ARCHIVED - Transcript, Hearing 29 April 2013
This page has been archived on the Web
Information identified as archived is provided for reference, research or recordkeeping purposes. It is not subject to the Government of Canada Web Standards and has not been altered or updated since it was archived. Please contact us to request a format other than those available.
Providing Content in Canada's Official Languages
Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
Volume 5, 29 April 2013
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
Applications for mandatory distribution on cable and satellite distribution systems pursuant to section 9(1)(h) of the Broadcasting Act and applications for the licence renewal of independent conventional, pay and specialty television services
140 Promenade du Portage
29 April 2013
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
Applications for mandatory distribution on cable and satellite distribution systems pursuant to section 9(1)(h) of the Broadcasting Act and applications for the licence renewal of independent conventional, pay and specialty television services
Leigh-Anna GatesLegal Counsel
Pierre-Marc PerreaultHearing Manager
140 Promenade du Portage
29 April 2013
- iv -
TABLE OF CONTENTS
PAGE / PARA
11. Shaw Communications Inc.1246 / 7440
12. Canadian Cable Systems Alliance Inc.1305 / 7742
13. Rogers Communications Partnership1340 / 7993
18. WoneWomanWorks ltd1407 / 8373
14. MTS Allstream1414 / 8409
16. Matthew Hays1440 / 8591
17. On Screen Manitoba1457 / 8677
19. Cogeco cable inc.1475 / 8757
20. Avaaz1516 / 9045
21. Canadian Association of Community Television Users and Stations (CACTUS)1535 / 9155
- v -
PAGE / PARA
Undertaking1294 / 7670
Undertaking1296 / 7690
Undertaking1338 / 7973
Undertaking1395 / 8305
Undertaking1436 / 8556
Undertaking1494 / 8876
Undertaking1495 / 8886
Undertaking1511 / 9002
--- Upon resuming on Monday, April 29, 2013 at 0900
7437 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
7438 We will now continue with the interveners in Phase 2 with a presentation from Shaw Communications Inc.
7439 I would ask you to identify your panel and you have 10 minutes to make your presentation. So please go ahead.
7440 MR. MEHR: Good morning, Mr. Chairman and Commissioners. My name is Jay Mehr and I'm Senior Vice-President of Operations with Shaw Communications.
7441 I am joined by:
7442 - Jean Brazeau, Senior Vice- President of Regulatory Affairs;
7443 - Barbara Williams, Senior Vice-President of Content at Shaw Media; and
7444 - our regulatory team of Michael Ferras, Cynthia Rathwell and Dean Shaikh.
7445 We strongly agree with the direction in the Chairman's opening remarks. 9(1)(h) orders should be used very sparingly, only when an applicant provides evidence that its service meets a real and exceptional need within the broadcasting system and makes an exceptional contribution to one or more objectives of the Act. We support the 9(1)(h) criteria and framework. The Commission's approach considers the potential impact on Canadians and ensures that mandatory orders are granted only to exceptional services.
7446 Respecting and responding to the demands of consumers will ensure the long-term health and relevance of a Canadian broadcasting system that serves the public interest. We compete in a borderless environment with multiple platforms and digital technologies that provide Canadians with unprecedented choice and control over content, with access that has never been easier or cheaper, often for free. These are exciting developments that raise significant opportunities but also challenges for the system. We cannot ignore them or try to override them.
7447 In order for the system to thrive, our only option is to engage with the new dynamics of the marketplace with a focus on customer choice, value, great content, innovation and investment, and this is why Shaw has established the following strategic priorities:
7448 - First, we are committed to delivering exceptional customer and viewer experiences. Even in a challenging business environment, we have added resources within our Canadian-based customer service operations.
7449 - Second, we are leveraging technology through innovation and investment, including our Digital Network Upgrade, a successfully launched $300-million satellite, our WiFi network and Shaw Go.
7450 - Third, our pricing and acquisition strategies are based on sound financial discipline. We are committed to increasing choice and flexibility, while providing relevant and value-based offers to both new and existing customers.
7451 - Finally, we are improving operational efficiency, as we recognize the importance of cost control to our business and, ultimately, to our customers.
7452 We operate in the most intensely competitive market in North America. In this environment, the price and composition of our basic service is disciplined by competition. However, requiring all BDUs to distribute additional mandatory services will increase our costs and this will impact the price of basic.
7453 Our daily challenge to even retain -- never mind grow -- our subscriber base is evidence of the intense competition we face from licensed and unlicensed sources. We remain confident that, with our strategic priorities, Shaw will remain successful. Similarly, the Commission's vision for a world-class broadcasting system can only be achieved by allowing innovation and investment to drive customer choice.
7454 MR. BRAZEAU: The Commission has set a high bar to ensure that mandatory distribution orders are issued only in exceptional circumstances. We strongly support the Commission's high threshold and its transparent framework.
7455 An applicant "must provide evidence demonstrating the exceptional importance of its service to the achievement of the objectives of the Act." In our view, this requires the identification of one or more specific objectives that the broadcasting system, as a whole, cannot meet in the absence of a mandatory order.
7456 But the first threshold is only a necessary condition. Once satisfied, the applicant still must meet the additional criteria. This includes demonstrating "extraordinary need" among an intended audience and widespread acceptance by Canadians of an increase in the price of their basic service.
7457 In our view, very few applicants have satisfied the Commission's test. APTN does demonstrate the proper application of the Commission's criteria. Without a mandatory order, the special place of Aboriginal peoples in Canadian society may not be fully reflected in the broadcasting system as required by section 3(1)(d) of the Act, and a specific audience with an extraordinary need may not be properly served. However, we do not support the proposed rate increase.
7458 AMI-audio and AMI-tv achieve a specific objective under the Act as they provide "programming accessible by disabled persons," pursuant to section 3(1)(p).
7459 Canal M will also achieve this objective with distribution in French-language markets.
7460 And CPAC is distributed pursuant to an Order-in-Council.
7461 We recognize that there may be unique circumstances pertaining to the legislative assemblies of Nunavut and the Northwest Territories. Given the capacity that will be made available on Anik Gl, Shaw Direct is open to working with the applicant to discuss distribution.
7462 A few other services at least merit some consideration by the Commission as their applications are premised upon public interest objectives. These include Described Video Guide, EqualiTV, All Points Bulletin/Avis de Recherche and additional French-language services. However, for the reasons explained in our written intervention, we remain opposed to 9(1)(h) status for these services.
7463 MS WILLIAMS: At Shaw Media, we are very proud of the contributions our 19 specialty services make to our viewers, to program diversity and to Canadian content. It won't surprise you to hear that in our opinion, each one of our services is exceptional.
7464 The strength and contributions of our services has been supported by a regulatory framework that works as it has consistently evolved in response to a dynamic environment. As the Commission knows, Shaw is regularly reminded of this evolution when we enter into negotiations for program rights.
7465 The players now include over-the-top competitors with deep pockets. In some cases, they are bidding for the first window. They are definitely looking at second windows of our hit shows, including next-day viewing. And, they are creating and acquiring original content exclusively for their platforms. They are now competing with us for our audiences, our advertising dollars and our program rights.
7466 We are confident that we can compete in this environment by continuing to invest, innovate and respond to the demands of Canadian consumers with great content, including programming like "Continuum," "Vikings" and "Big Brother Canada."
7467 We are also investing in news, as we recently created "Global Halifax" and "Global New Brunswick," which will tell local grassroots stories. We are also developing multi-platform content delivery.
7468 In short, we are looking to the future. On the contrary, certain requests for 9(1)(h) status are an attempt to return to an outdated protectionist framework that is not based on innovation and disregards today's competitive realities.
7469 As Jay and Jean explained, 9(1)(h) status should be reserved for services that make an exceptional contribution and serve an audience with an extraordinary need. Movie, news and general interest services clearly do not satisfy the Commission's criteria as they serve a mass audience. Mandatory distribution will only serve to distort competition within these genres. Like all services, they should compete for distribution and audience share based on their appeal to Canadians.
7470 Contrary to this, several applicants argue that they need 9(1)(h) status to compete. This argument is not relevant to the Commission's criteria. A service that is not already exceptionally important should not be allowed to become exceptional through a mandatory order.
7471 MR. MEHR: In order for the Canadian system to thrive in today's intensely competitive and borderless digital environment, we have no choice but to fully engage in the new digital reality. Relaxing eligibility requirements for mandatory distribution would undermine these efforts. This is why we encourage the Commission to deny any application that is based on weakened criteria or irrelevant considerations.
7472 We have provided our own view that very few applicants have met the test for 9(1)(h) status. However, we acknowledge that the determination of which services deserve mandatory distribution on the basic service is the Commission's role, not ours.
7473 Regardless of the outcome of this proceeding, Shaw is, and will remain, excited about the challenges and opportunities in the digital world. In our view, the success and relevance of the broadcasting system will be driven by investment, innovation and, above all, the needs of customers.
7474 Thank you. We look forward to answering your questions.
7475 THE CHAIRPERSON: Thank you very much for that presentation. Commissioner Simpson will start the questions.
7476 COMMISSIONER SIMPSON: Good morning. I hope everybody enjoyed the weather on the weekend.
7477 I'm going to start my questioning by going back to your written submission. What caught my eye on page 5, paragraph 8, was to do with your view on what a 9(1)(h) applicant has to do to satisfy the criteria in your mind, and we have heard a lot in the last week about the requirement of a service being exceptional in more ways than one and I think we understand that but you had sort of gone over the top by saying, if you pardon a very bad pun, that an applicant for 9(1)(h) status must do much more than provide evidence that it makes or will make a significant contribution to one or more of the policy objectives.
7478 Now, I just want to understand. Are you saying that they have to do better than just getting one out of the four or five exceptional criteria or are you saying that collectively they have to do much more, but what is that much more in your eyes? I'm trying to understand.
7479 MR. BRAZEAU: Well, I think the point we were trying to impress here is that there must be real meaning to the word "exceptional," and I think if we look at how the Commission has applied it in the past, I think there's some obvious conclusions that we can make that exceptional means more than good or okay or, you know, we have to redress a disadvantage that we suffered in the past or things of that nature.
7480 So we just think that the word "exceptional" needs to have some context.
7481 And I think maybe, Dean, you want to maybe add a few comments on what specific provisions of the Act we think are important.
7482 MR. SHAIKH: Well, we think each provision of the Act is important and I guess the issue is, a service becomes exceptional when you identify one specific objective of the Act that is not presently being met by all the services collectively within the system, and then in that case one particular service, APTN is an excellent example, can fulfil the needs for the special place of aboriginal peoples.
7483 The second part of the question I think was should they satisfy all the criteria. The way we read the criteria as listed, the first step is define exceptional. That means an extraordinary, unique contribution that other services are not making to fulfil that one specific objective.
7484 But then the second part is, must satisfy all the additional criteria, which includes evidence of acceptance by Canadians, evidence of extraordinary need within a specific community and that their business plan relies on 9(1)(h) status.
7485 So our view is definitely satisfy all the criteria.
7486 COMMISSIONER SIMPSON: I give you full marks for acknowledging that some services that are in the 9(1)(h) envelope right now are services that you recognize as being exceptional but, you know, I can't help but notice that your tolerance or appreciation for exceptionality goes as far as the content, but not necessarily the need of those services to have to have a subscription revenue that goes along with it.
7487 I recall in another paragraph of your written submission that you had been referencing that there is no question that 9(1)(h) status benefits the service, your service, because those exceptional pieces of content I presume add to the exceptional experience you are trying to create for your customers, but in pulling out some anecdotal comments there was a reference to taxing everyone with cable or satellite services is essentially tantamount to what 9(1)(h) is all about, it's a tax, and I would like to ask you a bit about basic service in general and the costs of 9(1)(h) as it applies to basic.
7488 What has been interesting is that a lot if not most of the applicants that have come forward, either the incumbents or the ones seeking 9(1)(h) service, have indicated that they can't have one without the other, their product just doesn't work, and we hear from the BDUs, including yourself, that some 9(1)(h) services have merits, but the need to add cost to the basic service cost of a customer just doesn't wash in your eyes.
7489 What I want to start asking questions on is the basis cost of basic service.
7490 Now, 9(1)(h) comes as part of the basic package and as a cable customer I can't get at the specialty tiers above basic unless I buy basic. So assuming that basic is where you land most of your operational costs because you are spreading those costs over your entire subscriber base, do you put all of your operating costs as a system into the revenue return from basic service or do you distribute those costs on a cost-accounting profit centre, cost-centre basis throughout all the tiers?
7491 Do you have an idea of what basic is costing and if so could you tell me what that cost is?
7492 MR. MEHR: So, thank you for the questions.
7493 If you look at our relationship with our customers, we compete and sell our services primarily in a bundle and certainly in packaging and so the business of a basic-only television subscriber is not really a business that we are in and there is not that many of them. In this exercise I can appreciate the difficulties because you end up with where do you allocate your costs. Today we match our costs to our revenues and they are allocated throughout our lines of business.
7494 So if you look at what we brand as personal TV, which is our entry level TV service at $35, our direct network fee costs are slightly less than half of that today, moderately less than half of that today, but of course a customer that would only take that $35 service would not be a customer that we make money on by the time you do the installations, you do the free service calls, you do the equipment and capital and pieces for it. So we are certainly not trying to grow the stand-alone basic TV customer, it's really not a market that makes that much sense any more.
7495 I don't know if that's helpful.
7496 COMMISSIONER SIMPSON: Well, it's the first part of I think a chain of questions.
7497 MR. MEHR: Great.
7498 COMMISSIONER SIMPSON: There hasn't been a rate increase, with the exception of The Weather Network that has been imposed upon the BDUs since 2007 and assuming -- not assuming, knowing that every cable customer has to have basic service, the cost of basic service, along with the services as a whole that they may take, have been going up at often two, three, four, five times the rate of inflation and I'm curious as to why when it's my, perhaps naive, look of things that the cost of basic hasn't gone up.
7499 Your distance signal and your OTA signals are coming to you with a cost of carriage, which we know, and your 9(1)(h) has been a relatively understood and fixed cost for a good five or six years, and yet basic service has been going up and up and up and we are asked as a Commission to be sensitive to the decisions we make here in 9(1)(h) because the elastic seems to be stretching to the breaking point if we listen to all the BDUs telling us that there is a threshold that we are reaching and 9(1)(h) could put all of us in peril, the industry as a whole and the BDUs.
7500 So I would like to understand why basic cable is going up if your costs aren't.
7501 MR. MEHR: Yes. Thank you.
7502 So two things to think about there, if we can help share our point of view on that perspective.
7503 First of all, we can only -- most of my comments come from experiencing the western Canadian consumer market which is highly competitive and may not bear resemblance to some of the other markets in Canada. So it certainly hasn't been our experience that our entry level TV product has been going up and up and up, it goes up and down.
7504 Basic service was $42, today personal TV is available at $35. It includes 20 HD channels that it never included before, so there is an awful lot of extra value in that.
7505 So I think the market sets the price of basic TV and you can see from the pressure that we have been under from our subscriber numbers and the subscriber trends from both competitive sources within the system and competitive sources without the system that there is lots of things that move pricing, certainly in western Canada.
7506 To your point on cost, you know, we don't --
7507 COMMISSIONER SIMPSON: I should qualify that I meant cost of product, not necessarily cost of operations --
7508 MR. MEHR: Yes.
7509 COMMISSIONER SIMPSON: -- cost of programming.
7510 MR. MEHR: Yes. No, and I understand that.
7511 I think the difference is, though, when you look at our overall cost structure and the days of a straight pass-through mark-up structure is not really how we approach the business today.
7512 So if you look at the overall cost structure that we have in the business, you know we are investing intensely in capital, we have announced we are going to spend over a billion in capital next year, we launched a new satellite to create capacity to launch new services, which we are really excited about and we think the marketplace will provide a return on that, but that's a $300 million lifetime investment.
7513 When you look at the cost of just our base network fees, even though our subscribers are going down, we are losing customers, our network fees will go up 10s of millions of dollars next year just from what is in the system that already exists.
7514 So it's not that if there was another dollar added to our cost structure through this, it's not that it's that individual dollar that will directly get passed through, what we are saying is when you look at the overall cost structure of the business in the medium term it's going to find its way in some form to the consumer.
7515 You know, it's not clear where in that form it will take place. I hear the argument from some that we should increase the cost of the pay TV services in order to do that but, you know, pay TV is kind of our most competitive environment right now with the over-the-top services. It's not clear there's lots of room in home phone, certainly we know that the TV prices is under challenged. So it's overall cost structure and then trying to find a way to add enough value so that value for money in the marketplace can support pricing and I think that's generally our approach.
7516 COMMISSIONER SIMPSON: Okay. Thank you.
7517 The last question on this again has to do with you made just now a comment about how market pressures and market forces really are determinate in the costing of basic service, a while back we had kicked around the idea of skinny basic, you know, actually trying to find ways creatively to bring down the cost of entry into BDU subscription and it was kicked around the idea of reducing the number of services as a way to do it.
7518 That was met with a lot of resistance and I can understand why, because it handcuffs you into being limited in your innovation and I agree with that fundamental principle, but again I want to go back to the idea of how you -- the mindset with which you approach basic service because in a subscription environment getting the customer is everything. Getting that subscription and building that relationship and having an address to send a bill to is a thing of beauty, it's like getting an annuity, and retention is another.
7519 So if the market pressures and competitive pressures of new types of services are impacting you and we are coming along and we are trying to throw another log on the fire that you have to manage, are BDUs -- or is your particular industry or a player within the industry looking at ways to alternately price basic, so that if specialty is what the customer is really wanting, those wonderful services that are on those upper tiers that they have to pay for, by choice, are we at a point now where you have to sort of re-index the cost of basic and look at it as a bit more of a loss leader, and taking your hit there and then making it up -- you know, the swings and merry-go-round thing, where you start pricing the other tiers perhaps a little more aggressively for what they are, specialty, and basic being what it is, if not for the health of the BDU industry, which is challenged because it is getting into a period of flat growth, but just from the standpoint of being competitive and getting the subs and then not losing anybody.
7520 Do you understand what I am asking here?
7521 MR. MEHR: I do.
7522 I have a couple of thoughts. We share your view that we are maturing markets and that growth will be in the single digits and that double-digit growth days are gone.
7523 That having been said, we don't come here with a sense of the business is in trouble and we need your help. We have never been more optimistic about our business, about the opportunities in the digital space.
7524 We see in all of the new technology developments way more opportunity for Shaw and for our customers than we see drawbacks.
7525 I wanted to say that in terms of context.
7526 If you look at what we have done with our entry-level TV service, I think you have seen a certain amount of that today, and it's about differentiating ourselves from the marketplace, and it's about us partnering with programming partners.
7527 There are a couple of different programming models out there, and part of it is to embrace what the programming partners' models are.
7528 There are some programmers that have very high-end content, in which the vast majority of the revenue in their business model comes from advertising. Therefore, a large number of viewers is important to them.
7529 So we can, on a much lower subscription rate, give great value to our customers and build audiences for those services by putting them on much wider distribution.
7530 There are other services that have a business model that is primarily subscription driven, and advertising is a very small part of their business model. And the spot for those models in the value-for-money equation is on less penetrated tiers, where the consumer is choosing to pay that cost.
7531 So I think that is why you see some very popular services on our Personal TV, and it also distinguishes in the marketplace.
7532 We have been losing share in western Canada, and we have made a significant investment in sports. If you look at the price to be a Vancouver Canucks fan in Vancouver, you can get every Canucks game in HD for $35, and subscribe to only that. If you did that from our competitor, it would be significantly more expensive.
7533 So for folks that are not Vancouver Canucks fans, our competitor has chosen a pricing and packaging strategy that will appeal to those folks.
7534 The challenge with the loss leader argument -- and I hear that -- is that both in the system and outside the system people are taking less TV. So I hear the argument that says: The entry point doesn't matter because it's an annuity.
7535 That is actually not our experience. When we lose a customer to our primary competitor, they almost always package less than their historical package with us.
7536 When we win back a customer from our competitor, we almost always win them back, 70 percent of the time, at our entry-level TV package, often with lots of Internet and lots of phone.
7537 So the trick to say that we should make it up on discretionary services, there is lots of competition for video in the over-the-top space, and it's not quite as linear as it might seem.
7538 MR. BRAZEAU: Just to add, I think Jay alluded earlier to the loss leader and the opportunities to recover some losses on some leaders.
7539 Leaders are becoming -- there is less and less, and fewer and fewer of these leaders out there.
7540 On the cable side, Jay talked about cord shaving, and there is a lot of that happening. And that is also a very competitive marketplace. We can talk about how many customers we lose a quarter, and it is quite significant.
7541 On phone, we are seeing cord cutting on phone and people going to mobile and wireless.
7542 And on the Internet, we probably have one of the most competitive Internet markets in Canada.
7543 So the leaders there, as I said, are becoming harder and harder to find. So to suggest that somehow we can make it up on volume somewhere else is certainly not our view.
7544 COMMISSIONER SIMPSON: This will be my last question on this point, but I have to circle back to what you just said.
7545 The thing that we are hearing from BDUs and from customers is that, with an offering of 20 or 30 channels on basic, 20 of them are over-the-air, either distant signal or local, and customers are opting to throw an antenna up on the chimney and go back to getting that stuff over-the-air, at low cost/no cost, once they have paid for whatever hardware they need.
7546 The concern I have is that a lot of the services that are 9(1)(h) are not OTA, and in the course of them doing that, you have lost a customer and we have lost a way to get what we think is essential, important content to them, because it is coming through your system.
7547 I think the question is still valid that, out of an offering of 30 channels, 10 may be 9(1)(h), 20 may be OTA and distant signal, and if customers are saying, "I will take the 20 and leave the 9(1)(h) stuff," both of us have a problem.
7548 And I know there is a cost of carriage for OTA and distant signal. We understand that, but, still, there seems to be a pricing problem at the basic level that impacts everyone -- the consumer, the Commission, which has a desire to try and make sure that certain content is available, and you, as a customer.
7549 So I will just leave it at that.
7550 I'm sorry, I didn't mean to editorialize, but it is a concern.
7551 I am going to go into programming for a bit. We have been hearing a general characterization. Yours is the second BDU to come before us, but in the written submissions, we have been getting, I think, a really good, spirited set of responses back saying: Hey, when a product that is being offered and deemed by the Commission as being essential is given a green light, we accept that, because it is part of the responsibility, as well as the opportunity.
7552 But, mandatory carry is okay, but subscription fee is not okay.
7553 You have gone into that in great detail, in that you feel that a lot of services have merit, but not enough to justify guaranteeing them an income, and I am wondering if you have any comments on that.
7554 MR. BRAZEAU: I think a couple of points. One is, we think, as we mentioned, that certain services have merit, but there are alternatives to those services. Our question is: Maybe those alternatives are preferable to those services.
7555 So, if there are alternatives, are they really unique? Are they really exceptional?
7556 That is how we sort of see those services.
7557 They certainly fulfil a public purpose, and I think, for that reason, they are important, but could those public purposes be performed or be done through other services or other alternatives that are being discussed today.
7558 As for rates, I think what we are saying there -- on subscription rate -- I think we are saying: You have to justify it.
7559 I don't think we are saying no to any rate increase, but you have to justify those rate increases. And we have not seen, at least in the evidence provided by the applicant, that they have fully justified those rate increases.
7560 So it's not necessarily a no, it's just that I don't think they have made their case.
7561 COMMISSIONER SIMPSON: When it comes to a full 9(1)(h) being delivered to your doorstep, if there are cost issues that you take issue with, do you still then feel, if pricing is an issue, that you need to mark it up beyond the cost of carriage?
7562 MR. BRAZEAU: I think that Jay tried to explain that we don't necessarily mark it up -- and basic is not a self-sustaining product, where it has a certain cost structure to it. That is not how we run the business.
7563 Really, we look at all of our costs and all of our services, and that is how we determine what the prices are.
7564 Sure, we do packages and themes in trying to incite customers to buy our services, but we don't really look at basic as a standalone service with a standalone cost structure.
7565 I don't think we would say: Okay, there is a dollar increase as a result of 9(1)(h) decisions; therefore, we are going to increase our prices by $1.25.
7566 That's not how we look at the business.
7567 Jay may want to add --
7568 COMMISSIONER SIMPSON: We were hearing last week from applicants that, in discussions with BDUs -- because we always ask that question, "Have you talked to the BDUs before you came to us," and they are saying, "Yes, we have." But they are saying: "If I want to go in with a rate of X, by the time it comes out at the other end of the system, it is going to be twice X."
7569 Why are we hearing that?
7570 MR. BRAZEAU: Could you repeat the last sentence? I missed that.
7571 COMMISSIONER SIMPSON: In the conversations we have had with applicants, they are saying that they have had conversations with BDUs, and when they go in with a price of X, by the time it comes out to the subscriber of the BDU, it will not only have its cost of carriage recaptured, but it will wind up, likely, being twice the sub-revenue of the service.
7572 MR. MEHR: I suppose on specific applications, like pay TV movie services, that kind of model applies.
7573 In general terms, as we launch new products and services, we are launching them into existing packages, existing discretionary packages, but not increasing the price of the package.
7574 So, in essence, you are, again, building a little bit to your cost structure, and over the course of time you adjust your cost structure.
7575 So, for example, when we launched Sun, it was launched to relatively wide distribution in existing packages at a rate that we commercially negotiated with them. I suspect it's true of any commercial negotiation that we usually end up feeling like we've overpaid and that you should feel like they were underpaid, but that's where we landed.
7576 COMMISSIONER SIMPSON: You had another point that interested the -- on your written submission again. I'm sorry I keep going back to that, but it was a pretty fulsome document which I really appreciated. It was backed by research which is also appreciated.
7577 And on page 6, paragraph 13, you sort of waxed eloquently about your lens through which-- to try and help the Commission determine what is essential service. You know, you said essentially that essential service is needed. We appreciate that. We feel we have a responsibility to carry stuff that Canadians need as well as want, but there is a threshold.
7578 I mean, if someone is doing a service and it's a good service that there is not a need for a second or a third in essence. I'm paraphrasing.
7579 But I'm just wondering if you could talk to me about where that view comes from and does it universally apply?
7580 I mean, there has been a big debate about news services for example and we have a couple that are on right now. You introduced your news service and we've got Sun banging at the door wanting to get on.
7581 If I followed literally your interpretation of essentiality, the spirit of it, but the application being, you know, one is enough, then why do we have -- why did you add a new service to what already seems to be universal services?
7582 MS WILLIAMS: Yeah, sure. I think the opportunity for commercial services to add to, you know, diversity, a voice out there, is a great thing.
7583 And if Sun wants to, as they did, launch a new service and come and commercially negotiate their way into -- certainly with Shaw it was very wide distribution, and make a go of that then that's terrific. I think what we question is the need for them to then be somehow protected and subsidized when their big idea didn't maybe quite pan out the way they intended it to.
7584 News is one of those things where there can be a plethora of points of view and ways to express. And I think, as a distribution company we're okay with commercially offering a wide variety if we can come to terms, and we did.
7585 I think the frustration is to think that somehow a particular point of view when it didn't turn out to resonate as well with customers as in with Canadians as they might have thought, that the result then is, well, somebody maybe pay me to do it because I couldn't figure out how to do it myself.
7586 MR. FERRAS: Yeah, and I think the important context of course is 9(1)(h). So in the competitive world, discretionary world, everyone has to compete whether you're a BDU, whether you're a programming service and the door is wide open. The Commission has created open licencing for us.
7587 So when we're talking 9(1)(h) though, that's very different when someone is coming in and trying to justify that they're exceptional in the context of 9(1)(h) when those costs go into basic and they have an opportunity to enter the market in another way.
7588 Because we were very sensitive to, you know, the cost of basic and managing the composition. The value of basic is absolutely critical as Jay was explaining. That's how we, you know, managed -- respond to that issue of, well, what would go on basic. Your basic services, basically you're on a ramp to your business. If you don't get that right you've got some problems.
7589 So just that context for that comment in the paragraph was 9(1)(h) services.
7590 COMMISSIONER SIMPSON: On the subject of carriage, one of the comments we hear a lot, and not just in the 9(1)(h) hearing, but in general, has to do with tiers. Where I'm going with this is the issue of discovery of Canadian content.
7591 We've got a preoccupation of making sure that Canadian content, Canadian culture, Canadian information and stuff that we feel is important for a variety of reasons is found. It's been my impression from talking to programmers that getting on the train is one thing. Finding the right seat is another.
7592 The difficulty is that -- and again, I'm going to talk about movies now -- we heard from Starlight that there is a lot of content out there. We say, yeah, and we see the bills for it because a lot of that content has been subsidized by the Canadian taxpayer in one form or another, or by the BDU, or by the broadcaster.
7593 So we know that that stuff is out there but it isn't being seen. And being seen is tantamount or the net result of discovery.
7594 So my question is first on this: Why is it difficult to find -- why are you not aggregating types of services in neighbourhoods so that content can be found logically and compared like a movie service next to another movie service, a news service next to another news service?
7595 MR. MEHR: Well, let's -- I guess our opening comment on that, in terms of content neighbourhoods, is we think it's a good discussion. Because what we like about the discussion is instead of being anchored and forcing economic models on Canadians it's anchored in consumer experience.
7596 We've heard the discussion of news where you can see the consumer experience where you would flip between the various sources of information and get a diverse point of view.
7597 So we like the concept that -- we like the discussion because it's anchored in the customer experience. I think any time we hang onto the customer experience that's helpful. The other thing we like about the discussion is that it's anchored in audience development.
7598 I think one of the missing pieces in our system is the collaborative effort to build audiences. Our Canadians have choices and they consume video and lots of it through all kinds of different sources. They need to choose to be in the system.
7599 So to the extent that we cannot only layer costs into the system but create audiences for all of this content, I think it's in all of our interest.
7600 What I -- the reason we haven't historically packaged in terms of neighbourhoods, and we certainly had this conversation, it's simply a changed management exercise for consumers. You know, as we've launched channels they tend to have been launched sequentially.
7601 If you were launched as part of the Tier 3 package in 1996 we'd kind of bundled the like services that were part of that 14-channel package together. But as we've launched new services incrementally we haven't picked up and moved those services. That's why in Calgary CNN is on 29 and Fox is on 142 and MSNBC and so forth.
7602 I think it's a valid discussion. We wouldn't want to re-shift the channel lineup every single time a new lineup was channeled because I think consumers get used to finding their services where they like to find them.
7603 Arguably, in a fully digital world the actual channel placement doesn't make as much sense. It doesn't have the importance that it has. But when we have the audience development conversation, we're certainly leaning towards the thinking, certainly around news, that news neighbourhoods would make sense.
7604 We would make the argument, though, that that's something that commercial entities could work together on. I don't know if it is legitimate logically in all of our best interests. I don't know that we need to be mandated to do it. I think we should just do it.
7605 COMMISSIONER SIMPSON: I totally agree. Because right now, frankly, if it's not done and with a real concerted effort to getting it done once, it's like renovating your whole house as opposed to room to room. It's a little like walking into Safeway and the soap is next to the meat. You just don't know where to go for what.
7606 What I'm trying to give you some possible thought on is, that a lot of the issues that we're trying to deal with here, are not a question of getting on the services that is getting found.
7607 So the next question I've got for you on that subject is we heard from Starlight that they need this service because Canadian movies have to be discovered and seen. I was looking at my notes and coming to a bit of a fork in the road because, you know, I had always assumed that BDUs were carrying Canadian movies particularly on their VOD.
7608 I was wondering if you can tell me a bit about what your movie content, Canadian movie content is like on your VOD service and, also, whether on the theme of consolidation, a Canadian VOD service is something that solves a lot of problems.
7609 MR. FERRAS: Sure. Well, we've always been really big supporters of video on demand. It's been a major preoccupation for Shaw and I think we've constantly made that point to the Commission.
7610 We see it as a competitive weapon against over-the-top competition. So we do spend a lot of focus and resources on that. Of course, the Commission does require percentages of Canadian feature films which is 5 percent for the English and 8 percent for the French- language feature films.
7611 We have put a lot of effort into that and I -- you know, at any time there's probably you know, hundreds of English Canadian feature films that are available on the service and probably dozens of Canadian French-language services.
7612 I think over the last couple of years, going back to our renewal in 2011 to now, the amount of titles that we've acquired, they don't always stay in inventory, have doubled.
7613 And we have, you know, probably 30 or 40 genres of content or buckets of content in that service and including Canadian English and Canadian French-language services. So we really do put a lot of work and time into that and really respect the need to have Canadian feature films in the system.
7614 I don't know, Jay, if you want to add anything.
7615 MR. MEHR: No. Barb?
7616 MS WILLIAMS: Yeah, and I think your key question was, is there an opportunity to build a unique VOD Canadian film service?
7617 I think that actually kind of gets to the heart of our reflections on the Starlight application. That is to try and separate out clearly what the opportunity or challenge is around the Canadian film industry, theatrical film industry and what role 9(1)(h) may or may not play in that and is there a smarter, better, more forward-looking way to address the issue?
7618 I think -- I mean, I think you're on to something.
7619 I think there is such an opportunity now to put content on various platforms and encourage people to find content in new ways, and I think it's a very old fashioned way to assume that the only way we're going to get any attention is to put it all in one linear service and force that linear service into a home and think by some, you know, great act of God, therefore, people are going to turn it on and suddenly watch Monday nights to find the Quebec films and Wednesday night to find the whatever.
7620 I mean that frankly is, from my point of view, a very old fashioned approach to curating content and encouraging Canadians to find it. And to sort of force what feels like may be a real issue around how do we want to deal with the theatrical film industry in this country, to kind of force that into a 9(1)(h) solution, really seems to me to be mixing, you know, mixing tools.
7621 I don't -- I don't see that the 9(1)(h) tool is really what -- is reflective of what the real issue is.
7622 I feel as I think you said the other day, this is not about not respecting the value and the quality of Canadian film. It's there and it's substantial and we, as a country, need to think about if, in fact, we have an issue there and what the right way is to approach it.
7623 But I think to look backwards and say we're just going to hammer it into an old fashioned linear service and, you know, collect it all in one spot and force it into someone's home and that will solve the problem, I think really misses the point.
7624 I think thinking about a VOD service, thinking about how to partner with Netflix, thinking about a lot of other much more forward-looking ways, thinking about -- I mean, look what NFB has done with their website and bringing their film library forward in a much more aggressive way. So many people have discovered content that they didn't know was there before.
7625 So I acknowledge that there may be a conversation that still needs to be had about the next steps in the Canadian theatrical film industry, but I am really baffled by the idea that 9(1)(h) is the tool.
7626 It sort of feels to me in some way like it's a -- it's a fund, is really what it is, that we kind of buried or twisted around a 9(1)(h) idea in order to make this fund happen and yet, it's a fund, then, that doesn't have the scrutiny or the oversight or the transparency that all of our other funds have. It's a fund that -- I think, if I understood correctly, it's a fund that ultimately has the exclusive television rights in perpetuity, to sit in the hands of that channel owner.
7627 Well if I've understood that correctly and I reflect on our business, even when we fully finance a project, outside of tax credits, which I think is the same model they're looking at, we sure don't own exclusive Canadian rights in perpetuity for that financial investment.
7628 There's just a lot of mixed up stuff going on in that application that felt to me like they were just really trying to force-fit something into a 9(1)(h) solution, and I'm not sure we wouldn't be better off to step back and think about what that problem really is.
7629 They address an original programming criteria with a commitment to eight to ten films, so an original programming criteria of 16 to 20 hours a year, the first of which won't even come for three years. Well, as a programmer of a specialty channel, you don't build a channel on 16 original hours a year.
