ARCHIVED - Transcript, Hearing 7 October 2010

Volume 2, 7 October 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 2010-551

HELD AT:

Saskatchewan A Room

Saskatoon Inn Hotel & Conference Centre

2002 Airport Drive

Saskatoon, Saskatchewan

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 2010-551

BEFORE:

Stephen Simpson   Chairperson

Elizabeth Duncan   Commissioner

Candice Molnar   Commissioner

ALSO PRESENT:

Cindy Ventura   Secretary

Crystal Hulley   Legal Counsel

Michael Craig   Hearing Manager

HELD AT:

Saskatchewan A Room

Saskatoon Inn Hotel & Conference Centre

2002 Airport Drive

Saskatoon, Saskatchewan

October 7, 2010

- iv -

TABLE OF CONTENTS

   PAGE / PARA

PHASE II

INTERVENTION BY:

Pelmorex Communications Inc.   272 / 1929

CACTUS   308 / 2138

Communications, Energy and Paperworkers Union of Canada   327 / 2237

The Broadcasters' Coalition   359 / 2401

PHASE III

REPLY BY:

Corus Audio & Advertising Services Ltd.   382 / 2533

   Saskatoon, Saskatchewan

--- Upon resuming on Thursday, October 7, 2010 at 9:05 a.m.

1923   THE CHAIRPERSON: Good morning. I would like to call this a second day of our hearing to order, please, and ask Madam Secretary if she would please introduce our first presenter.

1924   THE SECRETARY: Thank you, Mr. Chair and good morning.

1925   Before beginning I would like to indicate for the record that we have received undertakings from Fabmar Communications and Golden West Broadcasting. These undertakings will be added to the public record and copies are available in the public examination room.

1926   Now, Mr. Chair, we will proceed to Phase II in which intervenors appear in the order set out in the Agenda to present their intervention.

1927   We will begin this morning with Pelmorex Communications Inc. Appearing for Pelmorex is Mr. Pierre Morrissette.

1928   You may now begin and you have 10 minutes for your presentation.

INTERVENTION

1929   MR. MORRISSETTE: Thank you.

1930   Good morning, Commissioners. I am Pierre Morrissette, Chairman and CEO of Pelmorex Communications Inc., which is the licensee of The Weather Network and MétéoMédia. Thank you for this opportunity to address you on an issue of serious concern.

1931   With me today are, on my immediate left, Gaston Germain, our President and Chief Operating Officer. On my right, Paul Temple, Senior Vice President of Regulatory and Strategic Affairs, and on my far right Mitch Charron, Vice President and General Manager of The Weather Network and MétéoMédia.

1932   Yesterday, Commissioner Simpson, you described Corus' presentation as an innovative proposal. We agree. For the last 21 years we have been doing exactly what Corus proposes to do, right down to the specialized equipment in each cable head-end, aggregating data and content from hundreds of sources and using our own proprietary software systems to make it all work. If time permits later I will be pleased to describe in detail how we do this every day for hundreds of communities across Canada.

1933   Pelmorex opposes Corus' LOCAL1 application because it copies The Weather Network and contravenes the Commission's genre exclusivity policy.

1934   LOCAL1's proposed programming grid, nature of service description and program categories would allow Corus to operate a weather service directly competitive to The Weather Network in western Canada. If you license this service it will reduce our audience and undermine our ability to provide the high quality local service we now broadcast to 1,200 communities in Canada.

1935   We have carefully analyzed the programming wheel that Corus included in its application and we heard them describe again yesterday the big weather box in the top left of their proposed service. While LOCAL1 may contain other less prominent content boxes, this would not change the fact the proposed service would be a full-blown weather channel that would duplicate our programming 90 percent of the time.

1936   And not only would LOCAL1 provide weather-related programming, its programming schedule is a virtual copy of The Weather Network's. We have local weather forecasts every 10 minutes on the 10s; they have local weather forecasts every 8 minutes on the 8s; we have hosted regional, national and international weather forecasts and so do they.

1937   Corus has claimed its service would be different because it would be hyper local and more granular. That's just hype. No service is more local than The Weather Network. No one else in Canada generates the detailed local weather, road safety and environmental forecasts that we provide to 1,200 different communities.

1938   MR. TEMPLE: When the Commission assesses whether a proposed service is directly competitive with an existing service to see if it contravenes the genre exclusivity policy, it generally examines five factors. Is the nature of service similar? Are the types of programming similar? Are the programming category similar? Is the target audience the same? And would the proposed service cause economic harm to the existing service?

1939   LOCAL1 fails all five of the Commission's tests.

1940   First, the nature of the service proposed for LOCAL1 is broad enough to fully allow it to offer a weather specialty service. In fact, The Weather Network could actually operate in western Canada using the nature of service proposed by LOCAL1.

1941   As the Commission is well aware, services with broad nature of service descriptions can and do rebrand themselves and morph into genres not intended at licensing. The Commission has consistently denied applications where the nature of service gives the applicant the flexibility to compete with other existing services.

1942   The LOCAL1 application contains a broad nature of service that allows LOCAL1 to be directly competitive with The Weather Network.

1943   The second factor is the type of programming Corus proposes to offer on LOCAL1.

1944   As we described earlier, LOCAL1 would offer virtually the same programming as we do in western Canada. We have appended their programming grid to show the striking similarity to The Weather Network.

1945   And don't be fooled by arguments that attempt to draw artificial distinctions between the styles of the programming on LOCAL1 and The Weather Network. Programming is programming and there is no difference between our local weather programming segments and their hosted local weather.

1946   Third, with respect to the program categories proposed by Corus, they are exactly the same as The Weather Network. Identical.

1947   The Commission's fourth factor to consider is Corus' proposed target audience. It would be identical to ours.

1948   Any service offering the same programming as we do 90 percent of the time is going to attract the same viewers as us. Clearly those who watch LOCAL1 would not need to watch The Weather Network, so we will lose viewers.

1949   Corus has proposed directly competitive service to The Weather Network that will act as a substitute, not a complement to our service. If a viewer watches the local forecast on the 8s on LOCAL1, they are not going to watch The Weather Network's local forecast two minutes later on the 10s.

1950   In terms of the fifth factor, economic harm, the Canadian market simply cannot support two weather services. We have no doubt that LOCAL1, with the powerful advertising synergies and weight of the Shaw/Corus media empire, will cause material economic harm to The Weather Network. Their own numbers project a significant audience greater than most specialty services and at The Weather Network's expense.

1951   While The Weather Network and MétéoMédia have been granted basic carriage in recognition of the unique role we play in safeguarding Canadians, it is not immune from economic harm. We earn about 40 percent of our revenue from advertising. It is essential to fund the depth and breadth of our service to Canadians that The Weather Network and MétéoMédia provide today.

1952   Nearly 40 percent of our audience is generated in western Canada. The loss of some of this audience would have a greater impact than regional numbers suggest. Any loss of viewers in major markets, particularly Vancouver, Calgary, Edmonton and Winnipeg, will certainly impair our ability to attract national advertisers. Those advertisers will simply seek more effective networks to maximize their national reach.

1953   We are also concerned that approving the LOCAL1 weather service for western Canada would just be the starting point. If this application were approved, similar weather applications for the rest of Canada would surely be filed in short order. The cumulative impact of these weather services would be a substitute for our service across the country and a disastrous impact on our advertising revenue.

1954   The Weather Network would have to increasingly focus on major centres and rethink our service levels to the hundreds of small communities that national advertisers have no interest in.

1955   MR. GERMAIN: So having assessed the LOCAL1 application using the Commission's five elements, it is apparent that the LOCAL1 service fails each one and must be denied.

1956   Corus has resorted to making a number of unfounded arguments as to why LOCAL1 would not be competitive with The Weather Network.

1957   Corus argues firstly that they would be more local than The Weather Network. This is simply incorrect as clearly demonstrated in our written submission.

1958   Secondly, they argue that The Weather Network has carriage on basic. The carriage status of an existing service has never formed part of the competitiveness test and therefore we consider the argument irrelevant.

1959   Thirdly, they argue that The Weather Network is profitable. Profitability of an existing service is not a factor in the Commission's tests. Besides, current profitability is no guarantee of future profit and we have proven that we will suffer economic harm.

1960   Fourthly, they argue that LOCAL1 would replace a TV listings service. This is completely false. Broadcasters don't have a statutory right to trade in a vacated channel position for a new licence.

1961   Fifth, Corus argues that somehow a foreign broadcaster could provide a service similar to LOCAL1. This is simply speculation and it's not material, nor is it relevant to the test.

1962   Finally, Corus also claims that weather is the only programming genre with exclusivity and no competition. This is absolutely not true on both claims. The CRTC application form that Corus completed lists over 60 services that enjoy genre exclusivity; and we have competition from weather on everything from over-the-air broadcasters and news channels to community channels and TV listing channels.

1963   MR. MORRISSETTE: Commissioners, we have demonstrated that Corus has proposed a directly competitive service to The Weather Network.

1964   Their application fails each of the five aspects of the competitive test and they have been consistently applied by the Commission in previous decisions.

1965   We must add that Corus had three opportunities to address our serious concerns about its proposal. They went to great lengths in their application to argue LOCAL1 wasn't a competitive weather network, but failed to offer safeguards either in their application, their written reply or in their presentation yesterday.

1966   Faced with the evidence that LOCAL1 is predominantly a weather channel whose programming would duplicate that of The Weather Network and would not meet the competitive test established by the Commission, the application must be denied.

1967   Thank you for your attention.

1968   We look forward to your questions.

1969   THE CHAIRPERSON: Thank you very much for your presentation.

1970   We will start the questioning with Commissioner Duncan.

1971   COMMISSIONER DUNCAN: Good morning.

1972   I think for sure that your position is certainly clear and I do have a few questions or a few points that I would just like to discuss. I think you have covered a lot of them in your document this morning, or your presentation, because they do relate to the test.

1973   First of all, I notice in your written intervention you quote the nature of service for both The Weather Network and Corus and I personally didn't see the substantial difference, but I guess I would like to know what you would think would be necessary to be added to their nature of service description to make you more comfortable.

1974   So you have said that:

"While not identical to The Weather Network, the nature of service description proposed is certainly broad enough to allow the undertaking to offer a weather specialty service." (As read)

1975   And, again, what you have said this morning.

1976   But in their nature of service that you described in paragraphs 10 and 11 of your intervention, as I say, I didn't see that it was as much of a cause for concern as you have interpreted it to be.

1977   So I would just like to see what you would like to see added to the description they have proposed that would make you feel more comfortable.

1978   MR. TEMPLE: Well, I guess there is a couple of points.

1979   We have not really sat down and tried to redraft their nature of service. I think the onus is on them to show that they are not competitive.

1980   The main concern we have with regards to the nature of service is it is so broad and when taken in the context of their filing clearly shows that they have complete flexibility to offer a weather service.

1981   I'm not sure it's really our job to rewrite their nature of service and if I did I don't think they would find it very satisfactory or acceptable.

1982   So that's why I think Pierre mentioned the onus, they had the opportunity to do this and haven't. Instead they have tried to argue that they are not competitive.

1983   But when you take the nature of service in combination with the content of their filing, it's clear that it's a weather service and that's our concern. It's far too broad.

1984   The Commission is facing these issues increasingly now where services morph into one thing. So, you know, you could take that -- as we said in our remarks, we could operate under their -- we could operate as a weather service under their nature of service. If the Commission -- you know, ours is that we will do local, national, meteorological and weather, we could just take that away, we would take theirs and we wouldn't have to change our programming a bit. And that's the concern.

1985   COMMISSIONER DUNCAN: I note that you do say that they haven't proposed any safeguards and I'm just wondering what kind of safeguards, or again are you going to say it's not your job to tell them what the safeguards should be.

1986   But what kind of safeguards would make you feel comfortable?

1987   MR. TEMPLE: Well, there would have to be very strict limits on the weather. I mean what, when, how often, what kind of weather they are providing, because, you know, the whole -- when we look at the application it's so fundamentally structured around weather I don't know how -- you would just be tearing it apart. I don't know how you could fix it. I think it's beyond repair I guess what we are saying.

1988   COMMISSIONER DUNCAN: I do think that -- I notice that your emphasis on the hyper local is on the weather aspect of it, but my read of the hyper local was that it was going to be on the video portion and the portions that would be inputted by the community and by individuals.

1989   That would really be what would make in hyper local and what would give communities a local service which they are lacking. Because many communities don't have local television stations or wouldn't be broadcasting information that would be that -- I was going to use the word granular, but that would down to that level. So I thought that would have appeal to the consumer.

1990   MR. TEMPLE: There is that element in it, but a careful reading of that application, they continually make the distinction about their hyper local weather, trying to make that as if there is some distinction there, that they will be more local in their weather.

1991   So their distinction of hyper local weather is as fundamental to their application as their comments regarding input from the community. And that's why we spent a lot of time in our written comments dispelling this myth that they are more local.

1992   I mean any weather service provider wants to be local, that's the whole point of it. So it becomes an argument of how many angels can dance on the head of a pin, you know. We are more local; no, we are hyper local; we are super hyper local. Its distinctions without relevance.

1993   We are a local service, our nature -- a local weather service. Our nature of service specifically says we will provide local weather. That's what they are doing. Well, that's our job.

