ARCHIVED -  Transcript of Proceeding

TRANSCRIPT OF PROCEEDINGS BEFORE

THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

SUBJECT:

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

HELD AT:

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

December 10, 2009

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Canadian Radio-television and

Telecommunications Commission

Transcript

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

BEFORE:

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

ALSO PRESENT:

Jade Roy   Secretary

Valérie Dionne   Legal Counsel

Crystal Hulley

Donna Gill   Hearing Manager

HELD AT:

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

December 10, 2009

- iv -

TABLE OF CONTENTS

   PAGE / PARA

PRESENTATION BY:

Tom Gordon   920 / 5024

A4One Media Productions   935 / 5115

Fédération des communautés francophones et Acadienne du Canada   941 / 5153

Dan Spott   974 / 5355

Angelic Entertainment   987 / 5428

Sri Lanka United National Association of Canada   992 / 5452

imagineNative Film + Media Arts Festival   1005 / 5521

Meagan's Walk   1009 / 5541

The Charles Taylor Foundation   1011 / 5554

MTS AllStream   1027 / 5640

FreeHD Canada   1074 / 5935

   Gatineau, Quebec

--- Upon commencing on Thursday, December 10, 2009 at 0912

5016   THE SECRETARY: Mr. Gordon, you can take your seat.

5017   THE CHAIRPERSON: Good morning. Bonjour, tout le monde. I'm sorry we are starting late but one of our colleagues was late due to traffic.

5018   Madame la Secrétaire, let's begin.

5019   THE SECRETARY: Thank you, Mr. Chairman.

5020   The Commission has contacted 21 citizens that have requested to appear at this hearing for the Atlantic provinces.

5021   One citizen has confirmed his appearance today. We know that others may participate through the CRTC's online consultation that can be found on the Commission's website. This online consultation will close on December 21st.

5022   I will now invite Mr. Tom Gordon appearing via videoconference from Newfoundland to make his presentation.

5023   Mr. Gordon, good morning, and welcome to the CRTC hearing. You may proceed with your seven minute presentation.

PRESENTATION

5024   MR. GORDON: Good morning. Thank you very much for seeing me today.

5025   My presentation to you emanates not from a kind of dollars and sense reasoning but, rather, from three deeply-held personal perspectives. These are, first, that I was once a new Canadian.

5026   Secondly, that despite my more than middle-aged Anglophone white male status I have had the privilege of living in a minority context.

5027   And, finally, that I have had the opportunity to observe and facilitate the development of the careers of young Canadian artists for the last 35 years. I will speak to each of these perspectives.

5028   Though it's now been a very long time since I considered myself a new Canadian, the memory of that experience remains vivid. I arrived in the early seventies under the circumstances shared by many young men at the time.

5029   Once here I set about the business of becoming Canadian and quickly found my best tutor to be regional broadcasting. News, yes, but especially the stories from the proverbial coast to coast to coast took me to places I could not yet experience in person and led me to understand the difference between mosaic and melting pot. It also bred in me a fervour for the blessing of difference.

5030   Though I lived in Toronto at the time I came to understand that Canada was not a monolith to find my immediate environment, not even the vibrant multicoloured monolith of the Toronto of the day.

5031   I came to understand the rich complexity of my new home gradually through the stories told to me by regionally produced broadcasting that found their way to the centre. And it was the way in which those stories were told as much as the stories themselves that informed my understanding. Regional inflections mattered.

5032   From our understanding of this Canada my family and I took the decision to live comme des Anglophones au Québec, which we did for 17 years. We made our home in Sherbrooke, a community with a visible Anglophone history, an ingrained respect for two cultures living together and the vitality of a majority Francophone population.

5033   To my understanding of a Canada of many identities, I joined the understanding of the privilege and the challenge of being in a minority of some description. And while we took advantage of the local Francophone broadcast media to learn about the environment we were adopting, I also became sensitized to the critical role that regional English-language broadcasting played to its community.

5034   I learned that the monumental resources of North American broadcasting don't reflect the textured reality of an Anglophone living in Quebec. In fact, for some, it enhances a sometimes held perception of being marginalized. My world is not like theirs.

5035   10 years ago when we exchanged one distinct society for another by moving from Quebec to Newfoundland, I acquired another more apparently subtle identity. Here I am. I come from away.

5036   Again, I could turn to regionally-produced broadcasting to help me come to an understanding of my new environment and it has not failed me.

5037   The vital if diminished and diminishing programming coming from CBC Newfoundland/Labrador and from NTV has been my tutor and developed for me a richer understanding of the people, the place, the weight of history on the present and the dreams of the past that define the future.

5038   I have developed a profound appreciation and respect for the cultural expression of my new home. And I have also had the privilege of connecting with the tiny Francophone community in this province and to understand their frustration at seeing themselves represented as distant relations to Acadians or lost Québécois.

5039   Robust regional broadcasting would go a long way to valuing the realities of Francophones outside Quebec, Anglophones in French Canada and Aboriginals across the nation.

5040   My third perspective on this question is no less personal than the first two. At the same time, it is marked by a connection to my professional life. For the last 10 years I have been director of the school here in Newfoundland and Labrador charged with preparing musicians for a professional life in the arts. For 17 years before that I held a similar position in a Quebec university and ran a theatre; prior to that I was a department head at the Ontario College of Art and Design.

5041   Thus, for 35 years I have been surrounded by young artists at the cusp of their careers. I have been privileged to witness the emergence of their creative voices and I have had a relationship of stewardship with them.

5042   There are many partners in the education and training of Canada's artists. Universities and professional schools, mentorship programs and companies across the country, the support for creative exploration from national institutions and agencies, but in my experience one of the most critical partners in inspiring and launching young artists careers has been local broadcasting. Not for a moment do I downplay the critical role that national arts, specialty networks like Bravo play in sustaining careers and in bringing the achievements of our greatest artists into homes across the nation.

5043   But Bravo will have no one to broadcast if the student artists of this country don't first step in front of a camera as tonight's feature alongside the NTV weather report or, if this year's Newfoundland and Labrador emerging artists of the year isn't heard across the province on a local TV broadcast.

5044   Through no other vehicle but local television, like CBC's remarkable Land and Sea, does a storyteller from Labrador come into our homes on a weekly basis.

5045   I don't wish to suggest that my belief is the television is but a mirror and must be directed solely reflecting the viewer back. Nor is television's sole purpose to create a platform for young artists. But along with entertaining, informing, educating, selling and a myriad of other functions, television plays a vital role in developing understanding, understanding of self and society and of self in society.

5046   Regional production and regional broadcasting that is vital is the ground zero of developing that understanding. The funding model to sustain regional production is broken and regional broadcasting is not sustainable without a reconfiguration of how funding flows through the entire system.

5047   Thank you.

5048   THE CHAIRPERSON: Thank you very much for your presentation.

5049   I note the last line that you put that the funding model is broken. We have had a lot of evidence on this from all sorts of Canadians and, of course, we have been mandated to inquire into affordability.

5050   As you know, it is our position that this should be negotiated between over-the-air broadcasters and the BDUs. And the BDUs have put out this figure that it would merely mean a $10 increase. A TV tax, as they call it wrongly, is nothing of the sort. It will be something they negotiate.

5051   If you take the parallel of negotiations for private channels -- for specialty channels and considering that specialty channels don't have some of the advantages that over-the-air do, we think it's probably going to be somewhere around 25 cents per channel, depending on how much local channels you have. It may be two, three or four so you are talking about 75 cents or a buck.

5052   Would you consider that affordable, bearable, worthwhile paying in order to maintain an over-the-air television system?

5053   MR. GORDON: I can certainly say that I would consider it worthwhile and for me personally it would be easily affordable and valuable.

5054   I recognize that my personal situation is not the same as many Canadians but I do feel that the value of supporting local broadcasting, however that funding is achieved, is critical.

5055   Like everyone else, I listen to the news. I hear this morning that the cable operations are posting a much larger profit this year than even last year. It strikes me that there is room in that negotiation to satisfy both parties.

5056   But in answer to your question, my first priority is that this is worthwhile, it should be a priority. For me personally it would be affordable.

5057   HE CHAIRPERSON: Perfect, thank you.

5058   Steve?

5059   COMMISSIONER SIMPSON: Good morning, Mr. Gordon. How is the weather on the Rock this morning?

5060   MR. GORDON: We are having another one of those wicked snowstorms.

5061   COMMISSIONER SIMPSON: Well, keep it there, please.

--- Laughter

5062   COMMISSIONER SIMPSON: First off, I would like to say that it's refreshing to hear your point of view. It's always refreshing to hear a different perspective. This hearing has been quite focused on -- the testimony to this hearing has been quite focused on issues of affordability and choice of existing programming of a commercial nature.

5063   My first question to you is to gain a better understanding of your point of view with respect to arts and education which seem to be at the core of your appeal.

5064   My question is are you currently finding local television from your experiences in Quebec and the Maritimes, to be a sufficient source of arts and education currently or is something that you are hoping to see more of with local television surviving?

5065   MR. GORDON: I will speak specifically to the context here in Newfoundland where there is a very direct connection between the two local broadcasters, NTV and CBC Newfoundland & Labrador and the arts community.

5066   We are in daily interaction. We have opportunities both through radio and television to present our young artists to the public. We have fewer and fewer opportunities to present them in a kind of fully-produced way.

5067   And I think one of the critical issues, from my perspective, is that the opportunity, in a region like Newfoundland and Labrador for a young artist to experience a kind of full professional production at this stage of their career is certainly being undermined now by the lack of funding flowing into the production facilities here in the province.

5068   COMMISSIONER SIMPSON: We had heard some very coherent presentations from some younger presenters the other day with respect to funding.

5069   For example, there was a recommendation -- I don't know whether you are familiar with the Local Programming Improvement Fund which was created to specifically enhance -- allow broadcasters to enhance their ability to produce locally.

5070   Are you familiar with that fund?

5071   MR. GORDON: No, I'm not.

5072   COMMISSIONER SIMPSON: It is a fund that is designed to direct -- to be directed back into local broadcasters in the smaller markets to assist in their ability to continue to incrementally improve their programming.

5073   I don't know how much of it, because it's new, is going to be used for arts and education but it brings me to my next question.

5074   You seemed somewhat critical about the funding formulas that this country has currently that are more national in nature and are not, in your opinion, doing a sufficiently good job in directing any of those existing funds to regional arts and education programming. Is that --

5075   MR. GORDON: Yeah, I'm not sure I would put it quite that strongly.

5076   COMMISSIONER SIMPSON: Okay.

5077   MR. GORDON: I have recognized in particular with respect to CBC Newfoundland & Labrador that the cuts that the national network has had to sustain have not been reflected to the same level here.

5078   I think that there has been a valiant effort to support or sustain regional broadcasting here. I just don't believe it is what it should be.

5079   COMMISSIONER SIMPSON: Or what it could be.

5080   MR. GORDON: Or what it could be.

5081   COMMISIONER SIMPSON: Or what it could be.

5082   MR. GORDON: Yeah.

5083   COMMISSIONER SIMPSON: May I ask you, you didn't name names and I'm curious as to your opinion about how well the CBC is doing versus the private broadcaster in terms of any existing commitments to local programming. Are they the same? Are they different? Is one better than the other in your view?

5084   MR. GORDON: I think that the local private broadcaster, NTV, does a splendid job of supporting the sense of community engagement. You know if I want to get people out to a concert I phone up NTV and they are going to bring their weather man into a rehearsal and do the weather from our rehearsal studio, which gets people interested.

5085   For promotion I think the local private broadcaster does a fine job. For production CBC has still been the sort of primary source to go to but diminishing year by year in terms of its capacity to produce local artists.

5086   COMMISSIONER SIMPSON: I think my last question before I turn it over to my fellow commissioner is would you comment on the role and the success or lack of in your mind that the educational broadcaster is doing in Canada?

5087   There are several of course. Every province has an educational broadcaster. I'm not familiar with --

5088   MR. GORDON: Except Newfoundland.

5089   COMMISSIONER SIMPSON: Except Newfoundland.

5090   MR. GORDON: Newfoundland has not, yes.

5091   COMMISSIONER SIMPSON: Okay. Then, may I refine the question by asking you about the job that is currently being done by the community cable broadcaster in terms of their accessibility and commitment. Is it making a valiant effort? Is there room for improvement? Is this a source that you can turn to with any help from us?

5092   MR. GORDON: I think they are a willing partner. They certainly broadcast on a daily basis, community-oriented broadcasting, news, arts features as well.

5093   There is a tendency there to exploit young artists as opposed to support and promote them. I think that's in the nature of how they put things together. But they are certainly part of the fabric of how we represent ourselves here.

5094   COMMISSIONER SIMPSON: Is there a campus broadcaster?

5095   MR. GORDON: There is a campus radio.

5096   COMMISSIONER SIMPSON: There is, okay.

5097   MR. GORDON: Here at Memorial, yeah, that's right.

5098   COMMISSIONER SIMPSON: My apologies for not knowing that.

5099   Well, thank you very much. I'm finished my questioning. I believe Commissioner Molnar has a few questions. Thank you very much for --

5100   THE CHAIRPERSON: Okay. Candice?

5101   COMMISSIONER MOLNAR: Thank you.

5102   Good morning, Mr. Gordon. My name is Candice Molnar. I just have one follow-up question.

5103   With your discussion with Commissioner Simpson, you spoke about the role of community and the role of the local broadcaster and the public broadcaster.

5104   The other platform, if you will, I wanted to ask you about is the Internet. As you likely know, part of the issues facing conventional television today is fragmented audiences as they move to specialty and they move to Internet viewing and so on.

5105   Given that you work with young artists and it is the next generation of artists, I wondered, from your perspective, what opportunities are available to those artists using the Internet as a platform. How does this fit into your fabric, as you mentioned it?

5106   MR. GORDON: Sure. Obviously, this is a very exciting development and not the last because of the fact that Internet provides an opportunity for any young artist and any established artist to produce and broadcast himself or herself on their own.

5107   I think that a lot of my students, a lot of the people in this community are taking advantage of it. I think that it's a very exciting opportunity. Exactly how it will reach everyone that everyone would like to reach is not yet clear. I think we're in transition with this.

5108   I still think that, you know, the way to reach the largest number of people here in our community is by conventional broadcasting but I know that that is going to be changing over the next several years as Internet broadcasting becomes more and more accepted to the wider public.

5109   COMMISSIONER MOLNAR: Thank you, those are my questions. Thank you for attending today.

5110   MR. GORDON: Thank you.

5111   THE CHAIRPERSON: Okay, thank you very much for attending. You know, you said you speak only for yourself and this is fine but we want to hear from consumers and from people, so we do appreciate that you made the effort to come to our studios and appear here and we will take your views into consideration, like those of all other consumers. Thank you.

5112   Madame la Secrétaire, le prochain, s'il vous plaît.

5113   THE SECRETARY: Thank you, Mr. Gordon.

5114   I would now invite the next participants to make their presentation as a panel, A4One Media Productions, appearing via videoconference from our Toronto Regional Office, et la Fédération des communautés francophones et acadienne du Canada to come to the presentation table.

PRESENTATION

5115   MR. DE SILVA: Mr. Chairman and Commissioners, thank you and merci for the opportunity to speak today. My name is Paul de Silva, representing A4One Media.

5116   I am here because the issue is of great concern to me both as a member of the film and television community and as a concerned citizen as I believe this issue has wider ramifications that affect our sense of identity as Canadians and ultimately the health of our communities.

5117   I would like to make it clear that I am not speaking on behalf of any organization but because this issue affects me, my friends and colleagues on a number of levels.

5118   I do have a vested interest as I have been part of the film and television industry for over 20 years. It has not only allowed me to earn a living in an exciting industry but it has afforded me an opportunity to live and work in all regions of this great country and to feel that I was in some small way contributing to the life of the community.

5119   Like most immigrants, my parents were very grateful for the opportunities Canada provided them and became passionate believers in the ideals of Canadian citizenship. While, like most newcomers to the country, they could not afford to travel much when they first arrived, they insisted we learn as much as we could about our newly adopted country.

5120   Watching local television played an important role in how we learned about Canada and how we might participate in the life of the country and in doing our part in making it strong and prosperous.

5121   Grâce à mon travail de journaliste, producteur et éducateur, je suis venu à réaliser le rôle important...

--- Technical difficulties

5122   THE SECRETARY: I'm sorry, I think we're not -- the feed is not coming through.

5123   THE CHAIRPERSON: Okay. Well, why don't you phone him and tell him --

5124   MR. DE SILVA: It is important that all members of our community see themselves and their interests, aspirations and contributions reflected on one of the most influential mediums in forming our national identity. Television is a powerful tool in nation-building, and local television is a key element in this process.

5125   Why is local television important in this particular aspect?

5126   Local television plays a crucial role in the process of shaping our national identity by providing opportunities for communities to see their activities and contributions reflected and validated. It is often perhaps the only professional entry point for members of these communities to work and to develop their skills in the industry.

5127   I can speak to this from personal experience and that of many of my friends and colleagues.

5128   I was fortunate to be starting my career at a time when there was a lot more money for local television than there is now. I worked at the CBC's local television channels in Winnipeg, Regina and Toronto as a reporter, then a producer on a series about the neighbourhoods of Toronto -- what better way to tell the story of our local communities past and present -- and later as a drama producer for a series that began as a local series but was picked for network play because of its success locally.

5129   It was the series that gave now internationally acclaimed director Deepa Mehta her first chance to direct drama as well as giving Atom Egoyan, another acclaimed director, his first network-level budget for a film.

5130   Incidentally, the series was commissioned for the CBC network by Mr. Ivan Fecan and co-funded by Rogers Television thanks to the support of Mr. Phil Lind. Cooperation can result in some wonderful things.

5131   As well know, CBC budgets have been severely reduced over the past decade, some would say decimated, and that, coupled with the losses in advertising revenue, has had a huge impact on how the local community is reflected on the CBC as well as on employment opportunities.

5132   Prior to the major cutbacks in the 90s, the local Toronto station CBLT produced a daily one-hour evening and late night news program, two weekly half-hour programs -- one news and current affairs, the other arts and entertainment -- and several special programs involving community events, i.e., the Toronto Arts Awards, Caribana, the Harry Jerome Awards and local drama specials.

5133   These losses are particularly distressing to me and many others in the diverse communities given the CBC's vital role in reflecting Canada's multicultural diversity both in front of and behind the camera and promoting national identity and cohesion. I firmly believe that this situation needs to be addressed as our lives as Canadians will be poorer for it.

5134   Due to many factors, including technological change, consolidation, the impact of the Internet and the recent economic tsunami, there is an urgent need to realign the TV industry.

5135   I do not profess to completely understand all the factors at play or the precise metrics of the situation or how it affects the BDUs and the broadcasters, particularly the conventional channels, both who obviously play a vital role in the industry and who understandably feel very passionate about the positions they have taken.

5136   However, it is time to rethink the economics of the industry and that the door be opened to negotiations that would take into consideration the major changes that have created the current impasse.

5137   There are many options that appear to be under discussion: a skinny basic, pick and pay, and the American model, which allows for negotiation on rates, which has apparently been working successfully for all stakeholders for close to 20 years.

5138   I feel whatever the final decision the Commission makes in this matter of local programming and affordability, if there is to be a new regime in the funding equations, it must include very clear requirements for expenditures on local programming.

5139   Finally, I would like to respectfully suggest that the Commission give serious consideration to examining the viability of licensing a channel akin to Channel 4 in Britain, which was created in many ways to address many of the issues involving local programming and the racial and cultural diversity of their country.

5140   It provided not only opportunities for increased reflection and participation by racialized communities but also encouraged the creation of innovative programming and acted as an incubator for new talent in all areas of the industry. It had the added result, a happy result, of revitalizing the British film industry as well.

5141   I understand that provision was wisely made by some far-thinking legislators for such a channel in our own country in the Broadcasting Act when the Act was revised in 1991, under the category of an alternative programming service.

5142   Je remercie la Commission de me donner l'occasion d'ajouter ma voix à ses importantes délibérations.

5143   THE SECRETARY: Thank you.

5144   MR. DE SILVA: I would be happy to respond to any questions that you have.

5145   I'm sorry, there seems to be a bit of a delay in the transmission there.

5146   THE SECRETARY: Thank you.

5147   MR. DE SILVA: But that is my presentation, Mr. Commissioner.

5148   THE CHAIRPERSON: Thank you.

5149   MR. DE SILVA: Thank you.

5150   THE SECRETARY: Thank you.

5151   J'inviterais maintenant notre prochain présentateur, la Fédération des communautés francophones et acadienne du Canada, à faire leur présentation.

5152   S'il vous plaît vous présenter, et vous avez 10 minutes.

PRESENTATION

5153   MME KENNY : Bonjour. Tout d'abord, merci de nous avoir invité à participer à cette audience publique ce matin.

5154   Je m'appelle Marie-France Kenny. Je suis présidente de la Fédération des communautés francophones et acadienne du Canada, et je suis accompagnée aujourd'hui de Serge Quinty, notre directeur des communications. Il nous fera grand plaisir de répondre à vos questions à la fin de cette présentation, in either official language.

5155   J'ai l'impression d'exprimer une évidence lorsque je dis qu'on parle ici d'un dossier qui pourrait avoir un impact capital sur la capacité des communautés francophones et acadienne de s'informer sur leur milieu au niveau local et dans leur langue.

5156   Nous avons eu l'occasion, à deux reprises cette année, d'exprimer devant vous l'importance que revêtent les stations provinciales de Radio-Canada à ce niveau, et dans une de ces deux comparutions, nous avons mis l'accent sur notre vive inquiétude par rapport à la fragilisation du réseau pancanadien de la SRC suite aux compressions de mars dernier.

5157   Nous sommes donc là pour parler au nom de nos communautés, mais nous sommes là aussi comme citoyens canadiens.

5158   And on that topic, since we're talking about preserving the ability of Canadian citizens to have access to a local coverage and programming that reflects their reality, I would like to express our sympathy for the people of Brandon, Manitoba, who in October lost their local television station CKX-TV.

5159   We Francophones living in a minority situation know what it is to have only one station that speaks of who we are, that covers our realities and our issues.

5160   Nous savons ce que c'est que de craindre qu'une situation financière difficile pousse un réseau généraliste à effectuer des compressions dans les services en région, et surtout, nous savons ce que c'est que de vivre ces coupures par les gens francophones de Windsor.

5161   C'est donc à la fois comme Francophones et comme citoyens canadiens préoccupés que nous avons pris position en faveur de l'adoption d'un système de compensation pour la valeur des signaux de télévision généraliste locale.

5162   Je crois que notre mémoire ainsi que mes remarques d'introduction expliquent très bien pourquoi. Notre propos aujourd'hui est plutôt de préciser certains éléments clés de nos recommandations et d'apporter des considérations supplémentaires sur les discussions qui ont eu lieu lors de ces audiences publiques.

5163   J'aimerais d'abord clarifier notre position par rapport au mérite respectif du Fonds d'amélioration de la programmation locale et d'une redevance pour la valeur du signal des télévisions locales.

5164   En ce qui a trait au FAPL, nous applaudissons cette initiative du CRTC, même si nous trouvons répréhensible, pour ne pas dire honteux, que les entreprises de cablôdistribution aient choisi d'en transférer les coûts aux abonnés.

5165   Il s'agit d'un moyen très prometteur pour l'appui à la création de contenu télévisuel à caractère local, et nous souhaitons ardemment, soit-dit en passant, que nos producteurs indépendants francophones puissent également en profiter.

5166   Toutefois, nous apportons un bémol. Quand on parle des dépenses admissibles au FAPL, on parle des coûts directs reliés à la prestation ou à la livraison d'un produit à l'écran. C'est très bien, mais le FAPL ne s'adresse pas, selon nous, à la problématique qui est au coeur de cette audience publique : la consolidation de l'infrastructure et des stations.

5167   Si un télédiffuseur généraliste n'est pas en mesure de consolider et de maintenir financièrement l'infrastructure de son réseau, que pensez-vous qu'il arrivera?

5168   Nous l'avons dit dans notre mémoire, il est normal qu'un télédiffuseur en difficulté cherche à préserver prioritairement sa présence dans les endroits où se trouve la majeure partie de son auditoire, dans les grands centres. Malheureusement, cela signifie souvent l'élimination des services dans des régions où les options en termes de couverture locale sont souvent beaucoup plus limitées, et même une coupure qui serait minime dans un grand centre devient majeure dans une petite région où les moyens sont beaucoup plus restreints.

5169   D'ailleurs, comme vous l'avez lu dans notre mémoire, nous mettons une condition importante à notre appui à la mise en place de ce système de compensation pour la valeur des signaux des télévisions locales : Nous recommandons d'exiger des réseaux de télévision généraliste que les fonds provenant d'un tel système de compensation soient investis dans les services de télévision régionale et locale.

5170   Je souhaite justement apporter quelques précisions à ce sujet.

5171   D'abord, nous ne préconisons, bien sûr, pas d'exclure totalement les grands centres des retombées de ce système de compensation, mais si on a passé les deux derniers mois à placer des annonces d'une pleine page dans les quotidiens canadiens pour mobiliser la population canadienne à la défense de la télévision locale, il nous semble normal qu'on réinvestisse justement à ce niveau.

5172   Nous sommes conscients de l'importance pour les télédiffuseurs de consolider leur réseau, mais justement, nous voulons que ce soit tout le réseau.

5173   Pourquoi aller jusqu'à un cadre d'imputabilité? Parce que dans une logique commerciale, il arrive souvent qu'un télédiffuseur veuille réinvestir prioritairement là où sont les plus gros marchés. Dans ce contexte, il faut un garde-fou pour les télévisions locales et pour leurs auditeurs.

5174   Nous ne sommes, d'ailleurs, pas les seuls à proposer un tel mécanisme. Nous avons noté que le Conseil provincial du secteur des communications du Syndicat canadien de la fonction publique a demandé que les généralistes soient obligés de maintenir une salle de nouvelles indépendante et opérée par ses propres employés.

5175   Nous demandons, quant à nous, deux choses :

5176   - d'une part, que les généralistes qui opèrent des stations locales ou provinciales rejoignant les communautés francophones et acadienne soient contraintes de démontrer de quelle manière elles ont réinvesti les revenus générés par ce système de compensation dans leurs stations provinciales et locales; et

5177   - d'autre part, dans le cas de Radio-Canada, que la société d'état démontre de quelle manière elle a consulté les communautés sur leurs besoins, telle que l'y engage la Partie 7 de la Loi sur les langues officielles, afin d'orienter ses investissements.

5178   Nous appuyons donc un système de compensation sous ces conditions.

5179   Et, d'ailleurs, j'aimerais parler un peu des remarques qui ont été faites devant le Conseil à l'effet que ce système de compensation devrait être limité aux télévisions généralistes privées, à l'exclusion de Radio-Canada.

5180   Je demanderais à ces télédiffuseurs privés s'ils sont prêts à en faire davantage pour nos communautés francophones que ce que Radio-Canada fait actuellement. La présence de Radio-Canada dans nos communautés n'est pas parfaite, et les Francophones ne se privent pas de le dire non plus, mais aucune autre chaîne généraliste ne fait l'équivalant en quantité et en qualité.

5181   J'aimerais maintenant apporter quelques considérations sur la transition au numérique.

5182   En janvier, nous avons souligné au Conseil notre préoccupation par rapport à la capacité financière de Radio-Canada de remplacer à temps, pour l'échéance de 2011, les émetteurs de ses stations provinciales de langue française à l'extérieur du Québec.

5183   Il semble que la société d'état ait, depuis, pris l'engagement de remplacer au moins un émetteur partout où il y a une station productrice de contenu, afin que le signal puisse être repris par les EDR. Nous sommes, bien sûr, encouragés par ce développement. Toutefois, étant donné les fluctuations récentes de la situation financière de la SRC, nous sommes certains que le CRTC et la gouverneure en conseil voudront surveiller de près cet enjeu.

5184   En terminant, nous comprenons très bien, croyez-moi, l'impératif de préserver un coût abordable pour le consommateur. Nous comprenons les préoccupations des citoyens qui ont écrit au Conseil et qui se sont présentés ici parce qu'ils craignent de voir leur compte de câble ou de satellite monté en flèche. Nous sommes, franchement, choqués par le fait que les entreprises de distribution promettent déjà de répercuter sur leurs abonnés le coût d'un tel système de compensation.

5185   Mais, en bout de compte, la solution qu'on trouvera ne doit pas être au détriment du consommateur, elle ne doit pas non plus être au détriment de nos valeurs et de qui nous sommes.

5186   Nous prions donc le Conseil de recommander à la gouverneure en conseil de tenir compte, dans les solutions qu'elle choisira de mettre en oeuvre, des objectifs de la Loi sur la radiodiffusion et de la Loi sur les langues officielles.

5187   La première énonce l'objectif de sauvegarder, d'enrichir et de renforcer la structure culturelle, politique, sociale et économique du Canada.

5188   L'autre a pour grand objectif d'assurer l'égalité du français et de l'anglais dans la société canadienne, mais établit également une obligation de mesures positives pour appuyer le développement des communautés de langues officielles en situation minoritaire au Canada.

5189   Voilà, selon nous, une toile de fond dont on ne peut faire abstraction au nom des impératifs de la loi du marché.

5190   Je vous remercie, et nous sommes maintenant prêts à prendre vos questions, comme je l'ai dit, in either official language.

5191   LE PRÉSIDENT : Merci.

5192   Je crois qu'il y a une autre personne. Non, c'est tout? Bon.

5193   Let's start with you, Mr. de Silva. You mentioned something, Channel 4 in Britain. I'm afraid I'm not familiar with it. Can you tell me what this is?

5194   MR. DE SILVA: I think -- can you hear me?

5195   THE CHAIRPERSON: Yes, I can hear you.

5196   MR. DE SILVA: Thank you, Mr. Chair, we've got a mute issue here.

5197   Channel 4 was established, I think, about 20 years ago by the British government, in response to a lot of lobbying by both the independent production community in Britain as well as many of the culturally diverse communities, basically to answer a need for a channel that would be reflective of the independent sector as well as the different cultural communities.

5198   After a number of years, the British government established Channel 4 with a very particular focus of reflecting the different cultural communities. They set up a department within Channel 4 to produce shows such as a quite famous show called "The Desmonds," "Tandoori Nights," "Black Britain," et cetera.

5199   The funding model for that was very interesting because it began with a direct allocation from the government.

5200   And I should say Channel 4, by the way, Mr. Chair, has become incredibly successful in Britain and has generated both, you know, very new, innovative programming initiatives as well as now it's become part of the British broadcasting system.

5201   What I was saying earlier, the funding model was that the British government started off with a direct stipend and then moved after, I believe, about 10 years to an advertising model. So it was no longer receiving direct funding from the government.

5202   And it has been tremendously successful in both, as I said, providing opportunities not only for employment but reflection and has done an amazing job. You may be familiar with many of the films you've seen in theatres produced by a company called FilmFour and that has been one of the added advantages of Channel 4.

5203   THE CHAIRPERSON: Why do we need it? We have OMNI, we have APTN, we have Asian Television Network, we have Fairchild, et cetera. We seem to have a variety of reflections of the multi-ethnicity of Canada on the screen. Why do we need a state-financed channel as well?

5204   MR. DE SILVA: Yes. Well, I'm glad you asked me that question, M. Chair.

5205   All of those channels contribute in many, many ways to reflection but the great distinction of that is that most of them -- Asian Television specifically and in much of the programming of OMNI, which is doing, I think, a terrific job in giving a voice to many of the local community groups -- tend to be ethno-specific channels.

5206   Asian Television aims specifically at the South-Asian market on a subscription basis.

5207   OMNI is, again, a local channel, although they have channels across the country now. If you examine the programming at OMNI, the local programming, the programming that reflects the community, except with the exception of a program series that they did with the Benefits Program, which is no longer available, was the only drama program.

5208   So I guess what I'm saying is while they do have an important role, they don't have the resources or the reach to adequately address this situation. And the concern is it is ethno-specific, it is not cultural and it is not funded in a way that allows for the production of programming that will be competitive in this market and that will allow for the participation and reflection of the communities.

5209   That's a rather long answer and I apologize for that.

5210   THE CHAIRPERSON: Thank you.

5211   Madame Kenny, dans votre présentation, à la page 3, vous dites, et je cite :

« Nous recommandons d'exiger des réseaux de télévision généraliste que les fonds provenant d'un tel système de compensation soient investis dans les services de télévision régionale et locale. »

5212   Nous avons eu des présentations d'autres groupes qui disent, oui, ça marche, mais on doit aussi assurer qu'une partie de cette compensation soit dédiée à la production de films et de documentaires.

5213   Est-ce que vous insistez que ça soit exclusif pour les télévisions régionales et locales ou est-ce que vous êtes prête aussi à permettre qu'une partie de ces fonds soit dédiée pour la production de films et de documentaires?

5214   MME KENNY : Nous, évidemment, on veut qu'une société comme Radio-Canada, par exemple, soit imputable sur la façon dont ils ont consulté et ils ont versé à la télévision locale. C'est certain qu'on s'attend à ce que ces médias-là qui ont pris des pages complètes pour sauvegardes les télévisions locales réinvestissent dans les télévisions locales, mais on comprend qu'on parle de la consolidation de tout un réseau. Évidemment qu'il y aura une partie de ces fonds-là qui ira au niveau national.

5215   Je ne sais pas si tu voulais rajouter.

5216   M. QUINTY : C'est correct.

5217   MME KENNY : Non. Ça va.

5218   LE PRÉSIDENT : Si je vous comprends bien, vous n'insistez pas que cette compensation soit exclusivement dédiée...

5219   MME KENNY : Non.

5220   LE PRÉSIDENT : O.K. Merci.

5221   Len, you have some questions?

5222   COMMISSIONER KATZ: Thank you, Mr. Chairman, and good morning.

5223   MS KENNY: Good morning.

5224   COMMISSIONER KATZ: Let me start with Mr. de Silva.

5225   Good morning, Mr. de Silva. Hopefully you can hear us.

5226   MR. DE SILVA: Good morning, sir.

5227   COMMISSIONER KATZ: I want to take you to a comment you made on page 3 at the end of the first paragraph, where you say that:

"...it is time to re-think the economics... [and to] take into consideration [what you say here are] the major changes that have created the current impasse."

5228   Can you expand on what you believe are those major changes?

5229   MR. DE SILVA: Yes, Commissioner Katz, I would be happy to do that with the caveat that, as I said earlier, I am certainly not an expert in any of these areas. I, as many people -- essentially I am a producer but I read the papers and I watch television. So I'm not speaking from any great -- I should say particular knowledge or inside information.

5230   But it appears to me that the factors I mentioned: technological change; the Internet obviously has had a huge impact on advertising; consolidation has reduced the number of companies in this country -- some would argue that's a beneficial thing and it may be; the downturn or the massive reduction of advertising dollars available.

5231   All of those factors, I believe, are crucial factors that have resulted in the situation I think we have now, where conventional broadcasters, who are really the ones that are producing local programming, (a) don't have the funds to do that anymore -- I mean after all it is a business.

5232   And all of those factors -- if I may go back to clarify your question, you asked me what do I think of those factors. I think those are the factors that have put us in the situation now.

5233   COMMISSIONER KATZ: Okay. I want to focus on one of them.

5234   I think you said fragmentation and that when we look at conventional television there clearly has been a change in their dynamics simply because there are so many other channels out there.

5235   But as an industry, should we not be looking at the growth of the industry in total?

5236   I know you had a discussion with the Chairman a few minutes ago about the specialty channels as it relates to ethnicity and the fact that there's a number of channels out there and I think you're advocating more of a general approach.

5237   But do you not see the value and the benefit --

5238   MR. DE SILVA: Yes.

5239   COMMISSIONER KATZ: -- of marketing on a targeted basis that way and the benefits that it attracts to consumers, to Canadians?

5240   MR. DE SILVA: If I understand your question correctly, Commissioner Katz, are you asking whether I believe that specialty channels or very focused, targeted demographic channels have a place in the system? I just want to clarify it.

5241   COMMISSIONER KATZ: That as well as having created a successful model that may in fact be the reality that conventional television in and of itself as it is today may have to find a place in its space relative to conventional and specialty side by side. Twenty years ago there was no specialty.

5242   MR. DE SILVA: Yes, that's right. Yes.

5243   COMMISSIONER KATZ: Okay.

5244   MR. DE SILVA: Yes, I think the specialties have a very important place and they have succeeded, I think, for a large part because they were given the great advantage of a very direct subsidy, if you will, or a subscriber fee when they began.

5245   Showcase television, The Life Channel, all the specialties that have done very, very well and have added a tremendous amount to the system have -- partly their success has been that they had a steady stream of income from the BDUs. Because of that, they have been successful. And yes, they play a very, very important role.

5246   I think because it's a very complicated issue I'm trying to focus specifically.

5247   If the conventional stations are the ones providing primarily local programming -- and the specialties tend not to do that, they tend to either rebroadcast American and international programming because that's their business model.

5248   OMNI, which the Chair referred to, needs to make money, it's a business, and the way they make money is to run American syndicated programming in prime time.

5249   The specialties, again, have an important place. But who is going to fund local programming? If the conventional channels don't have the money, they don't have the advertising revenue, they're not getting a fee in any way for their services on cable channels, then where is that money going to come from?

5250   COMMISSIONER KATZ: What if --

5251   MR. DE SILVA: I hope I've answered hat question.

5252   COMMISSIONER KATZ: Sure.

5253   What if you look into a crystal ball 10 years down, do you think that specialty channels will have migrated to a point where they actually will be providing local programming as well or could they evolve to that stage? In which case there isn't that much of a differentiation between conventional and specialty.

5254   MR. DE SILVA: That's an excellent question. Looking in a crystal ball, if I had one -- it's a really hard question to answer because it would depend on many, many factors.

5255   First of all, why would they? They are, again, a business. In terms of monetizing, the model they're currently on is very successful for them.

5256   Local programming costs money. We've heard several interveners talk about what it costs and I know because I've worked both, Commissioner, in the community channel, I've worked for a network, I've worked for private broadcasters and I've been an independent producer. The costs involved in producing quality programming which reaches a wide group of people -- and we're talking about in terms of the reach -- is expensive to produce.

5257   Would the specialties (a) have an incentive do that? I don't think so, quite honestly.

5258   I mean if you're looking at -- you know, asking me to look in a crystal ball, I can't see where there would be a reason or incentive for them to do that unless there were specific requirements by the regulator, by the CRTC, to say that is a duty, let's say, as you do now require a large portion of it to be Canadian content and a portion of that has to be local content.

5259   So if those elements are in place, i.e., a regulatory regime and the financial incentive, maybe, but quite frankly, I can't see it happening.

5260   COMMISSIONER KATZ: Okay.

5261   Closer to your world as a producer, are you starting to see an opportunity for creative programming to be distributed more and more through alternate media like the Internet as opposed to the linear broadcasting system? Are you looking at that as a vehicle and how do you see that evolving?

5262   MR. DE SILVA: Most certainly, I think any producer today has to look at alternate platforms to conventional television, and the Internet is obviously, you know, the most obvious one at the moment and you ignore it at your peril, first of all.

5263   And it is a really exciting opportunity. You know, there are so many examples of successful programs that have started on the Internet and now are on conventional television, et cetera. So yes, most definitely, we must and we are.

5264   However, there is still a very big gap in terms of the monetization. I mean we keep hearing, but where is the business plan here? There are some examples of that where there have been successful shows that have either been produced directly for the Internet and, you know, have made some money.

5265   But frankly, to produce a program -- you know, it costs a million dollars plus more for a one-hour drama, half of that for a half-hour drama, less but not that much less for a reality program.

5266   The reason the Internet is as exciting and viable is because they're taking programming that has already been produced for conventional television, as far as I can figure out, and it's another platform. It is not the platform. It is not the only platform and I don't think it ever will be but in the exciting world we live in, it is another choice.

5267   But I think we have to bear in mind the realities of where the funding is going to come from to actually produce programming and I still think it's in conventional television.

5268   COMMISSIONER KATZ: Thank you.

5269   Ms Kenny, you mentioned the LPIF in here and the value that the LPIF provides. You also talk about accountability and transparency.

5270   Are you suggesting that the Commission needs to do more in looking at how the LPIF is being spent by the minority broadcasters?

5271   MS KENNY: Absolutely not. Maybe I --

5272   CONSEILLER KATZ : Si tu veux parler en français, O.K.

5273   MS KENNY: No. I think maybe I didn't explain it correctly but what we're saying is the program, le Fonds d'amélioration pour la programmation locale, is something to help with the production, whereas there's no money in that fund intended for the bricks and mortar and the infrastructure, the equipment. So it's good to have local production, you have to make sure you have the infrastructure to stay.

5274   So we're not -- and when we're talking about accountability, it's accountability on how any money taken from what we're --

5275   Ce qu'on préconise aujourd'hui, c'est qu'on veut qu'il y ait une redevabilité pour le signal et on veut qu'il y ait une imputabilité sur la façon dont ces argents-là sont dépensés, pour s'assurer qu'il y a une partie de cet argent-là qui se rend, effectivement, aux stations locales.

5276   MR. QUINTY: Commissioner Katz, I do believe that several groups and people who have come before the Commission in the past few days have talked about some form or another of strings attached for fee for carriage.

5277   What we're saying basically is we don't necessarily expect 100 percent, every last cent of that money from fee for carriage to be invested in local or provincial television stations but what we do expect is to see some benefit from that because the campaign has been waged on saving local TV, so it would be normal that some part of that money be invested back in local TV and we would like to see a framework of accountability on that.

5278   COMMISSIONER KATZ: Okay, thank you.

5279   Those are my questions.

5280   LE PRÉSIDENT : Louise?

5281   CONSEILLÈRE POIRIER : Oui. Bonjour, Madame. Bonjour, Monsieur. Hello, Mr. de Silva.

5282   La première chose que je voulais vous dire, on a beaucoup entendu parler de l'Acadie...

5283   MR. DE SILVA: Good morning.

5284   COMMISSIONER POIRIER: Good morning.

5285   On a beaucoup entendu parler de l'Acadie cet été lors des festivités, entre autres, à Radio-Canada, et le Fonds d'amélioration locale n'était pas encore en place.

5286   Est-ce que vous pensez que le Fonds seulement peut venir vous aider à avoir une bonne couverture au niveau des minorités linguistiques du Canada ou qu'il faille absolument ajouter une compensation pour la valeur du signal pour obtenir ce que vous cherchez à obtenir?

5287   MME KENNY : Absolument. Comme je disais tout à l'heure, le Fonds d'amélioration est pour la livraison de produit à l'écran, donc, le contenu, la production, mais ne vient pas compenser pour l'infrastructure, c'est-à-dire le bureau de Radio-Canada qui est à Winnipeg ou à Edmonton, ou encore à Moncton, et pas non plus pour l'équipement et le reste, et donc, il n'aide pas pour nous.

5288   Si on parle de redevances pour le signal local, c'est important pour nous qu'on réinvestisse au niveau local, et par ça, on veut une imputabilité.

5289   Donc, les deux... un ne va pas sans l'autre. Vous pouvez m'offrir toute la programmation que vous voulez, mais si vous n'avez pas l'infrastructure pour nous l'offrir... Donc, c'est essentiel pour nous.

5290   CONSEILLÈRE POIRIER : Oui. Avec la transition au numérique, c'est certain que le CRTC fait tout pour s'assurer que l'ensemble des Canadiens et des Canadiennes reçoivent le signal, et c'est pour ça qu'on a préconisé, entre autres, le free TV avec le satellite, qui permettrait -- bien sûr, avec un coût pour les citoyens, peut-être pour le gouvernement, c'est à voir -- de s'assurer que tout le monde reçoit la télévision.

5291   Est-ce que ce modèle-là serait suffisant, vous pensez, pour rejoindre l'ensemble des communautés francophones partout sur le territoire canadien ou il faudrait faire encore plus?

5292   M. QUINTY : Si je ne m'abuse, le freesat dont vous parlez, effectivement, lorsqu'on avait comparu ce printemps, vous nous aviez demandé, d'ailleurs, de commenter le freesat, et si je ne m'abuse, il y a des frais quand même pour les gens qui ne sont pas abonnés, qui sont... présentement qui reçoivent la télévision par l'antenne, qui doivent naturellement mobiliser peut-être 500 dollars pour se procurer l'équipement satellite là. Donc, déjà, il y a ça.

5293   Nous, à la base, en ce moment, on est quand même content de savoir, au niveau de la transition numérique, que Radio-Canada va, effectivement, convertir, à tout le moins, un émetteur pour chaque station qu'on appelle en anglais an originating station, c'est-à-dire une station qui est productrice de contenu.

5294   Il faut comprendre que la grande majorité, effectivement, de nos communautés, parce qu'elles sont en situation rurale, reçoivent la programmation par des EDR, de toute façon.

5295   Donc, c'était là que se situait notre préoccupation au mois de janvier lorsqu'on avait lu dans le mémoire de Radio-Canada qu'ils ne pensaient pas avoir les moyens de remplacer les émetteurs.

5296   Ce qu'on dit essentiellement à ce point-ci, c'est que c'est beau, on est bien content, bravo! Cependant, étant donné les fluctuations qu'a connu la situation financière de la société d'état, on pense que ça mériterait d'être monitoré, ça.

5297   CONSEILLÈRE POIRIER : Parfait!

5298   Qu'est-ce que vous écoutez comme TV locale?

5299   MME KENNY : Chez moi, ma télévision locale -- j'habite à Regina en Saskatchewan -- TV5, RDI, la Société Radio-Canada, CPAC en français et TVA. C'est la télévision de base sur mon cablôdistributeur qu'on m'offre.

5300   CONSEILLÈRE POIRIER : C'est à la base.

5301   MME KENNY : C'est à la base.

5302   CONSEILLÈRE POIRIER : Est-ce que vous prenez aussi un bouquet plus spécialisé?

5303   MME KENNY : Oui. J'ai, entre autres, le Réseau des Sports et certains autres programmes en français, mais je dois vous dire que je suis très peu à la maison, donc, je me suis limitée pas mal au câble de base.

5304   CONSEILLÈRE POIRIER : Parfait!

5305   Est-ce que vous préconisez, pour l'ensemble des Francophones à travers le Canada, qu'il y ait un accès à un service à la carte qui pourrait leur permettre, entre autres, d'avoir accès peut-être plus facilement à des chaînes en français? Bien sûr, je sais qu'ils regardent aussi des canaux en anglais, mais est-ce que le système à la carte serait un avantage ou non pour les communautés francophones?

5306   MME KENNY : Bien, je voudrais m'assurer que dans le service de base, on ne m'enlève pas ces postes-là. Je suis très peu chez moi, mais je les regarde quand même quand j'y suis ou quand je suis ailleurs, d'ailleurs.

5307   Donc, je ne voudrais pas perdre TV5, RDI, Radio-Canada, TVA et CPAC en français, qui est une obligation en soi, et je ne voudrais pas non plus avoir à payer 36 postes ou 36 forfaits pour avoir des postes spécialisés.

5308   Donc, pour moi, il est essentiel qu'on maintienne les acquis qu'on a, donc, les services qu'on a maintenant dans mon câble de base et que j'aie l'option d'acheter...

5309   M. QUINTY : Nous, vous savez, ici en Ontario, Rogers offre Franco télé, qui est un forfait thématique qui comprend plusieurs stations, plusieurs chaînes facultatives francophones. Nous, on trouve que ça, c'est une approche intéressante.

5310   C'est sûr et certain que notre préférence -- et on l'a mentionnée au CRTC en janvier -- c'est on sait qu'il y aura un nouveau processus au niveau des 9(1)(h), c'est sûr et certain que nous, on trouve que pour les impératifs de variété, il serait peut-être intéressant d'examiner qu'il y ait deux ou trois postes de plus francophones au 9(1)(h).

5311   Au-delà de ça, entre le à la carte là -- je comprends que vous parlez peut-être de ce qu'on appelle le pick and pay communément là -- et des forfaits thématiques, c'est sûr et certain qu'il y a des tenants et des aboutissants qui sont détaillés là qui, à ce moment-ci, ne nous permettent pas vraiment de prendre une position définitive.

5312   Mais les questions qu'on a, c'est à savoir, effectivement... du point de vue des chaînes spécialisées, je crois que l'argument serait qu'il y aurait plus d'argent qui viendrait de forfaits qu'il y en a qui viendrait de pick and pay.

5313   Donc, de notre point de vue, pour revenir à notre point de vue, c'est lequel qui permettrait, effectivement, à une chaîne spécialisée... qui donnerait le plus de raisons à une chaîne spécialisée de peut-être faire un petit peu plus pour les communautés francophones et acadienne en termes de couverture. C'est la question qu'on aurait.

5314   MME KENNY : Si je peux me permettre un bref ajout. Pour avoir le Réseau des Sports chez moi, j'ai dû payer... je paie un forfait qui comprend Golf TV et un paquet d'autres postes que je n'aurais pas nécessairement voulus.

5315   Donc, si on parle de forfait, qu'on parle de forfait à contenu francophone que je peux acheter et que je ne suis pas obligée d'acheter quatre forfaits parce que mes différents postes sont jumelés...

5316   CONSEILLÈRE POIRIER : Oui. Mais, de façon générale, est-ce que les Francophones au Canada ont accès à des forfaits francophones?

5317   MME KENNY : Dans la plupart des régions, oui.

5318   CONSEILLÈRE POIRIER : Et ça, vous voulez le protéger?

5319   MME KENNY : Absolument!

5320   COMMISSIONER POIRIER: Maybe a last question, Mr. Chair, and it would be to Mr. de Silva.

5321   Mr. de Silva, I enjoyed listening to you. You have a wonderful voice. That's why I understand you're in that business.

5322   MR. DE SILVA: Thank you.

--- Laughter

5323   COMMISSIONER POIRIER: But I have to ask you, do you think we need to regulate more to guarantee you will get more local news or if we let the market forces go, it will be settled by itself?

5324   MR. DE SILVA: Hum --

5325   COMMISSIONER POIRIER: Is the consumer protected or not? Is he protected enough in this battle that we are in actually or does he need to be protected more?

5326   MR. DE SILVA: Commissioner Poirier, are you referring specifically to local news --

5327   COMMISSIONER POIRER: Yes.

5328   MR. DE SILVA: -- or a wide variety -- to news.

5329   It's hard to say but my sense is that if there isn't a regime of -- a new regime of funding, I can only go by the broadcasters in terms of what they're saying they have available of funding or available financing to produce this local news.

5330   Expensive to produce? Not and in most cases very remuneratively positive for them. In other words, they're not making a lot of money because the advertising isn't there.

5331   So you've got high production costs, low revenue for this. If there isn't regulatory protection -- and it's a complicated issue, again.

5332   How much you've got -- you know, in our local market in Toronto, Global, CTV and CBC are all doing news primarily. There are news, for instance, on OMNI, again ethno-specific news.

5333   But if those channels do not have the financing -- I mean CBC, I think, is in a separate category because they are the national broadcaster. It's a public broadcasting situation and they have both a regulatory as well as a government allocation for that.

5334   But, quite frankly, you know, I can only judge by CTV and Global, who provide the bulk of local news --

5335   COMMISSIONER POIRER: Yes. And your answer is yes or no?

5336   MR. DE SILVA: -- saying they don't have -- sorry?

5337   COMMISSIONER POIRER: Your answer is yes or no?

5338   MR. DE SILVA: Yes to regulatory or no?

5339   COMMISSIONER POIRER: Yes.

5340   MR. DE SILVA: I'm afraid it has to be yes --

5341   COMMISSIONER POIRER: Thank you very much.

5342   MR. DE SILVA: -- I believe. Yes, okay.

5343   THE CHAIRPERSON: Okay, thank you very much.

5344   MR. DE SILVA: I'm --

5345   THE CHAIRPERSON: We only have a little bit of time, Mr. de Silva. We have a huge number of interveners who want to share their views.

5346   MR. DE SILVA: I understand.

5347   THE CHAIRPERSON: So thank you for explaining your point. I think we got it.

5348   We will take a 10-minute break before we go to the next panel. Thank you.

--- Upon recessing at 1017

--- Upon resuming at 1030

5349   LE PRÉSIDENT : Commençons.

5350   THE SECRETARY: Thank you.

5351   The Commission has contacted 25 citizens that have requested to appear at this hearing for the provinces of Manitoba and Saskatchewan. Two participants had confirmed their appearance today. We know that others may participate through the CRTC's online consultation that can be found on the Commission's website. This online consultation will close on December 21.

5352   For the record, Mr. Alan Rae that had confirmed his appearance from our Winnipeg office is not present today.

5353   We will now hear the presentation of Mr. Dan Spott who is appearing via videoconference from Regina.

5354   Good morning, Mr. Spott, and welcome to this hearing. You may proceed with your seven-minute presentation.

PRESENTATION

5355   MR. SPOTT: Good morning. Ni hao.

5356   Rather disjointed, but -- sorry if I have to read a lot of it. First, I am a volunteer with a local cable company which is known as Access Community Cooperative Cable. They kind of gave me the hint to tell you all that, no, I am not a member of them -- I am a member, but I am not paid by them, I am not on their staff, I am just a volunteer.

5357   My reason for getting involved in -- we have had all these ads on television by the OTA, over-the-air, television stations and they are claiming to be community. And I object to them saying they are community. They are not community. They are paid local television.

5358   Now, the hearing is to the fact that they maybe should get money for having -- or more money for being over-the-air, over Access, and I have some complaints about that but...

5359   I don't really know how the CRTC works and, like a lot of people, probably haven't cared. But I appreciate being able to express my comments.

5360   The problem appears to be, to me, that the stations would like Access, as well as other cable companies, to pay them a lot of money for providing their signal. They do provide an over-the-air signal off an antenna, which everyone can pick-up, which I can pick-up without my cable system. But I do have local cable, minimum amount mind you.

5361   And I am guessing on some of this, but it appears to me what happens is they provide a local commercial advertising channel over-the-air which is provided to the cable companies, which the cable companies have to clean their signal up and provide the equipment necessary to ensure that it is a good quality continuous signal.

5362   Then the cable companies such as Access and others across the country feed this signal to their processors, which goes out through a cable system, into the homeowner, the cable companies provide equipment so the homeowner can view this signal. They also do it for TSN and all these other stations that are valuable.

5363   My complaint is I want CCTV China Central, and I can't get it. But that, I assume, is CRTC restricting that one.

5364   So it cost Access, and I have no idea on funding, but a lot of money to clean this signal up and distribute this signal. Now, Access I don't think are allowed to advertise being a cooperative cable system. But what they are doing is they are coming along, they are taking this local TV or whatever channel which is broadcast over-the-air, putting it on their system.

5365   This television over-the-air station is making loads of money over all this commercial that they put on of which the cable companies get none of their advertising revenue. Now, this means the stations want their advertising revenue, now they want the cable companies to supplement their advertising. I just say, fine, charge the advertisers more, don't charge the cable company.

5366   The other thing is the over-the-air stations constantly on their ads lately on television and said they are a community station. They are not community stations and I violently object to that. They are local over-the-air advertising channels, nothing more than that.

5367   I am tired today because I did from 6:00 p.m. to almost midnight last night. I did local cable curling, which is -- well, we did the first game live and then we taped the second game, and I am tired.

5368   Last we did the Rotary Carol Festival, we did four days of Rotary Carol Festival live, over air, two and a half hours a night. And local TV stations do none of this, they don't show-up, you don't see four hours, six hours, or two and a half hours a night of local Carol Festival.

5369   This local Carol Festival was done out at the local church put on by the Rotary Group. This goes lives to everyone. Who gets to see it? Parents or the children that are up singing at this Christmas Carol Festival. Grandparents get to see it, maybe great-grandparents get to see it.

5370   Local TV stations don't do that, they are not community stations, they are advertising channels. Access, which I volunteer at, does 12 hours a day of local programming, and that is local programming.

5371   CTV -- and I will be grateful to them, I will be generous to them -- I say we will give them 12 hours a week. I sat down one night with a stopwatch. They do one hour at noon, one hour in the evening, a half hour late at night. I sat down with a stopwatch and just did local. I took out the national "canned", as I call it, rebroadcasting of news, I took out all their advertisements.

5372   That two and a half hours ended up to be something like 28 minutes of actual local broadcasting. Twenty-eight minutes a day times seven days, that's not even 12 hours a week. Access does 12 hours a day of local community. And most of it is volunteer work like me, like you know, Rotary Carol Festival, you know four nights, two and a half hours a night, live.

5373   And this isn't commercial stuff, this is, you know, sometimes grade school children, six and eight-year-olds on the front of a church area singing Christmas carols. Like, I am sorry, but I get very upset when they are calling themselves local. They are not local.

5374   The other problem is funding I guess or this whole thing is over funding. Well, I don't know how the system works, but I assume that Access has to buy all the channels that they put over, excluding the over-the-air ones, from the satellite companies.

5375   Well, if they are paying the satellite companies for use of this signal, Access have to charge their customers to clean up this satellite signal which must cost them a lot of money. I don't know, I think they have eight or nine dishes on the roof because you have to change satellites regularly, you get sunspot activity and I assume that cancels the satellite. So you're juggling satellites all the time I assume, I am not an expert in these areas.

5376   So Access are having to pay whatever they are, I think it is Bell, Globemedia, Star Choice and others for their signals. Well, the consumers really shouldn't complain about that, because Access aren't making any money on this. They are taking this, adding their cost to it, putting their the signal out, making sure all the customers have a good signal.

5377   Over-the-air ones, I can stick a television antenna -- well, I have a television antenna in my attic, all I have to do is connect it to the television and I can see local CTV. If they are saying, no, I am going bankrupt. Fine, let them go bankrupt. Maybe they can sell the local station to Access.

5378   I would like to see Access do local news. Now, I think there are restrictions on that. CRTC I think put restrictions on that. I don't think Access are allowed to do any advertising, and I may be wrong, and my apologies. Like, I am not an expert in this area, I am a volunteer.

5379   If Access has to -- like, their fees -- if the satellite companies decide to come along and say, you know, we are going to charge you a dollar a customer for our signal, we don't care whether they get it or not, you have 100,000 customers, therefore you are going to pay $100,000 a channel for us. Access don't get any choice, they have to pay these things. If they raise the fee, they have to pay it.

5380   And then what are they going to do with it? Access is a community cooperative, they have to pass it onto the customers, they don't have any choice. My suggestion, and I think this is the ideal situation, is tell CTV and the other major friends, yes, Access will have to pay you for your signal, but they have two options; number one, they can cut out all your advertising, because as a customer I don't want all this silly advertising from CTV. Why not --

5381   SECRETARY: I am sorry, Mr. Spott, you have to conclude.

5382   MR. SPOTT: -- why not let Access fill local things? Instead of having the national ad, they can pay them for the community or for the CTV signal when the ads come up. Have Access substitute an ad saying, you know, so and so church has a service on tomorrow night, so and so church has a Christmas service, so and so church has a Remembrance Day service. That is the --

5383   THE SECRETARY: I am sorry, Mr. Spott.

5384   MR. SPOTT: Yes?

5385   THE SECRETARY: You have to conclude. You have 30 seconds left.

5386   MR. SPOTT: I think I am seven minutes.

5387   THE SECRETARY: Yes.

5388   MR. SPOTT: No, seven minutes.

5389   Sorry. Anyhow, the other option besides having them cut out the ads -- oh, now you have me confused. Well, number one option, have them pay them for the signal, let Access cut out the ads and put in community ads. That is the ideal situation.

5390   Now you have me confused. I didn't think I did my seven minutes.

5391   Anyhow, those are my comments. I don't think Access is a community -- and if other community channels are not getting 12 hours a day of local community programming, tell the people out there to dump their system, form a cooperative and start their own cable system.

5392   That way they can get their 12 hours a day of community programming. Children doing hockey, eight-year-olds doing hockey, eight-year-olds doing gymnastics. You know, this is community television, full, live or rebroadcasting of children doing stuff, of grandparents out on the stage singing concerts. This is community television.

5393   THE CHAIRPERSON: Thank you very much. I think we got your point.

5394   But let me ask you this question. This is not about community television, this is about local TV. And you said in one of your comments, "if they can't make it, let them go bankrupt."

5395   MR. SPOTT: Right.

5396   THE CHAIRPERSON: Right. So I gather you feel that CTV brings nothing of value to your community? Not as a community -- as a local TV, I mean there is a difference between community television and --

5397   MR. SPOTT: Twenty-eight minutes a day, with a stopwatch, of local news does not consider community television. Twelve hours a day on Access, local television is community television. Yeah, they don't do anything.

5398   THE CHAIRPERSON: Just so we get our terminology straight. I am not talking about community television, I am talking about local television. Local television that reflects the news of what is happening in the region. You are in Regina, so presumably Regina and Saskatchewan local news, local programming, programming about events or a documentary happening in that area.

5399   And if I understand it correctly, you feel CTV does not give you anything of value or too little. Is that correct?

5400   MR. SPOTT: They give almost nothing. If you lived in Humboldt, if you lived in Yorkton, if you lived in Wayburn, if you lived North Battleford, you'll get Access which provides local, actual local programming. But none of those stations are provided CTV stations. It will either come out of Regina or it will come out of Toronto.

5401   Access, at least, if you go to North Battleford, you are going to get local community television by Access. You won't get local community television by CTV. You will get it out of Regina or out of Toronto. If you go to Wayburn, the same thing, you will get local sports events in Wayburn, a local baseball game, a complete baseball game. CTV are not going to do a local complete baseball game, they are doing nothing for the community.

5402   THE CHAIRPERSON: Okay, I got the point.

5403   MR. SPOTT: Yes.

5404   THE CHAIRPERSON: Elizabeth, some questions?

5405   COMMISSIONER DUNCAN: Thank you, Mr. Spott. I would just like to say thank you for your comments, your written and your comments here this morning.

5406   Just one quick question because I think that the Chair has covered what is the focus of the order in council. With respect to your comments, is the local, regional news, information and public affairs programming which, I gather, you think you are getting more of from Access than from CTV or the other local broadcasters, Canwest.

5407   But I am wondering, have you noticed a decrease in the amount or quality if that type of programming from those broadcasters in recent years or has it always been that way?

5408   MR. SPOTT: Well, one time CKA had an evening musical show, I think Van Wiebe(ph) was a pianist, excellent. Like, it is all gone, they don't do anything anymore. A few years back they used to do a morning exercise show. Now the morning exercise show comes from California. No, they just cut it out.

5409   COMMISSIONER DUNCAN: As far as local and regional news, I don't mean coverage of community events, but news, do they report from the local news?

5410   MR. SPOTT: Gore is the correct term.

5411   COMMISSIONER DUNCAN: Pardon?

5412   MR. SPOTT: They show local gore, they show crime reporting.

5413   COMMISSIONER DUNCAN: Gore, okay.

5414   MR. SPOTT: Well, they show crime reporting, they show accidents, yes, they do that.

5415   COMMISSIONER DUNCAN: Okay, all right.

5416   MR. SPOTT: But outside of that, no, they don't.

5417   COMMISSIONER DUNCAN: Thank you. I am sure that Access Communications is very happy to have you as a volunteer. I know that is very critical to community stations. Anyway, thank you.

5418   I have no more questions.

5419   THE CHAIRPERSON: Peter? No.

5420   Okay, thank you very much, Mr. Spott, you have been very clear and to the point. We appreciate you making your contribution. Thank you.

5421   MR. SPOTT: Xièxiè.

5422   LE PRÉSIDENT : Madame la Secrétaire, le prochain, s'il vous plaît.

5423   THE SECRETARY: Thank you.

5424   We will now proceed with videoconference from Toronto for our four next presenters.

5425   For the record Pride Toronto confirmed that they will not be appearing.

5426   We will now proceed with Angelic Entertainment and Sri Lanka United National Association of Canada who are appearing via videoconference from Toronto.

5427   We will now begin with the presentation of Angelic Entertainment. Please introduce yourself, and you have 10 minutes for your presentation.

PRESENTATION

5428   MS THOMPSON: Good morning.

5429   THE CHAIRPERSON: Good morning. We hear you loud and clear.

5430   MS THOMPSON: Good morning, Mr. Chairman, Members of the Commission. My name is Diane Thompson of Angelic Entertainment.

5431   As a member of the industry and community, I thank you for inviting me to appear before the Commission today. As a member of the community deeply involved in bettering the lives of people throughout the GTA, Canada and abroad, I have utilized CTV and other local stations to promote and raise awareness for many causes, including children's advocacy, aids research, homelessness, cancer groups, excess violence in the media.

5432   Angelic Entertainment strongly supports the introduction of a sustainable broadcasting model in Canada so that local TV can negotiate with cable and satellite companies for the value of local signals.

5433   Having a deep relationship with broadcaster CTV and others has allowed myself and organizations whom I work with to raise additional awareness and funds for these much-needed causes. Without them, we would not be able to offer the support we do to any of the benefitting parties.

5434   And even though cable companies may indicate they create local programming, it is not at the level required. They do not have the audience, nor do they have the resources that local TV offers us and, for the most part, they rely on volunteers.

5435   From the onset of television, of which as a small child I would travel with my father, a media pioneer, to transmitter towers to fix interrupted signals. The broadcasters have never been paid for their signals.

5436   If cable and satellite companies were made to pay for these signals, at least partial funding for these programs could be obtained from the fees creating a win/win situation for all parties.

5437   It would seem that in the early days of television people making decisions within the CRTC did not have the foresight or a plan to recognize that satellite and cable companies would capitalize to this extent on our broadcasters and producers of local television as well as the general public.

5438   As the airwaves are controlled by the government, much like Canada's fly zone, it is clearly up to the CRTC and government to intervene. I am so pleased that this is being addressed. Cable companies have never paid for a broadcaster's signals. It needs to be made clear to satellite and cable companies to stop misrepresenting themselves to the general public and be accountable and work with the broadcasters and, thus, the producers who the content originates from.

5439   Would a supermarket not pay a farmer who produces the eggs or potatoes they sell? Over many years cable satellite companies have been making large profits on the backs of subscribers and broadcasters without being held accountable. It is completely unreasonable and unethical given today's economic climate to expect subscribers to cable, satellite or digital services to pay more than they currently pay.

5440   What would they be paying for when all along they thought part of their current monthly fee was going to be going to the broadcasters who supplied the programming on the channel they watch?

5441   For some people, including our seniors and our marginalized communities, a proposed raise of even $5 or $10 per month means the difference of whether one has a meal or not. Now, you may scorn or laugh at this, however if you became involved in causes you would soon see this is a fact. No one should be punished for where they choose to live.

5442   If one took the time to spend in more remote areas of Canada or smaller communities you would soon find that for the most part television at times is a sole source of entertainment. These people rely on their local television stations, as they are a true community experience. If the CRTC would ensure that all local television stations be made available to the widest number of Canadians and be carried by cable and satellite companies, it is a good start.

5443   By providing broadcasters compensation for their local signals, will ensure the local stations continue to operate. Once this situation is introduced, I would suggest the additional introduction of a condition whereby local television stations receiving compensation for their local signals, the broadcaster, are required to provide good Canadian programming content, not just a few newsworthy items, but good Canadian content without the flag and such stamped all over it, as pointed out by Commissioner Denton.

5444   Good content with morals and values, violence-free, which would also provide work for Canadian talent and production crews. Talent involving more than just the same 10 or 12 Canadian performers as seen on the networks today. Some of the talent are getting stale-dated, and when one watches a show they usually attach a persona, a role model to an actor. When the same actor has two or three shows running simultaneously with different characters in each, everything is lost and the characters are no longer compelling. Surely we have more talent.

5445   Finally, with the onset of digital TV fast approaching, it would be appropriate for the Canadian Government to either provide support to consumers in the form of coupons, as done in the U.S., or provide the broadcaster with a direct subsidy to make the transition.

5446   It is extremely important that consumers are informed and given every opportunity to obtain the right equipment so that they can continue to watch their local TV stations once the digital transition is made, and that the broadcasters be able to make the necessary upgrades required.

5447   We applaud the CRTC in finally moving forward to fix the broken model underlying the television system in Canada, including implementing a solution that enables sustainable future for local television.

5448   I thank you for your time and now I am open to any questions you may have for me.

5449   THE SECRETARY: Thank you.

5450   We will now hear the presentation of Sri Lanka United National Association of Canada.

5451   Please introduce yourself, and you have 10 minutes.

PRESENTATION

5452   MR. NIZAM: Good morning, Mr. Chairman and Members.

5453   My name is Noor Nizam and I am a Sri Lankan-Canadian citizen. I live in Hamilton with my wife and family, we have three daughters and a son, all of them are academics. We also have two grandchildren.

5454   I am an academic with long years of university teaching experience in communication studies and multimedia. My speciality is mass communication and I have been a Norad Fellow and pursued my higher education in Norway during 1971 to 1977.

5455   During this time I was also enrolled with the NRK, Norwegian Broadcasting Corporation doing community service and programs. After a very successful public sector and private sector career in Sri Lanka I came to Canada in 2000 with my family.

5456   Since my arrival in Canada I have been deeply engaged in community service and have been an active member in many similar societal organizations; in Montreal, Toronto and in Hamilton. I am convened now with the South Asian Community Group in Westdale, Hamilton, Canadian Friends of Sri Lanka, and in recent years deeply involved with SLUNA.

5457   Now, coming to a very important area of the local television station's responsibility. In the aftermath of the Boxing Day Tsunami of 2004, with the help of local TV stations, Hamilton reached out for the Canadians to engage in humanitarian assistance to the devastated Sri Lankan coastal communities.

5458   The stories of devastation back home and the agonies of the Sri Lankans living in Canada was brought and told by the local televisions throughout Canada. As a founding member of Relief Aid International, a voluntary humanitarian outreach NGO that was organized within the McMaster community, I spearheaded innovative programs funded and supported by students to help the ones that were in Sri Lanka.

5459   The aspect of that is what the local television stations give us, the strength to reach out and bring the content that was needed in the community, which we as the local community members always want and need to see through our local television stations. This would have never happened if we didn't have the strength, the cooperation and the ability of the local stations to support such community activities.

5460   I am presently engaged in political communication research activities at the Department of Communication Studies and Multimedia at McMaster. And also I am working for an International Residence College in Hamilton.

5461   I am now going to come directly into the focus of my presentation today. Mr. Chairman and Members, Canadians watch local television, news and programs and we support it. Local TV matters to me. It is where people in communities come together to learn about events that touch our everyday lives. It reflects of a unique Canadian identity and provides viewers with choice in quality programming.

5462   Now, this will also have relevance to my introduction of myself and the Tsunami. Our organization, Sri Lanka United National Association of Canada, is grateful to local television because we were also provided a rare opportunity to share our stories during the five-month long Tamil protests in Toronto.

5463   SLUNA's concerns were largely ignored by the media until CTV Toronto covered our opinions about the Sri Lankan Civil War. Sri Lankans of ethnic background had an opportunity to voice their concerns because of local television coverage.

5464   The value of local television comes in here. If you look at Toronto, if you look at Hamilton, if you look at Montreal, even if you go right into British Columbia, Sri Lankan communities are spread throughout. We are supposed to be one of the largest diverse minority immigrant communities that live in Canada. And we can only be serviced by local TV stations and that is what we were looking at.

5465   And here, again, I like to stress on behalf of SLUNA, that we are thankful to CTV because CTV gave us the right of expression, CTV gave us what freedom of expression is, to tell the story of the other side of the war. This is the ability of local TV, local television stations.

5466   The Sri Lankan community is therefore thankful to having local television stations supported in whatever way they have been up to now. But we are now facing --

5467   THE SECRETARY: I am sorry, Mr. Nizam. I am sorry, you have to conclude, thank you.

5468   MR. NIZAM: Have I got more time to go on?

5469   THE SECRETARY: You have 30 seconds to go on.

5470   MR. NIZAM: Yeah.

5471   THE SECRETARY: Thank you.

5472   MR. NIZAM: Broadcasting is a regulated business. Once you decide to regulate it should be a fair regulation. Yet, over the past 40 years the regulating policies and decisions have favoured one sector to the detriment of another resulting in a massive wealth transfer.

5473   Cable firms like Rogers and Shaw have most of the power in the industry today. This is not said by me, but that is what you hear from those concerned in the community, the electorate of Canadians who want their TV stations to exist. The local TV stations have to be allowed to continue to serve Canadian viewers.

5474   And moving forward with the implementation of a negotiation for value regime, which will lay the ground for a level playing field and sustainable future for local TV.

5475   I am open for questions and I thank again the Chairman and the Members for having given me this opportunity, thank you.

5476   THE CHAIRPERSON: Thank you.

5477   Mrs. Thompson, in your presentation, on page 2, you are talking about an increase of $5 to $10 per month and say, "you may scorn or laugh at this." Well, first of all, let me assure you, I don't scorn or laugh at it.

5478   But secondly, I believe you have the wrong number. In the discussions during the week, et cetera, here we talked very much what would a value-for-signal actually mean. And undoubtedly over-the-air broadcasters right now get a lot of compensation in kind, such as mandatory carriage, such as simultaneous substitution, et cetera.

5479   And if you look at the rates that might come out of value-for-signal, taking guidance from what they paid for specialty channels, they are probably coming to somewhere in the neighbourhood of a quarter per signal. So depending how many over-the-air stations you have and where you live, you are talking about 75 cents, $1.00, $1.50, something like that.

5480   Would that, in your view, also make such a huge impact or is that a price that consumers would be willing to pay in order to retain their over-the-air local stations?

5481   MS THOMPSON: Mr. Chair, I did watch your presentation and your discussions with the cable companies and I have been following very closely, so my comment with regards to the $5 or $10 was not in respect to what you had been saying, as I am quite aware as to what you have been proposing and trying to get the cable companies or some response from.

5482   In my view, in my personal view, as you brought out the other day, in the original Act in 1971 the distributors, it was their job to distribute, it was the broadcasters' job to create the content and the distributors, thus being the cable and satellite companies at this point, are to pay the broadcasters for their signal of which they have never received compensation with the exception of the specialty channels which have only come into play in the last few years.

5483   Based on that alone, I would say that the consumers should have no compensation whatsoever added to their current package and that the cable companies should -- and yes, I do recognize that they are running a business, just as you do. However, they have not been paying for the last thirty-some years. So therefore, their profit margins are astronomical at this point if you take into the fact all the math that as been done over those years.

5484   Why should the consumers be picking up now even if it is 25 cents or 75 cents, why should they have to pay that additional sum when this has been going on for over a 30-year margin?

5485   THE CHAIRPERSON: Okay.

5486   Mr. Nizam, you end your written presentation with the intriguing idea the CRTC and the federal government should protect consumers by regulating the cost of basic services.

5487   Yesterday or the day before, I forget, there is so many hearings, we had several people suggest that we should regulate basic service, like you, on, presumably, the conceptual underpinning that cable and satellite are really monopolies. They don't have competition, switching from one to the other is a very large investment and technologically not possible or the landlord may not allow you to put antennas up, et cetera.

5488   So since they are monopolies, regulate them or at least regulate the basic portion, because on the non-basic portion the consumer has some choice and can decide which channel he wants to subscribe to or not, but obviously he has to subscribe to basic.

5489   Now, we have the legislative authority to do that. But how does one actually do that? How do you price it, how do you regulate it? Are you suggesting we jus freeze them and say, no, if you want to increase, come forward and make out the case why there is a necessity to increase or are you suggesting that we adopt a costing regime such as we had in telephone, that you in effect have to justify all your input costs and then a legitimate rate of return in order to set the price?

5490   What exactly is it that you are suggesting we should be doing in that second-last paragraph of your submission?

5491   MR. NIZAM: Well, I have to state here that I am not a business expert or an expert in economical management. But looking at what I am, as a community member and representing a community group, the local television's existence, the local TV station's existence is my primary interest today.

5492   If the local television signals are taken free and picked up by cable companies, and if there is a regime control that is now being suggested, that suggestion should be supportive of maintaining the local TV station, maintaining the programs, giving support for local content and Canadian content and making it possible for that particular segment of the television industry not to be harmed, but to be supported by the government and whatever decisions the CRTC has to make.

5493   How and what will be done? I am not sure, that will be the conclusion of the CRTC. But I will not support anything that will be detrimental to the local station being productive or being put aside because there is some power which is supposed to be wielding, both political and otherwise, that can make things happen in a way that is very very very sad and not supportive of the community in terms of what the local TV stations have done and what they will do in the future.

5494   THE CHAIRPERSON: Thank you.

5495   Candice you have some questions?

5496   COMMISSIONER MOLNAR: Thank you.

5497   Ms Thompson, I don't have questions for you. I appreciated your presentation, it was both clear and it was informed. It was obvious that you have been staying close to these issues. So thank you for your presentation.

5498   Mr. Nizam, is that right?

5499   MR. NIZAM: Yes, it is, yes.

5500   COMMISSIONER MOLNAR: I have just one question for you. You represent a national association and you said that the Sri Lankan Canadian Community can only be serviced by local TV. I believe you said that in your opening remarks, I wrote that down here.

5501   MR. NIZAM: Yes.

5502   COMMISSIONER MOLNAR: I understand in your mind, or not in your mind, but in your experience that local television is important. But the broadcasting system of course has many elements, both regulated elements and non-regulated elements.

5503   As local TV is struggling a bit right now, there are other elements that are healthy and vibrant and growing. For example, we have national news services that didn't exist in the past that cover issues of national interest including, I would hope, issues that are important to your community.

5504   The internet as well is a growing element of the broadcasting system, but outside of the regulated element.

5505   And so I wondered to what extent you see any of these elements being able to also work to represent your community?

5506   MR. NIZAM: Ms Commissioner, I am to some extent agreeable to what you are stating.

5507   But the reality of the fact is the message, and the message is, for us, we sit in front of the television set, which is the medium, and what we look at is the news provided by our own local stations, which are more focused on us, telling our stories, telling about what content that is more acceptable to us and giving us the message so that we can understand and get immediately to know the happenings both in the local geographical territory as well as about the concerns of the community, diverse communities. We have various diverse communities.

5508   But when I am talking I am talking of 92,000 Sri Lankans who will sit in front of a TV program in a local situation and immediately watch what is happening. And it is the effectiveness, the immediate link, the connection that we get through the local TV station is more effective, far more, how could I say, advantageous to us than the other things.

5509   Because please understand that the diverse community people have a different culture. There are women, there are children, there are some people who don't even have the knowledge of how to go into an internet and workout things. But you come in here, you take your -- whatever instrument in hand, you click, you see your local TV and there you sit immediately. You don't even take your food, just look look look --

5510   COMMISSIONER MOLNAR: Thank you very much.

5511   MR. NIZAM: -- that happened in the Tsunami.

5512   COMMISSIONER MOLNAR: Thank you, those are my questions.

5513   THE CHAIRPERSON: Thank you.

5514   MR. NIZAM: Thank you very much.

5515   THE CHAIRPERSON: Okay, those were our questions. Thank you very much for participating.

5516   We will take a five-minute break while you can change the people who are appearing on video in Toronto.

--- Upon recessing at 1112

--- Upon resuming at 1118

5517   THE CHAIRPERSON: Okay, commençons.

5518   THE SECRETARY: Thank you.

5519   We will start with the presentation of imagineNATIVE Film + Media Arts Festival.

5520   Please introduce yourself and you have 10 minutes for your presentation.

PRESENTATION

5521   MS POTTS: Hi there, Mr. Chairman and Commissioners.

5522   My name is Kerry Potts. I'm the Director of Development at the imagineNATIVE Film + Media Arts Festival. Our legal name is a centre for Aboriginal media and we are based in Toronto.

5523   Just an introduction about the festival: The imagineNATIVE Film + Media Arts Festival is an annual five-day festival that celebrates the nearest and most innovative works by indigenous filmmakers and media artists from across Canada and around the globe.

5524   We are the largest and most respected festival of our kind in the world and are an important feeder of Canadian content into international festivals and broadcasters alike.

5525   Beyond the presentation of hundreds of new works annually we provide vital creative business and training opportunities for indigenous filmmakers. We create bridges between the mainstream industry and indigenous individuals to support indigenous involvement in the broadcast and media arts sectors in Canada and beyond as well as ensure that the stories and cultures of indigenous people are shared with a global audience.

5526   CTVglobemedia has been a longstanding sponsor of the imagineNATIVE festival. In 2008 CTV became the festival's presenting sponsor, representing the highest level of financial support provided by any sponsor. Additionally, CTVglobemedia provides tens of thousands of dollars of in kind airtime for our festival's PSA and promotes the festival through other tools as well.

5527   As one of Canada's major broadcasters, CTVglobemedia's support translates into support for the thousands of indigenous filmmakers whose work our festival showcases.

5528   CTVglobemedia also sends numerous representatives to the festival each year that meet with our attending artists, creating important creative and business opportunities for indigenous filmmakers. Additionally, CTV representatives have served as board members, volunteers, panellists, guest speakers and, more generally, as advocates for the work that this festival undertakes in building large audiences for indigenous-made content.

5529   Local television is key to forming a sense of community and an urban identity. CTVglobemedia has been essential in branding our organization within this diversity and helping to weave us into the fabric of the local community, and I will also add the national community.

5530   Our festival's annual publicity budget fluctuates between $5,000 and $10,000 and funding for festival marketing and publicity is quite scarce. By broadcasting our trailer on CTV stations, CP 24 and online we are able to reach hundreds of thousands of diverse community members who may otherwise not know about our festival's offerings.

5531   CTV local news has promoted and covered the festival over the years and this news coverage has been important to increasing attendance numbers, while building a sense of inclusion for an indigenous cultural festival within the most multicultural city in Canada.

5532   This year CTV's additional coverage contributed to an astounding 25 percent increase in our festival's box office revenue.

5533   In terms of local programming and affordability we believe that ensuring viewers have access to local television by keeping rates affordable is important to getting the message of our festival and other cultural and arts events like it on the radars of diverse audiences and, in particular, to Aboriginal audiences.

5534   Our festival demographics include a high percentage of low income audience members and we understand that keeping our admission rates low is key to ensuring high attendance numbers as well as creating a festival environment that is inclusive to a diversity of people.

5535   Keeping local television financially accessible to a lower income households means that a higher percentage of our target audience will be kept aware of important cultural and artistic festivals like imagineNATIVE.

5536   I believe that options need to be explored that keep local television accessible to low income households while also ensuring that broadcasters like CTV have the resources to continue the important work they do in supporting non-profit organizations and festivals like ours.

5537   Thank you.

5538   THE SECRETARY: Thank you.

5539   I will now invite Meagan's Walk - Creating a Circle of Hope to make her presentation.

5540   Please introduce yourself and you have 10 minutes.

PRESENTATION

5541   MS MORGAN: Good morning, Mr. Chairman and Commissioners. Thank you for this opportunity.

5542   My name is Catherine Morgan and I am the Chair of Meagan's Walk - Creating a Circle of Hope.

5543   This is a community-based charity organization. We are a third-party organization related to Sick Kids Hospital and we rely heavily on local TV to help us get the word out for our cause.

5544   We are an organization founded by Denise Bebenek in memory of her daughter Meagan who died in June of '01 at the age of five as a result of brain stem glioma, an inoperable brain stem tumour. Denise is Meagan's mother and is actively engaged in running the organization as a volunteer.

5545   Meagan's Walk raises funds for scientific research to improve the clinical outcomes for other children and their families. We also work to increase awareness of this fatal condition that dramatically affects children and their families. We share a message of hope through a human embrace of Sick Kids Hospital every year on Mother's Day. We actually hug the hospital.

5546   CTV has been a vital part of our communication plan for a number of years. Besides promoting our event on local stations, CTV personnel also assist personally in attending, hosting and promoting our activities which help us direct more funds to Sick Kids. In the eight years that we have been remembering Meagan and many other children we have raised $1.7 million directed to Sick Kids for brain cancer research.

5547   Meagan's Walk strongly supports the introduction of a sustainable broadcasting model in Canada so that local TV can negotiate with cable and satellite companies for the value of their local signals.

5548   As a non-profit organization we rely on local TV to assist us in publicizing our fundraising initiative events. CTV assists us in ensuring that our local community is informed about our fundraising events. CTV's Andrea Case attended last year's walk and many walkers flocked to her in recognition of her and her presence at the walk, clearly a sign of mutual support.

5549   Meagan's Walk relies on local TV to provide us with the opportunities to facilitate on-air educational messages to the public. Without local TV stations we would not have the ability to reach Canadians across the country in such an effective way.

5550   I fully endorse and support local TV stations negotiating fair value for their local signals and programming with the cable and satellite companies.

5551   Thank you.

5552   THE SECRETARY: Thank you.

5553   Our next presenter is the Charles Taylor Foundation. Please introduce yourself and you have 10 minutes.

PRESENTATION

5554   MR. WEIR: Good morning. My name is Stephen Weir and I speak today on behalf of the Charles Taylor Prize for Literary Non-Fiction.

5555   I'm appearing on behalf of Noreen Taylor, the prize founder and Chair of the Charles Taylor Foundation. Noreen was unfortunately unable to attend as she is presently out of the country.

5556   Since I am the prize publicist, it is probably fitting that I speak this morning because I am a key media contact for the prize. I see firsthand the value of an active, competitive media including of course local broadcast television stations.

5557   Before I talk about the positive impact local TV stations have on the Charles Taylor Prize for Literary Non-Fiction, I would love to give this panel a brief overview of the prize and its constituency.

5558   For the past decade the Charles Taylor Prize has commemorated the late Charles Taylor and his pursuit of excellence in the field of literary non-fiction. Mr. Taylor was a well-known journalist, author and businessman who passed away in 1997.

5559   The prize is now awarded annually to the Canadian author whose book best combines a superb command of the English language, an elegance of style and a subtlety of thought and perception. The prize consists of $25,000 for the winner and $2,000 for each of the runners up, as well as promotional support to help all short-listed books standout in the national media, bookstores and libraries. This award is presented early in February here in Toronto.

5560   In 2009 Ottawa author Tim Cook won the prize for "Shock Troops: Canadians Fighting the Great War 1917 to 1918". Mr. Cook weaves a story that painstakingly tracks Canadian fighting forces through the titanic battles of Vimy Ridge, Passchendaele and the Hundred Days campaign. It is a story told through the eyes of the soldiers who fought and died in the trenches on the Western Front. Readers learn how Canada came of age in World War I.

5561   Shock Troops is an important book because it tells for the first time our story of the Great War. It is an award-winner because it is so well written. Shock Troops embodies our definition of literary non-fiction. It is a true story well told.

5562   When the Charles Taylor Prize for Literary Non-Fiction was first established in 1998 literary non-fiction was under-recognized, a little known subset of non-fiction writing. Now in its ninth awarding, the prize has turned the situation around by awarding and celebrating the excellent writing of Carol Shields, Richard Gwyn, Isabel Huggan, Rudy Wiebe and J.B. MacKinnon among others.

5563   These writers' well-crafted works are spurring an increase in the output of literary non-fiction as publishers actively seek books in this genre from their best writers and submit these to our prize jury. This prize has expanded the publishing marketplace and has increased genre awareness.

5564   The Charles Taylor Prize for Literary Non-Fiction is privately financed. The monies are used to honour top authors, promote their books and to make Canadians aware of the burgeoning literary non-fiction genre. It is a huge challenge to make an impact on Canadian book buyers' reading habits. Although we are a literate nation, much of what influences our book choices comes from outside our borders.

5565   Let's face it. Oprah Winfrey has an impact on what books will be appearing under Canadian Christmas trees this year.

5566   Selling Canadian culture is at best times a difficult task. In recent years with cutbacks to the CBC, shrinkage in the size and scope of newspapers and an embattered television sector, it is very hard for non-fiction authors to be on anyone's radar, let alone on their TV screen.

5567   So the big challenge for the Charles Taylor Prize for Literary Non-Fiction is to get the media excited about its short-listed authors. We hope that they will tell their audiences about the books and about the men and women who write them, and then when the prize is awarded we trust the media will place their spotlight where it truly belongs.

5568   The Charles Taylor Prize is national in scope. Nominated authors have come from every part of the country. However, the actual coverage of the prize happens locally, city by city by city.

5569   It is the local newspapers, radio and television stations here in Toronto that cover our stories and it is television that best captures the emotion, the glamour and the importance of the actual book prize event.

5570   Local television stations located in cities where our nominated authors hail from are strongly supportive. During the past two prize cycles we conducted local television interviews with authors in Victoria, Vancouver, Edmonton, Kitchener and Waterloo. The interviews were conducted in the context of the communities they were shot in. The hometown was almost as important as the subject of their book and the connection to the actual prize whether they were short-listed or won.

5571   This televised local support works. For the past two years our winning authors have seen their books appear in Canadian bestsellers lists, which is a first. This is a strong indication that television coverage is working.

5572   Canadian consumers learn about these Canadian books from on-air local television personalities that they know and trust. This information is not beamed out from Chicago or New York but, rather, they are grassroot messages by Canadians telling great Canadian stories.

5573   Our concern is that if local stations that believe that culture is part of their mandate continue to be unprofitable, cutbacks will be made or, worse, stations will close. Our efforts to tell Canadians about our prize and literary non-fiction will be lost.

5574   Our concern about cutbacks and local television are against a backdrop of cutbacks in other media sectors. Due to funding shortfalls, CBC Radio will no longer be broadcasting the Charles Taylor Prize for Literary Non-Fiction. A cutback to print media has seen a drastic reduction in lineage devoted to Canadian literature.

5575   We are looking to local television here in Toronto to step in and step up with increased coverage of the Charles Taylor Prize for Literary Non-Fiction. We are currently working with CTV properties in Toronto to expand our local TV coverage.

5576   This year we are depending on local television services to support our prize promotion. If these services were to be cancelled or reduced it would have a profound negative effect on our efforts and the book industry as a whole. We would not be able to make viewers aware of the tremendous true stories, their stories being written right here at home.

5577   In conclusion, the Charles Taylor Prize for Literary Non-Fiction believe that local broadcasters regardless of the city that they operate in, should have the ability to be financially viable and thus be in a position to support the great Canadian culture that is created in their communities that they serve.

5578   Providing local stations with compensation for the signals is a fair request. It will help ensure their viability and continued operation. It will also ensure that Canadian consumers continue to learn about and support our great Canadian authors. Not to have that opportunity would be a great loss for our Canadian culture.

5579   Thanks a lot.

5580   THE CHAIRPERSON: Thank you.

5581   You are obviously all three firm believers in local TV and the value it brings. What strikes me is that you all talk about CTV. You are in Toronto. What happened to Global? What happened to CBC? What happened to City?

5582   Mrs. Morgan, for instance, it's impressive what you have done for children and how much money you have raised, et cetera, but I don't see any reference to any other station than CTV.

5583   MS MORGAN: Well, we have got them as a sponsor, if you will, and they actually donate up to $50,000 per year to us in getting our word out. So it is being associated with them that has given us, I guess, a mutual you know benefit.

5584   We do get captured by CP24 and others but sort of, you know, sort of more whimsical. We are not always sure whether it's going to happen. So we rely on CTV.

5585   THE CHAIRPERSON: Is that the same for the other two?

5586   MR. WEIR: No. I will speak first.

5587   I mentioned CTV because that's who we are working with this year but we rely on everyone. I personally started my career working for Global so I probably didn't mention them, just because I did at one time work for them.

5588   CBC is extremely supportive. I also worked with Karabana and that is another great cultural organization that depends on the support. And we work really closely with CBC.

5589   So yeah, I mentioned CTV but I did also mention, if you check my notes, CBC as well.

5590   MS POTTS: Yeah, and I would just like to add to that as well that with imagineNATIVE that as our presenting sponsor, CTV does represent you know our major sponsor for the festival. So that's why I was speaking to that specifically.

5591   However, Global is also an important supporter of the festival in terms of the airtime that they give to our PSA and to supporting the festival financially as well.

5592   As well as CBC has been a long time supporter of our festival in so many ways. And as I mentioned, it's multi-layered in terms of the support that we get from these broadcasters to the work that we do at the festival.

5593   THE CHAIRPERSON: Okay, thank you.

5594   Candice, you have some questions?

5595   COMMISSIONER MOLNAR: Thank you. I have just one question.

5596   You have all been very effective in clearly articulating the important role of local television to the arts, culture and volunteer community organizations. But a follow up to the Chair's question where he asked about what happened to the other conventional channels I would just ask where community television would fit for any of you in getting your messages out within your communities?

5597   MS POTTS: You want to go ahead?

--- Laughter

5598   MR. WEIR: I work with -- we work with community television and it's a good source. You know, we have to be realists, though.

5599   My mission is to get the word out about Canadian literature and if I were to get one of my books or authors on a community channel here in Toronto, which I haven't been able to do, but if I could the average viewership is, what, 900, a 1,000 people at best for an hour of TV, whereas if I can get CFTO to interview them I am looking at 291,000.

5600   I'm not sure of the CBC numbers but I would have to get 10 authors on a community channel to get what one sort of professional station would get me.

5601   And honestly, in the past the topics that I represent just haven't been of interest to community broadcasters.

5602   MS POTTS: Well, I would just add to that by saying that we are an international film festival and so our scope is far beyond the reaches of the Greater Toronto region.

5603   So getting that message out to potential audience members, potential tourists, artists who are obviously our main target and to other people across the country and in other regions that CTV and broadcasters like that reach, is really, really vital to the branding of the festival nationally and to getting the work that we do sort of recognized in a national and even international level.

5604   So it's not to discredit the work that the community stations do, but to say that it's certainly not adequate in terms of -- if that was the only place that was covering us to reach the audiences, et cetera, that we would like to reach.

5605   MS MORGAN: I would just sort of -- just a last comment, any publicity is good publicity for us. We will take whatever we can get.

5606   So you know adding that or having that is absolutely something that we would want. But the broader scope is what we are looking for because we need to take -- you know the more people that know about it, the better opportunity it is to raise funds and sort of it goes hand in hand.

5607   And to be associated with CTV as we have has allowed us to bring in bigger sponsors as well, like in the same ilk, whereas if you just have the smaller organizations only smaller organizations will kind of pair with you.

5608   COMMISSIONER MOLNAR: Thank you. And those are my questions.

5609   THE CHAIRPERSON: Thank you.

5610   Let me ask you both as consumers and as representatives of the organizations that you represent, you know that this value for signal, the debate is basically the broadcasters say we need it and the cable and satellite companies saying "We already pay you in kind", number one; and number two, "If we have to pay you as a result of negotiations and imposition of the fee, we will pass it on directly to the consumers" which is -- and we have been asked by the department -- by the government to look into the affordability issue.

5611   Now, you can't talk about affordability unless you have a number and we are looking at what is being paid for specialty channels and looking what -- and taking into account that the over-the-air stations already get some compensation in kind. We figure any negotiated solution would be somewhere around a quarter per signal.

5612   So since you are in Toronto there would be six or eight stations, depending how you count it, so it's a buck and a half or two bucks which the cable companies will then pass on to the consumer.

5613   Is it your view that that would be (a) something that's affordable or is this something that would cause either consumer reaction or hardship for people to abandon their cable or whatever?

5614   MS POTTS: I feel like there should be options available for the viewers. If there is other options available so that we could downsize our cable that that is important.

5615   I think that speaking as a representative of the arts sector who is -- you know, there is a lot of underpaid people of my sector, myself included, as well as the Aboriginal community that is well known for being generally you know in a lower income bracket as a whole, that those concerns are of real concern to people that -- an extra $5.00, $10.00 a month.

5616   THE CHAIRPERSON: I'm not talking $5.00. I'm talking an extra $1.50 or $2.00 a month.

5617   MS POTTS: An extra $1.50 or $2.00 per month -- sorry.

5618   Well, I think that -- I think that it's not necessarily outrageous to demand. But it's just when you are already getting charged all the additional fees on top of that -- you know my personal bill has been increasing incrementally over the past five years and it's just sort of like when I used to pay $45 now I'm paying $55. It does add up when you are working with a margin of about $150 to $200 as any kind of surplus that you have per month. And for the families that means that they don't have that.

5619   So I just think having some options available is really important to the consumer to making sure that they are feeling like they have an option then if those rates are going to increase.

5620   But as I said, you know fundamentally, personally I think that $1.50 to ensure that CTV -- that our broadcaster can continue to do that work is something that I personally do not have an issue with.

5621   THE CHAIRPERSON: Okay, thanks.

5622   Ms Morgan?

5623   MS MORGAN: I would absolutely say that having any increase of any kind would be personally a bad taste in my mouth, and I guess just from an emotional side there is big business out there. There has got to be room.

5624   There has got to be money that they have been capturing over the years that can be allocated to sustaining our current local news stations that people all over Canada have the right to. And, you know, from the age of time getting news and having news, sitting around and watching TV as a family in our community and understanding what is going on in your local community and being on the same page seems to be a fundamental right.

5625   And I don't know why there is not -- if businesses are properly -- I don't know -- founded, that there has got to be room in there that the cable and satellite companies can be passing some of that on to sustain that.

5626   THE CHAIRPERSON: Okay.

5627   MS MORGAN: And I guess I speak more personally than I do for Meagan's Walk on that part.

--- Laughter

5628   MR. WEIR: For the Charles Taylor Prize it's not an issue. It is a very small bit of money. We would like to see all cultural organizations get properly funded.

5629   On a personal level today my parking is going to be $21.00. What's a $1.50? The cost of living in Toronto is so high for someone like me that I wouldn't notice it. It has absolutely no effect on my life. I'm more concerned about what is happening with books and their prices than I am with TV. It's a nothing increase.

5630   THE CHAIRPERSON: Okay, thank you very much. We appreciate your taking the time to come to our office and share your views with us.

5631   Thank you.

5632   So we will take a break now, Madam la Secrétaire, and we will reconvene at 1:15. Thank you.

--- Upon recessing at 1145

--- Upon resuming at 1318

5633   LE PRÉSIDENT : Madame la Secrétaire, commençons.

5634   THE SECRETARY: Thank you, Mr. Chairman.

5635   For the record, as previously mentioned, the Commission has contacted a total of 95 citizens that have requested to appear at this hearing for the Western provinces, which includes Alberta, British Columbia, Manitoba, Saskatchewan and Nunavut. None of these citizens have accepted our invitation to appear at this hearing for this panel today.

5636   We note that others may participate through the CRTC's online consultation that can be found on the Commission's website. This online consultation will close on December 21st.

5637   We will now hear the presentation of MTS Allstream.

5638   Please introduce yourself and your colleagues and you have 10 minutes for your presentation.

5639   Thank you.

PRESENTATION

5640   MS GRIFFIN-MUIR: Thank you.

5641   My name is Teresa Griffin-Muir and I am the Vice President of Regulatory Affairs at MTS Allstream.

5642   With me today are Jenny Crowe, Director Regulatory Law; and Greg McLaren, Manager MTS TV Content.

5643   Good afternoon, Mr. Chairman, Commissioners. Today we are before you to provide our views on the implications and advisability of implementing a compensation regime for local television signals.

5644   We will focus our discussion on the impact that the imposition of a fee on distribution undertakings would have on customer choice and affordability.

5645   Also, in keeping with the Notice of Consultation, we will briefly discuss the impact of a hybrid model of digital transition, that is a model where local broadcasters convert to digital over-the-air broadcasting in some communities, but not others.

5646   Canadian consumers, through their comments in this and previous proceedings, have emphasized the importance of customer choice as it relates to the programming services available from television providers. Any consideration of a negotiated value for the signal regime for local over-the-air stations must take into account these comments.

5647   Customers are demanding more flexibility in the selection of smaller packages of pay and specialty services, including the availability of à la carte programming services.

5648   In fact, MTS Allstream has responded to this demand by offering customers more choice and flexibility in the programming services they purchase. This approach has allowed us to differentiate our service from the incumbent distributor in Winnipeg, making MTS TV one of the earliest and most successful DSL-based television distribution deployments in North America.

5649   Now, almost 7 years since our launch, we continued to focus on providing customers with what they tell us they want, a top quality viewing experience, new and innovative features, and, most importantly, choice.

5650   Our service does not have large tier discretionary packages where a customer must by programming packages in a set order before they can get the one programming service they really want.

5651   Currently MTS TV offers 26 smaller theme-based discretionary programming packages typically containing five services each, as well as 75 services that can be purchased on a stand-alone basis.

5652   Since there are no buy-through requirements, customers can control their television purchases to focus on the type of programming services they actually want to watch. Video-on-demand, which is also available to each MTS TV subscriber, has been a natural evolution of this marketing approach, extending customer choice to the level of individual programs.

5653   Our experience in TV reinforces the importance of customer choice, especially as it relates to creative content. As Samuel Goldwyn once famously said, if people don't want to go to the picture, nobody can stop them.

5654   The same is true for television, especially as new and traditional forms of video content are available from an ever-increasing number of sources. In order to be effective and to achieve the objectives of the Broadcasting Act, the regulatory model must reflect the paradigm of customer control.

5655   Responsiveness to customer demand is fundamental to the commercial success of broadcasters and distributors alike. It is ultimately the only way to ensure a strong and dynamic Canadian broadcasting industry.

5656   We believe that a new fee for the local television station is the wrong way to go and, at best, would be a short-term band-aid that would ultimately harm all stakeholders.

5657   There is no evidence that distributors are in a position to absorb the cost associated with any negotiated value for signal regime for local over-the-air stations. This means that ultimately any increased fee would be borne by consumers.

5658   By offering a full suite of flexibly packaged services MTS TV has been hugely successful in attracting and keeping customers. However, today MTS TV has not been profitable on a stand-alone basis.

5659   First of all, there is a significant cost associated with building digital distribution and maintaining pace with technological developments and customer demand. For example, this year, only six years after our lunch, we embarked on an intensive network and platform upgrade in order to accommodate more high definition services and a platform that provides customers with access to Canada's first whole-home PVR service.

5660   Second, we already spend almost half of each revenue dollar on programming, including expenditures on community programming, payments to the CTF, fees paid to specialty and pay services. Our all-in cost of operating has also increased by at least 10 percent over the past year.

5661   In the case of MTS Allstream, a negotiated value for signal regime would increase our vulnerability in negotiations with broadcasters as we can only expect that the broadcasters will use this additional leverage to extract more revenue and to require fewer packaging options for discretionary services.

5662   The proliferation of specialty services seems to be reaching a point of imbalance between supply and customer demand with the number of channels far exceeding an average subscribers' demand.

5663   The existence of a huge array of specialty services could be fine, as long as customers are not forced to buy services they do not want.

5664   As Mr. Engelhart of Rogers indicated on Tuesday, programmers want to maximize the number of eyeballs that view their programs. This means that programmers preferred their discretionary services to be included in larger packages. It also pushes programmers to insist that less popular services be carried as a condition of obtaining a more popular service.

5665   MTS Allstream has experienced pressure from broadcasters to drop our current packaging approach and adopt one that is more similar to the tiered approach that is the hallmark of a traditional distributor.

5666   It is our view that the only realistic way to retain and broaden customer choice is to continue funding conventional local television through an advertising model. The advertising model itself is inherently predicated on customer demand, sending the right economic signal, even in a cultural venue.

5667   Advertisers will not pay for airtime on programming that does not attract viewers, correctly placing the emphasis and incentive for local network and other stations to create and obtain programs that Canadians do want to watch. This is the model that is still successfully used in the U.S. for conventional local broadcasters.

5668   Ensuring the provision of local news and Canadian programming also requires a realistic view of the potential audience size and number of local stations. For example, the City of Winnipeg, with a population well below a million people, is currently expected to support six local over-the-air stations.

5669   In 1986, when the Commission licensed the station that is now Citytv, the CTV and Global affiliates argued strenuously that the advertising market in Winnipeg would not be able to support a fourth English-language local broadcaster and, for a time, the Commission agreed.

5670   However, by 1995 the station had persuaded the Commission to allow it to sell local advertising. Again, in 2002 the Commission licensed yet another local station, Joytv, again against the objections of the existing local broadcasters.

5671   Put another way, in Canada we have three or four national broadcasters, plus independent local broadcasters. In the U.S., with 10 times the population, there are only four national broadcasters.

5672   One potential solution to the imbalance between supply and demand would be to allow some of the current local broadcasters to transition to become national specialty services with negotiated wholesale fees and programming flexibility that can respond directly to customer demand.

5673   This approach would necessarily exclude mandatory carriage on basic service, local transmitters and the ability to sell local advertising.

5674   It appears that some broadcasters have already started such a transition and have begun channelling some of their prime programming away from the local network stations to specialty services.

5675   A recent example of this is the Grey Cup, which CTV decided to air on TSN rather than on its local stations.

5676   By allowing some local broadcasters to complete the transition to specialty services, the remaining local over-the-air stations could then focus on local programming, once again supported by local advertising dollars. This is one way the regulatory system could better take account of the relative importance of demand.

5677   A negotiated value for signal regime would result in higher prices for customers with no commitment from broadcasters. In fact, the changes that the broadcasters are currently asking for, including new fees, the elimination of over-the-air broadcasting in many communities, fewer programming obligations, or even group-based licensing seem designed to make these stations more like specialty services.

5678   Now I will turn to the issue of digital transition.

5679   We are of the view that the adoption of a hybrid model where local broadcasters convert to digital over-the-air broadcasting in some but not all communities, could have a profoundly negative impact on consumers.

5680   Canada operates in a North American market and the majority of Canadians living close to the border can now access U.S. digital signals broadcast over the air. We have already fallen behind the U.S. and unless the Commission requires all local over-the-air stations to convert to digital transmission, or adopts an alternative model like the Freesat proposal, roughly 13 percent of households in non-metropolitan areas could lose their existing means of access to Canadian television signals.

5681   In Manitoba only stations in Winnipeg are required to convert their analog transmitters to digital.

5682   The hybrid model would also have a negative impact on the development and availability of wireless services in Canada, impacting the digital economy overall.

5683   The 700 MHz band is one we have seen around the world as a key component of mobile fourth generation or 4G development. Given the relatively low frequency, the 700 MHz spectrum has excellent propagation characteristics.

5684   The U.S. has already completed their transition for television and most EU countries see freeing of these airwaves as a digital dividend and plan to have their digital transition completed in 2012.

5685   Freeing up the spectrum only in major urban markets, with the resulting patchwork of spectrum availability for wireless broadband services, would make any 700 MHz spectrum that is opened up significantly less valuable.

5686   While existing wireless licensees may have other spectrum in these areas, patchy 700 MHz availability would negatively impact the ability of new entrants to provide a customer with seamless coverage while that customer is travelling in and out of analog broadcasting areas.

5687   Indeed, the customers of any new entrant would have to incur roving charges.

5688   As well, any delay or patchwork of the 700 MHz availability will put all Canadian service providers at a distinct disadvantage as they try to procure the newest and most innovative handsets, devices and services for their customers in Canada.

5689   Thank you.

5690   This concludes our comments.

5691   THE CHAIRPERSON: Thank you for your presentation.

5692   Were you here yesterday when Shaw appeared or did you listen to it on the radio -- on the Internet?

5693   MS GRIFFIN-MUIR: I didn't hear Shaw, no.

5694   THE CHAIRPERSON: Shaw, in its presentation -- with what I found an astounding statement -- which says:

"Finally, the requirement of the Order in Council to consult on this matter and make recommendations precludes the Commission from arriving at a final decision on the implementation of any single compensation regime until the government has responded to the Commission's report."

5695   Would you care to comment on that assertion?

5696   MS GRIFFIN-MUIR: I just want to make sure I understand.

5697   Shaw is suggesting that you, the Commission, may not implement anything until the Governor in Council has reviewed your report?

5698   THE CHAIRPERSON: They say that because of the making of the Order in Council, which was subsequent to us announcing the November hearing, we should not make any decision on the basis of the November hearing until we have made the report to the government and the government has made a decision in respect of the Commission's report.

5699   MS GRIFFIN-MUIR: I see.

5700   Well, it seems logical in the sense that if you, as a consequence of the November hearing, decide that part of the group licensing includes fee for carriage without the government actually making any determination, that makes sense.

5701   Go ahead.

5702   MS CROWE: I suppose you would have to balance the risk of making a decision that the government then overturns through another order of some kind.

5703   THE CHAIRPERSON: You are talking common sense. They were talking -- they were saying --

5704   MS CROWE: Legally?

5705   THE CHAIRPERSON: -- that because of the Order -- their counsel was speaking to us and said because that order remains you cannot.

5706   I told him this was a bunch of hogwash, plain and simple.

--- Laughter

5707   THE CHAIRPERSON: We are an independent tribunal, we make decisions when we want and how. The government has the power to give us direction. When they give us direction they have to use section 7, it has to be tabled in Parliament, it has to be voted upon, it has to be consulted and then indeed we will follow the direction. But you can't do and imply a direction.

5708   The mere fact that you issue an Order in Council does not mean we have to stop. Basically they have the right to issue an Order in Council and ask for a report and we will make a report, but that is a preceding totally separate and apart from what we are doing as an independent tribunal and I don't think you can impeach our independence or give us directions by merely asking for a report.

5709   That's what they suggest. They suggest because of the timing of the report we would have to basically lay down and wait until the government rules on our report.

5710   It's a new proposition, I have never heard it before in law, but they maintained it quite seriously and so since you are a BDU like Shaw I just wanted to know your view on this.

5711   MS CROWE: I would see it more as a practical issue rather than a legal one.

5712   The Order in Council, like you said, has asked you to make a report.

5713   THE CHAIRPERSON: Yes.

5714   MS CROWE: However, you have to take into consideration that parties really could use some regulatory certainty here so if one decision is made that then is changed rapidly afterwards. that has an impact as well.

5715   THE CHAIRPERSON: Yes. I understand that. That's perfectly reasonable.

5716   Just, you know, we value our independence very strongly and we don't believe that, you know, you can give us directions by -- through the timing of a request for a report, as Shaw suggested.

5717   I gather you agree with that?

5718   MS CROWE: Yes. We haven't looked at it specifically, but yes.

5719   THE CHAIRPERSON: I don't want to put you on the spot. Okay.

5720   MS CROWE: That's fine.

5721   THE CHAIRPERSON: Second, we heard from several people about the whole issue about basic. Some parties advanced the suggestion that we should not -- I think it was CBC, CTV and Canwest, but others picked up the theme -- that essentially the story goes you made a mistake when you stopped the control of pricing by BDUs. What was done is done.

5722   But BDUs are not really in a competitive position because alternate between -- changing from cable to IPTV, as in Manitoba, or to satellite, is a major expense, et cetera, and costs you anywhere between $500 and $1000, et cetera. So it's not really a substitutable product. So you shouldn't have done it, but you have done it.

5723   But if I interpret their remarks correctly, you can fix it partially by freezing the basic or re-regulating the basic, because the market will work for the discretionary channels. After all, people have the choice between packages or additional packages, but the part that they have no choice on if they want to receive the signal, be it on cable, be it on satellite, be it on IPTV, you have to buy the basic and that part should be regulated.

5724   Now, you can ask how you regulate it, do you freeze it or do you put it in a costing basis or do you suggest that it only can increase with CPI or whatever, different ways, but essentially is we, the CRTC, have the tools, as you know under the Act, and we should reassert those tools and should go back to regulating the cost of basic.

5725   What's your position on that?

5726   MS GRIFFIN-MUIR: Well, we don't think you should reassert regulating the cost of basic. I think --

5727   THE CHAIRPERSON: Surprise me.

--- Laughter

5728   MS GRIFFIN-MUIR: Yes. I know you are shocked by that.

--- Laughter

5729   MS GRIFFIN-MUIR: I think Greg can explain just how we recover some of the costs associated with distribution and the different models associated between -- cost recovery through the basic channel, and more fully could happen through the basic channel, with discretionary services contributing to cost recovery as opposed to -- I gather what the broadcasters are suggesting, that the basic is a very low point of access to the network. But you run the risk, then, of not recovering the costs associated with the actual distribution, depending on how the service is regulated.

5730   Also, if there is more emphasis on customer choice and your packaging is structured that way, there is more ability for customers to make a decision about how much overall they are willing to spend on TV services generally.

5731   THE CHAIRPERSON: Yes. I mean the people who advance this obviously are suggesting we should regulate it and include in the regulation a cost for the OTA portion. I can only -- since it was advanced by OTA people I can't imagine how it would benefit them unless you did include in that OTA the value for signal in the regulation of the basic.

5732   MR. McLAREN: If I can add something?

5733   THE CHAIRPERSON: Yes.

5734   MR. McLAREN: On a general principle the notion of regulating basic sounds fairly simple, that you come up with some kind of a formula, everybody operates under that formula and that determines what the retail price of cable would be.

5735   But when prices were regulated and there was a formula, it didn't always work uniformly across the country.

5736   THE CHAIRPERSON: Do educate me, because I wasn't here.

5737   MR. McLAREN: Sure.

5738   THE CHAIRPERSON: How did it work?

5739   MR. McLAREN: Absolutely.

5740   Well, there were a number of things that factored into -- the Commission set our basic rates and they varied across the country based on the various factors, but in our market, in Winnipeg, or Manitoba actually, the basic rates were lower than anywhere else in Canada because of the way the formula was structured.

5741   Consequently, the cable companies didn't have the revenue they needed to build out the -- that they said they needed to build out the cable plants, and consumers in Manitoba were notorious for saying everybody else in the country is getting more and better services and we are not because -- and the cable companies were arguing well, we don't have the money that other cable companies have because the regulation for basic hampers us.

5742   At a high level, as I say, it kind of makes sense that if everybody is following the same formula it should work, but the last time it did put the cable companies in Manitoba at a disadvantage.

5743   THE CHAIRPERSON: As we all know from telecom, trying to regulate prices and costing is not an easy task and it's much better for the market to work it.

5744   But anyway, if you have any further thoughts on that, I know I am catching you cold with that question.

5745   As you know, we announced yesterday, for you and anybody else who appeared before us, that you have until December 7th to make comments -- what's the date?

5746   THE SECRETARY: December 18th.

5747   THE CHAIRPERSON: Thank you. Thank you. It's December 18th.

5748   Anyway, as I say, the issue just came up the day before yesterday, it was thrown up, et cetera, so if you want more comment on it, feel free to do so in writing.

5749   MR. McLAREN: Sorry, can I just clarify which issues that you are asking us to --

5750   THE CHAIRPERSON: Both.

5751   MR. McLAREN: The basic. Regulated basic.

5752   THE CHAIRPERSON: But if you care to on the legality, by all means do that, but mostly it was the whole issue on regulating basic, freezing basic or doing something to ensure that in effect the basic -- because it really is not optional, you cannot the theory goes, therefore we should regulate it in some form or other.

5753   Len, I believe you have some questions?

5754   COMMISSIONER KATZ: I do, Mr. Chairman. Thank you, and good afternoon.

5755   I'm going to start with the back end where you talk about digital transition and you make an impassioned plea that the date not be deferred or delayed. Then you marry that with the suggestion that delaying it would delay the option of the 700 MHz spectrum, which is valuable spectrum for a number of reasons as well.

5756   Probably as a side comment, it's the first time I have seen an incumbent anxious for more competition in a market, so bless you for that anyways.

5757   But more importantly, is there some way of putting a value on delay?

5758   I mean presumably if the government auctioned off spectrum they would get "X" amount of money for it and if it does get delayed there is a cost of money associated with it in the general revenues of this country as well. So delay costs the country money as well.

5759   Have you thought through whether there is a value that can be put on this as well in terms of looking at it from that perspective?

5760   MS GRIFFIN-MUIR: No, I haven't thought of it from that -- we haven't looked at it that way.

5761   It's certainly possible. I guess one thing you have to bear in mind, too, when you are just looking at the cost of money, is there is a lot of factors as to what's going on in the market and who wants the spectrum and how much they want the spectrum.

5762   There probably is -- in our view there is that cost. Let's say the cost of money or the value that we don't get today that we will get sometime in the future as the Government of Canada -- there is also probably a delay in terms of just overall where Canada stands from a digital broadband perspective relative to the U.S. actually, in this case.

5763   And that's more the value we were talking about because we don't have sufficient population, let's say, to dictate what kind of handsets, what kind of devices are proliferated in the market. There is probably only a handful of wireless carriers who can do that.

5764   COMMISSIONER KATZ: Yeah, you are looking at the next generation of technology and product obviously as well.

5765   MS GRIFFIN-MUIR: Right.

5766   COMMISSIONER KATZ: And saying Canada shouldn't fall behind, which I don't dispute at all.

5767   But in terms of trying to find a way of rationalizing the parties that have got to contribute to this, because obviously there is a cost associated with the transition as well and any delay in the cost will mean a delay in the general revenues of this country and if there is some way of marrying that with the cost maybe there is a balancing here as well. But I have no way of putting a number on what a potential option would generate and therefore what a delay in that option would cost the country in terms of a delayed return.

5768   So I'm just wondering if you can put your mind to that as well. It might be helpful when you respond back to us on the 18th of December.

5769   MS GRIFFIN-MUIR: Right, you are thinking of the business case.

5770   COMMISSIONER KATZ: Yeah.

5771   MS GRIFFIN-MUIR: Yeah, sure.

5772   COMMISSIONER KATZ: Okay. Speaking of business, on your submission this afternoon, on the bottom of page 2 you indicate that, "MTS TV has not been profitable on a standalone basis". We have heard this from a lot of parties as well.

5773   You are in three businesses right now, three primary businesses; telecom, internet and video. You are saying that your video business is not profitable. Your telecom business is being inundated by competition obviously from the cable industry as well and, yet, you continue to generate profit in order to create shareholder value and you have got a pretty high yield on your stock as well.

5774   So I guess the question is where does the money come from? If you are not making money on video and you are being squeezed heavily in telecom and in internet, where is it coming from?

5775   MS GRIFFIN-MUIR: Well, we didn't say we weren't making money in telecom and internet. We just said we are not making money -- on a standalone basis the kind of investment that's involved in delivering television distribution is not profitable.

5776   I don't think we said here today that our company is not profitable.

5777   COMMISSIONER KATZ: No, I know your results. I mean you are a public company.

5778   MS GRIFFIN-MUIR: Right.

5779   COMMISSIONER KATZ: So we know you are profitable. But it seems as though when everyone looks at a segment of the business and then focuses on it, it doesn't seem to be the one that's profitable at this point in time.

5780   And I'm just trying to understand, if you can tell us, what segments of your business today is contributing to that contribution to your dividend stream?

5781   MS GRIFFIN-MUIR: Okay, well, actually I don't think we have ever said any segment of our business is not profitable but for this segment. So the telecommunications overall contributes to the profitability of the company. I include internet as a telecommunication service.

5782   COMMISSIONER KATZ: Okay. At least I know where the money is coming from anyway.

5783   You spent the first part of your submissions today -- the first two and a half or three pages and also in the filing earlier -- with regards to focusing on consumer choice and affordability. And you talk about how MTS provides much more customer choice than anybody else and you have catered to, virtually I guess -- maybe not in the right words -- an a la carte menu. And I think you also say there is no buy through requirements.

5784   So I'm going to ask you a question that I have asked other parties as well. And I think I am going to use Mrs. Parsons as an example from Vancouver who said she wants to watch the Space Channel and to get to it it's going to cost her 50-odd dollars.

5785   What would it cost someone in Winnipeg or in your territory to subscribe to the Space Channel?

5786   MR. McLAREN: It could be $40. That would be basic and the theme group that has Space in it.

5787   COMMISSIONER KATZ: How much is your basic package today?

5788   MR. McLAREN: $35.

5789   COMMISSIONER KATZ: $35.

5790   MR. McLAREN: Yes. Now, again, that's assuming she is not taking any other services from us. If she is only a TV customer the price drops if she has other services as well.

5791   COMMISSIONER KATZ: So there is a buy through. First of all, you have got to have basic.

5792   MR. McLAREN: Yes.

5793   COMMISSIONER KATZ: So there is a buy through. You have got to have basic first and then you can subscribe to not a la carte but to a theme package?

5794   MR. McLAREN: For Space Channel it has to be a theme package, yes.

5795   COMMISSIONER KATZ: Okay.

5796   MR. McLAREN: Nobody can negotiate a la carte with Space Channel. They won't permit it.

5797   COMMISSIONER KATZ: Okay. You also say on page 2:

"Video-on-demand which is also available to each MTS TV subscriber has a natural evolution marketing approach to individual programs."

5798   COMMISSIONER KATZ: Can I subscribe to video-on-demand without being a basic customer of yours?

5799   MR. McLAREN: No, we haven't set it up that way.

5800   COMMISSIONER KATZ: So I have got to have basic first.

5801   MR. McLAREN: You have to have basic.

5802   COMMISSIONER KATZ: And then I have got to have access to video-on-demand as well?

5803   MR. McLAREN: Yes.

5804   COMMISSIONER KATZ: So it's not as consumer -- it may be more consumer friendly than your competition. I don't know. But it's not --

5805   MS GRIFFIN-MUIR: Yeah, it's definitely -- probably than every major distributor in Canada.

5806   COMMISSIONER KATZ: But there is still no simple way of picking and paying for services?

5807   MR. McLAREN: Well, you know, there is a regulation that requires us to sell basic before we can sell any service except video-on-demand.

5808   COMMISSIONER KATZ: Right.

5809   MR. McLAREN: So when we say there is no buy through we are assuming that that's understood.

5810   COMMISSIONER KATZ: Okay.

5811   You also say on page 3 of today's submission that:

"There is a proliferation of specialty services seeming to reach a point of imbalance between supply and customer demand and the number of channels far exceeding the average subscriber demand."

5812   COMMISSIONER KATZ: But it's a free market. I mean you can choose -- other than the obligations that the CRTC imposes with regards to 9(1)(h) or over-the-air, you can pick and choose the services that you offer to your customers as well.

5813   I mean the implication I'm getting here is that we are forcing upon you this burden of having to carry all these channels but if it's specialty, there is type B or class B services, then basically the choice is yours as to whether you want to carry it or not for the sake of your customers.

5814   MS CROWE: To some extent that's true but as a relatively small BDU, we have very little negotiating power with many of the programmers who hold multiple licenses for specialty services and often require that we offer some of their less popular services in order to get access to some of their more popular services.

5815   COMMISSIONER KATZ: Okay. But it's still your choice?

5816   MR. McLAREN: It is largely our choice. You know we add programming services based on what the competitive landscape looks like. That's the driver for us.

5817   COMMISSIONER KATZ: Okay. So let me take it to the next step.

5818   In your submission of November 2nd on the second page, I guess, there is a bullet, the last bullet on there that talks to the potential implications of a forced financial cost through value for signal or negotiated value for signal.

5819   And then you say:

"This may be forced to reduce the number of discretionary and specialty services that they carry if the increase in the cost of basic service causes subscribers to reduce their demand for packages containing such services."

5820   So there is an implicit assumption here that there may be a reduction in people's consumption if in fact their basic service goes up. And I challenged a couple of parties this week about that as well. And so far no one has provided me with any evidence that as basic rates go up, demand for discretionary services goes down.

5821   Have you seen that in MTS?

5822   MR. McLAREN: When we are planning a rate increase on basic, built into that plan is an expectation that we are going to lose a certain number of customers or that a certain number of theme groups are going to be dropped. So the answer is "yes".

5823   We have -- the issue really is how much are customers prepared to pay for the television service overall, whether the price is in basic or whether it's in discretionary at some point they hit a limit.

5824   We had an example recently where one of our discretionary services, the price -- the negotiation was extremely difficult and the price went up substantially, 50 percent in the first year in fact. And it caused us to double the price of the theme group that that particular service was in and we got reaction from other specialty networks in other theme groups noticing that their penetration was dropping.

5825   So what customers were doing was choosing to drop certain services to prevent their overall TV bill from going up.

5826   COMMISSIONER KATZ: Did you pass through the LPIF charges to your customers --

5827   MR. McLAREN: We did not. We have not passed that through.

5828   COMMISSIONER KATZ: You have not passed through?

5829   MR. McLAREN: We have not.

5830   COMMISSIONER KATZ: You haven't had any other increases in the interim period of time?

5831   MR. McLAREN: No.

5832   COMMISSIONER KATZ: That would include all additional costs?

5833   MR. McLAREN: No, our last increase was on basic. Our last two increases; the first one was on basic in January of this year and the second one was in April on that theme group that I just described when the price of that service went up.

5834   COMMISSIONER KATZ: Okay.

5835   MS GRIFFIN-MUIR: I think you have to look at it too as a balance between our negotiation before programming -- and I realize what you are saying when you say we can just not provide discretionary service. It does affect our ability to retain customers to try to get more of a return on our overall investment. So there is a balance between what we can and cannot drop and how much we can charge.

5836   And even in the case of LPIF, I mean eventually we could pass that through too. We just have not done yet.

5837   COMMISSIONER KATZ: Yet means you are intending to?

5838   MS GRIFFIN-MUIR: No, I don't have a plan. I'm not aware of, but it's a possibility that --

5839   COMMISSIONER KATZ: The reason I was asking the question is if you had I would like to know what the elasticity was, whether you lost an inordinate amount of customers or whether customers complained about it or not. But if you haven't then I can't get any information out of you.

5840   MR. McLAREN: We can't answer that. You know I can tell you that our -- we don't do budgeting at the last minute. We have a pretty good idea. Well, we know what our costs are for this year and what we are going to need to recover for next year. We have a plan in mind for what our rate increase needs to be for next year.

5841   COMMISSIONER KATZ: My last question is also on that same page 2, is the second bullet where you say:

"Over-the-air television signals have no market value."

5842   COMMISSIONER KATZ: I interpret that to mean zero but yet other parties have come here and said, "There is a value and it's being offset by simultaneous substitution, by mandatory carriage, by lower channel placement." So they are saying there is a value and obviously you are abiding by the channel placement and the mandatory carriage and the simultaneous substitution requirements as well and the costs associated with those.

5843   So can you explain what you meant by no market value? Is it no market value above all the things that are already there or just no market value at all?

5844   MR. McLAREN: We should have said a net market value of zero to better capture what some of the other people have said as well. We are not saying that broadcasters don't bring value to the service. Absolutely, they do, but we also bring a great deal of value to the broadcasters.

5845   COMMISSIONER KATZ: I know, and I think they recognize that as well.

5846   MR. McLAREN: You know, I have rabbit ears at home and the picture quality that I get off air is not good, you know, and certainly we take care of all that airplane interference and reflection off buildings. All that stuff is gone. Those are things that people have largely forgotten about because cable has been around for so long.

5847   COMMISSIONER KATZ: When I worked for Bell about 25 years ago we had something called concession service where if you worked for the company you actually were able to test the equipment. I think Teresa would remember those days as well. So you may go back to Mr. Blouin and suggest that as well.

5848   MR. McLAREN: I will have to discuss that with my wife.

--- Laughter

5849   COMMISSIONER KATZ: Those are my questions, Mr. Chairman. Thank you.

5850   THE CHAIRPERSON: Rita?

5851   COMMISSIONER CUGINI: Thank you, Mr. Chairman, and good afternoon.

5852   I have a few follow up questions as well as an area that I would like to explore with you that you talked about on page 4 of your oral presentation. You cite -- you use Winnipeg as the example of number of over-the-air signals that are available in that market and conclude by saying:

"Put another way, in Canada we have three or four national broadcasters plus independent local broadcasters in the U.S. with 10 times the population. There are only four national broadcasters."

5853   COMMISSIONER CUGINI: Are you therein inferring that should the Commission decide to put in its report that perhaps we have too many over-the-air broadcasters and if some of them should go dark, so be it?

5854   MS GRIFFIN-MUIR: We are not inferring anything specifically around the national broadcasters. What we are suggesting is, it is a situation of supply and demand and eventually, especially today where there is a lot of fragmentation in the market, it's not surprising then that there is economic problems for some in the market.

5855   And so the trick -- and we don't have like the exact number of broadcasters there should be or local stations there should be, but obviously the more you fragment the revenue in the market, the more difficult it is.

5856   So what we're suggesting is what you want are strong -- like the fragmentation to gravitate to those who produce the best programming.

5857   COMMISSIONER CUGINI: And?

5858   MS GRIFFIN-MUIR: And if it can't support five local or four national -- it can't support five local or four national or it can't support it in this manner between conventional and specialty.

5859   COMMISSIONER CUGINI: Well, there's only one of two things that can happen, is some will shut down or we come up with a regime that supports all of the existing broadcasters and that's what the last two weeks of hearing were all about and what this hearing is all about.

5860   MS GRIFFIN-MUIR: Right. Well --

5861   COMMISSIONER CUGINI: I mean there's one of two things that can happen.

5862   MR. McLAREN: I think there's --

5863   MS GRIFFIN-MUIR: Go ahead, Greg.

5864   MR. McLAREN: Yes, I mean you're right when you say it goes dark but I think more realistically it's the transmitter that goes dark, the programming doesn't necessarily disappear.

5865   You know, local broadcasters today -- and it's a word that's charged, right, when we talk about local broadcasting. Local broadcasting today in the Winnipeg market is a national service that has an hour of news in it and they replay that news or repackage that news once or twice -- more often in a day.

5866   That's not what I remember as being local broadcasting and I don't think it's necessarily serving the community all that well. That may be all they can do given that the advertising market in Winnipeg, we would suggest, can't really support six over-the-air broadcasters.

5867   COMMISSIONER CUGINI: So, are you also saying that should these local broadcasters, of course, not serve their audience with -- you know, if the audience is finding that one hour of news a day on any local broadcaster is not enough that they will find some other way to get their local news, and therefore, you know, the broadcasters may be victims of their own demise?

5868   MR. McLAREN: No, I think consumers will continue to find local news on television but there might not be six transmitters in the market to do it. There might be only three and those three that are left -- I mean the three that leave become national general interest services as opposed to national specialty services.

5869   But the three that are left then are focused really on Winnipeg or Manitoba actually -- we need local broadcasters in Manitoba -- and they do a really good job of covering the local issues and we get better newscasts.

5870   You know, I listened this morning to the people who were talking about the charities that they work with and the value that those broadcasters bring. Well, I sit on the board of directors at a charity in Manitoba and one of the challenges we've got is trying to get our message out to six different broadcasters. That costs us money that we generally don't have.

5871   It would be better for us if we could focus that on three, half the number of broadcasters, and be guaranteed that the message is getting out. More efficient for us, less costly and probably better for the viewer as well.

5872   COMMISSIONER CUGINI: But as your charity, do you believe that you have to get your message out to all six in order to cover the market? Could you be more selective?

5873   MR. McLAREN: We are selective. I mean we do look at ratings. I shouldn't be wearing my charity hat perhaps but this is how it works, right?

5874   COMMISSIONER CUGINI: But you raised it.

5875   MR. McLAREN: I know. This is how it works. I mean we do try to buy ad time or promo time in the programs that are likely going to draw the most viewers, for sure.

5876   COMMISSIONER CUGINI: Okay, thank you. And it does lead into the next point that you make on your page that I just want to -- on that same page -- that I just want to explore with you a little bit.

5877   You know, you give the example of CTV showing the Grey Cup on TSN rather than its local Winnipeg station or its local stations across the country. I thought, well, it's a bit of stretch to say that it's the start of the transition to it becoming a specialty service.

5878   So what are you trying to get at here and why did you use that example as one that demonstrates that the broadcasters are already starting to make that transition?

5879   I mean, we know the Grey Cup was on a Sunday night. CTV was probably wanting to take advantage of simultaneous substitution opportunities on its main network, so it moved Grey Cup to TSN.

5880   Others would argue that's a good thing, you know. It's giving them programming flexibility, it's allowing the majority of Canadians to be able to have access to the Grey Cup because on most distributors it's available on basic or on one of their highest-penetrated tiers. What's wrong with that?

5881   MS GRIFFIN-MUIR: Actually, we're not saying anything is wrong with it, we're just noting a couple of things.

5882   What's interesting is for us Canadians, conventional over the air has dropped where it hasn't in the U.S. So we were just observing that maybe that's because of -- and we can't demonstrate this. I mean I haven't actually looked at it. Some of the services that are over the air there are not -- they're specialty here.

5883   So we were just trying to think of different reasons for these differences in our viewership of conventional over the air versus the U.S. We aren't suggesting it's a bad thing though.

5884   We're just making an observation that as you look at supporting over the air through a fee for signal, you have to consider what the demand is and why there's a drop in viewership or why there's a need for support in addition to the support that exists.

5885   COMMISSIONER CUGINI: Vice-Chairman Katz touched upon the next are that I would like to discuss with you and that is the availability of services on a pick-and-pay basis and therefore the whole concept of customer choice.

5886   What you didn't talk about is whether or not you believe -- should a value for signal regime be put in place, whether or not local signals should be available on an à la carte basis.

5887   MR. McLAREN: I'm not sure we wanted to inflame the Commission with that.

--- Laughter

5888   COMMISSIONER CUGINI: Okay.

5889   MR. McLAREN: I think we're taking it for granted that, you know, that that's not on the table.

5890   COMMISSIONER CUGINI: Okay, that's fine.

5891   Because you did not hear our discussion with Shaw yesterday, we did talk about -- and you touched upon it this afternoon -- with specialty services, the fact that they won't agree to an à la carte carriage.

5892   I am on your site now and I can see the various packages you have but you do say there are over 50 channels you can choose individually. What are -- don't give me all 50 but --

--- Laughter

5893   COMMISSIONER CUGINI: -- just give me an example of what some of those 50 are. Are they American, are they Canadian?

5894   MR. McLAREN: There's a couple of American ones. They by and large don't permit it.

5895   COMMISSIONER CUGINI: Okay.

5896   MR. McLAREN: To use some of our industry's wonky terminology, if it's an analog service, it's not available on pick and pay. If it's a digital service, generally it is, but for most of those services it has to first be in a package.

5897   Out of the 75 channels that we offer on a pick-and-pay or à la carte basis, 10 or 12 are not in a package -- maybe 15 are not in a package.

5898   COMMISSIONER CUGINI: And those would typically be what we license as either Category 1 or Category 2 services?

5899   MR. McLAREN: Correct. Correct, yes.

5900   COMMISSIONER CUGINI: And I ask this only because we very often hear customer choice, people only want to pay for what they watch, and we get that obviously. But how are you going to overcome this major hurdle with not only Canadian program suppliers but American program suppliers?

5901   We did have this conversation with Shaw yesterday and they said: American services, they flatly refuse to be offered on a pick-and-pay basis.

5902   So while it may be great for us to say in our report to the government, customer choice is number one, how are you going to do that when the programmers on both sides of the border aren't letting you do that?

5903   MR. McLAREN: You know, I don't have the actual facts to back this up but I've been in the industry for a long time. I think it would be really reasonable to suggest that we are offering more customer choice at MTS TV today than any other distributor in North America. I think that's a pretty safe bet.

5904   The challenge that we have now today in this conversation is that for us to explain things really clearly for you puts us at a disadvantage the next time we go into a negotiation with the programmers because they're watching us today.

5905   COMMISSIONER CUGINI: I understand.

5906   MR. McLAREN: We would welcome an opportunity to have you come to Winnipeg or we could come and meet with you privately. We have a lot of expertise in customer choice, its advantages and its disadvantages, and we would be happy to walk that through with you in great detail. I think you would be surprised.

5907   COMMISSIONER CUGINI: Well, Mr. Chairman, thank you, those are all my questions.

5908   THE CHAIRPERSON: Before I let you go, answer me one question.

5909   We are making a report to the Minister on this. This whole issue has assumed a dimension which is totally disproportionate to the amount of money involved.

5910   You've heard me talk about what could be possible if there were the valuation for signal, it would be the value of the OTA, and given that the OTAs get a lot of in-kind compensation, et cetera, it strikes us if you look at the specialties that it probably will be around 25 cents a signal, which would mean in a city like yours, Winnipeg would be a buck because it's for those who have local programming, and Joytv and SRC don't have local programming, so you have four over-the-air programmers. Maybe I'm wrong, maybe it's $1.50 or whatever, et cetera.

5911   Why has this become such a do-or-die issue? Why do we have a multimillion-dollar campaign on it, et cetera? Why does it seem to excite both sides -- I mean I can understand from the OTAs who feel that without it they're going under. I don't quite understand the resistance of this incredible battle by the BDUs, especially since when we did the FPFM (sic) or we did the -- what's it called?

5912   MS CRIFFIN-MUIR: LPIF.

5913   MR. McLAREN: LPIF.

5914   THE CHAIRPERSON: Thank you. You all know what I'm talking about.

5915   It was implemented and it was settled separately, et cetera, and still it went over without --

5916   I mean we're not talking about imposing a huge tax on Canadians or hurting them or driving them into making very painful choices. There may be some rearrangement, as you point out.

5917   But why is this issue totally out of disproportion to the amount of money involved? I just don't get it and what should I report to the Minister, why this has become such a sensitive issue?

5918   MR. McLAREN: I think if you recall when the issue first came up, it wasn't a discussion about 25 cents, it was -- the prices we were hearing were ranging from 50 cents to $1.00. So that kind of set the groundwork, I think, and then you get positions that are entrenched.

5919   If it's 25 cents and if it's four signals and if it's $1.00, you know, it's creeping into that typical $2.00 or $3.00 rate increase that we see on an annual basis just to keep the business running. And as I said earlier, every time we plan a rate increase, we consider what the impact is going to be to our customer base, how many customers do we think we're going to lose, how many discretionary theme groups do we think we might lose subscriptions.

5920   So I don't think it's necessarily the dollar, I think it's the cumulative effect of the dollar. Certainly, I've been trying to hear these hearings as much as I can and some customers have said a dollar, they can't afford it, right.

5921   THE CHAIRPERSON: I appreciate that.

5922   MS GRIFFIN-MUIR: I think that the feeling is also that there have been a number of issues associated with the delivery of television programming that all equate to a dollar amount: the LPIF that you were referring to, now fee for carriage, the use and quantum associated with the CTF.

5923   So it's the cumulative effect of additional funding and we're not entirely convinced that it would stop with the over-the-air fee. And we weren't -- we, MTS Allstream or MTS TV, we're not part of any national tax, no tax or anything like that.

5924   THE CHAIRPERSON: Yes. Well, hence my question to you. You know, I understand there has been an awful lot of propaganda, a lot of unnecessary invective vis-à-vis the BDUs, sort of suggesting, you know, they are so rich, they make large profits, they can carry this, et cetera, which is totally unnecessary.

5925   I mean I appreciate it's an input cost and input costs will be passed on. I'm just surprised that we can't get beyond this.

5926   So you're just suggesting it is seen as part of a multiplicity of issues which all have a negative implication for you?

5927   MS GRIFFIN-MUIR: Well, on the funding side. And then there's the question of whether or not the reason for the dilemma of the over-the-air broadcasters is not just changes to the way television viewing is, the way programming will have to evolve, and so whether or not this will actually be a resolution to what is a bigger problem.

5928   THE CHAIRPERSON: Structural. Okay.

5929   Okay, thank you very much. I appreciate your submissions.

5930   We will take a five-minute break before we go with our last intervener.

--- Upon recessing at 1414

--- Upon resuming at 1425

5931   THE CHAIRPERSON: Okay, commençons.

5932   THE SECRETARY: I would now invite FreeHD Canada to make its presentation.

5933   Please introduce yourself and your colleagues and you have 10 minutes for your presentation.

5934   Thank you.

PRESENTATION

5935   MR. LEWIS: Good afternoon, Mr. Chairman, Vice Chairs, Commissioners and CRTC staff.

5936   My name is David Lewis and I am the founder and CEO of FreeHD Canada.

5937   Our panel members are, on my right, Brian Olsen, our Vice President of Operations; and on my left Linda Rankin, our Vice President of Corporate Development.

5938   FreeHD Canada is a new entrant direct-to-home BDU that has an application before the Commission. FreeHD Canada previously submitted comments on certain issues arising in CRTC Notice of Consultation 2009-411 and 2009-577.

5939   We also provided information from our license application so that the FreeHD Canada service concept is on the public record in advance of our December 14, 2009 license hearing.

5940   FreeHD Canada wishes to further contribute to the dialogue amongst the CRTC and its many stakeholders in this notice of consultation.

5941   For the record, FreeHD Canada is a new applicant to be a direct-to-home BDU and SRD use satellite distributor that plans to utilize next generation and advanced video coding technologies to provide a superior high-definition television offering to Canadians.

5942   Canada's broadcast industry problems are unfortunately occurring at the same time as North America is transitioning to an all digital and high-definition television delivery. While the two are intermingled, the woes of the Canadian conventional television owners have seemingly hijacked the smooth transition to digital and high definition mandated by August 2011.

5943   The FreeHD Canada platform can solve the distribution issues and capacity bottlenecks for the Canadian broadcast industry by providing urgently needed satellite capacity and will employ innovative technology and market approaches to further the public policy objectives of the Canadian Broadcasting Act.

5944   FreeHD Canada has developed a unique free local program package to deliver all conventional over the airs in HD as they are ready to their local markets, local into local, free of charge to subscribers.

5945   Spot beams will enable spectrum reuse such that more capacity is available across Canada, thereby efficiently enabling more local into local capacity by effectively turning a 32 transponder satellite into a 40 transponder satellite.

5946   Subscribers will need to purchase a new antenna and a FreeHD Canada set-top box to receive this free local program package of signals.

5947   With the introduction of the FreeHD Canada service, many current issues facing the Canadian broadcast industry can be alleviated.

5948   This consultation is examining the potential impact of a monetary component for a value for signal to be negotiated between the over-the-air broadcasters and BDUs.

5949   We will comment on three broad areas as outlined in the Notice of Consultation 2009-614.

5950   First, the impact on affordable access by consumers.

5951   Second, the impact on the broadcast industry during its digital transition.

5952   Third, the implications for current and emerging business models.

5953   We will also briefly comment on a number of key issues arising from the 2009-411 hearing that has bearing on this consultation, those being the importance of over-the-air signal integrity and the impact on the ability of the over-the-air broadcasters to monetize program properties and meeting the digital transition deadline and, finally, ensuring that no consumer is left without a viable option for their TV viewing post August 2011.

5954   Brian...?

5955   MR. OLSEN: No matter what the regime to be negotiated between BDUs and broadcasters, FreeHD Canada will not charge the consumer. Our package of local into local signals is free and in HD as they are ready.

5956   Our technology allows us to distribute each broadcast signal into its discrete local viewing area, that area currently served by the analog over-the-air transmitters.

5957   This free package of local signals meets the objective of affordability for the consumer. We propose to have this solution available in all markets before the August 2011 deadline and we will give a viable option to every consumer in all markets without an over-the-air digital transmitter.

5958   Where others are talking about a skinny basic, we are talking about a free pack.

5959   For the remainder of services distributed on the new satellite platform, FreeHD Canada has proposed a package for subscribers that we see as providing a balance between affordability for the customer and maintenance of the health of Canada's robust pay and specialty channels.

5960   For much less than any other BDU charges today, FreeHD will offer all Category A channels, pay television channels, many Category B services, U.S. over-the-air and specialty channels, FM radio stations and audio services, all in one large package.

5961   Coupled with the free pack of Canadian over-the-air television signals, we are offering more than 250 channels in high definition.

5962   Subscribers make programming choices in the comfort of their own home, using the electronic program guide and easy to use remote control.

5963   This fits with what we know about high-definition TV watchers. They have made a big purchase for their new television sets. They want everything they can get in high definition and FreeHD Canada will provide it at reasonable prices, not at a premium.

5964   Linda...?

5965   MS RANKIN: One major oncern that we and several other major broadcasters and BDU's have is combating the gray market. If Canadian broadcasters don't offer a comprehensive and compelling lineup of HD services we may drive consumers towards the gray market.

5966   The largest impediment facing the digital transition for many Canadian broadcasters is lack of satellite capacity. No new direct-to-home satellite facilities are scheduled to become available in the next three years, except for FreeHD Canada. We can meet the digital transition deadline.

5967   We will also save the OTA broadcasters several millions for digital transmitter upgrade costs and deliver a higher quality HD signal than they currently have available from the other BDUs.

5968   For the OTA broadcasters one of the most significant benefits of the FreeHD Canada system is that it returns to them their signal integrity and program rights in their respective local markets. FreeHD Canada can accomplish this with a combination of the latest in satellite and digital technology but, just as important, is the business commitment to respect OTA wishes concerning signal integrity and program rights.

5969   Our packaging decisions have been designed to have a positive impact on local broadcasters' abilities to monetize their program inventory.

5970   FreeHD Canada does not propose to carry a second set of U.S. 4+1 signals. We will continue to provide simultaneous substitution of the in-time zone 4+1 signals and will only carry the major Canadian OTA broadcast signals for timeshifting if they wish.

5971   This puts the control of programming back in the hands of the broadcaster, while our technology will easily carry out simultaneous substitution when necessary.

5972   If the local broadcasters can count on monetizing their key program properties, the dire circumstances some of them find themselves in today may be ameliorated.

5973   Dave...?

5974   MR. LEWIS: FreeHD Canada has also proposed that the government of Canada aid consumers to make the digital transition by providing them with a technology and supplier neutral digital decoder coupon program to maintain the over-the-air signals in a digital environment and/or to upgrade their BDU services.

5975   We believe this program could be funded by some of the proceeds from the spectrum auction. If 15 percent of Canadian households were to utilize this program, consisting of two $75 coupons per household, the costs could be around $300 million, significantly less than the proceeds from the auction.

5976   We see FreeHD Canada as a new business model in the post-transition to digital era, offering a full lineup of high-quality, high-definition program channels and a free local into local package with signal addressability to the Grade B contour or wherever the conventional over-the-air broadcasters request.

5977   We hope we have provided you with input to help you in your deliberations and we look forward to playing a role in the future of Canadian broadcasting.

5978   Thank for your time and we would be pleased to answer any questions you may have.

5979   THE CHAIRPERSON: Thank you very much for you presentation.

5980   Mr. Lewis, am I getting old and losing my memory? You were before me a month ago. Didn't you say SD? Today you are talking exclusively about HD.

5981   I seem to recall distinctly that you said you would redeliver the signal in SD and you didn't have capacity to do it in HD.

5982   MR. LEWIS: I'm sorry, Mr. Chairman, I think you are incorrect. I think you are probably thinking of the Bell proposal.

5983   Our proposal has always been in HD. We will --

5984   THE CHAIRPERSON: Totally? Everything?

5985   MR. LEWIS: Sorry...?

5986   THE CHAIRPERSON: Completely? Everybody that you carry will you carry in HD?

5987   MR. LEWIS: As they are ready. That's our intention, to do as many HD's as the programmers have ready in the local markets as they transition to digital and HD.

5988   So yes, our satellite capacity has always -- we have been talking about high-definition from the get go.

5989   THE CHAIRPERSON: Okay. Wonderful. I gladly stand corrected.

5990   MR. LEWIS: Hence the name FreeHD.

5991   THE CHAIRPERSON: I must have been mixing up my submissions.

5992   Second, in paragraph 10 you say:

"It will give viable option to every consumer in all markets without a digital OTA transmitter." (As read)

5993   What about customers who are in a market where there is transition but who are not on cable and get their signal right now over the air?

5994   For them you basically -- let's say I'm in the outskirts of Winnipeg, Winnipeg gets converted but the area where I am is either not served by tables, so they are -- it's not served by terrestrial cable, so in that area in order to get your signal obviously I have to become your customer and buy the equipment.

5995   Would I get the signal for free, the Winnipeg signal, or not?

5996   MR. LEWIS: Yes. We are proposing to put up all of the local channels in their markets for free.

5997   So a consumer in the Winnipeg market, if there are five or seven over the airs, whatever the correct number is, they would all be on our service if they have local content and the subscriber would go out and purchase a system and indeed he would get the signals for free, the local channels.

5998   THE CHAIRPERSON: And of course you would try --

5999   MR. LEWIS: His alternative --

6000   THE CHAIRPERSON: You would try to upsell them into buying a full package.

6001   MR. LEWIS: Absolutely.

6002   THE CHAIRPERSON: Yes.

6003   Now, how come you can do it and nobody else can?

6004   Where is the money? I have been hearing now for a month that there is no money in local TV, and yet here you are offering to carry all of these. You say you have the capacity and obviously you hope to make money.

6005   What is the missing ingredient that nobody has been talking about?

6006   MR. LEWIS: I think there are several things where we are different from what you see typically in front of you from a DTH, whether it's Shaw Direct our Bell TV for instance, or even the other BDUs.

6007   THE CHAIRPERSON: Yes.

6008   MR. LEWIS: They have been in a legacy technology for quite some time and they have capacity constraints. So they have several billion dollars worth of set-top decoders that are out there that are probably a 10-year-old technology in MPEG-2.

6009   Our basic premises MPEG-4 to start with so it's much more efficient use of bandwidth than you typically would have, about twice as efficient today and continuing to improve. It's a newer standard so it's going to continue to improve.

6010   The second thing is, we are a next-generation satellite facility that we are talking about using in the longer haul. We are starting on an interim satellite and then moving to a brand-new satellite that would be higher powered than you typically would have. It's in a new band that allows for a DBS-type spectrum and pretty high-power.

6011   We also have some spot beams on the satellite which allows us to do the local into local more efficiently than anybody else would have today.

6012   Is there another one I'm missing, Brian?

6013   But those would be the key premises.

6014   I guess the last one would be there are new modulation schemes on the satellite such as DVB-S2 or APSK that are again twice as efficient on the satellite than the legacy technology could use.

6015   So if you put all that together you could jam a lot more high-definition channels onto a satellite and our premise is that we will not compress them as highly as everybody else has so we will have a superior picture quality than anybody else.

6016   THE CHAIRPERSON: Am I correct in -- somebody told me you are not a newcomer to the satellite field, that you are actually the original founder of what's now Shaw Direct.

6017   MR. LEWIS: I wouldn't make quite that claim.

6018   But yes, I have spent 31 years in this industry and worked with or for all of the direct to home BDUs and satellite service providers in Canada. So yes, I have a lot of experience.

6019   In the Shaw Direct days, there were two founders that preceded my joining the company. I would say they are the founders. I came in and I was responsible for I guess what you would call the SRDU business in legal terms and the uplink business, which at the time wasn't a regulated undertaking.

6020   That's what I brought to the table, more expertise in that area than in just the direct to home business.

6021   THE CHAIRPERSON: Okay. Thank you.

6022   Rita, you had some questions?

6023   COMMISSIONER CUGINI: Just a couple of questions of clarification, because -- I'm going to take you back to where the Chair started with you.

6024   When I look at your statement:

"Our package of local into local signals is free and in HD as they are ready..." (As read)

6025   The broadcasters. You will be in all markets.

"... a viable option to every consumer in all markets without a digital OTA transmitter..." (As read)

6026   And then in paragraph 17 you say:

"We will also save the OTA broadcasters several millions for digital transmitter upgrade costs." (As read)

6027   So when I look at those three things together -- and it's just me perhaps -- but I am a bit confused. You will carry the signals of all OTA broadcasters -- local into local, I understand that, with spot beam technology -- and you seem to be the only ones that are going to be able to do that, right, with the spot beam. The other satellite companies don't seem to be able to do that.

6028   But will the broadcasters have had to build a digital transmitter in order for you to carry their signal?

6029   MR. LEWIS: No, there will not be a requirement for them to maintain a digital transmitter. If they wanted to feed us directly from their studios that would be fine and we would indeed put them on the satellite and they would get back into their market.

6030   COMMISSIONER CUGINI: So that's why you can say "in all markets without a digital OTA transmitter", because he will take the feed directly from the broadcaster?

6031   MR. LEWIS: That's correct.

6032   COMMISSIONER CUGINI: Okay.

6033   And therefore obviate the necessity, in some markets I would imagine, for the OTA broadcasters to build a digital transmitter?

6034   MR. LEWIS: That's exactly right.

6035   We have had discussions with the major networks on exactly this topic. Some are quite excited about the prospect as an alternative to upgrading and/or even maintaining their digital transmitters in the remoter communities.

6036   COMMISSIONER CUGINI: And because of the digital transition we know that if a customer has three television sets in their home they need to buy three or rent three set-top boxes.

6037   Will that be the case with FreeHD as well? Will the customer have to have a set-top box for each of their television sets?

6038   MR. LEWIS: Currently that's probably the case.

6039   We are investigating some alternative techniques. However, if somebody wanted to watch an individual, a different program in each TV set, then you would require another decoder.

6040   But there are ways to extend, video extenders for instance and things, that you can put multiple TVs and still feed them without having a set-top decoder, but they would be more of a development exercise to do anything different than that.

6041   COMMISSIONER CUGINI: Okay. Because of course it all goes to the issue of affordability and what it is that the customer would have to purchase in order to receive their FreeHD.

6042   I understand the package is free, there is no monthly charge for the signals that would be received in their home, but I'm trying to understand how much of a cost it would be for the customer to become a subscriber of FreeHD.

6043   So in a typical situation where there are at least two television sets in a home, what would the upfront costs be?

6044   MR. LEWIS: You would have -- for a two TV set solution in a home you would have a master and a slave unit configuration in the home and they would each have a wire run to them from the dish, so you would have, for the first antenna and the first set-top box, which is a modular kind of set-top box which is quite innovative and interesting that we should probably try and describe, but the first box would be $300 for the system and -- the set-top and the outdoor antenna unit, and then after that there would probably be another $100 to $150 for the second set in the home.

6045   Depending on how that configuration is and whether we wanted to have a whole home DVR capability, which we can support as well, and have one of the units playing the DVR and the other one being the slave that can pull off of that DVR configuration.

6046   So we are also talking about that.

6047   COMMISSIONER CUGINI: And because of course affordability is aso tied in with availabiliy I guess, or whether or not it's a viable substitution, if I was to call FreeHD and I am currently a terrestrial cable subscriber, how long would it take for you to come out and rewire my home so I can have access to FreeHD instead of terrestrial cable?

6048   MR. LEWIS: There isn't really any rewiring of the home required, other than to install the antenna and then run a wire to that set-top box.

6049   But we are targeting to have it sold in retail and installed within 48 hours.

6050   COMMISSIONER CUGINI: Okay. Well, thank you very much.

6051   Those are my questions.

6052   THE CHAIRPERSON: Michel...?

6053   COMMISSIONER ARPIN: Thank you, Mr. Chair.

6054   I don't have that many questions, most of them have been asked.

6055   But you said in replying to Commissioner Cugini that the broadcaster will have to send the signal from its studio, but to where? To your control centre or to an uplink?

6056   MR. LEWIS: It could actually be provided in several forms.

6057   One of the concepts is to locally encode a number of the channels off-air and then bring them back together on a fibre network to our uplink centres. In that case there are actually going to be regional uplinks across Canada.

6058   Certainly currently on the plan Toronto, Montréal and somewhere out west -- to be determined at this point in time, but likely Calgary or Vancouver. So you would backhaul the signals to the closest uplink centre, and whether they are backhauled individually from a studio or brought together in a multiplex already and then encoded and brought together in a multiplex and sent down a fibre, which is a more efficient way to do the backhauls.

6059   COMMISSIONER ARPIN: As a matter of fact, the main networks are operating central master control anyhow for current?

6060   MR. LEWIS: That was exactly why I said Calgary probably as one of the options, because certainly Canwest originates all of their programming from that one facility in Calgary.

6061   COMMISSIONER ARPIN: Yes. And at whose cost?

6062   MR. LEWIS: Currently it would be the BDU's -- sorry, the broadcasters' responsibility to get the signal to the BDU headend, so their cost -- it will be part of the overall discussion in the value for signal debate.

6063   COMMISSIONER ARPIN: Yes. That was my question.

--- Laughter

6064   COMMISSIONER ARPIN: Thank you.

6065   THE CHAIRPERSON: Mr. Lewis, you have peaked my interest when you were talking about master and slave.

6066   I am a Shaw Direct customer right now. For every television I need a set-top box. If I want HD I have to upgrade and pay more. If I want a PVR that's obviously another one, but also I need an extra feed, because for the set with a PVR I need one for the PVR so it can record and another one so that I can watch. Apparently the two don't work at the same time.

6067   So if I become an HD customer I gather, first of all, I don't need two feeds for both PVR and viewing, I only need one feed.

6068   Is that correct?

6069   MR. LEWIS: The set-top box will have several tuners in it. We are still debating with the manufacturers about costs as to whether there is going to be anywhere between two and four tuners in the set-topo box.

6070   The technology that we have chosen for coming in from the dish is actually we would channel stack all of the frequencies onto one sire. So you wouldn't need to run two wires to your set-top box to be able to record on one transponder and watch on another or whatever.

6071   So we are thinking that if there are at least two tuners coming into the PVR and one to whatever you want to watch on TV --

6072   THE CHAIRPERSON: Yes, yes.

6073   MR. LEWIS: -- for the master unit, that that's what would be required.

6074   The slave would also have the ability to watch live TV on another transponder or pull from the same DVR in the whole home.

6075   It's a modular set-top box, like I mentioned, so it would be the basic price that we talked about, so the first box in the system would be $200, $299 and then after that we would have the slave unit sold for cheaper.

6076   But if you wanted to upgrade to a hard drive our model has that you go out and buy it at retail and you can buy from a manufacturer's suggested list of approved hard drives and for, let's say $100 today, you can go out and buy a terabyte.

6077   THE CHAIRPERSON: Yes.

6078   MR. LEWIS: So considerably more memory than anybody has in the market today where they are typically around 160 GB drives. So we could store a lot more movies in HD in this plan and it will be significantly cheaper for consumers that way, several hundred dollars per PVR.

6079   THE CHAIRPERSON: Aside from the PVR, what is the difference between the slave box and the main box?

6080   MR. LEWIS: Nothing. Nothing. It just has several USB ports on it to store a hard drive or to wirelessly connect, that kind of thing. So depending on how you want to use it.

6081   The basic box is also the slave box, it can be turned into the master just by plugging in those other devices, the hard drive and the wireless connecivity.

6082   THE CHAIRPERSON: You said you have had talks with other broadcasters.

6083   How come none of them when they came here before us and talked about the digital transition plan suggested that one of the solutions maybe FreeHD?

6084   MR. LEWIS: I can't speak for what -- I mean the questioning --

6085   THE CHAIRPERSON: The way you presented it seems to be the answer to their question for markets where they don't want to convert.

6086   MR. LEWIS: On the public record, both in our application and in comments, Canwest was quite supportive and suggested in their comments that this could be a solution for them.

6087   It never came around in the discussion. I know we had talked with them and they were prepared to talk about it if they got questioning in the last hearing and it never came up so it never came on the table.

6088   THE CHAIRPERSON: Okay. Thank you.

6089   I don't believe we have any other questions.

6090   Thank you very much for your presentation. I appreciate you coming.

6091   MR. LEWIS: Thank you.

6092   LE PRÉSIDENT: Madame le Secrétaire, I think that's it for today.

6093   Okay. We will resume tomorrow morning at 9 o'clock.

6094   Thank you.

--- Whereupon the hearing adjourned at 1451, to resume on Friday, December 11, 2009 at 0900

   REPORTERS

____________________      ____________________

Lynda Johansson         Jean Desaulniers

____________________      ____________________

Monique Mahoney         Madeleine Matte

Date modified:

2009-12-11