7630 I mean, this is a library service with an enormously high repeat factor, there's -- again, I -- following their numbers, I think I have it right, there is about 3,000 films in the current Canadian Film Library. There is 60 to 70 new films made a year, I think.
7631 Even if they licensed every single one of them, the repeat factor on this channel is very high and yes, a clever programmer can keep reorganizing and resorting and -- but I am not sure why we think a generation of new Canadians who are interested in discovering Canadian film are going to find that format to their liking today. It's just -- it was a bit baffling, to be honest.
7632 MR. FERRAS: I'm just going to add, one of the other things that we talked about in trying to understand the channel was the economic erosion that could happen to subsequent windows for Canadian feature films. Basically, Starlight would be a universal pay television service on the basic service.
7633 So we are trying to understand, well, what does that mean to the value of a window if you are a pay-per-view operator, a speciality operator offering movies or a VOD service and you have commitments to respect Canadian content and you are trying to acquire rights.
7634 So we think that there could be some window erosions, some economic erosion that needs to be thought about here.
7635 MS WILLIAMS: Well, in some ways, at the heart of it -- sorry, this one, I really have spent some time trying to figure this one out.
7636 MR. MEHR: I've hit a nerve here.
7637 MS WILLIAMS: At the heart of it, you know, on the one hand I think I understand 9(1)(h) to be about some extraordinary need in some sort of unique way that the commercial system will never support, and that's why it kind of needs this special treatment, because we acknowledge the system overall would benefit from it, and there is no way to commercially afford to do it on its own.
7638 And yet, their surveys, again if I was capturing all this right, their surveys were suggesting that, depending on the questions, 70, 80, 87 percent of Canadians want this. So if there's this vast desire and -- well, like, go out there, get a licence, launch a service, make it happen. That's what we do when we are trying to argue that we should get a licence, we go and we prove how many many people want it.
7639 We don't go and prove how many people want it and then say -- and, therefore, we need someone else to pay for it. Like, in some ways it feels like they need a bank loan, not a 9(1)(h) protection. Like, I am just -- are they mass, are they niche? It's just sort of all over the place a little bit.
7640 COMMISSIONER SIMPSON: Thank you.
7641 MS WILLIAMS: I could stop now.
7642 COMMISSIONER SIMPSON: I can't help but detect, though, that you know that there is an essence of not only want, but need. Your own research, strategic analysis and research, I found really -- first of all, very helpful, but also very thought-provoking in looking at your specific question on Starlight.
7643 I couldn't help but reflect on the fact that 50 percent of the respondents were either strongly in support, moderately in support or neutral to the idea of having, for sake of argument, better access or more fulsome access to Canadian content, which -- it tells me something. So I'll just leave it at that, but I am sure that you caught that as well.
7644 Can I ask a capacity question, please? We hear a lot of arguments that BDUs have a capacity constraint and that you're constantly having to find new ways to move stuff to through the existing pipes and build new pipes and constantly upgrade the network to handle capacity.
7645 Is this still the case? Are you still having to deal with capacity issues to be able to keep up?
7646 MR. MEHR: Sure. You know, I think if you talked to J.R. as he started our business, he has always talked about how it's a fantastic business, but it's a capital-intensive business and the capital has always been to build networks. And, you know, 40 years later it's really not any different.
7647 I think what's different about it is that the consumer is demanding the capacity in a variety of different ways.
7648 So, for sure, the largest portion of our capital investment goes to build internet capacity. It goes to build internet pipes for faster speeds. There is a portion of our capacity investment that goes towards the VOD network, which is not insignificant. I think people under-estimate the percentage of our total spectrum and what goes over four years to the VOD system.
7649 And when I say the VOD system, a very small portion of that is transactional VOD, a very, very small portion of that. Most of that is customers consuming content that they subscribe to, either as part of the basic service or not on an on-demand basis, as the marketplace shows.
7650 And then there is demand for -- there is certainly demand for capacity for broadcast television. So I don't know that the business has fundamentally changed.
7651 For us, we are coming out of a period where we have been at peak capacity and where capacity is at a premium, and in both of our core businesses we have made multi-hundred-million-dollar investments in the last 24 months that are just coming to fruition.
7652 So, the Anik G1 satellite is now successfully up in space and that's great news for us. It will be activated over the course of the next couple of months, and so we have a period of time where you are going to see a tremendous number of services come to market in the satellite business. Similarly, our digital network upgrade's second phase, which is the largest phase of it, will be completed by August 31st.
7653 So, on the cable side, you are going to see a significant number of new services come to market. And so I think we are in a period where we have an opportunity to work commercially with our programming partners and take advantages of opportunities in the marketplace.
7654 But, you know, we used to say, when I started in the cable business, somebody would say to me, this is the last plant upgrade we are going to have to do, and inevitably when you finish one, you just start the next one. And I think even though there is a bunch of capacity that we have even invested into about to come into the system, it's only reasonable to assume that a year or two down the road we'll have to take the next step jump.
7655 That having been said, again as we have said before, this is our business. That's what we do. That's -- our customers pay a lot of money for our services and we invest that back in in capital.
7656 COMMISSIONER SIMPSON: So, when --
7657 MR. BRAZEAU: So, just one remark thereto. I mean, we shouldn't -- understanding the positive externalities resulting from those investments for the country are enormous, and the digital economy is the based on those investments that we make and our competitors make. So it's also very, very important and crucial for the entire economy when we make those billion-dollar-plus investments.
7658 COMMISSIONER SIMPSON: No doubt. But I guess the question that's plaguing me is, are we at a point in time, if capacity constraints and capital constraints are such, with a flattening market, that we have to -- is it time to start looking at culling the herd a bit? Do we need time-shifted channels? Do we need extra distant signals from Rhode Island coming into Vancouver via Fox and CBS? You know, is it time to rethink that?
7659 MR. BRAZEAU: The over billion dollars that we are spending next year to build the network is being provided to us from customers who are choosing to pay us on average $120 a month. And so, in a competitive environment with huge regulated and unregulated choices, the customer is really in charge.
7660 And so I think that's naturally going to happen that there will be winners and losers in the marketplace, but I think in terms of the -- and, of course, the vast, vast, vast, vast majority of our services are Canadian, but I think it's the customer that picks the winners and losers in the marketplace and I think -- I think that will naturally happen.
7661 COMMISSIONER SIMPSON: Then, why aren't we seeing more pick-and-pay options?
7662 MR. BRAZEAU: We are seeing a tremendous amount of choice. We have lots of channels available on a pick-and-pay basis. Because of the nature of the pricing model, there is a lower network fee on a tier packaging and so consumers tend -- certainly, the trend with us has been a middle ground, we have seen a massive growth in our theme packs, customers migrating in the hundreds of thousands away from traditional tiers into targeted theme packs. And the theme packs at $10 for ten like-minded channels seem to have found the sweet spot for our consumers, as opposed to individual channels that are being packaged in the $5, $6, $7 range.
7663 We have seen an extraordinary growth in pick-and-pay on the multi-cultural side and certainly we have 20 multi-cultural services, many of them new, that are thriving in that base. But it does appear that the, just, value-for-money equation, customers are finding the smaller theme packs as the place they want to go for choice. But pick-and-pay is certainly available for consumers.
7664 COMMISSIONER SIMPSON: Okay. Those are my questions, Mr. Chairman. Thank you very much.
7665 THE CHAIRPERSON: Thank you.
7666 Okay, so I have one question. I gave a heads up to people on Friday that I would be asking this because, of course, when we were asking questions of V-Interact and this relates to the Sun News application, some allegations have been made there about the distribution, and you have talked about it.
7667 But since we are an evidence-based decision-maker and not an opinion-based decision-maker, I wouldn't mind having some more evidence on an issue.
7668 And so, we have a worksheet that has been made available in the public exam room dealing with the various news services available. Have you had a chance to get a copy of that?
7669 MR. SHAIKH: We don't have a copy of the worksheet, but we've given a heads-up to Calgary that they need to prepare one.
7670 THE CHAIRPERSON: Okay. So, would it be -- it wouldn't be a problem then for you to fill in that worksheet, which basically identifies the Canadian/non-Canadian news services that you distribute on your systems and talk about channel placement and wholesale rates?
7671 MR. SHAIKH: They are preparing that response to the undertaking.
7672 THE CHAIRPERSON: Okay. For the second of May?
7673 MR. SHAIKH: That's right.
7674 THE CHAIRPERSON: Great. Thank you very much. Those are our questions for you.
7675 COMMISSIONER MOLNAR: I have a question.
7676 THE CHAIRPERSON: Oh, sorry. Sorry. Commissioner Molnar has a question for you.
7677 COMMISSIONER MOLNAR: Thank you. Good morning. I just have actually a quick question. I want to clarify something you said in your statement here.
7678 Speaking of the request by the Legislatures of Nunavut and the Northwest Territories, you say on page 4 that:
"Given the capacity that will be made available on Anik G1, Shaw Direct is open to working with the applicant to discuss distribution."
7679 Tell me exactly what you mean by that?
7680 MR. MEHR: Certainly we have a strong view that Legislative services, in general terms, are not required as an 9(1)(h) service or basic carriage, and there are lots available and communications means either the Internet and others that keep the electorate fully-informed.
7681 We are quite open that the service in those communities is always different, for a number of reasons, one is Internet service is different and there is all kinds of cultural pieces. So we think, as a service made available on Shaw Direct, that it may well make business sense for us to do so, and so I think with the capacity that we have on Anik G1, we will certainly reach out and try and carry that service on Shaw Direct.
7682 COMMISSIONER MOLNAR: Okay. I want to understand better what you just said.
7683 MR. MEHR: Okay.
7684 COMMISSIONER MOLNAR: You will reach out and try and carry that service. So, we would leave here with no commitment that you will carry this service, you will reach out and try.
7685 I mean, they were here and said that they sent you a letter in 2011 and they have had no response. So, absent us mandating this, what kind of assurance would we have that you would reach out and more than try, that you would reach a solution to carry this service?
7686 MR. MEHR: Sure. That's an excellent question. Give me 12 seconds.
7687 MR. MEHR: Based on our understanding of the business model, which is without a network fee, we are prepared to launch the service on our direct-to-home basis.
7688 COMMISSIONER MOLNAR: Thank you very much.
7689 MR. BRAZEAU: We will be responding to their letters.
7690 COMMISSIONER MOLNAR: And you will cc us where it says, "We will carry your service"?
7691 MR. BRAZEAU: cc for sure.
7692 COMMISSIONER MOLNAR: Thank you very much. Those are my questions.
7693 THE CHAIRPERSON: Thank you. Legal counsel has a couple of questions for you.
7694 MR. McCALLUM: Yes, thank you, Mr.Chair.
7695 When you add a channel to your basic service, what does it cost you to add a channel, excluding the wholesale fee?
7696 MR. SHAIKH: I'll start and then Jay can jump in. Again, I think, you know, people view the basic service as a stand-alone service with a stand-alone cost structure and a stand-alone profit centre, and it's just not that.
7697 Adding capacity adds cost. Jay and I sit in all of the quarterly calls with the analysts and every analyst complains about our capex being too high. Our capex is 25 percent of gross revenue.
7698 So those costs have to be recovered somehow and, you know, the basic package is just part of a service that we have to invest in, that we have to grow the capacity.
7699 Jay talked about us losing customers and we are increasing our Call Centre capacity. We are hiring more people, so that's more cost.
7700 So, it's not just, well, here's an extra dollar, you know, how much -- you know, how much are you going to raise your rates by? It's more than that. It's a lot more than that, and those rates have to reflect the additional costs that we incur.
7701 Jay, I don't know if you want to add anything there.
7702 MR. McCALLUM: When parties say that they estimate 100 percent mark-up from the wholesale fee to what the BDU will eventually charge, is that a reasonable estimate of the mark-up?
7703 MR. MEHR: I don't understand how you get there from here. My sense is that if there is a 9(1)(h) services licenced out of this hearing, that our costs will go up and -- so let's say just because -- and it's ideally less than this, but just doing simple math, if there's a dollar in fees that come out of it, that's $36 million a year for our company. That will align with the other elements of our cost structure to guide pricing structure over a multi-year basis.
7704 It's -- probably, day one, there will be no direct rate increase in the first month, I don't know how we would do that and pass that through. I think we would look at it sequentially along with all of our other costs and figure out how it would go. So I don't know how you can even calculate mark-up in that kind of calculation.
7705 MR. McCALLUM: So, basically, if I understand it right, to calculate the mark-up, you have to put in the cost elements that go into that. Is that what I understand your answer to be?
7706 MR. MEHR: Yes. Our answer is that we have a market-based pricing model, not a cost-based pricing model, and so all of our costs will go into the cost structure that we'll lay out of a multi-year basis, and we we'll look at the forces in the market and adjust rights up and down based on what we think the market will bear.
7707 Obviously, if you adjust rates upward, it has an impact on your subscriber levels and we are currently losing subscribers. So, there's a -- there's an X and Y and a Z in the calculation as opposed to -- as opposed to a straight cost input with mark-up.
7708 MR. McCALLUM: So what would be the cost implications for Canadians, generally speaking, if there was mandatory distribution of some services with no wholesale fee at all?
7709 MR. BRAZEAU -- and Jay can add, but even -- I mean, the wholesale fee is part of the cost. There are other -- there are other elements to the cost and, you know, at the end of the day, what we have experienced is that our costs usually -- normally go up every year.
7710 As I have said, we hire more people who -- you know, our call centre gets -- it's a Canadian call centre, it's in Calgary, Toronto, Vancouver, Montreal. We hire more people, and so -- to deal with customers.
7711 So it's hard to answer this question because you are looking at it very differently than we're looking at it and we're almost talking at cross purposes here, so -- Jay, I don't know if you want --
7712 MR. McCALLUM: But for our reference, could I take it from your answer that 100 percent mark-up to any wholesale fee is not unreasonable under the circumstances? Assuming it's greater than zero, 100 percent is not unreasonable under the circumstances?
7713 MR. BRAZEAU: You've got to lose the notion of a mark-up. I mean, there is -- if the prices -- if this decision, out of this hearing, and the Commission's decision is to increase, or to have a number of 9(1)(h) services that mean about a dollar increase a month for those services, we are not going to multiply that by 50 percent. That's not the way we operate our business.
7714 So that's why when you say a mark-up, I don't really understand what a mark-up means and maybe -- you know, some of the people appearing in this hearing could explain to us what they mean by this mark-up because we're not quite sure what they mean at this point. So that's, unfortunately -- we would like to be helpful here, but again, that's not how we run the business.
7715 MR. McCALLUM: All right, thank you.
7716 I'll ask two questions in slightly different area.
7717 The first one is that several of the applicants have been asked about what would be the impact on them if the Commission issued a 9(1)(h) order that their service must be offered by broadcasting distribution undertakings as opposed to mandatory carriage on basic.
7718 If the Commission were to impose must offer status on some services, what would be the impact on Shaw of such an order?
7719 MR. BRAZEAU: Again, are the applicants promising that none of our customers will call us because of that service, because if they do, then that has a cost on us, or that that service will not consume bandwidth, because it will consume bandwidth.
7720 So there are opportunity costs arising out of introducing these services and even though there's not a specific rate for that service, there are costs associated with providing that service that we have to deal with.
7721 And that's why I suggest that -- and I think Jay alluded to there won't be, you know, a day after the Commission's decision, a $5 rate increase. You know, that's not how these additional costs will be reflected in our prices.
7722 They will go through our normal, you know, budgeting process and we'll look at the cost and we'll look at, you know, the CAPEX we have and we'll deal with the company as a whole, not as individual services or individual groups of services.
7723 MR. McCALLUM: Even if certain services were offered on a -- or ordered of a must offer basis, is it reasonable to assume that another service would have to be bumped or moved or realigned in order to make place for the must offer service?
7724 MR. MEHR: Because there's a test of exceptional, I don't think that the number of services that could, even in a broad definition of that term, be launched on that basis would provide us with capacity difficulties.
7725 You're making choices on how a limited capacity is going to be used. We accept that the criteria that you have is the perfect platform to make those choices and, in short, we can make that work.
7726 I think we do need to be cognizant, without taking -- I think we can make that work without taking services down. I think we do need to be cognizant that we're spending future capacity that could be used for other things, but we think the 9(1)(h) framework is right, and however you choose to apply it, we can absolutely make that work.
7727 MR. McCALLUM: Thank you.
7728 Shaw also has certain terrestrial services -- BDU systems that would be exempt systems, I would imagine?
7729 MR. FERRAS: Yes.
7730 MR. McCALLUM: And certain of the applicants have said that they would like to have mandatory distribution not only on licensed systems but also exempt systems, at least one that have between 2,000 and 20,000 subscribers.
7731 How would it impact Shaw if an order included some exempt systems between 2,000 and 20,000 subscribers?
7732 MR. FERRAS: Well, I think everything that we've said so far about 9(1)(h) and capacity and that we're expanding capacity and what is a 9(1)(h) service would also apply to exempt systems.
7733 We have -- I think the comment I would make about our exempt systems is if you look at their line-ups, and Jay can correct me, they're very similar to the Class 1 systems. So even though they're exempt, we work really hard to get those systems up and have a very substantial offering.
7734 So whatever the Commission decides to do with 9(1)(h), we would be able to manage it through our exempt systems. It might be a little bit tougher but that's how we try to run the business.
7735 MR. McCALLUM: That's good. Thank you, Mr. Chair.
7736 THE CHAIRPERSON: Thank you. Those are our questions.
7737 But before you go, I was informed this morning of the passing of Charles King and I know he's a colleague of yours and we express our sympathies.
7738 MR. BRAZEAU: Thank you very much.
7739 THE CHAIRPERSON: So let's proceed to the next presenter, which is Canadian Cable Systems Alliance.
7740 Thank you very much.
7741 THE CHAIRPERSON: So, welcome, gentlemen. As is usual, I will just ask you to identify your panel and make your presentation and you will have 10 minutes. Go ahead, please.
7742 MR. EDWARDS: Good morning. I am Chris Edwards, Vice-President, Regulatory Affairs for CCSA.
7743 With me today are two members of our board of directors:
7744 - Eric Banville, Director of Operations for DERYtelecom, based in La Baie, Quebec; and
7745 - Keith Stevens, Chairman of Execulink Telecom, based in Thedford, Ontario.
7746 Eric and Keith speak both as operators and as CCSA board members for CCSA's membership in general.
7747 CCSA opposes all of the applications for mandatory distribution on the digital basic service that are the subject of this hearing.
7748 CCSA also opposes the applications by APTN and Avis de Recherche for significant increases to their authorized wholesale rates.
7749 This proceeding is about whether any of the services that have applied for 9(1)(h) orders have something truly exceptional to contribute so as to deserve the extraordinary privilege of mandatory carriage on basic.
7750 The Commission has said it would issue such orders "only in exceptional circumstances where the channels fulfill important policy objectives under the Act."
7751 The onus is on each applicant to demonstrate that it meets that test of "exceptional" importance.
7752 The Commission must apply its criteria strictly. Mandatory distribution on the BDUs' basic service should be ordered only when no less intrusive measure is available.
7753 If the Commission does decide to grant mandatory carriage orders, it should design such orders to be minimally intrusive. Each of the applicants' objectives could be met with an order framed to apply only to BDUs operated by the largest integrated media companies.
7754 Such orders should not, in our view, be flowed through to the existing Small Systems Exemption Order.
7755 I'll turn it over to our members to speak to the effect such orders have on their systems and their customers.
7756 First, Eric Banville of DERYtelecom.
7757 M. BANVILLE : Mes salutations à Monsieur le Président et les membres de la Commission.
7758 DERYtelecom se spécialise dans la télédistribution analogique, numérique et HD, les services d'accès Internet haute vitesse et la téléphonie résidentielle, et ce, au Saguenay-Lac-St-Jean, à Charlevoix, dans la région de Portneuf, au Bas-Saint-Laurent, puis en Montérégie. Notre siège social est localisé à La Baie au Saguenay-Lac-St-Jean.
7759 Nous comptons, aujourd'hui, plus de 29 000, soit 7 143 abonnés en analogique et 21 980 abonnées en numérique. Notre base analogique, vendue 31.25 dollars par mois, comprend 32 chaînes, dont 26 spécialisées. Notre base numérique, vendue 34.50 dollars par mois, comprend 44 chaînes, dont 39 spécialisées, auxquelles nous devons ajouter 45 chaînes de musique en continu Galaxie et plus d'une vingtaine de chaînes à la carte Indigo et Viewers Choice.
7760 DERYtelecom offre un appui à l'essor des petits câblodistributeurs afin de doter les populations régionales de services de télécommunication diversifiés et à des prix compétitifs. Plus d'une dizaine de petits câblodistributeurs reçoivent nos services de télévision et d'Internet actuellement.
7761 Le marché de la télédistribution a bien évolué au cours des cinq dernières années. La multiplication du nombre de chaînes disponibles, et le coût s'y rattachant, a provoqué un changement de la demande chez nos clients.
7762 Alors qu'ils réclamaient un maximum de chaînes au forfait de base, nos clients réclament aujourd'hui un maximum de chaînes disponibles à la carte sous le principe d'utilisateur-payeur. Nous croyons donc fermement que les chaînes obligatoires à la base sont une méthode dépassée. La mesure actuelle va à contresens des demandes du marché.
7763 Actuellement, la clientèle se plaint de payer trop de chaînes pour lesquelles ils n'ont pas d'intérêts. C'est pourquoi nous pensons que cette mesure augmentera significativement l'insatisfaction des clients.
7764 Nous sommes d'avis que les mesures à venir devraient accorder un maximum de flexibilité à la clientèle, qui devrait avoir le choix de son mode d'abonnement, et ce, considérant l'ampleur de l'offre télévisuelle.
7765 Nous comprenons mal une mesure qui force 100 pour cent des clients à payer pour une chaîne intéressant une minorité. Comment une telle mesure sert l'intérêt collectif? Nous sommes en désaccord de faire porter la charge de leur financement à l'ensemble de la clientèle.
7766 En raison de notre pouvoir de négociation limité dû à notre taille, nous n'avons d'autre choix que d'offrir un maximum de chaînes spécialisées à la base de sorte que nous chargeons actuellement le minimum du coût raisonnable pour opérer, mais déjà élevé comparativement au marché. Augmenter le nombre de chaînes, donc le coût de la base, se révèlera très néfaste pour notre compétitivité.
7767 Également, il est à noter que notre réseau de câble est déjà à pleine capacité, considérant l'Internet, les services numérique, HD et analogique. Ces services occupent actuellement presque 100 pour cent de notre bande passante.
7768 L'ajout de chaînes nous forcera à retirer des produits pour offrir des chaînes que les gens ne nous demandent pas, alors qu'en ce moment, nos clients nous réclament plus de chaînes SD en format HD, plus de vitesse Internet.
7769 Les clients ont déjà beaucoup de choix en termes de distributeurs, et c'est d'autant plus vrai considérant la multitude de contenus vidéo disponibles sur Internet. En radiodiffusion comme ailleurs, combler le besoin des clients est au centre de notre industrie. Forcer le client à payer pour un produit qu'il ne souhaite pas consommer va à l'encontre des principes du libre marché.
7771 MR. STEVENS: Good morning, Mr. Chair and Commissioners.
7772 Execulink is a small TSP operating primarily in rural southwestern Ontario. Execulink offers video, local telephone, long distance, cellular and Internet access services.
7773 Execulink provides video services to just over 2,500 customers in 10 small southwestern Ontario towns. In total we offer 331 channels including music, pay-per-view and super sports, as well as video-on-demand.
7774 Our employees live in the towns we serve. They know their neighbours well. They know what they want and what they don't want. What our customers want is to have choice. They want to choose which channels they subscribe to and watch. What our customers don't want is to be told what channels they have to take and pay for. They definitely don't want to pay more for existing channels they have already been forced to take regardless of whether they watch those channels or not.
7775 The existing group of must carry signals is begrudgingly accepted by most of our customers. We do, however, regularly receive complaints. Given an option, our customers would prefer to have the number of must carry signals decreased, not increased.
7776 A requirement to add any of the proposed channels to the basic service will only intensify our customers' existing frustration. Very few, if any, of our customers would consider any of the proposed must carry signals exceptional enough to warrant mandatory carriage. In my own opinion, none of them meet the established criteria.
7777 When, in the customers' perspective, the cost of unwanted must carry signals outweighs the inconvenience of alternate providers, the customers will cancel their services -- and it is forever. Very, very few customers come back to cable TV once they have left.
7778 Execulink has lost video customers to foreign satellite providers and to the Internet. If new must carry signals are mandated or existing must carry providers are allowed to increase fees, I am concerned that the consequence of the resulting fee increases will be a new wave of customers cancelling their services -- and that will be forever.
7779 Execulink attempts to provide as many choices as possible to our customers. The result is our co-axial cable network is near capacity. If we had to add all the proposed must carry signals, we would have to either discontinue some of our existing signals or upgrade our complete network.
7780 Execulink's 109-year history is rooted in telephone service. In my 40-year career, I have been part of the telephone service evolution from a paternalistic monopoly to a customer-driven industry. The result is far superior service, quality and choice. That is the direction we should be taking in broadcasting.
7781 Thank you for listening to our concerns and I urge you to deny all of the applications for mandatory carriage and increased rates.
7782 MR. EDWARDS: As the Chair recently put it, the Commission has a fresh determination "to put Canadians back at the centre of their communications system."
7783 The Chair also emphasized that the CRTC's regulatory approach must reflect the needs and interests of Canadians. "That means that quality, choice and affordability must be factored into everything we do."
7784 That is entirely consistent with the attitude of our members' customers. The common refrain of Canadian consumers for decades now has been, "Why can't I just buy the channels that I want to watch?"
7785 The Commission has set a very high standard for evaluation of applications for mandatory carriage status. That standard requires that to secure such status BDU carriage of a service on basic must essentially be:
7786 - necessary for the good of the broadcasting system; and
7787 - necessary to the economic viability of the applicant's programming service.
7788 CCSA does not believe that any of the applicants for new 9(1)(h) orders has met those tests. All of the applications for new mandatory carriage orders should be denied.
7789 If the Commission does decide to grant mandatory carriage orders, such orders should be designed to apply only to BDUs operated by the largest integrated media companies. Such orders should not be flowed through to the Small Systems Exemption Order.
7790 Thank you for your time and attention.
7791 THE CHAIRPERSON: Thank you.
7792 Before we ask questions we will take a break if that's okay with you because we've been up here for a little while. So let's take a 10-minute break and come back at 10:40. Thank you.
--- Upon recessing at 1028
--- Upon resuming at 1040
7793 LE PRÉSIDENT : Donc, à l'ordre, s'il vous plaît.
7794 Commissioner Poirier vous posera... Madame Poirier vous posera des questions. Je devrais faire une phrase dans une langue ou l'autre, pas moitié-moitié.
7795 Madame Poirier.
7796 COMMISSIONER POIRIER: Yes, and I think the discussion will be in French and English, so make sure you have your translation device because we have a representative of a French company and an English one.
7797 And because we have a restraint in time, if one gives an answer and the other one approves it, you don't have to go further unless you have something else to add. And I'm sure it's different from one company to another, so the answer might be a little bit different from both of you.
7798 My first question. Because I know you're representing 100 companies and each has its market, its way of doing things, family companies, I wonder, if we allow mandatory distribution for a new channel, how will it impact small and independent distributors? Will it be similar to the impact on big BDUs or is it different because you have small businesses?
7799 MR. EDWARDS: I think -- sorry, I was noticing Shaw's comments earlier, that even for their exempt systems they thought they could manage the capacity to a degree.
7800 I think probably the biggest issue here for the small systems is a capacity issue. Most of them are still hybrid analog-digital systems. They're carrying a number of analog channels and they're really struggling for capacity, particularly for capacity to meet the up-spike in demand for broadband Internet speed.
7801 COMMISSIONER POIRIER: M'hmm. And that's why probably today in paragraph 9 you write:
"Such orders should not be flowed through to the existing Small Systems Exemption Order."
7802 What would be the impact on your operations if we required mandatory carriage for the services that are exempt services?
7803 Et vous pouvez répondre en français pour DERY.
7804 M. BANVILLE : La majorité des câblodistributeurs présentement qui sont exemptés peuvent offrir environ une vingtaine de canaux. Il n'ont déjà pas la capacité. Ils sont seulement à 300MHz. Donc, ils n'ont déjà pas la capacité d'en rajouter. Donc, quel serait l'impact? L'impact, c'est qu'ils ne seraient tout simplement pas en mesure d'ajouter les canaux par manque de capacité.
7805 Il faut comprendre également que la majorité des petits câblodistributeurs... pas la majorité, mais plusieurs câblodistributeurs n'offrent même pas le numérique. Donc, il y a beaucoup de câblos, dont des câblos membres de la CCSA, qui n'offrent pas le numérique, qui n'offrent pas l'Internet, qui offrent seulement une petite base analogique.
7806 CONSEILLÈRE POIRIER : Cependant, je vois que vous dites au paragraphe 15 que votre forfait de base numérique, à 34.50 dollars, comprend 44 chaînes...
7807 M. BANVILLE : Oui.
7808 CONSEILLÈRE POIRIER : ...dont 39 spécialisées.
7809 M. BANVILLE : Oui.
7810 CONSEILLÈRE POIRIER : Est-ce qu'il n'y aurait pas moyen de retirer des chaînes spécialisées pour permettre à celles qui auraient l'obligation de distribution d'être présentées? Il y a de la capacité.
7811 M. BANVILLE : Dans les faits... Je comprends la question. Cependant, la majorité... je dirais toutes les chaînes que nous offrons sont sous contrat. Donc, de casser un contrat pour déplacer la chaîne, il n'y a pas beaucoup de programmeurs qui accepteraient ceci.
7812 CONSEILLÈRE POIRIER : Et les contrats ont des durées de...?
7813 M. BANVILLE : Trois à cinq ans.
7814 CONSEILLÈRE POIRIER : Trois à cinq ans. Ça pourrait donc se faire, mais peut-être graduellement, à ce moment-là?
7815 M. BANVILLE : Ça pourrait se faire, mais encore là, notre mission, c'est vraiment de répondre à la demande de nos clients. Donc, si une chaîne... Considérons qu'on pourrait... le contrat serait à échéance, qu'on pourrait re-signer un nouveau contrat, que la chaîne actuellement au service de base serait en forfait, est-ce que le programmeur, de un, accepterait cette notion? Parce qu'il y a certaines chaînes qui vont demander 80 pour cent de pénétration. Donc, est-ce que nous avons des forfaits à 80 pour cent de pénétration? Je vous réponds, dans DERYtelecom, la réponse est non.
7816 Donc, nous n'avons vraiment pas le choix de laisser cette chaîne sur le service de base si un programmeur demanderait un pourcentage de pénétration aussi élevé. Donc, ce n'est pas si facile que ça peut paraître.
7817 CONSEILLÈRE POIRIER : Que ça peut paraître.
7818 M. BANVILLE : Oui.
7819 CONSEILLÈRE POIRIER : Alors, sur les 44 chaînes, 39 sont spécialisées, et les cinq autres sont des services de distribution obligatoire? Que sont-elles?
7820 M. BANVILLE : Over-the-air.
7821 CONSEILLÈRE POIRIER : Pardon?
7822 M. BANVILLE : Ce sont les chaînes disponibles dans les airs. C'est ce qu'on appelle des chaînes...
7823 CONSEILLÈRE POIRIER : Over-the-air?
7824 M. BANVILLE : Over-the-air, oui.
7825 CONSEILLÈRE POIRIER : Okay. Parfait!
7826 Any comment on this, Mr. Stevens?
7827 MR. STEVENS: Yes. I agree very much with what Eric said. I mean, our challenge is we have more capacity than some of our fellow CCSA members, but going back to Commissioner Simpson's analogy of a grocery store, we filled all our shelves up because we want to sell as much as we can. If we want to add more channels, we're going to have to pull something off the shelf and put something else on.
7828 COMMISSIONER POIRIER: And you're not planning to increase?
7829 MR. STEVENS: Well, we will eventually, but, you know -- and I think I agree with what Shaw said, eventually we're all going to have to keep increasing capacity but it doesn't happen -- you know, it may take several years before that happens. It can be very capital-expensive.
7830 And we're also having great competition right now for people who want more and more Internet, and that's all bandwidth. So if we give them a channel, we may have to give them less Internet or another channel. So there's no magic adding on, I mean, to do that. That's where the challenge comes.
7831 COMMISSIONER POIRIER: So capacity is the major issue --
7832 MR. STEVENS: Capacity, Commissioner, yes.
7833 COMMISSIONER POIRIER: -- with this hearing for you?
7834 MR. STEVENS: Yes.
7835 COMMISSIONER POIRIER: At paragraph 37, you say today that very, very few customers come back to cable TV. Do you have numbers to provide us that there is some cord-shaving or...?
7836 MR. STEVENS: Well, you know, it's just anecdotal because I mean we are slowly losing customers. We lose customers to our competitors, local competitors. Whether it's Shaw or Bell or whatever, we lose customers to those people.
7837 But we also lose some -- and we try to find out when they leave where they're going -- to the American satellites, which I know aren't supposed to be there, but they're there, and also to people just saying they just want to use the Internet, they're going to get it off the air, over the top. Not a lot but it's there and we don't see those people come back. And this is just what our staff are saying, because I mean we're a small town, they know the people, they just don't come back.
7838 COMMISSIONER POIRIER: But you have no numbers?
7839 MR. STEVENS: No, in have no numbers. No, just anecdotal.
7840 COMMISSIONER POIRIER: Okay.
7841 Et monsieur Banville, avez-vous des chiffres qui nous disent qu'il y a vraiment une diminution des gens qui sont dans le système traditionnel?
7842 M. BANVILLE : Il y a une diminution au niveau de... Si on regarde la courbe d'abonnés, il y a une diminution. On a vu également des abonnés qui vont canceller, qui vont annuler leur service de câble pour seulement garder l'Internet et la téléphonie.
7843 Pourquoi est-ce qu'ils font ça? Bien, il semble qu'il y a de plus en plus de contenus vidéo également disponibles sur Internet. Mais on voit que le nombre d'abonnés de télévision descend, tandis que le nombre d'abonnés d'Internet augmente.
7844 CONSEILLÈRE POIRIER : Vous avez des chiffres?
7845 M. BANVILLE : Au niveau de nos chiffres à l'interne, il y a certains chiffres, oui.
7846 CONSEILLÈRE POIRIER : Qui le prouvent directement?
7847 M. BANVILLE : Oui.
7848 CONSEILLÈRE POIRIER : O.K. Est-ce-que vous offrez les services à la carte? Je le sais que c'est populaire au Québec et que les gens l'offrent de plus en plus, mais vous?
7849 M. BANVILLE : Considérant notre offre que nous avons au service de base, considérant également la difficulté à négocier, parce que les pourcentages de pénétration demandés pour des chaînes très populaires sont très élevés, on n'offre pas beaucoup de services à la carte. C'est très, très minime.
7850 COMMISSIONER POIRIER: So that's why I'm surprised. You say we don't offer à la carte, but please make sure in this hearing to fulfil the consumer needs, they want à la carte services and you should be the one to think about it, the Commission, but you don't offer it to your clients.
7851 MR. EDWARDS: If I can address that?
7852 Eric was speaking earlier about the contracts and we always have to bear in mind that behind these services are contracts for wholesale provision of services, they involve packaging requirements, very often constrain pick-and-pay packaging or impose pricing on it that makes it very difficult to do.
7853 COMMISSIONER POIRIER: Mr. Stevens, do you offer à la carte services?
7854 MR. STEVENS: Yes, we have a few. We have some, yes, and we are trying to do that.
7855 COMMISSIONER POIRIER: Some.
7856 MR. EDWARDS: Some. We would like it to be more, but the same issues that Chris mentioned is it's contracts and it's how to work those details out.
