ARCHIVED - Transcript, Hearing 12 September 2012

Volume 3, 12 September 2012

TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION

SUBJECT:

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-370 and 2012-370-1

HELD AT:

Palais des congrès de Montréal

1001 place Jean-Paul-Riopelle

Montréal, Quebec

12 September 2012

Transcription

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

Transcription

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-370 and 2012-370-1

BEFORE:

ALSO PRESENT:

HELD AT:

Palais des congrès de Montréal

1001 place Jean-Paul-Riopelle

Montréal, Quebec

12 September 2012

- iv -

TABLE OF CONTENTS

PAGE / PARA

APPEARING ITEMS

PHASE II

INTERVENTIONS

APPEARING INDIVIDUALLY

- v -

UNDERTAKINGS

PAGE / PARA

- vi -

ERRATA

PAGE / PARA

Volume 1

"...about non-applicable programming..."

should be

"...about non-replicable programming..."    51 / 270

"...and so they must have programming and make..."

should be

"...and so it is "must have" programming and

they make..."    51 / 271

"...terms; non-applicable must have programming,

really most of it is applicable."

should be

"...terms; non-replicable "must have" programming,

really most of it is replicable."    51 / 272

Montreal, Quebec

--- Upon resuming on Wednesday, September 12, 2012 at 0828

4116   LE PRÉSIDENT : A l'ordre.

4117   Merci, Madame la Secrétaire, de présenter le prochain item.

4118   LA SECRÉTAIRE : Merci.

4119   Good morning. Just for the record, j'aimerais mentionner, pour le dossier public, que L'institut national de l'image et du son ne comparaîtra pas à cette audience publique.

4120   We will now proceed with the presentation by Communications, Energy and Paperworkers Union of Canada.

4121   Please introduce yourself and your colleague and you have 10 minutes to make your presraph...

INTERVENTION

4122   MR. MURDOCH: Thank you, Madam Secretary.

4123   For the record, my name is Peter Murdoch and I am CEP's Vice-President of Media. With me is Monica Auer, our legal counsel in this proceeding.

4124   Before beginning my formal remarks, Mr. Chairman, CEP would also like to congratulate you on your appointment. We look forward to working with you to strengthen Canada's communications systems.

4125   THE CHAIRPERSON: Thank you very much.

4126   MR. MURDOCH: CEP is a Canadian-owned and -controlled union with over 100,000 members in the communications, media, energy and forestry sectors of Canada, from coast to coast to coast.

4127   Roughly 18,000 CEP members work in the media, including radio, TV, newspapers and independent production. Thousands more work in telecommunications.

4128   CEP supports Canadian ownership and control, Canadian content and employment opportunities for Canadians.

4129   Our interests would generally align with those of Bell and Astral, who argue that scale enables them to hire more people, create more Canadian programming and offer more diversity. But in reality, concentrated ownership has done the reverse.

4130   It is true that Canada's broadcasting system has created almost 21,000 jobs since 1991. Yet 87 percent of these were in cable and satellite distribution, not radio or TV programming services.

4131   While pay and specialty services have created jobs, over half of those services on air in 2011 operated with one or fewer staff and earned $174 million in revenue.

4132   There's a graph here I would point to which I thing might be helpful for you.

4133   In 2010, 88 or 13 percent of Canada's radio stations operated with four or fewer staff. And as control over private TV revenues has concentrated, more than 2,000 jobs have been eliminated.

4134   Apart from chilling diversity and neutering competition, concentrated media ownership has reduced employment opportunities in content creation. That is why CEP opposes this application.

4135   You could approve it, however, if the evidence presented to you establishes that it will clearly, significantly and unequivocally benefit Canadians and the broadcasting system, and if its benefits offset the extremely serious concerns it has raised, especially for news and particularly local news.

4136   It is well-known that Canada's broadcasting system should "inform and enlighten," and then entertain.

4137   Programs of national interest do matter, but providing up-to-date information from a Canadian perspective is a broadcaster's most important function. Canadians relax with music and drama, but every day they make decisions that affect their lives based on the news they get from their local radio and TV stations, from school closures to local elections.

4138   None of the $200 million in benefits proposed by Bell is directed to local radio or TV news. Frankly, this is stunning: 85 of the 106 services that Bell wants to buy are local radio or TV stations that generate almost 40 percent of Astral's revenues and employ over 70 percent of its staff.

4139   Local news is what makes local radio and TV stations unique. Without it, they simply offer free rebroadcasts of music or network shows, most, sadly, American in origin or derivation.

4140   Yet, even though news costs less than it makes, it has been and is an easy cost-cutting target.

4141   No regulations or conditions of licence mandate specific hours of original local news in either radio or TV.

4142   The conditions added to TV station licences in 2011 call for "local programming," not "local news." Radio news requirements were dropped twenty years ago.

4143   While the CRTC's policies encourage broadcast news, it is not an offence to ignore encouragement.

4144   Original local radio and TV news has been left to the market, with the "TV Wars" as one result.

4145   Luckily, Bell says it supports local TV.

4146   In 2011, though, Bell's stations spent $2 million less on local TV programming than in 2008, while receiving $40 million in new LPIF money from 2010 to 2011.

4147   Since 2008 CTV has cut its TV staff by 24 percent, including 233 people since Bell acquired CTV.

4148   Astral has cut its radio news spending by 8 percent since 2008.

4149   In this context, Bell's description of the broadcasting industry as "healthy" is open to challenge.

4150   Last week two TV stations attributed new job cuts to the LPIF's cancellation that is coming within 23 months. Five months ago Bell told the CRTC that 10 of its TV stations rely on the LPIF for profits.

4151   Bell's silence in this hearing about those stations, about its program plans for the 28,000-people audience in Terrace and Dawson Creek whom Astral's CFTK- and CJDC-TV were licensed to serve, and more than 80 radio stations, is incomprehensible.

4152   Tangible benefits can help. Since 2000 the CRTC has approved 86 broadcast ownership transactions worth $22 billion. These generated almost $1.5 billion in tangible benefits.

4153   Only 3 of these 86 transactions directed benefits to local news specifically -- Newcap's 2004 purchase of Sask-Alta, Shaw's 2010 purchase of Canwest and BCE's purchase of CTV last year -- totalling $74 million.

4154   Altogether only 4.9 percent of 12 years' worth of tangible benefits have targeted news.

4155   The loss of local newscasts, reporters, bureaus and journalistic diversity directly hurts towns and cities across Canada. If Bell does not offer to direct benefits to local radio and TV news, the CRTC should require it by condition of licence.

4156   Bell now proposes to spend $40 million in tangible benefits on its Northwestel subsidiary. We disagree.

4157   First, it is unacceptable to shift the burden of ensuring telecommunications service to Canadians in the North from Bell to the federal regulator.

4158   Second, as Bell has said itself, the tangible benefits policy exists to improve the broadcasting system and service to local communities.

4159   Third, Bell already receives $20 million in annual subsidies under the Telecommunications Act to serve Canadians in remote communities.

4160   Fourth, equity will demand that if broadcasting benefits flow to distributors, the broadcast benefits policy should apply to BDU and telco transactions. Such a significant change is best handled in the coming benefits policy review, however, not this licensing hearing.

4161   Instead, we ask that you require Bell to use at least this $40 million to add original local news to its current and new radio and television stations' schedules.

4162   We also recommend that Bell submit public reports each year on its progress in meeting this requirement, with minimum information about original program hours and staff levels.

4163   Finally, given the strong concerns raised by this transaction and its recent predecessors about vertical integration's impact on diversity and balance, we suggest directing a small portion of the tangible benefits to independent academic empirical research to assess the effects of changing levels of ownership on news.

4164   To conclude, Mr. Chairman, you and your colleagues face the challenging task of deciding between competing views about the direction of our broadcasting system.

4165   If you approve this application, the core of your decision must be the enduring benefits obtained by Canadians and the broadcasting industry.

4166   Given Bell's vast experience in broadcasting, its substantial resources and the many synergies that this transaction purports to create, its proposed benefits are not clear, significant and unequivocal. In the case of conventional radio and TV they are simply invisible. We do not blame Bell's panel for this. We understand their fiduciary duty is to Bell's shareholders, not to Canadian consumers or the public interest.

4167   Ensuring this transaction creates enduring benefits properly rests with you.

4168   The CRTC has correctly supported Canadian television, film and music by allowing broadcasters to direct benefits to the Canadian Media Fund, FACTOR and other funds, all to ensure the continued creation of new Canadian drama, documentaries and music.

4169   Creating that content is a necessary cost of the broadcasting business, as is original local news, now again under threat by the LPIF's termination.

4170   The CRTC has the mandate, jurisdiction and power to ensure that this transaction benefits the broadcasting system by adding original local news to many radio and TV stations across (inaudible), consequently giving many young people the opportunity to launch new careers.

4171   You have a rare chance to strengthen Canadian broadcasting's most important function: to provide Canadians with more of the original news that is vital to them and our democracy.

4172   We respectfully urge you to use this opportunity to rebuild and add to the infrastructure needed to ensure high-quality, original local news for communities across Canada.

4173   Thank you for your time. I welcome your questions.

--- Technical difficulties

4174   THE CHAIRPERSON: And I take it if they weren't entirely on the record already you would be asking that we accept them?

4175   MS AUER: To have them accepted, yes, of course.

4176   THE CHAIRPERSON: Because nobody would be -- I don't want to put words in your mouth, but what would you arguments be?

4177   MS AUER: Our arguments would be that it does not constitute new evidence in the sense that it is simply a representation graphically of the material that the CRTC has already published; secondly, that we have already provided this information in other submissions to the CRTC; and thirdly, that the public interest warrants its acceptance.

4178   THE CHAIRPERSON: Okay. Thank you.

4179   You've put forward this morning, Mr. Murdoch, the argument that over the past number of years there's been a reduction of job opportunities in the sector, including for your members, and you seem to be drawing a conclusion that that has largely been a result of concentration of ownership and I'm wondering whether we can necessarily draw that straight line conclusion.

4180   I recall when I a number of years ago started working as a lawyer we almost all each had an assistant and over time, because of all kinds of other reasons, mostly driven by technology, we were able to reduce those ratios. By the same token, you know, with airline industries they've managed to outsource ticketing to me when I get to the gate and want to get my pass.

4181   Technology has influence and I was wondering whether above and beyond these scale issues whether you wouldn't agree that perhaps there are other reasons why employment numbers may have gone down.

4182   MR. MURDOCH: We don't have our head in the sand about the effects of technology and unquestionably some of these are due to technical change and they find synergies as a result of that technical change, but not all by a long shot, number one.

4183   Number two is that one of our concerns is that where there have been synergies from technical change, and I guess I can refer to concern about the $30-million synergies that Bell has already kind of suggested are there. Some of those are job losses and if there's going to be synergies found through technical change surely some of those savings should be put back into the creation part of the local news and local programming. In fact, we have seen no evidence of that.

4184   So I agree with you that yes, some of this is due to technical change. There's no question about it.

4185   THE CHAIRPERSON: In terms of -- I take your point -- early on in your presentation and in your documents I don't think you're taking disagreement with the basic tenet that scale is a valid business strategy, that one wants to grow business. In fact, even the union movement benefits from larger reach of membership and it gives you bargaining clout, right?

4186   So you're not saying that the principle is wrong, you're just saying in this particular instance it goes too far?

4187   MR. MURDOCH: Well, there's two things. I would say that we certainly understand why companies want to get larger and have more clout, more muscle, et cetera, but at the same time what we have failed to see is on the ground what the benefit is for Canadians, what does that bring for Canadians in terms of programming.

4188   We've seen an increase in foreign programming. We've seen a reduction in local news programming. On it goes, as we've just stated.

4189   So it's not so much that -- we can understand the rationale from a corporate viewpoint but what we want to see, and what we think our obligation partly is, is what is the benefit for the Canadian broadcasting system on the part of its citizens, public interest and consumers.

4190   THE CHAIRPERSON: And indirectly your membership?

4191   MR. MURDOCH: Indirectly our membership, and I would say almost as importantly as our membership, new membership and the terms of employment opportunities for young men and women who are coming out of college with severe debt and looking to find places in the broadcasting industry with stars in their eyes.

4192   THE CHAIRPERSON: Now, the applicant -- you probably followed -- is making part of their case that they need this approval in part to be able to compete against foreign players that have access to the Canadian marketplace through technologies, Apple, Google and other video content providers.

4193   Isn't it true that you would have -- your members should have also at heart the concern of the health of your employer in the sense that you wouldn't want the Bells or any other company to be going down with financial difficulties because of the likelihood that that's not going to be good for your membership either? Do you agree with that, that you do share an interest?

4194   MR. MURDOCH: Absolutely, and sometimes it's a bit hard to convince the employers that in fact we do share that interest. You know, a healthy company should -- some of that health should filter down to its employees and so it's in our interest to have good healthy companies, there's no question about that, but at the same time we do have a responsibility, I think, that we take very seriously, particularly from the journalistic side, is to ensure what's in the public interest here.

4195   So yes, of course we want to see healthy companies and, you know, our pensions, et cetera, depend on it.

4196   THE CHAIRPERSON: Is the threat, in your view, overstated?

4197   MR. MURDOCH: Well, I don't know. I mean you've asked other people here about what the future looks like. I'm not sure. There's definitely a threat there from over-the-top programming, there's no question about that, and I applaud them to try and meet that challenge.

4198   What we would want to say though is if they're going to meet that challenge, let's meet it with Canadian content, not just simply buying American content.

4199   MS AUER: And if I might add, Mr. Chairman, as well.

4200   We've faced -- the broadcaster system has faced a number of threats before. In the late 80s we had death stars -- we had VCRs that would, you know, kill the broadcasting system. We had tape recorders, cassette recorders.

4201   All sorts of new technologies have come in, and yet, broadcasting content is extremely desirable. That's what people want and that's what they continue to want.

4202   The form of distribution medium, that may change but the content and its desirability are unlikely to change.

4203   THE CHAIRPERSON: Right.

4204   When we look at diversity of voices -- I'm looking at paragraph 35 of your written intervention -- you're stating that there's no actual evidence that Internet-based information is in fact a substitute or part of the landscape one has to look at in terms of diversity of choices. Am I reading that correctly?

4205   MR. MURDOCH: Right. I think it's certainly, say, overblown by the media companies. Most of the Internet, they're either aggregators or they're original news, such as -- well, such as ctv.ca or your local radio station. It's the same news re-platformed or they're aggregators, as is Huffington Post.

4206   THE CHAIRPERSON: Right.

4207   MR. MURDOCH: So it's not that those are creating original news, and if you subtract from -- let's say from a -- from a newsroom in Vancouver at a television station, that will subtract, in aggregate, from the news that you're going to get at your Internet because the Internet's not hiring people.

4208   I mean, there are some people that are putting out cbc.ca, et cetera, but they -- it's not -- they're not creating, they're not on the -- they're not on the ground, they're not on the street; they're simply re-platforming a news that came originally from either the conventional stations or sometimes from the newspapers.

4209   THE CHAIRPERSON: But presumably the connectivity associated with this, the fact that people have smartphones, tablets almost everywhere and can access numerous sources does lead, that if there is an investigative piece, for instance, in the, I don't know, a Vancouver paper or a Vancouver TV station or radio station that somebody at the other end of the country before may not have had access to it but can now because of this connectivity. Surely that adds to diversity of voice through out-of-market access.

4210   MR. MURDOCH: Well, it's interesting you say that. I think -- I think it does, but, you know, it used to be, in the old days -- let me just sort of refer to print, if I can, for a minute.

4211   THE CHAIRPERSON: Sure.

4212   MR. MURDOCH: The Canadian Press, as you know, did that job. So you'd have a big fire in Dawson City or something and you'd be -- that'd go on the wire and you'd get it. So the old sort of system actually worked and now, sadly, it doesn't work as well.

4213   But, yeah, there is access, but the -- what our concern is focusses not primarily whether myself in Ottawa can access local news in Vancouver, it's whether the people in Vancouver will be getting their local news.

4214   THE CHAIRPERSON: I see.

4215   I was intrigued on some comments you had on paragraph 32 this morning in your presentation pointing out that very few of the tangible benefits have gone to local news.

4216   Now, as you know, our tangible benefits policy states that benefits have to be incremental and not what one has to do in the normal course, and I find a bit of a contradiction with the rest of your presentation.

4217   And if one is obliged as a broadcaster to provide news and information, surely it would be contrary to our tangible benefit policy to claim that doing news and information is somehow incremental.

4218   MR. MURDOCH: Yeah. I'll let Monica...

4219   MS AUER: Mr. Chairman, that's an excellent question. I think the issue that we raised earlier in the presentation we made this morning is the fact that there are very few mandatory requirements for local news.

4220   We would love it if there were more, but this isn't an appropriate proceeding in which to ask you to amend either the radio or the TV policies, and, as a result, we're simply looking at the tangible benefits in the same way that Shaw looked at tangible benefits for local news for Canwest.

4221   So as for the issue that in fact it is a cost of business and it's a mandatory cost of business, the fact that we had TV wars suggests in fact there may not have been that clearcut necessity to have a substantial amount of local news. And in fact, although we did not present the evidence this morning because we thought it might be too new to the process and therefore unfair to the applicant, we have done analyses of the availability of local over-the-air TV original news programming from 1981 going forward, and we've seen a substantial decline in hourly content by individual stations.

4222   So in our -- from our perspective, yes, it's true, the theory is that everybody wants local news until it comes to a point where you have to cut costs in order to pay, let's say hypothetically, for the large cost of a $2 billion transaction. Then costs are cut and non-mandated programming is a very easy target.

4223   THE CHAIRPERSON: You probably followed the hearing on the first day. The benefits package grew by about $40 million, apparently, and on top of that, one of those benefits included the creation -- the proposed creation of a new all-news service. Doesn't that address part of your issues about diversity of news in the marketplace?

4224   MR. MURDOCH: Well, I'm not sure. Let me just go to those news channels, all-news channels, that are in place now. Most of them will depend on their local affiliates for the news, to fill the news.

4225   I mean, they don't have a lot of reporters. They might have one or two national reporters, but most of them are depending on their local affiliates to fill that space, so we're still back to local news. I mean, I -- you understand what I'm saying?

4226   Do you want to add something, Monica?

4227   MS AUER: I think Peter has previously spoken to me about the very simple concept of "feet on the street".

4228   THE CHAIRPERSON: Mm-hmm.

4229   MS AUER: It's excellent to have a new national voice. In this transaction, the majority -- by the overwhelming majority of the services at issue are local undertakings that were originally licensed to provide service to local communities. Their access to a new national service is laudable. I think many of those local communities might want to see more local news and more investigative reporting about conditions where they live.

4230   THE CHAIRPERSON: But I've heard it argued that by creating a national platform, for instance, that distributes that news, you somehow have to feed it and therefore it provides the business case for local news coverage and hopefully investigative journalism, because that's the added value, really, but the most costly form; that this allows for a new platform, making that local coverage beneficial.

4231   MR. MURDOCH: Would that it were so.

4232   MS AUER: And in fact that was a key element of the original plan for CBC Newsworld, if you recall. In that service, the CBC was going to launch, very incrementally, a new national service on the basis of very strong and strengthened local programming services. That model has fundamentally shifted; it has now become centralized. So in theory, yes; in practice, no. It is not delivering new feet on the ground or new people on the ground.

4233   THE CHAIRPERSON: Right. But, by the same token, you're not surprised, for instance, yesterday, we -- sorry, Monday, we were asking questions about what's incremental vis-à-vis this, and the evidence seemed to suggest that Astral had looked at this, and it didn't -- they couldn't make it -- make a go of it.

4234   Now, one could argue that that's not surprising, because they are not in the local news business other than maybe radio, whereas someone like CBC/Radio Canada, TVA/CTV, because they have that local presence, they can feed that national voice as well.

4235   MR. MURDOCH: I think -- I think there's some rationale that I completely understand about that. I mean, yes, if you do have stations across the country, for instance, you're much more likely to get the programming to fill the airspace. But I'm not sure that necessarily the business case, as you put it -- which I think is an excellent idea -- to therefore increase at the local level so that they can feed the senior network, that hasn't happened. There's no evidence of that.

4236   MS AUER: And I think it's fair to say that Astral is a highly respected company. Its choices were made under its plans and its views of the future of the broadcasting system, but we're not here to talk about what Astral might have done or did -- chose not to do; we're here to talk about what Bell Media, the largest company in Canada right now, or soon to be, what are its plans for local content and local service?

4237   If it is that large, it has a leadership role. What are its plans to lead in all areas of programming, not simply programming of national interest or a national news service but the local service for -- that it was licenced to deliver. What are its plans in that area?

4238   THE CHAIRPERSON: You may have followed the questioning on Monday, and you mentioned earlier the TV wars and the "Save Local TV", and I had actually asked a question of Mr. Cope and his team on this about the threat or the continuing threat, and you mentioned it also in your presentation of closures of local television stations, for instance, both the ones that are currently owned by the Bell -- BCE Group and those in Dawson City and -- Dawson Creek, sorry, and...

4239   MS AUER: Terrace.

4240   THE CHAIRPERSON: Terrace. And I asked -- and apparently we're going to get an answer later this week, but you won't be able to react to that after that, so I was wondering if you had a view. The question I had was should we make it as a condition of approval that those stations continue in operation for a period of time?

4241   Mr. Cope was not keen on doing it in perpetuity. We can understand that, but I had put the question, you know, for a five- or seven-year period.

4242   Views?

4243   MR. MURDOCH: Well, of course, we think there should be an obligation that they keep these stations open. I mean, as I say, while there are some synergies that we understand both in, you know, purchasing and the points you mentioned, Mr. Chair, it's also incumbent that it doesn't come at a cost to local stations.

4244   And we also see that there should be a kind of cost to doing business in terms -- a lot of these -- a lot of the CTV, Bell Media network, their brand is based right in the local market. So whether it's everything from the local news to supporting local charities, et cetera, the brand becomes alive in the marketplace, in the local marketplace, and we think they have an obligation there to kind of keep that going.

4245   We also, by the way -- and I might let Monica speak to this-- we think that these local stations that supposedly are under duress, in fact, most of them, we have found, our experience has been that while the larger employer has suggested some of these local stations are under water or going under water, in fact, if we look at two examples, one at CHEK in Victoria and at CHCH in Hamilton, which, according, at that time, to Canwest were serious problems, in fact, are both, you know, thriving now. I mean, they are not -- at least they're staying on air, they're doing well, and they're -- and it's all based on serving their local community.

4246   So there are examples that we find in the system that are contrary to sort of the kind of comments that Mr. Cope was making.

4247   Monica, maybe you might want to just...

4248   MS AUER: I think when we -- and I don't want to keep using the term "TV wars" because it might suggest that we don't take it too seriously. Stations were closed, TV stations closed. And one of the concerns we have is an element just of this administrative process, which we respect, is that it was -- it was impossible for anybody but the Commission and the parties involved to really know what was happening and whether what was happening was entirely justifiable.

4249   In other words, there's a lack of evidentiary disclosure making it impossible for parties such as CEP or any of the other associations, any other Canadian, to challenge claims that local news is -- is too expensive or too unprofitable or too anything. We lack access to the necessary information at an aggregated annual level to permit us to fully understand why decisions have been made and whether they were necessary and in fact then to assess their impact, ultimately.

4250   The problem with that is that then, you know, when we look at tangible benefits -- and, again, this might be a discussion for the policy review that the Commission intends to undertake -- is the concept of what is an enduring benefit versus a transitory benefit. In other words, if there's a commitment to keep stations open for "X" years, this is a terrific achievement and accomplishment and a very welcome one as well because it provides certainty, which businesses require and everybody else would like to have as well.

4251   But at a certain point, if you have a number of transitory commitments, you have to wonder whether that's looking like a rent rather than an enduring benefit. In other words, if you have a house and you want to upgrade it, you might modify the landscaping; you make a permanent change that will improve the foundation of the house. Just putting on new curtains is transitory and it might -- you know, might work for a little while, but, you know, if you've got a leak in the basement, you're going to have water pouring in and it won't help any of us.

4252   THE CHAIRPERSON: Why do we need regulatory obligations? Since I've been appointed with respect to local, I've met a lot of radio operators, and clearly they've realized that local makes the difference for them. We've seen the same phenomenon in the U.S. People are saying, look, let's not try to be what we're not. We have to be close to our -- our local market. Why do you think it's not happening on the Canadian side in local television?

4253   MR. MURDOCH: Why do I think? Well, I think some of it is -- there certainly is a lot more money coming into the system through primetime. There's not -- once the purchase has been made and once they can re-platform those things into their specialties or CTV2, they -- there's a better return, let's put it that way.

4254   So I think that -- and given that, and given their responsibilities to shareholders, et cetera, et cetera, that they will naturally look to where they can cut costs. And if they feel they can cut costs where there are significant -- or there have been, anyway -- number of employees, that's where they go.

4255   And I -- again, let me get back to it. Sadly, it seems to me that they -- that there's not a lot of appreciation that with the -- as we pointed out here -- that with the broadcasting, it's not as though -- and I think this is the problem we're having a bit with the Bell Media folks is it's not as though broadcasting is yet another industrial product.

4256   THE CHAIRPERSON: Mm-hmm.

4257   MR. MURDOCH: Somehow -- it might be that people consume drama and to watch your pay-per drama, but when people consume the news, they often take action as a result of that consumption. Whether it's the closure of hospitals or, as we said, whether it's a snowstorm coming or whether it's local politics, et cetera, et cetera, that's information that's provided that can and often do create opinion, create reaction, decisions are made, et cetera.

4258   It's a different kind of product than one -- and so I think there's an -- on that basis alone, there's an obligation. That might not generate the kind of profit margins that you might get from showing primetime drama or CFL Football, but we feel -- and I think the Act has been quite clear about this -- is that there's an obligation nonetheless to -- to ensure that that type of programming remains on air. And also, by the way, it's also where there's a lot of employment opportunities for young Canadians.

4259   MS AUER: And if I could just add to Mr. Murdoch's remarks. Why isn't the Canadian broadcasting system is -- if -- hypothetically is dynamic or whatever adjective you'd like to apply to it as another broadcasting system? Well, in Canada, we have a shrinking number of competitors. We have heightened competition but fewer competitors.

4260   So if you don't -- you know, it makes business sense to share news across a network or chain of stations. It's good business to reduce costs where you can, but that's not what Parliament sought --

4261   THE CHAIRPERSON: Mm-hmm.

4262   MS AUER: -- in 1991, and as we're guided by that, and I think we're guided by the notion that they were looking to encourage employment opportunities, we need an industrial sector that thrives. We need an industrial sector that's growing.

4263   I mean, right now, we collected some data earlier on. I mean, if you look at growth of industrial sectors, the informational/cultural sector is one of the slowest-growing sectors in the entire economy. You know, what is it? Wholesale trade is growing faster than information and culture between -- you know, over the last decade. Waste disposal is growing faster.

4264   THE CHAIRPERSON: That's not surprising.

4265   MS AUER: Maybe we're just a cleaner society. But we need to be able to grow this sector, and the marketplace cannot do it, because the pre-conditions for a truly competitive marketplace do not exist. We have a highly concentrated oligopoly. Okay, but it can benefit everybody.

4266   THE CHAIRPERSON: Well, thank you. Those were my questions. I was wondering if my colleagues --

4267   COMMISSIONER PENTEFOUNTAS: Briefly, Mr. Chair.

4268   THE CHAIRPERSON: Yes. Vice-Chair of Broadcasting.

4269   COMMISSIONER PENTEFOUNTAS: I think Commissioner Menzies --

4270   THE CHAIRPERSON: Okay. Well, go ahead.

4271   COMMISSIONER PENTEFOUNTAS: Yeah?

4272   Just briefly, I -- my favourite line in your presentation is that it's not an offence to ignore encouragement --

--- Laughter

4273   COMMISSIONER PENTEFOUNTAS: -- and I've come to understand that over the last year and a half.

--- Laughter

4274   COMMISSIONER PENTEFOUNTAS: And we talked about -- you talked about technology having an influence, and would we not be in a position to say that the trend and perhaps even the future of journalism generally is more towards sort of freelance work and not people traditionally that were on salary and worked for the local paper or the local TV station, and have you taken those kinds of expenditures and that kind of revenue in the news reporting business into account?

4275   MR. MURDOCH: You know, in fact, we have a little sort of subsection of our media part of our union which has a lot of freelancers in it, so we're quite aware of the freelance world.

4276   The problem that the freelancers have is that there's not a lot of money in it. There's a lot -- there's a lot of -- and I've spoken to some journalism professors about this. There's, again, a lot of sparkle in the eye when they go out with their laptop and they can do broadcasting, print, everything with -- and so there's a lot of, well, I'm going to be not only going to go out there and get the big stories but I'm going to be my own business to boot.

4277   COMMISSIONER PENTEFOUNTAS: Yeah.

4278   MR. MURDOCH: The sad fact is that there is just -- it's a very poor business to get into. People end up working for "mymothersbasement.com", and it's a problem. And some of the contracts that are signed, that the employers expect these freelancers to sign, is they're signing away everything. So it's a real problem with freelancers.

4279   Is it growing? Yes, it -- yes, you're right, it is. It is growing, but it's not -- it's not growing in a way that a lot of people can survive on it. I mean, there is a lot of -- as you know, there's -- there's a lot of freelancers out there in -- in war and in places of great danger and jeopardy, again, looking for that -- that big story, but the people -- there aren't -- you aren't going to find an awful lot of freelancers on The Hill.

4280   MS AUER: If I could add, too. I mean, there was a time in Canada when doctors were often paid with chickens left on the back door stoop, but that's an unsustainable business model. They formed professional associations, they all grew up and got mortgages, and that's what should happen in broadcasting, too.

4281   COMMISSIONER PENTEFOUNTAS: Yeah, but are we sort of trying to turn back the hands of time? You know, we had the president of Quebecor here yesterday and there were two huge labour conflicts, one in Montreal, one in Quebec City, with the "Journal de Montréal" and "Journal de Québec," and part of -- I mean, one of the most substantial parts of that conflict wasn't -- was des pigistes or the freelancers and people not being willing to be paid what they used to be paid because times had changed and the reality on the ground had changed and technology, and you mentioned the aggregators, such as Huffington.

4282   Is it possible for the regulator or anyone to sort of turn that clock back to sort of, you know, the Edward R. Murrow era of newsgathering and delivering?

4283   MR. MURDOCH: Right. Well, I guess a couple of things that I think we should take note of. When we do this -- our concern is not just simply with sort of the union members, you know, as union members; that we do have a concern about the journalalism, period, and particularly the ethics and the quality of journalalism across the country.

4284   So what you end up having is where broadcasters and/or print used to maybe send somebody up to cover the town council or cover the school board --

4285   COMMISSIONER PENTEFOUNTAS: Right.

4286   MR. MURDOCH: -- you're less likely to have somebody covering every school board as a freelancer, because they're not -- their chances of them getting that story in are very small. They -- and if they do, it's that one hit a month, and that doesn't pay the bills. There isn't that kind of commitment to serious, quality, ethical journalism. That's not to discredit, by the way. There are a lot of very good freelancers out there who are doing admirable work.

4287   And I understand about turning the clock back. I think Mr. Péladeau wanted to do more than turn the clock back at the "Journal de Montréal" and "Journal de Québec," but that's a debate for another time.

4288   COMMISSIONER PENTEFOUNTAS: I'm going to actually hand it over to somebody that actually knows what they're talking about in the field, but maybe there isn't the interest for the town hall that there may have been?

4289   MR. MURDOCH: Well, our polls and pollings that others have done shows that, indeed, there are, you know, local news is very much supported by Canadians. They want their local news, there's no question about that.

4290   But, you know, the thing is is that local news is not something that I expect everybody turns on every evening at six o'clock, but if that storm's coming, they're turning it on; if there's something happening at City Hall, they're turning it on; if the plant is closing, they're turning it on. They expect it to be there when they need it. It is something that is on the shelf and they want it there when they need it. If it is not there, they are going to feel the effect of it; they are going to be disappointed, and the broadcast industry won't be serving them.

4291   MS. AUER: In a way, you know, we don't visit a hospital every day but the day we break a finger or a leg, we really want the ambulance to come and take us to that building and fix us.

4292   MEMBER PENTEFOUNTAS: Thank you.

4293   THE CHAIRPERSON: Commissioner Menzies?

4294   MEMBER MENZIES: Yes; thank you.

4295   Just two questions; one is regarding your proposal to direct benefits to news programming. I just -- it strikes me that it is not necessarily a bad idea, but one of the unintended consequences of it might be that we would be artificially strengthening one of the very large players in the market.

4296   So if you -- you are creating a bigger company and then you are creating more resources for it to compete against others, you are adding a little jet fuel to its ability to be a more dominant player in the marketplace and disadvantaging its competitors.

4297   I would just like your comment on that.

4298   MR. MURDOCH: Well, it strikes me -- first of all, most of the competitors or rather Rogers or Shaw are certainly in the English-language broadcasting system right now and they would have the wherewithal if they so desired. If they saw their market starting to erode, they certainly have the financial wherewithal to say: We had better get in and step up here.

4299   So in fact, it would be an encouragement for those folks to step up. I don't think it would sort of quash the competitiveness. I think it might encourage it.

4300   And it is the same argument, of course, that Mr. Cope made in other areas of why, you know, this would create more competition.

4301   So I don't think we are as worried about that. And in fact, you know, the problem is that at this point, some of those large players have actually reduced their local news and coverage.

4302   So the trend is going down and it is not going up. And if we ask somebody to sort of step up a little more and they start to get a larger share of the market; I think those other players might be encouraged to step up too.

4303   Because as they say --

4304   MEMBER MENZIES: So it would be more as a stimulate to competition rather than something (inaudible)

4305   MR. MURDOCH: Absolutely; yes.

4306   MEMBER MENZIES: Okay; thank you.

4307   And the other point was just -- we spoke of enduring versus transitory benefits. As for context, we don't have a big line-up of people wanting to launch OTA stations in front of us these days, but there are companies out there that are looking to launch news platforms in new media for smaller centres, et cetera.

4308   What would your thoughts be about directing benefits or allowing benefits to flow to new media? News projects connected to -- I don't want to say regulated and unregulated, because as the Chairman has pointed out, new media -- that we have a regulation that forebears from regulating. So it is regulated.

4309   But -- anyway; to get to -- benefits flow to new media, where people are looking to grow and transition into a new world through there.

4310   MR. MURDOCH: Well, it strikes me that these media corporations have, you know, all the distribution of a lot of the new media; they have access to the new media. If they want to build that new media in the sense of providing, and they can use as -- yes; replatform into the new media; those opportunities are already there for them; there is nothing to stop them from doing that now.

4311   And in fact, by encouraging them at the local news and providing local programming, that can be replatformed to the new media, if that is that is their desire, and I think they will desire that; I think they will do it. Because that is -- as I think Mr. Cope suggested, there is -- a lot of that will end up in mobility and in Wi-Fi, one way or another. So I don't think it is -- go ahead, Monica.

4312   MS. AUER: If I might add as well, Commissioner Menzies. I mean one of the issues is that of course the Commission has previously allowed new media initiatives to count towards (inaudible) benefits.

4313   MEMBER MENZIES: Right.

4314   MS. AUER: Decisions are non-precedential and binder, however. So you don't have to take that course again.

4315   Secondly, at this point, I think we have a lot of data indicating just what the effect of the new media benefits have been in terms of benefiting the system.

4316   Third, I would also go back to the starting point of your question, which was, you know, you don't get tons of applications for over-the-air TV stations. I am wondering to what extent that is because of the current framework of the licensing system in which once you have a license, it can't be challenged, unlike the early years of, let's say, the American broadcasting system.

4317   I won-- I mean this is not a social science experiment, you know, one might wish it were. But we can't sort of say: Well, hey, let's just launch a call for new services in Edmonton or Halifax and see how many people apply. I mean that would be -- you know, that wouldn't be a good way to operate.

4318   I am just saying I think that there would -- there is a pent-up demand that was then reflected in the satellite and specialty service applications, you know, you have got what? 600 applicants there.

4319   MEMBER MENZIES: Thank you very much; thanks for your presentation.

4320   THE CHAIRPERSON: Thank you for participating in the hearing. We don't have any other questions. Thank you very much.

4321   MR. MURDOCH: Just a comment, Mr. Chair. One of the things we have done for your -- in this submission, in our oral submission and other submissions, as I think some of the Commissioners know.

4322   One of the tenets of journalism is 'show; don't tell.' So we have tried to provide you with some facts, some figures, some graphs, as you understand, not just rhetoric and rant. And so I just want to sort of put that on the record.

4323   THE CHAIRPERSON: No; very much appreciated, your perspective on this. It enriches the record. We will have to make decisions. Thank you very much.

4324   MR. MURDOCH: Okay; thank you.

4325   LE PRÉSIDENT : Madame la Secrétaire?

4326   LA SECRÉTAIRE : Merci. I would now ask the Alliance of Canadian Cinema, Television and Radio Artists to come to the presentation table.

4327   THE CHAIRPERSON: Get yourself organized, there.

4328   So welcome to the hearing, and I would just ask that you identify yourselves for the purposes of the record and make your presentation please.

INTERVENTION

4329   MS. DOWNEY: Thank you very much, Mr. Chair, Vice-Chairs, Commissioners and Staff.

4330   My name is Ferne Downey and I am a professional actor and the National President of ACTRA, the Alliance of Canadian Cinema, Television and Radio Artists. With me today is Joanne Deer, our National Director of Public Policy and Communications.

4331   And we are here today as a voice of 22,000 professional English-language performers, members of ACTRA. We also represent the voice of 17,000 members of the Canadian Federation of Musicians. The foremost organization of professional musicians in Canada.

4332   I would like to start the morning by congratulating the Chair on your appointment. You have set out a heavy agenda for the next three years and we are delighted to be helping you navigate your way through that.

4333   Today, we are here to talk about the prospect of allowing Canada's largest vertically integrated media company to become even bigger. There is no question that a strong, independent media system is vital to Canada's cultural and economic future. The question, rather, is whether this transaction will strengthen our unique Canadian voice.

4334   As the gatekeepers and protectors of our Broadcasting Act, we are relying on you to find the balance that creates the conditions for strong, competitive, Canadian media companies to emerge, while at the same time allowing our voices and our stories to multiply; the balance that serves the economic and the public good.

4335   If you do that, we are prepared to support this transaction, but not without hesitation.

4336   There has been a lot of talk and debate and paid advertising about whether this transaction goes too far; about whether it crosses the line in terms of media concentration.

4337   Now I can't say that we don't share some of those concerns but our view is that ultimately, in the absence of all of the information - because some of it is confidential - that we must trust the technical expertise of the Commission to determine whether this transaction breaches the threshold of ownership and concentration as set out in your established policies.

4338   This isn't the first big transaction that has come before us in recent years, but it is possibly the most significant.

4339   BCE is already the largest vertically integrated media company in the country and should this transaction be approved, it will get even bigger and will do what no other vertically integrated media company has yet to achieve in our country. It will have a bold footprint in both official languages.

4340   Despite BCE's eagerness to portray this application as business as usual, we are reassured by the Chair's comments on Monday, that that the Commission is committed to undertaking a thorough examination of this purchase. And we know that you will.

4341   I do want to add one small note of caution. We need to remember that although it is only four years old, the diversity of voices policy was conceived at a time when the magnitude of this transaction was practically inconceivable.

4342   We are also conscious of the fact that the focus of the policy is in maintaining diversity and editorial content, which is absolutely critical to the foundations of our democracy.

4343   However, ACTRA believes that it is important to be proactive in fostering diversity and entertainment and scripted programming as well.

4344   The reality is that even without this transaction, four massive private corporations control the majority of our cable, satellite, internet and wireless services. These corporations possess an inordinate amount of control over what we see; how we see it; and when we see it.

4345   Vertical integration means that it is not unusual to see the same content on multiple services, and that is fine. As an actor, I want Canadians to have many opportunities to enjoy my work.

4346   However, we can't lose the need to have new, original and diverse voices; it doesn't work. If there are only three Canadian dramas airing on 10 services; that is not diversity.

4347   Public benefits have contributed, in a way, to the diversity of voices and entertainment programming. By ensuring more production, benefits have given us more variety, more voices and more Canadian stories on every single screen.

4348   In our view, a media company can't be competitive on muscle power alone. It must offer consumers something they want and that they can't get anywhere else.

4349   They have to be distinct, and in the era of globalized content, the only way for a Canadian media company to be distinct is to offer Canadian content, whether it is a fantastic scripted drama or local news; people want to consume content that connects them to their communities. If our broadcasters don't get that, they won't survive, no matter how big they are.

4350   Now we all heard BCE strut a bit on Monday. They are awfully proud of the fact that since they acquired CTV, they have greenlit more Canadian PNI than ever before, and that is great news.

4351   But let's remember how that happened. It wasn't BCE's decision to go out and pursue an aggressive strategy of producing Canadian drama, it was the Commission's.

4352   These new projects only came about as a result of Commission policies, whether the group-based licensing decision or the public benefits policies. And we haven't forgotten, at ACTRA, that when BCE first proposed to buy CTV, it offered to pay nothing; zero dollars in public benefits. But the Commission held firm and we urge you to continue to do so again.

4353   I will now ask Joanne Deer to share some of her thoughts on the proposed tangible benefits program.

4354   MS. DEER: Good morning.

4355   We were please, on Monday morning, when we arrived, to learn that BCE had come around on a number of concerns that we and a number of others had expressed in our original submissions. I am always happy to rewrite my speaking-out(ph) with good news.

4356   I also want to thank the Chair for asking BCE to file a revised benefits proposal yesterday, with some more details. While it meant revising our speaking-outs again, it is always better to speak to the fact rather to, you know, our worst suspicions.

4357   Unfortunately, we find some of the details are still a little vague in the proposal but we appreciate that you wanted us to have this opportunity and all the information at hand before we commented.

4358   So let's review the proposed benefits packages based on what we do, now.

4359   To start, ACTRA and CFM have no objections to BCE's proposed radio benefits package. It is based on 6 % of the value of the transaction; it is result in $60.8 million paid out over seven years, resulting in incremental benefits falling to predominantly third parties.

4360   To us, this meets the (inaudible) test and, you know, the pattern that -- and the policies that the CRTC has established in the past.

4361   On the other hand, BCE's proposed television benefits is a whole other matter. The proposed package does not reflect the CRTC's precedent when it comes to supporting on-screen programming initiatives. BCE proposes to devote 134.3 million, which is only 74.4 % of its total television benefits package to on-screen benefits, which is much less than the past practices and standard of 85 %.

4362   But then it gets a little odd. 20 million of that money is being directed to this new French-language service that we heard about on Monday.

4363   I am urging the Commission to reject that proposal. Don't get me wrong; we have absolutely no issue with a French news in principle; it sounds like a great idea. And in fact, it is such a great idea that we find it a bit hard to believe that BCE came up with this idea last week or even in the context of this benefits package.

4364   We are questioning whether this is indeed an incremental expense, and $20 million does sound like a small portion of what it would actually cost to launch and run all-news service. So clearly, BCE must be prepared to put in a lot more money behind this.

4365   We are also questioning the appropriateness of directing public benefits money to a broadcasting service that doesn't yet even exist as an application on the Chair's desk.

4366   Now onto the non-on-screen initiatives; Northwestel.

4367   I think we will just have to agree to disagree with BCE on whether this is incremental or potentially self-serving. We don't believe capital expenditures are an appropriate way to direct public benefits monies. We were worried, you know, that when allowing such expenditures in the Shaw (inaudible) and Bell's CTV deals, which start to create a slippery slope.

4368   And indeed, it looks to me like BCE has not only noticed the slip but it has built a toboggan; named it Northwestel and now it is sailing down into a snow drift.

4369   And so in their responses to submissions, without naming names, BCE kind of implies that ACTRA and some of our fellow unions and guilds out there are opposing this because we want the money for our own members; maybe we are being self-interested.

4370   In fact, our opposition is really just based on the facts. This is not an incremental expense. And try as BCE might to rebrand the initiative and market it as doing great things for the youth of the North; really, it is not a public television benefit. It is an undertaking that has already been mandated by the Commission. Again, Northern Canadians absolutely deserve better access to broadband and telecom services, but we find it completely inappropriate for BCE to try and fund this through the backdoor. It is a corporate investment; the cost of doing business; and the Commission should reject this proposal.

4371   So we are urging you to request that BCE redistribute the 20 million from the French news service and the 40 million it is proposing for the Northwestel upgrade proposal, to on-screen and social benefits.

4372   There are a number of great proposals for social benefits that we know were submitted to BCE for consideration, including, for the Broadcast History Museum and the Actors' Fund of Canada. These are very worthy beneficiaries for whom even a small amount of money would make a huge difference and mean a lot.

4373   As Canada's largest vertically media company, BCE can well afford to play by the rules and give a fair return to the Canadian public in exchange for the privilege of acquiring Astral's invaluable broadcasting assets.

4374   And what is fair, according to the CRTC's own rules and past practice is tangible television benefits package that directs 85 % onto the screen, towards content for Canadian consumers to enjoy and doesn't confuse a public benefit with a business benefit.

4375   What is also fair is to ensure that in the end, BCE is paying television benefits at full value of 10 % of the transaction, with 85 % going towards on-screen and 15 to social benefits.

4376   We are prepared to support this transaction but only if the Commission takes the steps necessary to ensure that the transaction does not break any of the rules; the valuation is fair and accurate; and that public benefits payable actually benefit the public.

4377   As for (inaudible) at the outset, we trust the Commission to find the right balance; keep our companies strong; and keep our stories on the screen. Because it is that balance that will best serve the interests of Canadians. Thank you.

4378   THE CHAIRPERSON: Thank you very much for your presentation. Commission Menzies will have some questions for you.

4379   MEMBER MENZIES: Thank you very much.

4380   For starters, in your written submission, you made the point that an additional 412 million should be added to the television evaluation. Is that correct?

4381   MS. DEER: The minority assets?

4382   MEMBER MENZIES: Yes.

4383   MS. DEER: Yes. We understand, in the revised proposal, that BCE has accepted that.

4384   MEMBER MENZIES: Okay. But then your position, then, too, is that it should be 10 % as television assets? Are you looking for another 41.2 million in terms of that?

4385   MS. DEER: Well, basically, we are accepting BCE's proposal that they came in with on Monday that the value of the minority assets would be included.

4386   MEMBER MENZIES: Okay; thanks.

4387   You don't comment a lot or at all on the concentration of ownership issues, as others do. Should we take that as an endorsement of Bell's position or a declaration of neutrality on the subject?

4388   MS. DEER: I mean, look, you know, we have heard some very different stories here this week. We know Quebecor's position and we know Shaw's position. And, you know, I don't think it is -- it seems somewhat obvious that they are both coming at it, you know, with their own interests at heart and looking down the road to their own interests.

4389   I mean basically, you know, what we said in our remarks; it is, you know -- the numbers are flying around but, you know, we trust the Commission to ensure that, you know, it does not -- this transaction does not put BCE over the 35 % threshold. And, you know, I guess there is some discussion over which numbers you look at; which services you include; is CBC involved in those audience totals. But at the end of the day, you know, we trust the Commission to ensure that the rules that it has laid out are being met here.

4390   I mean sure, it is not ideal. I mean we understand, you know, again, we need to strike that balance, you know. We understand that in the kind of global media industry we have now, that, you know, it is -- it does -- you know, having big, strong companies that, you know, can get content on every screen and distribute it in many different ways is definitely a benefit.

4391   But, you know, absolutely, we do believe you can go too far and, you know, we need to ensure that there is still diversity in our system.

4392   MEMBER MENZIES: Yes; because they -- the Bell position is that all viewership needs to be included and other positions are that just Canadian viewership; and that changes the percentages around quite a bit.

4393   But you are leaving us with that?

4394   MS. DOWNEY: Yes.

4395   MS. DEER: Yes, we are.

--- Laughter

4396   MEMBER MENZIES: Thanks so much.

4397   You are supportive of the submission, but you don't sound like real fans of the -- you don't sound like real fans in terms of that and it seems like you are sort of holding your breath. You made a comment about Bell/CTV's comments regarding PNI and that sort of stuff.

4398   One of the things that I at least am struggling to get a handle on is what sort of creative vision Bell/CTV has? I say strong corporate vision; strong commercial vision; those are not bad things.

4399   I am struggling to get a handle on commercial or creative and cultural vision. In your experience, do you have a sense of what that might be? Because talking about spending money on PNI is one thing; that is basically an economic issue. But what that PNI looks like is another thing. Do you have any sense of that?

4400   MS. DEER: Not really, to be honest. I mean we have noticed the culture changing as, you know, five years ago or so, you know; even when you come to these hearings, it would be -- you would see -- just in terms of who is presenting and who is kind of running the companies now. You see it is less the -- it used to be more of the people that were doing the day-to-day programming and creating the content. But, you know, as you see -- it was more the broadcasters, but now, you see it is more the -- it is the BDU folks that are -- seem to be more kind of -- playing a more leading role now. And just from my perspective, you just see it as sort of -- it is starting to change the culture a bit, of these companies, and it seems less content-driven and -- I don't know how to -- it is what I am saying; (inaudible)

4401   But it seems less content-driven, as you say, and there is less vision of what it is that they are putting on the screens and more just, you know, getting the numbers out.

4402   COMMISSIONER MENZIES: It strikes me that there is a large cultural challenge there when there are good things perhaps, bad things perhaps, regarding a single company operating in both systems, which is new.

4403   But when you look at the French language system it's very Canadian. All the top -- all the top programs here for the past year and they're all Canadian.

4404   When I look at the English, it's really an American system. The top rider show is the "Superball" you know, 40 places ahead of the Stanley Cup playoffs or 30 some places ahead of them. And what Canadian seem to really like is big band theory over and over and over again.

4405   So, one is a very Canadian system, the one in French, and one is a very American system, the one in English. Now, do you see any issues with that among your membership, cultural issues in terms of transition?

4406   MS DOWNEY: Well, there are huge cultural issues because, you know, the United States of America makes a gigantic amount of programming and they market it heavily and our broadcasters have all the advantage of the simulcast system that we have in Canada. So, we are surmount with non-Canadian content.

4407   I am encouraged that the current creative executives at CTV are beginning to -- I think beginning to articulate a vision of distinctly Canadian programming. I mean it's baby steps and they are getting there. You go on CTV.ca and try to find the Canadian shows and like finding three this morning at the --

4408   So, there is a long ways to go, but if they -- if the vision there try to articulate that as distinctly Canadian programs, the only thing that will make them stand out in the Canadian landscape and I want to encourage that advantage. I want them to become our cultural champions. I want them to be different about English language scripted drama and PNI. Somebody has got to step up.

4409   COMMISSIONER MENZIES: I just -- your submission actually is very clear in most areas, so I don't -- I have a limited number of questions, but I do want to touch on the Northwest Tel in regards to that new general view on the use of benefits for, as you term, capital expenses, and just to be -- for the sake of argument advocating a position against that, if something like a broad band system, wouldn't it provide in more enduring benefit, to use the recent terminology rather than something just transitory.

4410   Is there something wrong because, I mean, there is various views in the north whether this is a self-serving idea or a good or bad idea or a good idea badly presented or poorly structured.

4411   But there are very few people living in the north and they very much want to be treated with -- as if they are at least somewhat similar citizens in terms of the access they can get to communications and that sort of stuff. And some would be, not all, but some would be very disappointed not to have the opportunity to be able to have access to broad band system, broadcasting through it to a certain extent, plus education, which is something that we just mentioned certainly in the Broadcasting Act and those sorts of things.

4412   How would one particularly in my position as the Northwest Territories Commissioner, explain to people your position and why you don't think that this is a good idea?

4413   MS DEER: To me, it keeps coming back to the fact that this is a business expense, you know, like say condition that BCE has already been imposed by the Commission that they have to do these upgrades.

4414   And you know, I think it (inaudible) I find that it's somewhat unfair, I think, the BCE is even putting you in this position because if you reject it, you guys look like the bad guys and, you know, it looks like, you know, you're depriving the people of the north of the service that, you know, we absolutely agree they're entitled to.

4415   But you know, just on principle, you know, we have always maintained that capital expenditures are not an appropriate use of public benefits money.

4416   COMMISSIONER MENZIES: Okay. So, but in terms of -- so, the benefits should be within the term then?

4417   MS DEER: Huh, huh.

4418   COMMISSIONER MENZIES: Okay. I don't have any more questions. Thanks very much.

4419   THE CHAIRPERSON: Commissioner Lamarre.

4420   CONSEILLÈRE LAMARRE : Merci, monsieur le président. Ça va si je pose ma question en français.

4421   À la quatrième, troisième page, pardon, de votre présentation, vous faites référence à la proposition de Bell de dépenser 20 millions de dollars pour un nouveau service français de nouvelles. Vous dites que, oui, c'est une bonne chose, mais que vous trouvez étrange qu'on parle de quelque chose qui n'existe même pas encore, que c'est une demande qui n'est même pas devant nous et vous dites qu'on devrait rejeter la proposition.

4422   Seulement pour être clair, vous pensez qu'on devrait rejeter la proposition en la considérant comme un avantage tangible?

4423   MS DEER: I mean, I know you've asked for evidence that, you know, to prove that it is indeed incremental. So, choice just doesn't appear to be an incremental expense.

4424   COMMISSIONER LAMARRE: It appears more like being the cost of doing business if you want to be bigger in Quebec?

4425   MS DEER: Absolutely.

4426   COMMISSIONER LAMARRE: Okay.

4427   MS DEER: I mean, I find it hard to -- I -- yes, I mean this is likely something that, you know, if they were smart, they would be doing anyway and it's not dependent on getting -- being able to subsidize it with public benefits money.

4428   COMMISSIONER LAMARRE: Okay. Would you -- would you consider it similar to the way you consider the Northwest Tel proposal as being self-serving? Would you go as far?

4429   MS DEER: Yes. It's -- possibly, yes, it might smell that way to us.

4430   COMMISSIONER LAMARRE: Okay. Thank you.

4431   Ce sont toutes mes questions, monsieur le président.

4432   THE CHAIRPERSON: Thank you very much for being here this morning and representing your membership, obviously, of the creative aspect of the Broadcasting System. It's very important to us and you add to the richness of the record. Thank you very much.

4433   MS DEER: Thank you, Mr. Chair.

4434   LA SECRÉTAIRE : J'inviterais maintenant l'équipe SPECTRA à s'avancer.

--- Pause

INTERVENTION

4435   LE PRÉSIDENT : On vous attend. Vous pouvez prendre place en avant, s'il vous plaît. Alors, bienvenue.

4436   Je vous demanderais pour les fins de la transcription de vous identifier et de faire votre présentation. Merci.

4437   M. SIMARD : Je m'excuse d'avance.

4438   LE PRÉSIDENT : Oui, le micro, s'il vous plaît.

4439   M. SIMARD : Ça va, ça fonctionne?

4440   LE PRÉSIDENT : Merci bien.

4441   M. SIMARD: Bonjour. Mon nom est Alain simard. Je suis le président fondateur de l'équipe Spectra, de Spectra Musique du Festival international de jazz de Montréal, des Francofolies de Montréal et du Festival Montréal en lumières de même que Maison du festival et je vous remercie de m'accueillir.

4442   Je suis venu ici, bon, témoigner tous ces multiples titres et vous dire que nous sommes partenaires d'affaires, l'équipe Spectra et les différents festivals qu'elle organise, nous sommes partenaires d'affaires donc depuis très longtemps et avec Bell Canada, mais aussi avec Astral Média qui est un partenaire média majeur, qui est aussi un diffuseur de certains de nos contenus audiovisuels et qui est commanditaire de la Salle de spectacle Astral, mais aussi de Québecor et Vidéotron qui est distributeur exclusif de notre étiquette de disque Spectra Musique et qui a... pardon, qui a été longtemps un grand partenaire aussi des Francofolies qui présente, incidemment, plusieurs artistes issus de Star Académie, par exemple.

4443   J'aimerais d'abord rappeler ici que Bell commandite généreusement depuis plus de 30 ans un grand nombre d'entreprises culturelles et de l'OSBL du Québec. Vous voyez sans doute que le plus important commanditaire privé en plus, évidemment, d'être associé au Club de hockey canadien. C'est donc une entreprise qui est très enracinée au Québec et je peux en témoigner.

4444   Elle est notamment partenaire de nos trois festivals pour y offrir des spectacles gratuits pour le grand public. En plus de commanditer la Maison du festival via l'Expo Bell des Légendes du festival qui est un petit musée avec les plus grands noms du jazz que le public peut visiter gratuitement grâce à Bell.

4445   Alors, ma longue expérience d'affaires avec Bell depuis 25 ans me permet d'affirmer à quel point on peut faire confiance à cette grande entreprise qui a toujours respecté ses engagements en tout cas avec nous.

4446   Je peux aussi confirmer qu'en 25 années toutes les négociations concernant la commandite du Festival international de jazz de Montréal puis vous pouvez imaginer que c'est un investissement majeur, elles se sont toujours déroulées à Montréal.

4447   À ce sujet-là, la printemps derniers les Francofolies de Montréal étaient dans une situation précaire suite au départ d'un de ses commanditaires majeurs. J'appelais Martine Turcotte qui est président Bell pour le Québec et je peux vous dire qu'elle a décidé sur le champ, sur un simple appel de ma part, de nous octroyer une aide de dépannage dans les six chiffres pour aider les Francofolies à s'en sortir.

4448   Alors, c'est un exemple que je tiens à donner parce que ça montre à quel point c'est important qu'il y ait un centre de décision à Montréal puis d'autant plus que la direction, évidemment, de la radio et des stations de radio et des chaînes télévisées d'Astral doivent rester près de ses clientèles, puis quand je dis «ses clientèles», ce n'est pas seulement les auditeurs, les producteurs, les annonceurs, et caetera.

4449   Alors, je n'ai aucune inquiétude que ça va se faire de façon naturelle parce que c'est nécessaire.

4450   Nous souscrivons ainsi à la proposition de l'ADISQ qui veut également s'assurer que les radiodiffuseurs et télédiffuseurs affiliés à Bell continueront, advenant la décision évidemment du CRTC, continueront à soutenir le contenu musical francophone canadien et, par ricochet, la fragile industrie canadienne du disque et du spectacle que j'ajoute parce qu'on l'oublie trop souvent dans les engagements du CRTC que le spectacle vivant au niveau de la musique, c'est aussi important que le disque.

4451   Bon, pour toutes ces raisons donc, l'équipe Spectra et les trois festivals qu'elle organise qui sont des OSBLs avec des conseils d'administration différents d'ailleurs, appuient la transaction entre Bell et Astral, car nous croyons qu'elle est dans l'intérêt des industries culturelles québécoises.

4452   Ces dernières ont plus que jamais besoin de grands joueurs intégrés dans le domaine des télécommunications pour appuyer et diffuser, pour les appuyer et diffuser leurs produits sur toutes leurs plates-formes parce que, vous savez qu'il y a beaucoup de plates-formes qui viennent d'ailleurs maintenant.

4453   Alors, merci beaucoup de votre écoute.

4454   LE PRÉSIDENT : Merci, monsieur Simard. Je comprends bien que, à la fois les compagnies sous BCE et les compagnies sous Astral ont appuyé vos activités ici à Montréal et au Québec. Mais en l'absence de cette transaction, est-ce que vous pensez que cet appui disparaîtra?

4455   M. SIMARD : Non, je ne crois pas que cet appui disparaîtrait, mais cette alliance permet avec l'impact multi plates-formes et le... comment je pourrais dire, parce que la compétition que ça rend possible dans le monde, dans la mondialisation de toutes les plates-formes, là, fait qu'ils ont des moyens encore meilleurs de nous appuyer d'une façon plus intégrée.

4456   Parce que, maintenant, il ne suffit plus juste d'une commandite, qu'on reçoit de l'argent. À l'origine, Bell était une compagnie de téléphone qui donnait des sous, mais on a besoin de plus que des sous. On a besoin de visibilité, on a besoin de diffusion, on a besoin d'interaction à internet, et caetera, et la réalité d'aujourd'hui au Québec fait que je pense que c'est important d'avoir deux grands joueurs.

4457   Et je dis ça, c'est un peu malheureux que tout ça soit polarisé puis qu'on soit obligé de choisir son camp parce que, nous, on fait affaires avec tout le monde, on fait... pour faire avancer les choses et la culture et je pense que, ultimement, les deux grands joueurs en cause ont aussi un souci parce que c'est leur... leur business, c'est ça, c'est que ça fonctionne.

4458   LE PRÉSIDENT : Vous n'êtes pas inquiet, justement, parce que... à cause de l'étroitesse du marché, pas seulement de la radiodiffusion, mais de la culture, le marché est relativement petit ici dans la province et de plus en plus sous attaque de toutes sortes de côtés, que si on affaiblit certains groupes puis il y en a qui ont comparu à l'audience, que ça, par ricochet, ça va affecter votre... votre situation aussi?

4459   M. SIMARD : Je dois avouer humblement que je ne comprends pas comment ça pourrait vraiment les affaiblir.

4460   LE PRÉSIDENT : Ne trouvez-vous pas ça curieux que vous vous inscrivez en appui tandis que plusieurs autres grands joueurs -- il y a monsieur Paillé du Bloc, il y a Québecor et il y en a d'autres qui sont vraiment contre cette transaction-là?

4461   N'ont-ils pas un point de vue qu'on devrait tenir compte étant donné leur perspective sur l'impact de la santé culturelle des industries culturelles québécoises?

4462   M. SIMARD : Mais tout le monde a droit à son point de vue puis je tiens à souligner que le mien peut paraître intéressé étant donné que Bell est commanditaire des événements dont l'équipe Spectra a la gestion, mais je pense que mon point de vue avec ma longue expérience -- ça fait 40 ans que je travaille dans la télévision, la musique ici au Québec et je crois qu'il est important d'avoir deux grands joueurs qui sont plus à arme égale au point de vue de la radiodiffusion et de la télévision. Il y en a qui ont des médias écrits.

4463   Donc, je pense que ça m'apparaît une transaction qui laisse un paysage équilibré, mais encore une fois c'est de mon point de vue qui est bien petit.

4464   LE PRÉSIDENT : Oui. Vous faites... vous avez fait référence à l'aide que Bell vous a donnée et l'importance d'avoir des centres décisionnels présents ici.

4465   Hier, on a eu une discussion sur le fait que c'est bien beau les engagements comme ça, mais il y a des engagements, les situations changent, ça peut être particulièrement précaire. Ça ne vous inquiéterait pas que... bien qu'aujourd'hui on semble -- monsieur Cope et son équipe ont présenté le fait qu'il y aurait une présence... un centre décisionnel ici pour la plus grande société post-fusion, mais vous ne trouvez pas ça un peu précaire?

4466   M. SIMARD: Bien, justement, une des raisons pourquoi j'ai tenu à venir ici c'est que je l'entendais et je lisais dans les journaux que toutes les décisions se prendraient à Toronto et je trouvais ça important que je puisse, moi, venir témoigner de mon expérience depuis 25 ans où toutes les décisions se sont prises à Montréal.

4467   Et moi, il me semble, connaissant bien aussi Astral puis qu'est-ce que c'est leur industrie, de vouloir déménager ça à Toronto, ça serait se tirer une balle dans le pied. Je ne vois pas pourquoi ils prendraient une telle décision puis elle n'aurait pas de sens finan... d'un point de vue business.

4468   LE PRÉSIDENT : Et, donc, vous, vous êtes prêt à leur faire confiance sur parole?

4469   M. SIMARD : Oui, oui. Bien, c'est sûr que, évidemment, il y a des engagements que le CRTC impose dans ce sens-là. Je disais qu'on souscrirait à la démarche de l'ADISQ dont on fait partie aussi, mais je pense que Bell, c'est une compagnie intelligente qui a un long "track record" et qui... en tout cas, de mon point de vue à moi est digne de confiance.

4470   LE PRÉSIDENT : Lorsque vous négociez les commandites avec des corporations, est-ce que vous signez des contrats?

4471   M. SIMARD: Oui. C'est des contrats à long terme, des contrats habituellement de cinq ans.

4472   LE PRÉSIDENT : Donc, vous ne faites pas seulement confiance à leurs paroles. Vous le mettez par écrit?

4473   M. SIMARD : Bien forcément.

4474   LE PRÉSIDENT : D'accord.

4475   M. SIMARD : On est dans un état de droit.

4476   LE PRÉSIDENT : Et pourtant, ici, vous êtes tout à fait prêt à accepter la parole de la présence continue du Centre de décision au Québec?

4477   M. SIMARD : Moi, personnellement, j'accepterais la parole, mais comme je vous ai dit, on souscrit à la position de l'ADISQ qui demande, je crois, que le CRTC en fasse une condition. Mais d'après moi, ce que je vous explique, c'est que de mon point de vue d'affaires, je n'ai pas d'inquiétude parce que leur intérêt est d'en laisser un ici.

4478   LE PRÉSIDENT : D'accord. Merci. Moi, je n'ai pas d'autre question. Madame Lamarre.

4479   CONSEILLÈRE LAMARRE : Merci. Merci, monsieur Simard, d'être ici ce matin. Donc, si je vous comprends bien ce que vous nous dites, c'est que tel que vous l'avez vous-même expérimenté, les antécédents d'Astral et Bell comme entités séparées, vous estimez qu'ils sont garants de leur comportement à venir comme entités fusionnées?

4480   M. SIMARD : Je ne pourrais pas dire en termes légaux que c'est garant; forcément, c'est une culture d'entreprise puis une culture d'entreprise peut changer avec les individus, avec les années. Je ne dis pas le contraire et c'est la même chose pour toutes les entreprises d'ailleurs.

4481   CONSEILLÈRE LAMARRE : Mais vous avez confiance?

4482   M. SIMARD : Oui, j'ai confiance.

4483   CONSEILLÈRE LAMARRE : C'est bon.

4484   M. SIMARD : Parce que c'est quand même une compagnie qui est là et qui est sérieuse et qui est là depuis longtemps.

4485   CONSEILLÈRE LAMARRE : Vous avez confiance en tout cas... vous avez confiance à ce que ce en quoi ça va ressembler fusionné, compte tenu de ce que vous connaissez des deux entités séparées?

4486   M. SIMARD : Et je crois aussi que les gens de Bell ont besoin de l'expertise des gens d'Astral. Quand ils font cette transaction-là, ils n'achètent pas juste des chaises; ils achètent une expertise. Ils achètent un... et les gens d'Astral, pour avoir travaillé avec eux, sont des gens très compétents. Ce n'est pas pour rien qu'ils ont eu autant de succès puis qu'ils ont bâti ce qu'ils ont bâti et je suis persuadé que pour les gens de Bell, ils ne paieraient pas le prix qu'ils paient si ce n'était pas parce qu'il y avait ces gens-là.

4487   CONSEILLÈRE LAMARRE : Deuxième question et probablement la dernière...

4488   M. SIMARD : Et ces gens-là vont certainement vouloir rester à Montréal.

4489   CONSEILLÈRE LAMARRE : C'est vrai que les loyers sont un peu plus chers à Toronto.

4490   Deuxième question, peut-être la dernière; à la fin de votre présentation, vous dites que les festivals, la programmation dont vous faites la promotion et que vous organisez, a besoin plus que jamais, là, de grands joueurs intégrés pour appuyer et diffuser leurs produits sur toutes les plates-formes.

4491   Ceci dit, est-ce que vous ne craignez pas qu'avec une telle concentration justement d'un joueur intégré à la longue ça finisse par vous dicter ne serait-ce qu'implicitement votre conduite en terme de choix de programmation?

4492   M. SIMARD: Non parce que, bon, d'une part, dans le cas des festivals, que je représente, il y a... ce sont des sociétés sans but lucratif, il y a un mandat de gestion de Spectra, une vice-présidence programmation pour chacun des festivals qui est indépendante... indépendante aussi de toutes les commandites. Nos contrats de commandites stipulent tous qu'il n'y a aucune ingérence qui est possible dans la programmation.

4493   CONSEILLÈRE LAMARRE : Mais c'est pour ça que j'ai dit «implicitement» là, okay. Vous n'avez pas peur que même implicitement ça change vous, votre programmation?

4494   M. SIMARD : Non, non. Ça, ça ne peut pas avoir d'effet sur notre programmation; c'est-à-dire que la réalité étant ce qu'elle est au Québec, évidemment vous avez Vidéotron, TVA. Vous avez Radio-Canada qui est naturellement souvent en parténariat avec Bell et La Presse pour faire un peu l'équilibre.

4495   Alors, c'est difficile de ne pas être avec un ou avec l'autre pour quelque événement que ce soit. Nous, on a réussi à travailler un peu avec tout le monde depuis toujours, comme j'expliquais tout à l'heure. On a une maison de disques qui est distribuée par Québecor. On a... tu sais, moi-même je suis manager de Michel Rivard qui est professeur à Star Académie. On veut maintenir des bonnes relations

avec tout le monde.

4496   Mais c'est sûr que, bon, les festivals qu'on représente sont d'un point de vue parténariat promotionnel, télévision généraliste avec Radio-Canada. Puis au niveau des quotidiens avec La Presse pour la plupart.

4497   C'est déjà arrivé qu'on ait des projets qui peuvent être avec le Journal de Montréal aussi là.

4498   Mais c'est certain que si vous n'êtes pas présenté par TVA et le Journal de Montréal, bien ça prend quelque chose de l'autre côté pour un poids équivalent.

4499   CONSEILLÈRE LAMARRE : Donc, l'équilibre justement dans l'industrie présentement au Québec auquel vous faites référence, vous estimez que cet équilibre-là ne sera pas rompu si on approuve la transaction?

4500   M. SIMARD : Non; c'est-à-dire que cet équilibre-là va être meilleur parce que, actuellement, ce n'est pas si équilibré que ça, d'après moi.

4501   CONSEILLÈRE LAMARRE : Je vous remercie. Ce sont toutes mes questions, monsieur le président.

4502   LE PRÉSIDENT : Merci. Merci beaucoup, monsieur Simard. Ce sont nos questions. Merci pour avoir participé et nous passerons maintenant au prochain item.

4503   LA SECRÉTAIRE : Merci. J'inviterais maintenant Première Bobine if you could please come up at the presentation table.

--- Pause

4504   THE CHAIRPERSON: So, welcome. Please identify yourself for the transcript and go ahead with your presentation, please.

INTERVENTION

4505   MR. BERRY: My name is Tom Berry. I'm the President of Première Bobine/Reel One Entertainment.

4506   Good morning, Mr. President, Commissioners. Thank you very much for this opportunity.

4507   I have produced or executive produced over 120 movies in Canada, productions that have been clearly commercial, fitting into well defined genres and filling specific broadcasting needs, both in Canada and around the world.

4508   I am joined here today by Paul Gratton. Paul has helped me to prepare for these hearings.

4509   When a producer appears before the Commission, there are some who suggest they have been encouraged to do so as a result of a commercial relationship with the applicant. I would like to clarify that my company has not sold programming to Bell and that aside from Astral, our most significant Canadian licensors are in fact Bell's competitors, Shaw Media and Corus. So I am here today simply because my company believes that Bell is a good buyer for Astral and the likely the best buyer.

4510   In the United States, there are large broadcasters to whom we often license DVD, VOD, cell-phone, tablet and internet rights as part of our first cycle sales. This allows the US broadcasters to decide the best way to promote the programming that they have licensed n all their available platforms and to maximize the value of these rights by working with them as a whole.

4511   We are also able to maximize our licensing revenue from these rights by assuring that we have a fair share of this enhanced value. Bell can offer producers a similar cross-platform licensing opportunity in Canada.

4512   We are aware that the Commission has recently concluded that there is no current data to indicate tht5 Netflix and other over-the-top services are having a negative effect on the Canadian broadcasting sector. There is some evidence that cord-shaving, cutting out some cable TV services and avoiding bundles to save money, may be going on instead. According to CSI magazine, "the most likely `shaving' activity includes movie channels, where customers choose Netflix type all-you-can-eat in preference to a movie package from an MSO". Altman Vilandrie and Co. found that 20 per cent of their 1,000 surveyed US customers said they are already practicing cord-shaving by spending less money on TV services.

4513   We are deeply concerned that Canadian Pay TV operators, who have been major supporters of our programming for many years, will become the victims of unregulated OTT services in Canada. We do not believe the claims from certain OTT services that they are mere "complements" to our Canadian broadcasting sector.

4514   Netflix has more than a million subscribers in Canada and the have started buying exclusive Pay TV rights in direct competition with established Canadian Pay TV services like TMN. Netflix has recently launched in England and Ireland and has quickly amassed over a million subscribers in those markets as well. The CEO of Netflix, on the occasion of their launch in the UK, stated:

"Our main rival isBSkyB, with Sky Movies and Sky Atlantic -- they're the ones with big content."

4515   As reported in British publication the Telegraph:

"Mr. Hastings knows he needs to step up the fight and he plans to do so. The company has already made it a priority to secure coveted `first-window' pay-TV rights for content from many large film producers and is on a mission to wrest from BSkyB the coveted exclusives. `We will be really aggressive in our biddings... we're incredibly confident that we will win he bidding for some of those first window rights.'"

Well, how can Netflix be a complement to Canadian Pay TV and a competitor to British Pay TV?

4516   We are concerned that as Netflix takes square aim at the Canadian Pay television sector, that it has no Canadian content obligations and doesn't even have local offices. Our colleagues at APFTQ have insisted on local offices for French language Bell services, and Bell has agreed. The same principle should apply to Netflix.

4517   We believe that if we wait until there is measurable evidence of Pay TV cord-shaving in this country, it will be too late to reverse the damage. Clearly, a new policy framework is required. The Bell acquisition of Astral will give the Commission and stakeholders some time to work this out. Bell's recent proposal for an OTT service may also be helpful, though we all await more details. This is an example of a platform which a company like Bell can mount.

4518   Thank you for your time today and for providing me with an opportunity to express my views on these matters.

4519   I would be happy to answer any questions you may have as to why I think that in this case "bigger is better" from the Canadian producers' point of view.

4520   THE CHAIRPERSON: Thank you very much for that presentation. Commissioner Menzies will have some questions.

4521   COMMISSIONER MENZIES: Thank you.

4522   First of all, what do you think the relative threat value is of Netflix towards the French language system versus the English language system?

4523   MR. BERRY: We are focussed mostly on the English language system, so that's something frankly that I've never thought about.

4524   My immediate reaction would be that the French language system is much more protected by language, so that my own instinct would be to deal with the English problem first, see how it plays out. You have more time in French.

4525   COMMISSIONER MENZIES: Okay. Just help me understand the English problem a little bit. Some might argue that Netflix, and it has been mentioned, there's been many death stars predicted for the system.

4526   How different is Netflix, in a sense, from a threat posed 30, 40 years ago by US four-plus-ones?

4527   MR. BERRY: Well, it's very interesting because what we tend to do is to see threats and to all assume that they're going to hit us very quickly, and when they don't hit us very quickly, we all assume that the threats were't really there, you know. Unfortunately, they're not like Y2K which we all remember; it was obvious that January 1 of year 2000, that threat was passed.

4528   Well, I think that it's very easy to get complacent and I should say that when I speak of Netflix, that's really a proxy for a type of platform, not a company. What we've seen in other areas, and I've been doing this since the 80s, is a number of times we have predicted the end of something, and the end has almost always arrived later than we thought, and it's almost always arrived at a time when we've all assumed that since it's taken so long, it's never going to come.

4529   In my particular business, for example, we were predicting -- first we were predicting the end of US Pay TV as a substantial licensor of independent movies. When it came, it was brutal. We all knew that sooner or later they would just change their relationships with the studios. They did, and many companies went out of business.

4530   After that, we were all predicting the death of the DVD business for other than certain kinds of very big 10th hole productions and certain kinds of big series. That took a little longer than expected but if you look at the amount of revenue that Canadian producers derive from DVD and VOD -- I'm sorry, DVD and VHS, it's now a tiny fraction of what it used to be, in fact, it may be zero in comparison with what it was previously.

4531   I realize there have been predictions of disaster before. I'm still here I think because I'm alert to the possibility of disaster but also because I have been right about some of these predictions and hopefully most of them. I think it's pretty incontestable that looking for the evidence of a negative impact from Netflix on Canadian Pay Television is unlikely to drive you to panic. You can sift through the tea leaves and you can find indications, but I think it's because of the nature of this.

4532   The video process rolled out in sort of the same way. You get to a point where it's almost as if you're walking towards a precipice and you're holding in your hand an altimeter. And you're approaching a precipice and you're going, "Gee, altitude hasn't changed". Well, it's going to change suddenly and when it does, it will be very hard to change the direction of your walk.

4533   I think that what is the predictor is the programming, because you can see the programming coming. The example here is the Paramount programming. That Paramount programming is very expensive, is very promotable. It's going to be highly promoted and when it hits, is it a single cliff? No, it's not. But it's going to be a first big indication and the further this process plays out, unfortunately the harder it is going to be to deal with it --

4534   COMMISSIONER MENZIES: What are the Pay TV areas that are most threatened by OTT? What's the most popular Pay TV programming?

4535   MR. BERRY: Well, certainly the most popular Pay TV programming are the series, the big series from HBO or Showtime. After that, it's the bigger movies.

4536   As this programming begins to move to other platforms, it's going to have -- people are going to stop feeling the necessity to subscribe to the Pay TV services. Not every -- it's not as if everybody is going to say this or that huge Paramount movie is no longer available to me, therefore I'm going to cut my subscription. But there will be people who do that. And this is combined of course with the value proposition, because on the one side you have a service which is bearing the cost of their conditions of license.

4537   COMMISSIONER MENZIES: Sorry. Just to be clear, these are foreign series we're talking about, American --

4538   MR. BERRY: Well, they're entirely foreign series in this case because the non-Canadian OTTs -- or almost entirely, the non-Canadian OTTs are not really doing any -- acquiring any Canadian programming. We've done a little, but it's tiny.

4539   COMMISSIONER MENZIES: Is that related to the fact that most of the Canadian programming is under the direction of haw and Bell, who would be hesitant to make it available to them?

4540   MR. BERRY: Interesting question. It's obviously a puzzle. If you look at something which is available to licence and is in the hands of an independent -- for example, my company, we have a library of programming which we licence repeatedly through time. Obviously they could sit down with us and we could point out to them here's some things that they could buy.

4541   However, the Canadian programming business, I think to a greater extent than the US business, is dependent on Canadian broadcaster participation. So I think that's what has created this situation.

4542   If you look at a big HBO series, for example, there's generally, well, there can be a US studio partner involved, so somebody can come to the table, whether it's a studio or a Pay TV system, put up the money and recover the money because, amongst other things, they have US rights.

4543   In the Canadian system, that doesn't apply so you've got Canadian broadcasters with CMF envelopes, Canadian content requirements. So it's an interesting sort of double edge sword.

4544   I think it is harder for a non-Canadian OTT to get access to that Canadian programming, because they don't have the same tools to licence and finance it. It's interesting, because perhaps -- I know we've all been looking for other ways to bring them into the tent and perhaps that's one of them, to say, look, you'll have COLs, which is just like the Canadian broadcasters; by the way, that will give you some advantages.

4545   COMMISSIONER MENZIES: What is it that makes scale so vital to compete against OTT in terms of this -- generally what we're doing is we have Canadian companies whose most popular content is American, and we're talking about restructuring -- not restructuring, but a large market based restructuring of the shape of the industry in Canada, at least in terms of the English system, to defend Canadian companies, American content against American companies, American content.

4546   I'm confused as to why we need to restructure in order to do that, and why Netflix would be that excited about Canada which within Canada everybody always refers to it as a small market that needs big players.

4547   MR. BERRY: Well, you know, for many years the US studios derived roughly the same amount of money out of the Canadian market and the British market, and every other country in the world delivered far less.

4548   The Canadian market may be a small market, but it's a very efficient market. We deal with markets all around the world and there are a number of markets which -- there are very very few markets which have the same sort of openness and transparency that the Canadian market has, so we're frequently -- almost everything we do is licensed to you as companies and invariably the deal gets to their business affairs department and they, for a moment, try to get the Canadian rights. We remind them it's Canadian content, you simply can't have those.

4549   The US companies really like Canadian rights because it's easy for them to deal with the marketplace, they understand it, and if they're owed percentages of things they're going to get them.

4550   I'm certainly capable in some situations of talking about how small the Canadian market is, but it is a very good market and the world's big media companies are aware of that.

4551   Now, why is a scale important? I believe that the strength of Bell is going to be a stop gap. Sooner or later, and I don't think it's going to be sooner, the issue of the regulation of OTTs is going to have to be addressed. I'm not kidding myself as to how long it's going to take. We often hear there needs to be legislation and we hear that the Commission actually has the power to do it, but it's a big thing. It's going to occasion a political debate, a public debate. I think it's going to happen sooner or later and I believe it has to happen sooner or later.

4552   In the end, I think that the combination of Bell and Astral will at least provide a Canadian champion to help wage that battle and to help preserve Canadian Pay TV until the moment -- or hopefully preserve Canadian Pay TV until the moment when that happens.

4553   The advantage of scale, you might look at this and say, a company like Netflix licensees the United States, Britain and Canada separately, so what's the big deal? Well, as a company that works internationally I can tell you how these things work in the case of my company.

4554   I'll have a relationship with a very large US partner which finances my programming and buys US rights and they'll be opening a UK channel, and we'll sit down and we'll provide programming for the UK channel. Is it the same programming? No. But it's one meeting. Sort of a simple example would be, if you own a lot of content and there's a deal for Canada only from a Canadian Pay TV system and it's a 50 million dollars deal, well, certainly you're going to take that seriously.

4555   On the other hand, if there's a deal for five territories worldwide and the total is 500million, you're going to go to that deal first and you're going to skew the amounts. You don't really care. You're going to look at this and go, it's 500million, well, what do we put on Canada, what do we put on the UK, what do we put on Australia? It doesn't really matter.

4556   So somebody who is operating in all those territories ultimately has a very big advantage.

4557   COMMISSIONER MENZIES: Thank you. My colleagues may have some questions. Those are all for me.

4558   THE CHAIRPERSON: Commissioner Lamarre?

4559   COMMISSIONER LAMARRE: Thank you, Mr.Chairman.

4560   Mr. Berry, at the beginning of the hearing earlier this week the Chair announced that we would be challenging everyone's position, so I'm putting you on notice that I'm about to challenge something you said to Mr. Menzies.

4561   M. BERRY: Merci!

4562   COMMISSIONER LAMARRE: Mr. Menzies asked you, on the OTT, if there was a difference between the French and English markets, and you replied by saying English is much more desperate right now so let' do something for English and then see what happens and then we can move forward for French.

4563   In Québec, a lot of people are bilingual, Francophobes and Anglophones alike, even more so the younger generation that owns no TV, no electric kettle, but has a computer and a Smartphone.

4564   Couldn't we argue that in fact the TV services in Québec are under more stress than any other services because the threats are actually coming from two sides, not just one: from OTT services in French and in English?

4565   M. BERRY : En premier, je dois dire que j'ai remarqué à M. Menzies que j'ai jamais considéré ça avant. En même temps, je trouve ça très intéressant et j'ai pas d'intérêt dedans. C'est une discussion théorique et c'est peut-être un type de discussion qui peut être plus valable dans ces séances publiques.

4566   Ma réaction sera la suivante. Cette programmation sur un Smartphone en français, les droits sont où? Dans la plupart des cas, j'imagine que les droits sont avec les entités québécoises ou, mettons que c'est un film américain en version française ou même si c'est un film français, probablement ce film a un distributeur déjà, un distributeur québécois, c'est-à-dire que je pense que l'accès à ce produit est plus difficile et souvent ce produit sera dans les mains des concurrents, c'est-à-dire, j'imagine... Moi, je n'ai pas produit en français depuis à peu près 20 ans mais je n'ai pas lu un contrat TVA de financement de POD depuis longtemps, en même temps on fait beaucoup de licences avec eux.

4567   Mais j'imagine que dans ces contrats, comme dans les contrats, mettons, des Américains, de Corus, Global, etcetera, de Shaw Media, j'imagine dans le contrat tous les droits, incluant le VOD, les plateformes digitales, etcetera, sont proscrits pendant le terme de licence, c'est-à-dire que si quelqu'un veut le mettre sur iPhone, il doit aller à Québecor en effet, ou à Astral ou la nouvelle entité Bell-Astral.

4568   Peut-être je me trompe, mais je pense que la difficulté ce sera d'avoir accès à ce produit.

4569   Il y a tellement de produits américains où dans le cas anglais, même si les Canadien ont acheté les droits de beaucoup de programmes, ça reste pas mal de disponibles pour le Canada.

4570   CONSEILLERE LAMARRE : Mais justement, ces produits-là sont aussi disponibles et...

4571   M. BERRY : Oui, mais ils sont en anglais.

4572   CONSEILLERE LAMARRE : Oui, ils sont en anglais mais moi, pour l'avoir vécu de proche, je vais vous dire que quand une série qui a été traduite et dont les droits appartiennent effectivement à un radiodiffuseur québécois, les droits en français, et que le jeune adolescent découvre qu'il peut avoir la saison suivante plus rapidement en anglais, ça motive pour faire les cours d'anglais.

4573   M. BERRY: Ça c'est intéressant, et il est possible que la programmation française sera sous-représentée sur ces plateformes dû à comment les droits sont organisés. J'ai jamais pensé à ça, de cette perspective, mais, intéressant.

4574   CONSEILLERE LAMARRE : Je vous remercie, monsieur Berry, d'avoir partagé votre réflexion à chaud comme ça.

4575   Merci, monsieur le Président.

4576   LE PRÉSIDENT : Merci beaucoup. Je ne crois pas qu'on a d'autres questions pour vous, so thank you very much for having participated in the hearing.

4577   We will take a 10-minute break, so we will be back at 25 minutes to 11 to hear a presentation by Rogers.

--- Upon recessing at 1025

--- Upon resuming at 1036

4578   THE SECRETARY: Please take your seats.

4579   We will now hear the presentation of Rogers Communications Inc.

4580   Please introduce yourself and your colleagues and you have 10 minutes for your presentation. Thank you.

INTERVENTION

4581   MR. ENGELHART: Thank you, Chairman and Commissioners. I am Ken Engelhart.

4582   With me today are, to my left, Susan Wheeler, and beside Susan, David Purdy; to my right, Pam Dinsmore, and beside Pam, David Watt.

4583   Pam.

4584   MS DINSMORE: Rogers opposes Bell's application to acquire Astral unless the Commission orders Bell to divest of its English-language television services.

4585   If the Commission is not willing to do that, it should, at a minimum, require Bell to make available to third-party distributors any program rights it holds for any of its platforms without the need for negotiations up front. This would at least ensure that competing distributors are able to meet consumer demand for innovative program offerings on a timely basis. Bell could of course request a final offer arbitration proceeding to retroactively set reasonable commercial terms.

4586   Bell is already too big and powerful. After Bell acquired CTV last year, CTV's behaviour changed. At that point, CTV lost its incentive to compromise. CTV's programming became a tool for Bell to use to gain an advantage over its competitors by increasing their costs and by preventing them from offering content to Canadian consumers in new and innovative ways. Once Bell owns Astral, it will similarly turn one of our most important programming partners into a rival.

4587   Canadian consumers want more packaging flexibility and the ability to access content on multiple platforms. Bell does not want its competitors to have this ability. It would enable them to take customers away from Bell TV and Bell Mobile.

4588   If we had realized last year how Bell would behave once it acquired CTV, we would have opposed that application and proposed even stronger safeguards in the Vertical Integration proceeding. However, we know the Commission cannot turn back the clock on the CTV transaction now. That ship has sailed.

4589   The Commission can, however, take steps in this proceeding to prevent Bell from getting even bigger and more powerful in the English-language television market and from destroying the positive relationship we have always enjoyed with Astral. It can order Bell to divest of Astral's English-language television services as a condition of approval of this acquisition.

4590   If Bell is allowed to own both CTV and Astral, it will have overwhelming control over television on all screens in Canada. Those consumers who subscribe to one of Bell TV's competitors will either be unable to access content from CTV and Astral or they will be forced to pay significantly more for it. This is obviously unacceptable. No Canadian consumer should be forced to subscribe to Bell TV or Bell Mobile in order to access the content they want to watch at a reasonable price.

4591   The harm that is already caused by Bell's behaviour is evident in almost every facet of our relationship with Bell. David Purdy will provide you with examples of this.

4592   David.

4593   MR. PURDY: Thanks, Pam.

4594   Bell has us trapped in a catch-22 situation. If we accept Bell's unreasonable terms, we will have to charge our customers too much to recover our costs. Yet, by refusing Bell's terms, our distribution business is disadvantaged because we do not have the same ability as Bell TV to offer our customers smaller packages and more choice.

4595   On the linear platform, Bell has demanded massive increases in wholesale fees and revenue guarantees as a quid pro quo for packaging flexibility. The terms are so unreasonable that in almost all cases we have refused to accept them. In contrast, all of our other programming suppliers, both Canadian and foreign, have given us some degree of packaging flexibility.

4596   If we were to surrender to Bell's demands, Rogers would have to increase retail prices to our customers to such a degree that it would severely hamper our ability to compete with Bell TV. Our refusal to give in to Bell has meant that we have almost no flexibility in how we offer Bell's affiliated services on our linear platform. We are not able to offer smaller packages that match even Bell TV's offering.

4597   A recent example of how little flexibility we have occurred last year when Rogers initiated a market trial in London, Ontario. The trial provided our customers with a smaller basic package and the ability to pick services in packages of 15, 20 and 30 channels. We launched the market trial and included Bell services as part of it. The negative reaction we received from Bell forced us to terminate the trial prematurely. Obviously, this hurt our customers.

4598   The substantial power that Bell wields in the programming rights market inhibits our ability to meet the needs of our customers in other ways as well. Bell has frequently refused to provide us with access to content. It has also delayed providing us with access to it in order to gain an unfair advantage for Bell TV. This power stifles innovation and harms consumers because it enables Bell to dictate the rollout of any new service offering by a competitor.

4599   An example of this occurred when we launched our innovative cable service, Rogers Live TV, this past year. This service allows our cable customers to stream live TV channels to their iPads and tablets when they are inside their homes. This activity is entirely consistent with our cable licence and the Regulations. However, Bell has steadfastly refused to consent to including its services as part of this new offering. To avoid a lengthy and acrimonious conflict with Bell, we have not included its services in this offering. This has diminished its value to our customers and that is precisely what Bell hoped to achieve.

4600   We have experienced similar problems negotiating access to Bell's programming on our other platforms as well. Rogers On Demand only has access to a few hours of out-of-date content from Bell's specialty channels each week and almost none of it includes their most popular TV programs. Top-rated shows like "Jersey Shore," "Deadliest Catch," "Dallas," "Doctor Who," "Daily Planet," and "Pretty Little Liars" are just a few examples of programs that we have never had access to on the on-demand platform.

4601   Similarly, we have not been able to obtain any programming from Bell for our online service, Rogers Anyplace TV.

4602   The same is true of our mobile service. Bell has offered its content on terms that are completely unreasonable, and as a result we are not able to offer any Bell programming on our wireless platform to date.

4603   We have included below and on screen two charts that compare the amount of programming for our on-demand and multiplatform offerings that we receive from Canada's largest broadcast ownership groups. So the chart there on the left.

4604   The first chart shows that we have commitments from all Canadian programmers to provide on-demand content for our video-on-demand service, except from Bell Media. Next year, we will get 170 hours of specialty channel content from Astral, 80 hours from Shaw, 80 hours from Corus, 25 hours from CBC -- and almost zero hours from Bell.

4605   The second chart shows what we currently receive on the on-demand programming as well as both the broadband and wireless platforms. All of our Canadian partners, with the exception of Bell, are present with their specialty channel content on both our video-on-demand, broadband and mobile platforms. So you can see the green checks next to Astral, to Corus, Shaw, Rogers Media, CBC, and the steady stream of "X's" beside Bell Media.

4606   Our inability to access Bell content stands in stark contrast to our relationship with Astral over the past decade. In almost every instance where we were launching a new service or attempting to offer programming to our customers in an innovative way, Astral was an enthusiastic partner. Astral agreed to flexible packaging and it provided content for distribution on our new platforms. Bell's proposed acquisition of Astral jeopardizes our current and future arrangements with Astral's programming services.

4607   Bell's actions will have serious ramifications for the entire broadcasting system.

4608   Go back to our first chart. Astral provides 170 hours of extremely popular programming. This programming from Astral drives over 50 percent of our on-demand usage, or 50 percent of the on-demand viewing, to phrase it differently. Astral's English-language programming, particularly its movies and HBO original series, is extremely popular with consumers and is a driver for many of the new services we offer.

4609   If Bell controls that marquee content, it will have an even greater ability to damage the attractiveness of its competitors' offerings. To access that content, consumers will be forced to subscribe to Bell TV or pay a much higher fee for it. That is not real choice.

4610   Rogers has always been an innovator and an industry leader in offering new services to Canadians and, quite frankly, new services in North America. Bell does not want that to continue. It does not want third-party distributors to be competitive with Bell TV and Bell Mobile.

4611   Pam -- or, sorry, Ken.

4612   MR. ENGLEHART: Although much has been made of it in this proceeding, the issue is not whether Bell's English-language television viewing share is at 34 percent or 40 percent. The issue is market power. By that measure, Bell is already too big.

4613   Bell currently controls the number one over-the-air television network in the country, the most popular specialty services in the country, the most popular sports network in the country, and, with this acquisition, the most popular pay television services. When a vertically integrated company has too much content leverage, the temptation to behave badly is just too great.

4614   We would be pleased to answer any questions you may have.

4615   THE CHAIRPERSON: Thank you very much. Everyone always adds that we are pleased to answer questions. Nobody ever says we won't be pleased to answer questions.

--- Laughter

4616   THE CHAIRPERSON: You won't be surprised because I've seen your representatives in the room, so you know that I've been asking questions about how you would envision the broadcaster and the communications system in 2017, setting aside this particular transaction.

4617   So what's Rogers view of the world in 2017?

4618   MR. ENGELHART: Thank you, Mr. Chair. I am going to jump in and David might want to add something.

4619   I think the main focus, the thing that people are worried about in this room and broadly is the impact that the over-the-top and online distributors are having on the licensed broadcasting system in Canada, and not just in Canada but around the world the same concerns exist, is cable TV going to be replaced by the Internet, and there's sort of two contrasting views.

4620   The one view is yes, you cable guys are doomed, it's all going to be replaced by Apple TV, get used to it. There's another view that well, it's all very overblown, Netflix is not the powerhouse people once thought it was and this is all just so much alarmism.

4621   We take the threat seriously but we believe there's a middle ground. So we believe that the licensed Canadian broadcasting system can adapt and change and stay relevant and stay vibrant, and it can do that by giving people everything, everywhere, anytime. That's what customers want.

4622   They want all the content, they want it easy to view, they want it wherever they are, and that's why we have launched things like Rogers On Demand online, which we now call Rogers Anyplace TV content on the mobile platform.

4623   The model that we see working is customers pay one price for all their content. They can watch it linear, they can watch it on demand, they can watch in on their computer when they're at the airport, they can watch it on their iPad when they're watching their kids' soccer game. For that same price they can see it anywhere, anytime.

4624   And we think if we can put that model together and maintain that model and grow that model, we can keep people on the licensed system.

4625   It's not to say that there won't be a role for over-the-top and it's not to say that we don't worry every day about over-the-top, but we can make the licensed system work by growing and adapting, and that is, frankly, why we're concerned about this transaction for the reasons we've discussed.

4626   MR. PURDY: Thanks, Ken.

4627   I think the only thing I would add is two main thrusts for 2017 would be, one, the ubiquitous availability of content across all devices, as Ken referenced, so the notion that when I subscribe to a show or a service or a suite of, say, movies or original series content, that that content follow me across all my devices and all my platforms.

4628   So clearly, Rogers, as a linear TV offering or a standalone linear television provider, would be in big, big trouble by 2017 if that's the business we stayed in. So we have in every case been trying to secure the on-demand, online and mobile rights so that we can offer our customers a comprehensive offering.

4629   The second thing, second major thrust would be personalization. Customers and viewers on the Internet are used to being able to drill down or, to use the phrase, double-click on content that they really like.

4630   So the notion is if I like "Game of Thrones" on HBO, I don't just want to watch "Game of Thrones" in window season, I may want to go back to the previous seasons and catch up, I may want to go online and see information about the characters, dig deeper, I may want to watch excerpts or out-takes or content that's not generally available on the broadcast side. So customers want to create personalized packages and they want deeper relationships with their content.

4631   The challenge I have with some of our negotiations, particularly with Bell, is it seems that they want us to guarantee the old model, so guarantee their subscription and advertising revenue associated with their old model in the linear television provider, and they want to start a brand-new business online and mobile.

4632   It's as if they think we're stupid and we're only going to pay for that which is declining in terms of value to a customer.

4633   We have a joke within the office that sometimes when you negotiate they have a KISS rule: Keep it separate, sucker.

--- Laughter

4634   MR. PURDY: They want us to guarantee the old linear while they go out and start brand-new businesses with new partners on the multiplatform side.

4635   We're not against competition, we're not against their content being made available to other providers in the marketplace, but we're not stupid, we know our customers want to subscribe once to content that matters to them and have that content available across all devices and all platforms.

4636   THE CHAIRPERSON: You had more head start, so I'm going to give you some follow-ups on that.

4637   Thinking about it less so from your perspective but from the perspective of the Canadian consumer, will they be more satisfied, less satisfied of the whole communications system in five years and how do we -- if they're not satisfied, how do we get there?

4638   MR. ENGELHART: We think they can be more satisfied. I was really interested to see in your Communications Monitoring Report that online viewing is up and television viewing is up, viewing of the television system is up. A lot of that of course is on demand but it's still the licensed television system.

4639   So there's life in the licensed television system yet and the choice that people get is fabulous now, lots of channels, and if they can get it anywhere, anytime, anything, I think they will be more satisfied.

4640   Part of the trick going forward too, and this is something that we're working on a lot at Rogers, is to make it really easy. So, you know, when you move from room to room or outside of your house your movie will follow you on your iPad without you doing anything. It will just pick up exactly where you left it.

4641   So if we can make it really easy for people, make it easy for them to buy, easy for them to view, give them more content, more platforms, it will be better for customers.

4642   MR. PURDY: The only thing I would add to Ken's comments, Mr. Chairman, is we are going to have to run really hard and work very hard in order to keep up with customer expectations.

4643   I've been at Rogers now for 11 years and I've been with the Canadian broadcasting system since 1995. It used to be easy to meet customer expectations. I remember when we first launched specialty channels and providing just that level of niche access to content, whether it be the Discovery Channel or the Comedy Network, was fantastic.

4644   Now, customer's expectations are growing exponentially. Flat is the new up. You have to work very, very hard just to stay even with your customers' expectations.

4645   And their experiences on the Web affect their expectations on set-top boxes, mobile devices, et cetera. So whatever they've experienced in terms of online viewing and online access to content, online search capabilities, now is extensible or drives into the traditional television experience and they have the same expectations. So we're running very hard just to stay even.

4646   And sometimes when you talk to programmers, particularly Bell, and explain to them, if we're going to stay even we need access not just to the linear service but we need access to that best programming from the linear service on the on-demand platform just to stay even. Otherwise, we're going to experience what the industry calls "cord shaving," where customers skinny back their cable bills in order to save money and spend it elsewhere.

4647   If you want to avoid cord shaving you have to do more than you have historically and that's where we sometimes get into points of tension.

4648   It's interesting that that's also where Astral has excelled and I can't believe I'm going to be nostalgic about Ian Greenberg moving on because he was such a tough negotiator, but he always understood that you have to work really hard just to stay even, and Movie Network was always our best partner, always first to the platforms, always generous in terms of the amount of content they made available to customers.

4649   They're the only provider we have today that provides full stacking rights. So we don't have access to just "Game of Thrones" the past two weeks' episodes, we have all of the "Game of Thrones" stacked there for Movie Network subscribers.

4650   Ian gets it. Astral gets it. Bell has not.

4651   THE CHAIRPERSON: From a slightly different perspective, there have been a lot of comments over the past two or three years about Canada's declining productivity in the economy. Kevin Lynch, former Deputy at Industry and Clerk of the Privy Council, and Mark Carney of the Bank of Canada mentioned that.

4652   What's the contribution that the communications sector might have to improving Canada's competitiveness on productivity?

4653   MR. ENGELHART: Well, our penetration of broadband Internet in Canada is truly extraordinary, and, you know, we tend to read these different studies and critics and naysayers, but the facts speak pretty loudly.

4654   In terms of household penetration of broadband, Canada is well up there, sixth or seventh highest in the world, and availability is terrific, and it's -- you know, maybe this is my bias, but I think it's because cable is so heavily penetrated in Canada. It's cable with the DOCSIS 3 platform.

4655   We've now got 100-150 megabits per second kind of everywhere in the places it's not rolling out faster. So that's a huge driver of economic productivity when you have that kind of Internet capability across a country as vast as ours, and that's, I would say, the biggest contribution that we've made to Canada's productivity.

4656   THE CHAIRPERSON: Thank you.

4657   We have to get on with this other hearing. I would have more questions but Commissioner Pentefountas will have some questions for you. Thank you.

4658   COMMISSIONER PENTAFOUNTAS: Thank you, Mr. Chair.

4659   Talking about nostalgia, I thought I was sitting next to the big guy again who would take all the low-lying food for the first half-hour.

--- Laughter

4660   COMMISSIONER PENTAFOUNTAS: Look, I found this document a lot more interesting than the initial intervention you put forward. There's a lot more detail and it's interesting that we set aside the market share debate and look at the true power that comes with the share that's already there.

4661   What did you guys miss a year and a half ago when Bell bought CTV? You're sort of coming back today and saying, had we known then what we know now, we wouldn't have approved it.

4662   You're all experienced broadcasters and BDU operators. I mean, what happened? Ken, you spoke briefly about the temptation that comes with that kind of power. Is it a question of absolute power --

4663   MR. ENGELHART: I think so.

4664   COMMISSIONER PENTEFOUNTAS: For the record, Mr. Purdy is shaking his head; but go ahead.

4665   MR. PURDY: On the positive.

4666   COMMISSIONER PENTEFOUNTAS: On the positive.

4667   MR. ENGELHART: Look; CTV was a bit of a pain to deal with. It is like David said: We will be nostalgic about Astral.

4668   So when Bell bought CTV, we thought: Well, maybe this will put things on a more business-like basis.

4669   So we underestimated how those valuable assets would be used to benefit their distribution businesses.

4670   And we knew the Commission was going to have a proceeding on vertical integration and we had a pretty good idea of the rules we wanted, and the Commission put those rules in place. So we thought: That will surely solve the problem.

4671   So we didn't realize how aggressive they would be in strengthening their distribution businesses and we didn't realize that the safeguards would not be sufficient.

4672   I don't know, David, if --

4673   MR. PURDY: The only thing I would add to Ken's comment; if you had asked me in the summer of 2012 would we have three X's below those three columns in terms of access to specialty channel content on the on-demand platform, the broadband platform and the mobile platform, I could not have believed that we would be in this situation.

4674   Now part of that I am sure is partly my fault; maybe I could be a better negotiator. But we have really seen an unwillingness to come to a middle ground in terms of getting access to this content.

4675   In the case of VOD and broadband, we have not even received an offer. In the case of mobile; the initial offer that we received was so high, relative to the opportunity at the time, that we just had to pass on it.

4676   So this is really I think very surprising for me that we are in this situation, at the end of the summer in 2012, and I think what has changed also is customer expectations. Our customers now expect to have the best content available on-demand and online, and we are not able to secure that for them.

4677   And if you go back 18 to 24 months, it was still nascent; it was early days. I think they were grateful that we were experimenting. But is amazing how quickly the customer expectation goes from: Oh; this is new and kind of interesting too to: I expect to have that and why doesn't it work perfectly and why don't you have all the content there?

4678   COMMISSIONER PENTEFOUNTAS: Yes; it is a pretty quick raise between expect and demand.

4679   Let's get back to mobile and then we will try to sort of follow the order you guys set out here.

4680   You know, George Cope came in a couple of days ago and threw out a 3-million figure, and also stated that -- I think he said Bell Mobile is paying CTV or Bell in the area of $8 million. And when you look the numbers, $3 million is petty cash for Rogers or Shaw or anyone else. What is wrong with that statement and where is the disconnect?

4681   MR. PURDY: Thank you for the question. We were -- I am not sure who was offered the $3-million number by --

4682   COMMISSIONER PENTEFOUNTAS: It wasn't you?

4683   MR. PURDY: -- by Bell. I will walk you through the chronology, and I am a little uncomfortable doing so because we have non-disclosures and we shouldn't really saying core details of our negotiations with Bell but I am happy to provide it in confidence afterwards all the details and we will endeavour to do so.

4684   But the first offer that we received from Bell for access to their mobile content was in the double-digit millions. So this was for accommodation of specialty-channel content and CTV, the main network.

4685   Now they then subsequently came back and offered a bundle rate that was not quite in the double-digit millions but it was certainly far above five million.

4686   COMMISSIONER PENTEFOUNTAS: Just for the record, how many mobile subscribers do you have right now?

4687   MR. PURDY: We have 8 million billing relationships; 11 million users.

4688   COMMISSIONER PENTEFOUNTAS: Yes.

4689   MR. PURDY: But at the time, we did not have a single mobile video customer. So we had zero customers. In fact, we have only launched our mobile video platform commercially in May of 2012. So it was --

4690   COMMISSIONER PENTEFOUNTAS: But the pool would be 8 million or 11 million? The pool that you have to --

4691   MR. PURDY: 8 million billing relationships.

4692   COMMISSIONER PENTEFOUNTAS: Okay; that includes cable or strictly speaking mobile? Would you have the numbers for that?

4693   MR. PURDY: Just mobile.

4694   COMMISSIONER PENTEFOUNTAS: Just mobile?

4695   MR. PURDY: Yes.

4696   COMMISSIONER PENTEFOUNTAS: Thank you.

4697   MR. PURDY: Yes, Sir.

4698   COMMISSIONER PENTEFOUNTAS: Great. So -- sorry; go ahead. It helps us do the math.

4699   MR. PURDY: Yes.

4700   So the -- at that time, we did not have a single person paying us for mobile video. And if you look at the pool of customers that you could draw from, they would: a) have to have a smartphone that could enable video; and b) have to subscribe to a package or a data service package that would allow for access to mobile video.

4701   So at that point we had no customers signed up for a mobile video service of this nature.

4702   So the upfront guarantee, if you will, or access fee, was trust-prohibitive.

4703   COMMISSIONER PENTEFOUNTAS: And that was only a year ago? This would have happened a year ago, I gather?

4704   MR. PURDY: Yes, Sir; correct.

4705   COMMISSIONER PENTEFOUNTAS: I mean you have people on the data plan. I mean I -- I have been on your data plan for a while.

4706   MR. PURDY: Yes.

4707   COMMISSIONER PENTEFOUNTAS: For well over a year; my family in on Rogers.

4708   MR. PURDY: Yes; but at that point, we weren't offering a mobile video service.

4709   COMMISSIONER PENTEFOUNTAS: Okay.

4710   MR. PURDY: We didn't have our mobile video prior.

4711   COMMISSIONER PENTEFOUNTAS: And the mobile video service has been offered since?

4712   MR. PURDY: We rolled that out in May. So May of this year is when we made our $5 for five hours and a dollar for every hour thereafter. And that is really what Bell's roll out -- I think --

4713   COMMISSIONER PENTEFOUNTAS: Yes.

4714   MR. PURDY: -- prior to us; yes.

4715   COMMISSIONER PENTEFOUNTAS: And they focused on the mobile platform and nobody pays $5 for ten hours above and beyond any other data plan?

4716   MR. PURDY: Yes; they have modified their rate for $5 for five hours.

4717   COMMISSIONER PENTEFOUNTAS: Right.

4718   MR. PURDY: And nobody -- they chose to lead in the mobile space and that is terrific.

4719   COMMISSIONER PENTEFOUNTAS: But the $3 million offer is correct? I don't want to get into your own little business. But it just goes to -- it is part of the issue.

4720   MR. PURDY: August 4th, 2012; so just about a month ago.

4721   COMMISSIONER PENTEFOUNTAS: Pretty recent.

4722   MR. PURDY: In the middle of the Olympics is the first time that I personally heard the $3 million figure.

4723   COMMISSIONER PENTEFOUNTAS: Okay.

4724   MR. PURDY: It was verbal and it was -- if we were in this range, would you guys be able to move?

4725   So we have never received a formal offer.

4726   COMMISSIONER PENTEFOUNTAS: But if they would have come with a formal offer, it would be more than acceptable and we could put part of these arguments aside?

4727   MR. PURDY: I think it solves the issue of access to mobile content right now, but what it doesn't solve is the fact that by charging starting a very, very high number --

4728   This is the oldest trick in the book in the rights business: If you don't want your competitor to have access to content, you start off with a really onerous guarantee that scares them away and then you work your way down over an 18-month period.

4729   At the end of the 18-month period, you make them a reasonable offer. At that point, you have had 18 months of exclusivity in which to exploit access to this content. You have already sucked up all the customers in the marketplace that care about this. And your competitor comes in and sort of picks up the crumbs that are left on the table.

4730   So it is the oldest trick in the book. You charge a really up-front high guarantee; providing yourself with de facto exclusivity; and bridge to middle ground once you made all the marketing hay-you-can from this exclusivity.

4731   COMMISSIONER PENTEFOUNTAS: Was not the idea behind the head start rule in the VI decision an attempt to curtail that kind of practice? It goes to -- and we are getting back to your document, paragraph 3; but --

4732   MR. ENGELHART: Yes; and I think the rule -- this is a good example of how the VI policy, although it is, I think, one of the strongest safeguards you could put into place, is just simply no substitute for a properly functioning marketplace.

4733   In a properly functioning marketplace, the supplier comes to you and says, you know: What would you like? Here, Bell decides that they are going to launch their mobile video service. If they weren't launching their mobile video service, we wouldn't get access to the content at all and the VI framework wouldn't help us.

4734   So they decide to launch it, I believe, in April of 2011. They come to us with an offer of some, not all, of their content, at a very high rate.

4735   Then, in August, they offer a little bit more, at double the rate, and a discount if we take both packages. That is August of last year.

4736   And so the numbers are crazy -- yes?

4737   COMMISSIONER PENTEFOUNTAS: But when were you ready to launch, though, Ken. I am just -- because they launch in April, 2011 and you were not ready to launch, technically, in April, 2011; is that correct?

4738   MR. ENGELHART: We launched May, 2012.

4739   COMMISSIONER PENTEFOUNTAS: May, 2012? Okay. So the first year, it has been your moot point? You weren't ready to launch, anyway?

4740   MR. ENGELHART: It is --

4741   COMMISSIONER PENTEFOUNTAS: It is not like they got a head start, because you had the technology and they (inaudible)

4742   MR. ENGELHART: It is a bit of a chicken and egg --

4743   MR. PURDY: Yes it is --

4744   COMMISSIONER PENTEFOUNTAS: A lot of omelet references and egg references.

4745   MR. PURDY: A lot of what? Sorry?

4746   COMMISSIONER PENTEFOUNTAS: A lot of egg and omelette references in the last couple of days.

--- Laughter

4747   MR. PURDY: Yes. Without another egg reference, the -- one the challenges we had when we were working through the roll-out of our mobile video offering was how do we get access to a content offering that is comparable to Bell's? So --

4748   COMMISSIONER PENTEFOUNTAS: And that makes the roll-out worthwhile? Because if you don't have the content, no sense in rolling-out.

4749   MR. PURDY: Correct; and we are very fortunate that we own the Sports Network, and we are very fortunate, in a sense, that we own a Broadcast Network. But our specialty channels table is quite minimal.

4750   We were able to conclude deals with Astral, and quite frankly, it is a really interesting point, a bit of a side point but I hope you will allow me to go there. The big difference for us between the world today and the wold post-Astral/Bell merger is the fact that Astral has always allowed us to achieve critical mass to roll-out new platforms.

4751   They have been there in almost every single new product launch we had. And as a result, we were able to work around Bell; get to market with a reasonable offering that our customers don't find anaemic or confusing or misrepresentation of their traditional offering.

4752   If 41 percent of what my customers watch is controlled by a company that doesn't want me to innovate, I am not going to be able to do that. Effectively, my product roadmap will be at the mercy of Bell executives. I should really set up a monthly meeting with George Cope to discuss my product roadmap, to see whether he is going to give us his royal blessing or not.

4753   COMMISSIONER PENTEFOUNTAS: Well, I will tell you, it is one of the most compelling arguments you made in this document is the fact that Astral (inaudible) it is your contention that Astral will become a rival.

4754   Back to Astral; I mean people will come out and say: It is rather self-serving and self-interest that you are interested in Astral's properties and it would -- or that Astral's English-language pay TV properties, and that is the major reason that you would like that aspect of the deal at the very least to be blocked.

4755   I mean how do you respond to that?

4756   MR. ENGELHART: You know, I am sure that we would make a bid for it if those assets came on the market. They -- it is not according to our strategy; we would not be -- we did not bid on them. We did not bid on Astral the first time around. And if Michael Macmillan bought those assets, we would be thrilled; we would be very happy.

4757   So this -- our objective here is not to buy them ourselves, although, you know, as a media company, we would be interested.

4758   COMMISSIONER PENTEFOUNTAS: But when you say it is not according to your plan; Mr. Purdy came up and said simply this and that; HBO and TMN content is at the heart of a potential mobile offering. Do you see a --

4759   MR. ENGELHART: I mean I am hopeful that if it is a divestiture, whoever buys those assets will become a good partner, just Astral is. We very much need a good partner for those assets. That content is really key. It punches above its weight, particularly on the new platforms.

4760   If the only way we could, you know, keep Bell from getting it was to buy it ourselves, yes, that would be one of the motivations. But as a company, we are putting more of our emphasis on networks than on content, and although we are very proud of the content we have got, this would not be something we would be blasting after, but of course we would be interested.

4761   MR. PURDY: The only thing I would add is the primary concern we have with Bell owning Astral is - and particularly the English-language assets of Astral - is that it is a catch-22 situation we find ourselves in.

4762   So when we negotiated with Astral, there is no doubt that Ian Greenberg and Domenic Vivolo and his lieutenants that we negotiated with; they are difficult negotiators.

4763   COMMISSIONER PENTEFOUNTAS: They don't give it away?

4764   MR. PURDY: They do not give it away, the content. The notion that --

4765   COMMISSIONER PENTEFOUNTAS: Yes; no one does, though.

4766   MR. PURDY: -- nobody gives the content.

4767   COMMISSIONER PENTEFOUNTAS: But isn't that part of regular business and practices? I mean you are kind of making a case that Bell does things differently.

4768   MR. PURDY: They do do things differently, because -- you know, I think Mr. Crull said on Monday that we were expecting it for free. I can assure you that Ian Greenberg has given me nothing, other than a couple of good night out on the town, for free.

4769   COMMISSIONER PENTEFOUNTAS: In Montreal, I hope.

4770   MR. PURDY: Well -- yes. I have enjoyed his (inaudible)

4771   COMMISSIONER PENTEFOUNTAS: We won't ask the details of that.

--- Laughter

4772   MR. PURDY: And even then, it wasn't really free.

4773   MEMBER PENTEFOUNTAS: We won't the details there either. What is free, at the end of the day? But that is a different discussion for a different forum.

4774   MR. PURDY: We always pay for the multi-platform rights; we always pay. And if it is baked into a bigger deal, then it is baked into a bigger deal. But Ian has never given away anything for free in -- from what I know, in the TV business.

4775   The key thing, though, is that we always recognize that there was a symbiotic relationship. He needed us to distribute his channels and to try (inaudible) - and quite frankly, he was very quick to point out when we weren't doing a good job of it - and we needed his content and his marketing expertise in order to package and brand that.

4776   The difference is now, I am negotiating with somebody who says: You know what? Pay me what I want - which is way above market value - or my sister company is going to steal your subscribers. Either way, I am creating shareholder value; either way, I win. I don't really care how.

4777   We don't see that same level of tenacity to drive towards common ground and get the deal done.

4778   The three x's you see up there are an anomaly. Everybody else has found a way to do a deal with Rogers: Astral, Shaw, Corus, Rogers Media, CBC, has found a way to do a deal; they are an anomaly.

4779   MEMBER PENTEFOUNTAS: Why weren't you part of FOA this summer?

4780   MR. PURDY: You know, it is interesting, and I think the main reason is because we -- Astral didn't -- was not owned by Bell. The big difference now on a go-forward basis is if we are going to innovate, we need that Astral content. If it is not available to us, we won't be able to work around Bell.

4781   MEMBER PENTEFOUNTAS: But if it is available to you and it is just a question of finding the proper price to put on that content, then the Commission is always there. Isn't that a safeguard?

4782   MR. ENGELHART: Mr. Purdy will kick me under the table if I breach an NDA(ph). But we have a memorandum of understanding with Bell that gives us a price for our content on the linear platform, with current distribution packaging. If we want packaging flexibility, that is another discussion; a discussion that we are having - because we do want it.

4783   So we didn't have the same urgency to go to final offer arbitration as the others, because they had no deal. We had, if you will, a stopgap deal for the existing distribution structure.

4784   We have been able to get around all the auxiliary platforms by working with Astral, so we have been able to launch the other platforms.

4785   We will probably need to go to final offer arbitration at some point to get packaging flexibility. Although quite frankly, from what we read in the trade press, we are not that encouraged about how much packaging flexibility we will get, even as a result of that process.

4786   MR. PURDY: And the only thing I would add, Sir, is it is about time we had access to the content as well.

4787   So if you can buy yourself a period of exclusivity while you work through the: a) the upfront negotiations; and then b) the final offer arbitration process; by the time the issue is resolved, the marketing wind has already occurred. Rogers' fundamental tenet is innovation. If you look at how we go to market; how we advertise and promote ourselves, it is always the (inaudible) or the cornerstone has always been innovation.

4788   Bell will now be in a situation where they can either turn on or turn of the gas for innovation.

4789   MEMBER PENTEFOUNTAS: But doesn't a standstill and head start impede that kind of behaviour? I come back to a point I made earlier. I mean what -- nothing - rien ne t'empêche - nothing impedes you from launching whenever you are ready to launch.

4790   MR. ENGELHART: I think that -- with respect, I think that is incorrect. So if we had gone to Bell, say two years ago and said: We want to be the first people in Canada to launch mobile video, we would like to buy your content. They could say: No; we are not using it ourselves and therefore we are not going to give it to you.

4791   If had availed ourselves of the vertical integration structure, we would come and say: Well, they are not getting a head start because they don't launch it themselves. It is just simply not for sale and they are not selling it to us.

4792   So --

4793   MEMBER PENTEFOUNTAS: But under VI - and correct me if I am wrong - maybe VI needs work; I don't know.

4794   Under VI, if it is available, on linear, it should be available on all platforms.

4795   So getting back to -- I can believe you put Dallas on this list, Ken, but anyways --

4796   But getting back to Dallas or any of these other shows; Jersey Shores, I know you watch religiously. If it is available on linear, it has to be made available on all platforms. Doesn't your experience --

4797   MR. ENGELHART: You could be right. My understanding of the rules is they can't give themselves a head start but if they are just not selling those rights, they are just not selling those rights. And that is in contrast to someone like Astral, who would be happy to create a business for a new platform.

4798   Even as it is on the mobile, it is not all of their on-demand content that they are offering. They are offering us what they put on themselves.

4799   MR. PURDY: I think what we will find is that the rest of the industry is going to be forced into a fast-follow-Bell scenario. We will never be able to launch anything before Bell does leveraging their content.

4800   Historically, that didn't include the Astral content and so it meant that we could work around Bell. On a go-forward basis, if 41 percent of what my customers are watching is controlled by Bell; I need their acquiescence before I can bring a new platform to the market. If they haven't launched that platform, I am not going to get access to that content.

4801   COMMISSIONER PENTEFOUNTAS: And it didn't include Astral and that premium content that is so popular on mobile; David? Is that what you were telling us?

4802   MR. PURDY: That is exactly right.

4803   COMMISSIONER PENTEFOUNTAS: Okay.

4804   Back to the London trial. You made reference to it in here and you made reference to it in your initial document.

4805   I understand you wanted to offer flexible packaging, but you were -- there was a contract; it was a contract signed with Bell and other content providers; that things would work in a certain fashion. And those -- there would be those that are strict on contractual obligations that would say: Listen; you have got a contract and the contract is up; whenever it is up and I don't need to know. But if it is up in 2014, well then you can go ahead and offer that more flexible packaging then. In the meantime, you have got a contract; you have to respect it. And you were perhaps technically in breach not -- if you were to roll-out London throughout sort of Ontario. What would you say to that?

4806   MR. PURDY: I would say you were correct, Sir; that if we had a fourth column up there that said: Flexible packaging, we do not have the contractual right to offer Bell services in flexible packaging models. In fact, not only do we not have the right to do the London trial where it is pick 15; pick 20 or pick 30; we don't even have the right for Bell's analogue specialty channels, to offer them in the same way that satellite does. I would be in violation of my contract to just even match what Bell TV Satellite's offering is.

4807   COMMISSIONER PENTEFOUNTAS: And that is a contract that you signed. I mean there was no temple -- gun to the temple, right? You signed it; you have to respect it.

4808   MR. PURDY: If your point is that I am a bad negotiator, I would agree with you on this.

4809   COMMISSIONER PENTEFOUNTAS: You are really beating yourself pretty good, David. It is --

4810   MR. PURDY: We should have -- we had no idea how important this flexible packaging right was going to be when we did our last renewal with Bell.

4811   COMMISSIONER PENTEFOUNTAS: Yes.

4812   MR. PURDY: And quite frankly, most broadcast ownerships in Canada have recognized that it is a latent self-interest to try to figure out new models that would keep people within the Canadian broadcasting system. Which is why in almost every case, we have been able to achieve some degree of packaging flexibility, except in the case of Bell.

4813   COMMISSIONER PENTEFOUNTAS: Bell; live TV is obviously an example of that? There seems to be a conflict there. Why not bring that before the Commission?

4814   MR. PURDY: So on a go-forward basis, we may come to you more often and we may avail ourselves of some of the processes. We have to, because the difference will be that Astral is now part of the Bell (inaudible) services. We have been able to work around Bell to do our innovation projects. We won't be able to if they own Astral.

4815   But I think Mr. Engelhart will -- would (inaudible) on this but regulatory processes are not a replacement for a balanced marketplace. And if we are going to have to stock up on regulatory lawyers and lay off some engineers in order to manage the new world order, which - no disrespect to Mr. Engelhart, but who wants that?

--- Laughter

4816   COMMISSIONER PENTEFOUNTAS: A few lawyers up here, so I would tread carefully.

4817   I will let you deal with your IR issues on your own, but just to get to another point in terms of Bell and content and Astral, potentially.

4818   Explain to me the business -- explain to the room the business model or the argument whereby Bell, having paid close to $7 billion dollars over 48 months -- 24 months, sorry, new math, for programming and content, how they can leave money on the table, be it with Rogers or anyone else on the linear or the multi-platform world; how does that work?

4819   MR. ENGELHART: I will answer that question. I just wanted to come back for a second on the live TV and the London trial.

4820   You're absolutely right that a contract's a contract. Interesting, though, that the other suppliers were prepared to say, well, it's just a trial, it's just London, you need to experiment.

4821   I guess that's the point is, we're talking about a fairly limited trial in a fairly limited geography and other people are willing to cut us some slack; interesting, the one who wasn't.

4822   I think it's relevant because that's the way the world works; rights holders take a long-term view of we're in this together and we're trying to get to the same place, except one particular rights holder does not.

4823   To answer your question -- just one sec.

4824   COMMISSIONER PENTEFOUNTAS: The question is: Bell having spent close to $7-billion in programming, how can they leave money on the table?

4825   MR. ENGELHART: I agree with you completely that they have a right to get the money that a media company should be allowed to get, but the problem here is that they're vertically integrated, so suddenly their perfectly rational business incentives are changed.

4826   We're not here saying that Bell are evil or that Bell are cruel, we're saying that Bell are rational business people. The money that they make from their distribution businesses is much more impressive than the money that they make from their media businesses. If they can sacrifice a bit of profit in the media business by not selling to everyone and sell more cable subscriptions and sell more wireless subscriptions and sell more internet subscriptions, they make more money.

4827   So, you're absolutely right that they are trying not to leave money on the table, but the result is that they're not behaving like a content provider would behave. A content provider like Astral wants to get every last scrap of money out of their content business. A vertically integrated distributor wants to maximize the overall corporate profits which often means enhancing their distribution business and not selling content to their competitors.

4828   And that's where the conduct becomes anti-competitive and not the kind of profit maximization that's good for the system; it becomes bad for the system and bad for consumers.

4829   COMMISSIONER PENTEFOUNTAS: They're willing to sacrifice one of the pillars. You know, people often speak of the four-legged stool or three-legged stool. They're willing to sacrifice that stool because -- that pillar of the stool because you can make so much more money on the telecom side.

4830   MR. ENGELHART: Right.

4831   COMMISSIONER PENTEFOUNTAS: And we've reached that tipping point, we're beyond -- even with a $7-billion investment, at the end of the day you're leveraging that to make money on the telecom side.

4832   And at the end of the day, are people going to jump ship from Rogers to Bell because they can get something on their mobile device that they can't get on Rogers? Are customers that easily swayed?

4833   MR. ENGELHART: I'll let David add to my comments.

4834   But I think a Bell plus Astral, the answer's yes. So, they said on Monday that they had 500,000 customers on their mobile video service. David launched in May of this year, he has 350,000 customers.

4835   So, using Rogers' content, using Astral content, using the other suppliers' content, we've got a pretty good offer that our customers seem to like.

4836   You take that Astral content out of the mix, take it away from us and give it only to Bell, yes, I think that will have a serious competitive impact.

4837   COMMISSIONER PENTEFOUNTAS: But doesn't the sports content drive that kind of customer loyalty and not necessarily, you know, "Game of Thrones" or "Dexter"?

4838   MR. PURDY: So there's no doubt, as Rupert Murdoch said, that sport is the battering ram of television. So, when you're looking to negotiate deals with other distributors having sports content is very powerful and that's why Direct TV pays the NFL over a billion dollars for exclusive right to the content.

4839   But the Direct TV example is a good one where clearly Direct TV has seen the benefit of securing exclusive rights to content in order to differentiate itself against Dish Network and other cable companies in the U.S. -- or cable companies in the U.S. to steal subscribers.

4840   So, using content exclusively has always been a fairly good tool.

4841   Sports drives men 18-34, to a lesser degree men 25-54, but if you could secure the exclusive rights; mobile rights, catch-up rights, broadband rights or VOD rights for "True Blood", based on my survey, every woman between the ages of 25 and 54, if they couldn't get access to "True Blood" verily would move providers. So, what moves me as a customer is not necessarily what moves our overall customer base.

4842   And the content that we're talking about, this Astral content; catch-up rights, look-back rights, on-demand, online and mobile rights, are incredibly important in terms of keeping people within the Rogers family. I think Bell --

4843   COMMISSIONER PENTEFOUNTAS: Even the mobile rights?

4844   MR. PURDY: Absolutely, absolutely.

I mean, the children's content that Astral controls through their almost exclusive relationship with Disney --

4845   COMMISSIONER PENTEFOUNTAS: Yes.

4846   MR. PURDY: -- that children's content now is becoming a major driver of tablet viewing and of Smartphone viewing among children.

4847   COMMISSIONER PENTEFOUNTAS: Yes.

4848   MR. PURDY: A lot of my friends now have got these TVs in the backrests of their minivans, so when they drive to the cottage they turn on a children's show. I'm blessed in not having children, but --

--- Laughter

4849   MR. PURDY: -- for those people that do have children, I'm told that this makes the drive north much less painful. And, so, having access to that Disney content is absolutely a driver and important.

4850   COMMISSIONER PENTEFOUNTAS: I won't comment on the drive with the kids, but I will tell you something, and I think I've said this to you before -- you know, my daughter's 10 -- and I pity people making idiom screens, because she will not watch the Family Channel on the television anymore, it's all on her iPad, that's all happening there.

4851   But, at any rate, we heard Shaw yesterday and I think Pam was in the room, or someone was in the room and you've read their brief. Is Shaw not as worried about Bell/Astral because they don't have the mobile or cell phone play?

4852   MR. ENGELHART: Well, you have to remember that that really fabulous Astral content, the movies, Shaw buys that from Corus.

4853   COMMISSIONER PENTEFOUNTAS: From Corus.

4854   MR. ENGELHART: So, it's not that that content is unimportant to them, it's that they have a --

4855   COMMISSIONER PENTEFOUNTAS: They already have it.

4856   MR. ENGELHART: -- they have a very enthusiastic supplier of that content and Bell buying Astral won't interfere with that.

4857   The other thing is, as you say, they're not in mobile yet, but I think probably more to the point, we're eight percent of Canadian viewing at Rogers Media, Bell is currently at I guess 34 and Shaw plus Corus is at 31. So, when they sit down to horse trade, you know, Shaw can do pretty well. So, I think they're less worried because they bring a lot more to the negotiating table.

4858   COMMISSIONER PENTEFOUNTAS: Time to beef up your media division. Look, I understand no means no, but just briefly for the record if we can get to tangible benefits. You heard about some of the benefits that were put forth by Bell.

4859   First of all, let's talk about the valuation. You did mention in your initial brief you are troubled by the valuation. Do you want to speak to that?

4860   MR. ENGELHART: I think we complained about some of the benefits, I don't think we talked about the valuation.

4861   COMMISSIONER PENTEFOUNTAS: I think I saw it in your brief, but is there a problem with the valuation; have you looked at that?

4862   MR. ENGELHART: I listened to the exchange between Commissioner Denton and the accountant and I -- what the accountant said seemed okay to me.

4863   COMMISSIONER PENTEFOUNTAS: It's all numbers; what do you know? Why do I ask.

4864   So, let's get to benefits. Let's start with the 40-million up north; does that trouble you?

4865   MR. ENGELHART: Look, I mean, this is not particularly our issue and this is not the hill we want to die on. It did seem to us that it was out of context with the precedents the Commission has set, but it's not particularly our issue.

4866   COMMISSIONER PENTEFOUNTAS: Are there any other benefits that you want to speak to?

4867   MS DINSMORE: Yeah. The only other benefit that we had talked about was the mental health initiative and I think others have made their point about that. We don't think it falls within the square walls of what benefits have normally been but, again, you know, our issue and what we're here before you to talk about is not the benefits, per se. We've made our point I think in our submission it really is going to the larger issue of the English language market.

4868   COMMISSIONER PENTEFOUNTAS: Just briefly. You spoke about Olympic content, I think it was -- I have in my notes here, paragraph 36 of your brief. Do you want to put some more meat on that bone, David; your problem with Bell and the Olympic content issue? It's come up before.

4869   MR. PURDY: I think the only -- we're not exclusively focused on the Olympics, I think the Olympics are indicative of our experience across all their content, which is --

4870   COMMISSIONER PENTEFOUNTAS: But the argument that they had cut that deal and the deal did not allow them to offer it elsewhere.

4871   MR. PURDY: Yeah. We understand that that deal predated the VI ruling.

4872   COMMISSIONER PENTEFOUNTAS: Yes.

4873   MR. PURDY: And I think, you know -- well --

4874   COMMISSIONER PENTEFOUNTAS: Because you cite it as an example of sort of Bell's bad behaviour.

4875   MR. PURDY: Yes. I mean, I think the bad behaviour that we're representing here is the fact that if they were properly motivated they would have been able to probably secure those rights in a way that allowed them to sub-licence them to others. There's a number of ways that you can structure deals that make it problematic for you to sub-licence.

4876   COMMISSIONER PENTEFOUNTAS: Mm-hm.

4877   MR. PURDY: When the Commission told the NFL that they had to make the "Sunday Ticket" product available --

4878   COMMISSIONER PENTEFOUNTAS: Yes.

4879   MR. PURDY: -- on a nationalized basis, they ended up doing so, they figured out a way to do so. I truly believe that rights holders when properly motivated by the Commission will find a way to make that content available across the country.

4880   COMMISSIONER PENTEFOUNTAS: Okay.

4881   MR. PURDY: It doesn't mean for free, it doesn't mean that the original rights holder or licensee can't charge for it, but generally people find a way to do a deal, they just need to be properly motivated.

4882   COMMISSIONER PENTEFOUNTAS: It's another piece in the puzzle that goes to this sort of narrative that you're setting forth --

4883   MR. PURDY: Yeah. Exactly right.

4884   COMMISSIONER PENTEFOUNTAS: -- in terms of an attitude that Bell has.

4885   MR. PURDY: Mm-hm.

4886   COMMISSIONER PENTEFOUNTAS: Okay. Thank you so much.

4887   Monsieur le Président.

4888   THE CHAIRPERSON: Thank you.

4889   Commissioner Denton, please.

4890   COMMISSIONER DENTON: Hi. Good morning, everyone.

4891   So, your first proposal is that we order them to divest -- Bell to divest its English language television services. And the second is that you ask us to stipulate that Bell would be required to make available to third party distributors any program rights it holds for any of its platforms without the need for negotiations up front.

4892   So, let's just talk for a moment how that proposal would work, because I just would like your clarification and assistance to understand it.

4893   MR. ENGELHART: Thank you, Commissioner Denton.

4894   So, just so we're clear, it's the divestiture that we think is the appropriate remedy. We think that the issue is market power and you don't create more of a problem with market power because you've got a safeguard and, so, we would view the safeguard as a second best solution.

4895   But we thought if the Commission doesn't deny the -- or doesn't order the divestiture, they might be looking for safeguards and we sat down and tried to think of one.

4896   So, the idea would be this: if Bell's got the rights, we get to use them. This would not be a general VI rule that would apply to everybody, this would be applying to Bell plus Astral because Bell plus Astral is too big. And, so, instead of engaging in a negotiation, if they've got the rights, we can use the rights.

4897   Now, we'd have to pay retroactively back to day one a reasonable commercial rate as set by the Commission in final offer arbitration or otherwise agreed upon. That could be a huge risk for us. If you take David's mobile example and we went ahead and used their rights, then we might be paying that original several times higher than $3-million offer that they made to us and that's just our tough luck.

4898   So, this is not a perfect remedy by any means, but what it does is it doesn't let Bell dictate our product road map; it enables to set our own product road map.

4899   It doesn't let Bell dictate which of their services are going to be made available to us; it let's us pick those services.

4900   Now, part of the problem is, Bell may just not have the rights and until they need to use them for their own distribution arm, they may just not acquire them.

4901   So, I still don't think that this safeguard works as well as having a properly motivated supplier like Astral, but...

4902   And as a corollary of this safeguard it would also mean that in the case of Bell, and only Bell, the decision that you made in the CIDG decision/arbitration that the linear rights would be ruled on separately from the non-linear rights, that distinction would disappear for Bell and an arbitration would deal with all the rights.

4903   COMMISSIONER DENTON: I looked at the vertical integration decision because I wasn't part of that Panel and I thought it was a perfect formula for keeping all of us employed for a long time, and I'm not against that, but one of the things that concerns me -- and this may be a little delicate to ask but therefore I'm going to ask it -- does the CRTC have, in your opinion, the capacity to handle the kind of scale and importance of these arbitrations? Because if we are going to be in this, we're going to be substituting our opinion or engaged in final offer arbitration on a large number of highly important issues.

4904   MR. ENGELHART: Yeah. I mean, it reminds me of what, you know, Winston Churchill said about democracy: it's the worst system except for all the other systems that have been tried.

4905   You know, the Commission with the final offer arbitration is not as good as a properly functioning marketplace, but listen, it is the best regulatory safeguard that's available. And to the extent that you're going to have one, that's the one to have. And the enhancements that you and I have been talking about, Commissioner Denton, would enhance that further, but it still is not a substitute for a properly motivated supplier.

4906   COMMISSIONER DENTON: Well, since that is so and you ask us to insist that Bell divest of its English language television services, what do you envisage would happen if we caused that to be ordered? If Bell had to divest, who would buy it up?

4907   MR. ENGELHART: Ask Michael MacMillan, Cogeco, Corus would probably be interested. Now, they might get too big as a result of that. I mean, Bell would -- just as they did with the Sportsnet when they were ordered to divest, they would hire an investment banker and I'm sure there'd be bidders for those assets. Super Channel might bid.

4908   COMMISSIONER DENTON: All right. We have to contemplate the reality of what you're asking and consider it and, therefore, we have to consider the proposal seriously as to who else might step in and do something about that.

4909   Mr. Chairman, I think those are my questions.

4910   THE CHAIRPERSON: Thank you very much.

4911   Commissioner Lamarre.

4912   CONSEILLERE LAMARRE: Merci, Monsieur le Président.

4913   Good morning.

4914   Mr. Purdy, you're not the first one this week to mention, if not compliment, the way Astral has been doing business, though I must say you've been the most emotional about it.

4915   This being said, I have to read this out because I want to make sure I don't make any mistake with my question. Assuming that we also agree with your characterization of Bell's new behaviour since the acquisition of CTV -- I said assuming -- and assuming also that we share your concern that history may repeat itself, can't we nonetheless make some room for the probability that Astral's philosophy takes over Bell's and not the other way around?

4916   MR. PURDY: Thank you for the question. I feel that it would be unfair to characterize Astral's philosophy as being driven by the management ranks or the executive ranks within Astral, it was driven by Ian's relationship with Rogers and his fundamental belief that partnership is the way to success. And I think he did a great job for his shareholders, he sold that company at a fantastic multiple and I think it's a reflection on him.

4917   Ian I'm sure will stick around for some period of time, I know he's joining the Bell board and I'm hoping he influences Bell's corporate culture, but he will not be running these assets. You can't spend that type of money and maintain the same executive ranks and management ranks. They're going to have to seek efficiencies, there will be consolidation and there will be layoffs and there will be a streamlining of the Astral operations.

4918   There's no doubt that Mr. Cope has to get a return on his investment. He didn't buy these assets for the media value alone, he bought these assets for the strategic value alone.

4919   I believe his prime motivation was to secure French language assets to help with his battles in Quebec, but he will absolutely be looking to secure strategic value for those Astral English language properties.

4920   And I do not believe that we'll be able to have the same level of cooperation and unfettered access to Astral and, more importantly, Movie Network, HBO, Family Channel and Disney content that we do today, I believe that content will become incredibly difficult to get access to on multiple platforms.

4921   MR. ENGELHART: Commissioner Lamarre, if I could just interject. Although Mr. Greenberg is a very nice person and it's not -- the point here is not that Astral are nice people or that Bell are not nice people, it's that they are rational business people who are behaving rationally given the asset mix that they have.

4922   COMMISSIONER LAMARRE: Hence my reference to Astral's philosophy.

4923   MR. ENGELHART: Yeah, but their philosophy is driven by their need to drive profits out of the assets that they have. And, as David said, in order to increase their own profits they needed to partner with distributors. That was a completely rational philosophy.

4924   When they saw us with a new platform they thought, this is something else we can sell in the future and make more money. There's nothing evil about the Bell people and it's not that their philosophy -- it's not a clash of philosophies, it's business people behaving rationally given the assets that they hold.

4925   COMMISSIONER LAMARRE: Okay, fine. I get what you're telling me.

4926   Now, Mr. Purdy, you made reference to the French television assets of Astral and Bell's trying to move to try and get them.

4927   And you also mentioned that your preference would be that, you know, if we do approve the transaction, that we ask Astral to divest its English television services. Well, just after your appearance we're going to hear from l'Union des consommateurs, and the only concern I found in there -- geez, I had it right there -- okay, in their submission, I'm going to paraphrase it because it's in French, basically they tell us that Astral's French television services are so important to the community here in Quebec that basically we should make sure that these French television assets remain independent.

4928   So, they're basically making a similar point that you are. So, if we agree with your position and we also agree with l'Union des consommateurs' position, you're not the only one making that point, but it's just that they're right after you that's why I'm mentioning it.

4929   If we start taking apart Astral in all bits and pieces, won't we be weakening not only its market value but also the entire cultural system that they've managed to develop for the Canadian Broadcasting System over decades?

4930   MR. ENGELHART: We have looked at this transaction -- I'll start and David might want to jump in, and thank you for the question.

4931   We've really looked at this transaction kind of like competition lawyers; we've looked at it from an efficiency perspective. As we look at that and we look at Astral's portfolio of assets, obviously there doesn't seem to be any public policy issue with Bell owning their outdoor business. We kind of swallowed hard and got over the fact that they were going to become a 117-radio-station business and we get it that radio is mostly a local business and the Commission has rules in place for how big you can be in the local market. So that doesn't seem anticompetitive.

4932   Bell acquiring the French assets so that they can mix things up in Quebec didn't seem to us to be a public policy issue where you could say this is necessarily anticompetitive. I think the Union des consommateurs is looking at it more through a cultural lens than an efficiency lens and I don't really want to comment on that.

4933   But I completely take your point that if you took the English specialty out and the French specialty out it's really just radio and you're probably right, while Bell would like to have the radio, that's probably not what's driving them.

4934   CONSEILLÈRE LAMARRE : Ce sont toutes mes questions. Merci, Monsieur le Président.

4935   THE CHAIRPERSON: Thank you.

4936   Commissioner Menzies, please.

4937   COMMISSIONER MENZIES: Thank you.

4938   Just one question regarding your discussion here and as just summarized from Madame Lamarre.

4939   It strikes me that if this goes ahead and then scale is required, if that argument wins the day, some of the issues raised by yourself and Eastlink and others may indicate that if scale is required in the future that more regulation and a more activist Commission may also be required in the future in order to preserve consumer choice such as it is and protect cost for consumers.

4940   Could you comment on that proposition?

4941   MR. ENGELHART: Yes. I was hoping I would get a question on scale, so I'm glad you asked it because as I understand Bell's argument, they're saying we need scale in order to compete with the Netflix's of the world. A Bell without Astral couldn't do it, and Astral without Bell couldn't do it.

4942   I find this really far-fetched. I mean I see it as nonsense. Obviously we support the idea that media companies should be fairly big. We're pretty big. Obviously we support the idea of vertical integration. We started it. But the thing that you need to compete with over-the-top players is not scale. What you need is attractive platforms and content for your customers.

4943   If you look at the over-the-top business as it's unfolded, other than Netflix, Apple TV, Google TV, none of these things have really clicked. The reason that Netflix clicked, among other things, is they provided content that nobody else provided, the deep library stuff, last year's episodes, the seasons before. Nobody else gave that to customers. They gave it to them cheaply and conveniently.

4944   What you see in the United States is cable companies now outbidding Netflix for that content to offer on their SVOD services, broadcasters outbidding Netflix for that content. Poor Netflix is kind of finding that these things they bought for a penny are now costing a dime and going up to a quarter. So Netflix is somewhat retrenching.

4945   You don't need to have a gigantic scale to compete. In fact, if you have a broadcaster you can compete because Hollywood sells the linear rights for 90 cents and then they throw in all the ancillary rights for 10 cents. The guy paying the 90 cents can always beat the guy paying 10 cents in an auction for those rights.

4946   So this notion that Bell plus Astral is the scale that we need to defeat Netflix in Canada is one that we find absurd.

4947   Now, your question though is, I think, a good one, which is if the minimum efficient scale really and truly was so big that you didn't have a properly functioning marketplace, would the Commission need to regulate consumer prices?

4948   Yes. My belief is that we have -- the minimum efficient scale is not that big and we have enough players, and I think what I see in the marketplace is consumers doing very well from the competitive system that we've got, so I don't think the Commission needs to be regulating consumer prices.

4949   MR. PURDY: The only thing -- thank you and thank you for the question.

4950   COMMISSIONER MENZIES: You're lining up to answer this one. I may regret asking it.

--- Laughter

4951   MR. PURDY: My question will be very brief.

4952   The only comment I would add to Mr. Engelhart's is if -- well, first, the Netflix stonelike drop in their stock price is driven largely because the Netflix rights that Netflix has secured are -- just as Ken said, it's a deep library and they've secured those rights predominantly on a non-exclusive basis.

4953   So I could launch an SVOD subscription video-on-demand service tomorrow as Dave Purdy, secure the same rights if I was willing pay for them that Netflix has.

4954   Because of that, every BDU that I speak to both in Canada and the U.S. is planning on launching their own subscription video-on-demand service. Comcast has already launched Streampix, which is a competitor to Netflix. DIRECTV has a similar product. DISH Network is planning a similar product.

4955   Many of the Commissioners here know that we have had similar aspirations and I know of two other major BDUs in Canada that are looking to launch their own subscription video-on-demand services.

4956   So this is -- Bell will not be unique or exclusive in this marketplace. They will be unique if they've used it as some justification for a transaction like this but that's the only thing unique about their aspirations.

4957   If they were truly serious about blocking over-the-top disruption in the Canadian marketplace, you would not see an "X" at the bottom of that column for video-on-demand rights for their specialty channels, you would not see an "X" at the bottom of that column for broadband rights and you would not see an "X" at the bottom of that column for mobile rights.

4958   The best way to fight commoditization and over-the-top disruption is embracing new platforms and delivering on the TV anywhere message, and Bell has been absolutely last of all of our broadcasting partners -- or, sorry, specialty channel programming partners to give us access to this content.

4959   COMMISSIONER MENZIES: Thank you.

4960   THE CHAIRPERSON: The Vice-Chair of Broadcasting has a follow-up.

4961   COMMISSIONER PENTAFOUNTAS: Yes. Before I do my mea culpa, just to follow up on Commissioner Menzies' question, which really brought up something that we should have raised earlier.

4962   We heard Mr. Greenberg say clearly Monday morning that one of the motivations for selling was the threat of OTT and Netflix, and we don't want to redo the whole debate about Netflix and the penny a pound and how they got in early and when those agreements run out it's going to be a lot more expensive to get that library content, and people want premium content and there's going to be other competition.

4963   But you heard Mr. Greenberg. I gather from your response you don't really see that as a challenge and you don't see the acquisition of Astral by Bell as a solution to help control costs because costs are skyrocketing and this merger will help Astral in buying content, premium content, specifically south of the border?

4964   MR. PURDY: I guess the premise of the argument was that when you sit down with a Hollywood studio because you're buying over-the-air broadcast rights that you'll somehow secure access to pay TV rights at a lower rate.

4965   My experience in terms of securing content is that the studios are pretty careful about protecting windows and it's very difficult to apply leverage from the broadcast space into the pay TV space or from --

4966   For example, we used to own a very large video store chain. When we tried to bring our video store leverage to bear on our video-on-demand discussions the studios were pretty adept at making sure that the two conversations were bifurcated.

4967   So I don't believe -- and I'm having trouble reconciling Mr. Greenberg's comments with Mr. Cope's comments. So if the content is going to be made available to everybody then I don't understand how Bell owning them truly helps. I guess maybe it's incremental leverage on the programming rights side. It might help a little bit.

4968   I would suggest to you that whoever buys The Movie Network, HBO, once Bell is asked to divest of it would bring similar leverage to that conversation. So I don't believe that Bell's the only person in the Canadian broadcast ownership group world that can somehow bring leverage, incremental leverage to a pay TV discussion.

4969   COMMISSIONER PENTAFOUNTAS: Yes. I think Mr. Greenberg's and Mr. Cope's argument is totally contrary to what you just enunciated. That was my understanding Monday morning. So, okay, that answer is clear.

4970   I have to apologize, I was dead wrong on the exclusivity clause for mobile rights. I mean Bell would have to have launched for them to be forced to make it available to you. So I apologize. I think it's Mr. Engelhart or Mr. Purdy that was making that point. You're correct.

4971   MR. PURDY: I just thought of one other point, sir, that I would just add to previous answer, which is I think the single biggest determining factor on what The Movie Network and Astral pays for pay TV rights will be what Mr. Allard and Super Channel are willing to pay for those pay TV rights in the Canadian marketplace.

4972   COMMISSIONER PENTAFOUNTAS: So the threat is domestic and not international as was put forth? I mean the case was made Monday that the threat is international and the scale would allow them to compete.

4973   MR. PURDY: I think that's a bit of a self-serving argument and certainly not consistent with --

4974   COMMISSIONER PENTAFOUNTAS: It's all self-serving.

--- Laughter

4975   COMMISSIONER PENTEFOUNTAS: Fair enough. Okay. I get it.

4976   Last point. I'm really sorry. We also had a little bit of discussion yesterday about English radio in Montreal and Bell's request to switch languages. I don't know if you're at all familiar with that. I think Madam Wheeler was here yesterday.

4977   Is there what a Sportsnet or some kind of fan -- because Rogers does have sports radio in Toronto and elsewhere -- would that be a viable proposition in Montreal without Canadiens rights? You don't have a radio person on the board, but --

4978   MS WHEELER: Certainly, we would be interested in expanding our sports radio network across the country. So that's certainly something of interest to us. Whether it's a viable business model without the Canadiens rights I think is something that we would have to do the math on.

4979   But I also, I guess, would question the limitations that Bell, you know, has said in previous testimony that they don't have the rights to sub-license the Canadiens rights. So I'm wondering whether that's something the Commission could look into further.

4980   COMMISSIONER PENTAFOUNTAS: Well, I think with sub-licensing their brand -- allowing other people to use their brand yesterday. But that being said --

4981   MS WHEELER: We're not interested in sub-licensing their brand.

4982   COMMISSIONER PENTAFOUNTAS: I understand. But those rights are not ad vitam eternam. I mean they're not forever the property of Bell or anyone else for that matter.

4983   MS WHEELER: They do have an ownership interest in the team though.

4984   COMMISSIONER PENTAFOUNTAS: Well, one has nothing to do with the other, Miss Wheeler. You know that. Thank you.

4985   THE CHAIRPERSON: Just to follow up on that, I do think you're correct, we'll look at the transcript. I think there was a suggestion that they could not sub-license the rights outside of the ownership group, but --

4986   MS WHEELER: Right.

4987   THE CHAIRPERSON: -- we'll follow up on that.

4988   MS WHEELER: Thank you.

4989   THE CHAIRPERSON: I have three questions.

4990   The first one: Are you familiar with TOU.TV? I know it's more of a French-market reality that Radio-Canada offers some streaming.

4991   I mean if you're not familiar with it, I can ask someone else, but I was just curious of how different is that to this new Canadian Netflix that everyone wants to bring to Canada and I'm wondering if we don't already have it to a certain degree, maybe not for American content but certainly for French-language content.

4992   MR. ENGELHART: I am not familiar with that service but we launched, as you know, Rogers on Demand, which we now call Rogers Anyplace TV, to put all the content that people get on demand and online, quite frankly. So it's kind of a Netflix competitor already, the different being you can go back this season, you might even be able to go back last season. You can't go back two, three, four, five seasons. That's what you get with Netflix.

4993   But as Mr. Purdy said, cable companies all around North America are now buying those library rights, those deep library rights, in order to compete with Netflix. So this is not a terribly startling development and it's not some secret formula or secret sauce that Bell has that no one else has.

4994   This is just a question of the basic blocking and tackling of buying those rights, not that cheap, figuring out a business model that works and launching it. And I think Shaw said they would be able to do it with their current assets.

4995   MR. PURDY: Thank you. The only thing I would add, Mr. Chairman, is what Netflix uncovered was something that we had all suspected for quite some time, which is that customers want to binge view. They want to go back to series that had previous seasons and watch them three and four and five at a time over one weekend.

4996   That's the only magic that Netflix has uncovered, and, quite frankly, that's something that's easy for most BDUs to repeat or mimic and we're all in the process of trying to figure out how to do that.

4997   THE CHAIRPERSON: Harking back to my question about productivity in Canada, sometimes when I look at the Monitoring Report and how many hours Canadians are watching screens I'm wondering if that's not part of the issue. But in any event.

--- Laughter

4998   THE CHAIRPERSON: Second question: I know you said it's not your issue but our duty here is to make sure that we have a complete record. At paragraph 86 of your intervention you referred to some of the benefits that in your view shouldn't be acceptable, the Northwestel, the mental health, and you suggested that the money should be put into the CMF.

4999   On Monday we had discussions with the BCE panel where they were afraid that there would be too much benefit money going into the system at once. Are you proposing the CMF because it is a mechanism that can smooth out when the money gets paid out? It's like un fonds de dotation, like an endowment almost.

5000   MS DINSMORE: Really, we proposed it because it's there. I mean it's something that is a repository for monies, that divvies them out within the system. So rather than creating something new, it's a pre-existing mechanism for monies of this nature. So it just seems like an easy way to divert the monies from these benefits.

5001   THE CHAIRPERSON: Did you have any specific views as to -- as you know, the CMF currently has two streams -- as to the --

5002   No, you had no views on that?

5003   MS DINSMORE: No, we had no views on that.

5004   THE CHAIRPERSON: Okay. Thank you.

5005   My last question -- and none of us up here have made up our minds on this, it's a very hard issue. But one of the things I was thinking about as I was walking over here this morning was these divestiture scenarios. It's our job to make big decisions but they are big decisions and I was wondering how would -- because you've been publicly traded for a number of years, you know the markets both here in Canada, financial, stock and other markets.

5006   In your view, how would markets react were we to order divestiture in whole or in part of the assets?

5007   MR. ENGELHART: I don't think the market would react badly to the divestiture of the English stations. I think the synergies for Bell really come in getting the French-language specialty services.

5008   Bell's experience before in divesting Sportsnet and in divesting Citytv, or CTV's experience at least, is that they got pretty good money for those assets when they had to divest them. So financially they did pretty well having a sale afterwards.

5009   So I don't think it would necessarily be dilutive, and if it's not dilutive, the markets wouldn't react badly.

5010   THE CHAIRPERSON: I might ask that question to others later on in the week as well. So heads up to others.

5011   Thank you very much. Those are all our questions. Thank you.

5012   On va procéder au prochain, Madame la Secrétaire.

5013   LA SECRÉTAIRE : Oui, merci.

5014   J'inviterais maintenant l'Union des consommateurs à se présenter en avant.

--- Pause

5015   THE CHAIRPERSON: We're not in recess. We're just changing panels, please.

--- Pause

5016   LE PRÉSIDENT : Alors, bienvenue. Comme est notre habitude, on vous demanderait de vous identifier pour les fins de la transcription et de procéder à votre présentation, s'il vous plaît.

INTERVENTION

5017   M. TANGUAY : Bonjour. Merci, Monsieur le Président. Madame, Messieurs les administrateurs du CRTC, je me présente, Charles Tanguay. Je suis responsable des communications à l'Union des consommateurs.

5018   Je suis accompagné de Sophy Lambert-Racine, qui est analyste, et de Marc-Olivier Moisan-Plante, qui est économiste, deux de mes collègues.

5019   L'Union des consommateurs est une fédération qui regroupe 10 associations coopératives d'économie familiale, des associations de consommateurs locales et qui interviennent auprès des consommateurs, notamment en fournissant des services directs à la population, de conseils budgétaires entre autres.

5020   Donc, c'est par la lorgnette du budget des familles que nous examinons bien souvent les problématiques et avec une préoccupation particulière pour les ménages à plus faible revenu. Bien que ce dossier-ci n'affecte pas seulement évidemment que les ménages à faible revenu mais l'ensemble des consommateurs, nous avons toujours cette préoccupation particulière.

5021   Nous analysons les dossiers par des comités, et dans ce cas-ci, bien, c'est le comité télécommunications, radiodiffusion, inforoute et vie privée qui traite des questions qui relèvent notamment du CRTC.

5022   Alors, évidemment, nous sommes préoccupés par cette transaction. Nous croyons que les Canadiens qui dépensent... Selon le dernier rapport du CRTC, une famille moyenne dépense 180 dollars par mois pour des services de communication. Ça nous apparaît énorme, et quand on compare aux autres pays, effectivement, on paye très cher nos services de télécommunications et nous craignons que l'effet de la concentration accrue et de l'intégration que créerait cette transaction va contribuer à pousser encore plus haut le prix que l'on paye nos services de télécom.

5023   Sans plus tarder, je cède la parole à ma collègue Sophy Lambert-Racine, qui est analyste pour le comité radiodiffusion, télécommunications, inforoute et vie privée.

5024   MME LAMBERT-RACINE : Merci.

5025   Bonjour à tous. Vous m'entendez bien?

5026   LA SECRÉTAIRE : S'il vous plaît ouvrir votre micro.

5027   MME LAMBERT-RACINE : Merci. Parfait.

5028   Donc, bonjour à tous. Donc, voilà, je suis analyste en télécommunications et radiodiffusion pour l'Union des consommateurs.

5029   Union des consommateurs a plusieurs inquiétudes en ce qui a trait à cette transaction de plus de 3 milliards de dollars, une transaction d'une importance sans précédent dans ce secteur de l'économie. À notre avis, accepter cette fusion pourrait avoir comme fâcheuse conséquence, outre l'augmentation du niveau de concentration du marché, l'augmentation des prix des services offerts aux Canadiens, en plus de réduire les sources d'information et d'appauvrir les sources de divertissements à l'échelle nationale.

5030   En premier lieu, nous remarquons que le nombre de chaînes spécialisées sur le territoire québécois s'est accru grandement au cours des années 2000. Néanmoins, un plus grand nombre de chaînes disponibles n'a certainement pas été synonyme de meilleure concurrence pour ce qui est du prix des bouquets de services en télévision.

5031   Selon le rapport sur la convergence du CRTC, le prix pour les services de distribution de radiodiffusion a augmenté dans la dernière décennie beaucoup plus rapidement que l'indice du prix à la consommation.

5032   Selon nos calculs, faits à partir de la figure 32 du document sur la convergence, que vous trouverez à la dernière page du document en annexe, l'IPC a augmenté d'environ 2,1 pour cent par année entre 2002 et 2010, tandis que, pour la même période, les prix des services de radiodiffusion ont augmenté d'environ 4,75 pour cent par année. Le prix de ces services a donc augmenté, grosso modo, deux fois plus rapidement que le prix de l'ensemble des biens et services considéré dans l'IPC.

5033   De plus, des données compilées par l'Institut de la statistique du Québec démontrent que les revenus des distributeurs de services télévisés ont grimpé en flèche dans les dernières années, restant imperturbables aux soubresauts de l'économie. Leur marge bénéficiaire moyenne, qui était de plus de 40 pour cent en 2009, est bien supérieure à celle de l'ensemble des entreprises canadiennes.

5034   Parallèlement, nous remarquons u'au Canada l'intégration verticale semble s'être imposée comme une tendance lourde au cours de la dernière décennie notamment. Pour nommer quelques acquisitions, il y a eu l'achat de CTV par Bell récemment, l'achat de CTV par Rogers, l'acquisition de CanWest par Shaw, Vidéotron par Québecor, etcetera.

5035   A la lumière de notre analyse, nous croyons que la tendance toujours grandissante vers l'intégration verticale n'a pas profité aux consommateurs. Elle n'a certainement pas eu d'effets positifs sur les tarifs en vigueur au sein du marché canadien et québécois, malgré l'évidente santé financière de ce secteur...

5036   LE PRÉSIDENT : Je vais vous interrompre quelques secondes. Prenez votre temps; c'est difficile pour les interprètes de vous suivre...

5037   MME LAMBERT-RACINE : Oh, je parle trop vite!

5038   LE PRÉSIDENT : ...quand vous lisez trop vite, et on veut bien vous entendre, donc prenez le temps nécessaire, respirez!

5039   M. TANGUAY : Est-ce que les interprètes ont notre texte?

5040   LA SECRÉTAIRE : Oui, ils l'ont.

5041   LE PRÉSIDENT : Allez-y, s'il vous plaît.

5042   MME LAMBERT-RACINE : Je vais prendre un peu plus mon temps.

5043   En ce sens, on croit que d'accueillir la demande de Bell et d'ainsi autoriser un niveau d'intégration vertical encore plus grand ne peut pas avoir d'effets véritablement bénéfiques sur le marché. Cela risque, au contraire, de multiplier les pratiques anti-concurrentielles et de forcer le Conseil à gérer des conflits perpétuels entre Bell et les télédistributeurs.

5044   Dans un autre ordre d'idée, nous souhaitons également mettre le Conseil en garde contre les arguments simplistes de Bell concernant la diversité des voix sur le territoire québécois.

5045   Premièrement, même si les chiffres avancés par Bell semblent démontrer que l'entreprise n'occuperait pas, selon les critères du Conseil, une part au transfert des audiences au Québec, nous considérons que les enjeux concernant la convergence et la concentration des médias sont des questions complexes qui ne peuvent pas être cernées uniquement grâce à des calculs de parts d'écoute.

5046   Deuxièmement, Bell a même mentionné dans sa demande que l'acquisition d'Astral inclut tout de même plusieurs chaînes de radios qui diffusent des nouvelles. Le fait que ces services d'information passent aux mains de Bell, selon nous le fait qu'elles compromettent davantage la variété, l'indépendance et l'intégrité du contenu.

5047   En effet, le fait pour Bell de posséder déjà de nombreuses chaînes dans le Canada anglais et d'acquérir une part plus importante du marché québécois pourrait amener le risque que Bell fasse comme d'autres empires verticalement intégrées et impose, soit directement ou indirectement, une ligne éditoriale aux responsables des services d'information et de contenu.

5048   Bell mentionne également dans sa demande qu'aucune chaîne généraliste ne fait partie de ses projets d'acquisition sur le marché francophone. UC tient à rappeler que les négociations de Bell pour l'achat de V télé, une station de télévision généraliste, ont fait les manchettes à quelques reprises au cours des derniers mois.

5049   Même s'il n'y a aucune chaîne de télévision généraliste incluse dans la demande actuelle de télévision d'Astral par Bell, le Conseil devrait quand même garder en tête que même si Bell affirme ne pas acheter de chaînes généralistes pour l'instant, cela pourrait faire partie de ses intentions à moyen terme.

5050   Nous tenons également à rappeler que les empires verticalement intégrés ne font pas nécessairement bon ménage avec le secteur de l'information. Nous invitons notamment le Conseil à consulter une recherche citée dans notre mémoire à la note de bas de page 21 dans nos observations écrites, qui traite de l'impact de la convergence sur les travailleurs de l'information.

5051   Nous tenons également à rappeler que les médias d'information ne sont pas les seuls émetteurs à subir les conséquences de la convergence. Ce phénomène a aussi un impact non négligeable sur les chaînes spécialisées, incluant celles axées sur la culture et le divertissement, très présent dans le Bell-Astral.

5052   Il est hautement probable que le contenu des chaînes spécialisées d'Astral, si Bell l'acquiert, sera en proie à une diffusion qui pourrait avoir des dommages collatéraux sur la créativité. En effet, un contenu qui serait d'abord prévu pour la télévision serait relayé ensuite sur de multiples plateformes, tel qu'expliqué dans la demande de Bell, qui souhaite donner accès au contenu sur téléphones cellulaires et tablettes notamment.

5053   Même si l'accessibilité de certaines émissions s'en trouvera décuplée sur les plateformes de Bell, il reste que cela se fait au détriment de la diversité et de la concurrence. En effet, en voulant favoriser le contenu d'Astral, Bell risque de favoriser indûment son contenu par rapport à celui d'autres propriétaires de contenu et possiblement de nouveaux entrants.

5054   En somme, il serait faux de prétendre que Bell ne fait pas déjà concurrence à Québecor. Bell fait déjà concurrence à Québecor dans de nombreux secteurs, notamment celui de la télédistribution, même si Bell n'est pas détentrice des nombreuses chaînes d'Astral au Québec.

5055   Enfin, il faut faire attention aux nuances. L'acquisition d'Astral permettrait à Bell d'améliorer sa position concurrentielle face à Québecor mais toutefois, l'acquisition ne permettra pas d'améliorer la concurrence au Québec et au Canada en général. Bien au contraire. Si cette transaction a lieu, nous allons perdre un concurrent dans la production de contenu.

5056   En fait, nous nous inquiétons que le marché au Québec soit dominé exclusivement par deux géants aux formes d'entreprises relativement similaires et ce sont les consommateurs qui pourraient alors être contraints de choisir entre seulement deux concurrents, deux empires verticalement intégrées, qui par leur nature sont capables de réduire les coûts de production au minimum au détriment de la diversité, des voix et des choix.

5057   Tout compte fait, il est indéniable que l'acquisition d'Astral par Bell risque de modifier les rapports de force entre les différentes entreprises productrices de contenu et distributrices de service de radiodiffusion.

5058   UC considère que la positon dominante et renforcée de Bell pourrait miner le caractère abordable et la diversité des services de radiodiffusion canadiens. En fait, la santé financière de ces entreprises s'améliore au fil des années tandis que les bouquets de services servent une portion toujours plus grande du pouvoir d'achat du consommateur vu la rareté des services peu coûteux.

5059   De donner l'aval à une transaction de la sorte qui ne fait qu'exacerber les caractéristiques du marché actuel qui n'est pas efficace est, selon nous, pas la solution.

5060   Pour ces multiples raisons, nous suggérons en premier lieu le rejet de la fusion Bell-Astral dans son entièreté. La seule façon de réduire la perpétuelle convergence est tout simplement de s'opposer à une plus grande forme de concentration.

5061   Advenant le cas où la transaction devait être approuvée, nous demandons un encadrement strict empêchant, dans la mesure du possible, l'entreprise Bell d'adopter des pratiques qui pourraient lui accorder des avantages indûs, notamment au niveau tarifaire.

5062   Nous encourageons également le Conseil à demander à Bell de se départir en priorité de stations rentables, si évidement la transaction devait avoir lieu, pour s'assurer que celles qui seront exclues soient intéressantes pour plusieurs types d'acheteurs et pas seulement pour des entreprises intégrées verticalement et horizontalement comme Bell, qui sont susceptibles de trouver un avantage du simple fait d'acquérir la propriété du plus grand nombre possible de fournisseurs de contenu en vue d'avoir une position dominante. Voilà.

5063   Merci de votre attention.

5064   LE PRÉSIDENT : Merci beaucoup. Je ne sais pas si votre présence fait peur aux grandes sociétés mais je trouve un peu décevant que dès qu'un groupe de consommateurs s'est mis à la table, les représentants des plus grandes sociétés, des représentants les plus seniors des sociétés de communications au pays, ont quitté la salle. J'espère qu'ils écoutent par ailleurs par d'autres moyens.

5065   Madame Lamarre aura des questions pour vous.

5066   CONSEILLERE LAMARRE : Merci. Tout d'abord, j'appuie ce qui vient d'être dit par le Président.

5067   Avant de commencer, Monsieur Boucher -- c'est exact?

5068   MME LAMBERT-RACINE : M. Tanguay.

5069   CONSEILLERE LAMARRE : Monsieur Tanguay. Excusez-moi. J'avais mal noté.

5070   Monsieur Tanguay, juste pour qu'on s'entende sur le vocabulaire, au début de votre introduction vous avez fait état de la constatation que le budget mensuel des services de télécommunications augmentait tout le temps chez les consommateurs et j'ai cru détecter dans votre commentaire que vous utilisiez l'expression «services de télécommunications» et «services radiodiffusion» de manière interchangeable. Est-ce que je me trompe?

5071   M. TANGUAY : J'englobais l'ensemble des services de communications. J'espère que la statistique que je citais couvre bien ce dont on parle, mais ça devient effectivement de plus en plus difficile d'établir une frontière claire entre télécommunications et radiodiffusion.

5072   Ce qui complexifie peut-être l'examen du présent dossier, et ça me donne l'occasion de suggérer que cette question-là soit justement prise largement, parce qu'il faut voir qu'on parle aussi de compagnies qui contrôlent aussi l'accès Internet et qui contrôlent des contenus portables sur toutes sortes de plateformes, et dont certaines politiques contraignent les consommateurs à l'égard de services qu'ils pourraient utiliser s'ils n'étaient pas contraints.

5073   Par exemple, les plafonnements de téléchargement Internet qui sont la norme actuellement au Canada et qui empêchent les consommateurs d'avoir accès à des contenus télévisuels sur Internet ou, par exemple, pouvoir plus facilement utiliser la téléphonie par Internet et donc en restreignant l'accès à certains services, on maintient des positions dominantes ou des contraintes aux consommateurs pour favoriser d'autres services.

5074   CONSEILLERE LAMARRE: Donc, même si on n'est pas ici pour refaire un débat sur les politiques existantes du Conseil et qu'on traite de la transaction Bell-Astral, vous tenez quand même à ce qu'on garde en tête la forêt qui est autour et non pas qu'on prenne ça de façon isolée. Je vous entends.

5075   Maintenant, vous avez... disons que je suis contente de voir que je m'étais fait un résumé de votre position, qui ressemble pas mal à votre présentation, ce qui veut dire qu'on comprend quand même les mêmes choses, mais comme le Président l'a fait savoir au début de l'audience, nous sommes ici pour obtenir un dossier public le plus complet possible et aussi pour mettre à l'épreuve les positions qui sont devant nous. Alors, c'est maintenant votre tour.

5076   Vous nous dites, au paragraphe 8 de votre présentation, que les enjeux qui concernent la convergence et la concentration des médias sont des questions complexes, qu'on ne peut pas cerner avec des questions de parts d'écoute. Je pense qu'on peut être d'accord pour être d'accord.

5077   Ceci dit, vous semblez craindre que la transaction, si elle se réalisait, qu'il y ait moins de concurrence dans le marché, plus précisément au Québec. Un peu plus tôt aujourd'hui on avait M. Alain Simard de L'Équipe Spectra qui, lui, fait affaire présentement avec un peu tout le monde, il fait affaire avec Quebecor, il fait affaire avec Astral, et lui estimait qu'au contraire, présentait que s'il y avait un équilibre dans le marché au Québec, que cet équilibre-là serait en meilleure position, serait plus stable si effectivement la transaction allait de l'avant, en ce sens qu'on aurait d'un côté Québecor qui est un gros joueur et on aurait de l'autre côté la fusion Bell-Astral qui permettrait, justement, des batailles peut-être plus à armes égales.

5078   Qu'est-ce que vous en pensez?

5079   MME LAMBERT-RACINE : C'est justement quelque chose qui nous préoccupait. En fait, Bell, comme on le mentionnait dans nos observations, améliorerait peut-être sa position face à Québecor, mais ça ne veut pas dire que l'état de la concurrence en général serait amélioré.

5080   De ce qu'on en comprend de ce qui est présenté, c'est comme si le seul modèle qui devait être accepté pour être concurrent c'est des modèles de grosses empires verticalement intégrés qui doivent, si on veut, c'est une guerre de géants entre l'un et l'autre mais dans ces observations-là on ne prend pas en considération le fait qu'il y a peut-être des entreprises plus petites dans différents secteurs qui font concurrence à Bell et à Québécor, que ce soit, par exemple, des plus petits fournisseurs, des plus petits distributeurs.

5081   On croit qu'il n'y aurait pas amélioration de la concurrence. Ce serait Bell, si on veut, qui aurait un peu plus d'armes pour faire, si on veut, pour combattre, pour s'opposer à Québecor mais dans les faits, l'état de la concurrence en général ça reste que c'est proche d'un duopole et c'est pas nécessairement idéal ou un modèle de concurrence parfait.

5082   CONSEILLERE LAMARRE : Je pense que c'est dans cet esprit-là, et vous me corrigez si je me trompe, que vous suggérez qu'on impose, au fond, une structure quasiment indépendante pour Astral si effectivement on allait de l'avant avec la transaction.

5083   Pouvez-vous élaborer sur ce que vous envisagez comme structure à ce moment-là?

5084   MME LAMBERT-RACINE : C'est en fait une suggestion qu'on faisait dans nos observations écrites. Il faut comprendre que c'est des dossiers très vastes, c'est très complexe. On n'avance pas ici que c'est une solution miracle, mais ça pourrait être un modèle qui pourrait être étudié dans le milieu des télécommunications, notamment pour le service Internet large bande à l'étranger. Les formules de séparation structurelle, ça a déjà été abordé, ça a déjà été une solution qui a été utilisée puis qui a eu des impacts.

5085   Nous, en fait, quand on proposait ce modèle-là, notre but ultime c'est qu'il y ait... toutes les ententes pour les services de télévision soient prises dans l'intérêt du public, parce qu'en ce moment c'est un problème. Les négociations que les télédistributeurs et les producteurs d'un contenu se font, si on veut, derrière des portes closes; c'est normal, c'est des entreprises. On ne sait pas si ces offres-là sont nécessairement dans l'intérêt public.

5086   Des fois quand il y a des acteurs et qu'un acteur est plus petit que l'autre dans les négociations, il y a des rapports de forces qui sont changés. Évidemment il y a une politique d'arbitrage du Conseil mais ça encore, nous on n'a pas les moyens de voir si l'offre finale est dans l'intérêt public. C'est sûr qu'on prend pour acquis que le Conseil fait des vérifications, mais...

5087   Bref, devant toute cette transparence-là dans les différentes négociations, on pense qu'effectivement il faudrait qu'il y ait des balises claires pour mieux gérer.

5088   CONSEILLERE LAMARRE : Juste avant vous -- j'ai pas remarqué si vous étiez dans la salle, je m'en excuse -- il y avait Rogers qui présentait une position qui ressemble pas mal à la vôtre quand je les regarde en parallèle. Et Rogers proposait dans sa présentation de ce matin que si effectivement on allait de l'avant avec la transaction, bon, ils étaient plus préoccupés du côté anglophone que du côté francophone, on comprend pourquoi, on exige que Bell rendre sur-le-champ ses produits disponibles pour les distributeurs avant même que les négociations soient conclues et que les négociations se fassent par la suite.

5089   Est-ce que c'est une solution qui pourrait vous apparaître acceptable, compte tenu de la difficulté dont vous faites état pour les distributeurs à négocier les droits pour la distribution des contenus intéressants?

5090   MME LAMBERT-RACINE : C'est sûr que là c'est une idée très précise. Il faudrait peut-être voir plus en détails ce que Rogers entendait par là, mais effectivement on constate qu'il y a peut-être des problèmes dans les négociations des différents acteurs dans ce marché-là. Il faudrait peut-être avoir des balises plus claires -- en fait, c'est sûr qu'il y en a déjà -- pour, par exemple, les arbitrations d'offres finales au CRTC, mais peut-être on pourrait en avoir davantage, peut-être qu'effectivement la suggestion de Rogers pourrait du moins être étudiée.

5091   CONSEILLERE LAMARRE : Évidemment, et vous le saisissez très bien, tout tarif qui est imposé à un distributeur ultimement se trouve à sortir de la poche du consommateur d'une façon ou d'une autre.

5092   Vous parliez un peu plus tôt dans votre présentation, et même dans votre intervention écrite, vous dites qu'il n'y a pas assez de choix au niveau des bouquets, de ce que les gens peuvent choisir pour payer le moins cher possible.

5093   Vous nous dites ça et en même temps dans le milieu de l'industrie, Québecor est souvent cité en exemple comme étant le distributeur qui offre le plus de flexibilité à ses clients.

5094   Vous estimez que c'est pas encore assez?

5095   MME LAMBERT-RACINE : Effectivement.

5096   CONSEILLERE LAMARRE : Qu'est-ce que vous aimeriez voir, vous, comme flexibilité pour vos clients, pour les consommateurs?

5097   MME LAMBERT-RACINE : C'est sûr qu'on constate que il y a des offres peut-être un peu plus flexibles au Québec que dans le reste du Canada, ça on en est conscient. Cependant, ça veut pas dire que la flexibilité est absolue en ce moment.

5098   Il reste qu'il y a beaucoup de distributeurs qui, si on veut, le consommateur doit quand même accepté un bouquet de services d'une grosseur variable qui inclut souvent plusieurs systèmes de chaînes avant de pouvoir faire un choix de quelques postes, c'est pas nécessairement tous les postes qu'il veut.

5099   CONSEILLERE LAMARRE : Et il faut admettre qu'une partie de cette rigidité-là vient des Règles du Conseil aussi.

5100   MME LAMBERT-RACINE : Oui, c'est sûr. Oui, effectivement. Peut-être qu'en parallèle il faudrait étudier les réglementations du Conseil à ce sujet-là.

5101   Mais nous, on fait ce qu'on croit, c'est que il y a plus de choix mais il pourrait y en avoir encore plus. Quand on regarde, Bell a mentionné si on veut les offres, par exemple, de Netflix, ils craignent la concurrence de ce genre de service. Rogers mentionnait tantôt certains avantages de Netflix. Un avantage qui n'a pas été mentionné, et je trouve ça dommage, c'est le caractère très abordable de ces services-là par rapport à des services de radiodiffusion traditionnels.

5102   Effectivement, il faudrait essayer de voir s'il pourrait y avoir plus de choix, donc peut-être voir dans les réglementations actuelles s'il y a moyen de trouver une solution pour qu'il y ait encore plus de flexibilité parce que les consommateurs, ce qu'ils veulent, ce qu'ils apprécient, c'est de pouvoir faire des choix à la carte.

5103   CONSEILLERE LAMARRE : Et selon leur budget.

5104   M. TANGUAY : Si je peux ajouter. Si on revient à la forêt dont on parlait tout à l'heure, il y a la flexibilité théorique que le consommateur a mais il y a aussi la flexibilité réelle considérant les barrières qu'il doit surmonter pour faire des changements.

5105   On offre des bouquets de service Internet, télévision, téléphonie et cellulaire assortis de rabais. Quand on défait une partie de ça, pour un consommateur c'est d'abord beaucoup de magasinage, beaucoup de tracas, et finalement il y a une inertie du consommateur face aux offres des grands joueurs qui lui coûte cher parce qu'au plan de la concurrence il y a un frein très important dans la capacité effective du consommateur à faire des choix différents de ces bouquets dans lesquels il est prisonnier.

5106   Peut-être que le Québec s'en tire mieux, notamment parce que la Loi de protection du consommateur a été améliorée et a permis de lever certaines de ces barrières, comme des pénalités mois salées pour rupture avant terme d'un contrat ou la non reconduction automatique d'un contrat à la fin du terme. Ce sont là tous des exemples qui montrent que finalement il faut une réglementation aussi, comme la portabilité des numéros de téléphone, pour permettre aux consommateurs davantage de flexibilité.

5107   CONSEILLERE LAMARRE : Donc ce que vous me dites c'est que la concurrence existe mais c'est pas nécessairement sain d'en tirer profit.

5108   M. TANGUAY: Exact.

5109   CONSEILLERE LAMARRE: On va parler de la radio. Au sujet de la radio, vous insistez sur le fait que en ayant Bell au-dessus des stations qui présentement appartiennent à Astral, que ça viendrait probablement réduire la diversité des voix éditoriales.

5110   Si on parle du Québec précisément, pour l'instant les chaînes qui seraient acquises ce sont les chaînes d'Astral, donc, les chaînes qui sont là, tout ce qu'on ferait c'est de changer de propriétaire.

5111   Au début de la semaine, autant les représentants de Bell que ceux d'Astral ont insisté sur le caractère local de la programmation radio et du sens des affaires, la business, de la radio.

5112   Est-ce que malgré tout ça et ayant entendu tout ça, est-ce que vous êtes quand même inquiets?

5113   MME LAMBERT-RACINE : Inquiets, oui, parce que... je pense qu'ils ont mentionné aussi que dans tout bulletin de nouvelles il y a toujours une part qui est dédiée au national, donc, oui, même s'il y aurait des préoccupations quant aux nouvelles locales, il y a quand même... il y a toujours la possibilité pour eux d'imposer.

5114   C'est sûr qu'on les accuse pas, mais c'est un risque, quand il y a des empires verticalement intégrées comme ça, qu'il y ait des lignes éditoriales effectivement qui s'imposent.

5115   CONSEILLERE LAMARRE : Mais lorsque, justement, M. Parisien a fait référence à la portion du bulletin de nouvelles qui était nationale, il a aussi précisé que c'était pas le noyau de leur centre d'affaires publiques et de nouvelles, que chaque station de radio se préoccupait de la nouvelle locale et que pour la nouvelle nationale, la plupart du temps ils faisaient affaire avec une agence.

5116   Est-ce qu'à ce moment-là le péril ici est pas plutôt très hypothétique?

5117   MME LAMBERT-RACINE : Bien, le péril, c'est quelque chose qu'il va falloir voir à long terme, donc... en ce moment, l'acquisition n'a pas encore eu lieu. On ne sait pas dans les faits ce qui va réellement se passer. Est-ce que, effectivement, ça va être concentré sur vraiment les nouvelles très locales et seulement les informations d'agences, par exemple, d'agences de presse pour le national? On n'a pas encore la démonstration de ce qui va se passer.

5118   Comme je disais plus tôt, c'est un risque qu'il faut prendre en considération, malgré le fait que Bell n'a pas, pour l'instant, de média généraliste au Québec. C'est quelque chose qu'il faudrait surveiller à long terme.

5119   M. TANGUAY : Si je peux ajouter.

5120   Peut-être qu'on ne doit pas non plus considérer seulement l'information mais plus globalement la main mise aussi sur les contenus ou sur les packages publicitaires. Une plus grande position de dominance au plan de la publicité peut avoir aussi à terme une influence sur les contenus divertissements, et parfois la ligne n'est pas très claire entre contenu publicitaire et contenu de divertissement ou d'information. Alors cette crainte-là, elle vient de là aussi.

5121   CONSEILLERE LAMARRE : O.K. C'est bien noté, Monsieur Tanguay.

5122   Vous avez suggéré qu'au niveau du dessaisissement des stations de radio que devra faire Bell si on approuve la transaction qu'on s'assure, nous le Conseil, que des stations de radio rentables soient offertes, ils se dessaisissent aussi de stations rentables, pas seulement celles qui ne vont pas nécessairement très bien par les temps qui courent, pour permettre à des joueurs indépendants d'en faire acquisition.

5123   Est-ce qu'il n'y a pas ici un couteau à deux tranchants? Si la station est effectivement très rentable, elle a une valeur marchande beaucoup plus élevée, et peut-être que ça empêche justement un indépendant ou un nouvel entrant de s'essayer avec un nouveau format qui pourra apporter à la diversité, étant donné qu'il aura un prix élevé à payer pour l'acquisition de la licence.

5124   MME LAMBERT-RACINE : Bonne question.

--- Laughter

5125   MME LAMBERT-RACINE : Effectivement, peut-être qu'il y aura ce risque-là, que le prix de vente serait plus élevé. Cependant, on pense tout de même que le fait que des stations rentables fassent partie de celles qui sont départies serait dans l'intérêt du public dans le sens où les stations qui ne sont pas du tout rentables pourraient être prises à moindre prix, mais est-ce qu'elles vont survivre au sein de l'autre empire dans lequel elles vont se retrouver? Ça, on n'a pas la certitude.

5126   CONSEILLERE LAMARRE : Normalement, on n'a pas l'habitude de dire à une entreprise quel choix elle devrait faire lorsqu'elle se dessaisit de stations. Ça lui revient.

5127   Par contre, on doit approuver la transaction lorsque la deuxième acquisition se fait, une fois que le dessaisissement est fait. Lorsqu'il y a un nouvel acquéreur, on doit tenir compte de qui est cet acquéreur avant qu'on approuve.

5128   Est-ce que vous nous suggérez à ce stade-ci de justement utiliser cette discrétion-là plus tard, bien qu'on ne puisse pas le contraindre là, un prochain comité d'audition, pour nous assurer que les acquisitions subséquentes se font dans l'intérêt public?

5129   MME LAMBERT-RACINE : Ça pourrait être une voie, effectivement.

5130   CONSEILLERE LAMARRE : Sur un point un petit peu plus précis des avantages tangibles, j'ai noté dans votre mémoire ce que vous nous dites au sujet de -- attendez que je le retrouve, paragraphe 82 -- au sujet du fonds de participation à la radiodiffusion, bon, comme quoi c'est un fonds dont on devrait assurer le financement à long terme.

5131   Au-delà du financement, est-ce que vous pourriez me dire ce matin ce que ça représente pour vous l'existence de ce fonds-là et ce que ça représente pour les consommateurs que vous représentez?

5132   MME LAMBERT-RACINE : Bien, en fait, ce que ça représente, c'est que ça permet justement à des groupes comme nous, des groupes qui défendent les droits des consommateurs, de pouvoir faire des représentations devant vous, en fait, donc, au Conseil de la radiodiffusion et des télécommunications canadiennes.

5133   Donc, ça nous permet de financer nos représentations, parce qu'étant des organismes à but non lucratif, on a des moyens limités. Ça nous permet... et d'avoir ce fonds-là qui rembourse nos dépenses pour participer aux audiences, ça permet d'avoir une voix, donc, la voix du public, la voix des consommateurs, pour que, en fait, ça assure que les consommateurs soient entendus.

5134   CONSEILLERE LAMARRE : O.K. Toujours dans les avantages tangibles, vous êtes de la même opinion que beaucoup d'intervenants à l'effet que le 40 millions qui est promis pour le développement de l'infrastructure de Northwestel dans les Territoires ne devrait pas être accepté par le Conseil.

5135   Ceci dit, les consommateurs des Territoires sont probablement les consommateurs les moins avantagés du pays à plusieurs points de vue, dont l'accès à des services Internet, qui peuvent se traduire, comme vous le savez, par un accès aux produits culturels.

5136   En ce sens-là, est-ce qu'on ne devrait pas quand même le considérer?

5137   MME LAMBERT-RACINE : Bien, c'est qu'en fait, selon ma compréhension, la politique des avantages tangibles n'a pas été prévue à la base pour faire des investissements dans le secteur des télécommunications.

5138   Si on veut se mettre à... Si on veut traiter... prendre des fonds qui étaient prévus traditionnellement pour la radiodiffusion et les utiliser pour le secteur des télécommunications, il faudrait peut-être avoir une politique commune, si on veut, donc, une politique uniformisée pour ce qui est radiodiffusion et télécommunications, parce que là, en ce moment, de la façon que la politique est faite, c'est des montants qui ne devraient pas être investis dans des infrastructures en télécommunications.

5139   On pense que Northwestel ou, en fait, Bell en général a peut-être les moyens d'investir dans les infrastructures du Nord sans nécessairement profiter des avantages tangibles pour le faire.

5140   CONSEILLERE LAMARRE : Donc, si ces 40 millions-là étaient redirigés pour le bénéfice des consommateurs des Territoires pour, d'une façon ou d'une autre, faire en sorte que les consommateurs du Nord aient accès à meilleurs prix et qu'ils aient plus de diversité dans leur choix au niveau des produits de radiodiffusion, ça, ça ne vous causerait pas de problème?

5141   MME LAMBERT-RACINE : Dans le sens où il s'agit de produits traditionnels de radiodiffusion et non de produits qui sont...

5142   CONSEILLERE LAMARRE : Et non d'infrastructure pure?

5143   MME LAMBERT-RACINE : Et non d'infrastructure pure et non, par exemple, que... En fait, ce que Bell proposait, c'est... Un de ses arguments du moins, c'était que ça allait pouvoir lui permettre d'offrir des services, notamment via Internet, des services de radiodiffusion.

5144   Avant d'avoir ces préoccupations-là, il faudrait peut-être s'assurer que les services traditionnels, qui sont encore très en demande des consommateurs, soient disponibles pour les populations du Nord.

5145   CONSEILLERE LAMARRE : Maintenant, je veux revenir sur une question que je vous ai posée au début parce que je dois avoir de la difficulté à comprendre.

5146   Lorsque vous nous dites que l'acquisition -- paragraphe 14 là, je vais reprendre votre citation :

"L'acquisition d'Astral permettrait à Bell d'améliorer sa position concurrentielle face à Québecor ... [sans] toutefois ... améliorer la concurrence au Québec..." (Tel que lu)

5147   Pouvez-vous élaborer sur ce que vous entendez? Parce que ça semble contradictoire à première vue.

5148   MME LAMBERT-RACINE : Oui.

5149   Bien, en fait, pour peut-être expliquer un peu plus en détail, bon, on sait que Bell est déjà là, offre déjà des services, des bouquets de services en télévision de façon similaire à Québecor. Cependant, Bell n'est pas... pour l'instant au Québec, n'est pas propriétaire de beaucoup de contenus, outre, par exemple, les chaînes sportives, RDS, RDS2, et cætera.

5150   CONSEILLERE LAMARRE : Et vous estimez que le fait qu'il ne soit pas propriétaire présentement des chaînes qui appartiennent à Astral, ça n'empêche pas du tout Bell de faire une concurrence féroce à Québecor?

5151   MME LAMBERT-RACINE : Exactement. Ils sont capables de faire concurrence à Québecor sans nécessairement être propriétaires de ce contenu-là. Dans les faits, ce qui risque d'arriver s'ils sont propriétaires d'Astral, ça va leur permettre d'augmenter leur marge de profit. Ça ne veut pas dire que ça va se répercuter sur des avantages visibles pour les consommateurs pour ce qui est des prix des services.

5152   CONSEILLERE LAMARRE : O.K. Je comprends bien. Merci beaucoup.

5153   Ce sont toutes mes questions, Monsieur le Président.

5154   LE PRÉSIDENT : Merci beaucoup.

5155   Premièrement, je constate que les représentants des sociétés commerciales sont revenus et je peux visiblement voir qu'ils sont à l'écoute. Donc, je m'en réjouis.

5156   Si je comprends bien, vous représentez ou vous avez surtout des contacts avec des consommateurs moins fortunés; est-ce que ça serait exact?

5157   M. TANGUAY : On n'aime pas dire que nous représentons les consommateurs parce que ça serait peut-être un peu prétentieux. Nous essayons de défendre l'intérêt des consommateurs -- c'est comme ça qu'on le présente -- avec une préoccupation particulière pour les ménages à plus faible revenu.

5158   Mais dans ce dossier-ci, je vous dirais que c'est l'intérêt général des consommateurs qu'on cherche à défendre et à promouvoir.

5159   LE PRÉSIDENT : On pourrait vous mettre l'hypothèse qu'en général tout le monde est contre les hausses de taxe, contre les hausses de tarif, que, instinctivement, personne n'aime ça payer plus cher.

5160   Dans ce cas-ci, je comprends là que les consommateurs, qu'ils soient à faible revenu ou non, tout le monde va réagir de la même façon, on ne veut pas payer plus cher.

5161   Mais comment pouvez-vous nous amener -- je le sais que vous avec une économiste avec vous -- que c'est vraiment plus que des augmentations dont vous avez peur, mais vraiment des augmentations qui ne sont pas assujetties à des forces du marché?

5162   MME LAMBERT-RACINE : Bonne question. En fait, ce qu'on a remarqué, puis ce qu'on a démontré... ce qu'on a voulu amener dans notre mémoire du moins, c'est que les revenus des entreprises qui offrent des services de distribution en radiodiffusion sont à la hausse.

5163   Donc, quand des entreprises comme Bell affirment qu'ils ont absolument besoin d'Astral pour survivre face à la concurrence étrangère, on ne pense pas qu'ils sont sur le bord de la faillite là puis que c'est nécessaire pour leur survie.

5164   En fait, on ne croit pas que ça soit nécessairement... Justement, ce qu'on a essayé de démontrer, c'est que ce n'est pas nécessairement... L'état du marché actuel ne permet pas... en fait, n'a pas eu d'effet positif sur les tarifs, et c'était essentiellement ça.

5165   Donc, ce qu'on a remarqué, c'est qu'il y a eu beaucoup d'acquisitions, il y a eu beaucoup de concentration entre différents empires, puis en parallèle, on remarque l'augmentation des tarifs, on remarque que les revenus sont en croissance aussi. Donc, on a fait évidemment un certain lien de cause à effet.

5166   M. TANGUAY : Des rendements moyens de 40 pour cent, c'est assez impressionnant. Quand les entreprises pour la même période, toutes entreprises confondues, font des rendements autour de 6 ou 7 pour cent, il y a là un problème.

5167   Et le consommateur aujourd'hui a pratiquement nécessairement besoin de ces services-là. Ce sont pratiquement des services essentiels si on veut exercer pleinement sa citoyenneté, si on veut faire partie de la société.

5168   Alors, pour des ménages, même à revenu moyen, des factures de 100 ou 150 dollars par mois pour l'ensemble des services de communication, c'est un gros effort. Et il y a un problème à voir une profitabilité si impressionnante de ces entreprises-là pendant que les consommateurs, eux, payent de plus en plus cher.

5169   MME LAMBERT-RACINE : Puis c'est un service que les consommateurs... c'est important pour les consommateurs.

5170   Donc, par exemple, si une personne avec une situation particulière perd son emploi ou, bref, a une baisse de revenu, ce n'est pas nécessairement le premier service duquel elle va se répartir. Malgré les frais élevés, c'est quelque chose qui est important pour eux. Pour quelqu'un qui ne travaille pas, ça l'a une certaine importance d'avoir accès à la télévision.

5171   Donc, on considère, effectivement, que les tarifs soient le plus bas possible, c'est dans l'intérêt de tous.

5172   LE PRÉSIDENT : Mais on a eu quand même un certain succès au Canada de bâtir un système de radiodiffusion et de télécommunications qui offre beaucoup de diversité, des nouvelles, du divertissement, nonobstant le fait qu'on est le deuxième plus grand territoire au monde, une très grande diversité de cultures, de langues, et une proximité à un marché américain très présent à l'intérieur de nos frontières.

5173   Vous ne pensez pas que ce succès du passé pourrait être un certain garant de l'avenir, même avec une société fusionnée?

5174   MME LAMBERT-RACINE : En fait, ce qu'on a remarqué, c'est sûr que la convergence a certains impacts et certains vont dire que ça apporté certains avantages, mais nous, on a vraiment voulu axé nos observations sur les inconvénients que peut apporter cette concentration-là.

5175   Malgré le fait que pour certaines choses, il y a peut-être des avantages, nous, ce qu'on remarque, c'est qu'il y a des prix qui semblent... ou du moins des services que les prix semblent rester très élevés, malgré le fait que...

5176   Malgré toutes les synergies de ces entreprises-là, on dirait que les conséquences... on dirait que les avantages de ces synergies-là, il n'y pas nécessairement répercussion positive sur les consommateurs.

5177   LE PRÉSIDENT : D'accord.

5178   M. TANGUAY : On ne remet pas en question, effectivement, ce que vous décrivez, cette diversité, cette qualité culturelle, et cætera, sauf qu'il y a peut-être menace à cette diversité dans la transaction actuelle.

5179   LE PRÉSIDENT : D'accord. Je pense que ça complète nos questions. Je vous remercie de votre participation.

5180   Il est maintenant une heure moins 10. On pourrait reprendre à 2 h 00 avec l'instance... avec le prochain présentateur, qui est le Canadian Association for Public Alerting and Notification.

5181   Donc, à 2 h 00.

5182   Merci bien pour votre participation.

--- Upon recessing at 1250

--- Upon resuming at 1400

5183   LE PRÉSIDENT : A l'ordre, s'il vous plaît. Donc, on va recommencer la séance. Merci.

5184   LA SECRÉTAIRE : Merci.

5185   We will now hear the presentation of the Canadian Association for Public Alerting and Notification.

5186   Please introduce yourself and you have 10 minutes for your presentation. Thank you.

INTERVENTION

5187   MR. TOWNSEND: Good afternoon, Commissioners. My name is David Townsend and I am the Secretary of the Canadian Association for Public Alerting and Notification, commonly known as CAPAN.

5188   This presentation that I came to make is in support of our written intervention filed on the 9th of August wherein CAPAN urged BCE and the Commission to agree to allocate specific tangible benefits funds to the broadcast-based public alerting initiatives that we outlined within our submission.

5189   CAPAN was incorporated in 2008 as a national non-profit organization to advance public safety through timely alerts and notifications. Our Executive Director, Doug Allport, serves in a voluntary capacity and he is aided by our nine Board members, of which I am one.

5190   Since our inception, we have worked in the public interest to advance alerting and emergency messaging initiatives at the provincial, federal and international levels.

5191   Currently, we are making contributions to the National Alert, Aggregation and Dissemination Service (NAAD) being implemented by Pelmorex, the Multi-Agency Situational Awareness System being implemented by a number of stakeholders in Canada, the federal government's National Public Alerting System (NPAS), and the new alerting system currently operational within the Province of Alberta.

5192   To best ensure that timely and accurate messages will be received by Canadians in times of emergency, our principal public emergency messaging systems must be brought together to form an integrated, multimodal alerting and notification system.

5193   The best way to achieve a national, integrated warning system is for a federal government to create a national alerting strategy to provide sufficient financial resources and to create comprehensive legislation, such as occurred within the USA starting with an executive order in 2006. This, we are not likely to see in Canada in the near future.

5194   Despite the challenge noted above, CAPAN's members believe that the various alerting and public notification initiatives under development in Canada can be harmonized in a consensus-driven manner so as to create a national, multimodal warning system. We believe that the use of compatible technologies, software languages, technical standards and operational protocols can achieve that result, and we have been dedicating our resources accordingly.

5195   Since the earliest days of radio in Canada, broadcasting undertakings have played a critical role in the provision of public safety information and emergency messaging content to the Canadian public. Indeed, all broadcasters have regarded the provision of public safety and emergency information to be an important part of their corporate responsibilities to their listeners and their viewers.

5196   It is clear that the inclusion of broadcasters as message distributors is a critical precondition to the success of an integrated multimodal warning system of national application. But the equipment, the software, the standards, the operational protocols that each broadcaster selects must be compatible with the deployments within other broadcasting sectors and with other technological modes of distributing alert messages, such as those distributed by Internet service providers.

5197   Within its written submission, CAPAN set out representative examples of actual compatibility issues currently being experienced by Canadian broadcasting undertakings as they prepare to distribute the alerting messages being produced by Pelmorex under NAAD and those to be produced by the federal government under the NPAS initiative. Solving compatibility issues such as these within the broadcasting sector -- and that's our concern here -- will require significant resources over the next three- to five-year period.

5198   Within its application BCE proposed to provide $200 million and now significant more dollars in tangible benefit funding for certain broadcasting initiatives that will improve Canadian broadcasting in the public interest.

5199   Again, CAPAN urges the Commission and BCE to agree to designate specific funding within the proposed tangible benefits package, should their application be approved, for broadcasting-based public alerting initiatives, those outlined within CAPAN's written submission.

5200   As a concluding comment, our Board was very pleased to note that within the Commission's Press Release of the 6th of September and also on its own Web site, the CRTC stated that it will "promote the safety of Canadians by monitoring the deployment of the public alert system" as one of its priorities over the next three-year period.

5201   Relatedly, CAPAN is pleased to publicly acknowledge that the Commission's support for public alerting over the past few years has been instrumental in the recent advancements made on the national scene.

5202   Thank you for this opportunity to make a presentation to reinforce our submission. I will be happy to take questions.

5203   THE CHAIRPERSON: Thank you very much for being here.

5204   Commissioner Menzies will have some questions for you.

5205   COMMISSIONER MENZIES: I'll try to make it reasonably quick.

5206   How much do you want and how long will it take to get this in place?

5207   MR. TOWNSEND: It's taken the U.S. federal government -- essentially it was done by executive order, so you have all the force of the President's office and resources thereunder, and they're six years in and they spent just millions and millions of dollars.

5208   I think we can stand on the shoulders of what they've done, but the implementation in Canada is going to look different in some ways that are going to raise challenges.

5209   I don't have an answer for you. Our Board discussed whether there's any way to sort of liaise in a way that can come up with an answer. My own view was it had to be in excess of a million dollars but I can't offer that on behalf of my Board because they were concerned that if I offered any number at all, we would be challenged, where did this come from, and, you know, public alerting by modern technologies in Canada is just on the cusp edge right now.

5210   What Alberta has just rolled out is probably the most modern thing we have in the whole country.

5211   COMMISSIONER MENZIES: Right. And Alberta has had it for 25 years and it works with the broadcasting system and I continue to be perplexed as to where the barriers are. I mean there was talk in the past about liability at various levels, but you can do this through provincial legislation, first of all, because I mean we're not really in a position to tell Parliament what to do. We don't do that.

5212   MR. TOWNSEND: I appreciate that.

5213   COMMISSIONER MENZIES: So in order to consider this, some kind of estimated timelines -- because one of the problems perceptually with funding working groups is that they just keep on working and don't have an outcome, like a deadline.

5214   So having a set timeframe, a sort of strategic plan, would be helpful. And I know you've had that discussion and you can't give that answer right now.

5215   But tell me about what it's been like working with the broadcasters because it seems to me that if you were going to have a broadcast system at all that one of the things it could be useful in is public safety.

5216   What has been your relationship with the broadcast industry in general in making progress on this? And because Bell is the topic of conversation you might specifically -- and this is their money -- you might specifically address that.

5217   MR. TOWNSEND: I'm the Corporate Secretary and our Executive Director had a prior commitment he couldn't break or else he would be here to talk to this issue. I think that so far the broadcasters have sort of been hanging back, not resisting, just hanging back and raising a number of questions and saying we would like these questions answered before we weigh in.

5218   So I think it may be pretty early to characterize their participation other than to say it's just been a waiting position for now.

5219   COMMISSIONER MENZIES: But it's been about a decade or so, hasn't it, since the CRTC has been expressing interest in this and trying to push this forward and it seems to be stuck, and that's my concern, is that -- I mean I think everybody can agree it's a great idea, right, and certainly, the CRTC has shown interest in public safety and citizen safety and how the system can be useful and many broadcasters work through their newsrooms to alert people, et cetera.

5220   But particularly being from Alberta, when I first started doing this I was actually shocked to find out that nobody else did it because it's such a routine part of the landscape there.

5221   For us to have some grasp of where the institutional barriers are and whether we can do anything about it anymore as a Commission, it would be useful, particularly in terms of any consideration of use of tangible benefits for this project.

5222   MR. TOWNSEND: Okay. Like I alluded to in my presentation, I mean the U.S. federal government, their force came from above. It was a top-down system. They faced a number of short fuse, catastrophic events like 9-11, like tornadoes, like hurricanes, things that in Canada are sort of more distant memories for us.

5223   You know, we've had tsunamis reach our West Coast, we've had a very serious tornado in Edmonton, as you know, but almost all emergency circumstances are local and I think that it's just not strongly on the radar for our federal government.

5224   And the legal liability question keeps arising on a regular basis. The broadcasters are raising it, the wireless service industry is raising it. You know, if we participate in this, who's going to save us harmless?

5225   And it's a prominent feature within the early sections of the U.S. legislation that it does save the participants harmless. So I guess that when sectors of our industry see that and say, well, we'd like that in Canada too.

5226   COMMISSIONER MENZIES: Right. So how are -- also, obviously, provincial governments can do these, too?

5227   MR. TOWNSEND: I think -- I think that provincial governments can certainly do it. One could do it much like gift tissue legislation in some kind of a model that you share. Some of these things don't have to be a standalone piece of legislation; they could be put in the various emergency statutes.

5228   There could be legislation under the Broadcasting Act, there could be legislation under the Radio Communication Act, you know, so whereas -- where the federal government clearly has -- has constitutional authority and have save harmless provisions there. That wouldn't cover the whole sector of all the participants.

5229   COMMISSIONER MENZIES: How is your -- how is your group doing or groups acting on your behalf doing with provincial governments are trying -- because this, as you say, requires some sort of legislative process which, again, we can't -- that's not what we do in terms of that.

5230   How is your group advancing that cause? Is there any chance that, for instance, Saskatchewan, which is -- to start with Saskatchewan, looking at some sort of legislation that would be very similar to Alberta's so you could at least build out from there?

5231   Because the Alberta one, I mean, I can -- I found out that Milk River was being evacuated from a fire the other night through a text message.

5232   MR. TOWNSEND: Right, right.

5233   COMMISSIONER MENZIES: Right?

5234   MR. TOWNSEND: It works well.

5235   COMMISSIONER MENZIES: I mean, half of Slave Lake burned down last year, but-- the radio station burned down too so that was a bit of an issue-- but they, the CBC signal was still getting through to people.

5236   So is your group working at all to advance the cause legislatively?

5237   MR. TOWNSEND: We have. We're --

5238   COMMISSIONER MENZIES: Because all we can do is fund to the cause, but if there's no -- if there's no evidence that the cause is being advanced through the venues that can actually do something about it, it's -- makes it more difficult.

5239   MR. TOWNSEND: We don't know of any legislative initiatives ongoing right now. We would certainly be part of them. I mean, I'm a lawyer and a law professor, I'd be happy to participate in those.

5240   Two members of our board, myself and Dr. Gordon Gow of the University of Alberta, participated in the Legal Liability Working Group for the CANALERT initiative of a few years ago. We produced a very large document that sets out legal liability exposures and makes some recommendations as to how they might be addressed.

5241   So where we've had opportunities to address things like the liability question, we've -- but we don't know of anywhere in Canada where they're at a legislative drafting situation right now.

5242   COMMISSIONER MENZIES: Okay. If it's at all possible for you to consult on the previous question about what sort of timelines --

5243   MR. TOWNSEND: Okay.

5244   COMMISSIONER MENZIES: -- your group is looking at and/or being willing to commit to and get back to us, that would be helpful, and if you could do that, how soon could you do that?

5245   MR. TOWNSEND: When would you want it by?

5246   COMMISSIONER MENZIES: Well, yesterday, but...

--- Laughter

5247   MR. TOWNSEND: I think we can have a reply back in two days.

5248   COMMISSIONER MENZIES: I'm trying to be reasonable here -- that would be great. If you could do it by the end of the hearing, that would be -- that would be great.

5249   MR. TOWNSEND: Okay. We can do that.

5250   COMMISSIONER MENZIES: By Friday afternoon? Sound okay? Okay.

5251   THE CHAIRPERSON: Ideally, it would be before the reply phase, I think, if we could deal with that by -- could you do it by Friday morning?

5252   MR. TOWNSEND: We will.

5253   THE CHAIRPERSON: Please. Thanks.

5254   MR. TOWNSEND: It may be short but we will.

5255   THE CHAIRPERSON: Well --

5256   COMMISSIONER MENZIES: It's okay. All it has to do is, you know, like, say September 15th, 2014, it'll be done or that's your target or something, whatever it is, if you have one.

5257   MR. TOWNSEND: Well, I mean, the U.S. is still facing compatibility questions now. They've only done a couple of tests and, you know, not -- not -- a number of them haven't been successful.

5258   COMMISSIONER MENZIES: I think you get my drift, it's sort of --

5259   MR. TOWNSEND: Yeah.

5260   COMMISSIONER MENZIES: -- assigned --

5261   MR. TOWNSEND: I appreciate you need parameters.

5262   COMMISSIONER MENZIES: -- assigned, you know, a strategic plan that says our target is to have this step done by this time, you know, in one year or whatever, that lays it out. So, because, otherwise, it -- unless sooner or later we get some discipline to this project, it's going to be something that somebody will dig up from a transcript from this hearing twenty years from now and say, gee, they were talking about it even then, and it's -- and it's not done.

5263   So that would be -- and we understand that these things, you know, you can't guarantee completion but you can have targets. It kind of makes it easier for us to work with.

5264   MR. TOWNSEND: Now, to be clear, we weren't thinking of a fund of money that CAPAN would draw on.

5265   COMMISSIONER MENZIES: Right.

5266   MR. TOWNSEND: You know, we weren't thinking of sort of funding for our own initiatives.

5267   COMMISSIONER MENZIES: I know that. Yeah.

5268   MR. TOWNSEND: Okay.

5269   COMMISSIONER MENZIES: Yeah, yeah, I think that was clear. But we need -- but the general project, we need some sense of timeline for how things are being pushed forward.

5270   MR. TOWNSEND: Okay. We will have it to you by Friday morning.

5271   COMMISSIONER MENZIES: When you -- when you see success. And if you could check, too, with a little detail on where the progress has been with the broadcasters, that would be -- that would be most helpful, too.

5272   MR. TOWNSEND: All right.

UNDERTAKING

5273   COMMISSIONER MENZIES: Is there something I didn't ask you that you were hoping I would?

5274   MR. TOWNSEND: I don't think so.

--- Laughter

5275   COMMISSIONER MENZIES: Okay. Okay. Thank you very much.

5276   THE CHAIRPERSON: Just on -- on the filing of that additional information, you might want to, offline, talk to our corporate secretary -- not our -- the hearing secretary to find out exactly the process to provide that information in a timely way and to whom.

5277   MR. TOWNSEND: Okay.

5278   THE CHAIRPERSON: I don't believe we have any other questions for you. Thank you very much for participating --

5279   MR. TOWNSEND: Thank you.

5280   THE CHAIRPERSON: -- in the hearing, Mr. Townsend.

5281   LA SECRÉTAIRE : Merci.

5282   J'inviterais maintenant Cogeco Câble à s'approcher.

5283   LE PRÉSIDENT : Bienvenue, Monsieur Audet et votre équipe. Comme à la normale, on vous demanderait d'identifier votre panel et procéder à votre présentation.

INTERVENTION

5284   M. AUDET : Merci, Monsieur le Président.

5285   Monsieur le Président, Madame et Messieurs les Conseillers, nous vous remercions de nous donner l'occasion de venir vous exprimer de vive voix notre point de vue à l'occasion de cette audience publique si cruciale non seulement pour l'avenir du système canadien de radiodiffusion mais aussi pour l'ensemble de l'industrie des communications au Canada.

5286   Mon nom est Louis Audet. Je suis président et chef de la direction de Cogeco Câble.

5287   Les autres comparant avec moi aujourd'hui sont :

5288   - à ma droite, maître Yves Mayrand, vice-président, Affaires d'entreprise;

5289   - à sa droite, le professeur Roger Ware de l'Université Queen's, auteur de mémoires d'expert sur la concurrence, qui sont annexés à notre intervention; et

5290   - à ma gauche, Mme Suzanne Blackwell, présidente de Giganomics Consulting, qui nous a assistés dans la préparation de notre intervention et des autres annexes de notre intervention.

5291   Allow me to put things back into their proper perspective.

5292   First, the applicant presents this megatransaction of $3.4billion as an ordinary business transaction that should be determined from a regulatory perspective entirely and only on the basis of a measure of television audience share and mainly in the French-language market of Canada.

5293   But let's face it, this proposed transaction is in fact the largest transaction in the history of the Canadian broadcasting system involving content assets, a transaction that involves an unprecedented level of concentration of ownership across over-the-air television, specialty television, pay television, radio and new media throughout Canada, and a transaction that involves also an unprecedented level of vertical integration between production, aggregation and distribution of all sorts of audiovisual contents in both official languages across all fixed and mobile communications platforms across the country, including the Province of Quebec.

5294   These levels of concentration and vertical integration would be largely unmatched amongst the G8 countries, as has been amply demonstrated by the fine work of Dr. Ware's analysis.

5295   We have all witnessed Bell's appearance and its general statements of good intentions and some last-minute technical adjustments to the application for approval.

5296   But more significantly, Bell has deliberately elected not to deal with the crux of the matter in this appearance. On the contrary, Bell has steadfastly dismissed as being insignificant all arguments related to the fundamental issue of market dominance raised by this megatransaction. In fact, to use the Chairman's words, "the applicant's burden of proof has simply not been met."

5297   Deuxièmement, la requérante veut nous faire croire que cette mégatransaction est bonne pour les consommateurs canadiens et dans l'intérêt public et qu'elle permettrait à Bell de mieux faire concurrence à Québecor au Québec.

5298   Or, les consommateurs assisteraient tout simplement à la disparition du plus important producteur et programmateur indépendant de contenus audiovisuels au Québec et au Canada, à la disparition du principal concurrent de Bell et de Québecor dans la fourniture de services de télévision spécialisée et payante dans le marché francophone, et de la disparition d'un siège social d'entreprise indépendante à capital ouvert dans le secteur clé des communications et de la culture à Montréal et au Québec.

5299   Les consommateurs québécois et canadiens ne sont pas dupes: Ils comprennent très bien qu'ils auraient en fait moins de concurrence si cette mégatransaction était approuvée et qu'ils en feraient les frais en bout de piste. Ils sont maintenant plus de 60000 mille à avoir déjà exprimé leurs préoccupations par écrit et demandé le rejet de cette mégatransaction.

5300   Un sondage récent mené par une maison indépendante, et que nous n'avons pas commissionnée, Forum Research Inc., conclut qu'une très nette majorité de Canadiens, tant au Canada anglais qu'au Québec, s'oppose à cette mégatransaction.

5301   Les organisations qui représentent les consommateurs québécois et les canadiens s'y opposent catégoriquement.

5302   J'ajouterais qu'à sa face même, le fait d'assurer la domination du système canadien de radiodiffusion et de l'industrie des communications par Bell dans l'ensemble du pays ne peut tout simplement pas constituer un résultat souhaitable pour la concurrence et les consommateurs canadiens en général, ou pour les consommateurs québécois, qui répondent en particulier qu'ils se trouveraient coincés dans un étau, entre deux groupes intégrés verticalement, avec une source de programmation indépendante en moins.

5303   Third; the Applicant parades which is what has just become at this hearing, a package of $241 million in tangible benefits in order to justify this mega-transaction.

5304   The focus is unfortunately diverted towards these one-shot benefits, while the fundamental issue of this proceeding, which is the structural problem caused by greatly increased concentration and vertical integration and the lasting prejudice to competition and diversity it entails within the Canadian broadcasting system and the communications industry across Canada is being completely side-stepped.

5305   Let's be frank. The whole debate around the valuation between the various assets involved; the spending; the spreading out of the benefits over five, seven or ten years; or whether zero, 17 or 20 percent of the total amount of these benefits should go from one pocket to the other between a broadcasting subsidiary and a telecommunications subsidiary of Bell are just diversionary tactics designed to distract the Commission and allow Bell to exchange a fistful of dollars in last-minute concessions for the approval of a transaction that is positively contrary to the public interest.

5306   The first and the only true test in the payment of benefits will be the Commission in fact is not the payment of benefits, but it is to make sure that rather, the public interest is what is truly respected here.

5307   And I wish to point out that any purchaser of Astral would and in fact will necessarily have to pay benefits; so that becomes a non-issue.

5308   Otherwise, this would mean that an already dominant company such as Bell can purchase at leisure more market power by simply paying a prescribed fair.

5309   To my knowledge, this would be the most blatant example of the devious implementation of a public policy affecting competition, whether in any industry in Canada or any industry elsewhere in the developed world.

5310   Quatrièmement; Bell vous fait valoir que cette méga-transaction ne pose aucun problème, puisque vous avez un cadre de règlementation sur l'intégration verticale et des mesures en place pour intervenir au besoin.

5311   Au départ, c'est une affirmation hautement suspecte venant non seulement de la plus grande entreprise de communications intégrée verticalement au Canada mais en plus de l'entreprise qui a ouvertement dénoncé ce même cadre de règlementation il y a moins d'un an, et avancé publiquement que par la suite, le Conseil devrait laisser libre-cours au marché, en bout de piste.

5312   Mais de manière plus fondamentale, cette position escamote les comportements anti-concurrentiels de Bell, qui ne s'est jamais gênée, au cours de sa longue existence et de manière plus évidente depuis l'acquisition de CTV, pour tirer avantage des imprécisions, des délais et des coûts qu'impliquent les procédures règlementaires, tout en profitant de sa position dominante.

5313   Membres du Conseil, entendez-moi bien : ce n'est pas une coïncidence si tous les distributeurs indépendants au Canada qui ont vécu une expérience aussi frustrante que couteuse dans le renouvellement de contrat de fourniture de services de programmation de Bell Média depuis l'acquisition de CTV par Bell se sont frappés à un mur de brique en tentant d'acquérir de Bell Média le droit de distribuer les mêmes contenus sur leurs propres plateformes de distribution, y inclus sur-demande et par-Internet.

5314   Ce n'est pas non plus une coïncidence si Cogeco câble a été au contraire en mesure de conclure récemment, avec Astral, des renouvellements de contrats et obtenir des droits multi-plateformes pour les services de télévision spécialisées et payantes de langue française d'Astral, dans le cours normal des affaires, sans devoir recourir à des procédures règlementaires, alors qu'Astral est encore, pour l'instant, un programmeur indépendant qui s'avère être un excellent partenaire dans le système canadien de radiodiffusion.

5315   Que ce soit aux États-Unis ou en Europe, des marchés pleinement et fonctionnellement compétitifs, sont nettement la solution préférable. Pourquoi devrait-il en être autrement au Canada? Pourquoi devrait-on viser ici à gagner le championnat de l'intégration verticale dans les communications électroniques, toutes catégories d'activités confondues?

5316   Il n'y a aucun avantage pour l'intérêt public à faire grossir un conglomérat pour essayer ensuite de le contrôler par la règlementation. L'expérience passée, notamment dans les télécommunications, démontre clairement qu'une fois le monstre créé, il est impossible de le contrôler, et la règlementation est vouée à l'échec.

5317   L'excès de concentration et d'intégration verticale dans une industrie cause un tort aussi grave qu'irréversible, et ce sont des générations de consommateurs qui en subissent invariablement les conséquences néfastes pour très, très longtemps.

5318   Finally, the Applicant wants you to believe that this mega transaction is not only unavoidable but it is also the only one that could be concluded in the circumstances.

5319   This is evidently not the case. There was and there still is a public market for the shares of Astral, and the management information circular issued to all shareholders of the company demonstrates that despite the knowledge of offers from parties other than Bell, the management and the controlling shareholders of Astral chose to deal exclusively with Bell and to cause their preferred purchaser to bear entirely the financial risk of obtaining the required regulatory approvals.

5320   The Commission must fulfil its duty examine this mega transaction based on its consequences, not only for the diversity of voices in television and radio but also the entire communications industry in Canada and in light of the public interest, without feeling one bit at all constrained by this exclusive arrangement concluded between Bell and the management and controlling shareholders of Astral.

5321   Pour conclure, Monsieur le Président et Membres du Conseil, si vous voulez exercer de manière crédible votre juridiction en matière de changement de propriété dans le secteur des communications, vous devez assurer pleinement votre responsabilité de (inaudible) l'intérêt public et vous devez être disposé à dire non lorsqu'une transaction est contraire à l'intérêt public.

5322   Le Conseil l'a d'ailleurs déjà fait sous la présidence de Monsieur André Bureau, qui occupait alors ce poste lorsque Power Corporation a tenté de faire l'acquisition de TVA.

5323   Pour toutes ces raisons, nous vous représentons que le Conseil doit tout simplement refuser d'approuver cette méga-transaction, dans le meilleur intérêt du système canadien de radiodiffusion, de l'ensemble de l'industrie des communications, de la concurrence au sein de cette industrie, et des consommateurs canadiens, y compris les consommateurs québécois.

5324   Il nous fera plaisir maintenant, Monsieur le Président, Madame, Messieurs les Conseillers, de répondre à vos questions.

5325   LE PRÉSIDENT : Merci beaucoup, Monsieur Audet; bienvenu à notre audience.

5326   M. LOUIS AUDET : Merci.

5327   LE PRÉSIDENT : Comme vous le savez -- parce que je vous ai vu pendant de longues heures assis à l'arrière de la salle d'audience, donc je vous félicite pour votre assiduité.

5328   Comme vous savez, j'ai pris l'occasion de cette instance pour poser en genre d'introduction des questions à certains participants sur leur vision du système des télécommunications, des communications et de la radiodiffusion en 2017. Donc je vous donne la même occasion de le faire.

5329   M. LOUIS AUDET : Je vous remercie, Monsieur le Président.

5330   Je ne voudrais pas prendre trop de temps, mais quand même, c'est une question qui est dans le fond complexe; qui semble simple mais qui est dans le fond complexe et qui mérite qu'on s'y attarde.

5331   Nous avons toujours considéré que l'évolution de notre système reposait autant sur les fournisseurs de programmes que sur les entreprises de distribution, et que nous sommes tous deux, en fait, en marche dans la continuation et le maintien de l'identité canadienne. Et donc nous jouons un rôle à plusieurs niveaux, que ce soit au niveau de fournir des plateformes évoluées, qui sont à la base même de l'augmentation et de l'accroissement de la compétitivité du pays, ou que ce soit dans le reflet que nous fournissons aux communautés et aux pays d'eux-mêmes et de lui-même.

5332   Et évidemment, je ne retournerai pas trop loin en arrière, mais nous savons tous que les racines de cela se retrouvent dans le théâtre de l'antiquité grecque. Les gens veulent se voir afin de mieux se comprendre, et c'est une partie très importante de notre responsabilité.

5333   Si on entre maintenant dans les activités plus spécifiques; évidemment, la radio, c'est un marché qui est beaucoup plus mature maintenant, beaucoup plus stable. Et c'est maintenant un médium de proximité, qui fournit le compagnonnage à plusieurs personnes, en plus de fournir une tribune pour les débats d'affaires publiques, et bien sûr les services de musique.

5334   Nous n'entrevoyons pas de bouleversements majeurs dans cette industrie, pourvu que les équilibres fondamentaux qui la gouvernent aujourd'hui ne soient pas dramatiquement modifiés.

5335   En télévision - et ici, la télévision et la distribution sont étroitement liés. Je vais donc parler d'eux comme s'il s'agissait d'un tout, mais en réalité, il faut se souvenir qu'il s'agit du service de télévision traditionnel, over-the-air et spécialité, ajoutés en bouquet pour rejoindre les goûts des consommateurs; l'Internet, au début, et bien sûr la téléphonie.

5336   Pour que ce marché puisse se développer d'une façon qui encourage la créativité, il doit y avoir une concurrence dans le marché. Il doit y avoir une diversité de voix.

5337   Ce que nous voyons à plus long terme, c'est que les abonnés vont se polarisés de plus en plus; les abonnés à la recherche du package le plus avantageux vont éventuellement confier leurs trois services aux mêmes fournisseurs.

5338   Alors ils confieront peut-être à Bell et ils confieront peut-être à Cogeco, en territoire Cogeco. Ils confieront peut-être au satellite Shaw et aux services Internet Shaw, qui tôt ou tard aura un service radio attaché; peu importe. Et il faut s'attendre à ce qu'il y ait une convergence de part de marché. A moyens technologiques égaux, nous pensons qu'à terme, il y a une convergence de parts de marché.

5339   Mais pour cela, il faut qu'il y ait un marché compétitif, et c'est là que je vous dirais, en réponse à votre question, que vous arrivez à une fourche dans la route. Vous pouvez, à la fin, au terme de l'audience que vous tenez en ce moment, choisir la voie de donner à Bell ce qu'elle demande et vous retrouvez ultimement avec un marché ingouvernable, formé de quelques gros joueurs, dont toute créativité sera exclue, ou -- et qui sera en fait redevenu un marché monopolisé, comme Bell était il y a 30 ans, quand je me suis joins à l'industrie.

5340   Ou bien, vous pouvez favoriser la diversité, l'éclosion des nouvelles. Je me souviens d'avoir assisté à un colloque sur Internet et le -- un des participants avait dit : Laissez mille fleurs fleurir; c'est cela qu'il avait dit et il avait raison : laissez mille fleurs fleurir; laissez la diversité et la créativité prendre racine et se manifester.

5341   Alors voilà en deux mots, Monsieur le Président, notre vision de l'avenir. Elle n'est pas parfaite; elle n'est pas complète; mais c'est comme cela que nous voyons le monde à l'heure actuelle et il nous fera plaisir de répondre à d'autres questions à ce sujet.

5342   LE PRÉSIDENT : Évidemment, j'aimerais bien m'étendre sur ce sujet-là, mais malheureusement on a une transaction devant nous qu'on doit considérer, donc on va couper cela là.

5343   Lorsque vous parlez de la fourche dans la route, par contre, j'avais peur qu'on s'en aille soit vers l'Acropole ou l'Agora, selon l'antiquité grecque. Mais voilà.

5344   Bon; la thèse -- à la base de la thèse de BCE, c'est l'idée que pour, dans le marché concurrentiel des communications, il faut avoir quand même une certaine envergure et que pour compétitionner, particulièrement lorsqu'on voit les services de contenu, traverser des frontières relativement facilement maintenant; qu'il faut en plus avoir des sociétés stables et d'une certaine ampleur.

5345   Est-ce que vous partagez cette vision ou cette stratégie d'affaire?

5346   M. LOUIS AUDET : Monsieur le Président, vraiment pas. Nous pensons qu'il s'agit là d'un faux débat destiné à détourner votre attention; un débat au cours duquel on se sert de pressions internationales pour justifier la création d'un super monopole canadien. Et selon nous, il s'agit là d'une affirmation exagérée et fausse. En fait, il en résulterait la concentration que vous savez; c'est-à-dire que 42 pour cent de toutes les heures de télévision au Canada seraient entre les mains de ce groupe; 33.1 pour cent de toutes les heures de télévision au Québec seraient entre leurs mains; et 45 pour cent de toutes les heures syntonisées à la radio au Canada anglais, même après disposition des dix stations dont il est question -- dont il a été question, serait à des stations de Bell.

5347   Donc pour nous, c'est tout à fait inacceptable.

5348   Maintenant, référence a été faite hier -- pardon; il y a quelques jours, au 11 millions d'heures syntonisées par semaine sur NetFlix.

5349   J'aimerais signaler au Conseil qu'il se consomme au Canada 713 million d'heures de visionnement de télévision au Canada anglais à chaque semaine. Donc on parle d'environ 1.5 pour cent; au Canada français, on parle d'environ 1.2 pour cent.

5350   Donc je pense qu'on essaie ici d'induire la peur chez tout le monde alors qu'il n'y a pas réellement matière à avoir peur.

5351   Nous concevons qu'il y a une concurrence, une concurrence qui est de plus en plus mondialisée, c'est vrai; c'est indéniable. Mais cela ne veut pas dire qu'il faut créer des monopoles chez nous pour y faire face. Cela veut plutôt dire qu'il faut laisser la créativité s'exprimer; laisser les gens amener des nouvelles idées; et promouvoir notre développement de cette façon-là.

5352   LE PRÉSIDENT : Mais vous pensez quand même que c'est important pour vos actionnaires d'accroître la grandeur de votre société? D'ailleurs, vous avez fait des acquisitions à l'étranger, en Europe, puis plus récemment aux États-Unis. Donc premièrement, vous avez quand même une stratégie corporative d'accroître votre société, je suis certain. Lorsqu'il y a des licences qui viennent disponibles, vous voulez compétitionner. C'est une procédure de concurrence.

5353   Au Conseil, des fois, les licences -- pas les licences mais les sociétés de radiodiffusion deviennent disponibles pour acquisition. Et puis vous avez tenté aussi des acquérir.

5354   Donc votre stratégie d'affaires est aussi -- comprend une stratégie d'agrandir.

5355   M. LOUIS AUDET : Tout à fait, Monsieur le Président. Notre position ici n'en est pas une de nier aux entreprises leurs droits à la croissance, qui est tout à fait normal et désirable. Les compagnies qui restent immobiles finissent ultimement par disparaître.

5356   Alors ce n'est pas de cela que nous parlons. Ce dont nous parlons, toutefois, c'est empêcher un joueur de devenir dominant - il l'est déjà - mais de devenir encore plus dominant et d'étouffer les autres.

5357   Nous, nous n'étouffons personne. On nous a fait le reproche d'avoir investi à l'étranger; bien moi, je ferais le reproche contraire. Moi, je dirais que quand on investit trop domestiquement et qu'on en vient à étouffer le marché, c'est pire; c'est encore pire. Ce n'est pas correct. C'est répréhensible.

5358   Alors je pense que notre position là-dessus est très claire. Nous continuerons à nous développer mais écraser les autres ne fait pas partie de notre agenda, Monsieur le Président.

5359   LE PRÉSIDENT : Parlez-moi donc de cette stratégie de faire accroître votre compagnie en investissant à l'extérieur du pays. Si on regarde les sociétés canadiennes du domaine des communications, il y a eu quelques tentatives. Les sociétés de câblodistribution ont tenté à un certain moment de pénétrer aux États-Unis; souvent, ils ont revendu. On a vu l'expérience CanWest en Australie, puis cela aussi n'a pas été un succès.

5360   Pourquoi vous, vous -- cela fait partie de votre stratégie d'affaires?

5361   M. LOUIS AUDET : C'est très simple. Si les -- s'il y avait d'autres réseaux de câble à acheter au Canada; s'il y en avait eu de disponibles, nous les aurions achetés avec plaisir, et il n'en aurait pas résulté de dominance nulle part sur le marché. Mais nous l'aurions fait avec plaisir.

5362   Par contre, nous sommes suffisamment flexibles et adaptables pour comprendre que quand il n'y a pas d'opportunités au plan domestique, on va ailleurs.

5363   LE PRÉSIDENT : Certains diront que d'investir à l'étranger n'est peut-être pas à l'avantage de la croissance du Canada.

5364   M. LOUIS AUDET : Mais moi, je dirais : au contraire. Nous avons besoin de compagnies fortes, qui ont des ramifications internationales; qui ont des sièges sociaux forts, remplis de gens qui ont des connaissances approfondies dans tous les domaines. C'est ce que les multinationales ont fait avec succès. Et je le dis sans prétention, parce que nous sommes encore minuscules dans cet univers-là, mais je pense que le monde attend les Canadiens; que les Canadiens et les investisseurs canadiens sont souvent frileux, alors qu'il y a plein d'opportunités. Il y a des compagnies qui ont très bien réussi dans le domaine; qu'on pense à Bombardier, à SNC, pour n'en nommer que deux.

5365   Alors je pense que ce sont là des exemples tout à fait emballants de gens qui ont très bien réussis. Et je ne vois pas pourquoi nous, dans le câble, on ne réussirait pas aussi bien. Et le Canada a bien tiré son épingle du jeu de ces stratégies.

5366   LE PRÉSIDENT : Hier, j'ai tenté de parler un peu de radio avec Monsieur Péladeau. Évidemment, il est moins présent dans ce marché-là. Vous, par ailleurs, vous êtes beaucoup plus présent.

5367   Depuis de le début de l'audience, on a parlé beaucoup de télévision, à la fois dans le marché anglophone et francophone.

5368   Que pensez-vous -- parce que si on regarde les seuils traditionnels; le fait qu'Astral avait déjà une présence d'à peu près 90 stations -- bon; cela pourrait -- si on autorise cet aspect-là de la transaction augmenter. Mais on avait quand même un joueur qui était très présent dans le marché radiophonique.

5369   Si je comprends bien, de vos propos de ce matin, vous êtes néanmoins préoccupé nonobstant les seuils du Conseil établis dans la politique de 2008 sur la diversité des voix. Vous êtes quand même préoccupé par rapport aux achats radiophoniques?

5370   M. LOUIS AUDET : Oui, Monsieur le Président et merci de me poser la question. Nous sommes non seulement préoccupés mais en fait très préoccupés.

5371   Soyons réalistes. La décision de 2008 sur la diversité - oui, je crois que c'est 2008-4, si mes souvenirs sont bons - est une décision qui a été rendue au moment où il n'existait d'autre intégration verticale que celle du câble et de la télévision commerciale à Montréal qui avait été octroyé en 1980 sur la base de la nécessité de renforcer un joueur québécois dans le marché francophone qui était considéré être un marché à risque.

5372   C'est la seule raison pour que l'intégration verticale ait été octroyée à ce moment-là.

5373   Donc, les règles de 2008 sont des règles qui ont été établies avant l'intégration verticale.

5374   L'intégration verticale qui a déboulé par la suite dans les deux, trois années qui ont suivi est une intégration qui a complètement changé la donne.

5375   Il est absolument inconcevable que quelqu'un vienne vous voir en vous disant «je vais juste avoir 30 pour cent d'écoute. Je vais juste avoir 40 pour cent d'écoute. Inquiétez-vous pas», alors que ce joueur est pleinement intégré, une situation qui n'avait jamais été envisagée dans la décision 2008-04.

5376   Alors c'est clair que c'est une préoccupation.

5377   En radio, Bell détiendrait 45 pour cent des heures d'écoute à la radio au Canada pour une compagnie verticalement intégrée. C'est sans précédent. Vous ne trouverez ça dans aucun pays. C'est grotesque.

5378   LE PRÉSIDENT : Aux paragraphes85 et suivants de votre mémoire, vous faites des commentaires sur le fait qu'on ne savait pas à l'époque quelles des stations BCE était pour se départir.

5379   Maintenant, on les connaît. Ils sont au dossier public. Je voulais vous donner une possibilité - je comprends que votre première position c'est que vous pensez qu'on devrait pas permettre le transfert de propriété.

5380   Mais selon l'hypothèse qu'on permette ce transfert, est-ce que vous avez un point de vue sur ces dix stations?

5381   MR LOUIS AUDET : Oui, bien sûr que j'ai un point de vue, Monsieur le Président.

5382   Même après le dessaisissement dont il est question ici, qui a été conçu en prenant la décision 2008-04 du Conseil qui a été bâtie à un moment où on se préoccupait de savoir comment un joueur qui avait 30 stations et voulait en acheter cinq de plus, comment il devait se comporter.

5383   Et il est possible que ce modèle-là ait bien convenu au besoin de l'époque.

5384   Et aujourd'hui, ce n'est pas de ça qu'on parle. Aujourd'hui, on parle de 117 stations moins 10, égale107 représentant 45 pour cent de l'écoute après disposition des dix stations que vous portez à mon attention.

5385   Alors, c'est clair que c'est absurde.

5386   LE PRÉSIDENT : Mais dans ce cas-là, je vais vous amener justement à un paragraphe88 dans votre mémoire où vous parlez justement de l'avis public 2008-4.

5387   Vous faites état du fait que ce n'est qu'une politique et donc, un peu la même discussion que j'avais eue avec le panel de BCE disant que, effectivement, si les politiques adoptées en vertu de l'article6 et non pas contraignant sur le Conseil, c'est pas des règlements comme nos règlements. C'est...

5388   Est-ce que je dois comprendre par vos propos par rapport à la radio que, essentiellement, vous nous dites que, nonobstant la politique de 2008, il y a tellement un changement dans le marché par rapport à la radio et d'autres réalités, qu'on devrait carrément mettre de côté la politique de 2008.

5389   M. LOUIS AUDET : Je ne dirais pas ça, Monsieur le Président.

5390   Il est probable que mon confrère Yves Mayrand veuille compléter ma réponse à cet égard.

5391   L'objectif visé par 2008-04 est un objectif désirable. C'est un objectif qui vise à assurer la diversité des voies, que ce soit en radio ou en télévision au Canada, c'est un objectif désirable.

5392   Cet objectif-là, il doit être recherché, promu, encouragé.

5393   La question est de savoir est-ce que les étalons qui ont été choisis en 2008 conviennent toujours à la réalité d'aujourd'hui.

5394   Nous vous soumettons qu'avec l'abondance d'intégration verticale qu'il y a chez Bell, que l'étalon n'est plus approprié pour vous permettre de faire une bonne décision.

5395   Et en fait, ce que nous avons également dit cet après-midi dans la partie introductive, nous vous avons représenté que Bell est un tellement mauvais coucheur avec ses partenaires du système canadien de radiodiffusion que vous devriez tout simplement lui refuser tout accroissement de ses activités. C'est ce que nous avons dit tout à l'heure.

5396   LE PRÉSIDENT : Maître Mayrand, pour compléter?

5397   Me MAYRAND : Je voudrais tout simplement ajouter, Monsieur le Président, que le paragraphe que vous avez cité faisait référence vraiment à votre barème, si vous me permettez l'expression, applicable aux parts d'auditoire télévision. C'était pas sur la radio comme telle.

5398   Je pense pas qu'il y ait quoi que ce soit dans notre mémoire qui dise que la politique de propriété commune en radio est remise en question.

5399   On vous faisait tout simplement remarquer dans ce paragraphe-là que nous faisons face aujourd'hui au moment où on se parle et au moment où nous avons écrit cette intervention au début août, que le seuil que vous avez fixé ou les seuils que vous avez fixés en matière de part d'auditoire, de marché télévisuel ne constituent pas la fin de la discussion.

5400   Et on vous répète la même chose lors de notre présentation d'aujourd'hui.

5401   Ce qu'on essaie de vous faire valoir, et je pense que c'est crucial de s'en rendre compte, c'est que nous sommes aujourd'hui dans un environnement très convergé, de haute convergence avec quelques joueurs qui ont un niveau d'intégration vertical plus ou moins élevé, mais un très petit nombre d'entre eux. Et que la transaction qui vous est proposée comporte un accroissement de concentration et un accroissement des niveaux d'intégration verticale dans tous les segments ou lignes d'affaires de ce qu'on appelle l'industrie des communications convergées à l'heure actuelle.

5402   C'est de ça qu'on parle.

5403   Et quand on vous indique le fardeau de la preuve, d'après nous, Bell doit le relever sur la question de la dominance.

5404   Il devrait y avoir au moins une discussion de la part de la requérante sur ce que ça implique d'avoir une telle conjonction d'actifs.

5405   Bien sûr, on nous dit, la politique sur la propriété commune règle la question de la radio. Il y aura dessaisissement de certaines stations de radio pour se conformer à la politique.

5406   Il reste un problème ponctuel à Montréal. On comprend que vous êtes pas nécessairement tout à fait confortable avec la solution proposée par Bell. Nous ne le sommes pas non plus, ayant été un requérant éconduit dans ce cas-là pour une fréquence désirable sur la bande A.M.

5407   Mais ceci étant dit, on vous présente, vous, les décideurs au Conseil, tenez-vous en au barème de part d'auditoire TV pour le marché de la télévision. Tenez-vous-en à la politique de propriété commune pour la radio et faites complètement abstraction de la conjonction des intérêts dans tout le reste. C'est ça qui nous pose problème.

5408   C'est ça qui nous pose problème. Et ça nous pose particulièrement problème parce que écoutez, il y a un peu moins d'un an, à la suite d'une très longue procédure que vous avez tenue sur la question de l'intégration verticale, vous avez quand même fait un constat assez précis du problème que cause l'intégration verticale.

5409   Et je pense c'est important pour situer notre discussion, que je cite votre constat ici.

5410   Dans la politique règlementaire 601 de septembre 2011, aux paragraphes19 et 20, voici ce que vous constatiez. C'était sous le titre: «Analyses et décisions du Conseil.»

5411   «Le Conseil estime que le dossier de la présente instance démontre que les entités intégrées verticalement ont à la fois l'occasion et l'incitatif de se conférer une conférence indue en s'attribuant des droits d'exclusivité du contenu qu'elle contrôle sur différentes plateformes de distribution.

5412   Un consommateur serait aussi obligé de s'abonner à la plateforme de distribution appartenant à une entité donnée pour avoir accès à ce contenu exclusif.

5413   Une éventuelle augmentation de la part de marché et des services de distribution faisant partie de l'entité intégrée verticalement pourrait inciter celle-ci à refuser aux entreprises de distribution concurrentes l'accès à des émissions populaires.»

5414   Et ensuite, vous dites:

5415   «Des parties ont affirmé que les services de distribution comptent, pour la plupart, des revenus du système de radiodiffusion au Canada.

5416   En conséquence, la garantie de revenu stable à marge importante et récurrent pour les services de distribution pourrait ainsi l'emporter sur toute perte de revenu résultant d'une diminution des téléspectateurs lié au refus de fournir des émissions aux distributeurs concurrents.»

5417   Voilà le noud du problème. Vous l'avez identifié dans cette politique règlementaire.

5418   C'est le noud du problème. Et on parle ici d'accroître encore de façon considérable le niveau d'intégration du joueur dans le système de communication électronique au Canada qui en a le plus. Voilà notre difficulté.

5419   LE PRÉSIDENT : Et puis on va revenir à l'intégration verticale. J'essaie de bien saisir le filtre décisionnel qu'on doit appliquer à la demande.

5420   Je vais vous expliquer.

5421   L'article6 de la Loi sur la radiodiffusion est en fait une codification d'une décision, je crois, de '84, de la Cour suprême.

5422   A l'époque, on avait tenté d'imposer - le Conseil avait tenté d'imposer au - je vois CTV à l'époque - les conditions de licence. Et la Cour avait décidé que le Conseil avait le droit d'émettre des politiques «thinking out loud» sans que ce soit contraignant.

5423   Il y a une certaine logique pour une instance de règlementation comme la nôtre de pouvoir faire ça, parce que ça crée une certaine prévisibilité, une certitude aux opérateurs.

5424   Et c'est pour ça que j'essaie de voir qu'est-ce que vous nous dites cet après-midi par rapport à l'avis public 2008-4, parce que j'ai comme l'impression que nonobstant les barèmes qu'on... puis ça ne lie pas le Conseil, ça ne peut pas lier le Conseil. C'est juste le Conseil qui énonce en général ce qu'il ferait parce qu'on ne peut pas et ça serait une erreur de juridiction d'ailleurs de compétence de traiter comme une règle claire.

5425   Mais j'ai l'impression que vous semblez nous amener à dire, nonobstant ce qui est écrit là, on devrait, dans le domaine de la radio, parce que si on regarde le test «radio» on serait en deça du seuil présumément, et vous nous amenez à regarder d'autres critères qui ne sont pas dans l'Avis public 2008-4 et, là, je me pose la question, mais on n'affecte pas la prévisibilité de notre réglementation si immédiatement avec une grande transaction de ce genre, on modifie le test.

5426   M. AUDET : Monsieur le président, je pense que vous avez très bien compris ce qu'on vous a suggéré aujourd'hui.

5427   Il est manifeste que même en appliquant les règles de propriétés multiples de radio, de stations de radio dans les villes canadiennes, une fois que vous l'avez fait, une fois que vous faites le calcul, vous confiez 45 pour cent des auditoires de radio canadienne à une seule compagnie. Ça n'a pas de bon... c'est sans précédent et ça n'a pas de bon sens.

5428   Bon. Est-ce que ça veut dire que l'effort fait en 2008 n'est pas valable? Non, ça ne veut pas dire ça. L'effort était valable, la documentation était là pour que tout le monde la consulte, mais en bout de piste on arrive à un résultat absurde.

5429   Pourquoi arrive-t-on à un résultat absurde? Parce qu'à l'époque vous avez constitué une politique, un propriétaire détenait 40 stations, il voulait en acheter cinq autres, ou il en avait 10 puis il voulait en acheter trois autres. Vous aviez besoin... le Canada avait besoin dune espèce de guide pour décider comment on va procéder dans ces cas-là.

5430   Mais c'est que déjà la réalité a rattrapé et dépassé les étalons qui ont été fixés en 2008-4.

5431   Or, il s'avère que vous avez la responsabilité ultime de ce qui se produit dans le système canadien de la radiodiffusion et que vous avez le pouvoir et même le devoir de décider. Donc, vous ne perdriez absolument pas en crédibilité en disant, bien oui, c'est ça que notre politique disait, mais c'est malheureux, elle est maintenant dépassée par la réalité, on va donc devoir intervenir et appliquer la règle du gros bon sens.

5432   Parce que la règle du gros bon sens, là, c'est elle qui doit toujours prévaloir. Vous ne pouvez pas abdiquer votre obligation d'appliquer le gros bon sens sous prétexte qu'il y a un barème qui est maintenant dépassé. Ce n'est pas envisageable. Vous ne pouvez pas faire cela au public canadien.

5433   LE PRÉSIDENT : Sauf que la règle du gros bon sens, ça simplifierait la rédaction de nos règlements évidemment si on mettait ça tout le temps dans nos règlements qu'il y ait peu de prévisibilité pour des gens comme vous et d'autres joueurs dans le marché des communications qui tentent de développer des stratégies d'affaires.

5434   Oui, c'est un domaine réglementé, mais c'est aussi un domaine d'affaires et peut-on... Qu'est-ce qu'il y a dans ce cas-ci qui est tellement unique ou est-ce que vous nous dites qu'en général cette politique louable à l'époque, mais elle ne l'est plus?

5435   Est-ce que c'est un cas d'exception dans cette transaction-ci ou c'est un cas d'exception dorénavant?

5436   M. AUDET : Bien non. Ça serait un cas d'exception dans... si vous arrivez au résultat que quelqu'un contrôle 45 pour cent des heures d'écoute à la radio, qui est constitué de milliers de stations au Canada, je vous soumets que nous avons un problème et que ce n'est pas acceptable.

5437   Maintenant, je reconnais que les personnes d'affaires cherchent à établir ce qu'elles ont le droit de faire et ce qu'elles n'ont pas le droit de faire et nous avons tous le même souci dans toutes nos entreprises, d'essayer de voir qu'est-ce qui est réaliste pour nous.

5438   Mais, franchement, dans cette situation-ci, placez-vous à la place de l'acheteur deux minutes, si quelqu'un était venu me voir pour me dire, Louis, on va faire... on va poser tel geste, on va devenir propriétaire de 45 pour cent des heures d'écoute de la radio au Canada après dispositions des dix petites stations que le détail de la réglementation nous oblige à faire j'aurais regardé et je lui aurais dit: es-tu malade, ça ne tient pas debout ton affaire?

5439   Bon, bien, à un moment donné les CEOs, là, on a une obligation de gros bon sens et, vous, au CRTC, vous avez la même obligation. Je pense que Yves veut compléter ma réponse.

5440   Me MAYRAND : Oui. Monsieur le président, juste sur la question de la prévisibilité, on a essayé de vous expliquer, là, en fait au paragraphe 2 de notre présentation de cet après-midi que ce dont on parle ici, là, c'est une transaction qui implique, évidemment, non seulement un nouveau quantum de concentration à l'intégration verticale, mais qui touche pas juste un secteur du système; il en touche plusieurs à la fois.

5441   Si on compare, par exemple, au précédent que vous avez approuvé il n'y a pas si longtemps dans le cas de l'acquisition de ce qui était alors le plus grand programmateur indépendant au Canada qui était CTV, on parlait de télévision conventionnelle et de télévision payante... de télévision spécialisée, pardon.

5442   Ici, on parle de télévision spécialisée combinée à de la télévision conventionnelle, combinée à de la télévision payante, combinée à des nouveaux médias, combinée aux télécommunications, combinée aux communications électroniques fixes et mobiles dans l'ensemble du Canada, dans les deux langues officielles, avec tous les contenus les plus attractifs pour les auditoires, qu'ils soient de langue française ou de langue anglaise, à savoir les contenus de sports, les contenus de variétés, les grandes séries télévisées et les contenus pour enfants et les films. C'est de ça qu'on parle ici.

5443   Où est le précédent? Il n'y en avait pas de précédent. Alors, je ne pense pas qu'on puisse parler dans ce contexte-là de prévisibilité parce que "We are testing new waters here".

5444   Tout ce qu'on vous dit, c'est que vous avez établi une politique de diversité en 2008, cette politique-là comporte certains critères et comme vous le disiez si bien au terme de l'Article 6 de la Loi sur la radiodiffusion, cette politique telle qu'elle est, que vous avez énoncée en 2008 ne lie pas le Conseil sur les questions dont elle traite.

5445   Vous avez toujours le loisir d'en varier la teneur ou l'application selon les cas d'espèces qui viennent devant vous. Bon, on ne dit rien de différent.

5446   Tout ce qu'on dit, c'est que, là, ici, vous avez devant vous, dans ce cas-ci, dans ce cas d'espèce, quelque chose qui ne s'est pas présenté, à ma connaissance, jamais auparavant et vous n'avez pas nécessairement établi tous les barèmes qui vous permettent de traiter de cette situation-là utilement lorsque vous avez établi votre politique de diversité en 2008. C'est tout ce qu'on dit.

5447   Et, ensuite, on vous dit, regardez l'ensemble du portrait. Regardez la forêt, pas juste un arbre en télévision puis un arbre en radio puis un arbre dans les nouveaux médias. Regardez l'ensemble de la forêt puis où est-ce qu'on s'en va avec ça, est-ce qu'on va avoir un ou peut-être deux ou au plus trois exploitants de la ressource forestière. C'est ça qu'on vous dit.

5448   LE PRÉSIDENT : Donc, pour être clair, même si on vient à la conclusion qu'en télévision francophone que le 35 pour cent n'est pas rencontré, vous nous dites qu'on doit regarder ça dans son ensemble et nonobstant ce constat, c'est l'ensemble de la transaction qui échoue dans ce cas-là?

5449   Me MAYRAND : C'est effectivement ce qu'on vous dit, monsieur le président. Et, moi, ce que je comprends de la demande de la requérante BCE c'est que cette transaction-là pour eux c'est tout ou rien. Ce n'est pas divisible. C'est ce que je comprends, ils l'ont répété encore lundi lors de la présentation. C'est tout ou rien.

5450   LE PRÉSIDENT : Oui. Bon, on leur a posé la question; ils vont nous revenir. J'avais posé des questions lundi sur des scénarios de vente.

5451   What do you think Shaw contrary to some of the other BDUs in the country, is supportive of this approach... of this transaction, sorry?

5452   MR. AUDET: Yes, sure. I'll do my best to answer the question, but I don't know the answer because they haven't told me. But it is not easy to project from what they had said that they are very excited with their purchase of Canwest and they are discovering a lot of the possibilities that are attached to that and I am very happy that they can enjoy that excitement.

5453   It is clear that one day they would like to amalgamate CORUS in there and that would give them the same kind albeit not at the same absolute level of clout that Bell is seeking with the purchase of Astral.

5454   So, I think they are just supporting a concept. It's a concept that in the fullness of time will exclude players and reduce diversity, but I understand their position, I think that's the best I can guess from a situation where I am not on the inside.

5455   THE CHAIRPERSON: Maybe I can change the speed here a little bit. I've read with interest where is -- in Annex 2 of your presentation. I am not an economist. Help me understand the Nash bargaining model, please?

5456   MR. AUDET : I would be happy to try to do that and hopefully succeed. So, the point is simply this and I think the point can actually be made quite effectively without even -- without mentioning the Nash bargaining model and the basic point is that in a situation where we have a highly concentrated broadcasting industry and a highly concentrated distribution industry and one is supplying the other, that if there is an event of vertical integration involving a large upstream broadcast and a large downstream distributor, what that does is it fundamentally alters the bargaining position of the two sides with respect to continuing to supply content to the unaffiliated distributor. And, you know, that could be Cogeco; obviously, it could be many other distributors.

5457   So the point is that -- and this was -- I felt quite robbed by some of the Roger's people this morning, is that when Astral is negotiating to sell content as a content provider, they have a completely different set of incentives from the day that they become part of Bell, who is a vertically integrated or will be a vertically integrated -- more vertically integrated company.

5458   Their incentives fundamentally change because now their bargaining position is to say, "We'd love to sell you our content, but if we don't sell it to you, we'd be happy, possibly almost as happy, not to sell you our content and have your subscribers come over to us because we actually make more money out of our subscribers anyway, as subscribers, than we do from selling you the content."

5459   So that's the point. Now, what the Nash -- coming back to your question specifically, what the Nash bargaining model adds to that is it's simply a predictive tool that economists have devised which gives you a way of predicting in a quantitative way how this will turn out.

5460   How will this turn out? It's pretty easy to see that the bargaining power of the vertically integrated company increases or -- increases the day that the vertical integration takes place. What's more difficult to see is how would you quantify that?

5461   What the Nash bargaining tool says, well, we generally believe in bargaining theory that we should -- that each side of the bargain, so the distributor -- I'm sorry, the unaffiliated distributor and the vertically integrated company will, let's say, share the rents, share the bargaining -- the rents of the bargaining process equally. That's what the Nash bargaining model says.

5462   It simply says let's just assume as a first approximation that when they come to the bargaining problem, the outcome of negotiation is that they share the surplus which comes from that negotiation equally.

5463   And what that predicts in a case like this is that there will be a substantial increase in programming fees as a result of the vertical integration event, because as I said, there's a whole vocabulary associated with bargaining theory, but they talk about threat points and best alternative to a negotiated agreement.

5464   So what happens is the best alternative to the negotiated agreement for the content supplier becomes much more attractive once they're vertically integrated because, like I said, they can simply bid away the subscribers and supply the content anyway to the subscribers on their own network.

5465   THE CHAIRPERSON: And what you are describing is nothing unique to the programming broadcasting distribution marketplace?

5466   DR. WARE: It's not, except in the following sense. It's unique in one interesting sense and that is that there is close to 100 percent coverage within most of the markets, certainly the urban markets in Canada, of supply to households by one of the video distributors.

5467   So what makes that unique or a little unusual for an economist is that the only way that Bell can attract a new subscriber is by inducing them to switch from someone else. That's what makes it a bit unusual.

5468   We don't -- you know, if you think about General Motors trying to sell you a car, it is certainly true that they may need to bid your business away from Toyota or somebody else, but in general, it's not essential that they do that. They may be able to sell you a car by simply selling you on the attributes of that car, and if they price it low enough they can induce you to buy perhaps even an extra car for your teenager or something.

5469   But in the world of video distribution, that isn't true. If you want to gain another subscriber, you have to gain it at the expense of an existing distributor. That's what makes it unusual.

5470   THE CHAIRPERSON: And your view here is the application of those rules, or those principles, bring us down a path of a completely unhealthy marketplace?

5471   DR. WARE: Well, the application of those principles -- and I developed this in that appendix that you referred to -- the application of those principles leads to the conclusion that a vertical integration event of this kind is going to be anticompetitive, yes.

5472   THE CHAIRPERSON: Thank you.

5473   MR. AUDET: May I put some numbers on that, Mr. Chairman?

5474   THE CHAIRPERSON: Sure.

5475   MR. AUDET: And I am picking fictitious numbers but the order of magnitude is appropriate.

5476   So under the new agreements we have with Bell -- and I'm not disclosing, as I said, they're just order of magnitude -- say we pay them $5 for their specialty services, so under the model that Dr. Ware has explained, it is a better deal for Bell to make our life difficult, take a customer that pays $120 for all of our services and still get the $5 from that customer. Instead of getting it through us, they now get it directly. So that's how perverse this model becomes.

5477   THE CHAIRPERSON: Thank you, that was helpful.

5478   J'ai dit tout à l'heure qu'on aborderait la question du cadre d'intégration verticale.

5479   C'est clair de votre présentation écrite puis de cet après-midi que vous semblez peut-être pas donner une note de passage au cadre d'intégration verticale dans son application sur le terrain depuis son adoption. Est-ce que c'est exact?

5480   MR. AUDET : Monsieur le Président, avec respect, oui, c'est exact.

5481   J'écoutais avec intérêt ce matin le témoignage de Rogers et de messieurs Engelhart et Purdy, qui ont décrit toutes les embuches auxquelles ils ont eu à faire face dans leurs négociations avec Bell, et je secouais la tête parce que tout ce que j'ai entendu là, c'est ce que nous avons vécu.

5482   Mais il y a une différence fondamentale entre Rogers et nous. C'est qu'aujourd'hui, Rogers est encore libre, alors qu'aujourd'hui, nous, nous sommes contraints à toutes ces choses inacceptables. Nous y sommes contraints en vertu du final offer arbitration qui résulte de la non-application du framework d'intégration verticale. Alors, nous maintenant, nous sommes pris au piège. Lui, il ne l'est pas encore. C'est ça la différence.

5483   Maintenant, la prochaine question, vous allez me dire, bon bien, là, vous faites une affirmation péremptoire, expliquez-vous. Alors, je vais m'expliquer.

5484   LE PRÉSIDENT : Vous savez, l'audience pourrait être plus simple si vous posiez les questions et les réponses aussi.

--- Laughter

5485   LE PRÉSIDENT : Mais c'est une très bonne question. Donc, allez-y.

5486   MR. AUDET : Merci. Je l'apprécie.

5487   Je ne qualifierais pas de fonctionnel une politique relative à l'intégration verticale quand une partie comme Cogeco Câble à la fin d'un final offer arbitration process paye plus cher, excluant les frais d'intérêt rétroactifs sur les délais qui se sont écoulés, plus cher que l'offre originale que le distributeur lui avait faite. Ça, moi, je n'appelle pas ça un vertical integration framework fonctionnel.

5488   Quand nous étions privés de chaînes comme RDS2, Space HD, Discovery HD, à compter du mois d'octobre, où Bell a pu les lancer sur son réseau et que nous, nous les avions pas, nous déposons une plainte au CRTC en décembre, ce n'est qu'au mois de juillet que nous avons reçu une lettre pour dire, bon bien, vous avez un problème, mais maintenant que vous avez signé avec Bell, vous n'en avez plus.

5489   Ça, ce n'est pas un framework d'intégration verticale qui fonctionne, et ce que ceci signifie, c'est que les remarques que le commissaire Denton a faites tout à l'heure à Rogers sont tout à fait justes.

5490   Il a dit : "Maybe we have created something that's unworkable."

5491   And I think I agree with him. I think it's very difficult, not because people are not, you know, full of good intentions, they are, I'm sure they are, that's not the issue. The issue is that it's unworkable, it's unpoliceable. The beast is too big, you can't shackle it down.

5492   THE CHAIRPERSON: The purpose here is not to redo the final offer arbitration. I just want to make clear, at least in my mind, that your comments aren't just that it took too much time, because presumably the Commission could fix that by being more rigorous in its timelines, you're saying that the very framework is unworkable?

5493   MR. AUDET: Well, we are not asking a reconsideration of this decision. We could have asked it. We could have appealed it, but we didn't because we think it's more constructive to come to this hearing and tell you how unsatisfactory the process is and how unpoliceable the vertical integration policy has proven to be.

5494   DR. WARE: I wonder if I could just add something very short to that?

5495   THE CHAIRPERSON: Yes, professor.

5496   DR. WARE: The notion of foreclosure -- and actually I think I recall there was quite a good discussion of this in the FCC's decision in the Comcast NBCU case -- but foreclosure is something that doesn't necessarily have to be permanent in that when you get a substantial delay in a provision of a service because of -- well, because of many things, including the regulatory process, then that amounts to a foreclosure, which obviously has significant cost to the company that is being denied service.

5497   THE CHAIRPERSON: I'm not saying that there was or wasn't regulatory gaming in this particular instance, but we are, of course, quite conscious that that goes on both on the telecom and broadcasting side and we try to be cognizant of it and reactive to it.

5498   In your intervention -- and I know you're not supportive of the transaction -- mais dans votre intervention, vous avez critiqué beaucoup le bouquet d'avantages tangibles comme étant insuffisant.

5499   Depuis - parce que vous avez suivi l'audience - vous savez qu'il y a à peu près 40 millions qui a été ajouté.

5500   Est-ce que cela satisfait vos préoccupations?

5501   M. AUDET : Monsieur le Président, nous n'avons, à ma connaissance, pas dit que les avantages intangibles étaient insuffisants.

5502   Nous avons dit que cette transaction est tellement... cause un tel bouleversement au marché que pour nous c'est tout à fait inacceptable qu'il y ait une discussion sur des bénéfices tangibles quand les principes mêmes de l'intérêt public sont en cause.

5503   Ça fait 31 ans, moi, que je suis dans cette industrie. Et encore là, je compte pas les années où je travaillais pour d'autres compagnies avant.

5504   Et je n'ai jamais vu ça.

5505   Le premier test, c'est le test de l'intérêt public. Il passe ou il passe pas.

5506   S'il passe, ensuite, pour compenser le fait qu'il n'y ait pas eu d'appel d'offres pour choisir l'acheteur, le Conseil décide si les avantages que le requérant a mis sur la table sont suffisants.

5507   Dans ce cas-ci, cette transaction ne passe pas le test de l'intérêt public. Les avantages significatifs qui ont été établis, qui ne méritent même pas que j'en parle, ne constituent rien de plus que de la poudre aux yeux et j'en suis franchement outré, Monsieur le Président.

5508   LE PRÉSIDENT : Ça va raccourcir mes questions, parce que je pense que je vais faire face à une fin de non-recevoir sur chacune de mes questions qui portent sur la nature et le contenu de ces avantages tangibles.

5509   Ce qui est malheureux, parce que j'aurais voulu avoir votre point de vue sur l'opportunité de créer une nouvelle chaîne de services de nouvelles et toute cette notion de, est-ce que ça serait incremental, étant donné que vous opérez dans le marché.

5510   Mais si vous me dites que vous préférez ne pas en parler, ça...

5511   M. MAYRAND : Monsieur le Président, tout ce qu'on peut dire, c'est que comme vous, nous avons pris connaissance de ces changements en fait, lors de la présentation de lundi et de façon un peu plus formelle dans le document que Bell a déposé à l'intention des différentes parties intéressées mardi matin.

Alors vous savez, non seulement notre intervention ne porte pas sur les avantages tangibles ou significatifs comme tels.

5512   Non seulement portent-elles vraiment sur le noud de l'affaire qui est le niveau de pouvoir de marché qu'implique la transaction à travers toute les différentes activités du secteur des communications électroniques au Canada.

5513   Mais en plus, nous sommes placés dans une situation où c'est pas possible de commenter utilement sur des projets généraux qui sont apportés comme ça séance tenante, qui n'ont pas fait l'objet d'aucune documentation et qui, dans certains cas, impliquent en fait un processus différent.

5514   On parle d'un service de nouvelles qui serait de catégorie C qui prendrait l'attribution d'une licence de votre part. Ça prendrait un processus d'appel d'offres. Ça prendrait un processus de considération des différentes demandes reçues, éventuellement d'une décision.

5515   Vous savez, on peut pas commenter sur des projets généraux de cette nature-là comme l'intention de déposer quelque part dans l'avenir une demande sur un certain service.

5516   Honnêtement, ce n'est pas juste de s'attendre qu'on puisse faire un travail, nous les parties intéressées. C'est pas juste pour vous non plus, le Conseil, d'avoir à faire le travail que vous avez à faire quand des choses comme ça vous sont apportées à la 11e heure.

5517   LE PRÉSIDENT : Mais on doit s'assurer quand même comme tribunal administratif, que vous ayez une chance de traiter des enjeux.

5518   M. AUDET : Je peux traiter d'un enjeu avec vous. C'est sûr que quand vous avez un joueur qui a 20 milliards de revenus des ressources quasi illimitées, il peut venir ici et vous lancer à la tête toute espèce de choses.

Et ça pour nous, c'est une autre facette du comportement abusif de quelqu'un qui veut s'approprier tout.

5519   Alors ça oui. Ça je peux compléter ma réponse avec ça.

5520   LE PRÉSIDENT : D'accord.

5521   Vous étiez là tout à l'heure quand j'ai posé la question à Rogers de l'impact que ça pourrait avoir sur les marchés financiers, les marchés boursiers si, comme vous nous invitez de le faire en citant certains précédents, de carrément refuser cette transaction.

5522   Ça fait des années évidemment que vous et votre famille sont dans ce domaine-là. Quelle serait la réaction à votre avis?

5523   M. AUDET : Monsieur le Président, vous excuserez encore une fois ma franchise, mais c'est notre marque de commerce. On dit toujours ce qu'on pense.

5524   C'est pas votre problème. C'est pas votre problème.

5525   Vous, vous êtes le gardien de l'intérêt public. Vous décidez ce qui est correct, ce qui est pas correct. C'est tout.

Vous n'avez pas à solutionner le problème de l'acheteur prétendu. Vous n'avez pas à solutionner le problème du vendeur. Vous avez simplement à décider. Vous êtes un tribunal administratif.

5526   Qu'est-ce qui est dans l'intérêt public? Vous prenez la décision, c'est tout.

Nous, nous vous avons dit dans notre présentation d'ouverture que, à la face même des documents qu'on a vus dans la circulaire envoyée aux actionnaires d'Astral, il y avait d'autres parties d'intéressées qui n'ont pas été choisies.

5527   Bon! Ça c'est l'information qu'on a. Et il faut croire, comme l'a dit mon confrère Rogers un peu plus tôt aujourd'hui, qu'il y aura d'autres personnes intéressées.

5528   Mais c'est pas votre problème ça!

5529   LE PRÉSIDENT : Par contre, l'article5.2 de la Loi sur la radiodiffusion nous donne un certain mandat par rapport à la façon dont on règlemente. On doit être conscient de l'impact de notre règlementation.

5530   On ne peut pas réglementer d'une façon imprévisible, chaotique. Vous seriez parmi les premiers à nous dire qu'on est complètement imprévisible de sauter d'une chose à l'autre.

Non.

5531   M. AUDET : Je vous comprends bien sûr l'aspect d'un environnement que tous peuvent comprendre. Ça, je vous suis très bien là-dessus.

Et nous, comme exploitant d'entreprise de communication, on comprend cela.

5532   Mais malheureusement, nous avons atteint ici dans ce cas-ci un tel niveau d'exagération commis par une entreprise qui a démontré un comportement prédatoire avec tous ses partenaires d'affaires, ça ne rencontre plus les barèmes auxquels on faisait référence dans le passé.

5533   Nous sommes dans un nouveau monde, dans une nouvelle situation et malheureusement ou heureusement, cette responsabilité vous incombe entièrement.

5534   LE PRÉSIDENT : Ma dernière question, il y en aura peut-être d'autres des membres du panel. J'ai posé la question à propos des campagnes qui ont eu lieu à l'extérieur de la salle d'audience.

5535   Vous n'êtes pas le seul impliqué là-dedans. Ça a commencé, je pense, bien avant ça. Il y avait eu «Save Local TV», mais ça me semble être une tendance lourde d'avoir ce genre de campagne médiatique à l'extérieur de la salle d'audience.

5536   Est-ce que vous pensez que ça ajoute à la sérénité de nos délibérés?

5537   M. AUDET : Vous excuserez encore une fois ma franchise. Moi, quand je vois cette transaction-là, je ne suis pas très serein. Ma famille est impliquée dans cette industrie depuis 50 ans.

5538   Quand je vois un joueur prédatoire étendre ses tentacules à un point qui n'a plus de bon sens, honnêtement, entre nous, qu'on soit aujourd'hui en train de discuter une pareille ignominie, c'est kafkaesque, absolument kafkaesque.

5539   Bon, cela étant dit, alors moi, je ne suis pas serein, mais je comprends votre question.

5540   Peut-être devrions-nous l'être quand même.

5541   Le dossier est devenu public le 10 juillet. Il était comme c'est souvent le cas un dossier qui circulait entre deux eaux l'été quand personne s'en occupe.

5542   Nous avons collectivement cru qu'il était dans l'intérêt public d'en accroitre le profil pour que les consommateurs canadiens soient au fait de ce qui se passe.

5543   Et je constate avec intérêt que les consommateurs qui ne l'avaient pas venu venir en ont pris connaissance et ont communiqué avec vous en très grand nombre.

5544   Ils sont même venus ici vous dire ce qu'ils en pensent. Ils agissent indépendants comme nous, ils ont souvent des objectifs conflictuels avec les autres. Mais ils sont venus ici, ils vous ont donné leur façon de penser.

Je pense que le débat public en est enrichi et non pas appauvri.

5545   LE PRÉSIDENT : Merci pour cette réponse. Et comme toutes vos réponses, ce sont des réponses très directes et franches et j'ai toujours apprécié ce genre de réponses.

Donc, je vous en remercie.

5546   Je crois qu'il y a d'autres conseillers. Le vice-président de la radiodiffusion a une question pour vous.

5547   CONSEILLER PENTEFOUNTAS : Merci, Monsieur le Président.

5548   J'ai presque envie de tendre l'atmosphère en commentant votre commentaire sur les mauvais coucheurs ou les mauvaises coucheuses. Mais je vais m'empêcher.

5549   Mais ceci étant, pour retourner sur la prévisibilité, et j'ai bien compris votre réponse au président. Mais nous avons entendu monsieur Cope lundi qui est venu dire - puis on retourne aux barèmes et aux balises et à l'encadrement qui est établi depuis quelques années pour ce genre d'acquisition.

5550   Monsieur Cope est venu nous dire qu'il y aurait jamais mis en péril l'investissement de ses actionnaires en agissant d'une façon qui n'était pas déjà établie et acceptable.

5551   Et là, ce que vous demandez au Conseil, en quelque sorte, c'est votre droit. Vous avez peut-être raison, on verra. Il n'y a pas de décision de prise encore. C'est d'écarter ces normes, ces balises, ces barèmes qui ont été établis.

5552   Vous disiez c'est pas notre problème. Mais pour créer un environnement d'affaires serein, pour utiliser ces mots-là, n'est-il pas nécessaire à ce qu'on a, à ce qu'on donne l'idée à ceux et celles qu'on réglemente, des règles du jeu.

5553   M. MAYRAND : Alors écoutez. Je pense qu'on vous a pas demandé d'écarter comme vous dites, les barèmes que vous avez ou les seuils que vous avez déjà énoncés.

5554   On en parlait un petit peu plus tôt dans l'échange avec le Président.

5555   Vous avez une politique de 2008. Bien sûr Bell l'a regardée. Bien sûr, d'autres l'ont regardée. Bien sûr il y a eu toute une discussion sur la question de savoir comment les seuils en question sont effectivement calculés au niveau du numérateur, un, et du dénominateur pour les parts de marché, parce que c'est un ratio.

5556   Intéressant en passant de noter que Bell, malgré ses connaissances et ses nombreuses ressources règlementaires, a pris le point de vue que les propriétés conjointes d'Astral qui se trouve à acquérir dans le groupe d'actif d'Astral, n'aurait pas dû être tenu en compte pour un calcul d'avantage.

5557   Par contre, il demeure encore d'avis que ça devrait pas être tenu en compte non plus dans le calcul de parts de marché télévisuel, un peu bizarre.

5558   Mais ceci étant dit, quelle que soit la façon dont on examine ces barèmes-là - et on vous a pas dit qu'ils devaient être écartés.

5559   Ce qu'on vous dit, c'est que quelle que soit la façon dont on les regarde, il y a quand même un os. On va être d'accord là-dessus, il y a un os.

5560   Et nous avons, je pense, clairement établi que les parts de marché, certainement pour l'ensemble du pays, là, Bell va vous dire «Ah! Non, non, non! C'est pas comme ça qu'il faut le calculer. Il faut le segmenter absolument. It's a watertight compartment, you know, English TV and French TV.

5561   Mais sur l'ensemble du marché canadien, évidemment sur le marché ou le compartiment de la télévision de langue anglaise, il y a un problème.

5562   Alors, on vous a pas dit «Faites abstraction de vos critères sous 2008.» Ce qu'on vous dit, c'est ne décidez pas entièrement et uniquement sur ce barème-là. Parce que c'est un barème privé.

5563   Vous avez une politique de propriété commune en radio aussi. Mais vous ne vous êtes pas exprimé. Vous ne vous êtes pas commis, vous n'avez pas donné de barème particulier sur ce qui est approprié pour la concurrence ou non comme seuil de concentration et d'intégration verticale sur tous les segments d'activités des communications électroniques pour le Canada.

5564   Ça, vous l'avez pas fait.

5565   Alors on aurait aimé voir une discussion de Bell sur cette question-là. Mais malheureusement, ils n'en parlent pas. Ils font comme si ça n'existait pas.

5566   Alors ça, c'est la première remarque que je vais faire.

5567   Et ensuite, il faut se dire les choses comme elles sont.

5568   Je pense que Bell, encore une fois avec ses nombreuses ressources règlementaires et autres, a fait une analyse très serrée de cette situation-là et a conclu qu'il y avait des risques de pas obtenir les approbations règlementaires requises.

5569   Puis on comprend qu'il y a celle que votre conseil doit donner sous l'autorité de la Loi sur la radiodiffusion. Puis il y a aussi celle que le Commissaire à la concurrence doit donner sous forme de non-objection le cas échéant sous la Loi sur la concurrence.

5570   Bien, ils ont fait l'analyse de ça, bien comme il faut sûrement. Et puis, ils l'ont faite avec les vendeurs, puis ils ont conclu qu'il y avait un risque parce qu'ils ont magnétisé le risque, puis ils lui ont attribué une valeur fixe.

Et c'est dans la circulaire d'information de la direction d'Astral à tous les actionnaires de ce temps-là.

5571   CONSEILLER PENTEFOUNTAS : Non, non. Pense que ça crée, même c'est non plus inhabituel à ce que dans le cas d'une acquisition, on calcule ce risque-là, s'il n'y a rien d'anormal.

5572   M. MAYRAND : Bien, je vous parle pas de savoir si c'est anormal ou pas.

5573   CONSEILLER PENTEFOUNTAS : Ça se fait couramment.

5574   M. MAYRAND : Je fais juste vous dire c'est ce qu'ils ont fait.

5575   Et c'est ce que Bell a fait. Et c'est ce que Bell a effectivement souscrit.

5576   Alors maintenant, de venir nous dire devant vous comme je les ai entendus lundi dernier, affirmer qu'ils sont en droit de s'attendre à la prévisibilité alors qu'ils ont clairement reconnu contractuellement et publiquement qu'il y a un risque, j'ai un peu de difficulté avec ça.

5577   CONSEILLER PENTEFOUNTAS : Bien en tout cas. On va pas faire le débat là-dessus. Il y a toujours un risque. Et ça fait partie de presque tous ces genres d'entente.

5578   On a juste à penser à l'année passée et l'acquisition de AT&T et de Verizon, je pense qu'il y avait une pénalité de quatre milliards. Oui. Et une brève déclaration du Chairman du FCC a déraillé le processus.

5579   Ceci étant, il y a d'autres gens qui vont dire et qu'il y a même eu allusion hier de la part de monsieur Cope, qu'en fait, vous voulez acquérir ces actifs-là, ces propriétés-là et vous êtes des mauvais perdants.

5580   Et que je vois que monsieur Audet est prêt à aller, et que tout ça, la campagne de cet été, les représentations ici sont motivées par le fait que vous avez perdu en quelque sorte, et que vous êtes, pour plusieurs raisons. Alors, je vous donne une chance de répondre à cette déclaration qui serait assez...

5581   M. AUDET : Là, la question est posée?

5582   CONSEILLER PENTEFOUNTAS : Elle est posée, Monsieur Audet. Sentez-vous à l'aise.

5583   M. AUDET : Regardez, Monsieur le Commissaire, Monsieur le Vice-président, nous, nous sommes une société publique. Nos actions sont transigées en bourse. Nous répondons aux impératifs et à la réglementation de la bourse et des commissions des valeurs mobilières du Québec et de l'Ontario.

5584   Nous n'avons fait aucune déclaration au sujet de ce que vous dites. Si nous avions eu une déclaration à faire, nous l'aurions faite. Nous ne l'avons pas faite.

5585   De surcroît, cette question est tout à fait hors champ, parce qu'en réalité, votre rôle à vous, c'est de protéger l'intérêt public et de décider si cette transaction passe ou si elle ne passe pas.

5586   C'est ça votre rôle, rien de plus.

5587   CONSEILLER PENTEFOUNTAS : Bien, j'apprécie la leçon. Mais ça circule et ça a été soulevé lundi.

5588   Je voulais vous donner la chance d'y répondre. C'est aussi simple que ça.

Vous avez parlé d'échelle, vous avez parlé de monopolie. Il y a ceux et celles également au Québec dans le marché radiophonique québécois, montréalais qui a ce qui peut être vu comme une duopolie entre vous et Astral.

5589   Parlez-nous-en un petit peu de la différence entre la situation de la propriété à Montréal et au Québec et le genre d'échelle ou de part du marché que Bell vise dans l'acquisition d'Astral.

5590   M. AUDET : Avec plaisir.

5591   Les parts d'écoute de la radio à l'échelle du Québec sont de l'ordre suivant. Astral 34 pour cent, Cogeco 24 pour cent, Radio-Nord 6, Radio-Canada 6 et la balance, soit une trentaine de pour cent pour tous les autres.

5592   CONSEILLER PENTEFOUNTAS : Voulez-vous qu'on parle de Montréal et des revenus de Montréal, sans rentrer dans les détails?

5593   M. MAYRAND : Nous pourrions parler de Montréal, Monsieur, certainement. Mais ce n'est pas l'objet de cette audience.

5594   CONSEILLER PENTEFOUNTAS : Vous avez parlé du FOA. Est-ce que c'est le processus qui vous déçoit ou est-ce que c'est le résultat dont vous n'êtes pas content avec, qui vous déplaît, devrais-je dire?

5595   M. MAYRAND : Non. Monsieur le Vice-président, n'allons pas...

5596   CONSEILLER PENTEFOUNTAS : Je dis ça dans le sens suivant, Monsieur Mayrand. Parce que les gens arrivent à FOA à leur risque et péril, toujours à risque si tu ne réussis pas à t'entendre avant d'y arriver à ce stade-là.

5597   M. MAYRAND : Mais alors précisément, si vous me permettez de répondre à votre question.

5598   Nous ne sommes pas ici pour débattre de cette procédure particulière ni de son résultat.

5599   Et comme monsieur Audet l'indiquait, on n'a pas contesté le résultat.

Et vous venez de le dire. Il y a des risques et des périls. Et évidemment, il y a des délais en cause. Je pense qu'on va être d'accord là-dessus.

5600   Et ce que ça signifie en pratique pour une entreprise comme la nôtre, c'est qu'on a un processus. Vous parlez de prévisibilité, sur ce à quoi on devrait s'attendre, nous, comme justiciable devant votre organisme. Et ça pose un problème de prévisibilité, certainement dans notre expérience.

5601   Alors il y a des risques importants et il y a des préoccupations importantes qui nous amènent à réfléchir sur ce que seraient ces risques et ces préoccupations si le même interlocuteur que nous avons eu dans ce cas-là, à savoir Bell Média, contrôle pas seulement la proportion des frais de programmation que nous payons tous les programmeurs canadiens et autres.

5602   Là, on parlerait d'une proportion qui augmenterait considérablement avec le parc de services de programmation d'Astral.

5603   Et nous sommes amenés bien honnêtement à nous poser la question à savoir comment on va être capables de fonctionner dans ce genre d'environnement-là, même avec le processus d'arbitrage que vous avez en place.

5604   Comme le disait monsieur Audet, le commentaire de monsieur Denton, je pense, un peu plus tôt aujourd'hui lors de la période de questions à Rogers est important.

5605   Moi, je m'attends à ce qu'inévitablement, plus le niveau d'intégration et plus les enjeux grossissent et plus les ententes sont toutes conditionnées par un même agenda d'intégration verticale, et j'ai expliqué ce que ça signifiait, plus vous allez avoir des litiges et des différents acrimonieux longs, compliqués et difficiles à résoudre.

5606   Pourquoi ne pas prendre plutôt que d'essayer de voir comment vous allez faire pour vous équiper, pour traiter d'un paquet de nouvelles demandes de conflits qui vont durer de longues périodes de temps?

5607   Pourquoi ne pas vous atteler à prendre les décisions structurelles qui vont éviter une multiplication de ces problèmes-là ou un accroissement de leur degré de gravité?

5608   On est à ce point de jonction, Monsieur Pentefountas. C'est triste, c'est dommage, mais c'est ça la réalité.

5609   CONSEILLER PENTEFOUNTAS : Et la décision structurelle, ça serait de refuser la demande d'acquisition, aussi simple que ça?

5610   M. MAYRAND : Tout à fait.

5611   COMMISSIONER PENTEFOUNTAS: Professor, you mentioned the NBC Comcast Universal deal and I had a note when I was listening to Monsieur Audet and there were some ex post safeguards placed subsequent to that merger.

5612   How would you compare the two environments and how do those ex post safeguards -- how have they come into play?

5613   DR. WARE: Well, it's an interesting question. Thank you.

5614   Actually I was looking for some follow-up studies to see -- I don't think enough time has elapsed for us to honestly know how well those are working, but in general there are greater safeguards. There's much more oversight of rates and a different kind of dispute resolution mechanism if there was a dispute over programming fees.

5615   Generally speaking, it's a more activist role. I believe the arbitration process is different. I'm not really an expert on it but it's a different process.

5616   COMMISSIONER PENTEFOUNTAS: Okay.

5617   MS BLACKWELL: Mr. Chairman, if I could just add to that.

5618   COMMISSIONER PENTEFOUNTAS: Sure.

5619   MS BLACKWELL: I would point out that there has been follow-up enforcement procedures by the FCC that have required further action. There was a ruling issued by the FCC in June of this year.

5620   COMMISSIONER PENTEFOUNTAS: That was the tennis --

5621   MS BLACKWELL: Actually, no. It was -- but there is the tennis issue. But there was another enforcement Bureau decision, a consent decree issued by the FCC related to broadband-related initiatives that were imposed on Comcast, again, recognizing the broad vertical integration nature of the Comcast situation.

5622   COMMISSIONER PENTEFOUNTAS: That's not -- I don't see how that applies to our situation here with the broadband initiative --

5623   MR. AUDET: Well, it doesn't, Chairman, and the reason it doesn't is one that I explained amply at the vertical integration hearing and it's the following.

5624   Comcast is a minority partner. It cannot advantage itself to the disadvantage of its General Electric partner. So you have an embedded safeguard.

5625   There are no embedded safeguards in the vertical integration transactions that have occurred in this country and that is now being submitted for your review and that leads to concentration levels and possibility of abuse that are essentially unmatched in the G8 countries except Italy.

5626   MS BLACKWELL: If I could just point out. I think my point on it was not so much the nature of the issue but that the enforcement bureau was able to negotiate a settlement that there was consequences of not fulfilling the safeguards regardless of the specific nature of them.

5627   COMMISSIONER PENTEFOUNTAS: Okay. Monsieur Audet makes an interesting point and Donna made that difference.

5628   Vous avez également fait référence à un geste d'un ancien président, Monsieur Bureau, qui se trouve dans la salle, mais à l'époque -- puis je veux assurer les gens que c'est avant mon temps là -- mais il n'y avait pas certaines choses qui étaient différentes à l'époque dans la tentative d'acquisition de Power?

5629   D'abord, Power était très fort et dominait le monde des journaux. Il y avait une nouvelle offre qui était plus lucrative. Il y avait des tensions entre acheteur et acquéreur. Il y avait question d'avantages. Je pense un moment donné le président à l'époque, il n'avait pas des assurances nécessaires quant aux avantages.

5630   Et tout ça n'est pas présent ici, Monsieur Audet?

5631   M. AUDET : Monsieur Pentefountas, vous n'y étiez pas, mais moi, j'y étais aux premières loges. La position de Power Corporation était mille fois moins dominante que celle de Bell ne l'est aujourd'hui. Il n'y a pas de comparaison possible.

5632   M. MAYRAND : Si vous me permettez...

5633   CONSEILLER PENTEFOUNTAS : Vous avez soulevé la comparaison. Alors, voilà!

5634   Monsieur Mayrand.

5635   M. AUDET : Je m'excuse. Une minute.

5636   Non. J'ai soulevé la comparaison pour vous signaler que vous avez le pouvoir et la responsabilité de faire ce qui est pour l'intérêt public -- point à la ligne, rien de plus, Monsieur.

5637   CONSEILLER PENTEFOUNTAS : Noté.

5638   M. MAYRAND : Si vous me permettez...

5639   CONSEILLER PENTEFOUNTAS : Ça va, Monsieur Audet?

5640   M. AUDET : Vous, est-ce que ça va, Monsieur?

5641   CONSEILLER PENTEFOUNTAS : Moi, ça va très bien.

5642   M. AUDET : Ça n'a pas l'air.

5643   CONSEILLER PENTEFOUNTAS : On va essayer de garder notre calme. La sérénité s'impose.

5644   Monsieur Mayrand.

5645   M. MAYRAND : Si vous me permettez, vous mentionnez le fait que c'est une décision qui date évidemment d'avant votre période de mandat au Conseil, bien sûr. Elle date, en fait, d'un bon bout de temps. Mais d'après nous, elle est très pertinente.

5646   Pourquoi? Parce que... On a ressorti le texte de la décision et il y a deux paragraphes... Malheureusement, j'ai le texte en anglais ici, mais je pense que c'est instructif par rapport à la dynamique à laquelle vous faites face dans le cas présent à cette audience. Et permettez-moi de citer les paragraphes opératoires de la décision.

5647   Ça dit d'abord :

"Although the Commission does not question the ability and willingness of Power Corporation to fulfil all the commitments made by Télé-Métropole at its last licence renewal and to maintain the present high level of performance, it considers that the Applicant has not demonstrated to the Commission's satisfaction that many of the specific benefits it proposes are not either already offered or planned by Télé-Métropole or that they could not be offered by it. Moreover, none of the other proposed benefits were sufficiently concrete or detailed to permit examination and assessment by the Commission. Having carefully examined the applications as submitted and the statements made at the public hearing, the Commission has concluded that the Applicant has not demonstrated to the Commission's satisfaction that the proposed transfer of control would yield significant and unequivocal benefits to the communities served or to the broadcasting system as a whole and that it is in the public interest. Accordingly, the Commission denies the Application." (As read)

5648   I think on the looks of it that it is somewhat relevant to your deliberations in this proceeding.

5649   COMMISSIONER PENTEFOUNTAS: That's exactly why I raised it. Thank you very much.

5650   Merci, Monsieur le Président.

5651   LE PRÉSIDENT : Merci.

5652   On ne refera pas l'audience de 1984, je pense. Par contre, si je comprends bien votre point de vue, Monsieur Audet, c'est que vous nous dites qu'on a la pleine autorité, même le devoir, de refuser une transaction si ce n'est pas dans l'intérêt public, et, de plus, le niveau de problématique ici dans cette demande est beaucoup plus supérieur aux problèmes qui ont mené, à votre avis, en '84 au refus, et donc, a fortiori, on devrait refuser dans ce cas-ci? C'est ça?

5653   M. AUDET : Vous m'avez très bien compris, Monsieur le Président.

5654   LE PRÉSIDENT : Merci bien.

5655   Je crois qu'on n'a pas d'autres questions pour vous. Donc, je veux vous remercier, à moins que vous vouliez rajouter quelque chose en dernier.

5656   M. AUDET : Je vous remercie, Monsieur le Président, d'avoir pris le temps de nous écouter.

5657   LE PRÉSIDENT : Merci beaucoup.

5658   Donc, on va prendre une pause de 10 minutes. Nous reviendrons à 4 h 05. Merci.

--- Upon recessing at 1556

--- Upon resuming at 1608

5659   LE PRÉSIDENT : Madame la Secrétaire, s'il vous plaît.

5660   THE SECRETARY: We will now proceed with the presentation by ICE Wireless Inc. and Iristel Inc.

5661   Please introduce yourself and your colleagues and you have 10 minutes for your presentation. Thank you.

INTERVENTION

5662   MR. RENNER: Thank you.

5663   Mr. Chairman, Commissioners, ladies and gentlemen, my name is Roland Renner. I am a broadcasting and telecommunications consultant working in the regulatory sector.

5664   I am here today to introduce senior management of Iristel and ICE Wireless.

5665   To my immediate right is Cameron Zubko, executive vice-president of ICE Wireless. Cameron is based in Vancouver and Yellowknife.

5666   To his right is Samer Bishay, President and CEO of both Iristel and ICE Wireless, and he's based in Toronto.

5667   And to Samer's right is Maged Bishara, who is Vice-President of Operations of both companies as well, and he's based here in Montreal.

5668   Now, I will turn it over to Samer.

5669   MR. SAMER BISHAY: Thank you, Roland.

5670   Good afternoon, Mr. Chairman, Commissioners, ladies and gentlemen.

5671   There is no doubt that financial support is needed to upgrade the North's aging telecom infrastructure. Northwestel and Bell should have done so long ago. But we strongly believe this proposal by Bell to funnel $40 million to her offspring, Northwestel, under the guise of "public benefits" is wrong on a number of regulatory and business levels. The proposal clearly benefits Bell and Northwestel, but not the public.

5672   If approved, it will harm competition, perhaps kill it outright, in Canada's North.

5673   Our companies, Iristel and ICE Wireless, joined forces because we see future growth in the North when it comes to improved telecom services. But the rules must be fair to all the players if we wish to bridge the Digital Divide in Canada.

5674   Before I continue, I'd like my colleagues to tell you a little about our companies.

5675   Maged.

5676   MR. BISHARA: Thank you, Samer.

5677   Bonjour, Monsieur le Président, Conseillers, Conseillère, Mesdames et Messieurs.

5678   Iristel est une entreprise enregistrée comme entreprise de services locaux concurrentiels (l'acronyme on français est ESLC, en anglais CLEC).

5679   Iristel est un opérateur voix sur IP desservant le Canada de côte à côte. Fondée en 1999, Iristel s'est vu délivré sa licence d'opérateur un an plus tard par le CRTC. La compagnie à été formé dans l'appartement de Samer, ici même à Montréal. Aujourd'hui, Iristel est l'opérateur voix sur IP le plus important au Canada, avec 4 millions de numéros de téléphones canadiens en circulation.

5680   In many ways, Iristel's coast to coast CLEC network serves as the "Carrier's Carrier" to many of Canada's VoIP solutions providers and integrators.

5681   The Iristel network also powers third-party VoIP services beyond Canada's borders, in such areas as Eastern Europe, Africa, and countries such as Romania and the Ivory Coast. Many of these countries are utilizing Canadian home-grown technology and expertise and we're happy to provide this for them.

5682   Dans les faits, Iristel est une ELSC nationale en Roumanie. Donc, nous avons l'expérience et la connaissance sur la livraison de services dans des environnements où l'accès est difficile.

5683   Chez Iristel, nous voyons une opportunité importante au Nord du Canada pour servir les gens qui ont été mal supportés et desservis par Northwestel pendant longtemps, une opportunité d'offrir au Nord du Canada les mêmes services VOIP dont bénéficient les autres et que certains ont pris pour acquis, une opportunité de livrer des solutions flexibles, abordables et répondant réellement aux besoins de l'usager.

5684   Le résultat de la décision de la politique réglementaire de télécommunication CRTC 2011-771 a permis d'ouvrir le marché pour la compétition locale dans ces régions, et Iristel s'est joint avec ICE Wireless pour mieux diversifier l'étendue des services, avec et sans fil, pour les Territoires du Nord-Ouest, du Yukon et du Nunavut.

5685   And we are now actively expanding our CLEC network to bring these services to the North and taking Iristel's coverage not only coast to coast in Canada but coast to coast to coast.

5686   Now, I would like to turn it over to Cam to talk about ICE Wireless.

5687   MR. ZUBKO: Thank you, Maged.

5688   Good afternoon, Commissioners.

5689   Founded in 1999, ICE Wireless provides cellular and data service in the Yukon, Northwest Territories and soon to be Nunavut. We currently serve six communities in the North which make up three-quarters of the population of the Northwest Territories and Yukon.

5690   The Arctic Communications Infrastructure Assessment report said only Yellowknife and Whitehorse are viable but we have managed to do more -- and to do it without subsidies.

5691   It has not been easy facing an incumbent owned by Bell Canada which also receives $20 million a year from the National Contribution Fund.

5692   It has been difficult at times but we're proud to say that Rogers Wireless and a number of international phone carriers using GSM have enough confidence in ICE Wireless to choose us to provide roaming for their customers in the North.

5693   It is also worth noting that our group was formed in the early 1990s because Northwestel said there was no business case to provide Internet access service to Inuvik, the beautiful gateway to the Beaufort-Delta, with 3,500 residents.

5694   Interestingly, once we provided Internet access in Inuvik, Northwestel magically appeared and started competing with us.

5695   We also brought service to Aklavik, a community of about 500 people, 65 kilometres from Inuvik. Northwestel tariffs were so high we had to build our own microwave route to serve the community economically. This is a classic example of a small company using technology creatively to deliver service.

5696   In the late 1990s when Northwestel said it could not provide cellular service to Inuvik, we did it. And once again, Northwestel appeared offering mobile service.

5697   The point is healthy, sustainable competition drives innovation, even at Northwestel.

5698   Now, I would like to turn it back to Samer.

5699   MR. SAMER BISHAY: Thank you, Cameron.

5700   Here in the South, we have some of the best telecom services in the world and Canadians and Canadian businesses have reaped the benefits -- or at least in the Canada below the 60th parallel.

5701   During Canada's initial telecom deregulation era some time ago, there were feelings of consternation that deregulation may harm Canada's telecommunications infrastructure. These feelings are quite similar to what some people are talking about today in the North. But these feelings emanate from incumbents that have owned these markets for generations. These feelings were proven inaccurate in Canada's South and they can be proven wrong in the North, too.

5702   When Northerners have trouble obtaining basic wireline services or even something as trivial as call display, we know there is a Digital Divide -- and that it is real.

5703   Over the past decade, VoIP technology has transformed the telecom world as we know it and it has been available to Canadians for at least 10 years.

5704   We believe that it is time for Northern Canadians to reap these benefits as well. They deserve it and they want it. It is healthy competition that drives innovation and value for customers, not anticompetitive former monopolies.

5705   At every corner, Northwestel does its best to block competition by charging wholesale customers more than what they charge their own retail customers. It is no wonder that every single independent ISP has been driven out of the Yukon. They simply could not survive such predatory pricing by the incumbent.

5706   The Seaboard Group, an independent technology research firm, called Northwestel the "Pirates of the Arctic" in a 2011 report. Seaboard said Northwestel's wholesale prices are so high compared to other parts of Canada that if they also sold Big Macs they would charge $61 for a burger that costs less than $5 here in Montreal.

5707   But you know this, judging by your policy decision of last December.

5708   Here is just one of many things you said about Northwestel's disappointing performance:

"The Commission is concerned that Northwestel's shareholders have benefited from the price cap regulatory framework to a far greater extent than its customers."

5709   Despite what customers say, despite what independent third parties in the telecom industry say, despite even what the CRTC says, Northwestel tries to paint a fairy tale that it alone is best suited to bridge the digital divide.

5710   But the facts say otherwise. This 40 million public benefits proposal is the latest example of Northwestel/Astral deal doesn't add up to being able to stand up against a giant like Bell. But for Canadians in the North and competitors to Northwestel, it is a huge hill of beans.

5711   Instead of Northwestel's anti-competition fairy tale, we aim to prove competition in Canada's North is real and that the digital divide can be bridged. We have invested millions in the North already and we continue to invest and build. In the weeks ahead, you will be hearing a lot more from us in that regard.

5712   We just need to rules to be fair as envisioned by the CRTC and policy 2011-771.

5713   Public benefits money historically goes to independent third parties, not companies owned by the corporation pledging the money, in this case BCE. Public benefits are also intended to be incremental to normal expenses. And the CRTC has already ordered Northwestel to modernize its infrastructure, because you are dissatisfied with its performance.

5714   This 40 million is Bell's benefits, it is not public benefits. If, however, you see fit to approve the 40 million from the Astral deal to telecom in Canada's North, we urge you to allow all players access to these funds, not simply Northwestel.

5715   In conclusion, we propose a telecom fund set up with this money, that can be accessed by all qualified players in the North.

5716   At this point, I would be happy to answer any questions. Thanks.

5717   THE CHAIRPERSON: Thank you very much for participating in the hearing.

5718   Commissioner Lamarre will have some questions for you.

5719   CONSEILLERE LAMARRE : Merci, Monsieur le Président.

5720   Bonjour. Thank you for being here this afternoon.

5721   Maybe I should ask you this : Do I do this in French or in English? Because I actually did two mistakes today; one in French and one in English, so --

--- Laughter

5722   MR. BISHAY: If I had to choose, I would pick English, please.

5723   COMMISSIONER LAMARRE: Okay; your choice; thank you.

5724   I am going to start with the end of the presentation, though. I am listening; I have read your submission; I am hearing you this afternoon. You have a very focused point to make here and only one; and you are making it quite clearly also.

5725   I am still going to ask a couple of questions.

5726   When you -- basically, the Commission, with this proposal with Bell, if we do approve the transaction, we may decide that yes, this 40 million, we should accept as they are proposing it. We could decide that no; we don't accept as tangible benefits. And there are other options, but you are mentioning one and you are saying it could go into a fund where, you know, all Northern players could have access.

5727   So how do you figure that could work? I mean who would arbitrate who gets what if we were to put up such a fund?

5728   MR. BISHAY: If -- I mean I would have to assume it probably could fall under some kind of national contribution fund that Northwestel has been receiving, you know, x amount of dollars for 20 or odd years now; about 20 million, from what I understand.

5729   And why it is important to manage this fund accordingly is we have -- we are the first players in the market when the competition opened up and we are finding all sorts of resistance just to get our network integrated with the Northwestel network. The switches are old; they are over 17 years old; some of them cannot handle some of the technologies that we require to interact with. And basically almost impossible to deploy service in any timely manner.

5730   COMMISSIONER LAMARRE: Okay.

5731   MR. BISHAY: Go ahead, Rol.

5732   MR. RENNER: The Broadband Canada Program, which until recently operated in the North and in rural areas in Canada provides one model of how this could be done.

5733   COMMISSIONER LAMARRE: Okay; thank you.

5734   Now you are there; you are doing business; you are already in several locations; you want to expand; you have made that clear. And given, you know, your own business and operational experience, can you tell me how it can be done; how you can expand those services for people in the North; maybe up to (inaudible) Bay, and provide them with the type interactive video product on Internet that people from the South get?

5735   MR. BISHAY: We are -- as Ice Wireless, we already are in six communities and we have a solid plan to expand in 16 more communities.

5736   We have already demonstrated that we do not have to rely on Northwestel in any fashion with what Cameron had mention in Aklavik, for example. We actually deployed our own microwave towers to backhaul the signal to the community.

5737   If we had done through the Northwestel rout; besides taking too much time, it would have cost too much money that it would have sunken the whole business model.

5738   So -- and this is just, as Ice Wireless, now. And Iristel, we have a history of starting from basically one rate centre, one city, which was Toronto, and -- when we got the CRTC approval. And now, we are literally cost-to-cost, supplying services that, you know, we were innovative in the sense that we have enabled all phone numbers, for example, landline phone numbers to receive and send text messages. We have enabled machines to have phone numbers, so it is not just people; you can order, you know, a coke from a vending machine by sending a text message. We brought a lot of innovation to remote communities, to major aid centres.

5739   So we have a resume of about 13 years now of us doing this already.

5740   In terms of the North; we have deployed our towers; we have our antennas. We have experience deploying in much harsher environments in Africa as well.

5741   So we know exactly what it takes to deploy a full broadband service to enable video, telephony, broadcast, whatever it is that needs to be delivered to these communities.

5742   COMMISSIONER LAMARRE: And I am not asking you to tell us any, you know, trade or company secrets you would not want to discuss today.

5743   But when you are -- just to get a sense of the timeframe. You say you are planning to expand into 16 more locations in the North. What is the timeframe for that?

5744   MR. BISHAY: We are looking roughly, in the next 12 months; we are going to have a lot of these communities serviced.

5745   The reason we have actually been delayed - we were supposed to launch service in July first, but it goes back to the point where policies have not been established at Northwestel to deal with the first (inaudible) at hand and that has kind of dragged us to September now.

5746   So we are trying to, I guess, work through all the hurdles right now and there is no reason -- because with today's technology, we are deploying full next-generation switches. They are small; they are efficient; they are robust; redundant. That is one thing that the infrastructure at Northwestel lacks currently is this redundancy.

5747   So we are able to deploy into communities that are as small as 500 people within a couple of weeks.

5748   COMMISSIONER LAMARRE: Okay.

5749   So 500 people that would be how many clients, approximately?

5750   MR. BISHAY: We would estimate a community like that to have probably about 250.

5751   COMMISSIONER LAMARRE: Okay

5752   MR. BISHAY: Yes.

5753   COMMISSIONER LAMARRE: Thank you.

5754   I don't know if you have read Xplornet's submission in this proceeding?

5755   MR. BISHAY: I have not had a chance yet, no.

5756   COMMISSIONER LAMARRE: Okay. Well I am going to quote something out of it and if you want and can comment, you do so, and if you can't, you can keep it for another day.

5757   They have been saying, basically, that, you know, Bell's initiative will not result in Northern Canadians being able to experience TV programming to the extent of people in the South of Canada.

5758   So referencing that (inaudible) on wireless data plans - and this is the quote from Xplornet; they say:

"It defies all credibility to suggest that giving people the equivalent to two to three hours of HD television content, or four to six hours of standard definition content per month through a mobile wireless network is somehow a substitute for broadcast television."

5759   Would you like to comment on that?

5760   MR. BISHAY: Sure; I can comment a little bit. I am not the broadcast expert. Maybe I will pass some of that to Roland, actually.

5761   But just from my opinion; I mean this probably -- this whole thing kind of started when NetFlix and I was a consumer of NetFlix, and all of a sudden, we heard the whole thing --

5762   COMMISSIONER LAMARRE: Are you still?

5763   MR. BISHAY: Yes, I am -- data caps, you know, that came into play.

5764   Now from my perspective, what I see is that it funnels back to the point that some of this funding that is -- that was given, let's say to Northwestel - I will use that as an example, because that is the issue that we are battling - is -- that fund should have gone to the infrastructure to support such bandwidth.

5765   Now that public infrastructure, that money did not necessarily go there because we are facing it today in terms of lack of redundancy; lack of speed; caps. I mean we are getting quotes on something like 5 megabit services or 10 megabit services when in the South, you can get 10 gigabit service.

5766   So it is very obvious that there is a lack of broadband to allow consumers to freely watch what they need to, from an IP perspective, internet perspective.

5767   And it does funnel back to having this funding spent in the right direction on public infrastructure and not to be (inaudible) Northwestel's customers, for example, or whoever it might be, in remote communities.

5768   And maybe Roland -- yes?

5769   MR. RENNER: If I could add a couple of things. The data cap issue is a major problem for streaming video and certainly a major problem for video -- potential video customers in the North and broadband internet.

5770   And the caps are there particularly in the North, primarily because of the lack of transport capacity back to the South.

5771   And if anything needs to be subsidised, that is a component that should be subsidised.

5772   And then, each of the competitors would be able to access that subsidised transport capacity back to the South, at the same subsidised price. And there have been other precedents whereby those mechanisms have been enabled. And whether that is the fibre transport that Northwestel loans; whether it is microwave routes or whether it is space segment satellite capacity; in all of those cases, that would be a good place to deliver some of the funding.

5773   And then, all of the competitors could equally access the subsidised pricing. And then all of those competitors can distribute the retail services in the North. Because they are all capable of doing it and deliver -- compete to deliver to customers in that manner.

5774   COMMISSIONER LAMARRE: Thank you very much. Ce sont toutes mes questions, Monsieur le Président; merci.

5775   THE CHAIRPERSON: Thank you. Are there any other -- Commissioner Denton, please?

5776   COMMISSIONNER DENTON: Hi; good afternoon, Gentlemen.

5777   So when you are dealing with Northwestel, do they have any IP-based switches or is it all TDM?

5778   MR. BISHAY: As far as I know, it is all TDM-based.

5779   COMMISSIONER DENTON: Okay. Is your stuff IP-based or what?

5780   MR. BISHAY: It is IP-based, but what we have done to build a network across Canada - because there was no framework to interconnect with incumbents on an IP level; we had to build a translator, basically.

5781   COMMISSIONER DENTON: Yes; okay.

5782   Now I heard, by implication, when Roland was speaking, Mr. Renner was speaking, that if we came to the conclusion that some portion of the benefits package of a hypothetical approval; if that were made, then something that is competitively neutral would be an acceptable outcome of spending money up North; right? I mean that is what I was hearing from you; but not otherwise.

5783   MR. BISHAY: Correct. I mean we would be against that money going to Northwestel. It would have to go through a fund that is dispersed in a fair manner.

5784   COMMISSIONER DENTON: Right. And you were saying the principle problem is it is actually backhauled to the South is the policy problem that needs solving; is that correct?

5785   MR. BISHAY: That is the major issue. There no redundancy in place; bandwidth is horrible; latency is there; there is no quality of service that even matches one tenth of what is available in the South. And that is the issue.

5786   COMMISSIONER DENTON: Okay; thank you very much.

5787   MR. BISHAY: Thank you.

5788   COMMISSIONER DENTON: Thank you, Mr. Chairman.

5789   THE CHAIRPERSON: Thank you very much. Those are all our questions. And thank you for participating in the hearing; very much appreciated. Thank you.

5790   MR. BISHAY: Thanks.

5791   THE SECRETARY: I would now ask SSI Group of Companies to come to the presentation table.

5792   THE CHAIRPERSON: So will you be alone? Yes?

5793   Donc identifiez-vous pour les fins de la transcription et s'il vous plaît procédez à votre présentation. Votre micro, en passant.

INTERVENTION

5794   Mr. PROCTOR : Merci. Je suis Dean Proctor, chef de l'expansion de l'entreprise et très heureux d'être ici pour représenter le groupe SSI. Cela me donne l'occasion de mettre une cravate.

--- Laughter

5795   Malheureusement, je suis seul pour représenter la compagnie aujourd'hui. Justement, Jeff Phillips, le fondateur et chef de l'entreprise voulait vraiment être ici, mais des obligations et dans les Territoires du Nord-Ouest et au Nunavut la semaine prochaine rend impossible pour lui de venir ici aujourd'hui. Nous vivons vraiment dans un très grand pays.

5796   SSI's origins are in full providence in the Northwest Territories from 1965, when the Phillip family founded the Snowshoe Inn. Since then, the SSI has grown and evolved, and today's largest division, SSI, is principally a telecommunications provider.

5797   Using our own network infrastructure, we deliver broadband wireless to consumers, businesses and governments across Nunavut and the Northwest Territories. We are not a broadcasting company nor and entity otherwise involved in the broadcasting sector.

5798   Indeed, if it were not for the tangible benefits package proposed by Bell. I expect that we would have no more than a passing interest in Bell's application to purchase Astral, and certainly, we would have no reason to appear before you today. So we really do appreciate the opportunity.

5799   As explained in detail in our written intervention of August 9, we oppose one of Bell's proposed tangible benefits initiatives known as the Astral component, which relates to a modernisation plan that Bell's subsidiary, Northwestel, was directed to file pursuant to separate Commission telecommunications process.

5800   Northwestel was required to prepare a network modernisation plan because of its chronic underinvestment and repeated shortcomings to meet its basic obligations as a telecom provider in the North.

5801   In brief, the Astral component would have Bell pay itself $40 million in tangible benefits package in order to deploy broadband wireless access infrastructure across the North.

5802   This would compete with the facilities of competitors, including SSI, who are in place and upgrading.

5803   We have included as an appendix to this presentation - and it is this document here - some information and images of our installations and services in the North. We really are there.

5804   As we will describe, Bell's Astral component doesn't not remotely meet or comply with the Commission's benefits test for broadcasting transfers of control. And even more importantly, the proposal itself does nothing to address the real communications needs in the North.

5805   Let us review the Commission's three conditions to pass the benefits test.

5806   First, expenditures must be truly incremental to ongoing normal responsibilities.

5807   In this case, it is not incremental. The CRTC ordered Northwestel to propose a network modernisation plan, not as an abnormal measure but because Northwestel had not been making normal and necessary network investments and system upgrades that should have been made anyway.

5808   The second condition is that the projects and initiatives would not be realized in the absence of Bell purchasing Astral.

5809   But broadband wireless service is already available across the vast majority of Northern communities.

5810   To drive this point home further, Northwestel actually described the investments that are now (inaudible) within the Astral component and presentations to the Commission in October, 2011. That was well before the proposed acquisition of Astral by Bell.

5811   The third condition: Expenditures must flow predominantly to third parties such as independent producers. And this is clearly not the case with the Astral component, since the expenditures would flow simply from Bell to Bell.

5812   The Astral component must be set aside simply on the basis of its failure to meet the benefits test.

5813   In the event that the Commission would ever consider making a massive détournement around its own test, we would like to take a few minutes to review the substance or, more appropriately, the lack of substance behind the Astral component.

5814   We believe it is an ill-conceived proposal that does not address the communications needs of the north.

5815   Bell claims that with the Astral component there will be broadband infrastructure rolled out to remote northern communities and:

"For the first time northerners will have access to the extensive on-demand offerings that can only be accessed online." (As read)

5816   MR. PROCTOR: This claim is not only false, it completely misses the mark. Broadband access is already widely available in the north. In 2004 SSi became the first operator to launch broadband wireless service. Today we're in over 50 northern communities in Nunavut and the Northwest Territories. Customers using SSi's broadband wireless systems are perfectly capable now of accessing online on-demand offerings and Canadian programming that is offered online.

5817   The real issue to address is the very high cost of bandwidth transport in the north provided either via satellite or across Northwestel's monopoly terrestrial backbone.

5818   I do not need to remind the Commission, and I'm happy that you went into some of that questioning earlier, I do not need to remind the Commission that the pricing of Northwestel's monopoly-supplied backbone conductivity is another contentious file before you and is a file directly tied to the ability of northern consumers to affordably access Canadian programming online.

5819   The bottom line: It's simply not affordable today for northern consumers to take advantage of over-the-top online streaming of content services regardless of the last mile access network or who supplies that last mile network. The Astral component proposes nothing to address that reality.

5820   Investments by the Federal Government have served to support certain costs of satellite transport. In June of this year, SSi launched a new plan for Nunavut consumers with significant upgrades to their internet service speeds and capacity, and I'm very happy to inform the Commission that next year's 2013 communications monitoring report, the CRTC will be able to list broadband as being available for all of Nunavut.

5821   Unfortunately, even with these latest upgrades, the speeds and usage caps, it's still too expensive for consumers to stream online programming in the north.

5822   And let me provide a simple consumer level example for the Commission focusing on Nunavut. I selected an example without Canadian content because I didn't want to start choosing favourites.

5823   Anyone with an internet connection can purchase for $2.99 a single 45-minute episode of "Mad Men-Season 4" using Apples' iTunes. For a Northwestel DSL customer in Iqualiut, however, this $2.99 purchase could cost up to $37.50 more because of internet usage charges to download the programming, and if one were to purchase all 13 episodes of "Mad Men-Season 4", paying $22.99 for the content via iTunes, the result would be internet usage charges from Northwestel approaching $500, and that is not a typo, to download the content. This is clearly something no rational consumer would do, at least not intentionally.

5824   The lack of a real plan for sustainability in the Astral component should set off alarms for the Commission. There's a déjà vue element with the history of cable television in the north and with Northwestel.

5825   As described in our August 9th intervention, in 1995, in exchange for being able to purchase the large Yellowknife cable franchise, Northwestel committed to build out cable TV in many small northern communities, but after a period of providing cable to that television in some of the smaller communities, Northwestel did not like the results and shut down the cable systems and did not build out others.

5826   The history of cable is eerily reminiscent of Bell's Astral component. In exchange for approving Bell's proposed acquisition of Astral Media, Bell and Northwestel are proposing to build out local wireless infrastructure in the north but with no sustainable plan to provide an affordable bandwidth.

5827   We need to add here that the north has only been open for local telephone competition since last December. Thank you for that.

5828   The dominant source of local telephone competition in the rest of the country comes from the cable companies and we only need to point to the "Just Say No To Bell Coalition" to demonstrate that.

5829   In the north, competition cannot come from the cable companies because Northwestel owns the cable franchises. So, effective telecoms' competition in the north is going to come from wireless operators, including SSi and including Ice Wireless.

5830   But if the Commission allows the Astral component to go through, just as has happened when Northwestel acquired the major cable franchises in the north, Northwestel will be given a golden subsidy to thwart competitive entry, this time in the wireless sector. Fool me once, shame on you; fool me twice, shame on me.

5831   But the north won't be fooled again. I only need to point to the interventions, not of directors and producers, not of competitors, but of others filed as part of this proceeding.

5832   And, for example, the Governments of the Northwest Territories and the Yukon, as well as I point out, the Government of Nunavut as highlighted in our August 9 intervention, which has called for the CRTC to conduct a holistic review to address the communications needs for the north to avoid piecemeal proposals; political leaders, including First Nations, the Municipal Council for Dawson City and the Senators for both Nunavut and the Yukon; consumers and consumer groups, including PIAC coming up after us and the Yukon Utilities Consumers Group and northern businesses, including the Northwest Territories Chamber of Commerce.

5833   These interveners understand that northern communications needs will not be met by Bell -- allowing Bell, rather, to subsidize Bell's own build-out of competing wireless facilities. Rather, the key is for affordable backbone pricing to be available for transport in a fair and competitive marketplace.

5834   At the end of the day, there's no consumer choice or benefit if local internet providers cannot offer affordable bandwidth to view online broadcasting content.

5835   Further, if Northwestel is allowed to continue on this path of anti-competitive behaviour, there will not be any competitors left to provide choice. The Yukon has seen this all too clearly and suffered the loss of competitive alternatives over the last few years.

5836   So, to conclude our presentation, SSi believes the CRTC must reject the Astral component of the tangible benefits plan. This is not the forum to address the broad issues concerning modernization of telecommunications infrastructure in the north.

5837   The Commission has separately set out its intent to conduct a holistic review of Northwestel's regulatory framework.

5838   If the Commission were ever to direct any tangible benefits funding to telecommunications in the north, that funding must be dealt with in a manner that is competitively neutral. If $40-million is available, or some other number, then it should be directed towards projects that are defined with stakeholder input and then put out to, for example, competitive tender. In that way, the Commission will be able to ensure that the public benefit really does benefit the public, that it maximizes social and economic value and that it does not distort or even destroy the developing telecommunications sector in the north.

5839   So, we thank the Commission for having allowed us the opportunity to present before you today. I probably don't need to say the rest, but I would be pleased to answer any questions you have for me.

5840   Merci beaucoup.

5841   THE CHAIRPERSON: Thank you very much. Commissioner Denton will have some questions for you.

5842   COMMISSIONER DENTON: Hi. Good afternoon.

5843   What would be your idea of a competitively neutral project?

5844   MR. PROCTOR: In terms of how this might actually go about?

5845   COMMISSIONER DENTON: Yes.

5846   MR. PROCTOR: Well, actually our creation came about -- our creation in terms of being a broadband provider in Nunavut came about through a neutral process. Funding was available through, I guess at that time it was BRAND, the Broadband for Rural and Northern Development Program of Industry Canada. An RFP was put out, competitive bids were put in, in this particular case it was -- in that particular case it was Community Champions selected who would be receiving that funding to build out broadband networks in the north.

5847   That's one way to do it. Another is --

5848   COMMISSIONER DENTON: That's a process but not necessarily a project. And that's fine, I'm just --

5849   MR. PROCTOR: No, no, it's true, but you go on. One other approach that I'm personally quite in favour of and SSi is as well, is to actually have consumer choice in this and that's, if you want, through portable subsidies and Ice Wireless talked about that earlier. But certainly through the National Contribution Fund, if you can identify 'x' dollars per month that will be going to consumers to help reduce the cost of broadband bandwidth in the north, it's up to the consumer at that point in time to choose who they want to receive their service from, so...

5850   COMMISSIONER DENTON: Is there a facility, like an interconnection point or any kind of thing that could be built that would be competitively neutral?

5851   MR. PROCTOR: Well, in our particular case we've already built out local access facilities but, yeah, there's certainly a point where, if you want structural separation from Northwestel, you separate the point of where the fibre becomes long haul versus the point of local interconnection.

5852   In the case of Telesat it's already there, it's pretty clear, where in our particular case we buy satellite transponder space from Telesat as does Northwestel and we have our own facilities in place across the north to receive that satellite signaling.

5853   So, yes, that's fairly easy to determine, what is long haul, what is local access, that would not be difficult.

5854   COMMISSIONER DENTON: Any other further idea for a competitively neutral project or competitively neutral facility?

5855   MR. PROCTOR: The major project that we have to work on over the coming years is how to reduce the cost of satellite, in particular transport.

5856   You have in front of you a hearing -- an application, a tariff notice with respect to the cost of fibre from Northwestel. I think if you can drive down the cost for all local service providers, the cost of satellite on one hand and the cost of fibre on the other, you will create a scenario where competing service providers can actually flourish in the north.

5857   It's that backbone cost which, in the case of satellite, is quite simply high, there may be a need for assistance, in fact there is a need for assistance in that, but we're quite positive we'll find solutions for that.

5858   In the case of fibre, well you have before you all the information you need to make a proper determination with respect to the actual costs of Northwestel's fibre and making certain that it's available for all parties at competitively appropriate rates.

5859   COMMISSIONER DENTON: Because the previous people were saying that driving down the cost of fibre backhaul was the principal problem they saw, if I understand them correctly.

5860   Do you have any comment?

5861   MR. PROCTOR: In fibre-served communities, they're right; in satellite-served communities, it's the cost of satellite transport.

5862   COMMISSIONER DENTON: You mentioned there's some sort of solution, or you mentioned there was a ray of hope in your discussion of satellite. There was something you mentioned that --

5863   MR. PROCTOR: The ray of hope is that every single stakeholder in the north realizes this is a problem and we're working together to try to resolve that problem. That's the ray of hope.

5864   In terms of the magic bullet solution, I believe part of it is actually in the hands of the Commission and we've raised that with respect to adjusting the National Contribution Fund so that, in fact, it can be used to allocate towards broadband services, but in a competitively neutral manner; in other words, that becomes a portable subsidy for broadband. That's point one.

5865   Point 2: I think something that we can all be encouraged about is the very significant amount of investment and growth in the economy that is going on in the North. It is actually a very exciting time to be in the North. In Nunavut alone, the Nunavut Chamber of Commerce is predicting some 30 billion dollars of investment in the mining sector over the next five years. Those parties need infrastructure. So that's one example of where we are very hopeful that private sector demands will help feed infrastructure build-out and with that, of course, the need for backhaul will come with that.

5866   So working between new private needs, solutions from the public sphere and, as I say, the fact that all stakeholders up North are working to find solutions, we're hopeful to find those solutions.

5867   COMMISSIONER DENTON: A great note to end on. Thank you, Mr. Proctor.

5868   MR. PROCTOR: Thank you.

5869   THE CHAIRPERSON: Thank you.

5870   Are there other questions from Commissioners? No.

5871   Thank you very much, Mr. Proctor. That was very useful.

5872   M. PROCTOR : Merci beaucoup.

5873   THE CHAIRPERSON: What I think we will do now is -- we're up to PIAC. Is that correct?

5874   THE SECRETARY: Exactly, and just for the record I would like to say that Telus will now be tomorrow morning.

5875   THE CHAIRPERSON: Okay. Thank you.

5876   What we will do is ask PIAC to make their presentation. We will take a short break after your presentation before asking questions. But come and make your presentation, which will allow us to deal with a scheduling conflict. Thank you.

--- Pause

5877   THE CHAIRPERSON: Welcome.

5878   As I've asked others, identify yourselves for the transcript and make your presentation please.

INTERVENTION

5879   MS LO: Good afternoon, Mr. Chair and Commissioners of the panel.

5880   My name is Janet Lo and I am counsel for the Public Interest Advocacy Centre, or PIAC.

5881   On my left is John Lawford, Executive Director and General Counsel at PIAC, and today we appear on behalf of PIAC, the Consumer Association of Canada, Canada Without Poverty, and the Council of Senior Citizens Organisation of British Columbia, to collectively voice our opposition to this transaction as consumer groups.

5882   With us is Dr. Dwayne Winseck, on my right, Professor at the School of Journalism and Communication at Carleton University, and Lead Canadian Researcher in the International Media Concentration Research project.

5883   Before we begin, I would like to request the panel's permission to present evidence that supports our statements we have already put on the public record in our Intervention dated August 9th.

5884   We designed this survey with Environics Research Group that ran in the field from August 23rd to 26th 2012, and the survey shows public opinion support for our statement that consumers are dissatisfied with prices, choices and competition for television services. I'd like to refer to these within my remarks.

5885   THE CHAIRPERSON: The Panel considered through legal counsel your request earlier and we will accept it. It's very short, and I'm sure you will have copies for the Applicant.

5886   MS LO: That's right. I understand that copies are available. Thank you, Mr. Chair.

5887   We oppose this transaction. Bell has not established that its acquisition of Astral Media is in the public interest. Bell has not provided sufficient evidence that there will be benefits that flow to the entire broadcasting system, not simply to Bell and its shareholders, that outweigh the disadvantages that result from the elimination of the largest remaining independent broadcaster, reduction in the diversity of voices and increase in media concentration.

5888   Bell boasts that its acquisition of Astral will result in "efficiencies", "synergies" and "benefits for consumers". Bell wants to focus on its claims that there will be competitive benefits for Quebec consumers.

5889   Speaking as consumer groups that represent consumers across Canada, we disagree. This deal is broader than competition and choice in Quebec. This deal is about Bell -- a leading distributor of television services, Internet access services and wireless services -- adding to its already vast and valuable array of broadcasting content, so that Bell can push its content on Bell subscribers and its competitors' subscribers. If Bell's plan works, its competitors' customers would switch their bundle of communications services to Bell. These strategies are designed to maximize Bell's revenues and profits.

5890   Further entrenchment of Bell's market power will produce anti-competitive effects and harm consumers in the following ways:

5891   Harm #1: Consumers will pay higher prices for Bell's content. When the Commission deregulated BDU prices in 1997, basic service cost $18.70/mo. Today, basic BDU service costs $32 to $44 a month, and Bell's basic FibeTV tier in English Canada costs $44.43/mo. BDU subscribers pay on average $61.86 per month. PIAC's August 2012 survey shows that 82percent of consumers think that the cost of television service is too high.

5892   Bell already has the ability to impose wholesale rate increases for its broadcasting services on its competitors in the distribution market. For example, the industry has stated that Bell demands excessively inflated wholesale rates for its broadcasting services. If Bell unilaterally decides to increase wholesale rates for Astral services, consumers will have to pay. The Commission's expectations that BDU competition ensure affordability, choice and flexibility, will not materialize if Bell acquires Astral.

5893   Harm #2: Consumers will have less choice for services offered by BDUs. Despite Bell's promise that this deal will provide "innovative packaging to increase consumer choice", Bell in February of this year reduced the number of packages it offers and eliminated its à la carte choices for TV services in English Canada. PIAC's survey shows that consumers continue to be dissatisfied with the level of choice offered, especially in English Canada. As VI conglomerates get bigger and more profitable, consumers pay more for TV packages that are bigger and offer less choice.

5894   Harm #3: Consumers will not have choices to access broadcasting services on other screens. Bell promises "[delivery of] the best content to any screen consumers may choose - TV, smartphone, table or computer - whether they are Bell customers or not". But Rogers and independent BDUs state that they are unable to negotiate commercially reasonable terms for non-linear rights with Bell. Consumers lose when they cannot access popular programming on any screen they choose unless they switch to Bell.

5895   Harm #4: Consumers will have no real choice of service providers: 71 percent of consumers said that they do not have real choice of TV service provides. New innovative service providers will be unable to launch if Bell does not want them to.

5896   Harm #5: This deal reduces diversity of voices for Canadian viewers: Bell's acquisition of Astral eliminates Canada's largest remaining independent broadcaster, reducing the plurality of voices in the private element of the system.

5897   Bell's methodology for calculating the commitment Bell/Astral TV audience viewing share is not consistent with the Diversity of Voices policy. When considering only the viewing share of Canadian services, Bell and Astral's combined TV audience viewing share reaches a threshold that requires careful examination. The Commission should consider other metrics to understand the full impact of this transaction on diversity of voices. Dr. Winseck will now explain the value of other metrics such as revenues.

5898   DR. WINSECK: Measuring and evaluating media concentration and trends is not an easy job by any means, and there are several ways to do so. The CRTC uses audience ratings as a proxy for market share. This is not an unreasonable thing to do, but I think it also has its limits.

5899   Working with the International Media Concentration project over the last three years, we've used revenue as a proxy for market share. We do so because it makes comparisons across media sectors, time and with the rest of the world easier to do and more reliable. In a more complex and intertwined media ecology, revenues serve as a denominator that allows us to examine trends within specific sectors and across the media as a whole.

5900   While Bell claims that its purchase of Astral will increase competition with Quebecor in French language markets, Astral is already a very strong rival with more television revenues by a significant amount than Quebecor. Astral is not just a strong competitor to Quebecor, it's a strong rival to Bell.

5901   The effects of this transaction on concentration in the specialty and pay television and `total television' markets will be significant by the CRTC's own standards, by historical norms, by global standards and by CR and HHI measures.

5902   The impact will be most extreme in the specialty and pay TV market, where Bell's share of the market will rise sharply from 26.6 percent to 42.2percent, well in excess of every other major player and close to the CRTC's red line. Together, the top five companies will control 92.5 percent of this market. Out of the 16 countries studied, Canada is now the 8th most concentrated market. Approving the Bell-Astral deal would see it drop to 11th place.

5903   The "total television" market is also already more concentrated than it has ever been in the last 25 years. The HHI score is now an already high 1918, it will be over 2300 if the Bell-Astral deal is approved.

5904   Lastly, Canada already has the second highest levels of cross-media ownership consolidation and vertical integration in the world. Approving this deal would see it move to first place. And again this is using data from the International Media concentration Research project.

5905   MS LO: For all these reasons, we ask that the Commission deny Bell's application to acquire Astral Media as it does not serve the public interest.

5906   The steady rise of BDU pricing since deregulation demonstrates that the level of competition is insufficient to protect consumers. VI and media concentration further undermine consumer choice and flexibility to pay only for services that consumers want to watch. Thus we urge the Commission to immediately initiate a public proceeding to examine BD pricing. The proceeding must ensure that VI and independent BDUs will meet the objectives stipulated in s. 3(1)(t) of the Broadcasting Act.

5907   A proceeding should study the manner in which VI firms establish wholesale rates for their broadcasting services, rules for TV packages, and the impact on the affordability of BDU services and choices in the retail market.

5908   Finally, I will turn it over to John Lawford to discuss Bell's proposed tangible benefits package.

5909   MR. LAWFORD: Thank you.

5910   Bell's proposal to direct $400M to BCE's subsidiary Northwestel in order to modernize broadband infrastructure in the North did not meet the Commission's test for tangible benefits. It is directed to telecommunications, not broadcasting; it must be undertaken in any event to respond to the Commission's direction to modernize NWTel's infrastructure, and it directs money back to the applicant and not to independent third parties.

5911   Secondly, PIAC requests that the tangible benefits package include a contribution to the recently approved Canadian Broadcasting Participation Fund. The Commission previously stated that the Fund should be funded from tangible benefits packages going forward, and we suggested in our written and again today that 1 percent of the total tangible benefits package would be an appropriate contribution to the Fund to ensure sustainability. When it rains, the barrel must be refilled.

5912   We would be pleased to answer your questions, I suppose after the break; whatever works for you.

5913   Thank you.

5914   THE CHAIRPERSON: That would be great, and I hope there won't be any other pyrotechnics in your presentation! That was certainly making us awake.

5915   We will take a 10-minute break, back at 5:10 for questions.

--- Upon recessing at 1700

--- Upon resuming at 1715

5916   THE CHAIRPERSON: Thank you for indulging us for that small break. It was very helpful for us.

5917   First of all, I'll be asking you some questions. Other commissioners may join in later on.

5918   First of all, your documents were very clear and complete, and, as Commissioner Lamarre pointed out earlier, in those cases sometimes we have fewer questions, but that doesn't mean that we're no less interested.

5919   The first question I wanted to ask you was: your research and your approached was based on, in some respects, the 2011 Monitoring Report. I just wanted to make sure, from your perspective, that -- as you now know, we recently published the 2012 Monitoring Report, and I take it that it does not substantially change your position on anything?

5920   MS LO: No. The pricing seems to continue to go up, and the viewing share didn't change our perspective.

5921   THE CHAIRPERSON: Okay.

5922   In your oral presentation today, at paragraph 18, you stated that:

"Out of the sixteen countries studied, Canada is now 8th most concentrated market. Approving Bell/Astral deal would see it drop to 11th place."

5923   DR. WINSECK: Yes.

5924   THE CHAIRPERSON: Okay, so is it like golf, a high score is bad?

--- Laughter

5925   DR. WINSECK: Yes. Yeah, the higher the score, the worse the scenario.

5926   THE CHAIRPERSON: Okay. That explains that. Because we saw another analysis where the most concentrated was higher up. So that's helpful to understand that.

5927   Now you may have heard the discussion I had with the BCE/Astral panel on the first day of the hearing concerning the status of Public Notice 2008-4, and also with Cogeco earlier on the status of policy statements of the Commission.

5928   Dr. Winseck, in your evidence, as I understand it, you're not saying our test is inappropriate or unreasonable, but you're saying it could be improved.

5929   DR. WINSECK: Yes. I think I'm talking about two things there. The first is the test itself, and then also what we use as our proxy for establishing market share, whether it's audience viewing or ratings or revenue. I'm suggesting that revenue would be at least a good additional measure.

5930   THE CHAIRPERSON: Now if I understand correctly, the way you were positioning it is in the context, in particular, of the International Media Concentration Research Project and that revenue was may be more easily comparable factor across borders.

5931   Is that correct?

5932   DR. WINSECK: Yeah, that's correct.

5933   THE CHAIRPERSON: Would you agree, though, that when we're looking at it, contrary to someone like yourself, who's trying to compare internationally, perhaps it might be more reasonable for us to focus on a purely domestic criteria?

5934   DR. WINSECK: That's what I tried to capture with the notion of across time, right? Because revenue stays a more stable common denominator across time versus audience rating. Audience ratings are notoriously known for shifting over time, right, so you get changes in methodology. I think that compromises our ability to come up with, like, a steady, stable measure that we can compare things in, say, 2000 to now.

5935   THE CHAIRPERSON: Right. As well as between jurisdictions, domestic markets, the way ratings are done, may be done differently. Is that also...?

5936   DR. WINSECK: Yeah, absolutely. So across time, across countries, and across media.

5937   THE CHAIRPERSON: But are you actually suggesting that we should, because, in the end, the policy notice is just that, us thinking out loud, a way of creating guide posts? Or do you share the view put forward earlier today by Cogeco that this is such an extraordinary and unforeseen transaction that we should set aside or go beyond the framework?

5938   MR. LAWSON: Well, as you saw from our initial comments, we are opposed to the transaction as whole.

5939   Yes, we agreed with Cogeco to the extent that you have the English market share, which is past where the -- in the zone where the Commission can examine on market share -- on audience viewing share. And, together with all the other factors, we think that's a situation where the Commission could come in and say a reasonable result is the whole transaction is denied.

5940   DR. WINSECK: I'd also like to just point out that just in -- if we look at the specialty and pay channels alone, that the share of the market is towards the upper limit of your own criteria in the DOV ruling.

5941   So I think have ample grounds to intercede just on that particular measure.

5942   THE CHAIRPERSON: One could look at this transaction, and I put the question to BCE at the very beginning, that you could look at the assets in three bundles -- there's a radio bundle, an English TV bundle and a French language TV bundle -- and, depending on what your analysis is, one of those could or not be within the thresholds, depending on how one calculates threshold, in or out.

5943   Do I take it, therefore, because you're in opposition, that because one part in one bundle is over what you think is unacceptable, it's a package deal, in your view? Or could you not envisage that, let's say, the radio assets would be less problematic?

5944   MS LO: I find it very challenging to separate it into the three bundles simply because the reality we're dealing with is a vertically integrated conglomerate of a national level.

5945   So even if we were to look at each market in isolation, and say, okay, you don't get the English language specialty or you don't get the English language television, they can use the radio to benefit the rest of their operations. So I just find it very challenging to apply to Diversity of Voices policy in a vertically integrated environments.

5946   That said, I do understand. You know, it's on the books. It's history. We have to respect that, and we have to figure out how to move forward.

5947   So I'm not sure if I'm giving a great answer, but I'm saying I think it is a challenge to look at Diversity of Voices, and then split up all of the markets.

5948   THE CHAIRPERSON: The evidence we've heard seems to suggest that maybe radio, the way it's sold and marketed, is perhaps different, in the sense that you can hive it off, that it's not sold necessarily as a package with other media.

5949   MS LO: We didn't focus a lot on radio in our intervention, as you probably are aware. We did look at it. I know Dr. Winseck did look at the revenues from that, and based on the diversity of voices policy it does appear to comply.

5950   That said, I think our concerns, as a consumer group, and what we hear from consumers we speak with, is more on the television side.

5951   THE CHAIRPERSON: Right.

5952   One of the underlying rationales for the diversity framework, but also a long history of the Commission always concerned about diversity of voices, is to make sure that Canadian citizens -- we've talked a lot about Canadian consumers, but sometimes Canadians also wear a citizenship hat, and that Canadian citizens have access to news and information that allows them to participate in local, regional, provincial, national issues, for instance political events and so forth.

5953   It's been suggested -- and I wouldn't mind your view on this -- that we have to adapt, even since 2008, our view about how the new platforms, the new digital platforms, deliver it through the web, add to the diversity of news choices.

5954   I put that this morning to the CP. I wouldn't mind knowing your views on this.

5955   MS LO: It's an interesting view. I think it's challenging because we can't equate access to diversity of voices with having diversity of voices in the market.

5956   I think access is an important component, but, for example, if we look at an individual market and we focus on what types of views, from an editorial event's perspective, are presented to that community, if they're getting national news or talking about events that focus in Toronto as opposed to something that's happening in their local community, I mean they have access to what's happening in Toronto, but maybe it's not critical for them, as a citizen, what would be more important is to have diversity of voices in their local community.

5957   So it is a bit of a tricky, I suppose, balance.

5958   I think Dwayne's got something to say about that, too.

5959   DR. WINSECK: That's been one of the real concerns with the International Media Concentration Research Project. It addressed precisely that question--

5960   THE CHAIRPERSON: Right.

5961   DR. WINSECK: -- because some people would say new media environment, that's an old concern, media concentration.

5962   What we found, generally speaking, if you look at online news sources, which I think is most germane to your question, is the levels of concentration there are not as high, but they're still not minimal either.

5963   I don't actually have the data on my spreadsheets here. I'd be happy to provide it with you going for 2004, 2007, 2011. I think the top four have stayed steady around 44 percent, something like that, so lower than --

5964   THE CHAIRPERSON: M'hmm.

5965   DR. WINSECK: You know, and the other thing, not just one last thing, you know, Internet access providers, ISPs, search engines, we see a high level of concentration in those zones, too. So each side has its own characteristics, but they're not immune to these processes.

5966   THE CHAIRPERSON: Even comparing CRTC hearings just 10 years ago, we wouldn't have had the phenomenon of journalists and others in the room. And they'll probably a Twitter about the fact that I'm asking the question about the Twitter, but I mean that is a way of bringing the information beyond live.

5967   Does that not add to the diversity of voices phenomenon?

5968   DR. WINSECK: I would say what that generally tends to do is it tends to increase the circulation and to make visible what's always happened with news. It's the water cooler phenomenon, and now we can see it with tools like Twitter. And it spreads it faster and further.

5969   THE CHAIRPERSON: Yes.

5970   MR. LAWSON: But you're not suggesting, I don't believe, Mr. Chair, that Twitter is a substitute for a diversity of voices in the sense of, you know, viable competitors in the marketplace. Because we don't view it that way yet, and that is a large part of our concern, and why we're here today.

5971   THE CHAIRPERSON: I wasn't suggesting anything. I was asking your views on this. And I think you're saying, then, that that is not -- some have suggested it, perhaps not us --

5972   MR. LAWSON: Right.

5973   THE CHAIRPERSON: -- that, in fact, there's a -- and this CP's perspective -- that although it may add to pointing to information, it doesn't give you the rich analytical news and information that more traditional platforms provide.

5974   MR. LAWSON: I think that's fair. We're talking more about mainline broadcasting services here, the way I'm thinking, at least.

5975   THE CHAIRPERSON: But they operate, wouldn't you agree, in an environment where there's also print media?

5976   MR. LAWSON: Absolutely.

5977   THE CHAIRPERSON: So we have to see the -- although we may not regulate that aspect, nor have it within our jurisdiction, it's still something that you should consider.

5978   MR. LAWSON: It's a consideration.

5979   THE CHAIRPERSON: Your presentation talks a lot about affordability. I take it your position is that competition is not sufficiently present to control or limit affordability in the broadcasting market.

5980   MS LO: We, as a consumer group, believe in the benefits of competition. Where it works properly, we think that it could deliver affordability to consumers. But what we're talking about in the television service and the BDU environment is we haven't actually seen competition work to deliver affordability.

5981   We're seeing prices rise at a rate that exceeds the rise of CPI. We are seeing the packages lose flexibility and choice while the costs go up. And we think that there's no -- there does not appear to be competitive forces working to ensure that BDU services are affordable to consumers.

5982   THE CHAIRPERSON: We talked earlier about Canadians sometimes being citizens and access to news, but they're also creators. There's an implicit tenant of the Broadcasting Act: that Parliament acknowledges there may have been a market failure, being quite close to the U.S. market, and that we don't always have as much access to indigenous production.

5983   Could it be possible that some of what you describe as affordability issues are the costs implicit in making sure that we have, as well, Canadian choices?

5984   MR. LAWSON: I think that the kinds of numbers we're talking about are much in excess of what's necessary to have Canadian content and Canadian choices. So the price increases that we're seeing are more than adequate to cover all the Canadian content that's being produced, and lots more. Most of it's going to shareholders of communications broadcasting companies.

5985   It also doesn't explain why packages are becoming larger, yet, you know, there's less choice between them, and why can't I add one station over here, one station there? So that's our answer to that.

5986   THE CHAIRPERSON: Surely, there's a limit at one point, though. There's alternative forms of entertainment and information.

5987   Could it not be that consumers are still willing to pay more because they see value?

5988   MS LO: I understand your point. I think it is important to perhaps assess the value proposition.

5989   I'm trying to focus more specifically on our concerns, as a consumer group, that we haven't seen analysis from the Commission or from BDUs, to be frank, that examined whether what they're offering is truly affordable.

5990   Our concern for that stems from, in particular, low-income and fix-income families, who, I think, have a direct interest in receiving these services, and some of them might even view it as essential.

5991   So I understand the nuance of your question. I think you're trying to get at: is there value for what they're paying? We're less focused on that and we're really concerned about, you know, just ensuring that the objective of the Broadcasting Act, that says these services must be affordable, is considered, we examine what's offered in the market to ensure that it's affordable, and that consumers can benefit from that.

5992   THE CHAIRPERSON: It reminds me, you know, the survey you added today, suggesting that it was 82 percent, one of the figures you -- that the prices were too high. But if you'd survey people, you know, they'd say taxes are too high, they'd say that the price of cheese and the price of milk is too high.

5993   It really depends on how you ask the questions and getting to the value proposition, isn't it?

5994   MS LO: We phrased the question in that way. We did sort of wrestle with whether we should be asking a value proposition question. We chose to phrase the question as "Are prices too high?" simply because we had run a survey in 2005 that asked that question. So in order to be able to compare it to 2005, where we had 44 percent of consumers say it was unreasonably high, and then now, in 2012, seven years later, we have somehow gone up to 82 percent of consumers thinking it's too high....

5995   So I do agree perhaps there's some value proposition to ask, but it also goes back to who's making sure -- who's looking out to make sure -- looking out for consumers to make sure that there is value and that it is affordable.

5996   THE CHAIRPERSON: But surely that evidence merely goes to indicating -- and you've got two measuring points and you've got a line that suggests, but all that measures is that the perception of affordability has gone up.

5997   MS LO: M'hmm.

5998   THE CHAIRPERSON: Have actually got their evidence that it is or is not affordable? I put it to you that there's a difference between something that's actually affordable --

5999   MS LO: M'hmm.

6000   THE CHAIRPERSON: -- and something that is perceived to be affordable.

6001   MS LO: It's a good question, and I'm glad you brought it up, because you're right, somebody should be doing that analysis. Maybe it's us, as consumer groups, but I do think the Commission has a role to play in evaluating the affordability.

6002   I know the Commission had in past done affordability studies on the telecom side. We haven't seen these happen recently, and we believe that they are important to consumers, to just have a public agency saying, "We've done the study and this is what we've learned".

6003   We haven't seen that. We would like to see that.

6004   THE CHAIRPERSON: One of the challenges we sometimes have is -- and you represent among your group some individuals that are lower income households and -- so there's a myriad of consumers. In fact, residential consumers and business consumers are a class of consumers as well, right? Now, in broadcasting, business consumers is less of an issue, as it is under the Telecom Act, but there's a myriad of types of consumers.

6005   So how do we come to the value proposition on the affordability balance?

6006   MR. LAWSON: Well, yeah, if we were going to redesign this and run it with a lot more metrics that would be exactly the kinds of ways we'd have to break it down. It is difficult when it's a general question and it's posed to all people. We don't have statistics on the income of each individual who answered the question, so I follow that that would be very helpful.

6007   MS LO: Sorry, we --

6008   MR. LAWSON: We do have it? Okay.

6009   Well, we do have in the larger survey the breakdown by income --

6010   THE CHAIRPERSON: Right.

6011   MR. LAWSON: -- of who answered, so that is partially answered, but I see where you're coming from, and it would be helpful.

6012   Sure, there's no typical consumer, but, you know, there are broad categories.

6013   THE CHAIRPERSON: M'hmm.

6014   MR. LAWSON: There's folks that are subscribing to the present BDU offerings, and who can afford that level, but we don't know, for example, how many people would like to and can't or haven't worked it into their budget. That research does need to be done, though.

6015   THE CHAIRPERSON: Right.

6016   MR. LAWSON: But I agree with you there's no typical consumer, but there has to be a way to slice that.

6017   THE CHAIRPERSON: I was a bit surprised about your position with respect to the Northwestel proposal, in the sense in your written submission that -- I mean, those northerners are also consumers --

6018   MR. LAWSON: Absolutely.

6019   THE CHAIRPERSON: -- and yet you have fallen them not inappropriately, you've done analysis that many others have done as to whether or not that meets the existent test the Commission would apply onto an acceptable benefit, but it does have the odd consequence of perhaps, as you've heard, providing less quality service to those northern consumers.

6020   MR. LAWSON: See, I'm going to say that our position's actually completely consistent with the consumer interest in the north because of the following: Those upgrades should be made as part of the Northwestel modernization process. There is a processing running on there. And, quite apart from that, you've got Bell offering an offer which only goes to themselves. So they've taken this process under one act, broadcasting act, and said, "Look, we could help out people in a telecom infrastructure way", and, "Oh, they could get a little bit of broadcasting over the top" -- which we're very unclear on, we don't really know exactly what they'll be able to access -- and said, "Oh, but if we take it away, how hard will it be on northerners?".

6021   You've heard SSI come before you, and Ice, saying that, "We could do it with competition", and they said this isn't sustainable. Those are also considerations. They've really given what looks like a gift, but isn't. It has so many strings attached and it does so many other things that it's got too many problems with it.

6022   We absolutely want to have broadband for northerners. We want it to get there and to be sustainable. We want it to work within the Commission's plans for competition in the north, and this isn't the way to do it. This is the way to entrench Northwestel in the north as the telecom provider and as the Internet provider. It doesn't do a lot for broadcasting.

6023   If there were going to be tangible benefits for the north, I would have expected to see things like proposals to broadcasting in indigenous languages or to start -- or to at least send film professors up to northern communities to teach northern filmmakers how to make productions, rather than making them come down south, things like that. That would be within the broadcasting system. But we have a telecom proposal pure and simple here.

6024   THE CHAIRPERSON: I get your point about largeness of these companies, but at the heart of Diversity of Voice proceedings is also, as I mentioned earlier, diversity of access to news and information, and through the public process, BCE has proposed a new all-news channel.

6025   Surely that adds to the diversity of voices in the marketplaces, does it not?

6026   MS LO: I can start.

6027   It's an interesting proposition because it's premised on reducing diversity of voices first by taking out Astral, and then adding a new service, a French national news service.

6028   The proposal's a little confusing to me. I'm not clear on medium- and long-term sustainability. I think that if you want to add diversity of voices to the French market in that way, you have to make sure that it is sustainable for the long term. I'm not sure that we've heard that.

6029   I've seen the plan and it looks like the money is for startup. It's over the first three years. I think we would want that assurance, at minimum, as well. I know that we have application, so it's very challenging, but we would also want to be assured that the concerns that we've heard other BDUs say about anti-competitive practices in negotiating for different category C services wouldn't be exercised with respect to this particular service.

6030   THE CHAIRPERSON: I'm bringing you back to your oral presentation this afternoon.

6031   On paragraphs 16, there are two numbers there. Astral has a strong rival with more television revenue of $582 million than Quebecor, $379 million.

6032   Where did your source that particular...? Is it from the Monitoring Report or elsewhere?

6033   DR. WINSECK: That would likely be from their annual reports this year, because your Monitoring Report wasn't out when I put together the 2011 data for this. So it would have been from there or it would have been from your financial -- what's the name? -- Specialty and Pay Financial Summaries.

6034   THE CHAIRPERSON: Okay.

6035   DR. WINSECK: So it'll be one of those two sources.

6036   THE CHAIRPERSON: Okay. So that was your attempt at -- because you didn't have, necessarily, the access to the most recent data to estimate what the revenues would be?

6037   DR. WINSECK: We did have the most accurate -- we didn't have the Monitoring Report --

6038   THE CHAIRPERSON: Right.

6039   DR. WINSECK: -- but there was access to 2011 data --

6040   THE CHAIRPERSON: Okay.

6041   DR. WINSECK: -- and the 2011 data was, as I said, annual reports or your financial summaries.

6042   THE CHAIRPERSON: Sure. Okay, good.

6043   I've asked others, but I was asking it at the beginning, and in your case I'll ask it at the end of the discussion, as to how you see the communication system look in 2017. I know it's a big question at the end of a day.

6044   MR. LAWSON: Well, I hope I rise to the occasion.

6045   We're hopeful. We're hopeful that the Commission and the other parties to the broadcasting and related systems, such as telecom, see what we want to see, what consumers we think want to see, and that will be a system where, for broadcasting content, prices could even go down. Just imagine a world where your cable bill came it was less than last month.

6046   Secondly, we envision a world where there is choice, where, beyond a basic package, which, by the way, would be offered to everyone at a reasonable rate, you could add at least tiers or packs of your choice without having to jump to another "quite a bit higher" price level or even à la carte choices, pick and pay.

6047   We really believe there could be more players rather than fewer, and that means more competition and that we would have rivals who are not all vertically integrated.

6048   Lastly, we'd see a world where there was protection, so even though consumers dealt with any number of competitors, had good prices and choices, there still are problems, that those would be resolved in front of a complaints commissioner for broadcasting, which could be part of the telecom complaints commissioner or another, but they would have a place to go and have those problems resolved.

6049   So that's the world we would like to see, and we're hopeful that we can get there from here.

6050   THE CHAIRPERSON: Thank you.

6051   Commissioner Lamarre.

6052   COMMISSIONER LAMARRE: Merci, monsieur le président.

6053   Just two questions. Like the chair, I know it's late in the day.

6054   Each time PIAC files an intervention, I aim at the section where you make for, you know, legal opinion, and I didn't change that habit here. So I quickly zoomed in paragraph 110 till 116, where basically you tell us why you think that agreeing to that $40 million tangible benefit for Northwestel would be, and I quote you, that it would be a "jurisdictional minefield for the Commission".

6055   And in that presentation, you quote the Broadcasting Act, the Telecom Act, you even quote the presentation made by the minister, Northwestel review, but you don't quote the decision last February by the Supreme Court of Canada on the question of should ISP be or not be considered as BDUs?

6056   So I'm wondering, is it an oversight or is just me reading too much into the Supreme Court decision?

6057   MR. LAWSON: We did look at the Supreme Court decision and we made a conscious choice to not include it --

6058   COMMISSIONER LAMARRE: Okay.

6059   MR. LAWSON: -- for reasons of argumentation, but --

6060   COMMISSIONER LAMARRE: You're the master of your own strategy.

6061   MR. LAWSON: There we are.

6062   COMMISSIONER LAMARRE: That's fine.

6063   MR. LAWSON: That's the truth.

6064   COMMISSIONER LAMARRE: Thank you.

6065   Now in your oral presentation this afternoon, I draw your attention to section 25. I need some clarification.

6066   You proposed that 1 percent of the total tangible benefits package be used for a contribution to the fund, the Canadian Broadcasting Participation Fund.

6067   Do you mean 1 percent of all the television tangible benefits or 1 percent of television and 1 percent of radio?

6068   MR. LAWSON: Both radio and --

6069   COMMISSIONER LAMARRE: Okay.

6070   MR. LAWSON: -- television.

6071   COMMISSIONER LAMARRE: Okay. Here's where I would see a problem if we were to agree with that on the radio side.

6072   The 1 percent that is not mandatory is the small part of discretionary benefit that is available for broadcasters. So, you know, if we were to raise them to 9 percent, I'll just ask, maybe that would be easy to do, but if we're not, and we approve the transaction, how can we please you also if we want to?

6073   MS LO: The 1 percent a rough approximation, just based on the CTV decision. We noted the $3 million that was put into the -- to initiate the Broadcasting Fund -- it was approximately 1 percent -- so that's where we came up with the number.

6074   At the end of the day, it's less important, I think, where it comes from and more important that there is some kind of contribution to the Broadcasting Participation Fund.

6075   MR. LAWSON: If I just might add, we were a little concerned that the Commission in the MLSE decision said that we would have to have a policy hearing on deciding whether to put money into the broadcasting and participation in accessibility funds.

6076   Because the decisions that set them up, we thought, had put down as a principle that when this process happened for the next transfers of control that it would definitely be one of the things that would be considered.

6077   Not saying anything, but there is zero from MLSE.

6078   COMMISSIONER LAMARRE: Okay, duly noted.

6079   Merci, Monsieur le Président. Je n'ai plus de question.

6080   THE CHAIRPERSON: Thank you very much.

6081   Very useful to have you contribute to the hearing and add to our perspective.

6082   Thank you very much.

6083   MR. LAWSON: Thank you.

6084   THE SECRETARY: I will now ask the Writers Guild of Canada to come to the presentation table.

--- Pause

6085   THE CHAIRPERSON: Welcome.

6086   As usual, I ask you to identify yourselves for the purpose of the transcript and make your presentation.

6087   Thank you.

6088   MS PARKER: Good evening, Mr. Chair.

6089   THE CHAIRPERSON: I know the day. It's late.

--- Laughter

6090   THE CHAIRPERSON: It's late, I know.

6091   MS PARKER: Still before six.

INTERVENTION

6092   MS PARKER: We're the Writers Guild of Canada.

6093   My name is Maureen Parker, I'm the executive director of the Writers' Guild, and with me today is Kelly Lynne Ashton, our Director of Policy.

6094   The WGC is a national association, representing over 2,000 professional English-language screenwriters across Canada.

6095   As a guild, we exist to represent the interests of our members, Canadian screenwriters. In the context of the CRTC, that means advocating for Canadian programming so that Canadian screenwriters have work today and have a sustainable domestic television industry have work tomorrow.

6096   But cultural groups such as ourselves also act as an important balance to the large corporate groups such as BCE, whose primary concern is its financial return to shareholders.

6097   When we advocate for Canadian programming, and particularly the more expensive and difficult to produce Canadian drama, we are also advocating for Canadian audiences who want to see themselves reflected on their television screens. Only when we a satisfied audience can we have a healthy, sustainable industry.

6098   When Canadian drama, such as Saving Hope, Rookie Blue, The Listener and Flashpoint, to name just a few, are earning audiences in excess of a million viewers per week, it is clear that Canadians want to watch their own stories. It is equally clear to us, from our experience at the CRTC, that broadcasters will not provide Canadians with the programming they want unless they are required to do so.

6099   We have heard Bell share with pride their increased investment in Canadian programming, and particularly drama, but we feel compelled to remind the Commission that Bell is only making this sizeable investment because the Commission required that Bell spend benefits money on PNI. benefits money that they initially did not want to spend.

6100   So we will continue to do our job of helping the CRTC to balance the interests of the shareholders of Bell and Astral and keeping in mind the needs of the Canadian public, because that is good for Canadian television, and therefore Canadian screenwriters.

6101   The WGC supports the Bell acquisition of Astral provided that our concerns are addressed. Specifically, the WGC is here today to talk about media consolidation that will result from the transaction and the structure of the benefits package triggered by the television services, with a focus on the English portion.

6102   There have been as many different formulas proposed for assessing the resulting media concentration in this transaction as there are interested stakeholders. We agree with the chair that regardless of the formula used, this transaction is large enough to warrant concern and careful scrutiny.

6103   The WGC has frequently expressed concern about the impact of media consolidation on entertainment programming. It is important to the Canadian broadcasting system that there is a diversity of programming and programmers, making decisions in order to provide Canadians with real choice.

6104   To offer an example, the WGC is concerned that as part of the new larger Bell Media, TMN could cease to air edgier, adult dramas, such as Call Me Fitz, Good God, and instead would start to commission mainstream primetime dramas that could also air on CTV.

6105   Bell's interest in reducing the cost of programming and the cost of promoting that programming could easily lead to a homogenization of programming across its services. At this time, Astral has a separate PNI CPE. We request that the Commission make it a condition of licence that Astral maintain its own PNI CPE to encourage separate management of programming.

6106   As well a benefits package that targets the forms of programming that the acquired assets broadcast, such as feature films, children and youth and other PNI like these edgy adult dramas, can effectively limit the opportunities for amortization because money needs to be spent and programs need to be commissioned. The sheer size of a benefits package promotes diversity of programming.

6107   We do not suggest that the Commission deny Bell's application as a result of the risks to media concentration, nor do we suggest that there are no other potential risks. We remain concerned about the impact of media consolidation on the existence of a wide variety of Canadian programming.

6108   Kelly Lynne?

6109   MS ASHTON: Before addressing some of the specifics of the benefits package, we would like to address one comment from Bell, and that there is already plenty of money in the system for English language PNI because of the PNI CPE and existing benefits packages from Bell and Shaw.

6110   First, we have yet to see the reporting on the first year of the group licence policy, so we do not yet have confirmation that the PNI CPE was set at an appropriate level and that spending on PNI is at least on par with previous years' spending. But more importantly, the benefits policy is not about need, but about benefit or bonus to the system.

6111   For years we have argued that a Canadian independent production industry cannot be built on benefits alone as they are temporary and unpredictable. This was why we needed a CPE to ensure that broadcasters were spending sufficient money on Canadian programming. Benefits money has been structured to focus on on-screen programming because targeting Canadian audiences is the easiest and most efficient way to benefit the largest number of Canadians.

6112   Benefit packages should therefore not be allowed to stray from CRTC policy that 85 to 100 percent of the benefits should be spend on on-screen programming merely because there are other benefits in the system.

6113   While the CRTC has made exceptions to this policy in the BCE-CTV and Shaw-CanWest transactions, they can be distinguished from this transaction. In the case of BCE-CTV, the exception was made in favour of improving satellite delivery of local broadcasting and for Shaw-CanWest the exception was in favour of assisting the transition to digital broadcasting. Both of these exceptions benefited some aspect of the broadcasting system. Bell now wants and exception to the policy to fund their Northwestel proposal for wireless broadband. This is a totally inappropriate exception.

6114   The Northwestel allocation is contrary to CRTC policy because it is not a payment to a third party, it is an infrastructure cost, it is a telecommunications cost and it is a cost to help pay for something that the CRTC has already told Northwestel to do in another proceeding.

6115   Bell is trying to justify this expenditure on wireless broadband as a broadcasting expense because it would help being online video to northern communities, and now, apparently, will help northern youth and northern creators.

6116   While these are worthy causes, video is not the only use of broadband. Broadband is essential to communities now to allow for fast speeds and email, online banking and shopping, file transfers, online gaming, provision of government services and many more consumer and commercial applications. Calling broadband broadcasting because one of the things it will do is carry video would be like calling television radio because one of the things it does is play music.

6117   The WGC therefore recommends that the CRTC disallow the allocation to Northwestel and reallocate the English share of the $40 million, plus any increases in the benefits due to increases in valuation to on-screen programming, and specifically children and youth television series and other PNI.

6118   We were as frustrated as the Commission to be presented with new benefit proposals on Monday, and continue to be frustrated with lack of detail that has been provided subsequently. We do not know how the allocation to the French news service is incremental, nor how it would be spent on on-screen programming.

6119   Bell has said at this hearing that the allocation to Canada's 150th celebration will be to documentary, and we would like to see that confirmed in writing. As well, we would like to see it confirmed in writing the Mental Health Initiative is for on-screen programming other than PSAs.

6120   We ask that the Commission require more information from BCE in the reply phase and provide stakeholders with the opportunity to comment.

6121   The process by these rabbits have been pulled out of hats, along with announcements about Bell's sort-of version of Netflix and partnership with Cirque du Soleil have been, in our opinion, an abuse of the process of the public hearing. As stakeholders, we do not have sufficient information or time to react in an informed manner to the new proposals.

6122   What concerns us even more is that this process of negotiating at the hearing has become the norm over the past few years. We believe that the Commission has the ability to take disciplinary measures, and should, in order to preserve the integrity of the process and allow stakeholders an appropriate opportunity to engage with the new information, if not in this hearing, then as a warning for future hearings.

6123   Finally, Bell initially proposed a 10-year term for payment of the benefits with the payment of other PNI back-ended to the last four years of the term. They have reluctantly agreed to a seven-year terms, but again with the bulk of on-screen program, $36.4 million, back-ended to the last two years of the term.

6124   Equal payments over the course of the benefits' term provides the industry with stability and assurance that the benefits will actually be paid. Without a payment schedule, Bell is only just about to finally pay out its 2000 benefits five years late.

6125   As well, as Vice-Chair Pentefountas has pointed out, the standard seven-year term for payment of benefits was based on the seven-year term of licences. They're not expected to be coterminous with them. Now that licences are five years, it is logical that benefit payment terms be reduced to five years as well. We therefore recommend that the term be limited to five years, to be paid out equally over the course of the term.

6126   MS PARKER: In conclusion, our recommendations are focused on ensuring that any distress caused to the Canadian broadcasting system from this transaction, and the resulting media concentration, particularly in the English market, are mitigated by the benefits package and the production of Canadian programming that will be generated by it.

6127   We ask for the opportunity to comment on further information on benefits that BCE will hopefully provide in the reply stage.

6128   And a common closer, any questions?

6129   THE CHAIRPERSON: Thank you very much for your presentation. It is very useful.

6130   In terms of disciplinary measures; I guess I have one including keeping you after class; late in the day like this. So -- we apologize for that.

6131   And we will also -- I note your request and the Commissioners, the Panel, will decide any further process that might come out of this to address the points you have raised with respect to information that you may not have had a chance to comment on.

6132   The first question I have is -- relates -- perhaps a question of an impression that you may have had from this.

6133   We have talked a lot since the beginning of the week about consumers and citizens. We haven't talked a lot about creators. There have been some creative interveners to the table, but I don't get the sense that the creative community is very excited.

6134   I recall hearings where, you know, visions of new television services or even transactions has garnered a little more excitement of that which is potentially deliverable.

6135   And in a sense, I am asking myself when, in your perspective - and other have made it -- they said: Well, okay; we reluctantly, you know, accept the transaction as long as there is enough benefits. It is almost like ordering a -- going to the store and ordering a ham and cheese sandwich and saying: Well, no ham, no cheese, no bread. What do you have in the end?

6136   So are you excited by what is -- in a good way, by what is in front of us?

6137   MS PARKER: I could say it takes a lot to get me excited, in the broadcasting system, these days.

6138   THE CHAIRPERSON: Okay.

6139   COMMISSIONER DENTON: You have to emote.

6140   MS PARKER: I definitely will start yelling and jumping up and down.

6141   I think, you know, we were very fond of Astral; it was a well-run business. It did make programs -- different types of programs and got into the television series game, following the patterns set by the American; an edgier adult fair.

6142   And our members want to writer edgier adult fair; and it is very difficult to do that type of programming on mainstream Bell/Shaw/Rogers, you know, it is not -- you are writing for a time spot, you are competing because of simulcast. And so --

6143   And then we have the 10 o'clock news on CBC.

6144   So, you know, that -- TMN is very special to creators, because it allows creative freedom. And we have to ensure that that creative freedom continues to exist.

6145   You know, I guess we are a group that likes to play by the rules, and when we look at this transaction, we looked at the diversity of voices policy and it seemed to fall within the realm of that policy. It was in the concern -- B concern area 35 to 45; it wasn't exceeding 45.

6146   So, you know, looking at the rules, that is what we are thinking.

6147   Are we excited about media consolidation? Well, you know, I think we do accept the inevitable; we are a smaller market. But we have to ensure - and this is why we so rely on our CRTC; that the proper safeguards are put in place. And those, for example, mean maintaining a separate PNI/CPE for Astral. This can't become programming that can be amalgamated and amortized across CTV, Bravo, et cetera. It has to remain unique and special.

6148   And I would say that that is one of our key points in our presentation.

6149   Benefits packages; it is true, you know. It is interesting, you know, when you are reading all of this; it seems that, you know, some might portray us as greedy, you know, we will take it as long as there are benefits.

6150   The thing about benefits is they increase spending. If they are properly put towards on-screen programming, they will increase Canadian programming; and that is what we want.

6151   So is it going to -- I think it will mitigate to some extent the consolidation. There will be more programming; there will be more choice for Canadians consumers; and that is ultimately what we want at the end.

6152   We are concerned about what we are hearing with respect to exclusivity and not sharing content. I think that would be a very bad thing. Creators want to see -- want to share their product. They want to ensure that everybody can watch what they do.

6153   We need bigger audiences and, you know, if we are making that edgier fair, we want Rogers to be able to pick it up as well.

6154   So that is of concern to us and I don't know how to answer that; it is more in the BDU realm. But we do need to make sure that that programming is readily available; that there aren't blocks and protections up around that so that content becomes exclusive property.

6155   THE CHAIRPERSON: Right. With respect to edgy, creative content; I have heard it said that, you know, there is maybe five or six ad agencies, probably in Toronto, that are looking for a certain product - and it is not my words - targeted to young, single women who live in a condo. That is what the broadcasters have to deliver; something for that audience, and that defines what the conventional buyers is.

6156   MS PARKER: That is downtown Toronto, yes; that could happen.

6157   THE CHAIRPERSON: Is that what -- do you that is a fair statement of what the ask is in programming these days?

6158   MS PARKER: Programming changes by trend on a very -- it is season to season --

6159   THE CHAIRPERSON: Your mic, your mic.

6160   MS ASHTON: We have heard that Bell is doing a lot of shows with a female protagonist, and they have recently commissioned a number of shows for space that all have a female protagonist. But that changes and the next -- next year, it could be something else.

6161   THE CHAIRPERSON: So you have got the doctor shows, the lawyer shows and we start all over again?

6162   MS ASHTON: Yes; yes.

6163   THE CHAIRPERSON: Okay. There was an exchange earlier about benefits packages and I think that is your principle concern about the on-screen in particular.

6164   And we have had this issue in the past of having suddenly an influx of money into the system and if we were to approve this, we would have two large influxes of benefits, money, for on-screen, in a very short period of time, which you can well imagine creates a spike.

6165   And when we were asking about the duration of the benefits package, one of the answers was: Well, there is a risk associated with putting too much money into a system at the same time and that may not be sustainable over the longer period.

6166   What are your views on that?

6167   MS PARKER: We don't agree with that at all. It is like your dad giving your allowance and not to spend it all in one place, you know.

6168   We can manage that money; there is a talent pool in this country. Many of that talent pool are not working, you know. Series are very, very expensive to make, you know, up to two million per episode, you know. TV is a very expensive business.

6169   So yes, this is additional money and, you know, volume can drive eyeballs as well.

6170   You know, we have been struggling over the last couple of years waiting for a new TV policy to come into place to set a basic status quo expenditure, and so our production has been quite down.

6171   I think we are really -- I am really quite concerned right now about retaining a talent pool in this country of screenwriters, because there has to be work and there has to be opportunity.

6172   We are currently running some diversity programs and they are very successful. We are seeing some new talent emerging. There is talent. We want to tell Canadian stories. We need the money to make them. And I think that, you know, we can manage that influx of money.

6173   THE CHAIRPERSON: But how sustainable can it be in the longer term? Because -- are you -- or are you making the bet that in five, seven years' time that money will dry up, in a sense.

6174   MS PARKER: Well, didn't we just hear about Shaw and Corus today and -- you know --

6175   And looking down the road --

6176   THE CHAIRPERSON: Surely, there is a limit to how much consolidation you can incur. I mean at one point, you get to one, right?

6177   MS PARKER: Well, there is; there is.

6178   But we are also looking down the road, because your TV policy will be up for renewal and we think that those PNI's/CPE's were set too low. And we are going to go back and we are going to look at that. We think they were too low and, you know, this is to mitigate to get back into the spend(ph).

6179   So we are waiting to see the results of the PNI/CPE's from the TV policy next spring, and we will see, you know, if that is enough money going into the system on a regular basis. We are not optimistic that it is.

6180   MS ASHTON: But I think another point is it is about building a sustainable industry. If you have Canadian programming, high quality Canadian programming on the air, audiences are going and they are watching it; that is building a demand.

6181   Then we stop getting these (inaudible) comments about nobody watches Canadian TV; it is not any good.

6182   It is really hard to say that now when you have got these big, over-a-million-viewers every week.

6183   And then maybe the Canadian broadcasters will actually choose to spend money on these programs because they know they are going to get an audience.

6184   THE CHAIRPERSON: Are you seeing that? I mean on the English market, obviously, is the area you are excited by broadcasters?

6185   MS ASHTON: The problem is we don't have the reports at this point to be able to say: When they are spending money, is it benefits money that they are spending? Is it PNI/CPE that they are spending? We are hoping -- the first fiscal has only just finished.

6186   THE CHAIRPERSON: Right.

6187   MS ASHTON: So we are hoping that when we get that detail, that data, that we will be able to assess it be able to, you know -- I think it will take a couple of years to be able to look and see what is happening. But even from the first year, we will be able to get an idea about whether the policy is working and how much is: They are spending it because they have to.

6188   MS PARKER: Just to that point; I just want to say, to that point: As we are moving into a new world where content is being protected and need exclusive. You know, you look at NetFlix not being able to buy any Canadian -- or any content, because the rights are all, you know, tied up.

6189   I think that what we will see in that case is that content because king and hopefully, that will be Canadian content.

6190   You know, it is more expensive to make than American, but I am guessing the Americans are going to start hanging on to their content at some point as well and finding different ways to exploit it.

6191   THE CHAIRPERSON: But haven't we heard content is king for at least ten years now?

6192   MS PARKER: Yes; yes we have, and we are waiting for the day that it actually happens.

6193   THE CHAIRPERSON: I am glad you are an optimist.

6194   Earlier today, I had a discussion with Rogers precisely about this risk of a boom bus(ph) pumping money into the system and asked -- because in their intervention, they had suggested that maybe the money should be put in the CMF. And as you know, the CMF can carry forward sums of money and benefit from the sums they put into the placements; investments. And so the money is -- it is a bit like an endowment, in a sense; that mechanism will be available.

6195   Views?

6196   MS ASHTON: Yes. We have always been in favour of endowments. That is how we have got the independent production fund, from an endowment - I can't remember what years; 1996 or something - and they have been putting money into Canadian drama ever since.

6197   The Bell fund has an endowment. It actually is a sustainable way to put money into the system. And we have a great relationship with the CFM. They do a great job of -- it is the broadcaster that picks the product but they are the ones that are processing the funding.

6198   We have, in the last few years, gotten into self-administered funds, but before that, we think the system of giving it to independent funds as endowment worked.

6199   MS PARKER: But we do want to add that, you know, we are most concerned about funding going to PNI programs. CMF has a much wider reach and, you know, they are also funding reality-type programs; low-budget docs. We don't see this as the proper way to spend benefits money coming out of this transaction, you know. It is again, as we have in our presentation; we do believe that the benefits should mirror the actual content being made on Astral right now, and that is, you know, series; edgy, costly series; feature films; and children and youth on family, you know.

6200   The CMF is a great organization, but it has a much broader mandate and I don't think it is appropriate to place the benefits money there.

6201   THE CHAIRPERSON: Even if you could somehow carve it out and more targeted to PNI?

6202   MS PARKER: No. If that is doable, you know, that is an idea.

6203   THE CHAIRPERSON: Everything is doable, remember, the Reform?

6204   MS PARKER: Yes; yes; so we think.

6205   THE CHAIRPERSON: Yes. I am glad you are now more pleased with the work of CFM; yes; thank you.

6206   Those are my questions. But I believe Vice-Chair Pentefountas has questions for you.

6207   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chair. Just briefly; edgy Canadian I think is going to create a new sort of sub-category, because if you can't out special-effect your American counterparts, you had better be able to out write them.

6208   That being said, in PNI, and much was said about PNI last year, but our definition of PNI --

6209   So you want to create a targeted tangible benefit toward scripted work or are you happy with PNI as defined in the group licensing format?

6210   MS PARKER: We are good with the PNI as defined.

6211   COMMISSIONER PENTEFOUNTAS: Documentaries?

6212   MS PARKER: Yes; long-form documentaries.

6213   COMMISSIONER PENTEFOUNTAS: Long-form?

6214   MS PARKER: Long-form documentaries.

6215   COMMISSIONER PENTEFOUNTAS: And what about films. Do you think we need -- that much has also been said with TMN and Astral, generally and Corus, and we had a debate on this last year, I think.

6216   MS PARKER: Yes.

6217   COMMISSIONER PENTEFOUNTAS: Post -- and the fact that funding for dramatic series was still there, because that was popular.

6218   MS PARKER: Yes.

6219   COMMISSIONER PENTEFOUNTAS: But one shot film, long-form filmmaking was way down.

6220   So PNI; you would like -- what about film, in the spirit of Canadian film and financing for Canadian film?

6221   MS PARKER: Well, there is certainly room, you know, in -- to be generous with feature film. It is a struggling endeavour and we do understand that. But on the other hand, these are broadcasting benefits; they are to benefit the broadcasting system.

6222   I think the problems with feature film run so deep, you know. It is not just buying a license to distribute. It is just -- it is so difficult to fund a feature film these days.

6223   And, you know, I am -- Canadians want to see series; they watch series. We are, as Kelly Lynne was saying, we are at, you know, close to two million for Rookie Blue.

6224   You know; we struggle in the feature world, but I think there is room to be generous.

6225   COMMISSIONER PENTEFOUNTAS: As a writer; as a guild, the Writer's Guild per se, with money goes -- as long as it is scripted; it can be a long film or it can be a series; you don't have a problem with it?

6226   MS PARKER: Right; right.

6227   COMMISSIONER PENTEFOUNTAS: Okay.

6228   MS PARKER: Not reality programming.

6229   COMMISSIONER PENTEFOUNTAS: No; we get it; great; thank you.

6230   MS PARKER: You are welcome.

6231   THE CHAIRPERSON: Thank you. I believe that those are our questions. Thank you and again, I apologize for the lateness of the -- your appearance.

6232   MS PARKER: (inaudible) thank you very much.

6233   THE CHAIRPERSON: Great; thank you very much.

6234   LA SECRÉTAIRE : Nous entendrons maintenant le dernier intervenant. J'inviterais Canal Savoir à s'approcher.

6235   LE PRÉSIDENT : Bonsoir, Mesdames.

6236   Encore, désolée; on a pris un peu de retard. Je crois que vous préférez passer ce soir que d'être -- que de le faire demain matin. Donc on prendra le temps nécessaire. Mais --

6237   INTERLOCUTRICE NON IDENTIFIÉE : Peut-être qu'il y a aura une meilleure (inaudible) demain matin, mais cela nous fait plaisir d'être avec vous.

6238   LE PRÉSIDENT : D'accord. N'oubliez pas d'allumer votre micro.

6239   Donc comme d'habitude, veuillez vous identifier pour la transcription et faire votre présentation.

INTERVENTION

6240   MME FORTIN : Je m'appelle Michèle Fortin et je suis présidente du Conseil d'administration de Canal Savoir.

6241   MME GODBOUT : Je suis Sylvie Godbout, directrice générale de Canal Savoir.

6242   MME FORTIN : D'abord, merci de nous recevoir aujourd'hui à cette heure un peu tardive et à cette audience si cruciale pour l'avenir de notre système de radiodiffusion.

6243   D'entrée de jeu, nous aimerions vous rappeler que nous sommes ici un peu comme des extraterrestres. Je veux dire nous sommes ici dans une audience où on parle de milliards pour faire des transactions alors que nous gérons une télévision avec un budget inférieur à une heure de série de télévision anglophone.

6244   Donc, je veux dire, c'est important, nous croyons important que cette voix-là soit entendue.

6245   Donc nous ne sommes pas ici pour vous rappeler que pour appuyer la transaction, ni pour nous opposer à la transaction de BCE/Astral. On n'a pas de mandat pour faire cela et je ne suis pas sûre qu'on possède collectivement toutes les informations que vous avez et qui vous permettrons, j'en suis sûre, de prendre une sage décision.

6246   Nous en connaissons toutefois tous les dangers, ayant expérimenté depuis plusieurs années les années les effets de la convergence d'un groupe dominant comme Quebecor au Québec, de même que l'influence de plus en plus grande des distributeurs de signaux sur l'évolution de l'industrie.

6247   C'est fortes de cette connaissance que nous sollicitons aujourd'hui votre appui afin de tenir compte de l'impact d'une telle concentration sur les petits et moyens radiodiffuseurs indépendants qui n'ont pas les avantages de revenus de distribution; de redevances; des avantages de la convergence; du pouvoir de négociation; des économies d'échelle.

6248   Ces entreprises sont néanmoins soumises à toutes les contraintes règlementaires. Elles sont de plus en plus isolées. Et pourtant, ce sont elles qui assurent la diversité des voix et des choix.

6249   On valorise, dans les arguments que nous avons entendus ici, la priorité des choix des consommateurs et leur capacité de payer. On ignore le plus souvent la diversité des choix, des goûts et des intérêts, de telle sorte que des segments importants de la population sont oubliés.

6250   Dans ce contexte, la télévision éducative, qui valorise la diffusion des connaissances et le partage du savoir sont laissés pour compte.

6251   De notre point de vue, il revient dont au CRTC, organisme de règlementation chargé de favoriser la santé de l'ensemble du système; de veiller à ce que soit protégé l'équilibre du système et la diversité des voix, que ce soit par la règlementation, qui limiterait les pouvoirs des grands groupes dominants, ou par des mesures spéciales visant à soutenir les plus petites télévision.

6252   Parmi ces mesures, notons l'allocation des avantages tangibles. Ces derniers ont été conçus à l'origine pour contribuer à l'amélioration de l'ensemble du système. A ce titre, malgré de récents précédents, nous croyons qu'ils ne doivent pas servir à consolider ou renforcer les pouvoirs ou les revenus des organismes demandeurs, en particulier lorsqu'il s'agit de grands groupes déjà puissants et qui le deviendront davantage.

6253   C'est pourquoi nous croyons dans ce cas-ci qu'une portion des avantages tangibles devrait être versée à des entreprises indépendantes pour qu'elles puissent continuer à assurer la diversité des voix et la diversité des choix.

6254   Mais pourquoi Canal Savoir?

6255   MME GODBOUT : Parce que Canal Savoir est une station de télévision sans but lucratif qui exploite une entreprise avec l'un des plus petits budgets de programmation au Canada depuis plus de 27 ans.

6256   Cette corporation privée était initialement axée sur l'enseignement à distance regroupant des universités et des collèges du Québec, sans redevances d'abonnés; sans revenus de distribution ni de publicité. La chaîne a toujours été unique par son économie de moyens, dans un univers audiovisuel commercial.

6257   Il y a quatre ans, Canal Savoir concluait une entente avec Télé-Québec, qui devenait son partenaire principal, tout en conservant son indépendance.

6258   Cette entente a été soutenue financièrement par le Ministère de l'Éducation, du Loisir et du Sport du Québec, et la volonté continue des établissements d'enseignement membres (inaudible), ainsi que celles de TFO et de l'Université d'Ottawa, qui se sont jointes au consortium.

6259   Cette apport, qui en matière de contenu, a aussi été enrichi par divers partenaires du milieu de création et du savoir, a donné rapidement une nouvelle impulsion à la programmation de Canal Savoir, renouvelant son image publique et son attrait pour de nouveaux auditoires.

6260   Aujourd'hui, Canal Savoir se distingue par son offre télévisuelle dédiée à la vulgarisation des connaissances, à une volonté de donner le goût d'apprendre, d'encourager la réflexion des citoyens et d'offrir à la jeune relève en formation un lieu d'expression unique.

6261   Ces efforts exceptionnels contribuent annuellement à la réalisation de plus de 300 heures de nouveau contenu canadien largement retransmis par Canal Savoir.

6262   Canal Savoir rejoint plus de quatre millions de foyers canadiens, dont 2,5 millions au Québec. En onde 24 heures sur 24, la chaîne diffuse en numérique, en direct de Montréal.

6263   Elle est aussi présente sur les services de base par câble analogique et numérique ainsi que par les services satellitaires de Shaw Direct et de Bell Télé. Et on la trouve en Ontario via Rogers.

6264   Notre programmation est aussi retransmise en simultanée sur notre site internet. Et le rayonnement d'émissions phares est optimisé grâce à des liens avec des partenaires nationaux et internationaux.

6265   Malgré ces réalisations, les efforts investis des nouveaux partenaires ne peuvent suffire à assurer la stabilité financière de la chaîne et à lui permettre de relever les défis qui l'attendent.

6266   Nous devons trouver du financement afin d'élargir l'offre de programmation en assurant un plus grand équilibre de la grille.

6267   Enrichir la qualité télévisuelle de nos émissions, optimiser l'accès de nos contenus sur les multiples plateformes en premier lieu sur le web et à la demande, et répondre aux exigences du CRTC en ce qui a trait au sous-titrage pour malentendant.

6268   Par l'entremise du programme davantage tangible dans le cadre de l'acquisition d'Astral Media par BCE, nous pourrions nous doter d'une assise qui nous aiderait à atteindre ces objectifs.

6269   Les institutions d'enseignement du savoir disposent de bandes d'archives audiovisuelles et sont au coeur de nombreuses activités d'intérêt public qui peuvent servir de base à la production d'émissions de télévision.

6270   Canal Savoir est en mesure de favoriser l'accès à ces banques et événements ici de ses partenaires, ce qui permet le partage de la connaissance avec un plus large auditoire.

6271   Cependant, pour collecter ces archives, ou couvrir ces événements, les aménager avec l'appui de producteurs indépendants pour créer des éléments télévisuels, cela requiert un soutien financier.

6272   A titre d'exemple, Canal Savoir pourrait bonifier une série sur les services de santé offerts aux Innus du Nord du Québec à partir de matériel réalisé cet été par une équipe de professionnels qui a suivi des médecins et des étudiants de l'Université McGill.

6273   Mais faute de moyens financiers, cette production et bon nombre de projets sur d'autres thèmes ne peuvent se réaliser.

6274   Notre démarche en est une donc de soutien à la production d'émissions et non pas pour le fonctionnement de Canal Savoir.

6275   MME FORTIN: A notre avis, un des objectifs du régime des avantages tangibles se doit d'avoir un volet de soutien des entreprises indépendantes.

6276   Et c'est dans ce contexte que nous avons soumis une requête à BCE, laquelle nous a été refusée par lettre le 19 juillet dernier.

6277   Nous croyons toutefois, comme l'atteste notre mémoire, que la proposition actuelle de BCE sert ses propres intérêts de groupe plutôt que l'ensemble du système de radiodiffusion et que le Conseil devrait inciter cette dernière à revoir sa décision et agréer cette requête en faveur de Canal Savoir.

6278   Nous vous remercions de votre attention et sommes prêtes à répondre à vos questions.

6279   LE PRÉSIDENT : Merci beaucoup, Mesdames.

6280   La conseillère Lamarre aura des questions pour vous.

6281   CONSEILLERE LAMARRE : Merci beaucoup, Monsieur le Président, Madame Fortin, Madame Godbout. Bonsoir.

6282   MME FORTIN: Bonsoir.

6283   MME GODBOUT: Bonsoir.

6284   CONSEILLERE LAMARRE : Première question avant de parler plus précisément de votre demande.

6285   Au paragraphe16 de votre présentation de ce soir, vous parlez des efforts investis avec les nouveaux partenaires et que ces efforts ne peuvent suffire à assurer la stabilité financière de la chaîne.

6286   Par la suite, au paragraphe18, vous donnez des exemples de projets, de productions particulières qui pourraient bénéficier des avantages tangibles.

6287   J'essaie d'arrimer les deux, ensemble. Parce que quand vous me dites que, ce que je crois comprendre, c'est que vous aimeriez profiter des avantages tangibles dans le cadre de la transaction devant nous si on l'approuve.

6288   Pour assurer en partie la stabilité financière de la chaîne.

6289   Mais par définition, ces avantages-là, c'est ponctuel. On parle de cinq ans ou sept ans.

6290   Donc, comment vous aménagez ça?

6291   MME FORTIN: Dans le moment, je veux dire, nous avons assez de revenus pour assurer le fonctionnement régulier de la chaîne. Sauf que nous n'avons pas, dire, les revenus suffisants pour assurer son déploiement en enrichissant sa programmation, en faisant une programmation de meilleure qualité, en répondant aux objectifs du CRTC du sous-titrage pour malentendant.

6292   Ce sont des objectifs de production.

6293   Laissées à nous-mêmes, on peut faire vivre la chaîne, mais on n'aura rien à télédiffuser, sauf les contributions de nos partenaires qui sont les universités, les collèges, les organismes culturels avec l'aide de Télé-Québec.

6294   Mais ça ne suffit pas pour donner à cette chaîne-là une impulsion qui lui permet d'être une véritable université populaire de qualité et qui la rend intéressante pour l'ensemble des téléspectateurs qui sont intéressés par ces questions-là.

6295   CONSEILLERE LAMARRE : Madame Fortin, vous avez lu dans mes pensées. Ça fait peur un peu.

6296   Quand vous avez utilisé le mot «impulsion», je crois comprendre à ce moment-là que si vous aviez des sommes d'argent supplémentaires pendant cinq ou sept ans, ce sont la formule que le Conseil pourrait retenir.

6297   Ça vous permettrait de créer une programmation disons extraordinaire par rapport à ce que vous avez présentement et ça vous permettrait de venir à bout du moment d'inertie qui, après ça, attirerait d'autres contenus et vous permettrait de continuer une programmation plus intéressante.

6298   MME FORTIN: On a déjà amorcé ce mouvement-là au cours des deux, trois dernières années avec l'aide de nos partenaires et du ministère de l'Éducation.

6299   Mais ce n'est pas suffisant pour faire le virage que l'on souhaite et la rendre à un niveau de qualité qui serait plus intéressant ou acceptable dans l'ensemble de la programmation.

6300   CONSEILLERE LAMARRE : Et pour fins de précision, dans les avantages tangibles, on prévoit toujours une portion qui sera visible à l'écran, les productions, une portion qui pourrait, qui peut toujours être ce qu'on appelle des avantages tangibles, des bénéfices sociaux.

6301   Vous, ce que vous avez demandé à Bell, vous le mettez dans quelle catégorie?

6302   MME FORTIN: Je comprends pas votre question, je m'excuse.

6303   CONSEILLERE LAMARRE : Les mêmes...

6304   MME FORTIN: Pour moi c'est à l'écran.

6305   CONSEILLERE LAMARRE : C'est à l'écran. C'est avec l'écran.

6306   MME FORTIN: C'est pour voir à l'écran.

6307   CONSEILLERE LAMARRE : Donc, c'est tout à l'écran.

6308   MME FORTIN: Oui.

6309   CONSEILLERE LAMARRE : O.K. Tout entièrement à l'écran.

6310   Bon. Là, je vais vous poser des questions indiscrètes. Vous avez le loisir de ne pas répondre si vous voulez.

6311   Vous dites que vous avez reçu, vous avez essuyé le refus de Bell Média à votre demande le 19 juillet.

6312   Vous l'avez faite quand, votre demande?

6313   MME FORTIN: Le 16 avril.

6314   CONSEILLERE LAMARRE : Le 16 avril. Et est-ce que je peux me permettre combien vous aviez demandé?

6315   MME FORTIN: Oui. Sur... on a fait l'hypothèse d'une licence de sept ans. Et on a demandé un million et demi par année pendant sept ans. C'est autour de 10 millions et demi.

6316   CONSEILLERE LAMARRE : O.K.

6317   Donc, bien en deçà, pour fins de comparaison, de l'avantage que Bell propose de faire pour le déploiement de l'infrastructure puis...

6318   MME FORTIN: Oui. Puis au niveau de la chaîne de l'information et en-dessous de...

6319   CONSEILLERE LAMARRE : Et de la chaîne de l'information aussi. Oui, j'aurais pu prendre cet exemple-là de la même façon.

6320   Il y a beaucoup de gens qui s'objectent justement à la définition que Bell fait des avantages tangibles en ce qui concerne le 40 millions qu'il prévoit consacrer au développement de l'infrastructure de North Westel en même temps pour une chaîne comme Canal Savoir qui, justement, fondamentalement, est là pour aider à la transmission et au déploiement de l'éducation et...

6321   Est-ce que vous voyez pas quand même une utilité pour permettre comme vous dites, vous avez eu des gens cet été qui sont allés faire une série sur la santé avec les Innus du Nord du Québec.

6322   Est-ce qu'une infrastructure mise à niveau permettrait pas justement d'atteindre un objectif que vous aussi, vous visez?

6323   MME FORTIN: Si vous permettez, moi je suis pas une experte de ces choses-là. Mais je veux dire, ce que je reproche à toute la philosophie des avantages tangibles, c'est que Bell se sert des avantages tangibles pour renforcer sa domination en distribution dans le Nord pour se doter de chaînes pour alimenter ses plateformes en concurrence avec un compétiteur en français.

6324   Je veux dire, c'est self-serving.

6325   Donc, non seulement c'est pas du broadcast, mais c'est une façon de l'utiliser qui ne bénéficie qu'à Bell et qui renforce la dominance qui est déjà renforcée par son acquisition d'Astral.

6326   Et je me dis, dans le contexte actuel, si cette demande est acceptée, mais je veux dire, il appartient au CRTC de fixer des limites ou des réglementations. Mais aussi de permettre à l'ensemble, je veux dire, des gens qui vont être «victimes» de ça. Puis on le vit.

6327   Je veux dire, on n'est pas dans l'environnement dont vous avez parlé aujourd'hui.

6328   Je veux dire, nous, on passe après, je veux dire, on est en français. Alors on est en compétition avec Quebecor. On appelle pas ça de la compétition. Quebecor passe, puis nous, on attend en arrière.

6329   Ensuite, c'est Radio-Canada dans le secteur privé.

6330   Ensuite, c'est Astral. Je veux dire, dans le monde, pour Télé-Québec dans le monde commercial. Mais toutes ces petites chaînes-là qui ont pas les autres avantages, passent toujours en dernier.

6331   Et je me dis que les avantages tangibles devraient servir à l'ensemble du système pour protéger ces chaînes-là qui font des choses que Bell, Astral ne fera jamais, parce que le public qui est concerné par ça est trop étroit. Mais c'est du public aussi, ce sont des consommateurs et qui ont des droits et des choix de télévision différente.

6332   CONSEILLERE LAMARRE : Et pour terminer, effectivement je l'avais noté que vous étiez en numérique à Montréal, sans qu'on vous le demande.

6333   Et vous nous dites que vous êtes sur Shaw Direct et Bell Télé.

6334   Mais dites-moi, êtes-vous aussi en haute définition?

6335   MME FORTIN: Non, pas encore.

6336   CONSEILLERE LAMARRE : Pas encore.

6337   MME FORTIN: Pas encore.

6338   CONSEILLERE LAMARRE : Donc, une chose à la fois.

6339   MME FORTIN: On essaie. Même je devrais dire...

6340   MME GODBOUT: Mais disons que c'est une question...

6341   MME FORTIN: Financière.

6342   MME GODBOUT: ... financière surtout. On espère réussir. Mais encore là, ça va dépendre de l'avenir de nos capacités.

6343   CONSEILLERE LAMARRE : Parfait. Je vous remercie.

6344   MME FORTIN: En fait...

6345   CONSEILLERE LAMARRE : Oui.

6346   MME FORTIN: Si je peux me permettre, pour une chaîne comme Canal Savoir, il y a deux exigences, je veux dire, de développement sur le plan de la distribution: il faut qu'elle soit en HD, on le sait. Et il faut qu'elle soit accessible à la demande.

6347   CONSEILLERE LAMARRE : Que la demande soit par...

6348   MME FORTIN: Parce que si...

6349   CONSEILLERE LAMARRE : Soixante-quinze pour cent des auditeurs ou que ce soit par un pour cent des auditeurs.

6350   MME FORTIN: Oui, mais parce que si vous faites, je veux dire, des cours, des conférences, etc., les gens font pas vous suivre suivant une programmation prédéfinie, je veux dire, dans l'hypothèse où vous êtes capable de la rendre publique.

6351   Mais les gens vont aller chercher selon leurs besoins. Et ça, je veux dire, c'est un développement qu'on envisage d'ici un an ou deux, peut-être.

6352   CONSEILLERE LAMARRE : Ce sont toutes mes questions. Merci, Mesdames.

6353   Merci, Monsieur le Président.

6354   LE PRÉSIDENT : Monsieur le Vice-président? Oui?

6355   CONSEILLER PENTEFOUNTAS : Est-ce une requête écrite que vous avez soumise à Bell?

6356   MME GODBOUT : Oui.

6357   CONSEILLER PENTEFOUNTAS : Est-ce dans le dossier public? Non?

6358   MME FORTIN: Ça je sais pas.

6359   CONSEILLER PENTEFOUNTAS : Est-ce que vous auriez objection à ce qu'on le dépose dans le dossier public?

6360   MME FORTIN: Ah ça! Oui.

6361   MME GODBOUT: La lettre de...

6362   MME FORTIN: Oui, oui. Bien sûr.

6363   MME GODBOUT: Pas de problème.

6364   MME FORTIN: Pas de problème.

6365   CONSEILLER PENTEFOUNTAS : Merci.

6366   LE PRÉSIDENT : On vous demanderait de la fournir à la secrétaire de l'audience.

6367   MME FORTIN: Avec plaisir.

UNDERTAKING

6368   LE PRÉSIDENT : O.K. Alors merci beaucoup et encore désolé pour l'heure tardive. Et puis merci beaucoup d'avoir participé à l'audience.

6369   MME FORTIN: Bon, bien c'était important que la voix des petites télévisions, je veux dire, les extraterrestres se fassent entendre!

6370   LE PRÉSIDENT : Oui! Faut pas oublier personne.

6371   Merci bien.

6372   MME FORTIN: Merci.

6373   LE PRÉSIDENT : Bonne soirée.

6374   MME FORTIN: Merci.

6375   MME GODBOUT: Merci.

6376   LE PRÉSIDENT : Alors, on ajourne pour la soirée et on se revoit à 8h30 demain matin.

6377   Merci bien. Bonne soirée. 8h30.

--- Whereupon the hearing adjourned at 1837, to resume at 0830 on Thursday, September 13, 2012

REPORTERS

Johanne Morin

Monique Mahoney

Madeleine Matte

Carmen Delisle

Beverley Dillabough

Date modified:

2012-09-12