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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO-TELEVISION AND
Call for comments following a request by the Governor in Council to prepare a report on the implications and advisability of implementing a compensation regime for the value of local television signals
140 Promenade du Portage
December 8, 2009
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Canadian Radio-television and
Call for comments following a request by the Governor in Council to prepare a report on the implications and advisability of implementing a compensation regime for the value of local television signals
Konrad von Finckenstein Chairperson
Michel Arpin Commissioner
Len Katz Commissioner
Rita Cugini Commissioner
Timothy Denton Commissioner
Elizabeth Duncan Commissioner
Suzanne Lamarre Commissioner
Peter Menzies Commissioner
Candice Molnar Commissioner
Michel Morin Commissioner
Marc Patrone Commissioner
Louise Poirier Commissioner
Stephen Simpson Commissioner
Jade Roy Secretary
Valérie Dionne Legal Counsel
Donna Gill Hearing Manager
140 Promenade du Portage
December 8, 2009
- iv -
TABLE OF CONTENTS
PAGE / PARA
Rogers Communications Inc., Cogeco Cable Inc., Bell Canada, Bell Aliant 284 / 1501
Harvey Oberfeld 377 / 2039
Rosalie Persichini 383 / 2076
Marjorie Lemieux 386 / 2093
Lydia Luckevich 390 / 2113
Nicole Brunet 394 / 2137
Ruben Boiardi 398 / 2159
Corus Entertainment 429 / 2331
Astral Media inc. 438 / 2378
CTVglobemedia Inc., Canwest Television Limited Partnership, Radio-Canada 480 / 2565
Mayor of Stratford 576 / 3177
Big Brothers and Big Sisters of Greater Halifax 588 / 3257
Boys and Girls Clubs of Greater Vancouver 594 / 3297
Alan Cruise 603 / 3337
Fondation des étoiles 608 / 3360
Lung Association of Saskatchewan 615 / 3387
--- Upon commencing on Tuesday, December 8, 2009 at 0902
1497 LE PRÉSIDENT : O.K., commençons.
1498 THE SECRETARY: Thank you, Mr. Chairman.
1499 We now invite Rogers Communications, Cogeco Cable, Bell Canada and Bell Aliant to appear as a panel and make a joint presentation as a panel.
1500 Appearing for this panel is Mr. Mirko Bibic. Please introduce your colleagues and you will then have 20 minutes to make your presentation. Thank you.
1501 M. BIBIC : Merci.
1502 Bonjour, Monsieur le Président, Vice-Président, Mesdames et Messieurs les Conseillers. Je m'appelle Mirko Bibic. Je suis le premier vice-président, Affaires réglementaires et gouvernementales, chez Bell Canada, et je suis heureux de vous présenter les membres de notre groupe " Non à la taxe TV. "
1503 Je voudrais clarifier et indiquer que Natalie MacDonald de Bragg Communications fait partie de notre panel ce matin.
1504 Immédiatement à ma gauche, on retrouve Kevin Crull, que vous connaissez, président du groupe Services résidentiels de Bell Canada.
1505 Comme je l'ai mentionné, à la gauche de Kevin, on retrouve Natalie MacDonald de Bragg Communications.
1506 À mon extrême gauche, Denis Henry, vice-président, Affaires juridiques, réglementaires et gouvernementales chez Bell Aliant.
1507 À ma droite, Ken Engelhart, premier vice-président, questions de réglementation chez Rogers.
1508 À sa droite, Phil Lind, vice-président du conseil chez Rogers Communications.
1509 À mon extrême droite, Yves Mayrand, vice-président, Affaires d'entreprise de Cogeco.
1510 Avec nous, aujourd'hui, aussi, dans la rangée à l'arrière, on retrouve Chris Frank, vice-président, Bell Canada; Suzanne Blackwell, présidente de Giganomics Consulting; et David Watt, vice-président, Rogers Communications.
1511 Nous sommes heureux de comparaître devant vous aujourd'hui pour discuter de l'incidence qu'un régime de redevances pour les signaux de télévision locale aurait sur les consommateurs canadiens.
1512 The impact of value for signal or compensation for local signal regime is clear. A new fee for conventional TV signals would require consumers to pay higher prices and would offer no additional value in return. This would be a "no-win" situation for consumers and no amount of debate or discussion will change this fact. But higher prices are not the whole story. Broadcaster demands are even more consumer unfriendly than this. Under broadcaster proposals, programs on the popular U.S. 4+1 channels could also be blacked-out or BDUs could be forced to drop these stations altogether.
1513 The views of Canadian consumers on the issue of paying compensation to local TV stations have been remarkably consistent. While many customers enjoy their local TV station, very few are willing to pay extra to receive it. The broadcasters that launched the "Save Local TV" campaign in April of this year know this. That is why they have gone to such great lengths to assure consumers that the fees for basic service would not go up as a result of their compensation demands and that BDUs could or should absorb the cost of any new charges.
1514 In the surveys we conducted, we gave consumers all the information they needed to develop an informed opinion. Not surprisingly, the overwhelming majority of Canadians said "no" to the new fees. This distaste for higher fees seems to cut across ideological boundaries. Consumers dislike the idea, regardless of which side of the TV Tax debate their sympathies lie.
1515 Thus far, in your online consultation, consumers have spoken and spoken loudly. Overwhelmingly, they are saying that they do not want to pay more for local TV, and that they will spend less, or cancel their subscriptions outright, if a value-for-signal is imposed.
1517 MR. LIND: Twice, Mr. Chairman, in the past three years, the Commission has considered awarding broadcasters a fee for carriage for their over-the-air television signals. Both times, the Commission rejected the concept. But in May of this year, Global and CTV started a new public campaign to pressure the Commission into changing its position.
1518 The "Save Local TV" campaign was a thinly veiled request for signal compensation in which Global and CTV promoted the campaign on their local news programs using their news anchors and reporters. CTV held open houses in May, served hot dogs and celebrities posed for pictures. Attendees were asked to sign a petition. The purpose of this campaign was to create fear in the minds of the public by threatening to shut down local TV stations unless the CRTC gave the broadcasters exactly what they wanted.
1519 Then, on September 14th, a new campaign called "Local TV Matters" was launched with CBC/SRC joining the fray. No longer was this a thinly veiled request. It was an out and out demand for money. The cornerstone of this campaign was a claim that BDUs were stealing the broadcasters' local signals and not paying for them.
1520 Now, BDUs can hardly be accused of stealing local signals if broadcasters are required by law to provide them over-the-air for free, and BDUs are required by law to distribute them, but that didn't stop CTV, CBC/SRC and Global.
1521 Another baseless accusation was the claim that BDUs spend $300 million on U.S. networks and pay nothing for the equivalent Canadian over-the-air signals. What blatant nonsense. We do not pay the U.S. over-the-air networks one dime. BDUs pay $300 million per year to U.S. cable channels like CNN and A&E. But we pay almost seven times this amount or $2.1 billion per year to the Canadian specialty services like TSN, Showcase and CBC News Network. Consumers have been deliberately misled.
1522 At this point, we had no choice but to respond, and we did so on October 5th. But for five months, we did not respond at all. For Rogers' part, we refused to force our Citytv newscasts to broadcast the sort of self-serving advocacy that CTV and Global were trying to pass off as journalism.
1523 The fundamental dishonesty of the Global, CTV and CBC/SRC campaigns was that they argued that cable rates would not increase. They knew that if TV viewers were given the facts and were told that their rates would increase to cover these new expenses, they would oppose signal compensation. In fact, the whole campaign was, and is, based on two fallacies; first, that the over-the-air broadcasters are not compensated for their local signals and, secondly, that the BDUs somehow are bank machines which can dispense huge amounts of money to broadcasters.
1524 So let us be clear and give consumers the complete picture. We did not start this war of words. And, when we did respond, we explained that by paying hundreds of millions of dollars to Global, CTV and CBC/SRC would have major consequences for Canadian consumers and would do nothing for local TV.
1526 MR. ENGELHART: It is important to explain to Canadians that signal --
1527 THE SECRETARY: Sorry. Please open your mike.
1528 MR. ENGELHART: Thank you.
1529 It is important to explain to Canadians that signal compensation will have an impact on their bills but it has been very difficult to estimate the financial impact because of the nature of the compensation regime being considered.
1530 Indeed, as the Chair noted last month during his questioning of Shaw, the Commission does not have the foggiest idea of what the local signals are worth. Some have suggested that the five to ten dollar increase identified in the "Stop the TV Tax" campaign is an exaggeration. For a number of reasons, we believe it is the best assessment available.
1531 First, in some major markets today, such as Toronto, there are as many as 13 local Canadian over-the-air signals that are being distributed by cable BDUs.
1532 Second, the fact that the Commission has not proposed to remove the mandatory carriage requirements for over-the-air television stations means that there would be no reason for a conventional broadcaster not to demand compensation. Each one would seek compensation and many have done so already.
1533 Third, a number of broadcasters who appeared before you have already indicated the value they believe their signals are worth. Global stated at the November hearing that each of its signals is worth between 50 and 70 cents per subscriber per month. In previous proceedings, the CBC indicated that a value of one dollar per subscriber per month was appropriate.
1534 At the same time, smaller independent broadcasters have argued that the Commission should peg the compensation for their signals at the same levels as the larger Canadian broadcasters. These smaller broadcasters argue that they have comparable regulatory obligations to those of the larger broadcasting groups and have, in fact, a greater economic need for compensation.
1535 Broadcasters in smaller markets could conceivably argue that they should get a greater value since the smaller number of channels in these markets makes each one more valuable. Were this to be the case, rural Canadians would pay relatively more than urban Canadians.
1536 For its part, the Commission has proposed that those BDUs that could not successfully negotiate local signal compensation would no longer be authorized to distribute ABC, FOX, NBC and CBS. This would mean that the value of the U.S. network signals would be added to the value that would ultimately be ascribed to the Canadian signals.
1537 So this would leave BDUs with mandatory carriage of up to 13 stations at a value per signal that has been estimated at 70 cents to a dollar each or about $10 in total. In smaller markets where there are fewer local signals, the cost could be less, resulting in our overall estimate of between $5 and $10.
1539 MR. CRULL: The campaigns launched by Global, CTV and CBC/SRC involve an attack on BDU profitability in which the broadcasters claim that the BDU industry makes $2 billion per year in profits. This is misleading for a couple of reasons.
1540 First, the figure represents only operating profit, not the industry's actual bottom line profit. If the significant debt payments that BDUs make to finance their massive expenditures on network expansion and improvements as well as digital transition were included in this analysis, then the profit figure would be considerably smaller. Rolling out and maintaining millions of kilometres of cable and fibre, launching and maintaining satellite distribution systems and indeed launching new distribution systems for pay TV are expensive.
1541 Second, the $2 billion figure includes cable's operating profits from providing internet and telephone services. These are significant contributors to reported cable operating profit and they are irrelevant to a broadcasting discussion about TV signal value.
1542 The expenditures our companies have made to expand and enhance our networks and the new services we provide are consistently ignored by those over-the-air broadcasters that are in fact benefiting from these very investments and that are now seeking additional compensation for their local signals. Without these expenditures, however, there would be no platform for the delivery of over-the-air television signals or for the distribution of the myriad of pay and specialty services that have been licensed over the past two decades, many of which are owned by the over-the-air broadcasters.
1543 Our investments in network infrastructure have furthered the policy objectives of the Broadcasting Act and those of the Government of Canada by encouraging the vast majority of Canadians to continue to receive services from those BDUs that are operating within the regulated Canadian broadcasting system, rather than opting for non-regulated and illegal sources of Canadian broadcasting.
1544 The need for ongoing investments is crucial. BDUs and broadcasters alike need to explore new broadcasting services and platforms which will both satisfy consumer interests and keep Canadian content relevant.
1545 The development of new on-demand services, interactive services, new business models and new distribution technology all take significant time and investment. New fees and regulatory uncertainty would clearly inhibit such activities. Without these investments, the broadcasting system would stagnate and ultimately drive Canadians to other sources of entertainment.
1546 If the Commission capitulated to the demands of some broadcasters and required BDUs to absorb the cost of a signal compensation regime, thereby subsidizing broadcasters with profits generated from internet and telephone services, this would be contrary to the government's initiatives to encourage the expansion and the advancement of broadband infrastructure in Canada. It would make no sense at all to force the BDUs' shareholders to enrich CTV and Global's shareholders with money that could be used to bring better broadband services to Canadians.
1547 BDUs are in no position to subsidize broadcasters. Satellite distributors have never been profitable and have accumulated over $2 billion in losses since launching service. The cable television business has earned returns which are commensurate with its cost of capital. IPTV is in a start-up phase of its business and is nowhere near being profitable, a situation that seems to be completely ignored in this and the previous hearing.
1548 The imposition of a subsidy, if absorbed by the BDUs, would wipe out BDU profits entirely while boosting the profits of the television broadcasters. This is completely unreasonable and unjustifiable in a market-based economy.
1550 MS MacDONALD: These proceedings often give birth to strange monikers. This time around the term "skinny basic" has emerged. The idea seems to be that we could give consumers a lot less, make them pay a bit less and have money left over to subsidize the broadcasters. This is not a good idea.
1551 As we and other parties said at the November hearing, we do not see any benefit in the Commission establishing a skinny basic requirement. If BDUs were mandated to provide a skinny basic, the basic package would become skinny, but the cost of that package would not.
1552 To the contrary, the cost of the basic service might actually increase if a signal compensation payment regime is implemented because the amount of those payments would have to be added to the price of that basic package.
1553 At EastLink in Halifax, we offer 29 services on basic for the price of $22.42 per month. 14 of those services would comprise the skinny basic that is being discussed at this hearing. The incremental costs for the additional channels that make up our basic service are negligible. The 14-channel skinny basic plus a fee to compensate the local broadcasters would bring the skinny basic price to the same price we offer today for a much larger basic service.
1554 It has been our collective experience that customers are happy with the current basic services being offered by satellite, cable and IPTV distributors. Some of us on this panel, Bell TV for example, have even experimented with a skinny basic and decided to abandon the offering when it became evident that no one really wanted it.
1555 Those few Canadians that might seek a skinny basic today can choose to receive their signals off-air with an antenna, and statistics show that 12 percent of Canadians currently receive their programming this way or via the internet. There is, therefore, no reason to mandate a skinny basic offering from BDUs, and every reason to believe that to do so would be a mistake.
1556 In our view, the skinny basic idea is a self-serving concept supported by broadcasters as a means to distract everyone from the obvious negative impact their demands for compensation would have on consumers.
1558 MR. HENRY: Global, CTV and CBC/SRC have also argued that BDU rates should be regulated. This would be next to impossible, however, in a competitive environment where BDU competitors utilize different technologies, have different cost structures and pursue different business strategies.
1559 The Commission has long ago abandoned rate regulation in order to encourage facilities-based competition and this policy has proven to be very successful. Instead of one cable network in each area, we now have one cable network, two satellite networks and in many areas an IPTV network.
1560 The system has evolved from 78 channels of analog TV to 500 channels and has introduced digital, high-definition, on-demand and interactive content.
1561 Customers that take advantage of bundled discounts are now enjoying more services for less money. Any attempt to force BDUs to absorb signal compensation through rate regulation would jeopardize this progress. And I can tell you that IPTV such as that provided by my company, for example, could very well be stopped in its tracks as a consequence.
1562 And besides, any compensation fee established under a legitimate rate regulation scheme would still be passed on to consumers.
1564 M. MAYRAND : Le Conseil s'est efforcé d'établir une distinction entre les propositions antérieures de tarif de distribution et la proposition actuelle de redevances pour les signaux, qui est fondée sur la négociation.
1565 La proposition du Conseil et celles de la plupart des télédiffuseurs reposent toutefois sur le principe que les EDR continueraient de distribuer les signaux en vertu d'un régime obligatoire, le niveau de redevances étant ultimement fixé par le Conseil au moyen d'un processus d'arbitrage exécutoire.
1566 En présumant que les télédiffuseurs en direct pourraient se voir accorder le droit par le Conseil de négocier des redevances pour leurs signaux locaux, ce qui serait impossible, et en présumant que de telles négociations échoueraient, ce qui serait inévitable, le Conseil devrait intervenir pour fixer un taux de redevances. En conséquence, les propositions actuelles reviendraient au même qu'un tarif de distribution.
1567 Dans les faits, le Conseil imposerait et appliquerait de nouvelles règles qui pourraient se traduire par des tarifs beaucoup plus élevés pour les clients des EDR pour recevoir exactement le même service qu'à l'heure actuelle. Il s'agirait de frais imposés par le gouvernement à tous les clients des EDR, et, à notre avis, cela constitue une taxe.
1568 Les propositions mises de l'avant par les réseaux Global, CTV et Radio-Canada/CBC seraient une catastrophe pour les consommateurs. Les tarifs augmenteraient considérablement, alors que les consommateurs n'obtiendraient aucun service additionnel.
1569 Not content with driving up BDU costs, Global, CTV and CBC/SRC are also making rate regulation proposals that would inevitably increase the regulatory burden and decrease both innovation and investment.
1570 BDUs are keeping customers in the regulated Canadian broadcasting system. Our customers' needs and wants are changing and we are working hard to adapt to those changes. The Global, CTV and CBC/SRC demands for subsidies seem perversely designed to prevent us from doing that and they should not be allowed to succeed.
1571 Thank you for your time today and we would be pleased to address any questions you may have.
1572 THE CHAIRPERSON: Thank you for your presentations.
1573 First of all, may I suggest we keep the temperature down? Terms like blatant nonsense, dishonesty, any subsidy would wipe out BDU profits and so be a disaster for consumers, the Commission could not capitulate to the demands of broadcasters, I think, don't add anything to the discussion.
1574 We are here because we are mandated to make a report for the Minister. We are being asked to report on two points. If there was a value for signal, (a) what would it mean in terms of affordability to the consumers and, (b) what it would mean in terms of impact on the industry as it adjusts to the digital migration?
1575 That's what it is, no more, no less. This is not an epic battle. This is not something that will turn the world upside down. We are supposed to make a report.
1576 We have heard from you in November. We will make a decision on your submissions then. But today, can we just talk about what's really before us and what I'm supposed to report?
1577 My first question is to you, Mr. Lind, and I would appreciate it if this time you would answer it because I have to report to the Minister. I'm not interested in Mr. Engelhart's answer but in yours.
1578 You were here in '71 when we announced the policy. The policy established clear-cut principles. Broadcasters are the producer of the product; you are the distributor of the product. The distributor should pay for what it produces.
1579 Do you feel you have lived up to that requirement of the BDU policy?
1580 MR. LIND: I'm sorry, what was the last part of your question?
1581 THE CHAIRPERSON: Do you feel that this is -- this is the principle that has been established by the CRTC when they announced the BDU distribution policy. Do you feel that that principle is in place now and that you have lived up to that requirement of the CRTC that I stated?
1582 MR. LIND: The '71 policy is one of many policies which the Commission has looked at over the past 30 years. So I think that -- I think that we could look into Commission documents for the past 30 or 40 years and find almost anything we wanted in any of them.
1583 Do I think that we have lived up to our obligations to the TV networks? Absolutely -- and more and more.
1584 THE CHAIRPERSON: Okay. The reason I have asked you is because you lived it. You have been part of it, et cetera. You have a much better historical view of all of this than any of us here.
1585 And it was clear what the CRTC wanted to establish, the principle that clearly you are a vital part of the communications system, of the broadcasting system. You enable customers to get a better signal with a broader reach, et cetera. You have to pay for it. We are paying for it and we all know what these are. You are paying it partially through simsub, partially through exclusive advertising, partially through mandatory carriage.
1586 Now, is this what you see -- you think was the principle when the '71 policy said, you know, you as a distributor should pay for your product. Is that in your view what was in mind?
1587 MR. LIND: You remember that the CMF was devolved as well --
1588 THE CHAIRPERSON: Yes. Yes, absolutely.
1589 MR. LIND: -- as another thing.
1590 So I think that if you are asking me whether this -- whether we have lived up to our obligations in this thing, whether we have lived up to the concepts that were articulated in that paper and others, for that matter; yes, we have through the CMF, through simultaneous substitution, through broader distribution of their signals and countless other ways that we have assisted the local broadcaster to deliver his product to the consumer.
1591 THE CHAIRPERSON: Okay. Now, as you well know, the broadcasters say that's payment in kind but it doesn't represent the total value of our system. And that's something they want to negotiate. You don't want to negotiate. I understand that. I'm not revisiting it.
1592 Obviously, if there is a negotiation, and assume from argument sake there is a negotiation and you agree on a price you are going to pass it onto the consumer. You are not going to eat it. I think when you are in business, like if this is an input cost that you have to absorb you are going to pass it onto your customer. That's unquestionable.
1593 The question is what is the amount of that input cost? What could they legitimately ask for? What could likely come out? I don't know. I have said -- I mean we only can look at sort of parallels. Mr. Engelhart, in his presentation this morning, says it's somewhere between $10 to $12.
1594 Frankly, I think that's vastly exaggerated and for the following reasons. You are already paid in kind so it's only a question whether you pay the total value or not.
1595 Secondly, it would only be for stations that have local programming the way that we demanded, i.e. seven hours in local in areas under a million, 14 hours in over the million.
1596 And, thirdly, if you look at what the specialty channels, what you are paying them, et cetera, you see that the rates are nowhere near the figures that the broadcasters -- legitimately, of course, they put the highest figure on that they can. I cited yesterday when I was questioning some of the consumers the fact that MuchMusic gets nine cents, The Weather Network gets 23 cents, APTN gets 25, TSN 36, Newsworld 63.
1597 MR. LIND: CBC Newsworld or Newsnet?
1598 THE CHAIRPERSON: Newsworld.
1599 MR. LIND: 68 or 70 cents?
1600 THE CHAIRPERSON: 63.
1601 MR. LIND: Oh.
1602 THE CHAIRPERSON: Those are my figures and they are public figures, you know.
1603 Anyway, I think if one assumes -- I want your reaction. If one assumed you settle somewhere in the middle, let's say around a quarter then -- no, let me -- before you shake your head let me pose the question. I'm sure you don't agree with me but I just want to get this out.
1604 If you settle at a quarter and then we look at the various markets that are being served and, for instance --
1605 MR. LIND: Toronto for example.
1606 THE CHAIRPERSON: Yes.
1607 MR. LIND: Yeah.
1608 THE CHAIRPERSON: Well, yeah, but you are not only in Toronto. You are in Ottawa for instance.
1609 MR. LIND: Yeah.
1610 THE CHAIRPERSON: In Ottawa that would mean four signals at 25. That's a buck. Is that --
1611 MR. LIND: No.
1612 THE CHAIRPERSON: Okay, then tell me where I am wrong because -- and I would like to sort of understand how -- this $10 fee, which seems to --
1613 MR. LIND: Well, you know, we are concerned about Toronto because we serve Toronto and Toronto is a fairly big area, you know, in Canada.
1614 THE CHAIRPERSON: Yes.
1615 MR. LIND: Toronto has what, 13 stations over-the-air? So there is --
1616 THE CHAIRPERSON: Over-the-air with local programs, okay, that is where --
1617 MR. LIND: Yes.
1618 THE CHAIRPERSON: But there are not 13 stations in Toronto that have over-the-air programs over 14 hours -- not that I know of.
1619 MR. LIND: Yes, they do.
1620 MR. BIBIC: Mr. Chairman, if I may. You opened your questioning of this panel by indicating that what the Commission needs to do here is issue a report to the minister regarding consumer impacts.
1621 THE CHAIRPERSON: So I want to know what your assumptions are on which you base this, because they don't coincide with mine.
1622 MR. BIBIC: I understand.
1623 THE CHAIRPERSON: And that is why -- I want to see where is the difference here. We shouldn't have a debate about the number of stations that have over-the-air programming in the various centres.
1624 MR. BIBIC: Well, we can certainly identify the local stations in each community. The point I want to make is, one, even assuming 25 cents, and we can debate that and we should debate it.
1625 THE CHAIRPERSON: Right.
1626 MR. BIBIC: And assuming four signals in the smaller markets. I mean, we were watching and monitoring the hearing yesterday. And from what I gathered from yesterday's response from actual consumers, even a dollar, each and everyone of them said, except for one person perhaps, each and everyone of them said, that is too much, no.
1627 THE CHAIRPERSON: Mr. Bibic, I agree, that is exactly what they said and that is what they feel and they feel why should I pay for more, what I'm getting right now? I understand, I got that.
1628 But it is a question, when you talk about affordability, and when you are trying to maintain the Canadian broadcasting system as it is, the question is whether $1.00 is affordable or not is a different issue. But that is not my judgment, it is the minister wants to know, we will make it for him, we will make a report for him. But that is why I am harping on this point. It is not -- we are not talking about large amounts, whatever.
1629 MR. BIBIC: Well, let's debate that Mr. Chairman. Because back in the April hearing the Commission on the first day put together that chart assessing what the cost would be for the industry if it were 50 cents. And in that, CRTC's own document, the authorized wholesale monthly rate for TSN is shown to be $1.07, for Rogers SportsNet 78 cents and for Newsworld, as you just indicated, 63 cents.
1630 You can get down to stations like YTV and Teletoon at 35 cents and the Life Channel at 33 cents, and we all know that Global is going to come to a negotiation and say we are vastly more valuable and important than the Life Channel, and if they get 33 cents, we should get multiples of that. And in fact, we heard them at the last hearing saying that they think it should be at least 70 cents as Mr. Engelhart indicated in his section of the opening statement.
1631 THE CHAIRPERSON: They exaggerate just as much as you exaggerate, everybody puts out their best position. I understand that, that is a normal part of advocacy. But that doesn't necessarily mean that is where it is going to wind up.
1632 MR. BIBIC: It also doesn't necessarily -- it could end up at 25 cents, it could end up at more. But even at 25 cents, we heard the consumers say yesterday, that is too much. That is why I started with that point.
1633 MR. ENGELHART: Mr. Chair --
1634 THE CHAIRPERSON: Okay I have here, Halifax. In Halifax we have three stations; CTV, Canwest and CBC, so that is three signals by my count. You can get the figures for Toronto but, you know, you, Rogers, serve a lot of other places besides -- and Toronto is not 13. I mean --
1635 MR. ENGELHART: Well, there is 1.6 million customers in Toronto. But in Ottawa I have got TVO, Global and so --
1636 THE CHAIRPERSON: Okay, stop right there. TVO is not producing local programming of seven hours.
1637 MR. ENGELHART: Well, I haven't watched it lately, but I will take your word for it. Global, SRC, A-Channel Pembroke, CTV Ottawa, CJOH, CBC, CHOT Hull, TQS, TFO, so that looks to me like a lot more than four.
1638 THE CHAIRPERSON: Well, you least have two in there, TVO and TFO, who don't belong in there because they don't have local programming. You are putting in Pembroke, which is not Ottawa, et cetera.
1639 I mean, let's not redo the November hearing. This wasn't the point of my question. All my point was -- I appreciate that you will pass on whatever is imposed on you as an input cost, as any businessman would do.
1640 What I was trying to establish is that we need obviously, if we go down this route, of VFS, we need a clear definition of what is included or not. But I guess what I am trying to say, is why are we frightening consumers, why are we putting out big figures rather than trying to figure out how to solve this problem? Because the problem is we want to keep a viable Canadian TV system. I think we all want to do that. You live from distributing and they live from producing it.
1641 And instead, we seem to have a debate that nobody understands, we have a huge publicity campaign by both sides and we have figures and concepts thrown around that don't make sense or maybe they do make sense, but they are based on assumptions which are quite different, et cetera.
1642 What I am trying to figure out is how we are going to put this into some meaningful quantities so people can get their heads around what you are actually talking about?
1643 MR. LIND: But you shouldn't -- I mean, you go to Halifax right away because they have the smallest number of local signals. But, you know, you can't ignore a city like Toronto, you know. I mean, it is a factor. And when you have 12 or more channels, even on your definition, you still have $3 or $4. So I don't see how you can minimize that amount of money for consumers. It is a lot of money and they get nothing in return, nothing in return. Everything is just the same as the day before.
1644 THE CHAIRPERSON: You are absolutely right, they get nothing in return. The question that is being posed, and I don't know whether that is right and you don't know, is that some of the local stations will close because they --
1645 MR. LIND: You have LPIF for that.
1646 THE CHAIRPERSON: Well, you object to LPIF too and you have passed it onto the consumer. Let me put it the other way around, do you feel we should abandon VFS and just increase the LPIF and deal with it in that way in order to keep local stations alive?
1647 MR. LIND: LPIF is designed to keep local stations around, that is right. Fee-for-carriage is designed to keep executives going to Hollywood, and there is a big difference.
1648 THE CHAIRPERSON: Look, just as much as you protested against people saying you spent billions in Hollywood when you only spend for specialty programming, let's not talk about people going to Hollywood. Let's stick to the facts here. This is claimed to be necessary to keep the stations alive and, you know, you may or may not accept that. I am just wondering, what are we talking about, what are we talking about in terms of dollars and what would be the impact?
1649 And we can debate how many stations there are in Toronto, I will have my staff dig the number of. But it is not a $10 amount per customer, that is my whole point, it is a much more reasonable one and we should, in terms of affordability, you have to come up with a reasonable number before you can decide whether people are willing to afford it or not.
1650 MR. BIBIC: Mr. Chairman, may I? I mean, certainly as I sit here today, I can take -- I can't say that it is going to be 25 cents a channel or less. It could very well be more. I don't know. I think we have a very good and legitimate and credible basis to suggest it is going to be a lot more. But let's put that aside for a second.
1651 The Commission created the LPIF. For Bell TV subscribers it ended up being just about under $1 per subscriber. And we passed it on and we explained why we passed it on, and you need look no further than the state of our profitability, our lack of profitability. Consumers were very unhappy. They are unhappy with us, they are unhappy with the Commission.
1652 So even if value-for-signal is 25 cents in a market that only has four stations, that is yet another dollar. And they are not happy about that either and they are making their views known loud and clear, and that is the dilemma. We can sit here and debate if it is $5 or if it is $10 or if it is $1, at the end of the day the consumer is not going to be happy and that is why it is a significant issue.
1653 And as Mr. Lind said, they are getting nothing in return for that dollar or for the previous LPIF dollar and that is why they are getting angry. And as for a trade off, you asked Mr. Lind, would we or would he trade off value-for-signal for LPIF, you know, trade away the value-for-signal and increase LPIF instead. And my answer to that is absolutely not, because we need to examine why it is we would do that in the first place.
1654 The over-the-air stations still are the means today to deliver the largest audiences to advertisers and they have tremendous power as a result of that. And they are still profitable, they will return as the economy recovers. And I remember Mr. Crowe, when we appeared before you in April, making the point that as a large large advertiser in Canada he, in charge of Bell residential services, goes first to the over-the-air broadcasters for advertising.
1655 In fact, look no further than our "say no to TV taxes campaign." When we felt we had to respond, where did we go to buy advertising? The last place we wanted to go was CTV and Global to buy advertising, but that is where we had to go to get our message across.
1656 THE CHAIRPERSON: Well, you know, the advertising campaign, we got the results. I mean, we have managed to hear from more Canadians than on any other issue. As you know, there are about 40,000 from you, about 130,000 from the "save our local TV stations." It sure shows you can mobilize a lot of people with advertising, but it doesn't really help us resolve this issue here.
1657 MR. BIBIC: Well, I think if you -- I mean, we got 50,000 letters in a month compared to 120,000 or whatever it was since last April, and I don't think their pitch was very precise and explained to customers what the impacts were, but let's put those aside.
1658 Look at your online consultation, we are not directing the comments there.
1659 THE CHAIRPERSON: They are not over yet.
1660 MR. BIBIC: It is not over yet, I agree, but it is overwhelming. I read it everyday. Customers are not happy and they don't want to pay more.
1661 THE CHAIRPERSON: I am glad you are participating, and I hope the rest of Canada, so we can report on it.
1662 But anyway, we obviously talked about affordability and as well as what the impact of digital transition is for the industry.
1663 And my colleague Rita Cugini has some questions. Peter. Sorry, Peter has some questions for you.
1664 COMMISSIONER MENZIES: Thank you.
1665 A little housekeeping item to start. You mentioned two consumer surveys, they are mentioned in your submission on file and in your oral presentation in paragraph 6 on page 2.
1666 And we don't seem to have those on file. You are referring to the Strategic Counsel Survey and the Decima Survey. Have you filed those and..?
1667 MR. ENGELHART: I think they were filed in the last hearing.
1668 COMMISSIONER MENZIES: Oh, can you file them for this hearing, please --
1669 MR. ENGELHART: Yes, Sir.
1670 COMMISSIONER MENZIES: -- by the end of the week? Thanks.
1671 The other item quickly, I need you on the record, to whom it applies, please explain the purpose of the monthly digital service fee. I believe it is $2.99 a month for Rogers and Bell's is $3.00 roughly.
1672 MR. ENGELHART: You go, Kevin.
1673 MR. CRULL: Okay, sure. Thanks, Ken.
1674 Mr. Commissioner, you know, as it has been presented to this Commission a number of times, Bell TV has yet to achieve profitability. More than $2 billion of cumulative losses. And yet, the contribution to the Canadian broadcasting system has been profound from Bell TV.
1675 So we certainly take action to try and achieve profitability and, through pricing actions, that is one of the things. We launched the digital services fee coincident with also launching bundling discounts. And there are a number of strategies, there are a number of means to try and monetize the revenue from our distribution system, and the digital service fee is one of the revenue actions that we have taken.
1676 But price increases, I can tell you from many many years in the consumer telecom business, price increases are accepted by customers under certain conditions: one, if they get more value for it; two, if it is something that approaches sort of a normal inflationary understanding of the business; three, if it reflects the increasing cost and that sort of goes with the inflationary aspect of it, the customers can accept.
1677 But they will not accept and they revolt, as Mirko said, if they get a price increase with no additional value of even $1. And so the digital services fee is part of a pricing strategy to try and achieve profitability to cover our increasing costs.
1678 And in fact, as I mentioned, our bundle discounts which have been profound value contributors to consumer purchases, if a customer has three products with Bell, the bundle discounts that they get for that offset the entirety of Bell TV's price increases over the last nine years.
1679 COMMISSIONER MENZIES: So to take it back, what do I get for the digital services fee?
1680 MR. ENGELHART: If I could just --
1681 COMMISSIONER MENZIES: Do you mind if I just stick with the current conversation, then we will come right to that?
1682 So if I am a consumer, what do I get for that? I still don't understand the exchange I am getting for the digital services fee.
1683 MR. CRULL: The digital services fee, it is a mechanism for pricing for the distribution of the signals that you get. You get Bell TV's package that you purchase.
1684 COMMISSIONER MENZIES: So why would they purchase? The consumer would wonder, you know, here is a new fee I am getting, okay?
1685 MR. CRULL: M'hmm.
1686 COMMISSIONER MENZIES: I mean, they understand the LPIF fee that you have put on. But what is this fee for and I understand that --
1687 MR. CRULL: But I am not sure they understand the LPIF anymore than the digital services fee. And I think the digital services fee --
1688 COMMISSIONER MENZIES: Well, okay. But fair enough, what I am trying to do is and part of your argument is people will pay more if they get more, right? And I understand you say it is part of a pricing strategy, okay, I get that internally from a corporate point of view. But it is essentially adding a fee but not adding a service from what you have said. If there is a service that got added, that is entirely different. But I am confused as to what service has been added in exchange for --
1689 MR. CRULL: Oh, there were a number of services added. I think that the digital services fee was added in 2008 in January. And during the year 2007 we had to add 30 new channels to the packages that customers were participating in. So quite a bit of value has been added every year to the package.
1690 COMMISSIONER MENZIES: So if I was a consumer and I phoned you up and I said, what is this $3 for? You would say..?
1691 MR. CRULL: It is for the distribution of an all-digital -- a very expensive and high value and much in demand all-digital television service.
1692 COMMISSIONER MENZIES: Thank you.
1693 MR. ENGELHART: If you called Rogers and with that question, the customer service representative would tell you that it covers the cost of the interactive program guide, our distant signals, our time-shifting package, vide-on-demand and the digital music service.
1694 COMMISSIONER MENZIES: So are those upsells in your package?
1695 MR. ENGELHART: Those are things you can't get with analogue basic, but once you --
1696 COMMISSIONER MENZIES: So if I am getting analogue basic I am not paying that fee?
1697 MR. ENGELHART: Right. And then if you get a digital box and then you pay the digital services fee you get those four things.
1698 COMMISSIONER MENZIES: How long do you suppose that fee will last? I mean, if it is basically a capital cost recovery fee is what I am taking from what you are saying, capital costs sooner or later are recovered. You know, is this going to last forever as part of the digital upsell or is there --
1699 MR. CRULL: Commissioner Menzies, we have been trying to recover our capital costs for 13 years now, and it is going to be a long time before we recover the capital costs that it takes to run Bell TV.
1700 COMMISSIONER MENZIES: Do you have a -- 20 years, 25, 10, five..?
1701 MR. ENGELHART: Well, there is also some ongoing costs. So the music service, for example, we pay a wholesale fee for that, the distant signals we pay a wholesale fee for that, the guide we pay for, the video-on-demand content there is often costs for us. So it is not just capital cost recovery, it also reflects fees that we pay.
1702 COMMISSIONER MENZIES: Okay, go ahead. Sorry, did you have something to add? Because you have your microphone on. When I saw the red light go on I thought you had something to add.
1703 Thank you, thanks for that.
1704 In your remarks today on skinny basic, you referred to EastLink in Halifax in paragraph 30 on page 7 of your oral presentation; 29 services for a basic of $22.42, 14 of those services would comprise the skinny basic.
1705 And then you say, "The 14 channel skinny basic, plus a fee to compensate the local broadcasters would bring the skinny basic price to the same price we offer today, except people would be getting a smaller service."
1706 Can you help me understand the math there? What sort of assumptions are built into that?
1707 MS MACDONALD: Certainly. I guess the point of the Halifax example is that it illustrates that in that system we are already providing customers with a fairly good-size package at a fairly low price point.
1708 To make an assumption that if you drop a number of services to bring it down to what would be a skinny basic or the basic that has been described in these proceedings, it doesn't automatically result in dropping the price down in half.
1709 Our basic is comprised of cost components that comprise our basic service, include a large number of fixed costs that will not change by dropping a number of services; fixed costs including our billing system, our customer cares, the cost of our maintenance of our plant, et cetera, those costs will remain the same.
1710 So if we are looking at dropping a number of services, the actual price of that service will just be a small reduction. And if we keep in mind that we are going to end up negotiating, if that is the end result, with the broadcasters for a fee, we can anticipate paying a per subscriber fee for the services that we are carrying that are over-the-air services.
1711 So when we do the math, we basically say that we won't be paying -- the customers will be paying pretty much the same price for a smaller service.
1712 COMMISSIONER MENZIES: Okay, I understand that in general. But I still don't understand specifically like the numbers that might have been used there. Maybe just I will ask this question in an attempt to sort of clarify and be helpful on that.
1713 For that $22.42 for a subscriber in Halifax, how much of that currently would be, after all the interest is paid and all the taxes are paid and that sort of stuff, how much of that would be profit for that operation?
1714 MS MACDONALD: Well, I can't really speak to that at this time, but I can say that the additional services that comprise, that bring the package up to a full size basic today, include a number of 4+1, U.S. 4+1 services for which no fee is paid and a number of exempt services.
1715 So when we drop those services, we are not really reducing the price. A lot of the balance of the services in our basic package remain and the fixed cost associated with our basic package, for the most part, will stay the same.
1716 COMMISSIONER MENZIES Okay.
1717 MR. CRULL: Yes, Commissioner Menzies, maybe I can offer from Bell some specifics in the interest of transparency. I did do quite a lot of looking at our current basic packages that we offer. Bell has, in English, we have 69 channels for $34 and, in French, we have 51 channels for $29. And I currently lose money on both of these current basic packages, and let me explain to you exactly how.
1718 The English package that I mentioned is $34. Now, as Natalie was saying, only $2 of that is programming. So you take away and you go from our current enhanced basic to your definition of a skinny basic and a little bit less than $2 goes away. So not much of the cost goes away.