7857 COMMISSIONER POIRIER: Okay. Let's talk about mark-ups, okay.
7858 How much does it cost you to add a channel to your basic service, excluding all the sale fees?
7859 MR. EDWARDS: I don't know if either is going to be able to give you a number, but I think they can speak to the types of costs that are involved.
7860 So perhaps Eric, you might do that.
7861 COMMISSIONER POIRIER: Yes.
7862 M. BANVILLE : Bon, c'est sûr qu'il y a toujours la partie marketing, la partie qu'il faut aviser nos abonnés. Donc, ça l'a un coût.
7863 Un des coûts également qui n'est pas négligeable, c'est la source de la chaîne. C'est-à-dire est-ce qu'il faut la prendre par satellite, est-ce qu'on doit s'interconnecter avec un autre plus gros câblodistributeur? Donc, il y a des frais à cela, que ce soit des frais fixes ou des frais mensuels.
7864 Il y a également des frais rattachés à l'achat d'équipement, l'achat également des licences, parce qu'au niveau numérique, maintenant, il y a des licences qu'on doit payer annuellement pour les équipements aux fournisseurs.
7865 Alors, de là à pouvoir mettre un mark-up sur vraiment combien ça coûterait à rajouter une chaîne, c'est extrêmement difficile parce que ça dépend vraiment de la provenance de la chaîne, puis ça dépend également, dépendamment des réseaux, si, de un, on a la capacité. Si on n'a pas la capacité, alors, on ne peut pas rajouter la chaîne.
7866 Mettons qu'on a la capacité, est-ce qu'on doit racheter des « groomers » -- excusez-moi l'expression anglaise -- des « groomers » supplémentaires, des licences supplémentaires? Alors, c'est très difficile.
7867 Je comprenais tantôt la question qui disait, est-ce que c'est le double du prix? Je vous dirais bien que c'est difficile à dire. Une chaîne qui vaut 4 sous, est-ce que c'est 4 sous que ça nous coûte? C'est sûrement plus que ça, mais je ne pourrais pas vous dire exactement combien ça coûterait, considérant ce que je viens de vous expliquer.
7868 COMMISSIONER POIRIER: So, Mr. Stevens, what would be the impact of new mandatory distribution services on your consumers? Would it double, would it --
7869 MR. STEVENS: No. I heard that comment before "double" and sort of it baffled me, I agree with the statement of Shaw. Because double $0.04 is a lot different than double $.45. It makes no sense saying it's a markup -- a proxy for your fixed costs to have a markup on a very variable fee.
7870 Double $0.00 would not cover our cost, double $.45 may well more than cover our costs. So I think that whole notion of doubling costs is a notion that shouldn't be given any credence. It doesn't make any sense at all.
7871 COMMISSIONER POIRIER: So on what should we rely then to try to understand what are the consequences on consumers if we allow some mandatory carriage?
7872 MR. STEVENS: No doubt, I mean there are costs. I mean there's also that trade-off, too, if we have to take channels off, you know, we will save some costs there, but also we will lose revenue from our opportunity cost for revenue for those, too. Also being the small companies that we are in the CCSA members, we don't really get to set our rates. Our rates between -- our competition sets our rates. I mean if we don't -- if we aren't competitive, we are not in business anyway.
7873 So I understand the Commission's challenge. If they are proposing $0.04 what's the cost going to be, more than $0.04 cents, you know -- but I really couldn't -- I mean it would be very hard to do that.
7874 And each company is going to be much different. I mean some companies have many, many headends, many, many cities they serve, others may be linked together by fibre, they are quite different. The cost structure for each of those is going to be significantly different.
7875 COMMISSIONER POIRIER: So it's difficult to estimate?
7876 MR. STEVENS: Very difficult. And everyone is going to be different. Everyone is going to be different.
7877 COMMISSIONER POIRIER: Okay. So if we no longer allow some services to be mandatorily distributed, will the price go down for consumers?
7878 MR. EDWARDS: I think there's a preliminary answer to the question, which is, if you take away the mandatory distribution right is the cable company necessarily going to drop the surface. One of the main things the cable companies care about, as far as I understand it, is disrupting the consumer.
7879 Certainly at the CCSA level I don't see a lot of companies necessarily dropping services just because they lose a 9(1)(h) designation, because the customer has it on the dial, expects to see it there.
7880 Now, if there is a tremendous need to recover some capacity for something else, that might happen, but that's going to be a decision taken seriously by the cable operator I think.
7881 Then, having made that decision to take it off are they going to save some money? I suppose they would.
7882 COMMISSIONER POIRIER: But it means the broadcaster would have to renegotiate with you and maybe the wholesale fee would go down. I'm thinking mostly of Vision TV, okay. They are a group afraid to lose their double status and they are asking for mandatory distribution and they would have -- if we don't go in the direction of their request, they might lose money because they will have to renegotiate.
7883 MR. EDWARDS: You have had a lot of interventions from private citizens, seniors in particular --
7884 COMMISSIONER POIRIER: Yes.
7885 MR. EDWARDS: -- who are very concerned about losing that channel and I think, you know, one of the things to think about when you think about CCSA is these rural cable companies by and large --
7886 COMMISSIONER POIRIER: That's it.
7887 MR. EDWARDS: -- who have an older demographic, who have a lower income demographic and I suspect very few of the CCSA members would actually pull Vision off their systems at this point.
7888 Either of you can speak to that.
7889 MR. STEVENS: The idea of any pulling, we don't want to pull any signals because even though maybe a small number of people like it, or a large number, you are going to disrupt our customers. We don't want to disrupt our customers and give them a reason to leave.
7890 So we don't like pulling any channels, but we also don't want to -- that's also why we are very careful to put channels on, because once they are there they are hard to take away. So that's why we are cautious on the whole thing, we want to do that very cautiously.
7891 COMMISSIONER POIRIER: Okay. Thank you for the straightforward answer.
7892 Are you once in a while asking for money to distribute some services, because we heard this last week during the hearing.
7893 Are you asking to be paid by a service to distribute it?
7894 MR. EDWARDS: I think what you are referring to is administration fees and CCSA, in some cases, charges programmers administration fees for the service that we provide in managing the whole billing structure and the accounts receivable for 100-odd companies with 1000-odd systems.
7895 So we operate quite a sophisticated billing operation that calculates the payments based on penetrations and volumes under all of these various contracts and that is a fee-for-service sort of arrangement.
7896 I will say that it's becoming less and less common.
7897 COMMISSIONER POIRIER: We heard many of the independents telling us that it's difficult when you have a Cat B to be distributed.
7898 What do you think about that statement?
7899 MR. EDWARDS: I think depending on the nature and the quality of the service it can be very difficult to get distribution on the very large BDUs.
7900 I think the smaller companies are more capacity challenged. If it's a question of putting it on basic, that might very well be difficult again, but generally in terms of being a service a place on one system somewhere, in a digital theme package for instance, it's probably not that hard to do.
7901 M. BANVILLE : Si on a la capacité, le seul problème qui reste, c'est le pourcentage de la pénétration demandée par les programmeurs. Des fois, c'est des pourcentages de pénétration irréalistes comme 80 pour cent, comme je donnais comme exemple.
7902 Considérant, mettons, que nous aurions la capacité s'ils demandent... il y en a des fois qui demandent aucun pourcentage de pénétration, puis on a la capacité, on est très ouvert à pouvoir offrir la chaîne. Ce qui vraiment... ce qui détruit l'argument, c'est quand ils demandent des pourcentages de pénétration irréalistes.
7903 CONSEILLÈRE POIRIER : J'ai presque terminé mes questions.
7904 Je voudrais revenir maintenant au fameux rapport Strategic Counsel Survey.
7905 Beaucoup de demandeurs, la semaine dernière, nous ont dit que le questionnaire n'était pas crédible parce qu'il y avait des questions qui étaient biaisées, par exemple, des questions comme on utilisait le mot « forcé », que vous le vouliez ou non, en voulant dire vous allez être obligés de payer, et cela réduit beaucoup la crédibilité du questionnaire de Strategic Counsel Survey.
7906 Qu'est-ce que vous en pensez?
7907 MR. EDWARDS: I participated in all of the phone calls with the group that commissioned the survey by a reputable survey firm and I can attest to the fact that the parties on the phone call were very concerned with doing the survey fairly and not influencing the results.
7908 The particular language I think that's complained of there was taken by the survey company directly from the CRTC's language in the Public Notice. There was one word, "mandated" was changed to "forced" I think --
7909 COMMISSIONER POIRIER: Yes.
7910 MR. EDWARDS: -- and that was a question of making it plain English.
7911 COMMISSIONER POIRIER: Yes.
7912 MR. EDWARDS: I think that was the only change that was made to that language.
7913 So in my personal opinion --
7914 COMMISSIONER POIRIER: But it has been criticized, okay.
7915 MR. EDWARDS: It has been criticized.
7916 In my personal opinion every effort was taken to make sure that survey was fair, neutral and legitimate.
7917 CONSEILLÈRE POIRIER : Ok. Alors, M. Président
7918 MR. EDWARDS: I think I need to put the question back to you.
7919 So the question is: How is a cable company going to choose which services --
7920 COMMISSIONER POIRIER: Yes.
7921 MR. EDWARDS: -- regardless of 9(1)(h) orders --
7922 COMMISSIONER POIRIER: That's it.
7923 MR. EDWARDS: -- which services it will place on its system to satisfy the 1 to 10 rule?
7924 COMMISSIONER POIRIER: Yes.
7925 MR. EDWARDS: And in the reverse, if you are a Francophone system which Anglophone services are you going to pick?
7926 COMMISSIONER POIRIER: Yes. But let's talk about the French services.
7927 MR. EDWARDS: Let's talk about the Francophone.
7928 So I think the obvious answer is popularity of the service, you know, the attractiveness to consumers. Wholesale prices is going to be a factor in that. The contractual requirements for packaging will be a factor in it.
7929 I suppose that's the answer there.
7930 COMMISSIONER POIRIER: Yes. And there is no specific consideration for channels that give a better service to the minority communities with official languages?
7931 MR. EDWARDS: You know what, I really can't speak to how the individual members are making that decision about how to comply with the 1 to 10 rule.
7932 COMMISSIONER POIRIER: Yes. Maybe Mr. Stevens can.
7933 MR. STEVENS: I mean our challenge where we are in Southwestern Ontario, northwest of London, the number of French people there I can probably count on one hand.
7934 COMMISSIONER POIRIER: Okay.
7935 MR. STEVENS: So it's a very -- you know, if they were recommending -- I mean they would probably talk to our staff. We may well consider that, but, you know, it's going to be very hard for us to do that. We may rely on some of our other members that know what they recommend and go as a group, too.
7936 COMMISSIONER POIRIER: Okay. So you don't really know what are the rules, okay --
7937 MR. STEVENS: No.
7938 COMMISSIONER POIRIER: -- and the preferences.
7939 Maybe a last topic, I forgot, it's on film, Canadian film.
7940 You all offer VOD services?
7941 M. BANVILLE : Non.
7942 CONSEILLÈRE POIRIER : Vous, non.
7943 You do?
7944 MR. STEVENS: Yes. Yes, we do.
7945 COMMISSIONER POIRIER: Okay. Do you have a big inventory of Canadian films?
7946 MR. STEVENS: No. We are fairly new in that game and just starting to build and relying on getting our sources from other providers. So we are new in the game so we don't have a lot I can answer or tell you one that.
7947 We would like to offer as many as Shaw, et cetera, does, but we are not there yet, that's for sure.
7948 COMMISSIONER POIRIER: And do you think your answer risks all the other members of the CCSA?
7949 MR. STEVENS: I think, Chris, you may know.
7950 MR. EDWARDS: I think a number of the larger members certainly are more established. I think of Access, Westman, and so on.
7951 COMMISSIONER POIRIER: Yes.
7952 MR. EDWARDS: I really can't speak to the percentage of their inventory that is --
7953 COMMISSIONER POIRIER: Okay. But I could conclude there is little Canadian film on VOD in the CCSA service providers?
7954 MR. EDWARDS: Well, they would be meeting the license requirements.
7955 COMMISSIONER POIRIER: Okay. The minimum.
7956 MR. EDWARDS: Yes.
7957 COMMISSIONER POIRIER: Five percent in English and 8 percent in French?
7958 MR. EDWARDS: Yes. And I suspect companies like Access are probably doing more than that, but I can't tell you that for sure.
7959 COMMISSIONER POIRIER: Okay.
7960 So thank you, Mr. Chair.
7961 THE CHAIRPERSON: I think there will be a question from legal counsel, but before we go there, you probably have heard me ask for more information on the distribution of news services available on systems. I know you are at the Association and not necessarily the systems themselves.
7962 Would it be possible for you to complete that worksheet?
7963 MR. EDWARDS: I have had an opportunity to look at the worksheet. We can undertake to do best efforts to get you information.
7964 I know there is one column we cannot fill, which is the channel placement one, because what we will have to do here, considering 110-plus companies in over 1,000 systems, each with their own line-ups in many cases, what we would have to do is go to our billing system and put the information from that automated system and that doesn't include channel placement information.
7965 But most of the other columns, other than the rate for à la carte offerings we might not be able to pull out. But other than that, I can undertake to get you a report out of our billing system that will answer most of this.
7966 THE CHAIRPERSON: So except for those two columns?
7967 MR. EDWARDS: Yes.
7968 THE CHAIRPERSON: Would it be possible however where you can get the information with respect to a given system on those two columns to include it?
7969 MR. EDWARDS: Within the timeframe given, very doubtful.
7970 THE CHAIRPERSON: Perhaps from the larger systems?
7971 MR. EDWARDS: We can try that.
7972 THE CHAIRPERSON: How about the three largest systems?
7973 MR. EDWARDS: Okay. We will undertake to provide that to you.
7974 THE CHAIRPERSON: That's great, thank you. That's for May 2nd.
7975 Legal counsel...?
7976 MR. McCALLUM: Thank you.
7977 Certain of the applicants were asked about receiving a must-offer status as opposed to a full 9(1)(h) distribution on digital basic and provided answers for the record.
7978 What would be the impact on small BDU's that you represent if the Commission were to mandate some of the services on a must-offer basis?
7979 MR. EDWARDS: I think the basic answer our members would give you, and they can amplify, but it's still a capacity demand and that's a challenge.
7980 MR. STEVENS: Can I just to add to that?
7981 Whether it really goes on basic for our system, whether it goes on basic or one of the other packages isn't the deciding factor, it's do we have enough capacity to do that.
7982 Me McCALLUM : Et ce seraient les mêmes réponses pour vous, Monsieur Banville?
7983 M. BANVILLE : Oui. J'en ai parlé un petit peu tantôt. C'est vraiment une question de capacité.
7984 En supposant que nous avons la capacité, quel serait l'impact sur nos réseaux, considérant qu'on pourrait prendre la chaîne et la placer dans un forfait déjà existant?
7985 L'impact serait, toutefois, minime parce que nécessairement, ce n'est pas des chaînes qui vont coûter 3 dollars en termes de redevances. Mais le problème est vraiment la capacité. Si on n'a pas la capacité, si on est obligé de... que ce soit au service de base ou dans un forfait, on n'est pas plus en mesure d'offrir la chaîne.
7986 Me McCALLUM : Merci, Monsieur le Président.
7987 LE PRÉSIDENT : Merci beaucoup, messieurs. Ce sont nos questions, et nous allons aller au prochain panel maintenant.
7988 So let's just take a 2-minute break to let the next panel set up.
7989 Thank you.
--- Upon recessing at 1105
--- Upon resuming at 1108
7990 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
7991 Hello and welcome. As is usual we will ask you to identify the members of your panel and make your presentation.
7992 Thank you.
7993 MR. LIND: Mr. Chairman, good morning. I want to thank you first of all for referencing Charles King this morning. It's a sad day for a lot of us.
7994 My name is Phil Lind and to my immediate right is Ken Engelhart. To his right are Pam Dinsmore, David Purdy and Peter Kovacs. To my left is David Watt.
7995 Sitting behind me are Suzanne Blackwell of Giganomics and Chris Kelly, the well-known researcher of The Strategic Counsel.
7996 Mr. Chairman, Rogers believes the Commission got it right in 2010. In making its criteria for granting mandatory orders more stringent, the Commission signaled that any further section 9(1)(h) designations would be rare and would have to be balanced against consumer demands in a rapidly evolving digital environment.
7997 This proceeding is a stress test of that framework. A clear set of rules is a good thing only if it can withstand best efforts to circumvent it. Unfortunately, many of the applicants in this proceeding are trying to do precisely that. Most of them have not demonstrated that their proposed services are exceptional and meet the Commission's criteria for 9(1)(h).
7998 As the Commission foresaw three years ago, Canadians are demanding more choice and flexibility. They are less willing to accept services that are forced upon them.
7999 Mandating basic carriage for select services runs counter to this trend. It also raises the cost of basic service by forcing consumers to subsidize channels with limited appeal. As the consumer research conducted by The Strategic Counsel confirms, Canadians do not want to be forced to subscribe to these proposed 9(1)(h) services. When consumers were presented with a description of the service and the wholesale fee, none of the services garnered majority support.
8000 We believe that we are at a tipping point in the evolution of the Canadian broadcasting system. Our customers can choose competitive, unregulated options for entertainment services if they are unhappy with the regulated system. The Commission must carefully weigh the merits of any of the proposed services against this reality.
8001 While time constraints prevent us from addressing each application, we will speak to three in particular -- Starlight, Sun News and Vision TV -- all of which fail to meet that test.
8003 MS DINSMORE: Starlight is not proposing to offer an underrepresented category of programming.
8004 It is simply wrong when it says Canadian feature films are not available to consumers on linear TV. In today's world, movies are ubiquitous. They are available everywhere and on every conceivable platform Canadians use.
8005 There were almost 11,000 broadcasts of Canadian theatrical feature films on linear channels in 2012, a number that has doubled since 2008. Approximately 25 percent of these films were aired in primetime. This means that, on average, five Canadian feature films were aired in primetime by linear broadcasters every single day.
8006 Canada's linear broadcasters are providing far better access to Canadian feature films than movie theatres. In 2011, Canadian feature films only had a 0.9 percent share of box office revenues, but 17 percent of the movies aired on linear television were Canadian feature films.
8007 With respect to conventional television, Mr. Lantos said, and I quote:
"You will never stumble onto a Canadian film on a conventional over-the-air Canadian network ever."
8008 This is simply not so. Our own City station continues to broadcast Canadian feature films, even though the Commission removed the condition requiring their airing two years ago.
8009 Last broadcast year, City devoted more than 60 hours to Canadian feature films. And this year these films are being aired in prime time almost every Saturday night in Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal.
8010 And evidence of the ubiquity of Canadian feature films isn't limited to the linear platform. In response to consumer demands for more choice and flexibility, on-demand platforms have become the go-to destinations for movie-watching.
8011 On our Rogers on Demand platform, Canadian feature films are well represented and easy to locate in two folders titled "O Canada" and "Canadian Flicks". Those folders currently offer a choice of approximately 245 English Canadian feature films.
8012 Another 100 titles are offered for free through SVOD extensions of other pay and specialty services.
8013 By this summer, close to 1,000 Canadian movie titles will be available on a VOD basis. That amounts to almost one-third of all the Canadian feature films ever made.
8014 In response to competitive threats from over-the-top and other BDUs like Bell, we are expanding our VOD service and will eventually offer virtually every Canadian feature film ever produced.
8015 And our customers are using this platform. Last year, 80 percent of our digital customers used VOD at least once, and last month, 50 percent of our customers, almost 850,000, used the on-demand platform. In the 2012 broadcast year, close to 11 percent of VOD movie orders were Canadian.
8016 In addition, new online services like Rogers Anyplace TV, as well as a plethora of over-the-top services, are acquiring rights to all kinds of Canadian feature films. These are widely available to Canadians.
8017 Cable operators across North America are launching subscription online and on-demand services, such as Vidéotron's Illico, that will make even more movies available to consumers.
8018 Clearly, there is no Canadian feature film void. Viewers are able to access movies, including Canadian films, from multiple sources. And they are able to get them whenever they want and on the device of their choosing.
8019 We were, therefore, not surprised when the Strategic Counsel Research showed that a majority of those surveyed did not support paying for the Starlight channel as part of their basic service.
8020 As a final comment on the Starlight application, it is proposing to create only 8 to 12 movies a year, at a cost of $22 million, as its contribution to original Canadian programming. Assuming that each film would be close to 90 minutes in length, Canadian subscribers would be forced to pay well over half a billion dollars, over seven years, to support the production of what amounts to 12 to 18 hours of original content a year. Such a small contribution to the system would certainly not qualify as "exceptional" under the CRTC's 9(1)(h) test.
8021 MR. ENGELHART: Sun News is seeking basic carriage to address its concerns about competitive equity and the need for exposure. These are not part of the 9(1)(h) criteria.
8022 With the exception of CBC Newsworld, no other news service has received mandatory basic carriage.
8023 Sun News is not asking the Commission to grant it the same distribution rights that had been given to other news services. What Sun News wants goes far beyond turning the clock back to a "dual status" era. That distribution status was also accompanied by other regulatory mechanisms like genre protection and competitive licensing. We assume that Sun News is not asking for those to be reinstated. The fact is that, even if we did go back in time, Sun News could not have obtained a licence in the 1994 and 1996 licensing rounds because it would have been seeking to operate in the same genre as CBC Newsworld.
8024 Mr. Teneycke portrays Sun News' fight for access as a struggle between a small independent broadcaster and vertically integrated BDUs. That is inaccurate. Sun News is not a small independent broadcaster. It operates as part of one of Canada's largest vertically integrated media companies.
8025 Further, it is the vertically integrated BDUs that Mr. Teneycke villainizes that carry his service, while a number of independents, TELUS and MTS, do not.
8026 On Rogers' systems, Sun News is distributed in standard definition on Channel 142 and in high definition on Channel 567, beside CityNews on Channel 566. It is broadly distributed in the following 5 packages: Digital VIP, Digital Plus, News Theme Pack, Ultimate Specialty and Customer Choice.
8027 It is also offered on a pick-and-pay basis at $2.79 a month, roughly half of which is remitted to Sun News.
8028 Today, more than 1.26 million of our 1.7 million digital cable subscribers subscribe to the service. This represents 71 percent of our digital subscriber base. The revenues earned by Sun News and its penetration on our systems are greater than those realized by each of CNBC, FOX News, Headline News and MSNBC.
8029 Mr. Chairman and Commissioners, it is important to note that Rogers did not force these carriage terms on Sun News. They were negotiated as part of a comprehensive agreement in 2011 between us and Quebecor.
8030 There is no issue here of undue preference or unfairness. We offer Sun News on terms that Quebecor negotiated less than two years ago. And, from what we can see, we offer the service in a similar way to how Vidéotron offers it. Neither BDU has it on basic.
8031 With respect to Vision TV, the Commission ruled in 2007 that it did not meet the less stringent 9(1)(h) criteria in place at that time. If Vision TV did not meet the test then, it certainly does not satisfy it today.
8032 ZoomerMedia's whole argument is premised on the sky-is-falling scenario that, unless it is granted 9(1)(h) status, all BDUs will move Vision TV from basic to a discretionary religious package. The same argument was made by Vision TV six years ago and was rejected by the Commission.
8033 MR. LIND: Mr. Chairman, what these applicants are asking the Commission to do is to revive a regulatory framework for the carriage of specialty services that was abandoned years ago. Their proposals are flawed. They are indifferent to consumer demands and industry trends. They do not satisfy the stringent test for granting 9(1)(h) orders and should be denied.
8034 We would be pleased to answer any questions that you may have. Pam Dinsmore will be our quarterback, but she will be ably assisted by Ken.
8035 THE CHAIRPERSON: Excellent. Thank you very much for your presentation.
8036 I have two bundles of questions. The first is more general, and the second deals with specific services.
8037 The first question deals with a comment you have made in a number of places, but I am going to point to one in particular, at paragraph 9 of your written submissions, where you say: "We do not believe that it serves anyone's interest for the Commission to hold a public proceeding to consider mandatory carriage requests involving applications that obviously do not comply with the criteria or that have already tried and failed to achieve mandatory status."
8038 Am I to read that that you think we do not have a duty to hear applications?
8039 MS DINSMORE: No. Mr. Chairman, obviously you have a duty to hear applications. That is fair and that is your job, and I am well aware of that, I have been through the system, as you know.
8040 These applications do cause a lot of work for a lot of people. There is no question of that. Some of them, in our view, seemed to be applications that didn't seem fully fleshed out, necessarily. Some of them didn't have full financial information, or not financial information on the public record, necessarily.
8041 The Commission will do what the Commission must do, and we are not trying to second-guess that, but we did have that perspective on these applications.
8042 THE CHAIRPERSON: Thank you for that. And we will, of course, hear your views as we shape our opinions on this.
8043 On page 139, and going throughout your presentation today, you seem to -- obviously, and fair enough to do that -- one of your major premises is that there is competition in the marketplace. At paragraph 139, in particular, you talk about the fact that if, for instance, one BDU doesn't carry something, another BDU might, and potential subscribers could move between satellite, IPTV or terrestrial BDUs.
8044 I have heard it said, both at this hearing and elsewhere, that there are costs to switching BDU subscribers. There is a natural lethargy in the marketplace. Wouldn't you agree that there are barriers to switching, and that maybe competition doesn't actually fully play its role, as the perfect marketplace would?
8045 MR. PURDY: Thank you, Mr. Chairman. I think my comments would be that it is certainly an imperfect marketplace, and I wouldn't argue that there are no barriers to switching providers, but I don't think we have ever seen such frenzied competition in the core TV or cable TV marketplace than you are seeing today.
8046 If you look at Shaw or Rogers or any of the local cable incumbents, they are all experiencing extreme pressure from the IPTV providers in the marketplace.
8047 Historically, one of the encumbrances in switching used to be putting a satellite dish on the roof. The IPTV providers no longer have that impediment.
8048 So I think you are seeing much more aggressive or extreme competition in the marketplace.
8049 Just to give you one example of a programming network that was ultimately carried because of competitive pressures, when Hollywood Suite first launched, I was not a big fan of the service, neither the product definition nor their adoption of new platforms like video-on-demand or broadband.
8050 But my competitor did carry Hollywood Suite, and after a series of months of looking at ads that basically said "Only available on my competitor's channels," coupled with their improvement in the product definition, I decided to carry the service, and we are actively now engaged in a negotiation where we would give them perhaps even broader distribution than their current à la carte offering.
8051 So I think it's not a perfect marketplace by any means, but certainly there are competitive pressures, and I am loath to live without a service that my competitor has.
8052 THE CHAIRPERSON: Just not on basic.
8053 MR. PURDY: The services today that we are talking about, I think, would not deliver the same competitive pressures that Hollywood Suite did, because most of the services we are talking about here today are not of a compelling enough nature that they would cause somebody to switch.
8054 I would say that the one exception might be Vision TV, which has some pretty strong programming on it, in the form of Downton Abbey, which is perhaps one of the most popular TV shows in the world right now.
8055 There are a few exceptions on the list, but certainly I don't see any of these services warranting basic carriage.
8056 THE CHAIRPERSON: At paragraph 82 you say that the retail rate for the service -- you are talking about Starlight. I will get back to Starlight. It is not so much about Starlight, my question.
8057 I am quoting here:
"The retail rate for the service would obviously be higher."
8058 There is that "obviously" word again.
8059 Why obviously?
8060 I mean, we have talked about this notion of a markup or not. Some people are saying that we shouldn't be using it, but how do you go about, beyond the wholesale rate, adding a fee?
8061 MR. WATT: I think that, actually, I would like to start with a comment about the markup.
8062 I think that the term "markup" carries, maybe, a pejorative connotation with it. I think that the way I would look at it is, what we are doing here is recovering the costs that are associated with carrying the channel that are over and above the actual costs of programming.
8063 For example, when you carry a channel, you have to devote capacity to carry that channel. We heard about the 16.2 cents per month per subscriber, which was a number referenced by, I think, Starlight last week.
8064 Our comment would be, that is clearly a cost, the cost of the channel capacity.
8065 With reference to the 16.2 cents, that just pays for plant maintenance, duct rental, pole rental, et cetera, and then the depreciation expense related to the massive distribution channel, and then a 23 percent return on the net fixed investment to recover the financing cost, income taxes, and profit.
8066 So those costs completely exclude any type of engineering, marketing, finance -- all of the other costs of operating the company.
8067 That 16.2 cents was set in 1995. Since then we have experienced, roughly, 35 percent inflation. So that, in today's terms, would be about a 22-cent cost.
8068 Then, very importantly for us -- and it really goes to the earlier question about the state of competition. In 1995, when that rate was set, we had cable penetration of 81.7 percent of the homes passed. Today we are down, unfortunately, to 58.1.
8069 So this mass of what I will call for this purpose fixed cost, the large infrastructure cost, now has to be recovered from paying cable subscribers from 58 out of 100 homes, rather than 82 out of 100 homes. That requires a unit cost increase of 40 percent.
8070 So the 22 cents, increased by 40 percent, gets us to, roughly, 31.5 cents. That would be the physical plant cost of carrying the channel and the maintenance associated with that channel.
8071 Those are the costs that we are talking about.
8072 THE CHAIRPERSON: By the same token, though, I take your point that there may be fewer subscriber households for you, but more than 15 years ago there would have been fewer services. So the incremental cost to run support for the subscribers through an online service, or even a phone centre, surely gets spread over many more services than there were back then.
8073 MR. WATT: Yes, we get spread over many more services, but, again, back in 1995, we were a 550 megahertz cable system. So in order to carry those additional channels, we have had to increase to 750 megahertz capacity, and in most of our system today we are at 860 megahertz capacity, to provide the capacity to carry the extra number of channels.
8074 And Mr. Purdy could explain it probably better than I can.
8075 With the number of channels, we have had to implement switched video technology, in which case we don't actually assign a channel full-time, or capacity full-time to a channel. It's on a switched basis because, frankly, we don't have enough capacity to carry all the channels.
8076 MR. PURDY: Thank you, David.
8077 We have, for over a third of our channels, implemented a technology that allows us to stream them on a per-request basis. So we are not broadcasting those channels, but streaming them on demand, and there is some complexity associated with that. There are engineering costs, IT costs, operational costs.
8078 It does allow for more efficient use of spectrum, and that is a benefit; however, it is not free, and there are a lot of operational costs.
8079 The second comment that I would make, Mr. Chairman, is that the digital customer requires a lot more support from an administration perspective. There are many more calls to the call centre, many more visits to the home to maintain the plant, the infrastructure.
8080 The traditional analog television business was a relatively simple product offering, which could be explained very quickly when you phoned the call centre.
8081 The fact that we are now carrying close to 1,000 channels means that the handle times in our call centre are much longer, and the number of times our customers phone us or contact us via e-mail has grown dramatically.
8082 So there have been benefits, in the form of the call centre is now serving Home Phone, Internet, as well as cable television, but those benefits have been eaten up, and then some, by the complexity of the digital product.
8083 THE CHAIRPERSON: I hope you are not longing for the days in the analog world, when you had to run trucks and put traps up on the poles.
8084 MR. PURDY: No. It's interesting that you bring that up. We still do need to filter out analog signals. I am sure it is something that my children will laugh at one day, but right now we still physically have to roll a truck and trap somebody out if they don't take the full analog tier product.
8085 We are quickly moving to an all-digital solution, and that will eliminate the need for truck rolls. We kind of have the worst of both worlds right now.
8086 THE CHAIRPERSON: Just on capacity, I want to make sure that I understand. You, obviously, have to invest in building the capacity, and that is an ongoing fixed cost, and that is a complicated calculation, but you are not suggesting that you do not have current capacity in any of your systems to carry any of these services?
8087 I mean, you are not at zero capacity in any of them?
8088 MR. PURDY: No, most of the services that are currently on the dial that are in question, whether it be Vision or Sun News, we carry.
8089 And if the Commission decided in its wisdom and it was a "Must Offer" ruling, we would be able to absorb the channels.
8090 For us, we don't have some of the capacity challenges that the smaller cable systems face.
8091 THE CHAIRPERSON: As a terrestrial BDU, I would be interested in knowing how you go about -- because you are geographically situated, right -- how you go about assessing subscriber demand.
8092 And I get it for populations at large. My question relates more to a subgroup of that population.
8093 We may have in the country, for instance, a large group that -- I don't know -- represents Aboriginal Canadians, or would be interested in Aboriginal programming, official language minority communities, the disabled. They may be a large group of the population, or at least not a group that we must ignore, but they may be, geographically, minorities.
8094 How do you go about finding what they want?
8095 MR. PURDY: We conduct ongoing research, and increasingly that research is more segmented, and segmented by age, demographic, ethnicity, and increasingly now, geography.
8096 It's important for us to have relevant product offerings, and 44 percent of our customers currently speak a language at home other than English or French. So, for us to properly serve that marketplace, we are increasingly doing more targeted multicultural research, and not just multicultural, but we look at -- for example, when we made the decision to give broader distribution to OUTtv, we looked at the gay, lesbian and transgender community to figure out whether their needs were being serviced, and how many of them were in our footprint.
8097 So we are increasingly getting much more targeted in terms of our marketing efforts and our activities, and it is forcing us to dig deeper in our research.
8098 In addition to the research, we have analytics. The currency for advertising sales is BBM, and that is how ad sales are done. But, for us, it is much more important to understand what households are doing -- not necessarily the demographics, as a cable company to understand what the household is doing.
8099 For example, Asian Television Network would not normally rank in the top 10 or 20 services in the country, but in an area like Brampton, or western Toronto, it would often be in the top 10.
8100 So when we are making decisions around spectrum utilization, whether or not we convert a channel to switched digital video or leave it in a broadcast mode, we increasingly have to drill down on the analytics associated with our set-top box.
8101 And we have deployed a technology in our set-top boxes that can track, in an aggregated sense -- nobody's personal viewing is being tracked, but in an aggregated sense, we can track household viewing by region and by system.
8102 THE CHAIRPERSON: Let's take a for instance, the 1 to 10 rule that we use for minority language in the framework. How do you decide which go into that package?
8103 Is it a question of price or the negotiation you have with a service provider?
8104 Is it a question of demand, based on the research you just referred to?
8105 Is it based on incumbency; that if you have been there it is less disruptive? Therefore, first past the post seems to have the advantage?
8106 MS DINSMORE: I will start that one.
8107 The 1 to 10 rule, when it came about, we were already in compliance with it, based on historic additions of channels to our lineup.
8108 So, in terms of having to meet the rule, technically, we met it from the get-go.
8109 Then it really becomes more of a question of how do we offer those French-language services to our customers to make them most attractive.
8110 In terms of your other question, about having services that are available for official linguistic minority communities, we do carry ARTV in a number of our packages. It is available to our customer base in New Brunswick and Ontario.
8111 That is a service that came on perhaps -- that is probably the latest French-language service that came on, and we immediately put it into a package and offered it, because it was a service that we felt would be attractive to our French-language customer base.
8112 MR. PURDY: To the second part of your question, the short answer is that, certainly, first past the post is a factor, but increasingly we look at two other main criteria, which are: is the service affiliated with a source of programming, in the case of non-French language programming, that -- a strong output deal?
8113 So we've increasingly been encouraging our broadcasting, especially general partners, to make sure that they have access to the content that's core to their marketplace. So that often affects first pass the post.
8114 And we've seen a couple of instances where channels have -- international channels have changed their Canadian affiliates or broadcast affiliate partners. We've had to accommodate that.
8115 THE CHAIRPERSON: I take it, though, from what I'm hearing that incumbency of services being distributed weighs heavily. Is that...?
8116 MR. PURDY: Yes, I think one of the earlier folks mentioned that it's very difficult to go and change your channel lineup and any incumbent has a huge advantage over a new entrant in terms of general packaging. We're not in the business of changing our packaging without a lot of thought.
8117 THE CHAIRPERSON: So it would be very surprising, for instance, for a service like ARTV that's already been distributed to be removed?
8118 DINSMORE DINSMORE: It would be -- I don't ever anticipate that would happen.
8119 THE CHAIRPERSON: Ever?
8120 MS DINSMORE: Ever. A strong word, but I really don't.
8121 THE CHAIRPERSON: Okay, that's fine.
8122 MR. PURDY: Mr. Chairman, our preferred path, if we do make channel changes, is to optimize the packaging of the channel rather than eliminate it entirely.
8123 So we have made changes where a channel -- I'll use a U.S. example -- a channel slipped in the ratings and stopped delivering the same audience it once did. But for us, we always try to make sure that that channel is still available on the dial in some way.
8124 THE CHAIRPERSON: Right.
8125 Ms Dinsmore, with respect to Vision you at least referred to the foreseeable future. Are you upgrading that to never?
8126 MS DINSMORE: We weren't talking about Vision.
8127 MR. PURDY: A question. Mr. Chairman, I will jump in here.
8128 The interesting thing about Vision is they currently have perhaps the most popular television series in the world. If AMC networks could leverage the distribution they have on a North American wide basis on the backs of walking dead, I assure you that Vision without a doubt now would be able to secure continued distribution.
8129 MR. LIND: In Colombo.
8130 MR. PURDY: Oh, you're referencing the show, not me. That's good.
8131 THE CHAIRPERSON: I still had some general questions, but since we've opened the door up on Vision...
8132 You know some would argue that their ability to go and get some of those programming that attract in a marketplace, in a more open and dynamic marketplace, viewers and brand loyalty and all the other things I'm hearing you want us to rely more on, it requires money and, therefore, subscriber wholesale rates and penetration become part of that equation.
8133 Is that not the case and, therefore, you can't say, well, if they got great programming they'll be carried? To get great programming oftentimes one has to open up one's wallet.
8134 MR. PURDY: So, certainly, if I worked for Vision I would be securing the long term multiplatform rights for Downton Abbey and I absolutely would be trying to leverage from guys like myself a higher wholesale fee and continued distribution.
8135 THE CHAIRPERSON: But everyone is running after those same rights, right? They're inflating presumably unless you -- when someone is bright enough to get renewal rights down the road, earlier on for down the road?
8136 MR. PURDY: Yeah, but in most cases broadcasters have the same thing we have just referenced as cable distributors. They favour the incumbent.
8137 So I think it would be hard for an over-the-air, especially a channel to displace Downton Abbey from Vision TV. It would be theirs to lose.
8138 The challenge we have when looking at Vision is, it is a popular ratings-driven service? In which case, it should have operational leverage that allows for it to negotiate a wholesale fee. Or is it a must carry religious service?
8139 They seem to be straddling both camps. I think that's the challenge we have with the service. We can't figure out if they are fish or fowl, which is why we have not done a long term renewal with them.
8140 We need them to decide are they a religious faith-based must carry service or are they a popular service that shows Eastenders and Downton Abbey.
8141 THE CHAIRPERSON: Well, they'll be able to make decisions, I guess, after we've ruled on the various applications.
8142 MR. PURDY: Yes.
8143 MR. ENGELHART: If I could just jump in, Mr. Chair, related to your question which was, "Don't these services often need broad distribution to have the economic base to attract the popular programming?" Yes, I agree.
8144 One of the reasons why 9(1)(h) has status is, I believe, problematic. It gives them that broad distribution. It also takes away their incentive to innovate. It takes away their incentive to be creative programmers because they have essentially guaranteed carriage at a guaranteed rate.
8145 So someone like Vision who has basic carriage, they have the economic base that they need to attract the programming but they don't have the regulatory protection to allow them to stop working hard. So that's why we think the current arrangement really is the best.
8146 MR. PURDY: And if I could just add to that, Mr. Chairman, if you look at Vision and go back to the Downton TV, Downton Abbey reference, we've been quite aggressive in terms of trying to secure the on demand, online and mobile rights for Downton Abbey because our customers want to be able to watch TV anywhere. And to date they've not been able to secure those rights.
8147 I think if you removed the incentive to keep innovating the unfortunate byproduct of that will be that we won't be able to get the TV anywhere rights associated with the Vision TV programming. I think that would be bad for the system.
8148 THE CHAIRPERSON: So your message would be you might not be able to -- Vision might not be able to get the programming rights long term to this particularly hot property, but they keep having to find the next generation of programming that might attract audiences?
8149 MR. PURDY: That's one message.
8150 The other message is make sure that they get the innovative rights associated with the on demand, online and mobile platforms. Because if the system is going to survive, it'll be because we deliver a TV anywhere product, not a traditional linear TV service.
8151 The old-fashioned notion of linear cable television, I think, is both antiquated and at risk. If the system is to survive we have to deliver a much more robust product.
8152 Our thrust is twofold: Make sure that our cable television offering is available across all platforms and, two, that the on-demand and catch up and look back rights is part of that product definition.
8153 THE CHAIRPERSON: Right.
8154 Page 123 of your written submission, foreseeable future, how is that defined?
8155 MS DINSMORE: This is in respect to Vision?
8156 THE CHAIRPERSON: Vision, yes.
8157 MS DINSMORE: I'll pass it over to David.
8158 THE CHAIRPERSON: Because I understand the future isn't what it used to be, so I have questions about how foreseeable things are.
8159 MS DINSMORE: I think we've just been addressing that point.
8160 So as far as we're concerned, as far as Vision TV offers, you know, top-notch product with programming that is attractive to our customers, they don't have to worry. They have been carrying them on basic even after they lost their dual status designation. Satellite guides have been carrying them on basic ever since they began and they never had an obligation to carry Vision TV.
8161 So Vision TV is a service that we have made available on basic to our customers who like it very much. There is nothing that we are going to do to upset our customers and for whatever reason move Vision up the dial off onto a tier and, in their words, onto a discretionary religious tier that, in their view, no one really wants to watch. That's not what we're about.
8162 We are about ensuring that we keep our customers happy and we keep them with us. To do something like that which would be counter to what our customers want would be not a good move for us.
8163 So I think that when we say for the foreseeable future it really goes back to what Ken says. I mean as long as the service is incentive to continue to provide a product that our customers want to watch, we are very incented to keep them where they are.
8164 So that's why we think actually it would be okay not to give them a 9(1)(h) designation. It would keep them sharp and it would probably keep them on the basic service in any event.
8165 THE CHAIRPERSON: Now, I'll go back to my general questions. Is that okay? Yes, okay.
8166 So I'll go back to my general questions. So you clearly say that large basic, you know, crowded basis isn't good. It creates redundant programming. It goes to costs. It's not good for the system.
8167 So based on that, wouldn't somebody looking at this be surprised why you seem to oppose non-basic, must offer for some of these services which wouldn't be the same driver that the customer would still be in control of the basic. It wouldn't be too large.
8168 MS DINSMORE: I think David already expressed the fact that we don't have a capacity issue with a must-offer designation. I think the services that you're probably thinking about we may already be carrying them on a must-offer or a Cat A. Effectively, a Cat A status anyway.
8169 So we don't have an issue with that. I think the confusion in this proceeding has been that the test that has been developed really seems to be more oriented to digital basic.
8170 So our focus in this hearing was really to look at these services as against the test, which is effectively a digital basic test. We weren't really clear whether that test equally applied on a must-offer basis because it just wasn't that clear.
8171 But more generally, to the extent that you decide that there are some services that should effectively get Category A status, we don't have an issue. We don't have a capacity issue and we would carry them.
8172 THE CHAIRPERSON: Okay. It's been suggested that some services are being asked for payments to be distributed. We asked the question earlier of another intervener.
8173 Is that generally the practice or has it occurred in certain circumstances and with respect to what kind of payments?
8174 MR. PURDY: Thank you, Mr. Chairman.
8175 We carry a number of channels that pay for carriage. The most obvious example of that is our own Shopping Channel which the media company pays the cable company for broad distribution.
8176 We carry the Torstar's ShopTV service.
8177 We carry a number of religious services that primary focus seems to be raising donations and funds.
8178 And in the case of the Natural Resources Channel in question, they seem to be and still, quite frankly from my perspective, seem to be a channel that is an advocacy channel. It's there to represent the interests of the mining, lumber and natural resource industries. They were heavily funded by the natural resource industries. They seem to be a channel that was meant to, for lack of a better word, run a very 24-hour day infomercial service about the good, the bad and the ugly associated with natural resources in Canada.
8179 They didn't have a political opinion on the merits of their channel, but I did feel that if there was going to be a channel that was advocating on behalf of a series of very large corporations that the customer should not be asked to pay a wholesale fee for that or the cable company shouldn't have asked to pay a wholesale fee for that.
8180 And it seemed to bear a lot more resemblance to a shopping channel or a tele-shopping service than it did an actual real channel. My feeling was if they got carriage that the next person at my door would be Greenpeace asking to run a channel that would offer a different perspective or a counterview to their channel and, in which case, we're happy to carry those services but I don't think the customer should be asked to pay for them.
8181 As Mr. Watt just outlined, there are very real costs associated with provisioning a channel and we have to recoup on those costs. That's part of the regulated framework that governs things like the Shopping Channel.
8182 So we did ask for carriage, a carriage fee to offset our costs associated with carrying the channel. We did say we would carry it broadly.
8183 But we wanted to establish a precedent for all other advocacy channels that came down after them.
8184 THE CHAIRPERSON: Because you see them as an advocacy channel?
8185 MR. PURDY: Absolutely. When they came to present to us it was effectively a channel that was speaking on behalf of the mining, oil, lumber.
8186 Those are great industries. Canadians have been employed by them and profited by them but they are just that. They are commercial enterprises. And a channel that advocates on behalf of -- if BMW came to me and said, "We wanted to run a channel that speaks to the merits of our automobiles", I would ask for a carriage fee. I wouldn't ask the customer to pay for the BMW channel.
8187 THE CHAIRPERSON: When we were looking at all these applications, I was wondering if you had views as to whether we should apply a different approach and a distinction because you mentioned a lot, you know, that this is a commercial service in speaking of individual applications here.
8188 So should we be applying a different approach whether or not the service is not for profit or commercial?
8189 MS DINSMORE: Thank you, Mr. Chair. We know that you've had that discussion with other interveners and we've looked at it.
8190 I mean, in our view, what the service should offer is something in the nature of a public service and offer something that is unique in the system, unique programming, unique content serving a need that's not otherwise served. That's kind of where we come from.
8191 You already have a couple of 9(1)(h) services that are commercial in nature. You've got TVA which is a commercial service and that's just one of them.
8192 So it may be difficult to make that distinction yourselves because you've already got some services that operate on a commercial basis. But generally, I think it's more the spirit than whether it's actually not for profit or not.
8193 But certainly in the spirit of what 9(1)(h) is about, it would be something that is offering effectively a non-commercial service that wouldn't otherwise be made available in the system for those in communities that are not otherwise served. That would be our view.
8194 THE CHAIRPERSON: Okay.
8195 MR. LIND: As a general rule, not for profit is a good thing to do for 9(1)(h).
8196 THE CHAIRPERSON: Right. Although I read your submissions and you would have argued, I think, that some services have managed to reverse engineer and make sure that they are not for profit by increasing their operating costs. Is that not the case?
8197 MS DINSMORE: We had some issues with some of the applications in reverse engineering and building up costs in order to, you know, provide a service that would meet 9(1)(h) criteria, yes.
8198 THE CHAIRPERSON: Okay. So obviously before us there are some requests for renewals of mandatory orders. If we were to refuse the renewal what do you do with the current rates there? Do subscriber rates go down?
8199 Do you continue -- I think in the case of Vision there is a continued distribution there or there would be a continued wholesale rate. So I take it, is that the case for all the currently existing services that are seeking renewal of their order?
8200 MR. ENGELHART: David might want to jump in.
8201 Generally speaking, as other people have said, it's very hard to take something off once it's already on and no matter how it originally got on.
8202 I remember when we used to have an alpha-numeric stock ticker service and getting a bit of a blast from my parents when we took that off. So every channel has its audience and the likelihood is if these services lost 9(1)(h) status we would probably keep carrying them. We might be able to renegotiate their packaging or their pricing.
8203 And to the extent that packaging or pricing lowered our costs, yes, that would be a factor that would go into our ratemaking decisions.
8204 MR. PURDY: Generally, we have four guiding principles and we've been able to stay true to them in most cases. Now, sometimes in the case of sports or networks that have enjoyed a meteoric rise in terms of the popularity of their programming, we've had to break from these principles.
8205 But the guiding principles are largely that they deliver rate increases that were within our ability to recoup in terms of rate increases. So the rate increase can't be well beyond what we charge for the current cable product in what our planned increases are.
8206 Two, that they deliver flexible packaging options. So increasingly, our customers are saying they want to be able to create more tailored or flexible packaging that meets their household needs.
8207 And the third, and this is the one where we get into perhaps the most contentious part of the negotiations, it's not tied to rate. It's actually tied to their ability to innovate and deliver the TV anywhere rights that we feel as a company are critical to the success of -- our future success of our product.
8208 We believe strongly at Rogers that if you're just offering linear television channels, to use Barb Williams' reference, it's a very old-fashioned antiquated and at risk business model. We need companies like Vision to deliver TV anywhere rights associated with their product. That means the VOD rights for the set-top box and the broadband rights for tablet, PC and mobile viewing.
8209 Increasingly, we're forcing the networks or pushing the networks to secure those rights. We believe it's in their enlightened self-interest but it's pushing them beyond their comfort zone because it is hard.
8210 You have to negotiate. You have to go to BBC or ITV and secure those rights and you have to try and do so at a reasonable rate. But we feel it's so critical. And if a company like Vision doesn't secure those rights they're not doing what's necessary to protect the system and the business.
8211 THE CHAIRPERSON: Right.
8212 And this may be a question for Ms Blackwell as well as Ms Dinsmore to figure out who will answer.
8213 But there seems to be some disagreement on projections on future subscriber numbers. I guess people are hesitating to speculate, particularly publicly-traded companies, on what the core shaving or core cutting projections might be but on what basis were the projections in the study? I think it's at Table 2. You're forecasting a growth between 5 and 9 percent which seems optimistic compared to some others.
8214 MS BLACKWELL: Thank you, Mr. Chairman.
8215 The 2012 numbers are built up from the publicly-traded reports and the aggregate annual returns that were available to us in February of this year. So they are from public sources for 2012. That covers well over 90 percent of the entire BDU subscriber universe.
8216 The publicly-traded companies also give us information on digital versus analog. Because this is a proceeding about digital basic the focus is on the digital basic subscriber base, not the analog. And we are seeing some shifts away from analog cable into digital cable as well as digital IPTV and DTH.
8217 So the 2012 number is a very, based on reality, figure. That 9 percent growth relative to 2011 is, for all intents and purposes, real numbers.
8218 So then it's a question of at a certain digital penetration level among cable, how much more can we expect in the growth of people switching to digital cable? Obviously, the cable operators want to have more of the subscriber base there, but it is difficult to get that last 5 to 10 percent of your subscriber base to make that switch.
8219 So there is that baked into where are we going to be in 2013 and then continuing onto 2014? So those are the analyses of how we get to the -- I got to the 2013 and 2014 numbers. They compare extremely well to recent independent industry reports for 2014 and 2015.
8220 So I think that's -- you know, it's just a question of which assumptions do you want to look at. But I think the important part is that in 2014, what's the right number? I feel quite confident that that number is a realistic projection.
8221 THE CHAIRPERSON: But it is a projection with respect to all the BDUs, right? It's not specific. You didn't drill down to individual BDUs and the reality and what their internal projections are?
8222 MS BLACKWELL: Certainly, I carved out IPTV versus DTH versus cable. And large cable, obviously, I have access to their ongoing public reports. And for the other smaller players it is less available in terms of public information.
8223 THE CHAIRPERSON: Right. But you're always focusing on the publicly-available documents, correct?
8224 MS BLACKWELL: Right.
8225 THE CHAIRPERSON: All right.
8226 I'll now turn to specific applications and I may not -- I will not cover all of them but nobody should read anything into that. I just need to understand your views on a few of these.
8227 At paragraph 83 of your written submission and again in your presentation today, you make the case that there is a great deal of availability of Canadian movies on the system.
8228 Do you think they are sufficiently promoted? In other words, there is one thing for it to be on the shelf available to be seen. There is another issue of getting it connected with Canadian viewers.
8229 MR. PURDY: Thank you, Mr. Chairman.
8230 We currently use as the primary way of promoting our video on demand offering, our Channel 1, "barker" channel which is the default starting channel for all of our digital customers. So when you turn on the set-top box you immediately go to Channel 1. And on it we have a rolling barker that we produce weekly. It highlights programming.
8231 On the left-hand side of the screen we list all of the titles that are launching that week and we promote video on demand.
8232 I'm a marketing guy so I never feel I have a big enough budget to do what I'd like to do and, certainly, I would like to promote transactional VOD more aggressively.
8233 We are looking at ways to optimize the barker, we are looking at adding a daily hit. So, basically, here are the titles that have been loaded onto video-on-demand this day, and we would incorporate that.
8234 We're also using the US ad avails so that we have two minutes per hour that are available and that becomes a -- 25 percent of that is devoted to promoting the Cable TV product and much of that is devoted to the VOD product.
8235 On a go-forward basis, we feel strongly that the best way to do promotion of video-on-demand is targeted one-to-one e-mails, using our recommendation engine.
8236 So, by the summer, we will have a recommendation engine and we will be able to track customer viewing, and on an opt-in basis we will be able to send out updates and e-mail blasts to our customers about services, new movies that have launched that are tied to previous movies that they have ordered and watched.
8237 So, we think that will be, I think, the most effective way of promoting and driving the on-demand usage, in particular movies.
8238 One of the things -- I was struck by Ms Williams' comments that the Starlight application seemed to be old-fashioned, and I couldn't agree more. The notion of a linear channel when referencing movies seems to be a very antiquated way of both promoting and merchandising films.
8239 Most of the people that I know that are under the age of, say, fifty, are starting to use online recommendation tools and Netflix and the like have had much of their success not based on what I'd call curation or promotion, but on recommendation engines, driven by customer viewing habits.
8240 That, to me, seems to be the most obvious and important way of driving Canadian films in the future.
8241 THE CHAIRPERSON: And everything you have just said relates to Canadian films, or films in general?
8242 MR. PURDY: Generally.
8243 THE CHAIRPERSON: Correct. So what are you doing for Canadian films?
8244 MR. PURDY: So, Canadian films -- as Pam said, we have the category folders. We have two category folders that are exclusively devoted to Canadian films. We also then incorporate those films into the other genres.
8245 So, given that current user interface on the VOD platform, most of the merchandising of the content occurs in genre-based folders, so romantic comedies, dramas, award winners.
8246 So the Canadian films show up both in the CanCon folders or Canadian promotional folders, and they show in the genres of the films that are -- and if they do very well, they will also show in the top ten list as well.
8247 We are introducing in the summer a recommendation engine, and that recommendation engine will be the most important, I think, thing we do in the next 24 months in terms of driving on-demand viewing. And in that recommendation engine will be -- so if you watched, say, Deepa Mehta's "Water", it will then say, if you liked "Water", you may want to watch the other Deepa Mehta films that are available on the VOD server. So, the most recent one is the Salman Rushdie novel that was converted, "Midnight's Children", so --
8248 MS DINSMORE: And if I could just add -- I know you know this, but our barker channel, we promote -- 25 percent of the titles are Canadian on the barker channel. And that's the channel that you arrive at when you turn on your television set.
8249 So that promotional activity is happening very specifically for Canadian films, 25 percent per week of the titles are Canadian.
8250 THE CHAIRPERSON: You see, someone looking at this might have said, faced with the potential of a Starlight Application that we might agree with, wouldn't it have been in your interest to come here and say, look, we know what we are trying to -- we understand what they are trying to cure as a problem, and here is a solution we have for you, CRTC, and it's about promotion and we are going to go a little further.
8251 You have quoted even the -- paragraph 86, the efforts the industry is worried about promotion of Canadian content, including films.
8252 MR. PURDY: So, thank you, Mr. Chairman. I think the thrust that we have taken is we see the on-demand platform as being a very strategic platform in terms of dealing with over-the-top competition and our direct competitor.
8253 So I think what we are probably interested in talking about today, mostly, is the fact that there is going to be a massive explosion of movies available on-demand over the next 24 months, and that's not driven by -- I think one of the applicants said, you know, it's conspicuous that a network -- a distributor has gone out recently and acquired 300 Canadian films for their on-demand platform.
8254 Well, that distributor was us, and the reason we have acquired those 300 Canadian films -- it's been in the works for over a year -- is because we have an intent to differentiate our product offering against our competitor's product offering by having at least twice as much video-on-demand content.
8255 So if you look at our ads that are running in the newspapers currently, we are promoting the fact that our product has twice as much video-on-demand as our competitors' product.
8256 In the efforts to drive that differentiation, we have had to go out and secure a lot of films, and in particular Canadian films, in order to make sure that we adhere to all of our CanCon requirements, but also to make sure that we --
8257 THE CHAIRPERSON: That's a good catch.
8258 MR. PURDY: -- drive the revenue.
8259 THE CHAIRPERSON: Because it's not about quotas.
8260 MR. PURDY: It's not about quotas, it's also about driving the revenues. So, in this case in particular, we acquired 300 films that had never been digitized or made available to the on-demand platform, and we actually paid for the costs associated with digitizing and making that content ready for the on-demand platform.
8261 So I believe that there's three things that are going to benefit Canadian feature film distributors:
8262 One, this explosion of on-demand content that, now that we're in the arms race, it's very similar to the arms race that we had with our competitors around HD channels. Now that the arms race has begun, you will see them counter and we'll ratchet it up, and so you are going to see and explosion --
8263 THE CHAIRPERSON: But you can see, Mr. Purdy, the frustration of the people backing the Starlight, when, you know, they make world-class films -- and this company has been partnering with --
8264 MR. PURDY: Right.
8265 THE CHAIRPERSON: -- Canadian films for a number of years, in various venues, and you come here and suggest that the reason you are buying Canadian films is to meet a quota of Canadian, as opposed to, because it's great and Canadians should see what they've paid for.
8266 MR. PURDY: Sorry, if it came across that way, I apologize. It's not about the quota, it's about making sure that we have the most robust offering in the marketplace. And the CanCon, I just wanted to make it clear to the Commission that that CanCon will be on that offering and it's -- we're happy to put it there, we're keen to put it there. But even if we weren't, it would still be on our on-demand offering because of the explosion of content that's available.
8267 The second thing that's happening that I think will benefit Canadian film makers is we are pushing very hard for the TV Everywhere rights, so, increasingly, a network, whether it be Hollywood Suite or whether it be Movietime, increasingly as we push them to make sure that they secure the on-demand rights, they are going to have to go back to the rights-holders and secure those rights.
8268 When you take Hollywood Suite is an example, their -- with their four networks, they now are required to carry at least a full channel of Canadian content if each network has to adhere to that 30 percent requirement.
8269 So, Hollywood Suite alone is delivering a vast amount of Canadian films into the Canadian marketplace.
8270 And the third thing that I think will benefit Canadian film-makers is subscription video-on-demand offerings. So, Illico is just the tip of the iceberg, and I think we have spoken in front of the Commission before, where we have referenced that most big BDUs are going to roll out some form of subscription video-on-demand product.
8271 Illico would be an example. In the States, Comcast has rolled out Streampix, Verizon has rolled out Redbox. All of us are planning to roll out SVOD or TV Everywhere extensions, all of which will require Canadian content.
8272 Could we do better at promoting it? Yes. Will we? Yes.
8273 MR. KOVACS: And if I could just add, our current offering of 350 Canadian features, we're well in excess of our CanCon ratios today, both on English and French. I think we are 10 percent English and about 33 percent French. So it's not -- we are not driven by the content ratios, or else we would be skirting just above the percentage needed.
8274 We recognize that it is a point of differentiation and I wanted also to step back and talk about the past a little bit and about the effectiveness of the VOD platform because
8275 Mr. Lantos, I think, had asked or made the comment that finding the Canadian feature film within the VOD inventory was like finding a needle in the haystack. And I think the combination of all the promotional efforts we've made, the folders that we have is bearing -- it's borne out by the actual orders.
8276 At the end of the day, we have to see whether Canadians are reacting, actually ordering these Canadian films, and I think last year we had, in terms of the total number of feature films ordered, Canadian and foreign, we had I think 32.6 million orders.
8277 Of that, 3.5 million orders were Canadian, a combination of orders, either through transactional or through the SVOD extensions, the TV Everywhere extensions, from TMN and the other services.
8278 So when you look at 3.5 million out the base of 32.6, it's a 10.7 -- that's the 11 percent Pam was referring to in the opening remarks. When you compare that to the effectiveness of feature film on linear channels, I think it's -- on conventional channels, it's about 7.4 percent of the total number of airings is Canadian over all other feature films, and on pay service I think it's 7.1.
8279 So, the VOD platform is probably -- it's quite a bit more effective in terms of Canadian's finding these movies and actually using them, and it's only going to get better with recommendation.
8280 THE CHAIRPERSON: It also appears to be more efficient than theatrical release.
8281 MR. PURDY: Definitely. Theatrical, I think, is 0.9 percent.
8282 MR. KOVACS: Yes. And my promise to you, Mr. Chairman, is that by the summer we will have 1,000 Canadian titles up there, far and above our requirements, and we'll promote them heavily and -- I mean, if you turn to the VOD service today you will see that we have Deepa Mehta talking about her most recent film, and that wasn't contrived for this hearing. It's just a matter of course.
8283 THE CHAIRMAN: I certainly hope not.
8284 MR. ENGELHART: Despite the guffaws.
8285 THE CHAIRPERSON: Paragraph 85, you refer to the CMF and you say, and I quote:
"This is a more efficient mechanism for the Commission to ensure that there is support for production of Canadian programming."
8286 Should I read anything into that? Are you hinting at something?
8287 MS. BLACKWELL: No, not hinting at anything there.
8288 THE CHAIRPERSON: Okay. So the whole idea of perhaps increasing that contribution, maybe to support promotion, that's not what I'm --
8289 MS BLACKWELL: It's not what we were hinting at.
8290 THE CHAIRPERSON: Because the next paragraph speaks about promotion. That's --
8291 MS. BLACKWELL: Yes. Well, I mean -- clearly, we're working with you and others on the Committee to make it -- to look at ways to promote Canadian programming, Canadian film better. So we are fully engaged in that process, but we did not want you to read into that anything further than what's on the page.
8292 THE CHAIRPERSON: Thank you for that.
8293 TV5, as you know, is requesting two feeds on the same licence. It this sort of two feeds from a network perspective, just to understand the consequences for you, if any, or is it as if you had two services in any event?
8294 MS DINSMORE: It wouldn't be a big issue for us capacity-wise, if that's what you're asking.
8295 THE CHAIRPERSON: Well, from a network -- yes.
8296 MS BLACKWELL: From a network perspective.
8297 It really -- at the end of the day it depends how many services ultimately the Commission in its wisdom decides to grant 9(1)(h) status to. So, taken on its own, by itself --
8298 THE CHAIRPERSON: Right, but there's a cumulative effect.
8299 MS. DINSMORE: But it's a cumulative effect.
8300 THE CHAIRPERSON: I understand.
8301 With Sun, you made references in your presentation, and you've heard in the hearing so far that there's allegations that it's almost impossible to negotiate carriage, allegations that they aren't treated fairly, allegations that in terms of carriage, in terms of channel placement and wholesale rates, they are not treated as well as some foreign news services.
8302 What do you respond to that? I noticed that you mention some of the services, but globally, do you have a position on that, some of the foreign services that you do distribute?
8303 MR. ENGELHART: Certainly.
8304 So, MSNBC or Fox -- and David can correct me if I'm wrong -- there are about 100,000 subscribers, whereas Sun is 1.2 million subscribers on Rogers. So, you know, they are getting much better carriage than Headline News or most of the foreign services. CNN, obviously -- back to your earlier comments about incumbency -- you know, they have been on a low tier forever, so CNN gets a lot of eyeballs, but most of the others don't.
8305 THE CHAIRPERSON: You're aware of this worksheet that I have been speaking to other BDUs about and you're all fine with filling it out and sending us for the 2nd of May?
8306 MR. KOVACS: Peter already has most of it filled out, and I would wager that we'll be the first to submit it.
8307 MR. PURDY: And Mr. Chairman, I was intrigued by one comment that was made earlier, that cable companies are paying $1.05 for Headline News. We don't pay one tenth of $1.05 for Headline News.
8308 THE CHAIRPERSON: That's one of the reasons why I would like us to make evidence-based decisions, and so I understand that that may be something you may not want to share publicly and will request confidentiality, and if you have reasons to get it, we will look at it.
8309 MR. PURDY: And we'll absolutely fill in the form and we look forward to doing so, Mr. Chairman, but I can't resist the temptation to point out that Mr. Lind's quite right that not only does Sun News enjoy broader distribution than Headline News, it actually has a higher wholesale fee than Headline News, as well.
8310 So no matter how -- whether you measure in terms of eyeballs or measure it in terms of subscription revenue, they enjoy a broader distribution than Headline News.
8311 THE CHAIRPERSON: Okay.
8312 I have three other questions to ask, or subject matters to deal with.
8313 Avis de Recherche, you know, they will argue that they are important for helping solve certain crimes, perhaps find leads on missing children. What's your view with respect to that? Is that an objective of the Canadian Broadcasting System?
8314 MS DINSMORE: Well, I guess the way they got their licence originally was because it was -- they were viewed to be some form of public safety type service.
8315 You know, you've granted Pelmorex a licence for a 9(1)(h) status for providing some sort of public safety type service. So, you know, arguably, when the Commission gave Avis de Recherche that licence, that was on the auspices that you did it.
8316 We've looked at it, we think that, you know, things have moved along since then, there are other means, other ways by which, you know, police can find missing persons. I don't believe that they have good ratings. I watched their intervention, I have read their submission, so it's not really the public that are necessarily watching the service. It would appear it's more, that it's the law enforcement community that seems to support the service in spades.
8317 So, in our view, it probably shouldn't get a 9(1)(h) status licence, but -- it doesn't seem to be fulfilling the need of a community, in terms of Canadians viewing the service, but there seems to be a need within the law enforcement community. So, you know, it's -- in our view, it's not worthy, but that's just our view.
8318 THE CHAIRPERSON: Well, it's an important view. I mean, like everyone that --
8319 MS. DINSMORE: Yes. We just don't think it's -- I mean, it's not garnering any eyeballs.
8320 THE CHAIRPERSON: Right.
8321 MS. DINSMORE: People aren't watching it. So, in terms of --
8322 THE CHAIRPERSON: One could question its efficacy?
8323 MS. DINSMORE: Its efficacy, yes, but it's not got any kind of constituency, shall I say.
8324 THE CHAIRPERSON: Okay.
8325 Described video. There is a number of requests and you, in your written submission, talk about it will take three to four years to get the right equipment, I guess the right button on the -- why is it taking so long? I notice that VOD buttons showed up really quickly.
8326 MS DINSMORE: I'll ask Peter Kovacs to address that question.
8327 MR. KOVACS: Well, I think it's -- in the Canadian environment, we're -- all the distributors are dependent on the manufacturers of the set-top box equipment to integrate these enhanced features. And we have been members of the described video working group, which the Commission had taken the lead on establishing a few years ago, and, you know, we have looked at a number of ways to enhance the pass-through of described video and making it more easily accessible through remote controls, you know, simplified steps.
8328 We, along with a number of other major BDUs that have implemented, in recent years, a set-and-forget feature which enables described video to come on automatically if you just happen to be on a channel that has it, as opposed to having to turn it on.
8329 So some of these features are readily supportable with the current, you know, state of boxes that are out in the marketplace, but when we talk about a described video guide and going to the next step and making the navigational menu or the IPG more accessible by having audio feedback, it's a whole much more complicated level of support, technically, that's required and, you know, as you are aware of, I guess, the Communications and Video Accessibility Act of 2010 which was passed has now put a lot of pressure in the States on manufacturers and on BDUs to move in the direction of making their navigational devices and menus more accessible in real time.
8330 And so, it's -- we now see that momentum building up and I think what has happened is that, in April of last year, there was a recommendation report -- there were a number of working groups and there was one in particular dealing with menus, access to menus and IPGs, and that had been presented to the FCC.
8331 So the FCC is then due to have a set of regulations issued by October of this year.
8332 And then there would be a two to three year timeframe where the expectation would be that BDUs in the States would then start implementing these new enhancements to their set-top boxes and the feeling would be, you know, we are dependent on that infrastructure and on that ecosystem. The road maps would then, you know, benefit us as well. We would then be able to implement those solutions, and some more elegant solution that's integrated within the set-top box, so that as a customer's using their IPG, they have readily-available information about the programs that they are watching.
8333 The interim solution with AMI, with their video guide that's online, we think, works well. The industry worked together to develop it with broadcaster and BDU input as well as the visually impaired advocacy groups like the CNIB.
8334 We all fed in to say we all recognize, okay, there are certain things we can do on the screen by providing the announcements, as a broadcaster, saying the upcoming show's in described video. BDUs, in their IPGs, can indicate some text that this show as described video, but you need to have more than just visual indicators, you need audio indicators.
8335 And so that's where the need was born to have the online guide developed with AMI, and we recognize, I know with the described video guide application by Mr. Kozner, that the concern was there were no channel numbers associated with individual shows or services.
8336 THE CHAIRPERSON: So notwithstanding the pressure as part of this broader ecosystem in the United States with the FCC which, by the way, extends to regulating well beyond, you know, what we would do in Canada --
8337 MR. KOVACS: Right.
8338 THE CHAIRPERSON: -- because it includes the Internet. We'd have protests outside our doors if we had suggested that.
8339 Notwithstanding that, you still think it will take three to four years to get this into the marketplace?
8340 MR. KOVACS: Well, I think that's the outlier. You know, I think sooner than later is certainly possible. I think that's just a -- I mean, the FCC could turn around much more quickly in terms of having their requirements set out in regulations, and then having a certain time frame. The latest it has to be is October 2016, but --
8341 MS DINSMORE: Mr. Chair, I mean, the point being that we are dependent on the US vendors for our equipment and for our set-up boxes, so the moment that that technology is baked into the boxes that we buy in the States, we will have that same technology and we will be able to provide it to our customers.
8342 We have been working very closely with the manufacturers for a very long time and so, as soon as it's ready we will be ready to go. What Peter is offering you is probably the outside time frame by which this will happen.
8343 MR. KOVACS: And also I would add that, you know, throughout the process we have constantly, you know, put the bug in the ears of our suppliers and say, we want enhancements. We've done this for several years, to say, please, an explorer where there are audio tones that can be incorporated for -- if you happen to be landing on a certain program on the IPG. And those are things that are under consideration at a standards body level, as well, like CableLabs.
8344 THE CHAIRPERSON: We have -- it's my final subject matter. We have three applications that attempt to serve the French minority communities, and your presentation, written presentation, you certainly talk about that there is already programming offered to them: TVA, Société Radio-Canada, TFO and you have even mentioned your community channels, where they offer that.
8345 That certainly was the case as well in 2008-2009 when the CRTC talked about the need for an inter-regional service.
8346 I have difficulty understanding how the relevance of those existing services in the marketplace address the broader public policy issue there.
8347 MS BLACKWELL: Well, I mean, ARTV is a service that is actually required to serve OLMCs, so Official Linguistic Minority Communities, and so, you know, on the system right now, we have a service dedicated to doing that. We carry it. I know others don't, but we do.
8348 And so, to the extent that the needs of these communities outside Quebec want to see themselves reflected, there is currently a service that is mandated to do that.
8349 There are other services, as we mentioned, that we carry there in the French language. I know that at the CBC hearing there was a lot of discussion around SRC becoming more reflective of official language minorities outside Quebec and of CBC becoming -- or, and also to reflect anglophone -- CBC reflecting anglophone minorities in Quebec.
8350 So our view is that those needs are being served, but, you know, I don't -- I don't live in those communities, I am not a French language subscriber. My husband is, and he is a user of all the French language services that are made available in Toronto and, you know, I don't think that he feels that there is something missing, but that's just anecdotal.
8351 I just feel that with ARTV, we have probably got the service that we need but, you know, should the Commission consider that it needs to go further, those two applications are there.
8352 THE CHAIRPERSON: But not necessarily on basic, would be your view?
8353 MS DINSMORE: TV5 right now is being offered on a channel that is very close to basic we've been offering in our first tier since the beginning, so it has probably got 90 percent of the base already subscribing to it. I guess if it got the nod and it got the second channel, you know, if it was offered in the same way, it would still be getting a fair amount of customers.
8354 So, a must-offer is always preferable to a 9(1)(h), but that's our view.
8355 THE CHAIRPERSON: Okay.
8356 I believe Legal counsel has some questions.
8357 MR. McCALLUM: There has been some discussion about the impact on exempt systems, on systems that have between 2,000 and 20,000 subscribers. Can you explain the impact if any of these services are mandated? What would be the impact on exempt systems? And if any of your answers previously given change in relation to exempt systems?
8358 MS DINSMORE: I don't think any of our answers change. The fact is, as we went through them, these services vary in that some want SD and HD carriage, some just want SD carriage. So I think it really depends (a) on how many services you were to give the nod to for 9(1)(h) and (b) how many of those want both standard def and high def carriage because, obviously, a high definition channel takes up more capacity than a standard definition channel.
8359 So it's really -- you know, whatever you do, we will accommodate it, but it would put more pressure on our smaller systems if the services that are being licensed are not only in SD but in HD as well.
8360 MR. WATT: Pam, if I could just add -- excuse me -- we do have some systems in New Brunswick that are as small as 87 subscribers, and so on and some of those, they literally are at max, 450 megahertz systems, some 330 megahertz systems. I think in those systems of that size, I think there would be a problem. I know you caveated the question, saying you're mostly interested in the 2,000 to 20,000 subscriber exempt systems, but bear in mind our really small ones I think would have a problem.
8361 MR. McCALLUM: Thank you, Mr. Chair.
8362 THE CHAIRPERSON: Alright then. I think those are our questions.
8363 We will -- it's a bit later than we thought it would be at this point, but these are important questions. Let's adjourn till 1:30.
--- Upon recessing at 1227
--- Upon resuming at 1330
8364 THE CHAIRPERSON: Order, please.
8365 Madame la Secrétaire.
8366 LA SECRÉTAIRE : Merci, Monsieur le Président.
8367 Just for the record, for logistical purposes we are going to start with a presentation from an intervener who is appearing by videoconference from Vancouver. It is Mrs. Delores Smith from WoneWomanWorks Ltd., and then we will hear MTS Allstream.
8368 Mrs. Smith, can you hear us well?
8369 MS SMITH: Yes, I can.
8370 THE SECRETARY: Perfect! You may now start your presentation. You have 10 minutes.
8371 MS SMITH: Thank you very much.
8372 THE CHAIRPERSON: Welcome to our hearing and we can hear you quite well as well, so please go ahead.
8373 MS SMITH: Thank you, and I appreciate the opportunity to present to the CRTC.
8374 I'm an independent Aboriginal producer, my company is WoneWomanWorks, and there's a number of issues I'd like to address.
8375 I can start with the hours that are being used for Aboriginal-language programming. Its 35 hours is fine, but can you put in the licence that it's new programming rather than reruns or it has be original and new programming, and for the TV portion, because there's talk of pushing it off to the Internet. So I wanted to make that point, that it's new programming.
8376 The main reason I'm here is that they state that 80 percent of the programming is produced by independent producers, but the wording got changed to "production companies" and we've been relegated to the back burner.
8377 I'd like the wording to say "producers" instead of "production companies" because it's too easy to dilute the production company. You know, they just need 51-percent ownership and anybody else can own the other 49 percent and it doesn't say they control it.
8378 So we're getting non-Native companies invading APTN by this manner, and so to put it back to giving us an authentic voice because the reason APTN was created in the first place was to provide a voice for the Aboriginal people and I don't believe it's being heard as well as it should be now. So to take the words "production company" out and put "producer" in would help us a lot.
8379 And another reason I ask that is the wording of "priority access," which is a term used for Aboriginal people when something is for them or by them, that they have priority to the funding, they have priority to the services.
8380 That wording is not there and I'd like that wording to be there because, again, we're being diluted by loopholes, you know, people setting up umbrella companies, and if it's written in the terms of trade that we have priority access, then it would help guarantee that Aboriginal people are doing the work. And priority access was established in 1996.
8381 And another little aside is that the CRTC approved OMNI to exclude Native people. So there's a precedent there that you can say one way or the other which people are being represented and I really strongly feel that APTN is there for an authentic voice.
8382 Like I started in -- I was with TVNC before APTN and, you know, took the transition to APTN and I really believe in APTN because there is nowhere else for us to go. All the other broadcasters say, sorry, you've got APTN. And now, we don't even have APTN anymore.
8383 And my licence, you know, this past year was $30,000. For somebody that's an affiliated company with the broadcaster, it was $350,000. I just need it to be tweaked. And I also ask the Commission to -- you know, there's a term, "this is not related to the broadcaster," but I don't know what that means. I couldn't find it in your literature.
8384 And, you know, most of the productions that they put in their presentation, their licence application named productions done by this company that's owned by APTN. I don't know if you have the scope to look at that but I would like somebody to look into it to see if it's legitimate.
8385 I also put into my request that the Terms of Trade Agreement -- we don't have one with APTN -- be a condition of licence. And I wanted to amend that because the Aboriginal production community is too large and we haven't been able to find consensus and we need a consultation period.
8386 We're asking that it be a condition of licence but to give us some time to do a thorough job of it. I'm asking for a year and I'm asking that APTN fund the roundtables that we have to have if they get an increase so that they're responsible for us to facilitate us to get a proper Terms of Trade Agreement in place.
8387 I also believe that there's not enough money at APTN. Maybe it's being mishandled right now, but we are marginalized. You know, the glass ceiling is out there with all the other broadcasters. We only have APTN and, you know, we have colleges, we have people coming into the industry who can't find work. So, APTN needs to be supported financially in a better way and an increase in licence, they're asking for a small amount. I mean, I myself, I would probably ask for more, but they're asking for not very much amount of money.
8388 And another little aside, but maybe the other broadcasters should, in their licence conditions, be made to broadcast Aboriginal languages or Aboriginal programming because right now they don't have to. You know, they don't. They just say, well, you've got APTN, and now we don't.
8389 And so that's -- like I said, it's a small report but they are big issues and I'll recap them:
8390 - priority access means that Aboriginal people have first choice to deliver programming;
8391 - new Aboriginal-language programming would be a condition of licence, not reruns, new and original languages at 35 hours; and
8392 - the Terms of Trade be extended for one year.
8393 And again, priority access is my main goal and to change the word back -- the original terms of licence with APTN said "Aboriginal producers" and somewhere along the way it got changed to "production companies." It's a big change because it means that these companies can come in without any proof that they're Aboriginal companies, and I think the CRTC, your scope is to regulate this.
8394 THE CHAIRPERSON: Thank you, Ms Smith, for that. Your position is very clear, so we don't have any questions for you, other than one.
8395 You are in the production sector; is that correct?
8396 MS SMITH: Yes. Yes, I'm --
8397 THE CHAIRPERSON: Can you briefly describe what you produce and if you're dealing with broadcasters other than APTN?
8398 MS SMITH: I produce -- I've been since 1996 with TVNC and APTN. I produce television specials, variety shows, documentaries, and some are award-winning and some of them have the highest ratings APTN has ever had.
8399 So I'm an experienced television producer and I have produced for CTV, CBC, Bravo, the other networks, but it's gotten less and less as time goes on because people say, you've got APTN, you don't need us.
8400 And also the Aboriginal-language program with the CMF makes it mandatory that they have to air the show in prime time in the language and so the other broadcasters don't -- you know, it's not their vehicle for that.
8401 So we are pushed into a corner with APTN.
8402 THE CHAIRPERSON: Your view is it hasn't actually -- the availability of APTN hasn't actually grown the windows for you to produce?
8403 MS SMITH: That's right.
8404 THE CHAIRPERSON: All right. Well, that's clear. We've taken good notes of your request that it be first-run original programming and your points about who should be involved, producers versus production company, as well as your comments on Terms of Trade. So I thank you for that. It's all very clear and very useful and I would like to thank you for participating in our hearings.
8405 MS SMITH: Thank you very much.
8406 THE CHAIRPERSON: Thank you.
8407 So, we will now go to our next panel, which is the folks from MTS Allstream, please.
8408 As is usual, please identify your panel and go ahead. Thanks.
8409 MS GRIFFIN-MUIR: Good afternoon. I'm Teresa Griffin-Muir; I'm the Vice-President of Regulatory Affairs at MTS Allstream.
8410 With me today, on my right, is Greg McLaren; he's the Manager of MTS TV Content.
8411 And on my left is Pauline Jessome, the Director or Regulatory Affairs at MTS Allstream.
8412 MTS Allstream is sympathetic to the challenges faced by independent programmers in the current environment where Bell, Rogers, Shaw and Videotron, all large, vertically integrated broadcasting distribution undertakings, control access to the programming available to the majority of Canadians. These companies account for 80 percent of all Canadian television subscribers. So, refusal to carry by even one of these distributors could have a devastating impact on a programmer.
8413 However, mandatory distribution is not the answer, especially at this juncture in the Canadian broadcasting industry. Mandatory distribution will drive up costs not only for independent BDUs but for consumers as well. Consumers are already increasingly bypassing cable distribution. At a time when technology is providing customers with greater options for access to content, the broadcast system should not be looking at ways to force programming on viewers. This will simply drive consumers away from the system.
8414 It will also limit the ability of independent BDUs to compete with the larger vertically integrated carriers that have far greater control over their own costs. While vertically integrated BDUs may have an incentive to favour their own programming over that of independent programmers, as certain 9(1)(h) applicants have stated, this is not the case for independent BDUs.
8415 MTS TV's success is predicated on consumer choice. MTS Allstream was the first BDU to offer customers the flexibility to buy small theme packages of content and to the greatest extent possible we provide customers with the ability to only buy the programming content that they wish to view. Over the past 10 years, through affiliate agreement negotiations, among other things, our flexibility to maximize customer choice has been increasingly challenged.
8416 Today in English-language markets there are eight 9(1)(h) services and 32 analog category A or must carry services.
8417 The addition of new 9(1)(h) channels will further impede our ability to offer our customers choice and control over their viewing experience. Despite the often laudable goals of some independent programmers and content producers and, in some cases, their strong desire to promote Canadian viewership of Canadian content, the reality is if customers are forced to pay for content they do not wish to view the channel, and over time even the broadcast industry itself could ultimately fail.
8418 In our view only one of the new 9(1)(h) service applications, DV Audio Guide, should be granted that status. Our endorsement is based on the support that DV Audio Guide could offer to Canadians with vision impairments.
8419 We do not intend to discuss the merits -- or lack thereof -- of each of the applications. However, given the attention focused on MTS Allstream last week we feel compelled to set the record straight with respect to Sun Media's allegations.
8420 Contrary to the impression left by Sun News Network we would like Sun News on our channel line-up. Moreover, the offer that MTS Allstream made to distribute Suns News Network was in no way unreasonable. After MTS TV customers subscribe to basic service, they are welcome to choose whichever theme groups they wish.
8421 We offered to distribute Sun News in our News theme group with six other news programming services: CTV News Channel, BNN, Fox News Channel, MSNBC, CNBC and Bloomberg Television. These are high-profile news services, including one with which Sun News is seeking parity and another that is the number one news service in the U.S. Our theme group sells for $2.50 per month.
8422 Sun News rejected this offer. In essence, when Sun Media says that MTS Allstream is unreasonable, what they are really saying is that customers who choose not to subscribe to news programming are unreasonable. Even though Sun Media claims to want Canadian consumers to determine whether or not they want the Sun News TV service, Sun Media does not wish to give MTS TV customers that choice.
8423 Today, news is ever-present on every device and the Commission was correct to reclassify news services as Category C.
8424 The Commission is also considering the renewal of the 9(1)(h) designation for existing licensees.
8425 MTS Allstream agrees with those who have already expressed support for a continuation of the 9(1)(h) designation for these services until such time as a broader policy review is undertaken.
8426 However, there is one aspect, the application by APTN for a 60-percent increase in its regulated wholesale rate, that MTS Allstream submits should be denied. APTN already has the highest rate of any 9(1)(h) service in our market.
8427 According to APTN, they are asking for an increase in their regulated rate to: extend their reach through unregulated distribution platforms; expand their news coverage, a program genre that has been largely deregulated, and; to expand their children's programming.
8428 In terms of unregulated platforms and news, we are all operating within a regulated environment of licensing. It would be inappropriate to impose a regulated rate on BDUs knowing that the programmer intends to direct the resulting revenue toward unregulated activities. Further, in terms of children's programming, the new rate that APTN is requesting is higher than either YTV or Treehouse TV, arguably the leading children's programmers in the country.
8429 In 1999, when approving APTN's application the Commission stated that it considered:
"... that a maximum fee of $0.15 per subscriber per month, in all markets, will enable APTN to generate the revenues needed to maintain this service."
8430 Six years later, APTN applied for and received a 40 percent increase in its rate in order to expand distribution, increase programming, including news, increase licence fees and languages, and improve promotion. Now, APTN is asking for an additional 60 percent increase again to expand distribution and programming. This increase is not justified.
8431 APTN must operate a general interest service that is of specific interest to Aboriginal people, and we understand at least some of the difficulties in doing so. We respect the mandate under which they operate and recognize their accomplishments over the years.
8432 APTN is on Channel 14 on our lineup, a deliberate effort on our part to expose APTN programming as much as reasonably possible to viewers of the popular local and distant broadcast services. We are not aware of any other Class 1 or 2 BDUs providing such favourable channel placement.
8433 As well, MTS Allstream and APTN have a very good working relationship. We meet fairly regularly and we speak candidly about both our businesses and the issues affecting Aboriginal people in general.
8434 MTS Allstream would like to emphasize that revocation or denial of 9(1)(h) status does not necessarily mean that the channel will not be carried on basic or that we will refuse carriage. For example, Vision TV is no longer classified as 9(1)(h), but Vision TV continues to be part of MTS TV's basic line-up.
8435 We would also be interested in carrying many of the 9(1)(h) applicants' programming services because certain of our customers would like to be able to get these services. What concerns us is being prevented, due to the status of the channel, from placing these channels in the most suitable package and paying for them based on an actual rather than theoretical penetration level.
8436 While many of the services proposed by the 9(1)(h) applicants may have merit, we do not believe that they meet the criteria for mandatory distribution on all BDUs' basic services. However, since many of the services claim to have high levels of consumer interest and appeal, there should be demand for these services by consumers. This demand will provide us, and others, with an incentive to carry these services.
8437 What we are asking for is the ability to distribute these services in packages that make sense in relation to the themes, price points and anticipated demand. Consumer demand is a potent force in determining what a BDU will distribute.
8438 We also need the flexibility to move channels to different theme packages as customers' interests and viewership patterns change. However, if we are forced to carry a large number of services, we often do not have this flexibility and thus cannot react to changing consumer tastes in our television market. In addition, mandatory carriage of 9(1)(h) and Category A "must carry" services drive costs up and encourage consumers to look beyond the regulated system for the content they want.
8439 One of the main benefits offered by digital distribution technology is greater packaging flexibility and choice for consumers. Mandating access to services through 9(1)(h) limits the ability of BDUs to provide this choice and for consumers to actually exercise it.
8440 Thank you.
8441 THE CHAIRPERSON: Thank you very much for your presentation. The Vice-Chair will have some questions for you.
8442 COMMISSIONER PENTEFOUNTAS: Good afternoon. Thank you for your patience. I know you missed your sort of morning window, but we went a little over.
8443 We had a discussion, I think it was a couple of years ago or a year and a half ago about sort of packing and pick-a-pack and pick-a-pay and the whole issue and it kind of goes to one of the point you made today about not forcing people to pay for things they don't want.
8444 I was just kind of looking at your site and maybe you can help me out, do you sort of a have a pick-a-pay service similar to what the major provider in Quebec offers?
8445 MR. McLAREN: Every programming service that's available to us contractually pick-and-pay, we offer pick-and-pay. The only ones we don't are the ones that will not sign a contract that allows it. So everything is in a package and then a number of the services are available pick-and-pay if the customer chooses.
8446 COMMISSIONER PENTEFOUNTAS: Okay. And the rate for that pick-and-pay? There was a discussion earlier amongst Rogers and --
8447 MR. McLAREN: Typically $1.99. There might be -- I can't remember off the top, but there might be one at $2.50 or something, but typically $1.99 would get your any of those services.
8448 COMMISSIONER PENTEFOUNTAS: Much has been said earlier -- and you have heard most of the questions in terms of the costs of adding an additional channel.
8449 Do you want to speak to us briefly, if you can, on that?
8450 MR. McLAREN: I don't have that information. I meant it's obviously I think hardware and labour to do it. And I didn't get the information I was hoping for from our technical staff, I heard this come up last week and I tried to get it, but we can provide it.
8451 COMMISSIONER PENTEFOUNTAS: Could you speak to the issue of how you decide as to the mark-up on a channel?
8452 MR. McLAREN: I can speak to that.
8453 We actually brought some numbers for you.
8454 I listened to what Shaw and Rogers and CCSA were saying earlier and I sense some frustration because you are not getting numbers to maybe understand, or I'm not sure.
8455 What they are saying previously though it absolutely correct, that the cost is not simply taking what the wholesale rate for the programming service is and then increasing it. There's all sorts of other things that go along with that.
8456 So I have some numbers here for you that I think will illustrate that a little bit. Of course we don't -- other than the pick-and-pay services at $1.99 we don't sell the services on an individual basis, so what I have done is group them by their theme groups and I will give you the percentage mark-up, if you could call it that. Basically it's the difference between what we pay for those programming services and what we charge the customer.
8457 COMMISSIONER PENTEFOUNTAS: Please.
8458 MR. McLAREN: So just in terms of those percentages I will read off a few of these: 41 percent, 89 percent, 49 percent, 35 percent, 71, 16, 74, 71, 27, 53, 7 and 123. So that's about half of our line-up. The other second half you don't need to hear it I'm sure, it's pretty much the same.
8459 COMMISSIONER PENTEFOUNTAS: That's a pretty accurate reflection. I only saw one there north of 100 percent, most of them are slower than that.
8460 MR. McLAREN: Correct. Correct.
8461 In that specific example in part one of the programming services in the theme group terminated operations and so our costs went down. So at some point we will put another programming service in there and bring the cost back up. These kinds of things happen.
8462 COMMISSIONER PENTEFOUNTAS: Yes. You can't have a straight up percentage because the cost, the wholesale rate is different --
8463 MR. McLAREN: Correct.
8464 COMMISSIONER PENTEFOUNTAS: -- and you have your fixed costs that are at a certain level and whether you are paying $0.05 for a service or $1.50 for a service, that will affect tremendously the percentage of --
8465 MR. McLAREN: Right.
8466 COMMISSIONER PENTEFOUNTAS: -- mark-up if you will.
8467 MR. McLAREN: The other thing --
8468 COMMISSIONER PENTEFOUNTAS: I don't like that word, but --
8469 MR. McLAREN: Sorry. The other thing we are trying to do is keep a realm of simplicity for the customer so we don't have a dozen different price points. Right now I think we have three or maybe four and we try to get all of the theme groups to fit into that, into that range, just to make it easier for the customer as well.
8470 COMMISSIONER PENTEFOUNTAS: And anyone that wants a one-off would have to minimally subscribe to your basic service?
8471 MR. McLAREN: Yes, that's one of your rules.
8472 COMMISSIONER PENTEFOUNTAS: That's one of the rules, okay.
8473 What happens if 9(1)(h) disappears? What kind of an impact is that going to have on a Canadian's monthly bill?
8474 MR. McLAREN: Well, it's not the 9(1)(h) that causes the cost, it's the carriage of the service, right. We have no plans to drop any of the services and at this point we have no plans to move any of them out of basic.
8475 COMMISSIONER PENTEFOUNTAS: So the answer is "very little"?
8476 MR. McLAREN: It would have no effect on MTS TV customers, yes.
8477 COMMISSIONER PENTEFOUNTAS: On the pricing.
8478 MR. McLAREN: On the pricing.
8479 COMMISSIONER PENTEFOUNTAS: On what they pay at the end of the day?
8480 MR. McLAREN: Right. Right.
8481 COMMISSIONER PENTEFOUNTAS: And currently what percentage of the monthly bill do you think is attributable to 9(1)(h) services?
8482 MR. McLAREN: I wasn't ready for that one, sorry.
8483 COMMISSIONER PENTEFOUNTAS: Okay.
8484 MR. McLAREN: There are a lot of numbers that go into -- again, understand, we look at our costs as a whole, right, so we have marketing staff, technical staff, all of these things, we don't typically parse them out by if we got, I don't know, 300 channels on the line-up, I guess we could do something like that.
8485 COMMISSIONER PENTEFOUNTAS: Yes. At the end of the day if there aren't any increases in rates, and even if some services are dropped, there won't be a significant or marked impact on what the consumer pays at the end of the month, because most of the services, as per your own statement, will continue to be carried.
8486 MR. McLAREN: Understood, yes.
8487 MS GRIFFIN MUIR: I think, though, where it might have impact, not immediately as Greg said, we don't have immediate plans to change anything with the existing 9(1)(h) services.
8488 It does limit our flexibility to move certain services from basic into different theme packages and as time goes on that will have ramifications, because that in conjunction with other must-carry, there are placement requirements with those services as well so it --
8489 COMMISSIONER PENTEFOUNTAS: Yes. That movement and the fact that the rate will be subject to greater market forces in its determination may have an impact at the end of the day
8490 MS GRIFFIN MUIR: Right.
8491 COMMISSIONER PENTEFOUNTAS: Would you agree with that, Ms Muir?
8492 MS GRIFFIN MUIR: Could have an impact even whether we continue to carry the service or not depending on whether the provider of the service negotiates a reasonable rate that we could afford.
8493 COMMISSIONER PENTEFOUNTAS: Is there any hope for news service -- we heard a lot from news services about how difficult it is and most of them found it so difficult that they felt the need to come in and pitch for a 9(1)(h) designation?
8494 Do you want to speak to that issue? Much has been made about that issue earlier in the day and we talked about incumbents and how difficult they are to dislodge, if you will. How difficult would it be for a news service to come onboard?
8495 MR. McLAREN: That's a really tough question for us to answer and I will tell you why obviously.
8496 I like to think that MTS TV is a fairly approachable distributor when it comes to programming services, I hope most of them would tell you that, and we have meetings with people who are up and coming and they have great ideas for new TV programming services and what we tell them is, if you are basing your business on getting distribution on MTS TV, you don't have a business. You know, we represent fewer than 1 percent of the market.
8497 So getting distribution on MTS TV is not your challenge, it's getting it on Shaw, Rogers. You need at least one of those and probably more or you don't have a business.
8498 So it's very difficult for me to answer how challenging it is to get on their line-up, I don't know.
8499 COMMISSIONER PENTEFOUNTAS: It's a lot easier if you are already carried by one of the bigger BDUs?
8500 MR. McLAREN: Yes, for sure. Absolutely.
8501 MS GRIFFIN MUIR: I think really what Greg is saying though is who we are in the market. We have a smaller number of subscribers.
8502 COMMISSIONER PENTEFOUNTAS: Yes.
8503 MS GRIFFIN MUIR: So if we are the only ones who pick you up and carry you it's obviously not going to be enough to sustain you, you would need some of the larger distributors to carry you as well.
8504 COMMISSIONER PENTEFOUNTAS: Or some kind of ridiculous publicity revenue on the other stream.
8505 MS GRIFFIN MUIR: Right. Exactly. Something really great.
8506 COMMISSIONER PENTEFOUNTAS: The other stream has to be -- yes.
8507 MS GRIFFIN MUIR: And then I guarantee everybody will want to carry you.
8508 MR. McLAREN: We have seen instances where we have launched a service, an existing service, and it has prompted Shaw to launch it because their customers are asking for it, too. That's happened, the programmers told us that. But that's really the exception and it wasn't somebody new coming out of the -- you know, just coming out and getting started, this was an existing programmer.
8509 COMMISSIONER PENTEFOUNTAS: Anyone paying to be distributed on an MTS service right now?
8510 MR. McLAREN: A programmer paying us?
8511 COMMISSIONER PENTEFOUNTAS: Yes. I gather by the surprise --
8512 MR. McLAREN: Yes.
8513 COMMISSIONER PENTEFOUNTAS: -- in your voice -- there is.
8514 MR. McLAREN: No, no. There are some exempt services so obviously, like Shopping Channel.
8515 COMMISSIONER PENTEFOUNTAS: Right.
8516 MR. McLAREN: But we do have at least one that pays us for access. I'm trying to think if there are others, but there is at least one.
8517 COMMISSIONER PENTEFOUNTAS: Are you comfortable with the Giganomics survey? Much has been said that it may have been slanted, that some of the questions may have been somewhat biased.
8518 Do you want to speak to that issue, without breaking ranks with your fellow BTUs? Or feel free to break ranks.
8519 MR. McLAREN: Yes. We speak for ourselves.
8520 COMMISSIONER PENTEFOUNTAS: Please.
8521 MR. McLAREN: Yes, we are not afraid to speak for ourselves for sure.
8522 I don't feel adequately prepared to speak to the research.
8523 I do feel that there was almost a sense of obligation to come here with research because that seems to be the norm, but I'm really good at speaking to what's really going on in our marketplace in Winnipeg, right, and the research is much broader than that.
8524 COMMISSIONER PENTEFOUNTAS: And what you have discovered in the research in your market place is reflected in the document you provided for us today and the initial document that you provided?
8525 MR. McLAREN: Yes. I would say generally that's true.
8526 COMMISSIONER PENTEFOUNTAS: I'm not going to touch on the Sun News topic because there may have been some questions following your initial submission, but they were pretty much answered today. So I think it's there, it's on the record, your position is quite clear.
8527 On another issue that has come up often repeatedly sort of the RTV issue and the idea of must offer and the impact on that with respect to the 10 to 1 rule and whether other Francophone services may be knocked off the package to make room for FRTV.
8528 Do you want to speak to that issue?
8529 MR. McLAREN: Yes. That wouldn't happen at MTS TV.
8530 COMMISSIONER PENTEFOUNTAS: RTV is being carried and will continue to do so?
8531 MR. McLAREN: Yes. We have carried it since we launched back in 2003.
8532 COMMISSIONER PENTEFOUNTAS: Is there an impact on the fact that it's being carried with other Francophone services?
8533 MR. McLAREN: An impact?
8534 COMMISSIONER PENTEFOUNTAS: Is 10 to 1 sort of a floor or a ceiling for MTS?
8535 MR. McLAREN: Oh, I see. For us it's a ceiling.
8536 You know, I have to say this is really frustrating for us, the whole French-language programming situation. You know, St. Boniface in the Winnipeg area is the second or third largest --
8537 COMMISSIONER PENTEFOUNTAS: Yes.
8538 MR. McLAREN: -- French population in Canada and our two French theme groups have less than 1 percent penetration. The services that are on basic, the French services that are on basic, I'm not exaggerating when I say nobody is watching them. It's frustrating for us, we don't understand it, but those are the numbers.
8539 COMMISSIONER PENTEFOUNTAS: So the statement made by CBC to the effect that on the 600,000 Francophone subscribers potentially outside of Quebec, 50,000 of which would want to subscribe to the service, that doesn't ring true in your footprint? Obviously if you tell me 1 percent...
8540 MR. McLAREN: No. SRC/CBC French in Winnipeg has the highest viewership by far and it's not very much.
8541 COMMISSIONER PENTEFOUNTAS: To the other issue of TV5 and the second feed that was asked for, does that present any technical difficulties or capacity challenges?
8542 MR. McLAREN: Capacity is not an issue for us.
8543 I think you have heard other BDUs talk about it being kind of cyclic, you know, they do a rebuild and capacity goes up and then overtime it wears down as you use it and of course Internet chews into it now. We just happen to be at a point in the cycle where we are good for television capacity. That wasn't the case a couple of years ago for sure.
8544 COMMISSIONER PENTEFOUNTAS: Briefly, and I think I am going to close with this, on your barker channel are you respecting the 25 percent Canadian title rule?
8545 MR. McLAREN: Absolutely, yes.
8546 COMMISSIONER PENTEFOUNTAS: And is there an uptake on those titles? Are you seeing demand for those titles?
8547 MR. McLAREN: Not so much. We just went through the exercise with the Commission two weeks ago reviewing the 2012 annual return. They are doing that with all the video-on-demand providers and, you know, the numbers aren't great for sure.
8548 COMMISSIONER PENTEFOUNTAS: That's all for me, Mr. Chairman.
8549 THE CHAIRPERSON: Thank you.
8550 Just to follow-up, I understood your presentation about your news package $2.50 a month with respect to Sun News.
8551 Did I hear you correctly that CNN is not part of that news package?
8552 MR. McLAREN: That is correct.
8553 COMMISSIONER PENTEFOUNTAS: Where do you put CNN if not in the news package?
8554 MR. McLAREN: That's a great question for CNN.
8555 THE CHAIRPERSON: What do you mean by that?
8556 MR. McLAREN: Mr. Chairman, you know what I heard last week that you were asking for information on the new services I mean I was, yes. I mean we have been wanting to provide this kind of information and Rogers probably will get it there before us, but ours will be there on time for sure.
8557 THE CHAIRPERSON: Okay. So I don't even have to ask for the undertaking. I don't need to go there.
8558 MR. McLAREN: You do not have to ask, yes.
8559 Negotiating with these programmers is extremely difficult and they have --
8560 THE CHAIRPERSON: The foreign programmers.
8561 MR. McLAREN: Pardon?
8562 THE CHAIRPERSON: The foreign programmers.
8563 MR. McLAREN: Well, yes. Any foreign or vertically integrated, either way it doesn't matter to us.
8564 In this case we are talking about a foreign programming service and they -- you know, they are not regulated in Canada beyond making sure that they don't compete directly with Canadian services, after that they are pretty much free to do whatever they want.
8565 THE CHAIRPERSON: But what are they asking for that forces you to put them in the particular package?
8566 Am I correct that they are with A&E?
8567 MR. McLAREN: They are, yes.
8568 THE CHAIRPERSON: Why are they asking to be -- and The Learning Channel; is that correct?
8569 MR. McLAREN: Yes. It's a wonderful combination, isn't it?
8570 THE CHAIRPERSON: Why do you think they are doing that?
8571 MR. McLAREN: Well, when we got into the TV business they required distribution of a certain level or the highest penetrated tier that we had. Well, they call it a tier of course in the analog world, but the highest penetrated theme group.
8572 So A&E is and almost always has been the most popular specialty network outside of sports. Chances are whatever theme group you have A&E in is going to have the highest penetration and that's where CNN had to go.
8573 We went through a rigorous negotiation with them at the end of last year 2012 and the beginning of 2013 to try to get them into our news theme group and we were largely successful on that. We were able to put them with CTV News Channel and so on, but it came with a price and the price was tied selling. We had to launch another programming service --
8574 THE CHAIRPERSON: That they owned.
8575 MR. McLAREN: That they owned.
8576 THE CHAIRPERSON: Apparently vertical integration has no borders.
8577 MR. McLAREN: And if we didn't agree to launch the new service they would not agree to a reduction of the penetration and so there we are.
8578 THE CHAIRPERSON: Okay. Thank you.
8579 So you will give that in by the 2nd of May or sooner? We will have a race between yourself and Rogers then. Okay. Thank you.
8580 Thank you very much. Those I believe are our questions. Thank you very much.
8581 So we will now hear from Mr. Donaldson.
8582 THE SECRETARY: Well, I will now invite -- I'm not sure if he's in the room, Mr. Chairman, so if you are here, Mr. Donaldson, we would like to hear you.
8583 I think for the record, Mr. Chairman, he's not here.
8584 THE CHAIRPERSON: He's not here, okay.
8585 THE SECRETARY: So we will hear the next presenter, he is appearing by Skype.
8586 THE CHAIRPERSON: Okay.
8587 THE SECRETARY: Mr. Matthew Hays.
8588 THE CHAIRPERSON: Hello, Mr. Hays, can you hear us?
8589 MR. HAYS: Yes, I can and good afternoon.
8590 THE CHAIRPERSON: We can hear you quite clearly, so please go ahead.
8591 MR. HAYS: Well, first I would like to thank the CRTC for hearing me out and I get to apologize for not being in Ottawa. I planned to travel there today, but I have just had too busy a week. And thanks to your tech crew for setting me up via Skype.
8592 So I should rewind about 2 1/2 or three years in regards to this presentation when I first learned about Quebecor's plans to hatch Sun TV, and I have to say that I wasn't as freaked out as a few people were upon hearing this. Some people really reacted with a lot of anxiety about the idea of a Fox News North. And one of the things the original architects of the plan were saying was, in the media and interviews they repeatedly said that much of Canadian news -- CBC and CTV, but in particular CBC they went after and they said that a lot of it is really quite boring.
8593 And I found myself in the odd position, though I'm not ideologically on the same wavelength as a lot of these guys, but I found myself agreeing with them. I do think that for whatever reason we tend to be a bit risk-averse in Canada in the media and I don't know if that's part of our national character or if there is some reason we are worried about offending sponsors or advertisers or a phantom audience out there that's very, very middle ground. It does seem like sometimes we are falling all over ourselves not to offend anyone and I have written a fair bid for British media as well as American media and I do notice that that is different. Editors in Canada and publishers and broadcasters will take less risk here. So I actually was kind of excited by the idea that somebody might come in and shake things up.
8594 And I also want to make it clear that though I do clearly tend to swing to the left on most issues I have always welcomed debate. I grew up in Alberta and so if I didn't have any right-wing friends I would have been a very lonely person. I appreciate debate from all ends of the political spectrum, right, left, whatever, I have friends -- when I go back to Alberta twice a year, I get into arguments with friends who work for the Conservative Party for God's sake, I have no problem with having those debates, and I have certainly never limited my media diet to newspapers or websites or TV channels that are only left wing.
8595 I think it is really important, and I always tell my students to try to read or watch media across the ideological spectrum. Don't limit yourself to something that is left or right wing, you should always be reading other kinds of media, as well.
8596 I read Peggy Noonan's column in the Wall Street Journal, for example. I read the National Review online, as well as The Guardian and The Independent, and observe more left-leaning publications.
8597 When Sun News finally debuted, I began watching it and, for the most part, I would have to say that I was pretty disappointed. It appeared during the day that they were doing very similar things to what other networks were doing, with maybe a little bit more of a right-wing spin -- more right-wing guests to be interviewed, so to give it more of a rightward tilt.
8598 In the evening, there were the talking heads that they would trot out, you know, foaming at the mouth about whatever issue.
8599 I found it pretty predictable, usually right-wing dogma. There was nothing that was that inspired about it. I guess I was disappointed just because they had spent so much time talking about how boring everyone else was, I thought they might actually try to come up with something a little bit more unique.
8600 So I actually didn't watch it for a little while, and then, when I tried to go back -- I don't know what the exact timeline is on this -- of course, it has been going for about two years -- but my cable provider is Bell, and I believe there was some sort of issue with Bell and Quebecor, because Vidétron is a competitor of Bell's. So, when I would go to the channel, 505 on my dial, for Sun News, it said: "This channel is not available."
8601 So I couldn't watch it for a while, so I didn't watch it.
8602 Then, I would intermittently turn back every now and then. And, then, when I heard a few months ago that Sun News would be applying to become part of the carriage system, I thought: I should do some research and go back and watch the channel.
8603 So I said: You are going to flip your dial to this channel, and you are going to watch it for at least an hour every day -- usually a couple of hours, sometimes three.
8604 I watch a lot of television and media and view the news a lot. So, for me, it was just kind of an interesting experiment to go back and look at it -- try to look at it at different times in the day, look at it in the morning, in the evening, in the afternoon, and see what was going on.
8605 A while back I recalled that I had heard a conspiracy theory -- and I don't normally go in for conspiracy theories. I don't believe that 9/11 was an inside job. And unlike Thomas Mulcair, I believe that Osama bin Laden is actually dead.
8606 But I was watching this, and I had heard this rumour a while back; that is, Pierre Karl Peladeau is a closet separatist and, in fact, he created Sun News to torture the people in English Canada.
8607 And I kind of thought that there might be some credence to this as I watched it, because I found a lot of it so unbelievably repetitive and redundant, and I felt like, if you tried, you couldn't have created a show that was sort of less interesting -- programming that was less interesting, more repetitive, and just sort of full of the same dogma over and over and over again.
8608 They had about two years since I had last watched it at all to smooth over some of the rough edges, and I was sort of surprised at how rough a lot of it still looked.
8609 Like I say, during the day the shows look a lot like a lot of programming on other networks; not that radically different, except they might skew things a bit to the right.
8610 For example, if the Fraser Institute institutes a report, the right-wing think tank, they would spend a little more time talking to the people who have written the report. I have no problem with that. I read the reports when they come out, too, from the Fraser Institute. They can be interesting.
8611 Then, in the evening, they have their various pundits, who are there to spew predictable venom.
8612 One of the things I find kind of funny about watching it are some of the recurring themes, and one of them that often comes up is that the people on the shows are often patting each other on the back, and themselves on the back, for speaking their minds and repeatedly saying: We are just talking about what is politically incorrect, and speaking about what is important, despite people who might want to censor us.
8613 If you watch the channel, it is kind of like you are watching a group of freedom fighters, who are operating covertly from someone's basement, in a country run by a dictatorship that is hostile to them.
8614 And I think the timing was perhaps a bit odd, for Sundays, because it's a conservative channel, at a time when we have a Conservative government federally that has a majority -- a clear majority -- they operate mainly out of Toronto, where there is a mayor who is very right-wing, and they are backed by this huge multinational corporation called Quebecor, one of the biggest corporations in Canada.
8615 I believe it's worth -- and correct me if I am wrong -- I believe it's worth a couple of billion dollars.
8616 So, I am always left with the question: Who, on earth, is oppressing these people? They keep going on and on and on. Especially around their second anniversary, they kept saying: Isn't it wonderful that we have the right to say whatever we want, and how we are champions of this.
8617 And I keep thinking: Champions of what? You are speaking the same discourse that the federal government is speaking, for the most part.
8618 It felt like a bit of disconnect from reality. It is no grassroots movement.
8619 The other thing that tends to happen on their programming -- and I see this rather a lot -- is that they sometimes have a left-wing guest on, and you can kind of tell the left-wing guests from the right-wing guests, because the right-wing guests are usually allowed to finish their sentences. But, mainly, they have a lot of similar-thinking people on, and they tend to agree with each other a lot.
8620 So you have a group of right-wing people interviewing other right-wing people, and they are all sort of commending each other for thinking the same way.
8621 I don't know who thought this would make for interesting programming, but so much agreement between like-minded people often on television doesn't make for very interesting or enlightening broadcasting. I am kind of surprised that they didn't think this through just a little bit more carefully.
8622 I kind of feel like I should throw out a spoiler alert, but I think that if you make professional dullards like Ezra Levant and Michael Coren the stars of your show, it is going to tank, and that is exactly what has happened. It is not just me giving them this review. I don't think that any TV commentators in the country, or reviewers, have been very nice to Sun News, with good reason. I think they have earned their negative reviews, and they are tanking in the ratings.
8623 And now that they have tanked, they have come grovelling, through another layer of hypocrisy, to the CRTC and want to become part of a system that I heard them denouncing on Day 1. They were denouncing the system and the CRTC on the first day of their programming two years ago.
8624 So it seems to me very odd that they are asking for a bailout, given that the owners of Sun News are, of course, still Quebecor, which is a very wealthy corporation. It just seems to me that it's a little like Donald Trump showing up at a food bank and expecting a free meal. It is odd. They already have the resources, if they want to spend them.
8625 I appreciate that you have invited me here probably mainly on my credentials as a journalist, and I do think that, already, Sun News has proven itself on shaky ground as a journalistic organization. There are the obvious cases -- the citizenship ceremony, which you all know about, where members of government were acting, which is an absolute no-no in journalism. And the gypsy comments, which I guess they apologized for.
8626 But the news that they have made is, usually for the wrong kinds of reasons, not good for their brand.
8627 I am mainly here, actually, as a consumer advocate, and that is because I pay, every month, my fee to get my cable channels, and I get a bunch of different channels for that. And now Sun News wants me to pay a little bit out of my pocket -- and it's not a lot, as they point out, per subscriber -- to sort of bailout their vision of this channel. And to that I say: No way. I do not want my money going to this channel.
8628 They had a chance. They had huge resources behind them to do this. They had a lot to draw on, and I feel that they failed. And I don't --
8629 THE CHAIRPERSON: Mr. Hays, you are out of time. Do you have any final thoughts before we ask you some questions?
8630 MR. HAYS: This is a very right-wing argument that I am making. It is just that I don't want to pay for what I don't want, and I don't want this channel. And I don't think that cable subscribers in Canada should be forced to bailout Sun News.
8631 THE CHAIRPERSON: Thank you.
8632 Commissioner Simpson will have some questions for you.
8633 COMMISSIONER SIMPSON: Good day, Mr. Hays, how are you?
8634 MR. HAYS: Fine, thank you; yourself?
8635 COMMISSIONER SIMPSON: I'm fine, thank you.
8636 As the Chair has said repeatedly, we are absolutely thrilled when we have citizen interventions. It adds a tremendous amount to the scope of the hearing, and it is always appreciated. And the time that it took to do this is very much appreciated.
8637 I would like to understand your precise position. You are not, as I understand it, objecting to this service being available on cable --
8638 MR. HAYS: Not at all.
8639 COMMISSIONER SIMPSON: -- you are objecting to the idea that it should be paid for by cable subscribers without their choice.
8640 Is that correct?
8641 MR. HAYS: Yes.
8642 And I feel that if they were offering something different, if they had offered, as they said, something exciting, if they had presented a lot of these ideas, and political ideas, in an interesting and exhilarating way, even if it was right-wing, I would say great.
8643 I don't mind if you don't always line up entirely with my political way of thinking. It's that the product, itself, I don't feel is worth paying that extra money for.
8644 COMMISSIONER SIMPSON: In your written intervention -- and I have your one-pager in front of me -- you said -- and I am paraphrasing here -- that it would be funny if people weren't buying it, but, sadly, people do.
8645 Putting aside the editorial portion of the comment, you are acknowledging that there are people out there who want to watch, or would like the option to be able to watch that type of programming?
8646 MR. HAYS: I know both of them, yeah.
8647 MR. HAYS: Obviously, I think that people would want to, but the channel has failed. As you know, the ratings are really very low.
8648 And I think, again, that is their fault. I don't think they put out a product --
8649 There are all sorts of right-wing people in Canada; obviously, we have a government run by them.
8650 I just don't think they put out the product properly and, unfortunately for Sun News, as you know, whenever a magazine, or a TV station, or a website starts, the first year or two is really crucial to the public's association with that brand.
8651 So they have now created the brand, which, as I say, is deeply banal, and that hurts them in how they are going to reboot that.
8652 And how that suddenly is going to change with the system change -- like, if you gave them this carriage system, why would we believe that it would suddenly turn around and change?
8653 They have had all of these resources behind them. I wish I had a major corporation like that behind me, I would love to put on a show.
8654 COMMISSIONER SIMPSON: It has been said that there can't be a left unless there is a right, and I am curious about -- bad pun -- about rights versus responsibilities.
8655 There are organizations like Sun that aren't necessarily everybody's cup of tea, but is it your view, as a journalist of some considerable experience and integrity -- and congratulations on your awards, by the way -- that everybody should have their opportunity to have their day in the sun?
8656 I guess where I am going with this is, there are intervenors who are coming before us who believe that it should not be on the air at all. They are not as tolerant as you are with respect to at least having a chance to get exposed, but there are intervenors that didn't even want them on the air in the first place.
8657 Do you think, as a journalist, that voices should be censored before they even get exposed?
8658 MR. HAYS: No, of course not, and they had every right to do this.
8659 I think that the people doing the programming, who are creating it, should have been far more careful about how they handled this, because they did come out swinging and saying how boring the CBC was. And, frankly, the CBC and CTV news channels look sort of like wonderful, magical amusement parks compared to Sun News at this point.
8660 Also, I think that, really, things like that citizenship ceremony -- that does great damage. If you are going to claim that you are a journalistic organization --
8661 They should have put more money into things like investigative journalism. Actually, if they had done something that I thought, "Wow", you know, "Look, they uncovered this story," or they did something really important, I would have been -- I would like to think that I would be here saying: Okay, they are not my cup of tea politically, but they have raised some important concerns.
8662 The other thing is the whole left-right scenario. As you say, you can't have a left without a right.
8663 One of the big charges that they have made -- and I think it has been very effective over the years -- is that the right has repeated this -- it is very effective in the United States, too, to repeat that the mainstream media has a liberal bias. In fact, right now -- in particular, they go after the CBC, which, really, they talk about as if it is a gigantic lesbian, communist daycare centre, run by the spirits of Trotsky and Stalin.
8664 But if you look at CBC programming, if you look at some of the pundits they have on -- Kevin O'Leary gets an awful lot of face-time on CBC; Andrew Coyne, Rex Murphy, Don Cherry on the sports programming. These people all get a lot of airtime, and I think that the CBC, if anything, has kind of gone out of its way to appease the right and say: Look, we have right-wing people on our show all the time, and we pay them well to tell us their thoughts and feelings and express their philosophies of the right.
8665 I don't know, I can't seem to name as many prominent leftists around the CBC. I think, if anything, the CBC now probably leans a little too far to the right.
8666 So I think, in a way, that Sun News -- not only have they really not done a particularly good job, but they came along at sort of an odd time, because it has been a successful couple of years for Conservatives, frankly, politically. If they had come along at a time when the Liberals were in power, or if the NDP had suddenly formed the federal government, then that might have been a little bit more interesting, because then there would have been an opposition.
8667 It's a little bit like, as some people say, the success of Jon Stewart and Stephen Colbert couldn't have happened without George W. Bush.
8668 So, in a way, Sun News has almost been hurt by the fact that the people who they work with, and their friends and neighbours, are the ones who are now in control.
8669 COMMISSIONER SIMPSON: Sir, thank you again for your intervention, it was very much appreciated.
8670 Those are my questions.
8671 MR. HAYS: Thank you.
8672 THE CHAIRPERSON: Thank you, Mr. Hays, those are our questions. Again, thank you for participating in our hearing. There is no problem in participating through Skype or through our regional offices. That is what the technology allows now, so we are happy to accommodate that. Thank you.
8673 MR. HAYS: Thank you very much.
8674 THE CHAIRPERSON: We will hear from the next intervenor, please.
8675 THE SECRETARY: On Screen Manitoba, could you please come forward to the presentation table.
8676 LE PRÉSIDENT : Alors, bienvenue. Je vous demanderais de vous présenter et de faire votre présentation pour un maximum de 10 minutes, s'il vous plaît.
8677 MME MATIATION : Bonjour, messieurs, mesdames. Je m'appelle Nicole Matiation, je suis la directrice générale d'On Screen Manitoba et j'ai avec moi, Charles Clément, producteur indépendant au Manitoba et membre du C.A. d'On Screen Manitoba.
8678 On Screen Manitoba est l'association professionnelle de l'ensemble de l'industrie de la production des médias au Manitoba. Nos membres sont les producteurs, les scénaristes, réalisateurs et autres professionnels de ce secteur qui croient que la diversité linguistique et culturelle de la production indépendante au Manitoba est un atout qui assure l'équilibre du système de la radiodiffusion au Canada.
8679 Parmi nos membres se trouvent des individus des milieux anglophone, francophone, autochtone et multiculturel. Leurs productions contribuent de façon importante non seulement à la diversification du contenu canadien sur les ondes mais à l'économie du Manitoba.
8680 De façon générale, On Screen Manitoba soutient des initiatives destinées à faire valoir la production indépendante en région et à soutenir la diversité des voix sur les ondes canadiennes. C'est pourquoi nous sommes présents aujourd'hui. Nous considérons que la licence de distribution obligatoire est un outil clé pour assurer la diversité des voix et pour favoriser l'expression de l'identité culturelle des Canadiens.
8681 Aujourd'hui, nous voudrions parler d'abord de la valeur de quatre des propositions cherchant une licence de distribution obligatoire : APTN, TV5, ACCENTS et Superchannel. Plus tard, on se penchera sur les offres d'ARTV, de The Starlight Channel et de Superchannel -- oops, une petite faute de typographie -- ainsi que sur des conditions de licence que nous considérons essentielles à tout accord de renouvellement de licence.
8682 APTN is a broadcaster that, since its inception, has met the mandatory distribution criteria in terms of its mandate, its decision-making structure, and its programming.
8683 There is no doubt in our mind that APTN makes an essential contribution to the Canadian broadcast system as a multilingual offering, dedicated to reflecting the Aboriginal peoples of Canada.
8684 It has contributed to the development of the Aboriginal media production community, offering a place for their stories of priority, and where non-Aboriginal Canadians also have access to independent Canadian content that reflects the linguistic and cultural diversity of Aboriginal peoples living in Canada.
8685 In light of the valuable service offered by APTN, we support their request for renewal and the request for a 15-cent increase to their wholesale fee.
8686 While we support the renewal of APTN, we believe strongly that, as a condition of licence, APTN should complete negotiations with the Alliance of Aboriginal Media Producers on the terms of trade within a few months, and then be held to respect those terms throughout the licence period.
8687 We also believe that, as a condition of licence, APTN should be required to report annually on its production expenditures in all genre formats and languages, by province and by territory.
8688 Clearly established processes for business dealings and transparent annual reporting mechanisms would attest to APTN's commitment to its mandate.
8689 MR. CLÉMENT: Mr. Chairman, as a proud member of Manitoba's production community and the owner of a small Aboriginal company, it never ceases to amaze me how many terrific stories are told by regional storytellers and producers located outside Toronto and Montreal in this great country. That is to say, they tell great stories when they are given a chance to do so, either through funding incentives or because of strong regulatory support for exceptional broadcasters such as APTN.
8690 Monsieur le Président, si, en 2013, j'ai la chance, avec tous mes collègues dans toutes les régions du Canada, d'évoluer dans une industrie qui nous passionnent, c'est à cause de diffuseur comme APTN, qui a pour raison d'être de collaborer avec des partenaires régionaux et faire valoir leur culture, leur langue et leur identité. C'est dans cet esprit régional que nous aimerions maintenant vous présenter nos pensées vis-à-vis la création d'un service de télédiffusion pour les communautés franco-canadiennes hors Québec.
8691 MME MATIATION : On Screen Manitoba appuie toute augmentation de services de télévision en langue française pour les francophones hors Québec, souvent mal ou peu servis malgré le fait que depuis plus d'une quinzaine d'années les producteurs franco-canadiens sont impliqués dans le milieu de la production télévisuelle au Canada.
8692 On Screen Manitoba apprécie fortement l'intérêt porté par ARTV, par ACCENTS et par TV5 à étendre des services de diffusion aux Franco-Canadiens vivant hors Québec. On parle de trois projets distincts qui ont tous le potentiel d'enrichir l'offre de la programmation canadienne en français et surtout de soutenir davantage les productions indépendantes franco-canadiennes.
8693 Les propositions d'ACCENTS et de TV5 offrent de nouvelles opportunités pour augmenter la production franco-canadienne en tous genres et formats et de présenter au public francophone de toutes les provinces canadiennes, sans exception, une fenêtre sur la réalité des francophones vivant hors Québec.
8694 Cependant, une licence de distribution obligatoire exige que le télédiffuseur propose un service exceptionnel aux Canadiens. Actuellement, on pourrait dire que n'importe quel télédiffuseur dédié à faire valoir la production indépendante francophone en privilégiant une programmation qui reflète les perspectives des Franco-Canadiens vivant à l'extérieur du Québec sera exceptionnel.
8695 En vue de la nature exceptionnelle d'une licence de distribution obligatoire et suite aux informations apportées à la discussion dans les dernières semaines, On Screen Manitoba constate que c'est ACCENTS de par son mandat et sa structure de gouvernance ainsi que par ses plans de programmation qui répond le plus complètement à toutes les exigences d'une licence de distribution obligatoire. Son mandat principal est de refléter la réalité de Franco-Canadiens vivant à l'extérieur du Québec en situation minoritaire. Sa structure de gouvernance suggère une connaissance profonde de la diversité des intérêts et des expériences géographiques et économiques des Franco-Canadiens qui se trouvent dans toutes les provinces et territoires du Canada. Avec ceci, ACCENTS propose d'installer son quartier général à Ottawa, au centre du pays.
8696 La vivacité des communautés francophones hors Québec est une histoire exceptionnelle qui fait partie intégrale de l'identité canadienne. Nous voyons avec les multiples demandes devant le CRTC qu'il y a un intérêt prononcé à servir ces communautés.
8697 Je tiens à souligner que la proposition de TV5 est fort intéressante également et toute augmentation de service en français qui cherche à répondre aux besoins des CLOSMs sera bienvenue. Ceci dit, en se penchant sur la question des exigences d'une licence de distribution obligatoire, il nous semble qu'ACCENTS y réponde le plus complètement.
8698 Si le CRTC accorde une licence de distribution obligatoire à un service francophone, que ça soit ACCENTS ou TV5, On Screen Manitoba demande que des conditions de licence incluent la négociation de termes d'affaires avec l'APFC comme organisme national, en collaboration avec l'APFTQ, ainsi que l'adhésion à ces termes, et, avec cela, un rapport annuel sur les dépenses en acquisition et en production dans toutes les provinces et territoires du Canada.
8699 On Screen Manitoba apprécie également les efforts d'ARTV à refléter la diversité de la francophonie dans sa programmation, ainsi que son investissement dans la production indépendante hors Québec. Nous appuyons sa demande de droit d'accès au service numérique à condition qu'ARTV accepte de maintenir ses niveaux historiques de dépenses et de diffusion de productions indépendantes réalisées par des Franco-Canadiens vivant et oeuvrant hors Québec, tel qu'exprimé en décembre 2012 lors du renouvellement de licence de la Société Radio-Canada. Afin d'assurer cet engagement, on demande comme condition de licence qu'ARTV soumette un rapport annuel détaillant les dépenses sur des productions en région.
8700 Turning to the English language offerings, now, we would like to speak to our support for the Starlight Channel, a proposal that promises to provide an important forum to access Canadian feature films, both documentary and fiction.
8701 Canadians have demonstrated in a variety of studies their desire to have access to more Canadian films. A mandatory distribution licence for the Starlight Channel would represent a unique model for making Canadian feature films accessible to Canadians across the country as well as contributing to the creation of new feature films.
8702 Feature films are a unique format for the telling of Canadian stories and a key means for expressing Canadian cultural identity within Canada and to the world.
8703 MR. CLÉMENT: 0n Screen Manitoba appreciates Starlight's commitment to including productions from all regions of Canada in its programming plans as well as its commitment to spend 50 percent of its proposed Feature film fund on productions in Western, Atlantic and Northern Canada. We also recognize its commitment to emerging and to Aboriginal productions.
8704 Filmmakers across Canada would have access to new financing and distribution opportunities that would encourage the production of films that are driven by Canadian talent.
8705 Furthermore, the Canadian feature film industry contributes to the economy of Canada through the employment of countless -- excuse me -- hundreds and thousands of artists, musicians, artisans, and film industry professionals. It also contributes more broadly to the economy through the purchase of goods and services such as accommodation, decor, transportation amongst countless others.
8706 MS MATIATION: As with any broadcast licence, On Screen Manitoba believes that should the Commission award a mandatory distribution licence to The Starlight Channel that it should include conditions of licence to negotiate and respect a terms of trade deal with the CMPA and to provide annual reports to the CRTC regarding its expenditures by province and territory in regard to both commissioning and acquiring films.
8707 On Screen Manitoba recognizes and appreciates the significant commitment Superchannel has made to Canadian programming and to regional programming, in particular, when it negotiated its licence in 2006. It is not the only applicant seeking reductions in its Canadian content obligation but in doing so, it is also putting at risk a significant commitment to regional production.
8708 MR. McCALLUM: I'm sorry. I believe that Superchannel is in renewal and we have asked interveners not to address orally remarks in relation to non-appearing items.
8709 THE CHAIRPERSON: They are not part of this oral phase of the hearing so you can put those --
8710 MS MATIATION: We put them in as written comments previously.
8711 THE CHAIRPERSON: Okay.
8712 MS MATIATION: So I will skip forward.
8713 THE CHAIRPERSON: You need to skip that part. Yeah, thanks.
8714 MS MATIATION: In general terms, with regard to all broadcast licence applications and renewals, On Screen Manitoba supports the Commission's opinion that terms of trade bring clarity and stability to the Canadian broadcast system for both producers and broadcasters.
8715 On Screen Manitoba urges the Commission to require adherence to the terms of trade with regard to all broadcast licences accorded and renewed whether for the English language or for the French language market.
8716 Further, On Screen Manitoba believes that an annual transparent reporting process that details expenditures on all genres and formats by province and by territory for all broadcasters as a condition of licence would allow industry stakeholders and Canadian consumers alike to see that broadcasters are respecting their mandates and delivering on their commitments to reflect all regions of Canada.
8717 0n Screen Manitoba appreciates the opportunity to provide its comments to the Commission. Merci.
8718 THE CHAIRPERSON: Thank you for your presentation. I don't have a lot of questions because your position is somewhat clear. Maybe three -- two or three things that I was wondering.
8719 You know, I was somewhat disappointed, to be frank, that your position is "Yeah, we'll support" -- it's a caricature of it -- "We'll support anything provided there is money coming back to our association's membership in Manitoba".
8720 So you're producers and, yes, we're fine with that provided there is a share of us, there is terms of trade, there is something for us.
8721 I'm a bit disappointed that you haven't addressed the broader public interest in this, including the affordability of these services for Canadians, whether it actually contributes to the broadcasting system. It seems a bit self-interested generally.
8722 MS MATIATION: I think maybe we overemphasized our concern with the terms of trade and reporting mechanisms.
8723 The broader issues certainly dealing with ACCENTS and TV5 are very important to this community and there was a long -- a very long debate with the members as to the value of it and how do we move forward with a request such as this and mostly coming down to a firm commitment.
8724 Moi-même, je suis anglophone de naissance, mais je vis en francophonie dans ma famille, dans ma communauté et dans ma profession aussi, et j'aimerais que mes enfants puissent avoir accès à une programmation francophone qui reflète vraiment leur identité, qui ils sont et où ils habitent, et ça, c'est une des choses qu'on n'a pas vue jusqu'ici. C'est pour ça qu'on sent fortement que l'offre d'un diffuseur francophone est essentiel et que c'est une valeur qui en vaut la peine.
8725 MR. CLÉMENT: And if I may, without trying to overstate what On Screen Manitoba does and what it represents -- and Nicole can give me a nudge if I'm wrong -- but certainly in all of our discussions with other regional associations we are all speaking the same tune, so to speak, as far as trying to value regional production so that the diversity of voices from all corners of Canada are reflected in all of the programming that we see on our own airwaves, the airwaves that Canadians own.
8726 And so certainly we're speaking from the Manitoba perspective, but I would suspect that most other provincial associations would speak the same tune as far as having that regional representation available to all Canadians at all times.
8727 THE CHAIRPERSON: We'll talk about APTN for a second. That's a 60 percent rate increase which you support. I mean, you're business people. Your members are business people. Who gets to have a 60 percent increase in their revenues these days?
8728 MR. CLÉMENT: There are very few if any. I've got the honour later this week to also speak on behalf of APTN in a presentation that I'll give later in the week.
8729 So without trying to present all of that ahead of time, I can say that broadcasters that demonstrate the type of commitment that APTN has since its launching in 1999, as far as literally the creation of an entire ecosystem of Aboriginal media and who continue to grow and who continue to provide for a diverse number of voices to be heard where there simply weren't any, deserve that consideration going forward.
8730 Et de mon point de vue personnel comme producteur métis et francophone dans les Prairies, je comprends très bien le bénéfice que ça apporte d'avoir un diffuseur qui se concentre à 100 pour cent sur les producteurs en région. Je comprends qu'il y a un certain coût associé à ça, et je comprends très bien que je suis biaisé, étant producteur qui paye aussi sa facture à mon EDR à tous les mois, mais le coût, que ce soit 25 ou maintenant 40 sous, pour le tarif de gros pour l'APTN, je vois ça quand même comme un coût très abordable, vu l'impact qu'un diffuseur comme APTN apporte non seulement au public autochtone au Canada et ailleurs, ainsi qu'à toutes les communautés non autochtones au Canada qui apprécient cette programmation.
MS MATIATION: I just wanted to add that, you know, maybe this is partly a reflection of where we live as well because the Aboriginal population in Manitoba is close to 20 percent. So I can't imagine why we wouldn't encourage APTN to continue to deliver the kind of services that they do.
LE PRÉSIDENT : En ce qui a trait aux services francophones qui pourraient ajouter à l'offre par rapport aux communautés en situation minoritaire, il y a trois demandes : ARTV, la demande d'ACCENTS et la demande de TV5.
Si vous aviez à les mettre en ordre de priorité... parce que je vois bien là que vous évitez de le faire dans votre demande, vous ne choisissez personne. Si vous aviez... parce que, évidemment, le Conseil pourrait décider de n'octroyer qu'une seule permission ou on pourrait décider de zéro, un, deux, trois, mais on ne peut pas présumer qu'on en octroierait trois.
Donc, si vous aviez à les mettre en ordre de priorité, ça serait en quel ordre?
8731 M. CLÉMENT : Si je pourrais tout simplement aussi clarifier.
Je pense que dans notre présentation aujourd'hui, nous avons bel et bien dit que si le Conseil cherche à accorder une licence 9(1)(h) à un diffuseur que c'est clair à ce stage-ci que c'est la demande de l'ACCENTS qui répond le mieux et plus complètement aux critères établis par la loi même. Alors, c'est ça qu'on vous annonce aujourd'hui.
Et, de mon point de vue personnel, moi, je peux vous dire que, comme Nicole l'a bien dit, c'est après de nombreuses discussions et de la réflexion interne comme communauté qu'on s'est parlé pour décider un peu dans quelle direction on pourrait aller pour avoir une meilleure représentation de la réalité francophone et hors Québec au Canada.
Et je peux vous dire, de mon point de vue, ça se rapporte à deux choses vraiment. Je suis un jeune gamin francophone métis de Saint-Boniface qui a vécu toute sa vie en milieu minoritaire, qui comprend très bien la réalité d'être natif et d'être élevé dans une communauté où ma langue maternelle est la langue minoritaire. J'élève maintenant ma jeune famille. J'ai deux petites filles qui vont à l'école française à Winnipeg et à Saint-Boniface. Ce n'est pas évident de continuellement se battre pour sa langue, pour sa culture, pour son héritage. Alors, c'est de ce point de vue là que je me rapproche, je me rallie plus derrière la proposition de l'ACCENTS.
8732 Et, deuxièmement, comme producteur autochtone qui a... j'ai eu un long cheminement maintenant comme jeune producteur et comme propriétaire d'une petite boîte de production autochtone à Winnipeg. Utilisant l'exemple de l'APTN comme diffuseur, comme je viens de le mentionner, qui a vraiment inventer un écosystème médiatique au Canada depuis 1999, c'est de cette part-là que je vois que la proposition de l'ACCENTS fait plus écho au modèle de l'APTN.
8733 Et je veux revenir un peu, si vous me permettez, sur le point que M. Greg McLaren de MTS vient de nous annoncer, il y a quelques minutes. Je connais monsieur McLaren depuis longtemps. J'étais bénévole à Videon, il y a 16-17 ans quand j'ai commencé ma carrière, et j'ai beaucoup de respect pour monsieur McLaren, et, de fait, je suis complètement d'accord, parce que c'est un gars de statistiques. S'il nous a dit que le niveau de pénétration des chaînes francophones à Winnipeg est moins que 1 pour cent sur l'EDR de MTS, je peux vous le dire... je n'ai pas les statistiques, mais je peux vous dire avec pleine confiance que s'il y a une raison pour laquelle moi, je ne peux pas planter mes jeunes aussi souvent que je l'aimerais devant la télé française à Winnipeg, c'est parce que la programmation ne se relie pas à moi, à mon histoire, à mon héritage comme francophone hors Québec, et encore moins à mes jeunes de neuf et six ans le mois prochain.
8734 Alors, il a raison. Le penetration rate, comme on dit, de ces services-là n'est pas élevé, mais without trying to overdramatize this, but we are in showbiz, on a tous vu le film "Field of Dreams," et puis quand le monsieur a dit, "If you build it, they will come," je vous assure que si on avait un diffuseur canadien de distribution obligatoire qui était concentré uniquement sur la francophonie canadienne hors Québec, they will come.
8735 LE PRÉSIDENT : Et vous l'appuyez même si c'est au détriment de la distribution d'ARTV?
8736 M. CLÉMENT : Je ne sais pas, Nicole, comment on pourrait... Moi, c'est plus la... Moi, j'envisage ça plus sur les propositions entre l'ACCENTS et TV5, et ça me donne la chance encore une fois de répéter ce qu'on a dit dans la proposition.
8737 C'est que la proposition de TV5 et d'ARTV, en fait, sont toutes les deux très fortes, et TV5, c'est une agréable surprise n'importe quand qu'on puisse s'attendre à avoir plus de programmation pour les francophones hors Québec, et c'est nullement pour dire de quoi de négatif sur ce qu'il y a de TV5, c'est tout simplement un choix versus ma réalité et la réalité de bien d'autres producteurs qui ont vécu toute leur vie en situation minoritaire.
8738 LE PRÉSIDENT : On a entendu parler beaucoup -- puis c'est ma dernière question -- des entreprises de distribution, qu'il y a des forces de marché, puis ça fait plusieurs années que je suis impliqué dans le domaine, et c'est vrai qu'il y a souvent des propositions pour augmenter l'offre pour les francophones en situation minoritaire, mais malgré ça, les abonnés ne sont pas au rendez-vous, que les foyers franco-manitobains, parce que c'est votre réalité, ne semblent pas s'abonner, puis ça semble être confirmé par la référence du panel tout à l'heure.
8739 Il me semble qu'il faut voter avec ses pieds un moment donné ou avec son portefeuille et s'abonner aux chaînes.
8740 M. CLÉMENT : Absolument, mais c'est tout simplement pour ça que je viens de faire mon point. C'est que...
8741 LE PRÉSIDENT : Ça ne vous reflète pas assez?
8742 M. CLÉMENT : Ça ne nous reflète pas. Même si ce n'est pas assez, ça ne nous reflète pas du tout, et donc...
8743 LE PRÉSIDENT : Donc, c'est mieux d'écoutez des chaînes américaines ou des chaînes torontoises?
8744 M. CLÉMENT : Bien, moi, dans mon cas, j'essaie de diriger mes jeunes filles vers d'autres contenus, soit sur DVD ou à l'Internet si je peux le trouver, mais, malheureusement, ça aussi, il n'y en a pas beaucoup de contenus, bien presque aucun contenu qui se rapporte directement à qui on est comme francophones hors Québec.
8745 Alors, c'est exactement avec ce point-là que j'aimerais soulever que si la programmation était là qui reflétait les communautés francophones hors Québec, je serais du rendez-vous, et puis j'en connais bien d'autres qui le seraient aussi, pas juste à Saint-Boniface non plus.
8746 LE PRÉSIDENT : Je voulais vous pousser un peu, et vous avez une bonne réponse.
8747 M. CLÉMENT : Oh, j'apprécie.
8748 LE PRÉSIDENT : Alors, ce sont nos questions. Merci beaucoup.
8749 M. CLÉMENT : Merci beaucoup.
8750 THE CHAIRPERSON: We will take a short break till about 3:05 for the next intervener, which will be...?
8751 THE SECRETARY: Cogeco.
8752 LE PRÉSIDENT : O.K. Trois heures et cinq. Merci.
--- Upon recessing at 1452
--- Upon resuming at 1505
8753 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
8754 Donc, on va passer maintenant à la présentation de Cogeco.
8755 Comme est l'habitude, Monsieur Mayrand... bien non, ce n'est peut-être pas nécessaire, Monsieur Mayrand.
8756 Monsieur Bellerose, vous pouvez faire votre présentation. Merci.
8757 M. MAYRAND : Merci, Monsieur le Président.
8758 Alors, écoutez, Monsieur le Président, Monsieur le Vice-président, mesdames et messieurs les Conseillers, nous vous remercions de l'occasion que vous nous donnez d'exprimer de vive voix notre point de vue lors de cette audience publique.
8759 Je suis Yves Mayrand, vice-président, Affaires d'entreprise de Cogeco Câble inc.
8760 Je suis accompagné, à ma droite, de Serge Bellerose, conseiller en communications, qui nous a assistés dans la préparation de notre intervention.
8761 Je vais être bref car vous avez un horaire très chargé et vous avez déjà couvert beaucoup de terrain lors des comparutions précédentes au cours de cette audience publique.
8762 Permettez-moi d'abord de mettre les choses en perspective en ce qui concerne la situation de Cogeco Câble au sein du système canadien de radiodiffusion.
8763 First, Cogeco Cable is the owner of broadcasting distribution undertakings in Ontario and Quebec that account for a retail distribution market share of less than 10 percent at the national level and less than 15 percent at the level of each of these two Canadian provinces where it conducts its activities. It goes without saying that Cogeco Cable is simply not in a position to exercise any market power within the broadcasting distribution sector in Canada.
8764 Second, neither Cogeco Cable nor the other entities of its group have any financial interest in specialty or pay programming undertakings. For historical reasons, Cogeco is one of the founders and a minoriy shareholder of the Cable Public Affairs Channel, but, as you know, this is a not-for-profit Canadian corporation over which we do not exercise any control and from which we derive no financial benefit.
8765 Therefore, the position that we take in our intervention is entirely focussed on the role that we play as an independent broadcasting distributor within the Canadian broadcasting system, in a highly competitive market, and it is also clearly focussed on what we believe to be the best interest of Canadian consumers who are our present and our potential customers.
8766 Je sais que vous avez déjà examiné notre mémoire et ses deux annexes. Je vais donc m'en tenir aux grands points de principe que nous y avons exprimés.
8767 Nous ne nous opposons ni au renouvellement des licences ni au renouvellement des ordonnances de distribution des six services existants qui sont déjà portés à la base en vertu d'une ordonnance de distribution obligatoire à la base. Nous vous demandons seulement de vous assurer que les majorations tarifaires demandées par ceux-ci sont bien justifiées dans les circonstances.
8768 Nous ne nous opposons pas non plus au renouvellement ou à l'attribution de nouvelles licences pour les divers autres services de programmation, sous réserve toutefois que ceux-ci ne fassent pas l'objet de nouvelles ordonnances de distribution obligatoire à la base qui viendraient s'ajouter à celles qui ont cours présentement.
8769 Nous sommes donc essentiellement préoccupés par la possibilité d'une prolifération du nombre de services de programmation qui devraient être obligatoirement portés au service de base numérique sur nos réseaux, ainsi que par le précédent qui risque d'en résulter et qui, le cas échéant, serait certainement invoqué par de nombreux autres requérants par la suite.
8770 Notre préoccupation est fondée sur le fait qu'une telle augmentation donnerait lieu à des conséquences clairement indésirables aux plans de la liberté de choix des consommateurs, du coût des services de télévision de base, de l'adhésion des consommateurs au système canadien de radiodiffusion pour leur consommation de services audiovisuels de tous genres, et de la consommation par ceux-ci des services audiovisuels facultatifs qui, pour leur part, ne bénéficient pas du même statut hautement privilégié.
8771 Technological evolution and the growing power of consumers over their ability to choose all kinds of services is such that it would be totally inappropriate to try to forcibly impose on them new services irrespective of their will or their preferences.
8772 It is easy to imagine all kinds of worthy audiovisual programming goals, but a worthy goal is not in and of itself sufficient to turn it into a service that must be imposed to consumers and to their broadcasting distribution service suppliers.
8773 In our view, it would be clearly inappropriate to come to the rescue, through mandatory distribution orders, of services that have been licensed on a purely discretionary or competitive basis by imposing ex post facto their cross-subsidization by all cable and satellite customers or to grant licences for new services based on a business plan that necessarily relies on such a compulsory cross-subsidization.
8774 Monsieur le Président, nous avons noté avec beaucoup d'intérêt vos remarques à l'ouverture de la présente audience à l'effet que votre organisme de régulation est très conscient de l'impact des décisions qu'il pourrait prendre dans cette instance, que les consommateurs s'attendent à pouvoir choisir les services de télévision qu'ils reçoivent, et que les abonnés sont de plus en plus préoccupés de l'abordabilité des services de télévision.
8775 C'est pourquoi, comme vous l'avez si justement remarqué, la distribution obligatoire en vertu de l'article 9(1)(h) de la Loi sur la radiodiffusion est un régime d'exception. J'ajouterais qu'il doit demeurer un régime d'exception à toutes fins utiles.
8776 Vos critères d'évaluation indiquent d'ailleurs sans équivoque qu'il s'agit bien d'un régime d'exception, avec l'utilisation répétée du mot « exceptionnel ».
8777 Nous avons suivi attentivement le déroulement de cette audience et les représentations des requérants pour une nouvelle ordonnance de distribution obligatoire à la base lors de leur comparution respective. Notre position demeure inchangée car, selon nous, aucun de ces requérants n'a fait une démonstration claire et concluante que le recours à une telle ordonnance exceptionnelle est absolument nécessaire et entièrement justifiée dans les circonstances.
8778 Il faut noter enfin que la distribution obligatoire de services privés à but lucratif aux frais de tous les abonnés du câble et du satellite pose, de surcroît, un sérieux problème de gouvernance, puisqu'une partie variable de cet inter financement forcé se retrouve en bout de piste dans la poche des promoteurs du service.
8779 Nous vous remercions d'avoir bien voulu nous entendre à cette audience. Il nous fera plaisir maintenant de répondre à vos questions.
8780 LE PRÉSIDENT : Merci messieurs.
8781 Madame Poirier aura des questions pour vous.
8782 CONSEILLÈRE POIRIER : Bonjour Messieurs.
8783 Vous pourrez répondre en français et en anglais, parce que je sais que votre présentation a été bilingue. Alors n'hésitez pas si vous voulez le faire en anglais pour faire directement comprendre sans intermédiaire votre point de vue.
8784 Donc, si je comprends bien, vous n'avez changé aucune des positions par rapport au mémoire que vous nous avez présenté.
8785 Il n'y a aucune nuance que vous voulez ajouter par rapport à cette position initiale?
8786 M. MAYRAND : C'est exact, c'est ce que nous vous disons aujourd'hui.
8787 CONSEILLÈRE POIRIER : Parfait.
8788 Et suite à votre présentation d'aujourd'hui, j'ai noté qu'à plusieurs reprises, vous avez parlé de la liberté de choix des consommateurs.
8789 Nous, on a parlé beaucoup d'exception. Vous, beaucoup de liberté de choix. Donc, je suppose que les consommateurs de Cogeco ont déjà un service à la carte?
8790 M. MAYRAND : Bon. Alors, nous offrons évidemment une grande variété d'options aux consommateurs, de nos services de télévision.
8791 Quand vous dites « à la carte », faut faire attention à la confusion entre une offre à la carte de services linéaires puis à la carte, évidemment sur demande.
8792 Nous offrons également des services de programmation sur demande.
8793 Les offres varient entre le Québec et l'Ontario pour des raisons largement historiques, comme vous le savez, et des raisons de contrats d'affiliation qui font en sorte que nous n'avons pas nécessairement la même flexibilité dans la façon de disposer de notre offre. Que ce soit au Québec ou en Ontario.
8794 CONSEILLÈRE POIRIER : Mais, vous comprenez bien, Monsieur Mayrand, le sens de ma question.
8795 Tout le monde ici, tous les câblos nous disent : « Le consommateur devrait avoir le choix de tous ces canaux. »
8796 Or, on se rend compte que dans la réalité, ce n'est pas ce qui se passe comme offre faite aux consommateurs.
8797 Alors, j'essaie donc de comprendre quand vous dites que les consommateurs « s'attendent à pouvoir choisir les services ». Et la phrase est répétée à maintes reprises dans votre document.
8798 Je m'attends donc aussi à ce que les distributeurs fassent de même, c'est-à-dire qu'ils offrent aux consommateurs un choix de... la possibilité de choisir.
8799 Alors ma question, je la répète, est-ce que tant au Québec qu'en Ontario, Cogeco offre un service à la carte qui permettrait vraiment aux consommateurs de pouvoir choisir leurs services?
8800 M. MAYRAND : Comme vous le savez, Madame Poirier, nous offrons évidemment des services de base qui ne comportent pas une offre de chaque service individuel à la carte.
8801 Nous offrons également des volets de services numériques qui ne comportent pas nécessairement un choix par canal ou par service. Mais, nous offrons une grande variété de forfaits thématiques. Nous offrons la possibilité à des abonnés de choisir, de composer leur propre forfait à même un inventaire large de services.
8802 Ce ne sont pas tous les services qui sont disponibles sur cette base-là.
8803 Et encore une fois, je vous le répète, que dans certains cas, c'est impossible pour nous d'augmenter le choix ou la variété de choix qui est offerte aux abonnés pour des raisons de restrictions contractuelles.
8804 Alors, nous n'avons pas l'entière liberté de faire tout ce que tous les consommateurs souhaiteraient qu'on fasse en tout temps.
8805 CONSEILLÈRE POIRIER : Oui.
8806 M. MAYRAND : Alors, je pense que c'est la meilleure réponse qu'on peut vous donner. Il faut être pratique ici.
8807 Et, vous n'êtes pas sans savoir aussi que tout le secteur de la distribution et de la radiodiffusion au détail a toujours été historiquement axé sur des forfaits. Et la force que donne, entre autres pour le service de base, le fait que vous trouvez autre chose que juste quelques éléments du système de radiodiffusion choisi, il y a un éventail de choix. Ça a été historiquement toujours le cas.
8808 Et, on pourrait débattre à nouveau toute la question du volet de base restreint qui a fait l'objet d'un long débat dans les procédures antérieures.
8809 Je pense pas qu'on veut rentrer à nouveau dans ce sujet-là.
8810 Mais la tendance, ce que je vous dis, la tendance clairement, dans un marché où il y a une grande abondance de services offerts de tous types, et où il y a concurrence -- et j'insiste sur le mot « concurrence » -- dans le secteur de la distribution de radiodiffusion, nous sommes en concurrence avec plusieurs concurrents.
8811 Nous avons à subir de l'attrition de nos abonnés, de base, en télévision.
8812 CONSEILLÈRE POIRIER : Et, est-ce que vous avez des chiffres qui viennent étayer cette affirmation que vous faites? Parce que beaucoup aussi de distributeurs nous ont dit : « Oui, il y a une diminution. »
8813 Or, j'ai remarqué justement dans le rapport Giganomics que vous avez une estimation d'augmentation d'inscriptions et elle est de 5 à 9 p. cent pour les trois prochaines années.
8814 Alors, à chaque fois qu'un câblo ou un service satellitaire vient nous dire, il y a une diminution, je suis surprise. Parce que dans le fameux rapport Giganomics, il y a une augmentation prévue pour trois ans.
8815 M. MAYRAND : Alors, je pense que madame Blackwell un petit peu plus tôt aujourd'hui, vous a dit : « Oui, nous avons soumis des projections ou Giganomics a préparé des projections. »
8816 Elle nous a fait remarquer cependant que ce sont des projections d'abonnés numériques. Ce qui n'inclut pas évidemment la base analogique.
8817 Moi, tout ce que je peux faire, c'est vous référer -- parce que nous sommes une société dont les actions sont cotées en bourse. Et nos résultats financiers sont disponibles sur notre site web, bien sûr, et sur SEDAR.
8818 Mais les chiffres que nous divulguons montrent que si vous prenez notre rapport annuel de 2012, qu'il y a une certaine attrition des clients du service de télévision et puis nos résultats intérimaires que nous avons publiés il y a peu de temps, démontrent que cette tendance existe toujours.
8819 CONSEILLÈRE POIRIER : O.K. Et...
8820 M. MAYRAND : Bon. Je ne vais pas dramatiser, puis je ne vais pas vous dire qu'on est aux abois. Nous continuons à faire des gains sur d'autres services. Mais la réalité quand même, elle est très claire en ce qui nous concerne.
8821 CONSEILLÈRE POIRIER : Et c'est de là que peut-être vous pouvez vous distancer des résultats de Giganomics.
8822 Par contre, cette étude-là contestait beaucoup le nombre d'abonnés que la plupart des requérants ont mis dans leurs estimations financières.
8823 Dans cette étude-là, les requérants, d'après l'étude Giganomics, ont sous-estimé la croissance. C'est-à-dire donc, Cogeco dirait : « Non, on est d'accord avec les chiffres avancés par les compagnies, parce que chez vous, au contraire, c'est peut-être plus une tendance assez stable, pour ne pas dire, même en décroissance. »
8824 Donc, les requérants auraient fait un bon estimé du nombre potentiel d'abonnés.
8825 M. MAYRAND : Deux choses.
8826 D'abord, l'étude de Giganomics, c'est une étude qui vous donne, je pense, des données consolidées, en fait, pour chacun des marchés : marché anglophone, marché francophone.
8827 Et c'est pas des données qui sont reliées spécifiquement à la zone de desserte d'un ou l'autre distributeur.
8828 Et je répète encore une fois que les données que Giganomics a utilisées sont des données réelles 2012 sur la base desquelles certaines projections ont été faites, mais pour la croissance des abonnés numériques.
8829 Alors, je pense que c'est bien important de comprendre qu'on parle pas là de tout l'univers et de tout type de gens qui sont abonnés effectivement à un service de base.
8830 CONSEILLÈRE POIRIER : Cette fameuse étude-là aussi réduit pas mal à néant les plans d'affaires de plusieurs des demandeurs. Je pourrais nommer StarLight, Vision, Fusion.
8831 Alors, à votre avis, si les plans d'affaires qui ont été présentés et qui font partie d'un des critères demandés pour devenir une distribution obligatoire avec le 9(1)h), quelle preuve faudrait-il que ces gens-là nous présentent pour que vous les acceptiez comme étant des rapports, des plans d'affaires adéquats et exceptionnels?
8832 M. MAYRAND : Je pense qu'il y a deux réponses à votre question, Madame Poirier.
8833 La première c'est que, comme vous le savez, vous n'avez pas un seul critère d'évaluation pour l'opportunité d'appliquer...
8834 CONSEILLÈRE POIRIER : Oui, mais ce critère-là en particulier a été visé par l'étude.
8835 M. MAYRAND : ... un 9(1)h).
8836 Alors, c'est un des critères, c'est le type de plan.
8837 Je pense que ce que vous entendez de la part de distributeurs et de la part aussi d'autres parties et de consommateurs, c'est que, vous savez, on peut pas se créer un plan d'affaires qui est organisé de façon à ne fonctionner que sur la base d'un inter financement forcé auprès de tous les abonnés du satellite et du câble, puis dire ensuite : « Bien, vous voyez. C'est la preuve qu'il n'y a pas d'autres façons de faire. »
8838 Alors, nous avons-nous, observé dans nos... je cite dans notre mémoire écrit que pour prendre le cas de StarLight, qu'on n'était pas du tout convaincu que ce plan d'affaires-là justifie dans les circonstances -- et nous ne sommes toujours pas convaincus à la suite de la comparution de cette requérante -- justifie au regard de tous les critères d'approbation d'une ordonnance de 9(1)h), justifie cette mesure-là dans le cas qu'on vient de discuter.
8839 Et c'est pas uniquement le cas de StarLight.
8840 Alors, autrement dit -- et je vais essayer de mettre ça dans une formule aussi simple que possible dans notre présentation orale d'aujourd'hui.
8841 Il y a deux choses qui nous troublent. Il y a d'abord une série de requérantes qui ont obtenu des licences de catégorie B ou de catégorie C. Je reviendrai pas sur la définition de ce que sont ces catégories-là.
8842 Mais je pense qu'on s'entend tous pour dire que ce sont les catégories qui comportent un élément de concurrence et qui comportent un élément de risque financier.
8843 Ce qui nous trouble, c'est qu'on voit des titulaires ayant obtenu des licences selon ces catégories-là, venir vous voir puis dire : « Ah bien, au fond, on aimerait bien que vous nous donniez un privilège hautement extraordinaire d'être distribué partout avec un tarif de gros approuvé par vous.
8844 Et nonobstant le fait que la licence que nous avons demandée et obtenue ne comporte aucunement de tels privilèges.
8845 Alors, j'imagine que ces gens-là vont aussi vous dire : « Ah! Bien vous savez, dans vos critères, il n'y a rien qui empêche quelque service que ce soit de catégorie A, B ou C de venir vous voir, et puis de faire sa demande, de vous présenter sa demande pour une ordonnance de distribution obligatoire. »
8846 Nous, ce que nous vous disons, c'est : « Attention, ayons le souci de la prévisibilité et de la transparence. »
8847 Parce qu'à partir du moment où l'outil 9(1)h), qui est un outil d'exception, est appliqué à des licences qui comportent des risques.
8848 Je pense qu'on vient remettre en cause l'édifice même des catégories de licences la façon dont vous attribuez ça.
8849 CONSEILLÈRE POIRIER : Alors, vous leur dites qu'il y a d'autres avenues que celles du 9(1)h), je comprends bien.
8850 Dans vos documents, vous avez aussi parlé entre autres de Fusion et de Ami, les demandes qu'ils ont faites.
8851 Vous dites qu'ils ont fixé un tarif, puis ensuite, ils ont fait leur plan d'affaires en fonction du tarif demandé.
8852 On leur a posé la question cette semaine. Eux, ils nous ont expliqué comment ils ont fait leur plan d'affaires. Ils disent être partis de dépenses de programmation, de dépenses techniques, de dépenses de toutes sortes et ensuite ils ont fixé leur tarif de gros.
8853 Alors comment peut-on réconcilier votre position avec celle des demandeurs qui nous disent avoir procédé de bas en haut et non pas de haut en bas, comme vous semblez leur reprocher dans leur document?
8854 M. BELLEROSE : De toute façon, dans le cas de Fusion, je pense que le problème se situe ailleurs.
8855 Je pense que Fusion est un projet qui devrait davantage être développé sur d'autres plateformes que sur le service de base numérique.
8856 Ils ont, de mémoire, un plan d'affaires avec des coûts qui sont extrêmement élevés et très, très couteux.
8857 Ça, c'est le service de Stornoway, je crois, Fusion, c'est ça?
8858 CONSEILLÈRE POIRIER : Oui.
8859 M. BELLEROSE : Exactement.
8860 M. MAYRAND : Mais de façon générale, ce qu'on a constaté, c'est... effectivement, ils sont partis d'un point de départ. Et le point de départ, manifestement, c'était de voir quel était le tarif de gros raisonnable qu'ils pouvaient anticiper de demander dans un contexte historique de ce qu'ils ont fait.
8861 Et c'est, de toute évidence, à l'examen de différents plans d'affaires qui ont été déposés, la façon de faire de la plupart des requérants.
8862 Ils ont dit : « Bon voilà! Nous sommes en mesure de demander tant. Il y a certains frais qui sont assez faciles à calculer, les frais de transmission, les frais de marketing, d'administration.
8863 Alors voilà, il nous reste tant pour faire la programmation et voilà ce qu'on vous demande. »
8864 CONSEILLÈRE POIRIER : Alors vous maintenez votre position originale.
8865 M. BELLEROSE : Absolument, oui.
8866 CONSEILLÈRE POIRIER : Entrons dans des questions peut-être plus précises. Par exemple, les films canadiens. Ça a été un sujet important cette semaine. Vous êtes titulaire de Vidéo sur demande chez Cogeco? Bien sûr?
8867 M. MAYRAND : C'est exact.
8868 CONSEILLÈRE POIRIER : Alors, est-ce que vous avez un bon inventaire de films canadiens?
8869 M. MAYRAND : Bien, nous avons certainement un inventaire de films canadiens que nous présentons aux abonnés, que tous nos abonnés qui ont accès à la VSD...
8870 CONSEILLÈRE POIRIER : Avez-vous un chiffre, un nombre de films canadiens?
8871 M. MAYRAND : J'aurais souhaité pouvoir vous donner le chiffre d'inventaire. Je pourrais certainement vous le soumettre d'ici le 2 mai.
8872 CONSEILLÈRE POIRIER : Tout à fait.
8873 M. MAYRAND : Malheureusement, je n'ai pas eu l'information en termes de nombre de titres.
8874 Je peux vous dire que nous excédons les conditions de licence que nous avons au niveau de l'inventaire de films canadiens que nous devons rendre disponibles, que ce soit en langue française ou en langue anglaise.
8875 CONSEILLÈRE POIRIER : Parfait.
8876 M. MAYRAND : Je serais heureux de vous fournir des données plus précises.
8877 CONSEILLÈRE POIRIER : Parfait. Ce sera jusqu'au 2 mai, bien sûr.
8878 Est-ce que vous ajoutez régulièrement des nouveaux films aussi?
8879 M. MAYRAND : C'est dans le cours normal des activités d'une plateforme Vidéo sur demande, de continuellement rafraîchir l'inventaire.
8880 CONSEILLÈRE POIRIER : Et je suis certaine que vous en faites la promotion telle qu'il est stipulé aussi. Je présuppose.
8881 M. MAYRAND : Nous respectons...
8882 CONSEILLÈRE POIRIER : Le 25 p. cent.
8883 M. MAYRAND : ... toutes les conditions de nos licences.
8884 Nous avons déjà fait l'objet d'un renouvellement de licence récemment. Et nous avons soumis au Conseil tous les détails de nos opérations de Vidéo sur demande.
8885 CONSEILLÈRE POIRIER : Par contre, un chiffre qui nous serait intéressant, ça serait de connaître la proportion de vos abonnés qui sont aussi abonnés de la Vidéo sur demande.
8886 Est-ce que vous avez ces chiffres-là?
8887 M. MAYRAND : Je ne les ai pas sous la main. Mais là encore, on va être heureux de vous donner des données plus précises d'ici le 2 mai.
8888 CONSEILLÈRE POIRIER : Parfait.
8889 Parlons un petit peu de TV5. Techniquement, est-ce qu'il y a une différence ou un problème à ajouter un deuxième signal ou une deuxième nouvelle chaîne, tel que la demande a été faite?
8890 M. MAYRAND : La question se pose de la façon suivante. Est-ce qu'il y a un problème à court terme et est-ce qu'il y a un problème à long terme ou à plus long terme.
8891 À plus long terme, ce genre de problématique-là ne se pose pas au niveau de la capacité des réseaux. Parce que vous n'êtes pas sans savoir que dans notre industrie qui consomme énormément de capital, il y a des cycles d'amélioration de réseau et de reconstruction de réseaux qui ajoutent régulièrement de la capacité.
8892 Et le problème, c'est que ça se fait généralement par période de temps et non continuellement.
8893 Si on parle d'augmentation importante de capacité, il y a des améliorations technologiques qui doivent être déployées comme par exemple les modes d'utilisation partagées de canaux, la numérisation, etc.
8894 Ce qui fait qu'à court terme, il peut y avoir des problèmes de capacité et nous en avons au Québec.
8895 CONSEILLÈRE POIRIER : Pour laquelle des deux hypothèses? Un deuxième signal?
8896 M. MAYRAND : Dans le cas de...
8897 CONSEILLÈRE POIRIER : Ou pour une nouvelle?
8898 M. MAYRAND : Dans le cas d'un deuxième signal, ce serait très difficile pour nous si nous avions l'obligation de l'offrir immédiatement, particulièrement au terme d'une ordonnance 9(1)h).
8899 Nous aurions, malheureusement d'autres choix que d'en fait de tasser un des services qui sont portés présentement.
8900 Alors, à plus moyen terme, on verrait à régler ce problème-là. Mais à court terme, c'est un problème pour le moment.
8901 CONSEILLÈRE POIRIER : Et quand vous parlez court terme, moyen terme, ça pourrait vouloir dire combien de temps pour avoir une meilleure compréhension?
8902 M. MAYRAND : Je pense qu'on parle à court terme. C'est dans moins d'un an, généralement. Puis à moyen terme, on parle habituellement de un à trois ans. Il n'y a pas de définition absolument rigoureuse et précise pour ça. Mais c'est pour vous donner l'ordre de grandeur.
8903 CONSEILLÈRE POIRIER : C'est ça.
8904 M. MAYRAND : C'est à peu près ça.
8905 On parle, pour des améliorations de réseau au niveau des déploiements de technologies à travers nos réseaux, il faut que vous compreniez que notre architecture, elle est pas simple.
8906 On a beaucoup de réseaux qui étaient des réseaux qui étaient entièrement analogiques. On a graduellement converti au numérique. On en a qui sont interconnectés, on en a qui sont pas encore interconnectés. On en a des tout petits, on en a des moyens, on en a des plus gros.
8907 Alors, développer la plateforme à travers cet amalgame de réseaux de différentes tailles et de différentes technologies, c'est pas une proposition exactement très simple.
8908 CONSEILLÈRE POIRIER : Parlons maintenant d'ARTV. Pourquoi ARTV n'est pas offert à Hawkesbury où il y a une bonne clientèle de Franco-canadiens?
8909 M. MAYRAND : Alors, dans le cas de Hawkesbury -- et nous en avons fait état dans notre mémoire écrit.
8910 CONSEILLÈRE POIRIER : Oui.
8911 M. MAYRAND : Le problème qui s'est posé là c'est justement le genre de situation que je viens de décrire par rapport à des réseaux de relativement petite dimension. C'est pas un de nos plus petits, mais c'est quand même un petit réseau non interconnecté.
8912 C'est la raison pour laquelle dans le cas spécifique de Hawkesbury, parce que nous avons déployé ARTV ailleurs, il est offert, sauf, je pense, le cas exceptionnel de Hawkesbury. Et la raison c'est celle des raisons historiques de développement de réseau dans ce cas-là.
8913 J'ai cependant le plaisir de pouvoir vous dire que nous avons trouvé, je crois, une solution. On m'avise qu'on aura une solution pour Hawkesbury très prochaine.
8914 CONSEILLÈRE POIRIER : Et, encore une fois, très prochaine veut dire?
8915 M. MAYRAND : Bien là, on parle dans le court terme.
8916 CONSEILLÈRE POIRIER : O.K. Donc, un an. Si je vous décode bien, le court terme c'est un an.
8917 M. MAYRAND : C'est ce que je comprends de nos gens.
8918 CONSEILLÈRE POIRIER : O.K.
8919 Alors, d'ici un an, il n'y aurait plus de problème? Ou encore là, parce que la règle du 1 pour 10. Et qu'est-ce que...
8920 M. MAYRAND : Dans le cas de Hawkesbury, je crois que c'est considéré comme étant un marché francophone.
8921 Alors, je pense que dans ce cas-là, selon vos propres définitions, c'est pas vraiment la règle du 1 pour 10 qui s'applique.
8922 CONSEILLÈRE POIRIER : O.K.
8923 Mais, est-ce que vous pensez, quand on applique la règle du 1 pour 10, qui n'est peut-être pas celle qui s'applique dans ce marché-là, on devrait faire une place spéciale aux communautés de langue minoritaire, de langue officielle en situation minoritaire.
8924 Est-ce qu'on devrait le considérer et leur donner un avantage?
8925 Ou, est-ce qu'on devrait faire une exception à ARTV qui le demande?
8926 M. MAYRAND : Je pense que dans le cas d'ARTV, en fait, je relisais encore leur présentation orale la semaine dernière.
8927 Et, je pense que ce qu'ils vous ont dit, c'est que : « Bien, on aimerait avoir dans le marché secondaire -- le marché secondaire pour ARTV étant le marché à prédominance de langue anglaise -- on aimerait avoir quelque chose qui est l'équivalent du statut d'une catégorie A dans le marché primaire. »
8928 Mais vous voyez, c'est un autre exemple de la difficulté que nous avons, nous, comme distributeur face à des demandes qui visent à avoir par ordonnance du Conseil des modalités différentes de ce que prévoient les catégories de licence du Conseil et l'attribution des licences comme telles.
8929 On vous donne toujours, évidemment des objectifs louables pour faire, prendre une mesure ciblée de cette nature-là.
8930 Mais, d'après nous, ça pose des problèmes de, je dirais de prévisibilité du cadre de réglementation.
8931 Le Conseil, quand il a défini les services de catégorie A, il l'a fait d'une certaine façon et j'imagine qu'il avait de bonnes raisons de les définir comme il les a définis.
8932 Vous êtes bien sûr tout à fait... il vous est tout à fait loisible de changer la réglementation, de changer les définitions, d'agrandir les catégories.
8933 Là où ça devient troublant pour nous, c'est quand il y a ce genre de demande, je dirais presque de préférence par voie réglementaire.
8934 Toujours, l'objectif est en principe louable. Mais à ce moment-là, où s'arrête ce genre de mesure-là?
8935 Comment serons-nous frappés ultérieurement si vous deviez accéder à la demande d'ARTV?
8936 CONSEILLÈRE POIRIER : Et c'est ça. Comment, qu'est-ce qui se passerait chez vous et chez les abonnés de Cogeco si on acceptait leur demande telle que présentée?
8937 M. MAYRAND : Alors, je vais vous donner un exemple. Combien de titulaires de licence de langue anglaise diraient à ce moment-là : « Ah! Bien ARTV a obtenu un type d'ordonnance particulier pour le marché de langue seconde. Bien moi je veux le même type d'ordonnance particulière pour mon marché de langue seconde qui est Québec. »
8938 CONSEILLÈRE POIRIER : Entrons dans un autre sujet, si vous le voulez bien. C'est celui des fameux markup, comme dit en anglais.
8939 Alors, combien est-ce que ça vous coûte de rajouter une chaîne au service de base si on exclut la redevance?
8940 Et comment faites-vous ce calcul-là?
8941 M. MAYRAND : Je ne peux pas vous donner un coût hautement spécifique sur ce que ça coûte d'ajouter une chaîne. Il y a des coûts directs, il y a des coûts indirects et il y a des coûts d'opportunité.
8942 Et, je pense que le mieux que je peux faire pour vous parler de concept de coût, et avant de vous parler de ça et de vous référer à des choses qui sont déjà au dossier public, je voudrais vous dire que, comme d'autres membres de l'industrie de la distribution de la radiodiffusion au Canada, nous ne faisons pas d'analyse de coût détaillée canal par canal au moment de lancer un canal.
8943 CONSEILLÈRE POIRIER : O.K.
8944 M. MAYRAND : Alors, la façon que nous fonctionnons, évidemment, c'est, je pense c'est crucial de comprendre ça.
8945 L'environnement actuel de nos affaires, c'est un environnement d'offres de services groupés.
8946 Nous avons une offre de services de télévision qui comprend pas juste un service de base. Qui comprend des services facultatifs, l'accès à encore plus de choix sur demande, etc.
8947 Nous avons une offre de services d'accès internet qui comporte différents degrés de vitesse et de capacité.
8948 Nous avons aussi une offre de services de téléphonie.
8949 Alors, chacune des trois grandes familles de services a une tarification de sorte que des abonnés qui veulent choisir seulement l'un de ces services-là, c'est quelles sont les conditions pour y être abonné.
8950 Ensuite, ce qui se passe quand les abonnés prennent plus qu'une famille de services, ils en prennent deux. Évidemment encore plus trois, comme vous le savez, il y a des escomptes qui sont offerts par tous les distributeurs sur un mode très, très concurrentiel et il y a des promotions qui varient en durée et en termes d'amplitude monétaire que chaque concurrent amène sur le marché à un moment ou à un autre.
8951 Alors, vous savez, le concept de dire : « Bien là, on va regarder le tarif, par exemple, du service de télévision de base et puis on va se dire, là, combien est-ce qu'on peut rajouter de marge sur ce service-là? »
8952 C'est plus comme ça qu'on fonctionne.
8953 Dans l'environnement déjà très ancien où il y avait pas de concurrence, où il y avait des tarifs de gros prescrits et une marge prescrite pour les services portés à la base, c'était le cas.
8954 Mais vous savez, ça fait très longtemps qu'on n'est plus là-dedans.
8955 CONSEILLÈRE POIRIER : Mais, aidez-nous à le comprendre à ce moment-là. Vous n'êtes plus dans cette dynamique-là. On sent qu'il y a des vases communicants entre l'ensemble de vos services.
8956 Mais, en supposant qu'on accepterait la distribution obligatoire d'un des services qui demande, disons 15 sous, quel serait l'impact pour le consommateur?
8957 Le service de base chez vous pourrait augmenter de combien?
8958 M. MAYRAND : Bien, ce que nous avons mis devant vous, je pense, notamment si vous référez à l'étude de sondage qui est jointe à notre mémoire et à ce lui de plusieurs autres distributeurs, vous savez, la question a été posée strictement en termes de tarif de gros qui serait passé à l'abonné.
8959 CONSEILLÈRE POIRIER : M'hmm.
8960 M. MAYRAND : Il y a pas eu d'ajout de marge par le distributeur dans ce cas-là. Le résultat que vous avez, c'est ce qui adviendrait le cas où il y aurait passage des frais aux abonnés.
8961 CONSEILLÈRE POIRIER : Donc, il y aurait...
8962 M. MAYRAND : Est-ce qu'il y aurait effectivement passage des frais et à quel moment?
8963 Je pense qu'il n'y a pas un distributeur qui peut exactement vous répondre à ça. Ça va dépendre de services, des frais, combien il y en a, quand est-ce que ça va être lancé dans le cas de nouveaux services? Comment est-ce qu'on peut insérer ça dans une révision tarifaire? Parce que vous savez, on en fait pas à tous les jours, des révisions tarifaires.
8964 Alors, tous ces facteurs-là font être pris en considération par nous, comme d'ailleurs, par d'autres distributeurs aux vues de ce à quoi on a affaire.
8965 CONSEILLÈRE POIRIER : Donc, ce que vous êtes en train de me dire, qu'on ajoute ou qu'on retranche des services, vous n'êtes pas à même à ce moment-ci de dire qu'il y aurait nécessairement augmentation ou diminution.
8966 M. MAYRAND : La tendance, vous savez, quand il y a une augmentation de coût d'intrant, même dans un marché concurrentiel, la tendance va être inévitablement à terme. Les gens qui comme nous, qui font affaire à des augmentations d'intrant vont essayer dans toute la mesure du possible de les passer à leurs clients.
8967 C'est dans la nature de l'entreprise.
8968 CONSEILLÈRE POIRIER : Et la tendance quand il y a réduction, c'est de ne pas le passer aux clients.
8969 M. MAYRAND : Je m'excuse. Dans le cas où d'abord, il y a des considérations de Lois de la protection du consommateur qui entrent en jeu.
8970 Et, je dois vous rappeler l'exemple du FAPL. Nous avons dans ce cas-là nous et plusieurs autres dans l'industrie, clairement identifié un frais additionnel au surcroît taxable qui devait être chargé selon vos exigences.
8971 Et nous avons fait en sorte qu'il soit clairement identifié aux abonnés.
8972 Et lorsqu'il y a eu réduction du FAPL en vue de son élimination, nous avons effectué les réductions avec mention explicite à nos consommateurs.
8973 CONSEILLÈRE POIRIER : Nous avions aussi à ce moment-là clairement exprimé que c'était notre souhait que cela apparaisse sur la facture du consommateur.
8974 Donc, si je déduis bien ce que vous me dites, si jamais on retranchait des services pour la distribution obligatoire, nous ferions peut-être bien aussi de préciser qu'on voudrait le voir apparaître sur la facture du consommateur.
8975 M. MAYRAND : Vous êtes, comment dire? Vous avez une telle discrétion dans l'exercice de vos pouvoirs qu'il nous reste en bout de piste lorsque vous avez rendu vos décisions, qu'à nous conformer.
8976 CONSEILLÈRE POIRIER : Alors, on a eu toutes sortes de discussions sur le fameux markup. Et pour simplifier les choses, on s'est dit, bon, supposons qu'un tarif de gros demandé est de 15 sous, on pourrait estimer qu'il sera de 30 sous pour le consommateur.
8977 Qu'est-ce que vous pensez de cet estimé-là qu'on a fait jusqu'à présent?
8978 M. MAYRAND : J'ai un peu de difficulté à savoir à qui vous faites référence par le « on ».
8979 CONSEILLÈRE POIRIER : Dans tout le processus de l'audience ici jusqu'à présent, on a souvent dit, bon, le tarif demandé -- et je pense à StarLight qui a dit 45 sous. Bon, ça pourrait peut-être vouloir dire autour de 90 sous.
8980 C'est à ça qu'on a fait référence dans l'audience.
8981 Alors, dans ce sens-là, cette prémisse-là vous apparaît comment?
8982 M. MAYRAND : Bien, je pense qu'il y a vraiment aucun distributeur qui va pouvoir vous dire : « Ah! Bien dans le cas de ce service en particulier, ça devrait être X ou ça devrait être Y. Ou l'estimation de cette requérante particulière va nécessairement être la bonne. »
8983 En fait, j'ai entendu plutôt le contraire, moi, dans les comparutions plus tôt aujourd'hui.
8984 Et, encore une fois, la raison, j'y reviens. Je sais que c'est peut-être pas une réponse qui vous satisfait. Mais malheureusement, c'est la réalité.
8985 On ne gère pas nos entreprises, nous, dans le secteur de la distribution au détail en fonction de la marge sur un service considéré individuellement lors de son introduction.
8986 Alors, il y a des rigidités dans le système de facturation, de l'informatique, etc., etc., qui font en sorte que c'est pas comme ça qu'on procède dans la vraie vie.
8987 CONSEILLÈRE POIRIER : Et comme tous les autres, vous êtes probablement réticent à retirer un service pour en mettre un autre puisque vos consommateurs sont habitués de recevoir un service.
8988 M. MAYRAND : Ça je puis abonder dans le même sens que d'autres dans l'industrie qui vous ont dit clairement : « Nous, on n'aime pas enlever des services là où on les distribue et de la façon dont on les distribue. » Et honnêtement, c'est arrivé très, très rarement.
8989 Je peux vous dire qu'à ma connaissance, moi c'est pas arrivé pour aucun service canadien.
8990 J'ai eu connaissance d'un cas relativement récent et je ne le nommerai pas où c'est arrivé pour un service américain, faute d'entente sur des conditions raisonnables.
8991 Mais vous savez, on peut pas dire que l'industrie en est une qui cherche à « rogner » excusez l'expression, rogner sur l'éventail de services et faire en sorte que les clients en éprouvent une insatisfaction, au contraire. Au contraire.
8992 CONSEILLÈRE POIRIER : Parfait.
8993 Deux petites questions rapides, Monsieur le Président.
8994 Est-ce que ça vous est déjà arrivé de demander de l'argent pour distribuer certains services?
8995 M. MAYRAND : Alors, à ma connaissance, nous n'en avons jamais demandé.
8996 Il y a eu quelques rares, mais vraiment très rares exceptions où des gens sont venus nous voir avec une proposition de payer une redevance pour distribution.
8997 Je pense qu'on vous a parlé de service de nature religieuse.
8998 Je sais que dans ce cas-là, c'est ce qui est arrivé. Mais ça n'originait pas d'une demande ou d'une exigence ou d'une carte tarifaire de Cogeco Câble.
8999 CONSEILLÈRE POIRIER : Parfait.
9000 Et ma dernière question, à ce moment-ci, combien de chaînes supplémentaires au service de base votre réseau serait-il capable de supporter?
9001 Et combien en HD?
9002 M. MAYRAND : Ça, c'est une question à laquelle il me serait difficile de répondre vraiment de façon détaillée ici maintenant.
9003 C'est quelque chose que j'essaierais de faire comme partie de nos renseignements complémentaires le 2 mai.
9004 Et la raison pour laquelle je suis un peu réservé, c'est que la situation varie beaucoup dans notre cas entre le Québec et l'Ontario. Il varie beaucoup selon le type de classe de licence de nos réseaux.
9005 Alors, votre question, elle était très générale. Ça portait vraiment sur tous les réseaux.
9006 Et j'ai comme présumé que ça incluait également aussi possiblement des réseaux exemptés, c'est-à-dire qui ne sont pas titulaires de licence parce qu'ils remplissent les critères d'exemption. Nous en avons beaucoup.
9007 Et là, c'est un exercice...
9008 CONSEILLÈRE POIRIER : Et quelle serait votre position?
9009 M. MAYRAND : ... qu'il faudrait que je fasse avec nos gens de marketing et d'ingénierie.
9010 CONSEILLÈRE POIRIER : Oui.
9011 Et à ce moment-là, par rapport au réseau exempté, quelle serait votre position? Parce que ce matin, la CCSA nous a demandé d'exclure effectivement les réseaux exemptés de votre côté.
9012 M. MAYRAND : Bien, je pense qu'on rentre dans les zones à problèmes quand on essaie de capturer un univers tellement grand de réseaux. On parle toujours pour de nouveaux services, pas les existants.
9013 CONSEILLÈRE POIRIER : Voilà! Toujours dans le 9(1)h) aussi qu'on voudrait...
9014 M. MAYRAND : Toujours dans le cadre d'une ordonnance 9(1)h). On parle de nouveaux services où il faut trouver à les insérer dans toute sorte de configurations qui sont pas uniformes dans notre cas en tout cas.
9015 On tend à développer une uniformité, certainement dans notre offre numérique, puis à échapper aux facteurs de capacité historique dont on a hérité dans plusieurs petits et moyens réseaux.
9016 CONSEILLÈRE POIRIER : Mais alors...
9017 M. MAYRAND : Mais c'est pas complet encore.
9018 CONSEILLÈRE POIRIER : ... quelle est votre position?
9019 Est-ce qu'on devrait exempter les services exemptés dans la possibilité qu'il y aurait distribution, qu'on accorderait la distribution obligatoire à certains services?
9020 M. MAYRAND : Notre position, Madame Poirier, c'est tout simplement que dans les conditions actuelles, pour les raisons qu'on vous a exprimées par écrit et verbalement aujourd'hui, il n'y a pas de raison de forcer la distribution de nouveaux services en vertu d'une ordonnance 9(1)h).
9021 Alors, notre position demeure la même. Il devrait pas y en avoir.
9022 Au demeurant, si vous croyez malgré tout, après analyse de toutes les représentations, qu'il devrait y en avoir, le problème devient d'autant plus difficile et imposera des choix qui seront d'autant plus impopulaires auprès des abonnés ou de certains abonnés.
9023 Et Dieu sait que pour nous, des abonnés, dans un petit réseau, une petite communauté, sont pas moins importants que dans les grands réseaux. Ça comportera plus de problèmes.
9024 CONSEILLÈRE POIRIER : Et pourquoi ça deviendrait impopulaire?
9025 Qu'est-ce qui fait, vous m'ouvrez la porte à autre chose. Vous dites que ça deviendrait impopulaire? Alors que moi je vous demande si on devrait exempter de toute ordonnance de distribution obligatoire les réseaux exemptés.
9026 M. MAYRAND : Alors, si votre exemption porte sur les réseaux exemptés, fort bien.
9027 Il reste quand même les réseaux non exemptés titulaires de licence où il faudra annoncer que un, deux, trois, je sais pas. Vous êtes les rois et maîtres du nombre de services qu'il faudrait insérer, devront être insérés à la base.
9028 Et vous savez, en Ontario, on a 44 canaux à la base. Alors faudrait aviser tous nos abonnés dans ces réseaux-là de l'ajout de X nombre de nouveaux canaux et puis d'une révision tarifaire à venir en fonction de ça.
9029 Et c'est là que je vous dis que c'est ce genre de choses-là qui prêtent à l'insatisfaction chez au moins un bon nombre d'abonnés.
9030 Mais vous savez, les gens ont une tendance normale -- et ça inclut nos clients au détail -- ont une tendance normale à pas trop aimer le changement, puis à pas trop aimer les surprises et surtout quand le changement vient du fait qu'il y a une autorité quelque part qui a décrété que c'était bon pour eux. Ça les irrite. Ça les irrite beaucoup.
9031 CONSEILLÈRE POIRIER : Je vais m'arrêter là, Monsieur le Président. J'aurais aimé aller encore plus loin dans certaines questions. Mais si vous voulez le faire, ça vous appartient.
9032 LE PRÉSIDENT : Je n'ai qu'une seule question. Puis je sais que vous avez suivi l'audience jusqu'à maintenant et puis vous savez qu'on demande à tout le monde de remplir une grille. Donc, vous allez vous conformer pour le 2 mai?
9033 M. MAYRAND : Nous allons nous conformer pour le 2 mai, ainsi que les autres engagements que nous venons de prendre cet après-midi.
9034 LE PRÉSIDENT : De surcroît.
9035 O.K. C'est très bien.
9036 Merci bien, Messieurs. Je ne crois pas que nous avons... nous n'avons pas d'autres questions. Merci beaucoup au nom du contentieux, voilà.
9037 Let's take a two-minute break, just to switch the panel around.
9039 And the next presenter will be --
9040 THE SECRETARY: Avaaz, Mr. Chairman.
9041 THE CHAIRPERSON: Yes, that's it.
--- Upon recessing at 1553
--- Upon resuming at 1556
9042 THE CHAIRPERSON: À l'ordre, s'il vous plaît. Order, please.
9043 So we will now hear from the next presenter. So please identify yourselves for the transcript and go ahead. You have 10 minutes for your presentation.
9044 But do press your little button there.
9045 MS RUBY-SACHS: Thank you. That's the one thing I forgot.
9046 Mr. Chairman, Mr. Vice-Chairman, Commissioners and CRTC staff good afternoon. I would like to introduce you to our panel.
9047 My name is Emma Ruby-Sachs. To my left is Jeremy Waiser.
9048 Jeremy and I are campaign directors with Avaaz. Avaaz is the largest online campaigning movement in history with over 600,000 members in Canada.
9049 We make use of new technologies to enhance the ability of citizens to participate in policy-making and governance. We know that the CRTC shares our belief in the value of public participation and we are pleased to appear before you today.
9050 We are here on behalf of 26,000 of our fellow Canadians who oppose the Sun News application, and who sent us comments to file saying so.
9051 The question we are here to discuss today is, how do we decide who is going to get the subsidy of mandatory carriage, the unusual decision to force consumers to pay for a channel whether they want to watch it or not?
9052 In the next nine minutes, I'll explain how Sun News fails to meet the criteria for this exceptional subsidy, as laid out by the hearing notice.
9053 I'll also explain how their application asks this panel to replace its 9(1)(h) criteria with a mandatory carriage order based on diversity concerns alone, a decision that contradicts the terms of this hearing as laid out by you, and the previous 2009 decision to open news to competition.
9054 To my first point, Broadcasting Policy CRTC 2010-629 says it will only grant mandatory basic carriage in exceptional cases and it lays out eight criteria, all of which must be met. Sun News fails to do that in at least two important ways.
9055 First, to receive a mandatory basic distribution order, the CRTC has said that a service has to make an exceptional contribution to Canadian expression that significantly exceeds that normally made by a Category A service.
9056 In all the filings submitted by Sun News to this panel, it has nowhere that we have seen, promised to do anything above and beyond what it is currently providing under its existing Category C status. Its filings, instead, over and over again, point to the 96 hours per week of original Canadian programming that it already runs.
9057 But, under the terms of its existing licence, Sun News has to provide 113 hours a week of Canadian content. They are promising nothing more than their license requires, and promising nothing more than they currently provide, failing to meet the first criteria.
9058 Sun News's application makes a big deal of their commitment to 96 hours a week of original Canadian content, meaning they will air 17 hours a week of non-original Canadian product. On a news channel that aims to inform citizens with up to the minute national information, 17 hours of reruns or other programming is, at best, ordinary.
9059 Second, a mandatory basic service has to provide evidence of exceptional commitments to original, first-run Canadian programming, in terms of both exhibition and expenditures.
9060 I have just explained how the number of hours fails to meet this exceptional standard. And in terms of expenditures, Sun News is making virtually no new commitments either.
9061 When CBC Newsworld beat out other applicants to become a must-offer news channel, it committed to things like new foreign correspondences, substantial regional news programming and news headlines to update audiences every hour, on top of its ordinary programming.
9062 When CTV N1 Headline News beat out other applicants to become a must-offer news headline service, it promised to open new foreign news bureaus, purchase and air independent Canadian programming, start a co-op program with APTN, and enter into a news footage exchange agreement with its French counterpart, Québecor's LCN.
9063 Sun News wants to be given mandatory basic, not just must offer. It wants more than the CBC or CTV, even after those channels went through a competitive process to win their licenses. But it has not promised to invest in more or higher quality content. It has not promised to open foreign bureaus or spend money above and beyond what it already does under its Category C license. It has simply promised to keep on running talk shows and commentary, a relatively cheap and ordinary commitment to Canadian news content.
9064 The terms of this proceeding were very specific. This hearing on mandatory basic carriage was to be about which services meet the criteria that the Commission published. This is the standard by which Sun asked to be judged and they simply do not meet it.
9065 Perhaps because Sun News does not meet the criteria for mandatory basic that this body has laid out, they are asking for mandatory carriage on the sole basis of the diverse views they bring to the Canadian news market, which brings me to my second point.
9066 Diversity is not one of the criteria listed by you for this hearing. In 2009, this Commission determined that the news market was ready for competition. You issued competitive licenses which are likely the reason Sun News came to be on the air in the first place.
9067 They made a sophisticated business decision to enter into this competitive market knowing the terms and they are failing to make a profit.
9068 Now, that failure might be because the news market is not, in fact, ready for competition. And we, as a country, might need mandatory carriage licenses based on promoting diversity in the news market. That may be a discussion worth having. But if we did, Sun News wouldn't be the only one here arguing for it.
9069 Almost any other news service could arguably add diversity to the market. If mandatory carriage were available on diversity grounds alone, then likely a lot of other news services would be here applying. Sun News would have to compete for those licenses against other providers. They might even lose.
9070 But no one else knew, from the guidelines you circulated for this hearing, that this was going to be a conversation about diversity, a conversation about whether news can support competition. Only Sun News is here making that argument, asking for a mandatory basic order that would deprive consumers of choice on entirely new grounds in a hearing of one.
9071 They are here answering a question you didn't ask. I would respectfully request that you not reward them for that.
9072 In conclusion, I want to say, Avaaz is no Sun News. We don't run a nationally-distributed television station carried by almost every major cable and satellite system in Canada. And yet, still, 26,000 Canadians took the time to send us personalized messages opposing this application. We think that 26,000 Canadians writing into a website over a few days is remarkable.
9073 It's no secret that there are Canadians who dislike the content of Sun News, and some of these commenters are among them. But the issue before the Commission is not about approval or disapproval of Sun News's hard editorial line. It's about whether this is the exceptional circumstance in which consumers should be deprived of choice and forced to pay one of Canada's largest media companies for a channel they may not want and can already likely access if they so choose. On that point, the commenters who wrote to us spoke with passion. I'd like to share one of their comments here.
9074 Mr. Jeffrey Robbins wrote:
"As a Canadian I am proud of the reasonably balanced approach our news media takes in reporting on issues and events in Canada and around the world. I believe that we have some world class reporting owing to great training and excellent regulatory requirements. I am also a conservative. I have liberal associates and friends whose opinions and viewpoints I respect and admire very much. It's a Canadian approach, and it's a civil approach. Respect for each other's values and viewpoints is a part of our Canadian identity...
I don't get this from Sun Media. In fact, I've refused to watch anymore of Sun Media because I find its overall character and message to be one of vitriol. I do not want to see us go down the road of intense partisanship that our American cousins appear to be grappling with. My feeling on the matter of Sun Media is that if someone wants to view it, they have that freedom. We're a democracy. However, I do not wish to subsidize this particular media unless and until they can demonstrate a more inclusive and respectful culture in their on-air musings. To that end, I would request that Sun News not be subsidized..."
9075 Now, Sun News responded to the concerns expressed by Canadians like Mr. Robbins in its reply filing with a two-page spread that read in giant font, "YANKEE GO HOME". At no point in its reply filing did Sun News address the substance of our intervention or the commenters' concerns.
9076 We think the Canadians who took the time to express their views to this Commission deserve better consideration.
9077 On the basis of our intervention and the arguments explained here today, we respectfully ask that you deny Sun News's application for mandatory basic carriage.
9078 Mr. Chairman, Mr. Vice-Chairman, Commissioners and Staff, we thank you for your time and consideration. I am happy to answer any questions you might have.
9079 THE CHAIRPERSON: Thank you very much for your presentation. The Vice-Chair will start off the questions.
9080 COMMISSIONER PENTEFOUNTAS: Yeah, just briefly.
9081 Thank you very much. Your position is pretty clear and well laid out.
9082 Just speaking briefly about your membership I read that you were 17 million members. Is that in the U.S. or is that worldwide, that figure? Is that a worldwide figure?
9083 MS RUBY-SACHS: We're actually 21 million global members. We're a global campaigning organization and our largest national membership is actually Brazil, it just so happens. But we have membership all over the world in every single country of the world.
9084 COMMISSIONER PENTEFOUNTAS: And you're 600,000 members in Canada. How do you become a member of Avaaz?
9085 MS RUBY-SACHS: A member of Avaaz is anyone who takes action with us. So we give our members a weekly opportunity to take action on an issue of global or national importance. Once they do they become a member of the organization.
9086 COMMISSIONER PENTEFOUNTAS: Okay. So you have a mailing list and you ask them to participate in --
9087 MS RUBY-SACHS: We do.
9088 COMMISSIONER PENTEFOUNTAS: -- subjects that interest you?
9089 MS RUBY-SACHS: Yeah. We have -- yeah, we have a mailing list and our members participate.
9090 First of all, we act sort of like a great global democracy. So we don't run campaigns that the majority of our members don't approve of.
9091 Once we run those campaigns a certain sub-section of the membership takes action on an issue they feel strongly about, sometimes writing into commissions just like this one.
9092 COMMISSIONER PENTEFOUNTAS: Okay. And how do you decide if the majority of your members want you to take action on a certain -- on a certain question?
9093 MS RUBY-SACHS: We poll and test.
9094 COMMISSIONER PENTEFOUNTAS: You poll and test, okay. Okay.
9095 And the 26,000 Canadians that wrote in, in opposition. All your 600,000 members were asked to comment, is that correct?
9096 MS RUBY-SACHS: Each of our 600,000 members were given the opportunity to comment. Only 26,000, and it's actually a huge number, took the time to write those long personal comments.
9097 We do also run petitions which don't require that kind of time commitment and did run a petition on this. But we were under the impression that the Commission really valued the individual opinions of Canadians.
9098 COMMISSIONER PENTEFOUNTAS: Any of your 600,000 members write in favour of this application?
9099 MS RUBY-SACHS: They did, and we submitted those as well and submitted them to Sun News.
9100 COMMISSIONER PENTEFOUNTAS: How many were they? They are not in your --
9101 MS RUBY-SACHS: I don't know the exact number, but I believe it was very small, maybe a few hundred. But those are before you on the official record.
9102 COMMISSIONER PENTEFOUNTAS: Okay.
9103 And is this a full-time gig for you guys? Do you live in the region? I don't know anything about Avaaz besides the fact that I think it means voice in Farsi. But that's -- and do you two live in the region?
9104 MS RUBY-SACHS: I'll answer all of your questions.
9105 COMMISSIONER PENTEFOUNTAS: Okay.
9106 MS RUBY-SACHS: Avaaz means voice or song in 14 different languages. That's where the name came from. It's about facilitating expression.
9107 And my colleague Jeremy Waiser lives in Ottawa. I was born and raised in Toronto but fell in love with an American and have had to relocate.
9108 COMMISSIONER PENTEFOUNTAS: That's fine. Okay.
9109 And how are you funded?
9110 MS RUBY-SACHS: We're funded entirely through online donations from our members. We have the highest integrity funding in the business. We don't accept any money from governments or foundations and we limit each donation to 5,000 Euros.
9111 COMMISSIONER PENTEFOUNTAS: Per person?
9112 MS RUBY-SACHS: Yes.
9113 COMMISSIONER PENTEFOUNTAS: Oh, okay. Good.
9114 MS RUBY-SACHS: Yeah, most of our donations are small amounts from individuals around the world.
9115 COMMISSIONER PENTEFOUNTAS: Okay.
9116 Mr. Chairman, thank you.
9117 THE CHAIRPERSON: I take it, you would not be in opposition -- well, they already have a licence but you're not against distribution of the service. It's just mandatory distribution of basic?
9118 MS RUBY-SACHS: When we reviewed the application we found that they didn't meet the criteria for the 9(1)(h) category. We understand they meet the criteria for the Category C licence that they currently own, yes.
9119 THE CHAIRPERSON: Right.
9120 Other parties have -- as I pointed out at the beginning of the hearing there could be other means of distribution other than Category C which is a competitive licence. Some have suggested perhaps we should consider with such an application mandatory offer, mandatory offer not on basic, probably the sort of regulatory matters that you're perhaps less comfortable with and less familiar with. But in any event, do you have views on that?
9121 MS RUBY-SACHS: You know, we've been following that part of the hearing and we just don't see the need for the must-offer order. Already they're available to offer it to nine out of 10 households in Canada.
9122 So we're just -- I know they've had some disputes with some of the smaller BDUs and they have been asking for a higher price point than the BDUs were offering. It may be they have to reduce their price point or maybe those negotiations will continue. But I believe the market is setting a bit of a lower number than they are happy with.
9123 THE CHAIRPERSON: And you're okay with price points being set on use and opinion and corporate considerations controlling who has access to our broadcasting system? I know that's a provocative question.
9124 MS RUBY-SACHS: If I could take us back to the regulatory regime, I feel like the CRTC does an excellent job of balancing both the intentions of the Broadcasting Act and the right of Canadians to have a choice about what they pay for and the regime you set out in this hearing and the 9(1)(h) regime, those eight criteria, we believe are a very wise way of balancing those two interests. It means that in certain exceptional cases things like price point will be set by something other than the corporate and competitive factors in the market, but it's exceptional.
9125 THE CHAIRPERSON: Okay.
9126 COMMISSIONER PENTEFOUNTAS: May I, Mr. Chairman?
9127 THE CHAIRPERSON: Yes, Mr. Vice-Chair?
9128 COMMISSIONER PENTEFOUNTAS: To follow up on the Chairman's question, did you intervene a couple of years back when Sun originally launched?
9129 MS RUBY-SACHS: We did. We did intervene in that case.
9130 What happened then was that there was a meeting that the Prime Minister had with one of his communications aides and Rupert Murdoch and that communications aide then left his post and started to run a news network and the news network quite quickly came to ask for government assistance and we reviewed the application at the time and found that they didn't seem to qualify. So we intervened in that case.
9131 When they brought up their application again this time we of course reviewed it and felt again that they didn't qualify for this --
9132 COMMISSIONER PENTEFOUNTAS: The first application government assistance?
9133 MS RUBY-SACHS: There was talk of them appealing for, I believe, something similar to mandatory carriage in 2010, if I'm right.
9134 COMMISSIONER PENTEFOUNTAS: But you don't object to them having the right to have a licence?
9135 MS RUBY-SACHS: Sorry, what kind of licence are you referring to?
9136 COMMISSIONER PENTEFOUNTAS: Well, anything other than a 9(1)(h) border licence.
9137 MS RUBY-SACHS: We have done the most work at reviewing the 9(1)(h) criteria, we believe that the granting of the Category C licence was appropriate.
9138 COMMISSIONER PENTEFOUNTAS: Okay.
9139 MS RUBY-SACHS: But at the time there was some discussion of them applying for mandatory basic and that was the part where we got involved, or something similar to mandatory basic.
9140 COMMISSIONER PENTEFOUNTAS: Right, right. That's fine.
9142 THE CHAIRPERSON: okay. Well, thank you. Very clear and we thank you for participating in the hearing.
9143 MS RUBY-SACHS: Thank you very much for your time.
9144 THE CHAIRPERSON: We will now hear from the final presenter today --
9145 THE SECRETARY: CACTUS.
9146 THE CHAIRPERSON: -- CACTUS.
9147 THE SECRETARY: I will invited Ms Edwards to approach the presentation table.
9148 And while she does that, Mr. Chairman, I would like to inform you just for the record that some new documents were added to the public record for the following non-appearing applications: Blue Ant Inc. It's a clarification letter by Commission staff. The document has been added to the public accessible file of Travel + Escape, AUX, Bite, eqhd, HIFI, Oasis HD and radX.
9149 The second one is for Allarco Entertainment and it's a letter by the licensee and related documents concerning the performance evaluations on Super Channel, an acknowledgement letter by Commission staff.
9150 The last one is ZoomerMedia Limited, it's a letter by licensee regarding the performance evaluations on ONE: the Body, Mind and Spirit Channel and Love Channel.
9152 THE CHAIRPERSON: Thank you very much.
9153 Welcome, Ms Edwards, to the hearing and as a supporting intervener you have 5 minutes to make your presentation.
9154 Thank you very much. Go ahead.
9155 MS EDWARDS: Thank you. Good afternoon. A long day for you, I'm sure.
9156 I think you know who we are now, but in case there are any newbies that don't remember, the Canadian Association for Community Television Users and Stations, or CACTUS for short, was created to help ensure that ordinary Canadians have a voice within our broadcasting system. We represent independent not-for-profit community TV broadcasters, as well as the Canadians that use and watch these services. We also assist Canadians and communities that want to set up new community-operated television channels or who need assistance to access the community channels belonging to broadcast distribution undertakings.
9157 My name is Cathy Edwards.
9158 Martha Fusca approached us two years ago to sound us out about a 9(1)(h) application for FUSION. I think she understood that co-operation and collaboration with regional and community partners and producers who could provide content for FUSION would be critical to the service's success. The vision for FUSION, as I understand it, requires direct participation by Canadian citizens for three reasons:
9159 to engage them more actively in public affairs;
9160 to increase the geographic breadth, variety, quality and depth of content that could be shared with all Canadians within a single current affairs and information service; and
9161 third, to provide Canadians with a television broadcast service that enables them to voice their concerns, tell their stories, share their values and explore each others' opinions.
9162 The fact that Ms Fusca sought out our input so early in the development phase convinces us that she understands the complexity of the service proposed and the need for community-level partnerships to bring it to fruition, and also that she is committed to engage Canadians from the grassroots up.
9163 As the FUSION application points out, for 20 years the industry has been talking about "interactive television", yet relatively few providers have attempted to deliver it. For example, the CBC has popular radio platforms for citizen views such as Cross-Country Checkup, it does solicit viewer input to its TV programming via its website and e-mail, and there are occasional studio programs with local audiences on programs of national import, such as election coverage.
9164 But CBC television doesn't engage audiences in the medium of television itself to any significant degree. The CBC has a mandate to offer content in every genre and for all Canadians, yet nobody can be everything to everyone and do it well, nor maintain local bureaus in every Canadian town and city.
9165 FUSION can therefore fulfill a void within the Canadian broadcasting system to bring Canadians together in a national televised forum daily.
9166 As the Commission is aware, community channels are pioneers in the development and delivery of interactive content in which Canadians can participate and express their points of view.
9167 We see FUSION as a professional and national platform that unites the best in a professional information and current affairs service, with an editorial team to guide and mediate content created by Canadians from across the country, with the strengths of traditional community TV. Those are: localism and direct expression by Canadians.
9168 What is unique about FUSION is its national scope, drawing on local production hubs to interactively engage with all Canadians on any platform accessible to them.
9169 We were also impressed by FUSION's daring plan to engage Francophones, Anglophones and First Nations within a national dialogue on the same television platform: a virtual first for Canada. It shouldn't be daring, it should be old hat in a country that has been to the brink of separation twice, which still is challenged to engage with First Nations in a productive way. Yet it's not old hat.
9170 Broadcasting in Canada, even public broadcasting for the most part, reinforces existing solitudes. We need the national interface that FUSION provides in its multi-lingual and multicultural content, in its commitment to engage all audiences, the variety of its contributors, and the reach it will have because of its multiplatform use of technology, this application is exceptional.
9171 When Ms Fusca approached us, she wanted to know whether CACTUS members would be interested to provide content to FUSION and we responded resoundingly in the affirmative. Furthermore, CACTUS, through its relationships with other community-based media networks, for example former Industry Canada CAP sites, is in an excellent position to work with FUSION to develop and guide what are being called "Skype centres" in the application. We are expert in training communities to produce for themselves, especially with enlightened editorial guidance. We know the concept works and contributes to a stronger democracy.
9172 Canada is overdue for a truly participative current affairs platform, one that thrives upon and can respond to direct input from Canadians from coast to coast to coast. We need such a virtual platform to promote dialogue regarding the many challenges and opportunities we face as a nation in the 21st century.
9173 The NFB's "Challenge for Change" program in the late 1960s which spawned community television legislation demonstrated the power of video to do exactly this, yet that vision has not yet been realized at a national level.
9174 For these reasons, we support FUSION's request for carriage under section 9(1)(h). This dynamic and essential national platform can only work as envisioned if it is accessible to all Canadians and is given adequate resources to fulfill its ambitious and critical mandate.
9175 We appreciate the opportunity to comment.
9176 THE CHAIRPERSON: Thank you very much, Ms Edwards.
9177 Commissioner Simpson will be asking you some questions.
9178 COMMISSIONER SIMPSON: Ms Edwards, good to see you here again.
9179 Your position is very clear so the questions that I will be asking are in substance to do with my curiosity on how you see the working relationship between Stornoway and CACTUS going.
9180 My understanding of CACTUS, it has its roots in being a volunteer-based organization that had access to community broadcasting facilities of cable stations at one time and my question to you is this: In the proposed relationship with FUSION, would you be providing a volunteer-based organization or would this be a commercial proposition for the people who would be providing content to FUSION?
9181 MS EDWARDS: So that's a complicated question so just a couple of things.
9182 CACTUS was formed pretty recently, we were only incorporated in 2010, and our membership, although some of them used to volunteer for cable community channels -- we were formed actually as a response to what we see as the recent failure of the able community system. I used to work in it and at one point it worked very well.
9183 So, first of all, we don't have any direct affiliation. Our members are not-for-profit community-run entities.
9184 Second, there is a misconception that the community television sector is only about volunteers. There are professional individuals that work at all community channels in order to guide the content, train the public, so it's a volunteer professional partnership at the community level and at the national level as well, so CACTUS itself now has one paid person and volunteers that help us as well as all the channels that are our members.
9185 So we don't have a contract in place with Stornoway, but what was discussed is would our members be interested to contribute, on what kind of basis. We assume -- it's easy to upload content now -- that something might happen like either stringers could file particular stories on events that are completely edited and ready to go, they might provide raw footage if they are on the scene and we would have to work out with Stornoway, you know, would they be compensated for that amount, depending on how much editing it was, how professional it looked, those sorts of things would have to be worked out, I'm sure.
9186 COMMISSIONER SIMPSON: Okay. My apologies, I may have misspoken, but I was essentially trying to say, you know, that you established CACTUS from the roots of community access television or its failure.
9187 MS EDWARDS: Kind of.
9188 COMMISSIONER SIMPSON: Yes.
9189 MS EDWARDS: That's how we know that it can work well.
9190 COMMISSIONER SIMPSON: Yes.
9191 The next question I have for you, in trying to understand how this might work, CACTUS as an organization, you describe yourself as an open access democratic platform. In other words, very much in the spirit of user-generated content, everybody is contributing their effort and their views to a collective effort.
9192 When you are working in conjunction with a for-profit organization who will be drawing substantially on community-generated, user-generated content, I have two questions for you.
9193 How do you see the need of the private for-profit entity who has a responsibility to its viewers and to its shareholders and stakeholders, how do you see your largely volunteer-based collective group working in an environment where there needs to be curation and editorial control for the preservation of the overall effort that FUSION is trying to put out? How does that work when you have volunteers working with a for-profit organization? Do you see any problems with that?
9194 MS EDWARDS: I don't think so. I mean if -- I think there would be contributions at different levels. For example, I could imagine that if FUSION was looking for completely edited pieces on a particular topic that staff at some community channels might get involved to coordinate content coming in and that those channels would need to be compensated at some rate that recognizes the efforts and the resources that that sucks up.
9195 In other cases there is nothing to stop individuals Canadians who may also volunteer at a community channel from sending in content direct to FUSION, but if a station or that volunteer was putting in significant effort, we might make a move to try to make sure that, you know, people weren't being exploited by content. If we felt that their quality as as good as professional stringers that were also supplying content, you know, those kinds of things have to be worked out, but we have no issue in principle with people that now send their stuff to YouTube sending those comments --
9196 Because the point of FUSION is to open it up for people to make comment first and foremost, so the fact that there is any platform there that provides access is great. I mean community TV is like that, too, we don't want people to have to pay for it and we don't necessarily feel people should be compensated for just having a view. It's an open access platform.
9197 But like I said, if for some reason we saw a big trend where regular volunteers who were contributing content that was regularly appearing on FUSION just like a professional stringer were not being compensated at all, we would probably want to have a conversation about, you know, categories of contribution, but that's --
9198 You know, I have known Martha a long time, I don't see that becoming competitive. I'm very excited about the service and we would like to see it succeed and do everything we can to make sure that it is accessible to all levels of contributors as possible in an appropriate way.
9199 COMMISSIONER SIMPSON: I just have two more questions.
9200 Going forward you have mentioned stringers, stringers can be paid or in a Huffington Post model, you know, not paid or pay-as-you-go, but you have quite a wealth of -- you have your own community of volunteers right across the country which is very useful to FUSION, but as you go forward each of those individuals in their own way is going to be doing work. What do you see the role of CACTUS being in relationship to those people and to FUSION? So you take a backseat and let the relationship between the individual volunteers be a more direct relationship with FUSION or do you have an oversight? How does that work?
9201 MS EDWARDS: I think that there are two roles that we could have. One is in no way would we want to somehow become a gatekeeper between individuals who happen to work for member channels and FUSION. If they want to upload their content to FUSION, why would we say no? We are glad to see that they have an extra platform.
9202 I think where we could help FUSION is they talk about having -- because no everybody, you know, can run around with a camcorder and upload their own content. You know, young people typically can do that perhaps, seniors aren't as likely to do that, other categories of people that don't have access to technology aren't as likely to do that, so we thought that it was an important part of the application that it talked about Skype centres or places where folks that don't have their own camcorders and high-speed internet connections can go and still participate in the national conversation that they want to mediate. Because we have already members and communities we feel that there is a role CACTUS could play in helping develop those Skype centres.
9203 Like some of our members may become a Skype centre, in other cases we may be able to help set up and assist, say, Skype centres would be set up at libraries at former cap centres, you know, places we know the technology is already there and it's short jump to make them part of a FUSION network.
9204 I mean, if that ends up taking significant time on our part we would want some kind of formal partnership with them. So again, I think you figure those details out going forward, but certainly we can bring a lot of people and publicity and visibility among potential contributors to FUSION and vice versa, let those potential contributors know that now there is a national platform for their views as well.
9205 COMMISSIONER SIMPSON: Okay. So that was my last question, was is there a potential of a financial relationship somewhere along the line, either through mutual rights-holdings or profit-sharing or something along those lines?
9206 You know, because essentially you are providing a labour force of like-minded individuals to a very innovative venture, but I'm trying to understand why beyond the mutual recognition of this being a good thing for the broadcasting system, what's in it for you?
9207 MS EDWARDS: Stephen we believe in open access so when we see an application like this come forward I'm just excited, as I said, that there is a national platform for this.
9208 There has never been -- for example, when the Elizabeth Mays of the world can't get on a national leadership campaign, that's a problem. Sure, we can put them on one little channel in New Brunswick and maybe another one in the middle of B.C., but there should be national platforms, like a national public access platform.
9209 This isn't a national public access platform in that it's not a total free-for-all by any means, they intend to mediate it and control the editorial content, and so they should, but we are just excited to see that step forward.
9210 In our own future we had seen that eventually we think that there should be a national public access platform and when we become sure I'm sure we will put an application forward for that.
9211 So we are just excited at the idea and we are happy to work out those relationships as we go to make it work.
9212 COMMISSIONER SIMPSON: So it is evolving.
9213 MS EDWARDS: Yes. I don't see our volunteers as a labour force, like most of the people that --
9214 COMMISSIONER SIMPSON: Poor choice of words because no creative person likes to be considered as raw labour, but a talent. A talent pool, let's say that.
9215 MS EDWARDS: Yes. I mean, the point of community access is to give people a voice that normally wouldn't have it so they are not necessarily wanna-be journalists that were looking for it as a job outlet, and if those people end up occasionally making comments on FUSION nationally, great. Like we don't need to have a role in that, other than that we put them in touch in the first place perhaps.
9216 COMMISSIONER SIMPSON: Okay. That's it. Thank you very much.
9217 THE CHAIRPERSON: Thank you very much, Ms Edwards.
9218 Those are our questions for today and we are adjourned until 9 o'clock tomorrow morning.
9219 Thank you.
--- Whereupon the hearing adjourned at 1631, to resume on Tuesday, April 30, 2013 at 0900
- Date modified: