ARCHIVED - Transcript, Hearing 20 June 2011

This page has been archived on the Web

Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.

Providing Content in Canada's Official Languages

Please note that the Official Languages Act requires that government publications be available in both official languages.

In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.

However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.

Volume 1, 20 June 2011



To review its regulatory framework relating to vertical integration. Broadcasting Notice of Consultation CRTC 2010-783, 2010-783-1 and 2010-783-2


Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

20 June 2011


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


To review its regulatory framework relating to vertical integration. Broadcasting Notice of Consultation CRTC 2010-783, 2010-783-1 and 2010-783-2


Konrad von FinckensteinChairperson

Len KatzCommissioner

Tom PentefountasCommissioner

Rita CuginiCommissioner

Peter MenziesCommissioner

Candice MolnarCommissioner

Michel MorinCommissioner

Stephen SimpsonCommissioner


Jade RoySecretary

Stephen MillingtonSenior Legal Counsel

Eric BowlesLegal Counsel

Stephen DelaneyHearing Manager and Senior Advisor, Broadcasting


Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

20 June 2011

- iv -





Appearing individually

1. Rogers Communications Partnership (int. #40) 7 / 47

2. Quebecor Media inc. (int. #27) 85 / 507


3. TekSavvy Solutions Inc. (int. #56) 132 / 762

4. Public Mobile Inc. (int. #53) 139 / 800

Appearing individually

5. Allarco Entertainment 2008 Inc. (int. #30) 168 / 970

6. Senator Andrée Champagne (int. #6) 209 / 1192

7. TV5 Québec Canada (int. #25) 236 / 1349

- v -



Undertaking 26 / 137

Undertaking 147 / 843

Undertaking 164 / 941

Undertaking 166 / 952

Gatineau, Quebec

--- Upon commencing on Monday, June 20, 2011 at 0902

1 THE CHAIRPERSON: Good morning. Bonjour, tout le monde. Welcome to this public hearing.

2 This panel consists of:

3 - Len Katz, Vice-Chair of Telecommunications;

4 - Tom Pentefountas, Vice-Chair of Broadcasting;

5 - Rita Cugini, Regional Commissioner for Ontario;

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

7 - Candice Molnar, Regional Commissioner for Manitoba and Saskatchewan;

8 - Michel Morin, National Commissioner;

9 - Stephen Simpson, Regional Commissioner for British Columbia and the Yukon;

10 - and myself, Konrad von Finckenstein, Chairman. I will be presiding over this hearing.

11 The Commission team assisting us today includes:

12 - Stephen Delaney, Hearing Manager and Senior Advisor, Broadcasting;

13 - Stephen Millington, Senior Legal Counsel, and Eric Bowles, Legal Counsel; and

14 - our Secretary, Jade Roy.

15 Au cours des dernières années, l'industrie canadienne des communications a connu des changements sans précédent, à la fois sur le plan technologique et en matière de regroupements.

16 A la suite de transactions importantes au sein de l'industrie, quatre grandes entreprises intégrées verticalement ont vu le jour. Elles possèdent non seulement divers médias mais aussi les réseaux sur lesquels du contenu de radiodiffusion peut être distribué. Ces entreprises peuvent produire du contenu, l'ajouter à leurs services de télévision et le rendre disponible pour leurs clients sur des téléviseurs, des appareils mobiles et dans Internet.

17 Le Conseil dispose de règles afin de dissuader les radiodiffuseurs et les distributeurs d'adopter des pratiques anticoncurrentielles.

18 However, cconcerns have been raised by independent distribution and programming services that improved rules are needed to discourage anticompetitive behaviour by vertically integrated companies.

19 As more and more broadcasting content is distributed over new platforms, there is a concern that these companies could choose to make certain programming available exclusively to their customers.

20 In March 2011, the Commission imposed a moratorium on BCE preventing the company from engaging in certain activities, pending the outcome of the current proceeding. BCE cannot enter into new exclusive agreements that would prevent it from making the rights to its television programming available to competitors for broadcast on mobile devices or over the Internet. We also stated our expectation that other vertically integrated companies would abide by this moratorium.

21 At this hearing, we will examine whether specific rules are required to foster a competitive market where competitors have a fair opportunity to negotiate for programming or distribution rights.

22 The panel will focus on the following five key areas:

23 1. The perceived problems and benefits of vertical integration for the Canadian broadcasting system.

24 2. Concerns over the distribution of exclusive content, including over the Internet and through mobile devices.

25 3. Whether special measures are necessary to protect independent broadcasters or independent distributors.

26 4. The adequacy of the Commission's existing regulatory measures to address concerns arising from vertical integration and what improvements to these measures or additional measures may be appropriate.

27 5. Whether a code of good business practices should be developed for vertically integrated companies.

28 During this hearing, we will also address two additional questions, namely:

29 1. Should there be a mandatory "skinny" basic television service containing fewer channels than the present enlarged basic services?

30 2. Should the payment of benefits in the case of transfers of ownership or changes in control of distribution companies be reimposed?

31 Given our belief in markets, the Commission will only consider new or improved measures if convinced they are needed to maintain a competitive market and necessary to achieve the objectives of the Broadcasting Act.

32 I now invite our Hearing Secretary, Madame Jade Roy, to explain the procedures that we will be following.

33 Madame la Secrétaire.

34 LA SECRÉTAIRE : Merci, Monsieur le Président, et bonjour à tous.

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

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

37 The hearing is expected to last 6 days. We will begin each morning at 9:00 a.m. We will advise you of any scheduling changes as they occur.

38 Please note that the Commission Members may ask questions in either English or French. Simultaneous interpretation is available throughout the hearing; the English interpretation is on channel 1. You can obtain an interpretation receiver from the commissionaire at the entrance of the Conference Centre.

39 We would like to remind participants that during their oral presentation they should provide for a reasonable delay for the interpretation while respecting their allocated presentation time.

40 Veuillez noter que les membres du Conseil peuvent poser des questions en français et en anglais. Le service d'interprétation simultanée est disponible durant l'audience. L'interprétation en français se trouve au canal 2. Vous pouvez vous procurer les récepteurs d'interprétation auprès du commissionnaire à l'entrée du Centre.

41 Nous désirons rappeler aux participants d'allouer un délai raisonnable pour la traduction lors de leur présentation à vive voix, tout en respectant le temps alloué pour leurs présentations.

42 There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table to my right, which will be posted daily on the Commission's website. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.

43 For the record, the Commission has been advised that High Fidelity HDTV Inc. listed on the Agenda will not be appearing at the hearing.

44 We will now proceed with the presentations in the order of appearance set out in the agenda.

45 And now, Mr. President, we will start with the presentation of Rogers Communications Partnership.

46 Please introduce yourself and your colleagues and you will then have 10 minutes for your presentation. Thank you.


47 MR. ENGELHART: Thank you very much.

48 Good morning, Mr. Chairman and Commissioners, I am Ken Engelhart of Rogers.

49 With me today, starting on my left, are:

50 - Phil Lind, our Vice-Chair;

51 - to Phil's left, from Rogers Media, Keith Pelley, Susan Wheeler and Shannon Valliant;

52 - to my right is Pam Dinsmore, and to Pam's right is David Purdy;

53 - and also with me, behind, Robert Buchan, our counsel from Fasken Martineau, and Dave Watt, also of Rogers.

54 Phil.

55 MR. LIND: Mr. Chairman, in our opening remarks today we will address the 12 issues outlined in the Notice to Appear for this hearing.

56 Although much of this proceeding will be concerned with the problems associated with vertical integration, we should not lose sight of the fact that there are many benefits. When responsibly operated, vertically integrated companies are great drivers of competition, innovation and consumer benefits, which are good for the Canadian broadcasting system. It also eliminates any need for a value for signal regime. So how do we preserve the benefits while avoiding the possible abuses?

57 We don't need a lot of new regulations to accomplish this, just enough to ensure a cooperative relationship among all content and distribution entities. Unless content is fairly shared, consumers and smaller industry stakeholders will suffer. Let me explain.

58 Imagine a world where exclusive content deals on ancillary platforms like iPads and iPhones are the norm. You could easily end up with a situation with Bell owning NHL rights, Rogers owning Major League Baseball rights and Shaw owning NFL football content. Sports fans would be forced then to buy three iPhones or three iPads and subscribe to three distributors to ensure they could catch all the action when and where they wanted.

59 This is obviously unacceptable. No consumer should have to subscribe to multiple distributors in order to access the content they want to watch.

60 This example shows that the subject of exclusivity of content distribution raised by the Commission in its second issue is crucial. Some vertically integrated distributors have already experimented with acquiring exclusive mobile and online rights to television programming. While this reduces the revenues that they can obtain from other distributors, it allows them to attract and retain more television and wireless subscribers.

61 If allowed to continue, the result will be less competition in the BDU and wireless markets and less choice and higher prices for Canadians.

62 Keith.

63 MR. PELLEY: Thanks, Phil.

64 In the third issue, the Commission seeks input on how independent broadcasters and distributors can be protected. We believe that a relatively simple and non-intrusive safeguard would do the job.

65 Specifically, we propose that any television content broadcast in Canada and also distributed on a broadband or mobile platform must be made available to competitors for distribution on those same ancillary platforms, on a non-exclusive and non-preferential basis and on terms that are commercially reasonable.

66 This proposed safeguard would apply both to those distributors that are vertically integrated and those that are not. Exempting an independent distributor like TELUS would empower it to acquire ancillary rights to popular television content, such as the Canadian Football League, and provide that content to its subscribers on an exclusive basis. Those consumers who did not subscribe to the TELUS service would have to either change service providers or acquire an additional subscription just to watch the Grey Cup.

67 Confining the benefit only to independent distributors would also fail to distinguish between those entities that differ significantly in the size and scope of their content holdings. Rogers, for example, operates as one of Canada's largest cable distributors and wireless service providers, but our content assets are significantly smaller than those of Bell and Shaw.

68 As the chart shows, Rogers has only 8 percent of Canada's English-language viewing market, while Bell has 33 percent and Shaw 32. Rogers operates six specialty services; between them, Bell and Shaw operate close to 70. The size of their content holdings provides them with substantial market power on ancillary platforms.

69 In short, there is no permanent line separating those distributors that have content from those that do not. Even if there were, sound public policy requires access rules that apply symmetrically to all distributors.

70 We realize that independent broadcasters have asked the Commission to adopt new measures to address a perceived imbalance in bargaining power. Rogers does not support any proposal to adopt new access rules for linear services. The existing carriage and undue preference rules are sufficient to protect the interests of independents. We do, however, support a number of their other proposals.

71 For example, we agree that an independent Category "A" services of vertically integrated companies should not receive that same protection.

72 With regard to the fourth issue, the Rogers no exclusives rule is almost identical to the interim moratorium that the Commission imposed on Bell and extended to other vertically integrated companies as an expectation in the Bell/CTV decision. The key difference is that our rule would apply to all distributors, not just those that are vertically integrated, and would include pay, pay-per-view and VOD content.

73 And there would be exceptions. Like the Commission, we do not see the value of applying our rule to out-takes and other add-on content not previously aired on television. That would only increase the regulatory burden on the broadcasting system, while providing no real benefit to it. Allowing this kind of content to be distributed on an exclusive basis will give broadcasters incentives to create it, and find a window for it, that would otherwise not be available.

74 Ken...?

75 MR. ENGELHART: To supplement the general prohibition on exclusive content arrangements, in our evidence Rogers proposed the adoption of a Rights Holder Code of Good Practices. The Code identifies circumstances or conduct that could constitute an exclusive or unduly preferential arrangement. The presence of one of these circumstances would raise a rebuttable presumption. This Code would apply to all distributors, not just those that are vertically integrated.

76 The key benefits of such a Code are transparency, predictability and the reduction of the regulatory burden.

77 Rogers believes that the existing undue preference provisions referred to in issue 6 provide the Commission with an effective mechanism to enforce the safeguards established in this proceeding. We support the proposal to adopt a reverse onus for undue preference complaints.

78 With regard to dispute resolution, as raised in issue 7, we propose the adoption of arbitration and enhanced "standstill" remedies. Access disputes that relate primarily to rates should be resolved using final offer -- or baseball -- arbitration. Those that are more complex can be addressed using the Commission's expedited procedures. An enhanced standstill mechanism should also be put in place. This would require a rights holder to make its content available for distribution on all competing distributors' ancillary platforms during a dispute and would prohibit any change to pre-dispute terms and conditions until after the dispute has been resolved.

79 With respect to issues 8 and 9, information filing and sharing measures, Rogers supports one of the proposals made by the independent broadcasters. Vertically integrated entities should be prohibited from sharing confidential information obtained through contracts with them. No other requirements relating to filing or sharing need be established.

80 Issue 10 raises the question of enforcement. We believe that the Broadcasting Act already provides the Commission with the tools it needs to enforce any new rules established as part of this proceeding. Contrary to TELUS' position, however, the Act does not grant the Commission the authority to impose administrative monetary penalties.

81 Issue 11 reopens the notion of a mandated "skinny" basic service. This is a solution looking for a problem. The BDU market is highly competitive. As a result, the Commission should allow the market to decide the size and composition of each BDU's basic service.

82 Finally, with respect to issue 12 and whether the tangible benefits test should be reimposed, the test originally applied in an environment where BDUs operated as monopoly service providers. It was discontinued when BDU competition began in 1996 with the licensing of DTH services. Today, competition has increased considerably with two DTH providers, IPTV and cable in most markets. Therefore, the policy rationale that applied to eliminating the benefits test is even stronger today than it was in 1996. Moreover, in the 15-year period since then, BDUs have made significant and regular financial contributions to the production of Canadian content. Each BDU delivers a full 5 percent of its gross revenues to Canadian programming and an additional 1.5 percent to LPIF. Neither of these funding obligations existed in 1996.

83 Phil...

84 MR. LIND: In closing, Mr. Chairman and Commissioners, Rogers believes that, properly regulated, vertical integration will continue to create stability and strength for the Canadian broadcasting system. Without the imposition of minimally intrusive safeguards however, competition in ancillary markets will be impaired and consumers will be frustrated.

85 The proposals that we have advanced will ensure that Canadian consumers will be able to continue to access all of their favourite programs from the distributor of their choice, at a price that is fair and reasonable.

86 We would be pleased to respond to any questions that you might have. I will ask Mr. Englelhart to be the quarterback.

87 THE CHAIRPERSON: Thank you for your presentation. I appreciate that you stuck to the process letter that we sent to everybody and listed the issues in that format, it makes questioning a lot easier.

88 Other than for Mr. Lind's seemingly mandatory response to VFS you stuck to the 12 points that we put in there, so let me go through them in that order.

89 MR. ENGELHART: You say that vertical integration brings great benefit to the system. I think there is obviously a lot of efficiency to be gained, et cetera. But you put this interesting little hook in there. You say:

"When responsibly operated, vertically-integrated companies are great drivers of competition..."

90 What is "responsibly operated" and how can we prevent irresponsible operation?

91 MR. ENGELHART: Thank you, Mr. Chair.

92 In Canada we have always had a regulatory system which sort of prohibits exclusive content for distributors. All broadcasting systems in the world of course have broadcasters buying exclusive windows for their content, but the rule in Canada has always been all the distributors are allowed to carry all of the broadcasting channels. Very different from the rules in some other countries, in the U.K. for example, and even in the U.S., where exclusives are part of their system.

93 We think the Canadian system works. We think that that kind of competition works. People compete on price, they compete on service, on marketing and technology, but not on exclusive content. What we are worried is that we see a sort of wild west developing in the ancillary platforms with kind of exclusivity being the norm rather than openness, and that's the thing that we think needs to be regulated and controlled and without which there can be problems.

94 Are you at all worried that as technology advances, as the market progresses, et cetera, you may see the inverse, some production being started exclusively for internet or mobile devices and then migrating to the traditional media?

95 MR. ENGELHART: It could happen.

96 THE CHAIRPERSON: "Têtes à claques" is the one that comes to mind, you know.


98 THE CHAIRPERSON: If it then spawns a television series.

99 MR. ENGELHART: Of course. You know, most programming gets most of its revenues, the vast majority of its revenues from television today.


101 MR. ENGELHART: The ancillary platforms are ancillary. But absolutely you are right, I'm sure the model will eventually get amended.

102 The other thing that we are seeing is, of course, it's becoming a multi-screen universe and everything is on everywhere.

103 THE CHAIRPERSON: But your position then is it should apply both ways?

104 MR. ENGELHART: Our position is that --

105 THE CHAIRPERSON: Right now you are purely talking about mobile and internet as ancillary rights.

106 MR. ENGELHART: True.

107 THE CHAIRPERSON: I am suggesting when they are primary rights and television becomes ancillary, would your rule also apply?

108 MR. ENGELHART: When they become primary we are going to have to come back here for another hearing.

--- Laughter

109 MR. ENGELHART: Right now the hook to our test is if it appears on TV, then it --

110 THE CHAIRPERSON: No, but I would stick to your principle.


112 THE CHAIRPERSON: You started off with the characteristic of the Canadian system being that access is not exclusive, it's available to everybody. Now we have a new means of distribution. Following your logic, then that would extend that rule holus-bolus to the new media.

113 MR. ENGELHART: Right. But the only caution I'm making is we think if you take every piece of video content in the world and give it these protections, it's going to be a very broad rule, so by confining it to the things that are shown on television you draw some boundaries.

114 THE CHAIRPERSON: You apply it to every piece of television, so why couldn't -- I mean, I don't get that logic.

115 MR. ENGELHART: Well, you know, if you look at the outtakes, if you look at the videos that Rogers Media puts on Maclean's Magazine there's a huge bunch of stuff, of course you could take all that under your regulatory wing. We think it increases regulatory burden and we think, you know, paradoxically a lot of this niche content might not have a window normally, but if you give people an exclusive on this non-television video you might create a window for it.

116 MR. PELLEY: I think, Mr. Commissioner, I think one of the things that we are talking about is programs of national interest and major series. For example, if you were, from a news operation perspective, to create -- let's say after a City News telecast that just aired on television, that you wanted to shorten that down and do a customized 3 to 5 minute telecast just for online, I think that could be exclusive.

117 I think what we are talking about is major rights and major programs that would be, at the end of the day, a detriment to the consumer because they would need to have more than different devices to be able to watch those programs. But, for example, that particular 3-minute newscast could be separate.

118 THE CHAIRPERSON: Yes, but you are now on a different track, you are talking about ancillary rights and you want the ancillary rights to be restricted to the main newscast. I got that.

119 Mr. Engelhart and I were on a philosophical or he started out philosophically saying the characteristic of the Canadian system is that all television content is responsible to all distributors and I said well, that's fine, but we are now moving into a new world where a lot of distribution is done, not through television but through mobile devices or internet, et cetera, shouldn't the same rule apply in reverse also for content created specifically for that. So you have content that is created to be distributed on mobile devices, et cetera, and then it migrates to television and people should have access to it. And he says, "Yeah, but" and I'm trying to figure out what the "but" is about.

120 MR. ENGELHART: Well, thank you for repeating your question, because I think I'm zeroing in on it a little better.

121 Yes, I think that we are saying the really important stuff should be available to everybody. Right now we don't think the stuff created for online and mobile is really important.

122 Your proposition is what if it becomes really important, and I take your point, but we think right now it's not.

123 THE CHAIRPERSON: Okay. You then go on to say that your key role is that the same rule should apply, not only to vertically integrated but to all distributors. You take the example of TELUS and CFL football.

124 Is that really necessary? I mean do the non-integrated players, like TELUS or others, really have the necessary economic clout to be able to play competitively, et cetera? I mean a key here really is that when you are talking about Bell or Shaw or Rogers you can afford to say I will withhold that content and TELUS, or any other independent producer, if they actually get the rights to something we will be more than pleased to sell it to any integrated fund. With holding it just doesn't make sense given the economic -- and I haven't seen anybody except you advance that the same rule should apply to non-integrated one as well as integrated one.

125 MR. ENGELHART: Well, we think it's a realistic concern. With a sort of the less valuable rights the rights holder typically wants to sell a whole package of rights, the mobile, the online, the linear, to a broadcaster who will then sub-license it. But for the really valuable sports rights what we see very often is the rights holder says I'm going to sell all these things separately. It's the KISS principle, "keep it separate, sucker".

--- Laughter

126 MR. ENGELHART: So they want to have maximum revenue and for that reason they will often sell for mobile rights separately. We could certainly see TELUS buying the mobile rights for Canada and if they weren't covered by this rule they could give themselves an exclusive.

127 Now, we were talking over the weekend whether that transforms them into being a vertically integrated company because now they have some content rights and, you know, it gets a little complicated. Do we think the simplest way is to say that everyone is governed.

128 THE CHAIRPERSON: You make this wonderful expression:

"...on a non-exclusive and non-preferential basis and on terms that are commercially reasonable."

129 Those four adjectives of course contain the whole problem. I mean, what is non-preferential and what is commercially reasonable? How are you going to overcome that?

130 MR. ENGELHART: Thank you. Well, we thought the rule helps a bit and then the code helps a bit more. So the overall principle of course is undue preference or unjust preference or discrimination, but we thought that the code that we laid out gave a bit of examples or clarity, so these would be sort of things that when the Commission sees these things, or parties in the industry see these things, they go, "Wait a minute" and it requires a bit of explanation, it requires the rebutting the presumption. So that would put some flesh around the bones.

131 THE CHAIRPERSON: We started with you because you have sort of a foot in both camps. On the one, in terms of distribution you are a giant, in terms of programming rights you are relatively small, so you hopefully will have a reasonable approach and see it from both sides. You came up with that sort of halfway house of a code, but you only went halfway. You just enunciated some principles. Why didn't you put forward a complete code?

132 MR. ENGELHART: I don't think our code is that different from some of the other codes. Ultimately it is going to come down to enforcement, it's going to come down to baseball arbitration, it's going to come down to reasonableness in the marketplace which, as you have said, is a very difficult question to answer. We are not trying to underestimate the difficulties.

133 We don't think you can do much more than provide guidance about arrangements that seem unfair and then call upon the proponent of those arrangements to explain them.

134 THE CHAIRPERSON: Yes, but I mean at least give me your experience as a relative small producer of content. I would have been interested to see how your code, from your point of view, would protect you in that respect. I mean you are enunciating great principles, but at the end of the day, you know, there has to be a code and, as you say, people will be held accountable as to whether they violated the code or at least the principles or not.

135 I must say it to you and I say it to everybody else, I think at the end of the day your idea is probably something that I can see us ending up with and it would be very helpful, rather than having general principles, actually having a document. As you know, the independent broadcasters actually put one forward. Now, as you pointed out, and others, it is somewhat slanted in their interest, surprise, surprise.

136 If we have several codes which are put forward, it would be probably the easiest for us and others to produce an amalgam of what is acceptable of protecting the various interests.

137 MR. ENGELHART: We will do that in our reply comments. Thank you.

--- Undertaking

138 THE CHAIRPERSON: Thank you. I appreciate that. I will look forward to that.

139 Now, you have talked with -- there are various aspects, people are very concerned about the Category "A" channels and various intervenants have suggested a vertically integrated BDU shall continue to distribute each independent category currently distributed as its basic service.

140 What do you think of something like that?

141 MR. ENGELHART: Well, for Category "A"s you can't really change their packaging without them having the right to go to the Commission for a hearing. So if what they are saying is you won't do this without the Commission's blessing we can agree to it because I think that's the rule today.

142 THE CHAIRPERSON: But, as you know, after September 1 Category "A"s, they still enjoy genre protections, they still enjoy carriage. They are not necessarily part of basic service. What some people suggested, if they are owned by independents they should continue to be part of basic service.

143 MR. ENGELHART: Yes. I mean the way I interpret it is if you are an "A" and you are not happy with the rate that a distributor is paying you, you can invoke the Commission's arbitration mechanisms and have a hearing.


145 MR. ENGELHART: Part of those rate discussions always involves the package you are in because that affects the money you get. So I think even today if you tried to move an "A" from basic to digital or from basic to Tier 3, they could say, "Wait a minute, that's going to affect my advertising revenue, I demand an arbitration." The Commission will have to make a decision.

146 So I think the protection they are seeking is protection they really already have by virtue of being an "A", so we can agree with it.

147 THE CHAIRPERSON: But on the category, you are starting off on page 4 of your today's submission with a bit of a contradiction. In the second paragraph you say:

"Even if there were, sound public policy requires access rules that apply symmetrically to all distributors."

148 Immediately in the next paragraph you say:

"However, Rogers believes that the Category A services of vertically-integrated companies should not receive that same protection."

149 There go with your symmetry.

150 MR. ENGELHART: You're right. The symmetry is really about access rules. You are absolutely right. We think some of the arguments that the independents have made deserve some merit. So on this issue of genre protection they are saying, "Look, we know what you are going to do, you are going to go after our genre with a competing service of your own and then you are going to carry it and there goes our Category 'A'."

151 So I kind of take their point, or at least we are conceding their point and we are saying we think genre protection is a policy that is well past its best before date, we think you should get rid of genre protection for Rogers, Bell, Shaw, Vidéotron, but let's give some credit to the independent Cat "A"s and keep giving them genre protection.

152 THE CHAIRPERSON: What I'm switching to Category "B". As you know, after September we have now a 5 to 1 rule, we go to a 2 to 1 rule after September 1st. A lot of the independents suggested that one of the three should be an independent at a minimum, otherwise you can have a sort of trade-off between vertically integrated companies, I carry yours if you carry mine, et cetera, and you can increase your Schedule B's and basically close out the independents.

153 What do you think of that proposal?

154 MR. ENGELHART: We really hate that proposal, and I'm going to ask Keith to jump --

155 THE CHAIRPERSON: Can you be more categorical?

--- Laughter

156 MR. ENGELHART: I am going to ask Keith to talk about it, but the trouble is, Rogers Media is trying to grow in its specialty categories, and if we need to have a match between an independent, and not just one of our specialty services, but one of Bell's and one of Shaw's, and if Bell or Shaw need a match every time they add one of ours, it makes it very hard for Keith to grow.

157 Keith...

158 MR. PELLEY: Thank you, Ken.

159 The proposal of one-to-one, I think, would be devastating for industry growth overall.

160 For example, if we wanted to launch a service, a brand new service, then we would have to go to Bell and Shaw, because you need massive distribution, and they would look at us and say: Well, if we launch your service because you are a vertically integrated company, now we have to launch an independent, even though that independent, theoretically, might have no programming of merit that they want to actually launch.

161 So what would happen is, they wouldn't launch our service. So, all of a sudden, growth stagnates right away and you are not able to grow.

162 We talked about at the group-based licensing hearings over and over again that it's important for Rogers and, we believe, for the industry that we have a viable third player in the marketplace in terms of significant scale, and one-to-one industry private -- independents to vertically integrated companies would stop that growth immediately.

163 THE CHAIRPERSON: Let me just stop you there, and let's just talk about the English-speaking market. There are two other vertically integrated companies besides yourself.

164 MR. PELLEY: Right.

165 THE CHAIRPERSON: So the three-to-one rule and the independent -- presumably that's why they picked that up. If you want to launch one, you have to --

166 If this is a new service, you have to pick three other ones.

167 So the logic says here that you say: Bell, which one of yours do you want me to carry? Shaw, which one do you want me to carry? And then you pick from the independents, one of them, to make it three.

168 So I am not too sure that your growth is necessarily stunted, and they will have to do exactly the same thing.

169 MR. PELLEY: One of the proposals was a one-for-one.

170 THE CHAIRPERSON: Yes, but I was talking about the three-for-one.

171 MR. PELLEY: The three-for-one.

172 THE CHAIRPERSON: Out of the three, one has to be an independent.

173 The one-for-one, I understand that. Your arguments are clear.

174 MR. PELLEY: Right.

175 When we are talking about the three-for-one, it is much more suitable than the one-to-one. The one-to-one is something that just wouldn't work for us, but the three-for-one, providing that that was to continue, then that would be acceptable.

176 THE CHAIRPERSON: The fair terms, Mr. Engelhart, you and I talked about that, and you laid out the principles: not unreasonable activation fee; no unreasonable minimum subscription guarantee; solely -- et cetera. There is a very long list that you put in your submission, and so has everybody else. Everybody talks about the same issues. I mean, there is a clear-cut consensus among the various submissions of what the issues are. The question is how to structure them into something that is workable.

177 I don't want every single dispute between a distributor and a programmer to come before the CRTC. Hopefully, one or two to set the pattern, and after that the parties would negotiate by themselves.

178 But it would help me very much if you and others would set out a draft code. There are a few things on which you are quite specific; like you say that long-term agreements, they should not be in terms of five years, or something like this -- so that, at least, I have a book of something concrete.

179 As I say, I think your suggestion and that of others of a code would be very helpful, if we could get more specificity on it. But, given the time that we have here, I am not going to go through these terms one-by-one.

180 When we talked about exclusivity, you made your point and you established a very clear rule. You said that it should apply to all distributors.

181 One issue that you didn't deal with is the head start, and a lot of programmers are feeling that the distributors, whether it's you or somebody else, will give themselves an undue head start, and then, by the time others offer it, the newness of it in those people who are very key may have already switched, et cetera.

182 How do we deal with the head start issue?

183 MR. ENGELHART: There were allegations by the independent distributors about a head start problem. Is that what you are referring to?

184 THE CHAIRPERSON: Head start can work either way.


186 THE CHAIRPERSON: Your concern is ancillary purposes, let's say the NHL, et cetera. If Bell offers that for six months and then says, "Here, Rogers, you can have it," it's cold comfort to you at that point in time.

187 MR. ENGELHART: Exactly.

188 We proposed an enhanced stand still. If, say, Bell had the mobile rights to hockey and they gave it to themselves, under the enhanced stand still provisions we could say: Give it to us. The rate is to be determined later.

189 So they would have to give it to us.

190 Now, we are buying a pig in a poke. We might end up paying a lot of money for it, potentially, determined by the Commission through baseball arbitration, but we would have it, so that they wouldn't be able to keep us out.

191 THE CHAIRPERSON: Okay. So your enhanced stand still, it could work both positively and negatively, where not only you can't, but you must as well.