1994   COMMISSIONER DUNCAN: I'm just wondering, in your written brief you described at length the quality of the local weather service that you provide and when I was reading it I thought, well, I'm not sure that Corus is proposing to go into that depth and offer that quality of service.

1995   So would you agree there would still be a distinction, your service would be -- the service that you offer currently would be superior to what they offer?

1996   MR. TEMPLE: I think we -- we would like to think we will be superior. I think the issue -- obviously we are very passionate about what we do so we take great umbrage with someone saying that they are more local than us.

1997   But that aside, it becomes an argument about, you know, if we were The History Channel and someone was saying, well, we are going to be more historical. I mean it's irrelevant to the genre exclusivity tests.

1998   COMMISSIONER DUNCAN: Okay.

1999   MR. TEMPLE: If they are going to be local weather and we are local weather, that's our genre. Go find another one.

2000   COMMISSIONER DUNCAN: I understand your points with regards to the test, that's for sure.

2001   The one other question that I would like to ask you about is on the case of economic harm.

2002   I'm just curious to know, Corus says that they are going to serve 85 percent of Shaw's digital basic customers, but you serve 100 percent of their customers. I don't know how many 85 percent of their digital basic customers is as compared to the numbers that you serve.

2003   MR. TEMPLE: Well, it's a little bit of fun with numbers, because right now Shaw has a certain base of digital customers and we are not particularly privy to that, but by the time the Commission might issue a decision and this service is launched we will be faced with the transition of over-the-air to digital, so increasingly everyone is going to be digital. So by the time they are ramped up, launched and in all these markets, they will basically be 100 percent, and if they are not 100 percent they will be 95 percent, but the economic harm is still there and because of the rules in place at that time there will be no constraints on Shaw to put their channel right beside ours on digital basic.

2004   So that's our concern. They will be as broadly distributed as we will be.

2005   MR. GERMAIN: Commissioner Duncan, if I can expand --

2006   COMMISSIONER DUNCAN: Most certainly, yes.

2007   MR. GERMAIN: -- just a little bit on that point if I may.

2008   I'm linking this to some data and forecasts that Corus has provided in -- in fact I think it was a response to a deficiency question.

2009   So they put forward financial projections indicating that their average minute audience -- which as you know is the currency that we all operate in to monetize through advertising -- for LOCAL1 would regain or get back to a level that they were at in 2007-2008, approximately 7,000 in average minute audience.

2010   Now, when you compare that to a number of established services that are serving the west, including CTV News Channel, 9,700; Score at 9,500; TWN, ourselves, at 8,500, on the whole footprint that we cover in the west, that's analog and digital; MuchMoreMusic 8,500, VisionTV at 7,400, and would be higher -- higher than MTV at 5,600, Star 4,600, BNN at 4,000 and APTN at 2,900.

2011   So when we say that these economic -- when we say two things.

2012   We say the programming is sufficiently similar to ours, almost -- well, 90 percent the same as what we do, it's not complementary, it is a substitute. So for our -- if they achieve a 7,000 AMA in one year -- they say they can get back there in one year after licensing -- we think that that would eat up significantly into the 8,500 that we currently have, because it's a substitute. You get your weather here, you don't need to go to it.

2013   It's not like a sports event that you go to the next channel to get another sports event, it's sports but it's a different event. Your daily forecast is your daily forecast.

2014   COMMISSIONER DUNCAN: And the year one is referring to 10 markets only; right?

2015   MR. GERMAIN: Correct. Correct.

2016   MR. MORRISSETTE: But those 10 markets are the major markets --

2017   COMMISSIONER DUNCAN: Yes.

2018   MR. MORRISSETTE: -- which represent the vast majority of the population in western Canada.

2019   COMMISSIONER DUNCAN: Yes. No, I understand. I understand.

2020   Just I have another question here in mind I wanted to ask you and I have lost it here.

--- Pause

2021   COMMISSIONER DUNCAN: I was going to make a comment that you see news on many, many channels. I noticed last night watching the television just a bit in the hotel room, the community channel, Shaw's community channel, has a weather girl and I understand it actually has a person doing weather commentary. So there's lots of weather competition, that's for sure, just like news.

2022   MR. TEMPLE: I'm sure it's coincidence, but the Shaw community channel has their weather on the 9s, LOCAL1 will have it on the 8s, whereas we have long-established ours on the 10s. So it just -- yes, it just goes back to the point we have been making.

2023   COMMISSIONER DUNCAN: Okay. I think from my point of view I understand your points.

2024   I have no further questions, Mr. Chairman.

2025   Thank you.

2026   THE CHAIRPERSON: Thank you very much, Commissioner Molnar.

2027   Do you have any questions? Okay.

2028   MR. TEMPLE: Mr. Chairman, if I could just make one comment, if I could?

2029   THE CHAIRPERSON: Yes. Yes. We are not finished, I'm going to be asking questions as well.

2030   MR. TEMPLE: I beg your pardon?

2031   THE CHAIRPERSON: I will be asking questions as well.

2032   MR. TEMPLE: Oh, okay. Well, then I will let you proceed. I thought you were --

2033   THE CHAIRPERSON: You can go right ahead, unless you were going to do a wrap-up.

2034   MR. TEMPLE: Well, no. It's just that when we were talking earlier with Commissioner Duncan she asked about the other programming and I think it's important to make clear the point that what will be predominant, which is often used as a Commission test when they looked at whether something is programming, they look at what is predominant, and it was very clear yesterday in the presentation that what will be predominant is that big weather box and that those other things might be nice, but that doesn't distract from the -- or shouldn't distract from the point that this is predominantly a weather service.

2035   That is a rule or a principle the Commission has applied in other decisions. The focus will be on the weather and that's a concern.

2036   And what's on those other boxes is a bit of a red herring, in our view.

2037   Sorry for interrupting.

2038   THE CHAIRPERSON: Not at all, Mr. Temple. I appreciate it.

2039   I was going to start my questioning leading off with a statement that I find it incredibly interesting, given the events over the last year with local television going through its death rattles vis-à-vis fever carriage and the economic downturn which really put the boots to local television. I find it's interesting that a year later we are listening to national broadcasters now talking about the import of programming wheels and clocks like a radio operator where, you know, one news station has their traffic on the 4s and another has them on the 5s and, you know, how critically important that is to viewership. It's just it is interesting how quickly technology can turn things around when we thought we were looking at the end of local television and we maybe are looking at the beginning of new local television.

2040   So with that said, and the interest that it peaks in me, I would like to get back to a few questions of all of you because you are in this game, you have been in this game for a while, the weather game. You have been in the national service game with a type of television station that is part programming part utility so I'm going to lead off with questions in that area.

2041   First of all to ask you, is the technology that you are using at The Weather Channel which gives you the ability to substitute content at a regional and a local nature, from your understanding of what Corus is proposing, is your technology significantly different or is it relatively similar?

2042   MR. TEMPLE: I would turn that around a little bit and say what they are doing is exactly what we are doing. Yes, the software might be a little different but, as we said, we have been doing this since we launched so it's not something we just came up with. So they are just going to do the same thing.

2043   THE CHAIRPERSON: Okay.

2044   MR. MORRISSETTE: If I may --

2045   THE CHAIRPERSON: Sorry.

2046   MR. MORRISSETTE: -- we pride ourselves of being two national networks, one English and one French, who uniquely specializes in distributing local information and we have been doing this since day one. We distribute local content by a satellite to local head-ends, but we also do it via fibre sub-networks. Increasingly we are doing it via fibre sub-networks.

2047   The information that we distribute is weather related information. Anything that is influenced by weather or the Canadian public is influenced by weather is included in those categories. That has resulted in us developing unique categories of content such as health-related information, air quality, such as ultraviolet network. We are the only ones who own a network of real-time data for ultraviolet information across Canada in all regions of the country.

2048   So that's what we specialize in. And it's not just weather, it's a whole bunch of additional information.

2049   THE CHAIRPERSON: Do you employ meteorologists on staff?

2050   MR. MORRISSETTE: We have over 40 meteorologists on staff who interpret local weather data through our models and develop all of our own forecasts for -- today it's 1,200 communities across Canada, but in fact we provide specific weather forecasts for well beyond those 1,200 communities, it's close to 4,000 different sites in Canada.

2051   To give you an example, in Toronto we separate the market in about 14 different zones and provide distinct weather information for each one of those zones. We do that for many other major markets across Canada. And then we go into regions as small as -- a community as small as 50 or 100 people and provide a site-specific weather forecast for them, because we can do weather forecasts down to a 10 km grid.

2052   THE CHAIRPERSON: Okay. Thank you. That leads right into my next question.

2053   So if you have compatible technology and that technology gives you the ability to custom tailor and deliver a hyper local weather forecast to a local region, what I would like to explore is from your experience where have you found -- given that you have been on operation for some time now, where have you found the logical cut off in terms of your ability to produce content that's more than alphanumeric or graphical for a local market?

2054   I'm trying to -- you know, you are serving something like 1,200 markets, as I understand it, across the country, where have you found that you run out of time or capacity to be able to keep delivering or driving better content, not just factual content, down to the local markets?

2055   MR. TEMPLE: Just a point of clarification, alphanumeric has a very specific --

2056   THE CHAIRPERSON: Yes.

2057   MR. TEMPLE: -- and we don't do alphanumeric.

2058   THE CHAIRPERSON: My apologies, you are right, the terminology --

2059   MR. TEMPLE: But our programming, which is often graphics, maps and such --

2060   THE CHAIRPERSON: Yes. And crawls and the like.

2061   MR. TEMPLE: We have no limit at our end. I mean our website, we can do -- as Pierre was alluding to, we could do 10,000 forecasts for Canada. We are limited only by our distributors' networks.

2062   So in the case of Bell ExpressVu, we work with Bell ExpressVu to develop an interactive weather application integral to our service and that allows someone with Bell ExpressVu to actually get the weather they want when they want it. So that, if you want to think of it, we are providing that individual household with a weather service, with local weathers, because we can do that.

2063   So we can be -- there is no limit for us in the sense of being granular or hyper local, it's only the restraints of the distributor.

2064   THE CHAIRPERSON: I appreciate that and thank you for correcting me on the alphanumeric reference I should have said maybe informatic, if we can use that term mutually.

2065   But I still think I want to probe this a little more. There is a point where it doesn't make sense as a programmer to try and program to a local market -- whether it's economic or capacity issues, production issues, there is a point somewhere where you can't have an on-camera presenter presenting a hyper local broadcast and you have to switch to informatics to make it make sense, you know.

2066   My gut feeling tells me that and I'm trying to explore whether I'm correct in that assumption or not and asking you if you wish to share anything you have learned about where that cutoff exists, if it does it all?

2067   MR. TEMPLE: I mean there is a practical -- it would be very difficult right now. We provide, you know, local weather information through our cable and BDU affiliates at some 1,200-odd communities.

2068   So you are quite right, it would be a bit of a challenge for Mitch here to program 1,200 channels of, you know, live on-air hosted programming. We haven't really looked at where that limit is, but I can tell you that part of our plans, which we don't necessarily want to share in the public domain, is to extend our ability to provide that hosted live segment to beyond.

2069   We do that now in the Toronto area, we do it in Montréal. We are looking at fibre. It's a cost.

2070   I mean we have a challenge because we are a national service so we just don't have to serve the west, we have to serve all of Canada, so our challenges, technical and economic, are a little more daunting than those faced by LOCAL1 and their -- but the idea is to be as local as we can.

2071   MR. MORRISSETTE: I will just ask Mitch Charron, our Head of our Television Networks, to describe. First of all, local communities are most impacted when there is very active weather and we concentrate on those communities when that happens.

2072   But we also have bureaus across the country to enhance that focus. We also have stringers across that country who can report in increasingly live coverage of what's going on.

2073   Can you elaborate, Mitch?

2074   MR. CHARRON: I would love to. I was kind of waiting to jump in.

2075   When we are putting shows together on a daily basis we try to take advantage of the time that we have. Unlike traditional broadcasters who have 60 or 45 seconds for a weather segment, we have 48 minutes of programming to kind of deal with. Within the programming wheel that we have, we have 13-1/2 minutes of local forecasts, but the rest of it is all video and feature related.

2076   We have segments that are up to 6 minutes in length, which gives us plenty of time to cover the country and get local, especially, like Pierre just mentioned, where there is active weather. We use time zones when we are preparing the show, so at 5 o'clock in the morning eastern time we will focus a little bit more on the east, but then as the morning progresses we switch the focus to go moreso towards the west and dig deep into the western communities regionally and then locally, and especially when there is active weather.

2077   So we are very, very proud of when we are covering local weather -- sorry, active weather, we know exactly what's happening, exactly who is up and watching at that moment and we dig in really deep at that moment and try to do the best job possible, being a national network.

2078   MR. GERMAIN: One additional point on this, Mr. Chairman, and this speaks to the plans, our forward-looking plans that Paul was talking about and it ties into the evolution of technology.

2079   So we haven't tested the limits of what's the sort of in-studio capability, but we know that we now in-studio, given what Mitch just talked about, are able to provide more local, regional coverage than we have been in the past because fibre distribution is now fairly pervasive. The cost of it has gone down significantly.

2080   So I can tell you, without divulging our specific plans, we have been in discussions over the course of the last year with virtually every major BDU in the country and we are looking at addressing that additional or enhanced regionalization and localization, if I can call it, through fibre distribution, supplementing satellite distribution.

2081   In the past we have no other choice, it was satellite. So if you were trying to cover, you know, 5, 10, 15 regions in the country, the costs would have been prohibitive.

2082   We are now at the point where we can significantly expand our regional coverage and to make it similar to what we are doing in Toronto to for example, right out of our Oakville studios. When we serve Toronto we can break it down into multiple regions with the assistance of a fibre distribution and the cable operators, both Cogeco and Rogers, and we provide them with -- I would call it a hyper local service and the audiovisual content within the hour is significantly expanded to what we do in other situations.

2083   So we are at the point now of being able to -- and we will be launching that within the next 12 months, to be able to expand the number of regions in Canada where we can do that. And it's thanks to the economics of fibre distribution today. It wouldn't have been possible even five years ago.

2084   THE CHAIRPERSON: Okay. Thank you very much.

2085   Corus' application describes itself as more of a utility than a programming undertaking and I take that to heart, but they have also indicated that one of their strengths is going to be to deliver a -- I perhaps was impertinent when I challenged Ms Courtemanche by saying are you implying that you are going to deliver a better local service and she was very quick to correct me that she was just saying that they are going to be delivering a different type of local service.

2086   So where I'm going with this is quality versus quantity.

2087   Corus is far less ambitious in terms of it's going to be reliant on successful negotiations with Shaw and will have a much smaller footprint in western Canada and their business case is built around trying to take an available technology and repurpose it to something more meaningful to the markets and deliver a product that they feel the market needs, and in the course of doing so deliver a little more robust content to the local markets, which I challenged them on yesterday. How far can you take that level of robustness, if there is such a word, to the point where you have to fall back on that informatic format that seems to be what you rely on when you get to a local market.

2088   So I feel that they are challenging you in one regard, but on a much less ambitious nature.

2089   So is it the fear that they will grow this business to be more competitive on a footprint level with you or is it just the sheer basis of the preponderance of their programming being weather, because it's the most practical content for them to provide, given that news is expensive and they have developed a solution for community which is self-generated.

2090   Is it the 14 minutes per half hour that really sticks in your throat or is it the potential of the service beyond that?

2091   MR. TEMPLE: That's a tough question to answer because we find there are so many things wrong with their application we can't bring it to one.

2092   I mean you mentioned whether it's just because they are regional. Well, you know, yesterday they basically admitted that, you know, if that works, you know, maybe they will do it somewhere else, and even if it isn't them it will be someone else doing it.

2093   So it's not just a regional thing, although that's a big region and, as we mentioned in our oral remarks today, we rely significantly on the revenue we can provide. So we have a problem with that.

2094   We have a problem with the content and the predominance of weather.

2095   Yes, we are passionate about weather and we tend to focus and think that that's the most important thing in the world, but not everyone shares that view and a lot of people who watch us now would be quite happy if it's more convenient to tune in at 8 minutes after the hour to get their weather there.

2096   So it doesn't matter whether they are better, the genre exclusivity test aren't based on whether someone is better. You know, that's what I was saying, it's not whether I'm more historical than The History Channel or I will do a better job than The History Channel, the fact is The History Channel was licensed, has genre exclusivity and they are The History Channel.

2097   So whether you think we are doing a good job or they are going to do a better job is quite immaterial, they fail the test. That's the issue.

2098   So whether they are -- maybe they will be kind of lousy but, you know, we are not the biggest company in the world and if we start losing audience share, you know, we have enough issues fighting unregulated and all these other little community channels and TV listings with their weather, the last thing we need is another licensed service, whether they are good, bad or as local or not as local.

2099   The simple fact is, the Commission has a policy and certain criteria they look at and they fail that. And the point is they don't have to fail on all of them, they just have to fail on one or two, as the Commission has decided in many decisions in the past. It's not that you have to fail every one or that it would be better or worse, they want to be a local weather channel and that's our job.

2100   I'm not sure if that rant answers your question or not.

2101   THE CHAIRPERSON: That helps. No, it does. It does. Thank you. That's exactly what I was wanting to hear.

2102   My last question -- I'm hoping it will be just one question -- is to do with aiding my understanding on the commercial content that is put on your network.

2103   When a national ad is sold, does it run always across the entire system or are there regional ad substitutions and, if so, how far down the system does that go?

2104   MR. TEMPLE: Our licence -- we are licensed for national, to sell national advertising.

2105   THE CHAIRPERSON: Okay. I just wanted to hear that for the record.

2106   That ends my questioning.

2107   Anyone else have anything?

2108   COMMISSIONER DUNCAN: Can I just ask a question?

2109   THE CHAIRPERSON: Oh, yes. Ms Duncan, please?

2110   COMMISSIONER DUNCAN: I'm just curious, so in Halifax The Weather Channel we see is not identical to what people see in Toronto?

2111   MR. CHARRON: We mentioned earlier that using fibre we were able in the Toronto area --

2112   COMMISSIONER DUNCAN: Yes.

2113   MR. CHARRON: -- able to kind of localize it a little bit more. So it would be a little bit different, yes.

2114   COMMISSIONER DUNCAN: So it's the hosted portions that are different?

2115   MR. TEMPLE: Yes.

2116   COMMISSIONER DUNCAN: And if I understood what you are saying, you are hoping to expand that; right?

2117   MR. CHARRON: And I would also like -- we do another regional feed, it's called MétéoMédia. We tend to forget about it, but that's -- we have one licence. We only have one licence, so if you want to think of it we are doing a regional feed, a separate regional feed, distinct in French, just for that region. That's an obligation. That's a regulatory obligation we have and which we are proud of, because everything we do is in both official languages. We also have a feed in Montréal. So there are two other regional feeds that we already produce.

2118   So we are, always have been, you know, working to provide this regional feed, even though it's a national licence, because, I will go back to our nature of service, it's national, regional and local weather. That's our licence.

2119   COMMISSIONER DUNCAN: Interesting.

2120   So in Halifax when I was watching your extensive coverage of the hurricane recently that came through Halifax, was that the same programming that would have been seen across the country --

2121   MR. CHARRON: Yes that would --

2122   COMMISSIONER DUNCAN: -- except perhaps maybe in Toronto or where you have more customized --

2123   MR. CHARRON: Yes, that definitely was. It was such a big story that this deserved national exposure. So yes, this would have actually been something that would have been broadcast in both areas.

2124   COMMISSIONER DUNCAN: All right. I'm just curious. I will have to spend more time when I'm in Ottawa looking at The Weather Network than I currently do.

2125   MR. CHARRON: I hope so.

2126   COMMISSIONER DUNCAN: Anyway, thanks very much. Thank you.

2127   Those are my questions, thanks.

2128   THE CHAIRPERSON: Thank you very much, Commissioner Duncan.

2129   That concludes our questioning.

2130   Thank you very much for your presentation, gentlemen.

2131   MR. TEMPLE: Thank you very much.

2132   THE CHAIRPERSON: Madam Secretary, would you please take care of business?

2133   THE SECRETARY: Thank you, Mr. Chair.

2134   We will now proceed with The Canadian Association of Community Television Users and Stations, CACTUS, who will be appearing via videoconference from Gatineau.

2135   Appearing for CACTUS is Cathy Edwards.

2136   You may now begin and you have 10 minutes for your presentation.

2137   Ms Edwards...?

INTERVENTION

2138   MS EDWARDS: Good morning.

2139   CACTUS represents the views of individual Canadians, independent community television channels and producing groups that believe that participation in the broadcasting system by ordinary Canadians is fundamental to Canadian democracy.

2140   CACTUS would like to echo many of the views expressed in the intervention by Pelmorex regarding CRTC policies with respect to genre exclusivity and the dangers posed by broadcast distribution undertakings also being allowed to provide content.

2141   We echo Pelmorex's concerns that carriage on the basic cable tier is a status that other applicants must go to great lengths to obtain, yet BDUs as distributors have the ability to add services they like.

2142   Greater diversity of voices within the Canadian broadcasting system and Canadian democracy is not served by the level of cross-ownership we see between Shaw and Corus.

2143   We agree with Pelmorex's detailed analysis of the one-hour sample programming wheel given in the LOCAL1 application, supplementary brief on page 5. This wheel appears to consist almost entirely of weather-related programming, except for 3 minutes each half hour which is described as news.

2144   Based on this wheel we agree with Pelmorex that LOCAL1 appears to be almost exclusively a weather channel. We are confused, however, about how this application describes the channel in other sections and in how it is apparently being presented to the community at large. In particular, we are concerned to the extent that it appears to duplicate the role that is already supposed to be filled by community channels owned and operated by Corus' owner, Shaw Communications.

2145   The key statement in the application occurs on page 7 of the supplementary brief in the section "LOCAL1 will not directly compete with The Weather Network".

2146   The applicant writes:

"First and most importantly what will distinguish LOCAL1 from The Weather Network is its unique programming concept and hyper local approach to information about community events and activities." (As read)

2147   So on the one hand, given the sample programming wheel which we assume would be repeated all day long, we don't see where the information about community events and activities will be played back.

2148   Based on the split screen format presented in Figure 1 on page 3, if the weather one hour wheel fills the live video window at upper left, that only leaves the text only news tab running along the lower edge.

2149   If we set aside the programming wheel, however, which is the only directly analyzable description of content in the application, and take the application's statements about coverage of community events and activities seriously, then we encounter a different concern, which is that the proposed service encroaches on the community service that is supposed to be provided on the cable basic tier by Corus owner Shaw Communications.

2150   We were first alerted to the LOCAL1 application by Calgary residents who said LOCAL1's proposed split screen format and simultaneous mix of live video with a text news feed, weather and traffic cameras, is identical to services currently offered on Shaw community channels.

2151   When the LOCAL1 application was first submitted this spring, they sent me a copy of two hours of the Calgary community channel taped between 3:00 and 5:00 p.m. on a weekday on March 3, 2010. I would like to show you two short extracts.

2152   You can go ahead with the first one, please, Pierre.

2153   For the bulk of the programming day and several of Shaw's systems, including Calgary, Shaw TV repeats a professionally produced one-hour news wheel very similar to the wheel proposed in the LOCAL1 application. We see here the paid host of the sports segment that begins at 10 minutes past every hour with a weather strip and text news service superimposed at the bottom. There is a sponsorship message on now, which happens for 15 seconds of every minute, and then the other 45 seconds is occupied by weather information. Here it comes now.

2154   So weather information is on-screen 75 percent of the time.

2155   Now, if you could play the second clip...

2156   Shaw TV in Calgary also presents a full-screen minute of weather-specific video every 10 minutes -- here it comes -- on the 9s, where the Local1 application proposes to present a full minute on the 8s, and The Weather Network presents the same on the 10s.

2157   So there is a significant weather focus already to Shaw TV, which was never envisioned as a role for the community channel, and certainly is not produced by volunteers.

2158   Although graphically these samples don't look exactly like the Local1 sample given on page 3 of the supplementary brief, the format changes depending on the time of day. In the mornings, moving video is restricted to the upper left, as shown in Corus' sample, and traffic cameras and weather information are displayed to the right, exactly like the Local1 sample.

2159   Our members in Calgary, for example, reported that yesterday morning feeds from more than 20 different traffic cameras were rotated at the upper right, and according to mediamag.ca, the Shaw drive-home program in Edmonton, between 4 and 6 p.m., deploys 15 live traffic cameras at major intersections. These are significant and unusual resource allocations for what is supposed to be a community TV channel to facilitate production by members of the public. So, all of the elements of the Local1 format are already present on Shaw's community channels.

2160   The main difference appears to be that the live video window in the Local1 application is where the one-hour weather wheel will play, whereas Shaw TV in Calgary uses the window for community news stories.

2161   This raises the following questions: Where is Corus planning to produce these hyperlocal hosted weather segments?

2162   We are not aware that Corus has television studios in the 10 proposed markets on page 5 of its supplemental brief, but, coincidentally, Shaw does, its community channels.

2163   The left column on the table over the page shows all of the towns and cities in western Canada where we are aware that Shaw TV has television production studios. We note that there used to be over 50, and now there are just the 10 listed, according to the company's website.

2164   The right column lists locations that the Local1 application says will produce hosted weather segments three times a day.

2165   These lists exactly match, except for Red Deer, whose community TV studio only recently closed to the public, but may still exist.

2166   So we would like to ask: Will common staff be used and production resources taken from the community in order to generate ad revenue via Local1?

2167   The application does not say whether the community activities and events coverage planned for Local1 will be moving video or part of the text scrawl at the bottom. If they are to be moving video, will community stories actually be taken from the community channel directly, since short stories in a wheel is how Shaw has been packaging much of its community content in Calgary and other cities for more than a decade.

2168   I understand that the company claimed yesterday that their community channels are long format, whereas Local1 will be short format, but this simply isn't true. Shaw community channels play, predominantly, this wheel of short clips.

2169   This would imply that volunteer labour and resources would be used to subsidize a commercial service that would be competition for an existing Category 1 service, The Weather Network.

2170   Furthermore, extensive program sharing already occurs between at least four of Shaw's community channels and Corus-owned commercial radio stations. Below is the program schedule this month for Shaw TV in Winnipeg, which is seen, incidentally, province-wide. For three hours every weekday morning, community TV viewers across Manitoba hear the CJOB morning show, which is owned by Corus.

2171   Similarly, the 6 to 9 a.m. weekday slot on Shaw TV in Edmonton is occupied by the CHED morning news. Its schedule is on page 6.

2172   And, finally, the 6 to 9 a.m. slot on Shaw TV Vancouver is occupied by the CKNW morning show.

2173   CJOB, CHED and CKNW are all commercial radio stations owned by Corus.

2174   A feed from CHQR in Calgary, another Corus station, presents the news and traffic on Calgary's Shaw community channel, but we could not find a published programming schedule for Calgary, which is, in itself, a violation of community channel policy.

2175   But even if community channel staff and studios are not used to produce content for Local1, Local1 appears to want to take over the role of the community channel in many statements in the application, for example, describing the new service as an enhanced hyperlocal community information service with which viewers and municipalities will have the ability to create, upload and share information.

2176   What does "have the ability to create information" mean? Will Local1 facilitate content creation by viewers and municipalities as well as share it? Isn't that what the community channel is supposed to do?

2177   We are especially concerned by the mention of municipalities. Community channels were envisioned in early CRTC policy documents as conduits for local government and residents to share information on local issues and to exchange feedback. This significant role has been fully realized in the United States, where a whole cable channel is funded and used by the municipality to share information about its services with residents. This role never materialized here in Canada, except for the playback of municipal council meetings.

2178   In recent years, even council meetings have often been shuffled to the bottom of the priority list on erstwhile community channels by cable companies.

2179   For example, we heard in April from Metro Vancouver that even such a large city had difficulty maintaining scheduling priority with...

--- Technical difficulties

2180   MS EDWARDS: ...the strong and rich relationships that a community channel should have with its municipality are not being realized on Shaw's community channels, why should a commercial application by one of Shaw's subsidiaries to develop such a relationship be encouraged?

2181   The application appears to be an attempt to monetize free labour and content from residents and municipalities that already is meant to get production support at the community channels of the applicant's parent company.

2182   We note in the interventions by municipal councils posted on the CRTC website for this application that the letters endorse mainly the coverage of community information and events. Weather is mentioned secondarily, which makes us question how this application has been presented in the communities in question.

2183   These are the questions that this application raises for us. The applicant's intentions are just not clear. If we base our assessment solely on the programming wheel, we agree with Pelmorex that Local1 appears to duplicate The Weather Network.

2184   If, on the other hand, we believe the applicant's statement on page 8 that hyperlocal community events and information will distinguish the service from that of The Weather Network, then we conclude that Local1 will be very similar to various of Shaw's community channels, which already have mandatory carriage on the basic tier.

2185   Local1 would appear to be an attempt to repurpose that community channel format throughout Shaw-owned systems for commercial gain through advertising, which is not allowed on the community channel.

2186   We are of the view that either as a weather service or as a monetized community channel, Local1 offers nothing new to the broadcasting system, nor to the basic cable package.

2187   Further, it has the potential to undermine both existing services and should be denied.

2188   We appreciate the opportunity to comment.

2189   THE CHAIRPERSON: Thank you very much, Ms Edwards.

2190   Commissioner Simpson, here in Saskatoon.

2191   MS EDWARDS: Hi.

2192   THE CHAIRPERSON: I had the benefit, also, of looking at Shaw's community channel over the last few nights here in Saskatoon, and was, admittedly, a little taken aback at what appeared to be the Local1 proposal already happening on a community channel, but certainly not to the extent with respect to the weather content.

2193   My question is this. You being a professional observer of the community access television genre, why do you suppose, in your mind, putting all of the other technical issues aside, Shaw would be wanting to, essentially, replicate this service that they are now doing on community again on this other channel -- on this exempt analog channel?

2194   MS EDWARDS: It is hard to try to guess at somebody else's motivations, but I actually worked at Shaw, at the community channel, until 1997, which was the year in which they got rid of all the volunteers in that city, and there was an awful lot of investment -- resources -- put into developing the split-screen format, which could have all of these different feeds going. So they have been using the community channel to experiment with this idea for a long time.

2195   Whether they plan to use the studios that already exist, which are in all of the 10 cities where they are intending to have hosted segments -- and, like I said, we are not aware that there are any Corus television studios, only some radio stations -- that is the obvious thing. Whatever community chunks they are going to use, they would take those right out of the segments on the community channel from Shaw, as they are already doing with radio content on the community channels, freely sharing -- and we don't even know if that is legal, by the way. It's not access from content and its not community programming created by the licensee, as we understand it.

2196   They are already doing that, so it's a way for them to use the resources which they are mandated to spend -- 2 percent of their gross revenues on a community channel -- and use those studios and facilities to subsidize a service which is going to sell ads.

2197   That is the obvious conclusion from the outside, but that's your determination to make, I think.

2198   THE CHAIRPERSON: Thank you.

2199   Yesterday, in my questioning of Corus, I asked specifically where this content would originate from, and I was assured that, at least for the present time, it would be emanating from Calgary, from a facility in Calgary, and that they would be staffing up and applying significant dollars to building resources specifically for this channel.

2200   So taking that at face value, other than your basic concerns that you have expressed, do you have anything beyond anecdotal evidence or information that would add substance to your concerns that community facilities are being used for commercial purposes?

2201   MS EDWARDS: In an ideal universe, where we had true competition and we didn't have huge BDUs that can also program their cable services, I would say: Great, Local1, go ahead and compete out there.

2202   Our concern as an organization is mainly with the fate of the community channel, so we keep intervening to alert the Commission to the fact that these channels -- and Shaw has been a particularly egregious abuser of these channels, in our view -- they are using them for commercial intent.

2203   If you watch the sponsorship messages, they are on-screen for 15 seconds out of every minute. They are allowed to have as much sponsorship within a program as they want, but I don't know if the Commission, when they made these documents, understood that they are running these messages all the time.

2204   All of the hosts in that one-hour news program were professional. CRTC audits have shown that they routinely report, as access content, these professional segments.

2205   That's our main concern. So when we see another application come along which appears to be -- it appears that their community channel has been used to practise for that application for a dozen years, we just think that you should know about it. We think, beyond that, it is up to you to figure it out. It is between you and Pelmorex to figure out whether it is going to duplicate and undercut another viable service.

2206   THE CHAIRPERSON: Thank you.

2207   In your monitoring of the Shaw community channels -- and I gather that you have some facility to do this across the country -- has it been your experience of late that you have seen what appears to be paid advertising that is not necessarily attributable to a sponsorship, per se, on any of these community channels?

2208   MS EDWARDS: What we see -- and it's the Shaw community channel that I have looked at in detail recently, because of this application. I have a two-hour VHS tape from which those clips were taken that I can leave with the Commission, if you would like to have it, but right before -- what did I say -- it's on the 9s that they do the one minute of weather information on the community channels right now. On the 8s, they have a full minute of sponsorship messages, which are really riding the edge of commercial advertising.

2209   For example, one of the big sponsors is Yardworks, and it does use prejudicial language like, "Your efficient and timely solution for your yard needs," and this kind of thing.

2210   They have national car ads on there. It will say, "Go see your Hyundai dealer for our new, efficient models."

2211   It is riding the edge of what is commercial advertising all the time.

2212   I am happy to leave those samples with you.

2213   THE CHAIRPERSON: Thank you.

2214   One more question. Corus had presented the very innovative proposal that community content, using technology for not only efficiency, but for the dynamic that it can provide today via social media and other means -- that their proposal for Local1 would be to make available community content that is community generated, and put a whole new face and concept to community access.

2215   Do you have any specific comments on that?

2216   MS EDWARDS: Our comment is basically the same as we made at the Community Television Policy Hearings in the spring, which I know you weren't present at.

2217   Again, the issue of genre exclusivity and the overlap with The Weather Network aside, we wouldn't care in the slightest, from the point of view of the community sector and public access to Canadian airwaves, if Local1 were to go ahead. You know, more power -- there is space on the dial. I think, in a 500-channel universe, that there should be two local services.

2218   Our concern has always been that the community channel resources, that 2 percent of gross revenue, which amounted to over $120 million last year, is being collected from subscribers to give them a voice on the airwaves -- and they are paying for it -- and instead what they are getting are these pseudo-commercial news wheels, which are all professionally hosted.

2219   So we don't care. If they want to do that channel, it doesn't threaten us, but when I say "us", it's Canadians out here that can't get on. That news wheel is pre-empting full-length programming that people in the community would like to do.

2220   Our pitch has always been that the community television sector, as recognized in every other industrialized country, and a lot of developing countries, is defined, first and foremost, by ownership. They are run by non-profit organizations based in communities. That's how the community radio sector works in Canada, and we just think that it should apply here.

2221   We want the 2 percent collected for local expression to go to genuine community channels run by the community, and Shaw can go and do whatever it wants.

2222   In fact, we don't want to stand in its way. If it wants to go and experiment with that format, great, but we would like the money for local expression to actually let people make their own programs, because that is what it was intended for.

2223   THE CHAIRPERSON: And that technology is available today. Television is no longer completely inaccessible to the public because of technological and cost barriers. Today, with video cameras and computers, it does present the possibility that municipalities, for example, can provide packaged programming for distribution by the cable industry.

2224   So we all have to look at this evolving technology as perhaps shaping or reshaping our views to community access going forward.

2225   MS EDWARDS: Right, but those decisions shouldn't be made by cable companies, they should be made at the community level. If non-profits and municipalities want to do that, they should have a channel that they manage and can experiment with those new technologies.

2226   Over 80 percent of the community channels that once existed in Canada have been closed.

2227   THE CHAIRPERSON: Point taken.

2228   That concludes our questioning.

2229   MS EDWARDS: Okay. Thank you.

2230   THE CHAIRPERSON: We are under some time constraints. Thank you very much, I enjoyed your presentation very much.

2231   I am going to call for a five-minute break, so we can gather ourselves up and change technologies and get back to another presentation.

--- Upon recessing at 1013

--- Upon resuming at 1023

2232   THE CHAIRPERSON: Madam Secretary, would you please introduce the next presenters.

2233   THE SECRETARY: Thank you, Mr. Chair.

2234   We will now proceed with the Communications, Energy and Paperworkers Union of Canada, CEP.

2235   Appearing for CEP is Mr. Peter Murdoch.

2236   Please introduce your colleague, and then you will have 10 minutes for your presentation.

INTERVENTION

2237   MR. MURDOCH: Thank you, Madam Secretary.

2238   For the record, I am Peter Murdoch, CEP's Vice-President of Media, and with me today, on my left, is Monica Auer, CEP's legal counsel in this proceeding.

2239   Mr. Chairman and Commissioners, as you know, CEP is Canada's largest union of media employees. Thousands of the people in our union work for Canada's locally based and locally focused programming services. They are the producers who create award-winning programs, journalists and reporters who get on local streets to find news, and the camera operators and technicians who send programs to air.

2240   Our written submission addressed the Local1 application and several issues related to procedural fairness. Although we remain concerned about fair process, I want to use my time today to focus on the Local1 application alone.

2241   Local1 is a Trojan Horse for Canada's broadcasting system. It presents itself as a highly local service, but will not create any local content in the local communities from which it will take money.

2242   We believe it is very significant that Corus did not respond to the points we made in our written intervention concerning employment and local content.

2243   In failing to provide any evidence to refute our points, Corus has conceded that they are valid.

2244   So when Corus says that it will offer "local news", we are correct to point out that it will not be hiring any additional journalists.

2245   And when Corus says that it will offer reporting, we are correct to point out that it will not be hiring any new reporters.

2246   Instead of creating, producing and originating programming in local communities across western Canada, Local1 will reuse and recycle existing content from its existing radio stations, from transportation departments, traffic cams, and from local city halls.

2247   There are other problems with this so-called granular concoction. While Corus calls Local1 local or even hyperlocal programming -- I am not sure what that is -- more than half of its programming is regional, provincial or national.

2248   Of the 60 or so locations served by Local1, only 10 would receive the service's "hyperlocal" weather segments -- again, I am not sure what that is, and we can talk about it later. Everyone else would get regional weather forecasts. Local1 is far less local than it looks.

2249   And while Local1 has four program proposals that use the word "live" in their title, none of Local1's programs will be live. In fact, from what we can tell from Local1's draft schedule, roughly four-fifths of its produced programs will be repeats, and for this non-local, non-live and non-originating service, we estimate that Corus plans to charge subscribers between 8 cents and 9 cents per month.

2250   I would remind the Commission that this is a company that is owned by Shaw, which is the "stop the tax" crowd.

2251   Anyway, CEP also has concerns about Corus' Local1 application regarding concentration of ownership and local advertising.

2252   First, we note that Corus argues that the CRTC should ignore Local1's use of content from Corus-owned radio stations because Local1 would obtain this content from the stations' websites.

2253   Similarly, the radio stations could use any Local1 content placed online.

2254   This argument glosses over the basic fact that the same company's resources are being repurposed, reused and recycled.

2255   The simple truth is that this application does not provide Canadians with new news and information, it will simply recycle content that has already been used elsewhere.

2256   Second, if you approve Shaw's application for Canwest and Corus' application for Local1, the Shaw group will control radio, over-the-air TV, the community channel, and Local1 in Vancouver, Calgary, Edmonton and Winnipeg. This is too much control for one broadcaster or one family to have. Of all the safeguards for limiting centralized control over information, the only one that works is diversity in ownership.

2257   Third, we note that the Corus application said that three-quarters of Local1's revenues would come from local advertisers. Corus says that you can ignore this because its TV listing channels were earning even more local advertising income than Local1 will take.

2258   The difference is that the TV listing channels were exempted from regulation and licensing. Now that Corus wants a broadcasting licence, it wants you to ignore the inconvenience of the CRTC's 35-year-old local advertising policy. That policy says that local broadcasting -- as a quid pro quo, broadcasters create local employment and offer new local broadcast content in exchange for the right to earn local income.

2259   But since Corus will not be producing any original local programs in 60 or so of the markets it will serve, the policy says that it should not be able to extract local revenues from those areas.

2260   What Corus is really asking for is all of the benefits and none of the responsibilities that local programming services have had to meet to obtain their licences.

2261   Yesterday Corus revised its application to say that it would only sell local ads in areas for which it offers local weather or news, but these areas will still be the larger urban centres of the prairies and B.C., and Corus still does not intend to hire reporters and journalists in these communities.

2262   If Corus wants you to revise and review your local advertising policy, the right place to do that is a policy hearing. If you abandon or modify this policy in this licensing hearing, it will not be long, we think, before you receive more applications from other BDUs and TV listings real estate to offer so-called "local services" that cream from local communities without offering either locally produced programs or the employment that such programs create.

2263   For these reasons, CEP strongly opposes the Corus application. This scheme, to make new money from Shaw's spectrum real estate, will not strengthen Canada's broadcasting industry, will not increase employment in broadcasting, and will not produce the level of new and original programming that Canadians want and should have.

2264   We ask you to deny this application, but if you decide to approve it, despite the opposition from other stations, community channel supporters, and Canada's largest media union, we ask that you prohibit Corus from describing it as Local1 when, at best, it is a regional service.

2265   We also recommend that if you license this service you give it a one-year term, so that you can review its performance in conjunction with all of the programming services controlled by Shaw in Canada.

2266   Finally, to avoid any confusion, we recommend that you restrict Corus from soliciting either local or regional advertising in areas where it does not even offer "local weather", all the way from Calgary.

2267   To conclude, let me emphasize that CEP's members firmly believe in the importance of the financial viability of local news. Local TV stations serve important democratic and industrial goals, which is why Parliament was correct to demand programming of the highest standards for Canadians. But holding a broadcast licence should and does bear responsibilities that are not imposed on other businesses.

2268   We submit that Canadians should have, and are entitled by law to have, local news of a high standard, produced in their areas by reporters and journalists with ethical standards, accountability and professionalism.

2269   From what we have seen, this specialty service will essentially recycle and reuse content that others have already created, and then charge subscribers a fee for it.

2270   Our members believe that Parliament has given you the duty of ensuring that Canadians get more, specifically that they benefit from programming that meets the highest possible standard of professional newsgathering.

2271   I want to touch on a couple of other quick items.

2272   Our concern about the idea of being able to extract revenue from a community without any contribution that we can see that is significant with respect to news and information -- I just want to remind you of CHEK TV in Victoria. That was a station that was going to be closed by Canwest, and the employees dug deep. Some of them had to re-mortgage their houses. Some certainly went to the bank and got loans. And, with the help of other investors in the community, they have kept that station going, and it is focused on local news and information.

2273   They walk the talk, and if anything is hyperlocal, that is.

2274   The idea that you would consider licensing another broadcaster to come in and provide minimal, if anything, in terms of local news and information, but extract revenue from them, which could damage CHEK TV's ability to keep being on the air, is difficult to comprehend.

2275   I am not sure that local news is simply traffic cameras watching daily congestion and traffic jams. We have a severe problem with that.

2276   I would be happy to answer your questions.

2277   THE CHAIRPERSON: Thank you very much, Mr. Murdoch. I will turn the first line of questioning over to Commissioner Molnar.

2278   COMMISSIONER MOLNAR: Thank you, and good morning. I have read your submission and have heard your comments here today, and I think you are quite clear in the concerns you have.

2279   I have a couple of things that I want to cover with you. First of all, we heard first this morning from Pelmorex, which is concerned with the competition as it regards weather-related programming, and in reading yours, you appear to be perhaps more concerned with news reporting and the quality of news production, and so on, or what I would read from your statements to be the lack of quality in news reporting and news production, and I was struck somewhat by the fact that we haven't seen those who actually are in the business today of producing that local news coming forward and making those same arguments.

2280   CTV is not coming before us, and Canwest -- to what extent they may come before us on this or not. So I think that is somewhat interesting, that you are here to represent the competitive nature of this with local news.

2281   Going forward, on your statement you speak about the fact that this would be a cost to consumers, without providing them anything more. It is repurposed content at an additional cost to consumers.

2282   It is being presented as a discretionary service, where consumers could choose whether or not they would be subscribing. Do you believe that consumers should have the right to pay this?

2283   If it is truly discretionary and not bundled into basic or otherwise, why shouldn't consumers have the right to choose this service, repurposed content or not? If they feel it is repurposed and not providing them anything additional...

2284   MR. MURDOCH: I will let Monica answer that, but let me go back to your first comment. In terms of why the conventional broadcasts aren't here, CTV and Global, I can fully understand why Global is not here, they will be owned by the same company. So that is fully understandable, in some ways.

2285   But CTV -- and I think you are going to hear from the independent broadcasters, so they will be able to answer your question, probably, more clearly and ably than I can.

2286   But on the discretionary, I would ask Monica to respond.

2287   MS AUER: Thank you, Commissioner Molnar, for your question.

2288   I think we would begin by noting that however the service is categorized, Cat 1, Cat 2, or even if it were on over-the-air, it would still have to meet the Act's fundamental objectives, which would require programming of a high standard, as well as, in this case, what I would describe as true local content, rather than content that originates from a master control in Calgary.

2289   Secondly, I would suggest that it would still have to meet your additional policy requirements, including the local advertising policy. I don't think it meets that test or that burden here.

2290   Again, according to the application, it was my understanding that already Local1 had estimated that it would be obtaining 85 percent of Shaw's digital subscribers, which seemed to me to suggest that it had envisaged extremely widespread carriage and acceptance and uptake.

2291   Alternatively, if the idea is that everybody should be free to accept this application, or accept this service, if it were licensed, which we hope it is not, I think the interesting thing is that if everybody across the country had this interest in this service, surely there would be no difficulty at all in getting carriage from every cable company or every BDU in the country, and I don't think that was the impression that I actually got from reading the application, that there was some notion that, well, we think we can make a go of it in western Canada because we think we can get carriage here. As for the other parts of the country, we will see how it goes and maybe interest will emerge.

2292   I guess my point is that, first, we don't believe that the service, as presented, meets Canada's broadcasting legislative and regulatory requirements; and second, we don't know whether that level of interest actually exists.

2293   As for personal choice, it was my impression that the Commission is still not licensing even Cat 2's as standalone services, so presumably it would have to be included within a package of some kind, and I think there would be legitimate concerns on the part of those specialty services within that package as to what they are having to be put into bed with, so to speak.

2294   I hope that answers your question.

2295   MR. MURDOCH: Just let me add that, despite what the consumer might choose -- we can all choose to buy a lemon of a car, for instance. But it seems to me that we have regulatory policy and instructions from Parliament to ensure that the things that are making the airwaves come with a certain quality and expectation, in terms of their programming, employment, and a variety of other things. It's not just a matter of whether the consumer wants it, there is an expectation on the part of Canadians that this body will, in fact, ensure that quality will be maintained.

2296   MS AUER: If I could just tag along with Mr. Murdoch's comments; of course, there is the underlying objective of the Act, which one might view as an industrial policy, which particularly, I suggest, in times such as these, wants to see more Canadians gainfully employed in an extremely interesting and engaging profession, namely, producing programming.

2297   COMMISSIONER MOLNAR: I know that you are both very knowledgeable and follow closely the regulatory process and decisions, and your submission, as well, dealt with our broadcasting, the history and precedent, and so on. So you are knowledgeable and you are aware, I am sure, that we don't, for Category 2's, do severe scrutiny on the quality of the product that they will deliver.

2298   So having us review the quality of the product that is to be delivered is somewhat unique in this circumstance. Would you agree?

2299   MR. MURDOCH: I am not asking you to say -- for instance, compare the local news of BCTV and CTV in Vancouver and tell me which is the highest quality, et cetera. But I think there are expectations, both in the Act, in terms of employment and opportunities and the things that Monica just mentioned, and in the CRTC's own regulations and policies that say, for instance, that there are certain expectations that we are putting on broadcasters in order to get a local licence, in order to sell in a local market. There are certain expectations that we have; not to do with "Do you prefer to cover one thing or another", but expectations about employment, about professionalism, about certain standards, et cetera, which you have given voice to, by the way, over the years. This isn't anything new that I am telling you.

2300   I am not asking you to judge one quality from the other, and I think the folks from Pelmorex -- sort of the old History Channel example that they gave you. Nobody is saying, "Is one more historical than the other," and I am not saying, "Is one local news..."

2301   But there are certain standards. Come on, we agree that there are certain standards in what we think should be local news, and one of them, one would imagine, is a certain amount of rapportage and journalism professionalism, et cetera, and not just simply a traffic camera.

2302   MS AUER: If I could add, Commissioner, had we seen what one might think of as a normal Cat 2 service, where it is strictly national advertising, we might have reframed our arguments. But, in this case, they are asking for six minutes of local in each of the 10, which is a modification from the original application, and that does trigger our interest, because that would be unusual.

2303   For instance, I think there was a reference made to the case of CP24, and look, CP24 exists. You did that. On the other hand, I am looking at the CRTC's statistical financial summaries just from last year, and to serve the Toronto region, in terms of providing an excellent service, they hired 94 people, just for Toronto.

2304   So there is something to be said for having at least a look at what they are doing, particularly in this case, not only because it's affecting -- as Pelmorex argued this morning, I think, very ably -- but also the local aspect.

2305   COMMISSIONER MOLNAR: Thank you.

2306   You did bring up CP24, and I know that you argued that if we were to approve this, it is little more than a death knell for the CRTC's local advertising policy.

2307   You brought up CP24, and there are a number of examples -- CityNews, Rogers.

2308   Certainly earlier, years ago in Commission policy, there were a number of Category 2's licensed that provided the ability to access local advertising in the past. So why do you see this as being the death knell for our local advertising policy?

2309   MR. MURDOCH: I am going to turn this over to Monica in a minute, but let me, just by way of comment, suggest that -- I think that each local community has a certain amount of resources, revenue if you will, available in that community for advertising. And, as we know, we have had the so-called television wars between the cable companies and conventional, in order to see whether we could support local television news -- real local television news.

2310   And I think it is hard enough to attract local advertising. This pot is not a pot that is expanding. In fact, in today's economy, the conventional broadcasters and the newspapers will tell you that it's a pot that is actually reducing in size.

2311   If we bring more people into that game and we start to -- somebody is going to pay the price for that. Somebody is going to pay the price for that, and I am very afraid that it will be local television news, which is now done and handled professionally.

2312   That's just by way of comment. I will turn your question over to Monica.

2313   MS AUER: Thank you, Commissioner, that's an excellent question.

2314   Looking at the whole gamut of all of the services the Commission has licensed -- at one point I tried to figure out just how many, in total, had been licensed, whether they had launched or not, and it seemed to be in the order of 500. Of the ones that seem to now be reporting regularly to the Commission, it looks like, roughly, 180 to 200 services. And if there are as many as 5 that are producing a hyperlocal service, I would still say that, in that case, the Commission look very carefully at the nature of the programming and the actual investment in the industry, so to speak.

2315   And we have the example of CP24, in which they were actually hiring far more than 52 people to serve one city.

2316   I think you also have the issue, then, of The Weather Network. I was following the discussion this morning and I thought it was intriguing that if we have two fairly similar services, if we accept the argument that in fact these are fairly similar, specifically in terms of their ability to provide local weather -- if I were their counsel, I would certainly advise them to ask for an exception to the local advertising policy, too, if you were to license Local1.

2317   What would be the difference between the two? They are both offering some kind of local content, and it would simply make good financial business sense to ask for exactly the same treatment.

2318   That then becomes, I think, a bit of a tipping point. At what point do you say: Hey, we are producing a short regional segment, which is really a local segment, and even though we have a national news service -- or whatever it might be -- we think we are entitled, too, to collect some local advertising.

2319   I am not arguing slippery slope, I am just saying that you have a policy for local advertising, it makes certain requirements, and I think that is the policy that should be addressed and used at this point, until you decide to change the policy, following a full discussion of its key points, its benefits and so forth.

2320   COMMISSIONER MOLNAR: So where there were decisions made -- and I want to make sure that I reference the correct one here -- between CP24 and CityNews, one of the considerations was: What is the impact on the local advertising market? How significant will this be? Will it have a material impact? Are the markets healthy, and so on.

2321   Do you view that to be relevant, or should we simply go back to -- you know, that has been one of the criteria in determining whether to allow a Cat 2 to access local and regional advertising.

2322   That's not what you are saying is the proper consideration here?

2323   MS AUER: I am saying that the local advertising policy, as it now stands, implies a quid pro quo, an exchange, if you will, between the local communities and the broadcasters who seek to benefit from their access to the local retail market.

2324   I was here for part of the day yesterday, listening to the applications for a new radio station in Humboldt. Those stations rely, obviously, on the local market.

2325   How will local radio stations like that across Canada survive if we begin licensing Cat 2 TV services that, to all intents and purposes, are trying to offer much of the same content without going to the trouble of installing and employing people in those local communities?

2326   How does a service that originates from Calgary actually speak for the local community?

2327   And I certainly got the notion that we are going to have a great deal of user-generated content.

2328   But I think, as Ms Edwards from CACTUS pointed out, what of the community channel? How do we then distinguish between them?

2329   It seems to me that the Commission faced this issue, very clearly, in the mid-1980s, when it began to license the very first optional -- the very first basic specialty services, and it gave a great deal of thought to trying to ensure that there was a balance -- a finely tuned balance and equilibrium between existing services, so that everybody had a chance to thrive.

2330   Our concern, I believe, with this application, is that it is a Trojan Horse.

2331   MR. MURDOCH: I would just say that -- I can't speak for the conventional broadcasters, but I don't think they were kidding over the past few years about the jeopardy of some of their television stations and the markets they serve.

2332   I am sure you will take that into consideration.

2333   COMMISSIONER MOLNAR: We are taking everything into consideration, by the way.

2334   I want to close with one question. As I said, I read your submission, and I heard you, and I understand what you are saying in your intervention. At the end, today I think you left off by saying, "but if you decide to approve, here are the conditions."

2335   MS AUER: This is bad legal training. In the alternative, we are going to give you the --

2336   You know, if you are going to take the worst possible step, okay, here is how you could make that better.

2337   Really, we don't want you to license this service. Maybe we could make it a little bit more clear: Do not license Local1, it's a bad thing.

2338   COMMISSIONER MOLNAR: All right.

--- Laughter

2339   COMMISSIONER MOLNAR: So you are not prepared to tell me the conditions under which we could mitigate the harm that you feel would be put on the existing broadcast system?

2340   I mean, I understand that it's a bad thing from your perspective, that that is your position. On the other hand, it may be bringing some new information to some communities. It may be bringing some of the new multi-media platforms into the existing broadcasting system, and the risk is, if you don't bring the new into the traditional system, people leave the traditional system to go to all of the new platforms.

2341   So as we consider all of this, I just wonder if you could tell me, is there a set of conditions --

2342   You have said here that they shouldn't brand it Local1. I don't think that truly deals with your concerns.

2343   So what would be the terms and conditions, or the conditions of licence, that you think would help to mitigate some of the concerns you see?

2344   MR. MURDOCH: I can't think of any. I don't want to be sort of a smartass, but I think it's a bad idea, badly conceived.

2345   I don't blame them, by the way, for trying to see whether it will fly.

2346   And I don't see -- on the idea that it might offer communities something new, we don't see this. They talk about aggregated stuff; well, that's just recycled things that other people have produced, which is certainly available on the net.

2347   I mean, it strikes me that this is more a website that they are talking about than broadcasting.

2348   In terms of engaging the public and having a two-way street, that happens now on the websites of broadcasters and newspapers and radio stations. That kind of engagement is going on.

2349   People have blogs about what is going on in their local community.

2350   This isn't really anything particularly new.

2351   And the construct of hyperlocal is a spin on a word that I don't really fathom. It's not an accurate description.

2352   So even in my best -- try to look and see what is it that this brings, I can't see anything new that it actually brings to these communities, such that subscribers are going to have to pay for it, and local advertising revenue is going to move out of the community, where it actually could support the media that is producing local programming and local news.

2353   I can't think of anything that is going to mitigate this licence myself.

2354   MS AUER: And I obviously agree with Mr. Murdoch, but I would like to point out that, yes, this is a technologically innovative proposal, and it should still have high quality programming content. If technology alone were the criterion, I think we would have a problem with ensuring that Parliament's objectives for broadcasting were being met.

2355   As other people have mentioned, of course, we respectfully believe that you will make a determination in the fullness of time.

2356   We think that there are too many cons to outweigh any of the positive aspects of this application. There are serious negative effects.

2357   Insofar as providing you with draft conditions of licence, if we were to say to you, "Oh, they must employ a certain number of people in each community," I think you would be immediately accused, if you were to adopt that condition of licence, of returning to a highly regulated regime.

2358   Can we go down that road? I don't know, but my experience has been -- and I am sure that many people in this room have had the same experience -- that where you see a service licensed, within either the first licence term, or certainly the second, you see a series of amendments that fundamentally change what people thought they would be getting out of it.

2359   So, of course, you could impose a number of restraints and restrictions through conditions of licence, but how long will those remain in place?

2360   COMMISSIONER MOLNAR: I am asking the same question again, because sometimes I need to ask twice.

2361   In your submission, you said, firstly, "We ask that the Commission precisely define its understanding of what it is licensing by granting Local1's application. The CRTC should impose clear commitments to programming and boundaries on the licensee's activities through conditions of licence."

2362   Essentially, what you are saying is, you could do that, but at the end it will not be effective?

2363   Is that what I just heard you say?

2364   MS AUER: I think what I am saying is that none of us can predict the future clearly and accurately. None of us can predict the circumstances of a licensee, once licensed, who might come before you and apply for amendments and modifications.

2365   None of us can predict the future but if we don't licence the service that is one thing we can predict.

2366   MR. MURDOCH: Just let me add that while we heard I think significant questions that were raised by Pelmorex and I'm not sure, you know, if they came and said, well, we will put one reporter at each will that do it. So I don't know what the threshold is there.

2367   What I do know is that in these communities there are now competing local news that are professional that are servicing these communities and I'm not sure that the economic environment now can afford to have somebody new come in and downgrade the quality of that material and in so doing extract revenue. I just -- I don't see that. I think it's highly jeopardizing to what's out there now.

2368   MS AUER: And in the last few submissions that CEP has filed we have provided our estimates of the loss in employment in the broadcasting sector alone over the last several years and there are thousands of jobs that have been lost. We need new growth in the industry, absolutely, and of course we want new ideas.

2369   This may not -- this is not in our view, the application that will get us closer to having those goals being met.

2370   COMMISSIONER MOLNAR: Thank you. Those are my questions. You have, as I said, been very clear in your submission and today.

2371   THE CHAIRPERSON: Thank you very much, Commissioner Molnar.

2372   I have a few questions that I will also be asking the next group.

2373   In the last few years it has become apparent to, I think, all of us who work or observe or have an interest in the media industry that local is important. Local seems to be well served or was well served by some industries and not others in the media business.

2374   I think we saw that radio because of its basic nature stuck to its guns and took the least hit of the broadcast media. Interestingly enough, newspapers, the local papers, held their own when the dailies were suffering.

2375   All of the industry in total was starting to suffer the swings and arrows of the mash-up of technology but television fared the worst because it seemed to me at least, subjectively, that a lot of television forgot about local. It was -- the national advertising was lucrative. News is expensive to produce and it paid the price.

2376   So why I framed this question I have got for you is to understand if there is at least a conceptual understanding that what Corus is doing here, aside from whether it is in conflict with a Category 1 that occupies that space now in weather, what Corus is doing is coming forward with an application that is technologically based but seems to me to at least be trying to move in the right direction which is to have television get back into the local game. This is not to argue the merits of the content versus the right to sell advertising in the local market.

2377   I'm curious to sort of close your testimony off with the notion from your unique lens, Mr. Murdoch, as to whether television should be re-entering the local market and if it should be, is it acceptable to use all the technology it has available or are you stuck on the issue that there should be more feet on the ground in the local market.

2378   You know -- so if I can leave it at that.

2379   MR. MURDOCH: Well, I think that the conventional broadcasters, despite at times a bit of a questionable history in their employment figures as Monica has pointed out, I think that they understand, particularly the large networks, that the branding, if you will, of their networks requires a local presence. So I think they are fully aware of that and engaged with that.

2380   The idea that somehow though this application you know brings a new technology and therefore will attract a new audience to local, I mean I just don't see it because I don't see -- we saw the duplication that's been sort of put out there by Pelmorex. We have heard from community television crew. I'm telling you about the conventional news. I don't see what is particularly new here.

2381   I will tell you that -- and you are right. We haven't had -- we have had one newspaper in this country close and that was the Halifax Daily News. Other than that the newspapers have survived, but survived at some severe cost.

2382   There are newsrooms in this country that are 50 percent of what they used to be but they have hung on. And a lot of that, as you are aware -- I won't go into the story -- is a result of servicing debt and not so much servicing the community.

2383   On the idea -- I don't think that the conventional broadcasters or newspapers for that matter have in any way sort of not engaged the new technology. They engage them in their websites.

2384   That's why I say, I mean this sounds to me like a website. They engaged them with their websites where in fact you know viewers can start to write in and talk about but there is a full engagement there. There is postings of community events there. There is precisely what is going on with the Corus application on these websites.

2385   I think, and again I can't speak for the conventional broadcasters, but my guess is that that's where that engagement is taking place. It's not broadcasting. It's the internet, although in other venues I might argue that the internet is broadcasting.

2386   But I don't see -- I think if you start to licence the internet as a broadcaster, essentially the same kind -- precisely the same kind of argument that the internet have, well, you are going to have -- you are not going to have to.

2387   You might have to deal with the flip side of that which is the internet broadcasting then. If this turns out to look like something very much like an internet site except it's broadcasting then, surely, internet sites are broadcasting.

2388   Do you understand what I'm saying there? So there is a flip side to that argument.

2389   I don't see, and I haven't heard particularly what is new here. I just -- I fail to see what is new. If indeed I thought it was an exciting opportunity for local news I would be -- you know I would be jumping for joy.

2390   I think the most exciting thing that I have seen happen for local news has been, as I say, CHEK in Victoria and CH in Hamilton which have devoted themselves to local news and are proving a worthwhile enterprise.

2391   MS AUER: And just on a side note to all of this, the Commission has gone to some lengths in the last two years through the establishment of the Local Programming Improvement Fund in order to assist local over-the-air TV stations to ensure that they are serving communities in a more appropriate manner.

2392   So it might be useful, we would suggest, just to give them some time to figure out exactly how they are going to use that revenue and ensure that they are serving the community.

2393   THE CHAIRPERSON: Thank you very much. That concludes our questioning.

2394   Thank you very much for making --

2395   MR. MURDOCH: Thank you very much, Commissioners. Appreciate the opportunity.

2396   THE CHAIRPERSON: Madam Secretary, would you please make the arrangements for our next presentation?

2397   THE SECRETARY: Thank you, Mr. Chair.

2398   We will now proceed with the last intervenor on the agenda, the Broadcasters Coalition, if you would like to come forward?

2399   Appearing for Broadcasters Coalition is Mr. Mike Keller. Please introduce your colleagues after which you will have 10 minutes for your presentation.

2400   Thank you.

INTERVENTION

2401   MR. KELLER: Good morning, Mr. Chairman, Commissioners.

2402   My name is Mike Keller and I am with Newcap Broadcasting.

2403   With me today are Cam Cowie of Harvard Broadcasting, Lyndon Friesen of Golden West and Jay Thomson, our regulatory advisor.

2404   We are here on behalf of an ad hoc coalition of independent TV and radio broadcasting companies which we formed for the sole purpose of participating collectively in this proceeding.

2405   The other members of our coalition are Astral Media Router, Channel Zero, CHEK Media Group, Jim Pattison Broadcast Group, Rawlco Radio and Vista Broadcast Group.

2406   Our group represents a true broad-based cross-section of Canadian broadcasters who truly understand what it means to be local. We invented the concept of hyperlocal and we already offer that kind of service to our audiences every day on every one of our stations in every one of our markets.

2407   We produce local weather and local traffic reports.

2408   We provide information on local events.

2409   We have local studios and production facilities.

2410   We have local reporters on the street and announcers and other staff working from our local offices.

2411   We produce our local programming right in the communities we serve with local talent and local resources.

2412   We utilize our own local professional news anchors who broadcast live.

2413   Our weather presenters use their own community as a backdrop, not a chromo key wall in a studio in Calgary.

2414   We are in regular contact with and we get regular input from members of our local audiences not just by waiting for them to contact us but by constantly investing in our relationship with them and proactively reaching out for contributions and feedback.

2415   MR. COWIE: Mr. Chairman, Commissioners, there is really nothing local about the Local1 service, not the way we do local, not the way a broadcaster must do local to be able to sell local advertising.

2416   All their programming for all their targeted western Canadian markets, large and small, will emanate from a central broadcast facility in Calgary. It won't come from Lloydminister. It won't come from Red Deer or Saskatoon, places where members of this coalition have real, on the street local presence and real local costs.

2417   They will neither own nor operate any dedicated local production facilities or offices. They will hire no local reporters, announcers or office staff.

2418   They will offer no professionally-produced, locally-based news or public affairs programming; in other words, no local reflection.

2419   Instead, Local1 will rely on wire feeds, social networking for news and Environment Canada for weather.

2420   We listened carefully to Corus' presentation yesterday and in doing so it became clear to us that the way they -- once they realized that their analog TV listing service was a dying animal in the digital world they scrambled to find an alternative vehicle to keep their advertisers. All they could come up with was a weather channel, a weather channel wrapped in an attempt to form a TV version of Facebook.

2421   Frankly, Mr. Chairman and Commissioners, Corus' attempt to pass a glorified weather service as local deserving the privilege of selling local ads is offensive to us, to all of us who produce and broadcast real local service who in our large and small markets live local everyday.

2422   MR. FRIESEN: Despite Corus' attempts to convince you otherwise, we do not believe for a minute that Local1 would not represent a new and effective competitor for the limited local and regional advertising revenues available in our respective markets.

2423   We reject the suggestion that Local1 would merely derive its local revenues from businesses which formerly advertised on the Corus TV listing service.

2424   Local1 will be an entirely new and different service than the TV listing service and its expanded potential audience could therefore appeal to a much broader range of potential advertisers.

2425   Moreover, Local1 will have none of the advertising constraints that were imposed by regulation on the exempt TV listing service. As a result, Corus will be free to pursue new types of advertising from a new and wider base of advertisers and we fully expect it to aggressively do just that.

2426   We note that when the Commission rejected increasing the advertising limit for specialty services it stated:

"The Commission notes that both small over-the-air broadcasters and over-the-air broadcasters in Quebec are vulnerable to shifts in advertising dollars. A significant shift in ad buying from the over-the-air sector to specialty services would not be recovered by independent over-the-air stations, especially those that do not have significant specialty holdings." (As read)

2427   MR. KELLER: Mr. Chairman, Commissioners, we are also concerned with the harmful regulatory precedents which you could set if you were to licence Local1.

2428   First, by licensing Local1 other broadcasters would believe that contrary to your longstanding policy of local advertising, it is okay to extract local advertising revenues from communities where they do not provide a real local programming service.

2429   Second, other applicants seeking to compete in local markets would believe that it's okay to hide behind Category 2 status to avoid providing the detailed market impact information you normally require in such circumstances.

2430   Third, other specialty services would believe that it's okay to provide multiple and distinct programming services under a single licence despite the fact your licensing framework for digital specialty services requires separate licences for each multiplex service.

2431   In conclusion, Mr. Chairman and Commissioners, when considering this application we ask you to give special attention to weighing the costs of the broadcasting system of licensing Local1 against the benefits it might provide.

2432   In our view the negative impact Local1 would have on existing local TV and radio broadcasters and the harmful regulatory precedents that could be established if this application is licensed represent real and substantial costs to the system. In contrast, the potential benefits of licensing Local1 are clearly minimal if they exist at all.

2433   Therefore, we submit that you should deny this application.

2434   Thank you for this opportunity to appear before you and we welcome your questions.

2435   THE CHAIRPERSON: Thank you very much, gentlemen.

2436   We will begin questioning with Commissioner Duncan.

2437   COMMISSIONER DUNCAN: Thank you for your comments.

2438   They are certainly very clear and I don't, after listening to the other intervenors and including what you have had to say, have many questions.

2439   I'm just wondering is there anything that could be done by way of a COL or other limitations that would allow you to reverse your recommendation to deny this application. Is there any compromise?

2440   MR. KELLER: Not in our opinion. We have just come through some very tough times in the broadcasting industry.

2441   You know, the comments that were made earlier about how the local aspect of broadcasting survived better than others is true and very true in our particular case as Newcap with some small local television stations, local radio stations throughout the province of Alberta.

2442   But I don't see any compromise in here, you know, because we have done our best to maintain our services and local was the key to our success.

2443   COMMISSIONER DUNCAN: Okay. I appreciate that.

2444   MR. COWIE: If I could just add?

2445   COMMISSIONER DUNCAN: Sure.

2446   MR. COWIE: That I don't think you could draft or craft a condition of licence that would make something local that clearly isn't, and that's the issue that we have or the main issue.

2447   COMMISSIONER DUNCAN: Thank you very much. That's very clear.

2448   I have no other questions, Mr. Chairman.

2449   THE CHAIRPERSON: Commissioner Molnar?

2450   COMMISSIONER MOLNAR: Thank you.

2451   And by the way, I did hear you. It's not local. You can't make it local.

2452   But I still want to just because you folks are in front of us and you are the people who are on the streets deriving local advertising today, I just wanted to get from you some information about the situation today or as it existed when the exempt TV listing service was there.

2453   I believe Corus suggested they were deriving about $12 million a year in advertising from the TV listing service. Were you folks who were also working hard to garner those local advertising dollars, were you competing with them? Were you going to the same businesses having to compete on price or otherwise?

2454   MR. KELLER: In some cases we would have been. There certainly would be crossover because that is drilling down to the local, local level in terms of what you would have seen on the local listings channel.

2455   You know perhaps somebody else can jump in here.

2456   In our particular case the Lloydminister market would be the one I would be totally familiar with. There was crossover certainly in that area.

2457   You know is there a lot of extra dollars available in the market because that listing service was cancelled? I can't speak to that today.

2458   COMMISSIONER MOLNAR: So you didn't feel the consequence of that listing service out there and you didn't feel the consequence of when they essentially shut off that --

2459   MR. KELLER: You know it would be hard to determine that because of the timing. You know at the same time that that happened is when we were in the depths of this most recent recession.

2460   So where would you look, you know, because you are trying -- you are trying everything possible to retain your revenue lines as they are. So it would be very hard to pull that specific out of that local market.

2461   Cam, perhaps you...?

2462   MR. COWIE: Yeah. I mean we look at, obviously, the reports that we get collectively in the markets where those reports are available. The markets are down and are just starting to make their way back.

2463   So to Mike's comment, you know, could we determine the exact number of dollars? I don't think we could. I think, you know, more importantly we talked about their average admitted audience and how that's gone down and you know how it's gone from an estimate of $12 million to $4 million.

2464   I mean at the end of the day this service is dying on the vine because of relevance. I mean as the digital market comes to fruition and more of us have accessed onscreen programming, everybody is a programmer now. I mean you take your remote and you select the programs that you want to watch and you become your own programmer. Very seldom, I think, would any of us use a listing service unless we are in a hotel room now.

2465   So I mean, you know, it's that scenario that has been the demise, I think, of an analog listing. It's a relevance issue.

2466   MR. KELLER: Jay has some comments on this as well.

2467   MR. THOMSON: Commissioner, I think one of the difficulties the Panel Members might be having in appreciating the impact that the TV listing service may have had on their regular services is the fact that the TV listing service was subject to exemption orders and had limitations on the kind of advertising it could offer, still image and teleshopping-type advertising, which is not the same kind of advertising that the broadcasters of radio and television offer.

2468   That being said, Local1 service won't have those same constraints. So it's much more likely to have a greater impact than it might have had in its previous incarnation.

2469   COMMISSIONER MOLNAR: So the Corus statement that what they are attempting to do is essentially repatriate those advertisers onto this new platform, it's not the same advertisers?

2470   MR. THOMSON: It's a totally different beast that they will be offering the advertising community. So they may very well repatriate those particular advertisers but they are certainly open to approach many more and many different kinds of advertisers at the same time if they get this licence.

2471   COMMISSIONER MOLNAR: Right, understood.

2472   Thank you. That's my question.

2473   THE CHAIRPERSON: Thank you, Commissioner Molnar.

2474   Gentlemen, going back to a question I asked Mr. Murdoch earlier which was to gauge the level of intensity of his position on, I guess, this application was it based more on his assertation that while this purported to be local it wasn't local because there was nothing local about it other than the physical content which was being extracted from other sources elsewhere, or whether this was fundamentally not a service that really warranted a broadcast licence because of its repurpose nature.

2475   I am going to ask you the same question but I want to frame it slightly differently. The reason why I'm doing this is we don't have the CAB to talk to any more.

2476   And I try and take every opportunity when I have members of the broadcasting industry to talk and get it right from the horse's mouth and to try and gauge the temperament of the industry as we all are trying to deal with an industry that is in flux and often moving a heck of a lot faster than our corporate plans and our regulations sometimes really anticipate.

2477   So here is the question.

2478   It seems to me out of this last while what I have been hearing, aside from the Pelmorex intervention which was very obviously structured around genre protection, but putting that aside and looking at the whole issue of changing technology and deliverability of content at a hyperlocal level, what Corus has access to, what Shaw has access to, what Bell to a certain extent but more Rogers has access to, BDUs have a direct pipe into a household.

2479   We are seeing -- the broadcasting industry, all of us are looking at the radio industry getting into the web business, as Mr. Murdoch said. He sees the service more as a website than a broadcasting outlet.

2480   But taken at a face value we are all moving toward a concentration of content into perhaps an ultimate form that I don't want to speculate could be at this point. But I know Golden West is very adept at taking the information that is vital to a community and putting it onto a website to add value to its own franchise in that marketplace, and it does so very well. And all of you do to some form or other, whether the website is promotional or dedicated to community content.

2481   So the question I have got here, asking you to sort of put an association view to this, a broadcaster view to this, is there any merit, given that the principal objection to the Corus application is that it doesn't deserve to sell advertising in a local market because it isn't in that local market, is there any opportunity for local broadcasters, particularly radio, to work with an enterprise like Corus to provide that local resonance where they have stations in certain markets, and where they don't have stations in markets that they would like to penetrate that they can work out arrangements with local broadcasters to really put the local content into proper context?

2482   And further to that, perhaps elevate that local broadcaster into a different form. They have got CKNW on the air in Vancouver. I really don't know why because looking at a guy talking into a microphone is not necessarily valuable to me but they might see some value in it. This is Shaw, of course, but Corus might get something out of it.

2483   But is there an opportunity as we go through this next transformative stage for broadcasters and BDUs to start looking at these opportunities and not necessarily liking the potential outcome, at least try and work together to maximize satisfactory outcomes for both the broadcaster and the BDU and, in this case, Corus?

2484   Is there any chance to work together on this?

2485   MR. KELLER: Well, I should have brought my crystal ball.

2486   THE CHAIRPERSON: I left mine at home too.

2487   MR. KELLER: There would always be opportunity. You know, in our case we are so ingrained in the daily grind, I guess for lack of a better way to explain it, that we are totally, 100 percent, and passionately focused on local.

2488   We had a very hard lesson over the years that when we cutback on our local service at whatever level, it eventually affects you because clients are ultimately who we have to count on. You know our audience certainly are number one but the clients pay the bills and they vote with their chequebooks.

2489   So BBM ratings aside, like if we take a local radio station and somehow deliver a national platform for a potentially increasing audience we can't translate that into things that are going to help us meet the payroll, to put it simply.

2490   There would be opportunities to work together, like if there was -- if there was something happening in that community that was of an emergency nature or you know like we are working together as groups again with Pelmorex in developing the amber alert program to make sure that that's rolled out properly across the country.

2491   So there are examples of things that local stations can do to contribute and will add to the national exposure.

2492   In this particular case I don't know what it would be but there is always value in sitting down and discussing it to death. You will find something in there.

2493   Ken...?

2494   MR. COWIE: I think that you know when you step back and take a look at it, I mean our delivery system has been from radio and will go beyond you know the traditional sense of delivery and BDUs. I mean right now through our web streaming we interact with listeners all over the world.

2495   We have you know free apps at the Apple store that rank in the top 10 of music downloads right now for our alternative rock station in Calgary.

2496   We have, you know, employed what I would refer to as Nintendo kids as our forward seers and thinkers in terms of they want to know what happens when you push this button, not what happens when you look in the rear-view mirror.

2497   So you know the days for us of that, you know, it just doesn't really exist anymore. I mean we are out there and beyond our community.

2498   But we need to absolutely service the communities that we were licensed for because that's where we excel. That's where our livings are made and so on. The things that we do above and beyond that, as Mike said, are tough to monetize. I mean somebody who is listening to our alternative rock station in Australia is not monetizable for us.

2499   You know when you are dealing with the Apples of the world we can through our blogs -- I mean you can on your iPhone hit our app, go to our blog, engage one of our jocks, vote on a voting session through our X on Demand radio to pick a song, vote on our stack in terms of -- you know in great detail.

2500   But unless you are Apple that's tough to monetize because you know the only thing where we provide apps to them is a conduit back to the Apple store that if they like the song they are hearing they can go to Apple and buy it and download it. For that we get absolutely nothing, zero in return other than it's a service to our listeners.

2501   It's tough from the radio side to think about the old delivery system. The old delivery system it's not relevant.

2502   THE CHAIRPERSON: I see newspapers and radio moving to the web because it's a natural extension of their footprint and it's unregulated and it's a space that you can get into and leave it up to you to figure out how to monetize it.

2503   Television is like the web in that it's more visual. But it seems that this is a natural opportunity to extend your brand into a television atmosphere, into a channel, a distribution channel that you don't presently really have access to and you could potentially monetize.

2504   MR. COWIE: Most of our stuff is music-based. And you know we have some stations that have more news delivery than others but it's music-based.

2505   In the world of will somebody tune into a television station to see a tweet about a bake sale in Flin Flon, I don't think so. I'm sure not going to pay nine cents a month for that because it's not relevant to me.

2506   The whole driver on this system -- I mean you know I will step back from radio and go back to 20 years in television. I mean the reader bar is the L Bar that we would run on a program like breakfast television. You take that breakfast television content from there and you are left with a reader bar that nobody wants to see because it's an inconvenience to the viewer who wants to see the content.

2507   Now, think about it now if this goes forward in the next version, you know, how quick for Super Channel to come before you with an L Bar every five minutes on their movie with an opportunity for people to tweet back and forth and comment on what's going on in the movie, to now call that Canadian content and local and go sell a local for a movie channel.

2508   I mean where does it stop? I mean that banner without the content, without that wheel of content, is irrelevant. Nobody would watch it.

2509   MR. FRIESEN: My only comment would be that you know in order for us to be successful, you know going forward, it's the broken record you have been hearing all along, that's we have to invest deeply.

2510   I mean the cost of gathering and aggregating a local -- I mean deeply local, seriously local, there is a huge cost to that.

2511   I think that whenever something comes along -- you know we were talking about the impacts of let's say when the community channel or the Listening Channel changed. You know the newspaper -- we have seen the newspaper revenues decline and we have seen the internet grow to be one of the largest advertising generators of all times.

2512   What we have to do everyday is be vigilant to just go after that little bit of share. And in these small local markets, as you saw yesterday, that's a tough job.

2513   When you have to invest deeply and make commitments to the community to do that I think we have to protect at least the serious services should get, you know, recognition and maybe the opportunity to extract local revenue. But there has to be a commitment to these communities and, you know, certainly we fail to see that.

2514   THE CHAIRPERSON: That ends my questioning. So I think at this point what we are going to do is take a 15-minute recess and we will be hearing from our final presenter at that time.

2515   Thank you very much, gentlemen.

--- Upon recessing at 1132

--- Upon resuming at 1150

2516   THE CHAIRPERSON: Order, please.

2517   And Madam Secretary, would you please do the introductions?

2518   THE SECRETARY: Thank you, Mr. Chair.

2519   We will now proceed to Phase III in which the Applicant can reply to all interventions submitted for its item.

2520   Please reintroduce yourselves for the record and you will have 10 minutes for your presentation.

2521   Thank you.

2522   MS COURTEMANCHE: Thank you. My name is Sylvie Courtemanche and I am here today with my colleague, Mr. Bryan Ellis.

2523   Before we begin our reply, I just wanted to alert the Commission to the fact that I did provide a response to the three undertakings from yesterday.

2524   So I did provide the detailed breakdown that you were seeking as well as the financial information and also I have provided here a text of the condition of licence which we would be prepared to accept on the matter of the conditions under which we would have an opportunity to avail ourselves of local avails.

2525   So if you want to, I could read it into the record or I could just be part of -- I'm at your -- whatever you think is most appropriate.

2526   THE CHAIRPERSON: Legal, would you prefer to have it read into the record? There is a condition of licence statement that the Applicant is willing to make.

2527   MS HULLEY: Actually, that would be great if you could read that into the record.

2528   MS COURTEMANCHE: Okay, I will read it into the record.

2529   THE CHAIRPERSON: Okay.

2530   MS COURTEMANCHE: There is some language at the beginning which is just sort of standard language that the Commission always uses in these conditions of licence. So I will read it all out. It says:

"Except as otherwise provided in subparagraphs (b) and (c), the licensee shall not broadcast more than 12 minutes of advertising material during each clock hour, no more than six minutes of which may consist of local advertising solely for markets in which the licensee has deployed a playback unit in the local cable undertaking head-end and where the licensee provides local news, information and weather programming specific to the local community." (As read)

2531   Thank you. We will proceed now to our reply to interventions.

2532   Before I reply I just wanted to thank again one more time the 538 individuals who sent positive interventions and supported our ideas. We really thank them. Too bad we didn't have them in the room today but we just wanted to note that for the record.

REPLY

2533   MS COURTEMANCHE: To begin, we just wanted to say that we think our broadcast colleagues both weather network and all of our colleagues, the Broadcast Coalition that was here today -- we just wanted to say they do a terrific job. They provide a high quality service and we think they just do terrific work. We are not just -- we don't want to do the same thing. Obviously, our proposal is something very different.

2534   Just to make a couple of points on the Weather Network, we just want to reiterate that we honestly believe that our weather segments will be different, not necessarily in the nature but in the level of granularity. I think that's very, very important.

2535   You know we had a discussion as to what point they could provide the level of granularity across the whole service. I think it's safe to say that a national service wouldn't be able to provide a video component that would provide granularity to 1,200 communities across Canada. I just don't think that it would be capable of doing that.

2536   Also, I wanted to say that when it comes to the nature of service or even program categories our program categories that we have selected are basically the same as CBC Newsworld except for sports. But you know obviously it's the nature of service that distinguishes it from that.

2537   The Commission has a history of licensing like services which seem to be in the same genre. Case in point, the Commission first licensed CBC Newsworld and then -- which was an exclusive genre, news and information, and then turned around and licensed Headline News. Well, Headline News is news and information. The only difference is the format, is the wheel format, but the content is exactly the same. It's a different level of granularity. That's what we are kind of proposing.

2538   The same thing with sports; it first licensed TSN and then after several years it licensed a regional sports service. Sports is sports. It doesn't change. But the focus was on regional sports as opposed to national sports.

2539   Notwithstanding genre exclusivity, the Commission went ahead and licensed those services.

2540   So I think the Commission has always had a broader, you know a more open view on genre exclusivity when it comes to the same type of programming.

2541   On the nature of service we just wanted to make the point that on our condition of licence that we have proposed we think it's very clear. It says it's focused on the provision of local information customized for each community in which it is distributed and that the information would be a combination of local news and information about community events, activities, weather using video, texts, graphics and audio content. I don't think we could be any more specific than that.

2542   But we really do hope to distinguish ourselves other than just being kind of lousy. We are very proud broadcasters and although it might seem like a very utilitarian channel, we do think we will be able to provide something that will be of value to the local communities which we serve.

2543   There was a statement -- in the opening statement there was some question about audience share that we might be reaching. Just to give you the latest PPM data, the latest PPM data for the Weather Network is average audience to July 25th is 8,500. For the TV listing service the average audience to July 25th is 1,700. So I just wanted to make that particular point.

2544   Just moving on, I wanted to reassure the Commission that we will not use community TV production facilities. We will have our own. We will not share resources with Shaw. I just wanted to make that particular point.

2545   With respect to our ability to access local avails, we hope the condition of licence will clarify when and where we will have an opportunity to do so. So that in response to the CEP and obviously the Broadcaster Coalition. We just wanted to put that on the record.

2546   We also just wanted to make a point that there seemed to be an intimation that there were privileges for Category 2s when it comes to packaging. And we just wanted to make the point that there are no packaging rules when it comes to Category 2 services. We have to negotiate everything, carriage and packaging. We have no -- it's not like Category A services that do have packaging privileges.

2547   We just wanted to also make a point that we are trying to repatriate revenues that are not in our currently directed to -- excuse me -- not currently directed to traditional, local and radio. We do understand that you know there is concern that that's what we would, you know, be targeting.

2548   We would just reiterate that we are looking to be a bottom rung type of advertising buy that doesn't traditionally go to radio and local television.

2549   We just wanted to make a correction on the record. The regulatory counsel for the Broadcast Coalition said that we were restricted in the type of advertising we could do on our TV listings.

2550   Just to be clear, we currently provide or did provide our service pursuant to two exemption orders, the exemption order respecting teleshopping programming service undertakings and the exemption order respecting still image programming service undertakings. The Commission has always allowed those two exemption orders to be used in combination which allowed us to have full motion advertising.

2551   So just to be clear, we did have full motion and within the exemption orders you were allowed to do this. So contrary to -- you know we would just be perpetuating the same thing that we have for several years.

2552   I think that concludes -- oh, sorry. I would just -- I guess one of the last items I would like to say is although we won't have a lot of hired feet on the streets, we are going to have thousands of unpaid ones. So we just thought we would make that small point.

2553   Yes, and in conclusion my colleague, Mr. Ellis is reminding me, really what we are trying to do here is -- you know we said it yesterday. We are trying to be ahead of the curb.

2554   It's not about the past. It's about the future. It's about trying to provide a service that we think is going to be provided in an unregulated environment. We are trying to bring it into the regulated environment.

2555   And I'm not sure. I guess it was a little schizophrenic because you know at one point it's too much weather and then we are trying to be local TV, then we are not really local TV.

2556   We are trying to be something different and we are not apologetic for that. You know it's going to grow and we think it's going to occur. Like I say, we want to bring it into the regulated environment. We don't think that the Commission or any of us, the broadcasters, can delay these kinds of evolution.

2557   I think people are looking for it and we are just hoping that we could provide it, like I say, within this particular structure, but having said that we would like to conclude by thanking you very much.

2558   Cat 2 applicants don't usually have the opportunity to have their applications scrutinized in this way. We don't take this as -- we took this as an opportunity to talk to you.

2559   We really appreciate this face time to tell you about, you know, where we are thinking and where we are going and where we think the opportunities are, that it's not just challenges and bad news.

2560   We really think that we can grow. That's why we built, you know, a major broadcast facility in Toronto, is to build on that in future.

2561   So we appreciate having the opportunity to talk to you about it. We appreciate staff's time and attention and we would like to thank you.

2562   If there are any questions we would be happy to respond.

2563   THE CHAIRPERSON: Thank you very much, Ms Courtemanche.

2564   As usual you are very thorough and it's appreciated by the Commission. As a result I have no questions that require further clarification.

2565   Do you, Ms Duncan, do you have a question for clarification?

2566   COMMISSIONER MOLNAR: I just have one question. You mentioned I believe if I heard you correctly, that in your view the condition of licence that you have proposed here addresses the concerns of the CEP. Is that what you said?

2567   MS COURTEMANCHE: The issue for them is to make sure that -- not from a qualitative perspective because their issue I think is really a quality -- is more on the quality of the service. You know we have admitted that it's more of, you know, a utilitarian-type service.

2568   But what we were trying to say is that, yes, we believe the condition of licence is clear in that we won't be able to access local avails until we provide a local reflection.

2569   Now, they will dispute that we are providing a quality of local reflection that's acceptable in order to have access to local avails. But what I'm saying is I think the condition is very clear that we can't sell, you know, until we provide that local content.

2570   COMMISSIONER MOLNAR: I believe the other element of their argument was that there is or there has been in the past a requirement that you actually have a local presence in order to access local advertising.

2571   MS COURTEMANCHE: The local presence in not -- traditionally, yes, the Commission did require that, you know, you had to have your studio located and over time those rules have eroded. You know you don't -- you used to have -- for radio you had to have your studio in a particular location and then now it's your antennas.

2572   So I guess what I'm saying at the end of the day is we think you can provide this type of -- a type of local reflection. The requirement to have you know a local presence in the sense of having a studio in every particular community that you are going to operate has somewhat been eroded overtime.

2573   The best example I can give you is that -- you know, is CablePulse 24. I don't think it has a studio in every city in southern Ontario in which it functions. It has one studio and then it assembles all of its programming and then some of it is local, some of it is regional, but it doesn't have a studio in every single community in southwestern Ontario. And it is allowed to sell local avails, you know, in that region.

2574   So what I am saying is that, yes, traditionally the Commission did say you had to have infrastructure. I think over time that infrastructure requirement has changed somewhat.

2575   We think that this type of service which is a Category 2 service that's going to try to cater to 64 communities, it's not realistic to think that we are going to be able to finance, based on the revenues that we forecast, studios and individuals located in each of those 64 communities. It's just not going to be a financially-viable service.

2576   So yes, we would like to have access to some local revenues. But it will provide a local reflection. It would also provide you know the people that are in those communities to, you know -- to make their stories and news known.

2577   So yeah, there will be local reflection maybe not, as I said earlier, hired feet but volunteer. Thousands of people that are locally based and locally situated will be contributing local content to the channel.

2578   That's the proposal. It's different but that's what we are trying to do.

2579   COMMISSIONER MOLNAR: Thank you.

2580   THE CHAIRPERSON: Thank you very much for your presentation.

2581   May I ask legal counsel to make a statement?

2582   MS HULLEY: Thank you.

2583   We did receive the undertakings filed by Corus. We note that those undertakings do include substantive new information.

2584   Therefore, the condition confirms that those who filed submissions for the above-noted -- or for this application will have an opportunity to file written submissions in answer to these undertakings.

2585   The written submissions will be accepted on or before 18 October, 2010. The submissions should be limited to no more than five pages, must be limited to the new information provided in the undertakings and must not introduce new evidence.

2586   The condition will accept written reply comments from Corus on or before 21 October, 2010 and, again, the written reply should be no more than five pages and limited to the information submitted on the 18th of October.

2587   Thank you, Chair.

2588   THE CHAIRPERSON: Thank you very much.

2589   Madam Secretary...?

2590   THE SECRETARY: Thank you, Mr. Chairman.

2591   This concludes Phase III and Item 3.

2592   For the record there are 16 non-appearing applications on the agenda of this public hearing. Interventions were received on some of these applications. The Panel will consider these interventions along with the applications and decisions will be rendered at a later date.

2593   This completes the agenda of this public hearing.

2594   Thank you, Mr. Chair.

2595   THE CHAIRPERSON: Thank you very much.

2596   I declare this hearing adjourned.

--- Whereupon the hearing concluded at 1208

   REPORTERS

____________________      ____________________

Lynda Johansson         Jean Desaulniers

____________________      ____________________

Monique Mahoney         Sue Villeneuve

Date modified:

2010-10-07