ARCHIVED - Transcript, Hearing 20 September 2010

TRANSCRIPT OF PROCEEDINGS BEFORE

THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

SUBJECT:

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2010-497

HELD AT:

Willow Room

Four Points by Sheraton

Calgary Airport

2875 Sunridge Way NE

Calgary, Alberta

September 20, 2010

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

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2010-497

BEFORE:

Konrad von Finckenstein   Chairperson

Len Katz   Commissioner

Rita Cugini   Commissioner

Peter Menzies   Commissioner

Marc Patrone   Commissioner

ALSO PRESENT:

Jade Roy   Secretary

Moïra Létourneau   Legal Counsel

Denise Moore   Hearing Manager

HELD AT:

Willow Room

Four Points by Sheraton

Calgary Airport

2875 Sunridge Way NE

Calgary, Alberta

September 20, 2010

- iv -

TABLE OF CONTENTS

   PAGE / PARA

PHASE I

PRESENTATION BY:

Novus Entertainment Inc.   5 / 32

PHASE II

No interventions

PHASE III

REPLY BY:

Novus Entertainment Inc.   42 / 302

PHASE I

PRESENTATION BY:

Shaw Cablesystems Limited and Videon Cablesystems Inc.   44 / 310

PHASE II

INTERVENTION BY:

CACTUS   124 / 801

TELUS   147 / 942

PHASE III

REPLY BY:

Shaw Cablesystems Limited and Videon Cablesystems Inc.   160 / 1007

- v -

   UNDERTAKINGS

Undertakings can be found at the following paragraphs:

638

   Calgary, Alberta

--- Upon commencing on Monday, September 20, 2010 at 0830

1   THE CHAIRPERSON: Good morning, everybody. This is like church, the front rows are empty and everybody is --

--- Laughter

2   THE CHAIRPERSON: Good morning and welcome to this public hearing.

3   The panel for today consists of:

4   - Len Katz, Vice-Chairman, Telecom;

5   - Rita Cugini, Acting Vice-Chair, Broadcasting;

6   - Peter Menzies, Regional Commissioner for Alberta and the Northwest Territories;

7   - Marc Patrone, National Commissioner; and

8   - myself, Konrad von Finckenstein, Chairman of the CRTC. I will be presiding over this hearing.

9   The Commission team assisting us today includes:

10   - Denise Moore, Hearing Manager and Manager of Distribution Compliance;

11   - Moïra Létourneau, Legal Counsel; and

12   - Jade Roy, our Hearing Secretary.

13   At today's hearing, we will examine the applications submitted by Shaw Cablesystems, Videon Cablesystems and Novus Entertainment. The applicants are seeking to renew the licences of 25 cable systems in British Columbia, Alberta, Saskatchewan and Manitoba.

14   In August 2008, the Commission granted short-term renewals of two years to the systems operated by Shaw and Videon. This decision was taken to more closely monitor their compliance with regulations concerning the distribution of sponsorship messages on their community channels and channel realignment notices, as well as their audit practices.

15   The Commission also granted Novus a two-year licence renewal in 2008 for its system in Metro Vancouver due to its non-compliance regarding the distribution of a priority television station, CHNU-TV Fraser Valley.

16   The panel will want to discuss current issues of apparent non-compliance with the three licensees.

17   For Novus, this entails, inter alia, the apparent failure to distribute the mandatory service, The Accessibility Channel, and the distribution of three campus radio stations.

18   For Shaw and Videon, this includes monthly payments to the Canadian Media Fund.

19   I would now like to ask the Hearing Secretary, Madame Roy, to explain the procedures we will be following.

20   Madame Roy.

21   THE SECRETARY: Thank you and good morning.

22   Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

23   When you are in the hearing room we would ask that you please turn off your cell phones, beepers, and BlackBerrys as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.

24   We expect the hearing to take one day.

25   The Spruce Room located on the 7th Floor is reserved for the Examination Room where you can examine the public files of the applications being considered at this hearing. As indicated in the agenda, the telephone number of the Examination Room is 403-262-3903.

26   Le service d'interprétation simultanée est disponible durant cette audience. Vous pouvez vous procurer un récepteur auprès du technicien à l'arrière de la salle. L'interprétation anglaise se trouve au canal 2 et l'interprétation française au canal 3.

27   Interpretation services will be available throughout the duration of the hearing. English interpretation is available on channel 2 and French interpretation on channel 3.

28   We would like to remind participants that during their oral presentations they should provide for a reasonable delay for theinterpretation while respecting their allocated presentation time.

29   There is a verbatim transcript of this hearing being taken by the court reporter sitting in front of me. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break. Please note that a full transcript will be made available on the Commission's Web site shortly after the conclusion of the hearing.

30   And now, Mister Chairman, we will proceed with item 1 on the agenda, which is an application by Novus Entertainment Inc. to renew the Class 1 broadcasting licence for its terrestrial broadcasting distribution undertaking serving Metro Vancouver, expiring 30 November 2010.

31   Appearing for the applicant is Madam Donna Robertson. Madam Robertson, you have 20 minutes for your presentation. Thank you.

PRESENTATION

32   MS ROBERTSON: Thank you.

33   Honourable Commissioners, Ladies and Gentlemen, I am Donna Robertson, Co-President and Chief Legal Officer of Novus Entertainment Inc.

34   If you are readers of modern fiction, you will have read or at least heard about a novel called "The Accidental Tourist." Well, Novus is "The Accidental Cable Company."

35   I would like to provide just a brief overview of the history of the company to give you some understanding of where it fits in the Canadian communications industry. Vancouver is a long way from Ottawa and I thought it might be useful for you to know a little bit more about the company.

36   In the mid-1990s the development company Concord Pacific purchased the Expo '86 property in Vancouver, B.C., and commenced to build the first multi-dwelling unit planned community in Canada.

37   The principal of Concord, Mr. Terence Hui, has degrees in physics and in electrical engineering. He is keenly interested in modern communications technology and one of the things that he wished to provide to the residents of this new community was state-of-the-art communication services.

38   To that end, he partnered with BC TEL -- as Telus then was -- to build a fibre optic network on the development site to provide cable television, phone and an Ethernet Internet service to the residents.

39   Concord Pacific and BC TEL had excellent, and I am sure very expensive, legal advice and were assured that they could provide the cable services in a finite area as a small master antenna television service.

40   Rogers, which was the incumbent cable company in Vancouver at the time, had a different opinion and filed a complaint with the Commission. Apparently, the regulations were no easier to interpret then than they are now.

41   A hearing was held on the matter and the Commission, on the verge of opening communications services to competition, determined that the best solution was to allow Mr. Hui and BCTEL to form a company which would be issued a Class 1 Broadcast Distribution Undertaking licence but only for the area that was being developed.

42   The licence was issued in 1996 to the new company, which was named Pacific Cable Company Ltd., and so The Accidental Cable Company came into being.

43   The company was sold to a group of investors in 1999 and was renamed Novus Entertainment Inc. An application was made to the Commission to expand the licensed service area to Metro Vancouver and the company began to build and establish a fibre optic network that would allow it to service multi-dwelling units in its new licensed service area.

44   In 2000, the fledgling company was approached by Nortel, which offered to partner with Novus to allow it to offer the triple play: cable TV, Internet and telephone services. Novus formed a subsidiary, Novus Telecom Inc., and applied for and received a competitive local exchange carrier licence and proceeded to build telephone switches in Vancouver and Toronto.

45   Unfortunately, the partnership with Nortel proved to be difficult to sustain as it greatly strained the resources of the company. Novus sold its subsidiary and terminated its agreement with Nortel and set out to find new financing for its cable television and Internet services in Vancouver.

46   The necessary financing did not materialize and the company was put into receivership. Mr. Hui had retained a small ownership interest in the company and in 2004 he repurchased Novus. Since that date, Novus has continued to expand its network and has continued to add multi-dwelling units to its service footprint.

47   Last year Novus concluded an agreement with InTransitBC, the builder and operator of the Canada Line, Vancouver's new rapid transit and subway system which joins the airport to downtown Vancouver as well as providing a link between the City of Richmond and downtown Vancouver. This was Vancouver's Big Dig prior to the Olympics.

48   Novus' agreement with Canada Line has allowed Novus to put a 284-count fibre optic cable from the Waterfront Station in downtown Vancouver to the Brighouse Station in Richmond. This fibre optic cable will allow Novus to provide dark fibre to businesses and other communications service providers as well as expand its services to a significantly larger area.

49   The incumbents are unwilling or unable to provide leases or sale of dark fibre to small businesses, so that this service which will be made available by Novus is an important one.

50   I have provided this brief overview to you so that you can appreciate the many hurdles a small communications company faces in order to establish itself in a large urban market.

51   This is a capital-intensive business, the competition is fierce, and consequently, Novus' growth has not been dramatic but the company does continue to grow and to act as an important competitive force in the Metro Vancouver market.

52   Novus has an enviable reputation for providing exemplary customer service and value to its customers.

53   One of the services that Novus and its staff is most proud of is Novus' Community Channel. The staff of the Community Channel is young, techie and enthusiastic and the channel has provided an outlet for many volunteers who are attempting to establish careers in broadcast and in film as well as providing an outlet for community activists.

54   Novus has, for example, championed the Peace it Together initiative in Vancouver. Peace it Together was formed by two Vancouverites whose roots are Palestinian and Jewish and who have formed a foundation to bring teenagers from Palestine and Israel to the West Coast every summer to make films together about their experiences living in a divided territory.

55   Novus has aired these films and has provided a platform on its Community Channel to the principals of Peace it Together to get out their message and assist them with their fundraising efforts. This is but one small example of the type of access programming which Novus presents.

56   We have attached as Schedule A to this presentation an overview of the Access Programming aired by Novus. We hope that you will take a few minutes to review it. It is far too extensive to try and enumerate in this oral presentation.

57   You will note that many of the programs have also been posted on YouTube. We hope that you will take the time to go online and view some of them.

58   We have also included testimonials from persons to whom Novus has provided access.

59   Because Novus' customer base is still so small, its Community Channel budget is also very small, even though it represents 5 percent of Novus' gross revenues derived from broadcasting activities.

60   We have appended to this presentation a Schedule which shows the average budget for Novus' Community Channel for one month. The document is filed on a confidential basis as it contains competitive financial information. It was filed to show how remarkable it is that Novus is able to do so much with its Community Channel with its very limited resources.

61   The new regulations effective September 1, 2010, allow a Class 1 BDU to devote only 2 percent of its gross revenues from broadcasting activities to a community channel. Should Novus have to comply with this restriction, it would be impossible for Novus to continue to broadcast a Community Channel.

62   Fortunately, the Commission has recognized the financial limitations of BDUs in Novus' position and has provided to such companies and to Novus the ability to seek relief.

63   In its Licence Application, Novus has followed the direction set out in Broadcasting Regulatory Policy CRTC 2009-543, paragraphs 21 and 22.

64   In paragraph 21, it states:

"For undertakings that may not qualify for exemption [i.e. for revocation of their licences], licensees may apply to the Commission for a Condition of Licence that would allow them to be relieved of the new requirements governing contributions to Canadian programming and to the Local Programming Improvement Fund."

65   Paragraph 22 states, under section 29.1(2):

"Licensed BDUs with fewer than 20,000 subscribers as of 31 August 2009 will not be required to make Local Programming Improvement Fund payments for the 2009-2010 broadcast year. Thereafter, subject to the result of the proceedings announced in Broadcasting Notice of Consultation 2009-411, BDUs with fewer than 20,000 subscribers will be required to make contributions unless exempted or they receive a Condition of Licence relieving them of such requirements under section 29.1(1)." (As read)

66   Further, in Broadcasting order CRTC 2009-544, the Commission, in paragraph 29, stated:

"The Commission notes that licensed and exempt BDUs serving fewer than 20,000 subscribers have, since 2003, been permitted to direct all of their required 5 per cent contribution to Canadian programming to their own community channels or community programming. As noted by the CCSA, virtually all BDUs serving fewer than 20,000 subscribers take advantage of this flexibility and therefore do not make contribution to the Canadian Media Fund or other production funds. In fact, the Commission's analysis of BDUs' annual returns indicates that BDUs with less than 20,000 subscribers collectively contribute only a small amount to independent production funds, including the CMF, in a given year.
Accordingly, the Commission is satisfied that its decision will not have a material and negative impact on independent production funds." (As read)

67   Consequently, Novus has proposed as a new Condition of Licence that it be permitted to devote 5 per cent of its gross revenues derived from broadcasting activities in the broadcast year to local expression, which can be 100 per cent satisfied by the distribution of its own community programming on its own community channel, until it has 20,000 or more subscribers on August 31st of two consecutive fiscal years, after which section 29(5) will govern its contributions.

68   Further, Novus has requested as a new Condition of Licence to be relieved of the requirements of section 29.1(1) to make contributions of 1.5 per cent of its gross revenues until such time as it has reached the same benchmark as above.

69   Rogers Communications in its intervention opposed Novus' request for relief from the new regulations.

70   However, Novus believes that the Commission has taken into account the difficulties encountered by a Class 1 BDU with fewer than 20,000 subscribers in meeting its financial requirements in the new Broadcasting Distribution Regulations and has provided to Novus the opportunity to seek the Conditions of Licence which it has requested in its application.

71   In its response to Rogers' intervention Novus pointed out that it was not in a position to have its licence revoked.

72   Consequently, Novus followed the directions provided in Broadcasting Regulatory Policy CRTC 2009-543 as quoted above.

73   Novus is also of the view that it has demonstrated that its community channel is an important part of its programming and provides a valuable service to the metro Vancouver community and should have the level of funding required to maintain it.

74   For all of the above reasons, Novus believes that the objections raised by Rogers in its intervention should be rejected and that the Conditions of Licence that Novus has requested for relief from the requirements of section 29(5) and section 29.9(1) be approved.

75   Thank you for giving us this opportunity to present our position.

76   THE CHAIRPERSON: Thank you for your presentation.

77   You are here because you were found wanting. We gave you a two-year licence because you weren't living up to all the conditions.

78   Are you living up to all the conditions that are required for a Class 1 BDU right now?

79   MS ROBERTSON: Yes, to the best of my knowledge we have met all of the deficiencies. We have worked with the analysts at the Commission. We are now broadcasting Channel 10.

80   As we explained to the Commission previously, it was actually technically impossible for us to broadcast that particular regional signal until such time as we had managed to bring our fiber out farther into the metro Vancouver area.

81   THE CHAIRPERSON: Channel 10 was the Accessibility Channel?

82   MS ROBERTSON: We have the Accessibility Channel.

83   THE CHAIRPERSON: Well, tell me what happened to the Accessibility Channel.

84   We imposed that requirement. You launched it, as I understand it, in January of -- it was late.

85   MS ROBERTSON: It was late.

86   THE CHAIRPERSON: The channel was late but you were also late. Even after it was launched, you didn't provide coverage for it.

87   MS ROBERTSON: We had ordered the necessary equipment. We are a Motorola company. We had ordered the necessary equipment and the equipment was not available.

88   We contacted the Accessibility Channel and explained our difficulties to them, and they worked with us to ensure that the equipment was provided to us as soon as possible.

89   We often have this difficulty with our supplier.

90   THE CHAIRPERSON: But we made a decision in January of 2008. Since then you knew you had to do it.

91   The Accessibility Channel was late, so you got an unexpected -- you were supposed to be ready earlier than when they actually came on, which was January 29, 2009. And yet it still was until this year that you finally launched it?

92   MS ROBERTSON: That is correct.

93   THE CHAIRPERSON: I mean, you had plenty of time to get that equipment. You actually got a break because the channel isn't ready to do it.

94   So as far as I can see, you had a total of -- from January 2008 to January 2009. You had over a year to get this equipment.

95   And you are telling me that Motorola is not capable of giving you the equipment to carry an extra channel?

96   MS ROBERTSON: My understanding is, from my technical staff, that the actual specifications of the equipment weren't immediately known. Once they were known, it is also my understanding that the order was placed and that we had great difficulty in getting the equipment.

97   And we launched the channel as soon as we were able to do so.

98   THE CHAIRPERSON: You know that we have no ability to fine you or do anything with it. Our only ability is that if you are a licensee and you are not in good standing, we will give you a short licence and make sure that you are in good standing when you re-apply next time. Or else if you keep continuing to be in bad standing, we can ultimately revoke your licence.

99   Here we gave you a two-year licence, clearly putting you on notice. Smarten up. Get your things in order. And you haven't done it.

100   And the Accessibility Channel, where you had over a year of lead time, you have not in any way told me -- like you are saying, I believe technical people tell me, et cetera, et cetera. You have not shown me any evidence from Motorola or anybody that you couldn't live up to it.

101   I must say I'm not terribly impressed that somebody comes and wants a seven-year licence and they have been on a two year renewal anyway because of previous breaches.

102   MS ROBERTSON: I can only repeat that we did the very best that we could under the circumstances. We understood how important the channel was. We have always known that. We have worked with the Accessibility Channel. We are in constant contact with them and we work with them to ensure that the Accessibility Channel is known about to our subscribers.

103   I can only say that we did the best we could with the technical requirements that were imposed on us in order to launch the channel.

104   THE CHAIRPERSON: I understand that it's not only the Accessibility Channel but there are also three campus radio stations where you were delinquent in putting on the air.

105   My colleague Len is going to ask you some questions on that.

106   Len...?

107   COMMISSIONER KATZ: Thank you, Mr. Chairman. Good morning.

108   You are aware that there were three campus radio stations that you were not carrying for a long period of time.

109   MS ROBERTSON: Yes. We apparently had carried them at one time and they were taken off and not put back on when they should have been.

110   They are now back up and running.

111   COMMISSIONER KATZ: For what period of time were they not being carried?

112   MS ROBERTSON: I think for about a year and a half.

113   COMMISSIONER KATZ: What guidelines or process have you instituted in your company to make sure that those regulations that exist in this country are adhered to by your company?

114   MS ROBERTSON: We have tried to put in place better systems and procedures with our technical staff. We sometimes appreciate that they do not appreciate, or have come to appreciate that they do not always appreciate that some of the actions that they take have implications.

115   And occasionally things are done that we are not fully aware of.

116   So now we have regular meetings. We review the requirements and we also have them provide to us a list, on a monthly basis, of all of our programming and any of the items that they may have undertaken to remove, or any technical difficulties that they have that they report them to us in a timely manner.

117   COMMISSIONER KATZ: Do you have written guidelines that are circulated around to your staff and there are training programs in place to update them on a quarterly/semi-annual basis?

118   MS ROBERTSON: Yes, we do. We have a consulting engineer who comes in on a regular basis, and he reviews all of the requirements with the staff.

119   He reviews them with me so that we are sure now that we are always compliant.

120   We did not appreciate that we were not compliant until we actually reviewed our licence requirements and understood that some of these signals had been taken down.

121   COMMISSIONER KATZ: How long a term are you applying for in this proceeding?

122   MS ROBERTSON: We understood that this was a hearing for a seven-year renewal of the licence.

123   COMMISSIONER KATZ: If you were sitting in this chair and we awarded you a seven-year licence and three years from now you decided to swap out your infrastructure from Motorola to somebody else, and for whatever reason certain programming did not come on the air, how would you deal with that situation?

124   MS ROBERTSON: I think before we did anything of that sort we would probably contact the Commission and review the situation with them to see whether or not we could have a period of adjustment.

125   I think that we would probably try and enter into some kind of a dialogue to see whether or not it would be possible for us to do that before we did it.

126   COMMISSIONER KATZ: And what if there was some issue that came up during that process that caused consumers who are paying for services to be denied services for a period of time?

127   What tools would the Commission have at its disposal to I guess educate the licensee?

128   MS ROBERTSON: As the Chairman pointed out, the tools that you have are limited. I guess you could sanction us. You could do what you did previously. You could put us on a short leash, as you have done, to ensure --

129   COMMISSIONER KATZ: But if you are already in that seven-year term and two years down the road something has happened.

130   You have your licence for another five years. Do we just wait five more years before we bring you back in front of us?

131   MS ROBERTSON: I'm not sure what other approaches you have available to you. I think what you would have to do is order immediate compliance.

132   Probably that is your very best option.

133   COMMISSIONER KATZ: Those are my questions, Mr. Chairman.

134   THE CHAIRPERSON: Thank you.

135   Rita, do you have some questions?

136   COMMISSIONER CUGINI: Yes, thank you, Mr. Chairman.

137   Ms Robertson, good morning.

138   I do have questions specifically regarding your request to be relieved from the requirement to contribute to LPIF.

139   Just on a point of clarification, in your application you say to be relieved of the requirement until you have 20,000 or more subscribers on August 31st of two consecutive fiscal years.

140   MS ROBERTSON: Yes.

141   COMMISSIONER CUGINI: Can you confirm that your fiscal year does end on August 31st?

142   MS ROBERTSON: Yes, of course.

143   COMMISSIONER CUGINI: If we were to grant you this request, would you agree for us to change the wording to say "on the broadcast year" as opposed to fiscal? You could change one day your fiscal year.

144   MS ROBERTSON: Yes. I have no objection to that whatsoever.

145   COMMISSIONER CUGINI: Okay, thank you.

146   One thing you said in your oral presentation that I do agree with, you say that the new Broadcast Distribution Regulations do provide companies like yours the opportunity to seek new Conditions of Licence, which you have requested in your application.

147   However, those requests have to be substantiated with evidence that such compliance would cause you undue harm.

148   I would like to explore with you this undue harm that it would cause if we did require you to contribute to the LPIF.

149   In other words, you make the request and it has to be followed up with evidence.

150   So in your application you say until you reach 20,000 subscribers. I believe you have put on the record the number of subscribers you currently have?

151   MS ROBERTSON: We do.

152   COMMISSIONER CUGINI: And it has taken you 14 years to get to this number.

153   MS ROBERTSON: It has.

154   COMMISSIONER CUGINI: So theoretically it could take another 20, 25 years to get to 20,000?

155   MS ROBERTSON: I hope that isn't the case. I hope that we will have better growth opportunities because of our new fiberoptic cable that we have placed and I hope that our growth will grow at a greater pace than it has in the past.

156   I provided that history to you because I think it is important for the Commission to know why the growth has been so slow.

157   It has been very difficult. We are better funded now. We are much more stable now. And we have been growing at a more steady and more reliable rate than in the past.

158   So I don't think it is going to take that long for us to get to the 20,000 customer base.

159   I would not hazard a guess as to when that would be. It would be very difficult to provide you with any kind of an estimate.

160   We find that because of the very fierce competition in our market, we actually compete against two very large BDUs.

161   COMMISSIONER CUGINI: Do you have a five-year forecast, for example, of where you will be in terms of number of subscribers five years from now?

162   MS ROBERTSON: We do. I would just as soon not share that publicly.

163   COMMISSIONER CUGINI: You could file that confidentially?

164   MS ROBERTSON: I would be glad to do that.

165   COMMISSIONER CUGINI: Thank you.

166   I'm not quite sure when the filing date is.

--- Pause

167   THE CHAIRPERSON: You should file it before the close of the hearings.

168   COMMISSIONER CUGINI: Also, can you please elaborate further on why you believe that Novus should not have to contribute to the LPIF?

169   MS ROBERTSON: Again, it's financial. We will be adding a part two fee again this year. We have very limited resources always to do the things that are necessary.

170   We believe that just even that 1.5 per cent makes a difference to a company that is of our size. It just enables us to do the things that we have to do.

171   COMMISSIONER CUGINI: If we were to not grant your request, what would you have to sacrifice?

172   In other words, if we said we don't agree with you, you must contribute to the LPIF, what financial impact would that have on your company?

173   MS ROBERTSON: Probably the first thing that we would have to sacrifice would be part of our marketing budget.

174   We don't like to affect people, so we would probably take it out of the marketing budget.

175   COMMISSIONER CUGINI: All right.

176   Thank you very much, Ms Robertson. Those are my questions.

177   THE CHAIRPERSON: Thank you.

178   Peter, do you have some questions?

179   COMMISSIONER MENZIES: First of all, for the record in terms of this area in which you are asking for specific relief from or an extension on section 29(5), you also used the word fiscal year instead of broadcast year.

180   Can you confirm for the record that in this area they are consistent as well?

181   MS ROBERTSON: They are consistent. Our fiscal year is also the broadcast year.

182   COMMISSIONER MENZIES: Okay.

183   In paragraph 9 of your presentation this morning you referred to the Regulations. You say "allow a Class 1 BDU to devote only 2 per cent of its gross revenues from broadcasting activities to a community channel".

184   Are you aware that there is nothing to prevent you from spending more?

185   MS ROBERTSON: We are aware.

186   COMMISSIONER MENZIES: Thank you.

187   There are a number of other small BDUs similar in size that we granted the one year of relief. What is it specifically that makes you so different from them that you should be granted further relief?

188   MS ROBERTSON: As Rogers pointed out in their intervention, that one-year relief was granted to many of the small BDUs to provide them the opportunity to seek an exemption from licensing.

189   We are in a Class 1 BDU's licensed territory. So right from the beginning we have had to comply with Class 1 BDU regulations.

190   My understanding of the regulations is that we are not permitted to seek revocation of our licence. And frankly, we would not want to seek revocation of our licence.

191   It is an important aspect of our company.

192   COMMISSIONER MENZIES: Okay.

193   What would be the -- you might not want to share the exact number, but you could share a percentage number.

194   What would be the fiscal impact on the Community Channel if you don't get the relief you are looking for?

195   MS ROBERTSON: We definitely would have to let people go. We have staff at the Community Channel. They work for very little money, but we would not be able to sustain the staffing level that we have at the present time.

196   We also pay licensing fees for some of the access programming that we air. That probably would not be possible. We would not be able to compensate some of the small film production companies that we work with.

197   COMMISSIONER MENZIES: Can you give me some idea of sort of what percentage it would be reduced by?

198   If you had to let people go, what percentage of the staff would that be?

199   MS ROBERTSON: We only have three people on staff.

200   COMMISSIONER MENZIES: So you would have to let them all go?

201   MS ROBERTSON: We would probably have to keep one person on part-time, and that would be the extent of our ability to fund any staffing level for the community channel.

202   COMMISSIONER MENZIES: What specifically is preventing you from passing any of these costs along to your subscribers?

203   It is not uncommon for others to do so.

204   MS ROBERTSON: I think that some of our costs are passed on to our subscribers. I think that we try to remain competitive.

205   Our costs are higher than those of our competitors, just by virtue of our size. We don't have the economies of scale that they do.

206   And in order for us to stay competitive in our market, we have to be very careful about the level of cost that we pass along to our subscribers.

207   COMMISSIONER MENZIES: Okay, but this is a relatively small percentage that we are talking about here.

208   MS ROBERTSON: Yes, and I am sure that we pass some of these costs through to our subscribers. To the extent that we are able to, and to remain competitive, I am sure that we do it.

209   COMMISSIONER MENZIES: Because we are still dealing with the overall 5 percent. You want to devote the entire 5 percent to your community channel. Correct?

210   MS ROBERTSON: Yes.

211   COMMISSIONER MENZIES: So the only change in here is where the money goes to, so the only impact should be on your community channel. Right?

212   MS ROBERTSON: Yes.

213   COMMISSIONER MENZIES: And how vital is your community channel to your overall business proposition to subscribers?

214   How many are taking you for your community channel versus your competitor's community channel?

215   MS ROBERTSON: I think our community channel provides a certain profile for our service. I think that we air things that the other - our competitors do not. We have provided access to persons who have not been able to have access at other BDUs.

216   And I think that our community channel is very important to us. It provides us an opportunity to connect with our community.

217   COMMISSIONER MENZIES: Sure. Is it part of your marketing plan? Do you market your community channel and say, "You should subscribe to us because our community channel is better"?

218   MS ROBERTSON: We use it. We use it by putting some of the programming up on YouTube, and we hope to attract customers to Novus through its community program that is posted on YouTube.

219   So, yes, we do use it as part of our marketing.

220   COMMISSIONER MENZIES: Okay, thank you.

221   THE CHAIRPERSON: Marc...

222   COMMISSIONER PATRONE: Thank you, Mr. Chairman.

223   Thank you, Ms Robertson, for your presentation today. I certainly appreciate the degree to which your community channel has become an integral part of its community and is such a source of pride to your company.

224   I am sure you would agree that we would like as many people who are disabled to be able to access that content as possible.

225   As a result, there are certain standard accessibility requirements which the Commission has deemed important enough to raise with you today.

226   First off, regarding a condition of licence requiring licensed BDUs that operate community channels to caption 100 percent of original licensee produced programming by the end of the licence term, can you comment on your capacity to meet that condition?

227   MS ROBERTSON: At the present time, we would not be able to do it.

228   What we hope will happen is that technology will help us out. We are hoping that there will be developed voice recognition software that will provide the captioning on the screen.

229   We have been exploring the availability of such technology. Right now it would have to be done by a human being, and it would have to be done on a constant basis.

230   It would be very difficult to fund. It would require a full-time person to do this.

231   And we are not in a position - I will be honest right now - we are not in a position now to do that.

232   We would hope that there would be technical developments that would enable us to do it in the future, or that we would grow to the point where we would have the resources to do it in the future.

233   COMMISSIONER PATRONE: You know that this applies by the end of the licence term. Right?

234   MS ROBERTSON: Yes.

235   COMMISSIONER PATRONE: Do you still feel that by that point you wouldn't happen to have the capacity to fund that service, or have the technology that you were referring to up to the level where it could be applied in this case?

236   MS ROBERTSON: I guess it is going to depend on the licence term, too, isn't it?

237   COMMISSIONER PATRONE: Yes.

--- Laughter

238   MS ROBERTSON: I think, if the licence term is seven years, there is no question that we will, by that point, be able to have a solution.

239   If the licence term is two years, I am a lot less hopeful.

240   COMMISSIONER PATRONE: So you feel that an imposition at this point would cause undue harm.

241   MS ROBERTSON: It would be very difficult to do.

242   It would be very difficult to do.

243   COMMISSIONER PATRONE: Are you able to provide financial data supporting that?

244   MS ROBERTSON: Yes.

245   We have filed our monthly budget with the Commission as part of the materials today. It is appended to the presentation, and I think, if you look at the monthly budget, you will see that it would be extremely difficult for us.

246   COMMISSIONER PATRONE: What about audio description? You have also expressed that that would be an issue, as well.

247   MS ROBERTSON: Yes, it would be. At the present time it would have to be done by a staff member, and we do not have the resources to hire an additional staff member to do that.

248   COMMISSIONER PATRONE: But you understand that we are talking about audio description which is just the description of any graphic information on the screen, or numeric information, stock tickertape numbers, weather information, that kind of thing.

249   MS ROBERTSON: Yes.

250   COMMISSIONER PATRONE: It's not a separate audio track or a shot-by-shot description of action -

251   MS ROBERTSON: Oh, and I did not understand that. If it is limited in that way, I think that we could probably meet that requirement.

252   COMMISSIONER PATRONE: It would entail, basically, a cultural change of your station, just simply to have the talent read any information on the screen, because if you can't see the information on the screen, then you don't know what's going on.

253   It's just an opportunity for certain individuals to get the information that is on the screen without having to be able to see it, if you know what I'm getting at.

254   MS ROBERTSON: Yes.

255   COMMISSIONER PATRONE: What about your interactive voice response system as part of your customer service? Where are you with that?

256   MS ROBERTSON: I brought the materials regarding all of our accessibility...

257   COMMISSIONER PATRONE: As I understand it, Ms Robertson, Novus was in the process of getting upgrades done.

258   MS ROBERTSON: Yes.

259   COMMISSIONER PATRONE: Have those upgrades taken place?

260   MS ROBERTSON: Some have; some are still in progress.

261   COMMISSIONER PATRONE: Can you tell us what a disabled individual has access to if they contact Novus and require customer assistance?

262   MS ROBERTSON: We have closed captioning.

263   COMMISSIONER PATRONE: We are talking about phone information. Right?

264   I am talking about calling and requiring customer service information from your people.

265   MS ROBERTSON: TTY, teletypewriter users, can communicate directly with Novus Customer Care through relay service operators of their choice.

266   COMMISSIONER PATRONE: So they can contact you and they can access a customer service representative?

267   MS ROBERTSON: They can.

268   COMMISSIONER PATRONE: You are aware that the Commission has the option of imposing COLs on matters pertaining to customer service.

269   Is that correct?

270   MS ROBERTSON: I understand that.

271   COMMISSIONER PATRONE: I believe those are my questions, Ms Robertson. Thank you very much.

272   MS ROBERTSON: Thank you.

273   THE CHAIRPERSON: Okay, Ms Robertson, before I let you go, I want to walk you through again - I have the dates here now.

274   We made our decision regarding the Accessibility Channel in July 2007. So in July 2007 we told you that by January 2008, or whenever the Accessibility Channel was ready, you would have to distribute it.

275   It actually was not ready until January 2009, which was two years after our decision.

276   And then you actually started distributing it in May 2010, more than a year later.

277   So, in effect, three years after our decision that once the Accessibility Channel was up you should distribute it, you finally put it on the air.

278   You are telling me that it was because of a lack of available equipment from Motorola. We have no evidence of that, but as I mentioned at the outset, you struck me in your presentation as a very reasonable person, and you were very level-headed the way you answered questions, et cetera.

279   You know that you are on a shortened licence. You get a full licence if you - you have, since you have been put on a shortened licence, been living up to all of your obligations. As I just pointed out to you, you have done anything but in terms of the Accessibility Channel.

280   So what would be a reasonable renewal for you?

281   MS ROBERTSON: I'm sorry, could you repeat that question?

282   THE CHAIRPERSON: What would be a reasonable term of renewal for you in light of these facts, the fact that it took you three years to comply with something which we clearly told you had to be done.

283   And, yes, there may have been difficulties in obtaining the technical equipment, but I find it very hard to believe that it took three years to get the equipment.

284   MS ROBERTSON: With all due respect, we did contact the Accessibility Channel almost immediately, so that we could understand the technical requirements, and it is my understanding that we had great difficulty in accessing the equipment that was required in order to mount the channel.

285   We kept in constant touch with the Accessibility Channel. We wanted to work with them. And we actually hoped that they would be able to assist us with some of our requirements.

286   I think that we were put in a position where we did the very best we could with the circumstances that were presented to us. I don't think that we were dragging our feet. We were well aware of our requirements, and we are always aware that these are very important things to the Commission, and I can only say that we did the best we could under the circumstances.

287   And if there were shortcomings, I apologize for them, but I don't think that they were entirely our fault.

288   I would hope that -

289   THE CHAIRPERSON: You haven't answered my question yet.

290   MS ROBERTSON: I know.

291   I would hope that the Commission would look at our record over the past year, and the efforts that we have made to work with the Commission to ensure that we are meeting all of our requirements, and I would hope that we could have a seven-year licence. That would be my hope.

292   THE CHAIRPERSON: So you are telling me that, if you sat here instead of over there, you would say: Yes, I accept Novus' argument, and because of forces that were beyond their control, they were in breach, and they should have a full seven-year licence.

293   MS ROBERTSON: Yes, that is my hope.

294   THE CHAIRPERSON: Thank you, those are our questions.

295   We will take a 10-minute break before we start with Shaw.

296   THE SECRETARY: Mr. Chairman...

297   THE CHAIRPERSON: Yes, Madam Secretary.

298   THE SECRETARY: This concludes Phase I for Item 1 on the agenda. For the record, I have to say that we will now proceed to Phase II, in which intervenors appear in the order set out in the agenda to present their intervention.

299   For the record, no intervenors have requested to appear in Phase II for this item.

300   We will now proceed to Phase III, in which the applicant can reply to the interventions submitted in this process.

301   You will have 10 minutes for your reply, if you wish.

REPLY

302   MS ROBERTSON: I believe that I have addressed the issues raised by Rogers in their intervention. They have opposed our request for the conditions of licence, which we have discussed, regarding funding for the community channel, and relief from providing funding to the Local Programming Improvement Fund.

303   And I would simply repeat that, given the size of this particular BDU, the conditions of licence that we have requested are eminently reasonable, and that Rogers, in their intervention, seemed to have the mistaken notion that what we should have done, in the alternative, was to seek a revocation of our licence, which we are not able to do, and which we do not want to do.

304   That is my response to the intervention.

305   THE CHAIRPERSON: Thank you.

--- Upon recessing at 0927

--- Upon resuming at 0945

306   THE CHAIRPERSON: Madam Secretary, let's begin.

307   THE SECRETARY: We will now proceed with Item 2 on the agenda, which are applications by Shaw Cablesystems Limited and Videon Cablesystems Inc. to renew the Class 1 broadcasting licences of their terrestrial broadcasting distribution undertakings, serving various locations, expiring 30 November 2010.

308   Appearing for the applicants is Mr. Brad Shaw.

309   Please introduce your colleagues. You will then have 30 minutes to make your presentation.

PRESENTATION

310   MR. SHAW: Good morning, Mr. Chairman and Commissioners. I am Brad Shaw, Executive Vice President of Shaw Communications. It is my pleasure to welcome the Commission to Calgary to hear our cable licence renewal applications.

311   I am joined by Peter Bissonnette, our President; Ken Stein, Senior Vice President of Regulatory and Corporate Affairs; Jean Brazeau, Senior Vice President of Regulatory Affairs; Michael D'Avella, Senior Vice President of Planning; Jay Mehr, Group Vice President, Cable Operations; Rhonda Bashnick, Vice President of Finance; Alex Park, Vice President of Interactive Advertising and Programming; Michael Ferras, Vice President of Regulatory Affairs; Greg Kane, Legal Counsel; and also in the audience today with us is Jim Shaw, Vice Chair and CEO of Shaw Communications; Michael O'Brien, Lead Director of Shaw; Adrian Burns, Director; J.R. Shaw, Chairman of Shaw Communications; and, of course, my mom, Carol Shaw.

312   Shaw Communications is now the largest cable BDU in Canada, serving 2.3 million basic cable customers. We provide our customers incredible value, choice, and outstanding customer service.

313   Our customers have more choices and more services because we continually invest in our network and new technologies to meet their expectations and demands, in an increasingly competitive and complex communications industry.

314   Shaw's Vision Statement reflects our focus on customers, our commitment to developing high performance leaders, and our overall leadership within the industry. It reads as follows:

"We, the leading entertainment and communications company, deliver exceptional customer experience through outstanding people sharing Shaw values."

315   We are equally committed to our seven core values, which we proudly display in all of our buildings, signage, documents, e-mails - but, most importantly, it's the way we operate together. They are: balance, accountability, integrity, loyalty, customer focused, positive "can do" attitude, and team player.

316   Shaw is committed to the Canadian broadcasting system and the distribution of Canadian programming services. We are dedicated to building and maintaining a world-class broadband network across western Canada, northern Ontario and Hamilton.

317   We are constantly planning, designing and investing to ensure that we maintain our leadership role.

318   To give you a better sense of this, consider the fact that this is the last year we will use coaxial cable to build our outside plant. Fibre to the home has become a reality. Such technological developments will enable a fundamental shift in what we can deliver to our customers, including:

319   A more efficient compression technology, MPEG4, that has the potential of doubling our digital signal capacity and increasing consumer choice.

320   Set-top boxes based on the Tru2Way operating system, which, when deployed next year, will significantly increase the capabilities of a set-top box, such as interactive services, access to personalized services, enhanced HD user interface, and increased control and access to content.

321   Testing technology to deliver speeds of up to 1 gigabit per second for residential and small business in a low cost manner - speeds that were traditionally only available to business and institutional customers.

322   And for the first time we can effectively cross the barrier between delivery platforms for an enhanced viewing experience by providing the option to watch content over both digital cable and online systems in a seamless manner.

323   Like all BDUs, Shaw is facing tremendous challenges that are dramatically transforming the communications landscape. These challenges include the need to finance massive capital into our networks each and every year, to ensure we can meet consumer demand for content, HD services, speed, reliability, and customer service.

324   Since 2005 we have invested over $3 billion in capital expenditures alone, and over $7 billion since 2001.

325   As my father once said, the cable business is a licence to spend money, and he was absolutely correct. Each year we must invest to rebuild and expand the network, increase its speed and reliability, add new services, and develop new platforms.

326   We are driven to invest by the fierce domestic competition that we face each day, but at the same time we must also deal with the entry of new global competitors like Apple TV, Hulu, and Google TV, which threaten to transform the marketplace as we know it.

327   These foreign firms are not part of a regulated Canadian broadcasting system, and are looking to exploit any opportunity they find. They want to use their dominance in the broadband space to control content, advertising, and the customer experience.

328   These are huge competitive issues with which individual players in the Canadian broadcasting system, as a whole, must contend.

329   It is against this backdrop of investment, competition, both domestic and foreign, and rapid technological change that our licence renewal must be fully understood and considered.

330   Mr. Chairman, in order to continue making the massive investments necessary to provide leading edge digital and broadband communication services to Canadians, and to meet present and future competitive challenges, we need to have regulatory certainty.

331   Long-term renewals for our licensed cable systems are critical to provide confidence to our customers, industry partners and investors, and allow us to focus on maximizing our contribution to the system.

332   Let us be clear. Shaw respects the CRTC's rules and regulations. We believe we have taken the necessary steps to address the concerns expressed in the previous renewal and achieve compliance. Going forward, you have Shaw's commitment, and mine, to operating in full compliance with the Commission's rules and policies.

333   Finally, we are all tremendously pleased to have received over 250 interventions and letters supporting our cable licence renewal applications. We are very proud that these intervenors represent a broad spectrum of support: from new Canadians residing in communities we serve; customers; municipal, provincial and federal public officials; mayors and councillors; local charities and organizations; local sports teams and programs; schools and educators; local businesses; organizations promoting persons with special needs; access producers; and specialty broadcasters.

334   These intervenors have highlighted the significant contribution of Shaw and Shaw TV in their lives, their organizations, and to the communities we serve. These contributions include direct financial support of projects and charities, the use of Shaw's staff and technical resources for fundraising activities, involvement with student training programs, the provision of free high-speed internet access and web hosting, the production and broadcast of public service announcements, financial support and sponsorship for the Canadian Olympic athletes, including sponsorship of the Canadian Olympic Bobsled and Skeleton teams.

335   Shaw remains committed to providing our customers and the communities we serve with the most advanced broadband network, exceptional customer experience, and the widest available choice and value.

336   A full seven-year licence term will allow us to achieve these commitments.

337   MR. BISSONNETTE: BDUs have always played a critical role in the broadcasting system. Indeed, we are the backbone of the system.

338   BDUs must finance and build the broadband networks that reach Canadian homes and businesses to provide them with the leading edge entertainment and information services they need and desire.

339   In so doing, BDUs fulfil the objectives of the Broadcasting Act and the government's Digital Economy agenda.

340   Shaw has always played a leading role to ensure that our customers are connected to a reliable and extensive broadband network that offers tremendous value, choice and features.

341   We have also supported the Commission and the government's goal of transitioning the Canadian broadcasting system from analog to digital.

342   In the late 1990s, Shaw was the first BDU in Canada to offer a digital tier of pay television services.

343   Today, Shaw Cable has over 1.5 million digital customers, representing over 65 percent of our 2.3 million basic customers, and over 650,000 high-definition customers.

344   Since 2001, Shaw has added over 150 new digital services, and we offer almost 60 high-definition channels.

345   Shaw's digital phone service is now available to over 93 percent of our cable customers, and subscribed to by over 43 percent of them, another great achievement.

346   By constantly investing in our cable broadband network, expanding capacity, and offering new products, we are providing an invaluable service to our customers, to Canadian programming services, and to the Canadian broadcasting system.

347   Brad provided you with examples of how Shaw is employing new technologies to transform the customer experience. In addition to his examples, we are providing our customers with internet speeds up to 100 megabits per second, utilizing DOCSIS 3.0 technology.

348   This year we became Canada's first provider to trial Gigabit Internet technology delivered over fibre to the home, which will offer revolutionary speeds of 1,000 megabits per second.

349   We have also launched a new broadband player that allows Shaw customers to access video-on-demand content on their computers, and soon on Shaw wireless devices.

350   As a result of these developments and investments, we now have over 1.8 million internet customers, achieving the second-highest internet penetration among North American cable systems. This is not only to the benefit of the urban customer; we are also closing the broadband gap by providing high-speed internet service to small towns like Campbell River, British Columbia, Viking, Alberta, Elie, Manitoba, and Rainy River, Ontario.

351   As Brad indicated earlier, the landscape is changing dramatically as it relates to content, technology, and competitors. It is our commitment to continue to provide the Canadian broadcasting system with the strongest possible foundation for the future. To do this, regulatory certainty is essential.

352   MR. D'AVELLA: As competition intensifies and consumers have access to a greater choice of content across multiple platforms, both regulated and unregulated, the strength of the Canadian broadcasting system will be severely tested.

353   The importance of BDU investments in the network is critical, and Shaw must continue to innovate and invest in the network to remain competitive.

354   In this equation, Shaw's carriage and support of Canadian programming services is also critical to the success of the system. Without our continued investments in the network, Canadian programming services will not have the means to reach Canadian audiences.

355   Through our carriage of Canadian conventional, specialty and pay television services, we provide the means for Canadian audiences to connect to Canadian programming, and for advertisers to support the Canadian broadcasting system.

356   Each year Shaw provides hundreds of millions of dollars in affiliation payments to Canadian specialty and pay services. We also provide valuable marketing support through local avails and other initiatives.

357   In the last year alone, Shaw Cable contributed over $90 million to support Canadian program production, including $32 million to the Canadian Media Fund, $8 million to the Shaw Rocket Fund, $18 million to the Local Programming Improvement Fund, and $30 million to supporting local expression.

358   It is a fact that our investments and efforts to support Canadian programming services are critical to the success of the broadcasting system.

359   What is also critical is that Shaw has the regulatory certainty and confidence that comes with having long-term licence renewals, so that we can focus on dealing with the challenges of the future.

360   As Brad mentioned, these challenges are many, including unregulated over-the-top global players like Google, Hulu and Apple TV, that provide access to content over the internet and which potentially threaten the availability of digital rights to Canadian services.

361   In this regard, having a strong and positive working relationship with our programming partners is also very important to us. We continue to add new Canadian programming services and explore on-demand, broadband and mobile opportunities with them.

362   We have met with independent programming services, we have listened to their plans, and we are now negotiating to launch their services.

363   As noted in our reply to interventions, Shaw will be adding approximately 6 to 12 additional non-affiliated programming services in each system by the 31st of August, 2011 in order to be consistent with the CRTC's three-to-one rule for carriage of affiliated services. Not only will this commitment increase the distribution of Canadian services, it demonstrates that the CRTC already has clear and defined rules to govern and promote the distribution of unaffiliated services and that no new regulatory requirements are necessary.

364   In 2009, the Commission initially approved the distribution of the Seattle HD signals during the current term of our licence. Shaw is requesting that we be permitted to continue the distribution of Seattle HD signals.

365   We believe that the continued distribution of these signals in place of the Spokane HD signals causes no harm to the broadcasting system and their removal would be disruptive to our customers while achieving no clear policy objectives.

366   Shaw is committed to continuing its strong support of Canadian programming services and the broadcasting system across all our systems. The regulatory and operational certainty associated with full licence renewals will be beneficial to our customers, programming partners, producers, and viewers.

367   MR. PARK: Shaw recently participated in the community media policy review that took place in April. At that hearing, Shaw highlighted the many contributions that Shaw TV has provided to the various communities that we serve.

368   Each year, for example, Shaw TV provides important media training to hundreds of volunteers; over 10,000 hours of locally produced, locally reflective community programming; hundreds of local and access feature stories every day from across western Canada, northern Ontario and in Hamilton; weekly coverage of over 50 local municipal council, school board and committee meetings; 157 hours per week of public affairs programming; over 1,000 hours of programming focused on federal political issues but from a local perspective; critical in-depth coverage of major community issues, special events and local emergencies; coverage of local sports, local food, entertainment, lifestyle and adventure shows.

369   This year, in addition to our financial support of Canadian Olympic athletes, Shaw TV provided informative programming about the various venues and athletes participating at the Vancouver Olympics. For the Paralympic Games, we produced six half-hour programs devoted to profiles on Canadian athletes and their achievements, as well as the celebrations surrounding this event.

370   Shaw also provides two special programming channels in our Vancouver systems and in our Calgary system comprising a variety of third-language programming supporting local ethnic communities. We would be prepare to offer that service to all of our customers if the CRTC considers this would be desirable for the system.

371   As the record to this proceeding shows, Shaw TV has received overwhelming support from the communities we serve, including local access producers. At the same time, we appreciate that there were concerns raised about access programming at the community channel hearing in April and in some of the interventions filed in response to our cable renewal applications.

372   To show our commitment and leadership, Shaw has recently met with some of the access groups, such as one here in Calgary, NUTV, to discuss ways to accommodate more of their programming. We are also providing information online respecting training and volunteering opportunities with Shaw TV.

373   Shaw is compliant with all the regulations respecting the community channel, and, as stated in our renewal application, we have proposed new commitments respecting access programming.

374   Further, the CRTC has just recently issued its new community television policy that sets out new requirements for terrestrial BDUs respecting access programming. Accordingly, the policy concerns raised by intervenors have been addressed in the new policy and by Shaw's voluntary commitments.

375   Shaw has reviewed the CRTC's new community television policy and we are completely committed to its policy objectives.

376   MR. BRAZEAU: In 2008, the Commission issued a two-year renewal to Shaw so that it could review at an earlier date Shaw's compliance with the rules respecting the distribution of sponsorship messages on the community channel and the provision of notice of channel realignments to Canadian programming services.

377   The Commission also indicated that it wished to monitor Shaw's audit practices.

378   Shaw has taken the issuance of a short-term renewal very seriously and we have worked hard to meet all of our regulatory responsibilities and obligations. We are in full compliance on all these matters.

379   Moreover, Shaw has taken necessary measures and implemented processes to ensure we remain in compliance. For example, with respect to sponsorship messages on Shaw TV, we continue to monitor these messages and communicate with our access producers to ensure all messages comply with the CRTC's determination.

380   We also provided a status report to the Commission in December 2008 describing our efforts and processes to ensure compliance, and we have continued to file monthly compliance reports.

381   In terms of notice of channel realignments, Shaw has provided a minimum of 60 days' notice to Canadian programming service that have been moved, and in many cases more than 60 days. We have also implemented a sign-off process to ensure that all channel realignments will meet the 60-day requirement.

382   With respect to the audits, Shaw provided audits to all programming services whether or not they have an audit right in their existing agreement with Shaw. Audits are currently under way with over 44 programming services.

383   We are also very supportive of the CRTC's new accessibility policy to better serve customers with special needs. To this end, Shaw has created a special needs section on all our customer websites, performed audits of our websites to ensure our special needs functionality, created a one-button remote control solution to access DVS programming, provided ongoing training to our customer service teams, and have committed to begin providing 100 per cent closed captioning on Shaw TV.

384   Shaw is also a participant in the CRTC's DVS Working Group. We were very pleased that Accessible Media Inc. took the time to file an intervention in support of our renewal application and to recognize Shaw as a good business partner in helping AMI to meet its mandate.

385   Now in the notice of consultation announcing this licence renewal hearing, the Commission noted an issue concerning monthly payments to the Canadian Media Fund. As we explained in our deficiency response, Shaw was advised by CRTC staff that Shaw may be behind in payments to the CMF.

386   Upon investigation, Shaw determined that, although we had been consistently paying the CMF on a monthly basis, our payments were four months in arrears. This was an oversight. Once the matter was brought to our attention, we took immediate steps to investigate and a full payment was made to the CMF within five days.

387   It is also important to note that we have received a positive intervention from CMF confirming that Shaw is in good standing with its monthly payments and supporting a full renewal of Shaw's licences.

388   We regret this misunderstanding and we can assure the Commission we are current in our payments to the CMF and will continue to pay on a monthly basis.

389   Brad.

390   MR. BRAD SHAW: Mr. Chairman, we cannot stress enough how imperative it is our that cable systems receive full seven-year licence terms so that we can focus on the challenges that we face and help us play an important leadership role in the Canadian broadcasting system.

391   Without a doubt, the issuance of a short-term renewal has disadvantaged Shaw, created uncertainty and placed a significant administrative burden on us. While we have been successful in managing this added uncertainty, it is a situation that we do not want to have repeated, particularly as we move forward with the task of meeting the multiple challenges we are now facing.

392   As you have heard today, the Shaw team has taken the issuance of a short-term licence renewal extremely seriously. We expeditiously addressed all the concerns raised by the Commission in 2008, and, in fact, even before the CRTC issued its decision.

393   We are in full compliance with the terms of our licence and believe that a full-term licence renewal is warranted and in the best interests of the broadcasting system.

394   Shaw is totally committed to harnessing all our powers to ensure the success of the Canadian broadcasting system in the face of many new economic and technology challenges. Having the confidence and regulatory certainty of long-term licences for our cable systems is critical to both Shaw and to the Canadian broadcasting system.

395   We appreciate your time today and we would be pleased to answer your questions.

396   Thank you.

397   THE CHAIRPERSON: Thank you for your presentation.

398   So you end up on the note that it is absolutely essential that you get a seven-year renewal. Let's deal with the issue of non-payment. This is particularly dear to me. It was the first issue that I faced when I was appointed chairman.

399   I met with your CEO personally in order to resolve the issue. He had suspended payment and graciously agreed to resume them, subject to us working out the issue.

400   As you know, we had a task force, we had hearings on the issue, which eventually was taken out of our hand by the minister, and the CMF was reformed. So at the time you made the payments admittedly.

401   We then changed the regulation to make it absolutely clear payments are to be made monthly. That took place in September 2009. And yet I don't know what, if you did not. You fell in arrears. You had to be reminded you were in arrears. And just now, when you suddenly want something from us, you are coming up to date.

402   I must say, I find that not very confidence-inspiring behaviour. Surely making payments that you are required by law to make -- you know the amount -- it's a simple question of instructing your payment department to make them.

403   What happened here? What didn't these payments get made? Why did we have to come to you and tell you you are in arrears in order for you to make the payments which under law you are required to make?

404   MR. STEIN: Well, first, I would like to start on that, and Rhonda, our vice-president of finance, may want to comment on this particular situation.

405   The first point I want to make is that we have always been committed to funding and meeting the obligations to the CMF, and so that has never been at issue. Even when we did suspend the payments, there was never any question that we would make those payments. And Mr. Shaw did indicate that to you, and he also indicated to the standing committee, when we met in Ottawa, and then we resumed the payments.

406   What happened was that we then resumed the payments and the regulations were passed, due on a monthly basis. We were doing it on a monthly basis. What happened was that nobody indicated to us, and the accounting people didn't actually -- you know, they were told, Okay, start making the payments.

407   So there was an oversight in the sense of saying, Okay, we have got to make up the back payments. And so we were shifted out by a period of -- I mean, I think we were always paying -- in the process, we were always paying on an arrears basis. So we shifted a month, from instead of being three months in arrears, we then moved to four months in arrears, and that was never made up.

408   So then when -- we never got a call from the CMF. Jim and I met with the CMF. They never raised the issue. We met with the new chairman. It was never raised with us. And it was never raised with our accounting people.

409   We received a call from the CRTC to say that they had been contacted by the CMF to point this out. And so what we did was we immediately had the finance people look at it. They indicated we were in arrears, and we immediately made it current.

410   So we did respond to it as quickly as the problem was identified to us.

411   And it was not anything that was done with any kind of intent or any kind of objective of trying to get out of the payments or anything like that. We recognized the commitment that the government made to us, in terms of revising the CMF, in terms of dealing with the issues that we had, and that both the Commission and Mr. Mehr responded positively to the reviews that they undertook.

412   The structure they now have in place is a much better kind of structure. But all that flowed out of the policy thing. That had nothing to do with the fact that we were in arrears on that payment.

413   THE CHAIRPERSON: Mr. Stein, I absolutely agree with you CMF needed to be reformed. It was your action and that of Vidéotron that led to it. And I think we have a better CMF now than there was before. But it also was a point of central contention between you and the CRTC. And then for you to say, We have overlooked payments, is a bit difficult for me to accept, you know, and it was an oversight.

414   So what assurances do I have that you won't have another oversight?

415   MR. STEIN: Well, we have a monthly contact with the CMF, and we monitor it on a monthly basis. And Rhonda Bashnick, our vice-president of finance, makes sure that payment is made, as we do with all other payments that we make.

416   So that's now included as one of the payments that absolutely has to be made, including payments to the LPIF and the Rocket Fund, et cetera. There are a number of payments that are made in that way, and so -- you know, some of them aren't done monthly, but some of them are.

417   So we try to do it on a consistent basis. And we now have processes in place to address your concern.

418   THE CHAIRPERSON: You were here this morning when I had my conversation with Mrs. Robertson. I mean, this is the only tool I have to get your attention is not to give you a full renewal. I made it absolutely clear. We gave you a two-year renewal. There were several items from here. And this was in the responses you have an oversight.

419   But other than that, you have monthly contacts with the CMF. Basically, there's nothing I can rely on.

420   You say it's essential that you have a seven-year licence, if I understand it. And you mentioned, Mr. Shaw, in your outset that us giving you a two-year licence renewal had caused you considerable problems, for what I understood, administrative problems, too.

421   I didn't quite understand what were the administrative problems that the two-renewal caused.

422   MR. FERRAS: What we were speaking there, Mr. Chair, is just of the -- it's on page 15, we said the administrative burden. It really goes to what Brad said at the beginning.

423   Even before the 2008 decision came out, we really took the compliance matter very, very seriously. All of the issues, from sponsorship, to audits, to 60-days' notice, to HD substitution, we worked so hard to get up to speed, make sure we were in compliance.

424   When you get a two-year renewal, you barely get it and you are into the next year. And so what we were saying here is, in terms of trying to move the business forward and deal with the challenges that we face and the regulatory issues that are associated with those, when you also have to deal with the licensing process and the deficiency process, that is a very long and intense process.

425   That's what I get paid for, for sure, but it really does take a lot of time from the senior members to go back and make sure that they all understand what the issue are. Are we doing it? Let's set up processes.

426   So it's not really a negative, we are just saying it does take a lot of work. And to have another short-term renewal would require this table here and all of the people behind us to be constantly involved with these issues.

427   We think we have put in place really strong processes. I think your message has been received loud and clear by everybody, not just the regulatory department, but senior executives, operational people, and we just want to make sure that you understand that. In fact, that's why we have the folks with us that we have today.

428   MR. BISSONNETTE: And Mr. Chairman, just to make it clear, you have Brad's commitment, as he said in his presentation, that compliance is going to be met and that whatever processes are necessary within our company that they will be undertaken to ensure that on every issue with respect to our licence that we are in compliance.

429   THE CHAIRPERSON: I mean, you are entering into a major undertaking now buying CanWest, which will be interesting to discuss tomorrow. And obviously you want regulatory certainty, I fully understand that, from a business point of view. But put yourself into my shoes.

430   Assume I grant your wish and we say, Yes, you can have a seven-year, and there is a default in payments to the CMF, because that's what we are talking about, in two years, what happens then? Basically, I have to wait another five years before I can call you on the carpet?

431   MR. BRAZEAU: But Mr. Chairman, you did indicate that those payments are required and we understand they are required. We were making those payments on a monthly basis. The only question at issue here is the four months in arrears.

432   I mean, you know, to emphasize, this was really a misunderstanding. That's all it was. And as soon as we were made aware of it.... And if had been made aware of it sooner, the issue would have been resolved sooner.

433   And so that's all we are talking about here. We are not talking about the --

434   THE CHAIRPERSON: That doesn't answer my question, Mr. Brazeau.

435   MR. BRAD SHAW: Mr. Chairman, you know, certainly you are right, in business, you know, with seven years for us, and needing to focus on all the challenges ahead of us.

436   But, you know, at any one time you can bring us back in, and if we feel there's a regulation in place at any one time, if you feel we are not meeting conditions of license, that you have the authority to bring us back in and change those conditions.

437   THE CHAIRPERSON: Are you talking about a conditional seven years, too, conditional on you living up to your obligations?

438   MR. BRAD SHAW: Well, as I said, you have our commitment, and, you know, we --

439   THE CHAIRPERSON: I want some flesh on that commitment. I don't want just a bare-bones commitment, I want to make it meaningful. And if I understood you correctly, what you just suggested was essentially, you know, you have seven years conditional on living up to the terms of your licence.

440   Should there be a default, we can have a show costs hearing and can shorten that licence? Is that what you are thinking about?

441   MR. BRAD SHAW: No, it's not.

--- Laughter

442   THE CHAIRPERSON: Well, then, let's think about it. What's wrong with it? Wouldn't that sort of put some meaningful measure behind it?

443   Because, I mean, you give me your commitment. I'm sure you have every intention to live up to it, which, if you do, then it shouldn't cause any problem.

444   MR. STEIN: Well, Mr. Chairman, first of all, we seem to be before you more often than not, and we think that you can remind us of our commitments.

445   And I would say that we did take steps to correct the issues that we did have. And, as Mr. Ferras pointed out, we did take steps even before the last licence hearing to correct the issues that were there.

446   The problem with the conditional one is that it would really put us at a competitive disadvantage. It would be something that would be different and unique in the system. And we think that, from our point of view, it's not only in the interests of Shaw, but it's in the interests of the whole broadcasting system, that we have a system that serves over 3 million customers, that we have a certainty that we go forward, that, you know, we are on the same level playing field as everybody else. And so that --

447   THE CHAIRPERSON: You realize that you are asking for an exception right now. Normally, if we put somebody in a short-term licence, we expect them to come back here totally with a clean hand, we don't expect during that two-year licence to default on payments, you know. You are basically saying, Overlook our breaches because they have all been cured.

448   MR. STEIN: Well, we are saying it was an honest -- there was no intent to do anything different than comply with what the CRTC wanted us to do.

449   THE CHAIRPERSON: I mean, we will talk about the others in a moment. Right now, we are just talking about the payments.

450   Okay, I hear you on this. We will obviously have to reflect on what we do here. As I say, this really concerns me because, on the one hand, I want you to succeed. I understand Mr. Shaw's saying, I need certainty, I'm entering into a major venture. It is absolute.

451   On the other hand, I mean, you know, we have one tool. This is the one tool we have. I wish we had AMPs or other more flexible tools. We don't have it. And you basically are asking me, notwithstanding during the two years there were problems, to overlook them and give you a seven-year licence.

452   MR. KANE: Mr. Chairman?

453   THE CHAIRPERSON: Yes.

454   MR. KANE: I wonder if I could just add to the discussion because I think you have hit upon an important point with your reference to the amendments to the regulations.

455   I mean, I think it's significant that in amending the regulations, the Commission noted that during the calculation of the amounts that had to be paid there could be overpayments or underpayments and that you then gave licensees an opportunity to correct that by December 31 of any one year.

456   So there clearly is a contemplation that amounts could be in arrears during the payment period and as long as a company makes the final payments by December 31 of a subsequent broadcast year they are in full compliance with the regulations.

457   Now, we have said that what happened in this situation was completely inadvertent, that measures have been put in place to ensure that it won't happen again. But the fact is that companies will be having to calculate amounts and it will vary during a year. It could be under, it could be over, but by December 31 of the subsequent year they have to ensure that they are in compliance.

458   And, in fact, we are in compliance on a monthly basis, so we are well ahead of what the regulations enable us to do.

459   THE CHAIRPERSON: I must give you credit for a good presentation, but to suggest when you are several months in arrears you are in full compliance, I find difficult to accept. But let's move on to other issues.

460   I'm not quite sure what you meant and this is just a question of information.

461   On page 6 where you point out the various monies that you spent on the Canadian broadcasting system, the last after LPIF, and you say you spend $30 million to supporting local expression, what exactly are these $30 million about?

462   MR. D'AVELLA: That's specifically in reference to community programming.

463   THE CHAIRPERSON: Oh, that's community programming, okay.

464   Then one thing that you asked for is that we give you permission to spend money on ethnic and multicultural programming in some of the licenses in which you don't have that right now.

465   Explain to me a bit more what this is all about. I don't understand. Who would be receiving this money? Who would be producing this programming? How would it be put on your system?

466   I just want to understand what this is all about, first of all.

467   MR. PARK: Mr. Chairman, we currently, as a condition of licence, operate two multicultural services, one in Vancouver and one in Calgary. These are historically services that have been available to our customers for about 25 to 30 years actually.

468   The programming on those channels represents a multitude of languages, a multitude of cultural groups that program that service. That programming is made up ostensibly of locally produced programming in third languages or programming that is acquired by independent producers in third languages.

469   And that programming has been amalgamated and put together in one programming service both in Vancouver and in Calgary.

470   THE CHAIRPERSON: Just to conclude, as an example, so there is a special channel for this. What is it called?

471   MR. PARK: It's called the Shaw Multicultural Channel.

472   THE CHAIRPERSON: Shaw Multicultural Channel.

473   MR. PARK: Yeah.

474   THE CHAIRPERSON: You run it and you -- is this run more or less like the community channels that the ethnic folks produce? The staff can come to you and say put it on or do you finance it, do you buy it from them or how do you get the programming?

475   MR. PARK: It's financed very simply by the independent production community. They will sell certain forms of regulated advertising in those programs and it is ostensibly self-funding.

476   We provide a little bit of admin support to those groups but ostensibly those groups operate those channels on their own.

477   In Vancouver, as an example, we are now producing about 142 hours a week of programming in that area. 23 languages are represented in this programming. About 68 percent of that programming is international so that would be third-language programming from other countries. About 32 percent is locally produced in Vancouver with our multicultural -- a wide variety of multicultural communities in Vancouver.

478   In Calgary we operate a similar --

479   THE CHAIRPERSON: Okay. But in --

480   MR. PARK: Yeah.

481   THE CHAIRPERSON: You run the channel in Vancouver or Calgary, as the case would be. You buy that programming and put it on, et cetera.

482   Are you in charge of sort of the programming structure for that channel?

483   MR. PARK: We do not purchase the programming. The independent producers purchase that programming on their own and they bring that programming to us.

484   We work with them to schedule the programming so that there is a good deal of access and equitable access across all of those groups. And we support them on an administrative basis.

485   THE CHAIRPERSON: Is this in competition with OMNI for instance who has a channel in Vancouver?

486   MR. PARK: No, we don't believe that it is. We think it's very complimentary.

487   The Vancouver system, in particular, because of the wide diversity of multicultural and ethnic communities in that very large metropolitan area seems to be able to support a great deal of that kind of programming so we don't see -- and there is no negative intervention on this from that group.

488   THE CHAIRPERSON: The money you spend on this it's separate and apart from the money you spend on community TV?

489   MR. PARK: The service is really self-funded by the independent producers.

490   THE CHAIRPERSON: Right.

491   MR. PARK: Through access to advertising and some support.

492   THE CHAIRPERSON: It's not part of your 2 percent or 1.5?

493   MR. PARK: No, it is separate.

494   THE CHAIRPERSON: Rogers is not opposed to this?

495   MR. PARK: No.

496   THE CHAIRPERSON: They don't see this as a --

497   MR. PARK: No, there is no opposition.

498   THE CHAIRPERSON: Okay, thank you. That's about all I have.

499   Now, my colleague, Len Katz, has some questions for you.

500   Len...?

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

502   I want to build upon the conversation you had a few minutes with the Chairman. Obviously, track record and compliance goes a long way to achieving latitude and flexibility within the Broadcasting Regulations.

503   It is only when non-compliance occurs that additional obligations are put upon licensees in order to hopefully bring them back and promote the marketplace and the Broadcasting Act and things like the COLs that we imposed upon you, the shorter licenses, are all sort of band-aids for what might in fact be something that is more direct, and that is AMS. I guess the Chairman talked a bit about AMS a few minutes ago as well.

504   If the government did introduce amendments to provide the CRTC with AMS legislation, AMS approval, what would Shaw's view be?

505   MR. STEIN: Well, I don't think we would support that. We think that we are in a position for the Commission to -- we do think that we are in a position for the Commission -- we do think that the Commission has the ability to instruct us as to how to perform and how to be in compliance.

506   We think that there are provisions within the distribution regulations and that the Commission does have sufficient powers now to basically make sure that we are in compliance and that we are in accord with the regulations.

507   So we think that there are sufficient safeguards in place now to be able to -- to enable us to do that given a long term licence.

508   In fact, a long term licence is a commitment. We understand that it is a commitment from the company to the government and to the Commission that we will meet the obligations that are there.

509   So we don't see a need for other kinds of approaches to deal with the problems.

510   COMMISSIONER KATZ: So you would prefer, where there is a finding that there is breach, for us to continue to use conditions of licence, reporting of submissions on a monthly basis and short term licences --

511   MR. STEIN: No.

512   COMMISSIONER KATZ: -- as a vehicle to police, if I can call it that, the transgressions?

513   MR. STEIN: No. I think that our view of it would be that a long term rate licence renewal, along with the kind of provisions the Commission now has put in place over the last number of years with respect to undue preference, that the Commission does have the ability now within its powers to ensure that we do the kind of things that we have to do.

514   So we feel -- we are confident that over the next seven years that we will be in compliance with the conditions that you have set and the policies that you have set and that you had every opportunity to make sure that we will be in compliance.

515   COMMISSIONER KATZ: But if you are, why would you object to something that is less intrusive, if I can call it that, and more market oriented?

516   MR. STEIN: Well, because it would require legislation we of course would explore it in that forum in terms of what it would be.

517   But I think what we are always concerned about is administrative burden and what it means. We try to run hundreds of systems, small systems, et cetera, and we have to ensure that -- and that's the mandatory focus, that's where we focus on what we are trying to do.

518   I think that we have over the past five years developed systems within the company to ensure that the systems are in compliance.

519   How we do channel changes, for example, how we do audits. All of those kinds of things we put in place to ensure that we can be responsible to the Commission's policies and regulations.

520   We feel that doing it that way from a mandatory point of view, is much preferable than trying to go through legal recourses or administrative actions of other kinds.

521   COMMISSIONER KATZ: You have asked us to remove the conditions of licence on your reporting of sponsorships and then I quote here on page 12 of your submission of October 23rd. It says:

"Drafting monthly reports are a considerable administrative burden and no longer required in the circumstances." (As read)

522   That's what we are referring to. So you have recognized that it's a considerable administrative burden which is time and money and I guess, as well, other things that could be done that perhaps in fact might be more profitable to you than following up on these reports.

523   But when you say it's no longer required in the circumstances, what do you mean by that?

524   MR. STEIN: We now have a very clear understanding of what the Commission's understanding is of what kind of sponsorship measures we can put on the community channel and we have put in place a process to ensure that all such sponsorship messages are clear and they do not, you know, go into the area that could be called advertising or promotions.

525   Alex consulted with people in other domains to ensure that the procedures we put in place are consistent.

526   I would note that through this whole process nobody has filed complaints about our messages to this point and we have good support from our sponsors in terms of the new message formats that we have. So it's a win-win.

527   COMMISSIONER KATZ: Are you aware that there have been occurrences where hosts of Shaw TV have actually invited viewers to view certain pay-per-view hockey games?

528   MR. STEIN: I would think we would probably advocate people watching a lot of hockey games.

--- Laughter

529   COMMISSIONER KATZ: The question is whether it's your policy to allow in-programming promotions on Shaw TV, in a more general sense.

530   MR. PARK: Certainly, from an advertising point of view we have not done that with any third party sponsors or any sort of outside sponsorship message.

531   On occasion that may happen and we would certain review that, but certainly our vision and our understanding as well is that we do have the capability within our system to promote our own programming and our own programming services.

532   And we have done that on occasion.

533   COMMISSIONER KATZ: But it is a practice that you support?

534   MR. PARK: No.

535   COMMISSIONER KATZ: Okay. How do you make that non-support knowledgeable to those that host Shaw TV?

536   MR. PARK: If I could for a moment, I would like to take you through the steps that we have taken specifically during the two-year licence renewal to address this issue and to ensure that we have met certainly the compliance --

537   COMMISSIONER KATZ: Well, I understand the issue of your sponsorship. I read it in the evidence and I have heard it again this morning.

538   What I'm asking about specifically is how do you inform your commentators on Shaw TV that you do not support in-program promotions?

539   MR. PARK: What we would certainly propose to do would be to sit down with the hosts and with the various play-by-play commentators and to some degree everyone who is involved in the production, and communicate that very directly to them.

540   COMMISSIONER KATZ: Okay. My last question is actually in your submission as well of October 2003, and if I refer you to the last page I think it is, there is a comment that I found interesting. It says in conclusion, paragraph 74:

"...as the leading communications company in Canada it is in the public interest that Shaw be in the strongest regulatory position to provide service to its customers." (As read)

541   What do you mean by strongest regulatory position, having the most regulation or the least regulation?

--- Laughter

542   MR. BISSONNETTE: I think it's the most compliance actually.

543   It refers to being in compliance in all aspects of our licence.

544   COMMISSIONER KATZ: And having the full flexibility to run your business to meet your customer needs?

545   MR. BISSONNETTE: Absolutely within that construct.

546   COMMISSIONER KATZ: Okay.

547   Okay. Those are my questions, Mr. Chairman.

548   THE CHAIRPERSON: Thank you.

549   Rita...?

550   COMMISSIONER CUGINI: Yes, thank you.

551   Mr. Shaw and your colleagues, good morning and thank you for your presentation.

552   I have questions specific to the community channel commitments. So Mr. Park, I think I'm going to be addressing them to you. So we are both going to shift so I can actually see you.

553   I do note in your oral presentation this morning that you said you reviewed the CRTC's new community television policy and you are committed to its policy objectives.

554   Does that include as well the corrections that we issued on September 13th?

555   MR. PARK: Yes, it does.

556   COMMISSIONER CUGINI: In your application, in your original application you asked for authorization to devote not less than 35 percent of the programming distributed on the community channel in each broadcast week to community access programming. So I take it that you are now going to revoke that request --

557   MR. PARK: Yes.

558   COMMISSIONER CUGINI: -- and comply with the new policy. Thank you.

559   So both in terms of exhibition and the expenditure requirements for access programming?

560   MR. PARK: Yes, both of those.

561   COMMISSIONER CUGINI: Okay.

562   You did mention that you were obviously part of the whole process that led to this policy. So you know that -- it's not going to come as a surprise to you that Shaw TV didn't have the most stellar of reputations anyway as a result of those proceedings.

563   So I just want to go through a little bit of your process now for both recruiting of volunteers, for making your -- for what your outreach plans are to various groups so that we won't receive any more of those complaints.

564   Let's go through the type of training that you provide to the volunteers at Shaw TV. And just so you know, myself, and a couple of my colleagues had the privilege of touring your Shaw TV facilities when we were here for the Calgary Stampede so we had quite a bit of a discussion with the people at Shaw TV. So it was great for us to be able to see that firsthand.

565   But take me through what it is that you do in order to recruit and train volunteers.

566   MR. PARK: If we could, for the course of the two-year renewal I think we would be relating to reflect on what has actually happened within that period.

567   So within 2008 to 2010 across all of our systems that are currently up for our licence renewal we held 142 training sessions within that period of time.

568   828 volunteers were trained within that time on various aspects of production. Our current active volunteer list is just under 400 at 391.

569   Over 20 community dialogue sessions were held during that period.

570   We also -- in terms of promotion, two bill inserts per year within the licence period were utilized in all of our systems to promote access opportunities. Your requirement is actually one.

571   TV commercials promoting access and training classes and opportunities ran 77,399 times during the two-year period.

572   All of our access guidelines have now been posted on all of our local Shaw TV websites and actually in a number of our systems over the course of the licence period, the amount of access programming has increased quite dramatically.

573   So as an example, in Lethbridge it was up 101 percent in the past year, access programming.

574   So that's across all of our systems.

575   If we could I would like to talk specifically about Vancouver and the Lower Mainland. I know there were a lot of concerns and issues raised during that time.

576   Again, during the course of the licence period, non-assisted access programming -- so this is programming where actually we have little or no involvement whatsoever in the content or the production of that programming -- it made up 42 percent of our programming during the licence period.

577   We currently now work with five non-profit access television corporations in the Lower Mainland. We train them. We provide access to those groups.

578   We provide five hours of airtime per week for a total of 1,300 hours per year simply to those not-for-profit organizations. These groups all have access to training, whether that is through mobile production, electronic field production or studio production. That's available to all of those groups.

579   Since September -- and again this is in Vancouver and the Lower Mainland -- since September of 2008 we have provided 43 training sessions for those corporations alone and 44 separate training sessions for other community members, so over 85 training sessions for volunteers within the licence period.

580   From September 2008 to August 2010, 511 volunteers have gone through these training sessions.

581   Our current active volunteer roster in the Lower Mainland is 171 volunteers.

582   We have just launched two new weekly access programs this month.

583   We have launched eight new weekly monthly multicultural programs from seven different local producers, two of these shows. Two new shows, again, will be launched this month.

584   We have introduced closed captioning in our service on December 9th. We now close caption two and a half hours a day of programming within that community.

585   We have also partnered with Langara College and Simon Fraser University to provide access training to their students.

586   And finally we have committed to a major engineering project in the Lower Mainland that takes our entire Lower Mainland cable system and breaks it down into 14 specific local programming areas, allowing us to discretely program council meetings and other local content into those areas.

587   In our view, access and training and volunteer participation is not an issue in the Lower Mainland.

588   COMMISSIONER CUGINI: Mr. Park, are you able to quantify even in a percentage term how much of an improvement your efforts represent, so those efforts that you have just detailed to us in the last two years, how much of an improvement that represents over the previous term?

589   MR. PARK: I don't have that with me but would be happy to file that.

590   COMMISSIONER CUGINI: Okay, thank you.

591   You have been quite forthright in agreeing to comply with all of the requirements of the new policy. I take it that means you will comply with all of the reporting requirements as well?

592   MR. PARK: Yes, we will.

593   COMMISSIONER CUGINI: And that Shaw will in fact send a representative to work on the industry working group to develop best practices on access programming?

594   MR. PARK: Yes, that would be me.

595   COMMISSIONER CUGINI: I would think so.

596   Well, thank you very much. Those are my questions.

597   THE CHAIRPERSON: On this last point I have chaired the community TV hearing and it was a constant cause of complaint against BDUs but particularly against Shaw.

598   Now, you know people usually complain so it's not that by itself but the competitiveness with which the name of Shaw was mentioned was quite significant compared to the other one. That's why we asked for this -- started this follow-up group developing a code of best practices and you are going to be participating in it. I'm glad to hear that.

599   Do you see any problem of that making compliance with -- that code of best practices being made a condition of licence?

600   We suggested that in our decision because it seems to be that the behaviour of the BDUs varies considerably in terms of what they do and what they offer, et cetera. Hence, we wanted an industry-driven solution which we would then ask you to comply with.

601   MR. PARK: Well, certainly we have filed, I think with you in the last proceeding, our own guidelines and we are -- we will certainly work actively with the other BDUs to look at putting some form of standards together. Whether that becomes a condition of licence, I think, is a discussion point.

602   But we are absolutely committed to participating with the other BDUs to come to some general terms of reference for best practices.

603   MR. BRAD SHAW: We would have no problem with that.

604   THE CHAIRPERSON: Okay, thank you.

605   Marc, you had some questions?

606   COMMISSIONER PATRONE: Thank you, Mr. Chair.

607   Mr. Shaw, ladies and gentlemen, thank you for your presentation this morning.

608   You provided a handout which I appreciate this morning and in it you speak about customer care and special needs support. There is no reference that I saw -- I stand to be corrected -- to community TV in this and that's kind of where we are going to head in the next couple of minutes. If it's here perhaps I didn't see it or I missed it.

609   But specifically you did mention it during your oral presentation, specifically that of closed captioning of content on Shaw TV.

610   I believe, Mr. Brazeau, you spoke about it on page 14 where you said "have committed to begin providing 100 percent of closed captioning on Shaw TV".

611   And I guess I'm looking for a little bit of clarification around the words "begin providing" because as you are aware, there is a condition of licence requiring licence BDUs that operate a community TV channel to caption 100 percent of their original licensee-produced programming by the end of their next licence term. So we would be speaking about shows that specifically Shaw produces rather than the volunteer segment of your content.

612   Are you clear about that distinction and can you commit to that today?

613   MR. FERRAS: Yes, we can. Just to be clear we had in our last licence term in 2008, had made some incremental commitments towards closed captioning and, as we headed into this licence hearing and recognizing that the Commission imposes now a 100 percent commitment on licensees as they come forward, we have agreed to accept that commitment starting in Year 1.

614   So we couldn't be there obviously the first day of the new licence term but we will take some time by -- as quickly as we can within Year 1 we will be 100 percent.

615   COMMISSIONER PATRONE: Thank you.

616   You have indicated that implementing audio description as well in your community channel is prohibitive. Now, can you speak a little bit about that?

617   And are you clear about the distinction between audio description and described video?

618   Because there may be some lack of clarity around understanding that on audio description you are essentially talking about describing through voice over any information that's on the screen vis-à-vis graphic information, weather information, temperature, that kind of thing, rather than the other one, which is kind of a shot-by-shot description of action on the screen, which is -- and I see a head nod in the back and I appreciate that because there has been some confusion around those two services.

619   One, by all rights, shouldn't cost that much money. The other one, I realize, takes a separate audio track and so forth and that can be prohibitive.

620   Are you able to distinguish between the two and are you able to commit to audio description?

621   MR. PARK: Certainly, I do understand the distinction very clearly. I was actually part of the original DBS working group, so I do understand the distinction with respect to video.

622   COMMISSIONER PATRONE: Okay.

623   MR. PARK: We have done some work to begin to look at what those costs could be in terms of providing audio description.

624   In some cases, that could be a relatively simple process. In other cases, it could be quite complicated depending on the amount of visual information that is displayed on the screen at any given time.

625   As you are probably aware, there are certain cases where we are perhaps running local bulletin board services, community message type services, along with weather services. So we could find ourselves in a situation where there are a variety of pieces of information that would need to be described.

626   Our initial look at that in terms of cost -- and we have done some investigation over the last couple of weeks around services that would do that -- there are a couple of cost pieces to that.

627   There is certainly the physical presence of someone having to do the actual describing. There's the situation of perhaps having to record that for later playback, for editing and there are other costs built into that.

628   Our initial look at that, we believe, will be somewhere between $1.5 and $1.8 million per year to begin to describe some of the content on the Community Channel. So we have had some work at that.

629   COMMISSIONER PATRONE: That is an astounding figure, I must say.

630   You are saying that it could cost as much as $2 million to simply describe content that is written on the screen?

631   MR. PARK: Yes.

632   COMMISSIONER PATRONE: And I take it that as a result of that you are reticent about committing to that condition?

633   MR. PARK: Yes.

634   MR. STEIN: Well, we know that you mentioned that you would want to investigate that with us, and Alex has been doing quite a bit of work, as you said, with one of the working groups going at it.

635   But it is complicated in terms of real-time information, and therefore the adequate way of dealing with it would be through a radio broadcast in terms of providing that information. So it gets complicated.

636   It is not as much of a problem for ongoing standard kind of programming but for the kind of format that we use, it gets to be quite expensive.

637   But we are committed to looking at it and trying to determine how we do it, but it is premature to say that we could actually implement it overall at this time.

638   COMMISSIONER PATRONE: Okay. Well, can I ask you to commit to providing information, financial information on the cost associated with that particular service?

UNDERTAKING

639   MR. PARK: Yes, we would do that.

640   COMMISSIONER PATRONE: Your handout also does deal with customer service, which I appreciate, and I would like to talk a little bit about interactive voice response system, specifically the capacity for disabled persons to be able to access customer service.

641   Where is Shaw with that commitment?

642   MR. BISSONNETTE: Well, we actually have spent a considerable amount of time providing as many bridges, if you will, to our customers with accessibility issues.

643   On our IVR, I think come October we are going to have a dedicated line with a customer service representative, a live person that can actually -- that an accessibility-challenged person can actually get to.

644   We also have Amy, which is our interactive agent, and Amy is somebody that we introduced in the last year after several years of actually making her a bright person, and essentially any question that you can conceive of that would come from any of our customers, Amy would be able to handle.

645   And so we have created a significant database of Amy's responses and included in those responses will be those for accessibility.

646   As well, I think, on the IVR side there is an option that is available to our accessibility-challenged customers that can get them directly to a CSR.

647   COMMISSIONER PATRONE: Okay. It sounds like you are on your way there and I must ask whether or not you are in fact aware that the Commission has the option of imposing a COL on matters pertaining to customer service.

648   MR. BISSONNETTE: We are aware of that and I think what we try to do is take the initiative so that it is not necessary.

649   We realize that this is, frankly, a customer service issue and to the extent that we want our customers to be calling us instead of somebody else, we are going to do everything we can to make it as simple as possible for them.

650   COMMISSIONER PATRONE: Thank you very much.

651   Those are my questions, Mr. Chairman.

652   THE CHAIRPERSON: Peter?

653   COMMISSIONER MENZIES: Thank you.

654   I want to talk about the request for amendments to the COLs on four-plus-one's for a minute.

655   What is the difference between Spokane and Seattle in terms of the feeds, in terms of programming, what percentage difference?

656   MR. D'AVELLA: Well, the prime time programming is essentially the same. The off prime time programming would obviously be different.

657   But as far as prime time programming is concerned, which is essentially the main reason for carrying four-plus-one, it would be essentially the same.

658   COMMISSIONER MENZIES: So how would it be disruptive to change the HD signals from Seattle to Spokane?

659   MR. D'AVELLA: Well, we have configured our network and we have built our systems around getting the Seattle four-plus-one. So all that technology has already been invested, systems have been put in place.

660   Customers have become accustomed to -- you know, you might find this a little odd, but they are now watching Seattle news that they actually want to watch as a lead into a particular prime time program.

661   Anytime we make any of those types of changes, particularly with a PBS station, it tends to be fairly disruptive.

662   COMMISSIONER MENZIES: I could understand with a PBS station, but if -- I can understand that it is disruptive to you. I don't quite understand how it is disruptive to subscribers or citizens to the extent that they would somehow suffer a major inconvenience because they can't see the news delivered live from Pike's Market as opposed to Chelani.

663   MR. D'AVELLA: Well, in our experience, whenever you change a network feed -- and you may argue that the network feeds are more or less the same -- it always generates calls. It is not a simple matter of taking the CBS station out of Spokane and replacing it with Seattle or vice versa. It generates calls.

664   We have taken the view that it is an unnecessary change at this stage given that we have already established the Seattle four-plus-one as sort of the main -- it is the same time zone as well, so it has become more or less the accepted feed.

665   COMMISSIONER MENZIES: Okay. But on that you are essentially getting three sets of four-plus-ones that way, and your argument is that does no harm, except for the fact that everybody else will want one then.

666   MR. D'AVELLA: Just bear in mind, you know, we carry the Spokane four-plus-one because we have carried them forever. They were the only signals that we could actually provide in the early days. So they are analog signals and they have been ever since we were authorized to carry them.

667   At the time -- and you know the history -- at the time we launched the HD, Spokane wasn't ready. So from a time zone point of view, Seattle was really the only option we had.

668   So those two are -- you know, they are largely the same. Now, you could argue, well, just pick one. And if we need to do that we will pick one and we will probably end up replacing all the Spokane signals with Seattle, which would disrupt analog customers to some extent as well.

669   COMMISSIONER MENZIES: Can you clarify which systems aren't yet capable of carrying the Spokane and at what point they will be?

670   MR. D'AVELLA: I believe they are all there. I think that is the case, Mike.

671   COMMISSIONER MENZIES: So they are all capable now, there is no longer a technical issue?

672   MR. D'AVELLA: There is no longer a technical issue. We would still have to, you know, implement the changeover. So there would be, you know, an implementation issue.

673   COMMISSIONER MENZIES: Okay. While we are at it, can you help me understand the history as to why you stayed with a basic four-plus-one signal from a different time zone, which essentially shifts prime time in Calgary and Edmonton an hour later than you get in other parts of the country which -- okay, start with that.

674   MR. D'AVELLA: Well, in the early days -- and I do date back to the early days -- there was never really an opportunity to take a mountain time four-plus-one. You know, we have to go as far south as Denver and that was prior to actually having sort of satellite distribution.

675   I don't think any of the stations in Montana would have been able to sort of fill the bill at the time. So Spokane was the only option and we went to great lengths to microwave those signals over the mountains into Alberta.

676   COMMISSIONER MENZIES: Okay. My next question is, what kind of impact does that have on the broadcasting industry? I mean you have some interest in that now when you shift prime time an hour later.

677   MR. D'AVELLA: Generally speaking, the Alberta broadcasters will program to essentially the four commercial stations out of Seattle. So simultaneous substitution is respected and honoured in that particular case.

678   They have always done it. They have become used to it. It's not -- it doesn't affect their operations.

679   COMMISSIONER MENZIES: So there is no negative impact on their ability to build the audiences they might otherwise built in a regular prime time?

680   MR. D'AVELLA: No. No, there's no impact on them whatsoever.

681   COMMISSIONER MENZIES: Okay. In regards to the prime time programming in your eastern-based four-plus-one's, how do you compensate -- how many of your subscribers do you think are regularly watching because of the time difference?

682   Because there is a three-hour time difference, right, if your second set of four-plus-one's is Detroit, sometimes Rochester, that sort of stuff, while your basic four-plus-one's are coming out of the Pacific time zone. So there is a three-hour difference.

683   So there is a show that is available at 9:00 on -- pick a network -- Global and it is also available at 6:00 on W-something in Detroit, right. I can watch that program then without simultaneous substitution. I can tape that program then.

684   What kind of impact does that distant signal, that time difference, have on the broadcasting industry and/or how do you compensate them for that lost audience?

685   MR. D'AVELLA: Well, we certainly compensate them in the form of distant signal compensation. So the broadcasters are paid. The money is still collected by the CAB.

686   In terms of viewing habits, you know, it's one of several ways to time-shift. People have PVRs. They can time-shift through a PVR if they want to.

687   Time-shifting has become certainly from a cable point of view, perhaps also from a satellite point of view, it has become a valuable feature for customers and it would be difficult to remove it.

688   But, you know, it's a three-hour time zone difference because we are programming east towards the Pacific.

689   Generally, if "Survivor" is going to air at 6:00, it is kind of competing with the local news and people would actually prefer to watch the local news.

690   So you will get some leakage in terms of viewing. We can't quantify it. I don't think we have the data to quantify it.

691   But most of the viewing, we think, still takes place in prime time on those particular networks for major network programming.

692   COMMISSIONER MENZIES: Okay. On the Fort McMurray licence, what is the history behind the situation there with the Detroit NBC station on basic and does that mean that that station is going prime time at 5:00 and the others aren't or how does that work? How has it worked?

693   MR. MEHR: I am afraid we don't understand how that became the NBC signal in Fort McMurray but it has been that way forever.

694   COMMISSIONER MENZIES: So no one knows? Is it known onto God only that the NBC --

695   MR. MEHR: Well, no. As you can appreciate, as four-plus-one's were launched in various communities, they were launched because there was access to certain signals in certain ways, and that is the signal, that is the NBC signal that we have carried in Fort McMurray.

696   We haven't received complaints about it or objections.

697   COMMISSIONER MENZIES: But its prime time begins --

698   MR. MEHR: Early, yes.

699   COMMISSIONER MENZIES: -- early? It is like a distant signal?

700   MR. BISSONNETTE: It goes back to prior to our actual ownership of that cable system.

701   COMMISSIONER MENZIES: Okay.

702   MR. BISSONNETTE: In the mid-80s NBC Detroit signals were, you know, certainly attractive because they created some time-shifting and in some of our smaller systems that still exists today because they are popular.

703   COMMISSIONER MENZIES: Okay. So what is the purpose of changing it now? Because it is obviously going to be disruptive to your customers who are used to watching NBC from Detroit and you are going to take them to Seattle or Spokane.

704   MR. D'AVELLA: Well, I mean, our objective here, especially with the HDs, is to make sure that we have a common set of HDs. That one is obviously an anomaly.

705   They will still have access to an Eastern time zone NBC feed. So they will still have time-shifting. But the NBC network programming is going to be pretty much, you know, in our prime time or Pacific time prime time.

706   COMMISSIONER MENZIES: Okay. Would you still want this amendment if the Commission decides not to extend the COL regarding the use of HD Seattle?

707   MR. BISSONNETTE: It is our preference to continue it because of, you know, the impact it has on our customers, and so from a customer point of view we would like to do it because it will result in no change. No change is really good for our customers.

708   I don't know if any of you lived in Vancouver when "Casey McKeough" was moved. Back in the old days, in 1981-82, it was moved from a couple of channels and it created just an outlandish response by moving it from a couple of channels.

709   So there are customers who actually see it as a negative with respect to moving things. So to the extent that we don't have to do that, that would be a positive.

710   COMMISSIONER MENZIES: No, you don't want to change from Seattle to Spokane. I understand that.

711   But do you still want the amendment on Fort McMurray on the NBC regardless of the outcome of that decision?

712   MR. STEIN: Yes. You know, in terms of going back to the historic parts of all this, of course, Spokane was unique because of the microwave situation with respect to getting that signal in Alberta, and then with satellite services there was more flexibility involved in all this.

713   But the key issue from the broadcasters -- and I think we had lots of discussions about this in the 90s -- was essentially they wanted us to bring in signals that had no impact on the local market. So, you know, whether we have Spokane or Seattle does not have an impact on the local broadcaster.

714   So therefore, what we would be doing if we removed the Spokane signals is disadvantaging customers who want to see those signals but not really providing any advantage to the local broadcaster.

715   The way in which signals have always been treated in the local market has always been dependent on, you know, the impact on the local broadcaster. In this case, we wouldn't see that.

716   Now, distant signal, of course, that is another issue and that, of course, is subject to negotiations which we will undertake over the coming months.

717   COMMISSIONER MENZIES: Just so I understand, it would now be technically feasible to be taking your basic four-plus-one's from, say, Denver, but the reason you haven't changed is just because it would be disruptive to people who have -- the pattern of their lives has developed along as it should be because of the Spokane news?

718   MR. STEIN: That is correct.

719   COMMISSIONER MENZIES: Okay. In your Winnipeg operation, your basic four-plus-one set, near as the information I have, includes CBS and NBC from Minneapolis, ABC from Grand Forks, and Fox from Rochester.

720   Now, that sounds like a Fort McMurray situation, except just one-hour difference instead of two getting the Fox signal from Rochester; is that right? Does that mean prime time in Winnipeg on Fox is an hour earlier?

721   MR. MEHR: The prime times there are all aligned. The Grand Forks signal is on an Eastern time zone.

722   COMMISSIONER MENZIES: The Grand Forks signal is on an Eastern time zone?

723   MR. MEHR: Yes. That is just how the American networks have lined up --

724   COMMISSIONER MENZIES: And the Minneapolis signals are on an Eastern time zone as well?

725   MR. MEHR: Yes. Yes. So it is a single time zone. So the programming is at the same time.

726   COMMISSIONER MENZIES: Okay. Despite the fact that the signals are in Central and Eastern time zones, they still broadcast on Eastern in Minneapolis?

727   MR. MEHR: Yes. Where you hear 7:00 Eastern, 8:00 Central, on the advertising program, that is how they adjust their line-up.

728   MR. STEIN: Americans only run two time zones.

729   COMMISSIONER MENZIES: Americans only run two time zones?

730   MR. MEHR: They adjust their broadcast schedule so they run on two time zones.

731   COMMISSIONER MENZIES: Oh! Okay. Their broadcast system runs two time zones?

732   MR. MEHR: Yes.

733   MR. STEIN: The real people live on four, but --

734   COMMISSIONER MENZIES: Okay. So in the real world, we have this many time zones, and in your world, you have two?

735   MR. STEIN: I think it's because it was a Canadian invention or something.

736   COMMISSIONER MENZIES: Ah! Okay.

--- Laughter

737   COMMISSIONER MENZIES: Okay. Nice ties, gentlemen. Thank you.

738   THE CHAIRPERSON: Back to the four-plus-one. If I understood you correctly, you said there is no reason anymore for carrying Seattle, you can bring all of Spokane in, either in HD or in digital; is that correct?

739   MR. D'AVELLA: That is correct.

740   THE CHAIRPERSON: So then when you say you don't want to disrupt customers, is that really true? Isn't this driven by sports? Do they carry different sports channels and therefore, by you now having a triple offering rather than a double offering, you in effect are more appealing?

741   MR. MEHR: There is no material difference in sports team coverage between Spokane and Seattle. They cover the same teams. The difference is primarily PBS and connection with the communities from the services you have watched for 30 years.

742   THE CHAIRPERSON: So if we say we gave you this exception because technically you couldn't do HD before, but now that you don't need it anymore, choose either Spokane or Seattle, what would you do? If I understand correctly, you would go all Spokane?

743   MR. BISSONNETTE: That is where the rub is, Mr. Chairman, because there is history.

744   Spokane signals are indigenous, if you will, to Alberta and they have been carried on the basic service for that long. But the HD signals have not been Spokane signals, they have been Seattle signals and people who watch HD tend to always watch HD and they are kind of used to the personalities they see coming out of Seattle.

745   THE CHAIRPERSON: No, I understand how it arose, but I mean we did this basically to accommodate you because of technical impediments. They are no longer there.

746   So why should this exception then be grandfathered? Because it gives you an additional advantage. You are effectively, as my colleague said, carrying three four-plus-one's rather than two.

747   MR. FERRAS: Well, when we applied for this, Mr. Chairman, in 2009 to get this condition which the Commission approved, we provided some analysis that the Commission requested in terms of the amount of common programming and unduplicated programming and it was about 85 to 90 percent of the programming was identical.

748   Because they are coming from the same region, the same time zone, they covered the same major sports. That is on the record with you. The difference was the syndicated daytime programming.

749   I also would just point out that in your decision approving that, you also noted that and you thought -- you noted the technical concerns but you also noted that there was not a lot of impact on the system.

750   And then finally just to say that we didn't have a single intervention opposing this in this application or in the small application that we filed just to sync up administratively on this four-plus-one issue.

751   THE CHAIRPERSON: And what do we say to Rogers when they want something similar?

752   MR. FERRAS: Well, I think it's just the situation that we faced ourselves in historically that those -- it's a historical situation that I don't think at this point would ever apply again because virtually every station in the United States now is HD.

753   THE CHAIRPERSON: I understand making an exception and grandfathering, but surely it's for a purpose. The purpose is no longer there. I haven't heard a rationale, but anyway, I think --

754   MR. STEIN: Can I just make one more point then?

755   The thing is the rationale we would use is just basically that one of the biggest problems we have dealing with customers is changing anything, right, and so what we are saying is if there is no broadcasting system reason to make the change, then we would just leave it the way it is.

756   We are not saying that that is something that we would expand or even support into all different kinds of markets.

757   We are just saying that that is the situation that we face here and that that is what people have become used to, and to change it and just say, well, we just dropped the Spokane signals because the technical impediments aren't there just could lead to some concerns in the community that well, why are you doing this?

758   So that is why we want to apply for the extension. It is not doing any harm.

759   THE CHAIRPERSON: Except your colleague says the programming is 90 percent the same.

760   MR. STEIN: We will deal with that tomorrow, I guess.

--- Laughter

761   MR. BISSONNETTE: The news actually is different and that is why. You know, it's the news personalities that seem to create the flavour of the channel and so that is what would change.

762   THE CHAIRPERSON: Okay. Just one point of correction. Mr. Kane suggested that you were making payments on time.

763   Just for the record, the payment for the month of September 2009 was made in January 2010. The required October 2009 payment was paid in February 2010. Then in March you caught up and made all the payments.

764   So to say that you were in compliance and made monthly payments on a regular basis, in light of that record, is just not true.

765   What we do about it is obviously something we have to reflect.

766   Lastly --

767   MS BASHNICK: For the record, we were making monthly payments throughout. There was a period back in 2007 that we stopped making payments and when we restarted we continued to make monthly payments. We have never missed a monthly payment.

768   What had happened was we had never caught up and so we did do that catch-up upon us being notified, you know, within the five days. So we were always making monthly payments.

769   THE CHAIRPERSON: Well, the table that I have shows what I just read out to you. If that is incorrect, then please file me the information that you claim.

770   My table shows clearly that the payment for the month of September 2009 was made in January 2010. The October 2009 payment was made in February 2010.

771   If you are telling me that is not true, I would like to see evidence of that.

772   MR. STEIN: Well, we can review the information that you have, but I think what we are saying is we paid monthly, we paid every month, but what was at question was the fact that we were four months behind and when that was brought to our attention, that is what we corrected.

773   We are not trying to depend on any --

774   THE CHAIRPERSON: Sorry, when you say you were four months behind, you paid the amount that you should have paid four months ago?

775   MR. STEIN: Well, we caught up.

776   THE CHAIRPERSON: I know you caught up. That is not in dispute. I am delighted you have done that. That is not the issue.

777   I just meant what was happening is looking --

778   MS BASHNICK: Back in 2007 when we had stopped making the monthly payments, we stopped for, I believe it was three months.

779   THE CHAIRPERSON: M'hmm.

780   MS BASHNICK: At that time we were paying a month in arrears. Then when we restarted, we just continued to make monthly payments. So we just restarted the regular --

781   THE CHAIRPERSON: When you say we continued monthly payments, the monthly payment that was due that day or that was due three months ago?

782   MS BASHNICK: At that time it was the four months in arrears but we continued to make monthly payments and --

783   THE CHAIRPERSON: You continued to make monthly payments four months in arrears until we pointed it out to you and you made a catch-up; is that what you are saying here?

784   MS BASHNICK: Immediately upon being notified of being in arrears on the four months, we did do the catch-up and, you know, we are just -- we are surprised that it wasn't brought to our attention earlier. We certainly would have caught up as soon as we knew about it.

785   THE CHAIRPERSON: Lastly, something totally unrelated to this.

786   I heard you say in your opening statement, Mr. Shaw, that you are offering now VOD to your customers on the computer so that the customer can either do VOD on Shaw Cable or can watch it on the Internet.

787   That doesn't apply to Shaw television customers, which I am one of them. Is there any intention to offer that one day to Shaw satellite customers?

788   MR. BRAD SHAW: It is certainly our goal to continue to expand our product offering and we have some neat things we are working on for our Shaw Direct customers.

789   THE CHAIRPERSON: Well, you know, as a satellite customer, one of the real disadvantages is you don't have VOD.

790   MR. BRAD SHAW: That is right.

791   THE CHAIRPERSON: So it would be neat if at least you could, as a Shaw customer, see it on the Web as part of your monthly payment that you make as a television customer.

792   MR. BRAD SHAW: Yes. Well, you will be happy to know we have some exciting things close and it is in regards to VOD.

793   THE CHAIRPERSON: Good. Okay, wonderful.

794   Thank you. I think that is it. Thank you. We will take now a five-minute break and then we will listen to the intervenors.

--- Upon recessing at 1116

--- Upon resuming at 1128

795   LE PRÉSIDENT: Madame la Secrétaire.

796   THE SECRETARY: We will now proceed to Phase II, in which intervenors appear in the order set out in the agenda to present their intervention.

797   For the record, the Commission has been advised that the Independent Broadcast Group, le groupe de diffuseurs indépendants, and Pelmorex Communications Inc., listed on the agenda, will not be appearing at the hearing.

798   We will now hear the presentation of the Canadian Association of Community TV Users and Stations, CACTUS, who is appearing via videoconference from Gatineau.

799   Please introduce yourself for the record, and you have ten minutes for your presentation.

800   Thank you.

INTERVENTION

801   MS EDWARDS: Hi, my name is Catherine Edwards. I think I have met all the Commissioners before, in the spring.

802   CACTUS represents the views of Canadians and independent community television channels and producing groups that believe that participation in the broadcasting system by ordinary Canadians is fundamental to Canadian democracy. While Shaw honoured the spirit and intent of the CRTC's Community Channel Policy up until 1997-25, CACTUS does not consider that it has done so since.

803   As we elaborated at the Community TV Policy Review this spring, Shaw has abused the spirit of the Community TV Policy since 1997 by classifying magazine programming, in which members of the public are interviewed but have no editorial control, as access programming.

804   The systems in western Canada produce almost exclusively staff controlled news magazines, as was validated by the CRTC's audits for the years 2002 through 2005.

805   Members of the public in Campbell River, Courtney, B.C., Calgary, Winnipeg and Nanaimo say they have approached Shaw with ideas that do not fit this news magazine format and have been turned away.

806   While a handful of persistent groups on the west coast have given their videos to Shaw for playback under the 2002-61 policy, most received neither production nor financial support. As we heard at the hearings of all the offices that were once available throughout Vancouver, only the downtown tower now has full facilities. We have heard that the studio, for example, is just a warehouse with not even a writing grid.

807   Would-be producers in Fort St. John and Nanaimo have even been told that if they find sponsors to help defray their own costs, they have to turn over between 50 and 60 per cent to Shaw.

808   These groups have also faced frequent censorship, including both the removal of content deemed offensive by the cable operator without consultation, as well as the position that advertising content acts as programming.

809   Shaw's training programs, where they exist, tend to be offered to media students and rarely to the general public.

810   And as we elaborated in our submission to 2009-R661, Shaw operates its community channels as regional networks. Its online programming schedules indicate that significant amounts of production occur only in Vancouver, Calgary, Edmonton, Saskatoon and Winnipeg.

811   Even these channels share considerable amounts of programming, particularly interprovincial sports. Smaller communities see the Community Channel programmed largely from provincial hubs where the bulk of levy money collected from subscribers for local expression is spent.

812   To illustrate this pattern of consolidation, the left column below lists all communities within Shaw's current licence areas that had their own studios according to the Matthews' Cable TV Directory in May of 1999. There were seven in Manitoba, ten in Alberta and thirty-four in B.C.

813   The middle column lists communities where we have been able to confirm that there are studios today; a total of about ten for all three provinces, or a drop of over 80 per cent.

814   And finally, the right column lists the 22 separate licences that Shaw is asking that you renew. In each licence area it has committed to between 35 and 50 per cent access production, training four times a year, and a minimum of one yearly advisory meeting.

815   We would ask how Shaw plans to meet these requirements in licence areas that no longer have studio facilities. Where can residents tape a program? Where can training be held? Will Shaw re-open studios in these licence areas?

816   For the more than 20 communities that may have lost studios because their licence areas have been consolidated in the last decade, we ask whether the Commission considers that Shaw is honouring its Community Channel obligations by offering residents a single access studio for each of these large licence areas.

817   As noted in 2010-623, increases in spending on Community Channels has outstripped inflation over the last decade.

818   Does the Commission accept that over this period Shaw has closed more than three-quarters of the facilities at which western Canadians used to access their broadcasting system?

819   Must residents of Thompson, Flin Flon, Portage, Morden and Altona drive to Winnipeg to meet with staff, access training, borrow cameras, book studio time or use an edit suite?

820   Is it reasonable for residents of Penticton, Kamloops, Vernon and Merritt to drive to Kelowna and residents of Hope, Nelson, Fernie and Castlegar to drive to Cranbrook?

821   Given that all cable subscribers pay equally for local expression, CACTUS considers this unacceptable.

822   Since 2010-623 states that systems of more than 2,000 subscribers should benefit from a Community Channel, even if they are exempt, will these studios be re-opened?

823   And we would request clarification from the Commission which of the communities whose studios have closed are part of larger licensed areas today than they were in 1999 and which are exempt, so that residents of these communities can know their rights.

824   Without addressing these station closures, the access expectations of the new policy are meaningless. We therefore would request that BDUs be required to report their access programming expenditures and activities by licence area and by community within those licence areas not as a single annual return per company.

825   CACTUS has also been informed that Shaw has destroyed the pre-1997 community programming archives in both Calgary and Winnipeg. That is over 30 years of social, political and cultural history gone for two of Canada's largest cities.

826   We assume that the programming archives for the communities where studios have been closed are also gone; but if not, we would ask that Shaw donate unwanted archives to local libraries to protect them for future generations.

827   One of the reasons cited for Shaw's temporary licence renewal in 2008 was concern about access to its community channels. We do not believe that Shaw's management of community channels has improved, despite what we heard this morning.

828   The clearest example with regards to deterioration of community programming is in Campbell River since the system was purchased by Shaw in 2008. At that time the Commission wrote:

"Shaw has committed to maintain and exceed the commitments made by CRTV to the CRTC. Shaw will also undertake capital improvements to upgrade the community programming facilities and will continue to support training and volunteer programs." (As read)

829   Today the studio sits empty most of the time, where once it was busy with over 30 volunteers. Half the staff have been cut and there are no volunteers.

830   There was multiple full length programs that originated from Campbell River weekly. Shaw's staff now produce one or two segments, a few minutes long, each day, which they mix with segments from other parts of the island.

831   Shaw states in its response that Campbell River is exempt. But since the system has more than 2,000 subscribers -- it has in excess of 13,000 -- the access and training policies of 2010-622 should apply.

832   The same failure to honour the conditions of sale occurred in Chilliwack in 1999.

833   Shaw committed to provide an excellent local community programming service with volunteer participation and increased access for many community groups.

834   The Chilliwack studio has also since been closed.

835   Complaints about censorship by Shaw continue.

836   For example, a complaint to the CRTC by Don Walchuk of ICTV in Vancouver is pending regarding a refusal to air a program dealing with the Israeli-Palestinian conflict.

837   In the fall of 2009 Shaw refused to play programs in which the TELUS logos appeared.

838   Despite the requirement in 2002-61 that cable licensees should have public advisory boards to determine the scope and types of programs that best serve the needs and interests of the community, CACTUS is not aware that any Shaw system has ever maintained such a board.

839   In fact, although the company claimed at the Community TV Policy hearing this spring that it had staged public meetings throughout its system -- and Mr. Park just reiterated that a few minutes ago -- it was the first in 16 years in Vancouver.

840   When Mr. Tan of Access TV asked if members of the general public could attend, he was told that they could not.

841   Furthermore, although those present were encouraged to engage in ongoing dialogue with Shaw, emails from Mr. Tan to continue discussion since that meeting have gone unanswered.

842   We conclude that in light of the fact that Shaw had not complied with existing community channel policy, despite several audits by the CRTC and the issuance of temporary licences in 2008, CACTUS has no confidence that Shaw will follow the new Community Television Policy, which has even higher access expectation, nor confidence that the CRTC is willing to use regulatory mechanisms that are needed to enforce this new policy.

843   In the 1970s when recommended community channel spending was 10 per cent of gross revenues and the cable companies' only contribution to Cancon, the Commission divided bigger cities among different companies so their community channel commitment could be enforced.

844   That world just no longer exists. Cable companies provide cable and internet service, they fund CPAC and professional production funds. With so many factors to consider in any licence renewal, we consider community TV policy to be unenforceable unless you are willing to consider our recommendation.

845   We urge you to treat community channels like other channels and services offered by BDUs and licence them separately.

846   And secondly make this licensing process competitive so that the communities whose studios Shaw has closed can apply; for example, non-profits such as public libraries with adequate archival facilities or non-profits with track records stimulating alternative media.

847   They should be entitled to the money collected for local expression. This is consistent with both the previous policy 2002-61 and the new policy 2010-623. So the mechanism exists but has never used by you.

848   In situations where the terrestrial BDU does not provide a community channel or does not operate a community channel in accordance with the provisions of this policy, both of which conditions apply throughout Shaw's systems, community groups may apply for community programming undertaking licence.

849   The regulations also specify the applicable percentage of the terrestrial BDUs' gross revenues to be allocated to the community programming undertaking.

850   With the number of complaints you have heard about Shaw's community access practices over the years, acknowledged a few minutes ago, through the CRTC's own audits this spring at the Community TV hearings and at this present hearing, it has surely been demonstrated that this BDU at least does not operate its community channels in accordance with the provisions of these policies.

851   And finally, because only roughly 50 per cent of western Canadians subscribe to cable, the potential audience under separate licensing could almost double, making much more efficient use of the resources for local expression, which the Commission has recognized in 2010-622 achieves only a moderate overall viewing at present.

852   CACTUS appreciates the opportunity to present these comments.

853   THE CHAIRPERSON: Thank you for your presentation.

854   In paragraph 15 you suggest that the BDUs be required to report their access programming expenditures and activities by licence area and by community within those licensed areas.

855   Is this new? I don't recall you making that suggestion at the hearing that we had on Community TV.

856   MS EDWARDS: Well, it's a response to the new Community TV Policy in which you are asking -- it's 2010-622, which asks that BDUs now report their access programming expenditures separate from their overall programming expenditure, and also asks them to report on volunteer training and outage activities.

857   What wasn't clear to us in reading that document -- and maybe I misread it -- we couldn't figure out whether that would be gross figures and lists of training, and so on, per company, so for all of western Canada, or would it be broken down by licence area.

858   And further, it would be useful within these licensed areas, where as we have seen many studios have been closed, to know per community what money is being spent and what activities are happening.

859   THE CHAIRPERSON: Community in this context refers to what?

860   MS EDWARDS: Well, if you look at the table, for example in a single licence area now, for example in Kelowna, there may be four or five or six communities that used to have their own studios that no longer do. There might only be one studio per licence area now.

861   And some of the licensed areas have no studio at all.

862   For example, Shaw is asking for renewals in Duncan, Coquitlam, Kamloops, Red Deer.

863   To our knowledge, there are no studios at all within these licence areas.

864   THE CHAIRPERSON: Okay. So community --

865   MS EDWARDS: This is where we know there are licensed areas and there is only about ten. And Shaw is asking for licence renewals in 22 communities.

866   THE CHAIRPERSON: I was being much more specific. I wanted to know what you mean by community.

867   Do you mean municipalities in the service licensed area.

868   MS EDWARDS: Yes.

869   THE CHAIRPERSON: Okay. You recall that at the hearing you made this request for auditing information, et cetera, and we accepted and we stated it in the policy. But you never brought it down to this level of specificity before.

870   You feel without it, information that they now have to furnish under our new policy is not going to be serving what purpose?

871   MS EDWARDS: Well, it depends. I can't tell from the policy as it is written whether you intend them to report these figures once per company. Like does Shaw publish a single figure that says, you know, we did 40 training sessions this year? Or is Shaw going to report for each of these 22 licence areas we did X number of training sessions and we spent so much on access programming?

872   We think it is important for the Commission to see if this policy is working; that you can see how much is being spent in Vancouver, for example, compared to Coquitlam which no longer even has a studio.

873   THE CHAIRPERSON: Thank you.

874   Peter, I believe you have some questions?

875   COMMISSIONER MENZIES: Just a couple.

876   Can you clarify them for me. Certainly Shaw's take on it was -- and it might be mine as well.

877   Are you asking us to not renew the licence?

878   MS EDWARDS: No. I think that given the environment since the Community Television Policy was first created in the seventies and which they are administered by cable companies, cable companies offer such a huge range of programs and services now and contribute to Canadian content in so many different ways, through CPAC and multiple production funds and so on, that it is unrealistic to expect that none of their licences would be renewed just because of the Community Channel. We get that.

879   But that is why we are asking that the Community Channel be licensed separately, so that you can monitor just the Community Channel. We can make sure that those channels are working and it doesn't have to impact on Shaw's other business.

880   COMMISSIONER MENZIES: We can't redo the Community Television hearing, but is there a specific Condition of Licence that you are asking be included in a renewal for Shaw?

881   MS EDWARDS: Yeah. I'm not asking for a new policy. I'm asking under the existing policy.

882   Both the previous policy 2002-61 and the new 2010-63 stipulate that if a BDU is not providing a Community Channel -- so throughout at least half the licensed areas in the current licence application there is no studio facilities, nowhere to hold training; there is nowhere to produce programs -- or does not operate a Community Channel in accordance with the provisions of this policy -- so those are access arguments; that they don't follow your policy and never have or haven't back to '97 -- currently your policy enables you to grant these licences to a community programming undertaking and that they will get the BDU's gross revenues for local expression.

883   It already exists in both policies, and we are asking that you apply that.

884   COMMISSIONER MENZIES: In terms of some of your disaffected members or displaced members that you described, what have they done?

885   Have any of them attempted to innovate and launch their programs on the internet or anything like that?

886   Have any of them, say since the period 1997 when all this changed -- which is some time ago now. Have any of them applied for a community OTA TV licence?

887   MS EDWARDS: I believe it was discussed at the hearing seven such community TV licences exist in the country, but I think four out of those seven intervened at the hearing in the spring: Neepawa, Andrea from Valemount in B.C., Patrick Watt from New Brunswick and Gloria. None of them were able to make the advertising revenue model that is offered to them work. They all subsist in other methods.

888   All of them have told me that their channels are extremely fragile.

889   In your own policy analysis, it was acknowledged that so few of these licences had been requested because there is no funding formula. We have been asked if these channels either be able to apply for a portion of the BDU revenue, be able to apply for the LPIF. And Quebec asked really strongly for the possibility of advertising on cable channels.

890   All of these methods were denied.

891   COMMISSIONER MENZIES: Okay. Thank you very much.

892   MS EDWARDS: There is no funding formula that works.

893   COMMISSIONER MENZIES: Thank you.

894   THE CHAIRPERSON: Marc...?

895   COMMISSIONER PATRONE: Thank you, Mr. Chairman. I just have a couple of follow-up questions.

896   Shaw dealt with some of the issues which you have raised during your presentation. And I'm not going to go over the Community Television proceeding, but I just want to bring it up.

897   Specifically their oral presentation says as to the record of this proceeding:

"Shaw has received overwhelming support from the communities we serve, including from local Access producers. At the same time we appreciate that there were concerns raised about access programming at the Community Channel hearing in April and in some interventions filed in response to our cable renewal applications. To show our commitment and leadership, Shaw has already met with some access groups, such as NUTV in Calgary, to discuss ways to accommodate more of their programming." (As read)

898   And they also mentioned that there is now information online respecting training and volunteering opportunities with Shaw TV.

899   Does any of this give you any degree of comfort as far as their handling of community television?

900   MS EDWARDS: Well, I think the biggest issue is the fact that 80 per cent of their studios in their areas that used to exist don't. So even if they follow the letter of the law in the 20 per cent that still exist, there are huge numbers of communities where there is just no facility near them that they could take advantage of the new policy.

901   Secondly, for the reasons that I said, we have no confidence that it is going to work.

902   For example, since 2008, Sid Tan, Access TV in Vancouver, was invited to a producer's meeting last November, prior to the Community TV hearings, the first in 16 years, according to the groups in Vancouver. He asked whether the general public could come to propose new programming ideas and was told that they couldn't.

903   He says -- and I've seen the email trail so I trust what he is telling me; I check all of these stories whenever somebody contacts us with a complaint -- that he has tried to contact and follow up with the program manager since to follow up with the dialogue and he hasn't had any response.

904   COMMISSIONER PATRONE: Okay.

905   MS EDWARDS: So no, we don't.

906   And to do with training, I went to the Shaw websites myself, and I went to communities where I know there are no studios, like Swift Current and Moose Jaw, and on each of the web pages now they have added "Click here for Swift Current volunteer opportunities."

907   But if you do that, you go to the same PDF document for the whole system, which has kind of general guidelines. There is no contact information for Swift Current, there is no program manager named for Swift Current, and there is no list of upcoming training. You have to drive to Winnipeg to get it.

908   COMMISSIONER PATRONE: The second and last thing I wanted to address with you was on the issue of censorship. Do you have specific instances in which on-air content was tampered with or doctored unnecessarily?

909   MS EDWARDS: Tons of them. There are a couple of case IDs that are listed here in our oral presentation. Sid Tan is the one that follows it most regulatory. The rest are, frankly, exhausted from producing programming with no support.

910   But the current one by Don Walchuk is, he was told that they won't air a program dealing with the Israeli-Palestinian conflict -- and I can forward you the e-mail exchange and the letter from Shaw, if you like --

911   COMMISSIONER PATRONE: Fair enough.

912   MS EDWARDS: -- but Shaw claimed that, yes, it is balanced. Their concern isn't with balance, they said that the CRTC is holding up another Access program from some other part of the country because it isn't balanced, and they claimed that they wanted to wait for the outcome of that ruling.

913   COMMISSIONER PATRONE: Okay.

914   MS EDWARDS: So Don Walchuk contacted the CRTC and said, "Is this true?" and the CRTC wrote back and said that it didn't interfere in the programming requirements of cable companies, which are business decisions.

915   COMMISSIONER PATRONE: But you can appreciate that there may have been either legal issues or issues related to broadcast standards, in which the broadcaster would be responsible, and hence, rather than risk running afoul of standards, or even legal issues, they are bound to make changes in content.

916   Can you appreciate that and address that?

917   MS EDWARDS: This is one of the things that we feel is a problem with a cable company holding a licence. They always feel potentially threatened by Access productions.

918   We feel that if they were run by communities and the policy mechanism you already have, which is to give communities their own licences, then the communities would be responsible for that and the cable company wouldn't be making those calls or exposed in that way.

919   COMMISSIONER PATRONE: Yes. As I said, I don't want to go over your application for the community TV proceeding, but thank you for your answers.

920   THE CHAIRPERSON: As a result of the community TV hearing, we instituted this follow-up proceeding, where we are asking the industry to come up with a code of best practices, particularly to address issues such as, as you say, consultation with Access and Datalog, et cetera, which will take place.

921   And you heard Mr. Brad Shaw here this morning say that he sees no problem, once the code of best practices is developed jointly by the industry, i.e., by the cable companies and groups like yours and community groups, to adhere to it.

922   Do you not think that that will resolve, largely, the issues that -- it won't create studios, I appreciate that, but the point that you are making of lack of consultation, lack of involvement, lack of opportunities for community groups?

923   MS EDWARDS: The main problem -- I mean, it was a good idea in the universe 30 years ago that wasn't hypercompetitive for cable, but the main problem with that suggestion, on paper, as implemented, is that members of this working group are only from the cable companies. Surely the code of best practices for access should be worked out by the people -- the clients of that system, the Canadian public.

924   How come Cactus hasn't been asked to be involved in that group?

925   How come none of the independent community television corporations have been invited to be part of that working group?

926   How can that set of best practices possibly end up addressing our needs if we are not included?

927   I mean, you know, it's a good idea; it's the implementation.

928   THE CHAIRPERSON: I'm sorry, but you are making some statements here that I am not -- this is not restricted to BDUs.

929   MS EDWARDS: Well, the 2010-622 policy says that five BDUs will participate. There is no mention of any membership by the Canadian public in that working group. We would really appreciate being added to the list.

930   We haven't even commented on that here, because, as you say, it is outside the scope of the Shaw renewal. We were waiting, in fact, for the 623 September 30th deadline to comment on that issue.

931   THE CHAIRPERSON: Okay. So you want to be consulted and you want to be a part of the working group.

932   MS EDWARDS: Yes, please, and the other independent corporations would really appreciate a seat at the table, as well -- including La Féderation, I'm sure.

933   THE CHAIRPERSON: Okay, thank you.

934   Any other questions from my colleagues?

935   No.

936   Thank you for your intervention.

937   MS EDWARDS: Thank you.

938   THE CHAIRPERSON: Madam Secretary...

939   THE SECRETARY: Thank you. I would now ask TELUS to come to the presentation table.

--- Pause

940   THE SECRETARY: Please introduce yourselves. You have 10 minutes for your presentation.

941   Thank you.

INTERVENTION

942   MR. HENNESSY: Good afternoon, Mr. Chairman and Commissioners. My name is Michael Hennessy, Senior Vice President of Regulatory and Government Affairs with TELUS.

943   Along beside me is Ann Mainville-Neeson, our Director of Broadcast Regulation at TELUS.

944   TELUS is here today to make a very simple point: Shaw's cable licence renewals come at a time of unprecedented shift in the landscape of Canadian broadcasting, due to increased vertical integration that will leave the majority of once independent broadcast properties in the hands of Canada's four largest broadcast distributors. This clearly warrants a cautious approach by the Commission, and it is important for the Commission to retain its powers to act in a timely manner to respond to unanticipated abuses of market power, to the detriment of non-affiliated distributors, broadcasters and producers.

945   Later this week we will appear before you to address your request for comments on the potential abuse of market power resulting from Shaw's acquisition of CanWest. At that time we will present our case for the imposition of special conditions of licence for Shaw, as well as CanWest Global programming services being acquired by Shaw, in order to ensure that the Commission's policies against undue preference, on all platforms, are made clear and enforceable, on a timely basis.

946   While we save our comments on these safeguards for our presentation on Thursday, suffice it to say that these safeguards are all the more necessary now, given the announcement of Bell's purchase of all of CTV's over-the-air and specialty programming assets.

947   The link between the hearing starting tomorrow and today's licence renewal hearing is the use of conditions of licence as a regulatory tool.

948   The Commission implements many of its policies and determinations and safeguards by way of conditions of licence. Conditions are, in fact, one of its key regulatory tools. But, as you suggested today, there is a limited window of opportunity for using conditions of licence, namely, at renewal time and during the last two years of a full seven-year term.

949   If the Commission were to issue a full seven-year licence term to Shaw now, it would lose the opportunity to implement or amend any conditions of licence for Shaw for a period of five years.

950   The Commission's only tool, then, to enforce new policy determinations would be amendments to the various regulations, which involves a very cumbersome and, hence, slow process.

951   Caution in the face of unprecedented change in broadcasting -- and I think that many people would agree that the vertical integration we are now seeing is such a thing -- is the principal, but not the only reason for justifying a second short-term licence renewal for Shaw.

952   While Shaw states no less than four times in its reply comments that there have been no new compliance issues raised in the interventions, this is not true. TELUS has raised such an issue. Shaw references the serious compliance issues raised by TELUS at page 13 of its 21-page reply, but attempts to obscure the issue by stating that questions around the issue of customer transfers are now being determined in the proceeding initiated by Notice of Consultation 2010-406.

953   TELUS' complaint has been rolled into this broad proceeding as a result of Shaw's refusal to accept the clear rules, as explained by Commission Staff.

954   While we wait for a Commission decision on our complaint, Shaw has been causing significant problems to the growth of TELUS' television distribution services by continuing to take upwards of 15 days to process some service cancellations, causing customer confusion and brand damage for TELUS.

955   Shaw would no doubt prefer that there not be any new compliance issues as it seeks the renewal of its BDU licence, but it cannot allege that there simply aren't any by calling into question the finding against it and triggering a lengthy public process.

956   In any case, we are not recommending that a short-term renewal be characterized as punitive in any fashion. As noted, our major concern is not compliance but current uncertainty over the impacts of vertical integration. Contrary to Shaw's allegations, TELUS does not make its recommendations out of regulatory gamesmanship. TELUS is raising concerns as an independent carrier wanting to provide consumers choice and diversity in content.

957   Shaw argues that a long-term licence renewal is critical and essential to playing a leadership role and maximizing contributions to the Canadian broadcasting system, yet Shaw has provided nothing by way of evidence to support this argument. On the contrary, all the evidence points to Shaw having done quite well during its most recent short-term licence renewal.

958   In fact, during this period Shaw set a course to become Canada's largest vertically integrated media company, through a transaction in which it paid $2 billion to acquire the restructured CanWest.

959   Shaw has not suffered any hardship from its earlier short-term licence renewal, and will not suffer harm from a second short-term renewal.

960   On the other hand, delays in responding to the negative consequences of vertical integration because conditions are baked into a long-term licence could pose serious risk for the objectives of the Broadcasting Act.

961   The potential for harm to the Canadian broadcasting systems, and independent distributors, broadcasters and producers, if the Commission is not able to act swiftly to correct negative impacts of vertical integration, could be very significant.

962   Accordingly, the balance clearly tilts in favour of a cautious approach with respect to Shaw's licence renewals.

963   Short-term renewals, triggered merely by industry volatility, are not without precedent. Indeed, there are many instances where the Commission has done so, most recently with respect to the renewal of the OTA broadcast licence and the administrative renewals of VOD programming services, pending other broader industry developments and policy proceedings.

964   No one has a crystal ball which enables them to see what the future will hold in five to seven years, given the speed of change and constantly evolving business models for new platforms.

965   If one were to step back less than four years ago to the debates about the threats to diversity and choice arising from the acquisition of the CHUM properties by CTV and the Alliance Atlantis properties by CanWest Global, surely no one would have predicted the level of concentration, consolidation and vertical integration about to become the norm in broadcasting.

966   It is possible that Canada is about to become amongst, if not the most vertically integrated jurisdiction in the OECD. The consequent need to ensure safeguards to enable choice and diversity in content has never been so great, nor the consequences of this experiment so uncertain.

967   As we will suggest on Thursday, issues of undue preference in broadcasting across all platforms have never been more real, and yet the number of factors in place making it difficult to predict all potential issues that may arise have never been less clear.

968   That is why we are asking the CRTC to grant Shaw a short-term licence renewal.

969   In light of what is now perhaps the most massive shift in industry structure amongst any of our major trading partners, now is the time for regulatory caution, and a short-term licence renewal for Shaw in order to provide time for the Commission and the industry to adjust is appropriate.

970   We would now be pleased to answer your questions.

971   THE CHAIRPERSON: Thank you for your presentation. It is very clear and very targeted, and I appreciate that.

972   Just a small correction. You said that nobody foresaw the consultation that was coming. May I remind you that we held the Diversity of Voices Hearing while specifically saying that further consultation would undoubtedly occur.

973   The pace may have been more quick than anybody suspected, but I think that the trend was clear there.

974   How do we deal with this? You say that we should grant Shaw a short-term licence. What do you have in mind?

975   MR. HENNESSY: What we have suggested are a number of conditions of licence that we are going to discuss at the hearing, dealing with the onus on producers, safeguards and --

976   THE CHAIRPERSON: I know. That is all stuff -- I read your submission. I mean right now, right here. Your words were "a short-term licence renewal". What short term do you have in mind?

977   MR. HENNESSY: Two years.

978   And the reason for that is, over the next two years, to ensure that as the integration happens, and as issues arise, if there are adjustments that are still needed to conditions of licence, those can be made.

979   THE CHAIRPERSON: I don't have to tell you that, if we do that, it means that the cost of money for Shaw goes up. Therefore, their acquisition of $2 billion would be more costly than it otherwise would be.

980   That is the obvious consequence. Do you think it is worth imposing that on Shaw, under the circumstances?

981   MR. HENNESSY: I think the alternative has to be a significantly long and lengthy list of safeguards, trying to anticipate what might happen with respect to this integration, and we will be before you asking the same thing in the Bell hearing next year. That would be the alternative.

982   At the end of the day, we are not saying that we would particularly have trouble with Shaw having a seven-year licence renewal as a general principle. The issue is that, as a result -- assuming approval -- of the deal that you are looking at later this week, and approval of the Bell deal when it comes before you, the four largest distributors in this country will own virtually every major broadcast programming licensee in the country as well, and that creates significant opportunities for abuse of the existing broadcast policies.

983   So, to the extent that we resolve those later in the week, or you feel that conditions are sufficient, then I agree with you, there isn't necessarily that need.

984   MS MAINVILLE-NEESON: If I may also add, Mr. Chairman, you asked this morning what evidence Shaw had that supported that need for certainty. In fact, if you look at the last short-term renewal, which they have just lived through, they have shown no evidence of an impact on their stock or that their price of borrowing has gone up because of the short-term licence renewal.

985   So I think it is taking a lot for granted to indicate that a mere short-term renewal is going to have a tremendous impact on the cost of money for them.

986   THE CHAIRPERSON: On the customer or on the cost of money?

987   I was talking about the cost of money.

988   MS MAINVILLE-NEESON: You were talking of the cost for Shaw --

989   THE CHAIRPERSON: Yes, right.

990   MS MAINVILLE-NEESON: -- and they have not proven that their stock, or their cost of debt, or any of those things has actually been impacted by the previous short-term renewal.

991   This one here, in particular, especially if it's not made punitive, but rather, simply, on the basis of wanting to protect some of the ability to make adjustments to the system, I don't think will have a significant impact.

992   THE CHAIRPERSON: And how do I do that? How do I make it not punitive but cautionary, as you suggest?

993   MS MAINVILLE-NEESON: You have done so already on numerous other occasions. With respect to the over-the-air broadcasters, for example, one would argue that by giving short-term renewals for CTV and Global, pending further proceedings, has not significantly impacted them, and certainly it didn't seem to be a huge consideration there.

994   So I am not sure why it needs to be a huge consideration here. By not making it punitive -- and you would do that by saying that it's because of broader industry changes that you are wanting to reserve the right, and pending the outcome of other hearings.

995   We are not asking you to make it solely on the basis of non-compliance, for example.

996   THE CHAIRPERSON: I know, but you're mixing apples and oranges. Those were administrative renewals on previous terms.

997   I have read your submission on what you are going to say later this week, and that's not what you are asking here. You are not saying: Give Shaw another two years on present terms.

998   No, you want all sorts of conditions imposed in order to ensure that there is no abuse of dominance, there is no exclusivity of programs, et cetera.

999   MS MAINVILLE-NEESON: Yes, and we are going to make those arguments in the next proceeding. But even with all of those arguments, we are asking you to make a short-term renewal because one doesn't have a crystal ball to be able to determine how things will ultimately play out, and that is something that the Commission has done on a regular basis, to act with caution so that it can make the proper adjustments as the industry evolves.

1000   THE CHAIRPERSON: Okay. I have no more questions. Do any of my colleagues have questions for TELUS?

1001   Okay. Thank you, and I look forward to hearing from you on Thursday.

1002   It is 12 o'clock now. I suggest that we break for lunch and that we deal with the reply from Shaw after lunch.

1003   Let's resume at 1:30. Thank you.

--- Upon recessing at 1208

--- Upon resuming at 1401

1004   THE SECRETARY: We will now proceed to Phase III, in which the Applicant can reply to all interventions submitted for its item.

1005   Please reintroduce yourself for the record, and you have 10 minutes for your reply.

1006   Thank you.

REPLY

1007   MR. BRAD SHAW: Good afternoon, Mr. Chairman and commissioners.

1008   Once again, I am Brad Shaw, executive vice-president of Shaw Communications.

1009   On behalf of Shaw Cable Systems Limited and Videon Cablesystems Inc., it is my pleasure to present our Phase III reply to interventions and comments with respect to our applications to renew 24 class 1 distribution undertaking licences for the systems identified in our written application that we filed on October 2009.

1010   To begin, we would like to again thank the individuals, organizations and groups who filed in support of our cable licence renewals. We are very proud of this kind of support and never take it for granted.

1011   What makes us particularly proud is they represent a broad spectrum of our customers and supporters: new Canadians residing in communities we serve; municipal, provincial and federal public officials; local charities and organizations; local sports teams and programs; schools and educators; local businesses; organizations promoting persons with special needs; access producers; and speciality broadcasters.

1012   We would note that the interventions have come from people and organizations in virtually all of our licensed areas that are the subject of this licence renewal. We are determined to deliver the highest quality of our service to all of our customers, wherever they reside. Our success in doing this has been reflected in these positive interventions.

1013   We would respectfully ask the Commission to remember that these individuals and organizations took the time not only to say positive things about Shaw, but also to support our request for full-term licence renewals for all the systems listed in our application.

1014   The level of support for our applications from more than 250 intervenors, as well as the positive reasons provided in our written filings and discussed with your earlier today all provide the rationale for a decision to renew our licence for a seven-year term.

1015   In contrast to the over 250 interventions filed in support of Shaw's cable licence renewals, we received only a few interventions that raised issues concerning community channel access and ownership in relation to Shaw's application to acquire effective control of CanWest. The Commission has already addressed these concerns.

1016   MR. BISSONNETTE: Last month, the Commission introduced its new community television policy that addressed the access issues raised by CACTUS. Shaw has also made voluntary commitments to increase our support of access programming. We currently operate 30 studios across our operating territory and we also offer mobile and single-camera equipment. Further, this morning we committed to developing and implementing best practices through the working group. We are very proud of the overwhelming number of individuals and groups who intervened in this process in support of our community channel.

1017   Regulatory certainty and stability will support investment and innovation. TELUS is advocating the opposite.

1018   The Commission has it right. Through proceedings such as the BDU regulatory framework and diversity of voices, the Commission has established a regulatory framework that will carry the system for the next decade. We say it in our opening remarks and cannot repeat often enough how important it is that our cable systems receive seven-year licence renewals so that we can focus on the challenges we face, including making significant investments in the Canadian broadcasting system.

1019   Mr. Chairman, we would like to thank the Commission for holding this hearing in Calgary, and we express our sincere appreciation to you, Mr. Chairman, your colleagues and staff for the professional way in which our applications have been considered.

1020   MR. BRAD SHAW: Finally, Mr. Chairman, we have taken all the necessary steps to address the issues expressed in our previous renewal decision. Going forward, you have Shaw's commitment, my commitment, and our whole team to operating in full compliance on all issues.

1021   We take seriously the fact that the CRTC can, and at any time, intervene during the licence term to address any regulatory issue.

1022   We would be pleased to respond if you have any further questions.

1023   THE CHAIRPERSON: Thank you.

1024   Just explain to me for one second what you are saying about community. You are saying you offer mobile and single-camera equipment. You heard CACTUS. They were very upset with you that you have closed studios and there is no ability for people to film or record things in those various communities.

1025   So are you telling me that you are addressing those communities through mobile studios?

1026   MR. PARK: We operate a number of large mobiles, and we actually provide quite a bit of training on those mobiles. Mobile production constitutes a growing amount of the programming that we actually do. That programming actually happens in the community, and so our training happens through our mobile facilities.

1027   As well, a lot of the content that is produced these days on the community channel is actually not studio-based programming; it's actually programming that happens in the community. And so we are providing training on single-camera operation, editing, post-production, all the things that actually really reflect what's going on in the communities. It's not necessarily studio-based programming.

1028   Also, just to set the record straight, there were some comments this morning about studios that we had closed in specific communities and we would like to be very clear that, indeed, studios have not been closed in Kamloops, Moose Jaw, Flin Flon, Thompson, Chilliwack and Red Deer, as was asserted this morning.

1029   So we want to make sure that that's clear and on the record.

1030   THE CHAIRPERSON: Okay.

1031   I hate to come back to this issue of payments, but I have a note here from my counsel, Mr. Kane, who disputes with you the fact whether you were in arrears or not. So I will let her speak.

1032   Madam Létourneau, you want to explain why we take the position that they were in arrears.

1033   MS LÉTOURNEAU: Yes, sure, Mr. President.

1034   You mentioned earlier that you had until December 31st to make up some payments for the CMF. I just wanted to remind you that the new regs are really clear about this time that you have to catch up with your payments. It's really for the estimate that you have to do starting in September. I'm sorry about that.

1035   THE CHAIRPERSON: Okay, if you have any further doubt, Mr. Kane, why don't you speak to Ms Létourneau off-line.

1036   I actually have no more questions for you. I think we have canvased the issue. You understand our predicament: on one hand, we want to help you; on the other hand, you were on a short-term probation and the records show that here, you know, you didn't remedy all the issues that should have been issued.

1037   So we will have to have something to ponder about, but I don't think there's anything more useful that I can think that needs to be discussed.

1038   Do any of my colleagues have any questions?

1039   Peter.

1040   COMMISSIONER MENZIES: Just on the length of licensing term, I would just like your response to this.

1041   On the one hand, I understand, obviously, clearly the need everyone expresses, not just yourself, for regulatory certainty. On the other hand, during a period of time in which all businesses, the media business in particular, is going through rapid change, is the licence term as it is -- let me put it this way, is the regulatory certainty, which length provides, not also a negative in terms of the amount of flexibility that it might provide the industry to adapt during a period of rapid change?

1042   MR. STEIN: No. Our view is that regulatory certainty is one of the most crucial things we need over the next number of years and that's something the Commission has addressed in their group licensing policy: diversity of voices, broadcast distribution regulations.

1043   And I know that the Commission has expressed the view, for example, on bright line definition that what companies require is certainty as we go into particular arrangements and that certainty is really a crucial thing in terms of dealing with how we do our planning.

1044   So the licence term over this period of time is important in terms of giving us that kind of certainty so we can make decisions and go forward and try things that might not work in one instance, but then you can try something different. So the flexibility comes within the framework that you have already established and so we feel that, on that basis, the regulatory certainty becomes the most important consideration.

1045   COMMISSIONER MENZIES: Thank you.

1046   THE CHAIRPERSON: Well, on that point, I mean, we are now embarking on group licensing next April, and we have said publicly that we will do it for five years because nobody knows what's happening in this industry and how things are developing, et cetera.

1047   Would it then not make sense to, and by way of symmetry since you are both a distributor and a producer of content, if we approve this transaction, that the terms would be coterminous?

1048   MR. STEIN: I would rather have separate hearings.

--- Laughter

1049   THE CHAIRPERSON: Take two kicks at the same can, is this the idea?

1050   Okay, Len.

1051   COMMISSIONER KATZ: I just have one point. Thank you, Mr. Chairman.

1052   Your last paragraph talks about taking seriously that the CRTC can at any time intervene during the licence term to address any regulatory issues, and I welcome that fact. The issue is what can we do to incent you or anybody else to remedy the situation during a term as long as seven years?

1053   MR. STEIN: Well, I think that you probably have more of an impact on us than you think, and I will give you an example dealing with the programming services. We have always had, you know, a variable kind of relationships with them, and those relationships have become more positive because the Commission's made it clear that's the kind of environment which it wants to see us operate. So we have tried to go from an adversarial arrangement with some, the exceptional ones, obviously, to a very, very positive relationship with the programming services.

1054   So we think that the fact that the Commission has the ability to speak out indicate how they want to see policies followed. You can't have regulations for everything. Basically, if you try to anticipate everything, it's almost impossible. I think what you need to have is a good working relationship between the Commission and the industry it regulates, and I think that's what we are advocating, in terms of what Brad has said.

1055   You also have means, in terms of dealing with disputes, other issues with respect to broadcast distribution regulations, in which you can intervene when people complain about certain things.

1056   So we think that you have quite a bit of clout to deal with particular issues as they arise.

1057   MR. KANE: Vice-Chair Katz, the other section we would like to refer to is section 12 in the Broadcasting Act and your ability to issue a mandatory order. When you read through that section, subsection 2, for example, you have extensive powers to bring a licensee in at any time on any matter relating to even an order of the Commission, and then at the end of that exercise, when you issue a mandatory order, to file it with the Federal Court.

1058   Then if the company is not in compliance, you are then in violation of a Federal Court order and you are subject to any number of punitive measures at that time.

1059   So there are extensive powers that are available to the Commission at any time.

1060   COMMISSIONER KATZ: The issue, from my perspective, and it's something Mr. Stein just said, you can't have regulation for everything. I would prefer to have less regulation, a lot less, and I would like to have it on an ex-post basis.

1061   So I'm trying to find vehicles to try and simplify the entire process rather than going through an awful lot of these processes and these procedures by having something simple, after-the-fact-type process. And threw out AMPs as being one of them, but at least it allows the Commission the tools necessary on an after-the-fact basis. And let the market take care of itself, rather than going through all these hearings and all those process.

1062   So whether it's that or some other solution, I would much prefer less regulation to more regulation, from that perspective.

1063   THE CHAIRPERSON: Rita?

1064   COMMISSIONER CUGINI: Thank you.

1065   I'm going to go back to the issue of access programming and reporting and just ask you to react, if you will, to something that CACTUS proposed earlier this morning, which is that they requested that BDUs be required to report their access programming expenditures and activities by licence area and by community within those licensed areas not as a single annual return per company.

1066   MR. PARK: We would agree to that.

1067   COMMISSIONER CUGINI: You would agree to that?

1068   MR. PARK: Yes.

1069   COMMISSIONER CUGINI: Okay. Thank you.

1070   THE CHAIRPERSON: Okay, I think that takes good care of today. I will see you tomorrow morning.

1071   What time are we starting, Madam Secretary?

1072   THE SECRETARY: Eight-thirty.

1073   THE CHAIRPERSON: Okay. Thank you.

--- Whereupon the hearing adjourned at 1615, to resume on Tuesday, September 21, 2010 at 0830

   REPORTERS

____________________      ____________________

Johanne Morin         Jean Desaulniers

____________________      ____________________

Sharon Millett            Monique Mahoney

Date modified:

2010-09-20