192 MR. ENGELHART: Correct. Now, it gets a little more complicated if the rights holder is outside of the broadcasting system, like the Masters Golf Tournament, for example; and, say, that the Masters would sell the linear rights separately from the mobile rights.

193 We think what really needs to happen is -- and Keith might jump in, in a moment, whether I give it to him or not.

194 With the Masters, if they sold the mobile rights separately in Canada, there would be a rule in Canada. Once you are on linear TV in Canada, all of the mobile distributors have to get it.

195 You might even require broadcasters to bake that into their contracts for linear TV.

196 So that becomes the hook in Canada. If you want to sell your programming on linear TV in Canada, which is where 95 percent of the revenue comes from, you had better provide it to all of the mobile operators.

197 Keith will explain why we don't think it is that hard to do.

198 THE CHAIRPERSON: We would accept that Canadian broadcasters would put such a clause in their contract with the provider of the contract?

199 MR. ENGELHART: Correct.

200 THE CHAIRPERSON: Mr. Pelley?

201 MR. PELLEY: I think that probably the best example would be the NFL Sunday ticket, where the National Football League, at one point, had an exclusive deal with Rogers, and then it was ruled that the NFL would have to deal with all distributors to expose the product of the NFL Sunday ticket.

202 Theoretically -- and this would be a question that you would have to ask the NFL -- it could be that the NFL could say: That is something that we would like to do. We would like to do an exclusive deal, potentially with Rogers, or with Bell, or with Shaw, because that would generate the largest dollar for that particular property.

203 However, the minute that it was ruled that they could no longer do that, the NFL certainly respected those rules and understood what the Commission was saying, and even if that's what they wanted to do, they have now come back and sold those rights to all distributors.

204 THE CHAIRPERSON: Okay. Following that up, we would, in effect, generalize the NFL rule, only for sports or for everything?

205 MR. PELLEY: Well, potentially, but if you stick with sports --

206 Let's say, for example, that the NFL could do an exclusive deal, and the NFL had the Sunday ticket just on Rogers, and then the NHL came along and did a deal just for Bell. Theoretically, Roger, who is living in Scarborough, in order to get the NFL Sunday ticket, he would need to be Rogers and Bell, as well.

207 THE CHAIRPERSON: I understand that. My point is, our basic principle is that we don't want to regulate unless we have to, and we like to see market forces work.

208 You are picking on sports, and I think very wisely so, because sports is a very great driver. It has been singled out to me as the content driver, which actually may make people switch their mobile devices, et cetera, because if you are really an NFL nut, you need to have every game on the mobile, and the fact that it is not on Rogers is not good enough, I am going to switch over to Bell so I get it.

209 MR. PELLEY: Right.

210 THE CHAIRPERSON: Is there any other content than sports that is such a driver where this rule should be applied?

211 MR. PELLEY: Sure. If you go through any university or college dorm now, it is commonplace that the tablet and mobile are often where they are watching their content.

212 Take the two biggest comedies right now, The Big Bang Theory from CTV and Modern Family from City Television. If, in fact, those weren't available on the multiple platforms and they were exclusive to linear, then that university or college student, in order to watch the two biggest comedies right now, would need to have two different devices.

213 So, yes, it does work well beyond sports. In fact, the same thing could happen with the Academy Awards, the Emmys, the Junos -- there are so many different variables outside of sports.

214 MS VALLIANT: Particularly as consumers are migrating their viewing to online platforms, you want to make sure they can get what they want, when they want, regardless of whether it's sports or not sports.

215 MR. ENGELHART: I think the short answer, Mr. Chair, is: We think that rule should really apply to all television content. When you buy television content in Canada, if you are a broadcaster, from a foreign source, there should be a standard clause in your contract that the mobile and ancillary rights have to be available to all distributors.

216 THE CHAIRPERSON: Okay. That's a clear answer. We will see what other intervenors have to say about it.

217 What about most favoured nation? The independent broadcaster, especially, finds that the most favoured nation clauses, which were perfectly legitimate, et cetera, unfortunately, if you now have integrated entities, they can be abused. You could grant something very nicely to your in-house programming, and then you insist on getting the same thing from an independent.

218 Since you are vertically integrated and you can make the profit at either end, it really doesn't make a difference, but it may have a dramatic effect on the viability of the independent broadcaster.

219 So they basically suggest, in various forms -- the basic idea is that most favoured nations, to the extent that they apply between an integrated distributor and an owned programming service, should not apply.

220 MR. ENGELHART: Yes, they say that the rate you are paying your affiliate is irrelevant.

221 I take their point, that the rate you are paying an affiliate is not the same thing as the rate you are paying a third party, or vice versa.

222 I think, if it ever went to arbitration at the Commission, it would have less value, that piece of data, but I still think it is a piece of data.

223 THE CHAIRPERSON: Okay. But put on your integrated company hat. We have put a rule in place saying that MFN clauses between affiliates cannot be imposed on independents.

224 Would that really upset your business case? Would that cause you any damage?

225 All we are saying is, what Rogers agreed to with Sportsnet they can't impose on a third party.

226 MR. ENGELHART: An MFN typically says -- EastLink would say: I want the cheapest rate that Sportsnet has with any distributor.

227 So if there was a very high rate with Rogers Cable, that wouldn't be the beginning and the end of MFN, there is still whatever Shaw is paying, or Bell is paying, or someone else is paying.

228 THE CHAIRPERSON: Because you are in the middle, and you are very reasonable in your answers, that is why I am asking you, as a businessman. I cannot see, if we bought this argument of the independents that the MFN clauses, insofar as they are within the integrated companies, will be disregarded, that that would really cause you a major problem. But maybe I'm not --

229 Is there something I don't see?

230 Mr. Purdy?

231 MR. PURDY: Mr. Chairman, just to build on Mr. Engelhart's response, if I were negotiating with Shaw Media and they had come to me and said, "Listen, we have done a deal with Shaw Cable and Shaw Direct and have an MFN; ergo, you must take the Shaw deal," my response to them would be, "The Shaw deal is a Shaw deal. I am not going to respect your MFN."

232 "And, quite frankly, that was a deal done within the family; ergo, it is not really applicable to your Rogers deal."

233 I would expect that Cogeco would have the same response to Mr. Pelley if he came and said, "Listen, we have just done a deal with Mr. Purdy for the carriage of Sportsnet One, and because we have an MFN with Mr. Purdy, you are going to have to take his deal."

234 It is relatively inconsequential. I think, if they think that this is the fundamental stumbling block of negotiating with vertically integrated BDUs, then they are sort of tilting at the wrong windmill.

235 The real fear is that, if Shaw comes to you with a deal for a Shaw Media property and they have already done a deal with Cable and Shaw Direct, you are in a lose-lose situation when negotiating with Shaw. You either have to take the rate or live without the content. Both put you at a structural disadvantage in the marketplace.

236 So I don't think that MFNs are the issue, I think it is a bit of a red herring.

237 THE CHAIRPERSON: For you. If somebody is an independent broadcaster, it's a different story.

238 MR. PURDY: If the rate they have gotten from Rogers Media -- if the rate that Rogers Media has extracted from Rogers Cable comes with an MFN, the challenge for the independent is not the MFN, the challenge is the fact that Rogers will be in the market with that product.

239 THE CHAIRPERSON: Yes, but wouldn't Rogers say, "Look, Rogers Cable is paying Rogers Media only $2, so that's all you can get"?

240 That's the MFN question.

241 And although they say, "The market values are a lot more," that's too bad.

242 MR. ENGELHART: I don't think there are any MFNs like that in the marketplace. There is no MFN that says: We won't pay Lone Star more than X because we don't pay Sportsnet One more than X. Those types of MFNs I am not familiar with. I have never run up against one.

243 THE CHAIRPERSON: Okay. You are in the business, what does a normal MFN say?

244 MR. ENGELHART: Typically, with an MFN, the distributor says: I don't want to pay you more than any other distributor is paying you.

245 That is typically the scenario.

246 Over the years we have tried to get away from the MFNs because all the deals tend to be a bit idiosyncratic and they include different extra and optional elements, and you can make yourself crazy trying to figure out who has a better deal than someone else.

247 But the typical MFN arrangement is a distributor saying: I don't want to pay more for Sportsnet than anyone else paid for Sportsnet.

248 MS VALLIANT: And because of those challenges, in terms of proving what is an MFN, we have moved away from them completely from a broadcasting perspective -- from a programming perspective.

249 THE CHAIRPERSON: When you do your code, you may want to reflect on the MFN. There are a lot of concerns from a lot of broadcasters.

250 What about packaging, especially themes, and being included in a theme, or not being in or not being -- or being, at least, included in a theme before it can be offered on a standalone basis?

251 That seems to be of great concern to a lot of the independent broadcasters, that distributors can wreak havoc, effectively, with their penetration rate, by where they place them, whether they put them in a theme, et cetera.

252 MR. ENGELHART: Sure, and I think that was an issue long before there was vertical integration. It's just part of the natural tension between a broadcaster and a distributor. The broadcaster always wants to be in a really high penetration tier or package. The distributor sometimes thinks the broadcaster's service is more niche, that it belongs in more of a niche package.

253 Those sorts of tensions exist, and I don't know if they will be made worse with vertical integration. I doubt it, but the Commission has powers to deal with it.

254 In the recent Cave decision, the Commission said: We are not convinced that this packaging was not discriminatory, so the Commission will have to, on occasion, deal with those types of concerns.

255 THE CHAIRPERSON: That is a non-answer.

--- Laughter

256 THE CHAIRPERSON: The whole idea is: What are the principles for themes?

257 We all agree that there may be issues here, and everybody shies away from hard-and-fast rules because they may have unintended consequences and restrict productivity in a competitive market. On the other hand, some people, obviously, feel that they need protection.

258 We are talking here about what would one say in a code about themes, et cetera, so as to make sure that a vertically integrated company can't abuse the packaging in order to discriminate or hurt independent programmers.

259 What you just said is a description of the problem, but not a solution.

260 MR. PURDY: Mr. Chairman, are you referencing theme packs when you say themes?


262 I'm sorry, it's my accent, I can't pronounce "th".

263 MR. PURDY: No, I just didn't understand that you were saying theme packs.

264 The theme packages -- I guess the inference is that somehow we would favour vertically integrated BDUs' content when creating theme packages versus --

265 THE CHAIRPERSON: Or leaving people out who really belong in the area.

266 MR. PURDY: If you look at the historical packaging, the DVIP package is our most widely penetrated digital package, and it is made up of all the analog tiers plus Tier 4, which is a digital tier.

267 The vast majority of the channels that have gone into that package, historically, have gone in because they were either very strong channels or strong channels affiliated with a really strong media company, and it was largely based on ratings and the ability for that media company to promote the content.

268 So it has very little to do with vertical integration and everything to do with scale.

269 The bulk of the channels in Tier 4, which is the digital portion of the DVIP package, came from Alliance Atlantis, which was independent at the time, and Michael MacMillan and Phyllis Yaffe actually helped us create the DVIP package.

270 We did that deal because they promised great content and they had promoted it aggressively.

271 I don't think there have been any historical abuses tied to vertical integration, it has always been tied to scale.

272 THE CHAIRPERSON: But we didn't have vertical integration then. You had Alliance Atlantis, which became Canwest, and now is part of Shaw -- there is a natural incentive to construct theme packages with your own content and leave out others who really feel that they would belong in there.

273 That's the point.

274 MR. ENGELHART: Mr. Chairman, I don't know if we can do much better than my non-answer, because I really think what the independent broadcasters are saying is: Because we are independent, you have to carry us, and you have to put us in a great package, no matter if our programming is crummy or not.

275 That is something that I just don't think will work. I think they have to be protected from undue discrimination, but I don't know if there are any mechanical rules that we could set out that would decide which service goes in which package.

276 And as Mr. Purdy was saying, some of the independents, like Leafs TV, for example, have great content that we really need. They have a lot of bargaining power.

277 So it's not whether you are independent, it's how compelling your programming is.

278 MR. PELLEY: Yes, there is no question, when you mention Leafs TV.

279 If, in fact, somebody was to launch -- whether it was an independent or a vertically integrated company, if they were to launch a brand new curling channel and all of a sudden had the rights to the Brier and the Scotties Tournament of Hearts, which are the men's and ladies' curling championships, they would get broad distribution right away.

280 The challenge with forcing the independents on broad distribution is, they would quickly move into a harvest mode. They would have no incentive to actually build their programming, and they would just live off the sub-fee.

281 So I think it comes down to -- whether it be the current channels or launching new channels, I think if you have strong, compelling content, you are going to get launched.

282 MR. PURDY: Just to add to Mr. Pelley's point, currently in the DVIP package is BITE, OX, Leafs, Raptors, Teletoon Retro, and all of the Astral services that are in the analog agreement, including the Family Channel.

283 So I think it's a bit unfair to say that even since vertical integration we have unfairly advantaged vertically integrated media companies over non-vertically integrated.

284 Just last week we launched Playhouse Disney XD so that the Astral-affiliated service that went into the DVIP package. So we are helping groups that have been able to get broad distribution despite not being vertically integrated.

285 THE CHAIRPERSON: Now, I hope you will be here for the rest of the week because there are certainly a lot of programmers who will disagree with you guys in saying that this is not an issue. So we will hear from them and I will let -- I will await your reply.

286 Let's move on to undue preference and reverse onus.

287 Madam Secretary, would you please distribute the two sheets I gave you this morning?

288 This is very simple. This is the existing regime as I understand it, just basically it sets out where there is undue preference applied and where do we have a reverse onus. That is the state of play right now as I understand it.

289 This hearing brings back the question why do we have reverse onus only with regards to terrestrial BDUs, DTH, mobile and new media and why don't we do it across the board and really apply it everywhere? Because the rationale being that when you have a dispute like this, it is usually the BDU that has all the information, the data that is necessary in order to really come to grips with the issue.

290 Basically, first of all, the complainant has to go forward and make out his case in saying there is a preference and establish how the preference is and then it's up to you to justify it rather than saying why it's not undue.

291 It wasn't until my staff produced this chart that I saw this sort of uneven -- and I really don't -- I'm asking quite openly, what would be the negative if we put the reverse onus across the board?

292 MR. ENGELHART: I agree with you. We think the reverse onus should be right across the board.

293 THE CHAIRPERSON: Okay. That's a very clear answer compared to your previous non answer. So let's move right on.

294 You talked a lot about the code and you know my view on that.

295 Is there anything else in terms of ex ante rules that you think are required in light of the -- when you talked about the exclusivity, I guess, that will be if I follow your suggestion -- will be another ex-ante rule. Is there anything because of this huge restructuring into four vertically-integrated companies that we need?


297 THE CHAIRPERSON: Dispute settlement you say essentially "we propose adoption of arbitration and enhanced 'standstill' remedies".

298 You explained to me what the enhanced standstill are, which was what you can't do and what you have to do and you say the adoption of arbitration. We already have the arbitration.

299 What exactly are you getting at? What would you like to see us do?

300 MR. ENGELHART: I am not sure you do have it today for the ancillary platforms. So we are saying that should be made clear.

301 THE CHAIRPERSON: Clarified as it applies to both?

302 MR. ENGELHART: Right.

303 THE CHAIRPERSON: Okay. And that's really your key concern, the ancillary platforms, that if there is exclusivity and it's not honoured that you can take it to arbitration and you get a ruling?

304 MR. ENGELHART: Correct.

305 THE CHAIRPERSON: Now, a lot of interveners suggested our whole dispute settlement while effective in generally resolving and CRTC has a lot of knowledge about the industry, it's too slow and that some of the periods should be shortened because the delay itself can be very harmful, et cetera.

306 Are you of the same view or do you feel that they work as they are right now?

307 MR. ENGELHART: Well, we think the enhanced standstill would go a long way to ameliorating any difficulties with a lengthy arbitration process.

308 I think it's pretty fast, the arbitration process that the Commission has.

309 Certainly, if you are not getting the content while the thing is being arbitrated, yeah, that's a problem. And that will happen in a few cases. But, as you said, once some precedents are laid down I think everything will settle itself, sort itself out.

310 THE CHAIRPERSON: Okay. Then, additional information requirements, there are two types.

311 First of all is the requirement to file existing affiliation agreements and new ones in confidence. A lot of independents suggest that should be done so that the CRTC knows what are the precedents and can do rulings based on comparables, et cetera.

312 And as you know, when we allowed the merger of Shaw and Bell we insisted that they file existing affiliation agreements. Some people want to extend that to future ones.

313 What is your feeling on that?

314 MR. ENGELHART: I mean, if you order us to send it in, of course we will. I don't see the point.

315 You know, if a dispute ever occurs -- for example, I had a dispute once with Sportsnet where one of the BDUs objected to the rate they were paying. As part of the Commission's arbitration process they said to me, "Give every Sportsnet agreement with every distributor for the last x-years because we need that information to resolve the dispute".

316 So obviously you are going to get it. But when a dispute happens I don't really see the point in sending it to you in advance.

317 So I can't say I support that. Obviously, if you need it or want it we will send it to you.

318 THE CHAIRPERSON: But couldn't we have a sort of halfway house saying if a dispute arises, let's say with Rogers, and it concerns a sports channel for argument's sake, that you file at the moment the dispute comes before us all other sports affiliation agreements that you entered into over the last three years or something like that.

319 So we would have a base of comparison, et cetera but, on the other hand, limit the imposition on you in terms of the burden or the suppress, et cetera. I don't want people to go on a fishing expedition, et cetera but this is what the market does right now with sports agreements.

320 MR. ENGELHART: Yes. I think that makes sense.


322 Again, something for your group, what about the CSG situation? You suggested the vertically-integrated companies should adopt sort of the notion of customer service groups the same way as we imposed on telephone companies so that there is no horizontal flow of information from the programming side to the distribution side.

323 MR. ENGELHART: Yes. So if you know Mr. Purdy has to let a distributor or, sorry, a programmer know that they are in five million Rogers households, you know, and he keeps track of that for the purpose of that agreement, he shouldn't go telling Mr. Pelley, "Oh, listen, you know, this guy has only got five million".

324 So yeah, we definitely think there should be -- that information should be restricted to the distributor on a kind of need to know basis.

325 THE CHAIRPERSON: And do you have such provisions right now in-house, in Rogers?

326 MR. ENGELHART: I don't think we do on the broadcasting side. Of course we have, as you know, CSGs galore on the telecom side.

327 I would also say that on the broadcasting side if we have put these safeguards in, it should probably only apply to protect the independents because, as between the vertically-integrated companies I'm not sure that you need that rule for them.

328 MR. PELLEY: If this becomes -- Mr. Chairman --

329 THE CHAIRPERSON: I didn't catch the last part of what you said.

330 MR. ENGELHART: So Mr. Purdy wouldn't be telling information about OX TV to Mr. Pelley, but I don't think the same thing would apply to information about a Shaw service or a Bell service. I don't think you need the CSG rules there.

331 THE CHAIRPERSON: Okay. But what -- how would we be assured that this internal rule is being obeyed?

332 MR. ENGELHART: Well, what we do on the telecom side is there is sort of a memo that goes out to everybody, you know, "You are on the team. You can't distribute this to other than the following people".

333 And then we have -- it's not an affidavit but it's a declaration that they sign annually I believe saying, "We have read it. We agree". And that's really how it works.

334 THE CHAIRPERSON: Well, no reason you couldn't elevate it through the level of an affidavit.

335 MR. ENGELHART: True.


337 Now, I don't know whether you saw the proposal by High Fidelity who, as you know, are a Cat B and who suggest that it was unfair that they have to do annual returns and file them with us while others -- and they suggested that we should not require it or suggested filing should only be restricted to VI-owned companies, et cetera. They felt that their market position is unduly exposed by having to do filings.

338 What is your position on that?

339 MR. ENGELHART: I think it should be the same for everyone. I think it's probably a pain for them to file them but it's a pain for everyone. I don't really think they get more exposed.

340 THE CHAIRPERSON: Okay. I am nearly through.

341 You did not at all comment on enforcement, especially on the TELUS proposal which suggested sort of homemade AMPs. The way I understood their proposal -- they will correct me later on, but when I assessed it we have -- their thinking is let's assume we have this code. It is there to be applied.

342 It turns out Rogers didn't comply with it so we can then order Rogers to comply. But we could also order Rogers you know because this was a deliberate or willful breach -- let's assume so.

343 I'm not suggesting you are in the habit of doing it. It's just an example of my -- for the purpose of my example. We could then say you should also make a payment of whatever, $200,000. You could say either into CMF or into one of the Rogers funds, you know, so then this money will be spent for the benefit of the creative community in producing Canadian content.

344 That's perfectly within the ambit of the present provisions of the Act to decide that and would have the same effect as an AMPs and would be better because rather than as a payment that would go to the Central Revenue Fund it would go into the system and produce content.

345 MR. ENGELHART: Yeah, our legal advice -- Bob Buchan is here on the panel with us to assist -- is that you really can't -- we don't think you can give yourself an AMPs power by dressing it up that way. It still amounts to an AMPs power that Parliament hasn't seen fit to grant you.

346 THE CHAIRPERSON: I don't know what Mr. Buchan has said, and I have a lot of respect for this view, but the key differentiation in what I just said is so to not be a payment which is new and normally something that you pay to the state. This is something that you would do to enhance the communications system.

347 Let's say in the example if I said you have to bring it into the Rogers fund, in effect it is a reallocation within your company for the benefit of the system. It is not necessarily a penalty the way an AMP normally works. This was the thing that I found intriguing about the TELUS proposal.

348 Mr. Buchan, did you want to comment on that?

349 MR. BUCHAN: I am trying to find the button here. Thank you.

350 I don't want to get into a litany of case law but the law -- the cases that we did review indicate that if a matter -- the imposition of a fine or close to a fine or something that looks to be a punitive measure, that the Broadcasting Act is considered by the courts to be, in court terminology, remedial litigation. It is not punitive legislation.

351 We certainly appreciate that the Commission has the power under the Telecommunications Act in respect of the do not call list and will have the power under the anti-spam legislation, but that was introduced by amendments to the CRTC Act that provided specifically for that power.

352 We think that the TELUS proposal, which isn't very well fleshed out, is the type of thing that is going -- a situation that would result in some broadcaster challenging whether this was a punitive measure or not punitive measure to end up before the courts.

353 But if what you are suggesting is that there would be an order made, a mandatory order made under section 12(2) and that it would be then filed with the court, the Federal Court or another court of superior jurisdiction and it could be enforced in that way, possibly it would work.

354 But I think that the Commission's own proposal to Parliament makes a lot more sense. You know, amend the Broadcasting Act if you believe we have to have the power. The Heritage Committee has suggested should be the case.

355 And we are not taking a position pro or con on AMPs power under the Broadcasting Act but we don't understand the TELUS proposal as being certainly not a bullet -- we don't consider it to be a bulletproof proposal.

356 THE CHAIRPERSON: Okay. Number one, I totally agree with you as per the amendment in the form of AMPs power.

357 But I am -- and I may have misunderstood the TELUS proposal or am building on it, but follow me for a second in the logic because you just, I think, very nicely and concisely said the difference between remedial and penalties.

358 If whatever the alleged breach of Rogers has occurred, you can surely make the argument this has resulted in a harm to the broadcasting system functioning as it should and the way to remedy that is to put some money into concentration.

359 Hence, the order by us to pay that money into a Rogers fund is thereby to remedy the injury that occurred to the system, et cetera, and therefore is perfectly within the ambit of the Broadcasting Act.

360 We are dealing with a remedy here. We are not punishing Rogers. We are saying, "Rogers, through your behaviour you have caused some harm to the system. Here is a way to remedy it".

361 MR. BUCHAN: I understand what you are saying, but the jurisprudence that's on the record today suggests that you can't acquire a power of this kind that could be interpreted to be a penalty by a necessary implication and that's in effect what we think the TELUS proposal amounts to.

362 THE CHAIRPERSON: I have no doubt if we do it we will be challenged. I have no doubt about it. Somebody will.

363 But I think the difference between punishment and remedy is quite -- can be quite clearly drawn and depending on how you construct it, you could hopefully do it by way of remedy. But anyway --

364 MR. BUCHAN: Mr. Chairman, I can only say one man's remedy might be another man's perceived punishment.

365 THE CHAIRPERSON: Indeed, and that's why we have courts.

366 MR. BUCHAN: Thank you.

367 THE CHAIRPERSON: Skinny basic, you are against it. I honestly don't understand why. We are becoming more and more into the age where the consumers control -- it's the consumer who decides what you want, where you want it, et cetera. We have heard that from you and everybody before me saying that.

368 The enhanced basic is contrary to that. The basic package alone already does violation to the consumer not being able to but saying you know this is the threshold you have to buy. You have to buy the OTAs and the 9(1)(h)s and the educational. Everything else is up to you.

369 Now, you have told me and others, particularly Quebecor, saying skinny basic nobody has any interest in. If that's the case, well, that's fine. Why shouldn't it be offered as an alternative so that the consumer can -- you basically put the consumer in charge the same way as the consumer is in charge on the internet? He or she picks what they want and pay for it.

370 MR. ENGELHART: I am going to let Mr. Purdy give a full explanation.

371 But the short answer is there is costs associated with it, trapping costs, digital box costs. It's quite expensive to set up and if demand is fairly modest, that we will end up in a situation where we are really impacting profitability for very little gain.

372 To say that, however, it's not like we are not working on it. Mr. Purdy will explain that he has got some of his best people trying to solve this problem.

373 MR. PURDY: Thank you, Ken.

374 Mr. Chairman, we do have an appetite to roll out lower costs or skinny basic products and we are in the process of developing those. We have talked to some of the U.S. cable companies and MSOs and they have rolled out economy packages. They have done it generally in markets where they are 100 percent digital, where they have stopped serving analog. So part of what we are working through right now is the costs associated with doing traps on analog.

375 So how we would provision a skinny basic, what technology we use to do that is the big question mark that we are working through right now. But there is an appetite at Rogers to rollout a skinnier basic product and it's something that we are both pursuing and researching right now.

376 THE CHAIRPERSON: It's the analog trap that is your main cost component.

377 MR. PURDY: Exactly right. So if we were forced to roll it out, if it was mandated to roll it out across our entire footprint and we had to do this in an analog world, it would be very challenging for us both in the form of truck rolls, reconfiguring all of our filters and other capital costs associated with the initiative. We think it's something that makes more sense when we rollout what we can enable it by an entirely digital solution.

378 That's what we are working through.

379 THE CHAIRPERSON: When we had the BDU hearing about two years ago or whatever -- I lose time -- we talked about this. Quebecor mentioned that they used to have a basic package but there was no appetite and therefore they abandoned it. So how did they get around this issue of the basic traps?

380 MR. PURDY: How did Quebecor do it?

381 THE CHAIRPERSON: Yes. They testified here before us that they used to have the basic package and there was no uptake.

382 MR. PURDY: My understanding is they have rolled it out on a digital-only basis so that there is no analog skinny basis. It's a digital-only product.

383 And skinny basic allows you to do two things; one, serve low income houses and that's a potential opportunity and; two, create packages that are more tailored.

384 So in the case of Quebecor I think they were looking to serve the analog marketplace with a more tailored packaging offer.

385 The impetus for Rogers to do this would be to serve the multicultural communities and our footprint with a more tailored or personalized packaging. That's what is going to drive this.

386 Our only concern is that it's mandated and it may force us to do things in analog that we don't think make sense.

387 THE CHAIRPERSON: But by the same token, if you who sooner or later want to have all your customers digital, I assume, and so you could do it certainly on the digital side --

388 MR. PURDY: Yes.

389 THE CHAIRPERSON: -- you could -- at least everybody who is a digital customer gets the option for basic.

390 MR. PURDY: Yes.

391 THE CHAIRPERSON: And if people are interested in it they could. This could be an incentive also to switch, have them switch from basic to -- from analog to digital.

392 MR. ENGELHART: That's true, Mr. Chair, but some houses are digital customers but they still have analog TVs in the home.

393 THE CHAIRPERSON: It's their choice. I'm just trying to empower the consumer.

394 MR. PURDY: The conundrum --

395 THE CHAIRPERSON: I thought that's what you are trying to do too.

396 MR. ENGELHART: We are, and so we are saying to you on the one hand don't mandate it because you might get it wrong, but we are working on it because we do think there is some value in it.

397 MR. PURDY: Just to build on Mr. Engelhart's point, the conundrum we are working through right now is that the houses that are most interested in a skinnier basic product are the houses that index very high on analog. So we are working on low-cost DTA converters, digital-to-analog converters that would help us provision a product like this.

398 What we are asking for is --

399 THE CHAIRPERSON: But Mr. Purdy, by what you are saying I can see no harm mandating a skinny basic on the digital side. If people don't convert to digital households for whatever reason then obviously they can't take the benefit of it and you may do something for the existing analog ones.

400 But I don't see the downside on the -- for the digital customers -- and I see the upside for them having the freedom to choose what they want.

401 MR. PURDY: The problem is that they would get the full analog on their second sets. So we would still have to roll a truck to filter out all the analog signals.

402 So it's just working through the economics of the opportunity. Right now it's a challenge for us.


404 And lastly benefits: I heard your argument. You and every signal BDU said the same thing but it seems to me that you are talking past each other here.

405 Benefits are a transfer tax. That's what they are and a transfer tax to the benefit of the system.

406 You know whenever there is a major transaction -- you have been before me -- at the two of them. We had a big one for Shaw and Bell, et cetera. It results in a lot of money being made available for the benefit of the system mostly on the creative side, sometimes partially on the distribution side.

407 And, you know, to the extent that you can there is also a benefit to your company if you are ingenious enough to construct it in such a way that you benefit as well as third parties. I think it works well. Why wouldn't the same thing apply when you have a transfer of a BDU from one to another?

408 Let's say, for argument's sake, you buy a major BDU. Let's say that Shaw bought Mountain, let's just say in Hamilton, et cetera, a major transaction, lots of money involved.

409 Why shouldn't the benefits rule apply and therefore this one generates benefits to the whole system, also to Shaw and Mountain no doubt, but if you take that example.