1719 In operating these basic packages we have a series of costs that we call cash costs per user, and that is programming, billing, bad debt, call centre, marketing, non-acquisition, marketing costs and also the regulatory fees which, by the way, are the second biggest in that line of expenses.
1720 In addition, I have acquisition costs. I subsidize the costs of very expensive set-top boxes, I have marketing costs, I have channel compensation costs, and I have promotional discounts that we give the customer upon acquisition. Over the average 80-month life of a customer, those come to $9. The cash costs per users come to $15.
1721 If I take the satellite capital that we have invested and I look at current scale of nearly 2 million customers -- so I can't bear an argument that says, but wait a minute, you are not at scale, we are absolutely at a figure that is actually four times higher than we though we would need to achieve profitability in Bell TV. I have an amortized $9 per subscriber.
1722 So $9 and $9 and $15 is $33, and I get $34. With the time value of money, because I put all of that out at the beginning and I collected over time, I am negative. And the same cost figures apply in French, but I have $5 less revenue.
1723 So those are the specifics of the current basic package and that is why a skinny basic would be devastating. And let me just add that, you know, I understand from the Chairman that we are here to talk about the implications on consumers today, but the profitability or the lack of profitability of broadcast distribution is absolutely a consumer issue because, you know, we are trying very hard to maintain investments and, in fact, to increase investments for new delivery platforms that will bring choice to a number of areas where it hasn't existed in competition.
1724 COMMISSIONER MENZIES: Okay, thank you. Numbers and facts are always very useful things, especially for a report.
1725 You make reference in your oral remarks on page 6, paragraph 24 regarding new fees and regulatory uncertainty. And you concluded by saying, "This would ultimately drive Canadians to other sources of entertainment."
1726 And I just want you to expand on that a little bit. To what extent do you expect Canadians to go there one way or another? To what extent do you expect Canadians to begin going to the internet for their entertainment, not just their entertainment, games, et cetera, news, but basically what we know as television today?
1727 To put it more simply, at what point in the future do you expect that the preponderance of TV viewing in Canada will be on the internet as opposed to cable and over-the-air?
1728 MR. ENGELHART: Well, every time I go to a conference there is someone up there saying, you cable guys are doomed, people are going to watch all their TV over the internet. Certainly, reading the online consultations, a lot of people have talked about moving to the internet for their sources of television.
1729 We view it as sort of a struggle, a titanic struggle to keep people not doing that. And part of that strategy, as you know, is to create our own online broadband service, a video service so that if you have paid for Home and Garden Television on television, on cable television, you can watch it on the internet, you can watch it on video-on-demand. Soon, we hope you will be able to watch it on your cell phone.
1730 So our plan is to try and give customers a legal way of staying within the regulated broadcasting system and watching what they want when they want. That is really the driver, people want to watch what they want when they want. If we can, through investment and innovation, figure out a way to let them do that and have the regulated broadcasting system, I think we will succeed.
1731 If we don't do that, we will end up like the music industry and people will get all their stuff on the internet and they won't be watching cable television.
1732 MR. CRULL: I certainly agree with Mr. Engelhart. The content creators and the rights owners will also tell you that solely distributing over the internet is uneconomic, there is not a business model that is going to work for them.
1733 So what we need to be doing instead of this kind of battle, is we need to be spending time with those broadcasters and rights holders and we need to be working on business models that can work for both of us to deliver what consumers want. And I can tell you, we have been distracted now for over a year and not been having productive conversations to do that.
1734 But our business model is to compliment the linear subscription Pay TV with content that you can get on the go, anywhere, and distributed on devices that you want to watch it, not to substitute for Pay TV, but to compliment it, and that is what broadcasters want as well.
1735 COMMISSIONER MENZIES: So if we understand that those are the future trends, giving people what they want when they want it, yesterday's Quebecor-Vidéotron presentation talked about creating a future in which consumers would be very much in charge, in a way that they aren't today in the current broadcast system, but are on the internet, where they can choose exactly what they want.
1736 And you spoke about people, you know, not wanting to pay more for and not getting anything more. Currently, I certainly hear complaints from people that their issue is why do I have to pay for these channels and bundles and regulated necessity and that sort of stuff that I never watch? The issue might not be paying for what they do watch, it is paying for what they don't watch.
1737 So in terms of the Quebecor-Vidéotron proposal, what are your thoughts on a future in which consumers are completely in charge of their television viewing and you would just be a table from which they select and pay according to their selections?
1738 MR. CRULL: We have certainly paid close attention to the feedback of consumers, as we always do. And so the packaging strategy at Bell TV has been developed over 12 or 13 years and it is has been refined a great deal over that period of time.
1739 In our packaging, we work to balance several things. We work to balance customer flexibility, absolutely. We work to balance the overall value in the package that is delivered, so not just what they pay but what they get.
1740 We work to make things -- mundane things like ordering, billing, provisioning, we work to make those easy because it takes quite a while to call and order a satellite television service and we have to try and make that a good experience for customers.
1741 We also have to meet programmer requirements. There is an entire ecosystem here that delivers the kind of entertainment that people enjoy and there are programmer requirements as well, and we have to meet our profit ambition as running a business.
1742 So all of those go into the packaging that we do.
1743 Today, Bell offers a basic foundation that I talked about earlier in both French and English, and on top of that we have several thematic packages. These thematic packages average five channels and they are grouped by genre, by interest and designed when a customer buys into them to be a good way to select that.
1744 We also do have about 60 channels that are available à la carte. A few customers do take those but some customers can take what is available à la carte.
1745 I think a very interesting aspect of the long tale in linear broadcast delivery is that a great deal of customized specific content has been able to be funded through packaging, because your interests are different than my interests, are different that Commissioner Molnar's interests, and each of us has affordable availability to get entertainment and information that we wouldn't otherwise be able to get.
1746 It would be prohibitively cost expensive to purchase that on an à la carte basis and the content owners don't want it --
1747 COMMISSIONER MENZIES: How expensive would it be?
1748 MR. CRULL: Well, I don't know. I mean the system has never operated that way. The last time the system operated anything like this, we had 70 channels. So I do not know.
1749 I can tell you that I do not believe a 500-channel universe would have been developed or sustained if we didn't have clever marketing and packaging that would allow customers to get more for their entertainment dollar.
1750 COMMISSIONER MENZIES: What I am taking from that is that it wouldn't be possible then for me, say if I lived in Ottawa but decided to still be a Calgary Flame's fan, to subscribe to Sportsnet West only so I can watch the hockey games I want to watch and not watch the Leafs? Sorry.
1751 MR. CRULL: Well, certainly -- and I can't -- I may ask Mr. Frank to speak to the specifics of some of these but there are absolutely penetration requirements in nearly all of the content that is purchased by Bell TV and so we have to manage a very complicated Rubik's Cube with our programming partners, with customer needs and wants to deliver and to keep it affordable.
1752 COMMISSIONER MENZIES: The bottom line is it is not technically possible at this time?
1753 MR. CRULL: It is not today.
1754 COMMISSIONER MENZIES: Okay.
1755 MR. CRULL: And if I could ask others on the panel or Mr. Frank to comment.
1756 MR. FRANK: Maybe I can just go to your question about Sportsnet West.
1757 My understanding of the way Rogers Sportsnet run their business, they acquire regional rights, so those hockey games are only viewable through Rogers Sportsnet in parts of Western Canada. They are not available in the East.
1758 We do have that hockey game available to you but it would require you to buy an out-of-market premium package of hockey games.
1759 COMMISSIONER MENZIES: Right. But it still would be possible for me to buy it out-of-market in the current system, right --
1760 MR. FRANK: Yes.
1761 COMMISSIONER MENZIES: -- as a subscription, as an additional subscription out-of-market?
1762 MR. FRANK: Yes, but it is interesting to note, since you are on the issue of pick and pay, that the only way that that package is affordable is to buy all of the out-of-market hockey games. That package probably wouldn't exist if it was as granular as just one hockey team out of its home market.
1763 COMMISSIONER MENZIES: Okay. So how come Videotron think they can do it and you guys say you can't?
1764 MR. ENGELHART: Mr. Menzies, maybe I will put in my two cents worth.
1765 So the problem when people see a package of 40 services for $30, they say, well, that is great, I am paying 75 cents a signal, what I would really like is just to pick this one, this one and this one for 75 cents a signal, and as Kevin and Chris were saying, it doesn't really work that way, in large part because the programmers have a higher wholesale fee when you buy them à la carte than when you guy them in a big package.
1766 COMMISSIONER MENZIES: Sure.
1767 MR. ENGELHART: They have penetration-based wholesale fees. So I agree with Videotron that the future is more and more an à la carte world and that customers want that kind of choice.
1768 We are constrained a little bit, of course, with our analog offering. We can't do it there but we can do it in the digital world. We can't do it in the analog world because of technical reasons. You can't pick and pay in an analog world.
1769 COMMISSIONER MENZIES: I understand that.
1770 MR. ENGELHART: In a digital world you can but you run into this pricing problem. So, for example, we have all of the diginets. All the Category B's are offered in à la carte and pick packs but if you buy one it's $2.79 per channel, if you pick two to four it's $2.69, if you pick five it's $10.95, if you pick 30 it's $27.99. So you see, the price goes down.
1771 COMMISSIONER MENZIES: I understand the efficiency of packaging.
1772 MR. ENGELHART: Yes.
1773 COMMISSIONER MENZIES: For people who are willing to pay, I wanted to know in the future what your thoughts were on, from a consumer point of view -- I am not saying it would be cheaper, it would be more expensive for them to do this this way but they would be free to do so if they chose in the future in a digital world, as they are now, to buy an out-of-market signal?
1774 MR. ENGELHART: The biggest problem really is the programmers. They don't want this. They like those big packages. We would have to have a mini-war, not a war like this but a mini-war with CTV and Global. If we tried to sell their analog services on a pick-and-pay basis, it would no doubt come before the Commission for some sort of dispute resolution.
1775 And that day may come but right now they don't want their services sold that way. But I agree with Videotron that the customer wants that kind of pick-and-pay environment, and directionally that is where we are moving.
1776 COMMISSIONER MENZIES: Okay. And just on that point, a quick point of clarity. You will be continuing to offer analog basic services past the digital transition; is that correct?
1777 MR. ENGELHART: Yes.
1778 COMMISSIONER MENZIES: Everybody else?
1779 MR. ENGELHART: We don't know -- you know, at some point some of the tiers are going to start to migrate to digital, but yes, past the migration date, we will definitely have analog services.
1780 MR. BIBIC: Bell TV is all digital, so it doesn't apply to Bell.
1781 COMMISSIONER MENZIES: Right.
1782 MR. HENRY: This is Bell Aliant TV.
1783 COMMISSIONER MENZIES: Yes.
1784 MS MacDONALD: And with regard to Bragg, we have hundreds of very small systems that are analog and will continue to be analog after the migration.
1785 COMMISSIONER MENZIES: Okay, thank you.
1786 MR. MAYRAND: And for Cogeco Cable, sir, we have a bit of the same situation, not quite as many small systems but a lot of them analog, and we expect that we will continue in an analog world at the consumer end on a number of those systems well beyond the digital transition date.
1787 COMMISSIONER MENZIES: Okay. What has been the impact -- you talked about consumers resisting price increases for nothing more and I believe all of you have passed along the LPIF charge to them.
1788 What has been the impact on your subscriptions since the introduction of LPIF, not just the introduction of LPIF but the introduction of your charge related to LPIF?
1789 MR. MAYRAND: Perhaps I could address your question first.
1790 In the case of Cogeco Cable, of course, we have been subject to the extra charge resulting from the LPIF since September 1st of this year. We have not passed on the cost as yet.
1791 We have just barely notified our customers, actually beginning this month and I think late November, that there will be a charge and a line item for the LPIF applying as of January 1st of next year.
1792 So we have eaten up part of the impact, at least for four months, and just notified our customers that this extra charge is coming on stream at the beginning of next year.
1793 So obviously, we can't say what the impact is.
1794 COMMISSIONER MENZIES: Okay. In the interest of brevity, are your sales up, down, the same? Everybody. I know yours because Cogeco can't --
1795 MR. ENGELHART: If I could give a slightly longer answer, sir.
1796 COMMISSIONER MENZIES: I know you want to but I want to keep it a short slightly longer answer if you can.
1797 MR. ENGELHART: Okay. EchoStar solved their theft problem, so we expected a big jump this Q4, back to school. We haven't seen it. Q4 has been very poor. So we are wondering if that is the LPIF that has had that effect.
1798 MR. CRULL: Churn at Bell TV jumped by nearly 100 basis points in the last couple of months and we have invested a great deal in marketing and other things. So it's not -- it's a, you know, dynamic multi-variable thing to look at total subscribers.
1799 But churn is up and the number one reason customers called into our call centre over the last couple of months has been questions about the bill and as a subset of that about LPIF.
1800 COMMISSIONER MENZIES: Just for clarity sake, what do you term a basis point?
1801 MR. CRULL: So that would be one-tenth of 1 per cent, is the total increase.
1802 COMMISSIONER MENZIES: So 100 -- so that churn is up 10 percent?
1803 MR. CRULL: It is up, yes, that is correct, 10 percent.
1804 COMMISSIONER MENZIES: Ten percent.
1805 MR. CRULL: One-tenth of a percentage point.
1806 COMMISSIONER MENZIES: Sorry. Churn is up one-tenth of a percentage point?
1807 MR. CRULL: That's right, on a monthly basis, which is how we talk about it, or 10 percent in total.
1808 COMMISSIONER MENZIES: Okay.
1809 MR. CRULL: And that is from -- that would be from the second quarter.
1810 COMMISSIONER MENZIES: Okay, thank you.
1811 MS MacDONALD: For our systems, we don't have any specific details in terms of any losses attributable to LPIF. I think, you know, with our recent activity, we have been adding more services to our systems, so gaining customers in some areas, losing in others. So any assessment of the LPIF on those losses would really be anecdotal at this point.
1812 MR. HENRY: And for us, we were late getting to putting it on the bill for our IPTV service, so it is too early to tell. I think we put it on in November.
1813 COMMISSIONER MENZIES: Okay.
1814 Cogeco, I just have -- in paragraph 70 -- sorry, it's not necessarily in paragraph 70. But you make the statement that:
"Local TV as we have known it is in the process of inevitable demise."
1815 This is in your filed responses. I think it's paragraph 70 of that response.
1816 Anyway, the point is you make the statement that:
"Local TV as we have known it is in the process of inevitable demise."
1817 I am wondering how that fits with some of the overall arguments I read, that, for instance, this is just a temporary problem. In other people's arguments, it's saying this is -- over-the-air television has just gone through a recession. It's not that bad a thing. They are going through a recession, they will recover, they will go on.
1818 And then I read a statement that is saying this is an inevitable demise and I am trying to make sense of how -- is it a state of inevitable demise or is it a state of temporary demise?
1819 MR. MAYRAND: I am not finding the exact reference but I think the explanation is very simple, sir.
1820 In small markets, we think that you are already seeing that some local stations are closing and they are closing -- they have closed and have permanently closed because the broadcasters that operated them were convinced that there was no longer a business case to operate these stations as local outlets.
1821 I think that this is not to mean that all of conventional television is affected in the same way, certainly not the network heads, certainly not the major stations.
1822 But, of course, in markets where you have such a small component of local programming that it is measured in terms of a few hours, actually less than seven hours a week, by the sheer fact of this small component, first of all, it's very hard to find on the dial because all the rest of the time you have non-local programming and a lot of people lose the habit of tuning in to that particular signal for that particular component of the programming at a prescheduled time of the day.
1823 I think there was a lot of discussion about the situation in Red Deer. It's interesting to note that a number of customers in the Red Deer area have, in fact, subscribed to satellite packages, knowing full well that they would not have the local signal available in that package.
1824 So I think, to put things in perspective, certainly in small markets, when you look at the economics today of operating a broadcast outlet, particularly investing fresh new capital to change that outlet from analog to digital, there is no longer a business case.
1825 And what Cogeco is saying is that in those situations, there are other alternatives to offer an excellent, very relevant and more substantial local component to customers, and that is through the local TV channel on cable.
1826 That is exactly what we do in North Bay in Ontario. There was a discontinuance of local news by CTV in that market and we stepped in at the request of the community to offer a local news service there.
1827 COMMISSIONER MENZIES: Okay.
1828 Just one last thing for me. I know it's relevant to Bell, and I believe others, but if not, forgive me.
1829 How do you explain the difference in the fact that the French-language basic is $6.00 a month cheaper than the English-language basic? How does that make sense?
1830 MR. CRULL: It's a competitive market. It's purely -- it's a competitive market. It does have fewer channels, so there is less specialty in that package, but it's a competitive difference.
1831 COMMISSIONER MENZIES: Do you make any money there?
1832 MR. CRULL: I think I gave you those figures earlier.
1833 COMMISSIONER MENZIES: Thank you.
1834 THE CHAIRPERSON: Rita?
1835 COMMISSIONER CUGINI: Thank you and good morning. I have a couple of follow-up questions and then I am going to move on for a little bit to the area of digital transition, because that is the other part of the Order in Council, of course.
1836 Mr. Engelhart, in your oral presentation this morning you talked about our proposal that BDUs that could not successfully negotiate local signal compensation would no longer be authorized to distribute the 4+1 and then you went on to say that:
"This would mean that the value of the U.S. network signals would be added to the "value" that would ultimately be ascribed to the Canadian signals."
1837 Are you cautioning us in the sense that -- do you anticipate that the Canadian services will say, well, if you can't carry -- you won't be able to carry 4+1, therefore, my CTV or Global signal has much more value to you and we will therefore ask for a higher wholesale fee?
1838 MR. ENGELHART: Yes.
1839 COMMISSIONER CUGINI: Is that what that sentence means?
1840 MR. ENGELHART: Yes.
1841 COMMISSIONER CUGINI: Okay, thank you.
1842 Mr. Crull, you also talked about:
"...the $2 billion figure includ[ing] cable's operating profits from providing Internet and telephone services, which are irrelevant to a broadcasting discussion about TV signal..."
1843 And, of course, we all know that all BDUs are able to bundle their services and offer discounts to their customers.
1844 So my question is directly to the affordability of basic cable and whether or not these bundling abilities of BDUs, what effect, if any, they have on the cost of basic cable.
1845 MR. CRULL: I will ask Mr. Engelhart to comment on the cable aspects of Internet and voice.
1846 But those figures that I gave you and the revenue that I talked about, the $34 and $29 in our basic packages, those are bundle-eligible, and so if a customer has Bell Internet or Bell telephone, they are eligible for a $5.00 additional discount on that.
1847 I would observe that those are tremendously affordable entry points and that they are market-based, that we believe, as a business, we want to be at an entry-level point so that we can grow the base and then upsell customers from there.
1848 But that is at a point that is well under half of what our average ARPU is. I think that that is a very, very affordable entry point for customers and, as I said, it is bundle-eligible.
1849 COMMISSIONER CUGINI: And if it weren't bundle-eligible, how much more expensive would it be for the customer?
1850 MR. CRULL: These are the prices, $34 in English and $29 for our French basic.
1851 COMMISSIONER CUGINI: I understand.
1852 MR. CRULL: Those are pre-bundling and then there is a $5.00 bundle-eligible discount on those.
1853 COMMISSIONER CUGINI: I understand. Thank you.
1854 MR. ENGELHART: Commissioner Cugini, thank you for that question because you are the only one who cares about those bundle discounts. The Stats Canada figures ignore the bundle discounts. My friends at Global and CTV ignore those bundle discounts in their evidence.
1855 So with Rogers, if you buy two services, you get a 5 percent discount -- and that discount is on all the services -- three services, you get a 10 percent discount, and four services, you get a 15 percent discount.
1856 We have a million and a half Internet customers. So a lot of people are getting two services. We have a million telephone customers, and, of course, Canada-wide we have 9 million wireless customers. So a lot of our customers get those discounts.
1857 And if you are getting, for example, the 15 percent discount, a basic television customer over the last 10 years would have only experienced a rate increase at the rate of inflation and a digital basic customer would have actually experienced a rate increase less than the rate of inflation.
1858 So those bundle discounts are a big part of what keeps the service affordable.
1859 COMMISSIONER CUGINI: It also keeps the customers loyal to you as a company, however?
1860 MR. ENGELHART: Yes, it does.
1861 COMMISSIONER CUGINI: Ms MacDonald, in paragraph 31, you said:
"It has been our collective experience that customers are happy with the current basic services being offered by satellite, cable and IPTV distributors."
1862 And Mr. Crull has just said, of course, basic for IPTV, cable and satellite is an entry point, it allows customers, of course, to then move on to either extended tiers or digital or HD or VOD and pay services as well.
1863 So how do you characterize that customers are happy?
1864 MS MacDONALD: I think the point of that message is -- it's in the context of a discussion about going to a smaller basic. So when everyone is here discussing, oh, let's go to a skinny basic, I am saying, our customers are already happy with our 29 plus, in some other area, services in our basic and in fact we would say that they are actually, if anything, looking for more services.
1865 Our experience is that probably only about 10 percent of our customers will take a basic package. Most customers want more and it just so happens that I learned just in the last day or so that about 10 years ago we actually tried to offer a smaller basic in our Prince Edward Island system and that basic went with about eight channels at a price point of around $16. We dropped it within a couple of months because customers just weren't taking it.
1866 So, you know, our experience is that customers want more, not less.
1867 COMMISSIONER CUGINI: So, you never get the question, why am I paying for 29 services, I only want to watch 10?
1868 MS MacDONALD: Well, I think, you know, we are always going to have those customers that ask those questions but the point is we get more questions saying, why can't we get these additional HD services, you know, and when are you going to add this new service to your cable offering? Those are the kinds of questions that drive us to add more and provide more to our customers.
1869 MR. HENRY: If I could just add to that. We have a service in Atlantic Canada as well. It's the smallest package we have, 39 channels for $25. Almost nobody takes it. Everybody wants the next one up.
1870 COMMISSIONER CUGINI: Thank you very much.
1871 In the discussion with Commissioner Menzies regarding the digital access fee, that has already increased the price for the digital basic customer.
1872 Does that mean, therefore, that in 2011, if the digital transition is complete, basic cable will be even more expensive for customers? Because if it has already increased it now for both cable and satellite, through the digital access fee, can we expect to see prices increase even more in 2011 when the digital, hopefully, transition is complete?
1873 MR. CRULL: I think that is for our cable friends. Bell is already all digital.
1874 COMMISSIONER CUGINI: Right, but you do charge the digital access fee?
1875 MR. CRULL: That is correct, on all -- so all subscribers pay that today.
1876 COMMISSIONER CUGINI: So you wouldn't anticipate increasing prices in 2011?
1877 MR. CRULL: Oh! I can't project what my price strategy is going to be in 2011.
1878 COMMISSIONER CUGINI: Okay, thank you.
1879 MR. ENGELHART: In 2011, I am almost completely confident that we will have analog basic still. So we will down-convert those digital signals to analog for those customers that don't want a digital box. So I don't anticipate moving everyone to digital in 2011.
1880 MR. MAYRAND: And it's the same for Cogeco Cable. We really don't see a wholesale transition of our analog subscription base to digital when the over-the-air digital transition occurs.
1881 Now in terms of projecting, you know, what the market conditions would be when that over-the-air transition occurs, you know, by August 2011, frankly, we expect certainly at least and probably an even more competitive landscape than is currently the case. Why is that? Because, of course, you will have had more rollout of IPTV and more options available to the consumer.
1882 So the short answer to your question is we don't have any occult plan, if I may use that word, to jack up rates using the digital transition as an excuse. It just cannot happen as far as we are concerned.
1883 The concern though is that if the digital transition is a reason for some additional charges to be passed on to us on the copyright front or on the distant signal front -- and that is why we made that point very clearly on the digital transition issue -- then certainly there is an increase in our input costs.
1884 COMMISSIONER CUGINI: Right. And again, in keeping with the whole digital transition issue, we know of, obviously, the Freesat proposal. We have another proposal that we will be examining shortly, the Freesat proposal. Broadcasters have said that those who cannot meet the August 2011 deadline are proposing a hybrid model.
1885 So the question is in particular for terrestrial cable. Is there a plan to offer a competitive service to either free HD or the Freesat model in being able to continue to provide -- if either one actually of those proposals were accepted by the Commission?
1886 MR. ENGELHART: Yes, I mean if there is an opportunity, we would like to be included. You know, if the government is subsidizing boxes or installations or something, we would like to have that open to us as well as to satellite providers.
1887 Right now, we are having -- we are working on it but it doesn't look like it's going to work for us but we would still like to be included in any discussion of it.
1888 COMMISSIONER CUGINI: And you did say earlier that you are going to continue to provide analog service and downgrade those broadcasting signals that do not convert to HD by 2011?
1889 MR. ENGELHART: Yes, Commissioner.
1890 COMMISSIONER CUGINI: So it's really going to be a combination of different elements within the system as of September 1st, 2011?
1891 MR. ENGELHART: That is correct.
1892 COMMISSIONER CUGINI: All of which are going to have to be acceptable. Okay. Thank you.
1893 Mr. Chair, those are all my questions.
1894 THE CHAIRPERSON: Okay.
1895 Michel Morin, tu as une brève question?
1896 CONSEILLER MORIN : Merci, Monsieur le Président.
1897 I will ask the question to Mr. Mayrand but if others want to jump in, be at ease.
1898 Ce matin, Monsieur Mayrand, dans votre... en page 10, vous situez tout le débat dans le cadre d'un régime obligatoire de distribution, et dans votre présentation écrite, vous avez été un des rares qui a fait des allusions très précises au régime américain, the retransmission consent regime.
1899 Si un tel régime était adopté au Canada, autrement dit, s'il n'y avait plus de distribution obligatoire et si on avait le droit de retrait, au fond, on parle beaucoup du consommateur, mais est-ce que le consommateur ne serait pas véritablement en charge de payer pour le service de CTV, de TVA ou de Canwest? On ne parlerait pas là de quatre ou cinq dollars. Peut-être qu'on ne les prendrait pas tous, les généralistes.
1900 Et est-ce que les entreprises, finalement, n'auraient pas à faire le choix d'être au niveau de la distribution obligatoire, comme c'est le système actuel, ou de facturer puis de voir si le marché...
1901 Autrement dit, si on recourait plus au marché, si on donnait plus de liberté au consommateur -- on en parle depuis ce matin -- si on donnait plus de liberté aux entreprises d'avoir le droit de retrait de leur signal, est-ce qu'on ne serait pas dans un monde où il y aurait plus de liberté économique pour tout le monde, pour les consommateurs, puis pour les entreprises, pour les diffuseurs, et pourquoi vous seriez contre?
1902 M. MAYRAND : Je pense que pour se situer sur le plan du consommateur, le principal problème avec ce que vous présentez comme un droit de retrait ou, en tout cas, la possibilité qu'il y ait cessation de la distribution de services et de signaux qui sont normalement distribués, ça pose un problème important pour le consommateur.
1903 Pourquoi? Parce que lorsque ça se produit, il n'y a personne, à commencer par le consommateur, qui est en mesure de savoir quand est-ce que le service sera rétabli, à quelles conditions, et puis avec quels avantages ou inconvénients additionnels. Alors, ça crée énormément d'incertitude.
1904 Il peut y avoir une situation de blocage où le manque d'entente dure des mois et des mois. Ça s'est déjà produit dans certains...
1905 CONSEILLER MORIN : Mais vous savez qu'aux États-Unis, c'est très minimal. Sur 1 200 stations -- vous-même, vous citiez des chiffres de 2004, je pense, à 2006 -- 9 stations autant que je me souvienne où il y a eu des blackout.
1906 M. MAYRAND : Écoutez, le problème demeure que dans un régime de marché ouvert avec une libre négociation, vous allez avoir... indépendamment des statistiques du nombre de cas, vous allez avoir des situations avec des interruptions de service variables, et dans certains cas, prolongées.
1907 Alors, ça, ce n'est pas une situation qui est facile à comprendre pour le consommateur. C'est difficile à accepter aussi pour le consommateur, parce qu'on dit, bien, comment se fait-il que tout à coup, parce qu'il y a une négociation commerciale qui intervient, moi, je suis privé de service? Alors, ça, c'est le premier aspect de la réponse à votre question.
1908 Le deuxième aspect, c'est que les télédiffuseurs eux-mêmes, comme groupe, et lorsqu'on regarde chacune de leur présentation individuellement, il n'y a aucun des télédiffuseurs qui est prêt à vous dire, oui, Monsieur le Commissaire Morin, ayons un système de libre marché parfait, c'est-à-dire sans aucune priorité de distribution, sans aucune distribution obligatoire pour aucun signal, sans substitution simultanée, sans règles de protection sur les marchés publicitaires parce qu'il y a un monopole réglementé de l'utilisation des revenus publicitaires au bénéfice des télédiffuseurs.
1909 Il n'y a pas un groupe de télévision au Canada qui est prêt à vivre avec ce type de libre marché. C'est ce que nous vous disions à l'audience de novembre. Si on parle d'un véritable libre marché, il faudrait que toutes ces règles-là tombent. C'est toute une révolution.
1910 Vous avez examiné le cadre de réglementation en large, il y a un an, et la conclusion, c'est qu'il doit rester des règles de distribution et certaines règles d'assemblage et des règles d'accès.
1911 Maintenant, encore une fois, au point de vue du consommateur, essayons de penser ce que le consommateur pourrait vouloir, il pourrait bien dire... et je pense que la question a été posée par madame Molnar à Radio-Canada.
1912 Elle a dit : Bien, écoutez, que penseriez-vous d'un régime où le consommateur pourrait choisir de payer pour le service de Radio-Canada ou pas?
1913 Et la réponse qu'on lui a donnée -- et j'ai vérifié la transcription des notes sténographiques -- c'est que ça, ce n'était pas acceptable, et ce n'était pas acceptable parce que c'est dans l'intérêt public et l'intérêt du système de radiodiffusion de s'assurer que le service de Radio-Canada, et les services du même ordre qui font traditionnellement partie du service de base, demeurent disponibles en toute circonstance.
1914 Alors, voyez-vous, ce n'est pas du tout évident au plan du consommateur, et ce n'est certainement pas évident au plan de la position des télédiffuseurs, qui n'en veulent pas vraiment d'un libre marché.
1915 CONSEILLER MORIN : Merci.
1916 THE CHAIRPERSON: Len?
1917 COMMISSIONER KATZ: Thank you, Mr. Chairman, and good morning.
1918 I would like to focus for a moment on the transition to digital and broadcasting in HD. I think you have all said at some point if not just today that you have higher prices for digital and HD programming commensurate with the value received by the consumer.
1919 How do you propose conventional broadcasters recover their increased cost related to provision of higher value programming?
1920 MR. ENGELHART: Vice-Chairman Katz, we don't charge extra for high definition if we don't get charged for it.
1921 So for the over-the-air signals you get all those HD signals for free. Of course you have to buy an HD box or rent an HD box but there is no fee. And if the specialty service gives us the service for free we don't charge the customers. If they have a wholesale fee then we just charge extra for those HD services.
1922 COMMISSIONER KATZ: So they would have a different wholesale fee for HD or digital versus analog?
1923 MR. ENGELHART: Yeah, if they say for your 50 cents you get everything, then we just pass it along for free. If they have an additional fee for HD then we charge.
1924 COMMISSIONER KATZ: Do some of your broadcasting programming have a different fee?
1925 MR. ENGELHART: Yes.
1926 COMMISSIONER KATZ: So hypothetically if the conventional broadcasters wanted to recover some of those costs they could?
1927 MR. ENGELHART: Sorry, can you say that again?
1928 COMMISSIONER KATZ: If CTV came to you and said, "We would like a fee for the HD quality programming that you package into your HD package" you would be receptive to negotiating that with them?
1929 MR. ENGELHART: No, No.
1930 COMMISSIONER KATZ: Why not? You do it with everybody else?
1931 MR. ENGELHART: I think that's the whole debate we are having here about the over-the-air signals. I mean we have spent all this --
1932 COMMISSIONER KATZ: We are talking about HD here and digital which is not necessarily over-the-air at that level of quality.
1933 MR. ENGELHART: Well, it is soon going to be over-the-air and you can see from the advertisements that HD is an important thing for customers. We are in a battle with my friends to the left about who has more HD signals and it's a hugely important issue for customers. We have a huge number of channels.
1934 So the idea that customers will not expect to get their over-the-air signals in HD I think is inconsistent, I think, with customer behaviour.
1935 COMMISSIONER KATZ: But would you not think that HD is discretionary from the perspective of the consumer?
1936 MR. ENGELHART: No.
1937 COMMISSIONER KATZ: It's not --
1938 MR. ENGELHART: In the U.S. they don't charge extra for those HD signals.
1939 COMMISSIONER KATZ: But you are saying in Canada some programmers do charge you extra and you pass on --
1940 MR. ENGELHART: Some specialty services -- some specialty services absolutely do.
1941 COMMISSIONER KATZ: But you would differentiate those specialties from the conventional in this regard?
1942 MR. ENGELHART: Yes. Yeah.
1943 COMMISSIONER KATZ: With no rationale other than you just wouldn't?
1944 MR. BIBIC: Well, it's the same -- it's the same concept. The conventional broadcasters will be making those signals available for free over-the-air. It's the same thing in terms of making these signals available for free and analog formats since time immemorial, and the compensation bargain between the two sides is the same.
1945 Conventionals will continue to get all the regulatory privileges they get associated with their licence whether or not it's HD or analog and the obligations are the same. So the principle that there is no additional value that should be compensated for applies whether or not it's HD.
1946 COMMISSIONER KATZ: Would you concede they have got a higher cost associated with provision of HD and digital?
1947 MR. BIBIC: I suppose they do but I also recognize that they have higher costs from going out to buying -- you know spending more and more on the U.S. -- you know on U.S. programming every single year. At the end of the day you have to run -- and we have higher costs too.
1948 Thank you, Ken.
1949 But at the end of the day you have to run --
1950 COMMISSIONER KATZ: But your higher costs you are passing through to the consumer.
1951 MR. BIBIC: But they can --
1952 COMMISSIONER KATZ: You said that.
1953 MR. BIBIC: But Vice-Chairman Katz, you have to run a business like everyone else. So you can take action on the revenue side. The prime revenue vehicle for over-the-air broadcasting is advertising. Or you can take action on the cost side, like all of us have done, which they can certainly do to manage their cost structure, or you do a combination of both.
1954 I mean there are -- or you explore new revenue opportunities online, video-on-demand with Rogers and the portals. There is a whole host of things that conventional broadcasters ought to be doing and will be doing in order to generate a return on their investments, whether or not those investments are digital transition, HD transition or acquiring U.S. programming or producing Canadian programming.
1955 COMMISSIONER KATZ: I'm sure, just as we all are hoping advertising revenue turns around sooner rather than later. The reality is they are at the beck and call of the advertising marketplace right now and where that is in its evolution of the cyclical nature of the business. Notwithstanding that, when you provide better or increased services to your customers you have said that you package that into a value proposition and you are able to extract value for that.
1956 What I'm wondering is, as they provide a higher value they are caught in the middle. How do they get that? And I have heard you say get it from advertising but I'm not sure at this point in time there is a market to get it back from the advertising.
1957 MR. BIBIC: Vice-Chairman Katz, I think your response to me is a little bit unfair. I did not say increase your advertising rates and then press the button and stop talking.
1958 I said you have to get your cost structure under control and you have to potentially look at increasing your advertising revenues or you have to look at other revenue opportunities in the value system; online, video-on-demand, et cetera. And I provided a whole bunch of ideas and things that could be done. I didn't just focus on advertising.
1959 We at Bell TV have not simply increased prices in order to dig ourselves out of a loss situation. We have taken pricing action. We have reduced costs significantly and, in fact, we spent half of our opening statement in the November hearing explaining all the cost containment initiatives that we have put together.
1960 And we have invested significantly in our business to compete with our cable friends on this panel, introduction of PVRs and, you know, the leading HD distributor in Canada, et cetera, et cetera. You run a business and there is a whole number of things you need to exploit including cost containment.
1961 So the broadcasters have to convert to digital and despite their desire to ignore it altogether it needs to be done and they will find a way to implement that and continue to operate a business. They also run specialty services and they make a lot of money on specialty services. That's another technique to have a healthy overall business.
1962 MR. ENGELHART: If I could just briefly add, Vice-Chairman Katz, one of the problems that TV has is the internet, as we discussed with Commissioner Menzies.
1963 HD is a wonderful thing if you are an over-the-air broadcaster because now you have got people watching fabulous HD pictures that are not so easy to get over the internet. So certainly at Rogers Television we think the conversion to HD is a good investment. It's a modest investment when you look at the type of capital that BDUs or wireless companies make and it's a way to really increase their audience.
1964 COMMISSIONER KATZ: The only point I'm trying to make is I received some promotional material from some of you and basically you are promoting your HD and packaging it in and charging the consumer a value for that HD. Get HD and you get all these channels and you are paying more than if you didn't get the HD.
1965 MR. BIBIC: Vice-Chairman Katz, in the case of Bell TV we are consistent with Rogers in the sense that we include over-the-air HD signals that are available today in basic at no extra charge.
1966 COMMISSIONER KATZ: Okay.
1967 MR. BIBIC: Now, the extra charge that one gets for HD on Bell TV, are for the specialty services.
1968 MS MacDONALD: And Vice-Chair, if I can also add, in the case of our systems we would say we are actually providing a good service to the conventional broadcasters, because what we are doing is we are paying for the transport of their signals in HD, providing them to our customers in HD really in a package that's at no extra charge for those services, allowing those conventional broadcasters to have their advertising provided in HD format as well.
1969 So HD is not available in our systems to pickup over the air by those conventional broadcasters and we are providing them to those broadcasters and incurring the costs for transport.
1970 THE CHAIRPERSON: Okay, Marc, you have a question?
1971 COMMISSIONER PATRONE: Thank you, Mr. Chair, and good morning.
1972 Since this is ultimately about affordability, do you anticipate that BDU rates should by all rights fall in communities where the local station goes dark? Since the consumer is getting less shouldn't they be paying less?
1973 MR. ENGELHART: Well, we have -- to operate a cable system you have to build a network. You have to send a bill. You have to have customer service or representatives to answer the phone.
1974 The costs don't really go down if one channel -- well, first of all, if one channel goes dark I'm sure the cable operator replaces it with something else. I think in Brandon because the service was a CBC affiliate they now bring in CBC from Winnipeg. So customers are still getting, I believe in Brandon from Westman, the same number of channels.
1975 And it is part of the nature of the cable beast that you have a certain number of fixed costs that don't go up and down as you add one or two channels.
1976 COMMISSIONER PATRONE: But ultimately, as a subscriber, say in Windsor, if I'm a Rogers' customer and my local TV station goes dark, I'm not getting what I paid for originally. So shouldn't that be reflected in my bill at the end of the month?
1977 MR. ENGELHART: Well, if you are in Windsor you are actually a Cogeco customer but if -- certainly you know the value comes into the equation but in terms of a cost perspective our costs don't go down. As I say, that channel will be replaced with something else.
1978 COMMISSIONER PATRONE: One last question. I know you spoke at length about packaging, but is it fair to say that current packaging rules and requirements have had the effect of inflating the overall prices that consumers have been paying for their BDU services? Wouldn't flexibility ultimately translate into lower cable bills as Mr. Peladeau suggested yesterday?
1979 MR. BIBIC: Commissioner Patrone, Kevin took a stab at that in responding to Commissioner Menzies which is -- ultimately the conclusion that was drawn from that questioning is that on a pure pick and pay model, or on a model where you have a skinnier basic and then an ability to adopt pick and pay channels over and above the skinnier basic, the customer will end up paying just as much and likely more for fewer channels.
1980 So I think the answer to your question is "no" for all the reasons that Kevin and Natalie explained.
1981 I would also encourage you to look at Figure 6 of Bell's evidence in this proceeding at page 18 where you will see that since 1999 the value adjusted price per channel that we offer has gone down from 54 cents per channel to 23 cents per channel because while prices go up in the absolute, ignoring the value of the bundle discounts, we offer far more value and far more channels for those increments in prices so customers are effectively paying about 23 cents per channel today whereas it was 54 cents 10 years ago.
1982 So the value adjusted price is going down and that's even before taking into account bundled discounts.
1983 COMMISSIONER PATRONE: Overall bills are still going up, is that not fair to say?
1984 MR. BIBIC: Well, there are a number -- there are a number of reasons for that. And when you say that you are of course ignoring the value of the bundled discounts because, as Mr. Crull explained, if you are a triple or quadruple play Bell customer and are obtaining a $15 discount that's bigger than the total price increases that Bell has put into place over nine years.
1985 COMMISSIONER PATRONE: But has the average revenues --
1986 MR. BIBIC: So you can't ignore --
1987 COMMISSIONER PATRONE: -- per unit declined or gone up?
1988 MR. CRULL: The average revenues have in fact gone up but only about 40 percent. Between 35 and 40 percent of the increase in average revenues is because of price increases.
1989 COMMISSIONER PATRONE: Over what span of time, sir?
1990 MR. CRULL: Over -- well, we looked at the last four years.
1991 COMMISSIONER PATRONE: They are up 40 percent?
1992 MR. CRULL: No, what I'm saying is we often talk about average revenue per customer and you are talking about the bills going up and I presume that you are referencing what we call average revenue per user.
1993 COMMISSIONER PATRONE: Yes.
1994 MR. CRULL: Average revenue per user is going up predominantly because customers are choosing to buy more.
1995 COMMISSIONER PATRONE: But not choosing to buy more as a result of being --
1996 MR. CRULL: Of more availability of more choice, of more variety, of more innovation --
1997 COMMISSIONER PATRONE: But they told us that they have been directed to certain packages. So they are forced to buy into packages that they might not necessarily do so.
1998 MR. CRULL: You can add --
1999 COMMISSIONER PATRONE: So my question stands. Wouldn't the prices fall if people had more flexibility?
2000 MR. CRULL: I don't believe they would at all.
2001 COMMISSIONER PATRONE: Okay.
2002 MR. CRULL: We heard from a customer yesterday that he was interested in only the OTAs and then the Space Channel.
2003 And I have seen a number of studies because of distribution over the internet, when you have entire pick and pay where individual users, the economics for the content creator would have to charge that individual $10, $15 because small audiences don't fund the creation of that special interest content.
2004 So the system hasn't created a price for the Space Channel on a one-off basis and I think it would be prohibitive.
2005 COMMISSIONER PATRONE: Thank you for your answer.
2006 THE CHAIRPERSON: Thank you.
2007 Before I let you go, Mr. Lind, we didn't have a very good discussion and therefore let me give it one more try because I'm starting with what we are here for. We are here to make a report to the Minister.
2008 The Order in Council says:
"...hold hearings on the implications and the advisability of ... compensation for the value of the [local system regime] local television signal regime and to issue to the Government, as soon as [possible] ... report ... taking into account:
(a) the comments of the general public on the impact of such a measure on consumers, and in particular, the impact on affordable access to a variety of local and regional ... information and public affairs programming;..."
2009 THE CHAIRPERSON: So I started on the assumption that you, as you told me, you think you are already fully compensating local signals. They believe there is some additional amount. That's their position. I said looking at the specialty channels we don't have the other compensation that these guys have. It's going to be a small amount and for argument's sake I said it's 25 looking at those.
2010 In Toronto, by my count, there are five stations who qualify who have got 14 hours. We have got City, CTV, CanWest, CBC and Sun. So that's what I was trying to put in front of you.
2011 If we look at what the Order in Council says, look at local stations that have local programming, et cetera, if you are in negotiations we don't know where it will come out, but where it struck me that it would come out to an amount less than you posit.
2012 Now, I may be right; I may be wrong. And this is what we are really trying to -- we are all trying to make sure that people continue watching TV and don't go somewhere else. The issue becomes is this affordable or not?
2013 Because I understand you are profitable. I don't think you should be punished because of being profitable. If it's an increased incurred cost, of course you are going to put it on, pass it on. The question is what is this amount that you are going to pass on?
2014 And I am trying to get some fix on it, and that's what I was posing to the consumers yesterday. It struck me it will be somewhere probably in that area of specialty channels that I cited and the average is more or less 25 cents.
2015 So you obviously disagree. So tell me where in my approach I'm making a mistake.
2016 MR. LIND: Well, first of all, I think the Order in Council -- I interpret that as perhaps somewhat differently than you do. I see that the Order in Council urges you to look at costs and to keep costs down, not to inflate costs or to raise costs. So that's something that I feel very strongly about.
2017 Secondly, Toronto, you say five. I think it's about 10 but it may be seven, eight, nine, I don't know. But on to your definition because you should not ignore Sun TV or OMNI or some of the others, I think 25 to 50 cents, to your suggestion, times eight or 10 is still a lot of money.
2018 And it's a lot of money -- I keep coming back to this -- and not getting anything more. They are not getting anything more than they got yesterday only now they are paying two or three dollars extra. I can't see how you can defend that position. You cannot do it.
2019 I can see how you can defend LPIF for keeping local stations open. I can see that because I know that small stations rely on that money to keep themselves alive now. I don't know whether it will ever be discontinued. I just don't know.
2020 But for healthy urban stations such as operate in Toronto and you are going to charge customers another two or three dollars a month, I don't get it. I just don't get it.
2021 THE CHAIRPERSON: I appreciate the very honest and straightforward answer. Let me just follow up with one question.
2022 The one thing that everybody says, you included, is that conventional TV is blowing their brains out in Hollywood and you have got to restrain it. One of the ways of restraining -- and they just say we do it because we make some money on U.S. programming and that allows us to finance the Canadian.
2023 If, as a result of the group hearing, we impose upon them both Canadian programming expenditure for the conventional and, let's assume for argument's sake, also minimum spend on drama and documentary which the artistic groups very much want, under those circumstances do you feel one could then justify the increased cost?
2024 MR. LIND: No, no.
2025 THE CHAIRPERSON: Thank you. That's all.
2026 We will take a 10-minute break.
--- Upon recessing at 1054
--- Upon resuming at 1106
2027 LE PRÉSIDENT : O.K., commençons, Madame la Secrétaire.
2028 THE SECRETARY: Thank you, Mr. Chairman.
2029 Appearing as a panel for the "Stop the TV Tax" campaign are:
2030 - Harvey Oberfeld, appearing via videoconference from Vancouver;
2031 - Rosalie Persichini, appearing via videoconference from Toronto;
2032 - Marjorie Lemieux;
2033 - Lydia Luckevich;
2034 - Nicole Brunet; and
2035 - Ruben Boiardi.
2036 We will hear each presentation, which will then be followed by questions by the Commissioners.
2037 We will begin with the presentation from Harvey Oberfeld.
2038 Mr. Oberfeld, you have seven minutes for your presentation. Thank you.
2039 MR. OBERFELD: Thank you very much.
2040 Mr. Chairman, Members of the Commission, I realize you already have a huge amount of stats and financial figures at your disposal, so I would like to talk to you about something I feel I do know a lot about: broadcast quality.
2041 I am deeply concerned about the future of local television in Canada.
2042 Although a print journalist originally, many years ago I was made an offer I couldn't refuse by a local television station in Vancouver, British Columbia Television.
2043 I was privileged to be able to report for the BCTV News Hour, one of the highest-rated local newscasts in all of North America, for 26 years, including eight years in Ottawa covering Parliament Hill, and yes, the CRTC as well.
2044 I believe in local television. I have profited from local television and since my retirement three years ago, I have fought to defend local television through my blog "Keeping it real."
2045 That is why I have been absolutely distressed by the multimillion-dollar campaign of the television networks to convince Canadians and you that their goal and these hearings are about saving local television.
2046 Mr. Chairman, I was there. I saw for years before my retirement how the conglomerates that took control of Canada's private television stations did their hatchet jobs on local television, in particular local television news, and this was when they were still racking up profits in the hundreds of millions of dollars.
2047 I personally witnessed the results of the bean-counter philosophy: shallower news, chasing police, fire and ambulance stories, press conferences, puff pieces, and doing much less in the way of in-depth research of major local issues or investigative series.
2048 Some networks have been unabashed in their cuts of local news programming.
2049 Others may have told you they are spending more but neglected to tell you they were bulking up their Canadian content at the same time with morning news, noon news, early news, six o'clock news and late news, all using much the same shallower stories over and over. So I suspect on a cost-per-hour- airtime basis, their news programs, as Canadian content, actually cost them a lot less, not more.
2050 At our station we began to use old videos so often we were told to drop the video file supers on our stories, thereby making old footage appear new again.
2051 There is a phrase often heard in Quebec: Je me souviens. I remember. Well, Members of the Commission, je me souviens.
2052 Je me souviens when CFCF Montréal had its own reporter and cameraman in Ottawa doing stories of particular interest to Montreal viewers.
2053 Je me souviens when CFTO Toronto had its own reporter and cameraman in Ottawa covering issues specifically important to Ontario viewers.
2054 Je me souviens when CJOH Ottawa had a staff of hundreds producing all kinds of vibrant local programming, not just being a shadow of what it once was.
2055 And je me souviens when BCTV, now Canwest Global Vancouver, had its own reporter and crew in Ottawa covering important B.C. issues.
2056 But coverage of local, regional or provincial issues as they are dealt with in our nation's capital is now almost nonexistent.
2057 At some stations, local news has been virtually eliminated, in others, reduced to a few reporters producing instant stories requiring little journalistic initiative. It's cheap, it's shallow and it shows. And, Commissioners, you have been letting them get away with it.
2058 Incredibly, I understand some networks would like to slash or eliminate even more local television news content or shows. How does that save local TV?
2059 And in B.C., I am very afraid of what will happen after the Olympics are over.
2060 So don't believe private TV's claims that they want a share of cable company revenues to save local television.
2061 I guess it would have been too embarrassing for them to run ads saying that what they really want is a bailout from bad investments, the poor economy and rising costs of buying foreign programs.
2062 Now, it is true cable companies pay to carry American channels but I submit to you, there is little benefit to American TV stations in telling their local advertisers they can offer them audience numbers in Canada.
2063 In fact, Canadian networks benefit from simsub, where, as you know, their ads get superimposed on American station broadcasts carried on Canadian cable at the same time.
2064 And Canadian networks already actually benefit to the tune of hundreds of millions of dollars in extra advertising revenues just because of the huge audiences they get when cable companies carry their signals.
2065 Yes, Canada's TV networks are going through difficult times but their specialty channels are still raking in millions in profits. And isn't that the nature of business? To have ups and downs without asking their clients for subsidies.
2066 Apart from Canada's major TV networks, no other corporate losers, in Canada or the United States, suffering in the economic downturn have had the gall to ask for a permanent bailout that would go on in perpetuity, even when their revenues and their profits return to the hundreds of millions of dollars.
2067 One way or another, anything you allow the private networks to cash in on through a share of cable revenues will come out of the pockets of ordinary Canadians, a permanent taxpayer subsidy to a multimillion-dollar-making private industry. There is just no justification for that.
2068 And without any guarantee that any bailout would be used to support or repair the local television and local news programming they have so devastated over the past decade.
2069 If the cable companies are making too much money, cut their rates or let consumers pick and choose channels they want to watch or drop, not be forced to accept bundled packages, paying for some channels we don't want.
2070 But I urge you to let the television networks take care of their own network financial problems.
2071 And if you do grant them any relief, even temporary relief, I urge you to make sure that the money goes into local television and news to stop the ongoing decline in those vital services for Canadians.
2072 Thank you very much. Merci beaucoup.
2073 THE SECRETARY: Thank you.
2074 We will now hear the presentation of Rosalie Persichini.
2075 You have seven minutes for your presentation. Thank you.
2076 MS PERSICHINI: Good morning, Commissioners. Thank you for the opportunity to appear before you today.
2077 My name is Rosalie Persichini and I have lived in York Region for 37 years. My husband Joe and I founded the Persichini Fitness and Squash Complex in 1975. It is a family business, which today also employs our two daughters.
2078 We have been active in the community for many, many years. Thirty-four years ago, we started the Persichini Easter Seals Run/Walkathon. We teamed up with Jarmane(ph) Cable at the time in Newmarket and promoted and publicized the event on the community television station. This partnership initially with Jarmane and with Rogers as of 1979 has been critical to the success of our local event.
2079 We have gone from the days of black and white coverage to high definition today. The community channel became the driving force behind the promotion of the Run/Walkathon. Rogers TV provides pre-event coverage and has helped fuel and motivate young and old to participate.
2080 We would start the Run/Walkathon from the community television studio and the warm-up. Celebrity welcome and kick-off of the event would be aired live. Our Run/Walkathon was drawing over 1,000 participants and became the largest Run/Walkathon in Canada.
2081 Rogers TV employees became very involved in our event and Aida Blackwell from the station has co-chaired the event for over 30 years. Rogers TV daytime hosts are emcees for the event as well.
2082 For the 25th anniversary of the Easter Seals Run/Walkathon, Rogers TV was a truly active partner from broadcasting the event live and using their trucks and employees to support and keep safe the 3,000 participants. Rogers has had a huge impact on the success of the Run/Walkathon.
2083 Over $3 million has been raised for over 7,000 physically disabled children across Ontario. And beyond just covering the event, Rogers has profiled stories of some of the children and parents that have been helped by the Ontario Easter Seals Society.
2084 Newmarket has had a local carnival for the past 20 years and the carnival has donated a portion of their revenue to the Run/Walkathon and South Lake Regional Health Centre. Rogers does live hits from the carnival and even broadcast live my husband Joe riding the ferris wheel for 12 straight hours to promote the carnival and the Easter Seals event.
2085 For 24 years we have partnered with community TV. When I think of local TV, I think of Rogers TV. They are truly part of our community and cover the events that are important to local residents. I attend many events in York Region and Rogers TV always has a presence.
2086 The community channel is very much the only local TV media in York Region. Rogers has earned the respect of the local mayors, businesses, educators and the general public, as they are on site covering all the stories and providing the key link via community television.
2087 I am here today to say I don't think we should pay more for local TV. We already have wonderful local TV from our cable company. Rogers TV provides local to the ends of York Region.
2088 It is my understanding that Rogers TV is only available on the cable service. I have a real concern that if TV distributors pass through an increase to the basic rate for local TV channels, it could result in consumers deciding to cancel cable service. As a result, our event would lose an important promotional opportunity since we would reach a smaller audience.
2089 Thank you.
2090 THE SECRETARY: Thank you.
2091 We will now hear the presentation of Marjorie Lemieux.
2092 You have seven minutes for your presentation. Thank you.
2093 MS LEMIEUX: Good morning, ladies and gentlemen. My name is Marjorie and I want to stop the TV tax. I am very glad to be here today.
2094 I subscribe to Rogers Cable and I have the VIP package. I pay $80 a month, which includes two digital boxes and all the channels I get. Without the digital box, I would only get channels 1 to 44. I don't have a flat screen or any other kind of TV with high definition because I feel it would be a waste of money that I do not have.
2095 These are the types of programs I like to watch, mostly comedy shows. Here are the show names and channels I watch them on.
2096 I watch Global once in a while. I watch "Ellen DeGeneres" talk show on channel 6A. I watch soap operas on channel 13 WWJ, also "The Bold and the Beautiful" on that same channel. Channel 16, OMNI.1, I watch "Two and a Half Men." Channel 21 is The Weather Network. I watch it in the morning and the evening for the local weather. Channel 27, I watch poker games. Channel 31, I watch "American Justice."
2097 Channel 33, "Larry King"; 34, "Eighteen Kids and Growing," "Jon and Kate Plus Eight" and "American Shopper"; 43, "Reba" and "According to Jim"; 47, "Frasier" and "Cheers"; 54 is "Seinfeld" and "The Seventies Show"; 55 is "Ice Road Truckers"; 74 and 75 are poker games; 100, I watch "Survivor" and soap operas; 284, I watch "Fraggle Rock"; 285 and 286 are stand-up comedians; 287 is game shows; again, 288 is poker; 292 is "Andy Griffith" and "Phil Silvers"; 293 is "Cosby" and "Roseanne"; 719 is "Jukebox Oldies"; 720 is "Flashback Seventies"; 721 is "Remember the Eighties"; 722, "Classic Rock"; 730 is "Hot Country"; 731 is "Country Classics"; and 915, my favourite radio station is Majic 100.
2098 The programs that I do not watch is the news. Why? Because I feel it is very depressing because there is usually very little good news.
2099 These are 14 of my favourite channels and programs: 287, game shows; 27, 74 and 75 are poker games; 16, 43, 54 and 47 are comedy; 33, 6 and 7 are talk shows; 34 is family shows; 100 for shows that I sometimes miss; and 31 for "True Stories."
2100 I don't watch these channels. The channels I don't watch, because, like I said, the news is too depressing, and those channels are Global, CTV, CBS and CBC.
2101 My fiancé loves to watch all the same shows as me, except 27, 74, 75, 287 and 288, because he doesn't like poker or any game shows.
2102 I watch poker and other game shows also on 287 and I don't like the idea of the new TV tax because I am on a disability pension. I don't watch those channels that they want my money for.
2103 The channels that want my money already have lots of money on their own. Those channels have commercials and there are way too many of them. The people that want more money will probably waste it on stuff that I don't want.
2104 If my cable bill goes up, this is what I would do:
2105 - disconnect my cable and watch more TV shows on the Internet;
2106 - pay the increase and do without something else -- I would have to do without food that I am used to having.
2107 If I could only get a few channels, then these are the channels I would want. I would pick a few of my favourite channels.
2108 If I had to cut back, these are the first channels I would drop: the music channels, the Majic 100 radio show; "American Justice"; channel 33; channel 21, I can get the weekly local weather or daily weather from the Internet; the History Channel, channel 55; the next channel I would drop is channel 100, Rogers on Demand -- the shows that I have watched on there are "The Young and the Restless" and "Survivor" and also "Ruby" and a few others I cannot remember; also, channel 288 I would drop with my game shows.
2109 I want to thank you all for allowing me to be here today and I hope something or everything I said today will stop the TV tax.
2110 THE SECRETARY: Thank you.
2111 We will now hear the presentation of Lydia Luckevich.
2112 You have seven minutes for your presentation.
2113 MS LUCKEVICH: Good morning. My name is Lydia Luckevich and I would like to thank the Commission for allowing me to speak today.
2114 I am a Rogers Cable subscriber in Toronto. In the past I have also been a Bell ExpressVu subscriber at a vacation property.
2115 I am going to have four parts to my presentation. First, I am going to describe the current viewing habits in my household. Secondly, I will discuss the cost of cable and its value to me and my family. Thirdly, I will address the provision of television services in general. Fourthly, I want to address the proposed compensation tax.
2116 First, I am going to describe the current viewing habits in my household.
2117 Although I have many channels available for viewing -- I do have an HD digital box -- my family and I predominantly watch PBS, TSN, Sportsnet and other cable only stations such as Turner Classic Movies, the History Station, American Movie Classics, Discovery, Rogers 10 -- we are big fans of Rogers 10, BBC World and CNN.
2118 Periodically we will watch American shows like the prime time over air network shows. These shows are sometimes simultaneously broadcast by Canadian stations.
2119 The local content I watch is Rogers 10, mainly curling -- I am a big curling fan, it's on right now in case anybody knows -- and "Goldhawk." Rogers 10 actually has more local content of interest to me than CBC, CTV, Global or CHCH, all of which I rarely, if ever, watch.
2120 Secondly, I want to address the cost of my cable television services.
2121 I currently receive and pay for many stations that I do not watch, including local stations. Even though I only watch a limited number of stations, I want to maintain my cable subscription because most of the stations I do watch are not available over air.
2122 I should not be forced to pay more than I do now to support stations I do not watch. I will not be receiving anymore stations and I do not watch the stations that will be compensated from the proposed tax.
2123 On a side note, I like American advertising. I prefer watching American shows on the American station with American advertising. American advertisers are paying for the broadcast time and indirectly program development costs. I feel strongly that their advertisements, which are often relevant in Canada, should remain a part of the broadcast.
2124 Canadian viewers should have a choice of watching the program on the American station with American advertising or on the Canadian station with Canadian advertising. This would be the case if the stations were being received over air.
2125 The third point in my discussion is television services in general.
2126 Television broadcasting evolved with stations broadcasting signals paid for by advertisers. These signals reached a limited number of viewers, namely, those with antennas in the broadcast range.
2127 The provision of broadcast through a cable or satellite infrastructure, with significant investment and maintenance fees by the cable and satellite companies, is essentially a service provided to those unable or unwilling to receive signals through an antenna.
2128 In effect, Rogers provides television services to viewers who would be unable to get television because they do not have access to an antenna. And there are housing communities that indeed do not even allow antennas to be put on houses and in apartment buildings and condos and things like that. So in these instances, Rogers is effectively the antenna for people who are unable to have one.
2129 The over air stations should be available to all who want them, regardless of their ability to have an antenna.
2130 Finally, I will address the proposed fees.
2131 The proposed fees effectively tax those who use cable and satellite services to support stations that are unable to support themselves through advertising. It's a regressive tax because all income brackets, including those that pay no tax, will be forced to pay the tax through increased monthly cable bills.
2132 If the government wants to support Canadian TV, it should compensate all stations, including the over-air stations, Rogers Cable 10 and the cable only stations that provide content to Canadians. This compensation should come out of general revenue, not out of a tax on cable and satellite bills.
2133 So this concludes my presentation. Thank you for providing me the opportunity to address this panel. I appreciate it and hope that you will consider my views in making your decision.
2134 THE SECRETARY: Thank you.
2135 Nous poursuivrons maintenant avec Nicole Brunet.
2136 Vous disposez de sept minutes pour votre présentation.
2137 MME BRUNET : Monsieur le Président et Membres du Conseil, bonjour.
2138 Je vous soumets respectueusement que je suis en désaccord que des frais de redevances soient remis aux télédiffuseurs généralistes. Ces mêmes frais, lesquels seront assumés ultérieurement par les consommateurs, me paraissent tout simplement être une autre taxe déguisée que nous devrons absorber.
2139 Comme la plupart des citoyens canadiens, j'ai lu les journaux au sujet d'un nouveau régime d'indemnisation, regardé les annonces publicitaires, consulté l'Internet et discuté avec des amis, et malgré cela, je demeure perplexe et confuse et me pose plusieurs questions.
2140 Le gouvernement et, par extension, les consommateurs ne financent-ils pas déjà les télédiffuseurs, Radio-Canada, entre autres. Qu'est-ce qui justifie l'adoption de ce régime d'indemnisation à ce moment-ci? Les services offerts aux consommateurs en seront-ils réellement améliorés?
2141 Je suis sous l'impression que nos impôts contribuent déjà au financement des télédiffuseurs, entre autres, par l'entremise de subventions et de crédits d'impôt.
2142 De plus, je n'ai vu nulle part d'engagement de la part des télédiffuseurs, en contrepartie de l'indemnisation réclamée, de bonifier ou d'augmenter la programmation canadienne ou locale que l'on dit en péril.
2143 Les consommateurs doivent-ils se satisfaire de payer, sans espérer un retour sur investissement?
2144 Est-ce que la survie des télédiffuseurs généralistes dans les années à venir sera assurée par ces frais de redevances?
2145 Une révision de la gestion de leurs ressources existantes ne saurait-elle mieux redresser la problématique du moment et assurer un avenir plus prometteur?
2146 Si j'en crois mes lectures, des sommes importantes, soit près de 740 millions de dollars, sont dépensées chaque année par les télédiffuseurs généralistes pour acquérir des émissions étrangères. Si c'est le cas, je ne doute pas qu'en concentrant leurs énergies sur du contenu canadien, ils pourraient économiser substantiellement. Peut-être ainsi n'auraient-ils pas besoin de frais de redevances.
2147 Quant au contenu local canadien, n'est-il pas tributaire des choix de contenus, au quotidien, déterminés par chacun des télédiffuseurs? Les programmations existantes reflètent-elles vraiment le choix d'une société et de sa culture ou de la facilité?
2148 Les télédiffuseurs font consciemment le choix d'investir en programmation étrangère plutôt qu'en programmation originale canadienne. C'est, bien sûr, plus facile pour eux. Pourtant, cela reflète si peu notre culture.
2149 Si le choix de programmation canadienne était plus grand et plus varié, peut-être que celle-ci trouverait prenant auprès d'un plus grand nombre de consommateurs canadiens.
2150 En proposant ce régime d'imposition, le gouvernement ne rejette-t-il pas le fardeau du problème sur le portefeuille du consommateur, lequel a, lui aussi, à faire face à une économie particulièrement difficile?
2151 En cette période de récession, les temps sont difficiles pour tout le monde, et je crois qu'une récession ne justifie pas la mise sur pied d'une taxe additionnelle pour financer les télédiffuseurs. Nous devons tous, chacun de nous, nous adapter à une évolution constante et rapide, toujours bouleversante, et s'appuyer sur une créativité nouvelle.
2152 Les télédiffuseurs n'ont-ils pas, eux aussi, à remodeler leur façon de faire, à se réinventer, et non pas à se fier à l'apport financier d'un consommateur déjà bien imposé?
2153 Je reconnais que le contexte a changé avec l'arrivée des chaînes spécialisées et d'Internet. J'ai confiance, toutefois, que les télédiffuseurs ont les outils et les ressources pour revoir eux-mêmes leur stratégie. Une industrie qui ne se renouvelle pas s'éteint.
2154 En conclusion, Monsieur le Président, d'accorder l'imposition de ces frais réglera-t-il vraiment les problèmes profonds des télédiffuseurs?
2155 Le consommateur aura-t-il à craindre le retour successif à cette forme de taxage à l'avenir et voir sa facture périodiquement se gonfler?
2156 Je vous remercie de votre attention.
2157 LA SECRÉTAIRE : Merci beaucoup.
2158 We will now hear the presentation of Mr. Ruben Boiardi. You have seven minutes for your presentation.
2159 MR. BOIARDI: Thank you.
2160 Mr. Chairman, I am here to voice my opposition to any regulatory measure, which would not only require me to pay for channels that I can already get for free over the air, but also oblige me to subscribe to channels that are of little or no value to me.
2161 The following comments that I am going to make don't apply to the CBC or Société Radio-Canada. I consider both of them to be a true public trust and the standard bearers of our country's identity.
2162 Currently, the debate is framed as a broadcaster versus cable and satellite, with the broadcasters telling Canadians that since the cable/satellite companies make money they should absorb the additional costs. This clouds the issue of who will ultimately pay. I have no doubt that the costs incurred by the cable and satellite companies will be passed onto the consumer. And in today's economy, any price increase is significant.
2163 For example, my parents immigrated to Canada and learned to speak French, but not English. They are retired on a fixed government pension income. They live on a tight budget and every single week they have to make choices about what to buy and what to leave on the shelf. Any extra cost for their cable means, for them, they have fewer choices to make and less money to go for necessities.
2164 In order for them to manager their costs, they are going to have to drop specialty channels in their language in return for channels they already receive, but do not watch in whose language they do not even understand. From their point of view, they will be paying as much as they do now or even more, but they will be getting less for their fixed-income dollar.
2165 This is not a consumer-friendly scenario.
2166 From my understanding, conventional broadcasters like CTV and Global have the mission to produce local television. However, local stations have been suffering cuts over the last years. In fact, last year Global cancelled This Morning Live and just this year CFCF cancelled First News, a local show in favour of Canada AM.
2167 We no longer have televised local morning news in English in Montreal and probably not in Quebec.
2168 As another example of the lack of local or regional programming, we have had no coverage of the provincial elections -- municipal elections that were held this past November by any private broadcaster. Only Société Radio-Canada provided full live coverage of the elections.
2169 What is even more striking is that broadcasters spend over 60 per cent of their expenditures on American programming and have been increasingly cutting back on local programming. And they are not even willing to guarantee us that they will spend more on local programming. This makes me wonder. If local TV matters so much, why haven't the broadcasters acted accordingly? Does it only matter if somebody else is paying for it?
2170 The broadcasters state the business model is broken. Advertising revenues are down. And rather than looking for a solution that would generate new revenue streams through innovation and relevant Canadian content, they look to the consumer and taxpayer as the ultimate cash cow. Because make no mistake, while they say they don't want the consumers to pay a cent of it, they know perfectly well what is going to happen. And the broadcasters themselves refuse to fund their local stations through the profits of the specialty stations.
2171 Stations at this point have been homogenized to the point where there is practically no difference between let's say CFCF12 in Montreal and CFTO in Toronto. This ongoing homogenization has removed most local programming at the cost of the stations' relevance to their viewership and has served to position broadcasters as content resellers where once they were a source of original local content.
2172 As a consumer and a Canadian, I don't see why we need to prop up the failed business model of a largely import-driven business.
2173 In closing, I would like to thank you very much for this opportunity to be heard and reiterate my opposition to any scheme combining mandatory carriage and fee-for-carriage for Canada's private broadcasting works.
2174 Thank you very much.
2175 THE CHAIRPERSON: Thank you very much for your presentation. We hear loud and clear from you that you do not want what is called a tax. You of course appreciate it is not a tax, it is nothing of the sort, what is before us is a proposal to have the broadcasters negotiate with the conventional companies who are about to pay for their signal.
2176 But let's not get down into technicalities. They key question is, which you all have made clear, that if they make such a negotiation the cost of that will be passed onto you and you don't want to pay for it.
2177 But Mr. Boiardi, you made a point, like all of you, you say at the end of your page, first page, "What is even more striking about this issue, that broadcasters spend over 60 per cent of their expenditures on American programming and have been increasingly cutting back on local programming. And plus, they are not even willing to guarantee us that they will spend more on local programming."
2178 What if, as part of this group licence, which we are going to do next year and this is what we are talking about, we impose upon them stringent conditions for more local programming, more Canadian content? Because we are charged to ensure that the broadcasting system is overwhelmingly Canadian.
2179 And we have heard from all the broadcasters, they would love to do that, but effectively it costs a lot of money and the return is very limited because of the small audience in Canada who are interested in it. And so they buy American content and use that to subsidize Canadian content.
2180 Now, if they did get more for their signal on condition that they use it to produce Canadian content and local content, would you find that more acceptable or not?
2181 MR. BOIARDI: I don't believe that I have any trust in local broadcasters anymore. I have seen too many news shows go away, I have seen too much local content go away. It has gotten to the point practically of no return from my perspective. They are no longer relevant on my dial.
2182 THE CHAIRPERSON: Okay. What about the other five of you, any comment?
2183 MS LUCKEVICH: Yes --
2184 MR. OBERFELD: Well, speaking in Vancouver, if I could. The problem is when you say local content it has to be quality local content or not one is going to watch it.
2185 The quality of what goes over the airwaves right across Canada now is local news. I mean, they have really cut it back, there is no research, there is very little travel. In the last provincial election here they actually used a pool camera for much of the election coverage. There is no competition.
2186 And if they give Canadians a lousy product, they are not going to watch. If they give Canadians a quality product, Canadians will watch. And that is my concern that, you know, how are we going to control not just the fact that they make more hours available, but that it is quality that Canadians will want to watch?
2187 THE CHAIRPERSON: Okay. Mrs. Luckevich, you had a..?
2188 MS LUCKEVICH: Well, I was just going to say I am not sure how you would define local content. Because I am sure that is a very big box that you could put a lot of different kinds of programming into, and it addresses the quality issue as well. And I don't think you can come up with a definition that would satisfy me that we would be getting value for the money that they would be receiving.
2189 THE CHAIRPERSON: Okay.
2190 Steve, you have some questions?
2191 COMMISSIONER SIMPSON: I do, thank you very much.
2192 This is going to be a very interesting line of questioning, because some of you I think are telling the Commission that you don't see a value in local programming and would just as soon not have it as well as not pay for it. Others are, like Mr. Oberfeld in Vancouver, are saying that there should be a great degree of quality in local programming, and yet quality costs money and, you know, where does that come from?
2193 So my first question is to Mr. Oberfeld and it is on the issue of quality. The broadcast model we are being told is broken and local television is going to be the first thing on the block if there isn't some form of identification of new monies within the system to help pay for the local television.
2194 Now, given that we are being told that networks will close local television, there will be no place for quality improvement. How do these stations get through these dark hours?
2195 MR. OBERFELD: Well, Commissioner Simpson, you talk about the model being broken because of the current -- you know, that they are not making money. They were cutting back when they were making hundreds of millions of dollars in profits, I saw that. They wanted to water down the soup and hoped no one would notice. Well, people did notice.
2196 You know, when you talk about that they spend, CBC spent for the 2006 and 2008 Olympic Games coverage $73 million for Canadian rights. CTV for 2010 and 2012 is spending $153 million U.S. for the Canadian rights. They have money, it is just what they want to spend it on it seems to me is foreign broadcasting, they want to buy more American stuff.
2197 As I say, you talk about the business model being broken, the economy is now coming back, within a year of two the economy -- if the advertising comes back, if the economy is better, why should we in perpetuity give them money? Why would we subsidize? I don't know of any other industry that would come to government and say give us a taxpayer subsidy forever even when we are making millions or hundreds of millions of dollars. That is my concern.
2198 And then there is no guarantee that they would even put it back into improving or preserving local news, which I think is really paramount basically to our nation of keeping it together and telling people what is going on in their local community. That is where the money should be spent.
2199 COMMISSIONER SIMPSON: Following on, still, where would the money come from? Are you say that it wasn't a condition of controlling costs because they were losing money, but it was actually to maximize profitability that they were cutting their content in news and other forms of local programming, is that what you are saying?
2200 MR. OBERFELD: Well, there are a lot of news operations. I mean, I am not privy to their figures, but I will bet you that Canwest-Global Vancouver still makes money the news hand over fist. There are a lot of operations that still make money and their specialty channels make money. And when the economy is better and the advertising returns, they will make money you know.
2201 And they haven't demonstrated to me any way that it is impossible for them to make money in the future. Maybe they should start spending less for American content, putting more money into Canadian content, then we would watch.
2202 And I think the money is there, you know, and if anything, if they get any kind of financial assistance or loan or something, that when they start making money again, and maybe stop doing some of the bad investments they made in over-expanding and investing in all kinds of industries that have nothing to do with television, you know, maybe they should start spending their money more wisely themselves. But they are private industries, if they can't make a go of it, somebody else will be able to.
2203 COMMISSIONER SIMPSON: Thank you very much.
2204 Ms Luckevich and Ms Lemieux, my questions to you are to get a better understanding of why you seem to both feel that there is no real need or value in local programming from your standpoint. You both seem to consume a tremendous amount of U.S. and foreign programming.
2205 So my question is this, where are you getting your local news from? Not just your community information from the cable channel, as you indicated, Ms. Luckevich, but where are you getting your need-to-know stuff if local TV is not going to be there to provide it for you?
2206 MS LEMIEUX: I usually don't want to know what happens on the local news.
2207 COMMISSIONER SIMPSON: I sometimes share that feeling.
2208 MS LEMIEUX: You know, like I said -- you know, that I was reading off the paper, you know, I mean who wants to hear about murder everyday and, you know, people starving or abusing their children. Like, I just can't handle that stuff and that is my reason for not watching the news. I mean, I even stopped reading newspapers for the same reason. That's my answer.
2209 COMMISSIONER SIMPSON: Thank you.
2210 MS LUCKEVICH: I am the opposite, I am a newshound. Actually, my world news I would get from newspapers or from the Guardian Weekly, which probably has the best global perspective on global news. It is probably better -- I don't think there are any really great Canadian newspapers anymore. I think that they have all degenerated somewhat, but they are still pretty good, and I do read newspapers.
2211 Sometimes I will turn on CBC Newsworld, but then I find that it gets very repetitive very very quickly, so I don't really watch it a lot. But that again, is not over air, it is a cable only news station.
2212 And the radio, whenever I am in the car, and I don't want to look like too much of a Rogers booster, but when I am in the car I will put on 680News and I find that that is much more local, that there isn't a lot of international and sometimes even nationwide news on the radio station. And then I will listen to CBC News at 6:00, like on the radio, like the radio news.
2213 So I find that you don't need to go to your local television station to get local news. There are lots of other conduits for that. And for global news, I find that, really, you can't even get the best news from Canadian newspapers, I will go online a lot too. But I find that the best newspaper probably for global news is actually the New York Times is also pretty good and Guardian Weekly.
2214 COMMISSIONER SIMPSON: One more question for both of you. Again on the foreign programming question, the majority of the programs you have mentioned, both of you, are available through the Canadian networks and, therefore, through the local television stations.
2215 Do you make a conscious effort to try and not watch a local station and try and get your American programming requirements from a U.S. station or are you inadvertently watching that local TV station?
2216 MS LEMIEUX: I try to watch the local TV stations. Well, I mean, until this came up, I mean I wanted to support them because I am Canadian, I am not an American, so that is why I was doing it. But, unfortunately, like you know from what I -- from the papers that you have that I wrote, most of the things that I like watching unfortunately are on American stations, they are not on local stations. You know, they come right from here or Toronto or anywhere else in Canada, they come from Las Vegas and things like that.
2217 That is my answer, sir.
2218 COMMISSIONER SIMPSON: Thank you.
2219 MS LUCKEVICH: In our household the television actually isn't on very much. I actually calculated that probably we watch, between my husband and myself, now the kids are gone, we watch probably between 20 and 25 hours a week of television, so it is not very much television, and so it isn't like I will choose one thing or the other.
2220 But it tends to be sports, my husband will watch sports and I will watch a little bit of news and maybe Turner classic movies, I like the old movies, and maybe PBS.
2221 COMMISSIONER SIMPSON: But you are no consciously looking --
2222 MS LUCKEVICH: No, I am not consciously picking the American show over -- like the American station over the Canadian station, it just happens to be -- and I pay a lot for cable now for very limited viewing hours. Like really, the TV is on very little in our household.
2223 COMMISSIONER SIMPSON: So would you agree with the statement that because of the amount of American programming on Canadian networks there is little appreciable difference between them and American networks except for the local news?
2224 MS LUCKEVICH: I can't really answer that, because I don't really watch television enough to actually even say that. I mean, if I had a Canadian station on -- if I put Global on in the morning, like tomorrow morning, and kept it on 24 hours just to see what they had on it, I might actually find that there was more of interest to me than I know now.
2225 But because of my viewing habits, I don't even have the opportunity to say that there is stuff of interest to me. There may very well be. I keep on hearing about that Little Mosque on the Prairie, right, which is I guess a great show that CBC has.
2226 But of course, my TV is never on when it is on and I don't really have appointment television where I wake-up in the morning and I go, oh, that is on today. It will just be that if I happen to be doing something I will turn on the television to see what news is on or what movie is on. And if it is something I want to watch, then I will watch it. Like, it isn't really --
2227 COMMISSIONER SIMPSON: Thank you. I understand.
2228 MS LUCKEVICH: Yes.
2229 COMMISSIONER SIMPSON: I have two more questions. Madam Brunet, you had very eloquently critiqued the local television and Canadian television establishment as saying that perhaps what they needed to do was not seek more money, but to seek pursuit of better quality Canadian programming, and that perhaps would solve their problems.
2230 If they were to do that, do you believe through your own conviction that Canadians would respond by watching more and, therefore, rewarding that station with more audience, more advertising to help them get out of their mess?
2231 MR. BRUNET: I would hope so, I would hope so. When I turn on the television and I look I just, you know, because I often look at one and another, and I see the same program, like it is on American channel, Canadian channel and, you know, I don't really choose if it is the American or I -- I look at it if I want to look at it.
2232 But at times when I look at a program and then I realize, hey, this is a Canadian program, this is good, you know, or I am looking at a movie with a friend and we realize, hey, this has been made in Canada. We have such creators, such journalists, we have the top of everything.
2233 And for sure, American programs are tempting and, you know, they are nice to look at, but I think that -- or, like I said, I am not an expert, so I can't say if it is right or wrong, but my thinking is that if maybe we buy less American and try to produce a little bit more Canadian, of which the quality is there, there is no question about the quality, I think we have maybe even better than.
2234 But there seems to be a concept that it costs so much. It always a matter of dollars, we are always talking about dollar-wise. And like I said, not being an expert, I can't say if this is right or wrong. But it seems to me that maybe if we get over the hurdle that it costs too much to produce Canadian, we might get a little bit more and we might be a little bit more local and we might just vote for ourselves instead of going outside.
2235 Like I said, I am open to outside, I look at American television a lot too and at times I say to myself a bit too much, because I hear, oh God, I missed such a thing that was made here.
2236 And the other matter too is that we seem to be restricting ourselves so much. I am listening to the news and I listen to one channel and then I go to another one, another one and then I realize and read the papers, I am reading and hearing the same thing, almost word to word. Maybe we need more people to give their insights so that we might broaden our, you know, minds.
2237 COMMISSIONER SIMPSON: Thank you.
2238 MR. BRUNET: We seem to be focusing just -- funnelling just in one -- I don't know, in one direction. We seem to be losing so much right now.
2239 COMMISSIONER SIMPSON: Thank you.
2240 MR. BRUNET: And is it really a question of dollars?
2241 COMMISSIONER SIMPSON: Seems to be.
2242 MS BRUNET: Yes.
2243 COMMISSIONER SIMPSON: My last question. Ms Persichini and Mr. Oberfeld and maybe Mr. Bioardi, we are running out of time I would like to say, so if you could be brief but -- succinct, but brilliant.
2244 My question is this. Going back to Ms Persichini's comments about how community television is really satisfying a major portion of her needs. Given that there may be, in the future of Canadian broadcasting, a closure of more stations, would the community stations be sufficient to your needs as a platform for doing more for the community, including news?
2245 MS PERSICHINI: Well yes, of course. I mean, any kind of broadcast, especially local, is important to our fundraising endeavour and to the success of it. Without viewership it would be minimized and, you know, the sad outcome would be that families with disabled children would suffer because of that. And that is my real ultimate concern why I am here today.
2246 MR. OBERFELD: I would say that community television is very important, it does provide access and I watch it. But, you know, community television can't send a crew up if there is an accident or a ferry sinks or there is forest fires or there is something going on, a big issue let's say with the environment.
2247 Community television doesn't have the resources I don't think or the people to do that kind of thing. I mean, what else is Canadian television going to be about, just to take American signals and send them to us? I mean, we don't need -- we could just watch the American channels.
2248 They have a responsibility, I believe, to devote themselves to Canadian content, especially in the news. It saddens me to see that what they have done to the news right across the country and I think they are almost doing it deliberately, setting it up for a fall, because they don't want to put the money into it that would produce good quality Canadian news that people would watch.
2249 Even in small communities people have a right to see what is going on in their community, to investigate what is going on in their community, to do issues, and not just to accidents and chasing ambulances and stuff like that. And community television can't do all that, they just don't have the resources or the -- why do you need Canadian television if you can have community television do it? We can just watch American channels for the rest of it.
2250 MR. BOIARDI: I will be brief. I think that community television in the form as you described it could be a viable alternative. It will have more buy-in from the community, it will be produced by the community in someway. You might have more local interest and actually get more local coverage, but it will not be the same level of journalism that we have come to expect.
2251 Thank you.
2252 COMMISSIONER SIMPSON: Thank you.
2253 Those are my questions. Thank you.
2254 THE CHAIRPERSON: Thank you.
2256 CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.
2257 Good morning, almost good afternoon for some of us here in Ottawa. Thank you very much first of all for all of you, for taking time out from your personal schedule, for being here with us today.
2258 There are a few things I would like to touch on and the first one is going to be the viewing in the French market.
2259 Donc, Madame Brunet et Monsieur Boiardi, je vais compter un petit peu sur votre expérience. Étant donné que l'on doit donner un rapport au ministre en ce qui concerne l'affordabilité du service et donc, ce qui inclus la valeur du service, j'aimerais avoir vos commentaires, parce que tous les deux, vous avez avancé le même argument, à l'effet que beaucoup de dépenses étaient faites pour des programmes étrangers, principalement américains, et que c'était une des raisons probablement, selon vous, pour laquelle certains réseaux avaient des difficultés financières.
2260 Mais selon votre expérience de téléspectateurs des réseaux francophones, est-ce que vous estimez que le problème ou que la situation est aussi aiguë dans le marché francophone? Madame Brunet.
2261 MME BRUNET : Je pressens que oui. Je crois que oui. Depuis quelques années, je pense qu'il y a un petit peu plus d'intérêt, mais c'est comme si on ne fait pas assez de promotion. C'est comme si c'est connu, puis ce ne l'est pas. C'est comme... comment je dirais ça?
2262 On fait beaucoup de promotion pour ce qui est de la programmation américaine, des programmes américains, et puis, je ne sais pas, moi, si on parle de quelque chose qui vient de chez les Inuit ou quoi que ce soit, on ne l'annonce pas, ça, on ne dit rien de ça. C'est comme si les gens dans le local doivent travailler deux fois plus fort que les autres.
2263 CONSEILLÈRE LAMARRE : Et vous, en tant que téléspectatrice...
2264 MME BRUNET : Oui.
2265 CONSEILLÈRE LAMARRE : ...quand vous syntonisez des réseaux francophones, qu'est-ce que vous recherchez? À quoi est-ce que vous attachez de la valeur dans ce que vous voyez?
2266 MME BRUNET : Ce que moi, je recherche, habituellement, c'est d'apprendre quelque chose de nouveau, de voir quelque chose que je n'ai pas vue. Mais comme je vous dis, les séries américaines, je les écoute aussi.
2267 Mais, disons, pour ce qui est des chaînes françaises, en tout cas, je cherche souvent des reportages, découvertes ou quoi que ce soit, beaucoup l'information. J'écoute les nouvelles autant en français qu'en anglais. Mais c'est surtout d'apprendre quelque chose de nouveau, que ça ouvre un petit peu mon univers sur... disons que je ne suis pas forte, forte sur les jeux puis ces choses-là.
2268 Mais moi, mon expérience, c'est ça. C'est de vouloir entendre des commentaires, de me faire nourrir de quelque chose.
2269 CONSEILLÈRE LAMARRE : Monsieur Boiardi?
2270 M. BOIARDI : Personnellement, je ne suis pas grand consommateur de télévision en français. Cependant, mes parents écoutent ça, et pour eux autres, je pense qu'ils sont très satisfaits de ce qu'ils reçoivent. Je crois que les enjeux sont différents.
2271 CONSEILLÈRE LAMARRE : Et dans le marché francophone, Vidéotron a mis de l'avant la position selon laquelle ils estimaient que c'était possible de payer des redevances aux télés généralistes en faisant un rééquilibrage vis-à-vis des stations spécialisées.
2272 Est-ce que vous estimez, de votre point de vue, que ça serait une façon valable d'approcher le problème?
2273 M. BOIARDI : Oui. Short and sweet.
2274 CONSEILLÈRE LAMARRE : O.K.
2275 And I have a more general question for everybody because a theme that seems to be coming out of all of your presentations is that you would rather have more control over the choice of channels that you select and that you pay for.
2276 Did I read that correctly? And maybe you would like to add to that.
2277 So I am going to start from West to East. I am going to start in Vancouver for a first answer.
2278 MR. OBERFELD: Well, there are many channels, Commissioner Lamarre, that I wouldn't necessarily want to drop because I watch a whole plethora of them, but, you know, there are all kinds of rules here that make Canadians from West to East watch and accept all kinds of channels they may not want to watch.
2279 So if you have to pay for them, anytime you ask people to pay for something, you should give them the choice not to have it. I mean it's just a basic democratic principle.
2280 I would certainly say that, that if you are going to give them, the private networks especially -- I mean I can understand why you might have for political reasons or social reasons, let's say, Radio-Canada disponible ici à Vancouver s'il y a des téléspectateurs qui veulent la regarder.
2281 But generally speaking, for private television networks, if they want to charge us for the right to see it, we should have the right to say no. It's a very simple thing.
2282 COMMISSIONER LAMARRE: Thank you.
2283 Ms Persichini? Sorry, did I say your name right?
2284 MS PERSICHINI: Yes. Yes. Of course, a choice of cable or TV or national or international is a personal choice. I think the issue is the extra taxing or charges that we are discussing today and I just have this feeling that for many viewers, it may just be the proverbial straw that broke the camel's back. I mean enough is enough. That's the way I see it.
2285 COMMISSIONER LAMARRE: Ms Lemieux?
2286 MS LEMIEUX: One of the game channels that I watch, I have to pay extra for if I want it. It's not included in any package, it comes separate. I -- the train of thought is gone.
2287 But I just -- you know, I'm agreeing with what other people are saying, that we should be able to choose just the channels we want and just pay for those.
2288 Like I've got channels, I mean in the 200s, I mean all the way to 900s, but I don't have a clue how many of those I get and I know that most of them I don't even watch. And like I said, my cable bill is $80-plus every month.
2289 COMMISSIONER LAMARRE: For cable only?
2290 MS LEMIEUX: Yes.
2291 CONSEILLÈRE LAMARRE : Merci.
2292 Ms Luckevich?
2293 MS LUCKEVICH: Well, I think earlier when someone -- in the previous panel, they said that nobody wants just basic cable, that they offer these barebones cable packages and almost nobody subscribes to them. I'm a perfect example of that because the stations I watch are higher up on the dial.
2294 Now, do I resent having to pay for stations I don't watch? Well, I do a little bit but I also think that when I have relatives that come to visit or when my father comes over and somebody else wants to watch those other stations, I like having them there, because it's not only me all the time in my house using the television.
2295 So I think that I would probably, even if I was given a choice, say, well, I don't need those stations, I do not have to pay for them, I think I would probably keep them available if I thought I was getting value for money.
2296 Right now, I think I'm probably paying more for my cable than I'm actually using but I think that if I was given value for money, I would probably still want those local stations.
2297 COMMISSIONER LAMARRE: But do you feel you should have the choice, let's say, to be able to make your own package, let's say?
2298 MS LUCKEVICH: You know what, I'm a Canadian, I'm used to people telling me all these rules.
2299 MS LUCKEVICH: I have to watch Canadian commercials on American stations. I mean, my whole life, right, I have all these -- you know, I have to have TFO, I have to have, you know. So, you know what, I'm used to it. You know, Air Canada has to make the announcement in French and English. So we're just so used to it. So, you know, I don't really resent it because I'm used to it.
2300 And so I think that I'm quite accepting of the fact that --
2301 COMMISSIONER LAMARRE: There's a minimum?
2302 MS LUCKEVICH: Yes. Yes, that I will be forced to pay for things I do not watch because that's the Canadian way.
2303 CONSEILLÈRE LAMARRE : Madame Brunet?
2304 MME BRUNET : J'agrée dans son sens pas mal. Je me rappelle quand j'ai eu à choisir mon package avec Vidéotron, la personne m'a présenté les... je pense qu'il y en avait trois à ce moment-là. Puis, je ne voulais pas, pour commencer, avoir 100-150 canaux. Je me dis toujours, qui est-ce qui regarde 150 canaux, même si t'es branché 24 heures sur 24?
2305 Le choix que j'ai fait, j'ai fait le choix le plus économique pour moi. Puis là, je disais, oui, mais j'aurais aimé celui-là. Mais non, si tu veux celui-là, il faut que tu ailles dans le deuxième ou dans le troisième, et, naturellement, les frais.
2306 Alors, la personne me disait : Mais regardez, vous êtes chanceuse, vous avez... tous ceux que vous n'avez pas nommés là -- les quelques-uns que je disais, oui, celui-là, celui-là, celui-là, je le veux dans mon package -- regardez, c'est gratuit, vous avez ça gratuitement.
2307 Alors, j'ai dit : Gratuitement, non. Je suis désolée, ça doit être dans le coût. Gratuitement, je suis assez sceptique sur le gratuit. Mais en plus, vous avez des rabais quand vous prenez trois services, et caetera.
2308 C'est comme si on nous fait une faveur, qu'on est toujours en train de nous donner des cadeaux, mais en réalité, disons que ce n'est pas tout à fait transparent. On est vendu beaucoup de choses, et puis, on s'habitue, comme madame a dit, très bien. On est habitué à dire : Ah, O.K., donne-le-moi, t'sais, je vais le prendre.
2309 Et puis, c'est peut-être une des première fois qu'on peut dire, en tout cas, ouvertement aux parties intéressées, et non chialer dans l'entourage et à tout le monde et propos, de dire, non, on aimerait ça pouvoir, effectivement, choisir exactement ce que l'on veut, et on aimerait payer pour qu'est-ce qu'on choisit.
2310 Alors, pas tout le... disons, on nous demande... aujourd'hui, on nous demande tellement d'investir de notre poche, et on est dans une situation économique où on est obligé de réfléchir en quoi on investit. Alors, oui, choisir.
2311 CONSEILLÈRE LAMARRE : O.K. Et juste pour faire une précision là, votre abonnement avec Vidéotron, c'est au câble analogique ou au câble numérique?
2312 MME BRUNET : C'est numérique.
2313 CONSEILLÈRE LAMARRE : C'est numérique?
2314 MME BRUNET : Oui.
2315 CONSEILLÈRE LAMARRE : Bon. Alors, vous devriez peut-être les rappeler parce qu'on a pu comprendre cette semaine qu'il y avait un petit peu de flexibilité dans ce qu'ils offraient.
2316 MME BRUNET : J'entendais ça tantôt. C'est ce que je me suis dit, il faut que je revois.
2317 COMMISSIONER LAMARRE: And my last question is for Ms Lemieux. I did get your point that you don't like to watch or read about local depressing news.
2318 So it makes me wonder, who do you rely on to get necessary emergency information? Like if it were environmental or weather, I'm assuming it would be The Weather Channel since you mentioned it's one of the channels that you rely on. And you feel that's enough for you?
2319 MS LEMIEUX: No, I hear things from my daughter and I get information from my mother. Even though I don't want to hear it, I let them tell me, you know. But that's usually how I find out because I used to, you know, enjoy reading the paper and it just got to a point where I said, no, I'm not going to read the paper and I don't watch the news.
2320 I mean the point is, the reason I use the word "depressing" is because I suffer from depression and sometimes it can really put a load on me that I'd rather not have.
2321 COMMISSIONER LAMARRE: Thank you. Thank you, that's all.
2322 MS LEMIEUX: Thank you.
2323 THE CHAIRPERSON: Okay, those are all our questions. Thank you very much. I appreciate your coming and making the effort to come and see us.
2324 We will take an hour break, Madame la Secrétaire, and we will resume at 1:15. Thank you.
--- Upon recessing at 1212
--- Upon resuming at 1323
2325 THE CHAIRPERSON: Okay. Commençons.
2326 THE SECRETARY: Thank you, Mr. Chairman.
2327 We would now invite Corus Entertainment and Astral Media to appear as a panel.
2328 We will start with Corus Entertainment. Appearing for Corus is Mr. Maavara and Sylvie Courtemanche.
2329 You have 10 minutes to make your presentation.
2330 Thank you.
2331 MR. MAAVARA: Thank you.
2332 Good afternoon, Mr. Chairman and Members of the Commission.
2333 My name is Gary Maavara and I am Vice President and General Counsel of Corus. With me today is Sylvie Courtemanche, who is our Vice President of Government Relations.
2334 Corus appreciates the opportunity to take part in this proceeding. In our written submission Corus made over a dozen recommendations which we believe could help the local stations and the overall regulated Canadian system as a whole. We won't repeat these in these brief comments.
2335 Similarly, at the group licensing hearing just weeks ago we also suggested a regulatory framework that would be principles-based, not rules-based. We won't review these comments either, but express the hope that the Commission will carefully assessed the potential impact of each of our recommendations.
2336 We would like to focus on the key issues defined by the Commission in the Broadcasting Notice of Consultation CRTC 2009-614, namely the questions about affordability and the potential impact of a new compensation scheme on the system.
2337 We believe the affordability question is answered by a determination of value. It is the value to the consumer that determines affordability and the impact on the other components of the industry.
2338 Bill Gates once observed that:
"We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten."
2339 Using Mr. Gates' dictum as a guide, let's consider the history of broadcasting in Canada in decade-long increments.
2340 Over-the-air TV stations took hold of the Canadian market by the mid-1950s and within 10 years the CBC and CTV networks became, in the minds of Canadians, as the place to watch.
2341 Cable started to make an impact in the mid-1960s, expanding both the size of the television audience and the viewing menu.
2342 In the mid-70s direct-to-home satellite services launched and more Canadians could see new and existing services.
2343 The first pay and specialty services started in the mid-80s.
2344 By the mid-90s the list of Canadian and foreign channels was over 100 brands long.
2345 By 1995, the Internet was starting to take hold and, finally, the first 4G mobile networks were introduced just a few years ago in the middle of the first decade of this 21st century.
2346 At the beginning of each stage it was not clear what the impact would be, but 10 years later the media world was very different place and today Canadians have access to hundreds of linear channels delivered by a variety of carriers, as well as near universal access to millions of websites around the world. What we once called the TV set is now a video display that can vary in size from the 120 square-foot screens at Scotiabank Place to something that hangs on your belt.
2347 MS COURTEMANCHE: It is anybody's guess what the system will look like a decade from now, but that is what this process is about and, unfortunately, the context in which we must develop public policy.
2348 Canadian broadcasting evolved with these changes and today we have a variety of companies that have a major presence in local television, as well as specialty, pay and new platforms.
2349 There are only a couple of pure over-the-air -- OTA TV companies left in Canada. The rest each create content or acquire exclusive rights to use on a variety of platforms. The new world will be a digital interactive market environment which will further fragment the market.
2350 The perceptions about the relative value of the constituent elements of the system will also change, since consumers don't just buy one element any more.
2351 This is the first component of value that the Commission must consider.
2352 So the question is not affordability per se, but rather the perception of value to the consumer of the added cost of one channel in a world of many.
2353 In a fragmented digital interactive market, what is the value of the linear channel and the content it contains? This could be estimated using a range of factors such as audience size, near-term historic revenue levels and the like, but at the end of the day we really don't know.
2354 We do know what packages of channels are worth, however. This is the market that we have developed over the past quarter century since discretionary specialty and pay services were first licensed.
2355 The implementation of a new compensation scheme also raises the debate about whether Canadians should be forced to take a particular OTA channel.
2356 This is the second consideration of value, the right to decide.
2357 This has always been one of the tensions of the Canadian system. The size of our population means that an à la carte purely discretionary system would mean a huge impact on the variety of Canadian services that could be viable.
2358 Even in the United States it is recognized that consumers can actually get a better variety of channels at a cheaper rate if packages are offered.
2359 Some have suggested that a skinny basic is the way to solve the problem. This suggestion assumes that the value question is solved by making the package smaller and less expensive. Such an assumption will not work where Canadians decide that paying for reception of an OTA channel should we at their option.
2360 Canada is moving to significantly more consumer choice with the implementation of the digital migration rules next year.
2361 It remains to be seen what the impact will be. This issue simply complicates the issues of value perception and affordability. The value proposition is also not just about dollars. It is also about time. The ability to access a consumer's time is becoming more expensive and represents a much more risky investment than in the past.
2362 In the good old days, the content producers and advertisers were required to use the OTA television platform to reach Canadian consumers. This has now changed in myriad ways. So, the concept of value and affordability must be considered in this broader context.
2363 The market is hugely fragmented, not only in our media, but in all media overall. Therefore, value will be determined in the context of what else is available.
2364 MR. MAAVARA: So, we submit that the Commission can't assess the issue affordability without also considering what the consumer will do should a fee be imposed for a programming service which is free on other platforms.
2365 The question of value must also be assessed in the context of the total consumer market. Whether BDUs pass along the proposed fees to subscribers or not, the revenues need to be generated somewhere. Price Waterhouse Coopers, in their Global Entertainment and Media Look 2009 and 2013 and I highly recommend this, this is just statistics, but it's interesting stuff, PWC predicts that the overall consumer spending for everything from internet access to TV subscriptions to recorded music, et cetera, will only grow by a compound annual growth rate of only two per cent over the next five years.
2366 We also know that ad markets are fragmenting, online advertising has passed radio revenue levels and it's closing in on TV levels. This measure is also a bit misleading because the statistics don't take into account the amounts that advertisers are spending to interact directly with their customers.
2367 Corus submits that the observations the Commission makes in paragraphs 5 and 6 of the Consultation Notice seem to assume that if more advertising inventory is developed, it will grow the ad market. The reality is that we are experiencing greater inelasticity in the media advertising market than ever before.
2368 Price Waterhouse Coopers projects that the annual compound annual growth rate of television in Canada will be only 0.3 from now until 2013. Meanwhile, radios growth is projected at -2.1 per cent over the same period.
2369 Some of this may be due to the economy, but our hunch is that a large proportion is not. It is a structural change. We know this empirically, for example, in radio where the introduction of more stations in the market, a smashed unit price values thereby reducing overall market totals.
2370 The Corus recommendations on advertising are intended to attempt to grow the market with new revenues. That said, we don't believe that this will grow the size of the market overall. This view is supported by the PWC prediction and they forecast the growth of the overall Canadian advertising market to be -0.5 per cent again over the five-year period.
2371 On the subject of new ad technologies, we are ready, willing and able to work with distributors on VOD and other platforms. However, if new advertising methods are unavailable to broadcasters, then the results will simply to add another batch of inventory and new competitors to an already stressed market.
2372 It won't mean growth for the regulated broadcasting sector and will make the problem for OTA and others even more difficult.
2373 To summarize, Corus believes that the Commission needs to assess the issue affordability based on perceptions of value and this analysis must be done in the context of everything else that is available today, some for free and how the world is rapidly changing. Any new fee will be meaningless if the consumer decides that the value proposition is too low to warrant purchase.
2374 So, what can the Commission recommend to resolve the issue. It can assess the other recommendations we have made, it can continue policies that are working such as simulcast, the LPIF and priority carriage. If local stations still fail, then it should let others try. We are certain that someone will find a way to serve the market.
2375 Mr. Chairman, that completes our prepared remarks. We thank you for your attention and we would be pleased to answer your questions.
2376 THE SECRETARY: Thank you.
2377 Nous poursuivrons maintenant avec Astral Média Inc. S'il vous plaît, vous présenter et présenter vos collègues. Vous disposez de dix minutes pour votre présentation.
2378 Mme ÉMOND: Alors, bonjour, monsieur le président, messieurs les vice-présidents, messieurs, mesdames les conseillers, le personnel, mon nom est Sophie Émond. Je suis vice-présidente Affaires réglementaires et gouvernementales chez Astral Media.
2379 Je vous présente mes collègues qui m'accompagnent aujourd'hui. À ma droite, madame Johanne Saint-Laurent qui est vice-présidente principale, Affaires commerciales pour les chaînes Télé-Astral. Et à ma gauche, ma collègue, Nathalie Dorval qui est conseillère principale, Affaires réglementaires et propriétés intellectuelles, Astral Media.
2380 Alors, monsieur le président, nos observations aujourd'hui porteront sur deux éléments.
2381 Premièrement, nous entendons parler de l'incidence de la mise en oeuvre d'une compensation pour la valeur des signaux de télévision locaux sur le secteur de la télévision spécialisée et payante qui est une des composantes du système de radiodiffusion.
2382 Et, deuxièmement, nous aborderons la question de la liberté de choix des consommateurs en matière d'abonnements.
2383 Lors de notre récente comparution à l'audience portant sur les renouvellements par groupe de propriétés, nous avons fait valoir au Conseil les motifs pour lesquels nous considérons qu'il serait préjudiciable tant pour les consommateurs que pour le système canadien de radiodiffusion que le Conseil intervienne soit pour imposer ou pour autoriser le transfert d'une partie des paiements des droits d'affiliation qui sont actuellement versés aux services spécialisés et ce, pour les verser au profit des services de télévision conventionnelle.
2384 Nous demandons au Conseil de verser le contenu de notre comparution du 24 novembre au dossier public de la présente audience afin de compléter nos propos d'aujourd'hui.
2385 Et sans reprendre ici de manière exhaustive les arguments que nous avions alors exposés, nous souhaitons cet après-midi attirer l'attention du Conseil sur les effets néfastes de ce modèle dit de rééquilibrage. Mais avant, nous aimerions rétablir certains faits relativement à ce rééquilibrage.
2386 Premièrement, les discussions qui ont entouré ce modèle proposé laissent croire que le secteur discrétionnaire des services spécialisés et payants bénéficient de tarifs réglementés et protégés. Or, il n'en est rien.
2387 Nous tenons à souligner que, actuellement, dans l'univers numérique, les tarifs mensuels de gros, de nos services spécialisés, qui sont tous offerts dans des volets facultatifs ne sont pas réglementés et font l'objet d'une libre négociation entre les parties.
2388 Si dans cette libre négociation nous dispositions, comme certains le prétendent, d'un rapport de force éminemment favorable à notre égard, comment alors expliquer que les tarifs mensuels de gros par abonné de la plupart de nos services n'aient jamais augmenté depuis 15 et même 20 ans, depuis leur existence.
2389 D'autre part, dans un univers de distribution où les tarifs à l'abonné sont dérèglementés, rien ne permet d'assurer que le modèle de rééquilibrage sera sans frais pour le consommateur.
2390 Les EDRs ajustent constamment les tarifs de leurs relais de base ou des volets facultatifs sans qu'il soit nécessairement possible de rattacher l'ajustement à des services spécifiques.
2391 Dans le marché francophone, le modèle de rééquilibrage avec les exclusions et les critères de redistribution des redevances qui y sont associées et qui ont été proposées auraient, quand on les regarde, pour effet objectif d'avantager Groupe TVA par rapport à tous ses principaux concurrents, qu'il s'agisse de Radio-Canada, de V, d'Astral ou de tous les autres services spécialisés.
2392 Dans le marché anglophone, on a entendu à l'audience précédente les grands diffuseurs conventionnels qui ont exposé qu'un tel rééquilibrage ne solutionnera pas leurs difficultés.
2393 Un tel modèle nous semble inéquitable à sa base même. Il affaiblirait lourdement le secteur de la télévision spécialisée, ce qui, en retour, pénaliserait les téléspectateurs canadiens qui verraient se réduire la diversité de la programmation que leur offrent les services spécialisés canadiens dans des formats conçus sur mesure pour répondre à une grande variété de champs d'intérêt.
2394 Rappelons à cet égard que si les consommateurs sont toujours plus nombreux à choisir librement de s'abonner à nos services et y consacrer toujours plus d'heures d'écoute par semaine, c'est d'abord et avant tout parce que leurs attentes et intérêts sont au coeur de nos stratégies de programmation, des stratégies qui aussi font une large place à la production d'émissions canadiennes dans des domaines tels que les dramatiques, les documentaires, jeunesse et émissions musicales qui sont complémentaires et où souvent moins présentes à la télévision conventionnelle.
2395 Ainsi, en 2008, les services spécialisés canadiens ont consacré 44 pour cent de leurs revenus aux dépenses d'émissions canadiennes versus 30 pour cent pour les diffuseurs conventionnels privés. Avec le modèle de rééquilibrage qui impliquerait de transférer des redevances des spécialisés vers la télé conventionnelle -- excusez-moi -- chaque dollar de revenu transféré du secteur spécialisé vers l'autre secteur entraînerait donc une réduction de 14 pour cent des dépenses en émissions canadiennes qui y sont associées.
2396 Il est clair que le rééquilibrage proposé par certains créera un nouveau problème dans le système de radiodiffusion en affaiblissant le secteur des services discrétionnaires et en réduisant les ressources disponibles pour les créateurs et producteurs d'émissions canadiennes.
2397 Cette proposition de rééquilibrage nous apparaît donc perdante sous tous ses aspects et devrait, à notre avis, être écartée d'emblée.
2399 Mme DORVAL: Si le Conseil devait décider d'instituer un système de compensation pour la juste valeur marchande des signaux de télévision en direct, il y a toutes les chances que ce soit le consommateur qui, en bout de ligne, en assume le coût.
2400 Comme COGEGO l'a souligné lors de sa comparution du 24 novembre, dans une économie de marché: *There are no business anywhere in the world where the cost to produce or offer a good service is not ultimately passed on through the price paid to the buyer, the ultimate buyer of that product or service down the line.+
2401 Comme nous l'avons indiqué à l'audience précédente, Astral a confiance dans la qualité de la programmation et dans le pouvoir d'attrait de ses services facultatifs. Nous avons donc bon espoir que nos abonnés actuels nous demeurerons fidèles, même s'ils doivent faire face à une augmentation du coût du service de base.
2402 On ne peut cependant en être certain. Nombre de sondages versés au dossier public indiquent qu'il est hautement probable que les consommateurs décident pour compenser la hausse tarifaire du service de base de réduire les sommes qu'ils consacrent à l'abonnement, à des services facultatifs, particulièrement en cet an économiquement difficile.
2403 C'est pourquoi nous invitons le Conseil ainsi que le Gouvernement canadien à considérer avec soin les options alternatives à la juste valeur marchande qui s'offrent pour accroître les revenus des diffuseurs conventionnels et pour leur permettre plus de flexibilité à l'égard de leurs opérations.
2404 Depuis le début des audiences du 16 novembre dernier, nous notons que plusieurs options ont été portées à l'attention du Conseil dont, notamment, de prolonger de un à trois ans la période où les diffuseurs en direct pourraient bénéficier du FAPL sans obligation de défense additionnelle de programmation locale, de rétablir la distribution obligatoire par les SRDs des services de télévision en directe dans les petits marchés, d'éviter de fragmenter le marché publicitaire en permettant la publicité par les EDRs sur les disponibilités locales et sur la vidéo sur demande, d'adopter un modèle de flexibilité tel que celui proposé par Astral en matière de transférabilité des obligations entre services dans le cadre du renouvellement par groupe de propriétés.
2405 Enfin, recommander que le gouvernement utilise une partie des revenus provenant de l'enchère du spectre pour aider la transition au numérique, recommander au gouvernement d'ouvrir le marché de la publicité pour les médicaments sous ordonnance et recommander au gouvernement de mettre en place un programme de crédit d'impôt pour stimuler des dépenses publicitaires auprès des médias canadiens.
2406 En combinaison avec les mesures déjà récemment adoptées par le Conseil, ces options pourraient contribuer à atteindre l'objectif d'accroître les revenus et d'améliorer la rentabilité des diffuseurs conventionnels sans augmenter la facture des consommateurs.
2408 Mme SAINT-LAURENT: Dans son Avis public, le Conseil s'interroge à savoir si les initiatives ne pourraient pas être prises pour accroître la liberté de choix du consommateur en matière d'abonnement aux services facultatifs.
2409 Astral constate que dans l'univers numérique les consommateurs disposent d'une grande liberté de choix en matière de sélection des services facultatifs. Le service de base est le seul volet de service de programmation auquel un abonné à la télédistribution doit obligatoirement souscrire en vertu de la réglementation du Conseil.
2410 Le consommateur peut s'arrêter là s'il le désire et n'a aucune obligation de s'abonner en plus à des volets de services facultatifs ou à des services facultatifs individuels.
2411 Cependant, s'il souhaite le faire, il dispose d'une grande variété de choix en terme de nature, de composition, de taille et de prix des volets des services facultatifs auxquels il peut s'abonner ainsi qu'en terme d'accès à des services facultatifs sur une base individuelle.
2412 Aucune intervention du Conseil ne semble donc nécessaire ou requise à cet égard.
2413 En conclusion, plusieurs avenues ont été explorées au cours des derniers mois pour accroître les revenus de la télévision en direct et améliorer sa rentabilité.
2414 En formulant ces recommandations au gouvernement, nous suggérons au Conseil une approche prudente afin de s'assurer de ne pas compromettre l'avenir d'un secteur spécifique en tentant de solutionner les difficultés d'un autre. Le Conseil devrait plutôt privilégier les options qui renforceront l'ensemble des composantes du système de radiodiffusion.
2415 Nous vous remercions de votre attention et nous sommes, évidemment, disponibles à répondre à vos questions.
2416 THE CHAIRPERSON: Thank you for your presentations. Of course, I am specifically and especially grateful that yours appear to be neutral and objective presentation. I have heard a lot of self-serving ones and it's a pleasure to read one which basically gets to the basic issue of affordability and pointing out you can't deal with affordability unless you deal with value and what is the costing of value and how much you are prepared to spend.
2417 And then, I found it interesting what you say on page 7 where you say that basically packaging is of benefit to the consumer. You say even in the States it's recognized that consumers can actually get a better variety of channels at a cheaper price of packages offered.
2418 And then you say something suggested skinny basic is a way to resolve the problem.
2419 Is this suggestion assuming that the value is solved by making the package smaller and less expensive. Such an assumption will not work where Canadians decide that paying for reception OTA should be as an option.
2420 First of all, explain to me what evidence you have from the U.S. and then explain the second paragraph to me, which I don't quite understand.
2421 MR. MAAVARA: Okay. Mr. Chairman, there have been a number of studies done for the SCC on the question of bundling an À la carte and we can undertake to provide the Commission with those.
2422 And effectively, what the studies find is that the problem with as you start to break these channels, and there was some discussion about this this morning with Kevin Krull, I take it, of Bell, the costs on a bundle of channels to the consumer can actually be less than a simple À la carte system.
2423 The difference between the United States and Canada, of course, is that you can operate a channel with a fraction of the American market, whereas in Canada there are very few channels that can afford to do so. There simply are too few of us.
2424 And I think we had quite an eloquent panel before ours and one of the interveners talked about being Canadian, but one of the facts of the Canadian media world is that we need to find ways to offer Canadians as many channels as we can at the best price in order to maintain the viability of the system.
2425 And the funny thing is, and you always are reminded of this when you come back from a visit to the U.S., is that in fact the Canadian system is more interesting and more diverse. So, somehow maybe there is something in the water, but we managed to put on a pretty good service for what's only about 12 or 13 million households.
2426 THE CHAIRPERSON: But implicit in this fact is that you have certain cost subsidization about what you're packaging?
2427 MR. MAAVARA: Well, it's not so much subsidization, but as someone from -- I think it was Mr. Linder or Mr. Engelhart this morning talked about, you know, pricing is based on volume.
2428 So, for example, very often where if you are not able to achieve certain volumes, the price goes up and vice versa, that's part of the equation. But the reality is for most even Category 2 services, unless we start to get to a level approaching a million households or more, we don't appear on the radar for advertising and advertisers and the reality is that the fee that we get makes it a non viable process.
2429 And as the Commission has seen, we have seen a number of services fail since launch and the flips are that, of course, if services continue to grow and the good news is that even on digital platforms Canadians are buying Canadian services because they're good ones.
2430 THE CHAIRPERSON: Uh-uh.
2431 MR. MAAVARA: On the question of skinny basic, the concern that we have is -- first of all, we are not starting from a blank sheet. The challenge that we have of implementation --
2432 THE CHAIRPERSON: Now, I understand the skinny basic, the second sentence, such an assumption will not work, the Canadians are paying for reception of an OTA channel should be at their option.
2433 MR. MAAVARA: Well, we heard it this morning from the gentleman from Vancouver. He said it's one of the fundamental aspects is that I -- if I am called upon to pay for something, I should have a choice in that. And, of course, if services were all bundled together, then, you know, the element of choice tends to diminish.
2434 But the difficulty we have is that decision is not being made in a vacuum. It's being made based on 50 years of history and needless to say this process itself is very public, so the Canadian public are going to be watching whatever happens in this regard and the reality is then it's an inescapable reality, is that for 50 years people have not paid for the over-the-air and now, they will somehow be asked to do so.
2435 And some people are going to say: I don't want to pay. And the difficulty with a skinny basic or a big basic is that if Canadians decided to do that, even if it seems like a silly idea in the context of an entire package, penetration could drop and that's a concern that we have or the attractions of piracy could increase or -- I have at home, for example, a -- I should have brought it with me and then, a UHF antenna which I have on the third floor of my house, which is that big. It's the size of a mouse pad and I can watch a variety of channels over-the-air, the quality if spectacular, both Canadian and American, and the challenge that we have and I appreciated your comment at the beginning of this, but we do have a self-interest in this, Corus does, because if people disconnect from BDUs, we don't have a business. And that's the challenge that we have.
2436 THE CHAIRPERSON: Okay. And Astral, on your page 8, you suggested -- vous recommandez que le Gouvernement utilise une partie des revenus provenant de l'enchère du spectre pour aider la transition au numérique.
2437 Combien, à qui?
2438 Mme ÉMOND: En fait, notre propos, on énumérait toutes les propositions qui ont été entendues dans le cadre de l'audience du mois de novembre. Alors, personnellement, nous, on voit juste que ça avait été une des idées, une des suggestions qui avait été proposée.
2439 L'idée, ce serait d'aider après les télévisions locales. Combien? Monsieur le président, on n'a pas fait l'exercice. On voit juste qu'il y a énormément de solutions qui sont proposées.
2440 Nous, Astral, en télévision, on n'est certainement pas des experts en télévision conventionnelle. On vous l'a dit la dernière fois qu'on s'est présenté devant vous, on a deux petites stations dans le nord de la Colombie-Britannique, qui sont deux petites stations...
2441 LE PRÉSIDENT: Oui, je sais.
2442 Mme ÉMOND: ... affiliées à CBC.
2443 LE PRÉSIDENT: Mais nous avons l'audience ici pour avoir votre conseil à ce qu'on devrait mettre dans le rapport au gouvernement qui l'a demandé. Mais vous nous suggérez qu'on fasse une recommandation sur ce sujet, bon, très bien. Mais c'est pour les radiodiffuseurs conventionnels, est-ce que ça va cibler les radiodiffuseurs conventionnels?
2444 Mme ÉMOND: Tout à fait. Ça serait pour aider à la transition numérique, les télévisions conventionnelles puisque c'est une des questions, quand on parle de la dynamique actuelle de la télévision conventionnelle, pour nous, ce qui est une des préoccupations c'est qu'au niveau du débat on parle de comment continuer à avoir la programmation locale. À d'autres, on situe le débat au niveau des stations, parfois on le situe au niveau des réseaux.
2445 Il y a d'autres questions qui ont été... quels sont les coûts associés ou la difficulté de passer au numérique et on retenait... on trouvait que c'était une des solutions envisagées, mais effectivement on n'a pas fait l'exercice de voir combien, mais on se disait que ça pouvait être une des pistes de solutions à envisager.
2446 LE PRÉSIDENT: Mais comme vous ne parlez pas des consommateurs, il y a des consommateurs qui maintenant reçoivent leur programmation par les ondes hertziennes qui vont être sous le signal et on pourrait établir aussi un système pour les aider d'avoir l'accès par un moyen d'un satellite ou un freesat or VHD, et cetera.
2447 Est-ce que c'est votre opinion qu'on devrait accommoder quelque chose selon ces lignes, au gouvernement aussi?
2448 Mme ÉMOND: Je vous dirais que c'est quelque chose qui pourrait être envisagé puis je vous dirais bien humblement ce qu'on dit, c'est que le Conseil a plusieurs solutions qui leur ont été présentées. Vous avez l'information, vous êtes l'expert. Là-dessus, on remarquait juste qu'il n'y a peut-être pas juste une solution à envisager, mais effectivement c'est un autre aspect.
2449 Dans notre mémoire ici, on parlait vraiment juste de s'adresser par rapport à la dynamique de la télévision conventionnelle. Alors, c'est dans ce contexte-là qu'on le soulevait.
2450 THE CHAIRPERSON: Merci. Tim, do you have some questions?
2451 COMMISSIONER DENTON: I certainly do. Good afternoon, ladies and gentlemen.
2452 Mr. Maavara, first question: Did you write the presentation of Corus this afternoon?
2453 MR. MAAVARA: It was a group effort. I'll take the blame if there's something wrong with it.
2454 COMMISSIONER DENTON: No. I've just enjoyed reading the last two Corus things, the last one in a previous hearing, you didn't back off from a good intellectual punch-up with another party and I enjoy reading something that brought some flavour and taste to my reading.
2455 I am not saying I agree; I am just saying it was entertaining and important to read. Now, I have a question I am going to ask everybody, so I'll start with this.
2456 In what year do you expect that half of Canadians will be receiving half of their visual entertainment programming over the internet?
2457 MR. MAAVARA: Wow! This is one of those questions where I am tempted to say, if I knew the answer to that, I'd make the right investments, but I think that the important way we have to approach that is that at the same time as the system is fragmenting, our use of media is becoming very asymmetric in that -- obviously it's not linear, but we're moving to a circumstances where we're using information, gathering information, interacting with programming in a variety of different ways, so I am not sure that we are even going to be able to necessarily measure something like that.
2458 But if you look at the examples most often used is our kids and I watch, I have a 14, 18 and 20 year old and they seem to have a lap top strap to themselves whenever they're going anywhere these days. And they use television a great deal, they're on their lap tops all the time and they're using their lap tops for all sorts of different things, ranging sometimes for homework, more often for games, more often for some sort of interaction, whether it's in a game or messaging with their friends. Meanwhile, their cell phone is doing --
2459 COMMISSIONER DENTON: So, are you going to venture a year in all that?
2460 MR. MAAVARA: Well, I would say, you know, we use the Bill Gates example and if you look at some of the things that are -- they're predicted in here, you have to think that by 2015, the media world is very different. And why do I say that?
2461 Four-G networks are probably much more prevalent than they are now so that people can interact and bring entertainment to their large screen set through a device like this.
2462 Whether it's half; I don't know. I think you've heard this morning also that --
2463 COMMISSIONER DENTON: No. It does.
2464 MR. MAAVARA: The BDUs talked this morning about they're going to have analog for a while, so I think there is still going to be a lot of people who just like to flop in front of the television set and just watch what's there.
2465 A more important question is in so much consumption, it's about where the revenue is going and you look at, for example, the grow-up of gaming and, you know, the wallet that the consumer has of money and of time are limited and we may still see that a lot of linear television is being consumed, but the revenue flow isn't the same.
2466 COMMISSIONER DENTON: Okay. I'll be with you guys in a moment. You said on paragraph 6, page 3 of your presentation, the one that was filed before with us. You spoke of the existing regulatory structure provides OTA television stations with certain exclusive benefits as well as specific obligations. Some of these benefits and obligations may no longer be appropriate.
2467 Would you care to specify what you mean?
2468 MR. MAAVARA: Well, I guess starting with obligations and, you know, I am speaking of someone who had an involvement with broadcast stations for over 20 years, some of the things and some of these obligations are starting to change, but we have a regulatory framework which in some ways looks at the local stations as the platform for a lot of different things, ranging from -- It would be very difficult, for example, I am not suggesting that they would, but it would be very difficult for CTV to decide in a particular federal election that they weren't going to carry all the debates.
2469 Whether that's a good thing or a bad thing, that's an example of the kinds of things that we look from a station that may no longer be relevant. And as Mr. Cassidy said at the last hearing, I think what we really need to do is look at the contributions that each element of the system makes and start to look at it in the context of not only what's happening right now, but even just five years from now and say: should we really still have a discreet regulatory regime that looks at each type of channel in a particular way and, of course, we're going to deal with that as in the group -- the Commission is going to deal with that in the group licensing. So, that's kind of what we mean by that.
2470 Maybe it doesn't make sense for a television station to carry the obligations of particular kinds of programming when, in fact, the best model for both the creation of that programming and the presentation of that is somewhere else.
2471 COMMISSIONER DENTON: Well, that leads me to the question that I am trying to get around to asking and I am not trying to be provocative, but I am just trying to project from what we see today to where the future might take us.
2472 Are we in a process here of seeking to defend an industrial structure which is becoming obsolescent and -- well, that's my question. Are we seeking to defend an industrial structure which is becoming obsolescent and if so, what should we do about it?
2473 MR. MAAVARA: Well, first of all, I would disagree with the notion that it's obsolete or becoming so, but I think a lot of the approaches to the structure are based on perspectives and assumptions that really in so many ways are no longer applicable and the panels that appeared before us I thought were very eloquent, each one of them. And you would have to go back and look, but each person said, but they are all giving us a perspective in different things.
2474 The former newsman is saying: I want more high quality local. The person sitting in this chair was saying: I don't want news right now. I want entertainment and I really want to get away from the world when I get on to television. And what they are already saying to us is that we all kind of want what we want and from a revenue standpoint, where is the revenue flow going now?
2475 The revenue is flowing to the content and people say you can't make money with content on the air and well, in fact, there are a lot of people who are making that, but it's content that people want so much that they want to pay for it.
2476 In the Corus case, for example, our pay services are going terrifically well, even in the context of a bad economy because people are saying to themselves, I really want to watch these shows and I am prepared to stop up to that.
2477 The challenge in, and we have a small footprint in local, but we realize that our Peterborough and Kingston stations have to stay relevant to those communities. If they're not, there is really no point in turning on the transmitter.
2478 COMMISSIONER DENTON: Well, then, is it too adventurous to suppose that the local over-the-air television station is becoming obsolete?
2479 MR. MAAVARA: Well, it remains to be seen whether they're actually transmitting. So, there is another -- there is an example of, you know, what is over the air? Is there going to be a market for a local television service? Absolutely. That is never going to go away.
2480 COMMISSIONER DENTON: But will it be -- yes, and what will be his method of transmission in reaching people I guess is what we are trying to ask?
2481 MR. MAAVARA: It could be a mix. I think one of the challenges that we are having with the cost of over-the-air is that we haven't really considered what the potential benefits of it are.
2482 My own personal view is that the HD transmission has a lot of elements that could create revenue if we're prepared to make the investment. That aren't necessarily the good old fashion way of just selling advertising. There may be other things we can do there. But I think the local television station is going to be relevant.
2483 One of the things that intrigues me about this debate is that there seems to be sort of a 25-year gap in the history of television and there is a couple of people behind me who know more about the subject than I do, but Keith Campbell being one of them, the television stations in Canada historically are really only two in the community, except for the very largest markets.
2484 One was the CBC affiliate and one was the CTV affiliate and they were the most relevant services in their communities and what's happened is they've -- the structures have changed and as we heard earlier, people, whether it's true or not, people perceive that they drifted away from their communities.
2485 We know on a volume metric basis, there is less programming done locally than there used to be. So, people have less occasion to want to watch. We see that with ratings. But the other side of it is that when you're watching a local station, it's the most important thing you're watching which is why you're watching it.
2486 So, I don't think local stations are obsolete in a world of ten million websites. I think local is still eminently important because at the end of the day the most important thing to most people is what's going on within five kilometres of where they live and work.
2487 COMMISSIONER DENTON: Thank you. I think that answers it.
2488 Ladies of Astral, I hear you basically saying that given that there is a free negotiation among the parties for the prices of higher levels of television, there is really not a surplus available to be transferred to over-the-air or do I understand you right?
2489 MS. EMOND: Yes. That would represent our view in the sense that we think that if the notion is there value for a signal, we believe that I guess the value for the specialty is negotiated with the BDU.
2490 So, the idea of taking from the existing pie of subscription or revenue and then re-divide it, using some criteria share, while for example, just talking about that criteria of audience, the OTA having access to 100 per cent of the subscribers base being on basic, while subscription discretionary services are discretionary are carried on terce and do not have access to the same audience share and because we are a specialty needs genre to us, we think it's a model that, in our view, is not workable.
2491 COMMISSIONER DENTON: Okay. Et je vous poserai les mêmes questions que j'ai posées à Corus.
2492 En quelle année pensez-vous que la moitié des Canadiens recevront la moitié de la programmation par moyen de l'internet?
2493 Mme ÉMOND: Et j'ai la chance d'être accompagnée de Johanne Saint-Laurent qui est notre experte en Opérations. Alors, je vais demander à Johanne de donner ses vues sur le sujet.
2494 Mme SAINT-LAURENT: Malheureusement, je n'ai pas de boule de cristal pour répondre à votre question de façon spécifique.
2495 COMMISSIONER DENTON: Moi non plus.
2496 Mme SAINT-LAURENT: Cependant, ce que je souhaite souligner, c'est juste que pour Astral, notre stratégie, ça ne passe pas par la cannibalisation; c'est-à-dire que la télévision a fait sur l'internet, ne se fait pas d'une façon gratuite. On ne voit aucun avantage à faire la transmission de notre programmation linéaire sur le web. On ne fait pas ça.
2497 On ne donne pas la programmation, ce n'est pas notre stratégie de donner la programmation sur le web parce que, ultimement, quel serait l'intérêt de l'abonné de souscrire à un abonnement d'un télédistributeur.
2498 Ceci étant dit donc, on ne fait pas la duplication. Notre stratégie web est d'offrir à notre abonné une valeur ajoutée, des services qui sont complémentaires à tout ça et puis vous n'êtes pas sans savoir que les télédistributeurs ont des modèles. On a déjà en place avec Bell un service qui s'appelle Port TIAMEN où le service de TIAMEN n'offre avec Bell via internet, évidemment, la notion, c'est la protection de l'abonné.
2499 Alors, avec l'authentification de l'abonné, il a accès à la programmation sur internet lors de ses déplacements. C'est vraiment le modèle auquel on souscrit pour l'avenir.
2500 COMMISSIONER DENTON: Compte tenu de votre stratégie, est-ce que vous aurez... si j'avais une année pour répondre à la question?
2501 MME SAINT-LAURENT: Bien, écoutez, c'est parce que je pense que plus les plate-formes vont être déployées plus, par exemple, les télédistributeurs seront capables d'offrir une offre élargie avec l'ensemble des services et je vais le dire en portabilité sur l'ensemble des plate-formes, que ça se fasse qu'un abonné -- je voulais nommer un de nos principaux distributeurs -- disons Vidéotron, s'il avait toutes les plate-formes: internet, téléphonie, télévision, à partir du moment où un abonné est abonné au service télévision, s'ils ont la flexibilité par la mobilité de l'écouter sur peu importe la plate-forme, c'est un modèle on souscrit. On pense que c'est intéressant.
2502 Donc, est-ce qu'ils en écouteront la moitié? Ça devra devenir transparent, ça ne devient qu'une plate-forme pour écouter la même télévision.
2503 COMMISSIONER DENTON: Si j'entends bien le conseil d'Astral qui consiste en une série de petites, disons, non pas solutions, mais mesures qu'on prendrait, mais vous conseillez la prudence, je pense, n'est-ce pas, dans l'ingérence, dans cette grande question? Je pense que vous conseillez la prudence. Est-ce que c'est vrai? Est-ce que c'est bien caractérisé?
2504 Mme ÉMOND: En fait, premièrement, aujourd'hui, évidemment, c'est dans le contexte du fait que vous avez des recommandations à faire au gouvernement. Une des discussions, c'était la valeur du signal. Là-dessus on a dit: bon, on n'est pas des experts. On sait aussi qu'il y a plein d'autres mesures qui sont regardées. On se fie au Conseil qui a toutes les données financières sur la télé conventionnelle, qui a entendu, qui a eu plusieurs solutions proposées.
2505 Tout ce qu'on disait, c'est dans le contexte aussi des audiences actuelles et à la question du consommateur, le coût au consommateur. On se dit, il y a peut-être d'autres solutions, des solutions hybrides qui vont faire en sorte puisque c'est une préoccupation, que le consommateur n'aura pas nécessairement à payer, qu'il y a peut-être d'autres solutions à regarder. Et la prudence était peut-être plus en lien avec un autre aspect qui est soulevé dans l'Ordre en conseil, c'est-à-dire de regarder quels sont les impacts sur les autres composantes du système, dont le secteur spécialisé payant.
2506 Donc, quand il y a certaines solutions qui sont proposées où finalement on prend un secteur qui fonctionne et on dit: ah! comme ça fonctionne, on pourrait peut-être prendre ce secteur-là pour l'amener ailleurs pour régler un secteur qui fonctionne moins bien.
2507 COMMISSIONER DENTON: J'entends oui.
2508 Mme ÉMOND: C'était là où la prudence était, c'est par rapport à ça que notre note de prudence s'applique.
2509 COMMISSIONER DENTON: Merci, monsieur le président. Ce sont mes questions.
2510 LE PRÉSIDENT: Merci. Michel, est-ce que tu as des questions? Non. Louise?
2511 CONSEILLÈRE POIRIER: Oui. Alors, j'aurais une première question à demander et autant à Corus qu'à Astral.
2512 À la page 4 Astral, vous dites que dans le marché francophone le modèle de rééquilibrage qui est proposé par TVA aurait pour avantage... aurait pour résultat d'avantager le Groupe TVA par rapport à ses principaux concurrents, qu'il s'agisse de Radio-Canada, de V, d'Astral et des autres chaînes spécialisées.
2513 J'aimerais que vous m'expliquiez un peu plus ce que vous voulez dire par ça?
2514 Mme ÉMOND: Alors, bien, premièrement, c'est que le modèle, tel qu'on le comprend d'un rééquilibrage, la question c'est-à-dire, il y a des redevances, il y a un ensemble de redevances de tarifs de gros qui sont payés à chaque service spécialisé payant actuellement et la façon dont on comprend le modèle, c'est de dire, bon, bien, on va prendre ce qu'on paie en ce moment à ces services-là, on va le redistribuer en incluant cette fois-ci les télévisions conventionnelles.
2515 En utilisant donc les mêmes dollars, on va les répartir différemment en les partageant.
2516 Et dans le modèle qui a été proposé on disait que c'était uniquement dans le cas des télés conventionnelles privées. Et pour déterminer comment on faisait ce ré-acheminement-là, on ne parle pas d'une libre négociation, on dit, on veut avoir des critères établis, que ce soit les parts de marché.
2517 Deuxièmement, on va regarder, on a parlé aussi, bon, des coûts de programmation et c'est donc là-dessus, quand on regarde les critères et les exclusions, on arrive quand on fait le calcul, on réalise que, finalement il y a une personne ou un diffuseur qui va être gagnant et c'est TVA.
2518 C'était ça notre exposé en page 4.
2519 CONSEILLÈRE POIRIER: Et vous ne l'avez pas chiffré là, vous avez...
2520 Mme ÉMOND: Bien, c'est-à-dire, si on regarde les parts de marché, par exemple, qu'il y a un joueur, un seul, TVA, qui a autour disons de 28 pour cent, après le prochain, on a V qui est à peu près sept pour cent, après on descend les chaînes spécialisées. Il ne faut pas oublier que ce n'est pas un secteur à chaque chaîne, on parle de... il y en a que ça part de quatre pour cent de part de marché, trois, deux point 5, donc si on se base juste sur les audiences puis, évidemment, les dépenses de programmation, bien ça va aussi en fonction des revenus, du genre de service.
2521 Alors, quand on met tout ces critères-là, mais on n'a pas fait l'exercice de tout chiffrer parce qu'une autre des choses, on n'a pas... enfin, on ne pensait pas que c'était une voie à suivre, là, mais..
2522 CONSEILLÈRE POIRIER: Oui. And what about Corus. I wonder if we would apply the same model proposed by Videotron, the ré-équilibrage, what kind of an impact would it have on Corus?
2523 MS COURTEMANCHE: I think we end up in the same spot, because if you go by audience share, there is, you know, we all know that over-the-air television gains a much larger audience share than specialty services.
2524 It depends on the specialty services obviously, TSN and some specialty services do quite well, but if you get to some category B services that have, you know, very small audience shares, then you would have, you know, a great divide and, therefore, at the end of the day the lion share money would go the over-the-air sector to the parallel or to the detriment of the specialty sector.
2525 Now, I was just going to go back, sorry, to Mr. Denton's question about, you know, what's the date at which, you know, I would say that's a generational issue thing. I mean, I think the generation next is already there, so I was just going to say that if you're looking at the date, look at the generation and, you know, so far it's going to take longer, but you know, down the road, I think the young people are going to be there.
2526 THE CHAIRPERSON: Let's say on topic, please.
2527 CONSEILLÈRE POIRIER: Et ma deuxième question, c'est: on entend beaucoup des consommateurs qu'ils aiment les chaînes spécialisées, mais ils ne les aiment pas toutes, bien entendu. Donc, ils aimeraient pouvoir les choisir à la carte et ils ne peuvent pas toujours le faire dans le système actuel.
2528 Par contre, en même temps, on sait que l'argent dans le système, si on considère les over-the-air, la télévision traditionnelle, si on considère la télé spécialisée et les distributeurs, l'argent est plus du côté des distributeurs et elle est plus du côté des chaînes spécialisées.
2529 Alors, ma question est de savoir: quel serait l'impact réel sur l'industrie, si on allait avec un choix à la carte et est-ce qu'à ce moment-là l'impact ne serait pas tout simplement de faire en sorte que des travailleurs ou des chaînes qui existent qui sont moins populaires, peut-être vont disparaître parce qu'elles ne sont pas aussi populaires que d'autres et que le personnel qui y travaille ou l'argent qui allait là irait ailleurs et viendrait, elle aussi, rééquilibrer le système, qu'est-ce qu'il y a de si grave à ce que quelques chaînes spécialisées disparaissent parce qu'elles sont moins populaires auprès des gens?
2530 Mme SAINT-LAURENT: Bien, si je peux me permettre, il faut aussi repenser au rôle des chaînes spécialisées, en ce sens qu'elles apportent une diversité de programmation. Je vais parler des chaînes d'Astral, entre autres, ou nous comblons, dans le fond, avec nos dépenses d'émissions canadiennes, on investit dans des catégories d'émissions qui sont moins prisées par les chaîne conventionnelles.
2531 Donc, à cet effet, nous apportons une diversité. Donc, il y a un rôle réel qui est apporté au système canadien de la radiodiffusion avec le documentaire, la jeunesse, émissions musicales ou même beaucoup en dramatiques.
2532 Donc, quand vous dites, c'est ce rôle de complémentarité-là, est-ce que d'une façon générale, nous sommes les chaînes spécialisées en compétition avec les chaînes conventionnelles aussi parce que nous sommes en compétition pour avoir des parts de marché, mais dans un rôle complémentaire.
2533 CONSEILLÈRE POIRIER: C'est ce que... bien, en fait, les chaînes conventionnelles n'offrent plus ces services-là que vous offrez. C'est un peu ça.
2534 Mme ÉMOND: Bien, en fait, c'était le rôle des chaînes spécialisées d'arriver à offrir une complémentarité aux chaînes conventionnelles.
2535 Mme SAINT-LAURENT: Je peux juste ajouter, pour répondre à votre question, il y a juste une chose dont on ne parle jamais, par exemple, effectivement que l'abonné ait le choix, c'est une bonne chose, et qu'il puisse prendre ce qu'il veut, sauf qu'il y a des modèles, à un moment donné, il y a un prix pour le choix aussi. Si on veut une chaîne à la carte, peut-être qu'elle va me coûter pas mal plus cher si je veux la prendre et si je suis prêt à la payer, ça va.
2536 Mais comme ont dit les EDRs ce matin, il y a d'autres propositions qui sont un regroupement de plusieurs services et ça coût moins cher, ça revient moins cher chaque service. Alors, dans un univers, on a parlé par exemple au Québec, je pense qu'on commence à avoir un modèle en numérique avec le groupe Vidéotron où on a justement les deux. Il y a des possibilités d'avoir des chaînes selon une offre plus à la carte, mais qui est plus... qui coûte plus que quand on a un plus grand volet facultatif.
2537 Alors, je pense que l'important c'est qu'il y a le choix effectivement, mais il y a un coût associé à ça.
2538 LE PRÉSIDENT: Michel Morin?
2539 CONSEILLER MORIN: Thanks, Mr. Chair. Good afternoon. My first question will to Corus.
2540 I have here a summary of your recommendations: the oral one and the written one. And there is a very important point that doesn't appear in your oral statement today, even in the text, and the point in your written statement I read it: "The Commission should reexamine its policy on the right to withhold a signal. This would greatly balance the bargaining power of all services and perhaps obviate the need for a FCC for local stations."
2541 So, the first question is: I want to make sure that you still believe in your proposal and more importantly, will it be beneficial to the consumer?
2542 MR. MAAVARA: You ask two questions: Do we still believe it? Yes, yes, we do and we recognize that the CRTC amended its policy recently with respect to right to withhold, but our position would be that any service, in the event that there is an impasse, should have the ability to withhold.
2543 That, of course, begs the question about the benefit to consumers and more importantly, I guess, the impacts on consumers. And that's a question that each operator will have to bring to the table when they're contemplating the use of that right. But of course, that the existence of that right becomes an element in the tool chest of the negotiators really on both sides of the fee negotiation table.
2544 And it wouldn't only apply over the air, but it would be to any service and that is if we have a service which we would like to derive carriage for and what are the terms going to be for that carriage.
2545 And our view is that the channel shouldn't be put in a position where, if there is an inability to arrive at a decision, that a service is required to continue serving. And that question is going to become more and more going to the question of A la Carte.
2546 In a way, the new world is sort of A la carte and I think one of the difficulties of A la carte is that it becomes very challenging to compile the resources and of the things that Corus has talked about with respect to our big six is that -- and we sort of obliquely mentioned it today, here is the amount of investment that one has to make to get attention, whether it's an A la carte environment or not A la carte is huge.
2547 And I think the difficulty with moving to an A la carte environment in this regulated ground where it's surrounded by the practical A la carte environment is that diversity will really disappear because there will be those who cannot attract resources to compete for that attention or for the consumer, so -- but yes, that's our view.
2548 COMMISSIONER MORIN: Do you think that we thought it's a threat, the negotiation is still possible? If there is this threat of withholding its signal, do you think that it's possible really now Canadian Broadcasting system to negotiate and keep the CRTC out of the field?
2549 MR. MAAVARA: Well, let me start by saying I think it probably should be. And the way we approach, the Corus approach to all of this is very simple. We live, breath every day from a customer's perspective. We think every day about our advertisers, we think every day about what the BDUs need, we think every day about what our shareholders are looking for us and we spend an ordinate amount of time thinking about that.
2550 So, if we were ever to, for example, want to exercise that kind of a right, it would be only after a tremendous amount of deliberation. It would be very difficult for the CRTC to have the particular knowledge of the customer circumstance of everyone else at the table in order to step in.
2551 So, our view would be -- it would really be preferential for the parties to work it out between themselves. You know, the difficulty about this debate overall has been that we haven't been thinking enough about how the Canadian is perceiving this and what they are going to do and that's the fundamental question, regardless of what we present or what you decide, the really fundamental thing is going to be what do they decide.
2552 COMMISSIONER MORIN: Why didn't you suggest this proposal before? I understand this is the first time that you're proposing such a right, a new right?
2553 MR. MAAVARA: No. We have been pretty consistent. I think if you went through our -- at least in the last five years, our submissions in this area have been pretty consistent.
2554 COMMISSIONER MORIN: For the OTA broadcaster, do you think that the retransmissions consent regime will be workable in Canada?
2555 MR. MAAVARA: Well, I guess the problem with taking any kind of ad hoc rule from another jurisdiction and applying it in Canada is you have to look at all the factors that go with that. So, the short answer is "no" and the reason it's no is because the retransmissions scheme in the United States is built upon a variety of factors that don't exist in Canada.
2556 And one of the fundamental difference is that the BDUs face which is a huge challenge is that there are millions of Canadians who have access to over-the-air for free of U.S. services. And that, unfortunately, is, you know, if you go to Buffalo, there are some people, I suppose, and we see it in the retransmissions fees that we get, there are some people who are watching Canadian services, but it's not the same.
2557 The American market in insular and the rules that are built for that market are based on that. We just don't have the same system here. So, I would caution the Commission has to be very careful about the adoption of an American rule to the Canadian circumstance because there is a lot of baggage that goes with it.
2558 COMMISSIONER MORIN: Thank you very much.
2559 THE CHAIRPERSON: I believe those are all the questions. Thank you very much for your presentation. We will take a ten-minute break before we go with the next panel.
--- Upon recessing at 1427
--- Upon resuming at 1439
2560 LE PRÉSIDENT : O.K., commençons.
2561 THE SECRETARY: Order, please.
2562 I would now invite our next presenters to make a joint presentation. This panel is composed of CTVglobemedia Inc., Canwest Television Limited Partnership and CBC/Radio-Canada.
2563 Appearing for this panel is Ms Kathryn Robinson. Please introduce your colleagues, after which you may proceed with your 20 minutes for your joint presentation.
2564 Thank you.
2565 MS ROBINSON: Thank you, Madam Secretary. Good afternoon.
2566 Mr. Chairman, Vice Chairs, Commissioners and Commission staff, my name is Kathy Robinson and I would like to begin by introducing our panel for today's presentation.
2567 Next to me, Leonard Asper, President and CEO of Canwest Global Communications; Ivan Fecan, President and CEO of CTVglobemedia and President of CTV Inc.; Hubert Lacroix, President and CEO of CBC/Radio-Canada; Charlotte Bell, Senior Vice President of Regulatory and Government Affairs for Canwest Global Communications; Paul Sparkes, Executive Vice President Corporate Affairs for CTVglobemedia; and Steven Guiton, Chief Regulatory Officer for CBC/Radio-Canada.
2568 Mr. Chairman, thank you for the opportunity to appear today as part of this historic proceeding. We would also like to thank the government, and particularly Minister Moore, for providing this platform for Canadians to express themselves.
2569 They did in record numbers and the results were overwhelmingly clear. Canadians have spoken, they want affordable access to a diversity of Canadian services, including their local television services.
2570 This is the first time our three organizations have sat jointly before this Commission. While we may not agree on all issues, we have common cause regarding the importance of the issues you are considering today and the sense of urgency we all feel regarding those matters.
2571 To that end, our presentation is brief and to the point. We have divided our presentation into three areas which we believe go to the heart of the current proceeding.
2572 First, affordability; second, accessibility; and third, sustainability.
2574 MR. LACROIX: Thank you, Kathryn.
2575 So let's start with affordability. It's a key issue in this proceeding. We heard you this morning, Mr. Chairman.
2576 Canadians want diversity of choice and we think should be provided with affordable access to local television services.
2577 In our view, the first step to meeting this need is to revise the basic package.
2578 Specifically, we believe that the Commission should require BDUs to offer a skinny basic of Canadian services. It would include local and regional television stations, section 9(1)(h) services and provincial educational services.
2579 The BDUs should not be permitted to add anything else to the skinny basic package.
2580 This would give consumers both enhanced choice and a small, affordable entry point into the system. BDUs would be free to create packages that include the skinny package, but they could not force consumers to buy these larger packages. Consumers would thus have the option to purchase only the skinny basic plus whatever other packages of services they may wish; whatever they find affordable.
2581 And, finally, in order to ensure that the skinny basic package itself is affordable and continues to be so, we believe the Commission needs to take definitive regulatory action.
2582 Selon nous, deux options sont possibles.
2583 Dans la première, le CRTC pourrait exercer une surveillance directe sur le prix du service de base allégé qui serait mis en place. Le Conseil pourrait ainsi exiger des EDR qu'elles lui soumettent pour approbation le tarif de base qu'elles se proposent d'appliquer.
2584 L'autre solution, d'après nous beaucoup plus simple sur le plan administratif, consisterait pour le Conseil à fixer un tarif maximal pour le service de base allégé. Ce plafond pourrait être modulé selon la taille du marché dans lequel il s'applique.
2585 À cet égard, le plafond ressemblerait à celui que le Conseil a déjà établi pour le service de téléphonie locale dans les marchés déréglementés et remplirait exactement la même fonction que celui que nous proposons, soit celui de protéger les consommateurs.
2586 Les EDR pourraient exiger le tarif maximal prévu pour le service de base allégé ou un tarif inférieur à celui-ci, sans autre formalité. Toutefois, pour imposer un tarif supérieur au plafond prévu, les EDR devraient obligatoirement faire une demande au Conseil.
2587 Mr. Chairman, we believe that a skinny basic package with a rate that is either capped or subject to direct Commission approval would ensure that Canadians have an affordable entry point into the Canadian broadcasting system. It would also provide consumers with enhanced choice and control over their television service purchases.
2588 Affordability and choice, these are both important in order to keep consumers within the Canadian broadcasting system.
2589 MR. ASPER: Mr. Chairman, the second area we want to discuss today is accessibility.
2590 There is no point in having local television services unless they are accessible to consumers. This is an obvious fact, but one which deserves repeating.
2591 Parliament made it very clear when it enacted the Broadcasting Act that Canadians must have access to their local television stations. That's why BDUs are required to give local stations priority carriage and it's why local television stations are in the basic service package.
2592 Canadians want their local television. Surveys, viewing statistics and the tens of thousands of submissions to the Commission in this proceeding make that point very clear.
2593 Canadians value local television, but local television stations are not always accessible to their local audience. In many communities local television stations are not carried on DTH, the satellite carrier and the result can be devastating for the local television station.
2594 There is no justification for DTH to carry multiple versions of U.S. networks and not carry Canadian local television stations. Neither is there any justification for DTH to dedicate capacity to low priority services such as adult programming, otherwise known as pornography, while not carrying local television stations.
2595 In our view, DTH has the capacity to carry all local stations and we believe that must be done.
2596 If local television is to serve the people it is licensed to serve, DTH must do what the Broadcasting Act says it must do, which is to give the priority to local television.
2597 The small low-cost basic service that we are proposing, and that Hubert has just described, will also be of significant help in the transition to digital. By providing a low-cost entry point to the new multichannel environment, the skinny basic service will ensure that the hybrid model endorsed by industry and the Commission includes an affordable and accessible BDU option.
2598 Like most countries in the world, we believe there is a role for the Canadian government to work with broadcasters and BDUs and equipment manufacturers to assist Canadians with the changes to come.
2599 Accessibility means Canadians should be offered choice, including a choice of services in convenient, attractive and affordable packages.
2600 MR. FECAN: Finally we come to the issue of sustainability.
2601 Collectively our three companies represent the majority of the local television stations in Canada. We represent the sector that has made the greatest contribution to the Canadian broadcasting system with an investment since 2001 of over $8.6 billion in Canadian programming.
2602 It is important to recognize that this contribution flows throughout the system.
2603 While only seven of the top 30 video sites in Canada are Canadian, CBC, Canwest and CTVGM together represent the source of over 55 percent of the total Canadian videos viewed online.
2604 Today we are here representing the millions of viewers, thousands of employees and the hundreds of community organizations, who believe that local television has a critical place in the Canadian broadcasting system today, tomorrow and in years to come. Let's be clear, that is why we are here to talk about the future.
2605 Mr. Chairman, Panel, we believe the future must be built on two simple principles.
2606 First, Canadians are already paying for their local TV on their monthly bill. Quite simply, the time has come that BDUs should fully pay for what they use, just like any other business has to do.
2607 Second, property rights should be respected.
2608 Those two principles should apply to both specialty services and local television stations. There is no reason for excluding either of these types of services in respect of either principle.
2609 We are asking for a simple balanced principle approach in the future, an approach that will neither handicap nor advantage any particular type of service, an approach that will value services based on their appeal to Canadians, an approach that encourages competition, creativity and innovation.
2610 This balanced approach can only be achieved if conventional broadcasters have a framework for negotiating value for signal, a framework which recognizes the property rights broadcasters have in their programming.
2611 We recognize that there are no guarantees in this world, however, we believe there is a tremendous future for conventional television, because that is what Canadians love to watch.
2612 MS ROBINSON: This hearing is about Canadian consumers and the future of Canadian television.
2613 The Governor in Council specifically requested that the Commission take into account the comments of the general public. With a record number of submissions, the vast majority agree that there needs to be a sustainable future for local television. It's time to rebalance the relationship with the satellite and cable companies.
2614 We agree and our response has a two-pronged approach that would allow for local stations to receive fair value for their service, while at the same time protecting the consumer by creating a mandated skinny basic package to offer an affordable alternative.
2615 As outlined today, we believe our proposals address the three principles of affordability, accessibility and sustainability.
2616 Thank you.
2617 Our panel would be happy to respond to your questions.
2618 THE CHAIRPERSON: Well, thank you for your presentation.
2619 I think about a year ago, Mr. Asper and Mr. Fecan, you made history by the two of you appearing together for the first time. This year it's three, with Mr. Lacroix. I guess next year is going to be four with Mr. Péladeau.
2620 MR. ASPER: We want Citytv here as well, too.
2621 THE CHAIRPERSON: Okay, fine.
2622 We are here, as you know, to make a report to the Minister on the affordability of local television and the impact of digital migration.
2623 Let's deal with the first part.
2624 If you look at the Order in Council, it is quite clearly tied to local television, local television signal regime, in particular to affordable access to a variety of local and regional news, information and public affairs programming.
2625 When you were before me two weeks ago or something you, Mr. Fecan, suggested that we adopt a variation of the U.S. system of, in effect, being able to negotiate with the cable company your local signal or else being able to withdraw it.
2626 Does today's presentation supersede that or is that still on the table?
2627 MR. FECAN: It's still our view.
2629 THE CHAIRPERSON: Yes, but I mean you have put one version, Mr. Asper had a slightly different version and Mr. Lacroix suggested that we have a 9(1)(h) and dictate a rate.
2630 Now the three of you are together and you are speaking to me as one, so which voice am I listening to?
2631 MR. ASPER: I can't speak for CBC, I will let Mr. Lacroix do that after, but 9(1)(h) -- CBC was 9(1)(h), there was retransmission consent, but it all ties into one principle, which is a framework for a negotiation that results in a value for signal.
2632 I think that is the principle. There may be different ways to come at that, but we are all united on one point, which is that we need a second revenue stream and there we believe we have a consumer friendly way to achieve that.
2633 THE CHAIRPERSON: I understand that for you, Mr. Fecan, but if I understood CBC when they appeared before me, they in effect wanted us to use the 9(1)(h) model and impose a rate. There was no talk about negotiation between you and the BDUs.
2634 MR. LACROIX: Mr. Chairman, if I can bring you back to --
2635 THE CHAIRPERSON: Yes, please do.
2636 MR. LACROIX: -- our presentation at that time?
2637 We didn't talk about dictating a rate. What we talked about is forcing a negotiation to get to a rate. I think that's a very important distinction.
2638 We believed in a framework, we talked about the order, we suggested some criteria in the appendix to the order that could be used to frame the conversation.
2639 The only thing that we talked about was trying to get everybody in the room to force a conversation and a negotiation.
2640 THE CHAIRPERSON: Okay. I thank you for that clarification. I understood. That was clear.
2641 I recall that, but also that you say at the end of the day if there was an unsuccessful negotiation we would in effect set the rate, on the basis of those criteria.
2642 MR. LACROIX: You would be the backstop. You would be the backstop.
2643 THE CHAIRPERSON: Okay.
2644 MR. LACROIX: We talked about baseball arbitration or in any kind of other way to come to a conclusion to break the deadlock, yes.
2645 THE CHAIRPERSON: Okay.
2646 MR. LACROIX: Yes.
2647 THE CHAIRPERSON: Thank you for that clarification.
2648 Now, you all feel that the value of local signal is not properly compensated for.
2649 You have heard the BDUs at great length talking about how they pay for it in kind in terms of giving exclusive right to local advertising, giving you mandatory carriage, having a better signal, a clearer signal over a wider reach and you would get it through the air, and also you have the benefit of simsub, which they feel compensates for it.
2650 You feel it doesn't and therefore you want these negotiations.
2651 In order to sort of put it in some context, because you can't talk about affordability unless you talk what it is. We are talking here about consumers and the only number that has been out there floating around is the $10. God knows where it came from.
2652 So I suggested earlier this week that we look for guidance at the rate that's being charged for specialty TV, which does not have some of the advantages you have but who have clearly a second stream of income. I pointed out that it goes all over the place from $.09 for MuchMusic, The Weather Network $.23, APTN $.25, TSN $.36, Newsworld $.63.
2653 So from that I surmise that since you already receive partial compensation in kind, which people don't, you presumably will be somewhere in that range and, for argument sake, let's say that means $.25 is what you settle on, which would mean in a market like Ottawa with -- Halifax with three stations at $1.50, then this morning I talked with Rogers about it and by my count it's five stations in Toronto, which would be $1.50, et cetera.
2654 That is quite a different thing to ask people that's what you have to pay additional per month rather than $10 or what other -- it also takes us away from this catastrophic media campaign that both sides have waged in making it sound that this is the end of the world as we know it, this is the end of civilization.
2655 We are talking about $2.00 or $1.50 or $.75 a month, et cetera. That's how we see it.
2656 Do you see it the same way?
2657 I'm not asking you to commit to a figure, but do you see that that's really the problem we are dealing with?
2658 MR. SPARKES: Well, it's certainly not the $10 that the cable and satellite companies are saying. I'm glad that you clarified that with them today and they sort of agreed with you that that's not the number that's being thrown around.
2659 I think we all agree that we are just not being paid for our product and we want to have the right to have the negotiation with the cable and satellite companies to agree on a price.
2660 We don't know what that price is, but that would come through a negotiation process.
2661 THE CHAIRPERSON: Clearly, Mr. Sparkes.
2662 But CB -- they have said they will not negotiate with you. If we force them to negotiate and there is something at the end of the day they will pass it on to the consumer. I think we can take that for granted. They see that as an additional input price which they don't want to bear and will pass it on.
2663 So I am supposed to find out from you and from other people in this hearing that whatever is the result of this regime it would be affordable by Canadians. So we have to frame it around some sort of value and that's why we are in this discussion.
2664 I go from the assumption that it will be passed on unless we adopt your suggestion of setting a rate -- we will come to that in a second -- and that it will be in that neighbourhood.
2665 Because we have seen 40,000 Canadians have written in saying don't tax my TV. I have about 130,000 things, save my local TV.
2666 So clearly the nation is divided, there is not one view.
2667 But divided on what, that's what I'm trying to get to.
2668 MS BELL: Chairman, I think we agree with you and we are concerned about the same thing, which is why we are advocating a skinny basic because, actually, whether consumers choose to take a skinny basic or not the fact is the system should at least provide for that option so that they have an affordable option and if they choose to subscribe to a larger package that includes the services that are in the skinny basic, that's their choice, but at least this would provide an option for consumers at an affordable price.
2669 THE CHAIRPERSON: Well, let's talk about the skinny basic, because just before you was Corus and who quite pointed out the skinny basic, according to them, it's not -- if people adopt it it actually means there is less money in the system for the BDUs. If they don't adopt it nothing changes.
2670 And they made a very strong case for packaging. Packaging in effect allows a lot of channels to be offered at a greater number and therefore be able to charge greater rates for advertising and therefore bring more advertising to the system.
2671 They cited evidence that the U.S. has shown that packaging is the way to go rather than pick and play, and obviously if you have skinny basic packages, then aren't you in effect making consumers even more aware of the price of TV and won't they then opt for the skinny package, if it's their pick and pay package, but the net result will be a lower amount of income to the BDUs.
2672 So where is the money? I don't see how this benefits you.
2673 MR. GUITON: Mr. Chairman, if I could start on this?
2674 From what we have seen from people's comments on the skinny basic, there have been basically two reasons why it's not considered interesting.
2675 One, the BDUs have said, well, we can't do it because it's too costly. And we've seen the example of Videotron and even some extent bragged this morning saying basically that's not true because Videotron does offer a small basic that allows consumers to enter the system at a relatively low rate.
2676 The other reason they've said that it's not a good idea is that people don't want it.
2677 Well, we think it's a very effective way of having a safeguard to make sure that there is some pricing discipline and that people have an alternative should they choose to -- feel that the system is too high priced for them.
2678 If nobody wants it though, if that's what the BDUs are really saying, then there's no harm to them. It's there as a safeguard and it has no revenue impact.
2679 But it's an important safeguard because today, for the example of Rogers' service in Toronto, consumers have to enter the system at $40.
2680 MS BELL: I think the point on pick-and-pay, I think we have similar concerns about pick-and-pay but, Chairman, having a skinny basic does not preclude BDUs from offering larger packages for consumers to have access to. It's simply a small affordable on ramp so that they can purchase those larger packages if they choose to do so.
2681 THE CHAIRPERSON: So, you feel that we should report to the Minister in order to make the system more affordable to Canadians, there should be a skinny basic consisting of basically just local system plus 91H, is that -- or also basic four plus one, U.S.?
2682 MR. GUITON: No, not the four plus one, just the local services, the 91H and local education -- sorry, provincial educational where they're applicable.
2683 THE CHAIRPERSON: Yes.
2684 MR. GUITON: And yes, that's right, we do think it gives you a pure pro-consumer win for both the CRTC and for government because it's an option that consumers can have if they need it.
2685 They can always choose to go to more packages beyond the skinny basic, but it really does protect them.
2686 MR. ASPER: Chairman, I just want to add a little to what Steve's saying. I think there's a word missing in what we've heard when we're repeating what we heard the BDUs saying.
2687 I don't think they said people don't want skinny basic, what they said was people don't want just skinny basic.
2688 So, what this does is, the point is what I've heard them say is, people always trade up into high, more and bigger packages.
2689 So, here you have a win/win in the sense you create more flexibility, a cheaper entry point of the system but you still give everybody all the options of -- every consumer has all the options of moving into the specialty and discretionary packages.
2690 THE CHAIRPERSON: Who loses in this? I don't quite understand your scheme.
2691 Assume I follow you with the skinny basic, people will avail themselves of it, there's also negotiation between you and the BDUs and you get a value for signal. That's going to be represented where, in the amount that they pay you for your value for signal, is that part of the basic package?
2692 MR. ASPER: Steve.
2693 MR. GUITON: Yes, it is.
2694 THE CHAIRPERSON: So, there would be skinny package but it will be proportionately more expensive than the basic package that there is right now?
2695 MR. ASPER: To the cable -- to the BDU, yes. I mean, their input costs may go up, but businesses have input costs go up all the time and that's life.
2696 THE CHAIRPERSON: Yes, but play it out. So, at the end of the day it means Canadians will be able to afford fewer packages, fewer additional -- I mean somewhere --
2697 MR. GUITON: I'm not sure I understand that, Mr. Chairman. If I could explain how we see the pricing for skinny basic occurring.
2698 What we did, and you'll see in the evidence that we filed with you November 2nd, that is CBC, we looked at an example of basic packages across the country today and the number of services that are in them and basically all of the basic packages are being offered for under $1.30 per service.
2699 That's a basic phenomenon that's out there, under a $1.30 for the number of services in the basic package.
2700 The basic package can go up to 50, 60 services or down, in the case of Videotron down to 23, but you're still under $1.30 per channel.
2701 THE CHAIRPERSON: M'hmm.
2702 MR. GUITON: And so all we're saying is that the Commission needs to establish the small amount of services that will go in the skinny basic, it will be capped.
2703 We think that the cap approach is the most administratively approach using the $1.30 example, so that you'll end up with the ability for you to say, okay, we know that in certain markets a small, medium or large market there's a number of services in that skinny basic and we have an idea that it's going to be no more than, even with the value for signal, it's going to be no more than a certain price and you'll be able to set that cap.
2704 THE CHAIRPERSON: I still keep asking you, who's the loser? Right now I have a basic package, you're telling me they're basically all priced along the same line per channel depending --
2705 MR. GUITON: Yeah.
2706 THE CHAIRPERSON: -- who I subscribe with and if the system were reversed to along what you would like, I now have a basic package plus 20 a year -- three packages which amount to 20 extra channels and the whole thing for 70 bucks under this scheme.
2707 Surely under your scheme if I have a skinny basic and then want to buy all the additional one that I had before, it's going to be more.
2708 MR. GUITON: Well, actually I don't know how the BDUs are going to price the services that they're going to take out of skinny basic, or take out of basic that exists today. I have no idea how they're going to price it and it's up to them to price it to maximize their revenue as well their consumer demand, et cetera.
2709 They're going to price it any way they like. You don't regulate all of those rates. They may be making more money, they may be making less. I don't know what the end result is going to be for the consumer, but I do know that all the consumers that exist in Canada will have a safeguard.
2710 MR. SPARKES: But at the end of the day it's a win/win for the consumer, for the broadcasters and for the BDUs. There's a cheaper entry point --
2711 THE CHAIRPERSON: I see the win for the consumer and the broadcaster, I don't see the win for the BDU.
2712 MR. SPARKES: Well, it's a cheaper price -- a cheaper price into their other offerings. They don't necessarily have to buy all the packages to get the local channels, and if they want to get other specialty channels or whatever, they can order them up.
2713 THE CHAIRPERSON: Why do you feel it's necessary that we fix a price of the basic or if I quite understood you correctly, it's a maximum that we establish, they can offer it for less but not for more.
2714 MR. GUITON: Right. Well, basically you will have seen from the information that we've been filing with you for a number of proceedings now, it's our view that cable is raising rates indiscriminately, there have been multiple rates.
2715 We know that recently as just December we've seen ExpressVu raise rates again and, so, the conclusion we have is that there is no protection for consumers. That's the conclusion.
2716 This hearing is about affordability for consumers. We think an important step in that direction would be for the Commission to establish a cap in a skinny basic so that the consumers are protected.
2717 THE CHAIRPERSON: So, this is a halfway house to full rate re-regulation that other people have suggested? You said, just set the basic, all of the rest optional, the market will decide what they can charge, et cetera, but the basic --
2718 MR. GUITON: Yes.
2719 THE CHAIRPERSON: -- right now, there is no market for it and that's why we have to set a maximum cap. Do I understand you correctly?
2720 MR. GUITON: I think that's more or less what we're saying, correct.
2721 MR. ASPER: Chairman, just to go back a little bit though, we came to the Commission asking for a regulatory solution to an imbalance as it affected broadcasters. We were then asked to try to help solve the problem of how that would affect consumers.
2722 So, you know, I don't think we started the skinny basic discussion, but when we had to turn our minds to how do we implement the value for signal proposition, you know, we wanted to come up with a solution that was consumer friendly and that's why we're here trying to help solve that problem.
2723 THE CHAIRPERSON: And I'm asking you a question because I'm trying to understand what you put forward and what the rationale is because, as you know, our tendency has been to de-regulate as much as possible and let the market decide.
2724 But you are essentially telling me there's no market for basic because changing from one BDU to another is really not that easy and not that painless so, therefore, since 90 percent of Canadians watch this stuff through BDUs, in effect, at least the basic access through BDUs should be controlled.
2725 MR. GUITON: Correct. And we filed in our submission, Mr. Chairman, an appendix which has significant documentation on the level of competition that exists in the BDU marketplace and the conclusion has to be that there's none there.
2726 And, so, if we want to protect the consumers, there is a way for the Commission to come in. We believe the most administratively simple way is through a cap.
2727 And I should just point out in discussing this, that this is exactly what the Commission does in the Telecom market, the Commission's already familiar with this approach.
2728 In de-regulated local telephone markets where the Commission has forborne, the Commission has established a cap, the Commission has established that it will be different for different size markets, small, medium and large, and the telephone companies are not permitted to go beyond that cap and they're permitted to go under if they want to and offer something even cheaper for consumers.
2729 But it's not something that the Commission is unfamiliar with.
2730 MR. FECAN: If I can add another perspective to support the comments so far.
2731 I think we should all take a step back and understand that raising prices is a choice. It's not an automatic thing that always happens, it's a choice.
2732 In a real competitive environment, people choose to compete on price.
2733 In this case we have every BDU saying, if this particular -- if we get a value for signal they will pass it through and they will raise price.
2734 And, so, therefore, in order to protect consumers, we put forward skinny basic as an alternative to a system which clearly isn't competitive enough if they all decide by accident that they're all going to raise price due to this.
2735 THE CHAIRPERSON: Now, if we do this and we implement this scheme, in return for that we then go to group licensing and, as you told me two weeks ago, Mr. Fecan, also you, Mr. Asper, the big quid pro quo would be a CPE on Canadian programming which you see for the over-the-air television.
2736 MR. FECAN: That's one, and the other, Chairman, is that many of these stations would stay open most definitely.
2737 THE CHAIRPERSON: I was exactly coming to that.
2738 If we had had this system in place a year ago, Brandon would not have closed?
2739 MR. FECAN: At the right number, absolutely. We had no particular interest in closing Brandon just to close Brandon.
2740 THE CHAIRPERSON: And in terms of the amount of local programming, local news, et cetera, what would be the impact there?
2741 Because as you notice, the Minister's order specifically refers to affordable access to a variety of local and regional news, information and public affairs.
2742 MR. FECAN: It would -- I think that would be the subject of a licence renewal in terms of how much for what and different broadcasters may have different approaches.
2743 And, as a group, we didn't dig into having the same approach to each of our licence renewals, but there would be a quid pro quo.
2744 THE CHAIRPERSON: So, it would be over and above the status quo?
2745 MR. FECAN: I didn't say that.
2746 THE CHAIRPERSON: Well, I'm asking you.
2747 MR. FECAN: I said a quid quo pro.
2748 THE CHAIRPERSON: I ask you, would that be over the status quo or not because you three are now getting an additional source of income.
2749 MR. FECAN: Depends on what the income is, quite frankly.
2750 THE CHAIRPERSON: The other portion of the Order-in-Council of course deals with the whole digital environment.
2751 Two weeks ago I gave you this list of stations that have to be converted as a result of the digital migration, which I have here somewhere, there were three lists, do you recall.
2752 And, Madam Secretary, do you have a copy for...
2753 Oh here, I found mine. Please give them...
2754 List three is really the total obligations. The lists are the ones are in the 360-kilometre coordination zone and also the mandatory markets as we established this year which have to be converted by 2011.
2755 If this scheme that you suggest is adopted by us, you told me that you would not be there in August, 2011, I think all three of you told me that at different rate.
2756 What would be the impact of adopting such a scheme on the digital transition; (a) would you still go the hybrid model and only do the mandatory markets; and (c) what would be the time frame for doing the mandatory markets?
2757 MR. SPARKES: Well, we've committed to do the mandatory markets if there's a business there and we have a proper value for signal regime in place.
2758 Outside of the mandatory markets, we're still looking at the hybrid model that we discussed earlier with the industry and the Commission.
2759 THE CHAIRPERSON: Yes. But I'm supposed to report to the Minister. I need a little bit more precision.
2760 That's why I gave you those lists and I don't expect you to do now off the cuff, but each one of you I would like you to give me your best efforts, you know, what it would be on the assumption that there would be such a system.
2761 MR. ASPER: Yes, we'll come back to you.
2762 THE CHAIRPERSON: I need some precision on this.
2763 MR. ASPER: Sorry, Chairman, I just want to make clear. The question is, what would we do if what, if...?
2764 THE CHAIRPERSON: You are suggesting that we should adopt a skinny basic.
2765 MR. ASPER: Right.
2766 THE CHAIRPERSON: Mandate the price for the skinny basic and put in place a system for negotiating value for signal.
2767 MR. ASPER: Right.
2768 THE CHAIRPERSON: That's the nub of your suggestion, all three of you.
2769 MR. ASPER: So, you're saying if you did all of those things how would it affect --
2770 THE CHAIRPERSON: What effect would that have on your -- I would like you to list, "this is what we are presently doing and these are the additional things that we could do if a system was in place."
2771 MR. ASPER: Okay.
2772 MS BELL: We are going to be filing a detailed report, I think by Monday in terms of our plan, Chairman, and we will be happy to provide you with those details if that works for you.
2773 THE CHAIRPERSON: Good, but that will still leave a lot of your customers without access, you know people in areas which are not served by you directly, or not served by terrestrial -- by a terrestrial BDU and who are not willing to buy satellite.
2774 The figures are all over the place. Have you got any better feel on it now than you had two weeks ago, how much there is by market or by region or something like that?
2775 Are you undertaking studies on that respect or are you basically writing them off and saying, "That's too bad. I will not be able to serve them over-the-air. Hopefully, they will become satellite customers or hopefully there will be a terrestrial option but I cannot do something for them?"
2776 MR. SPARKES: From our perspective we are not going to -- we don't plan on shutting off our analog towers so people will still be able to get it off the air. The only issue is one area which is Bobcaygeon that we have to think about.
2777 THE CHAIRPERSON: That's the only one you have for CTV. What about the other two?
2778 MR. FECAN: On the mandatory list within the 52 to 69, Bobcaygeon in Ontario it's about a third of the way down the page, CFTO TV-54. We are presuming that we will do Windsor.
2779 THE CHAIRPERSON: But here, look at the next one which is the 360 coordination. You have Victoria there. You have Bobcaygeon.
2780 MR. FECAN: We're assuming that.
2781 THE CHAIRPERSON: You have got Windsor. So you would power them down so that you would be on an acceptable basis but continue in analog, is that what I understand?
2782 MR. FECAN: We are assuming that in a value for signal regime that we are going to convert Windsor and Victoria, and the pause we have is Bobcaygeon which is a re-broadcaster of CFTO and the Bruce Peninsula and that's one -- that's the pause we have.
2783 MR. ASPER: And we will put a little bit more flesh on that on Monday with our --
2784 THE CHAIRPERSON: Yeah, and I am not trying to get you to commit yourself. I just want to see, since I have been asked specifically to report on it, I would like to know what the impact is if this happens.
2785 MS BELL: Chairman, our engineers are also looking very closely at trying to find ways to serve as many Canadians as possible over-the-air.
2786 One of the things, if I may just suggest, and I know you said this the other day, it would be helpful to encourage the government to step up and work with us on this transition in terms of finding solutions for those markets where we may not be able to extend service to everyone and also to help us with a campaign to educate consumers on the changes that are about to occur. So it may be something appropriate for your report.
2787 THE CHAIRPERSON: This is your chance, Ms Bell. You said it would be -- you can ask the government to step up. Tell me exactly what you would like me to suggest to them by way of "stepping up" because this is a problem that nobody wants to own that is kicking around, et cetera. We have this deadline staring us in the face and no --
2788 MS BELL: M'hmm.
2789 THE CHAIRPERSON: So to the extent that you have concrete ideas that you would -- what you feel the government should be doing here or to facilitate transition, this is your time to give it to us in writing and we will convey it to the Minister.
2790 And of course the same applies to CTV and CBC and anybody else who is listening.
2791 MS BELL: We will happily do that. Thank you for the invitation.
2792 MR. FECAN: Yes, thank you for the invitation. The basic principle is follow the money; he or she who benefits. And the beneficiary obviously is the $4 billion that the government will make on reselling the frequencies.
2793 THE CHAIRPERSON: Yeah, okay. Presumably you say take X dollars of that and use it for Y. It would be helpful if you told me how much X is and what the Y is.
2794 MR. SPARKES: Yeah, we will flesh it out for you.
2795 THE CHAIRPERSON: Now, on pages 13 and 14 you are talking about another issue which is local television not carried on DTH. And essentially, you suggest that the capacity is there. It is just not used properly. It's being based on HD signals, on U.S. signals or on other signals, rather than on local TV.
2796 On what basis do you make these assumptions? I presume both the DTH systems have tried to pick channels on the basis of having a reasonable return on their own investment?
2797 Wouldn't -- if they took your suggestion and dumped some of this, the services that you suggest and instead carried a very small regional system wouldn't that have a dramatic impact on their revenue flow?
2798 MR. ASPER: I can't speak for each particular channel. It's probably obvious that it is probably true that pornography makes more money than carrying Montreal, Global or CTV affiliates in Saskatchewan.
2799 I don't know their economics on that but at some point there is a Broadcast Act here and they don't have entirely -- this, as I said in the November hearing, this is a regulated system and there is a statute here.
2800 And so there are -- everybody doesn't get to do exactly what they want all the time everyday on every channel on every system. There are content rules. There are carriage rules and the basic principles are just being ignored.
2801 THE CHAIRPERSON: So the nub of your suggestion, to understand it correctly, is have a DTH review and basically order that every single station that's over-the-air in Canada be on both systems?
2802 MS BELL: Chairman, I think that it's fair to say what we suggested is -- first of all, the first principle is we believe that local television should be carried because it's mandated under the Act and it's a priority under the Act.
2803 Having said that, if there -- and we believe there is capacity because it is being used in other ways.
2804 But even if that weren't true, at a very -- at a minimum I think if we are being expected to put up transmitters in markets, and the list of markets where the Commission wishes us to put up transmitters and defray the cost of providing a service over-the-air for consumers, then at least in those markets our signals should be carried by the DTH BDUs. I think it's fair.
2805 THE CHAIRPERSON: That's slightly different then. So you want to make sure that every station has converted to digital be on the bird?
2806 MS BELL: If we have to spend the money to put up a transmitter to make sure people have access. Don't forget 92 percent of people subscribe to a BDU. So we are putting up this money for less than 8 percent of Canadians.
2807 So at the very minimum I think that the BDU should be required to carry those signals in those markets.
2808 THE CHAIRPERSON: CTV and CBC?
2809 MR. SPARKES: We believe it should be just the cable company, local into local. All the satellite companies should carry all of our local stations.
2810 THE CHAIRPERSON: Let's say Prince Albert, which I think is outside the 360-mile zone. We know it is not terribly profitable for you. If you decide not to convert it you still want -- they have the right to have it being carried over the local terrestrial system?
2811 MR. FECAN: Well, yeah, we are doing local news there.
2812 THE CHAIRPERSON: But also do you want -- Mr. Sparkes just said the ones that he can convert. Here is one you don't convert.
2813 MR. SPARKES: I don't think -- I didn't say that. Ms Bell said that. Mr. Sparkes didn't say that.
2814 THE CHAIRPERSON: Please repeat what you said. I don't want to put words in your mouth.
2815 MR. SPARKES: No, let's be clear. We want our stations carried on DTH. Every community should have the right to see their local channel. Whether or not they are a subscriber to a local cable company or a local satellite provider they should be able to watch their local news.
2816 THE CHAIRPERSON: Even those that you don't convert?
2817 MR. SPARKES: Yes, absolutely.
2818 THE CHAIRPERSON: And what about -- do you have any that you will not convert and really you in effect become a non over-the-air local station which will only be carried by BDUs?
2819 MR. SPARKES: Sorry, I didn't hear you.
2820 THE CHAIRPERSON: I mean you have told me that some stations you will not convert to digital.
2821 MR. SPARKES: We are converting all the mandatory markets that you are asking us to do, which we are going to do by 2013, which basically covers the majority of the country.
2822 But that shouldn't separate the issue of Canadians not being able to get their local television station either through the cable company or through the satellite company. In the hybrid solution we would be delivering --
2823 THE CHAIRPERSON: Okay, I will give you a specific example to illustrate my point.
2824 Victoria is yours.
2825 MR. SPARKES: And we will be converting Victoria.
2826 THE CHAIRPERSON: I thought there were some stations that you would not convert but would want to be carried on cable anyway, in effect being a non OTA local station. You don't have any of those?
2827 MR. SPARKES: I mean some of the stations in the Atlantic maybe or northern Saskatchewan but, I mean, we can come back to you in terms of what stations that wouldn't convert, in respect to that question, but at the end of the day they still should be required to be carried by the DTH provider.
2828 THE CHAIRPERSON: Well, we had a BDU here in the last hearing in which we established the rules for what should be carried on satellite and what not and you are basically asking us to revise those, if I understand it, if that's that nub of what you are saying.
2829 MR. SPARKES: Yes.
2830 THE CHAIRPERSON: Mr. Lacroix, I have heard from a lot of people here saying value for signal and so on makes some sense, lots of sense, is desirable, whatever and all over the place with regard to the commercial stations.
2831 But a very strong position is also that with the CBC that's really not your responsibility, CRTC. CBC is owned by the government, is funded by the government and really, therefore, if there is a need for capital for the CBC it should come from the government, not through regulatory measures.
2832 MR. LACROIX: Mr. Chairman, you heard me in the November hearings on this matter. I will be happy to address this issue again.
2833 THE CHAIRPERSON: This is a different hearing for a different purpose so I'm afraid --
2834 MR. LACROIX: But the angles are the same.
2835 THE CHAIRPERSON: Repeat what you are saying.
2836 MR. LACROIX: So I just want to go back to the financial model that we are in. We have a mixed model. Yes, we have an important amount from government but, as you know, a significant amount comes from our -- because we do a lot of -- we have a lot of activities at CBC/Radio-Canada.
2837 The decisions over time have been to push us to a position where we have to balance our budgets by going out and adding ad revenues to our model and the ad revenues represent 40 to 50 percent of our television networks both at Radio-Canada and on the CBC side. And that's why we have the same issue that CTV has right now and Global has on trying to make this model work.
2838 And if you go back to the value that we bring, it's not because -- and I gave you the example, way back when, of a semi-conductor company doing business in Canada and providing a chip to a phone or to a television set and that particular company benefiting from because it involves -- because it's government funded to a point or because it benefits from tax credits or because it involves -- has a lot of jobs in Canada, gets some subsidies from Canada.
2839 Well, the price of that chip for the person who makes the phone and sells the phone is not different because a person benefits from a certain part of its budget from different subsidies.
2840 We gave -- we were talking about VIA Rail. I mean VIA Rail is a Crown corporation. It benefits from substantial amounts of money. It's a Crown corporation. Do you think that people when they step onto a train expect that the seat in that train is going to be free or if a tour operator starts to purchase a seat on a VIA train that it's going to be less expensive because it's a Crown corporation as when you compare it to something else?
2841 That's the point we were trying to make. That's the position we are in.
2842 THE CHAIRPERSON: Right. Let me just advance the argument that some devil's advocate would say.
2843 MR. LACROIX: Sure.
2844 THE CHAIRPERSON: Mr. Lacroix, if you want that position then you also have to face the consequences of a market which is people have the option not to watch you and BDUs have the option not to carry you.
2845 MR. GUITON: That's not a CBC issue per se. That's a local television issue per se, and I think that issue has come up here at this proceeding, why should BDUs or customers have to carry or have to choose local television stations when they purchase basic.
2846 I think that's your question, Mr. Chair?
2847 THE CHAIRPERSON: No, it's not.
2848 Mr. Fecan, when he was before us in November said, "Fine, you know, I want to renegotiate the value of my signal".
2849 MR. GUITTON: Yes.
2850 THE CHAIRPERSON: "If these guys don't want to carry it we can't even negotiate. We can't come to a conclusion. I want to have the right to withdraw it."
2851 You have not said that. I have not heard you saying it.
2852 MR. GUITTON: No --
2853 THE CHAIRPERSON: On the contrary, lots of people say you are a public service. You are a national broadcaster. Canadians are entitled to watch you.
2854 MR. GUITTON: Yes.
2855 THE CHAIRPERSON: Your signal cannot go off the air.
2856 MR. GUITON: And so let me explain that. Our position is not just on the basis of CBC. Our position would apply with respect to all local television stations. We differ with CTV on this point. But our position is the following.
2857 It's the Broadcasting Act that established that local television will have priority in the system and the way the regulations and Commission decisions have interpreted that, or have applied that, is to say that they will be carried on basic. So the priority for local television is in basic.
2858 And recently, as recently as October of last year the Commission reaffirmed that basic will form -- basic service will form the basis of the BDU multi-channel environment and there will be a buy through requirement for consumers.
2859 So I think we have to separate the issues between value for service and local television on basic. Local television is a priority. It should be part of basic and it should be a buy through. That's the Commission's conclusion.
2860 Allowing those stations to be eligible for value for service doesn't change that priority. It doesn't change the importance of those services. It just puts them on a level playing field revenue-wise with everyone else.
2861 THE CHAIRPERSON: So in your model there would never be a withdrawal of local signals?
2862 MR. GUITTON: No, and --
2863 THE CHAIRPERSON: -- if there was a contract?
2864 MR. GUITON: No, that's correct.
2865 THE CHAIRPERSON: And CBC or CTV, the same rule applies?
2866 MR. GUITTON: Well, I think the CTV has a different proposal from us.
2867 THE CHAIRPERSON: No, I'm asking you your version, the way -- conceptually the way you see it is it would be the same for everybody?
2868 MR. GUITON: Correct. There would be no withdrawal of service.
2869 There would be negotiations as -- that model, Mr. Chairman, exists for specialty services now. They are required -- except for the recent addition of sports and news, I believe, they are required to keep their service in play and to negotiate on the basis of fair market value and that's what we are suggesting should continue. It's a good model. It works and we see no reason to change it.
2870 THE CHAIRPERSON: And you have heard the BDUs coming here and saying, "We won't sit down and negotiate with you".
2871 So what concretely should the CRTC do to put something on the table?
2872 MR. LACROIX: That's the purpose of the order that we have put in front of you in giving the framework to the negotiation.
2873 THE CHAIRPERSON: I know. Are CTV and CBC of the same view?
2874 MR. SPARKES: Well, we need to have the bargaining power to have a proper negotiation with the cable companies. You are right that they don't want to sit down and talk with us. So we need from you the power to have a proper negotiation, and that would be what we propose to you in our submission.
2875 MR. ASPER: And we have similarly said final offer arbitration and the Commission doesn't have to do the arbitration. It can be an independent arbitrator chosen by the parties. There are models that exist out there in the world that have worked in that respect, and that's what we think the mechanism should be.
2876 MR. FECAN: You know, Mr. Chairman, we are not reinventing the wheel here. In the United States it took an act of Congress to get the cables to negotiate. This is the same struggle.
2877 THE CHAIRPERSON: Now, you have just put a different variant on the table today and I am just trying to get my head around it.
2878 I read your submissions last night which didn't -- have the skinny basic and an optional 4+1. So in effect 4+1 would be a package that I buy the skinny basic and then I decide what I want and one of them would be 4+1.
2879 And you are not worried that given that most of Canada lives very close to the border people will say "Forget about the 4+1, I can get that over-the-air"?
2880 MR. GUITON: If I could start on this, Mr. Chairman?
2881 The existence of the skinny basic doesn't mean that people have to stop taking the services that they take today. And how the --
2882 THE CHAIRPERSON: I appreciate that but you are giving them the option. You are giving them the option.
2883 MR. GUITON: We are giving them the option but if the BDUs decide to say to everybody, "Look, effective whenever you can keep the existing services. You don't have to do anything" all I'm doing is making a skinny basic available and people can build up from that in the future. But no one necessarily has to change anything and it's up to the BDUs how they want to market what people are taking and how they want to price it.
2884 The only single requirement in the system is that there will now be a skinny basic with a cap and that will be made available on their sites so people can see it. And if people want to purchase upwards from there, and how they purchase upwards from there that's a BDU marketing decision.
2885 THE CHAIRPERSON: No, but it's more than that. You say the skinny basic and you say negotiations for the value for signal which then has -- you want to cap the skinny basic to the extent the BDUs feel they don't capture the value -- they don't get the necessary income from just selling skinny basic they want to try to get it out of the additional packages.
2886 MR. GUITON: I'm not sure I follow you. In our model the costs of skinny basic -- the costs of all the elements that are in skinny basic, all the services that are in a skinny basic would be encompassed within the cap.
2887 THE CHAIRPERSON: So when we set the cap we take into account --
2888 MR. GUITON: Yes.
2889 THE CHAIRPERSON: -- the negotiations that you have had with the BDUs for the value of the local signal.
2890 MR. GUITON: I think all we are proposing at this point --
2891 THE CHAIRPERSON: No, I am just trying to understand it.
2892 MR. GUITON: No, I understand.
2893 And it's not necessarily the case that you need to know what the negotiated value is. But as I said earlier, we just did a back of the envelope analysis of what is out there and it looks like every basic service is under $1.30 per channel in Canada.
2894 THE CHAIRPERSON: So the cap wouldn't necessarily have a number. We will just say the cap is what you pay for local signals as negotiated with the broadcasters?
2895 MR. GUITON: Let me be a little bit more --
2896 THE CHAIRPERSON: Would it be formulaic or would it be money? That's what I am trying to --
2897 MR. GUITON: No, it would be, as I said, very similar to what you have done on the telecom side. You could say, well, for markets, small markets let's say of less than 10 services and for medium markets of 11 to 15 markets, large markets 16 or more services,.
2898 You could say, well, given that it looks like it's around $1.30 I know already what the cap is going to be for the small markets and the medium markets and the large markets. I know already it's going to be $15 for the small markets, $18 for the medium and about $22 for the large. I know that because right around now, just ballpark, that's what basic looks like.
2899 The basic, the cost of carrying our local channels is already in the basic, and we know that.
2900 THE CHAIRPERSON: I don't know that. I have no idea how the basic is set up.
2901 But I mean you could do it formulaic. You could say -- you can charge for their -- as a skinny basic they get all the ingredients that you bought from the broadcasters.
2902 MR. GUITON: You could do that, absolutely.
2903 THE CHAIRPERSON: Yeah, okay.
2904 MR. ASPER: Just to use the example that EastLink gave today, I think they were saying they charge $22 for basic. They could charge $18 for basic and $4 for U.S. 4+1 and still say you are paying $22 for the same package.
2905 And Rogers charges something like $39 or $40. They have a bigger basic package. They have a different philosophy. They could still charge $40 for the same package of services but offer an affordable option of $20 for a lesser number of services.
2906 So they have got a number of, you know, options to still end up in a consumer-friendly environment. But at least the basic package is very affordable and consumer friendly then as a result.
2907 THE CHAIRPERSON: I am trying to figure out whether this is -- it surely has to be substantive; people have to avail themselves of it and use it. If you just put it in there as a mirage so that, here you can have it but you are not getting what you want, what's the purpose of it?
2908 MR. GUITON: The purpose is to operate as an important safeguard, Mr. Chairman.
2909 Today, if you are in Rogers' territory and you are paying over $40 for basic and basic prices go up and other prices, the packages go up, what is your option exactly? You are paying minimum 40 bucks. There is nothing else out there for you. This gives people an option.
2910 Yes, it may be that it's going to be smaller but what it's going to offer is the Canadian services that are necessary by the Commission's estimation for people to enter into the marketplace, and that gives them an option.
2911 THE CHAIRPERSON: Yeah. You know what you discussed earlier it comes back to the basic point. There is no competition in cable at that level.
2912 Okay, thank you.
2913 Peter, you have some questions? My apologies, I looked at the wrong one. It's Candice.
2914 COMMISSIONER MOLNAR: That's okay. We are starting all to look alike by now.
2915 COMMISSIONER MOLNAR: I do have a number of questions and I'm going to start with just a couple of quick questions to clarify some issues.
2916 Very quickly, when you are talking about this skinny basic and the CRTC setting a rate or a ceiling, are you proposing that would be the same in English and French markets or it would -- it could be different?
2917 MR. GUITON: We actually were thinking about this before and we couldn't think of why it would be different off the top of our heads but it would be -- in our view it would be on the basis of size. It's obviously a size issue because you are looking at different numbers of service within the basic.
2918 COMMISSIONER MOLNAR: Okay.
2919 MR. GUITON: We are still thinking and so I don't have an answer for you right now.
2920 COMMISSIONER MOLNAR: Okay. One more issue of clarity. You have said that regional should be in the skinny basic package. What is defined as regional?
2921 MR. GUITON: It's kind of a special CBC definition. It's under the Act that if there is no local CBC service available then a regional service has to be in basic. That's all we meant by that.
2922 COMMISSIONER MOLNAR: Okay.
2923 Okay, I want to move on to follow on the Chairman's discussion on skinny basic. I will tell you I'm very troubled with the concept as being a win-win and being a win for consumers. It's presented as an affordable entry point but in fact it -- in some ways, you know, you can get less for more; is potentially what could result here.
2924 If we strip out all of the U.S. 4+1 which hold no costs -- there are no programming costs for those -- so I'm not sure what the rationale would be for taking those away. And, you know, they add no costs to the basic service so I'm not sure why we would take those away from basic service.
2925 And if we then strip out some of the programming and add in additional costs related to the value for signal negotiations, the result potentially could be consumers -- while it's presented as a win-win, would get less for more money.
2926 MR. GUITON: I actually think it is a win-win just because the pricing that exists in the marketplace today is pricing that results from a lack of competition. It's pricing that the CRTC has deregulated that marketplace.
2927 There is no -- there is no control today. And we don't believe there is any competition. I think most people, and you have heard the consumers say the same thing, they don't have real choice in the marketplace.
2928 So what we are -- to get to the heart of your question, if you can give consumers some choice and a smaller package that is necessarily lower priced, I think that's a good thing for consumers and I think it does give them some affordability options.
2929 Now, to the extent that the services that are taken out of basic are re-priced, again you don't regulate that and the government doesn't regulate that and how BDUs price that is no different than happens today. They price it any way they want.
2930 And so if basic service -- if you believe basic service is high priced now, which many people are telling you it is, all we are proposing is to offer something that's a little bit more affordable and that doesn't change the other half of the equation, which is BDUs can price anything they want. You are not regulating their business at all right now. They charge whatever they want.
2931 And so you are right. They may take the 4+1s out and charge a lot for it. Whether it's going to be more than what consumers pay today I don't know, because it's all basically monopoly or oligopoly priced. So I don't know.
2932 COMMISSIONER MOLNAR: So let me just ask very quickly and directly. Tell me specifically what is the rationale for removing the U.S. 4+1 given we know it adds no programming costs to the cost of basic service?
2933 MR. GUITON: Well, you say that it adds no programming cost and --
2934 COMMISSIONER MOLNAR: Based on the record of this and other proceedings.
2935 MR. GUITON: No, no, because I think you are saying that because they can pick it up over-the-air for free.
2936 But whether or not there are costs of basic -- and what is in basic today no one knows. Just we don't know. And so there are costs in there. Whether they are associated with 4+1 I don't know and whether they say it is 4+1 I don't know.
2937 But that aside, the original idea of why an all Canadian basic makes sense, actually I think I mentioned this at the last proceeding as well -- came from a report that the Commission itself commissioned and the idea in that report -- was the famous Dunbar/Leblanc Report -- was that it would be very consistent with the objectives of the Act to make sure that all Canadians get access to the same basic Canadian services across the country, that they are getting a core set of Canadian services.
2938 That was the logic. And it's on that type of idea which I think the Commission endorsed as well -- this was two years ago -- it's on the basis of that logic that we thought the skinny basic should follow that model of a core set of Canadian services that all Canadians would get. That promotes, we believe, the concept of making sure that Canadians are getting the benefits of the Canadian broadcasting system.
2939 MR. FECAN: Commissioner Molnar --
2940 COMMISSIONER MOLNAR: So it's not an affordability issue?
2941 MR. GUITON: Oh, sorry, it's that as well. I wasn't -- it's both things together in our view.
2942 MR. FECAN: In your assumption, in your kind of logic that you might end up with less for more, I think where we might differ is there is almost an implicit assumption in that logic that basic is fairly priced right now and our assertion is that it is -- whatever is in basic we don't know, but we think it can be priced for a lot less than what it's priced now. And I think there may be that difference in assumptions.
2943 COMMISSIONER MOLNAR: Okay, I want to move on to some of the more practical issues of implementing your skinny basic proposal if we were to implement or put in place a ceiling or set a rate.
2944 As you pointed out, we don't regulate all of the components of the BDU system. You used the analogy of telecom rate regulation with the basic rate and I could use lots of analogies on the telecom side but I will stick to the BDU side here.
2945 When we are talking -- this has been presented as an affordability option, that we can ensure there is an affordable choice for Canadian consumers and citizens. But when we don't regulate all the components -- we have heard over this period of time about a digital charge, a digital conversion charge, we have seen LPIF charges added to the bill, we have seen, you know, set-top box charges can be in or out.
2946 The reality is how practical is it to believe that if we simply pick a little piece of the full consumer's bill and say we are going to regulate this, that we actually have done anything to assure that consumers continue to receive an affordable service?
2947 Because they can get around that price, you know, so we set it and we say -- I mean, set it at whatever you want, $10, $15, $20 and they add onto it the LPIF charge, the set-top box charge. You know, they will just add incremental charges on top of it and it does nothing for consumers at the end anyway.
2948 MR. GUITON: I think that is a fair frustration and a fair commentary on the lack of competition in the market. You are absolutely right. Definitely the Commission can establish the number of services that go into basic, the Commission can do that. And definitely, through its regulation, the Commission can ensure that people don't have to buy other things to get basic, they can do that.
2949 Whether or not the companies are going to try to put a lot of other costs on there, you know, that is a question of what -- you do have the ability to set a cap for that small basic. And we believe you can follow through and do that.
2950 MR. LACROIX: And it comes back to a point that Ivan made a few minutes ago, if one of these BDUs chooses to compete on price, then the environment is going to change. If they choose not to, then some of the concerns that you have will actually get realized.
2951 MR. FECAN: I don't think any of us believe that BDU rates aren't going to go up. They have gone up historically by huge amounts and it seems to be a fairly regular occurrence. But what they are saying is they are going to go up specifically if we get value for service. Skinny basic would assure that it would not go up specifically for value for service.
2952 MR. ASPER: I think, Commissioner, also at least what we are trying to do is solve for the consumer that is on the tightest budget, if you will, I mean, the one who has the least disposable income and can afford the least amount. If someone gets charged, you know, a set-top or a digital box charge at the $80 or $100 range and it goes to $102, they are probably more able to absorb that charge than somebody at the lower end of the range who can maybe only afford a $20 or a $25 package.
2953 COMMISSIONER MOLNAR: Fair enough. I guess I am just questioning how reasonable this really is as a means to say consumers will at the end have a safeguard. Because, you know, where it was $20 and the box was included, now it is $20 but you have to go out and purchase your own or you can rent it for us for $3.50. You know, I mean, we are talking about a very little component of a big system.
2954 MR. GUITON: Right.
2955 COMMISSIONER MOLNAR: That includes -- in fact, I mean for many consumers, for 30 per cent of consumers, it includes their internet and their telecommunications as well and it is bundled and everything else.
2956 MR. GUITON: It is certainly better than today.
2957 COMMISSIONER MOLNAR: Well, these charges don't exist today
2958 MR. GUITON: No, but it is certainly better today that you establish a small basic at a low price, than a very big basic at a high price. Because those charges could be added onto the very big basic with a big price. So we are starting at the right place, we are going to a small skinny basic at a low cost.
2959 COMMISSIONER MOLNAR: I want to move onto accessibility, and you did speak to the Chair about this as well. But I would just like to know, particularly as it regards to small market systems, if you can give me some sense. We did go through a hearing just a couple of weeks ago and there was two things floating around; one is the value-for-signal and the other is carriage, local signals into local markets.
2960 And I would like to know from you, and particularly as it relates to smaller market systems, which one of those is more important to ensure that local television signals stay within their markets?
2961 MR. ASPER: Well, I think you are asking, you know, a station to choose between food or shelter. I mean, I think they are both an equal component of the equation. Obviously, value-for-signal is, if you had to rank them, if you put a gun to our head and said you had to rank one, the value-for-signal is the one we have been at this Commission and in front of heritage committees for 15 years saying needed to happen.
2962 COMMISSIONER MOLNAR: I am taking here particularly about the smaller market systems, and that is why I wondered if that sort of order might be different for small markets versus your system as a whole?
2963 MR. ASPER: I hate to give you maybe an answer you don't like, but it is really both. I mean, we have tried to come up with an equation that works for stations, and I just don't think you can pick one and two -- I don't think we feel you could pick --
2964 COMMISSIONER MOLNAR: So would either one of them alone solve the problem?
2965 MR. ASPER: No.
2966 COMMISSIONER MOLNAR: Neither?
2967 MR. ASPER: No.
2968 COMMISSIONER MOLNAR: Both are required to solve the problem?
2969 MR. ASPER: Yes.
2970 COMMISSIONER MOLNAR: Okay, thank you.
2971 I want to move onto the last issue you brought up, sustainability. First of all, I want to move this conversation a little bit into the future and talk about what we could see, assuming that value-for-signal was implemented. You know, what we have heard through this hearing, you made the point we have heard from a lot of Canadians, we have.
2972 We have heard from Canadians who want to stop the TV tax and we have heard who want to save local TV. And even those who want to save local TV are often telling us that local TV just isn't what it used to be. There is less in terms of both quantity and the quality of local television. And they view local television as extremely important, but they are concerned that it is really not what it used to be.
2973 And I am wondering, if you look into the future with the assumption that you achieve your value-for-signal and in small markets, if need be, it is your carriage as well. But do you see that turning around? Do you see it becoming more local?
2974 MR. FECAN: Well, I think this is part of licence renewal, and so each one of us may have a slightly different take on that.
2975 COMMISSIONER MOLNAR: Exactly, I would expect so.
2976 MR. FECAN: But I think each applicant, and along with the Commission, will have to prioritize all of the cost inputs and all of the kind of things that you hope that we would do as a licensee, which is more important: is local news more important than national news; are either of those more important than priority programming; what kind of priority programming has what ranking in terms of as you can afford to pay for things; as the Broadcast Act says we ought to behave as private broadcasters, that you contribute according to your means and your ability to pay for, what are the priorities?
2977 So together, we can determine what the priorities are and then, using resources available, meet those priorities in the order that they come out. So if that is what the people determine is important and if that is what a particular group wants to do and if that is what you feel is the right thing, that is a possibility.
2978 MR. ASPER: If I can just from Global's perspective or Canwest's perspective. I think there is some perception issues here about local TV and I think I know why they are there. I mean, if you look at the number of hours we produced since, you know, 1970 or whatever, it hasn't really changed. You know, in fact it has grown in some markets as we have had licence renewal or licence acquisition arrangements.
2979 For example with WIC, when we bought WIC in 2000 we upped the number of hours that Hamilton was doing and that Victoria was doing and we have maintained that.
2980 And something the Chairman said earlier about minimums and quid pro quos if we got value-for-signal. You know, we have said seven and 14 and we have agreed to, as a group, seven and 14 in small and large markets in terms of number of hours. But, you know, we are still doing 30 plus hours in Calgary and Edmonton and I don't think we plan to change that, because that works, that is what consumers want and that is actually generating revenue.
2981 It is the smaller markets where it is troublesome. And I think what has changed is the kind of production. I remember even working myself at CKND in 1979 or 1980, and I am dating myself more than I would like to here but, you know, we used to do productions, we used to really produce -- because there were only 10 channels we were competing with on the dial or 20 channels. Remember, 1979, TSN didn't exist, there really were 10 or 15 channels at that time.
2982 And so the revenue pie per broadcaster was bigger and so you could go to the local fair and take six cameras and produce a show and, you know, tape a live production, you could do all that stuff.
2983 So when I say we were doing 32 hours in 1980 and 32 hours in 2009, it is a different -- and I can speak at least for Global, it is a different 30 hours, you know, it is news and information, it is studio-based news and information which is still good for the community and people like that and they watch it. But you can't afford to do, you know, local comedy shows and, you know, big budget productions of musical performances and things like that.
2984 And I think the value-for-signal will let local TV get back into that a little bit more than they have traditionally been able to right now.
2985 MR. LACROIX: And from CBC's perspective, just to conclude, we also think it is a conversation for licence and renewals. However, if you want to have an idea of the direction that we are taking, you saw what we just did, we invested 30 more minutes in local news, we did something -- 10 minutes in the evening, so that is obviously one of the priorities in where we would like to go.
2986 MR. FECAN: Sorry just one final point. I think the plan, you know, the future, you talked a little bit about the future, is going forward there is no doubt that the broadcasters want to have a strong local brand all -- you know, if you listen to our strategic planning sessions and we are a fly on the wall and I am sure, you know, CityTV clearly is going the same way, which is build a very strong local brand because that is what is also going to win the battle online and on mobile devices and all the other devices that come along, it is start with that broadcaster.
2987 And I think Commissioner Simpson and I had this conversation in November, it starts with the broadcaster and the platform there that can pay for the -- that can finance the content that then can be, you know, all pervasive in the community on different platforms.
2988 COMMISSIONER MOLNAR: That is actually a perfect segway into my last question. Page 22 you said that, "We believe there is a tremendous future for conventional television."
2989 And what I wanted to do, because our hearing is also about reporting on how value-for-signal will assist or will influence or impact the both current and future business models, is I just wanted for you to share with us your thoughts on how this tremendous future for conventional TV -- how you see conventional TV remaining relevant in the future as we are going more and more into a multiplatform on-demand type of media usage.
2990 How do we ensure that, you know, we are not here talking about saving a typewriter because people still need documents, right?
2991 If you could tell me how you see the tremendous future of conventional television fitting into the future of multimedia on-demand world I would appreciate that.
2992 MR. FECAN: I will start and I know others will want to chime in. Structurally what it does for us, is it puts us in the same situation as the specialty channels, so it gives us a second revenue stream. What that second revenue stream enables us to do is to continue being relevant to our audience. Most people watch huge amounts of conventional over-the-air television.
2993 We make a lot of our programming available online or streaming or to pay-per-view. And we create most of the programming or much of the programming, the big-ticket programming in particular, that then have a life either online or on specialty.
2994 And so by getting this other revenue stream we will be able to continue doing that, which audiences enjoy clearly, and enhance doing that. And so that is the future. I mean, the future is that the people actually love it now, they are using it now, they are watching the shows now, shows continue living on in other platforms and this will enable us to continue doing that.
2995 MR. LACROIX: Frankly, I don't have much to add to Ivan's answer, that is exactly how we feel. We feel that the sound financial footing will allow us to continue doing more on the new platforms, sharing content and ensuring that conventional television, where it all starts -- there was, in the presentation, 55 per cent of the content of the websites is what we produce and what we put out there. We think that will allow us to continue to do more of that.
2996 MR. ASPER: I mean, I would say ditto but I also just would say, you know, you have to step back and realize that, you know, new media has not ever replaced old media and that radio still exists. People listen to radio, people listen to iPods, people get, you know, CDs and find other ways to listen to music.
2997 But, you know, right now and I know Commissioner Denton and others have asked a question about what in six years or 2015 or, you know, when will half the population get half the TV viewing online or whatever. We have to remember new media hasn't replaced old media because of stacking, basically people are doing it all. They are still watching their TV and, by the way, they still, in large percentages, start with the television broadcast of something. They then follow it on other platforms, as the others have said.
2998 But it is all part of the mix, one is not going to replace the other. And for the very, you know, I think short to mid-term future, 10 to 20 years, I think people are going to be sitting and watching television on their couch. They will be taking it with them, they will be watching it on their laptops, they will be doing lots of other things.
2999 But that content has to be financed and it comes back to the main message we have got here which is, you know, that medium exists, it will be strong for the foreseeable future and it needs to be financed properly.
3000 MR. FECAN: Commissioner Molnar, several hearings ago I think the Chairman asked me a really good question at the beginning. Not that they all aren't good, Mr. Chairman --
3001 MR. FECAN: -- but one that sticks in my mind. And that is, you know, if Susan Boyle is an internet phenomenon, what the heck do we need you guys for?
3002 And the answer of course was, well, yeah, she is an internet phenomenon, but where did she get created, she got created on Britain's Got Talent, an over-the-air conventional television program and it was massively well-produced. And from that, she had a life on the internet and, right now, I think she is the top selling physical CD artist in North America at this particular moment.
3003 So it is the long tale, but the content was created on the conventional system.
3004 MR. GUITON: If I could without confusing those financers, but I just want to get back to your question about the typewriter, and I know that Commissioner Denton has also asked the question of -- used the word "obsolete."
3005 Clearly, from what you have heard from the CEOs just now, is what we are producing is not at all obsolete or ancient. We are on the forefront. What is obsolete is our business model, it is not us, it is the business model that is broken. We are out there, we are the leading media companies, but we have an obsolete business model.
3006 COMMISSIONER MOLNAR: Those are my questions.
3007 THE CHAIRPERSON: Thank you.
3008 And I have five other questioners here. And we have a panel of consumers who have been patiently waiting. So I would ask all of which, as I give you your turn, to be very precise in your questions and be precise in your answers.
3010 COMMISSIONER ARPIN: Yes, thank you, Mr. Chairman.
3011 I have two questions. The first one is regarding skinny basic. It is good that you describe your skinny basic the way you do it. But the record says that the BDUs which are operating at 750 MHz are using 700 of those megahertz to carry video and that their business is very capital extensive. And they are recuperating part of that -- well amortizing the CAPEX on the basic service.
3012 Based on the assumptions that you have made so far, in particular you, Mr. Guiton, how significantly your skinny basic will be impacted if they keep amortizing their CAPEX?
3013 MR. GUITON: I can't speak to the costing allocations of the companies, the BDUs, Mr. Arpin. But as you know, the Commission has had a lengthy experience with those companies, they are shared networks. We have no idea how the costs get moved around and I can't speak to those.
3014 All we do know is that there are companies out there, BDUs, that are offering skinny basics, such as Vidéotron, who is able to do it and is able probably to do it profitably, we assume that. It is offering a standalone package with the skinny basic.
3015 COMMISSIONER ARPIN: Except by the evidence that we had yesterday from Vidéotron. Their skinny basic doesn't include a charge of $2.99 to access digital and other fee of $3.99 to access HD, which at the end of the day that skinny basic is --
3016 UNIDENTIFIED SPEAKER: Not so skinny.
3017 COMMISSIONER ARPIN: It comes in the same price range than the others.
3018 MR. GUITON: It is still, as I said earlier, Mr. Arpin, it is still in the order of less than $1.30 per channel. If you put in all those charges, you are still getting in the Vidéotron case 23 channels for around $20 with all those charges you have just discussed.
3019 COMMISSIONER ARPIN: Among the 20 channels that you are talking about, about 16 of them are audio anyhow because their basic is only made of local stations, it has no U.S. into it and it has the 91H --
3020 MR. GUITON: Correct.
3021 COMMISSIONER ARPIN: -- and the so-called double status that are still left. And the rest are audio services, a galaxy, among others.
3022 MR. GUITON: Commissioner Arpin, we have 23 TV channels in the skinny basic and I would be happy to supply you with a list of those.
3023 COMMISSIONER ARPIN: I have their list here. I have their brochure with me and I will check that by myself.
3024 I have another question and it goes to all of you. If you were to convert all your system to digital, your transmission infrastructure to digital, how much will it cost you? Have you ever done that study? And regarding Radio-Canada and CBC, have you done if for the French and the English?
3025 MR. SPARKES: Well, I think for -- just taking the major markets that you have asked us to transition --
3026 COMMISSIONER ARPIN: No, no, but at some point in time, in the past, have you looked at what will have been the cost of going digital all across the system that you are currently operating in analogue?
3027 MR. GUITON: Just so I can understand the question. So that means converting all of our analogue transmitters to digital?
3028 COMMISSIONER ARPIN: Yes, exactly.
3029 MR. GUITON: Well, I will start. Yes, we did sometime ago and it was -- I can't give you the number off the top of my head, because it was a number of years ago. But we looked at that and it was the basis of that cost, that was extremely high, that we ended up coming up with a hybrid model just because the cost was so out of whack with our ability to finance that that we obviously saw that we needed the hybrid model and so that was the genesis of the hybrid model.
3030 COMMISSIONER ARPIN: Could you provide us the information by say next Monday?
3031 MR. GUITON: Absolutely.
3032 MR. SPARKES: And we did it as well, so we will file something for you.
3033 COMMISSIONER ARPIN: Okay, at the same time. And I guess --
3034 MS BELL: We will do the same. We were planning on doing it anyway.
3035 MR. SPARKES: Commissioner Arpin, you are asking just about the infrastructure, not about the studios or the cost of production?
3036 COMMISSIONER ARPIN: No, no, I am talking the transmitting infrastructure.
3037 MR. SPARKES: Just the transmitting infrastructure?
3038 COMMISSIONER ARPIN: Yes, exactly.
3039 MR. SPARKES: Thank you.
3040 COMMISSIONER ARPIN: And in the case of CBC is you were to have Kamloops, how much would it cost? Because we heard some consumers that came after you had appeared that were claiming CBC back in Kamloops, so we are interested to know.
3041 Thank you, Mr. Chair.
3042 THE CHAIRPERSON: Len.
3043 COMMISSIONER KATZ: Thank you, Mr. Chair, and I will be brief.
3044 Good afternoon. I just want to pick-up on a conversation I had with the BDUs this morning. Am I correct in assuming that the cost of producing HD programming is higher than the cost of traditional programming?
3045 MR. FECAN: The cost of buying the facilities was higher and it is still a little higher, but it is beginning to be close to the replacement of the normal stuff. So no different, really, than if you go to a consumer electronics store. The cost of an HD player might be not that much different from the cost of a normal DVD player. It is still a little more, but it is coming down.
3046 COMMISSIONER KATZ: Okay, because I remember a conversation, I guess it was last year that we had, that the infrastructure, the cameras, the scenery has got to be done with a bit more --
3047 MR. FECAN: It is starting with the make-up, frankly, and going all the way through. Sure, there is more involved, but the issue becomes whether you are placing stuff before you would ordinarily replace it. The actual cost of the camera itself is probably, you know, in a few years not going to be any different other than the cost of a standard definition camera.
3048 But that camera, that standard definition camera, you might have another 10 years of life in it, which you are going to throw out if you go to HD sooner.
3049 COMMISSIONER KATZ: Over the longer term, we needed the longer term, there isn't that much of a difference.
3050 MR. FECAN: Over the longer term.
3051 COMMISSIONER KATZ: Thank you, Mr. Chair.
3052 THE CHAIRPERSON: Peter Menzies.
3053 COMMISSIONER MENZIES: Mr. Guiton, I am very confused by your description of the skinny basic as an affordable option. It is as if somehow that there is no additional cost to the consumer, in a sense, if there is a value-for-signal negotiation.
3054 And just to use Mr. Asper's numbers he referred to, you could basically go from a $22 basic to an $18 skinny basic. I can get the service that you are describing in the skinny basic for a lot less than that if I just unplug the cable, right? This is what I don't understand.
3055 And in the largest market in the country and others, if I want to have the skinny basic you are describing, which is just my local OTAs, right, I don't need to go from $22 to $18, I can just pull the plug and I get it all for free. In fact, if I am in Toronto, I get all that and more stuff for free.
3056 I mean, I can understand in remote areas where cable is the only way to get a number of local signals, but I just find that argument -- it just stretches my comprehension to such an extent that I am having trouble getting passed that and to the rest of the arguments because it sets off all kinds of alarms for me, that that would actually be the affordable option that would somehow protect the consumer.
3057 MR. GUITON: Right. I guess I would just say two things. There is more in our proposal for a skinny basic than simply the over-the-air channels. There is the 91H channels and, off the top of my head I can't tell you --
3058 COMMISSIONER MENZIES: But if I am in Calgary I would get to pay $18 or whatever it is, $20 a month for the weather channel on Shaw Cable? Like, I am not getting the consumer bargain then.
3059 MR. GUITON: Well, the consumer bargain is -- I was just trying to clarify the point actually, which is to clarify there is more in there than the over-the-air and it would be a function of whatever the Commission deems to be the core services that should go in basic. We have proposed that it be the over-the-air, all of the 91H and the provincial educational channels. That is just our proposal.
3060 And the benefit to consumers is in a BDU environment, in a multichannel environment, that they have an option. They have an option that goes beyond just putting up a transmitter, they have an option that gives them a low-cost entry point into the multichannel universe.
3061 And we have also pointed out that in the digital transition, should there be those consumers who are unable to get access to an over-the-air signal, this has the multiple benefit of giving them a low-cost entry into the multichannel environment as well, which they wouldn't have otherwise.
3062 COMMISSIONER MENZIES: But if I am going into the multichannel environment I am going into it for multi channels. So you are just dropping the price of admission from $22 to say $18, right. And then once I am inside the circus, I am still paying as much money, right? And I am not saving any money. Describing it as an affordability option to me is just -- I mean, I accept that it could be for some people. But broadly, it is --
3063 MR. GUITON: Yes. I was just going through the different options or the different benefits as we see it. Strictly speaking, affordability could be interpreted for those people that can't afford the current level of service. And we know that the current basic service is quite high.
3064 In some markets, as we have described, it is over $40 to enter the multi-channel environment. That is just getting the bare -- like, you are going beyond that if you want anything else. So right off the bat, it does give people who may not have the means, financial means, to enter the market at a level that they may not be able to right now.
3065 The second thing is, we have discussed it here before, is that it provides a tempering. We believe it provides a tempering because it provides an option should people feel that the pricing of different packages is getting too high, that they are able to have smaller building blocks, smaller building blocks and they don't have to be buying all of this big stuff at the same time. And we think that is a tempering effect on the pricing of those building blocks.
3066 And thirdly, as I mentioned to you, we believe it provides a useful solution or an aid to the digital transition and people's ability to enter.
3067 COMMISSIONER MENZIES: Okay. Sorry, I didn't want to take up too much time. And I accept that that is your answer.
3068 The other thing is just with all the rest of you, CBC doesn't have shareholders, but the rest of you do. I mean, you would understand that if you were on the cable side of the equation this is pretty simple, costs goes up, profit goes down, you need to recoup the profit, you need to keep your shareholders happy. So if there is going to be an additional cost to you, they have to get it back someplace.
3069 It might be that they charge more for pay-per-view, they might charge blah, blah, blah, blah, but they're going to get it some place, right.
3070 So, at the end of the day the consumer's costs have to go up or their profits have to go down, which is probably unacceptable to their shareholders.
3071 MR. FECAN: Or they can compete on the price to get more volume.
3072 COMMISSIONER MENZIES: Yeah, I mean, but either way they've got to get the money back; right?
3073 MR. FECAN: Right, but if they compete on price to get more volume, the prices don't -- every price doesn't necessarily go up for the BDU.
3074 COMMISSIONER MENZIES: Okay. Well, I'll let them answer that.
3075 MR. FECAN: Right.
3076 COMMISSIONER MENZIES: Because we try not to tell you how to do your business, just the field to play it within.
3077 But how can there not be an addition -- is that your answer then, how there cannot be an additional cost to the consumer is that the cable companies need to work harder to be better in those areas?
3078 MR. ASPER: They can compete on price. Yeah, I think also we should remember that there may be a loser out of this hearing, I mean and it may be cable, or the BDUs, they just may -- they've been winning for 30 years.
3079 I mean, we're paying $22-million in benefits a year for the privilege of owning the Alliance Atlantis channels and we're not going to advertisers saying, gee, we have to raise rates because we have this other fee we're paying.
3080 This happens to business and they have to make choices and they have to maybe cut costs somewhere else.
3081 COMMISSIONER MENZIES: Sure. But my concern here is primarily for the consumer.
3082 MR. ASPER: Right.
3083 COMMISSIONER MENZIES: And I'm just trying to understand, because none of you fellows have invested anything in local in recent years, whether you haven't had the capacity or you haven't had the desire or whatever, that has not been a strong area of investment, notwithstanding CBC's recent change in that one area.
3084 So, the consumers been getting less and less and less, more regional news and I'm just still trying to figure out a clear answer as to why you can justify having them pay for more when they're still getting less.
3085 MR. SPARKES: Commissioner Menzies, if I could just correct you. We spent $130-million a year in local and we out perform our obligations in some markets and in Calgary, you know, we've invested, we've expanded our newscast recently.
3086 We produce 30 to 35 or some odd hours a week of local news. We really are investing in local media and we are also, of course, investing in online local media which doesn't pay dividends yet but we think it's the right thing to do for reasons I suggested -- we really are.
3087 MR. ASPER: I have to take exception with that statement. I don't see any basis in fact for what you said in terms of us not investing in local.
3088 We've invested hundreds of millions of dollars in local. So, if you don't see it, that's a different issue.
3089 COMMISSIONER MENZIES: Well, I'm just going from --
3090 MR. SPARKES: But we have invested.
3091 COMMISSIONER MENZIES: Well, I'm just going from previous hearings and discussions regarding what your commitment to local might be and previous discussions on the whole fee issue, and there has never been anything -- you've presented to us that maintaining the status quo is the best you can do, and you're quite entitled to do that.
3092 And I just want to get back to my question. I mean, if you were offended by the record, fine, but still there's the consumer interest and there hasn't been anything on your side saying that maintaining the status quo was the best you could do, was the general answer that we got before.
3093 Now we're being asked perhaps to deal with consumers and this is about consumers. How do you justify the value for consumers if through your proposal, when you're talking about at best maintaining the status quo?
3094 MR. SPARKES: Well, Mr. Commissioner, you guys just released some numbers today on your website, I just want to put things in perspective in terms of the imbalance of our life right now.
3095 The consumer obviously is paramount here. So, PBIT numbers for the cable industry, Rogers, 551-million --
3096 COMMISSIONER MENZIES: I didn't ask about PBIT numbers.
3097 MR. SPARKES: No, but I know, but I'd just like to put things in perspective with what we're dealing with.
3098 COMMISSIONER MENZIES: No, no, I just need --
3099 THE CHAIRPERSON: Hang on, hang on.
3100 COMMISSIONER MENZIES: For the consumer record --
3101 THE CHAIRPERSON: You said to me, Mr. Fecan, in a specific answer, if you got value for signal you might give more local programming, you didn't say you would. I said, is that over and above the status quo, you said depends on what I negotiate.
3102 MR. FECAN: Right.
3103 THE CHAIRPERSON: That was my point.
3104 MR. FECAN: But the status quo costs money.
3105 MR. ASPER: Just so -- the status quo is not -- these people don't work for free, it's not like the community channels where it's all volunteers, they -- we're not asking actors and writers to work for free, so there is an investment there, it's a big dollar investment.
3106 MR. SPARKES: I think where the misunderstanding happened here is, Commissioner Menzies you said, you aren't investing in local media. We thought you meant, you aren't investing at all and you meant more --
3107 COMMISSIONER MENZIES: That you hadn't invested and that you don't currently invest. There was no future investment planned.
3108 MR. ASPER: Did you -- I think maybe what you meant was we're not proposing to add more investment. Because you know the record shows, we filed all of our financial statements with you.
3109 We invest between us four, five $600-million -- I know we are 130, they're -- CTV has more stations so they're a little more and CBC has a broader mandate so they might be more as well.
3110 So, the record is very clear of the hundreds of millions of dollars a year we spend in local media.
3111 The question was put, Mr. Chairman, to Mr. Fecan, what would we do as a quid pro quo more than we are already doing and --
3112 COMMISSIONER MENZIES: I don't want to negotiate, okay.
3113 MR. ASPER: I just want to be clear on what our position is, sir. And so, when Mr. Fecan answered at that point and I didn't, but I would just say that we've committed to the CPE applying to conventional.
3114 We were asked would we put more into local production, and I think the answer is -- comes back to it, it is part of an equation, so it depends what the value for signal regime is and how strong it is and we will be here at licence renewal to answer those very questions in great detail and we will be happy to have that conversation with you at that time.
3115 THE CHAIRPERSON: Thank you.
3116 Michel Morin.
3117 COMMISSIONER MORIN: Thanks, Mr. Chair.
3118 My question is for CTV.
3119 You're fighting for the retransmission consent regime that is in place in the United States and in paragraph 25 of your written statement you say that:
"Retransmission consent has not led to excessive payment from distributors to broadcasters." (As read)
3120 COMMISSIONER MORIN: But you didn't provide any numbers. So, I'd be anxious to know those numbers.
3121 And at the end of the day you'll still be on the basic service, you will still have the mandatory carriage, so the consumer won't be in charge with the system.
3122 Is there some place for some give and take, I mean, between a price for the value of your signal but, at the same time, you'll be paid like the specialized channels, instead to be paid value for signal, it will be the end of the negotiation and the consumer at the end of the day will be in charge, will decide if he takes CTV or not.
3123 MR. SPARKES: Well, in the U.S. the studies have shown the consumer is in charge and rates haven't gone up because of competition and if one BDU raises the rates, then they're going to go somewhere else who's charging less.
3124 So, the system has been working very well for the last 18 years in the United States and that's why we put forward this system.
3125 Local channels are mandatory in the U.S., that's the law. We still think that should apply here in Canada as well.
3126 COMMISSIONER MORIN: But the consumer in the United States has the choice to --
3127 MR. SPARKES: No, they don't, they don't. I mean, it's by law, it's mandatory carriage.
3128 COMMISSIONER MORIN: The same.
3129 MR. SPARKES: The same.
3130 COMMISSIONER MORIN: Yes.
3131 MR. SPARKES: And that's what we're proposing here in Canada as well and it's worked.
3132 COMMISSIONER MORIN: Thank you.
3133 THE CHAIRPERSON: Marc.
3134 COMMISSIONER PATRONE: Thank you, Mr. Chair.
3135 Good afternoon.
3136 Mr. Lacroix, can you envision any scenario under which a value for signal regime might allow the public broadcaster to get out of commercial television and become one hundred percent Canadian as has been recommended in a number of Royal Commissions?
3137 MR. LACROIX: Ad revenues in our life right now, as I said, are an important part of the way we finance the television networks.
3138 Depending on the other pieces of the puzzle, if one day the financing model of CBC Radio-Canada would allow us to do this without ad revenues, we'd be happy to go there, but it is not a simple equation of one dollar to one dollar.
3139 COMMISSIONER PATRONE: My second question. Between the various organizations that you all represent, there's a fair number of fairly lucrative specialty stations.
3140 Among the various measures that have been floated of course, including skinny basic, including liberalizing the regulatory regime around packaging, if those measures have the inadvertent effect of reducing revenues to your specialty properties, are you running the danger, have you considered the possibility that any value for signal regime compensation would really only make up losses on your specialty side?
3141 Has that been any part of your mind set?
3142 MR. FECAN: Well, Commissioner, it's certainly a danger and it's one we're worried about, it's not something we're oblivious to.
3143 We see them as separate businesses. There are some overlaps, particularly in the news channels. It would be very hard to have a CTV news channel without the local stations that create much of the content, but it is a worry, I can't say otherwise.
3144 MR. ASPER: I think it's the same thing --
3145 COMMISSIONER PATRONE: Did you want to weigh in on that.
3146 MR. ASPER: We don't have a news channel obviously but, yeah, of course -- there are 30 battles we fight as an organization, you know, one is the value for signal battle, the next is, you know, what's going to happen to pick-and-pay.
3147 I mean, in a deregulated environment, what's going to happen with digital transmission.
3148 I mean, you have at any one time 20 or 30 -- I don't know maybe, 10, 15 business challenges and that's just one of them, and I would think it's not a reason to provide one regulatory fix because there might be a problem somewhere else.
3149 COMMISSIONER PATRONE: Those are my questions.
3150 Thank you, Mr. Chair.
3151 THE CHAIRPERSON: Okay, Elizabeth, last short question.
3152 COMMISSIONER DUNCAN: I just have one question, because I'm concerned if the consumers will actually consider that this model that you're proposing, this skinny basic is actually in their best interest.
3153 I'm thinking in Halifax, for example, the people got three plus one American, initially, at the same time as they got CTV and the two CBCs before they got Global and they got the community channel, and now we're going to say, too bad for you, you know, you're down on your luck, this is what we're offering you.
3154 I mean, I just don't know that people are going to think that we looked after their best interests.
3155 MR. GUITON: Well, I guess I can only reiterate some of the things I have already said, Commissioner Duncan.
3156 What goes on with respect to the services that are taken out of local is an issue for the BDUs as it is today and how they price the access to those services is their issue as it is today.
3157 COMMISSIONER DUNCAN: I guess just one thing maybe I could just add, and I know we're pressed for time here, what we're doing, what you're suggesting is the definition of the skinny basic, and I'm saying -- I'm asking, does that really -- I'm asking on behalf of the consumers --
3158 MR. GUITON: Yes.
3159 COMMISSIONER DUNCAN: -- is that really a fair combination of services, given they had the three plus one U.S. to start with.
3160 MR. GUITON: Right.
3161 COMMISSIONER DUNCAN: Before they even had Global and they had a community channel.
3162 MR. GUITON: Well, I think it's probably a balancing thing. I think we've all -- as I discussed earlier, we've started with the notion that an all Canadian basic fulfils the objective of the Act and the cultural objectives.
3163 The other thing is, the more you start to go down that road, the more skinny basic gets to be kind of mid-size basic and more expensive.
3164 And the idea is, as I was mentioning earlier to Commissioner Menzies, it's a base of building blocks and you want to have a small building block to get into the system because for a number of reasons, that increases the affordability, the choices that are available to consumers.
3165 We actually think it's very friendly. What's not so friendly is when your big basic costs you a lot and it contains a lot of services that you don't want.
3166 COMMISSIONER DUNCAN: Thank you.
3167 THE CHAIRPERSON: Thank you.
3168 I don't want to cut you off, but there are five consumers who are waiting and have been waiting patiently, so unless it's absolutely urgent -- okay. Thank you very much.
3169 I think we've had a thorough sounding of your views. Look forward to the additional material you'll send us.
3170 Thank you.
3171 We'll take a five-minute break.
--- Upon recessing at 1629
--- Upon resuming at 1635
3172 THE CHAIRPERSON: Okay. Madam la secrétaire, commençons.
3173 THE SECRETARY: Thank you, Mr. Chairman.
3174 Appearing as a panel for the Local TV Matters Campaign are: Big Brothers Big Sisters of Greater Halifax, Boys & Girls Clubs of Greater Vancouver, Alan Cruise, Fondation des étoiles, the Mayor of Stratford, and the Lung Association of Saskatchewan is at the presentation table.
3175 We will hear each presentation which will then be followed by questions by the Commissioners to all participants.
3176 We will start with the presentation from the Mayor of Stratford. You have seven minutes for your presentation.
3177 MR. MATHIESON: Good afternoon, Mr. Chair, Commissioners.
3178 I'd like to thank you for the privilege to appear before you today to share my concerns regarding the issue of local television and the profound positive impact that it has in communities across this country and in the region of which I live.
3179 I'm the Mayor of the City of Stratford, Ontario, a beautiful community of 32,000 residents and the home to two important Canadian institutions, the Stratford Shakespeare Festival of Canada and the Canadian Digital Media Network.
3180 As well I am the Chair of the Southwest Economic Alliance, a 10-member municipal partnership in southwestern Ontario spanning from Guelph in the east, Owen Sound in the north, Simcoe in the south and Windsor and Sarnia in the west.
3181 We have 2.3-million residents and represent a little less than eight percent of the Canadian population.
3182 At one time we enjoyed four local stations and four bureaus covering the various communities.
3183 Local TV helps disseminate news, it raises awareness of impending storms and weather patterns, it talks about community emergencies, helps to raise funds for charity and it builds a sense of community.
3184 The value of local TV makes many positive impacts on Canadians from all walks of life, not just those who are consumers of BDUs.
3185 These are the issues I feel underline my points.
3186 One, local TV has helped my community deal with many important issues that have affected us, but nothing is more prominent than in 2005 our community had a crisis whereby our drinking water was contaminated and could not be consumed by our residents and/or our visitors.
3187 It was necessary to relay information to our residents in a timely fashion and to provide continual updates over a period of four days. Local TV made a significant positive impact on this situation for our residents and was looked upon by many of them as the primary choice for its news update.
3188 No. 2, the concept of providing a skinny basic package would provide the needed opportunity for every consumer and Canadian the chance to be guaranteed local TV content as per the Broadcast Act and other essentials covered under the 91H channels such as the Weather Network and CPAC, while choosing to pay more for various theme packages.
3189 I do not propose to know how that pricing should work, but what I do know is that consumers and people within my area, my residents, believe that they do deserve the choice.
3190 No. 3, there is need for transparency in the bills of consumers from the BDUs. I was shocked to learn that the entire amount of my basic package goes to the BDUs. I like many Canadians thought that fees collected were shared with those that created the content, specifically local TV.
3191 Furthermore, in an age where transparency is demanded of governments at all levels and government agencies, it is time we demand and receive the same from BDUs through government regulation.
3192 Their bills while often confusing with little or no explanation have been on the rise and provide little or no justification to the consumer and the Canadians of which we all are here to serve.
3193 Four, the further reduction in availability of local TV content will have negative impacts on communities. Many will suggest that the Internet will provide the media for Canadians to view local stories, however, broadband access is still not universal throughout this country and within my own region.
3194 Furthermore, there is a generation of Canadians who do not use the Internet because they do not understand how to navigate it or own a computer that allows them to do it.
3195 Furthermore, the content that is often found on the Internet for broadcast purposes comes from local TV.
3196 VFS is a holistic framework including regulatory rebalancing and protects the rights of signal providers and consumers as well.
3197 I'd like to share a story with you that recently tells you a little bit about local TV and an opportunity for a BDU in our area and how they chose to deal with it.
3198 Stratford is the host community of this year's Tim Horton's Hockey Day in Canada, a celebration of the game in Canada from coast to coast and one that is often looked on by over 3-million viewers across this country.
3199 On Friday evening there will be a community banquet on January 20th, 2010 that will have 1,200 people in attendance, many more will be wishing they could attend but could not either because they can't afford the cost of the ticket and availability of ticket because it's sold out or their schedule will not allow them to.
3200 We decided that a unique opportunity existed to ask our BDU to come in and as part of their licence and mandate to provide local programming to tape and broadcast the banquet to our community and to stream it on the web.
3201 Instead of being supportive and excited about this partnership, we were told that it provided no value to them and we were offered the chance to rent their equipment and to pay them to provide the service.
3202 This is the same BDU that uses municipal space free of charge to tape their community programming to provide their local content to their consumers and our residents.
3203 Thank you for the opportunity to present my concerns to you today regarding the need to protect and preserve local TV and ask that you act in a timely manner so that it protects all Canadians and provides a future for local TV.
3204 Thank you.
3205 THE CHAIRPERSON: Mr. Mayor, I understand you have a plane to catch.
3206 MR. MATHIESON: Yes, I do, sir.
3207 THE CHAIRPERSON: So, I appreciate you took the time with us, so my colleague, Mr. Menzies, has questions of you.
3208 If you have one, Peter, give it now so that the Mayor can catch his plane.
3209 COMMISSIONER MENZIES: I'll just run through these as quickly as we can, given your time constraints.
3210 Where do you think the value for local television is, do you think it's an economic value, a social value, cultural value?
3211 MR. MATHIESON: I would say that it's primarily cultural and social value more than economic.
3212 I think it happens people look and can identify with local TV and local -- I guess local content.
3213 A lot of people -- the best example would be my own children. A couple of weeks ago we were at a function where the local CTV station was there and they were with me when I was interviewed and I can tell you that they were more excited about going home to see themselves on the news than they were about seeing their father and hearing what I had to say.
3214 COMMISSIONER MENZIES: That's probably a good thing.
3215 COMMISSIONER MENZIES: You said that there were once four bureaus.
3216 How many are there now?
3217 MR. MATHIESON: There are none.
3218 I can give you an example. There was stations -- as I grew up CTV had bureaus in Chatham and Sarnia, they had one in Windsor and one in Owen Sound. There are now just the station left in Kitchener. 'A' Channel has left Windsor. 'A' Channel has also left Wingham in our area as well.
3219 COMMISSIONER MENZIES: You are aware that we recently implemented a fund that takes 1.5 percent off BDU revenues to support local programming I assume and you haven't seen any change or improvement in the coverage because of that, have you?
3220 MR. MATHIESON: I can tell you to date I have not been made aware. That is something I will definitely take up with our regional station managers.
3221 COMMISSIONER MENZIES: Thank you.
3222 As far as if there is an economic value, which is part of the station's network's argument, how much more would you personally and do you think people in your -- you are Mayor so I'm going to ask you to give your sense of the community -- would be willing to pay for it?
3223 MR. MATHIESON: I would say that people in my community -- and I'm speaking putting value on it and I do it all the time, from water to garbage to other services we provide -- would probably look at $5.00 a month as not being unreasonable.
3224 COMMISSIONER MENZIES: Thank you.
3225 You answered that.
3226 COMMISSIONER MENZIES: You mentioned just the skinny basic. This will be my last question.
3227 How do you think the people in your constituency would respond to the idea of just being able to have free choice, pick whichever stations they want off their cable bill.
3228 MR. MATHIESON: Well, I think you would see two things.
3229 I will talk about it from what their perspective is and then what I know.
3230 One is that I believe that skinny basic and pick what you want will erode Canadian culture and content. I think some people would like it. I think others would become far more confused and daunted.
3231 As a lead up to coming here today I actually sat in with a group of 12 retirees just the other day and asked them what they thought of cable TV and how they use it.
3232 A couple of them tell me that they use satellite providers but try to use rabbit ears, as they call it, to try to get local content out of Kitchener and London because they like the local news. They are disheartened with the fact that they have to do that and they often find it very confusing for them to try to get the UHF to work while forgetting to turn off the satellite and vice versa and it's confusing for them.
3233 And another comment I got from some of them is there are far more channels provided than they really need. I think that's just a comment on what's necessary.
3234 I would say that the Broadcast Act, though -- and I did take some time to peruse it before coming here -- calls for local content. I know about the 9(1)(h) channels that are required. I think that's exceptional leadership.
3235 I believe that the skinny basic can meet the Broadcast Act. The 9(1)(h) provides the standard that everybody should have with regards to information and then from there if you want to do it then the pick as you pay or pay as you pick model might work beyond that.
3236 COMMISSIONER MENZIES: Okay. Thanks very much. Go catch your plane.
3237 THE CHAIRPERSON: Marc, did you have a question for the Mayor?
3238 COMMISSIONER PATRONE: Maybe just a couple, Mr. Chair.
3239 I don't want you to miss your flight.
3240 I'm sorry if you have sort of addressed this, but in terms of affordability we have heard Canadians testify that they can't take on any more expenses as far as anything that might lead to compensating for signal or anything like that, that they are maxed out in terms of what they can spend.
3241 Assuming that regulating cable rates proves unacceptable, what would you have the regulator do?
3242 MR. MATHIESON: Well, I can appreciate the Commissioners all have a tough situation. I face it every year when I set rates and fees within my community from everything from using community centres to picking up garbage.
3243 Sometimes people often tell me that they can never afford to pay more, but the costs are what the costs are and doing what's right, whether it's culturally or socially or economically comes with a cost.
3244 I think I know that the Commission does not want to regulate cable rates, but I think there is room here to build a bridge between BDUs and the local networks or local stations and find a solution. I think you have the regulatory framework to do that and I think you just need to put it back into the room for them to do that.
3245 COMMISSIONER PATRONE: What do you think people can afford to pay?
3246 MR. MATHIESON: I have said it, about $5.00 a month I think is reasonable.
3247 COMMISSIONER PATRONE: Okay. Sorry if I asked you to repeat yourself.
3248 MR. MATHIESON: No, that's all right.
3249 COMMISSIONER PATRONE: Those are my questions.
3250 Thank you.
3251 THE CHAIRPERSON: Thank you for coming and I hope you catch your plane.
3252 MR. MATHIESON: Thank you.
3253 THE CHAIRPERSON: We will now go back to the rest of the panel.
3254 THE SECRETARY: Thank you.
3255 We will now hear the presentation from Big Brothers Big Sisters of Greater Halifax.
3256 Please introduce yourself and you have 7 minutes for your presentation.
3257 MR. SAUNDERS: Thank you.
3258 Good afternoon, Mr. Chair, Mr. Vice Chair and Commissioners. My name is Ed Saunders, I am the Fund Development Manager for Big Brothers Big Sisters of Greater Halifax and I also serve on an Executive Committee that works on behalf of all Big Brothers Big Sisters agencies across Atlantic Canada and in both these capacities I have been privileged to work closely with our local CTV affiliate as they support our endeavours.
3259 Losing local television would have a tremendous negative impact on Big Brothers Big Sisters and other agencies who rely on media partners to help us tell our stories and garner support from our communities.
3260 Our organization, and the many others who do good work at a local level, provided meaningful, valuable programs for citizens who are, in many cases, the most vulnerable.
3261 Local television plays a significant and invaluable role in helping us provide these services. To lose this support because local television isn't getting a fair deal for the value of their signals would have far-reaching repercussions.
3262 I'm certain most of you have heard of Big Brothers Big Sisters and the mentoring programs that we offer to children.
3263 Our programs make a positive impact and research shows children who are mentored go on to graduate from high school at a rate 20 percent higher than the national average and that 78 percent of them who come from a social assistance background grow up to no longer rely on this form of income.
3264 Mentored children feel better about themselves. They have better relationships with others, they do better in school and are less likely to initiate the use of drugs and alcohol.
3265 These outcomes and benefits for young people have tremendous spin-offs to the rest of our communities. Healthy, productive young people of course grow up to be healthy, productive adults who are more likely to have a positive impact in their community.
3266 Making this kind of a difference is important to all of us and it clearly demonstrates why Big Brothers Big Sisters works so diligently to continue to offer our programs.
3267 Our success has been augmented through the relationship with CTV, who has been a tremendous champion of Big Brothers Big Sisters throughout Atlantic Canada for a number of years.
3268 This support has had a direct, positive impact on our ability to attract volunteers, event participants and donors to our organization.
3269 For example, since CTV became involved in our Bowl for Kids Sake campaign six years ago as a regional sponsor, we have been able to raise over $6 million in Atlantic Canada.
3270 CTV supports this campaign on a number of fronts. As a sponsor, they provide pro bono airtime and public service announcement production to air in communities around the region where local agencies otherwise would not have the financial resources to mount a television campaign.
3271 They have easily donated in excess of $100,000 in kind to our organization in Atlantic Canada over the past year alone.
3272 They also offer opportunities to share the stories of our volunteers and children, thereby increasing awareness and community support for the campaign.
3273 And they encourage their local staff to become involved with agency activities.
3274 CTV's support has enabled us to steadily grow this campaign, raise more money and ultimately match more children with caring adults.
3275 In addition to this, they have also assisted in getting the message out about numerous other events and campaigns, which include our annual gala event in Halifax, Big Brothers Big Sisters Month activities and our used clothing collection service.
3276 Support to this extent would never come from a TV station that was not a part of the fabric of our local community.
3277 Lack of resources and lack of audience means that this kind of support could come from a community television station.
3278 As we attempt to serve more and more children who need our programs with limited resources, CTV provides substantial assistance in helping us recruit volunteers.
3279 On a regular basis we participate in interviews on local programming to share our stories and engage our community, to promote events and campaigns and CTV offers pro bono airtime for public service announcement.
3280 The local program hosts know about our organization and are willing to do what they can to support our work with the children. A number of them serve as participants in our events and even host some of our major events, too.
3281 The repercussions of losing this local support would be devastating to Big Brothers Big Sisters and many other like-minded organizations. It would significantly impact our ability to raise awareness, raise support and of course raise money, all three vital to our ongoing service to children.
3282 While all of these statistics and numbers illustrate the importance of support by our local CTV station and what we would lose if our local station shut its doors, for a moment we encourage you to view the issue through a lens of personal impact.
3283 Please consider the story of Little Sister who, for privacy's sake, I'm going to refer to as Jane.
3284 When Jane first enrolled in our program she was very shy, timid and would barely make eye contact with other people.
3285 Today, at 16 years old, she has been matched with her Big Sister Lucy for nearly 6 years now and the difference in her is absolutely amazing. She is growing into a confident young woman with aspirations to finish high school and go on to study child and youth development at the post secondary level.
3286 Jane and her Big Sister acted as spokesperson for our Bowl for Kids Sake campaign this past year. One of the most compelling, inspiring interviews they gave was to our local CTV station airing in the Live at 5 broadcast.
3287 This past summer Jane completed a work term placement at Big Brothers Big Sisters, with the support of the Centre for Entrepreneurship's Youth Employability Project.
3288 Jane came to work every day during this work term, despite some incredibly challenging circumstances at home, having no electricity or hot water for many of those days and, we suspect, having not eaten before coming to work. She never complained. Her demeanour and positive attitude belied these struggles.
3289 She has been empowered by her mentor to believe in herself and her abilities, and learned that obstacles can be overcome. Jane will succeed.
3290 So when you are considering whether local television has an important meaningful place in our communities, I urge you to think of Jane and thousands of others like her who rely on community programs to make a difference in their lives.
3291 Without local television we will lose an important community partner which helps us change kid's lives.
3292 Providing local stations with compensation for their signals will ensure they stay open and remain active members of our community.
3293 On behalf of Big Brothers Big Sisters, and in particular Jane, thank you.
3294 THE SECRETARY: Thank you.
3295 I would now invite our other presenter, Boys & Girls Clubs of Greater Vancouver to make its presentation.
3296 Please introduce yourself and you have 7 minutes for your presentation.
3297 MS TUCKWELL: Thank you.
3298 Mr. Chair and Commissioners, I want to first thank you all for the opportunity to speak on this important issue.
3299 I am Carolyn Tuckwell, I am the President and CEO of Boys & Girls Clubs of Greater Vancouver.
3300 Despite this being a very busy time of year in our world, where we are working hard to make sure we are taking care of all of the needs of kids and families so that not only do they have a place to be when school is out, but they also have the opportunity to perhaps even enjoy and celebrate a holiday.
3301 I was compelled to come because I think it's so important for you to understand the impact in organizations like ours, the impact that local television can have.
3302 We have a partnership with CTV BC that has -- I will try to illustrate today how it has significantly helped us to achieve some very big goals in our organizations and that has been supported as well by both CBC and Global.
3303 In thinking about today what I was struck by is that I think we have come to understand that local television is more than just a TV signal and for us what has illustrated that has been the way that the people who are employed in local television who live in, work in and care about our community have become engaged in our organization in a far deeper and more meaningful way. So that goes beyond simply whether there is a signal in our community or not.
3304 I think it's also important to acknowledge that the consumer also goes beyond the people that are paying the cable bill.
3305 I think about the consumer as our kids who are not yet paying a cable bill but certainly are benefitting from and seeking out television. It's also the people in our community who are looking for the services that we offer and who only hear about our services and our programs and the impact of our work through the support of local television.
3306 So Boys & Girls Clubs of Greater Vancouver has been operating in the Lower Mainland for more than 70 years.
3307 Our work is preventative. Our goal is to be a place for kids when they aren't at home and they aren't at school.
3308 And while to kids it feels like a place where they can come and hangout during the upwards of 90 hours a week that they might have of unstructured time, what's behind that, that place that feels like fun where they can hangout with their friends is extensive programming that's designed to give kids the right kinds of exposure to the right kinds of activities including access to positive adult role models that will help them to develop life skills, give them the opportunity to have a meaningful adult relationship, show them that there are people in their community that believe in them and hopefully mirror back hope for the future to those kids.
3309 All of that in our organization is offered for $25 a year. Kids can come every single day to our Boys & Girls Club for $25 a year. And that fee is waived if it's going to create a hardship for families.
3310 With 35 percent of our funding coming from all levels of government we are heavily reliant, as you can well imagine, on the community to run our programs. And so what that means is every January 1st 65 percent of our operating revenue needs to be generated just to keep our doors open. That doesn't include putting a new roof on a building that has an aging roof or any of the other important things that we need to do to keep our organization running.
3311 We have a policy that no one is ever turned away because of an inability to pay. That's a big job on an annual basis.
3312 So three years ago we set out on a new strategic plan that wanted to shift our organization from one that just maintained and in fact was maybe even losing ground in our community and our ability to reach the kids that need us most to focus us more onto growth. And as we started to go out into the community and actively seek partnerships, it was CTV B.C. that came to us and said, "We want to invest. We want to be part of helping you to get there". And what I want to illustrate today is how that felt and looked in our organization.
3313 Part of thinking about that also shifted my view from thinking just about covering the news to what a partnership really means. In the document that you have there is a long list of the ways that CTV and others have helped us in our community, and I won't go through all of those in detail but you can see that it's more than $80,000 worth of market value support in terms of sponsorships. That's huge.
3314 And in addition to that, the coverage that we have had in terms of editorial coverage and news stories during primetime doesn't come with a dollar value. Nobody seems to be able to give us that dollar value. I can tell you that our budget at Boys & Girls Club for that kind of public awareness work is zero.
3315 Our expertise and access to production and even the knowledge to create those kinds of stories in a way that people will quickly and easily understand also very limited.
3316 So without our partnership with CTV, we don't have the ability to tell our story broadly in the community the way you see it illustrated here. When you add in the way the staff in local television have come to care about our organization and invest in their own ways through their volunteer work, it starts to round out the picture of what really the impact has been.
3317 So to illustrate that, I can tell you that as we approached one of our fundraising events this year, CTV offered to help us to film and produce vignettes. It's challenging for us to tell our stories because when you serve kids and, in particular, where you are targeting kids who are vulnerable, you can't necessarily ask those people to stand up in front of an audience of 500 and tell their story. It's not a skill everyone possesses.
3318 CTV helped us to tell those stories in a very compelling way. And I will just share one of them. There were three that they created for us for this fundraising event.
3319 Jonathan is a young man who found our club when he was five and where he came from was a household full of domestic violence. At home there was stress. His parents struggled both with violence and also with drug and alcohol use.
3320 In his family in his lifetime, in his short life he has lost two close family members in the gang violence that the Lower Mainland is experiencing. This is a young man who was at great risk to follow a path that is not going to be good for him or the community.
3321 By finding his way to the Boys and Girls Club he was able to connect in a positive way with adults that showed him a different picture of what the world could look like, and staff that helped him to see that with the right kinds of support he could pursue dreams.
3322 He is now an 18-year old young man that has played for Canada's junior national rugby team and is continuing on that path in terms of competitive sport in a way that he acknowledges now he would never have accessed without the club.
3323 He also recognizes the importance of working in the club and he has come back and chosen to work in the club to give other kids who come from circumstances like his the chance to benefit the way he did.
3324 And when you hear him and you see him, you see a young man that you could just as easily picture embroiled in gang violence and it's amazing to hear him talk about how rugby tames him. It gives him a positive outlook for the things that he recognizes now could be very negative and damaging. And when he talks about Boys & Girls Club he talks about the fact that without the club he may well have met the same fate that his two family members who are no longer with us have met.
3325 CTV helped us to tell that story and at our gala that along with two other stories played and we moved into a live auction where the first question was, "Who will put up their hand to put up $1,000 to sponsor a child in a Boys & Girls Club for a year?" and within a minute 17 hands went up. That was unprecedented. It might not seem like a lot here but it's a lot in our organization to have 17 people say absolutely without question. We would not have been able to do that without CTV. There is just simply no way.
3326 So going back to our strategic plan, three years ago we knew we needed to raise more money. We knew we needed partners and we knew a big part of that was a partner to help us raise our profile.
3327 Since that plan and since CTV joined us as a partner, we have doubled our annual fundraising and that allowed us to open a new club last December 1st in Whalley, which if any of you know the Lower Mainland, you know it's one of the neediest neighbourhoods likely in our entire country in terms of vulnerability and underserved neighbourhood.
3328 And within walking distance of the club are a thousand elementary school kids that had nothing to do after school. So by opening that club we are serving a new community and without that or without CTV we wouldn't have been able to do that.
3329 I will tell you one last story and that's on the first day of that club a little girl came up to us as we were standing and she was nervous and a little shy and not too sure of herself, something different happening in her community. And she said to us very quietly, "Is it free today?"
3330 Kids in our communities everywhere are worried about whether they have to pay to play. And because groups like those that we experienced with CTV, and I know others experienced the same kind of support from local television, we are able to do this important work so that kids like Jonathan can grow up to be contributing members of community.
3331 THE SECRETARY: I'm sorry, you have to conclude. Your time is over.
3332 MS TUCKWELL: Okay.
3333 Obviously, we think local television is important and we hope that the solution that comes from these hearings is one that allows it to continue to thrive.
3334 Thank you.
3335 THE SECRETARY: Thank you.
3336 I would now invite Alan Cruise to proceed. You have seven minutes for your presentation.
3337 MR. CRUISE: Good afternoon, Mr. Chair and Commissioners, and thank you for the opportunity to speak to you and the need for local television stations to be compensated and the impact on consumers.
3338 My name is Alan Cruise and until CKX Television in Brandon, Manitoba went black in October, I was the general manager of the station.
3339 Today I want to talk to you about two facets of this issue. The first is the impact the closing of CKX has had on the people in the entire region of south-western Manitoba.
3340 My second discussion point will be the reasons for the closing and what could have saved this local station from signing off after broadcasting for over 54 years.
3341 While CKX has been referred to as a Brandon station, the market we served was in reality a huge area that roughly stretched 150 kilometres in all directions from the city. This is a very key aspect for CKX because we weren't just Brandon's TV station. We were also Westman's station and that's how we promoted ourselves, structured our local programming and sold our advertising.
3342 In my mind, the link that existed between communities that is now gone is the biggest fallout of the station closure. This impact is one that I asked the Commission to consider in its deliberations.
3343 There has been a lot of talk on the BDUs insisting they will pass any compensation fee onto their customers and how that would affect the affordability of television. But for Brandon's citizens, consumers by a different name, that's irrelevant. What matters is their local TV station is gone and they have lost a sense of community. As you know, 82 percent of Brandon consumers would have paid a dollar more per month to ensure the survival of CKX.
3344 Viewers that live an hour to the north of Brandon were able to see events that were happening in similar towns that were an hour the other side of Brandon and two hours from their home. Reading it in the newspaper or on the internet or hearing in the radio that Killarney is building a new recreation centre does not mean the same to someone two hours north of Russell as it does to see the actual building on the local news.
3345 Since the closure of CKX a day does not pass that I don't run into someone that will tell me how much they miss both our CKX news at six and our noon show program. The noon show was unique in that each day there were two seven to eight minute interview features that provided an opportunity for countless charities and community groups to showcase important events that would not otherwise get exposure to such a large audience. There is a gaping hole in their community outreach efforts now that CKX is gone.
3346 This May Brandon's major junior hockey league team, the Wheat Kings, will be hosting the Memorial Cup as the best teams in the entire country play for junior hockey's national championship. Sadly, this is the first season that fans haven't been able to tune into their local TV station to watch as the Wheat Kings play towards this once in a lifetime championship.
3347 So how and why did CKX Television close and how could it have been prevented? In my estimation there are simple answers to these questions.
3348 First and foremost, the old structural model for conventional television that depended on stations sustaining their operations based on advertising revenue alone no longer works. In part, fixing the model requires BDUs to compensate local stations for the value of their signals and their programming.
3349 The right to negotiate fair market value for local stations with BDUs is critical for the survival of TV stations across this country.
3350 The other part of fixing the old model is to mandate satellite carriers to carry local into local. Advertising revenues have shrunk because audiences fragmented while the demands on stations in the areas of closed captioning, described video and countless other regulations has increased. Costs have grown, revenue has not.
3351 The main reason advertising revenue has not grown in stations such as CKX is the penetration of satellite providers. Carrying local into local is not and has not been a requirement for satellite companies.
3352 Some BDUs at the November hearing said that by choosing satellite Brandon did vote on the lack of importance of local TV to them. But as I said earlier the broadcast area of CKX is very large geographically and many of the towns are simply too small to make the installation of cable infrastructure feasible. Therefore, the consumers and farms that are in these small farms had no choice but to turn to Bell or Shaw.
3353 At the time CKX went dark 54 percent of the viewers in our broadcast area were watching by a satellite. Over half of our potential viewers couldn't watch us if they wanted to. Trust me, from someone who has seen it and lived it firsthand, that's not a compelling case to make to an advertiser.
3354 Satellite providers should be required to carry local stations. Two weeks prior to CKX signing off forever, Shaw added an HD American college sports channel that took up as much space on their system as five local CKX-TV type stations. How is this helping our Canadian broadcast system?
3355 In my view, if the Commission doesn't want to see another station like CKX turn off the lights there is a down to earth solution: Change the model. Let local stations receive compensation for their product and make satellite carriers carry local into local.
3356 I watched 40 dedicated and talented professionals produce quality programming every day at CKX, right up to the last product and to the last broadcast. These people cared and loved telling the local stories that our viewers wanted to see. Now, tens of thousands of Canadian consumers of south-western Manitoba no longer have local TV news at noon or at supper. This is wrong and a backwards step for everyone concerned. And believe me, we should all be concerned.
3357 Local broadcasters deserve a fair and sustainable business model. Canadian consumers value their local stations. They just shouldn't have to realize exactly how much until it's too late.
3358 THE SECRETARY: Thank you.
3359 Nous poursuivrons avec la Fondation des étoiles, s'il vous plaît, vous présenter et vous avez sept minutes pour votre présentation.
3360 M. HUBERDEAU: Merci, madame. Monsieur le président, messieurs les vice-présidents, monsieur et mesdames les commissaires, merci beaucoup de nous recevoir.
3361 Mon nom est André Huberdeau, je suis le Directeur général de la Fondation des étoiles. Dans un premier temps, je prendrai quelques minutes pour nous présenter.
3362 Nous existons depuis 1963. La Fondation des étoiles a pour mission d'assurer un futur en santé aux enfants en sensibilisant la société et les communautés aux enjeux des maladies infantiles et en recueillant, naturellement, des fonds pour avancer la recherche pédiatrique.
3363 Ce que nous faisons avec l'argent, nous le redonnons à chaque année aux quatre centres de recherche pédiatrique du Québec: le Montreal Children, le Centre Ste-Justine, le Centre hospitalier universitaire de Québec et celui de Sherbrooke.
3364 Au cours des ans, nous avons redonné à la communauté plus de $60 millions pour la recherche pour les maladies infantiles.
3365 La Fondation des étoiles s'appuie sur 2 500 bénévoles à travers tout le Québec et elle est gérée par un Conseil d'administration de 13 personnes et nous recueillons à chaque année entre 4.5 et $5 millions de dollars auprès de la communauté.
3366 Nous avons, naturellement, plusieurs sources de financement, mais j'aimerais aujourd'hui vous parler plus particulièrement de notre Téléthon annuel. Depuis 33 ans, le Téléthon des étoiles a lieu lors de la première fin de semaine du mois de décembre, ça avait lieu samedi dernier.
3367 Dès le départ cet événement d'envergure n'aurait pas été possible sans l'implication et la très grande collaboration de CFCF maintenant de CTV. Cette émission spéciale nous permet non seulement de recueillir des sommes importantes, mais aussi et surtout de sensibiliser les auditeurs du Québec aux maladies infantiles et au ravage qu'elles amènent dans les familles et les communautés.
3368 Notre très longue collaboration avec le réseau CTV nous a permis de développer un grand rayonnement au sein de la communauté et, naturellement, d'amasser des sommes importantes que nous avons pu redonner aux centres de recherche.
3369 Aujourd'hui, la Fondation des étoiles demeure la plus importante fondation non gouvernementale entièrement consacrée aux fonds de la recherche pédiatrique au Québec.
3370 L'organisation d'un téléthon, vous pouvez les imaginer, implique un travail de plusieurs intervenants dont, je le souligne et je les remercie amplement, des employés et des cadres de CTV à Montréal qui, sans eux, nous aurions eu des problèmes techniques énormes, des problèmes de marketing et des problèmes de communication. Mais nous avons là pour nous des experts qui nous aident dans l'élaboration d'une approche de cette envergure.
3371 Pendant le Téléthon, nous avons 45 centres d'appels en région qui sont opérés par des bénévoles. Simultanément ils reçoivent les appels générés par la sollicitation faite par les animatrices et les animateurs du Téléthon. Des milliers d'appels reçus qui permettent de réaliser nos objectifs financiers et aussi de répondre aux besoins des Centres de recherche pédiatriques du Québec.
3372 Avec 2 500 bénévoles, des mois de préparation et surtout en travaillant avec l'équipe de CTV, nous acceptons de produire une émission de très grande qualité et ça répond aux critères naturellement de CTV, mais aussi aux critères de tous les auditeurs du Québec qui veulent être sensibilisés aux différents cas que nous leur mettrons en lumière pendant cette émission.
3373 Alors, l'émission de cette année a eu lieu donc samedi dernier, une émission qui a été faite en collaboration avec CTV et nous sommes revenus à nos origines, nous avons fait une émission bilingue, ce qui est très rare, le Téléthon se faisait de façon bilingue à l'époque.
3374 Or, dans le but, l'an passé nous avions un réseau français et un réseau anglophone et vous comprendrez que compte tenu de la situation économique, nous avons décidé cette année de couper les coûts et de travailler qu'avec un seul réseau et ça a été le réseau CTV qui nous a gracieusement offert non seulement la collaboration de ses employés et de ses cadres mais aussi nous a offert et gratuitement, et ce depuis 33 ans, les ondes que nous utilisons à CTV.
3375 Tout au long de ces 33 dernières années, on a travaillé main dans la main avec CTV. Dans l'éventualité où cette collaboration devrait malheureusement cesser, ce serait une conséquence financière énorme pour nous, mais aussi nous enlèverait une très grande visibilité et aussi une audience qui, une fois par année, prend contact avec l'impact pour les enfants et pour leurs familles des maladies infantiles.
3376 La diffusion d'un Téléthon dans toutes les communautés locales demeure essentielle. Les communautés sont extrêmement près des familles qui ont des difficultés avec des enfants et on parle ici des enfants qui, malheureusement, certains vont décéder en très bas âge et c'est dans les communautés où les gens se connaissent et c'est là que ça se passe et c'est là effectivement que nous recevons la plus grande somme d'argent.
3377 Ce n'est pas de Montréal, c'est des grandes communautés à travers le Québec parce que les gens sont très près les uns des autres et c'est avec eux que nous pouvons travailler.
3378 Pour les enfants malades, le Téléthon est une source d'espoir et une source de motivation essentielle dans leur tracas quotidiens. De savoir qu'une fois par année, lors d'un téléthon la communauté entière du Québec est sensibilisée à ce qu'ils vivent, ils se sentent supportés et ce qu'ils ont besoin, et oui ils ont besoin d'un nouveau médicament, oui, ils ont besoin de la rechercher, mais ils ont besoin d'avoir un espoir.
3379 Et c'est à travers une télévision locale qu'on peut leur donner ce genre d'espoir et c'est ça qui est très important pour les enfants et pour leurs familles.
3380 Sans l'appui de CTV à notre cause, surtout lors du Téléthon, tout ça, ça serait impossible.
3381 En terminant, l'impact d'un téléthon avec CTV cette année, on a pu le vérifier parce qu'on a envisagé la possibilité de ne pas faire le téléthon, j'ai parcouru l'ensemble du Québec pour leur demander qu'est-ce qu'on pourrait faire d'autre et la réponse a été très claire: c'est extrêmement important d'avoir ce genre d'émission, peut-être sur un format plus comprimé étant donné les contraintes financières que nous avons, mais c'est un moment privilégié que toutes ces communautés ont pour s'exprimer.
3382 Quand on fait des appels auprès de ces communautés-là, live, on leur demande quelle est leur participation, quels sont les chiffres qu'ils ont, ils ont à chaque fois la chance de parler de ce qui se passe chez eux et de la communiquer à l'ensemble du Québec et d'aller chercher le support du Québec.
3383 Ça fait 33 ans que nous avons le Téléthon et malgré les difficultés qu'on a pu avoir cette année dans les collectes de fonds à travers tout le Canada, je peux vous dire que l'an prochain nous aurons encore un téléthon et j'espère que nous pourrons compter sur la télévision locale pour le faire.
3384 Mesdames, messieurs les commissaires, merci beaucoup.
3385 LA SECRÉTAIRE: Merci.
3386 We will now hear the presentation of the Lung Association of Saskatchewan. You have seven minutes for your presentation.
3387 MS. KREMENIUK: Good afternoon, Mr. Chair, commissioners, ladies and gentlemen. My name is Sharon Kremeniuk. I have been an employee of the Lung Association of Saskatchewan for ten years and I am currently Vice President of Development. Our provincial headquarters are located in Saskatoon, however I run a satellite office out of the City of Regina.
3388 It is my pleasure to appear before the CRTC Commission on behalf of the Lung Association of Saskatchewan in support of local television and why they should be allowed to receive compensation for their signals.
3389 The Lung Association is Saskatchewan's oldest health charity, it was in 1911 that the Government of Saskatchewan mandated the Saskatchewan anti-tuberculosis league with responsibility for the diagnosis, treatment and prevention of tuberculosis in our province.
3390 In 1987 our mandate expanded with the needs of our population and today includes combating lung diseases as well as environment threats to the lungs.
3391 One statistic: in Saskatchewan, one out of three of our residents will be affected by lung disease during their lifetime.
3392 The Lung Association funds, world renowned medical research into the causes and cures of lung disease conducts programs and services on asthma, chronic obstructive pulmonary disease, sleep apnoea, tobacco, to name just a few right across our province.
3393 We provide training for health care professionals, we deliver health education in schools, we facilitate patient support groups and we lobby for clean air.
3394 Our Association relies on donations from the public and our community partners to meet our financial needs.
3395 Local television, our partners in funds development. Local television plays an important and valuable role in our community and is integral to the sustainability of charities such as the Lung Association of Saskatchewan. CTV Global Media generously and consistently assist our association to raise the funds that we require for medical research as well as the development and implementation of the science based programs and services that our residents with lung disease rely upon.
3396 In Saskatchewan, local television works with all community groups and not for profit organizations to raise their profile and support their events. Our Association is not unlike other Saskatchewan charities with limited budgets for paid media.
3397 For today's presentation, I will provide personal examples that demonstrate that the Lung Association's working relationship with local television in Regina. However, the involvement of our Association with local television expands right across Saskatchewan and includes Saskatoon, Yorkton and Prince Albert as well and I am speaking about CBC, Global as well as CTV.
3398 My very first experience with local television was in 2001 with the launch of a special event our breath-a-sprint to look campaign. CKCK-CTV's weather anchor at that time, Tom Brown, responded to a Public Service announcement that we had circulated. Tom invited me to speak on the news, a news segment of his show and to talk about the Tulip Campaign and I have to say that to promote a special event, to execute it requires a high degree of local involvement, volunteers, people to purchase our product, to name two areas.
3399 Not only did CTV assist in the promotion of our campaign, but members of their staff volunteered to deliver the flowers and we're going into our tenth year for this campaign and CTV has been with us every step of the way on that particular campaign. Thus began my ten year working history with CTV Globe Media on our fund raising campaigns.
3400 CTV Globe Media has provided the strong connection to the public, which is essential for successful fund raising activities. Local television, they are our partners in raising public awareness. Saskatchewan residents invite the Lung Association into their homes through local television.
3401 Whether we are raising awareness regarding a particular threat to the lungs, publicizing one of our support groups and community resources, providing training for health care professionals or a lobbying for clean air. Local television provides a powerful media platform upon which our Association depends.
3402 CTV Globe Media is an invaluable partner of the Lung Association and a tremendous asset to the residents of our province.
3403 An example, an excellent example of how local television raised awareness of sleep apnoea which is an under-diagnosed lung disease in Saskatchewan occurred in 2005 and this is an example of excellent reporting on behalf of CTV in this particular case, the calibre was just outstanding.
3404 CKCK-CTV's Jason Mavity Research developed and produce a special report entitled "Dying for a good night sleep" launched nationally and provincially in March of that year. Jason worked with a certified respiratory educator with the Lung Association as well as sleep apnoea support group participants did a tremendous job of research. It was just a phenomenal presentation.
3405 Thanks to Jason's report, we had a surge of awareness regarding sleep apnoea and that presentation compliments of CTV is available on our website if anyone would care to witness the calibre of that report.
3406 In summary, the Lung Association enjoys an excellent relationship with local television stations in Saskatchewan, the right to negotiate their market value for local tv signals with cable and satellite companies is critical for the survival of TV stations across Saskatchewan and Canada. It is a reasonable request to health ensure local stations are sustainable and continue to be available to Canadians.
3407 The Lung Association relies on local television to execute our vision, healthy lungs for everyone, our mission to improve lung health one breath at a time and our role to improve respiratory health and the overall quality of life through programs, education, research, training, treatment and the prevention of lung disease.
3408 Local television contributes to our success. It invests in our communities, reports on our community events and preserves our history and unique way of life. We simply couldn't do what we do without local television in Saskatchewan.
3409 Thank you.
3410 THE CHAIRPERSON: Well, thank you for your presentations. Each one of you travelled quite a distance to come here and share with us and we very much appreciate that you took the time and effort to come and I think your testimony is obvious evidence of the great role local tv plays in your community and how it helps the organizations.
3411 Now, throughout this week and in November we heard that this basically local TV is outdated tomorrow and whatever it did in the past and nowadays can be done right over the internet or through the community of channels that are owned by the cable companies, et cetera.
3412 From your personal experience, through the Telethon campaigns, you know, et cetera, could they be run through the local community channel? Could you do this or a combination of community channel and internet in lieu of having to rely on the local television channel?
3413 MR. SAUNDERS: I am certainly no expert in this, but I haven't seen any evidence in the past that the local community channels have either the staff, the resources to do that. We appreciate any coverage that they do give us in any possible way, but I can't imagine from a business model that they're going to be able to present a comparable newscast or comparable coverage in a short period of time without investing the money and staff and training and equipment and all of these things.
3414 A lot of the locals, as you know, of the community channels are predominantly run by a lot of volunteers and we appreciate -- we more than anybody else appreciate how great volunteers are, but having a highly trained really caring people that know how to broadcast is really important.
3415 I can't see how the community channels are going to be able to get somebody up to those standards in a short period of time.
3416 LE PRÉSIDENT: Oui?
3417 M. LANTEIGNE: Dans une organisation comme le Téléthon à travers tout le Québec, je pense que techniquement ça serait un défi de taille impossible à rencontrer, dans la mesure où ça doit se faire de façon simultanée. Alors, ce sont toutes des choses indépendantes.
3418 Je pense que techniquement ce serait des coûts astronomiques.
3419 Deuxièmement, je pense que les liens qui sont ici depuis des années avec des communautés locales avec, entre autres, CTV, nous permettent d'atteindre une population rapidement et, troisièmement, c'est une critique, là, d'un consommateur si vous voulez, d'un canadien moyen, mais ce que je vois avec les câblodistributeurs, ce n'est pas le niveau de qualité d'émission que nous devons produire pour sensibiliser les gens à la cause.
3420 On doit avoir une qualité d'émission qui est quand même supérieure pour atteindre et attirer et garder les gens pendant l'émission pour, finalement recevoir les dons qu'ils nous font à chaque année. C'est un commentaire personnel, mais je pense que ça doit être tenu en compte.
3421 LE PRÉSIDENT: Vous êtes ici en votre capacité personnelle et nous sommes intéressés dans vos commentaires soit comme organisme, soit comme personne. Madame?
3422 MS TUCKWELL: I suppose I would echo the comments of my counterparts and add that I think -- well, I can't comment on history beyond our own experience, the experience that Boys & Girls Clubs have had in greater Vancouver is that those stations haven't stepped out.
3423 So, you know, the burden of reaching out to support all of the local charities that are supported through local television would be an enormous task for those community stations to take on and so, I mean the question there I think would need to be back to them, whether they thought they could assume that as an additional piece.
3424 THE CHAIRPERSON: No. I am just only pausing the question because it has been put to us and I wanted to see from you who lives this life, you know whether this is a reasonable contention or not. Yes.
3425 MS KREMENIUK: Just to affirm what everyone else has said and to add my own comments. In working with the personalities that I have in Regina, they are known entities, they go into the schools, they MC public events, they're well-known and when they add the credence to a cause in the community, that has a tremendous impact. People listen to our personalities.
3426 So, unless a community -- a cable company were able to step up to the play and do that very same thing, that would be difficult.
3427 We work with Multimedia with the Saskatchewan Lung Association and I do work with the cable companies. They are volunteers, they do an excellent job. Many times they are sort of called in last minute and it's -- there are challenges associated with that, so having people that are highly skilled, that are, you know a continued visible presence in our community, I think that's essential.
3428 THE CHAIRPERSON: I guess with the closing year from now you can tell us what it's like to trying to doing the same thing without a local station.
3429 MR. CRUISE: Well, I would like to kind of emphasize what Sharon said about the personalities and what it means because it does mean something.
3430 There is a reason, you know, Nike has Michael Jordan on their shoes, it's recognizable people and that's what brings other people in and I know certainly in my experience whenever charities called us and looking for help, they always attached a name to it. They wanted the weather guy, they wanted the noon show host, they knew who it was and these people, they MC every event in the city they were asked for by name and there is some value to that, make no mistake.
3431 THE CHAIRPERSON: Thank you. Peter?
3432 COMMISSIONER MENZIES: In case I sound abrupt, I am not trying to be abrupt, I am just trying to be quick, so again, also thank you for coming all this way and sharing your stories.
3433 How much do you think people would be willing to pay on their monthly cable bills to sustain local TV?
3434 MR. SAUNDERS: I don't know what that figure would be. I can speak personally to know that there is a local television station that is going to cover the next hurricane that comes through Halifax, like Hurricane ! and to see that all three of the local television station has the resources to be able to make me know what is going on on a timely basis, that couldn't have been done if this was coming from New York or Toronto. We were a priority.
3435 So, for me to set a dollar figure on that, I don't know, but I wouldn't mind kicking in a few bucks a month for that side of insurance.
3436 M. LACROIX: Je pense que la question n'est pas de savoir combien on peut payer, c'est d'avoir... je pense que la question que vous devez vous poser, c'est: est-ce que c'est essentiel? Et dans un pays comme le Canada qui est bâti sur des milliers de communautés et de petites communautés, c'est ça la réalité du Canada à travers d'Halifax jusqu'à Vancouver.
3437 Je pense que d'être très près des communautés c'est quelque chose d'essentiel et je pense qu'en tant que Canadien, d'avoir des nouvelles locales, c'est quelque chose d'important. On peut avoir accès à des nouvelles internationales de différentes façons, mais je pense qu'on doit avoir ce genre de contenu-là au Canada. Ça fait partie de notre réalité et on doit investir, que ce soit le Gouvernement, que ce soit les consommateurs, que ce soit d'autres organismes, c'est extrêmement important d'investir dans un contenu canadien.
3438 Je peux parler pour l'expérience du Québec, je ne connais pas la réalité à travers le Canada, mais quand on regarde les émissions qui sont produites localement, que ce soit des téléromans, que ce soit des nouvelles, et caetera, nous atteignons au Québec des côtes d'écoute incroyables et je pense pourquoi? C'est parce que c'est un contenu qui vient de chez nous, ça emploie des créateurs de chez nous, ça emploie des concepteurs, des artistes de chez nous et c'est à travers ces gens-là qu'on se perçoit aussi et qu'on devient ce qu'on est.
3439 Et pour ce qui est du fait français au Canada, je pense qu'on doit investir pour garder le fait français, c'est une des grandes caractéristiques du Canada et je pense que les télévisions locales jouent un rôle extrêmement important dans la diffusion de ce contenu et de cette culture francophone.
3440 Alors, je parle de la réalité du Québec et de ma perception que j'en ai, mais je pense que: est-ce qu'il y a un coût? Probablement, je ne connais pas, je ne suis pas un expert en coût, mais je pense qu'on doit se poser la question: est-ce qu'on doit ou pas avoir ce genre de chose-là et si on le veut, il faut mettre en place des conditions facilitantes pour qu'elle puisse se réaliser.
3441 THE CHAIRPERSON: Thank you. Go ahead.
3442 MS TUCKWELL: Again, I am not sure I can speak broadly for a large group of people or on behalf of --
3443 COMMISSIONER MENZIES: You are not going to be held to it.
3444 MS TUCKWELL: Yes. No, I don't think that.
3445 COMMISSIONER MENZIES: You're real people and just give us --
3446 MS TUCKWELL: Yes. Well, I think personally I would be willing to pay a few dollars more a month to know that local television can survive.
3447 What I can also speak to is that the children and families that we serve through Boys & Girls Clubs of greater Vancouver, are among the groups that are perhaps not going to be able to afford a few extra dollars a month and it's that group that I think of when I hear the discussion about skinny basic, a lower cost entry point may well be the only option for a number of the families, maybe for 10 to 15 per cent of families that qualify as living in property or working poor and that may be the only option for them.
3448 COMMISSIONER MENZIES: Thank you. Next?
3449 MS KREMENIUK: I feel like I'm saying I agree with my colleagues.
3450 COMMISSIONER MENZIES: You can just go with that if you want.
3451 MS KREMENIUK: They have great points and I have to say that I do as well. Just to endorse what Carolyn is saying. I don't know what the statistic is for the, you know how many Canadians live below the poverty line, but I think that television, it conveys community to us and, you know, irrespective of what your economic status is I think that that's an important message for everyone to have the opportunity to experience and to not have -- you know, perhaps people that are impoverished, you know having a tv is important and it becomes a priority item, but I heard throughout the day people talking about, you know, mum and dad living on a fixed income and having to choose.
3452 And my concern is that there are so many people out there like that. I personally am in an income bracket that, you know, I could pay two more dollars or five more dollars or whatever, but I think that it's more basic than that. It is, you know, what level do we want, what do we want to make accessible to everyone.
3453 And for me that, you know, I would prefer not to see things increased, I would prefer to see a basic skinny package or whatever the binocular is, I do think that we need something that is an entry level so that we can all enjoy that.
3454 COMMISSIONER MENZIES: Mr. Cruise, you already told me 82 per cent will pay a buck, right?
3455 MR. CRUISE: That was a study that CTV did, yes. I guess the other thing is not how much we would pay, it's how much are we paying now. Why can't somebody tell me that? It's absurd to me that it's $27.00 for cable in Brandon and, you know, how much of that is going to CEPAC, how much is coming to CEQEX.
3456 Commissioner Petrone asked this morning what happened in CEQEX went off, what took that place and it's CBC did in fact take that place, but CBC was already on. Now, the exact same signal is on two different channels in Brandon.
3457 COMMISSIONER MENZIES: Are you working again yet?
3458 MR. MATHIESON: No, I am not.
3459 COMMISSIONER MENZIES: Thank you. I just wanted to check.
3460 The other, just quickly, and this is a one word answer, but I am not going to -- you have come a long way so I am not going to hold you to that if you want to embellish, but is local television where you live better, worse or the same today than it was ten years ago?
3461 MR. MATHIESON: Simple question.
3462 COMMISSIONER MENZIES: That was an easy one really.
3463 MR. MATHIESON: We had one local station. We no longer have a local station when --
3464 COMMISSIONER MENZIES: This just what I have. How many hours were you broadcasting locally when you went off the air?
3465 MR. MATHIESON: Ten.
3466 COMMISSIONER MENZIES: Ten. Thanks.
3467 MR. MATHIESON: Yes. Six was our conditional licence and we were doing ten and had done ten all through our licence, even though we didn't have to.
3468 COMMISSIONER MENZIES: Thanks.
3469 MS KREMENIUK: I can't say that television is better or worse than it was ten years ago. I don't really have a reference point. I do know from working with the local media that they scrabbled, they worked very hard to accommodate the needs of the Lung Association.
3470 MS TUCKWELL: I'll go with the one word. I think it's better.
3471 M. LACROIX: Je pense que l'implication que nous avons avec CTV est un exemple parfait de leur implication. Je pense que ce soit CTV ou les autres canaux, ont des difficultés financières présentement. Je pense que le monde de la publicité est en plein changement et les revenus publicitaires dans chacun des médias, on le voit, sont drastiquement diminués.
3472 Malgré tout, c'est important pour eux de nous appuyer et de nous aider et de continuer à le faire à la fois financièrement et à la fois techniquement. Alors, moi, je lève mon chapeau à CTV et la qualité d'émission que nous avons eue est égale à celle que nous avons toujours eue, alors je pense que c'est un bon signe.
3473 MR. SAUNDERS: I would vote better, certainly it seems the more coverage we're getting with CTV, the more opportunities we are getting for coverage throughout the regions with a variety of medias, so for us it's definitely working, so I say better.
3474 COMMISSIONER MENZIES: Thank you. That's all.
3475 THE CHAIRPERSON: I understand some of you have to catch a plane, so we will go just to my colleague, Marc, very quickly. We don't want you to miss a plane on top of having to wait here all day.
3476 So Marc, go.
3477 COMMISSIONER PATRONE: Thank you, Mr. Chair.
3478 The vast majority of my questions have already been dealt with. But, Mr. Saunders, I know you will know the Christmas Daddies program --
3479 MR. SAUNDERS: Absolutely.
3480 COMMISSIONER PATRONE: -- every year raises money. And I know from experience that people donate their time, the technicians, the on-air people, they do it all for free. Did that not apply with your own particular campaign?
3481 MR. SAUNDERS: Absolutely, absolutely. And to that point, CTV came up with an idea not quite to the grand scale of Christmas Daddies, because that is a long-established event. But this year for the first time during our Bowl for Kids' Sake Campaign they suggested, they came to us with an opportunity to have a CTV Bowl Day where they gave the general public a chance to come in and bowl against their personalities, and they broadcast this whole feature live on the Live at 5 program.
3482 And I don't think I am letting the cat out of the bag here, that they have vowed that they are going to be doing that again in 2010 for us. So in a small way, we are building similarly with an event that we think is going to be eventually Christmas Daddies' size.
3483 COMMISSIONER PATRONE: And very quickly, did any of you approach other, apart from Mr. Cruise, other potential corporate partners in terms of being able to donate their broadcast services or anything like that? And what kind of reaction did you get from those other corporations?
3484 MS TUCKWELL: I think our experience was that CTV was the only corporation that came forward with an interest in partnering. And, far and away, has given us the most coverage in all areas, including editorial. The others have picked us up. We haven't had very much pick-up in the community stations.
3485 COMMISSIONER PATRONE: So they took the initiative is what you are saying?
3486 MS TUCKWELL: Yes.
3487 COMMISSIONER PATRONE: No one else did?
3488 MS TUCKWELL: Yes.
3489 MR. SAUNDERS: I would echo that, that CTV has taken the initiative with us, Big Brothers, Big Sisters. However, we have been thankful to receive some coverage from CBC-TV too.
3490 COMMISSIONER PATRONE: Anyone else want to tackle that one?
3491 Thank you very much.
3492 Mr. Chair.
3493 THE CHAIRPERSON: Okay, thank you very much. We very much appreciate you coming here. And please, take off quickly so you won't miss your plane. Thank you.
3494 This will end it for today. We will start tomorrow morning at 9:00.
--- Whereupon the hearing adjourned at 1747, to resume on Wednesday, December 9, 2009 at 0900
Lynda Johansson Jean Desaulniers
Monique Mahoney Madeleine Matte
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