410 I just don't see conceptually why this is different, especially in an integrated age where the distinction between distribution and production companies becomes less and less clear.

411 MR. ENGELHART: Yes, I agree with you it's a transfer tax.

412 I think generally speaking economists would argue that transfer taxes are fairly inefficient and that they do fail to get the assets allocated in the right place.

413 I think the idea when the Commission put this in, it really was always tied up with the idea of competition and if I could sort of use economic language that the Commission never clearly articulated, what they were saying is: Look, this is an exclusive franchise, there is some good will, there is some supernormal profits, there's some net present value of a supernormal profit scheme and the public should get a piece of that on the transfer. Once it's competitive I think the thinking was then the returns return to a market rate and that transfer tax isn't appropriate.

414 So I do think it makes sense to differentiate between having an exclusive franchise and not having an exclusive franchise.

415 THE CHAIRPERSON: I agree with you. We are purely talking economics. Transfer tax is not an efficient way of taxation, but we are not really dealing with pure economics here, as you well know. We are dealing with the objectives of the Broadcasting Act, which imposes upon all of us certain objectives which are not -- the market won't produce and therefore, to help that system, we have all sorts of devices and benefits is one of them.

416 Looking at it through that spectrum there is a huge ability for profit argumentation and increasing your economic well-being through merging with other BDUs, et cetera, and I don't see why that transfer tax in this case shouldn't be accepted the same way as it is when two broadcasting units buy.

417 MR. ENGELHART: When the Commission had a benefits test on the transfer of cable licensees, for example when we bought Maclean Hunter --


419 MR. ENGELHART: These were not, for the most part, payments into funds or payments into programming. For the most part those benefits were extracted through commitments to upgrade plant. So the Commission's thinking at the time was: We need more capacity so that more Canadian services can be licensed.

420 So even on the occasion of a transfer, if you look back at the benefits package that was approved for us in Maclean Hunter, it was mostly plant building.

421 THE CHAIRPERSON: But that was then, this is now. When you but Maclean Hunter you never dreamed that one day the BDUs would own the world and the telcos would be secondary players, which is where we are today. So it's a completely different situation.

422 I'm looking at it now and I'm looking at what we can do under present circumstances.

423 MR. ENGELHART: But getting back to your point about the system, the most important thing that BDUs can do is build networks. That's our contribution to the system. That's what we do that is going to keep the Canadian broadcasting system modern. I don't think you want to put a lot of taxes on us that make that difficult.

424 THE CHAIRPERSON: Does that mean that if, against your wishes, we did adopt a benefits one that we should make sure that the benefits flow to a better enhanced network rather than to put it to the broadcasting side?

425 MR. PURDY: So yes, but I don't think we need a transfer tax.

426 If you look at the most recent purchase, or the second most recent purchase Rogers made, was the purchase of Aurora Cable, the first thing that we did when we took over Aurora Cable was rebuilt the network so that we could carry a large number of channels, Canadian services that weren't being carried prior to us owning it. We could enable video-on-demand at a level that we had within the Rogers systems but wasn't available in Aurora, all which benefited the system.

427 So any transfer tax would be stealing from the upgrades that we would naturally do for Aurora, or now Compton Cable.

428 So I think the biggest benefit to the system will be us going in and upgrading the system and carrying the large number of channels that Rogers carries relative to the smaller number of channels of the system that we --

429 THE CHAIRPERSON: But you would do that out of economic self-interest. You would do it anyway.

430 MR. PURDY: It would be a much longer period of time. We would look at the economics and if we were paying the transfer tax in addition to the capital upgrades, you would have to push the capital upgrades out, which would only hurt the broadcasters who are going to benefit from the upgrades.

431 THE CHAIRPERSON: Okay. I think I covered all the questions, I'm sure my colleagues have some questions. Thank you.

432 Len...?

433 COMMISSIONER KATZ: Thank you, Mr. Chairman.

434 Good morning. I have three questions or three main topics.

435 The first one deals with bright lines for vertically integrated companies. What is a vertically integrated company?

436 Obviously Rogers Media is integral and a component of Rogers Communications; Bell Media is as well; Shaw Media is as well; Corus is not.

437 The first question I guess is: Do you believe that Corus should be included as part of the vertically integrated assets that Shaw holds today for the purpose of what we are talking about in this hearing?

438 MR. ENGELHART: I think the answer to that is yes. As you heard from our opening remarks, we think that for the most part the protections and benefits of the rule should apply whether you are vertically integrated or not.

439 COMMISSIONER KATZ: Okay. If the Commission chose to only do it for vertically integrated companies -- and I got your point about TELUS getting into the business as well -- is there a threshold that one needs to look at and what would that be from your perspective?

440 MR. ENGELHART: Well, I just don't know if -- and this is our argument, is that there is no sort of bright line. You know, if TELUS bought one specialty service would they be vertically integrated? How about two? How about three? I'm not sure where you would draw that line.

441 David...?

442 MR. PURDY: Thank you, Ken.

443 Mr. Katz, if you look at Time Warner Cable, they recently bought the exclusive rights to the LA Lakers for well over a decade. They have divested of their media company, but they are now securing specific content that allows for them to potentially abuse that power in the way that we have outlined in our submission today.

444 So I don't think they are -- Ken's point is very strong in the sense that there is no bright line. You don't need a huge media company in order to abuse content rights. Time Warner could exploit their LA Lakers rights in a way that we would find totally unacceptable for the Canadian broadcasting system.

445 COMMISSIONER KATZ: What if they didn't control the LA Lakers but only owned 10 percent of them?

446 MR. PURDY: No, they --

447 COMMISSIONER KATZ: Would those transactions be deemed to be arms length or not I guess is the point I'm trying to make.

448 MR. PURDY: Oh, I'm sorry.

449 COMMISSIONER KATZ: Is there a threshold in terms of ownership? I understand what control is, but anything short of control, is there a threshold that we should be looking at?

450 MR. PURDY: I think it has to do with if they control those rights. So you could see a scenario whereby they purchase the ancillary rights and all they had was a veto on any ancillary rights deal, that would allow for them to abuse that power. So it's less about equity and more about do they actually control the direction of those ancillary rights.

451 COMMISSIONER KATZ: Let me give you a live close to home example. If Rogers divested of the Blue Jays, but kept 15 percent of the Blue Jays, they couldn't influence, presumably, the price that Rogers Cable would pay for the rights to broadcast the Blue Jays.

452 Would that be deemed to be within the spirit of an arms length agreement or not?

453 MR. PURDY: If part of our exit strategy from the Blue Jays was that we only held 15 percent of the equity, but we retained the ancillary rights for the next 20 years we could abuse that position. So it's about who controls the rights, less about the amount of equity you own within the organization. So it would be easy --

454 COMMISSIONER KATZ: What about the fee pay? Presumably would Rogers have any influence at all as to what the going rate, the market value would be for the rights?

455 MR. PELLEY: Well, to David's point, you would probably do that sharing the transaction period. So you would like yourself into a 15 or a 20-year content deal with rates as far as an escalation on a per-annum basis already built into it.

456 COMMISSIONER KATZ: You are saying the same thing would happen if you were starting in a greenfield and going out and just buying the Buffalo Bills, for arguments sake, and owning 15 percent of it as well and having rights to it, it would all be part of the master plan?

457 MR. PELLEY: Potentially you could do that, yes.

458 MS VALLIANT: In those specific examples, we have an obligation to the league to extract fair market value to the rights, so the league audit us specifically for the Blue Jays each year and all of the sports leagues operate the same way.


460 MR. PURDY: Mr. Katz, there was a scenario whereby there was a BDU that was vertically integrated with a media company and they then sold out of that stake. As part of their exit strategy when they sold out of that stake, they held onto a right of first refusal on digital rights, VOD rights, et cetera. You could easily see a scenario whereby in addition to the right of first refusal they also had a right to match or they had the right to block. So the scenarios we are referencing are not pie in the sky fictitious, we have actually lived with these types of examples.


462 The second question. We seem to have bundled into the new media concept both broadband services as well as wireless services and clearly a number of parties have come forward saying the rights to wireless services should not be withheld and they should be part of the rights transfer.

463 Where companies don't have wireless assets -- and Shaw is an obvious example -- and they go out and buy the rights to programming of some sort, sports or otherwise, do you believe that it's discriminatory if they don't sell the wireless component if they themselves aren't offering it at this time?

464 MR. ENGELHART: No. So if they just decide no one is going to get the wireless, there just isn't going to be wireless rights to that content, I don't think the Commission would intervene. If they decided to sell it to one player and not the other, that would be a violation of the rule that we propose.


466 My third question Relates to confidentiality of data. I think your position was that there should be a Chinese wall up for independent broadcaster's information, but not for vertically integrated. That's with reference to the data itself.

467 What about the people? In my day when I worked in telecom I remember the Chinese wall was up there for the data as well, but what about transferring bodies, moving a person who is on the Rogers Media side across to the Rogers Cable side or vice versa? Are there restrictions that you contemplate in that area as well?

468 MR. ENGELHART: No, there is no restrictions on the movement of individuals but, as I say, they are told what the rules are and we have business code of conduct training for all employees and they have fiduciary obligations and they understand them. But there is no sort of -- I think what you are talking about is a kind of structural separation and, no, we don't do that.

469 COMMISSIONER KATZ: Okay. Those are my questions, Mr. Chairman.



472 Briefly just a question for Mr. Pelley. First and foremost I want to congratulate him, he went on our and a half without mentioning the Blue Jays, but if you have a cap in your back pocket I will take it, because these lights are killing me. But there you go on the Blue Jays.

473 Now, Mr. Pelley, something you said. How do you get the rights to The Brier, or any other event in curling, if you don't have a distribution deal for your network?

474 MR. PELLEY: There's many different -- yes. Well, one-way that you could do it is you could actually become a partner with them. So, for example, let's say The Brier or the Scotties Tournament of Hearts, we are not feeling that they were getting value based on what some of the other high profile sports were getting. They might go and actually partner and become part of that particular network. So they might take a 20 percent or a 30 percent position in that network, knowing that that product is something that is absolutely critical to all Canadians and is going to get distribution.

475 So if Rogers, Shaw, Bell were presented with a curling network that had the season of champions, which are The Brier and the Scotties, then you would get broad distribution ASAP because the outcry from Canadians would be overwhelming.

476 COMMISSIONER PENTEFOUNTAS: And The Briers would sell their rights to a network that doesn't have a distribution deal as yet --

477 MR. PELLEY: Well, the worst-case scenario --

478 COMMISSIONER PENTEFOUNTAS: -- to anybody else.

479 MR. PELLEY: Or they could theoretic -- go ahead.


481 MR. LIND: The Sportsnet, when it was licensed, it had not any distribution deals, but it had NHL rights.


483 Also, Mr. Lind, how does vertical integration eliminate the need for value for signal. I know it's treacherous terrain --

484 THE CHAIRPERSON: No, I'm sorry. It is not part of this hearing, it is not going to be dealt with, neither by Mr. Lind nor by you, period.

485 MR. LIND: Gee, I was hoping I could answer that question.


--- Laughter

487 THE CHAIRPERSON: Peter, you have a question?

488 COMMISSIONER MENZIES: I just want to make sure I understand what you mean when you talk about access, that everybody should have access to certain programming and rights.

489 By "access", do you mean if I have the rights to the CFL that everybody else has to be able to watch everything I produce, or just part of what I produce, or watch what I produce at a discounted rate that you might have to pay for it on another platform, or just everybody gets it for free?

490 MR. ENGELHART: Definitely not for free, no. Our rule would apply to those things which aired on regulated television. So if it was on -- say for example we have the Blue Jay games and those Blue Jay games show up on Sportsnet and we put them on our own mobile platform, we would have to give them to all the other mobile operators.

491 But if, say, there was a special interview with one of the players that only appeared on the website, well, we wouldn't have to -- that appeared on the Blue Jay website, that wouldn't necessarily have to be given to anyone else. That would just be outside of the rule.

492 In terms of the price, it's a commercial rate so you are entitled to sell that to those other providers at a commercial rate and unfortunately there is no good formula for that other than what comparable properties sell for in the marketplace.

493 COMMISSIONER MENZIES: So you would be able to create online mobile-specific content that would be a value-add to Rogers subscriber, whereas TELUS does with the CFL, they can create value-added. So they can still maximize the value that they get from purchasing the rights, while maintaining whatever it is that -- whatever it is you show on TV you have to show?

494 MR. ENGELHART: Correct.

495 COMMISSIONER MENZIES: Make available. Does that apply to VOD as well, like replays of the game so you can go back and watch, or a post-game interview?

496 MR. ENGELHART: Yes. So if something was only on video-on-demand, say a football game, it would be captured by the rule so you would have to give that football game to the other mobile providers if you put it on your mobile platform. Anything that showed up on regular regulated television, so that's linear television and us, its over-the-air specialty, pay and VOD.

497 COMMISSIONER MENZIES: All right. A commercial incentive would remain for the creation of mobile content, mobile-specific content?

498 MR. ENGELHART: Well, exactly. Mobile-specific or online-specific, precisely.


500 THE CHAIRPERSON: Okay. Those were our questions for you.

501 I'm sorry it took so long. The first one always has the benefit of being thorough. On the other hand, you can set the tone for the hearing and you did that very well. Thank you very much.

502 We will take a 10-minute break.

--- Upon recessing at 1042

--- Upon resuming at 1059

503 LE PRÉSIDENT : O.K., commençons.

504 LA SECRÉTAIRE : Merci.

505 Nous entendrons maintenant la présentation de Quebecor Media inc.

506 Veuillez s'il vous plaît vous présenter et présenter vos collègues, après quoi vous aurez 10 minutes pour votre présentation.


507 M. PÉLADEAU : Merci, Madame Roy.

508 Monsieur le Président, Messieurs les Vice-présidents, Mesdames et Messieurs les conseillers, les conseillères, bonjour. Je m'appelle Pierre Karl Péladeau. Je suis Président et Chef de la direction de Quebecor Media.

509 Donc, vous me permettez de présenter mes collègues avec moi ce matin.

510 Il s'agit :

511 - à ma gauche, de Robert Dépatie, Président et Chef de la direction de Vidéotron;

512 - à sa gauche, madame Peggy Tabet, Directrice, Affaires réglementaires, Radiodiffusion, de Quebecor Media;

513 - à ma droite, Pierre Dion, Président et Chef de la direction de TVA;

514 - et à sa droite, Serge Sasseville, Vice-président, Affaires corporatives et institutionnelles de Quebecor Media.

515 Nous voudrions remercier le Conseil de nous offrir l'opportunité de nous exprimer à propos d'un sujet qui nous touche de très près : l'intégration verticale.

516 Lorsqu'il est question de l'impact de l'intégration verticale, l'expérience du Québec est inévitablement évoquée puisque Quebecor Media y a été précurseur en initiant cette tendance bien avant la conclusion des récentes transactions comme celles de Shaw-Canwest, BCE-CTV et NBC/Universal-Comcast. En effet, ce modèle d'affaires a été éprouvé, dès 2001, par Quebecor Media, qui détient, entre autres, une entreprise de distribution, Vidéotron, et une entreprise de programmation, Groupe TVA.

517 En prenant la décision de mettre en oeuvre un tel modèle à l'aube du 21e siècle, Quebecor Media avait anticipé un certain nombre de facteurs qui l'ont incitée à privilégier l'intégration verticale. Depuis, la constante transformation du monde médiatique, devenu de plus en plus concurrentiel et sans frontière, ne fait que nous conforter dans les choix opérés, il y a déjà plus d'une dizaine d'années.

518 Au fil des ans, les percées technologiques ont permis de numériser les contenus, d'augmenter la capacité de la bande passante, d'accélérer les vitesses de connexion et de généraliser l'utilisation des appareils mobiles tels que les téléphones sans fil intelligents et les tablettes électroniques.

519 Les annonces de découvertes technologiques font dorénavant partie du quotidien, et aucune autorité réglementaire ou législative n'a le pouvoir de freiner ces innovations ou la demande pressante du public pour de nouvelles avancées.

520 Ces dernières ont d'ailleurs réussi à transformer les habitudes de consommation des téléspectateurs canadiens qui se soucient dorénavant peu de la grille horaire et préfèrent plutôt cibler certaines émissions qui les intéressent et qu'ils visionnent au moment voulu, à l'endroit souhaité et sur la plateforme de leur choix.

521 L'ensemble de ces mutations nous démontre que l'intégration verticale est le seul outil viable pour sauvegarder le système de radiodiffusion canadien et maintenir la richesse de nos industries culturelles face aux défis technologiques et à la globalisation des communications. L'intégration verticale, combinée à d'autres orientations stratégiques telles que la convergence, permet de rentabiliser la production de plus en plus coûteuse d'un contenu télévisuel de qualité en le déclinant sur une multitude de plateformes qui se sont taillées une place grandissante dans le quotidien des Canadiens.

522 En effet, ce modèle d'affaires a permis à TVA de produire des émissions cultes devenues des références socioculturelles populaires du Québec et à Vidéotron de les distribuer sur une panoplie de plateformes répondant aux besoins des téléspectateurs.

523 Il nous a également permis de faire fructifier les précieuses compétences des journalistes de Corporation Sun Media et de TVA/LCN afin de lancer Sun News et d'offrir une plus grande diversité de voix éditoriales au Canada, une diversité essentielle dans un environnement démocratique sain.

524 Par ailleurs, les défis posés par le développement de la technologie et le changement des habitudes de consommation acquièrent depuis quelque temps un niveau de complexité inédit avec l'invasion de joueurs étrangers comme Netflix, Apple TV, YouTube, Google TV, Hulu et Amazon, pour ne citer que ces derniers.

525 Le terrain de jeu de ces Wal-Mart de l'audiovisuel est le marché mondial, et le Canada n'échappe pas aux tendances qu'ils instaurent, car ils s'inscrivent dorénavant, et indéniablement, dans le paysage audiovisuel canadien. Il est d'ailleurs fort probable que la population canadienne manifesterait son mécontentement de les voir déserter le territoire canadien si le Conseil tentait de réglementer leurs activités au Canada.

526 Ainsi, ce qui pouvait être perçu, jusqu'ici, comme une simple mutation des marchés s'est en fait transformé en véritable menace pour l'empreinte canadienne de notre industrie, que nous ne pouvons plus, et ne devons plus, ignorer.

527 A moins de réagir rapidement en outillant adéquatement les entreprises de radiodiffusion et de distribution canadiennes, le Conseil assistera à la naissance d'un cercle vicieux inéluctable : plus la concurrence des Netflix de ce monde se fera vive sur notre territoire, plus les clients des distributeurs comme Vidéotron se désabonneront, plus les contributions de ces distributeurs au financement de la programmation canadienne via le Fonds des médias du Canada et d'autres fonds d'investissement diminueront, plus l'auditoire des diffuseurs comme TVA se fera rare et plus les revenus des entreprises locales chuteront.

528 En d'autres termes, c'est l'existence même de nos industries culturelles qui est mise en péril.

529 Le Conseil ne peut plus continuer à jouer à l'autruche en se voilant les yeux pour éviter ou retarder la réflexion sur les véritables enjeux, car les retombées subies par les entreprises réglementées sont bel et bien désastreuses et les chiffres parlent d'eux-mêmes.

530 En effet, dès la première semaine de son lancement au Canada, plus de 10 pour cent des abonnés canadiens à Internet avaient déjà visité le site de Netflix. Une semaine, c'est le temps que nous prendrons pour tergiverser sur les portées philosophiques de l'intégration verticale, sans parler des délais nécessaires pour que la consultation publique sur l'incidence des services de radiodiffusion en ligne se traduise en directives concrètes. Pendant ce précieux temps, certaines entreprises étrangères se délecteront de notre lenteur et profiteront de notre passivité pour gagner du terrain et nous devancer sur notre propre échiquier.

531 En poursuivant sa conquête canadienne et en engrangeant au passage, avec d'autres services de radiodiffusion en ligne, près de la moitié du trafic Internet en Amérique du Nord durant les périodes d'achalandage, Netflix a gagné le pari de se constituer une clientèle frôlant le million d'abonnés, et ce, en l'espace de huit mois seulement.

532 Malgré leur simplicité, les propos d'un expert rapportés dans les journaux illustrent parfaitement la révolution numérique en cours :

"People know it is happening but I think it is happening faster than people might have expected."

533 Je me permettrais même de renchérir : It is happening much faster than expected.

534 Il est vrai que de nombreux modèles de services de radiodiffusion en ligne sont en cours d'expérimentation et que l'identité des joueurs qui connaîtront au final un succès durable n'est pas encore définitivement dévoilée.

535 Ce qui, en revanche, est certain est que l'équilibre penche dangereusement en faveur des compagnies appelées " over the top " et que les joueurs locaux essuieront une cuisante défaite si des mesures d'allégement réglementaire significatif ne sont pas prises très rapidement.

536 Citons simplement un cas bien connu sur le marché afin de démontrer que les défis que nous rencontrons sont bien réels et ne sont pas le fruit de notre imagination. En effet, nous ne pouvons plus nous accorder le luxe de l'oisiveté tandis que des sites aussi populaires que YouTube et Netflix se transforment dangereusement en faisant preuve d'une réactivité et d'une adaptation constantes dans le but de s'attirer une clientèle fidèle et loyale.

537 La stratégie de YouTube consiste depuis un certain temps à investir massivement dans la production de programmation par des professionnels, dans l'objectif de créer un réseau de chaînes financées par la publicité. En rivalisant autant les producteurs et diffuseurs que les distributeurs, YouTube fait d'une pierre trois coups et représente l'ampleur des obstacles auxquels le système canadien de radiodiffusion est confronté.

538 Si la tendance globale devait se maintenir, elle affaiblirait de manière tangible le niveau de contributions des entreprises canadiennes au financement du système canadien de radiodiffusion et mettrait en péril, à terme, la pérennité de ce système.

539 Je ne réinventerai pas la roue et me contenterai plutôt de répéter les propos du Président du CRTC lui-même lors du dernier Sommet sur la radiodiffusion et selon lequel, et je cite : " des améliorations à la pièce ne peuvent se substituer au fait qu'il faut repenser les choses en profondeur. "

540 Comme vous l'avez souligné, Monsieur le Président, il est donc primordial de " revoir la façon dont nous concevons l'ensemble de notre système réglementaire. "

541 En effet, l'inégalité des armes est tellement flagrante qu'une mise au point générale et une refonte du système s'imposent. La liste des limites imposées aux joueurs locaux est longue. En plus des investissements colossaux injectés dans l'infrastructure, ces derniers sont tenus de se conformer à de multiples contraintes réglementaires en matière de contribution à la programmation, d'assemblage, d'obligation de distribution, de publicité, d'exclusivité, d'accessibilité et d'imputabilité.

542 Les sociétés étrangères, quant à elles, ne sont assujetties à aucune obligation réglementaire au Canada et prennent l'argent des Canadiens pour la réinvestir aux États-Unis. Même la taxe de vente n'est pas facturée par Netflix.

543 Tous ces profits qui échappent aux Canadiens, en plus de l'immense avantage d'utiliser gratuitement une infrastructure existante pour diffuser leur programmation au Canada, leur permettent de conclure des ententes d'exclusivité hors de prix, comme ce fût le cas récemment avec Netflix et Paramount Pictures, alors que l'exclusivité sera maintenant prohibée sur les services canadiens de vidéo sur demande. Cela permet même à ces sociétés étrangères de pousser l'exercice encore plus loin en produisant leurs propres émissions exclusives.

544 Comble de la désuétude de notre environnement réglementaire et malgré une disparité incontestable, les acteurs étrangers bénéficient injustement d'un accès équivalent aux opportunités de développement qu'offre le marché canadien aux acteurs locaux qui contribuent au système de radiodiffusion depuis de nombreuses années!

545 Par conséquent, nous sommes d'avis qu'il est urgent d'alléger le fardeau réglementaire qui pèse de plus en plus lourdement sur les épaules des radiodiffuseurs et des distributeurs canadiens.

546 La mutation des marchés que j'ai tenté de vous synthétiser aujourd'hui a eu comme conséquence de focaliser toutes les attentions sur le contenu audiovisuel qui est devenu le centre névralgique de l'environnement médiatique canadien. Nos requêtes auprès du Conseil sont plus que jamais justifiées, en ce que nous réitérons notre demande de laisser libre cours aux forces de marché en l'implorant de ne pas réglementer les pratiques d'exclusivité.

547 Lorsqu'une entreprise prend la décision de garder un contenu exclusif ou de le partager, elle doit le faire en se fondant sur les impératifs commerciaux en jeu uniquement. Il suffit pour s'en convaincre de faire preuve d'un minimum d'imagination.

548 Projetons-nous dans quelques années et comparons ce qu'il adviendra des offres d'un distributeur canadien qui est assujetti à l'interdiction de signer toute entente d'exclusivité par rapport à celles d'un Netflix ou toute autre organisation qui peut en conclure à sa guise.

549 Il est crucial de comprendre la dynamique d'un tel marché, selon laquelle l'objectif ultime des négociations contractuelles est de monétiser la programmation en la déclinant sur l'ensemble de ses plateformes. Pour fidéliser nos téléspectateurs et les récompenser de leur loyauté, nous avons toujours oeuvré afin de différencier notre offre par son niveau de qualité.

550 Cependant, l'exclusivité de certains contenus constitue un outil indispensable pour que notre offre globale de services se distingue des offres disponibles sur le marché, en proposant au téléspectateur une valeur ajoutée. Il en découle que la valeur accordée à l'exclusivité est devenue un pilier fondamental de la structure de financement des émissions canadiennes.

551 En l'absence d'une perspective de profitabilité découlant d'un financement devenu impossible par l'interdiction de l'exclusivité, il serait très difficile de créer et de produire des émissions canadiennes à grand budget, malgré leur popularité.

552 Quebecor est persuadée qu'une interdiction de toute forme d'exclusivité de contenu sur les différentes plateformes nuirait certainement au développement du système de radiodiffusion canadien, d'autant plus que l'exclusivité est déjà pratiquée, comme nous l'avons évoqué, par des sociétés dites " over the top. "

553 En fait, ces ententes d'exclusivité sont nécessaires pour fidéliser les abonnés au système de distribution canadien, malgré les alléchantes offres étrangères disponibles en ligne. Mais, en l'absence de telles ententes, un téléspectateur serait-il prêt à payer un abonnement assujetti à une série d'exigences réglementaires pour visionner le même contenu par ailleurs disponible en ligne au moment choisi et pour une fraction du prix?

554 Par conséquent, nous croyons que l'interdiction de l'exclusivité ne ferait qu'affaiblir les joueurs canadiens tout en alourdissant inutilement le dispositif réglementaire en vigueur. Les dispositions relatives aux préférences et désavantages indus sont amplement suffisantes pour régler les abus.

555 Il relève d'ailleurs de la responsabilité du Conseil de garantir qu'aucune entreprise ne puisse individuellement abuser de sa position dominante pour exercer une influence indue sur le système de radiodiffusion.

556 En effet, il serait faux de croire que toutes les entreprises verticalement intégrées doivent être traitées de manière identique, car les résultats de la mise en oeuvre des balises de l'intégration verticale sont loin de l'être et peuvent mener à des résultats très disparates en fonction du degré de dominance des entreprises privées.

557 En conclusion, Monsieur le Président, l'intégration verticale a été pour Quebecor Media l'un des principaux outils qui lui ont permis de bâtir une assise solide et qui lui ont servi de fondation pour faire face à la tempête technologique qui s'abat sur nos industries culturelles.

558 Tous ceux qui peuvent juger honnêtement de la situation des dix dernières années s'entendront pour souligner l'apport extrêmement positif de Quebecor Media et de ses différentes composantes sur le paysage audiovisuel canadien et sur ses artisans.

559 Les gens qui oeuvrent dans l'industrie le savent, les découvertes technologiques et l'arrivée des services de radiodiffusion en ligne ont changé la donne. Le visage du monde médiatique n'a plus beaucoup de traits communs avec celui d'il y a 10-15 ans. Les téléspectateurs ont évolué. Leurs habitudes de consommation aussi.

560 Il faut que notre régulateur le reconnaisse, l'accepte et, surtout, réagisse très rapidement en conséquence. Une telle mission relève de l'essence même de son mandat.

561 Nous savons que la pérennité du succès de nos industries audiovisuelles et culturelles vous tient à coeur. Dans ces circonstances, nous vous demandons de garder en mémoire et de développer comme réflexe que l'inflation de la réglementation ne fera que nous créer des préjudices et nous empêchera de demeurer compétitifs face à une concurrence mondialisée qui n'a aucune assise dorénavant avec la situation des 30 dernières années. Alors, Messieurs, Dames du Conseil, nous vous le demandons, aidez-nous à demeurer compétitifs.

562 Je vous remercie de votre attention.

563 LE PRÉSIDENT : Merci de votre présentation.

564 Maintenant, dans la première page de votre présentation aujourd'hui, vous dites que vous êtes l'inventeur de l'intégration verticale, que c'est TVA et Quebecor qui ont vraiment commencé toute cette direction, et c'est sans doute vrai.

565 Un de vos élèves le plus distingué était Ted Rogers. Il a fait la même chose. Il a suivi l'exemple de Quebecor. Mais ce matin, Rogers était ici, et qu'est-ce qu'ils disent?

"Specifically we propose that any television content broadcast in Canada and also distributed on a broadband or mobile platform must be made available to competitors for distribution on the same ancillary platforms, on a non-exclusive and non-preferential basis and on terms that are commercially reasonable. "

566 Comment vous et Rogers, Rogers qui a suivi vos étapes, ont une position si différente? Est-ce que c'est à cause qu'ils sont principalement dans le marché anglais et vous êtes dans le marché francophone ou est-ce que c'est... Comment pouvez-vous expliquer cette position assez différente dans deux compagnies qui sont assez similaires dans d'autres aspects?

567 M. PÉLADEAU : Effectivement, Monsieur le Président, vous avez raison de le souligner, mais avant de répondre à votre question, j'aimerais aussi saluer l'exemplarité d'un grand bâtisseur canadien, Ted Rogers, qui a procuré pour une grande partie des Canadiens, particulièrement dans le sans-fil, une empreinte technologique importante.

568 Effectivement, j'avoue que je suis un peu perplexe face à la position de Rogers. Je suis... je me pose des interrogations concernant donc l'appréciation qu'ils ont de services " over the top ", et il y a quelques autres intervenants également, depuis quelques semaines et quelques mois, qui sont intervenus.

569 Si j'étais un diffuseur anglophone, je m'inquiéterais énormément de cette capacité financière qu'ont ces entreprises pour pouvoir envahir, purement et simplement, des marchés.

570 J'ai eu l'occasion dans ma présentation de faire référence à des ententes d'exclusivité qui ont été convenues entre Netflix et Paramount. Nous savons, puisque nous sommes en discussion avec les Majors américains, que ce genre de disposition contractuelle est fréquemment présenté dans les discussions qui existent.

571 Nous, comme diffuseur -- et éventuellement, Pierre, tu pourras commenter davantage -- mais ça devient de plus en plus difficile de signer des ententes parce que nous avons devant nous une concurrence qui dispose de moyens financiers bien différents des nôtres, et nous n'avons pas la capacité à l'heure où nous nous parlons d'envahir le marché américain comme les entreprises américaines envahissent les marchés étrangers.

572 Lorsque vous avez acheté un droit d'un million pour la diffusion de tel et tel type, bien l'objectif comptable et économique d'une entreprise, c'est de pouvoir le distribuer le plus largement possible pour amortir ses frais sur une envergure la plus importante.

573 Et c'est le modèle qui est celui derrière ces " over-the-top ", qui... Je dirais probablement que le marché canadien est même anecdotique face aux autres marchés occidentaux, qui sont pour eux une tarte encore plus intéressante.

574 Donc, j'ai bien peur que la position de Rogers et certains autres intervenants soit problématique et soit dangereuse.

575 LE PRÉSIDENT : Mais je ne parle pas des " over-the-top " -- comme vous le savez, nous avons commencé une enquête sur cela pour savoir qu'est-ce que la situation -- mais les propos de Rogers qui disent...

576 Si nous adoptons cette proposition-là, qu'est-ce que ça veut dire pour vous? Vous avez une position dominante sur le marché du Québec, sur le marché francophone. Vous aurez... vous continuerez d'avoir cette position. Ça serait une chose qui... où au moyen de mobile Internet, vous devez revendre ce contenu en forme non préférentielle et sur des dispositions commercialement raisonnables. Je ne vois pas comment ça va blesser Quebecor.

577 M. PÉLADEAU : Je crois, Monsieur le Président, que c'est difficile de prendre une question en isolation et de dire qu'elle n'a pas immédiatement de relation avec -- utilisons le terme " over-the-top ", mais on peut utiliser un autre terme. On peut utiliser le terme, dans le fond, si on définit ce que c'est qu'un " over-the-top ", c'est un outil technologique, un moyen ou un canal de distribution qui n'est pas réglementé et qui peut permettre à des étrangers de diffuser des contenus.

578 Alors, lorsqu'on fait référence à l'exclusivité, pourquoi des entreprises étrangères utilisant des infrastructures canadiennes auraient la capacité -- et c'est plus que la capacité, c'est la réalité, aujourd'hui -- de pouvoir convenir d'ententes d'exclusivité...? Même TVA, d'une certaine façon, pourquoi TVA ne pourrait pas convenir d'ententes d'exclusivité pour distribuer du contenu chez Netflix?

579 Alors, on ne peut pas prendre ces problématiques-là en isolation, elles sont toutes inter-reliées. Et malheureusement (et j'ai tenté de le dire) personne n'est en mesure de pouvoir stopper les évolutions technologiques. Et au contraire, les Canadiens le souhaitent. Alors, une fois de plus, la seule façon --

580 LE PRÉSIDENT : Oui, mais ma question était très spécifique. Je ne parle pas de Netflix, je parle de la règle suggérée par Rogers. J'aimerais savoir qu'est-ce que sera la conséquence négative pour Quebecor si on adopterait cette règle-là, parce que si vous pouvez acheter du contenu, mais tous les contenus visuels, vous êtes obligé de le partager sur l'Internet ou les appareils mobiles sur des termes non préférentiels, mais sur une base commercialement raisonnable.

581 Franchement, je ne vois pas où est le grand effet négatif pour vous.

582 M. PÉLADEAU : J'ai essayé de mettre en valeur la problématique de la valeur ajoutée, de la différenciation.

583 Si nous voulons continuer à avoir un système solide, si nous voulons continuer d'avoir un télédiffuseur privé autre qu'un télédiffuseur public qui coûte plus d'un milliard de dollars, il va falloir s'organiser pour que notre industrie soit solide. Et si dorénavant le CRTC ou le Conseil ne permet plus cette différenciation et détermine -- parce qu'à la fin de la journée, c'est peut-être ça qui va se produire -- quels vont être les tarifs qui vont être applicables entre un diffuseur et un distributeur, bien là, c'est pas d'un Conseil que nous allons avoir besoin, c'est de quatre Conseils. Vous allez avoir besoin d'une armée de fonctionnaires pour déterminer le tarif à la pièce de chaque émission en fonction de tel distributeur.

584 Ensuite, bien, il y a des distributeurs sans fil -- il y en a plusieurs; il va peut-être y en avoir plusieurs autres dans les années qui viennent, Dieu seul le sait. On va avoir des nouvelles enchères bientôt, sur le spectre 800. Il va peut-être y avoir de-- C'est absolument aberrant... ça va être une bureaucratie renversante.

585 Et pendant ce temps-là, les Américains n'auront aucun assujettissement. Alors, ça va dérégler le système et ça va mettre en pièces le système canadien, Monsieur le Président.

586 LE PRÉSIDENT : Mais vous-mêmes dites, sur la page 7 de votre présentation aujourd'hui qu'il est " responsabilité du Conseil de garantir qu'aucune entreprise ne puisse individuellement abuser de sa position dominante pour exercer une influence indue sur le système de radiodiffusion. " C'est la même chose.

587 M. PÉLADEAU : Oui.

588 LE PRÉSIDENT : Ça implique que nous, au point final, devons faire un jugement si vos contrats sont raisonnables ou non. Je ne vois pas la différence dans ce que vous avez dit ici et que vous acceptez et la règle proposée par Rogers.

589 M. PÉLADEAU : Je suis d'accord avec vous, Monsieur le Président. Effectivement, la venue des entreprises intégrées a crée une problématique particulière concernant les avantages et les désavantages indus.

590 Alors où s'arrête l'abus? En quoi se définit l'avantage ou le désavantage? Je dirais qu'heureusement, toutes les entreprises ne sont pas intégrées et que le champ, éventuellement, de compétence à l'égard des conflits qui pourraient advenir, bien, devrait être limité.

591 Ceci étant, je pense que de part et d'autre, compte tenu de la situation des entreprises qui sont assujetties à cette définition-là, il est à parier qu'en toute bonne foi, les entreprises pourront en venir à des ententes particulières. Et si ce n'était pas le cas, effectivement, le Conseil aura à déterminer ce que c'est qu'un abus.

592 C'est une question délicate, j'en conviens. C'est probablement une question qui permet de justifier l'existence du Conseil dans les dix prochaines années.

--- Laughter


594 Tom, tu as des questions?

595 CONSEILLER PENTEFOUNTAS : Merci. Je n'ai pas de questions.

596 THE CHAIRPERSON: Okay. Any one of my other colleagues?

597 Michel?

598 CONSEILLER MORIN : Merci, Monsieur le Président.

599 On a vu... Parlant de diversité, il y a une règle qui a été proposée pour qu'éventuellement, lorsque vous êtes assujetti à la règle de un service lié pour deux services non liés -- au Canada anglais, on a un service lié pour trois services non liés...

600 Qu'est-ce que vous pensez de la suggestion qui ferait qu'au Canada anglais... ça ne vous concerne pas, mais qu'il y ait un service qui soit réservé pour les indépendants, tandis qu'au Québec, compte tenu de la concentration qui est beaucoup plus importante, mais de l'offre relativement moins importante en ce qui concerne les services spécialisés de catégorie B, qu'est-ce que vous penseriez de la règle qui voudrais qu'au Québec, pour chaque service que vous vous offririez comme entreprise intégrée, il y en ait un qui soit réservé pour les indépendants?

601 M. PÉLADEAU : Merci, Monsieur le Commissaire.

602 Robert est un spécialiste de la distribution, comme vous le savez, il est président de Vidéotron. Mais peut-être aussi Pierre va avoir également des commentaires...

603 Robert?

604 M. DÉPATIE : Oui.

605 Premièrement... évidemment, la règle, Monsieur le Conseiller... La règle auparavant était de deux pour un. Et nous étions évidemment contre, pour des raisons assez simples : on veut premièrement que c'est le consommateur qui décide. Donc, simplement de laisser la réglementation le décider qu'on devrait offrir deux chaînes sans savoir ou avoir fait les recherches nécessaires si le produit est acceptable pour le consommateur aurait été vraiment difficile.

606 Donc pour nous, un pour un, nous sommes confortables avec cette position-là.

607 CONSEILLER MORIN : Un pour un?

608 M. DÉPATIE : Oui.

609 Mais encore une fois faut-il faire la preuve.

610 Et ce qui m'inquiète dans cette réglementation-là, c'est qu'il faut faire la preuve, autant notre contenu chez Quebecor que le contenu à l'externe, il faut faire la preuve que le contenu est accepté par le consommateur. Ce qui nous inquiète, nous, dans ces règles-là, c'est que c'est le consommateur au bout de la ligne qui devrait décider, et non la réglementation. Mais pour être juste, je peux comprendre.

611 Donc, une chaîne pour une, tant et aussi longtemps que les règles du marché sont respectées, c'est-à-dire que le produit soit acceptable par le consommateur.

612 CONSEILLER MORIN : Mais à ce moment-là, c'est vous qui décidez...

613 M. DÉPATIE : Non, c'est le consommateur--

614 CONSEILLER MORIN : nom du consommateur?

615 M. DÉPATIE : Les demandes qu'on reçoit dans les centres d'appels, la publicité ça force les chaînes, spécialisées ou autres, à faire une stratégie de marketing, à offrir un produit supérieur, à se différencier et créer la demande... comme tout bon produit dans le marché. C'est ce qu'on recherche auprès de la télédistribution, maintenant. Si vous avez un produit à lancer, assurez-vous qu'il y a un marché pour, assurez-vous que votre produit est de qualité et se différencie par rapport à la concurrence.

616 CONSEILLER MORIN : Parce que dans votre cas, vous comprendrez qu'au Québec, la position dominante que vous avez... si vous décidez, vous, au nom de telle ou telle raison qu'il n'y a pas de règle pour s'assurer que les indépendants seront partie prenante de votre offre globale, parce qu'il y aura une règle, c'est vous qui... S'il n'y a pas de règle précise, c'est vous qui décidez.

617 M. DÉPATIE : Nous sommes d'accord avec " un pour un ", Monsieur le Conseiller, sauf que tout ce qu'on dit, c'est qu'on ne peut pas prendre n'importe quelle chaîne. On veut s'assurer que la chaîne qui se présente à nous aurait fait ses devoirs puis qu'il y ait une demande auprès des consommateurs; c'est tout.

618 CONSEILLER MORIN : Alors, si on parle des consommateurs, justement. Il y a le point 11 où on parle d'un service de... " skinny basic service "... le service squelettique.

619 Actuellement, au Canada, on a différents services de base, des services hybrides, où vous avez la possibilité, vous, d'ajouter autant de services que vous voulez à ceux que le CRTC détermine, comme par exemple les généralistes ou la télévision éducative, à telle enseigne qu'on se retrouve avec des services de base qui sont bien différents d'un bout à l'autre du pays. Et les consommateurs n'ont pas le choix que de prendre votre service de base avec tous les services, toutes les chaînes spécialisées que vous mettez dessus.

620 Si on avait un service de base, comme on en parle ici dans la présente audience... Si on avait un service de base limité aux chaînes généralistes (on ne parlera pas de la valeur pour le signal)... limité aux chaînes généralistes et à tout ce qui est gratuit plus ou moins et, peut-être, à un service comme MétéoMédia, qui fait l'objet d'un 9(1)(h), est-ce que vous seriez d'accord avec une proposition...?

621 Je sais que vous avez le service de base le moins coûteux au Canada, mais est-ce que ça fait un sens, par rapport à la compétition qui nous arrive des États-Unis -- parce que le service de base est vraiment l'entrée dans le système -- est-ce que vous achèteriez ce service de base très squelettique où vous n'auriez pas la possibilité d'ajouter vos services, vos chaînes spécialisées, à vous ou aux autres?

622 M. DÉPATIE : Monsieur le Conseiller, nous sommes évidemment contre, pour la seule raison qu'on veut avoir le moins de contraintes possibles afin de concurrencer.

623 Vous allez comprendre que c'est le marché, en fait. Avec la concurrence... On a trois concurrents, maintenant, au Québec. Jean semble l'oublier, mais il y a quand même Star Choice ou Shaw, plutôt... Bell... Et donc, il y a la concurrence, les forces du marché qui nous obligent à offrir des produits concurrentiels; on n'a pas le choix, on doit satisfaire et répondre aux besoin de la clientèle.

624 Donc, toute règle ou contrainte possible nous forçant à... afin de concurrencer peut nous nuire. Donc, nous, on veut limiter ces contraintes-là le plus possible.

625 Mais ça a du sens quand même, votre point. C'est sûr que si on est limité le plus possible, sans avoir de limitation -- c'est-à-dire si plutôt on est... on a moins de contraintes, mais pas limitées, on devrait être capable d'opérer et d'offrir des produits à la hauteur des exigences de notre clientèle.

626 CONSEILLER MORIN : Mais on s'entend, et s'il y a un service de base, c'est le CRTC qui déciderait de son contenu. Pas du prix, mais de son contenu.

627 Donc, quand vous parlez de Bell, avec le nouveau système de Bell Télé, IPTV et Star Choice, tout le monde aurait exactement le même contenu pour le service de base. Et la concurrence -- puisque c'est un terme que vous aimez -- s'exercerait sur le prix. Comme quand on va à une station d'essence, l'essence régulière, on joue de semaine en semaine (ou plutôt de jour en jour, si ce n'est pas des heures) quant au prix lui-même.

628 Alors, le service de base, ce serait... je ne sais pas quelle est votre position finale, mais probablement que compte tenu du fait qu'il n'y aurait pas de chaînes spécialisées, le prix serait moindre pour le consommateur.

629 Et on ne parle même pas de Shaw, qui lui... Shaw Communications, qui lui, a un service de base qui est beaucoup plus élevé que vous, avec beaucoup plus de services spécialisés que vous sur le service de base.

630 M. DÉPATIE : Nous sommes d'accord avec une base la plus petite possible. La seule chose que je dis, Monsieur le Commissaire, c'est que nous ne devons pas nous faire limiter, d'avoir de contraintes possibles. C'est tout ce qu'on dit.

631 CONSEILLER MORIN : Donc, c'est dans votre philosophie?

632 M. DÉPATIE : Ah! Absolument! D'avoir la base la plus petite, il n'y a aucun doute là-dessus.

633 M. PÉLADEAU : D'ailleurs, je pense, Monsieur le Conseiller, que vous avez déjà posé la question -- il y a de ça peut-être entre 12 et 18 mois. Je me souviens fort bien que nous avons eu l'occasion d'en--

634 CONSEILLER MORIN : J'ai même fait une opinion minoritaire là-dessus.

635 M. PÉLADEAU : Tout à fait. Et nous ne pouvons que partager votre perspective à cet égard, parce que je pense qu'elle s'inscrit dans un mouvement de déréglementation.

636 Et elle permettra d'ailleurs au consommateur -- étant donné, évidemment, le périmètre des redevances payables sur les chaînes qui auront à être distribuées obligatoirement sur la base -- de permettre, justement, aux distributeurs d'être beaucoup plus concurrentiels.

637 Et ça entraîne aussi, évidemment, comme vous pouvez vous en douter, la négociation des tarifs entre le distributeur et les chaînes spécialisées, ce qui n'était pas le cas antérieurement, parce que ces tarifs-là étaient imposés par le CRTC. Vous savez que nous, on pense par exemple que RDI ne devrait pas valoir 1,25$ alors que LCN reçoit...

638 Combien, Pierre?

639 ... 0,46$. Il fait deux fois, deux fois et demie l'audience.

640 Ce sont des situations aussi contradictoires ou antinomiques qu'on rencontre dans un environnement réglementé.

641 Et je suis désolé, mais nous croyons que LCN fait un aussi bon travail sinon meilleur que RDI. Pourquoi cette entreprise aurait, donc, 40 pour cent de leurs redevances alors que sa programmation est de qualité équivalente ou supérieure.

642 CONSEILLER MORIN : En tout cas, on verra avec... si RDI peut avoir éventuellement un service 9(1)(h), si tant est qu'il continue d'exister, mais...

643 M. PÉLADEAU : Je pense que c'est le cas à moins que...?

644 O.K., mais il y a CBC qui en a un aussi--


646 M. PÉLADEAU : ...peut-être pas pour RDI, mais il y a News Net, donc--

647 CONSEILLER MORIN : Dans le marché anglophone.

648 Dernière question sur les avantages tangibles. Est-ce que pour vous les avantages tangibles ça ne serait pas une façon de taxer, finalement, la rationalisation? Parce que si on impose des avantages tangibles lorsqu'une compagnie de câble en achète une autre... quand on voit actuellement IPTV, qui est maintenant votre concurrent, eh bien, on risque de peut-être retarder certaines rationalisations dans l'industrie terrestre de la distribution.

649 J'aimerais avoir votre opinion là-dessus.

650 M. PÉLADEAU : Vous avez raison, et Robert se permettra peut-être de commenter davantage mais... C'est le cas. Et je dois vous dire -- puis probablement que c'est la situation aussi qui existe en ce qui vous concerne... Si vous êtes...

651 Je ne veux pas faire un exercice de représentations commerciales, mais je dois avouer que dans plusieurs régions Vidéotron n'est pas présent. Quand je me promène là-bas, on me dit : Quand est-ce que vous arrivez?

652 Et la raison pour laquelle, je pense, les citoyens aimeraient avoir Vidéotron, c'est que la réputation de Vidéotron au niveau du service à la clientèle et au niveau -- et les investissement sont là pour en témoigner.

653 Depuis de nombreuses années on oublie toujours qu'on dit que le bénéfice d'exploitation des distributeurs est élevé. J'en conviens, mais nous investissons des centaines et des centaines de millions de dollars pour, justement, nous assurer qu'il y a une infrastructure de qualité qui permet autant le passage, certes limité, de canaux de télévision achetés et évidemment aussi de l'accès à Internet le plus rapide. Mais ceci se fait effectivement pour le bénéfice des Canadiens.

654 Alors s'il n'existait plus de bénéfices tangibles pour les transactions dans le domaine des entreprises de distribution, ça serait souhaitable, puis que ces éléments-là pourraient faire l'objet, justement, d'un investissement à l'intérieur de l'intégration des réseaux pour que, justement, ces réseaux puissent bénéficier de toute la capacité que l'entreprise a déployée depuis de nombreuses années.

655 Peut-être, Robert, que tu as des...?

656 M. DÉPATIE : Oui.

657 Le seul commentaire c'est : évidemment on est -- encore une fois, Monsieur le... -- je dis toujours " commissionnaire ", je ne sais pas pourquoi... Monsieur le Relationniste, c'est peut-être --

658 CONSEILLER MORIN : Un autre !

--- Laughter


660 M. DÉPATIE : " Monsieur le Conseiller. "

661 Monsieur le Conseiller, écoutez. Actuellement, nos normes, nos standards au niveau de la technologie sont tellement élevés que lorsqu'on fait une acquisition, on se doit de moderniser, d'investir des sommes assez astronomiques.

662 Donc, souvent, même les câblodistributeurs que nous faisons l'acquisition, on investit autant que le coût d'acquisition lui-même pour nous permettre d'atteindre les standards, la modernisation, DOCSIS 3 et autres.

663 Donc pour nous, évidemment, on est contre le fait d'avoir des...

664 M. PÉLADEAU : Écoutez... Monsieur le Conseiller, j'aurais juste un commentaire additionnel, un petit peu dans la foulée des questions que vous faisiez référence un petit peu plus tôt.

665 Vous avez dit que peut-être la concurrence était moins élevée dans le marché francophone. J'ai des réserves là-dessus : il y a quand même de grandes entreprises qui sont installées avec des privilèges historiques auprès des chaînes spécialisées. Vous savez fort bien que lorsque TVA démarre une chaîne elle n'a pas -- je dirais -- le privilège, justement, de transporter. On a vu qu'est-ce que ça a donné aussi avec Sun News et Bell qui refusent... Pas juste Sun News, mais d'autres chaînes comme Yoopa, celle que nous avons lancée, quand même, pour un distributeur important au Québec.

666 Donc c'est ce, sans compter et... Tu sais, nous avons parlé des " over-the-top " américains, mai il y en a un aussi, un canadien qui est problématique, c'est Radio-Canada avec TOU.TV qui diffuse son contenu gratuitement sur l'Internet.

667 Alors pourquoi seriez-vous aujourd'hui éventuellement intéressé à vous abonner à un service de distribution si en grande partie vous pouvez avoir accès au télédiffuseur public par le biais de l'Internet, encore une fois, qui est un grand consommateur de bande passante et qui exige, de la part des entreprises de distribution une infrastructure robuste pour le transport de ses données.

668 CONSEILLER MORIN : Merci pour vos réponses.

669 C'était mes questions, Monsieur le Président.

670 THE CHAIRPERSON: Okay. Peter, you have a question?

671 COMMISSIONER MENZIES: Just two quick questions because you referred to OTT.

672 How many subscribers do you estimate you have lost due to OTT services?

673 MR. DÉPATIE: Currently, Mr. Commissioner, it's under investigation. We feel that we lost some, but I can't provide you with the numbers currently.

674 But what we're looking at now is the future as well because, as you know, Netflix doesn't have a lot of French content currently but it's coming with French content with the agreement they signed recently. So we're trying to be proactive because we've seen what happened in the United States and in the rest of the country.

675 So I can't provide you with numbers today, but certainly we are doing currently some research and we will provide you this information in the very near future.


677 MR. PÉLADEAU: Can I just add a little bit on this?

678 You know, for the last quarter in reviewing our numbers, and obviously we don't have any breakdown -- unfortunately, I would say, breakdown for our competitors between the French and the English market, but we've been looking at, you know, their increase for television distribution and it's not matched by the number that we've been losing.

679 So overall where you would expect, you know, the market growing, you're seeing a little bit of a decline. So is this something that shows, you know, what will become a significant phenomenon like the one that the Americans called cord-cutting, not for the wireline telephony, but now for signal distribution?

680 So nobody knows, but certainly, you know, in a certain tranche of the population, let's say 15 to 35, this tranche being more open to technology, this tranche going more often on the Internet, the question is easy to answer. I mean I will get a lot of content for 40, 50, 60 percent of the price.


682 MR. PÉLADEAU: This is the debate.

683 COMMISSIONER MENZIES: This is the next question.

684 Is there an institutional barrier of some kind to prevent you from starting your own over-the-top service?

685 MR. PÉLADEAU: Well, we've been seeing CBC doing it. I think that, you know, since we're accountable to our shareholders, we're accountable for the Canadian television broadcasting, we need to make sure that we will make money.

686 We don't have the size of those Americans and we have the accountability to our shareholders when we compare ourselves with the state broadcaster.

687 So we are squeezed. We are squeezed, and this is why we are raising this as a significant question that needs to be discussed, and our point is pretty simple. If we want to compete, we need to have a level playing field with those companies, at least, giving us the chance to compete, and get rid of the regulatory burden that we have been facing for the last 20 years.

688 MR. DÉPATIE: That is the exact point we have been trying to make since the beginning, because, as you know, Paramount signed a deal with Netflix for $100 million, with Canadian exclusivity. That is the point we are trying to make: how can we compete currently against Netflix, which bought the rights for the French and English content in Canada, exclusively?

689 That is the issue, and that is just the start. That is just the beginning.

690 So that's what we are facing, and we are saying that exclusivity is very key for us in the future -- today and in the future.

691 MR. PÉLADEAU: Pierre, as a broadcaster, would like to comment on this issue, too.

692 MR. DION: The answer to your question might be, "Yes, maybe we will have to start a service eventually," but we think that we need less regulation in order to do so.

693 What will be exactly the model for a Canadian incumbent like us to compete against the over-the-top, the model is not fixed yet, but certainly with less regulation we will probably find a creative way to be able to do our current business and also find a new model to compete against the over-the-top eventually.

694 So less regulation would help us find that model.

695 COMMISSIONER MENZIES: So less regulation, obviously, inside the regulated system, inside the traditional system, to allow you to compete in the new, emerging -- what appears to be a new, emerging system.

696 Is that right?

697 MR. DION: We are asking for less regulation overall. So it's not less regulation within the regulated system, it's just less regulation overall.

698 COMMISSIONER MENZIES: Okay. I'm sure that we will all be talking about that a lot in the future.

699 Thank you.



702 Obviously, in these proceedings, the whole issue of exclusivity is primary, and I understand why you take the position you do, especially when it comes, obviously, to Quebecor subscribers. But how does your position serve audiences who live outside the Quebecor footprint who want access to TVA programming and won't have it available because you have exclusive deals that won't provide your programming on VOD or on mobile platforms?

703 How does it serve those Canadians?

704 MR. PÉLADEAU: Maybe Pierre would like to answer this, also, because TVA, as a live broadcaster, is available all over the place.

705 Yes, it's true that there is a limitation at this stage, but it's not impossible to negotiate a contract with distributors for the programming that TVA produces, and delivering it on VOD.

706 MR. DION: Yes, TVA has a national signal, so we are available to most BDUs across the country, live.

707 COMMISSIONER CUGINI: So your position on exclusivity would apply only to the availability of programming on mobile platforms, but not on VOD?

708 That's what I am trying to understand.

709 MR. PÉLADEAU: Yes, on all the platforms.

710 MR. DION: All the platforms, but on the linear mode, everybody can, of course, see TVA nationally.

711 That's the thing about TVA content, if you want to see it, you can see it. All Canadians are able to see our content live, right?

712 COMMISSIONER CUGINI: Right, but we also all know the advantages of video on demand: consumers are in charge; consumers are in control of when they watch what they want to watch through VOD, as well.

713 Just so I am clear, your position would take away that opportunity from non-Quebecor subscribers.

714 MR. PÉLADEAU: I have been trying to say, even in my presentation, that the cost of programming is always getting higher.

715 The other side of the equation on conventional broadcasting is that the audiences are shrinking.

716 So if you want to continue to invest in programming in front of a declining audience, you need to make sure that you will be able to get this content on many other platforms.

717 In doing so, why would you give to your competitor an advantage, when this is paramount to being able to invest in programming?

718 Without this, why would a distributor invest in programming, if he doesn't have any exclusivity?

719 Why would I buy the sponsor of "Juste pour rire", which is a large festival in Montreal, if "Juste pour rire" is also selling the same sponsorship to Bell? It doesn't make sense.


721 LE PRÉSIDENT : O.K., merci. Ce sont toutes nos questions pour vous.

722 M. PÉLADEAU : Merci.

723 THE CHAIRPERSON: I think that's all we have for Quebecor. I hope you will be here for the reply phase.

724 Before we break for lunch, I want to apologize to my Vice-Chairman, Mr. Tom Pentefountas. I cut him off and I think I exceeded my jurisdiction.

725 He, obviously, can ask whatever question he wants. It's a tough subject, which I don't think is on the agenda, but if he wants to ask the question, that's fine.

726 Mr. Lind, could I ask you to come forward, please, and answer the question that Mr. Pentefountas asked you?

727 COMMISSIONER PENTEFOUNTAS: Thank you very much.

--- Pause

728 THE CHAIRPERSON: Just to clarify the record, I just used the expression "reply phase". What I meant was the written replies, which are due by July 8th.

729 Obviously, there is no reply phase in this hearing.

730 Tom...

731 COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chairman.

732 The question was: How does vertical integration eliminate the need for value for signal?

733 MR. LIND: Mr. Vice-Chairman, there are two or three answers. One is scale. The main reason is scale. When you consider where Global was, for example, two years ago, and where it is now, where CTV was, and where City was, for that matter, all three networks now have enormous financial backing that they did not have before.

734 So that's the first reason, that they don't need it, and the reason is because they have deep, deep pockets that they didn't have before. You know, Global was almost bankrupt, and now they have Shaw.

735 That's the first reason, and ancillary to that, of course, is the fact that the economy has improved dramatically. That's not related to vertical integration, but that's a point nonetheless.

736 The second reason is a little more sinister, and very hypothetical, okay? Just hypothetical, but let's say that the president of, say, Bell decided that it was going to be very aggressive in the subscriber acquisition business, so it would call on one arm of its company to injure somebody else, and then let another arm of its company benefit from that.

737 For example, they might say to CTV, "CTV, don't come to an agreement on fee for carriage. Don't come to an agreement." Or, "Make it almost impossible to come to an agreement. Stall --" whatever.

738 At the same time, they would then move their Bell satellite company, or their Bell IPTV company, heavily into Cogeco's area, because they don't offer CTV. Cogeco can't get CTV, but Bell can get CTV.

739 Bell has already said that they are not going to play this game with themselves. They will just play it with others, but not with themselves.

740 So while Cogeco is desperately trying to get CTV content, Bell is racking up subscribers.

741 That is where vertical integration really, really could hurt.


743 THE CHAIRPERSON: Thank you very much.

744 Are there any other questions?

745 Candice...

746 COMMISSIONER MOLNAR: Mr. Lind, the example that you just gave, if we were to replace CTV with TSN, that is the example that most of the independent distributors used to say that an integrated company could take some valuable content and they could make it difficult, either through negotiating -- stalling negotiations, at prices that are not appropriate, or whatever, and foreclose that content from their competition distribution, and therefore Bell would have an advantage, in the case you are using of Bell, in that market, through their satellite or IPTV.

747 If I understand the position that you folks put forward, you said that there really was not anything additional required for traditional distribution and our focus should only be on safeguards for the new media platforms.

748 Your example suggests that there, potentially, is consent on the traditional platforms.

749 MR. LIND: But my example deals with a network, not TSN.

750 I take your point, but I don't think it's exactly the same thing. Fee for carriage is an extraordinarily powerful instrument, and carriage on TSN, or whatever, is not exactly the same thing. Fee for carriage can ruin a company or benefit it greatly.

751 That's why I think that fee for carriage is so wrong in this country, especially because we are vertically integrated now.

752 COMMISSIONER MOLNAR: So you don't believe that there is any -- take away the issue of it being CTV. If the content was anything besides network television, you don't believe there are --

753 MR. LIND: We have the undue preference and --

754 COMMISSIONER MOLNAR: And that's all that's required.

755 MR. LIND: Yes.


757 THE CHAIRPERSON: Okay. Thank you very much. I think we have had a fruitful morning. We will take a pause now and reassemble at 1:30.

--- Recessed at 1201

--- Resumed at 1331

758 THE CHAIRPERSON: Okay, Madame la Secrétaire, commençons.

759 THE SECRETARY: We will now proceed with the presentation by TekSavvy Solutions Inc. and Public Mobile Inc. These two intervenors are appearing as a panel to present their interventions. We will hear each presentation which will then be followed by questions from the Commissioners to the panel.

760 I will now invited TekSavvy Solutions Inc. to begin. Please introduce yourselves and you will then have 10 minutes for your presentation.

761 Thank you.


762 MR. TACIT: Thank you, Madam Secretary.

763 Mr. Chair and Commissioners, my name is Chris Tacit and I am here representing TekSavvy Solutions Inc. today.

764 Seated with me is Mr. Patrick Lehoux, TekSavvy's Chief Business Development Officer. Mr. Lehoux will deliver TekSavvy's opening statement.

765 MR. LEHOUX: Thank you, Chris.

766 Mr. Chair and Commissioners, TekSavvy is pleased to appear before you to today to address the important policy issues surrounding vertical integration as that term is described by the Commission in this proceeding.

767 TekSavvy is already known to the Commission as a provider of Internet access, local and long distance services. In addition, we plan to start providing broadcasting services using IPTV technology in the near future. As a result, we have a keen interest in ensuring that vertical integration in the broadcasting industry does not lead to a reduction in competition in the distribution of programming to Canadians.

768 There is ample evidence on the record of this proceeding that vertical integration in the broadcasting sector, although beneficial in some respects, provides integrated entities with the incentive to engage in exclusionary, anticompetitive behaviour. This type of conduct can include margin squeezing, exclusivity, tied selling and decreases in the quality of programming offered to competitors.

769 Whether vertically integrated entities will actually have the opportunity to engage in and benefit from anticompetitive conduct will depend on the safeguards adopted in this proceeding. If these safeguards are not sufficiently robust or are not applied in a full and consistent manner, competition will be unduly lessened. Under this scenario, consumers will be worse off as they pay higher prices for fewer programing choices and the pace of innovation slows.

770 A number of service providers that are not vertically integrated, such as CCSA, Cogeco, EastLink, MTS Allstream, SaskTel and TELUS have made extensive submissions on the rules that could be put into place to discipline the market power of vertically integrated service providers.

771 We have reviewed those submissions and agree with the thrust of their proposals, which mirror TekSavvy's own views. In particular, TekSavvy agrees that regulatory safeguards are required in the following key areas:

772 - Exclusive content agreements should be prohibited across all distribution platforms.

773 - A vertically integrated entity should not be allowed to launch a programming service until that service is made available to BDUs that are not vertically integrated.

774 - Programming services should be required to offer standalone options without packaging or penetration requirements.

775 - Programming services should not be allowed to impose retail carriage, packaging or formatting requirements that the Commission does not require.

776 - Tied selling of programming services should be prohibited.

777 - Rates based on volume discounts should also be prohibited.

778 - Rates paid by vertically integrated BDUs for a program acquired from its own programming services or that of another vertically integrated BDU, should not be considered in assessing whether a carriage rate for the program is reasonable.

779 - MFN provisions in contracts between related or affiliated entities should not be used to disadvantage independent distributors.

780 - Undue preference and reverse onus provisions should apply to all types of programming undertakings, as well as BDUs.

781 - Vertically integrated entities should establish carrier service group functionality, together with related safeguards and reporting requirements.

782 - Dispute resolution processes should be available quickly, and be carried out in a rapid, transparent and efficient manner that does not impose large costs on independent BDUs.

783 - During a dispute resolution process, the status quo applicable immediately prior to the occurrence of the change or proposed change that gave rise to the dispute should be maintained.

784 - Determinations in disputes handled through an expedited disputes resolution process by the Commission should be made public so that industry participants can get a good sense of the principles by which the Commission resolves such disputes.

785 - Individual programming undertakings of all classes forming part of a vertically integrated enterprise should be required to file annual financial reports on the public record.

786 - Vertically integrated entities should also be required to file with the Commission the average net wholesale rate received by each of their affiliated licensed programming service from related and unrelated distributors respectively.

787 - These entities should also be required to file with the Commission the average net wholesale rate that each of their affiliated BDU operations paid to each related and unrelated specialty and pay TV service respectively.

788 - Finally, vertically integrated entities should be required to file, in confidence with the Commission, their affiliation agreements with related and unrelated programming services.

789 The measures just described will give independent BDUs that are not vertically integrated the ability to compete, but more is required. The regulatory environment should also encourage additional competition from new competitors using alternative technologies.

790 To that end, TekSavvy is asking the Commission to promote consumer choice in programming by allowing the basic service for new entrants that are not employing their own last mile facilities to be based on the definition that applies to DTH undertakings.

791 In effect, we are proposing to define a "skinny" basic package that consists of the services that DTH undertakings are required to deliver pursuant to section 37 of the Broadcasting Distribution Regulations, plus those services that the Commission requires BDUs to provide pursuant to section 9(1)(h) of the Broadcasting Act. Access to other services, including all specialty and pay TV services would be provided on a totally voluntary pick and pay basis.

792 In an environment where vertical integration is becoming more prevalent, competition from other BDU undertakings employing IPTV and other technologies is becoming more important. However, the composition of the basic service applicable to traditional cable BDU operators, which defines basic service in very local terms, is a huge impediment to new IPTV-based BDU operators whose operations typically must encompass very large regions to be economical.

793 The same is true with respect to the large number of Category A services that BDUs are typically required to carry.

794 For example, compliance with the Commission's terrestrial mandatory carriage requirements in the Greater Toronto Area requires a BDU to carry 84 channels. If a BDU wants to serve additional areas, it has to start adding a number of additional local and regional services to that list.

795 One of the central benefits of competition is consumer choice. If that choice is to be exercised in a meaningful manner, then BDUs employing new technologies should have the freedom to carry those services that their end users demand. They should not be forced to carry signals that are not consistent with their business plans.

796 Finally, the current policy that exempts changes in BDU ownership and controls from the tangible benefits test should be retained. Competition will provide the benefits required by Canadians.

797 We thank you for the opportunity to appear today and are ready to respond to your questions.

798 THE SECRETARY: Thank you.

799 I will now invite Public Mobile Inc. to make their presentation. Please introduce yourself and you have 10 minutes.


800 MR. BORON: Thank you, Madam Secretary.

801 Good afternoon, Chairman, Commissioners and Staff.

802 Public Mobile welcomes the opportunity to comment on the Commission's review of the regulatory framework relating to vertical integration.

803 My name is Bob Boron and I am the Vice President of Legal and Regulatory affairs at Public Mobile.

804 To my right is Bruce Kirby, Public Mobile's Vice President of Strategy and Business Development.

805 Public Mobile is a wireless telecommunications provider offering mobile telecommunications services in Canada's two largest urban markets. We provide wireless coverage in the Greater Toronto Area from Hamilton to Oshawa, and in the Greater Montreal Area from the north shore to the south shore including the island of Montreal.

806 We offer an array of wireless communications services to our customers on a simple, unlimited, pay-in-advance, basis with no term contracts.

807 We are, we like to believe, a Canadian spectrum success story. We acquired 10MHz of 1.9 GHz PCS G-block spectrum covering almost 19 million Canadians in Ontario and Quebec in the Auction of 2008.

808 When we launched service in Toronto and Montreal a year ago we became the global leader in the commercial deployment of this spectrum block and we remain the only Canadian wireless carrier to deploy services on this G-block spectrum. Since launch we have been steadily expanding both our coverage zone as well as the set of services that we provide.

809 Our service allows customers to place and receive unlimited local calls under simple and affordable flat-rate monthly service plans. We offer mobile phones to Canadians who previously may not have had the opportunity to afford a wireless mobile telephone.

810 So why are we here?

811 The reason that Public Mobile is participating in this hearing is at its core quite simple. We are concerned that licensed broadcasting entities will strike exclusive content deals or deals that are effectively exclusive with their affiliates that operate forborne distribution platforms, specifically over wireless and the internet.

812 We do not believe it is necessary for the Commission to regulate the distribution of content over wireless. However, we are asking the Commission to ensure that licensed and regulated vertically integrated enterprises do not use their broadcasting and content assets to create an unfair competitive advantage in wireless.

813 Currently, Public Mobile does not offer video streaming on our mobile devices. However, our set of services is constantly evolving and it would not be prudent to be silent on an issue that will very soon impact us and, more importantly, will impact our customers.

814 Public Mobile's catch phrase is "Everybody Talk" and that is because we believe Canadians need more choices in mobile services and shouldn't be limited by complicated restrictions whether they are making phone calls, sending text messages, emailing, surfing the internet or watching video on their mobile device.

815 However, we believe there must be safeguards to protect the customers of new wireless carriers like Public Mobile, and other non-vertically integrated companies, in order to encourage sustainable competition and to protect the interests of value-conscious Canadian consumers.

816 Public Mobile believes that the Commission should implement certain measures to ensure vertically integrated companies cannot behave anti-competitively by restricting the distribution of content across regulated and unregulated platforms.

817 We believe the Commission should expand and extend, on an industry-wide basis, the moratorium on platform content exclusivity.

818 We also believe the Commission should extend the application of the reverse onus and undue preference provisions to all distribution platforms.

819 We believe the Commission can accomplish these initiatives through regulations that encourage sustainable competition in the Canadian telecommunications market

820 The Commission has imposed, for the time being, a moratorium on BCE and other vertically integrated companies from entering into new exclusive programming agreements. This moratorium precludes exclusive agreements between affiliated content and distribution entities that are not extended to competitors.

821 We believe that the Commission was correct to impose this regulatory requirement on vertically integrated companies, and we also believe it is a measure that should be built upon by the Commission in this proceeding.

822 We agree with many of the recommendations made by TELUS, Cogeco, Sasktel and MTS/Allstream in their "Joint Proposal". Specifically, we would like to emphasise that we feel that;

823 - No distributor should withhold content from a competitor, or enter into an arrangement with a third party which results in content being unavailable to a competitor and this principle should apply to all distribution platforms and formats.

824 - And the fee paid by a vertically integrated content distributor for content provided by another vertically integrated content provider must be scrutinized carefully. MFN or "Most Favoured Nation" clauses between separate vertically integrated entities must not be used to disadvantage independent distributors.

825 Public Mobile believes that the Commission should apply anti-exclusivity provisions to all vertically integrated entities on a permanent basis. Allowing exclusive arrangements opens the door to anticompetitive behaviour and regulations should ensure consumers come first.

826 Consumers must be allowed to choose the content they want, on whatever medium they want to see it, and not be restricted by the business decisions of dominant vertically integrated companies.

827 Public Mobile believes that it is inappropriate at this time to impose -- that it is appropriate at this time to impose the reverse onus provisions originally discussed by the Commission in CRTC 2008-100.

828 In cases of alleged undue preference, the alleged preference must be removed or halted pending the resolution of the dispute and the vertically integrated entity should never be allowed to withhold signals or content during such a dispute.

829 I would like to hand it over to Bruce Kirby now to complete our submission.

830 MR. KIRBY: Thanks, Bob.

831 We would submit that the analysis that TELUS provided regarding Europe's experience in dealing with the vertically integrated entities provides a number of good examples of how vertical integration can be pragmatically managed. We believe that the Commission should borrow from the European experience in formulating regulations to govern Canadian vertically integrated companies.

832 BCE itself, in its submissions related to the acquisition of CTV last year seemed to concur with the requirement for regulatory safeguards. At that time, Mirko Bibic stated that,

"There may be some cases where we choose to offer content that is exclusive to our services, but of course, in whatever we do, we will always respect the Commission's rules against undue preference..."

833 We believe that a "light touch" by the Commission in regulating the distribution of licensed content across unlicensed platforms will actually encourage sustainable competition in the Canadian market.

834 Vertically integrated companies enjoy advantages related to content distribution, advantages that derive from operating in a regulated, protected market.

835 Having allowed the creation of vertically integrated enterprises, we believe it is critically important for the Commission to maintain regulatory safeguards that ensure that all Canadians have access to content, through the channels of their choice.

836 Vertical integration of content and carriage is not a public policy objective. However, promoting access to Canadian and other quality content to a broad base of Canadian consumers is government policy which is supported by federal laws, regulations, policies and programs.

837 The Commission's focus should be on facilitating economically efficient access to content by creating a healthy competitive environment with multiple distribution channels and competitive options for access to content by consumers.

838 It would not be good public policy to create an environment where only vertically integrated companies can thrive. The Commission should not, either deliberately or inadvertently, deem vertically integrated enterprises "the chosen ones." To do so could have the unintended consequence of raising consumer prices, narrowing consumer choice, and damaging competition to the detriment of Canadian consumers and the Canadian economy.

839 That sums up our points. Thank you. We will be free to take your questions.

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

841 TekSavvy, you have two pages of suggestions of what should be done. It's really following up on our discussion -- I had a discussion this morning with Rogers who suggested there should be sort of a code of behaviour for the vertically integrated. This is presumably your content for it.

842 Could I ask you, like I asked Rogers to sort of, in reply, submit to us sort of a draft code of what it would look like?

843 MR. TACIT: We will make sure to do that.

--- Undertaking

844 THE CHAIRPERSON: Now, what you have -- some of these points are very controversial that you raised. Let me just take one of them, number four:

"Programming services should not be allowed to impose retail carriage, packaging or formatting requirements that the Commission does not require."

845 Aren't you directly interfering in the free market process of negotiating between programmers and broadcasters? Why should we step in there and decide what kind of package they can impose or not?

846 MR. TACIT: The issue is for individual distribution undertakings, independent distribution undertakings to not be forced to offer things at the retail level in a particular format.

847 In other words, they should not be required by contract to adhere to specific types of rules. They should have the freedom to provide the packages they wanted to provide or to provide services on a standalone basis.

848 Otherwise, all that will happen is that the packages of the independent distributors will look exactly like the packages of the vertically integrated undertakings because it will be in the interests of those parties to try and impose lookalike rules.

849 THE CHAIRPERSON: So you think this rule should be imposed for the benefit of consumer choice?

850 MR. TACIT: Yes, sir, I do.

851 THE CHAIRPERSON: And by homogenizing the product you don't think the programmer realizes that he may diminish the availability and the practicality of his product?

852 MR. TACIT: I'm sorry, I don't -- I am not sure I understand the question.

853 THE CHAIRPERSON: You are suggesting that the vertically integrated company which makes its program available insists that it will be furnished by TekSavvy the same way, let's say, as it is by Bell, thereby presumably depriving themselves of additional customers that you could attract if you had a different non-homogenized package.

854 I mean why should they do that? Why wouldn't they want it to appeal to consumers outside the ones they don't appeal to now already, because presumably if you are in direct competition with Bell and it's the same product, Bell will win because they have other things to offer that you don't have -- bundles for instance?

855 MR. TACIT: I think this brings us to the central reason we are here and that is that vertically integrated entities have the financial incentive first and foremost to act in an exclusionary manner for the purpose of increasing their own overall subscriber base.

856 So they will do things that are consistent with that. And if they can reduce the ability of their competitors at the distribution level to differentiate their serving -- their service offerings, they will most assuredly use that tool. It's been proven in other areas, that that is the case.

857 THE CHAIRPERSON: Well, this is one way of looking at it.

858 Presumably, the other way to look at it is your clientele -- let's take TekSavvy and its singularly sophisticated users who really are high users of internet, et cetera, and they are unlikely to migrate to Bell. They might be not used to the programming that is if it's offered in this format, but if it's offered in a different, more savvy, more high tech-induced appealing way they will. So in effect, therefore, going in a market that they don't reach themselves.

859 MR. TACIT: All we are saying is let TekSavvy make the choice how to package those services. Don't let our supplier of those services --

860 THE CHAIRPERSON: Yeah, but --

861 MR. TACIT: -- impose how to do it.

862 THE CHAIRPERSON: -- impose that requirement because it is in Bell's best interest not to give TekSavvy that choice.

863 I'm not so sure I necessarily agree that it would be in Bell's interests, nor do I know whether Bell actually sees it that way.

864 MR. TACIT: Well, I think we will have to differ on that.

865 I think in a telecommunications area there has been ample evidence of incumbents trying to impose their business models on their competitors at the retail level. I don't see why they wouldn't try to do it here.

866 THE CHAIRPERSON: And Public Mobile, you suggest that we continue the moratorium on content exclusivity in perpetuity, but you only say for vertically integrated companies.

867 Any reason why should it apply only to vertically integrated companies?

868 MR. BORON: I guess our theory of that matter is that a vertically integrated company is leveraging off a broadcast distribution or similar licence through which they may be negotiating the delivery rights on multiple platforms and that should not be permitted.

869 If the Commission decided to extend that farther, I don't think we would have an issue with that. But I think our largest issue is with respect to abuse of those from vertically integrated company.

870 THE CHAIRPERSON: The way we use that term here is the four big companies that we defined in our Notice as vertically integrated. The others are smaller partially integrated companies.

871 Okay. Len, you had some questions?

872 COMMISSIONER KATZ: Thank you, Mr. Chairman. Good afternoon.

873 I will start with TekSavvy.

874 You seemed to have hardened your position from when you filed on April 27th. I'm just wondering what went through your mind between then and now that caused you to take a much more aggressive position with regard to things like exclusive arrangements where you had previously in virtually every sentence used the word "generally prohibited" which meant that there were some situations where they wouldn't be prohibited to a point now where everything is prohibited.

875 Can you sort of expand upon why the shift?

876 MR. TACIT: Well, I think, first of all, perhaps, Commissioner Katz, you are reading too much into the words generally that were put forward.

877 COMMISSIONER KATZ: It's not in anywhere here but it was there repeatedly.

878 MR. TACIT: No, I understand that. But we only had 10 minutes to deliver this presentation so something had to go.

--- Laughter

879 MR. TACIT: I don't think we mean to have that much of a nuance difference.

880 Clearly, we did think things through a lot more since then because we have the benefit of a more complete record of everybody else's submissions and that did generate some thinking, especially along the areas of inquiry relating to economic incentives and safeguards that need to be put into place.

881 But in terms of overall I wouldn't take too much meaning from the fact that we used generally there and didn't here.

882 COMMISSIONER KATZ: I am giving you too much credit, am I?

883 In your first bullet on page 2 where you talk about:

"Exclusive content agreements should be prohibited across all distribution platforms."

884 There was discussion this morning between the Chairman and, I guess, Mr. Engelhart with regard to whether that meant only where the programming was already available for linear programming to start with and was made available on the other platforms or whether it could in fact be the reverse as well where it was made available on wireless initially or on a new media platform and actually never made it onto the linear broadcasting.

885 What are your views on that?

886 MR. TACIT: We think that no matter how programming comes to the public availability, which platform it's on, it should be made available on all platforms so it doesn't matter whether it's first IPTV or wireless or first linear or VOD or whatever.

887 COMMISSIONER KATZ: On the wireless side do you folks feel the same way?

888 MR. BORON: We would agree with that.

889 And I guess the caution that I think we would have is that there is opportunity for games to be played, but if the content isn't exactly the same then maybe it could be differentiated for one purpose versus the other. I think that just that type of uncertainty in a regime wouldn't be to anyone's benefit.

890 COMMISSIONER KATZ: But we are getting into regulating wireless, essentially content over wireless when you get to that level, right? It's a matter of looking at what is on there and deciding whether it is or is not discriminatory?

891 MR. BORON: Sorry, from the perspective of what is available on wireless?

892 Yeah, again, from our perspective we want to make sure that content is -- or the rights to have content that is owned by the vertically integrated companies is available to us as a wireless provider, but that not be prevented because that content may not be exactly the same as what they provide on linear or broadcast television distribution.

893 COMMISSIONER KATZ: Does that go beyond just acquiring the rights to if they actually owned the asset itself, the programming whether its sports or anything else?

894 MR. BORON: I think it would be the same whether those rights are owned or the rights are acquired from a third party.


896 TekSavvy, what do you mean by:

"Rates based on volume discounts should also be prohibited."

897 MR. TACIT: So the concern here is that of course the four large vertically integrated entities have -- it's a well-known fact that they have by far the largest base of consumers/customers.

898 So if they were to devise a schedule for charging for programming that's based on -- has discounts based on volume, then they would in effect be doing indirectly that which the Commission might otherwise seek to not allow them to do, which is to have differential pricing for themselves relative to all of their competitors.

899 So we see that as a slippery slope and a potential problem area.

900 COMMISSIONER KATZ: But it's my understanding that advertising is sold based on eyeballs and programming is sold based on eyeballs because that's how the revenues are generated.

901 So you are saying whether you are buying content for distribution to five million people or buying content for distribution to five thousand people should be charged the same rate?

902 MR. TACIT: Certainly, we are saying that at the front end that should be. I don't know if in five or ten years we would take a different position. But right now when the odds are against other non-vertically integrated distribution undertakings and new and potential new entrants, we think it's extremely important because the problem is it then becomes a question of what is the basis on which the volume discount is given.

903 It becomes arbitrary enough that you have no way of really dealing with an undue preference situation. How do you measure that at that point? How do you assess that?

904 It becomes extremely subjective and what we are trying to do, and this is along the lines of the Chair's comments of trying to put some code with a little more flesh on the bones, so to speak, we need to have some assurance that this kind of differential pricing cannot be used in an anti-competitive way.


906 You also asked for some concessions as it relates to a skinny basic package in order to enter the market. Maybe I'm wrong but I would look at your business as almost entering via the new media exemption order and so I would wonder why you would need us to give you any relief at all.

907 MR. TACIT: Because IPTV is not subject to the exemption order. Internet delivery over the top is, but not using IP technology over traditional wireline and last mile facilities is not exempt from the new media exemption order.

908 COMMISSIONER KATZ: That's the vehicle you would using to enter the market?

909 MR. TACIT: That's correct.


911 Mr. Kirby, you mentioned the Commission borrowing from the European experience in formulating regulations. The Europeans have lots of experience, what specifically and where do you want us to borrow from, given that Europe is a very different market with different characteristics? Is there something specific that you want us to look at?

912 MR. BORON: I think specifically we were referring to the submission that Arnold & Porter drafted for TELUS and some of the ideas that come out of that report, in particular the safeguards and the mechanisms that could be used to make sure that there is not abuses by vertically integrated competitors in the marketplace.

913 COMMISSIONER KATZ: Okay. That helps.

914 My other question to you, you referred to -- I'm not sure what page it is, paragraph 7, in italics you say:

"We believe the Commission can accomplish these initiatives through regulations that encourage sustainable competition in the Canadian telecommunications market."

915 We are starting to merge the broadcasting sector and the telecom sector here. The regulations that you are looking at having us enact, are they pursuant to the Telecom Act or the Broadcasting Act?

916 MR. KIRBY: We are talking about regulations under the Broadcasting Act.

917 I mean the challenge we face here with these new vertically integrated enterprises is that you have broadcasting sector that is deliberately and consciously, as the Chairman referred to it earlier, not operating on an economic basis. It has created a situation which is not a free market open enterprise, it is restricted.

918 The players in that market are protected in various ways, all part of a relatively complicated policy trade off in which they are granted a position that allows them to make money in one piece of the market in order to help fund the production and distribution of Canadian content in another.

919 That is fine as a policy that is designed to support the broadcasting, support Canadian content, but you then allow those entities to be integrated with telecommunications entities that operate separately from that and to use their privileged position in the content market as a way to leverage their position and create anti-competitive benefits in the non-regulated segments of the market, particularly in wireless and internet.

920 You create an unlevel playing field in those segments of the market where BCE and Shaw, and so on, are benefiting from having gone out and acquired these special protected content providers as a way to gain themselves more leverage in the wireless internet markets. That is what we are concerned about.

921 COMMISSIONER KATZ: Okay. Those are my questions, Mr. Chairman.

922 THE CHAIRPERSON: Thank you.

923 Candice...?

924 COMMISSIONER MOLNAR: My question is for TekSavvy and you were talking a bit with Vice Chair Katz about your potential IPTV service. So you are proposing to come forward with a managed IPTV service.

925 Have you made an application to the Commission yet?

926 MR. TACIT: Not yet.

927 COMMISSIONER MOLNAR: Not yet. What you have requested here is asymmetry of regulation and, as I'm sure you are aware, that unlike in the telecom industry where there is a distinct difference, and it used to be more between the obligations of the incumbents and new entrants, under the BDU regs the requirement is symmetry in that the new entrants are required to take on all of the regulatory obligations of the incumbent. So if the incumbent is a Class 1, new entrants get those same obligations.

928 So you are asking for that regulation to be modified?

929 MR. TACIT: We do not object if the skinny basic package that we are proposing is also made available to the so-called incumbent cable BDUs. We have no objection to that, but we think it is critical to treat new entrants more like you treat the DTH undertakings, because from a competitive standpoint they are more similar to that than they are to the traditional incumbents. That is because the traditional incumbent, for one thing, have the last -- the last mile wire and they have developed their network architectures, they have developed their whole programming in accordance with the rules to respond to over-the-air broadcasting, picking up signals over the air. So we are saying that the regulatory regime needs to move with the times.

930 So we are not saying that this basic package will be exclusively for us, but we are saying that it is critical for us if you really want to encourage new entry.

931 COMMISSIONER MOLNAR: Okay. I didn't understand that truthfully. When I read this I thought you were saying there should new regulations or some modifications for new entrants and I think what you say is BDUs employing new technologies should have the freedom to carry those services that their end users demand and should not be forced to carry signals that are not consistent with their business plans. I took that to be a request for special treatment.

932 So you are not asking that new technologies, however that might be defined, would have a different regulatory obligation than existing?

933 MR. TACIT: Not necessarily. As I said, this approach could be made available to any who want to use it.


935 THE CHAIRPERSON: Okay. Public Mobile, my colleague Mr. Katz let you off the hook a little bit too easily.

936 You said borrow from the Europeans. We said what do you mean, you point to the Arnold & Porter study. I actually read the Arnold & Porter study. It's a survey of all the competition decisions made in Europe regarding the various mergers. A quite different market, a quite different situation.

937 Which lessons should we draw specifically from that Arnold & Porter study?

938 MR. BORON: Mr. Chairman, could we take that on as getting back to you in final argument?


940 MR. BORON: Because it's not something that we really focused that heavily on, other than to read it and learn from it and take that there are lessons to be learned there that could be used and be beneficial to the Commission's decision in this regard.

941 THE CHAIRPERSON: Okay, by all means, do it in your written reply.

--- Undertaking

942 THE CHAIRPERSON: Stephen, you have a question?

943 COMMISSIONER SIMPSON: Just two questions along the line of my getting a better idea of your concerns about programming being used as the baited hook to sell services.

944 My question first of all is on the issue of tied selling. Now, you say:

"Tied selling of programming services should be prohibited".

945 Are you talking pure programming such as cable bundling or are you talking --

946 MR. TACIT: What we were referring to specifically there is avoiding a situation where in order to buy one particular service we are forced to buy another one, whatever it might be. In other words, if we only want to buy one particular service we should be able to buy that service and nothing more.

947 COMMISSIONER SIMPSON: Do you see that as applying only to VI organizations, those that are vertically integrated but not companies who aren't?

948 MR. TACIT: Well, the part of me that is interested in competition law and economics says that generally one should not do this. It is certainly conduct that in an unregulated environment would be considered anti-competitive.

949 Now, for a whole host of reasons there are rules that have that effect in the broadcasting industry because of the cultural objectives and I acknowledge that's the case. I still have problems with the economic impacts of that.

950 So what I'm saying here is if you are trying to deal with these particular issues of making programming available more broadly, tied selling is certainly not a good way to do it.

951 COMMISSIONER SIMPSON: In your view, are we seeing tied selling, though, going on right now, let's say between internet and phone services? Is that a practice that is existing within non-vertically integrated companies?

952 MR. TACIT: Well, I think the problem tends to exist more with vertically integrated companies in terms of those sorts of bundles. I must admit I haven't done detailed research to see how all the others are behaving in the marketplace in this particular area, but I will have a look and let you know if I find something in reply.

--- Undertaking

953 COMMISSIONER SIMPSON: That would be great, because I'm trying to truthfully understand whether you are trying to set out a goal that we establish that certain practices are only applicable to vertically integrated companies who also happen to be in the same business as companies such as TekSavvy who don't have the programming capacity but do have multiple other services.

954 MR. TACIT: So let me make an important distinction and that is I acknowledge that from a distribution perspective there are rules that require certain packaging to take place, regulatory rules, so what I'm saying is don't leave it up to the supplier of the programming to determine how you buy service together. If I, as the independent BDU, know that I have a 3 to 1 rule, or whatever rule that I have to meet to package things together for my retail customers, that doesn't mean I have to buy all of those from only BCE or only Shaw.

955 So that's the point I'm trying to make, is we should be able to pick and choose how we buy our inputs and then certainly with regards to the provision of the service to the retail end user we will comply with whatever regulations are applicable.

956 COMMISSIONER SIMPSON: So that is actually tying into my next question, which was why you were taking a perspective on insistence that there should be standalone offerings, or an unbundling, so it's essentially the same idea.

957 MR. TACIT: As the issue thing.

958 COMMISSIONER SIMPSON: Okay. Thank you very much.

959 THE CHAIRPERSON: Okay. Those are our questions.

960 Madam Secretary, what is the date for final submissions?

961 THE SECRETARY: July 8th.

962 THE CHAIRPERSON: Okay. So I expect to hear from you by July 8th on the European question --

963 MR. TACIT: Thank you.

964 THE CHAIRPERSON: -- and see your draft code.

965 Okay. Thank you.

--- Pause

966 THE CHAIRPERSON: My colleagues want a 5-minute break, so let's have a 5-minute break.

--- Upon recessing at 1411

--- Upon resuming at 1421

967 THE CHAIRPERSON: Okay, commençons.

968 THE SECRETARY: We will now hear the presentation from Allarco Entertainment 2008 Inc.

969 Please introduce yourselves, after which you will have 10 minutes for your presentation. Thank you.


970 MR. ALLARD: Thank you.

971 Mr. Chairman, Members of the Commission and staff, my name is Chuck Allard and I am the Chairman and CEO of Allarco Entertainment 2008 Inc.

972 With me today, on my immediate right, is Malcolm Knox, Super Channel's President and COO. Next to him is Mark Lewis, our legal counsel. To my left we have Thom Eggertson, Vice President, Finance and Administration.

973 We wish to thank the Commission for inviting us to this public hearing on vertical integration, and the impact it may have on the future of Canadian broadcasting, particularly as it relates to Canada's broadcasting policy and the objectives of the Broadcasting Act.

974 We now begin our presentation.

975 When we look at the tremendous amount of vertical integration that has happened in the last 36 months in Canada, it seems quite fitting for the Commission to be taking an in-depth look at what vertical integration really means for the Canadian broadcasting system.

976 Allarco is one of the few independently owned broadcasting licensees which have to deal regularly with four highly vertically integrated, publicly traded broadcasting and distribution entities which have definitely become the gatekeepers to accessing the broadcasting system, controlling access to over 80 percent of Canadian households.

977 As the Commission knows, our entry into the marketplace has by no means been easy, even with must carry status from the Commission. We know how difficult it is for new, independent programming services to reach Canadian consumers when the only access is through vertically integrated BDUs that can ultimately make or break a new service entrant, no matter what carriage requirements the Commission has put in its licensing decision.

978 The present movement towards increased vertical integration is leading us into unknown territory for Canada. It is, however, appropriate to ask ourselves if such an integration will result in a reduction of diversity of voices in the Canadian broadcasting system. One thing is sure, the Commission cannot transfer responsibility of our broadcasting system over to four highly vertically integrated, publicly traded companies, leaving them to decide what is good for Canadian consumers.

979 In the past, BDUs had only broadcast services to market to ensure the success of their commercial activities. Now, however, vertically integrated BDUs are more interested in marketing internet, home phones, mobile phones and their own video-on-demand services and promoting the sale of Canadian programming services, particularly independent programming services.

980 Vertically integrated companies focus primarily on product lines, profit centres and their quarterly financial reports as opposed to the historical focus of the Commission and the broadcasting industry to ensure the development of the Canadian broadcasting system by nurturing the telling of Canadian stories to the benefit of Canadians across the country.

981 MR. KNOX: Due to time restraints of this hearing, we are going to concentrate our comments on some key elements for your review that are important to us, and we are of course open to questions from the Commission on the other issues such as program exclusivity.

982 Allarco believes the present level of vertical integration calls on the Commission to clarify its position on a number of important issues, of which we would place access and priority carriage at the forefront. In our own recent experience in trying to access Canadian consumers we had to deal with essentially all BDUs in the marketplace. Even though we had must carry status and it was clear from the specific wording in the CRTC's licensing decision that we were licensed to offer an HD service, we nonetheless encountered serious difficulty in getting comparable carriage with two of the major vertically integrated terrestrial BDUs, representing over 40 percent of the potential English-language market. Eventually we had no other recourse than to submit undue preference complaints and undue disadvantage complaints to the Commission.

983 What this situation demonstrates for a new pay television service like ours is that no matter what the Commission has imposed as distribution obligations, the BDUs can drag their feet in fulfilling their regulatory obligations and the Commission can do very little about it.

984 Allarco believes it is essential the Commission ensure there is a strong access regime in place with teeth and bite to support Canadian services seeking to reach Canadian audiences.

985 The Commission has to be much more precise in issuing licensing decisions by specifying not only mandatory distribution but also the timeframe expected for such carriage, including the depth of carriage in terms of number of channels, channel placement and the number of HD channels. While we realize the preference of regulators is not to micro manage the regulation of BDUs, we see no other alternative, given our own experience.

986 Furthermore, Allarco firmly believes the Commission has to use this policy hearing to examine the risk of self-dealing that could go on within and between the four vertically integrated companies in relation to carriage, promotion and sales of their own programming services versus independent services licensed by the Commission.

987 Allarco's experience is a good example of this risk, since we have yet to be carried by one of Canada's vertically integrated BDUs, Quebecor, which has regularly added English-language channels to its lineup since our launch, including its own Category 2 Sun News service, but yet refuses to carry our premium service.

988 This situation is in itself puzzling, considering Quebecor had applied at the same time as us for a national English-language pay television service. Quebecor's application was premised on distribution within Quebec on its own BDU system. Surely had the Commission awarded them a licence the service would be carried in Quebec today. With Quebecor's launch of Sun News on April 18, 2011, it would seem there is a double standard relative to the demand threshold that independent licensees must meet, as compared to the services owned by vertically integrated BDUs.

989 In addition to access, we believe that priority carriage of Canadian programming services over foreign ones should never have to be negotiated. We also believe that BDUs have to provide HD bandwidth to Canadian programming services before allocating it to foreign services. BDUs are notorious for claiming they have exhausted HD bandwidth one week, miraculously finding HD bandwidth for foreign services, or their own affiliated services, the following week.

990 The Commission has to ensure the marketing and sale of Canadian broadcasting services remains a priority within the operations of vertically integrated BDUs. Let us be clear, the offering of other services, such as wireless, internet and local phone, which are not the licensed activities of the BDU undertakings, should in no way and at no time be done in a business fashion that is detrimental to Canadian broadcast programming services.

991 It is our view, that in the increasingly vertically integrated BDU universe, Customer Service Representatives are at the forefront in reaching out to potential customers interested in subscribing to the diversity of services offered by a BDU.

992 More explicitly, CSRs are the primary contact point for consumers seeking to acquire BDU services. They are the salesperson who provides the consumer with the choices and, more importantly, they are the ones who close the sale with the consumer. However, as we have learned the hard way, if CSRs are preoccupied with the sale of non-broadcast services, it becomes extremely difficult for Canadian programming services to recruit new subscribers.

993 In addition, we wish to reiterate, that formal audit rights are a crucial necessity, particularly for independent programming services such as ours. In our initial negotiations with two BDUs, they refused to include audit rights in our agreements. It is time that the Commission clarify the rules regarding audit rights and access to reliable data on the subscriber count at the BDUs.

994 Concerning affiliation agreements, Allarco has agreements with a number of BDUs who control over 80 percent of Allarco's potential subscriber base. The affiliation agreements with these BDU's include some one-sided commercial terms, in favour of the BDUs, that are only possible for them to negotiate because of their significant size and subsequent bargaining power.

995 One of the commercial terms we are concerned about are "Most Favoured Nation" provisions, which are an odious requirement under which Allarco must change the elements of its negotiated affiliation agreement if any terms in another BDUs affiliation agreement are more favourable than those in the existing agreement. This situation is very one-sided as there is no reciprocal requirement for the BDU to improve the agreement in Allarco's favour to match other agreements they may have with other programming services.

996 Some BDU contracts include such things as unfettered marketing payments and/or marketing services provided by a related company or division of the BDU. In our experience, some of the services delivered by BDUs who have extracted these payments have proven to be of little value to Allarco.

997 Among other requirements worth mentioning are the inclusions of contractual purchase requirements of U.S. ad avails and the required use of other advertising services of a BDU. In our view, such requirements are simply just another way for the BDU to extract money from independent programmers and ultimately limit flexibility of an independent to market its service.

998 In some of the agreements, we find restrictive clauses that prohibit Allarco from pursuing normal commercial activities in the conduct of its business. The most difficult one, is a limitation of liability clause that prevents Allarco from suing a BDU for failing to comply with the agreement. Another such clause prohibits Allarco from selling its program services over the internet to subscribers.

999 MR. ALLARD: with regards to Dispute resolution, only our Bell agreement contemplates such a possibility, with other BDUs refusing to negotiate any dispute resolution provisions. Let us be clear, the Commission time and again has indicated that certain contractual terms, business arrangements between programming services and BDUs, as well as contractual interpretation, do not fall within its dispute resolution process. What this absence of dispute resolutions means, for Allarco and other independent services, is that there is little, if any, recourse in affiliations agreements when disputes arise with a BDU.

1000 In our view, the CRTC has to have the capacity to immediately issue clear directives to a BDU to rectifY non-compliance with regards to any matter which abrogates or denigrates from the spirit and/or intent of a Commission broadcast decision. In addition, the Commission should integrate in the undue preference/undue disadvantage procedure an obligation for follow-up to the rulings of the Commission, with a detailed roadmap of corrective measures and a precise and enforceable calendar for implementation.

1001 The Commission should also have the powers it has been seeking to be able to use Administrative Monetary Penalties in such cases, and we would further recommend the Commission have the power to financially compensate victims of undue preference or undue disadvantage. We were encouraged by the comments of the Chairman at the Banff World Media Festival last week who added compensation to the potential new tools the Commission could benefit from if there is a political will to do so.

1002 We agree with the Commission when it suggests the creation of a Code of Good Business. Such a Code should be implemented quickly, be fully transparent and require the licensees to adhere to it with pre-determined sanctions for breaking the Code. Should this procedure fail to work, we believe the Commission should consider placing the code requirements within the regulations.

1003 Such a Code should apply to all BDU programming service contracts. These would include a prohibition on MFN clauses; the prohibition of restrictive trade clauses; a prohibition against a mandatory requirement to spend marketing money with a BDU or related company; access to information relating to our subscribers; audit rights; and the settlement of disputes by three person arbitration.

1004 Concerning the question of basic service, we believe a costly big basic service can drive consumers out of the regulated broadcasting system into the hands of over-the-top services such as Netflix, to the detriment of Canadian pay television programming services. We recommend the Commission consider letting consumers bypass the basic service if they want to purchase stand-alone Canadian premium pay television services.

1005 Allarco submitted a substantive written brief on April 27, 2011 with very specific and comprehensive recommendations, covering a broad spectrum of issues related to vertical integration, and we are prepared to complement this information should the Commission or staff wish to develop some of our ideas.

1006 This completes our oral presentation and we look forward to responding to any questions you may have.

1007 THE CHAIRPERSON: Thank you for your presentation.

1008 Were you here this morning when I questioned Rogers, especially on MFN. They suggested that that's not an issue at all so I'm quite interested in what you have to say about this.

1009 You feel that MFN is being invoked to your disadvantage in the various negotiations; is it?

1010 MR. KNOX: We were quite surprised to hear that one BDU is no longer uses MFNs as it's still in our contract with that BDU. MFNs we feel are really one-sided. They are very difficult. They make negotiations very difficult, as you have to constantly be negotiating with the party in front of you and the party that you finished negotiating with previously.

1011 It's a constant balancing act trying to ensure that there is, I guess, fairness in all the contracts that you are negotiating going forward, and it's one-sided. There are no MFNs that work in our favour. It's not a reciprocated arrangement.

1012 THE CHAIRPERSON: So if we have a code, you think we should address the issue of the MFN.

1013 MR. KNOX: Yes, we do.

1014 THE CHAIRPERSON: Now, on page 6 you are talking about the CSR and how key they are, how they are really the person with whom the customer interacts, et cetera. You posit the question: However, as we have learned the hard way, if the CSR is preoccupied with the sale of non-broadcast services, it becomes extremely difficult for Canadian programming services to recruit new subscribers.

1015 What is the answer? What is the solution?

1016 You have obviously encountered this problem. You found out that CSRs are more interested in selling add-on Shaw services than selling Allarco, so what is the solution?

1017 MR. KNOX: That's correct. We have been told by BDUs that there is a pecking order in selling their services. It starts with wireless, goes to the internet, home phone, and then broadcast services come at the bottom of the list.

1018 We think that BDUs, particularly the terrestrial BDUs, should have a core of dedicated subscribers who can handle the sale of Canadian programming services.

1019 It is interesting to note that probably about 60 percent of our revenue is derived from the DTH BDUs, and we think one of the reasons is that their CSRs are pretty much dedicated to just selling television services.

1020 THE CHAIRPERSON: What do you want us to do about it?

1021 MR. KNOX: In the Code of Standard Terms we would like to see some provisions for some consideration that the BDUs focus on the foundation business, the reason they have BDU licences, and that there should be provision in there that ensures that the Canadian system is properly supported in their sales activities through their CSRs that are dedicated to selling us.

1022 THE CHAIRPERSON: You know as well as I do that that's pretty vague. I mean, the fact is that the CSR obviously sells the services of the BDU, and the various inclusive services, including Pay TV, such as yours, et cetera. But to actually get to -- unless the BDU is fully cooperative, I don't know how something like what you suggest would really significantly change the situation.

1023 Anyway, you have time for a written reply, so you might want to address that.

1024 Tom, do you have questions?

1025 COMMISSIONER PENTEFOUNTAS: No questions. Thank you.

1026 THE CHAIRPERSON: Peter...


1028 You guys don't look like you have been having a lot of fun lately.

--- Laughter

1029 COMMISSIONER MENZIES: Actually, I have a few questions here, and one of the things that strikes me is that you have a pretty comprehensive list of requests, going so far as having us get into the timeframe expected for carriage, which doesn't seem to cost much. But depth of carriage, in terms of number of channels, channel placement and that sort of stuff...

1030 Your experience, as you have articulated it, if we were to accept that straight up, the one thing it does prove is that you can regulate all you want, but you can't make people do it cheerfully, and there is a point at which rules can only be effective if people are accepting of them, in a certain sense. Otherwise, it's a battle.

1031 How would we create the space to get into that sort of regulation, like channel placement and that sort of stuff? You might want or not want us writing your regulations; I am not sure you want us doing your programming.

1032 MR. KNOX: I think it happens on a case-by-case situation, and I think it starts with the licence decision. I think there needs to be absolute clarity in the licence decision on what is expected.

1033 The licence decision has to support how this service is going to operate.

1034 For instance, in our licence decision, we were licensed as a Pay Television service with multiplex channels. The decision said that we were not allowed to disaggregate our channels. We couldn't sell them individually, we had to sell them as a package.

1035 The expectation of the Commission was that we would receive comparable carriage to the regional pay television incumbents, and if we didn't receive comparable carriage, the Commission couldn't expect us to achieve our business plan, and we were a must carry.

1036 So how that translated into the marketplace is, we had a number of BDUs who did not launch all of our channels when we launched. We launched in November. We had a number of BDUs that didn't launch the rest of our channels. They launched perhaps a handful. Some BDUs didn't launch until -- we launched in November, and some BDUs didn't launch us until the following May, and then only launched RSD channels, they didn't launch the HD channels for a few more months.

1037 In our initial negotiations with some of these BDUs they said,

"We appreciate that you are offering a multi-channel service, but the way the regulations read, we think that we only have to launch one of your channels."

1038 COMMISSIONER MENZIES: That's more a question of feedback to us on an operational efficiency, in terms of clarity in the writing of something, than it is a cry, necessarily, for more regulations.

1039 MR. KNOX: Certainly, because I think you end up doing it on a case-by-case situation, and I think it could be more straightforward if there was clarity in the decision.

1040 COMMISSIONER MENZIES: Were all of your difficulties with vertically integrated BDUs, or not?

1041 MR. KNOX: Primarily vertically integrated BDUs, but there were some other BDUs that --

1042 COMMISSIONER MENZIES: Because some of them predate the current industry structure, right -- some of the issues that you had?

1043 MR. KNOX: We launched in 2007, so...

1044 COMMISSIONER MENZIES: Yes, things looked differently.

1045 So those aren't necessarily vertical -- I'm not saying they are not issues with vertical integration, but they were issues that existed prior to the level of vertical integration that we have today.

1046 MR. KNOW: Those big vertically integrated companies were pretty darn big in 2007, and each of them had a dominant position in the marketplace. Each of them represented approximately 20 to 24 percent of the marketplace, and if they didn't launch the full offering on Day 1, we were behind the eight ball. We spent $50 million in programming in Year 1, and we had a heck of a time getting our revenue fully engaged without all the channels that we needed on each of the BDUs.

1047 COMMISSIONER MENZIES: The Chairman touched on this, but I was also struck by the issue around CSRs and how difficult it would be for us to get involved. Again, it's almost -- like the Chairman said, what can we do about it?

1048 But I am curious to know how central that is to your marketing plan for your product, and that also goes for your requests around avails on U.S. programming.

1049 Do you rely entirely on marketing within the regulated system, or do you do marketing via internet, marketing via radio, marketing via outdoor, marketing via print?

1050 How does your marketing -- what do you do on your own, outside the system?

1051 MR. KNOX: When we first launched, we spent a considerable amount of money on conventional advertising -- television, radio, newspaper, et cetera -- and we found that if the BDUs' CSRs in the market in which that advertising was deployed -- if the CSRs were not adequately trained and knowledgeable about our product and prepared to offer our product to the consumer, nothing happened. It was a complete waste of our money.

1052 COMMISSIONER MENZIES: How did that work? Were you involved in the training at all?

1053 Who would have to pay for that?

1054 MR. KNOX: The training? We work hand-in-hand with the BDU. We provide them with information to provide knowledge to the CSRs.

1055 We conduct regular training in the call centres.

1056 We send in our staff to train the CSRs. In some situations we have been lucky enough to have classroom-style training. At other times it's just a walk-by. We will have a booth and the CSR will stroll by on their break.

1057 But the key is, a knowledgeable CSR that is motivated can easily sell a product.

1058 We are really not on any tiers, we're a standalone, so...

1059 COMMISSIONER MENZIES: And you don't have your own CSRs?

1060 Like, there is not a number that people can just patch through to talk to --

1061 MR. KNOX: Actually, to complement what is going on at the BDUs, we have initiated a telemarketing program with a third party call centre. The way it works is, we work with a BDU and we get them onside to participate. The BDU will supply a list of their customers to the third party call centre. We don't see it. It's all confidential.

1062 Then, the outbound telemarketing proceeds from there.

1063 Over the last 14 months, we have added 44,000 subscribers in this fashion, for a number of -- particularly medium-size BDUs. The cost is incredibly reasonable, and the sell-through rate, the take rate, is about 42 percent of calls completed. It's remarkably successful.

1064 COMMISSIONER MENZIES: I just want to touch on the issue around contracts, and in your written submission it's at paragraph 56 where you refer to the contracts.

1065 What I took from that is that you want regulation to ensure equity in all contracts. It read a little bit like you are looking for a relatively boiler plate contract.

1066 But what I am asking more directly is, do you want this equity across the board, so that contracts between all domestic and foreign services are identical, or do you want certain provisions to --

1067 You are making the case that there is an imbalance between the requirements on domestic companies, like yourself, and the burdens that are requested of foreign companies.

1068 MR. LEWIS: Commissioner Menzies, I have had long experience, on both sides of the border, representing U.S. companies and representing Canadian companies in my law practice, and I have seen different versions or --

1069 Let's put it this way: BDUs in Canada know that they can't get away, from the get-go, with some of the clauses that they put into Canadian contracts with independent BDUs -- independent programming services -- they just wouldn't fly with American service providers, for two reasons. One is, the American service providers won't agree to MFN clauses. It's not even a negotiating point.

1070 So what we are concerned about, as we move forward, is having equity in the contracts.

1071 Secondly, our concern is that we may be subjected as independents, who really rely on coming to terms with the BDUs, to not getting carriage if we don't agree to these one-sided contracts.

1072 And with all the vertically integrated programming services, we have a suspicion, but we don't see the contracts, that they may not be subject to the same types of clauses, particularly oppressive clauses, limitation of liability clauses --

1073 COMMISSIONER MENZIES: The Americans just won't go for it; you guys do. Is there something else that we can do?

1074 You mentioned the time limits on getting something on the air --

1075 MR. LEWIS: I think the Chairman touched on it this morning, that is, the filing of affiliation agreements with the Commission. I think, if the Commission had an overview of -- I am not going to say the free ride that Americans get, but the types of agreements that the Americans are negotiating with Canadian vertically integrated BDUs, the Commission might have a better database when it receives complaints in the future from independent Canadian services.

1076 COMMISSIONER MENZIES: Okay. Thank you.

1077 MR. ALLARD: Mr. Menzies, maybe I could comment on that. I have been involved in Pay since `82, `83. I drafted a lot of those agreements. They were mutual back then. There were probably 100 BDUs. Probably up to 1999 I was involved in them. There were no MFN clauses. There were no restrictive trade practices.

1078 When we started negotiating we said, "Okay, just use Astral's agreement and white-out the names and stuff, and the wholesale rate, and we will go with that," because we knew that they didn't have any.

1079 But we had to negotiate new agreements, new short-form agreements, with everybody, and they all tried to put something to us.

1080 So, you know, it's just unconscionable what has happened in the last seven to ten years.

1081 MR. LEWIS: Commissioner Menzies, if I could just add something to what Mr. Knox said a few moments ago with respect to the CSR training -- and this was a major issue in the undue preference case that the Commission looked at -- we have tried, from prior to launch, to set up CSR training with a number of BDUs, and they have been totally resistant to any CSR training.

1082 And it is not coincidental that, with some of those BDUs, the take-up rates of Super Channel have been abnormally low relative to the BDUs who have embraced the joint marketing arrangement that Mr. Knox spoke about, or have allowed Super Channel to go in and train BDUs.

1083 I will just give you one anecdote. A couple of years ago, when we were preparing for another appearance before the CRTC on cable-related issues, in rehearsal I said to the affiliation manager, "I suppose you are going to come and say that you would be prepared to go to India to train customer service reps of this particularly BDU," and he said, "Not only were we willing to, I have just come back."

1084 So there are BDUs who have worked very hard and have really embraced this service, and there are some who just have not gotten with the program. And we are here today to say that, with this greater level of vertical integration, we think this will be an even greater problem for the independent services in the future.

1085 COMMISSIONER MENZIES: How do we balance this regulatory framework in terms of making sure it is fair for people to give an opportunity to?

1086 I don't know that it's -- there are probably a variety of views on it, but I don't know that it is possible for us to ever guarantee some sort of equality of outcome.

1087 The argument others would make is that the best we can do is give you the opportunity to present yourself to an audience; we can't make them watch you.

1088 That is the argument you would face, and I want to give you the opportunity to address that, which might say that your problem might have something, or somebody else in your position -- the issue might be content, not regulation.

1089 MR. KNOX: I think what we are really looking for today is to ensure that the independents have a chance to prosper going forward in this vertically integrated world. We are looking for a framework, a structure, so that when we, as David, are dealing with the Goliaths, we have half a chance to have an even playing field when we make our deals, and in how we are being treated.

1090 And we will deliver the content and we will work hard to make the sales happen.

1091 So we are not saying to the BDU, "We are just sitting back and you just sell us," we are saying, "We are working hard. We are spending a lot of money on programming."

1092 But we just need to make sure that the playing field is even and gives us half a chance to not get run over by these guys.


1094 At paragraph 67 of your written proposal you talk about the use of ad avails. Without getting into a long discussion about it, how would we manage that? Would we approve the use of these avails beforehand?

1095 How would we police something like your proposal?

1096 You have some percentages mentioned there, and that sort of stuff.

1097 Given the issues around compliance being cheerful versus vicious, how heavy a hand do you see the regulator having in an area like that?

1098 MR. LEWIS: About four or five years ago the Commission examined, during another proceeding, U.S. ad avails, and at that time I think it came to the conclusion that there was nothing that needed to be done at that time.

1099 At that point in time the Commission also allowed the BDUs to start to ramp up the marketing of their other services, such as internet, telephone, et cetera.

1100 We conducted a review, because we suspected that the system was broken with regard to ad avails, and I will give you two examples. I won't dwell on it too long, Commissioner, but we conducted an analysis in April of five of the major U.S. programming services, and there was virtually no Canadian programming service promoted during peak viewing times on any of the five. Almost 100 percent of the ad avails were used for the BDU's own services.

1101 And we had representative BDUs in different parts of the country.

1102 What we find with the current system is, number one, there is no rate card. Number two, you can't select a time of day run. So given the fact that in prime time, six to midnight, 100 percent of the avails may be used by the BDU, your service may end up being promoted at 2 a.m., at a very high cost.

1103 We are concerned that there may be inter-corporate exchanges of consideration, and that is how they are getting the use of those avails in the prime time hours.

1104 We think that it has to be rebalanced, and we have proposed in the appendix to our brief the possibility of having a percentage allocated of avails on U.S. channels to Canadian programming services -- hopefully independent services -- just as a mathematical formula, and some Commission oversight on what the real cost to run these avails is, with rate cards and the ability to --

1105 COMMISSIONER MENZIES: Would that be something that could best be dealt with in the code --

1106 MR. LEWIS: Absolutely.

1107 COMMISSIONER MENZIES: -- rather than a regulatory --

1108 MR. LEWIS: Absolutely.


1110 There are a number of things that we could touch on, because you have a number of requests, but I think that the last answer may have covered a lot of them. If it didn't, let us know.

1111 I have one last question. There has been a lot of talk about OTT services. Do you or have you imagined marketing Super Channel as an OTT service?

1112 MR. KNOX: One of our affiliation agreements precludes us from doing that, so our hands are tied.

1113 COMMISSIONER MENZIES: Okay. So that's not an option, because it seemed that you wouldn't have to be dealing with many BDUs if you did that.

1114 MR. KNOX: The challenge would be how you transition from where we are today, with our business base predicated on dealing with the BDUs, and we work very hard at trying to have a sensible business relationship with them, and we think it would be quite a challenge to migrate to the other scenario.

1115 MR. LEWIS: I might add that the programming agreements, as they currently exist with many of the program suppliers, would preclude us from going direct via OTT. The language is specific to delivery via BDUs, and it defines -- there are usually pages of verbiage in the agreements that define what a BDU is.

1116 So, at the present time, I would say that the majority of programming licences don't allow over-the-top delivery.



1119 COMMISSIONER PENTEFOUNTAS: I have a simple question. I listened to your presentation, and we all appreciate and understand the importance of nurturing the telling of Canadian stories, and I understand your situation. That being said, you come before us -- and correct me if I am wrong -- and you would like us to regulate a number of elements.

1120 Basically, you want us to regulate the contracts that you sign with BDUs.

1121 You come before us and you ask, first and foremost, that you be given bandwidth.

1122 You ask that we regulate the marketing strategy of BDUs, pushing them away from marketing internet, wireless and home services, and prioritizing broadcast services.

1123 You ask us to control U.S. ad avails, and to regulate what time they should be advertising your services.

1124 You want us to exclude the possibility that a liability clause be allowed in the contracts that you sign with BDUs.

1125 You want us to regulate MFN clauses out of the potential negotiations that you may undertake with BDUs.

1126 You would like to have standalone services imposed on BDUs.

1127 You would like us to regulate depth of carriage.

1128 You would like us to regulate channel placement.

1129 You would like us to regulate the number of HD channels available for your services.

1130 You would like us to regulate and prohibit self-dealing.

1131 I'm sure I have missed a few of them.

1132 Given what I have just finished telling you, what is left to negotiate with the BDUs if we are to regulate almost every single aspect of the contract you wish to sign with them?

1133 MR. KNOX: Price. There is a good deal that is left to negotiate. A number of the things that you identified there are already regulated -- have come under some regulation of the CRTC.

1134 What we are also talking about is a code of business terms or practices that the Chairman has been talking about that it would fit within.

1135 I mean, what we are talking about is trying to have an environment where the small independent broadcaster has a chance of surviving in this world.

1136 Otherwise, if we don't have an even playing field or some assistance with an even playing field you are going to be regulating four giant companies and that's it. But everyone else will either be purchased by the vertically integrated companies or they will wither on the vine.

1137 COMMISSIONER PENTEFOUNTAS: Why not include price in that mix?

1138 MR. KNOX: Well, I'm small --

1139 COMMISSIONER PENTEFOUNTAS: They are big. They are bullying you around. The only thing left is price. Why don't we regulate price as well?

1140 MR. KNOX: Well, perhaps I was being a little flip when I said price. There are a number of other aspects that need to be regulated as well.

1141 MR. LEWIS: Commissioner, if I may add, a number of years ago, probably three or four years ago, this Commission heard from the independent television production industry and as consolidation was occurring in the television broadcast side -- this is prior to this vertical integration situation -- they found themselves in a similar strait in the sense that rights that were being extracted from them, terms of trade were no longer fair, and they only had a number of doors to knock on.

1142 And the Commission got proactive with respect to terms of trade. I think everybody in the room knows that there was a difficult negotiation that took place over about a three-year period.

1143 You know the ink is just drying on that agreement which was signed just before the group renewals. But I think that it has leveled the playing field somewhat with the independent production industry and the broadcasters.

1144 What we are coming before you today and saying is, as we move to a very high level of vertical integration in this country, these are similar problems that we think the Commission should address and perhaps a code is the easiest way to deal with it. But some form of terms of trade -- I know the IBG, the International -- sorry, the Independent Broadcast Group -- will be here later in the week. They have come up with some recommendations. We are basically on the same page as they are because there is disproportion of power in the hands of very few and we think that the terms of trade is a good model to look at.

1145 MR. EGGERTSON: Sorry. Can I just add one thing?

1146 You used to comment that we pushed BDUs away from marketing internet, et cetera. I don't think there was any intention to change what the BDUs does.

1147 Our intention is to make sure that the broadcast element of their business receives the attention that we understand the Commission thinks it deserves. Without the attention to the broadcasting system, you basically have a significant infrastructure that is unregulated.

1148 And if you want to continue to regulate that, it was based at one time totally on broadcasting. So we are just trying to get back to where we received some attention because we believe that there is a priority to selling our services under the various acts.


1150 MR. ALLARD: Maybe I can make some comments here.

1151 First of all, we are here because of the Canadian Broadcasting Act. You made a bunch of comments about the other services.

1152 But I can tell you that, you know, when Ted Rogers found out we weren't carrying HD and we provided them with HD at lunch, he said we were treated outrageously. And we were treated outrageously.

1153 We had committed six months before to $15 million because we took the licence the CRTC issued to us at face value. Well, there wasn't face value -- there wasn't the integrity and the good faith from the vertically integrated -- some of the vertically integrated. We received great treatment from the BDUs; Bell, for example.

1154 So there is inequity. They are focusing on different aspects of business. We are here because of the Canadian broadcasting system. We are here because we are independent. There has got to be some balance.

1155 They have lost their focus. That's why we are here.

1156 COMMISSIONER PENTEFOUNTAS: Did you bring these issues at the time before the Commission resolution? You mention Quebecor and the difficulties you had with Quebecor. Did you bring that before the Commission at the time?

1157 Excuse my ignorance.

1158 MR. LEWIS: Yes. We were encouraged to request essentially an amendment of the regulation to permit carriage in Quebec as a mandatory service and the Commission determined that we should not have that carriage.

1159 We have continued to attempt to have discussions with Quebecor. I wouldn't say that there is any positive development on the horizon but, just to put it in perspective, Commissioner, in the period of time where Quebecor has said there is no demand for English-language services, they have launched more than 20 English-language services, many of them foreign services including things like Baby TV. So clearly there is a demand for English-language services.

1160 But it's the disproportion of power that is the problem.

1161 THE CHAIRPERSON: The question my colleague asked was did you bring it before us. You said you asked for mandatory carriage. You already have mandatory carriage.

1162 I mean the fact that you are unable to strike a deal with Quebecor, have you ever brought it us as such?

1163 MR. LEWIS: Yes. We are not entitled to mandatory carriage in Quebec, in Montreal for example.


1165 MR. LEWIS: Because we are an English-language service.


1167 MR. LEWIS: But Montreal, for example, is a very large -- has a very large Anglophone base of consumers.

1168 THE CHAIRPERSON: But if you don't have mandatory carriage what is your complaint in terms of the licence? The licence didn't give you mandatory carriage.

1169 MR. LEWIS: We had mandatory carriage -- I'm sorry, Chairman.

1170 In the example that I think Mr. Allard was using, when we had mandatory carriage at launch we brought an undue preference case in December of that year when we were unable to get any carriage on one of the largest BDUs. After the complaint was filed with the Commission, I would say probably 60 days later, the Commission staff assisted in attempting to propel negotiations and eventually it took until May of the following year and we got carriage.

1171 But we lost traction from the launch date until May of the following year and that was very, very costly because it was advertising campaigns running throughout the territory where those BDUs were and consumers couldn't order the service. We had committed advertising campaigns.

1172 We were on Bell ExpressVu certainly in those territories but it, at that time, probably had 20 or 25 percent of the market shares so 75 or 80 percent of the market share couldn't buy the service.

1173 THE CHAIRPERSON: So your concern is really with the speed or resolution because you had mandatory carriage when you got it after you complained to us. It just took --

1174 MR. LEWIS: We had mandatory carriage about eight months later and we lost a tremendous amount of traction. The decision was clear, though.

1175 THE CHAIRPERSON: Yeah, okay. Thank you.

1176 Okay. And finally, before I let you go, you mentioned audit rights, et cetera. What exactly do you think -- several people have mentioned audit rights, not the BDUs surprisingly, but mostly the others. What is it that you feel is needed for audit rights?

1177 MR. EGGERTSON: I think one of the things that has to be kept in mind is we are a very unique business, the programming services, because although we create a product which is the programming service, we don't deliver it in units to our customers. So we can't say that we had sent out 80,000 units, therefore we should get paid for 80,000 customers.

1178 What happens is we send out our signal and it's received and then distributed by a BDU. They sell it to their customers and then they report back to us on how many of those customers took the service.

1179 So I sit in my office every month wondering what my revenue is because I have no way to track it. So I'm totally reliant on a BDU to tell me how many sales I had that month in their shop and then to pay me correctly on that and to pay me on a timely basis. So without a clear audit right, I have very little control or ability to manage or even do reasonable professional due diligence about the quality of my revenue and that's a serious business issue.

1180 So what we are looking for on the audit rights you have created a public notice that is relatively simple and straightforward but that has not been adopted by all the BDUs.

1181 Two of our original affiliation agreements, even though we had asked for audit rights subject to that provision, we were denied the ability to put them in. That BDU has subsequently allowed us in to audit. The process started in September 2010.

1182 It's now June 2011. We followed the process that they set out. One of the companies has not yet provided our auditors with the information they have asked for and the other has just provided the information that was asked for, approximately 10 months after we started the process.

1183 Another complication that I'm looking forward to getting into is that under your public Notice it suggests that we can only audit once every 12 months for a 12-month period. I'm curious how the interpretation of the current audit is going to be dealt with when I write again in September wanting to audit the next 12-month period. The answer I expect to get back is that I can't audit the next period because I haven't finished the prior audit.

1184 I mean I use this as an example because it is so bizarre in any normal commercial relationship that it needs to be addressed.

1185 THE CHAIRPERSON: Okay. Well, I expect audit rights will figure prominently in the code that you will send us. And I expect other -- I would ask all others listening to the proceedings to also address that point.

1186 Thank you very much. I think we have a good understanding of your issues.

1187 We will take a five-minute break before we go to the last two intervenors.

--- Recessed at 1512

--- Upon resuming at 1522

1188 LE PRÉSIDENT : O.K., commençons, Madame la Secrétaire.

1189 LA SECRÉTAIRE : Merci.

1190 Nous entendrons maintenant la présentation de la sénatrice Andrée Champagne.

1191 S'il vous plaît présenter vos collègues et vous avez 10 minutes. Merci.


1192 L'HON. ANDRÉE CHAMPAGNE : Merci beaucoup. J'arriverai à les présenter dans une seconde.

1193 Monsieur le Président, Mesdames et Messieurs les Commissaires, quand je vous ai fait parvenir mon mémoire à titre personnel, le Parlement et, par conséquent, tous ses comités était dissous puisque nous entrions en période électorale. Toutefois, les opinions que je vous envoyais reflétaient fidèlement celles émises par mes collègues du Comité sénatorial permanent des langues officielles.

1194 Aujourd'hui, notre comité a été reformé et la majorité de nos collègues ont été reconduits dans leur poste. D'ailleurs, certains d'entre eux ont jugé bon être à mes côtés aujourd'hui. Je vous les présente brièvement.

1195 A ma gauche, madame la sénatrice Maria Chaput; elle est du Manitoba.

1196 A ma droite, la sénatrice Rose-Marie Losier-Cool; elle est du Nouveau-Brunswick.

1197 Et l'épine au milieu des roses, le sénateur Pierre De Bané du Québec.

1198 Au cours des années, notre comité a étudié en profondeur les défis auxquels font face les francophones canadiens qui vivent en situation minoritaire. Une chose est certaine, pouvoir regarder la télévision en français s'avère un apport important à leur épanouissement et contribue aussi à l'apprentissage d'une de nos deux langues officielles dans le cas des nouveaux arrivants.

1199 Nous avons été ébahis d'apprendre que, suite à votre politique de déréglementation qui entrera en vigueur en septembre prochain, la chaîne TV5 Québec Canada pourrait ne plus faire partie des canaux que les distributeurs doivent obligatoirement offrir à leur clientèle sans exiger de frais supplémentaires.

1200 Éradiquer TV5 de ce que plusieurs appellent la liste " must carry ", ou " mandatory carriage ", une expression que j'ai apprise dans la dernière demi-heure, causerait un tort irréparable à ceux et celles qui ont le français en partage et qui résident dans des coins éloignés de notre grand pays.

1201 Bien sûr, Radio-Canada demeurerait, mais il faut parfois regarder ailleurs pour être vraiment au fait de tout ce qui se passe dans le monde. Il y a aussi la nécessité de la diversité dans les émissions qu'on regarde. Priver les francophones et les francophiles du plaisir que procure TV5 Québec Canada nous semble cruel.

1202 TV5 n'est pas un réseau comme les autres. Il est le seul service spécialisé de langue française administré par un organisme sans but lucratif, ce qui veut dire que TV5 n'a pas à dégager de bénéfices financiers pour ses actionnaires. Subventionnée par nos gouvernements, cette chaîne est la seule à consacrer 95 pour cent de sa programmation à des émissions de langue originale française au lieu de versions françaises d'émissions américaines ou britanniques.

1203 A TV5, la totalité des revenus est affectée à la réalisation de sa mission : offrir une fenêtre grand ouverte sur la francophonie internationale, ainsi qu'un reflet dynamique de toute la diversité de la francophonie canadienne. Elle favorise ainsi le rayonnement international de productions télévisuelles canadiennes de langue française à travers son partenariat avec TV5 Monde.

1204 C'est le seul service spécialisé de langue française à avoir pris des engagements qui se sont traduits en conditions de licence, à l'effet de concentrer un pourcentage préétabli de ses dépenses annuelles à la production d'émissions canadiennes réalisées en français, hors Québec.

1205 Le CRTC est le fiduciaire du système canadien de radiodiffusion. Il doit veiller tant à sa protection qu'à son expansion dans un univers de plus en plus mondialisé. Il vous incombe non seulement de protéger ce système canadien mais aussi de le rendre plus robuste par rapport à de nouveaux fournisseurs comme Netflix. Vous devez aussi encourager l'exportation de nos productions.

1206 C'est ce que fait, entre autres, TV5. Ses productions canadiennes sont exportées, bien sûr, en France, mais aussi en Afrique, au Moyen-Orient, en Asie et en Amérique latine. Il suffit d'avoir voyagé ou résidé à l'étranger pour en faire le constat. TV5 reste, en toutes circonstances, un lien permanent pour les Canadiens à l'étranger, notamment grâce à la diffusion d'émissions d'information. Oui, parfois, il faut se lever très tôt, mais on peut au moins avoir des nouvelles du Canada.

1207 Aucun autre service spécialisé canadien parmi les centaines qui existent au pays ne fait une telle promotion des contenus canadiens sur tous les continents.

1208 Cette vocation unique de TV5 devrait bénéficier d'une distribution obligatoire sur le service de base de tous les Canadiens, c'est-à-dire de près de 11 millions de foyers abonnés. En ce faisant, le CRTC donnerait un signal clair à l'ensemble des acteurs de notre système de radiodiffusion.

1209 Au demeurant, n'oublions pas que ce service est subventionné par tous les contribuables canadiens à travers leurs gouvernements tant à Ottawa qu'à Québec, et, qu'à ce seul titre, il devrait être disponible à tous les abonnés du câble et du satellite.

1210 TV5 est unique dans le paysage visuel canadien. N'oublions pas que, après RDI, qui, lui, dispose d'une distribution obligatoire au service de base même dans les marchés anglophones, TV5 bénéficie actuellement de la plus grande distribution francophone hors Québec.

1211 Le cadre réglementaire énoncé dans la Loi sur la radiodiffusion tient compte d'objectifs sociaux et culturels, ceux-là même sur lesquels TV5 a toujours axé sa programmation.

1212 Ce cadre réglementaire serait profondément transformé s'il devait, en septembre prochain, devenir axé principalement sur l'établissement d'un équilibre concurrentiel entre les grandes entreprises de communication, celles qui, aujourd'hui, contrôlent la quasi-totalité du système canadien de radiodiffusion.

1213 Un tel cadre conférerait aux distributeurs un très grand pouvoir discrétionnaire pour déterminer les conditions de distribution, d'assemblage et de tarification des services spécialisés.

1214 Déjà, certains distributeurs proposent d'offrir TV5 au sein d'un volet composé de chaînes internationales en langues étrangères : en allemand, en italien ou en espagnol. Le français serait considéré comme une langue étrangère dans notre Canada où le français est une de nos deux langues officielles.

1215 Cela voudrait dire que le francophone ou le francophile canadien hors Québec qui voudrait continuer d'accéder à TV5 devrait payer plusieurs dollars par mois pour recevoir un bouquet de chaînes dont une seule -- une seulement -- serait en français.

1216 Ou alors, il lui faudrait, par exemple, prendre TV5 à la carte à plusieurs dollars par mois quand on sait que la chaîne n'est facturée aux distributeurs que quelques sous par mois selon le nombre de francophones dans certaines provinces lorsqu'il est offert en service de base.

1217 Nous sommes d'avis qu'une telle décision irait aussi à l'encontre de l'esprit et des exigences de la Partie VII de la Loi sur les langues officielles, celle qui précise que toutes les institutions reliées de près ou de loin au gouvernement ont le devoir de poser des gestes, de prendre des mesures positives visant à favoriser l'épanouissement des francophones et des anglophones qui vivent en situation minoritaire partout au pays.

1218 Faire en sorte que TV5 ne soit pas disponible dans un service de base ne serait sûrement pas considéré comme une mesure positive pour améliorer le sort des francophones et des francophiles canadiens vivant hors du Québec.

1219 Mesdames, Messieurs, permettez-moi d'espérer que, à la suite de ces audiences sur l'intégration verticale, le CRTC saura développer un cadre où une chaîne, indépendante des grands groupes, un OSBL par surcroît, pourra bénéficier d'un environnement propice à son développement afin de poursuive sa mission après des francophones et des francophiles du Canada.

1220 Je terminerai en citant monsieur Jean-Louis Arcand, ex-secrétaire général du Conseil international des radios-télévisions d'expression française. Il écrivait récemment, et je le cite :

" Le CRTC ne devrait pas céder aux pressions des intérêts commerciaux des opérateurs de câble et, au contraire, affirmer l'importance de soutenir les politiques canadiennes d'affirmation du caractère bilingue de notre pays. Le maintien pour les francophones et les francophiles d'un accès facile à un éventail plus riche de services en français est important partout au Canada et particulièrement pour les régions qui disposent de peu de services en langue française. Le CRTC ne doit pas ajouter aux difficultés déjà énormes de conserver la culture francophone dans notre environnement nord-américain et particulièrement dans les régions à faible concentration de citoyens qui utilisent la langue française. Sans de telles mesures, le bilinguisme officiel est une farce. "

1221 Le Canada est-il si peu fier de son héritage français qu'il peut à la fois permettre à toutes les télés du monde d'entrer dans les foyers canadiens et exiger qu'on ait à payer pour maintenir un lien avec la francophonie internationale?

1222 Ce débat dure depuis la Confédération. Il était présent quand le plan de rayonnement accéléré de Radio-Canada a amené les services en langue française à Vancouver et les services en langue anglaise à Québec.

1223 Trente-cinq ans plus tard, il est désolant que le débat reprenne, qu'on suppute, divise et qu'on doive entendre des plaidoiries pour permettre à nos deux nations fondatrices de se découvrir et de développer un sens de propriété des richesses et de la culture de l'autre.

1224 Je vous remercie de votre attention. If you have any questions, I'll do my best to answer.

1225 LE PRÉSIDENT : Merci.

1226 Soyons très précis, qu'est-ce que voulez que nous fassions?

1227 L'HON. ANDRÉE CHAMPAGNE : Que TV5 Québec Canada, partout au Canada, demeure sur la liste " must carry. "

1228 Si on l'envoie Dieu sait où... Si on met la chaîne dans un volet avec de l'allemand, de l'italien et de l'espagnol et je ne sais quoi, du chinois...

1229 LE PRÉSIDENT : Oui, mais " must carry, " ça veut dire que ça doit être offert, ce n'est pas dire qu'on doit l'acheter et ça ne fait pas partie du bouquet basic. C'est seulement que les distributeurs doivent offrir le service TV5.

1230 Ce que vous... parce que vous avez des expressions diverses. Vous parlez de service de base, vous avez parlé de " must carry ", et vous avez dit que c'est du prix. J'aimerais que ce soit très clair qu'est-ce que vous demandez.

1231 L'HON. ANDRÉE CHAMPAGNE : Je pense que TV5 devrait être accessible sans frais supplémentaires partout au Canada. C'est une chaîne...

1232 LE PRÉSIDENT : Sans frais supplémentaires?

1233 L'HON. ANDRÉE CHAMPAGNE : Sans frais supplémentaires.

1234 C'est une chaîne francophone, et pour bien des gens, que ce soit en Alberta, que ce soit au Manitoba, ces gens-là ont très peu de chaînes françaises, et si on rend ça absolument impossible ou très coûteux pour les gens, c'est ce que... parce que nous avons de beaucoup étudié les problèmes, les défis auxquels font face les francophones hors Québec, surtout ceux qui vivent dans des régions éloignées, et l'importance d'avoir une chaîne de plus en français, c'est très important sans que ça leur coûte les yeux de la tête.

1235 LE PRÉSIDENT : Ils ont maintenant Radio-Canada et TVA, et vous voulez qu'il y ait une troisième chaîne, qui est TV5?

1236 L'HON. ANDRÉE CHAMPAGNE : Oui, parce que c'est la francophonie internationale. C'est très important.

1237 LE PRÉSIDENT : O.K. Merci.

1238 Michel, tu as des questions?

1239 CONSEILLER MORIN : Merci, Monsieur le Président.

1240 L'HON. ANDRÉE CHAMPAGNE : Bonjour, Monsieur Morin.

1241 CONSEILLER MORIN : Ce que je comprends de votre intervention, comme le Président, c'est que, en fait, vous voulez une distribution obligatoire sur le service de base. Vous voulez plus qu'un service qui soit offert avec un tarif. Vous voulez que ce tarif-là soit inclus dans le service de base, qui à Calgary coûte 35 dollars, à Montréal coûte 28 dollars, à Toronto coûte 34 dollars. C'est le service de base où se trouve un certain nombre de services spécialisés, dont pourrait être TV5 également?

1242 L'HON. ANDRÉE CHAMPAGNE : Voilà ce que nous souhaitons, et je pense que mes collègues, nous avons fait cette étude-là au Comité sénatorial des langues officielles, et nous nous rendons compte que ce serait une perte énorme pour les francophones et francophiles hors Québec.

1243 CONSEILLER MORIN : Je comprends que c'est votre désir, mais vous savez que la Commission soulève un enjeu qu'elle n'a jamais soulevé dans le passé autant qu'elle peut le faire ici, c'est le service minimal le moins coûteux possible, ce qu'on appelle en anglais le " skinny basic service ", c'est-à-dire un service qui comprendrait finalement -- ce n'est pas encore défini, mais c'est en discussion -- qui ne comprendrait que des services qui sont gratuits, comme, par exemple, les généralistes comme Radio-Canada, comme un service éducatif.

1244 Mais vous, vous ne feriez pas partie de ces services puisque vous facturez. Malgré des subventions, malgré que vous soyez une OCBL sans but lucratif, plus de 60 pour cent de vos revenus, ce sont, en fait, des redevances d'abonnement.

1245 Alors, pourquoi le CRTC, à ce moment-ci, s'il devait mettre sur pied -- je dis bien s'il devait mettre sur pied -- un service vraiment de base, vraiment squelettique, devrait-il inclure TV5? Quelles seraient les raisons? Vous en avez énuméré quelques-unes.

1246 Parce que vous demanderiez, à ce moment-là, à tous les Canadiens, comme vous l'avez dit dans votre présentation orale, aux 11 millions d'abonnés qui n'écoutent pas nécessairement TV5, vous leur demanderiez de payer pour un service de base où tous les autres services sont gratuits, comme Radio-Canada, comme CTV, comme Global, comme TVA.

1247 Pourquoi ferait-on une exception pour TV5 -- c'est un peu ma question -- sur le service de base de distribution obligatoire?

1248 L'HON. ANDRÉE CHAMPAGNE : Parce que c'est un apport important aux francophones et aux francophiles qui vivent dans les coins reculés du pays, qui n'ont pas accès à des services, que ce soit des spectacles, que ce soit des films en français, très souvent.

1249 Alors, si on a TV5, on sait, par exemple, qu'on aura l'occasion de regarder des émissions comme " Thalassa. " J'en regardais une hier après-midi avant de rentrer à Ottawa, où on était à Key West. On pourrait voir " Des racines et des ailes ", où on peut voir vraiment ce qui se passe dans d'autres coins. C'est la francophonie internationale, et ça ajoute à notre bagage, et c'est nos racines à nous. Voilà d'où nous venons.

1250 CONSEILLER MORIN : Et c'est la faiblesse de l'offre nord-américaine aussi?

1251 L'HON. ANDRÉE CHAMPAGNE : En plus. La qualité que nous offre TV5, je pense, est valable pour tous les francophones et tous les francophiles. S'ils veulent s'amuser, bien sûr, il y a des émissions questionnaires, qu'on s'en aille à " Des Chiffres et des Lettres " ou qu'on s'en aille à " Questions pour un champion. "

1252 On verra même peut-être " Vivement dimanche ! " lorsque Michel Drucker nous amène Michel Morgan avec ses enfants, ses petits-enfants et ses arrière-petits-enfants. On n'a pas ça ici.

1253 Et TV5 Québec Canada, par son lien avec TV5 Monde... et le gouvernement du Canada a signé une entente pluriannuelle, a augmenté sa subvention et à TV5 Québec Canada et à TV5 Monde, où le Canada est partenaire.

1254 Je pense que si on est pour payer pour organiser, pour avoir cette qualité-là, le moins qu'on puisse faire, c'est de l'offrir automatiquement aux Canadiens qui ont payé pour. Ils ont payé pour indirectement par cette contribution de leur gouvernement.

1255 CONSEILLER MORIN : Mais je pense que le système peut aussi permettre d'offrir le service comme un service de catégorie B dans tous les marchés, sans nécessairement être une distribution obligatoire.

1256 Parce que, dans le fond, ce que vous demandez, c'est que ce soit une distribution obligatoire sur le service de base, et ce que je vous dis, c'est peut-être contraire à -- pas ce qui s'est passé dans le passé jusqu'au 1er septembre -- mais ce qui s'en vient, où on veut créer un service le moins coûteux possible pour l'ensemble des Canadiens, notamment pour faire concurrence aux Netflix, aux Google, Amazon et tout ça qui s'en viennent à grand pas, avoir un service qui soit le plus accessible.

1257 Et là, plus ou moins, vous suggérez d'ajouter quelques sous -- ce n'est peut-être pas beaucoup de sous, mais des sous quand même -- sur le service de base, et qui serait pris par tous les Canadiens, par opposition à un frais d'abonnement qui, lui, pourrait être accessible à tous les Canadiens dans tous les marchés, mais qui serait identifié comme tel.

1258 Si le service a une si grande valeur -- il y a six bulletins d'information, par exemple, chaque jour à TV5, de la Suisse, de la Belgique, de la France, et caetera -- il me semble que le marché francophone devrait être aussi quelque part désireux de payer pour ce service-là.

1259 L'HON. ANDRÉE CHAMPAGNE : Encore faut-il qu'ils sachent qu'il existe, et s'il est automatiquement dans un service de base, il est là, les gens vont regarder.

1260 Et si on enlève ce qu'on a en ce moment, comment TV5 Québec Canada aura-t-elle les revenus suffisants pour produire toutes les émissions canadiennes qui sont produites en ce moment, produites ici et exportées partout dans le monde?

1261 Ce sont nos produits canadiens, faits ici par nos artistes, par nos réalisateurs, par nos musiciens, qui s'en vont de par le monde via TV5 Québec Canada, TV5 Monde, et je pense que ça, c'est une grande valeur, et voilà où je pense qu'il faut peut-être donner un petit coup de barbe.

1262 Écoutez, je ne suis pas, et ça, vous le savez fort bien, une technicienne. J'écoutais tout à l'heure. Il y avait un paquet de ces initiales dont j'ignorais totalement la signification, et je vous l'admettrais humblement, mais ce que peut apporter à monsieur et madame tout le monde la qualité d'émissions que nous offre TV5 Québec Canada, je pense qu'on n'a pas les moyens d'en priver les Canadiens, où qu'ils soient au Canada, les francophones, et il y a beaucoup de francophiles. Ça va les aider à apprendre aussi.

1263 CONSEILLER MORIN : Vous avez énuméré peut-être trois aspects de ce service. Vous ne les avez pas regroupés, mais on les trouve dans votre présentation.

1264 D'abord, TV5 est un OSBL sans but lucratif.

1265 C'est un service -- il n'y en a pas des centaines au Canada, il n'y en a pas une demi-douzaine au Canada -- qui exporte la production canadienne à l'étranger.

1266 Et troisième chose, c'est subventionné par le gouvernement du Canada et dans une moindre mesure par le gouvernement du Québec.

1267 Est-ce que, pour vous, ces seules, ces trois conditions-là pourraient amener le CRTC, et pourquoi ça devrait amener le CRTC, à faire une exception --

1268 L'HON. ANDRÉE CHAMPAGNE : Vous me permettrez de...

1269 CONSEILLER MORIN : -- pour le mettre sur le service de base tel que vous le désirez?

1270 L'HON. ANDRÉE CHAMPAGNE : Vous me permettrez, Monsieur Morin, de vous dire que, avec mon coeur et mes connaissances, je vous ai présenté une liste de raisons pourquoi. Je suis certaine que d'autres personnes y ajouteront et que si vous grattez un tout petit peu, si vous cherchez, vous en trouverez d'autres raisons.

1271 C'est important que TV5 reste sur le service de base partout au Canada, surtout pour ceux et celles qui n'ont pas accès à beaucoup de services en français où ils vivent. C'est une perle, c'est un joyau, c'est un cadeau que le Canada peut offrir à ses francophones et ses francophiles avec l'aide de la France, d'où sont venus nos ancêtres, et si on peut essayer ensemble.

1272 Je vous citais monsieur Arcand quand il a quitté Radio-Canada pour aller former ce Conseil international des radios-télévisions. Au Canada, on s'est battu... à un moment donné, il a fallu se battre pour qu'il y ait des services en français à Vancouver et le service anglais de Radio-Canada puisse passer à Québec, dans la ville de Québec, où ils n'en ont pas besoin.

1273 Comme si mettre tout ça ensemble, ça fait pas de nous un meilleur Canada. Moi, je le vois comme ça, et il me semble que...

1274 Je suis certaine que si vous grattez un tout petit peu, vous allez peut-être trouver d'autres raisons que moi, je n'ai pas su élaborées, mais faire en sorte que le CRTC, que ce soit vraiment une mesure positive de la part du CRTC par la Partie VII de la Loi sur les langues officielles, tout simplement.

1275 C'est une autre des raisons que je vous ai données et qui est toujours valable. Vous n'êtes pas dispensés de la Loi sur les langues officielles. La preuve, c'est que plusieurs d'entre vous parlent les deux langues.

1276 J'ai eu le plaisir et l'occasion de vous parler en français aujourd'hui. Je me serais finalement débrouillée aussi dans l'autre langue de mon pays.

1277 CONSEILLER MORIN : Je vous remercie.

1278 L'HON ANDRÉE CHAMPAGNE : Merci, Monsieur Morin.

1279 LE PRÉSIDENT : J'aimerais clarifier quelque chose...


1281 LE PRÉSIDENT : ...parce que vous avez utilisé deux expressions qui sont diverses. Une, être sur le service des passes, l'autre doit être (indiscernible). L'un implique que c'est (indiscernible), mais c'est le client qui détermine s'il veut l'acheter un autre, si c'est sur les services de passes, il est automatiquement là. Et effectivement, le client doit payer pour ça. C'est pas seulement une question d'être offert, mais c'est aussi une question d'obliger des clients de payer pour ça s'il le veut ou non.

1282 Quel de ces deux types est-ce que vous voulez avoir pour TV5? Qu'il doit être offert ou qu'il doit être acheté aussi?

1283 L'HON ANDRÉE CHAMPAGNE : Bien, je pense que si on veut que TV5 Québec Canada continue à produire des émissions et à les exporter, il faut qu'ils aient un peu d'argent. Ce n'est pas les gouvernements. Nos gouvernements ne vont pas mettre de l'argent à TV5 comme on le fait à Radio-Canada. Ils mettent ça à coup de milliards.

1284 Non. On donne de l'aide. Je pense qu'il faut que ce soit acheté. Et qu'à ce moment-là, TV5 puisse récupérer un peu d'argent qui, automatiquement, ils remettent dans de la production.

1285 LE PRÉSIDENT : O.K. Donc, des questions?

1286 CONSEILLER PENTEFOUNTAS : Bonjour, Madame Champagne.

1287 L'HON ANDRÉE CHAMPAGNE : Oui, bonjour.

1288 CONSEILLER PENTEFOUNTAS : Ais-je bien compris que vous étiez à Key West hier?

1289 L'HON ANDRÉE CHAMPAGNE : Avec Thalassa.

1290 CONSEILLER PENTEFOUNTAS : Oh! Avec Thalassa, vous avez...

1291 L'HON ANDRÉE CHAMPAGNE : Avec Thalassa.

1292 CONSEILLER PENTEFOUNTAS : Avec Thalassa, O.K. Vous étiez pas là en personne.

1293 L'HON ANDRÉE CHAMPAGNE : Je regardais Thalassa hier après-midi...


1295 L'HON ANDRÉE CHAMPAGNE : ...avant de prendre ma voiture pour revenir ici.

1296 CONSEILLER PENTEFOUNTAS : Je me demandais si... ah oui? C'est bien. Alors voilà.

1297 Écoute, TV5 comme tel produit pas des émissions canadiennes.



1300 L'HON ANDRÉE CHAMPAGNE : TV5 Québec Canada, bien sûr!

1301 CONSEILLER PENTEFOUNTAS : Vos propres émissions?


1303 CONSEILLER PENTEFOUNTAS : Vous ne diffusez pas nécessairement des émissions qui sont produites par Radio-Can ou d'autres?

1304 L'HON ANDRÉE CHAMPAGNE : Non. Il y a des émissions qui sont produites par TV5 Québec Canada. Bien sûr.

1305 CONSEILLER PENTEFOUNTAS : Et les montants appliqués dans ces émissions-là, est-ce que vous êtes au courant?

1306 L'HON ANDRÉE CHAMPAGNE : Ça, je sais qu'il y a madame Gouin qui viendra tout à l'heure, qui elle, pourra vous donner des détails que...

1307 Moi, je vous ai donné le côté coeur de la tête(ph). Elle vous donnera le côté chiffre sûrement avec le coeur aussi, bien sûr.

1308 CONSEILLER PENTEFOUNTAS : Toujours. Toujours avec le coeur. Bon.

1309 Et dans les autres pays participants, qu'est-ce qui se passe chez les Suisses, les Français, les Belges? Est-ce que TV5 fait partie, s'il y a l'équivalent d'une distribution obligatoire ou est-ce que... êtes-vous au courant de ça? Non? Vous savez pas ça non plus.

1310 L'HON ANDRÉE CHAMPAGNE : Je sais que si je suis en France, en Suisse ou en Belgique, j'ouvre la télé, puis je suis sûre de trouver TV5 Monde.

1311 CONSEILLER PENTEFOUNTAS : Et vous avez dit que c'est subventionné par les états participants à TV5.


1313 CONSEILLER PENTEFOUNTAS : Mais également par les abonnés des ODR. On s'entend là-dessus?


1315 CONSEILLER PENTEFOUNTAS : Et le pourcentage de contribution envers le coût total, je pense que monsieur Morin a expliqué que c'était 60 pour cent qui vient des abonnés.

1316 On s'entend là-dessus?

1317 L'HON ANDRÉE CHAMPAGNE : Oui, d'accord.


1319 L'HON ANDRÉE CHAMPAGNE : Mais s'il n'est plus sur cette liste où les gens vont automatiquement devoir à payer ne serait-ce que quelques sous par mois, si le distributeur... ils vont avoir de la difficulté à continuer à réaliser et à produire des émissions.

1320 CONSEILLER PENTEFOUNTAS : Et pour retourner aux questions du président, c'est clair que pour vous, ce que vous demandez, c'est que ce soit disponible et que les gens payent un dollar par mois. Parce que si tu aimes TV5, tu aimes TV5. Puis c'est pas un dollar par mois qui va t'empêcher de regarder ou de vous abonner. Ça va?

1321 L'HON ANDRÉE CHAMPAGNE : Oui, peut-être.

1322 CONSEILLER PENTEFOUNTAS : Bien, peut-être...!

1323 L'HON ANDRÉE CHAMPAGNE : Oui, bien enfin, pour un dollar par mois, je vais le payer...

1324 CONSEILLER PENTEFOUNTAS : Bien, j'ignore le montant exact.


1326 CONSEILLER PENTEFOUNTAS : La question est à savoir, est-ce que ça doit faire partie de ce service minimal le moins coûteux, le «skinny basic», si on peut s'exprimer en anglais.

1327 L'HON ANDRÉE CHAMPAGNE : Mais, il faut pas...

1328 CONSEILLER PENTEFOUNTAS : Ou est-ce que c'est l'obligation que ce soit distribué obligatoirement avec un petit coût à cette distribution-là. C'est lequel des deux que vous proposez aujourd'hui?

1329 L'HON ANDRÉE CHAMPAGNE : Il faut que ce soit disponible...


1331 L'HON ANDRÉE CHAMPAGNE : Bien, ce serait préférable. Mais s'il y a de l'argent, qu'au moins, de ne pas couper les vivres à TV5 Québec Canada, en ce moment. Je pense que ça, ça serait extrêmement dommage. Parce que oui, effectivement, il y a beaucoup d'émissions qui sont produites ici et il y en a beaucoup qui sont produites en français hors Québec. Et ça, c'est assez particulier.

1332 Et on en a eu là, dernièrement, du nord de l'Ontario. Il y en a eu du Manitoba, il y en a eu de l'Alberta. Il y en a de l'Acadie.

1333 TV5 Québec Canada produit des émissions en français hors Québec.

1334 CONSEILLER PENTEFOUNTAS : Des arguments que nous entendons souvent, c'est que les cotes sont vraiment pas là. Il y a personne qui écoute, il y a personne qui regarde TV5.

1335 Est-ce que vous avez l'équivalent de BBM pour utiliser ces termes-là, que les gens puissent haïr, mais on doit vivre avec.

1336 Je comprends, pour vous c'est important. Pour nous, c'est important. Pour moi qui ai passé quelque temps dans les hôtels hors Québec récemment et qui ne pouvais rien trouver de nature francophone, c'est frustrant.

1337 Mais est-ce que vous avez des cotes d'écoute à l'effet qu'il y a des gens qui l'écoutent?

1338 L'HON ANDRÉE CHAMPAGNE : Écoutez. Je ne travaille pas pour TV5. Nous sommes quatre sénateurs membres du Comité permanent pour les Langues officielles.

1339 Nous avons étudié et étudié et étudié les problèmes et les défis des gens. L'année dernière, nous avons fait le contraire. Nous sommes allés voir les anglophones en situation minoritaire au Québec. Parce qu'il y en a aussi et qui ont parfois des problèmes.

1340 Nous avons beaucoup étudié les problèmes des francophones hors Québec en situation minoritaire. Et avec ce que nous avons appris, nous trouvons que ce serait cruel de leur enlever cette autre source de divertissement en français.

1341 CONSEILLER PENTEFOUNTAS : Merci beaucoup.

1342 L'HON ANDRÉE CHAMPAGNE : Merci beaucoup.

1343 LE PRÉSIDENT : O.K. Je crois que ce sont toutes nos questions. Merci d'être venue.

1344 L'HON ANDRÉE CHAMPAGNE : Merci, Monsieur le Président, Mesdames, Messieurs.

1345 LA SECRÉTAIRE : Merci. J'inviterais maintenant TV5 Québec Canada à venir à la table.

1346 L'HON ANDRÉE CHAMPAGNE : Vous allez les avoir, les autres réponses.

1347 LE PRÉSIDENT : O.K. Madame la Secrétaire. Commençons.

1348 LA SECRÉTAIRE : Merci. S'il vous plaît vous présenter. Vous avez dix minutes pour votre présentation.


1349 MME GOUIN: Bonjour, Monsieur le Président. Je me présente, Suzanne Gouin, présidente de TV5 Québec Canada.

1350 Au cours du processus qui nous conduit à cette audience, Monsieur le Président, même les plus grands groupes de programmation indépendants ont fait valoir qu'ils avaient besoin d'une protection réglementaire accrue face aux entreprises de distribution intégrée verticalement.

1351 Inversement, de grandes entreprises de distribution indépendantes comme Cogeco ou Telus ont fait valoir qu'elles craignaient le développement de pratiques anticoncurrentielles chez les entreprises intégrées qui possèdent un vase éventail de stations de télévision traditionnelles et de services facultatifs.

1352 La préoccupation de favoriser le développement d'un espace compétitif équitable entre tous ces géants de notre industrie est assurément très importante. Et je suis persuadée que le Conseil consacrera toute son attention.

1353 Il est aussi - sinon davantage - important que les groupes de radiodiffusion de plus petite taille puissent trouver dans le nouvel univers de radiodiffusion canadienne un espace d'émergence et de croissance.

1354 A défaut, c'est toute la philosophie qui inspire la politique du Conseil sur la diversité des voies qui risque d'être reléguée au rang de vieilleries dépassées. C'est aussi le dynamisme et la productivité du système canadien de radiodiffusion qui risque d'être compromise si on en vient à une situation où hors le cadre de l'intégration verticale, point de salut.

1355 Dans son intervention écrite, TV5 a appuyé plusieurs des mesures qui ont fait l'objet de discussions entre les services de programmation indépendants. Notamment celles qui vise à favoriser leur accès au système canadien de télédistribution, leur droit à une vérification comptable des renseignements sur les abonnés détenus par les distributeurs ou à la suspension de l'application de toute modification contestée aux modalités de distribution de leur service et ce, jusqu'au règlement du différend.

1356 Je ne développerai pas davantage dans cette présentation orale, mais je serais évidemment heureuse de répondre à toutes questions du Conseil à leur sujet.

1357 Je souhaite plutôt consacrer le temps qui m'est imparti à la situation de TV5 en tant que service spécialisé privé sans but lucratif.

1358 C'est une situation très particulière. En fait, presque unique parmi les services de programmation canadiens qui ne jouissent pas d'une distribution obligatoire au service de base.

1359 Rappelons d'abord ce qu'est un OSBL. C'est un organisme constitué exclusivement des fins sociales, éducatives, culturelles, religieuses ou philanthropiques sans objectif ou activité visant à procurer à ses membres un quelconque avantage économique ou un profit.

1360 En soi, cela distingue clairement TV5 de tous les services de programmation détenus par les entreprises privées commerciales.

1361 Sa mission fondamentale est de nature sociale et culturelle. Contrairement aux entreprises privées commerciales, il n'a pas pour responsabilité première de contribuer à l'enrichissement de ses actionnaires par la génération de profits et de dividendes. Tous les revenus qu'il génère sont réinvestis dans son activité statutaire et consacrés à l'accomplissement de sa mission.

1362 Et celle-ci est double:

1363 Premièrement, offrir à l'ensemble des téléspectateurs canadiens - francophones, bilingues ou en situation d'apprentissage du français - l'accès à une programmation d'information et de divertissement de langue originale française variée et de grande qualité en provenance d'une grande diversité de pays de la francophonie internationale et de toutes les régions de la francophonie canadienne.

1364 Deuxièmement, offrir aux productions télévisuelles canadiennes de langue originales françaises un rayonnement international soutenu et permanent grâce à son partenariat avec TV5 Monde qui est présent dans plus de 200 pays.

1365 Ceci lui permet de contribuer activement à l'enrichissement d'un espace audiovisuel francophone pluriel et vibrant qui fait une large part à l'expression culturelle canadienne.

1366 Le Conseil reconnaîtra aisément, je pense, que les services spécialisés privés sans but lucratif du type de TV5 sont ceux qui sont actuellement les plus fragilisés dans notre univers.

1367 Contrairement au diffuseur public national et au service de programmation éducative mandatée par une autorité provinciale, ils ne bénéficient d'aucune priorité de distribution au service de base en vertu du Règlement sur la distribution de radiodiffusion.

1368 Ce sont généralement des services uniques et autonomes. Ils ne disposent pas d'une masse critique de services de programmation ayant une part de marché collective importante et attrayante pour un distributeur, même s'ils ont des bonnes parts de marché, Monsieur Pentefountas.

1369 Ils ne sont pas reconnus comme étant une catégorie spécifique de services facultatifs faisant l'objet d'une protection particulière en raison même de leur statut d'OSBL.

1370 Enfin, ils répondent à une finalité différente de celle de tous les services privés commerciaux.

1371 Cela les place en porte-à-faux par rapport à l'environnement commercial qui dicte la conduite des grandes entreprises de distribution intégrée verticalement.

1372 Celles-ci réalisent des revenus de plusieurs milliards de dollars annuellement et cherche à conclure des alliances avec des grands groupes de programmation de radiodiffusion ou à se porter acquéreur de ceux-ci pour être en mesure d'alimenter en contenu d'information et de divertissement les diverses plateformes qu'elles contrôlent.

1373 Leur objectif ultime est d'inciter les consommateurs à acquérir l'ensemble de leurs services de télédistribution, d'accès Internet, de téléphonie fixe et mobile auprès d'un même fournisseur.

1374 Dans cette bataille entre géants des communications, les services spécialisés privés sans but lucratif sont des quantités négligeables.

1375 Leur isolement, leur très petite taille, leur absence de motivation au profit financier font qu'ils ne sont pas des partenaires attrayants, recherchés, en mesure de faire une différence pour les télédistributeurs.

1376 Ils ne représentent qu'une part infime des revenus mensuels que réalisent ces entreprises de distribution intégrée. Et dans un univers où elles offrent à leurs abonnés plusieurs centaines de services, leur présence ou leur absence ne peut influencer significativement le taux d'abonnement à une EDR.

1377 Bref, ils ne sont pas économiquement indispensables. Ils ne jouent pas dans la même ligue, n'ont aucun réel pouvoir de négociation et leur sort apparaît totalement indifférent aux grands enjeux des luttes commerciales en cours.

1378 TV5 a l'intime conviction que les services spécialisés privés sans but lucratif ont besoin d'une protection particulière dans l'univers de concentration, de convergence et d'intégration verticale croissante qui caractérise le système canadien de radiodiffusion aujourd'hui.

1379 A défaut, c'est leur survie même qui pourrait être mise en péril et avec elle, la contribution unique et exceptionnelle qu'elles apportent à l'atteinte des objectifs identifiés à l'article3(1) de la Loi sur la radiodiffusion.

1380 Nous croyons que la façon la plus efficace de leur assurer cette protection serait de leur reconnaître un statut de distribution particulier relié intrinsèquement à la nature de l'OSBL et à leur mission. Un statut qui s'appliquerait sans discrimination à tous les services spécialisés privés sans but lucratif.

1381 TV5 a suggéré à cette fin dans son intervention écrite d'inscrire dans le Règlement sur la distribution de radiodiffusion une disposition rendant obligatoire la distribution aux services numériques de base de tous les services spécialisés privés canadiens dont la licence est détenue par un OSBL, à moins que le service ne concentre autrement.

1382 TV5 constate que cela n'entraînerait pas un lourd fardeau pour les EDR ni une croissance significative du coût du service numérique de base, puisque pratiquement tous les services spécialisés privés sans but lucratif disposent déjà d'une distribution obligatoire au service de base.

1383 Un tel statut serait à notre avis hautement justifié dans le contexte actuel qui a pour effet concret de marginaliser et de pénaliser tout particulièrement cette catégorie de services spécialisés.

1384 Il permettrait à TV5 de rejoindre tous les Canadiens, qu'ils soient de langue maternelle française, bilingue ou en situation d'apprentissage du français où qu'ils se trouvent au Canada et ainsi remplir adéquatement sa mission fondamentale de faire rayonner la francophonie dans toute la région du Canada et du monde.

1385 A défaut, un service comme TV5 sera affecté de façon beaucoup plus négative que tout service commercial de catégorie A lorsque le nouveau cadre réglementaire des entreprises de distribution de radiodiffusion entrera pleinement en vigueur.

1386 Et ce, pour toutes les raisons que nous avons exposées de manière détaillée dans notre intervention écrite sur lesquelles nous pourrons évidemment revenir, si le Conseil désire un complément d'information à leur sujet.

1387 Rappelons simplement que pour un service spécialisé unique et autonome, sans but lucratif comme TV5 qui fonctionne sur une base d'équilibre des revenus et des dépenses: toute diminution subite du nombre d'abonnés et conséquemment des revenus d'abonnement se traduira directement par une baisse proportionnelle de ses dépenses d'opération dont ses dépenses de programmation.

1388 Ceci réduira d'autant sa contribution à la création d'émissions canadiennes, sa capacité de respecter ses autres obligations en vertu de la Loi et de continuer de remplir avec la même efficacité la mission sociale et culturelle qui lui est dévolue.

1389 Monsieur le Président, je sais que la tâche qui incombe aujourd'hui au Conseil est ardue.

1390 Je sais également que les intérêts économiques divergents d'entreprises puissantes et de très grandes tailles vont se confronter devant vous tout au long de la présente audience. Et que dans le tumulte qui en résultera, la petite musique des services indépendants sans but lucratif risque facilement de se perdre.

1391 Mais j'apprécie grandement que le Conseil nous ait invités aujourd'hui à se faire entendre et y ait accordé une aussi grande attention.

1392 Je vous remercie, et je serai heureuse de répondre à vos questions.

1393 LE PRÉSIDENT : Merci. Premièrement, je vous félicite d'avoir mobilisé les sénateurs pour faire votre entrée. Ça donne un certain air à votre présentation.

1394 MME GOUIN: Je tiens à remercier, si vous me permettez - je ne m'attendais pas à un appui aussi important.

1395 Et je tiens à remercier la sénatrice Champagne qui n'a aucune expérience en radiodiffusion d'avoir pris la défense avec autant d'élégance et de force sur TV5.

1396 Et vraiment je remercie aussi les sénateurs et sénatrices qui l'ont accompagnée.

1397 LE PRÉSIDENT : Maintenant, la suggestion que vous faites sur la page8 de votre présentation d'aujourd'hui, combien de stations sans but lucratif est-ce qu'il existe?

1398 MME GOUIN: Alors vous avez, dans les sans but lucratif, vous avez Vision qui est une station, une chaîne privée. Mais c'est la seule hôte privée que vous avez.

1399 LE PRÉSIDENT : Ça veut dire, ce règlement s'appliquera seulement à vous et Vision, si je comprends bien.

1400 MME GOUIN: Actuellement, oui. Exactement.

1401 LE PRÉSIDENT : Et ce que vous voulez avoir, c'est le statut de 9(1)(h) si je comprends bien...

1402 MME GOUIN: Si...

1403 LE PRÉSIDENT : ... ou est-ce que vous parlez d'avoir... de continuer ce que vous avez maintenant, que c'est le transport obligatoire?

1404 MME GOUIN: Alors si l'opportunité d'avoir un 9(1)(h) est toujours disponible, il est évident que TV5 va revenir avec une demande de 9(1)(h).

1405 LE PRÉSIDENT : Oui.

1406 MME GOUIN: Si les règles changent, il est évident que dans le contexte actuel, ce que nous demandons, c'est d'être accessible à tous les Canadiens sur le service de base, parce que TV5 est une chaîne qui est un peu différente des autres chaînes spécialisées canadiennes. Contrairement à la majorité des chaînes spécialisées qui ont une spécialité, soit en termes de contenu, soit en termes de public cible qu'ils veulent rejoindre.

1407 Dans le cas de TV5, c'est la seule chaîne spécialisée généraliste qui offre des contenus diversifiés et qui fait en sorte qu'il est très difficile de nous assembler, soit dans un portefeuille de chaînes d'informations, soit dans un portefeuille de chaînes de musique, soit dans un portefeuille différent ou de différent type.

1408 Alors, la place naturelle à laquelle TV5 se retrouve, c'est véritablement avec les chaînes conventionnelles dans un service de base.

1409 LE PRÉSIDENT : Ça veut dire, ce n'est pas une source de revenus à ce moment pour vous. C'est seulement une garantie que vous soyiez dans tous les foyers du pays, si je comprends bien.

1410 MME GOUIN: Alors je veux être certaine d'être claire. Quand on demande une distribution obligatoire, c'est aussi en fonction d'avoir accès à un revenu de la même façon que les chaînes actuelles qui sont distribuées par le 9(1)(h) ont tous accès à...

1411 LE PRÉSIDENT : A ce moment-là, ce serait 9(1)(h) en d'autres mots.

1412 MME GOUIN: Oui, mais même dans les... alors dans ce que j'ai entendu tantôt en termes de... l'évaluation qui est faite d'un service de base restrictif, toutes les chaînes auquel on a entendu que vous faites référence à part les chaînes conventionnelles, sont des chaînes qui sont... qui ont accès au 9(1)(h). Et ces chaînes de 9(1)(h) sont déjà... ils reçoivent déjà des contributions pour leur distribution.

1413 LE PRÉSIDENT : Bon. Et c'est les autres parties qui ont une production similaire à la vôtre ont demandé si on ne donne pas un statut comme vous demandez, au moins qu'on rétablisse la décision le 1er septembre de cette année pour une autre année, que vous mainteniez le statut que vous avez maintenant.

1414 MME GOUIN: Alors...

1415 LE PRÉSIDENT : ... et c'est vrai qu'on ne fait pas la décision maintenant. Vous avez une crise le 1er septembre si je comprends bien.

1416 MME GOUIN: Effectivement.

1417 LE PRÉSIDENT : Si nous décidons, O.K. On va... résoudre cette affaire pas maintenant, parce qu'on veut savoir comment va toute cette négociation analogique, tous les changements.

1418 On va vous donner une extension de votre statut présentement pour une année. Ça va au moins probablement résoudre votre problème, si je comprends bien.

1419 MME GOUIN: Vous avez raison. Et j'ai vérifié avec le service légal du CRTC un peu plus tôt aujourd'hui. Et il est évident qu'avec un renouvellement administratif, les mêmes conditions de distribution et de tarification de TV5 s'appliquent jusqu'à la fin du renouvellement administratif qui sera au 31 août 2013.

1420 LE PRÉSIDENT : O.K. Merci. Michel, tu as des questions?

1421 CONSEILLER MORIN : Merci, Monsieur le Président.

1422 Évidemment, vous nous demandez une exception. Vous êtes un service exceptionnel, j'en conviens, paradoxal également. Mais c'est une exception.

1423 Et une exception ouvre la voie à d'autres exceptions. Des OSBL, vous en avez mentionné, il peut y en avoir une actuellement. Mais si on devait faire ça pour vous, à combien d'autres OSBL à but non lucratif devrait-on faire face éventuellement?

1424 Parce que les objectifs culturels éducatifs pourraient se retrouver, des groupes religieux pourraient également mettre de l'avant des services spécialisés qui mériteraient une distribution obligatoire comme vous le souhaitez.

1425 La sénatrice madame Champagne a fait allusion, a été plus généreuse dans les raisons qui pourraient consacrer une exception.

1426 Vous avez insisté surtout sur un organisme à but non lucratif. Mais il y a - il me semble en tout cas - d'autres cordes à votre arc comme par exemple, il n'y a pas beaucoup de services canadiens qui exportent.

1427 Vous êtes un service qui exportez partout dans 200 pays à travers le monde, des productions canadiennes. Vous êtes aussi subventionnés par les deux ordres de gouvernements.

1428 Ma question est la suivante. Il me semble que vous pourriez défendre votre dossier en alléguant: c'est trois raisons au lieu d'une seule.

1429 Et dans ce sens-là, est-ce que vous avez peur de perdre des subventions? Est-ce que vous allez arrêter d'exporter parce qu'il n'y a pas de demande par le... pour TV5 Monde dans les autres pays?

1430 Est-ce qu'on peut être rassuré là-dessus? Est-ce que ces trois conditions-là ne devraient pas interpeler davantage le CRTC que le seul point d'une OSBL à but non lucratif.

1431 MME GOUIN: Alors Monsieur Morin, nous avons fait état à plusieurs reprises dans nos demandes précédentes en lien avec nos demandes de 9(1)(h) des trois points précis auxquels vous faites référence et qui, à l'époque, sont restés lettre morte et ont amené à des décisions négatives de la part du CRTC au sujet de l'octroi d'un 9(1)(h) à TV5.

1432 Il est évident que pour nous, ces trois raisons demeurent des raisons qui sont extrêmement fortes pour l'octroi d'un 9(1)(h), mais en plus nous avons voulu, dans le cadre d'un examen très large sur la question, de regarder de quelle façon ces chaînes qui sont des «OSBL» peuvent aussi bénéficier d'une protection particulière par le Conseil.

1433 Vous savez que d'être reconnu à des fins fiscales comme une OSBL ou comme «un» OSBL, je devrais dire, entraîne des obligations très importantes. Si ça se révèle être une opération de camouflage pour déguiser des activités à but lucratif, les pénalités peuvent être extrêmement sévères. Et je doute fort que des diffuseurs commerciaux responsables et soucieux de leur réputation se lancent dans ce type d'opérations douteuses et je suis convaincue que le Conseil a les moyens et l'expertise nécessaire pour déceler ce genre de manoeuvre.

1434 A la limite, si le Conseil a des inquiétudes à cet égard, il pourrait décider que le privilège ne serait accordé qu'au service spécialisé possédé et administré par un OSBL au moment de la décision et qu'ensuite, les décisions se feraient au cas par cas.

1435 Et je pense que de cette façon-là ça répondrait à vos inquiétudes.

1436 CONSEILLER MORIN : Vous qui avez une longue expérience en radiodiffusion, est-ce que vous pensez qu'un service semblable pourrait être mis sur pied du côté anglophone? Je veux dire les productions de l'Australie, de UK ou de la Nouvelle-Zélande ou de d'autres pays -- parce que même, par exemple, des chaînes allemandes produisent en anglais -- est-ce que vous pensez que ce serait un concept viable au Canada?

1437 MME GOUIN : Il faudrait demander aux chaînes anglophones si elles ont le goût de s'allier et de créer des alliances.

1438 CONSEILLER MORIN : Mais est-ce qu'il n'y a pas un projet semblable en Espagne ou enfin parmi les pays espagnols?

1439 MME GOUIN : Parmi les pays hispanophones il y a eu un projet similaire et ils ont dû le laisser tomber en raison de l'impérialisme de certains pays dominants. Et à la fin de la journée, ça aussi, ça joue dans les décisions de certains pays ou de certaines entités d'être capables de produire une cohésion de chaînes à la TV5. C'est vraiment particulier, c'est vraiment un produit qui est unique et qui jouit de l'expertise de plus de 20 ans, au niveau international, pour avoir été capable de s'établir un peu partout dans le monde.

1440 CONSEILLER MORIN : La proposition a été faite que pour que chaque entreprise intégrée, lorsqu'ils mettent de l'avant un service, qu'ils doivent en offrir du côté anglophone disons trois autres en anglais, mais qui ne sont pas liés à l'entreprise intégrée.

1441 Du côté francophone, ce matin, on a eu Quebecor qui nous a dit qu'ils pourraient vivre avec un ratio de un pour un. Autrement dit, si Quebecor lance un service spécialisé, bien, il devrait au moins y avoir également un autre service indépendant -- et je pense qu'à ce niveau-là vous pourriez vous qualifier... Et on sait que Quebecor veut lancer de plus en plus de services et on sait que l'offre au Québec n'est pas du tout comparable à celle qui existe dans le reste du Canada. Alors, est-ce qu'une règle comme ça, ça n'assurerait pas au Québec votre distribution?

1442 MME GOUIN : Alors, il y a deux éléments --

1443 CONSEILLER MORIN : L'accès, d'une part, l'accès. Et, compte tenu de la demande pour votre service, est-ce que ça ne résoudrait pas le problème? Au lieu d'avoir une distribution obligatoire, vous auriez l'accès garanti par une règle.

1444 MME GOUIN : Alors, je crois que ce à quoi faisait référence dans la règle du un pour un, c'est pour les chaînes de catégorie B, ce qui est un peu différent de la situation de TV5, qui est considérée comme une chaîne de catégorie A.

1445 Dans le cas des chaînes de catégorie A, actuellement, certaines chaînes sur les volets discrétionnaires ont droit à une certaine protection dans le marché francophone du bouquet que le CRTC a suggéré qui soit fait, c'est-à-dire un bouquet qui engloberait toutes les chaînes francophones.

1446 Vous savez qu'au Québec il y a encore presque 25 pour cent des abonnés qui sont encore en mode analogique et non pas numérique, ce qui voudrait dire que pour TV5, ça serait tout de suite une perte d'abonnés, de 25 pour cent de ses abonnés. C'est sur 2,4 millions d'abonnés au Québec, ce qui est quand même appréciable.

1447 Et personnellement, je fais partie des gens qui se questionnent énormément sur la valeur de ce volet préférentiel de chaînes francophones, étant donné que nous ne connaissons pas encore à l'heure actuelle le coût de ce volet facultatif qui sera offert par les télédistributeurs.

1448 Et quand on connaît la façon dont la majorité des distributeurs font la mise en marché de leurs produits, où on vend de plus en plus des services à la carte, peut-être que le taux de pénétration, qui est à peu près actuellement de 75 à 80 pour cent de ses chaînes viendra-t-il véritablement baisser et faire en sorte que les revenus qui auraient pu être soi-disant «garantis» (et puis je mets ça véritablement entre guillemets), ces revenus, aussi, risquent de s'effilocher très, très rapidement. Et c'est pour ça que TV5 continue de demander d'avoir une distribution la plus large possible dans tous les marchés à travers le pays.

1449 CONSEILLER MORIN : A la suite de d'autres intervenants, vous avez demandé aussi d'avoir accès à beaucoup plus de données au niveau de la vérification. Est-ce que vous pensez que ça ne pose pas des questions légales très importantes, parce que le contrat est entre le distributeur, disons Vidéotron, et des clients.

1450 Là, vous demandez d'intervenir dans des données qui pourraient être considérées comme confidentielles.

1451 MME GOUIN : Alors, dans le code de pratiques, ou de bonnes pratiques, une des recommandations spécifiques de TV5 a été de véritablement... que le CRTC accrédite les auditeurs en question, les vérificateurs, qui pourraient faire les audits chez les télédistributeurs. La raison étant que dans un cas bien particulier d'un télédistributeur canadien, il a refusé le guide actuel des bonnes pratiques de vérification, c'est-à-dire que des vérifications soient faites de façon simultanée et en plus, a refusé que les vérificateurs soient canadiens. Et TV5 a été pris, comme d'autres chaînes canadiennes, à embaucher une firme américaine pour aller faire un audit d'un télédistributeur canadien.

1452 Alors, c'est dans ce sens-là que nous avons demandé des pratiques de vérification plus précises de la part du CRTC.

1453 CONSEILLER MORIN : Merci beaucoup pour vos réponses.

1454 C'est tout, Monsieur le Président, pour moi.

1455 LE PRÉSIDENT: O.K. Je crois que ce sont toutes nos questions. Et comme vous le savez, vous aurez des occasions d'augmenter votre réponse en forme écrite jusqu'au 5 juillet. Merci!

1456 MME GOUIN : Je vous remercie beaucoup! Bonne fin de journée!

1457 LE PRÉSIDENT: Madame la Secrétaire, je crois que c'est tout pour aujourd'hui?

1458 On recommence quand?

1459 LA SECRÉTAIRE: A 9 h, demain matin.

1460 LE PRÉSIDENT: Merci.

--- Whereupon the hearing adjourned at 1621, to resume on Tuesday, June 21, 2011, at 0900


Johanne Morin

Carmen Delisle

Monique Mahoney

Jean Desaulniers

Susan Villeneuve

Karen Paré

Date modified: