ARCHIVED - Transcript, Hearing November 23, 2021

Attendees and Location

Held at:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Québec

Attendees:

• Chairperson: Ian Scott
  
• Commissioner, Ontario: Monique Lafontaine
  
• Commissioner, Alberta and the Northwest Territories: Nirmala Naidoo
  
• Commissioner, Atlantic Region and Nunavut: Ellen Desmond
  
• Commissioner, British Columbia and Yukon: Claire Anderson
  
• Legal Advisors: Christina Maheux, Matthew Welch
  
• Hearing Secretary: Jade Roy
  
• Hearing Manager: Cédrick Lelièvre
  

Table of Contents

Phase II – Interveners’ Presentations

1357 Cable Public Affairs Channel Inc.

1460 TELUS Communications Inc.

1787 Canadian Communication Systems Alliance (CCSA)

1986 The Independent Broadcast Group/Le groupe de diffuseurs indépendants (IBG/GDI)

2392 St. Andrews Community Channel Inc.

2488 Canadian Association of Community Television Users and Stations (CACTUS)

2628 Community Media Advocacy Centre (CMAC)

Undertakings

1442 Undertaking

1923 Undertaking

2228 Undertaking

2316 Undertaking

2321 Undertaking

Transcript

Gatineau, Quebec

--- Upon commencing on Tuesday, November 23^rd, 2021 at 11:03 a.m./ L’audience débute le mardi 23 novembre 2021 à 11 h 03

1338 THE CHAIRPERSON: Madam Secretary?

1339 MS. ROY: Merci beaucoup monsieur le Président.

1340 Before we begin, I would just like to announce for the record that Blue Ant Media informed us that they will not be appearing at the hearing.

1341 THE CHAIRPERSON: And before we begin proceedings today, I do wish to address two procedural requests that we received immediately prior to the decision. And the Panel is ruling verbally today.

1342 So the first request, the Panel is in receipt of a procedural request from the Canadian Media Advocacy Centre, CMAC, that was dated November 18.

1343 CMAC is seeking various data from both Rogers and Shaw similar to the data that had already been provided to CMAC in a previous request.

1344 We note that CMAC's already filed a request seeking similar data, and it had been responded to.

1345 The Panel is of the view that no further information, as requested by CMAC, is required for the record of this proceeding.

1346 Accordingly, CMAC's request is denied.

1347 Second matter, the Panel is in receipt of a procedural letter from the Independent Broadcasters Group, IBG, also dated -- no, it's -- pardon me -- dated November 19.

1348 In this letter, IBG offered the Commission the possibility of an in-camera session to discuss information that IBG may consider confidential.

1349 The letter also contains some information marked "confidential".

1350 Rogers filed response dated November 21^st. In its response, Rogers said that the information in the letter marked "confidential" should be disclosed.

1351 The Panel has reviewed that information and has ruled that this information is properly designated as confidential.

1352 On the question of in-camera sessions, we note that any evidence that IBG would like to submit can be submitted either as a response to an undertaking or during the final reply period, which is December 13 for intervenors.

1353 The Panel intends to present IBG with an opportunity to undertake to provide any additional information when it appears before this Panel later today.

1354 So thank you, Madam Secretary. That is all I have to begin.

1355 MS. ROY: Thank you very much.

1356 We will now hear the presentation of Cable Public Affairs Channel. Please introduce yourself and your colleagues, and you have 10 minutes for your presentation.

PRESENTATION/PRÉSENTATION

1357 MR. DEANE: Good morning, Chairperson Scott, Commissioners, and staff.

1358 My name is Jim Deane, and I am President and CEO of Access Communications Cooperative Limited.

1359 We are a cable operator serving 235 communities in the Province of Saskatchewan, including Regina, where I am from.

1360 Access has been a CPAC shareholder from Day 1, June 12^th, 1992, and I am here in my capacity as a longstanding member of CPAC's Board of Directors.

1361 With me today on my left is Colette Watson, CPAC’s President and General Manager. On my right is Joel Fortune, CPAC’s Corporate Secretary and legal counsel.

1362 Next June, CPAC will celebrate its 30th anniversary. Over three decades, CPAC has become the channel of record for parliamentary, political, and public affairs programming in this country. CPAC’s place in the Canadian media landscape is crucial and critical, especially in these turbulent times of misinformation and disinformation.

1363 The channel has come a long way from taking over the Parliamentary Service from the CBC after it announced, due to budgetary restraints, it would no longer fund the distribution of Parliamentary programming. Canada’s cable industry, under the leadership of Phil Lind and the Canadian Cable Television Association, stepped up and made a commitment to distribute that programming. And I can tell you that, as a Board, we are unanimous in our support for the work the people at CPAC do each and every day.

1364 And I will pass it over to Colette to tell you a bit about that work.

1365 MS. WATSON: Mr. Chair, Commissioners, CPAC is a unique television programming service, not only in the country. but in the world. Our partnership with the House of Commons and the Senate is envied by Parliaments worldwide. This partnership allows us to bring proceedings and committee hearings from both houses of Parliament to Canadians everywhere. We work closely with the House to ensure that Canadians have access to their federally-elected officials on every platform. Our mission is to provide Canadians with uncut and unfiltered coverage of national political and public affairs.

1366 Notre mandat de base consiste à diffuser les délibérations de la Chambre des communes; mais il ne s’arrête pas là. Au fil des ans, nous avons couvert les audiences des comités de la Chambre, les délibérations du Sénat et de ses comités, les audiences de la Cour suprême. Nous avons diffusé en direct des commissions royales, les célébrations de l’Ordre du Canada et les débats Munk, et cela ne représente que quelques-unes des 50 000 heures d’émissions d’affaires publiques et politiques que nous avons diffusées et qui sont sauvegardées dans nos archives numériques.

1367 We also hit the streets across the country every week to hear from Canadians on our program Outburst. We are especially proud of the wall-to-wall coverage we provide during federal elections. Every campaign we cover offers Canadians uncut and unfiltered comments from every major party leader. Every word, and every campaign stop is seen on every CPAC platform because "See for yourself " is a guiding principle at the heart of all our programming. And never has this principle been more important and more needed. In a time when political discourse has become open to manipulation and weaponization, CPAC offers a steady and real-time destination where Canadians can consult the record. Who said it, and what they said. Every word. Not soundbites and clips to fit a chosen narrative. “See for yourself” allows Canadians to hear every word so that they can decide for themselves. This is more than a mission, it’s our passion.

1368 Depuis le début, le Conseil d’administration de CPAC n’a pas participé aux choix de la programmation, de la rédaction ni des contenus. C’est ainsi que CPAC a établi la neutralité, l’équité et l’équilibre qui ont forgé sa réputation. Les Canadiens savent que quand ils écoutent CPAC, ils entendent les faits, tels quels sans parti pris.

1369 We guard our editorial independence as our most important asset. This editorial independence is codified in our Programming and Editorial policy which sets out how we meet our conditions of licence, honour our agreements with Parliament, and provide our editorial team with the autonomy to deliver CPAC programming every day.

1370 These principles were set out in the CRTC’s decision awarding CPAC’s first full-term broadcasting licence in 1995, and I'll go through them now.

1371 One, CPAC must respect the letter and spirit of its agreement with the House of Commons.

1372 Two, CPAC will not present its own editorial position in any of the programming which it distributes.

1373 Three, CPAC will present a balance of diverse points of view and represent the various views held by Canadians in the different regions of the country.

1374 Four, programming must reflect Canada’s dual linguistic nature.

1375 Five, programming will complement public affairs provided by other Canadian programming services.

1376 And finally, six, programming will not contain any commercial content.

1377 All these principles are important, but the first two are the pillars supporting everything we do.

1378 CPAC’s editorial neutrality is always top of mind in how we create, select, and air programs. As a part of ensuring neutrality, programming decisions have always been made by CPAC’s management and programming departments.

1379 All editorial decisions, such as what gets aired, who is interviewed, how we reflect Canadian diversity, and the whole host of other questions that go into deciding what gets made and what appears on air, is made by management and not by CPAC’s board.

1380 Our internal programming policy, approved by our board, states that:

1381 CPAC is committed to high standards of balance and neutrality;

1382 All programming and editorial decisions are made without interference from political, corporate or commercial interests;

1383 Direct contact about programming matters is prohibited between CPAC’s shareholders and board members, on the one hand, and CPAC’s Executive Producer, journalists, and producers, on the other;

1384 CPAC’s programing and editorial team is solely responsible for editorial decision-making, with the final privilege belonging to the Executive Producer.

1385 CPAC’s Executive Producer is Peter Van Dusen, one of Canada’s most respected political journalists.

1386 MR. DEANE: CPAC operates on a not-for-profit basis and its non-profit purpose is set out explicitly in our articles.

1387 CPAC is governed by a board of directors. Currently, we have five directors and, as directors, we owe a fiduciary duty to CPAC in our role as directors.

1388 In that capacity, we do not act as shareholder representatives, but rather as individuals who are required to consider matters from CPAC’s own point of view, in CPAC’s interest, and in recognition of the interests of a range of stakeholders in CPAC.

1389 As we have explained in our written reply to interventions, under CPAC’s Articles, each CPAC shareholder is entitled to one vote for the election of directors regardless of the number of shares held by that shareholder.

1390 This structure was put in place to ensure that a relatively small cable company, such as Access Communications, had the same say in the election of the board as the larger companies.

1391 More recently, CPAC’s Board has proposed that the shareholders amend CPAC’s articles to provide that shareholder approval matters will require approval by a majority of shareholders, irrespective of the number of shares they hold. This amendment will be put to the shareholders for approval at our next annual meeting.

1392 CPAC’s ownership structure has provided a stable base for CPAC and has worked well over the years.

1393 Today, CPAC provides an array of programs and platforms that could only have been dreamed of in 1992. From live streaming to podcasts, from call-in shows to expert panels, CPAC has expanded and diversified its offerings in concert with ever-evolving technologies that have allowed it to take its programming to where Canadians get their news and information -- on their televisions, on their laptops and smartphones, at home, while they travel, or at the office.

1394 And precisely because CPAC has a strong reputation for neutrality, fairness, and balance, it has never been more needed and important for CPAC to exist in today’s media and social media landscape.

1395 As a Board, we are proud to be stewards of Canada’s only not-for-profit, commercial free, bilingual television and content service created to preserve and promote this country’s democratic process and principles.

1396 We greatly appreciate the opportunity to appear before you today to provide you with an overview of CPAC, its governance, and programming principles, and we’d be pleased to answer any questions that you may have regarding these matters.

1397 THE CHAIRPERSON: Thank you.

1398 Please go ahead.

1399 COMMISSIONER DESMOND: So good morning. Thank you for appearing this morning. And I do have a few questions with respect to the information that you’ve filed on the record and you presentation this morning.

1400 I’m sure you’ve had an opportunity to review the record, and as you’re likely aware, the Forum for Research and Policy and Communications has made a statement suggesting that the approval of this transaction would result in Rogers having de facto control of CPAC.

1401 And I thought it might be useful if you had the opportunity to respond to that particular comment. I have read your intervention and your replies, but if you wanted to particularly comment on that.

1402 MR. DEANE: Well, I can tell you how the Board works, and I think control of CPAC is ultimately the responsibility of the board.

1403 As we said before, shareholders elect the board, having one vote, rather than voting their proportionate share of shares. Shareholders -- the only matters that shareholders now approve are -- that go to the annual meeting on the basis of their proportions, is the appointment of auditors. So I think -- I think it’s safe to say that the operational control of CPAC has been at the board level for the past 30 years. And I think it’s a governance model that’s worked well.

1404 COMMISSIONER DESMOND: Could you elaborate on what types of decisions the board would make other than the appointment of auditors, for example? What other types of decisions on a regular basis would be made by your members?

1405 MR. DEANE: By the board, correct? Yeah. Well, I think the board operates as most boards do. We establish the strategic direction for CPAC, including its mission and its goals. We provide oversight, including making sure that the organization is financial stable. We provide oversight with respect to risk management. We monitor progress towards our strategic planning through our business plan and our budget. And we ensure that we’re true to our mission, and our vision, and our guiding principles.

1406 We also hire the president and the general manager. It’s a board responsibility -- and ensure there’s a succession plan. And finally, we occasionally act as advocates and provide advocacy for CPAC. And today is an example of that.

1407 COMMISSIONER DESMOND: I know you spoke in your opening statement about the kinds of decisions that are made, but could you just elaborate on whether some board members may have more influence than others based on your bylaws, or your -- maybe other tools or policies that exist within your organization?

1408 MR. DEANE: Well, I can speak to my 20 years experience on CPAC’s Board, and I can assure you, we all have an equal say on how CPAC -- in carrying out the board responsibilities that I earlier -- alluded to earlier.

1409 I don’t see any undue influence. I think the programming policy creates a brick wall between the board and programming. And in terms of being operational, it’s to the extent of hiring a general manager and president and ensuring there’s a succession plan. So that’s been my experience over 20 years, yeah.

1410 MR. FORTUNE: And Commissioner Desmond, just on the -- you’ve mentioned the bylaws, and so I suppose the legalities. I can confirm there is nothing in CPAC’s constating documents, bylaws, or any other legal requirement that treats any director differently than any other director.

1411 COMMISSIONER DESMOND: Thank you for that. And I did notice in your opening statement this morning, you identified that there’s an amendment that’s been proposed. I’m just curious on what basis that amendment is being proposed, and for what purpose.

1412 MR. DEANE: Well, it was discussed at our last board meeting and it -- the rationale for it is, I think, in the interest of equity and fairness at the board level to ensure that should this transaction be approved, then that shareholders will have more or less and equal say in shareholders matters, with the idea that a majority of shareholders would be required to approve any shareholder matter, including the appointment of auditors.

1413 COMMISSIONER DESMOND: Could you speak just briefly about the hiring of staff, maybe some of your executive members? Does that happen by your board of directors? And again, are certain members able to influence those decision-making issues?

1414 MR. DEANE: I can only speak to hiring our general manager and our president, which is the board responsibility. Apart from that, hiring of staff is exclusively the purview of our executive and our operational management.

1415 COMMISSIONER DESMOND: And with respect to the hiring of your general manager, for example, can you just explain whether or not some board members would be more involved in that process than others, or might have more influence in the decision?

1416 MR. DEANE: Typically, that may happen. We did create a committee, a search committee for our most recent engagement of a general manager and president. And therefore, I think those board members -- it would be safe to say that those board members probably had more input than the rest of the board. But that -- I think that’s -- in boards that I’ve served on, that’s fairly typical.

1417 COMMISSIONER DESMOND: And just many to finish that thought, I would -- I'm wondering if -- if there's a committee, for example, does a recommendation then come back to the entire board for confirmation or for voting?

1418 MR. DEANE: Yes, without a doubt. That engagement of the President and General Manager is a board responsibility and a board decision.

1419 COMMISSIONER DESMOND: You've spoken this morning about how your programming decisions are made, and I just wanted to confirm. Is that same process used whether or not you're talking about your linear programming or your online programming, for example?

1420 MS. WATSON: Yes. Every editorial decision, regardless of platform, is made by Peter's team and no one else.

1421 COMMISSIONER DESMOND: As I'm sure you're aware, Rogers has proposed to nominate just one member to the CPAC Board of Directors if the transaction is approved, and they've also indicated that if required they would consolidate its ownership in CPAC into one corporate entity at the close of the transaction. So I'm wondering if you could comment on those proposals, and if you had a preference or you thought one option would, perhaps, be more efficient than the other, or would work better?

1422 MR. DEANE: I can perhaps comment on the board composition. We're supportive of Rogers' suggesting that they'll only nominate one member to the board post transaction, providing it's approved. And I'll let maybe Joel comment on the other part of the question.

1423 MR. FORTUNE: They sort of go hand in hand, I suppose, from a legal point of view, and I think the preferred approach is the consolidation of share holdings, which ensures in fact that there is only, well, one vote and effectively one nominee. So the consolidation makes a lot of sense from our point of view.

1424 COMMISSIONER DESMOND: Okay, thank you. I think those are all of my questions.

1425 THE CHAIRPERSON: I'm just looking to my colleagues to see if there any others.

1426 I have -- I have one. I'd just like to follow up a little bit more on the transaction's impact on CPAC.

1427 So as you've pointed out, in federally regulated not for profit that's owned by the companies that own and control the BDUs, Rogers currently owns 41.58 of the shares, and as a result of the transaction, if approved, Rogers would become the majority shareholder with 66.75, based on our calculations.

1428 Based on the previous answers, in your opinion, does the transaction involve a change by any means of the effective control of CPAC?

1429 MR. FORTUNE: Thank you for the question, Mr. Chair. In my opinion, the answer is no, because the primary indicia for control is whether a individual shareholder or any other entity has the ability to cause a corporation to undertake a course of action. And because of the share structure that CPAC has, which limits the votes for the most important matter, which is the election of the board, which functionally and in fact controls CPAC, Rogers will not have the ability to force CPAC to undertake any course of action, and all it can do is elect a person to the board.

1430 Now, it also as a shareholder has votes, and -- but those votes go to shareholder matters, and we've described one, which is the election of auditors, so with 66.7‑percent, they would have the ability to approve auditors. But you've heard -- now, normally those are -- if you look at CRTC jurisprudence, those are the sort of matters that don't go to control per se.

1431 But in any case, as you've heard, the CPAC Board to even out dealings between shareholders, the Board has suggested that the shareholders consider an amendment to the articles which would provide that in addition votes based on the percentage of shares held, that also votes would require the approval of a numeric majority of actual shareholders, regardless of the number of shares they hold.

1432 THE CHAIRPERSON: Okay, thank you, that's helpful.

1433 Might it be more appropriate to consider, in the event the Commission does approve the transaction, that Rogers would own 50‑percent or more of the shares but not have directly or indirectly effective control of the license pursuant to, and I assume this will go to counsel, subparagraph 10(4)(b)(4) to quiz your recollection of specific provisions?

1434 But if the Commission were to determine that the transfer of Shaw's interest in CPAC to Rogers serves the public interest, would it be acceptable to require CPAC as a licensee to submit an application following the Commission's determination on the present proceeding to complete the change?

1435 So two parts to that, if you would.

1436 MR. FORTUNE: That's a fairly complicated question.

1437 THE CHAIRPERSON: Would you like to take a undertaking to just give it some thought?

1438 MR. FORTUNE: Yeah, perhaps, if you don't mind.

1439 THE CHAIRPERSON: I take the point that it's not easily answered on the fly so to speak, but if you would be prepared to take an undertaking and provide us that response ---

1440 MR. FORTUNE: We'd be pleased to.

1441 THE CHAIRPERSON: --- at your convenience, but no later than November -- I got to remember it's a new day, 29th, but if you could provide it sooner that would be helpful to us.

1442 (UNDERTAKING / ENGAGEMENT)

1443 THE CHAIRPERSON: Do my Commission colleagues have any other questions? If not, we'll turn to counsel.

1444 Counsel?

1445 MS. MAHEUX: J'ai une question additionnelle. Dans votre présentation, vous mentionnez que vous avez modifié les statuts de CPAC, justement afin que la majorité des actionnaires ne soient plus requis pour prendre une décision.

1446 La question que je me pose : est-ce que cette modification-là va être faite avant la transaction qui est présentement envisagée?

1447 Ms. WATSON : Nous prévoyons mettre la proposition aux actionnaires à notre réunion annuelle, qui est présentement pas cédulée, mais on propose de le faire au mois de février 2022. Alors, sans savoir quand vous allez sortir votre décision, c’est notre…

1448 Ms. MAHEUX : Donc si je comprends bien, dans l’éventualité où la décision du Conseil serait rendue avant que cette présentation-là ne soit soumise aux actionnaires, il se pourrait que Rodgers soit devenu l’actionnaire majoritaire et que les voix… et qu’il y ait une majorité de 66 % pour empêcher la ratification de cette proposition-là. Est-ce que c’est le cas?

1449 Ms. WATSON : Ne sachant pas quand vous allez sortir la décision, probablement. Mais si c’est un tracas pour le Conseil…

1450 Ms. MAHEUX : Je vous pose simplement la question, je voulais juste avoir l’information sur le dossier d’audience parce que comme c’est une possibilité, comme c’est une information nouvelle, je voulais vérifier juridiquement quelles étaient les implications. Alors, ce sont les raisons pour lesquelles je vous pose tout simplement les questions.

1451 Ms. WATSON : J’allais tout simplement dire – si c’est important, on peut avancer la date de la réunion annuelle, si c’est important pour le faire. Mais le Conseil soutient que cette proposition, c’est le bon cheminement pour la station, donc ça va venir à la réunion annuelle… la décision du CRTC n’aura pas d’impact sur notre proposition de le faire quand même.

1452 Ms. MAHEUX : Je vous remercie.

1453 THE CHAIRPERSON: Merci. Alors, merci beaucoup. Thank you very much. Thank you for your presentation. It was very helpful, and I wish you a good day.

1454 Madam Secretary?

1455 MS. ROY: Thank you, Mr. Chairman. We will just take a very short two to three minute break to ask TELUS to come in the hearing room.

1456 THE CHAIRPERSON: Thank you.

--- Upon recessing at 11:29 a.m./

--- L'audience est suspendue à 11h29

--- Upon resuming at 11:35 a.m./

--- L'audience est reprise à 11h35

1457 THE CHAIRPERSON: Madam Secretary, please begin.

1458 MS. ROY: Thank you, Mr. Chairman.

1459 We will now hear the presentation of TELUS Communications Inc. Please introduce yourself and your colleagues, and you have 20 minutes for your presentation.

PRESENTATION / PRÉSENTATION:

1460 MR. SCHMIDT: Thank you.

1461 Good morning, Chairman Scott. Good morning Commissioners.

1462 I would like to acknowledge that the land on which we gather today is the traditional unceded territory of the Anishnaabeg People.

1463 Thank you for the opportunity to appear before you today, and thank you for the opportunity to expand on our written submissions in this proceeding.

1464 My name is Stephen Schmidt and I am Vice President, Telecom Policy and Chief Regulatory Legal Counsel at TELUS.

1465 With me today on my left, are Zainul Mawji, Executive Vice President Home Solutions. Further to her left, Lecia Simpson, Director Broadcasting Policy and Regulatory Affairs; and further still to the left, Jeff Yurchesyn, Vice President Strategy and Data Insights.

1466 To my right is Antoine Malek, Director Broadcasting and Copyright Policy; and further to his right is Wayne Lindo, Manager of Content Acquisitions.

1467 The merger that you are considering in this proceeding is one of the most significant ever proposed in the Canadian broadcasting system, but you would be hard-pressed to find any evidence of it in the application before you. Rogers fails to acknowledge, let alone address, the risks to the broadcasting system that the merger creates, and the harms to competition and to consumers that are certain to follow.

1468 Those harms are real, substantial, and non-remediable. This merger will greatly reduce competition and consumer choice, and will impoverish the diversity of voices in the broadcasting system.

1469 The Canadian broadcasting system was built around a principle of non-exclusivity of programming to create healthy competition between BDUs. This merger will change that, as Rogers will be able to use content exclusivity to force consumers to subscribe to their distribution service.

1470 As we will explain, this will happen because Rogers will gain the scale to buy exclusive access to foreign content and use that exclusivity to benefit their distribution business, at the expense of their competitors and the customers of their competitors.

1471 The unprecedented scale will also turn Rogers into a gatekeeper for Canadian programming services, because these services will depend on Rogers for their continued survival.

1472 Further, Rogers will use its own vertically integrated affiliates to give themselves exclusive access to content.

1473 Contrary to Rogers’ assertions, the Commission’s existing competitive safeguards do not prevent these outcomes, and indeed no safeguards will be able to effectively protect against the scale that Rogers will gain.

1474 We therefore urge the Commission to deny this application. Rogers has failed to discharge their burden to demonstrate that approval of the transaction is in the public interest, that the tangible and intangible benefits of the transaction are commensurate with its size and nature, and that the application represents the best possible proposal in the circumstances.

1475 Zainul?

1476 MS. MAWJI: Thank you, Stephen.

1477 There are two primary reasons from a distribution standpoint that this merger will be bad for Canadians. The first is the scale that Rogers will gain, and the second is that it will worsen vertical integration issues that are already prevalent in the broadcasting sector.

1478 Even if Rogers was not vertically integrated, the scale they would gain would do tremendous harm to competition in the broadcasting and broadband markets. Rogers would have unmatched distribution that covers about 36 percent of all BDU subscribers, and nearly 47 percent of all English-language subscribers. Their network would pass 80 percent of all homes in English Canada.

1479 The scale that Rogers will achieve will lessen competition in at least two important ways.

1480 First, Rogers will have the scale to secure exclusivity from foreign streaming services across Canada, at a time when foreign broadcasters are rapidly embracing online distribution in the Canadian market. Leveraging their relationship with Comcast, Rogers could buy the national rights to a foreign streaming service such as NBC Universal Peacock, which has 54 million U.S. subscribers, is owned by Comcast, and is already integrated into the XFinity platform. They could make it available to their BDU customers, and only their customers.

1481 If they do that, no other BDU would be able to offer that content to their customers, and Canadians will also be unable to buy it directly. Buying those national rights would be expensive, but it would make economic sense when you use those rights to serve nearly half of the English-language market, and use exclusivity to grow to 80 percent of the market.

1482 For many foreign streaming services, that will be an attractive offer. It will allow them to avoid or defer the significant costs of selling directly to consumers and of integrating their app with multiple BDUs, which is costly.

1483 Second, with this scale that Rogers will gain, they cannot help but become a gatekeeper for Canadian programming services that operate in the English-language market. If a programming service cannot secure carriage and reasonable packaging on the Rogers network, it will not be viable. Rogers will essentially become the de facto licensing authority for programming services in the English-language market, and will single-handedly determine the available programming options for all English Canadian customers, whether they are a Rogers consumer or not.

1484 This level of market power will also allow Rogers to dictate rates and terms of carriage for independent programming services, which will inevitably weaken those services. This is a structural problem to which there is no viable solution.

1485 The only practical way for competitors to combat the scale that Rogers will gain through this proposed merger will be to seek competitive parity through similar scale. This merger, if approved, will become the blueprint for further consolidation in the broadcasting and broadband industries.

1486 Lecia?

1487 MS. SIMPSON: Vertical integration abuses will make sense for Rogers to pursue after this merger. According to publicly reported data, Rogers earns around $50 million in operating profits from their media business each year, but their wireline distribution business contributes around $2 billion of operating profits each year.

1488 These numbers make it abundantly clear how Rogers can maximize their revenues. Where they can, they will deny competing BDUs and their customers access to content in order to drive those customers to their own service. By foreclosing access to their own content, Rogers will increase their overall corporate profitability. The Commission can be sure that Rogers will do this because it is rational, profit-maximizing behaviour.

1489 If Rogers cannot deny content to competing BDUs, they will undermine them by unreasonably raising their rates, and by denying or delaying their access to the newest features and functionalities that our customers have come to expect. They will do these things with the goal of impairing the ability of rival BDUs to offer their customers a better value proposition, which will only make Rogers’ cable TV service more attractive in comparison.

1490 Rogers has not proposed any safeguards in their application, but even if they had, our experience over the last decade leads us to conclude that regulatory safeguards will not provide sufficient protection from these anti-competitive incentives.

1491 The existing regulatory framework is not sufficiently robust to prevent Rogers from denying other BDUs, and their customers, access to programming. For example, the Commission has a longstanding principle of programming non-exclusivity, which requires that programming services be offered to all BDUs. The purpose of this policy is to ensure that Canadians have access to content that has been acquired on an exclusive basis, regardless of their television service provider. This also protects consumers by ensuring that BDUs compete on price, packaging, and on creating the best customer experience rather than by offering exclusives.

1492 There is no regulation to implement this important policy. Even the access policy has been actively challenged and undermined by vertically integrated entities. In 2017 Rogers tried to bypass the principal and deny Telus access to their Sportsnet service when it attempted to withdraw from dispute resolution.

1493 While that attempt proved unsuccessful, it was part of a trend in which vertically integrated companies have challenged the Commission’s access policies.

1494 In the past few years vertically integrated companies have challenged the validity of competitive safeguards that will address vertical integration such as the wholesale code and the standstill rule before the Federal Court of Appeal. These challenges to the Commission’s policies and jurisdiction have become a significant and growing source of uncertainty in today’s wholesale market.

1495 Even where the distribution resolution framework provides a remedy, the practical reality is that the damage is often done before the remedy is obtained. Disputes are often slow to resolve, and if customers are denied the full suite of services they have paid for they are forced to switch providers in the meantime. This is especially true in cases involving access to new features and functionalities, where access is not guaranteed, and a head start in the market will be difficult for a competitor to overcome.

1496 And in recent years the online distribution market has grown in importance, and this has created additional risks of foreclosure.

1497 Wayne?

1498 MR. LINDO: Thank you, Lecia.

1499 The vast majority of customers today no longer watch television on only traditional platforms. BDU service offerings have evolved to integrate online content with linear television signals in a seamless experience. However, the regulatory framework has not similarly evolved to prevent exclusivity in the online market.

1500 The Digital Media Exemption Order, or DMEO, does not prohibit exclusivity that is tied to a BDU subscription. It only prohibits exclusivity when it is dependent on subscription to a specific mobile or retail Internet access service. This means that the DMEO does not prohibit Rogers from airing some hockey games on an online service rather than on Sportsnet. They could then make that online service exclusively available to their cable subscribers. If Rogers did this, Canadians that are not Rogers cable customers would lose access to those games.

1501 Rogers has already demonstrated their appetite for exclusivity in the online market, when they launched an online service named GamePlus in 2014. GamePlus gives access to different camera angles in hockey games as well as replays, analysis, interviews, news and other programming.

1502 Rogers offered GamePlus to their own customers, at no additional charge, but no other BDU in Canada was able to offer GamePlus. Only customers of Rogers cable, Internet, or mobility services could access this content, because Rogers wanted to drive subscriptions to those more profitable lines of business. Since the Commission did not consider the service to be “television programming”, GamePlus did not violate the DMEO.

1503 The ongoing control of the Shaw family over CORUS is another element of this merger that will create anti-competitive harms.

1504 Rogers states in their application that CORUS will become independent as a result of this merger, but that is only true on paper. In reality, the Shaw Family will continue to control CORUS through their control of the voting shares, while becoming heavily invested in Rogers and their commercial success. In fact, the commercial success of Rogers will be more lucrative for the Shaw Family than the commercial success of CORUS, since their investment in Rogers will be several times larger.

1505 As an independent entity CORUS will benefit from all of the privileges and protections associated with independent programming services, such as the right to demand minimum penetration, minimum revenue, and minimum subscription levels, while being mandated by the Shaw family to favour Rogers.

1506 Stephen?

1507 MR. SCHMIDT: When the Commission rejected Bell’s first attempt to purchase Astral Media, it said it was not convinced that the transaction “would provide significant and unequivocal benefits to the Canadian broadcasting system and to Canadians sufficient to outweigh the concerns related to competition, ownership concentration, vertical integration and the exercise of market power.”

1508 In this case, the benefits are emphatically not significant, and they are certainly not unequivocal. They are vague, unspecified, not legally binding, and are what any company would do in the normal course of business. Indeed they will happen regardless of whether the merger proceeds or not.

1509 The primary benefits that Rogers has offered relate to unspecified investments in 5G and enhanced connectivity for rural and Indigenous communities. On 5G, they say they will spend $2.5 billion over the next 5 years, but TELUS has announced investments totalling $27.5 billion over the next 3 years to expand its fibre and 5G networks in Alberta and British Columbia, without the need for merger. More importantly, the investments Rogers is proposing will happen anyway, because they will be driven by the need to compete.

1510 Rogers also says that they will spend $1 billion to expand into rural and Indigenous communities. But they have not specified where, when, or how they will build. The proposal is a mirage, and will be impossible to enforce. On the other hand, TELUS has made concrete investments in expanding connectivity to rural and Indigenous communities, spending billions since 2014 to expand service to hundreds of rural communities. These include 129 Indigenous communities, 63 of which were in partnership with Indigenous peoples. Again, all without the need for a merger.

1511 The policy action most compatible with expanding rural and Indigenous connectivity in Western Canada is the complete rejection of the transaction, by all federal reviewers including the Commission, followed by the repurposing of the Shaw’s unused rural spectrum.

1512 The concerns created by this merger also extend beyond the anti-competitive outcomes. The merger will contribute to the hollowing out of Western Canada’s business community at a time when it can be ill afforded, especially in Alberta where Shaw is headquartered.The large amount of debt that Rogers is taking on to pay a 70 percent premium for Shaw will inevitably lead to job losses in Western Canada. The merger will also reduce the number of actors that control Canada’s essential broadband infrastructure, and concentrate an enormous amount of power into the hands of one of the wealthiest families in Canada.

1513 All of these issues will challenge the Commission’s ability to fulfill its mandate, and its authority to supervise and regulate the broadcasting system. The concerns that animated the Commission in Astral are therefore present even more acutely in this case.

1514 These are structural defects of the application that existing regulatory safeguards cannot adequately address. Moreover, the assurances Rogers has given to the Commission are wholly insufficient and incapable of outweighing the harms this merger would cause to the broadcasting system, if approved.

1515 Recent events demonstrate that statements made by Rogers to the financial markets, to the public, and indeed to the Commission itself, are not durable, credible, or reliable. The financial markets have reacted by applying a corporate governance discount to Rogers, and the Commission should do the same.

1516 For all of these reasons, denial of the application is the only response that is proportionate to the concerns that it raises.

1517 Thank you. We would be pleased to answer your questions.

1518 THE CHAIRPERSON: Thank you, Mr. Schmidt and your colleagues.

1519 I will turn the microphone over to Commissioner Anderson.

1520 COMMISSIONER ANDERSON: Thank you very much for your presentation. And thank you as well for your submission. It is an important submission and I’ve got quite a few questions to ask you for clarification and to add to the record.

1521 So I was wondering if we could please start or turn our attention to your submissions with respect to local news production by Global. And I understand that you've recommended that Rogers continue to provide contributions or funding to Global stations at levels commensurate with what Global is currently getting from Shaw. I was wondering why you think that those funds would be better spent on Global than on City TV?

1522 MR. SCHMIDT: My colleagues, Zainul and Lecia, will both address this. Thank you, Commissioner.

1523 MS. MAWJI: Thank you for the question, Commissioner. As a Western Canadian, I can tell you that Global News is a service that many Western Canadians rely on. The difference between the viewership can tell you those results very clearly. City TV has about 1‑percent viewership across the board in both provinces, where Global is north of 20‑percent, and is actively leveraged by many people in Western Canada, and dependent on many in Western Canada.

1524 The challenge that we see here is that -- is many, in terms of the fact that it will take, even if City TV is successful in claiming that viewership, it will take a long time. We have a dependable voice, customers will be penalised in the process, and it is a station that many depend on today.

1525 Lecia can tell you more about how the impact of those funds would actually deplete services overall for local news.

1526 MS. SIMPSON: Thank you.

1527 So the problem here is that, while it's the same $13 million, what happens when Global becomes independent or Corus becomes independent is they will then turn to the independent local news fund to seek the same $13 million to make themselves whole. That fund is actually supported by all BDUs, and is expressly set aside for those who aren't vertically integrated to be able to support their production. And $13 million would be more than half of the fund today.

1528 So the only two solutions that have been put before you, and I believe that was Corus and Shaw themselves, was to externalize the cost to all BDUs again, but that cost comes at the expense of more community programming.

1529 So when Shaw decided to fund Global after the 2016 policy that allowed them to do that, they shut down their community channel in Calgary, Edmonton, and Vancouver, and put that towards their Global private commercial networks, and that was allowed. And in fact, Rogers did the same thing in the East by sending some of their community programming money to City TV stations. So now just by coming out West, they're going to take that 13 million that Shaw has relied on to support their local news production, send it to City, and then try to draw from either the community or the CMF or -- we aren't sure who else.

1530 So their entire proposal relies on externalizing that to the detriment of truly independent news productions. So that in itself is a problem.

1531 And further, having listened yesterday to Rogers in response to their questions, and the questions you posed to them, there were no guarantees made, no commitments made, no actual firm commitments on how they would be spending the $13 million, and that also concerns us because the Global, we know that customers watch that, that's their favourite, or in some cases, their second favourite out West, where City, I think is the third or fourth watched, and by a lot, by big metric differences. So we would have to see the proposal also for -- and I would encourage you to really look at the proposal of how they're going to spend that money that they're going to take at the hands of an independent broadcaster's.

1532 COMMISSIONER ANDERSON: Yeah, I understand your concern. Thank you.

1533 In light of the fact that our local community -- local and community policy does not require a BDU to provide funding to a non‑related entity, what reasons would you provide that would indicate that they ought to be providing funding to Corus when they don't have to under our policy?

1534 MS. SIMPSON: It is -- you're correct, it's not under your policy. It's not a rule, it's not a -- it's not ordered, it's not forced, but aside from this merger, it wouldn't -- we wouldn't be discussing that. It is only the result of this merger that leaves Global seeking funding through some other source. So I think it's incumbent on them to first acknowledge, but then address the harms that flow from this merger.

1535 COMMISSIONER ANDERSON: So just to clarify, then, are there, in your view, any legal or regulatory mechanisms that would justify deviating from a policy's minimum standards?

1536 MS. SIMPSON: Commissioner Anderson, do you mean the policy's minimum standards in the sense of the 50‑percent in some communities?

1537 COMMISSIONER ANDERSON: Yeah, yeah, and also that would incentivise a BDU to maybe go above and beyond policies generally. So with respect to local and community policies, to not keep all the money say in‑house and provide it to their own affiliated local news programming, but like an incentive to say contribute to Corus or continue the contribution to Global.

1538 MS. SIMPSON: So we've proposed a condition of licence. I think you can -- you can apply that as an exception to policy, and you can apply an exception as a condition of licence to regulation that's in place. So I don't -- I don't see any reason you couldn't do that in this case.

1539 COMMISSIONER ANDERSON: Thank you. Can you explain why you think that transfers to Global stations would be the best option to ensure that diversity of voices are maintained?

1540 MS. MAWJI: I think in this case, as Lecia highlighted, it's the merger itself that's creating the harm. Today, Global News is actively viewed by Western Canadians. The funding that supports Global News is critical to making that happen in order to ensure that it can provide quality programming for the citizens that are dependent on that. So it's the result of the merger that is creating the outcome where that voice and those sets of voices will be depleted. And as Lecia highlighted, because of that depletion, that creates a domino impact if Global were to be able to access funding from other sources of funding that BDUs provide.

1541 So we feel that it's incumbent for Rogers to acknowledge that harm and to address that harm, and we don't feel that consumers should be penalised in that process, which would be the ultimate outcome if that funding was redirected or lost.

1542 COMMISSIONER ANDERSON: Thank you very much. So speaking of the $13 million in annual funding, I wanted to take you to paragraph 7 of your intervention, where you indicate -- I'll just give you a minute. At paragraph 7, you indicate that:

1543 “The merger would reduce funding for Global News and reduce the diversity of voices, and specifically, that the proposed merger would also diminish the diversity of voices in local news programming, as Rogers will deprive the Global Television Network of nearly $13 million in annual funding for local news production that it currently receives from Shaw, impacting its ability to create news programming that attracts strong viewership from Alberta and British Columbia. The merger will harm diversity of voices and reduce the quality and quantity of critical local news programming available today. (As read)

1544 So I note that you are essentially saying that the transaction will lower the quality of news on Global stations, but I understand that Corus has not stated that the loss of funding will result in a change or a decline in the quality of news offered on its Global stations. So how -- what would you say in response to that?

1545 MS. SIMPSON: Commissioner, I believe in the Corus response or Corus submission, they do note, though, that they are concerned about the $13 million. So I have to assume that where you're taking away $13 million and the party is concerned, that they're going to source that money in another place and their independence will, on paper, allow them to take that from the independent local news fund.

1546 So I think it's kind of implied when you lose $13 million that you lose some of the quality or quantity, and if that weren’t the case, we wouldn't probably be talking about where it should be, because I assume City would have the same response to that.

1547 In paragraph 7, we do address Global, specifically, but wherever Global gets that -- if they go and try to get that $13 million through other forums, and especially the Independent Local News Fund, the relative size of the funding to a truly independent service, or -- and remember, a lot of these services are in non-metropolitan cities, so it's not just Vancouver, Calgary, Edmonton; there are some in Lloydminster, Medicine Hat, Kamloops, Prince George.

1548 So they might take half a million to take some of those stations. That’s a big difference for their ability, if you have that. That’s a really big difference for their ability to meet the news standards. And I think quality or quantity suffer. One of the two must, you know?

1549 COMMISSIONER ANDERSON: Thank you.

1550 So on the topic of Corus and it potentially being, in your view, related or somehow associated with Rogers, post-transaction, are you suggesting that the legislative safeguards and as well the corporate governance documents provisions relating to conflicts of interest and prohibiting directors from participating in decisions or making decisions when they have got an interest in the topic are not strong enough?

1551 MR. MALEK: Thank you for that question, Commissioner.

1552 I think what you heard from Rogers yesterday related to conflict of interest provisions for Rogers' Board, but that’s not actually the concern. The concern is that that the Shaw family has the voting control of Corus, and can influence the decisions made at Corus, and that they would be heavily invested in Rogers and its commercial success.

1553 So that’s looking -- you know, the answer they gave you is looking at it in the wrong direction.

1554 The real issue is their ability to influence the decisions that Corus makes in its agreements with Rogers in a way that will advantage Rogers and disadvantage its competitors.

1555 COMMISSIONER ANDERSON: And would you say that the directors of Corus have a fiduciary duty to the shareholder which would prevent acting in the best interests of say, Rogers?

1556 MR. MALEK: I do think that they should have the fiduciary duty. I don't know what their conflict of interest policy is or any of their corporate documents say, but I do know that ultimately, they are answerable to the people who have the voting shares and can constitute that Board, and that is the Shaw family.

1557 COMMISSIONER ANDERSON: All right. Thank you very much.

1558 MR. MALEK: Thank you.

1559 COMMISSIONER ANDERSON: Let's go on to talking about your submissions or your concerns with respect to Rogers post-transaction being in a position to withhold its must-have programming from other BDUs, and in particular, transitioning their programming onto an online platform to try to avoid some of the regulatory protections that exist.

1560 So considering that Rogers Media's programming assets represent only a small portion of the available programming services, can you please elaborate on the potential impacts of Rogers choosing to solely distribute its programming services over Rogers BDU network or DMEO offerings?

1561 MR. SCHMIDT: Thank you for the question. I'm going to have my colleague Antoine start off with a regulatory perspective and Zainul and potentially Wayne can follow on from a business perspective.

1562 MR. MALEK: Thank you, Stephen.

1563 The problem, Commissioner Anderson, is that in the online space, the regulatory framework, which is the digital media exemption order, allows for exclusivity if it's tied to a BDU subscription.

1564 So what you have in a vertically-integrated entity is the incentive to use content as an exclusive rather than to seek the broadest distribution possible. And with online distribution, they have the means -- there's a regulatory allowance for it -- and that’s how -- that’s what they would do.

1565 And they can do it in a few ways. They can move their own content that airs currently on a linear channel like Sportsnet. They could start airing those games, for example, or some subset of those games exclusively on an online service such as Sportsnet Now. And if they do that, they don’t have to offer that service to any other BDU subscriber except their own.

1566 And the DMEO, the Digital Media Exemption Order, allows for that.

1567 There's also a problem, an intractable problem, I would say, related to their scale. They will have access or be able to provide access to over -- to I think 50 percent of the English-language market, and what that will do is give them the market power to be able to negotiate exclusivity with foreign streaming services.

1568 So for example, NBC Universal's Peacock service, they could negotiate an exclusivity deal with them where that content is only offered to Rogers' customers. They get the app, they integrate it into their set top box, which is the same platform that Comcast uses, and then the only way, as a Canadian, you would be able to get that content is by subscribing to Rogers cable. And that would be a powerful incentive for many customers to switch to Rogers, which is the whole point, because those distribution revenues are far more valuable to them.

1569 I'll now -- sorry.

1570 MS. MAWJI: Maybe I'll top up a little bit. I think that there's really two or three key points. There's incentive, there's opportunity, and there's a blueprint and a roadmap for this that can be easily followed, and you can look to the U.S. for that. And I'll explain that further.

1571 On the incentive, when it comes to licensing revenues from a media standpoint, Rogers would charge a BDU dollars for a Sportsnet subscription. In many cases, the dollars that they would charge us per subscriber actually don’t change if we lose subscribers, so there's penetration-base pricing, where if we lose subscribers, we actually have to still pay the same amount.

1572 If they are able to get that subscriber from a BDU perspective and move them over to the cable, that’s hundreds of dollars of profitability. And once you get a cable subscriber and you start bundling in internet and wireless, that’s hundreds more dollars and thousands of dollars of customer lifetime value.

1573 So the incentive is absolutely there.

1574 On the opportunity, as Antoine mentioned, there's the scale factor. In many cases, a content provider wants to ensure that they have access to advertising, revenue, and several thousands, millions, billions of ad loss.

1575 Once you hit critical mass on scale, you're able to actually exploit that advantage very effectively because you have -- you are able to maintain that advertising and you're able to maintain the composition of that content so that you can ensure that the media revenues and profitability stays intact.

1576 So we talked about incentive, opportunity, right? Now, let's talk about the roadmap.

1577 I mentioned the Peacock example in my opening remarks for a very specific reason. Ten (10) years ago, Comcast acquired NBC, and the FCC proposed a number and enforced a number of consent decrees so that Comcast would not be able to use NBC's content exclusively.

1578 The consent agrees were seven years long. As soon as they expired, within three months, Comcast launched their Peacock platform, so the NBC content is now on Peacock.

1579 That content is now free for Comcast subscribers, and slowly, they are looking and experimenting with ways to drive exclusivity over that platform. They started with MLB Regional Baseball games. They extended that to College Football, Notre Dame, which is a highly sought-after franchise in the U.S. And then in the Tokyo Olympics, with all of the focus on Simone Biles and her performance, if you wanted to watch gymnastics live from Tokyo, or if you wanted to watch track and field live from Tokyo, the only way you could do that was on the Peacock platform, the only way.

1580 Rogers has the Xfinity platform from Comcast. Shaw also has the Xfinity Comcast platform.

1581 So there’s incentive, opportunity, and the roadmap for exclusivity to be clearly delivered, and that is a very real outcome that could be -- that could come from this merger.

1582 COMMISSIONER ANDERSON: Yeah, I understand those concerns. Thank you. So what safeguards would you suggest would address or reduce some of the concerns that you’ve just cited should the Commission approve the transactions?

1583 And I do understand that your view, initially, is that there aren’t sufficient safeguards and that the transaction should be denied. But if it were to go ahead, can you please discuss some of the safeguards that you would like to see in place.

1584 MR. MALAK: Thank you. If I could take you to Appendix B of our intervention, you’ll see that we have -- we have proposed there a condition of licence that would prohibit Rogers’ cable business from entering into agreement for exclusive or preferential distribution of any online programming service through its own platforms.

1585 And I want to be clear that this is, we think, the best that we can do, and the best that you can do. But it won’t really solve the problem that scale creates. And that’s because they don’t have to call it an exclusive if they’re big enough. It can be a de facto exclusive.

1586 So for example, building on the NBCUniversal/Peacock example, if they were to offer them a guarantee of at minimum three million subscribers through their platforms, no other BDU in Canada has that many subscribers. They can’t match that offer even if NBC -- even if Peacock comes to every BDU and says, “We’ll give you the same deal.”

1587 So the Commission doesn’t really intervene or put itself in the middle of negotiations between program suppliers, especially foreign program suppliers, and the people that they sell the rights to. You would effectively have to do that in order to ensure that every BDU had a reasonable chance at the same kind of distribution that the rates that they were paying were appropriate, that the commercial terms were reasonable.

1588 And I would -- you know, I think it’s relevant here that vertically integrated companies have told you that you cannot do this, that you don’t have that jurisdiction. They’ve done it in the context of video-on-demand services, which are a multi-platform right. And I believe we asked for clarification on that issue about four years ago and are still waiting.

1589 So there is real uncertainty about whether or not you’d have the jurisdiction to do it, and then there’s the, I think, immense administrative burden that would come with that if you tried.

1590 But we’ve offered what we think is feasible under the circumstances.

1591 MS. MAWJI: I think the other aspect of exclusivity is that there is contractual, clear exclusivity, and there’s practical, de facto outcomes in the market. And I’ll give you a very specific example.

1592 We’ve been negotiating with Disney for Disney+ access on our platform. And when the Shaw/Rogers merger was announced, Rogers made a deal with Disney, and Disney pulled out of our negotiations. Well, they said, “Well defer.” And they said they will do a deal with us but we had to step up to a very, very significant guarantee of revenue to them. And we don’t have the subscriber base to do that.

1593 And so they don’t want to incur the cost of coming onto our platform if they have access to a broader market, and they don’t really need to have a second partner in the market if they have access to 80 percent of English-speaking subscribers in Canada.

1594 And so the challenge that we have is that, I think, Canadian content and some of the safety mechanisms that we have identified could address some of the components of Canadian content and independent programming in Canada, but the scale that Rogers will gain from this merger, it will be very difficult to apply that to foreign providers. And customers want that access, and they’re integrating -- they want an integrated experience.

1595 So, you know, there’s de facto exclusivity that comes with those arrangements.

1596 COMMISSIONER ANDERSON: Thank you very much. And so, in your view, in order to change the restrictions or the regulation about exclusivity for online programming, would we, in your view, be required to change the DMEO, or is this something that we could deal with through condition of licence on an adhoc basis and specifically just giving this condition only to Rogers?

1597 MR. MALAK: I think closing the loophole in the DMEO is a necessary a good start. But I don’t think it’s enough.

1598 I do think conditions of licence are also appropriate. But as I had explained in my earlier answer, I don’t think they will be enough.

1599 I think problem that scale creates in the -- the commercial reality and the market power that it creates will be very difficult and, practically speaking, impossible to govern.

1600 So I would say, if you’re going to start, those would be good places, but I don’t think it will be enough.

1601 COMMISSIONER ANDERSON: But since the existing DMEO is what we have to work with, you’re proposing that we deal with online exclusivity via condition of licence. Does that present any fairness issues with respect other BDUs that don’t have a similar condition?

1602 MR. MALAK: I don’t believe it does because it’s a question of opportunity. I don’t think any other BDU has that opportunity. And I also think that there is another way that you can deal with the problem, and that’s denial of the merger.

1603 COMMISSIONER ANDERSON: Thank you for that. I’ll just take a moment to review some of the questions because I think that in the last few minutes you’ve already addressed several of the questions, and I don’t want to make you repeat yourself too much. So just bear with me for one second, please.

1604 Okay. So you did discuss just now the fact that OTT services and direct-to-consumer services are exacerbating the situation with respect to penetration-based rate card. Is that right?

1605 MR. LINDO: That’s correct.

1606 COMMISSIONER ANDERSON: Okay, so I was wondering if you could what it is about the current transaction that is causing you to raise this concern? What is it about the nature of the transaction, if you will?

1607 MR. LINDO: Thanks for the question, Commissioner.

1608 So the penetration-based rate cards result the remaining customers to the programming service having to pay more.

1609 So in that specific case that you’re referring to, Rogers owns Sportsnet now, which is a direct-to-consumer product, and they’re also a programming service.

1610 So in the traditional system, where the BDU had exclusivity to content, meaning someone such as myself would negotiate with Rogers for a linear signal, TV-everywhere content, or content on-the-go, video-on-demand, look-back, restart, all the ancillary rights that come along with that programming -- and so with the influx of over-the-top products, or direct-to-consumer products, it’s created a situation, as Zainul mentioned earlier, where the penetration-based rate cards result in a substantial -- the same payment as the BDU loses subscribers and the rate per customer increase. And so Rogers is now directly competing with the BDU for the same subscriber.

1611 So with the penetration-based rate card, what that means is that as our penetration moved from 50 percent to 40 percent to 30 percent, as we continue to offer choice and flexibility, it means that our payment is substantially the same and Rogers is able to pick up the customer who leaves the BDU system and collect -- Sportsnet now, I think, believe, starts at $14.99. They’re able to collect from that customer, while the customers who remain on the BDU end up paying more as a result of increased pricing.

1612 COMMISSIONER ANDERSON: Okay, thank you. And are there provisions in the Wholesale Code -- while I understand that your view is that the provisions in the Wholesale Code are insufficient to address that concern.

1613 Can you elaborate on that?

1614 MR. LINDO: Thank you.

1615 The wholesale code considers PBRCs to be a commercially reasonable practice. And that may have made sense many years ago when it was created but not that direct to consumer competition is a reality in the market, it doesn't work the same way anymore and we think for that reason it doesn't address it and it needs to be looked at again from the commercial reality that exists today from that perspective.

1616 COMMISSIONER ANDERSON: Okay. So I understand that since the wholesale code was drafted and finalized that the transition onto online broadcasting, if you will, has created a different market. Are there any other considerations that would indicate that the wholesale code is insufficient to address any concerns with respect to the rate negotiation?

1617 MR. MALEK: Thank you. Yes, I think there are additional issues and I will go back to an issue that I mentioned before which was video on demand.

1618 The wholesale code requires that BDUs be given multi-platform rights at the same time that they negotiate linear rights. And one of the most important is video on demand content. It allows customers to catch up to prior season or shows that they were unable to see. It is part of what customers expect now with a service.

1619 When they subscribe to a linear service they expect to have that available because in most cases they do, and that has been true for years.

1620 Four years ago the vertically integrated companies like Rogers told you that you are not able to force them to provide that kind of content because, as they see it, they are acting as program suppliers when they do that. So they don’t think it is subject to your jurisdiction or to the scope of the wholesale code.

1621 And that’s a big problem. And I think we are still waiting for a solution to it. But in the meantime it has created a great deal of uncertainty and we have see vertically integrated providers leverage it in negotiations by threatening to withhold that content. So that is a real problem today that the wholesale code is not addressing.

1622 More broadly, though, that multi-platform right provision does not address online distribution so if something airs exclusively online, it’s not really a multi-platform right because it is not being offered alongside the linear right. And that is where the issues that we discussed before under the Digital Media Exemption Order arise. So unfortunately, the wholesale code is of no assistance in too many cases.

1623 COMMISSIONER ANDERSON: Thank you for that response.

1624 So keeping on the topic of the wholesale code, have you ever faced constraints to filing a complaint by virtue of the wholesale code regarding an unreasonable PBRC or volume based rate card in your negotiations with Rogers?

1625 And if so, would you be willing to detail you experience, distinguishing between regulatory constraints and market constraints?

1626 MR. SCHMIDT: Lecia?

1627 MS. SIMPSON: So one of the biggest issues you face when you are in negotiations from a regulatory standpoint, especially -- I will let Wayne speak to the negotiations themselves.

1628 But when you think you have reached the end of what you can, you know, just do party to party, or you're facing threats of withholding things like video on demand or features and functions especially, the biggest problem is you are entering a world of delay. So unfortunately, it’s not that the Commission doesn't have good dispute resolution processes; but they do take time to work out. So you have to go to mediation a couple of times, and you try and you really go trying. It’s best to get this done.

1629 And then you have to -- if that doesn’t work then one of you has to apply and if you don’t agree on, you know, what kind of rate card you're going to propose, then you have to fight that out. Then when you finally get a -- you fight that out, you still have a very long process of -- you’re in flux, waiting for the decision.

1630 And the hard thing about that is that it favours -- all those delays favour the programming service. They are actually a detriment when you're waiting to fund out how much your fees are actually going to have increased for a service. So you're actually, you know, accruing for something you don’t know is gong to happen.

1631 And during that time, the party you’re dealing with holds all the cards. They know how much everybody else is paying for the service. They know they are holding -- this is -- they’re holding the features and functions in some cases if they have threatened to -- or they haven’t given you it all. And they’re offering it to their subscribers so while that delay happens, they are happy to take your subscribers off your hands. And you're just sitting there waiting for what your increase is going to be.

1632 It’s a very bad situation where it just always favours the party that is in the driver seat, the programming service, and they will actually seek to delay it; they know that.

1633 But maybe Wayne can speak a little more to what happens in a negotiation standpoint.

1634 MR. LINDO: Thanks, Lecia.

1635 So during the negotiation, as Lecia pointed out, we have the ADR 120 which is the period in which we have to indicate to the Commission how the negotiations are going. We typically start 180 days or six months just so that we get a sense of how the negotiations are going.

1636 So typically that initial proposal if the parties are far apart, then you start to get threats about what will be withheld if we don’t come to an arrangement before expiry of the deal.

1637 So as Lecia pointed out, the dispute resolution process sis something that we -- I wouldn’t say we often enter. We try to negotiate commercial deals but in many instances there are threats about what would be withheld if the parties are far apart.

1638 COMMISSIONER ANDERSON: Thank you.

1639 Apologies for going back on a previous subject, but I am going to ask you a question about your proposal to set industry-wide rate cards for programming services. Are you suggesting that we regulate discretionary service whole rates on an industry-wide basis or only as pertains to Rogers?

1640 MS. SIMPSON: I’m sorry. Would you repeat the question? I think you are asking if we are looking for rate regulation on discretionary services?

1641 COMMISSIONER ANDERSON: Rate regulation on discretionary services. So in your submission I understood that you were proposing that Rogers programming services be subject to an industry-wide rate regulation. So what I'm asking is, do you think that the Commission should be regulating discretionary service wholesale rates on an industry-wide basis or specifically only Rogers.

1642 And if it’s only Rogers, then again what would be the rational behind this?

1643 MS. SIMPSON: So I will say that is certainly not our first suggestion of how to handle this. We do think that the conditions of licence and beefed-up wholesale code with respect to the fair market value is probably the first line of defence you could take.

1644 I do know that -- and I don’t have the paragraph number in front of me. But we have said you know, another solution might be to have a public rate card so that people could see what they’re looking at. I wouldn’t -- I don’t think we would propose to have rate regulation again. That was something that is long gone now. And it is gone in a world where we want customer choice and we want to allow our subscribers first to choose which services they want but also normally a BDU would act in the best interests of the consumers and try to formulate packages that their subscribers do want.

1645 So I don’t think going back that direction, like your Category As, your Category Bs, necessarily is the solution to that. I think this was just a possible way that when you are in negotiation with Rogers or FOA, that that advantage that I spoke about earlier where they know what their rate is and you don't. They know what they're offering other people. They know what they're paying and you don't. That if you had some sort of guideline you could reasonably figure out where you -- where you are on the penetration or the volume of that.

1646 And I -- and I -- if you -- if you may, I think earlier you had asked about our FOA, you know, being in dispute resolution, and perhaps I spoke too broadly. I think you were looking for an example, perhaps, where we had been in that situation with Rogers specifically, and we did -- we did talk about that in our opening comments.

1647 But in 2017, we did have a dispute with Rogers for the negotiation of our carriage of Sportsnet, and Rogers tried to leave the final offer arbitration and decide to instead terminate our affiliation agreement, saying, "Well, we just won't give you the service, then, and we'll go on our -- go on our ways." And during that time, they also withheld a new version of a signal, which was 4K, it was all the rage, it had just come out, from us as a -- as a leverage tactic, I suspect, in the negotiations. So we have -- we have indeed had some rough patches together negotiating.

1648 COMMISSIONER ANDERSON: Thank you very much. And so speaking about beefing up provisions in the Wholesale Code, what kind of safeguards above and beyond the Wholesale Code would be necessary to ensure that Rogers isn't entering into any agreement for exclusive or preferential distribution of any online programming services through its distribution platforms?

1649 MR. SCHMIDT: I'm going to start, and then my colleague, Lecia, and others, may pick up.

1650 I think in this sequence of questioning, there's kind of one theme I want to surface and step back from, which is that it's about the efficacy of rules in any regulatory context; right? You know, they are -- inherently they have gaps, inherently they have uncertainty, the ambulance always arrives after the accident, and you're just always going to be chasing market power.

1651 And if you process this through a competitional lens, you'd say the structural remedy, once and done, fixing the market structure to be the primary guarantor of better outcomes, you know, is the more durable effect of sustainable solution. And that's -- and that's our kind of headline view here, and it's a significantly secondary or very distant Plan B to kind of tinker with stuff.

1652 And the Commission's not the problem, just behavioural rules anywhere are the problem. So it's super challenging. We can make suggestions, but the durable solution is the structural one to say no.

1653 Lecia?

1654 MS. SIMPSON: So I'll just start briefly and pass it to my friend, Antoine, to speak more expressly about the online question you had with the Wholesale Code.

1655 So I'll just point out that the Wholesale Code itself is a bit confusing. So there's a Wholesale Code as part of the back of a policy, and that was challenged in the courts, and during the time that it was being challenged, the Commission, very smartly, made the suspense of conditions of licences a suspended condition of licence in a lot of the big vertically integrated licences. And the idea there was that when there was -- things were still unknown that you could still enforce the prohibitions and the things you wanted, the outcomes of the Code, even when the Code was being challenged.

1656 Sometimes, those suspended conditions are a little different than what's actually in the Code. And then also, as part of things like the Discretionary Services Standard conditions of licence, they also tie everybody to the provisions in the Code, and there's a little confusion. The policy stands, but which one is everybody thinking they're using as their guidelines?

1657 So as a quick example for access, Rogers has a suspended condition of licence that requires it to enter into dispute resolution if the other party is having problems in a negotiation. The actual Wholesale Code says both parties have to.

1658 So I think part of the -- you know, when we talk about beefing up the Code, maybe just making the Code very, very clear that there's no two versions of it, that it's applicable evenly, and that -- and where it isn't. And I would say today, these don't have to be Wholesale Code, we could just put these conditions directly on Rogers. They are the people who are in front of you asking for this license transfer, and they are the ones that the scale that incents them to and gives them the opportunity to act on it.

1659 But I think partly it's just starting by making sure there's not conflict in the various places the Code exists.

1660 And Antoine, if you could address from an over the top standpoint.

1661 MR. MALEK: Thank you, Lecia.

1662 I think -- it's important to start with the fact that the Wholesale Code, insofar as it applies to DMBUs, which are Digital Media Broadcasting Undertakings, is applicable only as a suggestion for best practices, and many of the rights that are guaranteed to be used as we mentioned before, for example, multi-platform rights, don't apply in the online space.

1663 So if you were going to look at revising the Wholesale Code, I think generally making that binding on DMBUs would be a necessary start, and expanding the suite of protections to cover off the online space would be necessary. However, I'm not sure that the existing framework and laws are up -- you know, make it clear that you have the ability to do that. I think there has been some doubt about that.

1664 And Bill C‑10, as you know, is partially meant to address that. But we don't know what that's going to look like. It hasn't been tabled again, and it hasn't passed, so at this point it's just speculation, really, what that's going to, you know, enable you to do.

1665 COMMISSIONER ANDERSON: Thank you very much. And apologies if some of my questions seem a bit repetitive, but we did hear yesterday that the existing regulatory provisions are going to be secure enough to ensure that the transaction is in the public interest. And so I just wanted to clarify or confirm what your response is to that. So I thank you for your patience, and the thoroughness of your responses.

1666 I'm going to talk about signal transportation services. And I note that you have expressed concern that Rogers will be acquiring the satellite relay distribution undertaking, and you've also noted in your written submissions that you're concerned that Rogers might increase the price of signal transporting -- signal transport services.

1667 Can you elaborate on why you think Rogers would have the incentive to do this, please?

1668 MS. SIMPSON: Sure. Thank you for the question.

1669 So signal transport, in this case, you've got Rogers who is our BDU competitor; Rogers who holds one of the most important and popular programming services in Canada; and it will be Rogers who is relied upon to provide its own competitors access to those signals. And I think anytime you have that many abilities in a chain to thwart competition, foreclose, raise rates for your competitors, it's just -- it's too tempting not to take those opportunities, and this is one of them.

1670 So I do think that, especially given where the Shaw satellite relay distribution undertaking, where that is most important to Canadians tends to be rural, remote, Indigenous often communities, and without having affordable, stable, and you know, just same as always, I'm at a lack for a word here, but, predictable I guess is the word, service and rates, you really do create a problem where smaller, very small independent BDUs could find it unviable to even provide their service anymore. And that is really, it's to protect those areas.

1671 MS. MAWJI: Maybe I'll top up, if that's okay, Commissioner Anderson.

1672 I think Rogers -- one of the things that we are seeing about this particular transaction, and one of the arguments that have been made, is that the cable specific footprint is separate, but in this case, with satellite and direct-to-home satellite, which is SRDUs, of course, the feeder service for satellite is its competing service.

1673 And so there is potentially an incentive over time. We come back to the fact that Rogers is paying a 70 percent premium for this transaction. The reality is that through the course of the competitive and other proceedings, there will be a desire to ensure that wireless and other assets might get divested. And in this case, on the SRDU, satellite transmission is a profitable and mature business, but then at the time where you have to launch new satellites, it's a very capital-intensive business.

1674 So there's no guarantees that have been provided with respect to this particular business, and we're, as well as other very small and independent BDUs, dependent on those signals to provide service to many remote and Indigenous communities.

1675 COMMISSIONER ANDERSON: Thank you.

1676 So yesterday we did put to Rogers, or propose, would they be agreeable to some type of rate freeze. And my understanding is that they don’t intend to increase prices, but that they refuse to commit to say, a condition.

1677 Similarly, we put to them Cogeco -- I believe it was Cogeco's suggestion -- that SRDUs also adhere to the Wholesale Code and the standstill rule. And I understand that Rogers equally was of the view that that was not necessary and they wouldn't agree to that.

1678 Do you have anything to say about Rogers' position yesterday?

1679 MR. SCHMIDT: I have a big picture sense of -- in an application where they are bearing the onus and they have -- saying it's all horizontal, so they have defined away the vertical problems that the Commission recognizes in the Wholesale Code and other frameworks. They have said it's just horizontal, just horizontal, and everything's fine, so they can buy every cable system in the country under that analysis, right, no problem.

1680 They have defined away the vertical problems that can't be in an answer and then fairly systematically yesterday, they have said, "Everything's fine, and no, I wouldn't accept any sort of creative or net new changes."

1681 And I look at that and say, "Well, how are you possibly discharging your burden here, not even engaging in the process at all?"

1682 So there's lots of problems and their only answer is, "I'm on the right track. The framework is fine." And they have defined away the biggest problems, and that’s their prerogative, I suppose, and maybe the value of the Telus submission that technically is the obverse of the Rogers submission, and it grounds the circle for you and let's you see more.

1683 But they have said, "Everything's fine. You don’t need to do anything."

1684 I just think they're not discharging the burden, would be my answer.

1685 MS. SIMPSON: If I may add, this is an opportunity the CRTC has in front of them, in our eyes, to ensure there's competition in this market. So if you had them divest of the SRDUs we have, you know, put forward, you can essentially assure that you have taken out part of this -- you know, this structure under which they will foreclose or raise rates or create problems.

1686 I mean, obviously, if somebody is unwilling to take conditions that just hold it to reasonable behaviour, I think it's a good sign that they're not really that committed.

1687 So I think this is an opportunity for the CRTC to ensure there's more competition in the market by divesting that undertaking.

1688 COMMISSIONER ANDERSON: Thank you for that response.

1689 I have come to the end of my questions, but I realize that there is a potential follow-up question, and so once again, I'm sorry for bouncing around, but this will be the last time I'll do it, I think. And ---

1690 MR. SCHMIDT: We love talking to you, so it's okay.

1691 COMMISSIONER ANDERSON: Okay.

1692 MR. SCHMIDT: Yeah.

1693 COMMISSIONER ANDERSON: Well, that’s very kind.

1694 So this relates back to entering into -- or your concern that Rogers would have the subscriber base, so it would be in a position to enter into an exclusive arrangement or an exclusive agreement with a foreign streamer.

1695 What would prompt a foreign streamer to agree to limit themselves to distribution only by Rogers? Like, why would Peacock, say, want to do that?

1696 MS. MAWJI: Commissioner, there are actually several reasons. I think if you look at the market, they are looking at the market from a global lens, not from a Canadian or a U.S. lens.

1697 And there are practical realities with respect to these integration costs. You know, you can have your -- you can have a direct-to-consumer service and it can be deployed on a Smart TV application or you know, Roku or those kinds of set top boxes.

1698 But if you want to launch clearly a direct-to-consumer service, you start to get to a point, depending on the content, where you have to really manage your subscriber base, right? You have to go and acquire customers, you have to manage the churn, you have to support those customers. And if you can offload all of that to the country or someone else in the country that you are entering into, there is an attraction to do that.

1699 And so -- but there's a cost, right? You have go to integrate into the platform. That can take -- those development cycles can be six months to a year. What we did, I mean, we -- you know, Rogers talked at length about the Ignite platform. We launched IPTV in 2005. We have done three iterations of the platform and we're on our fourth now.

1700 We launched OTT integrated apps in 2012. We launched integrated billing so that when you buy an optic subscription, you can buy a sports package and a Netflix package integrated into your bill.

1701 Those development cycles take a long time, but that’s how customers want to watch TV. They don’t just want to watch linear TV or local news, or Netflix, or Disney. They want to watch it all, and they want it in a seamless experience.

1702 And so those costs for development cycles and billing integration can be very extensive, and what typically, the foreign OTT companies do is they go into a country, they find one partner, and they're done, because they don’t have the cycles to spend in a country and get the scale they need. They will just go to the next country.

1703 So those are the behaviours that we see.

1704 And in Canada today, we have been able to compete successfully for those partnerships because by being the best partner and being able to offer the best value to customers and saying that, you know, "We can -- we offer services to this portion of the market, and we can be the best partner in this portion of the market," so they have no choice but to do multiple partnerships today.

1705 But if they had one player of scale that they could do a partnership with -- and we just saw it with Disney, and it's not even approved yet, the merger is not approved, and the behaviour changed overnight.

1706 So those are the practical realities of working with these foreign entities. And when you talk about the safeguards and the conditions of licence, unfortunately, you know, it confuses us in terms of okay, well, how would the Commission regulate what Disney can offer, you know, what Disney has to do with us or Eastlink or Cogeco or someone else? You know, you start to get it to a point where only one BDU can offer those integrated experiences to customers that customers desire. And we want to get customers what they want to watch. That’s our whole premise.

1707 COMMISSIONER ANDERSON: So the only way, really, to address that concern would be, in your view, to deny the transaction?

1708 MS. MAWJI: That’s absolutely right. We have competition in the market today and you know, many of your questions yesterday focused on areas of pricing, for example, in western Canada. You can see it in the western pricing. You can see it in the innovation.

1709 Rogers made the statement yesterday that through the Ignite platform and you know, what they have done with Xfinity, they were nets positive, so they grew their subscriber base last quarter.

1710 We have grown our television subscriber base for 51 consecutive quarters because we listen to our customers, we innovate, we make significant investments, and we give them fair value. And we want to continue to be able to provide those services.

1711 COMMISSIONER ANDERSON: I think on that note, I have got no further questions, but congratulations on that feat, and I'll open the floor or pass the mic onto you, Chair. Thank you.

1712 THE CHAIRPERSON: Thank you, Commissioner Anderson.

1713 Commissioner Lafontaine, you had a question?

1714 COMMISSIONER LAFONTAINE: Thank you, Mr. Chair.

1715 Yes, I have a couple of questions, and I am very mindful of the time, so I will ask them quickly and then if the response -- if you could provide sort of a concise response. And if you need more time, or you need -- you can provide more details, rather, in a submission later.

1716 So we’ve talked a lot about competition. Or you just talked a lot about competition and the impact of this transaction on competition with your exchange with my colleague.

1717 And one of the reasons that Rogers provided yesterday -- one of the main reasons they provided yesterday for the Commission not to be concerned about the impact of the transaction on the marketplace is that Telus exits in Western Canada, and you’re a very aggressive competitor, and that will keep everything in check. So I’m wondering if you could just speak very briefly to that point.

1718 MS. MAWJI: Well, I think this comes back to we have to have an environment where we can all compete. We have created innovation and great value in Western Canada because we’ve invested. We didn’t need to make a merger. Why do they need make a merger? We’ve invested billions of dollars in our fibre to the home-build. We’ve innovated in our platforms. So it’s not clear to us why anyone needs to merge.

1719 Shaw’s been on the Ignite platform -- or sorry, the same Comcast Xfinity platform since 2017. We don’t see the benefits that Rogers is actually articulating that they would bring to the competitive environment. So we’re confused, quite honestly, on why a merger is required.

1720 COMMISSIONER LAFONTAINE: But does your presence keep them in check, and therefore no additional requirements are required?

1721 MR. SCHMIDT: Under our thesis of the case, which is all about vertical harms, you know, foreclosing access to content, frustrating access to content, we can’t possibly serve as any form of check on them because we’re the supplicant wholesale customer looking for content. You know, you’re the check, or denial of the transaction is the check.

1722 COMMISSIONER LAFONTAINE: Thank you.

1723 A couple more questions, if I may, Mr. Chair. Thank you.

1724 Sorry, I’m trying to say them quickly and then I’m stuttering as I -- it’s taking me longer to say them.

1725 Anyway, so my next question relates to your proposal regarding local news, and I have Appendix B here before me, your recommendation for a condition of licence. I’m wondering whether you have any views on whether that obligation with regard to Rogers contributing to the Global news stations -- whether there should be a time constraint on that, or whether your proposal is just that they should be required to do this for however long?

1726 MS. SIMPSON: I wouldn’t put a time limit on it. As long as there’s this policy and we have a problem funding local news in Canada, and there’s a policy in place to fund it, they should have to fund it.

1727 COMMISSIONER LAFONTAINE: Okay, thank you. Yesterday, Rogers spoke about its IPTV platform and indicated that it was -- or suggested that it was superior to other IPTV platforms in the market. And so I’m wondering if you could speak briefly to that in terms of your IPTV platform and Rogers’.

1728 MR. YURCHESYN: Yes. Thank you, Commissioner. We were a bit confused by some of Rogers’ comments yesterday around the Xfinity X1 platform. There was an assertion that this merger is required to modernize -- it sounded like, to modernize their network in the west and migrate vast numbers of customers.

1729 Shaw launched the Xfinity X1 platform, the exact same platform that Rogers uses in the east, and was licenced from Comcast in 2017. So we believe that a significant amount of Shaw’s base is likely already based on IPTV. As Zainul pointed out, we’ve delivered IPTV service across three platforms since 2015.

1730 So ultimately, their platform was asserted to be superior but, in fact, it’s no better. It’s the same as what we’ve been able to create and offer without the need for a merger. So our platform seamlessly integrates linear TV along with OTT, brings the benefits of universal search, the ability to find all of your content from a home screen.

1731 Rogers spoke a lot about the ability to search by voice. Our service can do that as well via Amazon Alexa or Google Home, which many Canadians have. You can say, “TV, please show me X.” I believe they used an example similar to that yesterday. Our platform can do that.

1732 And, you know, we’ve been able to do that without the need to merge and without the need for scale. And because we’ve been able to do that with a million customers -- and we have led over the last 10 years in this space.

1733 So they said that their platform was superior. Maybe I would better characterize it as “catching-up”. But we’ve held the pole position on IPTV and the capabilities, and it’s simply not a valid reason to support the merger application as it was put forward yesterday.

1734 COMMISSIONER LAFONTAINE: Thank you, and one final question with regard to your proposal on a condition of licence, or a requirement that would impede Rogers from providing OTT content exclusively -- or content exclusively on OTT platforms.

1735 And you, in your response to Commissioner Anderson’s question, you indicated that there wasn’t a concern to fairness because was there was no other service in the industry that could do the same kind of thing that Rogers could do. And I was curious about that.

1736 Wouldn’t there be another vertically integrated company that could -- that might be able to provide content exclusively online in the same way, and therefore that there may well be a fairness issue if the obligation is imposed only on Rogers?

1737 MR. SCHMIDT: I think our -- we were keying in on -- in this proceeding, on these parties, on these facts with the quite unprecedented magnitude of market share they will have in the English-language market, they are uniquely deserving of remedies. So we were keying it to the facts.

1738 And it’s a proceeding about them. And it can become a condition of licence. And I think it’s -- if it’s not an unfairness to allow them to merge, it’s not an unfairness to allow them to have additional conditions, I think would be our -- the way I would put it. I hope I’m being helpful.

1739 COMMISSIONER LAFONTAINE: That is one -- I guess one piece, but I do believe that your colleague responded that there wouldn’t be, if the Commission were to impose this obligation -- because the question was, if we impose this obligation on Rogers, would it create an unfairness or a regulatory asymmetry in the industry if this obligation is imposed only on Rogers, that is to not be able to provide content exclusively online, to stop Rogers from being able to provide particular content online to the detriment of others, or others wouldn’t have access to?

1740 And so I think that you said that nobody else could do it, anyway, so it’s not a problem. I think that’s what I’d understood. Maybe I wrote the ---

1741 MS. MAWJI: I think maybe I was misunderstood then, because the question was about if there is a way to impose a condition of exclusivity or of non-exclusivity on OTT, can that condition satisfy, you know, the concern of the scale in the merger?

1742 And my response to that will be no, it can’t, because the challenge is not just the contractual exclusivity, as I highlighted. It’s the pragmatic outcomes of dealing with a partner -- a foreign partner and dealing with a domestic, and having the opportunity to partner with a domestic organization that has 46 percent of the English-speaking market and 80 percent of the homes passed.

1743 And that is, I think -- I know that we want to be very specific and restrict the proceeding to the broadcast market, but as we’ve all seen in terms of the dynamics of how our industry has unfolded, the broadband market and the broadcast market are inextricably linked.

1744 And so it’s that opportunity to go from the 46 to the 80 that challenges the ability for anyone else to really compete in that environment.

1745 MR. SCHMIDT: Commissioner Lafontaine, I’m going try to be helpful at peril of making the answer too long.

1746 So I think Zainul is saying that, you know, practically speaking, you can’t -- it’s super hard to fix. Even if you had rules, you’re just not going to fix it.

1747 But in the long term, do you have to renovate the DMEO and other things to catch up with the digital economy? I mean, that the work of government all around the globe.

1748 So I don’t want us to appear evasive. Do you have to kind of modernize your approach for all actors in the system over time? Yes.

1749 But here today on this issue I don’t think any short term fixes are going to be genuinely effective. It will make us feel good, maybe, that we got a rule, but it probably won’t work in practice. But over time, yeah, I think you've got to renovate your approach for all similarly situated player sin the system.

1750 COMMISSIONER LAFONTAINE: Thank you very much for responding to my questions.

1751 Thank you, Mr. Chair.

1752 THE CHAIRPERSON: Thank you, Commissioner Lafontaine.

1753 Commissioner Desmond, you had a question too?

1754 COMMISSIONER DESMOND: I just have one question.

1755 Earlier today my colleague asked you about the impact the transaction would have on the availability of local news offered by Global. And Ms. Simpson, when you responded, I think you spoke primarily about communities that had both a Global News station and a City news station.

1756 And I'm just wondering if perhaps you could add a little more clarity with respect to those communities where there is no City News, so only where they have a Global News station, and what impact would be experienced in those communities.

1757 MS. SIMPSON: Well, assuming that outside of Vancouver, Calgary, and Edmonton where City TV exists, if Global just lost the funding and didn’t get it made up in any other way, you would lose some support of the voice that our subscribers trust and like. They have chosen that channel as their favourite, so I can only speak -- I’m not even from the west so I can only assume they would be really upset to lose their news.

1758 And in the cases where that extended to places like Lloydminster or the smaller communities, the smaller cities -- I suspect they are still cities -- but I mean, I think it would harm those communities a great deal to have their only local news source depleted so much.

1759 Zainul?

1760 MS. MAWJI: Maybe I can top up as well if that’s okay, Commissioner?

1761 I think that when you take a look at the issue of local news as you really clearly highlight, you could look at Edmonton, Calgary, and Vancouver where there are dual stations. But in the communities where --there are two sets of communities that I think we have to look at -- communities that have a Global News station that don’t have City TV, and then communities that have local news that are dependent on the local news fund that would also be impacted if CORUS tries to go and get -- is able to act as an independent and get that funding.

1762 So in the case where Global -- Global is a commercial entity; it’s going to make its decisions, right, in terms of where it can get revenue, profits, et cetera, and how many areas it can afford to support. If it loses $13 million and it doesn’t have a way to replace that, then many of those smaller markets would be impacted.

1763 And in addition to that, if they do go and get that funding from the local independent news funds that is supporting the Lloydminsters and the Medicine Hats today, those entities will be impacted.

1764 So the point that is really clear here is again, the merger is creating a burden. That burden should not be borne -- that burden should be acknowledged and that burden should be managed and enforced by the entity that is asking for the merger.

1765 COMMISSIONER DESMOND: Thank you.

1766 THE CHAIRPERSON: Thank you, Commissioner Desmond.

1767 We are almost done.

1768 I would note, with respect to some of the examples you have given, that it is ultimately before the Commission and the Commission’s discretion as to how we would treat CORUS in the future. And it is not a direct outcome of this proceeding.

1769 A quick question if I could about the SRDU.

1770 You have expressed concerns about if Rogers hold it what the possible negative consequences might be. Can you just explain to me today why it is any different than the situation today with Shaw holding it?

1771 MS. SIMPSON: Yeah, I think the incentives change. Thank you.

1772 Right now Shaw has 30 discretionary services and a larger network for Global than Rogers will have. They have, it think, nine discretionary services and far fewer signals for their City TV stations.

1773 So from an SRDU perspective, Shaw has a good incentive to make sure that everybody gets their own signal. They are also one of the largest stable of programming services. So there is a good incentive to make sure they are all passed and they are all passed in an affordable rate, all of the outskirts and all of the areas throughout Canada that offer their services. They want eyeballs.

1774 When you get to Rogers and you have that kind of scale that this merger would create and create an opportunity for them to use these incentives that they have, I think that they are going to use that delivery as another means to thwart or delay, raise rates, or deny service altogether to smaller BDUs.

1775 THE CHAIRPERSON: Thank you.

1776 Those are all of our questions. I thank you very much for your presentation and participation at the hearing.

1777 And we will now recess for lunch.

1778 Madam Secretary?

1779 MR. SCHMIDT: Thank you for your generosity with our expansive answers as well.

1780 THE CHAIRPERSON: Not at all.

1781 MS. ROY: We will come back from lunch at 2:15. Thank you.

--- Upon recessing at 1:11 p.m.

--- L'audience est suspendue à 13h11

--- Upon resuming at 2:20 p.m./

--- L'audience est reprise à 14h20

1782 MS. ROY: Good afternoon, Mr. Edwards and Mr. Thompson. Can you hear me? Perfect.

1783 MR. THOMPSON: Yes.

1784 MS. ROY: Perfect. Thank you very much.

1785 We will now hear the presentation of the CCSA. Please introduce yourself and your colleague. You may begin.

1786 MR. THOMPSON: Thank you.

PRESENTATION / PRÉSENTATION

1787 MR. THOMPSON: Good afternoon, Mr. Chair and Commissioners. I am Jay Thompson, CEO of the Canadian Communications Systems Alliance. Appearing with me by remote connection from New Brunswick is Chris Edwards, CCSA's Vice President of Regulatory Affairs. Thank you for accommodating our different locations by permitting us to appear virtually.

1788 CCSA speaks for more than 100 independent broadcasting and telecommunications providers, who serve Canadians from sea to sea to sea. In large part, our members serve more rural and remote communities. In some cases, they are the only terrestrial provider in their community; in others, they represent a key terrestrial competitive alternative.

1789 The special role our members play in delivering communications services is vitally important in the context of the now urgent and widely recognised imperative to connect Canadians wherever they live, work, and operate their businesses.

1790 CCSA members typically operate in markets that are more -- are the most difficult and thus the most costly to serve. Their ongoing investment in their networks so they can continue to deliver affordable, high-quality broadcasting and telecommunications services to their communities, is critical to meeting Canada's connectivity agenda.

1791 That being said, the outcome of this hearing into the proposed Rogers/Shaw transaction could impact significantly on our members' ability to maintain those critical investments and the affordability of the services they provide. If you approve this transaction, a big, dominant, vertically integrated broadcaster will become even bigger and more dominant. It will dominate the BDU sector. It will dominate the provision of transport services, and we fear it could also come to dominate English language Canadian TV programming.

1792 If you approve this transaction, CCSA members will be entirely reliant upon two dominant vertically integrated enterprises with which they compete directly for almost all of the upstream inputs to their BDU operations. That is, our members will rely on Rogers and Bell for almost all of the Canadian English TV content they distribute and virtually all of the signal transport services they need to receive broadcasting services at their facilities. That reliance on just two providers would place CCSA members in an extremely precarious position and represents an existential threat to them and to their ability to serve their customers.

1793 Nevertheless, unlike many others, we are not opposing this transaction. But like many, we have serious concerns that if allowed to go ahead, it will negatively impact Canadian consumers and other industry players unless you impose appropriate and necessary safeguards, and not just impose them, but enforce them too.

1794 We believe that safeguards can be established to protect Canadians in these circumstances. We believe the Commission has the power to impose such safeguards. But, frankly, we do not believe that the safeguards in your current toolbox are adequate to do the job, and we fear that even if you impose the right safeguards, you will not adequately and effectively enforce them. Unfortunately, our own experience says that you won't.

1795 Chris will describe our primary concern with this application, which regards transport services, and offer our recommendation as to how they can be addressed.

1796 Chris?

1797 MR. EDWARDS: Thank you, Jay.

1798 Mr. Chair, Commissioners, as we've said in our written intervention, our primary concern with respect to this application is to ensure the continued availability of signal transport services at reasonable rates and on reasonable terms. We are especially concerned with the continued availability of satellite transport services at affordable rates.

1799 CCSA members who rely on satellite transport services already operate at a significant disadvantage. That is because, in addition to the wholesale fees for programming that all BDUs pay, our members also bear a cost premium to receive satellite or SRDU-delivered signals at their facilities. That cost premium already makes competitive and affordable delivery of broadcast to Canadians a special challenge for independent BDUs.

1800 While, currently, both Shaw and Bell provide SRDU services, technical differences between the two mean that our members rely primarily on Shaw for satellite transport. A number of our members also rely on Shaw for terrestrial, or TRDU services, through its fiber network.

1801 Shaw's satellite services also include its HITS-QT platform. Because HITS-QT requires relatively low capital investment in headend reception and back office facilities, it is a cost-effective means for smaller BDUs and those who operate in remote markets to access satellite-delivered programming. According to our most billing records, I'm going to correct my comments here, 131 of our members' BDU systems, about 13‑percent of the total operated by CCSA members, depend on Shaw's HITS-QT platform.

1802 Shaw has provided its SRDU service to CCSA members for many years. It has clearly been an important part of their business, and it is certainly a critical one for our members. But Rogers has never been in the satellite or SRDU business. Given everything else that is going on at Rogers, how important will the SRDU business be for it going forward? What guarantee do rural Canadians have that Rogers will continue to provide SRDU services necessary for them to still get their TV channels, including those Canadians living in the 133 communities dependent on the HITS-QT platform?

1803 And our concern is not just about Rogers' commitment to maintaining the Shaw SRDU services, it's about the rates it will choose to charge for those services. Absent reasonable constraints, Rogers could use its position as the dominant SRDU to increase its rates, further squeezing the already thin margins CCSA members must currently manage.

1804 We have experience trying to manage rate increases Rogers seeks for its programming services, so our fear of Rogers' imposed SRDU rate increases is a legitimate one. Moreover, it would be easy for Rogers to impose unreasonable SRDU rate increases because, as noted, it could simply threaten to cease its SRDU operations entirely if it did not get its way, and there are no defined regulatory constraints on how it could behave in making its services available or to force its position in the event of a contract dispute.

1805 Canada's Broadcasting Policy states that BDUs "should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost". That objective applies to BDUs, SRDUs and TRDUs alike. The objective is about delivering broadcasting content to Canadians at affordable rates, a goal that requires both the provision of transport services and efficiencies throughout the signal delivery chain.

1806 To help ensure that the Rogers-Shaw transaction contributes to meeting this broadcasting delivery objective, the Commission should, as a condition of approval, require Rogers to maintain the Shaw SRDU service and the signals it currently transports, subject to all the current Shaw SRDU Conditions of Licence. In addition, as conditions of approval, the Commission should impose on both Rogers' SRDU and TRDU services an obligation to comply with the relevant provisions of the Wholesale Code in all of their contracts for wholesale signal transport services, and to submit to the dispute resolution and standstill provisions, as set out at sections 12 to 15.01 of the Broadcasting Distribution Regulations.

1807 Application of the relevant provisions of the Wholesale Code would require Rogers to offer its transport services at commercially reasonable rates based on objective factors, such as historical rates and rates paid by others for those wholesale services. Those Code provisions would also require that the wholesale transport agreements be filed with the Commission to enable effective supervision of this element of the broadcasting supply chain.

1808 Most importantly, application of the standstill Rule established in the Regulations, backstopped by the Commission’s dispute resolution process, would prevent Rogers from unilaterally withdrawing vital transport services from unaffiliated BDUs, thereby disenfranchising Canadian broadcasting consumers, as a negotiating tactic.

1809 Jay?

1810 MR. THOMSON: Mr. Chair, Commissioners, in my introduction, I made the blunt statement that while safeguards are needed to protect consumers and other industry players if this transaction is approved, the Commission’s current safeguards are inadequate for the task and, moreover, based on our experience, we’re sceptical they’d be adequately enforced in any event.

1811 Let me now explain.

1812 Even absent the Corus services, Rogers is already a dominant provider of English-language programming services. If this transaction is approved, Rogers will serve almost half of Canada’s English-language BDU subscribers. There is no doubt that Rogers’ programming services will benefit from Rogers’ BDU growth; among other things, they will be guaranteed access to substantially more subscribers at guaranteed, self-negotiated rates and carriage terms.

1813 Those guarantees will mean that Rogers programming services will be substantially less reliant on carriage by other BDUs. That lessened carriage reliance will mean Rogers will have increased bargaining strength when negotiating carriage terms with other BDUs. That increased bargaining strength will mean those other BDUs will face higher rates and less carriage and packaging flexibility. That will mean higher prices and less choice for those BDUs’ customers. And it will make those BDUs less competitive, which will favour Rogers’ BDU services in the expanded markets where they will now be available.

1814 Now Rogers says not to worry because its programming services are subject to the CRTC’s safeguards, namely the Dispute Resolution provisions and the Wholesale Code.

1815 But we do worry, because those safeguards are not working now. And since they are not working now, they will be of even less help when Rogers is more than twice its current size.

1816 The Commission’s dispute resolution process is broken. Time and again, CCSA has found ourselves across the table from the large, vertically-integrated programmers, and sometime even the smaller ones, engaged in Commission dispute resolution processes that both the programmers and the Commission allow to run for months, even years, years in which the less powerful independent BDUs are forced to negotiate against themselves to conclude a deal so as to limit their retroactive liability or to launch new services in a timely and competitive way.

1817 During those protracted processes, independent BDUs suffer real financial harm because they cannot recoup retroactive rate increases from their customers, but must eat the increases themselves.

1818 And they can suffer competitive harm because a BDU vertically integrated with the programmer across the table can offer new functionalities for the programmer’s services while the programmer refuses to allow the independent to launch those same functionalities until a deal is done.

1819 For those reasons, CCSA submits that it is not in the public interest to approve this transaction unless, in doing so, the Commission strengthens its safeguards for Rogers’ various services and commits to enforcing those stronger safeguards more effectively. That includes addressing in a timely way the disputes that Rogers will trigger when it inevitably tries to use its substantially increased size to seek unreasonable rate increases and other anti-competitive carriage terms for its programming services.

1820 This means that, at a minimum, the Commission must impose firm and aggressive time limits on all stages of dispute resolution and especially, staff-assisted mediation; and confirm that retroactive payment liability stops accruing from the moment the CRTC is seized of a dispute.

1821 In the current circumstances, these improved safeguards and commitment to timely enforcement should be incorporated as conditions of approving the Rogers-Shaw transaction. And ultimately, they should be adopted across the board.

1822 Chris?

1823 MR. EDWARDS: Lastly, we would like to turn briefly to the issue of how Corus fits into this transaction. While we appreciate that Rogers is not directly seeking to acquire the Corus programming services here, what happens to those services going forward is clearly an elephant in the room.

1824 Like others, CCSA is concerned that Rogers’ ownership of Shaw will ultimately lead to the Corus services being accorded preferential Rogers treatment, at best, or being absorbed into the Rogers programming fold, at worst.

1825 Either result will inevitably lead to increased rates and choice reduction for Canadians. The Commission needs to ensure this does not happen.

1826 MR. THOMSON: Mr. Chair, Commissioners, that is our presentation.

1827 Thank you very much for your time and attention, and we’ll be happy to answer your questions.

1828 THE CHAIRPERSON: Thank you. Thank you very much for your presentation.

1829 I will turn the microphone to Commissioner Lafontaine, as she will begin the questions for you.

1830 COMMISSIONER LAFONTAINE: Thank you very much, Mr. Chair.

1831 Good afternoon, gentlemen. Thank you very much for your presentation.

1832 I have a few questions for you today about the SRDU-TRDU issue that you have raised, competitive safeguards, and the issue of Rogers' relationship with Corus.

1833 So let's start with the SRDU-TRDU issues.

1834 Now, the CCSA has proposed that the licensed SRDU and the exempt TRDU services should be required to comply with the Wholesale Code in all of their contracts for the provision of transport services to licensed and exempt BDUs, as well as to comply with the undue preference dispute resolution and standstill provisions that are set out in the BDU regulations.

1835 Now, you have talked about this in your presentation today, and you have discussed it in your written submission, but I would like to ask you if you would like to elaborate a bit more on that proposal and what it would entail?

1836 MR. THOMSON: I could start and then I'll turn things over to Chris.

1837 There are safeguards currently in the Shaw SRDU condition of licence, conditions of licence, and in the TRDU exemption order.

1838 In the conditions of licence for the Shaw SRDU, those apply to undue preference, and there's vague reference to a dispute resolution type of process.

1839 In the TRDU exemption order, there's only a vague reference to dispute resolution.

1840 We feel that these provisions need to be strengthened, and they need to apply, not only to the over-the-air services that are being carried by the SRDU, but also the discretionary services as well.

1841 Chris, I'll turn to you.

1842 MR. EDWARDS: Yeah. So I think I'll pick up and take it in pieces.

1843 First, as to the Wholesale Code, what do we mean when we say "Key principles of the Wholesale Code?"

1844 Really, it comes down to a question of fair value price for services, in this case, price for wholesale services to enable our members to carry satellite -- services delivered by satellite.

1845 So if you picture for a minute -- and I guess I'm going to integrate with dispute resolution for a bit -- but if we have a contractual dispute regarding the provision of SRDU services, we decide that we want to go to dispute resolution to get the matter resolved, where do we find ourselves?

1846 Well, as matters stand today, we would say, "Rogers is increasing rates radically. We think it's unfair, and the Commission should do something about that."

1847 And Rogers' immediate anticipated reply would be, "Well, the SRDU is not subject to the Wholesale Code, and then is therefore not subject to the concept of fair market rates."

1848 And so we would -- and Rogers would say further indicia like, historical rates, rates charged to other undertakings such as its DTH undertaking, for instance, simply can't be used in this case because we're not subject to the Code.

1849 So the initial premise that the Code needs to apply, key principles of the Code need to apply, is really about first of all, fair value price, and the inclusion of indicia upon which a determination would be made on what constitutes a fair price.

1850 And in that respect, we would clearly think about historical rates, rates charged to other BDUs.

1851 There are also prohibitions in the Code against, for instance, requiring an unreasonable rate, i.e., not based on fair market value requiring an unreasonable volume-based rate card. So for instance, how would we stack up against the DTH operation -- the affiliated DTH operation in terms of volume. In imposing unreasonable terms and conditions that restrict the ability of the BDU to provide consumer choice, which clearly, if we can’t get the wholesale satellite transport services, if going to be an issue for us.

1852 Secondly on the wholesale code, we come to the issue of CRTC supervision, and in this respect, the Wholesale Code requires parties to file contracts with the Commission so as to enhance the Commission’s ability to supervise that area of the sector.

1853 The second part, I guess, is really about the regulations. The undue preference provision is there, as Jay noted, in the SRDU Conditions of Licence, an also in the exemption for the TRDUs.

1854 What is not there -- and Jay has alluded to very, what he would call, vague language about what happens -- about access to dispute resolution. We think the terms and the regulations are much more precise.

1855 And in particular, the incorporation to the standstill rule is absolutely key to us, because what we see is in the event we’re in a dispute about renewing contract terms, there’s nothing in the regulations -- or in the conditions of licence right now that protect us from Rogers simply withdrawing those wholesale transport services. So that’s the big concern.

1856 So I think -- I think that covers the ground for that question. Thank you.

1857 COMMISSIONER LAFONTAINE: Thank you very much for that detailed response. I’d like to turn to your oral presentation and -- yes, at paragraphs 14 and 15, you make the point that, “CCSA members who rely on satellite transport services already operate at a significant disadvantage. That is because in addition to the wholesale fees for programming that all BDUs pay, our members also bear a cost premium to receive the SRDU signals at their facilities.” And I believe you also made this submission in your written remarks.

1858 I’m wondering if you could elaborate a little bit on this and explain what -- how this -- what this disadvantage is from a practical perspective.

1859 MR. EDWARDS: So I would say, first of all, that I can’t really quantify it, and that’s largely because it’s very geographically dependent.

1860 And so if you take the case of a BDU that can connect by fibre to 151 Front Street, and get all of its content from there, that BDU is going to pay a certain amount for that connectivity. And that will vary according to -- fibre interconnectivity -- and that will vary according to where the BDU is.

1861 So if they’re close to one of the major -- I’m trying to think of the word, but one of the major network centres, typically they’re going to pay a much lower rate per gigabit of capacity than someone who’s far more remote.

1862 I would make the general proposition that for the remote communities where most of the SRDU services are used, there is a higher cost premium even than the fibre interconnectivity, and that’s because the BDU is paying a charge per signal to get both the off-airs and the discretionary services, and that’s a rate that multiplied by the number of subscribers served. So it’s very different from a capacity-based terrestrial interconnection charge.

1863 COMMISSIONER LAFONTAINE: Okay, thank you. I’m just going to come back to the framework, as it were, or your recommendations for the framework -- or the regulatory framework to be applied.

1864 You indicated in your oral remarks today as well that Rogers should continue to carry the signals that are currently carried on the Shaw SRDU and TRDUs as a condition of approval of this application. You’ve referenced in your remarks today why this is necessary, but if you would like to elaborate on that, I give you the floor on that point. And -- so I give you the floor on that, but I’d also be interested to know whether there’s a particular period of time that you would suggest that such an obligation be put in place.

1865 MR. EDWARDS: So, I’ll respond to that, if that’s okay. So I’ll hark to back to yesterday when we heard Rogers essentially commit to carrying a number independent services and basically all of the services that it carries today. They said they would do that for a reasonable period of time, basically so long as it was commercially justifiable to them, I think was something like the language. That’s a nice commitment, but we can’t rely on it given the nature of the relationship.

1866 What we would suggest is that -- really, two elements.

1867 First of all, the SRDUs should continue to transport everything that it transports now, at least until the current SRDU licence expires, and that would be 2026. We would add on to that that Rogers should not be able to take signals away from that service without further public process to investigate the impact of that.

1868 MR. THOMPSON: If I could just jump in on that to add there’s precedent for the Commission doing this kind of thing, requiring and applicant, as a condition of approval, or as -- in a licence renewal, to continue to offer services that are important to ensure that Canada’s Broadcasting Policy objectives are met. And that is we harken back to the Shaw CanWest decision in which the Commission required Shaw to continue to operate its local television satellite solution for the length of term of the licence.

1869 And also, with respect to the ongoing carriage of over-the-air services, the Commission made that obligation in the Bell-Astral approval and also in Bell’s most group licence renewal decision and, added to that, the obligation to come back to the Commission and seek approval, and so to trigger a public process in the event that it proposes to drop any of its signals.

1870 COMMISSIONER LAFONTAINE: Thank you for that detailed response. Now, you’ve noted that as a result of the proposed transaction, Rogers and Bell would control virtually all of the transport signals of independent BDUs, and that the proposed transaction could only increase the potential for anti-competitive behaviour.

1871 Can you please elaborate on why and how, in your view, this would be possible given that SRDUs are required by condition of licence to provide their service to all terrestrial and direct-to-home BDUs who are willing to enter into affiliation agreements with them?

1872 MR. THOMPSON: Chris, do you want to take that?

1873 MR. EDWARDS: I want to address just the very last part of what you’ve said because it’s very important. And that is, the SRDU obligation is limited only to the distribution of, essentially, a named set of off-air signals. There is no obligation whatsoever in respect of transportive discretionary services.

1874 As to larger question, Jay can amplify, but I thought Telus gave a pretty robust response to essentially the similar question this morning, and that is, what’s really different here for us?

1875 And what’s different is the SRDU and the TRDU would be in the hands of a massively integrated undertaking from which we buy programming, from which we buy transport services, and with which our members compete, both on the DTH side and -- although there was a fair amount said yesterday about how terrestrial BDUs don’t actually compete, I would submit that they do. We see it all the time, especially on the fringes of their service areas.

1876 And so there is a very powerful, I would call it, anti-competitive incentive on Rogers, which would be in the position, by raising transport rates, for instance, to squeeze the margins of the independent BDUs to whom it’s providing its services, in the same way that it can hurt their margins in the provision of programming services.

1877 And as Jay noted at one point in our presentation, essentially the VI companies -- the two dominant VI companies would now be in control of virtually all the upstream inputs to our members’ business.

1878 That’s what’s different.

1879 MR. THOMPSON: If I could just add -- you know, we listened with interest to Rogers’ presentation yesterday where they attempted to say not to worry about this.

1880 Everything will be fine. No need for safeguards. No need to worry about any competitive behaviour.

1881 And as I understood it, they listed the number of reasons why we shouldn’t worry about it. For example., they said it’s a competitive business. So we have no incentive to engage in behaviour that’s going to harm us competitively.

1882 Well, it’s not a competitive business. The SRD business is two players, one of which, Shaw< is the one that is the dominant provider certainly to our members. And they cannot afford, and neither can their customers afford to lost that service. It’s an effective monopoly, really, in practical terms for serving the communities that our members operate in.

1883 Rogers also said that we have to transport our own signals so we have no incentive to harm the service because it impacts on us. Well, that’s a pretty self-serving statement. It says nothing -- it says a lot about Rogers signals, but it says nothing about the other signals that need to be transported too.

1884 They said they are just stepping into Shaw’s shoes. So what is the big difference? Well, there is a huge difference here that Telus talked about as well, and that is everything is different here. This is not a replication of the existing situation under Shaw. It will be a very very much bigger Rogers. And Rogers is not Shaw. Rogers has its own history. Rogers has its own history of its treatment of independent BDUs that is different than Shaw’s treatment.

1885 So these things need to be taken into consideration.

1886 And to that extent, Rogers said, “Well, there has been no complaints about Shaw.” Well, that says a lot about Shaw.

1887 And I will leave it at that.

1888 MR. EDWARDS: I would like to pick up and amplify a couple of points, if I may.

1889 First, Jay just made the statement that the SRDU business is not a competitive business. And I will just remind the Commission that in its 2012 SRDU licensing decision the Commission made exactly that finding. They said in -- and so this is 2012-94.

1890 The Commission found that there is no evidence to conclude that the signal transport situation in remote areas is likely to change in the near future. And they decided that in light of the lack of effective competition it’s a signal transport sector and the current contribution of SRDUs to the fulfillment of the objectives in Act, it would be inappropriate to exempt the SRDUs.

1891 And in 2019 in the Shaw SRDU renewal decision, the Commission again referred back to that policy as its SRDU policy. So the finding is it’s not a competitive sector and it remains that way. And I would say, as a factual matter, we may have seen some inroads by Bell ExpressVu into business with our members but Shaw by a factor of at least five to one, is by far the dominant player in the business for our members.

1892 The other thing I just wanted to pick up on is Rogers’ repeated statement in its written submissions and I believe they said it again yesterday. They said, “We’re not really in the satellite business. And that’s not what we do.”

1893 And quite frankly, that’s part of -- that’s one of the germs of our concern here is that we will be dealing with someone who is new to this business. We really don’t have any evidence upon which to base the seriousness with which they will treat that business, whether they consider it a core business in light of their total operation, whether it is going to be a profitable business, what they think they might need to do to make it profitable if it’s not working well for them.

1894 And our concerns arise from that just general inexperience with the business.

1895 COMMISSIONER LAFONTAINE: Great. Thank you very much.

1896 I am going to turn to a little bit to focus more on TRDUs. You have noted with respect to the transport of -- the transport services by a terrestrial fibre which is currently provided under the TRDU exempt order. Rogers could refuse to deal with independent BDUs once existing contracts expire or increases the rates and impose other commercial terms.

1897 Can you please elaborate on the importance of the Shaw’s TRDUs for CCSA members and on the specific risks you are trying to address.

1898 MR. EDWARDS: So Jay, I will take that, if that’s okay.

1899 So a lot of what I have here is anecdotal and the reason for that is CCSA does not actually see the direct arrangements that its members make with TRDU providers. What we do know, just from our experience and anecdotally discussions with our members is that quite a few of them have gone to Shaw fibre transport, what actually is a replacement for the SRDU services.

1900 And the premise for that has been that Shaw has made available a very convenient kind of full package of signals to members through its fibre network and at rates and terms that appear to be attractive to our members from everything we can tell. And so there has been an increasing reliance among our membership on that service.

1901 As to Rogers’ TRDUs pre-transaction, we agree with Rogers that so far as we know, that is a very small part of their business and not that significant. What concerns us here is again whether there will be a continued commitment to growing that TRDU business as it comes from Shaw. It has -- just because our members increasingly have come to rely on that, where they can get it.

1902 COMMISSIONER LAFONTAINE: Thank you for that.

1903 Now, you have discussed in our written remarks and in your presentation today that CCSA members are tremendously reliant on the Shaw SRU service and that they are equipped for the Shaw SRDU service.

1904 Could you please elaborate briefly on what is involved in transitioning to an alternative RDU service and the impact that might be on subscribers if there were -- if Rogers were to places the CCSA members in a situation or a position where they would need to pivot to an alternative RDU.

1905 MR. EDWARDS: So again I will respond, if that’s okay.

1906 So the history of the SRDU business has been that there was a solution called headend in the Sky, HITS, what we refer to as full HITS. That required a very extensive capital investment in headend equipment to take signals off the satellite.

1907 Shaw, working with CCSA and also with the U.S. HITS provider, came up with what is called the HITS-QT solution or more recently, HITS-QT PLUS. And my recollection is that the headend investment for the necessary equipment to receive those signals and process them, and also to do the billing and authorization required for the customer premise boxes, was about one-tenth of the cost, certainly in the headend of the full HITS solution.

1908 So it became an affordable solution for many of the small members who couldn’t get their signals other than by satellite and it gave them a way to do their business.

1909 And so that solution was based on what used to be Motorola, then became ARRIS, then became -- io think it’s most recently CommScope equipment in the headend.

1910 And in order to change the delivery model, the member is either going to have to find a way to do a fibre interconnection in which case I’m not certain what the headend costs are there. For many of these people it is more about how do I get a fibre interconnection with sufficient capacity to do what I need to do?

1911 On the satellite side, it’s basically a change-out of a lot of the headend reception and decoding equipment to use a different vendor platform and that would be one of the platforms offered by Bell ExpressVu, for instance. So it’s really an equipment left out in the headend.

1912 COMMISSIONER LAFONTAINE: Thank you.

1913 I note in your written submission in reference to the CCSA membership that there are members that are located in the north. I was wondering if you could provide some information about the RDU services that are used by the CCSA members in the north and how this transaction might impact on them.

1914 MR. EDWARDS: I will start by saying just generally that the northern systems are the most reliant on satellite relay services, just because of the difficulty in finding fiber interconnections. And until we manage to get Canada connected by fiber to every single Canadian, that's going to be the case for sometime to come.

1915 I don't have specific information right in front of me as to which of the northern members are using that. I could -- I could find that out. And the way we do that, I should say, is we manage billing for our members, their payments both for programming services and for the SRDU services, and we can look at our billing records and see who's using what to a degree.

1916 COMMISSIONER LAFONTAINE: Could you provide these details in writing to the Commission in terms of the CCSA membership that is located in the North? And I think you responded to the question of the RDU service that they're using?

1917 MR. THOMPSON: And I guess just to Commissioner's -- Commissioner Anderson's question from earlier, when we talk about the North, I assume we are talking about the Territories?

1918 COMMISSIONER LAFONTAINE: That is what I'm referring to. I don't know if Commissioner Anderson would like to add to that.

1919 COMMISSIONER ANDERSON: Yeah, or satellite dependent communities.

1920 COMMISSIONER LAFONTAINE: So the North or satellite dependent communities.

1921 MR. THOMPSON: We will take that undertaking.

1922 COMMISSIONER LAFONTAINE: Thank you very much.

1923 (UNDERTAKING / ENGAGEMENT)

1924 COMMISSIONER LAFONTAINE: Are there any specific examples or situations or example situations that the CCSA could provide that involve Rogers when the Wholesale Code or the various VI mechanisms, undue preference, dispute resolution tools, did not provide sufficient safeguards for the CCSA memberships, and whether you did file a complaint with the Commission regarding such grievances?

1925 MR. THOMPSON: So I'll start there. So the Wholesale Code is really a framework for dispute resolution. It guides the discussions, or we would hope that it guides the discussions during negotiations and then if negotiations break down, into CRTC staff-assisted mediation. So it provides the framework, as Chris had outlined earlier, for what constitutes reasonable rates and so on, and what kind of rights should be provided to BDUs.

1926 So our experience with respect to the effectiveness of the Wholesale Code is really our experience with the effectiveness of dispute resolution, and as we indicated, we're finding it very difficult to make that into an actually effective process.

1927 I can't get into details about what happens at the negotiating table with any particular programmer, but suffice to say we do have an experience with Rogers that we certainly didn't have with Shaw, and that is a direct challenge to the role of CCSA as a representative of small independent cable companies at the negotiating table. And we can only surmise that that is an effort to actually undermine the negotiating capabilities of smaller independent providers by forcing them, if Rogers had its way, to negotiate on their own rather than through us.

1928 COMMISSIONER LAFONTAINE: Thank you. Now, you mentioned the TELUS presentation this morning, so I understand that you had an opportunity to listen into that. You would have heard that TELUS suggests that the Commission require Rogers, and you would have heard the exchange, about TELUS suggesting that the Commission require Rogers to file for its approval, for the Commission's approval standard industry-wide rate cards for its programming services to effectively set the basis for what would be an acceptable wholesale rate. Do you have any views on this?

1929 MR. THOMPSON: Heard TELUS' response to that where I think what they said was that that's kind of a fallback position that they put on the table really in an effort to highlight the difficulties associated with trying to come to an agreement with a large vertically-integrated company over rates. And we -- and I think what they said ultimately was that they're not advocating for a return to wholesale rate regulation.

1930 We aren't either. We're advocating for a effective, timely dispute resolution process in the event there is a dispute regarding rates, and still allow the parties to work it out if -- with the Commission's help, if necessary.

1931 MR. EDWARDS: I think I'd like to add a little bit to that. Even if it were to go in that direction such that there was standard industry rate cards, what those rate cards look like is very important. So for instance, and I think -- well, for instance, if it's a volume-based rate card or even under a penetrate-based rate card in certain instances, it's certainly important to know where people fall within that card.

1932 CCSA continually faces the problem that it's presented with what a VI programmer calls the industry standard rate card, but there are only two, maybe three players who can get at the -- get the better rates on that rate card, and when you get down to volumes like ours it's punitive. And so how it's done is very, very important, if it's to be done, and I'm not sure we recommend that it should be done. I'll go back to Jay's comment that effective -- timely, effective dispute resolution is really a key I think.

1933 MR. THOMPSON: And TELUS had outlined problems with penetration-based rate cards, which would echo as well. Back in the Let's Talk TV decision, the premise was that moving into this new world there would be shared risk. As we increased consumer choice and looked to expand and approve affordability, we were going to look at a different world in which there was much more choice at the end user's -- in the end user's hands and that there would be a shared risk between programmers and BDUs in terms of the -- trying to market programming services to ensure the greatest take-up, but if that's not -- if that's not going to happen that the BDU and the programmer would be sharing the risk on that.

1934 But that's not what's happened. With penetration-based rate cards and make whole provisions that effectively have been locked in now, the risk is still all on the BDU side, because regardless of how many customers take a service, they're still going to have to make the programmer whole, which protects the programmer and does not protect either the BDU or its customers.

1935 MR. EDWARDS: Which means that regardless of the BDUs' performance, essentially those rate cards mean you pay the same cheque to the programmer regardless.

1936 COMMISSIONER LAFONTAINE: Okay, thank you. Just -- I have two more questions for you before I finish my line of questioning.

1937 I just want to come back to the -- the impact on a CCM member of having to change its -- if we were to change the -- its RDU service, Mr. Edwards mentioned that it would be a matter of changing the technology to switch to a different service. Generally speaking, is that -- is that very costly? Would that be very costly for the CCSA member?

1938 MR. EDWARDS: I'll pick that up. I think a key thing to understand here is the size of the BDUs we're talking about. Many of these, the ones particularly who have to rely on SRDU services, are very small systems. And I was actually totalling up some numbers this morning, and I was struck by how many of them are actually serving fewer than 100 customers. And so when you look at the capability of a company like that, changing out the headend gear for how many signals, now well over a 100 I would suspect in just about every case, can be a really daunting capital investment.

1939 COMMISSIONER LAFONTAINE: Thank you. My last question for you today relates to the relationship between Corus and Rogers. And you've made your submissions with regard to your concern on that front, but I was wondering if you could elaborate on what mechanisms you think that the Commission should use to monitor the relationship between Rogers and Corus since you have suggested that the Commission monitor this closely.

1940 MR. EDWARDS: And I think it's just down to looking at the contracts, and I guess -- I guess what we're really advocating for is a heightened awareness of any indicators of any competitive preferences. So it's really just looking closely at the contracts when they're renewed, comparing them to the contracts that other BDUs in the market are getting, and just keeping a close eye on it.

1941 COMMISSIONER LAFONTAINE: Thank you.

1942 Thank you, Mr. Chair. I believe those are all of my questions for this intervenor today.

1943 THE CHAIRPERSON: Thank you, Commissioner Lafontaine.

1944 I have got a quick couple of follow ups. I'll check with my colleagues in a moment.

1945 First, can I just clarify with respect to the undertaking you took earlier, we said the Territories and satellite-dependent areas. Could you please include the Yukon, just it's and the Yukon, just for greater certainty?

1946 MR. THOMSON: Of course.

1947 THE CHAIRPERSON: So that would be the Northwest Territories, Nunavut, and the Yukon.

1948 MR. EDWARDS: I'll just -- I think I'll condition that somewhat. We will look to see who’s using the services in those areas and get you the best information we can.

1949 THE CHAIRPERSON: Yeah.

1950 MR. EDWARDS: It may not split out specifically to -- what I'm thinking about in particular is satellite-dependent communities and whether we can meet that definition.

1951 THE CHAIRPERSON: That’s fine. I'm not -- yeah, we're not -- we're less concerned, pardon me, with the precise location and rather, a general indication of the number of members on the dependence on the service.

1952 While we're on the subject of undertakings, Commissioner Lafontaine just asked you for a little more clarity about costs or switching costs, if you will. And again, the response was relatively generic.

1953 I wonder if you could undertake to provide us a more specific and better response with respect to what is required, for example, to change between Shaw's service and Bell's service? Is it a change in dish or repointing? What specific network equipment is required to be changed, and roughly the cost estimates to do so? I think that would be helpful to us.

1954 MR. THOMSON: If I may, Mr. Chair, I think what we can undertake to do is reach out to our members to try to acquire that information. We don’t have that information ourselves. It's in the hands of our members, and we will certainly make every effort to get an answer to that from our members.

1955 THE CHAIRPERSON: Understood. But you have taken the position that it is costly, so we would appreciate whatever you can give to us in order to help us understand what that is and what are indeed the barriers to switching.

1956 MR. EDWARDS: And I think I would just further remark that I think the answer to the question is going to be widely divergent, depending on the system involved, where it is, and its capabilities, what technology it actually has.

1957 So probably the best way for us to do this is to give you some representative examples, if that will suffice.

1958 THE CHAIRPERSON: It would, thank you.

1959 And just maybe one last question from me.

1960 A number of the things that you have indicated about a concern of the withdrawal or changes with respect to the existing SRDU service, aren't all of those things also true today for Shaw? Shaw doesn’t have an obligation to continue to provide the service, carry the same signals, could abandon the service. Aren't all of those concerns present today?

1961 MR. THOMSON: Mr. Chair, we heard you ask a similar question to Telus at the end of their appearance, and they provided one response, which we agree with, which differentiates the Shaw situation from the Rogers situation.

1962 And I would refer back to an earlier answer about we're dealing with a very different set of circumstances here as Rogers is becoming substantially bigger than either Rogers or Shaw would be independently of each other. And we have a history with Shaw that is entirely different than our history with -- interacting with Rogers, and that’s the experience that we're relying on in many respects.

1963 THE CHAIRPERSON: Okay. Thank you, Mr. Thomson.

1964 Those are all my -- oh, sorry. Pardon me. Commissioner Anderson?

1965 COMMISSIONER ANDERSON: Thank you. Thank you very much, and thank you for your presentation and for answering our questions.

1966 I note that a lot of the discussion today has centred around the nature of this transaction and that there are a lot of concerns with the level of vertical integration that would be contemplated, or the landscape that would be contemplated post-transaction.

1967 So bargaining power is top of mind, and so with that said, I was really surprised to hear that a lot of your members serve fewer than 100 customers.

1968 And so I just wanted to confirm that that is what you said. And it would be helpful also to hear a little bit more either now or under undertaking to provide the information later about the makeup of your membership, because it is really interesting to -- when thinking about bargaining power, as well as if you're willing to disclose any details about interactions with Rogers that you have been slightly referring to. If you're able to give some concrete examples, that would be really interesting.

1969 MR. EDWARDS: I think on the concrete examples of Rogers' behaviour, that’s a real challenge, because it's almost always going to be confidential information.

1970 With respect to member sizes and makeup, I should clarify that what I was talking about when I said less than 100 was system sizes, so BDU sizes. And if we take Access Communications as an example, based in Regina, but as Jim Deane said this morning, with 235 systems throughout Saskatchewan, he has the Regina system, which is still a licensed BDU, but there are hundreds of systems -- or not hundreds -- there are very many systems with very low numbers of subscribers.

1971 So it's not necessarily true that you can say the members have fewer than 100, although some do.

1972 But it's the nature of the systems that is really the key here, because those are the ones that are the facilities for receiving, decoding, and distributing the broadcasting signals.

1973 And as many of our members will tell you, it's, you know, they have a 600-kilometre drive to go service a system up in the north of their territory, something like that.

1974 So that’s the kind of thing we're talking about. Happy to provide a list of the members and sizes. We could even break it out to system, I think. We would have to supply that in confidence.

1975 MR. THOMSON: You know, half of -- we have got roughly 100 members, and easily half of those serve less than 1,000 customers.

1976 COMMISSIONER ANDERSON: Thank you very much for your responses, and thank you for clarifying my misunderstanding earlier.

1977 I would appreciate that information, if you're wiling to provide it. Any information that you can provide about your membership and the size would be helpful to me. Yeah, thank you.

1978 THE CHAIRPERSON: Thank you, Commissioner Anderson.

1979 I see no more questions, so thank you very much. Thank you for your appearance today and your helpful contributions to our proceeding.

1980 I will turn it back to you, Madame la secrétaire.

1981 MS. ROY: Merci beaucoup, Monsieur le Président.

1982 We will take a 10-minute break and come back at 3:25.

--- Upon recessing at 3:17 p.m./

--- L'audience est suspendue à 15h17

--- Upon resuming at 3:25 p.m./

--- L'audience est reprise à 15h25

1983 THE CHAIRPERSON: Alors, please proceed.

1984 MS. ROY: Perfect, thank you.

1985 We will now hear the presentation of the Independent Broadcast Group. Please introduce yourself and your colleagues, and you have 20 minutes for your presentation.

PRESENTATION / PRÉSENTATION

1986 MS. ILLE: I would like to begin by acknowledging that we are in Ottawa, on the unceded territory of the Anishnaabeg People. And I would like to thank them for this hospitality.

1987 (Speaking in Abenaki language).

1988 Kwaï!

1989 N'wig8damobna ali nd'aï iotali pamkizgak nspiwi kiow8.

1990 Nd’aliwizi Monika Ille. Alnaba sqwa nia odzi Odanak m8wkaw8gan.

1991 So hello. We are very happy to be with you here today.

1992 My name is Monika Ille. I'm an Abenakis woman from the community of Odanak. I am also the CEO of APTN.

1993 MR. PERREAU: Mon nom est Luc Perreault, j'ai commencé ma carrière dans l’industrie en ’85 et je suis présentement conseiller stratégique pour le groupe Stingray

1994 MR. KINES: And my name is David Kines. I am the President and Co-founder of Hollywood Suite.

1995 MR. DANKS: I am Brad Danks. I'm CEO of OUTtv and OMG Media Group.

1996 MR. FUOCO: I am Chris Fuoco, the Vice President of Marketing and Sales at Channel Zero. We operate CHCH-Television in Hamilton, Silver Screen Classics, and Rewind.

1997 MR. MILLER: My name is Peter Miller. I have the privilege of acting as counsel and quarterback for IBG in this hearing. As you know, Joel Fortune, IBG’s counsel of record, appeared with CPAC this morning.

1998 Attached at Annex A to this oral statement is a list of logos -- list of IBG members with the logos, just so you have a sense of who we are.

1999 In addition to this presentation, you will be hearing from three members separately, Ethnic Channels Group and TLN, either later today or tomorrow, and I believe Channel Zero is either Thursday or Friday. You will also be hearing from independents who are no members but who we work with closely and one of them, WildBrain, is up either Wednesday or Thursday.

2000 Yesterday, Mr. Chair, you laid out the standard that Rogers must meet for approval of the broadcast aspect of this transformative $26 billion Shaw acquisition, that it is the responsibility of the Applicant to demonstrate that its application meets the public interest consistent with the objectives of the Broadcasting Act.

2001 In other words, as the Commission has pointed out in reviewing the many consolidating transactions that it has approved over the last two decades, significant and unequivocal benefits for the Canadian Broadcasting System. What was plainly evident, however, is that Rogers’ commitments come nowhere near meeting the Commission’s test.

2002 That said, to give credit where credit is due, there were some tangible commitments it made to independents. We will get to them later. For now, however, let us say, unequivocally, that we appreciate those commitments very much. We know that serious thought and attention went into them.

2003 Yesterday, Rogers also alluded to discussions and agreements with independents. What they did not say is that they were in serious advanced without prejudice negotiations with us, the IBG. In fact, while we have agreed not to talk about our respective positions, we can tell you that those discussions continued well into yesterday evening, when negotiations were called off by Rogers.

2004 I can also say that, as last night concluded, the IBG all had an ominous feeling of foreshadowing.

2005 MR. KINES: So how did we get here?

2006 It is now more than six years since the Let’s Talk TV decision created the current landscape. At the time the Commission was focused on consumer choice and flexibility, and wanted a “a healthy wholesale market” where “risk and reward” were shared between BDUs and programming services.

2007 The Commission’s goals at the time were to create a healthy and diverse marketplace. To achieve this, the Commission eliminated access rights for non 9(1)(h) services and introduced the Wholesale Code.

2008 The reality is that over the past six years one group of broadcasters -- the Vertically Integrated companies -– have been kept healthy and seen their profits increase even in a declining market. The other group of broadcasters -- Independent Services -- have seen their incomes decline.

2009 The Boon Dog Report we filed for this hearing establishes the factual basis of this situation. As summarized in our intervention at paragraphs 59 and 76, over the last five years, licensed independent discretionary television services had a relatively larger decline in revenues over those of Vertically Integrated discretionary television services.

2010 It seems highly unlikely that revenues lost by independent services found their way to consumers as a reduction in their cable bill.Rather, monies saved by Vertically Integrated BDUs in negotiations with independents appears to have been given back to VI discretionary services.

2011 These facts demonstrate that, far from sharing risks, Independents have been absorbing them at a much greater rate than the Vertically Integrated channels. VIs have been able to use and abuse their market power to ensure better distribution for their own services. This was clearly not the Commission’s intent in the Let’s Talk TV decision but it has been the result. MR. PERREAULT: We noted with interest Rogers comments about providing set top box data during yesterday’s hearing. Contrary to what was said by Rogers, set top box data has been repeatedly requested for many years. And it has on occasion been provided, but almost only when the information fits a narrative for contract negotiations. No attempt has been made to supply regular, consistent data that would help programmers improve their product and bring greater value to Rogers customers.

2012 While we appreciate Rogers undertaking to provide data in the absence of a Numeris industry-wide solution, an “annual report card” is woefully

2013 inadequate.

2014 Let me give you another example. Apps and the Ignite platform. Attached to our opening statement are the articles and platform descriptions that give you a hint of the access issues we face, and the next steps in the Comcast playbook, that Rogers has been following. In choosing to write off its own $500 million investment in an app platform (close to $1 billion if you count Shomi and the Purdy portal), Rogers has started down a path that, while not predetermined, has serious consequences for the availability and promotion of Canadian content and services, and the unfettered entry of foreign content.

2015 Hier, lors de leur présentation, les représentants Rogers ont fait plusieurs énoncés sur la plateforme Xfinity. Une plateforme d'envergure mondiale, unique, très avancée technologiquement, utilisée aux États-Unis, au Canada Et au Royaume-Uni.

2016 Il vaut la peine que nous nous attardions à son impact potentiel sur le Système Canadien de Radiodiffusion. Comme l'ont décrit les représentants de Rogers hier cette plate-forme hybride donne accès au service de télévision conventionnel et à du contenu applicatif via le même terminal. Une offre attrayante pour les abonnés qui cependant brouille la ligne de démarcation entre les contenus offerts par les services canadiens réglementés et les services de contournement. Si on examine de plus près cette technologie, on se rend contre rapidement qu'il s'agit d'un éco système fermé qui est contrôlé par Comcast et par les franchisés canadiens.

2017 La deuxième partie de cet écosystème et celle du contenu offert via des applications. Pour être clair on parle de la transition au système non réglementé vers un univers ou les règles sont entièrement dans les mains de Comcast et de ses franchisés. Metrological, une société basée aux Pays-Bas, qui est propriété de Comcast est responsable de la création d'applications ou de la validation d'applications produites par des tierces parties. Lorsque les applications sont prêtes à être déployées, une conversation s'amorce sur le partage des revenus publicitaires qui seront générés par la plateforme FreeWheel, aussi propriété de Comcast. Quand tous ces détails sont réglés, l'application pourrait être offerte sur la plateforme Ignite ou SmartStream.

2018 Récemment, le distributeur Sky au Royaume-Uni a annoncé le lancement de Sky Glass, Un téléviseur intelligent muni de toutes les caractéristiques de la plateforme Xfinity. Lorsque branché sur une connexion internet haute vitesse, il donne accès App Store de Comcast. Les abonnés internet haute vitesse pourront financer l'achat de ce téléviseur intelligent à même leur abonnement tout comme un consommateur finance son téléphone intelligent à même son abonnement au service de communications mobiles. L’équivalent de Sky Glass sera bientôt offert en Amérique du Nord.

2019 Comme le Conseil peut le constater, la plateforme Xfinity n’est pas un système ouvert ou le consommateur peut télécharger des applications comme il pourrait le faire sur son ordinateur, sa tablette ou son téléphone intelligent. L'accès à l’App Store est contrôlé de bout en bout par Comcast et ses franchisés canadiens. Ce nouvel écosystème ressemble beaucoup à un distributeur virtuel de programmation vidéo (VMPVD).

2020 Hier, Mme. Dinsmore faisait référence au Digital Media Exemption Order (DMEO) comme mesure de protection contre toute pratique visa à restreindre l'accès (gatekeeping). IBG est convaincu qu'il est opportun pour le CRTC qu’il est temps d’exercer son autorité.

2021 Brad?

2022 MR. DANKS: The Commission anticipated the advancement of streaming in the lead up to its 2018 “Harnessing Change” report. However, the Commission underestimated how quickly streaming, or what was called “online television” in the report, would be adopted.

2023 The shift has accelerated dramatically since the launch of Disney+ and AppleTV+ in 2019, and has been was quickly followed by other streaming platforms such as HBO Max, Peacock, Discovery+ and Paramount+, not to even mention a large number of other direct to consumer services.

2024 The problem now in the broadcasting system is that we are not “Harnessing Change” as the 2018 Report suggests but instead are seeing a “harvesting” of change as our major media companies focus on short term profits over long term sustainability.

2025 To be bluntly clear, this was not the expectation of the Commission. In fact, it was to the contrary.

2026 There’s a choice paragraph (#12) in Let’s Talk TTV on the assumed benefits of vertical integration that I won’t read in full, but I encourage you to, particularly the word ”international”.

2027 For almost two decades, the major media companies’ financial health has been secured by policies in support of vertical integration and greater reliance on market forces, as larger players were seen to be our best and perhaps only hope in this emerging marketplace. The fact that these “National Champions” have not done, or been required to do, more to transition the system to the streaming world -- with Rogers and Shaw, in fact, launching then shutting down Shomi -- is a major problem.

2028 The CRTC believed that the VIs would make the investments necessary to make our system competitive globally. Instead, these companies have focused on maximizing short-term profits. This transaction is all about the changes coming to the industry.

2029 While the merger makes sense for Rogers and Shaw for their future, it has the unintended consequence of potentially all but destroying the independent

2030 broadcasting sector.

2031 Simply put, at 50 percent of the English-language Canadian market, Rogers/Shaw will define that market. They will make or break every non-9(1)(h) independent English and Ethnic service in Canada.

2032 Yesterday, Roger’s VP of Regulatory spoke about some agreements with independents. We don’t know the nature of those agreements. We do know what we were in the process of negotiating on behalf of IBG, and that we were unable to conclude on terms.

2033 I can also tell you that BDUs are very good at ‘divide and conquer’, and that is what you

2034 are witnessing.

2035 The Commission needs to understand this. The main reason that independents are so easy to coerce is because over the past decade the Commission has not really been there to support us.

2036 We accept that the world is changing. All of us are looking at a streaming future, and many of us are already making significant investments in that future. All broadcasters, independent and vertically integrated, want to protect legacy revenues for as long as possible, to enable this digital transition. The problem is independents have been shouldering more than our fair share.

2037 If it was simply a matter that independent revenue would fall as quickly as that of the system, we could accept that. But that is not what’s happened.

2038 Yesterday, in their submission, Rogers said that their cable revenue had gone up last quarter. There is no doubt those increases will not flow to independents or consumers.

2039 I compare operating an independent service today to rowing a boat to the future but having to stop every third stroke to bail out the water coming in. That incoming water is loss of revenue from an unexpected

2040 new packaging arrangement, or new negotiation that always ends up with you being much worse off.

2041 Without clear enforceable safeguards, this transaction will make things much worse, if it can be, for Independents. A combined Rogers/Shaw entity will set the market and, based on their current approach to independent services, it’s going to be a choppy ride. The situation for many, if not most of us, is dire.

2042 Most of us historically had relatively good relationships with Rogers. Quite frankly, Shaw was the harder BDU to deal with. However, in the last decade, that dynamic has actually reversed.

2043 I hope to have the opportunity to tell you more about that, particularly as it affects Outtv, in our Q and A.

2044 MS. ILLE: So why is it in the public interest to create clear and enforceable safeguards?

2045 This one is so self-evident to us that it is hard to imagine a different perspective. Independents provide essential diversity and choice in the broadcasting system. We are the dreamers, entrepreneurs, and risktakers. We demonstrably provide services that differ from the mainstream and would likely not be there but for us. We are the manifestation of the

2046 call for “alternative programming services” at Section 3(1) of the Act, providing high-quality service to non-mainstream, typically underserved audiences, including OLMCs, Indigenous, ethnic, and LGBTQ2+ communities.

2047 Safeguarding a future for independent television services would be an unequivocal benefit, while allowing us to potentially be negotiated out

2048 of existence would clearly not.

2049 Moreover, such a benefit is achievable

2050 at a modest overall cost to Rogers, well within the range of reasonable and foreseeable regulatory outcomes.

2051 IBG raises many other important issues in its intervention, from treating Corus as an affiliated entity, to access to Apps, set top box data, and adtech platforms, and support for local news.

2052 We would be pleased to speak to those issues in questioning.

2053 MR. MILLER: IBG notes and appreciates the commitments towards independents made by Rogers yesterday.

2054 The problem is these commitments unfortunately don’t sufficiently address independent’s concerns or meet the onus on Rogers to prove that this transaction will significantly and unequivocally

2055 benefit the broadcasting system.

2056 Let’s dissect their commitments “to help independent programmers with their digital transition”.

2057 First, Rogers committed to “distribute a minimum of 40 independent discretionary programming services” on each of their BDUs for a three-year period.

2058 Your questioning of Rogers yesterday revealed that this is effectively a 4.5:1 commitment to carry unaffiliated services, excluding Corus.

2059 That time period aside, there is no doubt that this is a significant commitment, and we applaud Rogers for making it.

2060 But we also learned yesterday that today, Rogers and Shaw Direct already exceed this commitment. Rogers said it carries 46 independent services, that Shaw

2061 Direct carries 47. Shaw doesn’t exceed the commitment; it apparently carries 38. Again, without counting Corus.

2062 So unfortunately, what this commitment actually means is that Rogers wants to reserve the right to drop, or at least threaten to drop up to 6 independent services on its systems, up to 7 on Shaw Direct, while on Shaw systems, Rogers would need to pick up at least two new independent services. How can that be an unequivocal benefit?

2063 As Bead made clear just moments ago, what independents need, first and foremost, is economic stability.

2064 Coming up with singular language that covers all of the different situations independents are in, and is reasonable, is not easy. But the concept we came up with, of “no less favorable in aggregate after the transaction than before”, is the closest we came.

2065 Why that language? Because at absolute minimum, this transaction should not make things worse for independents than they were before.

2066 What would that actually mean in practice?

2067 Well, first, it means looking at the terms, all the factors that relate to carriage and

2068 Distribution -- rate, packaging, penetration, whatever other factors are part of the terms and conditions for distribution. It’s not simply a mathematical calculation or an aggregate of existing rates. It’s an overall assessment. That’s the test.

2069 Second, before versus after, we’re suggesting, can’t time specific. For some, rates in

2070 effect with Rogers just prior to the transaction closing will be the right metric. For others, a longer-term view reflecting what other BDUs have done, as Wholesale Code suggests, would be more reasonable.

2071 And while strictly speaking, this would not be enough for all independents, it will help.

2072 As we just discussed, while Rogers’ new 40 independent discretionary service commitment is significant, it is not sufficiently unequivocal. But at 50 independent services, that commitment along with “no less favorable in aggregate” would be. And this would stop, at least for the period it’s in effect, the

2073 weaponizing of the Wholesale Code. No more starting negotiations with, “We’re going to drop your channel.”

2074 It’s not perfect. It will not make up for the lost ground of the last 6 years since Let’s Talk TV. But a majority of IBG members believe the metric is a

2075 reasonable compromise to achieve a level of economic stability.

2076 Why should it be five to seven years, not three, as introduced by Commissioner Lafontaine, yesterday?

2077 First, because it’s already been seven years since Let’s Talk TV decision. And second, because five to seven years is a typical licensing period.

2078 As it turns out, most Rogers BDU licenses are up for renewal in August 2025. Shaw has short term renewals to 2023. So here’s a thought. Make the commitment indefinite but reviewable at Rogers’ next renewals, which would mean a bare minimum of four years, or five years if you choose to do an admin renewal. Luc has already spoken about this Rogers second commitment.

2079 Rogers third commitment is to help independent programmers with access to set top box data in two ways. We talked about the first part.

2080 The second part was helping independent programmers by providing set top box data free of charge for use on the CYNCH, something by the way, we understanding they are already doing for Corus.

2081 This commitment is important. Adtech platforms like CYNCH, currently used by Rogers and Corus, are the future of ad buying. At a certain point very soon, if independents are not on these platforms, they will not get advertisers. IBG looks forward to Bell making similar commitments vis à vis their SAM platform.

2082 With clear and enforceable language, commitments like these will, as Rogers intends, help provide independent programmers with a viable path to migrating their services to a digital future.

2083 We look forward to your questions.

2084 THE CHAIRPERSON: Thank you. Thank you very much for your submissions.

2085 I will turn the floor to Commissioner Naidoo.

2086 COMMISSIONER NAIDOO: Thank you very much. Thanks for being here today.

2087 I'm going to start off by talking about independent services.

2088 BCE indicates in paragraph 15 of its intervention that:

2089 "In order for a mainstream discretionary programming service to be viable, it must be able to secure wide distribution on BDUs at reasonable rates in its primary service area. Now, at present, for an English-language service, this means securing carriage and reasonable packaging on at least two of the three largest BDUs in the market, Bell, Rogers, and Shaw. The fundamental issue with the proposed transaction is that there will effectively go down to one, as Rogers will control just shy of half of the subscribers in the relevant market. As such, not having carriage on Rogers will make most discretionary services unviable, even if they have deals with all other BDUs. To be clear, carriage on Bell and other non-Rogers BDUs, for example, only half of the BDU market in English Canada will not be enough to ensure viability." (As read)

2090 So that’s the preamble. And my question is, can you please comment on that statement by BCE?

2091 MR. MILLER: Let me start, and I'll invite others too.

2092 We effectively said exactly the same statement in our intervention, and we have said it today. At 50 percent of the English-language market, Rogers/Shaw will effectively define that market.

2093 And they will do it in two ways, one, as the excerpt from the Bell intervention suggests, if you're not on Rogers/Shaw, you're viable.

2094 But in a second way that they don’t suggest, once Rogers sets the terms, those are the terms for the market. Every other BDU will follow suit.

2095 Luc, did you want to comment?

2096 MR. PERREAULT: It is effectively -- what you said is absolutely true, and BCE is absolutely right. If you're not in carriage with Rogers, becomes de facto, the new regulator, your new licensing service in the English market. If Rogers/Shaw doesn’t carry it, service is dead before even having launched.

2097 So safeguards are needed. If this transaction is to be approved, CRTC has to assess it's statutory in terms of ensuring that new services can launch, existing services will have some kind of preservability of their future revenues, and carriage and packaging. Otherwise, the broadcasting system, it doesn’t work as planned by the founders.

2098 MR. KINES: I can't believe I'm going to say this, but I 100 percent agree with Bell. I hope they're watching.

2099 MR. FUOCO: If I can add one last point, in addition to distribution and traditional subscriber fees that might be derived from that 50 percent distribution, let's also not lose sight of the fact that we're talking about the audiences in provinces now.

2100 So if the channel is not available for a viewer to watch, you're not going to generate an audience, and that has a direct impact on your ability to monetize that audience through ad revenue.

2101 So it's the equivalent of a grocery chain that has 50 percent of the country, yet doesn’t stock your product. No consumer in that store would be able to consume your product because it's simply not on the shelf.

2102 COMMISSIONER NAIDOO: Thank you very much. I appreciate the answers to that.

2103 I'm going to switch gears a little bit right now and we're going to move to local and community television.

2104 So you state that providing Rogers with the flexibility to allocate significant news funds and news support entirely to its local -- its own local TV stations would be unlikely to maximize benefits for the Canadian broadcasting system as a whole. Can you please explain why?

2105 MR. MILLER: Let me start, and I think Chris may have some comments in others.

2106 First of all, many of us -- in fact, I think all of us were around during the "Let's Talk TV" process, and what became clear in the follow up to that when the Commission was grappling with local news is the Commission was looking for a mix of requirements and incentives.

2107 And the solution was this notion that BDUs could give a certain money of -- a certain amount of their discretionary funding to their own affiliated news services.

2108 And the magic of it, at the time, was that it worked out, so Bell would give to CTV 1 and 2 local news, Shaw would give to Global local news, and Rogers would give to CityTV. And if you actually look at the numbers, when the CRTC made this decision, they match.

2109 So when you suddenly allow Rogers to give all the money from Shaw to its stations, it's all out of whack.

2110 Again, I don’t presuppose to know the reason behind Commission decisions. I'm not suggesting I have any inside knowledge. But my definite impression -- and I can assure you, the impression of many of us that saw that decision -- was the Commission came up with an elegant way to not mandate but incentivise that resulted in an equitable answer. That equity is lost if all of the money from Rogers and Shaw Cable Systems go to Canwest. That’s number one.

2111 The second part, I think, was addressed in some of your questioning yesterday. When you see the markets that would lose support, when you recognize the challenges that conventional television is under -- some of you know I have represented CAB in a lot of different forums -- and one of the things we have said on behalf of the CAB is that conventional television stations have lost more than $600 million in the last five to six years.

2112 Again, I'm not going to speak to specifics of Corus, whatever. But when stations are losing that kind of money, you have got enough of a challenge without actually making it harder.

2113 And I have respect for the challenges that all operators as well as the broadcasters are under, whether they are independent or affiliated. And for Corus to suddenly lose that money is not immaterial, in my view, as suggested yesterday.

2114 Do you want to add, Chris?

2115 MR. EDWARDS: I will, Peter, thank you.

2116 The other component related to the Corus question is one of the outcomes here is that Corus could be defined as an independent broadcaster, and CHCH and other independent broadcasters are recipients of the INLF funding. So we're watching very closely wanting to understand what might the implications of an influx of new recipients to that fund would be, because INLF for CHCH specifically -- and I guess I can speak on behalf of the other members -- and we will get into this at Channel Zero presentation a little deeper later in the week -- INLF has been an important plank in the sustainability of that local news station.

2117 And so again, with the potential change of the definition of Corus, that has the possibility to have another impact to that funding mechanism. Thank you.

2118 MS. ILLE: And if I could add to this, if it could be specific to Indigenous news service that they like to develop, and I think it's a good idea to do that. However, I don’t want them to forget that there's over 100 different Indigenous-owned media outlets out there, whether it be in radio, in print, and online media, in television, and maybe to reach out and create those partnerships.

2119 I mean, all of us -- most of us are non-for-profit charitable organizations. We need the support. Them as a big organization, could reach out and let's work together and collaborate. We have the context. We have that expertise. APTN broadcasts 5.5 hours of solid news, Indigenous perspectives, per week. We're already there. We're in the communities. I know Rogers reached out to communities. They're having the conversation. That’s fantastic. But beyond that, why not leverage what already exists?

2120 COMMISSIONER NAIDOO: All right.

2121 Can you expand a little bit on what you think the remedies would be to this issue?

2122 MR. MILLER: We are going to come back to you on this. We were looking forward to your questioning on it yesterday, and to be honest with you, we haven't had enough time to really reflect on it.

2123 But we do think there is two elements. One is we don’t think you can simply dismiss Corus' concerns. You have to do your own assessment as to what they mean, but what you don’t want is a setup where Corus lose money and then when they come in -- Corus loses a source of funding, and then when they come in to the next renewals, they say, "Well, we're going to have to cut our news because we just lost X." You don’t want that done.

2124 Secondly, as Chris was alluding to, whatever the solution is, it can't come at the expense of independence. Ms. Dinsmore did allude yesterday to the fact that we do have a review of the ILNF.

2125 And as you know, better than us, in situations like this you have decisions to make as to what you do specific to the transaction and what does it trigger in terms of possible future proceedings. And we recognize you are going to have to do something here. We will come back to you a bit more on that. Maybe the answer is for a certain period of time you say to Rogers that by condition of licence they have to keep funding CORUS.

2126 Maybe -- and we are going to come back to this -- if you are contemplating new significant benefits, some of those monies should go to local business. I mean, what is interesting about the benefits package that Rogers put before you is it has ignored all the policy developments since the Commission set out its guidelines on benefits. It ignored the fact that subsequent to that, the Commission deemed local news and community programming important and worthy of funding. There is nothing in there for local news in Rogers’ current benefits package.

2127 So maybe that’s another element.

2128 But we will come back to you on that as early as Thursday, and if anybody else has any thoughts now, please go ahead.

2129 COMMISSIONER NAIDOO: Thank you. I appreciate that.

2130 You are requesting that the Commission re-examine it current rules relating to the access to distribution including newer application platforms for independent programming services. So is that to say that you don’t consider the rules already in place to support independent services such as the wholesale code, for example, and undue preference provisions -- that you don't consider that those are sufficient?

2131 MR. MILLER: Again, let me start and others will comment.

2132 We weren’t able to catch much of the testimony from Telus and CCSA earlier but I did hear Jay Thompson say that the wholesale code is effectively a framework for dispute resolution. So the issue is as much dispute resolution and how it works as it is the wholesale code. And we agree with that.

2133 So where we go form here is again something we’re going to have to think a bit more about, unless anybody else has any thoughts. I think we will come on that.

2134 COMMISSIONER NAIDOO: I can ask a follow-up question.

2135 For example, section 11 of the Wholesale Code requires that where a BDU provides its related programming services with access to multiple distribution platforms it shall offer reasonable terms of access that are based on fair market value to independent programming services.

2136 So with that statement effect, is such a provision not sufficient to ensure that independent services can negotiate fair terms of carriage on traditional BDUs and their related application platforms? And if not, why? And how could access be improved?

2137 If you could just comment.

2138 MR. MILLER: So I am going to try and do this in two parts. What we are suggesting is the evidence before you -- which, by the way, no one has countered. No one has actually countered the Boon Dog Report. It was first developed by Boon Dog and IBG first used it in February 2021. We filed in this proceeding a new version. We haven’t heard anybody say the numbers are wrong, the facts are wrong.

2139 The facts in that report are very clear. I won’t go over them. We have talked about them today.

2140 So we have a problem where the consequence of the regime is that VIs are able to advantage themselves and ensure that their services do okay, and independents are seeing greater declines. That is the fact.

2141 So when you identify a problem you then start saying, well, what caused that problem and what are the solutions? And what we are suggesting is it’s a combination of things.

2142 The first problem is by eliminating access rights you have created the dynamic where BDUs can constantly win in the game of negotiation because the first thing they say is, “Oh, we’re going to drop your service.” And they do that to try and avoid dispute resolution and to be frank, the Commission has not yet pronounced on that practice.

2143 It came up in the recent Cogeco WildBrain dispute and the Commission sent the parties back to try and negotiate. The Commission has not pronounced on that.

2144 The proposals we have before you -- again, one of the nice things about it is it ends that practice. We no longer are going to be able to have a position where Rogers comes in and the first thing they say is, “We’re going to drop your service.” So we’re no longer automatically into this cycle of bringing the terms and conditions for independents now. That is number one.

2145 Second, unfortunately -- and others may want to comment on this. We have direct experience with the words of the Wholesale Code not being given their plain meaning. And if someone will pick up on that because they know what I am alluding to.

2146 Third -- and let me just finish with apps because you started with apps so let me finish with apps. As Luc was saying in his part of the opening statement, the way Rogers wants to see apps is that they are completely unregulated. And of course Rogers is taking that position because they see them under the DMEO.

2147 We don’t necessarily agree. We certainly -- what technically whether or not they’re right, I’m going to leave the legal issue aside for a second. But in terms of actually what they are, they did the comparison to VBDU services. IN our view, they are actually more linked to the broadcasting system and therefore more platforms that you need to regulate than VBDUs.

2148 Why? Because not only are they a closed system -- they’re not the open internet. They are a closed system. They are a system that is directly on the back of the regulated broadcasting system.

2149 Rogers Ignite would not exist but for Rogers regulated BDU. So the notion that those should not be regulated, that we should be left to try and negotiate based on a condition of the Wholesale Code, which we know is going to result in us having to give concessions, whether it’s revenue sharing or whatever else we’re going to have to do -- is not an answer.

2150 Again, we will come back to a little bit more and what more we think the Commission should do in this proceeding. We appreciate -- and we’re not dismissing the commitments that Rogers made. But they are not enough.

2151 Anyway, who wants to jump in on this?

2152 MR. PERREAULT: I can give you a real-time business case on applications.

2153 Mr. Bruno yesterday congratulated Stingray for having launched music applications on the Comcast system.

2154 COMMISSIONER NAIDOO: I’m sorry. Could you move the microphone just a little closer? I’m having a hard time.

2155 MR. PERREAULT: Sure. So Mr. Bruno yesterday congratulated Stingray for having launched music applications on Comcast. Our apps are available on the Comcast ecosystem, available to Rogers. Rogers hasn’t launched our applications. But they do have a foreign music service called XITE.

2156 Rogers doesn't have any music service so the Wholesale Code doesn’t apply. As simple as that. Access is key to success.

2157 COMMISSIONER NAIDOO: All right. So notwithstanding any proposed changes to the current regulatory framework for independent services, what would the impact of the approval of the proposed transaction be on IBG members?

2158 MR. MILLER: Again, I will start and others will lead.

2159 We were very careful in our intervention. We were very careful today to say that this application could be a significant and unequivocal benefit to the broadcasting system. We are not coming in here saying, like certain others, that you should oppose this transaction. What we’re saying is, why don’t you take that promise and we will say the very good intentions of Rogers executive and the panel appeared today -- and make sure that that promise is delivered on.

2160 And so what we’re saying is the way to go about it is to up the bar on the current safeguards you have. And what we are suggesting are not immaterial changes. But at the end of the day, when you look at them and you look at the broad circumstance, and you look at the test that the Commission has to apply, the onus that is on the Applicant, as we say and you pointed out, Mr. Chair yesterday, to demonstrate the public interest to the broadcasting system.

2161 This hearing is not about the public interest to telecommunications. This hearing is about the public interest to broadcasting, to show that the benefit to broadcasting is significant and unequivocal. It isn’t huge; as I think is a matter of public record, Rogers agreed to $1.2 billion breakout fee if this does go through.

2162 The things we’re talking about are in the -- maybe, maybe tens of millions of dollars. In the grand scheme of this transaction what we are asking for is not a lot in the scope of this transaction but it is huge for the survival and the future of independent services and for diversity in the system, because that’s what you care about. And that’s what we care about. And the beauty of the IBG membership when you go through it, you see that diversity writ large.

2163 COMMISSIONER NAIDOO: All right. To that point, can you propose some concrete conditions of approval?

2164 MR. MILLER: We’ve done that. We’d be happy to organize it in a more useful way to you, if that’s -- but I don’t want to just repeat myself, because I think we’ve done that.

2165 THE CHAIRPERSON: Just for clarity -- and maybe I’ll turn to legal counsel at the end of the questions, I guess.

2166 You’ve said a couple of times now “in the next couple of days” or “by Thursday”. I guess we’ll need a little more clarity about what you are undertaking to provide and when, so -- for the record of the proceeding.

2167 MR. MILLER: Thank you, Mr. Chair. First of all, we are open specific undertakings so we can define what you’re interested in. We don’t want to presuppose that’s there’s any particular things that you want from -- what I was alluding to, merely, is that Channel Zero, for example, is appearing either Thursday or Friday. I happen to be counsel to Channel Zero, so I’m afraid you’ll be seeing me again.

2168 So we’ll do some thinking. And Channel Zero has the position of not only being a founding member of IBG, but also a member of the LITS Group, which is the small local independent television services group. So that’s why we’re hoping to have a bit more precision on that issue, because we can do some canvassing of other local independent broadcasters.

2169 MS. MAHEUX: So maybe I have a proposal for you ---

2170 MR. MILLER: Please.

2171 MS. MAHEUX: --- because the undertaking is not your last chance.

2172 MR. MILLER: Correct.

2173 MS. MAHEUX: The Panel of the Commission already indicate in the December 13. So Rogers will have to file its undertaking by November 29. It will be put on the public record. So if you want to file a written submission that will reply also to the undertaking already taken by Rogers, you will have the opportunity to file a written reply. I think that could be ---

2174 MR. MILLER: I’m aware of that, counsel. What I want to be clear on is if there’s new evidence, or clarification we can provide to you that is useful to you, it would seem to be more procedurally fair that provide it at around the same time as Rogers provide its response to undertakings, so all parties could see it for the purpose of reply. That’s all we’re suggesting.

2175 THE CHAIRPERSON: Perhaps counsel will return to it at the end of the questioning and see if there are any other undertakings, and then we can deal with the issue of whether or not it’s appropriate to introduce other new evidence.

2176 MS. MAHEUX: Yeah, exactly, because when you asked for the procedural request to file confidential information, it was not to bring new evidence. It was to bring evidence as part of your ---

2177 MR. MILLER: Sorry, I misspoke.

2178 MS. MAHEUX: Okay.

2179 MR. MILLER: I should not have used the term.

2180 MS. MAHEUX: Perfect.

2181 MR. MILLER: I should have said clarification of our testimony. I beg your pardon.

2182 COMMISSIONER NAIDOO: All right. We’ll switch gears a little bit. In your intervention, you mention the increasing presence of disruptive non-Canadian over-the-top services such as Netflix, and Amazon Prime, and Disney+, et cetera. Is consolidation of Canadian services an appropriate tool to face competition from such foreign players?

2183 MR. MILLER: I’m going to ask Brad to take that one.

2184 MR. DANKS: I’d say no necessarily so. You know, there’s a couple of different approaches around the world.

2185 You know, what I was getting at sort of indirectly, with our larger players not doing what they should do, would be something similar to what we’ve seen in the UK with the other service, BritBox. Their larger channels came together. They put together an original programming regime that they now export globally, including here in Canada. Now, that’s one approach we’re seeing globally.

2186 Another approach we’re seeing is more niche services, even from major players, such as in the US, AMC has Shudder, which is a horror platform, and Sundance, and so on. So there are different approaches that are happening out in the OTT world.

2187 In Canada, we have a number of independent services that are moving across the globe. At OUTTV, for example, we are in the US on Apple TV+, and we have three further deals to distribute it in the US this year. We’re a channel on Amazon in Australia. And, you know, we are going around the world doing that.

2188 What you need to do for those services is create original programming. I mean, ultimately, that is the weapon of choice in the streaming wars.

2189 You can look at consolidations. It’s always good to have economies of scale. But, you know, the model is the same whether you’re a small service -- and again, many Canadian independents are doing very well globally within the marketplace. If you’re larger one and you’re looking for a larger chunk of the audience, then maybe there is some reason for scale. But as a strategy, we can go both ways.

2190 What we’re really saying is that you need to support the independent sector because right now we’re the only sector in Canada that’s actually globalizing our brands. None of that is happening through the vertically integrated services at all.

2191 COMMISSIONER NAIDOO: All right. Thank you. I’m going to talk a little bit about the Wholesale Code right now. As pointed out by Rogers, the Commission already has a framework of regulatory safeguards in place, such as the Wholesale Code and its various reporting requirements -- the 1:1 rule, the dispute resolution mechanisms such as staff-assisted mediation and final-offer arbitration, the standstill rule, of course, and prohibitions against undue preference or disadvantage.

2192 Nevertheless, you have suggested that the application and enforcement of this framework is not sufficient, particularly as the broadcasting is transitioning online.

2193 So in such a context, with that in mind, could you please elaborate on why you believe additional safeguards are necessary?

2194 MR. MILLER: Thanks, and we’ve obviously talked about that, but let’s start with, you know, the genius of Rogers position is they’re flattering you and saying, “You got it right the first time. You don’t have to do anything.” And, you know, I guess, to be honest, we don’t think we had it right the first time.

2195 But even if you did, even if that’s -- I’m not a winning argument. I think what we’re trying to say is the changes since you did this in 2015 are so big that maybe you could not have anticipated what actually happened.

2196 If you look at the projections the Commission made as to how online streaming would develop, we’re way in excess of what’s happened. We’re at a point now, with all the different players coming in that Brad spoke to -- we’re at a rather terrifying influxtion point.

2197 And what you heard yesterday was an interesting argument. And again, I’m going to ask Brad and others to comment. What Rogers seems to be saying is, “Let us take money that we have in our -- that we will invest after this transaction and put it into a platform that will accelerate the demise of the broadcasting system. And don’t impose any conditions on that platform.”

2198 Now, yes, there’s an argument they have, and we’re not dismissing it, that to ensure that Canadians can access foreign apps within the system may keep them attached to the system. We’re not dismissing that.

2199 But to have absolute free reign to do what you want in that app system, to have no requirements to carry Canadian services, to do a partnership with Comcast that allows you to open up the floodgates on foreign services and, as Luc says, not get around to carrying a Canadian app, so maybe get around eventually.

2200 To have a platform that because you don’t control it and are dependent on Comcast, you can’t -- while you could theoretically ensure Canadian services are on there, those Canadian services may be buried within other apps, given nowhere near the profile, nowhere near the discoverability of the big-labelled apps that are already on Comcast, and they can just turn on a switch to let them in.

2201 These are enormous opportunities and threats. And what we’re saying is you don’t have the tools right now to deal with this, and you need to get the tools to deal with it. And you’re not going to solve it all at this transaction level, but you can start.

2202 Anybody want to go?

2203 MR. DANKS: I will make one comment that I think is really interesting, which is, nowhere do we see anyone saying, “What do we do to fix the current broadcasting system to make it more viable?” You know, this is where we, as independents, complain about the leadership that we have in the system.

2204 And this is a by-product of vertical integration with the companies that own those broadcasters are primarily focused on internet and mobile, which is what this transaction’s all about. There’s nobody out there saying, “Well, what do we do to make the Canadian system that many Canadians are still on, particularly older Canadians, more viable?”

2205 There may be some way to do that, yet and there’s no champion for that. You know, the Infinity system that Rogers has is a good system for what they want to do. Comcast is very successful, as Luc alluded to, but it’s also a transition. It’s a between system where it allows them to do both at the same time and transition to the streaming world. Now, I haven’t heard any of these companies say this is what we need to do to improve the broadcasting system. This is a point.

2206 COMMISSIONER NAIDOO: Thank you.

2207 Can you then provide some specific examples of situations involving Rogers when the wholesale code or various VI mechanisms under preference or dispute mechanism tools did not provide sufficient safeguards, and whether you filed a complaint with the Commission regarding such grievances?

2208 MR. MILLER: So there’s a lot of ways we can address that.

2209 First of all, you’re right on point as to why we didn’t make a request for in camera. To be clear, we said that if you were interested having in-camera discussions, we would be available. As I understand your ruling, you declined the invitation but have invited us to file stuff, so we’re going to go down that path.

2210 I don’t know if anybody wants to say something generally at this time.

2211 MR. DANKS: I’m sorry; is the question regarding specifically regarding Rogers or in general and how the system works?

2212 COMMISSIONER NAIDOO: The question was specifically about Rogers but I think, you know, we’d be open to if you wanted to, as part of an undertaking, include -- actually, I should probably ask counsel.

2213 Can they include other than Rogers in your undertaking as well?

2214 THE CHAIRPERSON: I think for the purposes of this proceeding, we are talking about the Rogers’ proposed acquisition of Shaw, so I would suggest we limit it to Rogers.

2215 COMMISSIONER NAIDOO: I fully support.

2216 MR. FUOCO: If I could just add a point relating to -- you know, pulling back to the conversation just prior where Peter was speaking, you know, when we look at this, this transaction, we’re not fundamentally opposed to it. But we understand that there is potential risk in it for the independents. And what we really have been working on is safeguards, guardrails; whatever phrases you’d like to use. And because we mentioned in our opening remarks, you know, the IBG members, we’re the dreamers, the visionaries. Not that the large companies are not but we are in our own way. I think of our experience when a large broadcaster at the time, CanWest, in 2009 concluded that CHCH was no longer viable, and this relatively small, unheard of company from Dundas and Keele in Toronto stepped up and plucked it out of bankruptcy and saved the station; it’s still on the air. That’s who we are. And many of the members have that same DNA inside them.

2217 So what we’re saying is; put safeguards and guardrails in place because it’s -- what we’re talking about, whether it’s app development, set-top box data flowing to new ad tech platforms; these are the things that we need to invest him, but these are significant investments, significant projects.

2218 And we want to build a bridge to the future, to pick up some phrases used in the Rogers application. But it is very difficult to build that bridge if the current ground you’re standing on is unstable. And that’s what we’re looking for is the stability to build that bridge to the future, and this transaction, with appropriate safeguards, can create that environment for us.

2219 MR. PERREAULT: So what we’re saying to you is, we’re not against it but we’re telling you; tread lightly, be careful. If you look at the G7 countries, nowhere in the G7 will you see an operator controlling 50 percent or close to 50 percent of a given market in distribution.

2220 Rarely will you see -- and, again, one linguistic market -- an operator controlling more than 50 percent of the broadband market and the wireless market.

2221 So in terms of how you’re going to disseminate content in the future, we’re not talking about five years around the corner but this is going to be a matter of fact in a few years. We have to have very strong safeguards to maintain the diversity of voices.

2222 COMMISSIONER NAIDOO: Thank you.

2223 THE CHAIRPERSON: If I could just make a suggestion -- pardon me, Commissioner Naidoo.

2224 Perhaps just to close off on the other issue, if the Commissioner Naidoo could repeat her question, and then if you’re willing to do so, you can take as an undertaking to respond to that question in writing, and as appropriate, file in confidence. Would that be okay?

2225 Sorry to interrupt.

2226 COMMISSIONER NAIDOO: No, that’s absolutely.

2227 So as an undertaking, could you please provide specific examples of situations involving Rogers when the wholesale code or the various VI mechanisms under preference or dispute resolution tools did not provide sufficient safeguards, and whether you filed a complaint with the Commission regarding such grievances.

2228 (UNDERTAKING / ENGAGEMENT)

2229 MR. MILLER: Thank you, Commissioner, we shall, subject to the procedural ruling you made this morning.

2230 COMMISSIONER NAIDOO: All right, thank you.

2231 You touched on this a little bit earlier and I just want to make sure that we flesh it out a little bit, so I’m going to give you a chance to just expand on it a bit.

2232 You and some other intervenors, such as Anthem, suggested that Rogers be required to agree to minimum penetration revenue or subscription levels for independent programming services in order to support their growth for a period of five to seven years.

2233 Can you please clarify how you suggest establishing those levels; for example, on a service-by-service basis, or perhaps on the basis of a standard commitment?

2234 MR. MILLER: So this is what I was alluding to earlier in the opening statement, is this is the challenge; how do you come up with an all-encompassing principle that covers all circumstances?

2235 So quite frankly, we understand why, you know, Rogers has chosen to talk to independents individually because, you know, when all the circumstances are different, you know, everybody needs different things. Everybody’s in a different situation financially, commercially, you know, what they need, et cetera.

2236 But we do think, and that’s why we made the point in opening statement, you have to somehow come up with an overriding principle. You have to have something that you, when there’s dispute resolution, assuming that’s still the mechanism, when there’s disagreement you say, “Okay, that’s the principle and this is what we think a reasonable interpretation of it is.” So that’s why we came up with the “no less favourable” language.

2237 You’re going to hear from Tele Latino, an Ethnic Channels group, of the particular circumstances of ethnic services because, as you know, while Monica has the fortunate circumstance that she said of having 91H status, none of those services have that kind of status, and some of them are very small. And one of the things we’ve learned is that while the promise of IPTV originally was you could have an infinite number of channels because it’s switched, right? You’re not taking up the bandwidth for 500 channels. What we’ve learnt is the very nature of the deal that BDUs have with Comcast turns that back around because for each linear channel -- and I really wish you would get clarification of this on the record -- we understand Rogers pays something like 10 to $15,000 a year to Comcast. So that means for Stingray over here, it could be as much as $400,000 that Rogers is paying to uplink Stingray’s services.

2238 So no wonder, all of a sudden, you’ve gone from having no capacity issues to here we are again, back to the capacity crunches that we faced for decades since we were in analog on BDUs. And it’s self-made. It’s because, unfortunately, a commercial decision was made to do a deal with Comcast, and that commercial deal requires the payment, as we understand it, for each individual channel.

2239 So if you’re an ethnic service and you’re à la carte and maybe you only have, I don’t know, 5 percent of the BDU universe, you don’t have a lot of subscribers, you have a business but Rogers is going to say, “Actually, you know, we don’t want you to have a linear channel anymore; we want to put you on a app.” Well, okay, maybe that’s okay but if there’s no rules for the apps, where are you?

2240 MR. DANKS: ...say something, Peter about this more generally?

2241 Commissioner, one of the things that’s important to understand is, I think, on one of the really unfortunate by-products of let’s talk TV and the packaging arrangements, is that it sent us off the wrong direction, and we hear terms like weaponizing packaging. What that really means is that in order to pay you less, a BDU will move you to a smaller package because they can’t lower your rates under the contract. And that’s what that means.

2242 This has made the broadcasting system less competitive than other services. So, for example, if you are on what they call the fast channels, the advertising channels, the Pluto TVs and Zoomos that are popping up around the world, you can get 250 linear services and you get 100 percent of all channels as a subscriber. So those channels are all offered in the linear version and they’re 100 percent ad supported. And whereas what we’ve done in Canada is consistently diminish our services overall to the point where they’re at eight or seven or five. We’re eight percent. The market penetration -- you can’t make a business work in that level. And so it affects you in a number of ways. You can’t get in front of your consumer but you also can’t even get any advertising. And this hurts your bottom line.

2243 And for our channel to get paid more advertising wouldn’t cost anybody anything. But we can’t get enough consumers. We have literally sold out our advertising right now and we can’t raise our rates because we don’t -- we can’t increase our market penetration.

2244 And you would say, “Well, why can’t you go back and say that’s fair market value; we will negotiate”; well, I can’t do that. They won’t agree to that. That won’t happen. And this is where we get stuck as a system.

2245 And so when we say we need to raise minimum- -- there’s sort of two issues and they are separate. The first is, what is your market penetration? And our view is that independent services should get excellent market penetration.

2246 And the issue then is what do people get paid, and the two -- and so what has happened is in order to avoid moving your sub-rates at all, because they get stuck, they keep moving you down packaging and that’s just headed the system in the wrong direction which is why people like Anthem are making that proposal.

2247 COMMISSIONER NAIDOO: Thank you.

2248 Cogeco suggested that retroactivity should stop accruing on rates set out in an expired affiliation agreement from the moment the CRTC is seized of a dispute. However, the Commission notes that the date on which the rates come into effect as the central element of the agreement negotiated between the parties. How can the Commission change the effective date on which an agreement enters into force?

2249 MR. MILLER: A couple of things there. First of all, all agreements are subject to the CRTC. So the CRTC actually, if it wants to -- and I'm not saying it should. But if it wants to it can overrule a commercial agreement. That is number one.

2250 Number two, a retroactivity is a complex issue because there are various reasons why issues take a while to get to dispute resolution. And actually most of those issues are not about the CRTC in any way not engaging as soon as is practical to do so. Most of those issues are due to the situations that BDUs are in.

2251 Sometimes, quite frankly, you have a personnel changeover and you were doing a negotiation with one person; they leave and then you're starting with scratch with another. Sometimes you’re on the bottom of the list.

2252 So it is complicated. We would submit, because we are aware -- and some of the members around the table -- that sometimes there become situations where a BDU is trying to deal with reducing, if you will, the compensation, the rates, or the rates paid to independents years after an affiliation agreement has expired.

2253 And I think at a certain point, whether there is a formal rule -- and we’ll think about this a bit more. You have to recognize that you have to be careful. I mean, maybe a BDU can afford a retroactive payment on a discretionary service because in respect of all their revenues it may be very small. But if you ask a discretionary service to reimburse over, let’s say, two years of what you might ultimately conclude were perhaps excessive rates, then you could put an independent service under.

2254 So this is a delicate issue. I don’t know if anybody has a clearer answer for me. But we will think about this a bit more.

2255 COMMISSIONER NAIDOO: Thank you.

2256 TLN Media Group suggests that if a transaction is approved, the only recourse for independent Canadian ethnic services against unfavourable treatment would be to file an undue preference complaint and face the overwhelming resources of Rogers Shaw in trying to advance such a complaint, a sentiment echoed also by other independent programmers as well.

2257 Do you agree or support that statement?

2258 MR. MILLER: So sorry, was that Tele-Latino or ethnic channels group?

2259 COMMISSIONER NAIDOO: TLN Media Group.

2260 MR. MILLER: Thank you.

2261 So in any event, they are a member and as I alluded earlier there are a number of very common interests between ethnic services and other services. And there are some particular concerns that they have that we know they will be addressing with you.

2262 I am not going to adopt their words. I’m going to suggest another way of looking at it.

2263 Undue preference is a very high standard. As you know, first you’ve got to find that there is a preference and then you've got to find that it’s undue. So it is not a catchall. It is a -- in extreme measures you can get some protection. Most of what we’re talking about, the day to day concerns we have are not undue preference.

2264 What we’re talking about is a year by year negotiation by negotiation grinding down, grinding down of your rate or as Brad was saying, grinding down of your penetration, moving you from higher penetration packages to smaller ones.

2265 Again, everyone is different, but many services have good packaging on Shaw; they are in broad distribution. On Rogers, they are not. They’re worried about this transaction reducing their penetration. They’re worried about those negotiations that they are going to have to enter, and they will have o enter into. I mean, it is understandable and perfectly commercially reasonable that Rogers, after acquiring Shaw is going to want to make changes. We’re not saying they can’t; we’re just saying can you please make sure that in aggregate at the end of the day at the minimum independents are no worse off.

2266 MR. DANKS: I will say one thing.

2267 Commissioner, in my presentation I mentioned the analogy of rowing a boat and then having to stop to bail. An undue preference claim would mean that I would row once, bail once. It would be that sort of thing. They are very long protracted legal arguments. They have an entire team of lawyers on the other side. You go through the process.

2268 The last undue preference claim that OUTtv won at the Commission, we won the case clearly and then we lost in the remedy. We ended up with an empiric victory after a long period of time. It was a classic case -- and I would be happy to refer it to you -- of going the mile with the Commission and then the Commission not stepping up and doing anything to change the situation.

2269 So the reality is that many of us have no faith in what the outcome will be after a very long protracted legal battle that not only sucks up a lot of money but also sucks up a lot of time and energy that you could be taking away from trying to build your business another way.

2270 So it is not something that, you know, you do lightly.

2271 COMMISSIONER NAIDOO: Okay then. So what other mechanisms do you suggest the Commission implement to address such concerns?

2272 MR. MILLER: Again, I think for the purpose of this transaction we ‘ve done that. We’ve got six recommendations in our intervention. We talked about the first one quite a bit. We have touched on the others. I don’t think it is particularly useful unless you think as us -- for us to repeat what is already on the record.

2273 COMMISSIONER NAIDOO: Okay, that’s fine.

2274 TLN also cautioned that a combined Rogers Shaw would have the enhanced opportunity, capability and financial incentive to curtail the ability of any competing ethnic service from challenging Omni Regional.

2275 In your view, which proactive measures or competitive safeguards should the Commission consider implementing to ensure that independent ethnic services continue to be offered to Rogers subscribers on a fair and equitable basis?

2276 MR. MILLER: I have been in this business long enough that I remember when structural separation was still a thing. The distributors did not own television services. And that was the solution. That was the solution but no one is saying we’re going to go back to that. Well, some people do but no one around this table is suggesting we go back to that.

2277 But it does point to the fact that you really have to look at these things on a case-by-vase basis. So yes, the ethnic services have talked about Omni. WildBrain has talked about CORUS and what it faced in its dispute with Cogeco. And it fears going forward that given the preference given to affiliated service which we, as you know, believe will continue despite the fact that according to your current definitions, CORUS would no longer be affiliated with Rogers.

2278 So you have to dig in a little bit and understand, number one. And number two, better still if you can avoid it all together then we are all much happier which is why again the remedy we put on the table, the combination of the commitment to carry 50 independent services plus the commitment that would be subject to dispute resolution, would be in addition to the Wholesale Code for Rogers, that they will carry on now less favourable terms in aggregate independent services after the transaction, vis-à-vis how they were before.

2279 We think those two commitments together become the foundation of not only unequivocal and significant benefits out of this transaction but also the foundation of what we need for economic stability over the next, we argue, five to seven years.

2280 COMMISSIONER NAIDOO: All right. This is my last question. The Wholesale Code sets out commercially reasonable practices for packaging and distribution meant as safeguards specific to independent services.

2281 Of importance, Sections 7 to 9, which essentially state that independent programming services shall be offered in at least one package, and certainly the best available pre-assembles or themed package, if it exists, in addition to being offered on a standalone basis, and shall be included in theme packages that include related programming services.

2282 So given these available protections, please elaborate on the idea that IBG believes that BDU’s assemble big TV packages as they see fit, with demonstrable preference for their own or other VI services, and without regulatory oversight.

2283 MR. MILLER: I’m going to pass this over to Brad because I think -- he’s happy you’ve asked this question because it is exactly that language of “the best package” which he was alluding to earlier -- plain language -- but that was not enforced by the Commission.

2284 Brad?

2285 MR. DANKS: Yeah, I think it’s a very classic case of showing you the lack of confidence we have in the Commission regarding these things.

2286 We had a case involving two packages that were virtually identical, one was called Lifestyle One, one was called Lifestyle Two. We ran Lifestyle Two.

2287 Lifestyle One had been packaged up by the BDU so that it was included with other services, so it had 50 percent market penetration. And the one that we were in had five percent market penetration.

2288 We said to the BDU, “You must move us because we’re not in the best package, and these two packages are virtually identical in terms of composition.” The BDU said, “No, that’s not what it means.”

2289 So we went to the Commission. The Commission said, “Yes, OUTTV, you’re right,” and they gave us -- they said, “You’ve been undue preferenced.” And we said, “Great, we should be moved.”

2290 And the Commission said, “Well, no, not so fast. You know, the best package isn’t necessarily the one with the most subscribers. It’s really the one that the BDU says is best for you.”

2291 So that particular decision -- and I can refer -- we can send it and refer it to you -- was the kind of decision that makes us go, like, “Why are we not being helped here? Isn’t the obvious situation to put us where we should be best, because we have trouble fighting for that?”

2292 And that particular decision, by the way, resonated across the independent sector to say the Commission’s not going to stand up for independents. It’s just not. And that was the legacy of that particular decision. I think it cost the independent services, you know, millions of dollars as a result, and yet, you know, there we are.

2293 So, you know, if you really asked, that case is just one of many examples, even if it’s clear -- I mean, that was a provision, by the way, that we fought for at vertical integration. It was in the OUTTV submission, and we said, “Look, if you’re going to give so much power to the BDUs, let’s come up with some simple rules. Put us in the best package, period.” Well, we got the rule, but again, it wasn’t enforced.

2294 So when we file a claim, we don’t know where we’re going to be on the other end of it. We can even win under the law, and then the remedy is just not sufficient to make any difference.

2295 COMMISSIONER NAIDOO: To that point, can you provide specific examples of such situations in your relationship with Rogers, specifically, and/or your experience in availing yourself of the safeguards set out in the Wholesale Code?

2296 MR. DANKS: Well, in order to provide an example, it would mean we would have to bring a case, right, in that specificity. And one of the reasons we don’t bring the cases is because we don’t think we’re going to get an outcome. So it’s very self-reinforcing. And this is the problem we have.

2297 So are -- is the Commission going to say, “Okay, we’ve looked at this. We’re really going to do a better job, and we’re going to tell the staff to a better job, and we’re going to” -- you know, we’ve asked in the past for brighter lines in terms of a lot of these situations, but there have been times when we’ve been amazed because the brighter lines aren’t followed either.

2298 So it’s -- sadly, I’m going to say that it’s made a lot of us very cynical, which is why we negotiate deals which, while not great, are good enough to keep us in the business often. That’s just the reality. I’m sorry.

2299 MR. MILLER: Can I add, we have, I think, said in our intervention that there’s, you know, many disputes, many conflicts that don’t go to you because it’s hard for independents to take their primary customer “to court”, the Commission.

2300 But in the rubric of the earlier undertaking, if it would be reasonable, Madam Commissioner and Mr. Chair, we will look as to whether we can provide examples. And what we’re going to look at is also the ones we never filed, if that’s reasonable. But if we can roll that all in to one undertaking, we’ll do that.

2301 THE CHAIRPERSON: I was just about to suggest something very much along those lines, rather than asking Mr. Danks to do so separately, perhaps you can take that into account in your undertaking.

2302 MR. MILLER: Thank you, Mr. Chair.

2303 COMMISSIONER NAIDOO: And that’s all the questions I’ve got, so I pass it back to you, Mr. Chair.

2304 THE CHAIRPERSON: I’ll just turn to Commissioner Lafontaine and then, I think, Commissioner Anderson.

2305 COMMISSIONER LAFONTAINE: Thank you very, Mr. Chair.

2306 And thank you very much for your presentation, today. I do have a few questions, and I know that we don’t have a lot of time, so I’ll try to ask them as efficiently as possible, but I do find that I get tongue-tied when I try to go fast. So, anyway, here we go.

2307 Your position, from what I understand, is that your proposing 50 channels with no less favourable in the aggregate after the transaction than before. That’s the idea for maybe a five to seven year period, and that is ultimately for the independent broadcaster, is what you would be putting forward. Is that correct?

2308 MR. MILLER: That is correct. And we define independent broadcasters as excluding Corus.

2309 COMMISSIONER LAFONTAINE: Right. And excluding 9(1)(h) services as well?

2310 MR. MILLER: In that case, yes, because we’re satisfied that 9(1)(h), as long as it, obviously, continues for those services, protects them sufficiently.

2311 COMMISSIONER LAFONTAINE: Should there be any obligations with regard to programming services, or independent programming services that service diversity communities or equity-seeking groups?

2312 MR. MILLER: Can I respond to that in two ways?

2313 First of all, should there be a quid pro quo of any kind? There was a discussion yesterday, I believe, about whether there should be any kind of undertakings made by services in return for carriage. We have thought about that. We could come back to you on specific language. We think there are way you can do it in terms of investment in program, in terms of perhaps even maintaining your programming slate.

2314 So it -- but to the general principle, if the Commission is going to ask Rogers to ensure it that it will treat independents no less favourably, is there something we should do in return? We think there could be. So let us come back to you on that.

2315 In terms of ---

2316 (UNDERTAKING / ENGAGEMENT)

2317 COMMISSIONER LAFONTAINE: And will you come back on it as an undertaking? Is that ---

2318 MR. MILLER: We’d be pleased to do that if that’s what you’d like.

2319 In terms of your specific question, my general answer would be a, of course, all broadcasters have obligations -- basic obligations in that regard. And I think independents would absolutely be supportive and recognize their basic obligations. Obviously, some independents are in a better position to do more in that regard.

2320 So I don’t know if anybody else wants to comment on that.

2321 (UNDERTAKING / ENGAGEMENT)

2322 COMMISSIONER LAFONTAINE: Okay, thank you. And so Rogers had put forward, as you noted yesterday, this notion of carrying at least 40 services. And then they had also, as part of their reply to interventions, talked about the app -- their support for app development and the AdTech, which you’ve talked about.

2323 And perhaps this is something you could elaborate on in an undertaking or in a reply, is exactly how beneficial those two proposals that they have put forward for independents are.

2324 I’m hearing, for example, that Stingray had an app developed, but it never got picked up. I know that APTN has an app. Rogers mentioned that UCG -- developing and app with UCG. So I’m trying to understand whether -- what kind of benefit to the broadcasting system this component of the proposal is in terms of this -- for this transaction.

2325 MR. MILLER: On the app side, the development, we’ve touched on it, but we’d happy to accept an undertaking to give you more on that.

2326 COMMISSIONER LAFONTAINE: You mentioned in oral presentation these negotiations that you were having with Rogers that have -- that broke down yesterday. You Haven’t provided any more information about that. I suspect that that is probably confidential information. I don’t know if there’s anything else that you can provide in confidence, but it did leave me scratching my head because I -- anyway, it has left me scratching my head.

2327 MR. MILLER: The ground rules of our discussions were that we could refer to the existence, but that we would not reveal specifics, which is fair. So we’re not going to do that. I’ll leave it at that.

2328 COMMISSIONER LAFONTAINE: Thank you. My last question related to a comment by Madam Ille with regard to -- you mentioned that there are at least 100 Indigenous broadcasting services in Canada. Were you suggesting that some of the Rogers local expression money should be directed or redirected to Indigenous broadcasting services?

2329 MS. ILLE: I'm not necessarily saying directly directed, but may supporting, maybe working together and collaborating on specific initiatives concerning news or the creation of specific Indigenous storytellers that is too for Rogers. So trying to find a way that it could benefit, right, the Indigenous media community as well.

2330 COMMISSIONER LAFONTAINE: Okay, great. Thank you very much.

2331 Thank you very much, Mr. Chair.

2332 THE CHAIRPERSON: Thank you.

2333 Commissioner Anderson?

2334 COMMISSIONER ANDERSON: Thank you very much, and thank you for your presentation and your submissions. They were very interesting and they're important submissions to make.

2335 I have got quite a few -- I have got a couple of questions, sorry. I'm not going to say quite a few. And I'll try to get through them as quickly as possible.

2336 But I just really need to make it clear in my head because I don’t want to misconstrue what you're saying, what you're proposing with the five-to-seven years and the 50 channels, because you had set out your terms that you're requesting in Appendix C, and Appendix C is called, "Summary of Recommended Code of Conduct Provisions."

2337 And so am I to understand that the 50-channel scheme that you have put forward that my colleague has summarized is in lieu of the third recommended code of conduct provision, which is entitled, "Unreasonable Terms or Conditions for the Distribution of Independent Programming Undertakings"?

2338 MR. MILLER: First of all, thank you, Commissioner Anderson, for your interest in our submissions and for the questions.

2339 We have been evolving our thinking on this. And so that cornerstone proposal we put on the table, the two-part cornerstone proposal of 50 services and no less favourable in aggregate, becomes the most important one.

2340 We have not -- to be perfectly honest -- tried to figure out of all -- and it fits certainly within number one. We haven't quite figured out where we're going to go with the rest of it.

2341 We would be happy, you know, to revise that, if you will, if that’s convenient to you. We could take the list and we could revise it for you by way of undertaking, if that is helpful.

2342 COMMISSIONER ANDERSON: That is helpful, thank you.

2343 Okay. Thank you for that.

2344 The second question that I have relates to the five-to-seven years that has been proposed today with the 50 channels. And you have given some reasons for why it should be five years with an administrative renewal, I understand, and so that’s in the event that the licence isn't finalized by the Commission. Okay.

2345 Why -- what was the reasoning to support the initial request of seven years, because I'm still interested in hearing the justification behind that?

2346 MR. MILLER: So our proposal on making the condition not time limited but reviewable at Rogers' next licence renewals, we felt was an elegant solution, because licence renewals are a time for parties to tell you where they're at, to look at new conditions for the next term.

2347 So and then practically speaking, it just happened to align at the four-to-five year point. And as you know better than us, you're looking at your schedules of hearings over the next few layers. You're starting to push some things out because of all the work you have done on C-10 and all of the work you may end up doing on its successor.

2348 So as I understand it, you know, there's a chance that would be pushed out. So I sort of threw that in to say that, you know, it would fit as a mechanism, we believe, for you. That was the suggestion.

2349 Back to the seven years, the seven years is twofold. One, it will be seven years since the "Let's Talk TV" decision, when your decision on this transaction comes out, should you approve it.

2350 And so it's taken seven years for independents to put in the situation they're in. We believe the system is not falling apart in seven years, and we believe it shouldn't, and we believe, as Brad was alluding to, part of this transaction should be tangible commitments to keep the system going, not to move everybody to apps, certainly, not to move everybody to an unregulated universe of apps.

2351 So seven years is a) the time since the "Let's Talk TV" decision when you -- by the time you make the decision on the transaction, and b) it is what used to be a typical licence term, right? So those were the two reasons for that.

2352 COMMISSIONER ANDERSON: Thank you.

2353 So going back to -- let's say that the Commission adopted your proposal and there was a condition that Rogers support or include or come to agreement with 50 channels that provide independent programming services for five years.

2354 What happens at the end of those five years then to the independent programming services? Is there a risk that Rogers will just drop all of them and go down to nine? And if so, how is that in the benefit of the broadcast system?

2355 MR. MILLER: Well, that’s a very good question, Commissioner Anderson.

2356 I guess we would have loved to say can we have this commitment in perpetuity? But we obviously don’t think that’s realistic.

2357 And again, to link back to our suggested solution that link it to their renewals, they will be able to give you the opportunity at that time to say, "This is where the system is. This is how many subscribers we have for the traditional system. This is how many subscribers we have for the app system." They will be able to make a proposal.

2358 We are licensees too. We deal with terms and conditions that you establish for us. We understand how it is to operate a business, a regulated business. And so we're not in any way trying to suggest that Rogers should be bound indefinitely to something that may not be appropriate 10 years from now, for example. So that’s why we're looking at it this way.

2359 COMMISSIONER ANDERSON: Thank you for that.

2360 If I could bring you to your recommended condition of licence number 2, and that’s with respect to the Wholesale Code, and you propose that it be extended.

2361 What would you say if I put to you that this would better be addressed in a public proceeding?

2362 MR. MILLER: That’s again, a very good question.

2363 We have alluded to this. We recognize there are certain things you should do in this transaction to make sure that this transaction creates unequivocal and significant benefits. But issues are being raised in this transaction that go beyond it.

2364 And we have seen, particularly when you finally approved Bell Astro the second time that -- no, you didn’t approve it the second time, so you approved it at the second proceeding, the second hearing -- you imposed safeguards which became the basis for the Wholesale Code.

2365 And so what we're suggesting to you is -- and again, we will try and be a bit more definitive in this when we get back to you -- that there are certain conditions you should be imposing as a result of this transaction if you approve this transaction -- again, and we think you should approve this transaction, subject to conditions.

2366 Can I just say parenthetically not approving this transaction does not help independents? Not approving this transaction leaves independents in the situation they are, which is not a good situation.

2367 So that’s why we're saying yes, approve this transaction, but make sure the promise is realized. I just -- I want to open and close that parenthesis.

2368 And I have lost my train of thought, Commissioner. I'm sorry.

2369 MR. FUOCO: Peter, if I can -- I can step in and perhaps just add a point here, which is time is of the essence, and things are moving quickly for the entire industry. And so this is an opportunity to consider these safeguards and to put them in place. Pushing it down the road to another hearing, it's just -- it's a question of timing, and I think that’s where that we were. Throughout the week, many of us have been commenting that it's been a long time since we have had a hearing in a public forum. And so this is an opportunity to bring these issues forward and as I said, timing is of the essence.

2370 COMMISSIONER ANDERSON: Of course. One of my colleagues this morning -- and I'm not sure if you were able to catch that during Telus' submission -- raised the issue that if we're making systemic changes, that there might be an issue about regulatory asymmetry.

2371 And so I don't know if you want to speak to that?

2372 MR. MILLER: So again -- and this is where you have got different parties with different positions but similar concerns.

2373 One of the things -- again, I'm just opening a parenthesis here -- we alluded to is that all independents, whether they are independent broadcasters, independent BDUs, or independent producers are concerned about a key supplier or a key client or customer, however you want to define it, having the kind of power and dominance that Rogers will have in English Canada after this transaction. So that’s a common theme you're hearing over and over again for many reasons.

2374 Different intervenors have different interests and different proposed solutions, but that’s the commonality.

2375 And again, I have lost my train of thought, sorry.

2376 MR. KINES: I would just say that regulation asymmetry is great, but you do not have asymmetry in the industry if this transaction's approved.

2377 Before, there were kind of three almost equally-sized players; there's going to be one that's going to be mammoth, and time is of the essence and different, stricter rules may apply.

2378 MR. MILLER: And thank you. Thank you, David, because you reminded me.

2379 We do not believe imposing the proposals we've suggested create any unreasonable asymmetry on Rogers. We believe what they do is ensure this transaction provides unequivocal and significant benefits, and your precedent is the Bell Astral decision.

2380 In order to find significant and unequivocal benefits, you required certain things, and they were only required on Bell.

2381 Ultimately, they applied to other people, but at that moment in time, they only applied to Bell. At this moment in time, we're asking to impose what we're suggesting only on Rogers because they are going to be the biggest game in town.

2382 They are 10 times bigger than Cogeco after this proceeding, assuming the transaction is approved. They are at least 50 percent bigger than Bell after -- assuming this proceeding concludes.

2383 So we don't see asymmetry here. We see reasonable conditions of approval.

2384 COMMISSIONER ANDERSON: Thank you.

2385 Thank you for answering my questions. I don't have any other questions. Apologies if any of my questions were repetitive, but I appreciate your clarity.

2386 THE CHAIRPERSON: Not at all, and thank you.

2387 Thank you for appearing. Thank you for your contributions. It was very much appreciated, and I will bid a good day.

2388 Madam Secretary, this might be a good time for break, 15 minutes, please.

2389 MS. ROY: Yes. We will come back at 5:15. Thank you.

--- Upon recessing at 5:00 p.m.

--- L’audience est suspendue à 17h00

--- Upon resuming at 5:20 p.m.

--- L’audience est reprise à 17h20

2390 MS. ROY: Thank you very much for being here.

2391 We will now hear the presentation of St. Andrews Community Channel. Please, you may begin.

PRESENTATION/PRÉSENTATION

2392 MR. WATT: Thank you very much, Chairman and Commissioners.

2393 Good evening. My name is Patrick Watt. I’m the station manager at CHCO TV in St. Andrews, and we do appreciate this time to present our concerns.

2394 I've attached a map of the southwest corner of New Brunswick for your convenience, as I may refer to some of the towns in our region from time to time.

2395 Currently, New Brunswick is served mainly by just three telecommunications companies which operate all local private TV stations, their parent networks, television subscription services and most internet subscription options. Rogers' purchase of Shaw will further limit the diversity of voices in a province that has the highest concentration of media ownership in Canada.

2396 CHCO-TV is looking for better carriage and funding for independent community television.

2397 Besides CBC/Radio Canada, we are the only licenced TV broadcaster originating regular local programs within New Brunswick. We are distributed across the province by Bell Fibe and Bell satellite TV. In contrast, distribution by Rogers is limited to Charlotte County and the three small towns.

2398 Over the past two years, the pandemic brought a silver lining to CHCO-TV, putting our channel in the forefront. To use our COVID-19 coverage for example, we are the only local TV broadcaster in New Brunswick to dedicate a journalist to present regular live broadcast time to the government press conferences.

2399 Our social media during the past two years has proven to us that we are a much-needed source of local news and programming, showing a growth from 4,000 to now over 17,000 followers from all corners of the province. We feel this is quite respectable compared to a brand like Global New Brunswick, which has 57,000 followers on Facebook, and notably CHCO has more followers than Rogers TV with only 6,300 followers in New Brunswick.

2400 There were once over 30 unique community TV stations in New Brunswick, and today, Rogers maintains only six studios located in larger cities. Prior to 2010, eight other community-run channels still existed in schools and community centres set up by the former BDU, Fundy Cable. CHCO-TV was originally one of those channels; all others have closed.

2401 St. Andrews Community Channel began producing and cablecasting local programs in 1993. Our first meeting with Rogers officials in 2003 spelled out they had no interest in allowing us to maintain programming on our own channel. Within weeks, we were on a learning curve to obtain our own community programming licence.

2402 Obtaining our licence was made more complicated when Rogers had their BDU licence exempt in St. Andrews and operating under an exemption order, Rogers did not have to carry an independent community channel unless we broadcast over the air. Seeking a

2403 low-power community licence was more costly and eliminated our access to BDU funding, but we needed a licence that would trigger carriage with BDUs.

2404 We were granted our licence in 2005, and Rogers kept us on cable 10 until 2010, for about five years. That year, Rogers built a new digital head-end in St. Andrews, bringing mainland Charlotte County BDUs together and interconnecting them with the City of Saint John.

2405 This would be the first time that Charlotte County ever watched RogersTV-Cable10 from Saint

2406 John, which replaced the community-run channels, except in St. Andrews. CHCO was moved to cable 9.

2407 BDU regulations state that any local broadcast within 15 kilometres of a head end must be

2408 carried. It is important to know that Rogers interconnected their Charlotte County BDUs with one headend in St. Andrews, but prevented our channel from being distributed county-wide in other towns until our complaint was heard, finally, by the Commission in 2018.

2409 Eight years of potential growth for CHCO was lost, and why?

2410 Rogers claims that their community television channels "fill an important void left

2411 by the closure of local television stations and community newspapers". The truth is, in southwest New Brunswick Rogers has played a role in creating that void in order to assume a monopoly-like status in the industry.

2412 If Rogers truly cared about community television, they would be an ally to independent community stations, helping to nurture our survival, rather than fighting to limit our carriage and siphoning off community television money for themselves.

2413 The very thought that a non-profit -- or that a for-profit driven company like Rogers wants people to believe that they can do local community television better than an independent non-profit station is

2414 not only problematic, but detrimental to democracy. And in short, Rogers is actively contributing to the media void that they claim to be filling.

2415 Rogers’ reply to our intervention quoted Broadcasting Regulatory Policy 2016-224, using that policy to imply that Rogers was a more responsible community programmer.

2416 The paragraph reads, in part:

2417 "...i. the vast majority of stakeholders are pleased with the local coverage;

2418 ii. BDUs are licensed giving the Commission a mechanism for overseeing their activities; and

2419 iii. they are subject to industry codes."

2420 Now, we may not believe the BDU model is perfect' however, CHCO-TV is also a licensed broadcaster and all of the above three statements hold true for us also.

2421 Funding independent community television is not a new idea. BDU policy as recent as 2011 stated that if a BDU did not distribute its own community programming and if community programming undertakings were in the licensed area, the BDU shall make contributions of two and up to five percent to that undertaking.

2422 BRP 2016-224 also allowed BDUs to redirect their community television funding to commercial channels for local news. Again, another unfair advantage because low-power community channels leveraged local advertising, and that was the reason why LPTV channels could not access BDU community channel funding and commercial channels now get both.

2423 Shortly after BRP 2016-224 came into effect, Rogers TV in New Brunswick saw staff layoffs. This caught our attention because we were asked last-minute to cover the St. Stephen Santa Claus Parade after Rogers abruptly cancelled on the town for coverage.

2424 At that time, we were not yet carried by Rogers in St. Stephen; however, Bell did carry CHCO and we were happy to comply.

2425 During Bell’s acquisition of CTV, the Commission "required BCE to make specific commitments to benefit the broadcasting system". As part of those tangible benefits, one of those commitments was enabling the carriage of independent community-based television services. If that was a reasonable condition then, it should also be a reasonable condition today.

2426 When CHCO-TV was added to the Bell TV lineup, it greatly helped our reach but, more importantly, it gave so many rural New Brunswick households access to local community television for the first time.

2427 Specifically, Charlotte County includes the Fundy Isles: Campobello, Grand Manan and Deer Islands. None of these communities have access to high-speed internet or digital

2428 television except via satellite. We understand that Rogers has recently abandoned their cable systems on two of the islands, leaving the third with just a handful analog channels.

2429 These island communities and the majority of households in southwestern New Brunswick only have satellite options for television service. Referring to our local federal riding map, it represents a large rural area with a population of 65,000. The population

2430 of the area where Rogers carries CHCO is only about 20,000, and as you can see, many communities are bedroom communities to either Saint John or Fredericton, which

2431 means they receive cable services from those larger cities.

2432 If CHCO-TV was carried by Rogers in Fredericton and Saint John, approximately 20,000

2433 people in the southwest riding would have better access to local television that relates to them. This past Federal election we produced the only televised candidates’ forum in for Southwest New Brunswick that many Shaw and Rogers subscribers just didn’t have

2434 access to.

2435 We are proud of our comprehensive coverage of rural civic affairs and community content that many New Brunsickers can relate to. After all, we are a geographically small province whose majority lives in rural areas.

2436 Rogers realized this themselves in 2006, when they were granted a zone-based, regional approach to community programming. For instance, the one regular program Rogers does produce in Charlotte County, a country music show, can be seen provincially across

2437 the Rogers TV network.

2438 Rogers [sic] has community producers that regularly travel -- or, sorry; CHCO has community producers that regularly travel to our studio in Saint Andrews to produce their shows. The President of Black Lives Matter New Brunswick, who produces a regular half-hour series called New Brunswickers Want Action, dedicated to covering systemic racism, travels from Saint John. The producers of our human rights series called NB Debrief, they’re based out of Fredericton.

2439 We believe our provincial carriage request by Rogers Cable is not a technically complicated request because on July 23 of this year Rogers switched to our high-definition signal; however, they made a small error making CHCO-Television available to subscribers across Ontario. We received calls all day long from Rogers subscribers in Ontario wondering what happened to CHCH-Hamilton for the better part of that day.

2440 CHCO-TV is reiterating its request for Rogers and Shaw Direct to carry our television station throughout the province of New Brunswick because it is consistent with the current practice of other distant channels being distributed throughout New Brunswick, while our province lacks a common local independent TV channel that is available to every New Brunswicker.

2441 Additionally, we stand behind CACTUS’s approach to initiating a new fund for independent community television or another suitable approach the Commission deems appropriate through existing media funds.

2442 Thank you for your time, and I appreciate this and I’m ready for your questions.

2443 Thank you.

2444 THE CHAIRPERSON: Thank you. Thank you for taking the time to be with us today and for providing us with your intervention.

2445 I will turn the microphone to Commissioner Desmond.

2446 COMMISSIONER DESMOND: Good afternoon, Mr. Watt, and thank you for your presentation and your time this afternoon.

2447 MR. WATT: Thank you.

2448 COMMISSIONER DESMOND: I am from New Brunswick so I’m quite sensitive to the issues that you’ve identified in your submission and what you filed on the record. And I appreciate you sharing for all Commission members and for staff the map of New Brunswick; that’s very helpful.

2449 I do have a couple of questions for you today.

2450 MR. WATT: Sure.

2451 COMMISSIONER DESMOND: And you have proposed in your filing one of your specific requests, of course, is that your independent community TV service be carried provincially on both Rogers and Shaw Direct. But isn’t that an issue that was, in fact, resolved or dealt with in the CRTC decision of 2018 265?

2452 MR. WATT: Not completely. We had asked that same question, or we asked for that same thing back then, and Rogers only offered the distribution at a much-reduced area, which would be the three towns; St. Andrews, Saint George, and Saint Stephen. So we didn’t quite get what we were looking for.

2453 We were looking for them to add us to their cable offerings on Grand Manan, Deer Island, and Campobello, and we were, of course, hoping that where places like Harvey and McAdam, up in the northern part of this region, and those communities share a lot with the southwest New Brunswick region for other reasons other than the Federal riding. But -- and then of course the Federal riding, as I explained, we were showing examples of where places like Grand Bay, outside of Saint John, or New Maryland, outside of Fredericton, would benefit from also receiving CHCO, as our programming does reflect them as well.

2454 So we didn’t quite get what we were looking for then, and now with even less choice in New Brunswick, we’re now down to just Shaw -- or, sorry; Rogers or Bell for TV services, and where we were added to satellite when CTV bought -- or was bought by Bell, we thought it appropriate to revisit this ask.

2455 COMMISSIONER DESMOND: Okay. So in your mind, then, the ask is to be reconsidered, given the transaction before the Commission.

2456 MR. WATT: That’s right.

2457 COMMISSIONER DESMOND: There’s new facts, I guess, which would ---

2458 MR. WATT: Sure.

2459 COMMISSIONER DESMOND: --- impact a reconsideration of your request.

2460 MR. WATT: That’s right.

2461 COMMISSIONER DESMOND: Okay.

2462 In your filing before the Commission you refer to the fact that Corus does provide local news, but that Rogers in their submission suggests making a contribution now to CITY TV but that’s where some of their tangible benefits will be directed. And as you point out, of course, CITY TV is not a service that’s available in New Brunswick. I don’t believe it’s available in Nova Scotia either.

2463 We’ve heard conversation with respect to local programming, local news, diversity of voices. I just would like to have your view on how the allocation of tangible benefits may impact the diversity of voices. Of course, the Commission hasn’t ruled on that but if you could just share your opinion on that particular point?

2464 MR. WATT: I know my example just now was, you know, fairly small when I mentioned that, you know, Rogers Television, even, in New Brunswick experienced cutbacks after the 2016 -- yeah, 2016 224 was brought into effect. It’s small but it still I think it tells a tale. You know, it shows that community television money that we don’t have access to got taken away from their own stations and sent back to Toronto.

2465 So, yeah, I certainly -- back in 2016, when I -- when that decision was made, I guess it may have seemed like a good idea for those folks who were fighting for local news, but the situation that we have, or that you have before you now, it doesn’t look good for Global; I think that something should be done for them. But in the same time, you know, we asked to be a part of the LINF funding and -- you know, we got refused, so -- to be a part of that. And it’s -- yeah, I guess that’s my -- I mean, the commercial television side is not really what I focus on but I can certainly see the -- you know, it doesn’t look good for maybe Global Television’s News in New Brunswick.

2466 COMMISSIONER DESMOND: Okay, thank you.

2467 In your opening statement this afternoon, I’m just looking at the bottom of page 2 of your document, and you make a comment about how as Canada’s largest BDU, Rogers should be acting to prevent more voids and helping to nurture our survival.

2468 I’m just wondering if you can add a little bit of specificity to that suggestion, if you have anything more that you would like to ---

2469 MR. WATT: Well, I guess there I was referring to the fact that when they had the opportunity to -- and this was brought out in 2018; they had the opportunity all along in 2010 to take this community channel, that had been operating in St. Andrews and southwest New Brunswick for 17 years before they offered community television themselves -- I mean, they were in New Brunswick for 10 years before they brought community television into these communities in the southwest corner of the province. So the independent or the community-run stations were doing the work for them, or for themselves, really. But, you know, when they closed the others and interconnected those cable systems between St. Andrews, Saint George, and Saint Stephen. They could have taken CHCO and carried it across -- well, the could have carried it across the province then. And the certainly could have carried it across those towns as they were all serviced by the headend here in St. Andrews. But they refused to do it.

2470 I mean, I know, I was shown by a technician the equipment that was used to block our channels from those other communities. And finally we got the point across that you could take a cable box to the other towns and watch our channels. So they were going out of their way to make sure our little voice was not getting outside the town of St. Andrews when they could have nurtured that and thought, well, they’re really doing something down there that we can’t do because maybe we’re a bigger corporation that doesn't have that model.

2471 But instead of taking that and taking and looking at our services as something special and sharing it maybe even with the rest of the province, they didn’t do that. And they certainly made every excuse to not share the funding, as I said, you know, prior to -- like a class -- what is they call it -- a part 3 cable system 20 years ago could do advertising on its community channel and use up to five percent of the contributions to Canadian Reflection.

2472 And that could all be used to generate funding and operate a community channel. And now today., here we are doing basically just that and we’ve got no access to any of it. And Rogers has gone out of their way to ensure that.

2473 COMMISSIONER DESMOND: Okay, thank you.

2474 Just maybe on a final note, I do see in your opening statement that you refer to a new fund for independent community television. I’m just wondering if you -- what your thoughts would be if that was perhaps set aside or dealt with in a policy review. Would that be something more suited for a separate proceeding as opposed to being specifically related to this transaction?

2475 I just wanted your thoughts on that.

2476 MR. WYATT: Right. Well, the sooner the better, honestly, because if there could be something that comes out of this as even an interim approach just to get something started, I think that we could all probably learn something from it maybe. But waiting for another policy review, you know, in 2005 when some of these issues that I spoke about even just today, I first brought up with the staff as we were getting our licence. They said, you know, “Wait for the policy review in 2010, and the diversity of voices hearings and all that.”

2477 You know, I would say none of the things that we brought up -- we didn’t see an outcome to any of it -- the loopholes and the restrictions that we put upon us in the favouring of the BDUs. So waiting for another policy review to us isn’t reassuring that anything is really going to happen too quickly.

2478 I don't mean to be negative but it’s just what we have experienced.

2479 COMMISSIONER DESMOND: Thank you very much for your comments and your opinions. I appreciate that. And your time today. So thank you.

2480 MR. WYATT: You’re welcome. Thank you very much.

2481 THE CHAIRPERSON: Thank you. Thank you for your submissions today. We very much appreciate them as Commissioner Desmond indicated.

2482 And Madam Secretary, we will move to the next intervenor if we could, please.

2483 Have a great afternoon.

2484 MR. WYATT: Thank you very much. You too.

2485 MS. ROY: Thank you. We will now here the presentation of the Canadian Association of Community Television Users and Stations.

2486 Please introduce yourself and your colleagues. And you then have 15 minutes for your presentation.

2487 MS. EDWARDS: Sorry, 15? Okay. I thought it was 10. We won’t hurry now.

PRESENTATION/PRÉSENTATION

2488 Chairman Scott and Commissioners, thanks for inviting us here today.

2489 My name is Catherine Edwards, of the Canadian Association of Community Television Users and Stations, CACTUS for short. Joining us hopefully on Zoom from Vancouver is Geoff Scott, CACTUS' Western board rep and the Director of TriCities Community TV.

2490 From Victoriaville is Amélie Hinse, the Directrice of the Fédération des télévisions communautaires autonomes du Québec.

2491 Amelie?

2492 MS. HINSE: CACTUS et la Fédération défendent les intérêts de tous les Canadiens, mais en particulier les voix minoritaires et alternatives -- pour l'accès à la formation média, les équipements de production, et l’accès au platforme des plateformes de distribution afin que nous ayons les outils pour s'exprimer dans l'environnement de la cablodistribution et le numérique.

2493 Geoff?

2494 MR. SCOTT: We wish to comment on two issues:

2495 a) that the 20 percent of discretionary tangible benefits be directed toward the Broadcasting Participation Fund; and

2496 b) that it be a condition of license of the newly merged Rogers-Shaw to contribute local expression financing to a CRTC Certified Independent Production Fund for independent community TV, at least but not limited to territories where Shaw has been found to be deficient in the delivery of community TV services.

2497 MS. EDWARD: CACTUS is a founding stakeholder and regular recipient of BPF compensation for participation in CRTC proceedings that impact community TV.

2498 On the 7^th of September this year CACTUS received a letter from the BPF stating that the BPF will be depleted by June of 2022; and as of October 1^st of this year, the BPF will pay only $0.75 on the dollar of each claim and will impose a hiatus on all claims when funds near exhaustion.

2499 The recurring times when the BPF approaches depletion undermines its purpose. Consultants and organizations become leery of participating. For example, several claims filed by CACTUS recently have been discounted by more than $300,000. The last time the fund was running out of money, the same thing happened. Claims were discounted, and we had to file appeals to get paid after the Sirius tangible benefits were directed to the BPF.

2500 So if the relatively small amount available for tangible public benefits is correct -- just under $6 million -- we request that the entire discretionary amount -- just over $1 million -- be made available to the BPF. This would stabilize the fund until it becomes clear whether a new Broadcasting Act will result in alternate funding.

2501 Increasing consolidation in broadcasting as we see occurring in this hearing is the reason the BPF was created, to resource public-interest voices to balance the power of the VI entities that dominate CRTC hearings. A robust BPF is needed now more than ever.

2502 Amelie?

2503 MS. HINSE: Dans l'avis de consultation publique, la Commission a exprimé sa préoccupation concernant l'impact négatif potentiel de cette fusion sur la diversité des voix, sur la programmation communautaire et sur la programmation locale.

2504 Le Conseil fait référence à l'audience de 2008 sur la diversité des voix, dans laquelle un engagement a été pris au paragraphe 173, à explorer toute les sources de financement pour les titulaires de licences communautaires à but non-lucratif.

2505 Cet engagement là a donné lieu à la création du Fonds canadien de la radio communautaire, mais n'a donné lieu à aucun financement pour la télévision communautaire indépendante, malgré deux révisions de la politique de télévision communautaire depuis cette époque.

2506 En 2008, nos organisations ont fait valoir qu'avec la concentration croissante de la propriété, il n'était pas logique que la télévision communautaire, censée être une soupape de sécurité pour la liberté de parole et d'expression -- soit encore contrôlée par ces mêmes groupes privées.

2507 La proposition d'achat de Shaw par Rogers n'est qu'une étape de plus dans ce processus de concentration. Plus que jamais, nous avons besoin de médias communautaires indépendants.

2508 Geoff?

2509 MR. SCOTT: Rogers' application denotes a single paragraph, number 55 to its Supplementary Brief --to community TV. It states:

2510 “This transaction will enable us to build on the achievements of Shaw Spotlight, while leveraging our expertise and existing infrastructure to overcome the challenges currently facing community television.”

2511 So what are the “achievements” of Shaw Spotlight? When CACTUS assessed Shaw's community channels in 2015, in preparation for the CRTC's last review of the community policy, none of Shaw's 19 licensed service areas were compliant with access requirements, including those in the BC Lower Mainland where I live, nor were 16 exempt service areas.

2512 The Commission agreed, stating:

2513 “The Commission is…concerned that the issues identified in its monitoring exercise appear to be systemic in scope.”

2514 So shouldn't Rogers have a plan?

2515 Rogers writes,

2516 “Rogers is committed to supporting and strengthening the role of community television within the broadcasting system.”

2517 Yet the reverse seems to be true. Rogers was the first BDU to propose in 2006 that the Commission accept a “zone-based approach”, shutting all but five of the former 30 cable production studios in New Brunswick, moving to a single province-wide “community channel”.

2518 Rogers proposed to the Commission during the review of Local and Community TV in 2016 that BDUs be awarded the “flexibility” to a) close community channels in metropolitan areas and b) reallocate 'local expression' funding to commercial news. Rogers and Shaw were the first in line to close their remaining Toronto and Vancouver-based studios, cutting off community producers such as TriCities Community TV from the cable system in the Lower Mainland.

2519 Since then, we have struggled to maintain viewership online through YouTube. And we have only just begun to receive tangible funding from Telus Optik TV.

2520 Cathy?

2521 MS. EDWARDS: Rogers admits in response to Commission questions in this proceeding that it redirected 7.2 out of 7.25 million of local expression financing to fund the production of news on Citytv, leaving a paltry 50,000 for community TV. It asserts that it will use Shaw community channel resources to expand the Citytv brand in Western Canada, centralizing production resources in a single voice -- Rogers' voice, not in a diversity of voices.

2522 Rogers has, in fact, led the charge to destroy English Canada's once robust cable community system.

2523 Only in response to a request by CMAC in this proceeding, did Rogers file any concrete information regarding Shaw and Rogers community channels. In a characteristic lack of transparency, Rogers suppressed the names of access producers, a practice the ATIP office rejected during the 2010 Community TV policy review.

2524 We nonetheless found many anomalies. Here are a few.

2525 Both companies lack accountability in logging. In the table provided by Shaw, no running lengths for programs are provided, so it's impossible to validate Shaw's claim that 84.95 percent of its programming is access.

2526 Rogers provides program lengths, but they're inaccurate. The Saint John Common Council episodes are all recorded as being 2 hours long, when most are longer, sometimes as long as 4 hours according to their YouTube recordings.

2527 Government press conferences in Fredericton are listed as exactly 30 minutes, when most were closer to an hour. Since these are claimed as licensee-produced, under-reporting of length increases the relative percentage of access content.

2528 More damning, however, is the widespread reporting of licensee- or government-produced content as “access”. Rogers Fredericton claims over 31 hours of “Special Presentation: Covid-19 Government Update” as access (category B) when it should have been categorized as E- Government.

2529 Rogers claims more than 50 episodes of "Out of the Fog" in Newfoundland as well as well as "What's Up London" as “access”, yet the producers of both shows, Perry Cooper and Tim O'Neill, are Rogers employees. Both programs have been acknowledged as licensee-produced in previous monitoring exercises and are branded with Rogers' logo, which wouldn't be the case if they were access. We know that the access code of best practices stipulates specifically that if the program is made by an access producer, that they retain the copyright.

2530 Geoff?

2531 MR. SCOTT: Shaw claims "Statues of Saskatoon" as access, yet it is produced by Eric Steiner, a Shaw employee.

2532 The Shaw series "Connect" and "Community Link", versions of which aired across Western Canada, are claimed as access in some locations, such as Saskatoon, but not in others, where they are corporate network formats branded with Shaw's logo.

2533 If we are finding these anomalies at Rogers' and Shaws' largest remaining stations, what would we find in exempt systems?

2534 Rogers' plan for its combined community channels post-merger is insulting to the Canadians. On the one hand, the company lauds Shaw's “low-touch” approach, meaning for example, that Shaw's only Manitoba production facility in Winnipeg has been closed for a year, offering no assistance to access producers.

2535 On the other, Rogers plans to network of community channels to present “enhanced, multi-zone air format" featuring local news headlines and community event information, local weather forecasts and sports scores.” In other words, Bloomberg à la community TV.

2536 Access producers will be to -- in a small corner of the screen.

2537 Shaw tried the same thing in Calgary in the late '90s, and had to give it up in response to complaints from community producers.

2538 So all Rogers has to offer is a recycled 20-year-old idea that didn’t work in the first place.

2539 I met Ted Rogers at a volunteer appreciation event in Vancouver in the '90s. He was clearly proud of the community TV network that had been created, and even commenting to me that he was kind of ashamed of the VIPs that disappeared as soon as the formal festivities were over. I don't believe this is what he had in mind.

2540 Cathy?

2541 MS. EDWARDS: CACTUS and the Fédération therefore support this merger only if Rogers, as a condition of license, contributes one percent of its gross cable revenues throughout Rogers-Shaw service areas to a Community Media Fund for independent community TV.

2542 We would work with the CRTC and with Rogers to fulfill Rogers' commitment to “overcome the challenges currently facing community television” by re-opening community production studios where Rogers and Shaw have closed them, and opening new studios in communities that were never cabled, such as First Nations.

2543 To this end, we filed an application for a Certified Independent Production Fund

2544 today.

2545 Amelie?

2546 MS. HINES: Le Conseil a conclu que Bell avait détourné le financement des canaux communautaires dans sa décision l'année passée, et a ordonné à Bell de payer une pénalité de plus de 17 millions de dollars au Fond des Médias du Canada. À l'avenir, les pénalités similaires devraient être redirigées vers le Fonds de production que nous proposons, afin que les Canadiens soient compensés par des services de canaux communautaires équivalents.

2547 La télévision communautaire indépendante a démontré la contribution cruciale qu'elle apporte à la production d’information locales au Canada par le biais, entre autres, de l'initiative pour le journalisme local. Il est temps de s'appuyer sur ce travail et de saisir l'occasion offerte par l’achat de Shaw par Rogers pour créer un fonds permanent destiné à soutenir la télévision Communautaire indépendante.

2548 Merci beaucoup de nous avoir donné l’occasion de commenter cette procédure.

2549 THE CHAIRPERSON: Merci beaucoup pour les presentations.

2550 Thank you very much for the presentation and thank you for your ongoing and passionate commitment to community television. It's not the first time that I have sat at the front of this room and heard the concerns that some of which you're raising today.

2551 THE CHAIRPERSON: I would like to ask you a little more about the direction of the tangible benefits, if I could.

2552 I certainly understand and appreciate your interest in seeing ongoing funding provided to the broadcast participation fund, and indeed, I think I have spoken publicly and before Parliament about the need to find a model where there is sustainable reliable funding for public interest participation, in not just Commission proceedings, but broadly, and I'm not persuaded that the models we have now on cost awards are ideal or the best.

2553 And as you well know, they only apply -- they're only included in the Telecommunications Act, and albeit there are proposals in prospective broadcasting legislation, it hasn’t been the case today.

2554 That said, you take issue in your submissions with the funding of film festivals. And I believe your statement was, "They're not part of the broadcasting system, and therefore, shouldn't receive the funding."

2555 Can you explain to me why you would say that? I mean, they clearly produce Canadian content, which fulfills -- you know, part of my mantra is always when we talk about Canadian content, we talk about the production, distribution, and discoverability of content. And certainly, film and as I understand it, these ones in particular, attract and provide an opportunity for members of more diverse communities, including Indigenous and racialized producers, with a venue.

2556 So I'm just -- I'm a little -- uncomfortable is perhaps an unfair word -- I would like to hear why you say they shouldn't go there, funding should not go there.

2557 MS. EDWARDS: I think I prefaced -- I don't have the written submission in front of me -- but I think I prefaced my comments with while they may be worthy organizations, we just feel that the broadcasting participation fund, the Commission made a commitment, you know, in 2012 to set it up because it felt that -- and I'm reading between the lines, but this is the wording and the language that -- to balance the power of vertically-integrated entities and so on. We needed to bolster public interest voices before the Commission. And the fund was created, and now it's running dry.

2558 And that same environment is even more intense now. We're seeing, you know, the merger of Rogers and Shaw will create the biggest media entity in Canada.

2559 So we just feel that the conditions that triggered the Commission to create the broadcasting participation fund are even more acute now, and as I said, we have consultants working for us or who have worked from us that are owed in excess of $300,000 right now because the fund hasn’t honoured their claims, even though we filed them to the same level of accountability as we always have done in the past with stakeholders and funds. We never had anyone tell us, you know, there's anything wrong with our claims, but suddenly, whenever the fund is about to run dry, we get these claims discounted. And it's even more of a load on us when we then have to file appeals.

2560 It's extremely time consuming. You can't claim for the appeals. You know, there's two people in our office.

2561 So we just feel that there's a prior commitment to the BPF. We don't have an alternate regime in place. The BPF responds and enables public interest voices to come to hearings like these, so we just feel that those other groups are somewhat secondary and outside the immediate issues before us. Not that they should never find funding, but just that it's extremely important, we think, that you hear public interest voices and that they're adequately resourced to come.

2562 So it's not an either/or. One is -- one has no merit. It's just that we think one is more central in the zone of the issues being looked at in this hearing.

2563 THE CHAIRPERSON: Understood.

2564 And I did preface my remarks saying I've no doubt about the importance.

2565 I think the very fact that the Broadcasting Act does not provide for cost awards even in the manner that the Telecommunications Act does was the principal driver. I wasn't here at the time, but I expect it was the principal driver for the creation of it because we do -- we have, we do, we will always appreciate and want the maximum possible participation in our proceedings and to hear consumer voices.

2566 On that note, though, there are lots of, how shall I put it, laudable targets, if you will, for the funding. You've indicated the BPF. Rogers has proposed others that do perform a role in supporting the broadcasting system.

2567 Are there other ways -- and I'm sincerely and earnestly interested in this from a public policy perspective.

2568 Are there other ways that we can find support for public interest participation besides the BPF?

2569 MS. EDWARDS: Well, for example, just one comment that I think's relevant is there's an awful lot of data. Like those big tables of Rogers and Shaw community channel data are really important.

2570 You know, at preceding hearings we have, you know, engaged consultants to really comb through that data, get good data on the record for the Commissioners to look at regarding whether they really are access or not access.

2571 This time, we just don't -- we're owed so much in back payment, nobody wants to do that work any more, so we're able to make a few kind of superficial comments today and we'll attach the data that we did find to our final comments, but nothing like the kind of in-depth, thorough analysis of the data that we've been able to do in the past.

2572 In terms of other ways to adequately resource public interest groups, so absolutely.

2573 So for example, the Fédération, my colleague online from the Fédération, is directly funded by the provincial government in Quebec, as are the 40-plus community TV independent stations in Quebec compared to the 22 that exist in all the rest of Canada.

2574 So a way to fund CACTUS to do this work would be to set up the kind of community access fund we're asking for. Then we would have memberships flowing from members and then we could do the work. But right now, like our members can't afford to pay us memberships, I mean, you know, 10 bucks here, 10 bucks there. We've never had more than $3,000 in membership in any given year.

2575 So yes, there are, but we don't have access to any of that.

2576 As Patrick mentioned before me, every time we apply to a fund -- like they take what used to be called local expression money and everyone -- and understood it to be expression by individual Canadians -- has now been siphoned off to the independent local news fund.

2577 Our members were told we didn't qualify even though it said, "Oh, it's for conventional broadcasters". And we said, "Well, what's the difference between us and a conventional broadcaster? We hold over-the-air licences. You know, we're not specialty channels".

2578 They said, "No, it was intended for the privates, not you".

2579 Then Rogers asked for flexibility at the last hearing in 2016 to redirect local expression funding to local private news, you know, so how is putting more money into CityTV so they can, you know, extend one single brand across the country constitute local expression? It's not local expression. It's Rogers' expression.

2580 You know, news documenting data about what's going on in the community is not the community expressing itself. It's just a minimum amount of local information to tell people what's going on.

2581 So -- and we think it's a total like twisting of the idea of what local expression was meant to be.

2582 I understand that local news is in crisis and, you know, maybe getting -- taxing Facebook and the rest with the new Broadcasting Act will address that, but in the meantime, actual local expression has been totally left to rot even though there's lots of really great organizations like CHCO that run around selling bingo cards, you know, every Patrick's weekend. The guy's a workaholic to keep that place going.

2583 It was the only place that was giving any COVID-19 updates throughout, you know, the pandemic last year, as he said.

2584 It's the only full-time station in the province. CBC and I think he said Global have occasional, you know, segments that they produce from Halifax.

2585 Well, excuse that rant but, I mean, local expression to us is genuinely communities and citizens expressing themselves. It's not news.

2586 THE CHAIRPERSON: I will characterize it as passion, not a rant.

2587 MS. EDWARDS: Yeah, thanks.

2588 THE CHAIRPERSON: And it's appreciated.

2589 I mean, the answer is somewhat obvious, but I will ask the question. If the value of the transaction is revised by the Commission in the event that it is approved and revised, I was going to ask you to justify why additional benefit monies would be best served by directing them to the Broadcast Participation Fund, but honestly, I think you've clearly explained the importance of it and participation by organizations such as your own in that process.

2590 But maybe I can sort of deflect the question a little bit and ask it in a different way, and I feel challenged in asking this because I do place a very high emphasis on the value of participation by consumer groups and all Canadians in our proceedings.

2591 But when we look at a proceeding such as this and we're talking about how one positively impacts the Canadian broadcasting system, I guess I would just ask you how, on the one hand, participation in something like or funding of the Broadcast Participation Fund balances against other measures that directly contribute to whether it is the creation of content or additional diversity and so on in the system, perhaps, if you will, more traditional broadcast intensive measures.

2592 So how do you balance those things? I find it difficult.

2593 MS. EDWARDS: Are you referring to the proposed tangible benefit recipients that Rogers made?

2594 THE CHAIRPERSON: Well, they have specific proposals, but I'm saying more broadly there could be many, whether they are individual funds or, as they propose, film festivals.

2595 You're aware of the list of eligible activities, and parties do have some discretion in -- have discretion in proposing where they propose to direct those monies.

2596 I'm just asking you how can you help me balance, if you will, why, towards the Broadcast Participation Fund versus other measures that some might argue are more impactful in terms of the production, distribution, discoverability of Canadian content.

2597 MS. EDWARDS: Well, I think that the amount of tangible benefits, the discretionary portion is fairly small. I think that film festivals and events like that, cultural festivals that occur in particular cities often have access to a range of funding, whether it's, you know, local Arts Council funding, provincial funding like the Trillium Foundation, you know, Telefilm, Fundsfilm.

2598 I actually do think they're somewhat peripheral to broadcasting. Like we've been told by Commissioners in hearings, they've said -- you know, we propose, "Oh, we want community access media centres that are multi-media and can include video game production, la, la, la", and we've had Commissioners say to us, "Well, why do you think we should take BDU money, which is generated through cable subscription TV sales, to put it into video game production? It should stay within television".

2599 And it's been quite a narrow definition of where this money should go, so when I look at that list based on the kind of language I've heard from Commissioners in the past, I look at the list and say, "No, it's not directly broadcasting".

2600 Yes, it's content that may ultimately end up on the broadcasting system, but again, I think that, you know, if we've had -- we've set up important funds in the past like the BPF and their need is still there -- they haven't been -- you know, they haven't been sunsetted. There's still a need for them, and the need is increasing. Why would we turn our backs on those initiatives, you know, to jump into a new field which isn't really our bread and butter?

2601 I mean, it's a case-by-case basis, but that's how I would look at that particular list of funds.

2602 THE CHAIRPERSON: That's very helpful. Thank you.

2603 Maybe one more question from me, and I hope I'm not being repetitive, but I just -- I continue to look for a beacon, a lighthouse that will tell me where else funding can come from to support participation -- fulsome participation in Commission proceedings.

2604 Do you have, in your view -- you mentioned films may have access to other forms of funding. The Quebec Government, in its infinite wisdom -- and I say that with all sincerity, perhaps as more activist in this area in their support of cultural initiatives. But do you have any other sources of funding that you could avail yourself of?

2605 MS. EDWARDS: Specifically to do with the intervening

2606 THE CHAIRPERSON: To do with ---

2607 MS. EDWARDS: --- and broadcasting proceedings?

2608 THE CHAIRPERSON: Yeah. Yes.

2609 MS. EDWARDS: So this is an interesting question because of what came up when the Broadcasting Act was being reviewed. There was a thinktank held by the Public Policy Forum, I think ---

2610 THE CHAIRPERSON: Yes.

2611 MS. EDWARDS: --- and they were talking about redefining -- enabling media to be defined as a charity so that they could receive donations.

2612 And so about five years ago, Cactus -- you know, because we were failing miserably at all these hearings, insisting that we should get a part of BDU contributions to local expression, went through and we looked at -- I don’t know, we found some website that had a list of 40 foundations in Canada that not-for-profits could apply for for assistance. And all but two of them, you had to be a charity.

2613 I think one of them was the Trillium Foundation, so we did successfully get a grant from them. There was also a small fund, PIAC. I could tell you what they’re called. I can’t remember now. It was a department within Industry Canada. Anyways, there’s very few sources of funding for non-charities.

2614 So that situation may improve in the future, but it doesn’t pay, you know, the consultants that are owed $300,000 right now. So there’s an urgent need for that right now until the Broadcasting Act, you know, hopefully resolves that problem, as you identified.

2615 THE CHAIRPERSON: Thank you. They’re very earnest responses, and I said you speak -- all of you speak to the issues with great passion and sincerity, and I’m ---

2616 MS. EDWARDS: Could I -- am I allowed to add one more thing.

2617 THE CHAIRPERSON: You certainly may.

2618 MS. EDWARDS: You spoke as most of your questions on the relatively small abound of public, you know, one-time tangible benefit payments. I think it’s important to remember that since BDUs have operated within the Canadian Broadcasting System, initially, their single and only tangible benefit was support of community TV.

2619 And in terms of what’s required to support community media, digital skills training, you know, local content production, all those things that we’ve lost, the BDU contribution to so-called local expression is the single ongoing public tangible benefit that it makes. And I think that that is the bigger, more important question than, you know, the argument around what happens with this $5M.

2620 THE CHAIRPERSON: And your intervention articulates that very clearly.

2621 MS. EDWARDS: Great.

2622 THE CHAIRPERSON: I have no further -- other questions on it, but we’re certainly well aware of it, and it’s part of the record of the proceeding.

2623 MS. EDWARDS: Great. Thanks a lot for your time, and the Jeff and Amélie for your time, too. THE CHAIRPERSON: Thank you. I don’t know if my colleagues have any other questions. No? Then again, I do thank you, and once again, as always, compliment you for your passion about the issue. Thank you, all. Merci beaucoup à vous tous. Bonne journée. Good afternoon.

2624 MS. HINSE: Merci. Au revoir.

2625 THE CHAIRPERSON: Madam Secretary

2626 MS. ROY: Thank you very much. We will now connect with the next intervenor. We will now hear the presentation of the Community Media Advocacy Centre.

2627 Please introduce yourself and your colleagues. And you have 10 minutes for your presentation.

PRESENTATION / PRÉSENTATION

2628 MS. RAHEMTULLAH: Good afternoon, Chairperson Scott, Commissioners Lafontaine, Naidoo,

2629 Desmond, and Anderson, Madame Secretary, and CRTC Staff.

2630 Je m'appelle Omme-Salma Rahemtullah. Je suis une membre fondatrice de CMAC et une membre du conseil d’administration.

2631 DR. ODARTEY-WELLINGTON: I’m Dr. Felix Odartey-Wellington, an associate professor of communication at Cape Breton University, and a policy consultant at CMAC.

2632 MS. RAHEMTULLAH: You’re muted, Laith.

2633 MR. MAROUF: Sorry about that. My name is Laith Marouf, and I am a policy consultant at CMAC. Thankyou for this opportunity to participate in today’s hearing.

2634 DR. ODARTEY-WELLINGTON: We appear virtually before the Commission on issues of employment equity at Rogers/Shaw. We acknowledge Canada’s Settler Colonial origins, built on the unceded territories of Indigenous Nations and Inuit Peoples.

2635 CMAC is here today to highlight questionable financial claims made by Rogers/Shaw, and their failure to deliver on their obligations under the

2636 Broadcasting Act, the Charter, and the Multiculturalism Act to provide access, reflection, and employment to what the Commission refers to as “Diversity Groups.” CMAC uses the term “Protected Groups” to refer to groups granted protections under the law to communication rights they have been denied. This includes women, Indigenous and racialized people, and people with disabilities.

2637 The CRTC is mandated to ensure that Rogers/Shaw comply with Canadian laws, including the Broadcasting Act, the Accessible Canada Act, the Canadian

2638 Multiculturalism Act, and the Employment Equity Act, as well as obligations under international agreements that Canada has signed, including the UN Convention on the Protection and Promotion of the Diversity of Cultural Expressions, the UN Declaration on the Rights of Indigenous Peoples, and the UN Convention on the Rights of Persons with Disabilities.

2639 CMAC has anchored our review of the merger application in obligations outlined in the Broadcasting Act and international agreements to assess consistency with obligations to Protected Groups.

2640 The CRTC, in BNC 2021-124, sought to assess the impact of this merger on, among many things, diversity of voices and local and community programming.

2641 Our presentation focuses on CMAC’s findings concerning questionable financial claims, and inequity in access, employment, and reflection at Rogers/Shaw.

2642 Omme.

2643 MS. RAHEMTULLAH: In the context of reflection and employment at Rogers and Shaw’s Community TV holdings, CMAC reviewed the documents deposited on the record after our procedural letter, and the Commission’s orders requested more information. CMAC was concerned to find that Rogers/Shaw have made questionable claims in their Annual Return Forms that have not been challenged but the CRTC at their filing, nor investigated by the Commission staff.

2644 We would like to briefly remind the Panel today of how we got here. In 2014, after a non-compliance complaint was filed by ICTV-Montreal against Videotron, the Commission ruled the BDU violated its obligations under the Community Television Policy and ordered it to come into compliance.

2645 Unfortunately, the Commission rushed to review the Community Television Policy before more complaints could reveal these problems were widespread within the BDU-run Community Television sector.

2646 Under the new policy, the Commission legalized the practice of BDUs diverting Community TV

2647 funds to finance their corporate television activities, which we’ve heard about, and closed the avenue on

2648 any further complaints by the public against non-compliant BDU-run Community Televisions

2649 The new Community Television policy precluded future Part-1 complaints by the public and put the compliance procedures exclusively in the hands of Commission staff and excluded public complaints from the process.

2650 Consequently, the BDUs had no incentive to stop practices that had motivated the complaints, as will be made evident from the details of our review of the

2651 Annual Return Forms filed on the public record in this proceeding.

2652 MR. MAROUF: Rogers’ Annual Return Forms for 2020, as deposited, claim the following:

2653 A budget of $22 million is dedicated to its 30 Community Television stations after diverting $8M towards its local corporate news productions on CityTV;

2654 Administrative costs are $3M, and depreciation stands at $3M, miraculously equal to the operating surplus;

2655 Direct expenses stand at $14M, while indirect expenses stand at $8M. This means Rogers spends more than one third of the budget on indirect expenses, a rate inconsistent with any viable media production business model in any sector in the world;

2656 Rogers claims to have produced 5,416 hours of licensee-produced programming for $2.9M, an average cost of $537 an hour of content. It also claims to have produced 5,246 hours of community-produced programming for $10.5M, an average cost of $2,006 an hour, almost four times the costs of its professional content. Rogers would have us believe it costs four times more to produce programming with unpaid volunteers;

2657 The form indicates that Rogers neither purchased nor aired TVC-produced content, a claim that conflicts with information it deposited in response to

2658 the Commission's order where it detailed airing 102 TVC programs in the six cities sampled. Rogers also claims producing 128,000 hours of alphanumeric messages for $0;

2659 Rogers claims to have aired 77,474 hours of Access Programming in 2020, or 39 percent of hours on its 30 stations. But the form claims the percentage of

2660 Access Programming it aired was 62 percent;

2661 Finally, Rogers claims to have spent $636,000 on community outreach initiatives, a staggering three percent of the complete budget of 22 million.

2662 DR. ODARTEY-WELLINGTON: Mr. Chairperson and Commissioners, what about Shaw?

2663 Its Annual Return Forms for 2020 claim the following:

2664 a) A budget of approximately $12 million is dedicated to its 40 Community Television stations, after diverting $13 million to Global TV news production; this money will go to CityTV if the merger is approved.

2665 b) Administrative costs are $2.6 million, and depreciation stands at $4 million, miraculously equal to the Operating Surplus.

2666 c) Direct Expenses stand at $4 million, while Indirect Expenses stand at $7 million. This means Shaw spends approximately two thirds of the budget on Indirect Expenses, a rate even more startling than that of Rogers TV.

2667 d) Shaw claims to have produced 2019 hours of Licensee Produced Programming for $1 million, an approximate cost of $474 per hour of content. It also claims to have produced 1853 hours of Community Produced Programming for $1.6 million, an average cost of $861 per hour, almost 2 times the cost of its professional content.

2668 e) The form indicates that Shaw neither purchased nor aired TVC produced content; but it purchased and aired 3,612.7 hours of content from other BDUs at a cost of $1.3 million, an average of $379 per hour.

2669 f) Shaw also claims it produced five minutes of Alphanumeric messages, at a cost of $24,000. More alarming, is Shaw’s claim that it produced 103 hrs of PSAs, i.e. Public Service Announcements, for NGOs, politicians and government agencies most of whom pre-produce their own content at a cost of $258,000, meaning it spent $2,505 per hour to produce PSAs.

2670 g) Shaw claims to have aired 128,347 hours of Access Programming in 2020, or approximately 36.58 percent of its schedule, meaning it missed its obligations under the Policy to air at least 60 percent Access Programming.

2671 And finally,

2672 h) Shaw claimed $0 as costs for its Community Outreach, unlike Rogers which claimed over $600,000.

2673 Omme?

2674 MS. RAHEMTULLAH: Now let’s turn to employment for protected groups at Rogers.

2675 Reviewing the evidence deposited reveals the following:

2676 a) Rogers TV employs 116 people, and only 30 of them are women; that’s 26 percent. Interestingly, of the 30 women employed, only one is of a racialized background, and none are Indigenous.

2677 b) Over all in employment, seven employees are racialized, two are Indigenous, six are living with a

2678 disability, and three identified as LGBTQ2+, meaning, a staggering 84.5 percent of Rogers TV employees are white, able bodied and cis-gendered.

2679 Reviewing the evidence deposited by Shaw for employment numbers reveals the following:

2680 a) Shaw employs 63 people, and only 22 of them are women or 26 percent. Given that Shaw did not provide information on the gender breakdown for other protected groups, it would be safe to say only one to five of these women are not white, able-bodied and Cis.

2681 b) Overall, in employment at Shaw, four employees are racialized, one are Indigenous, one are living with a disability, and none identified as LGBTQ2+, meaning that 90.5 percent of Shaw TV employees are white, able-bodied and cis gendered.

2682 MR. MAROUF: In regards to reflection in programming Rogers TV’s inability to provide equitable employment to protected groups also translates to failures in providing reflective programming for these communities. This becomes evident when investigating programming information deposited by Rogers for the six sample stations, including the following:

2683 a) Of the 2,829 programs cited by Rogers, only four served disability communities, or less than 0.14 percent of all programming, all concentrated in one station in St. John’s, Newfoundland.

2684 b) Indigenous communities didn’t fare much better with only five programs concentrated in three stations, or less than 0.18 percent of all programming.

2685 c) Racialized communities benefited from 144 programs, or five percent of all programming, with two stations void of any reflection for them.

2686 d) LGBTQ2+ communities had 21 segments representing them, or 0.74 percent of all programming.

2687 e) Finally, women had 682 programs aired across the six stations, or 24 percent of all programming.

2688 Taking Rogers’ claims at face value, their numbers paint a very bleak reality for equity in programming reflection. This picture becomes even bleaker when investigating Rogers’ claims on key leadership positions and roles held by protected groups, which allow it to claim the above equity programming numbers. CRTC policy in regards to Access Programming requires that a volunteer community member must have requested access and pitched the program idea, and should hold editorial control during the production of the content, for it to count as Access Programming.

2689 Of the 503 shows cited by Rogers as servicing protected groups and qualifying as Access Programming, only 20 had any claim to an Access Request, and only 30 were declared as having community volunteer editorial control. Thus only 50 programs of the 503 shows cited actually qualify to be Access Programming label, contradicting Rogers’ claims to its Access Programming percentages, and revealing them to be yet another misrepresentation.

2690 Finally, we would like to point out to the Commission, that according to Rogers, zero members of protected groups were given the role of Director, Editor or Writer on any of the programs that aired on the six Community stations sampled.

2691 Felix?

2692 DR. ODARTEY-WELLINGTON: Mr. Chairperson and Commissioners, in conclusion, CMAC states for the record that both Rogers and Shaw made questionable financial claims, have not met their obligations to subscribers in terms of their contractual rights to a community television station compliant with the Community Television Policy, and also failed to meet their obligations to the public and the Commission in terms of funds earmarked for the operations of a compliant community television service. These failings are systemic as are evident from the Annual Return Forms deposited for the two years 2019 and 2020.

2693 Accordingly, CMAC respectfully recommends that the Commission consider fining Rogers and Shaw an amount equivalent to at least one year of their community television contributions, or $22 million and $11 million respectively.

2694 CMAC also respectfully recommends that the Commission consider obligating Rogers and Shaw to direct these fines to the Broadcast Participation Fund that supports interventions by public interest groups like this one, without which problems such as what we have detailed above would not be exposed.

2695 Additionally, CMAC respectfully recommends that the Commission consider mandating Rogers and Shaw to come into compliance with their community television obligations in regards to the rights of protected groups to Employment, Access and Reflection no later than a year from its decision on this BNC, or withdraw their authorization to provide a community TV service.

2696 Thank you for listening to our presentation, and we welcome your questions. Merci.

2697 THE CHAIRPERSON: Thank you. Thank you very much for your presentation and your participation in our proceeding.

2698 I will hand the microphone to Commissioner Naidoo.

2699 COMMISSIONER NAIDOO: Yes, thank you very much for your presentation. Can you hear me?

2700 MS. RAHEMTULLAH: Yes.

2701 COMMISSIONER NAIDOO: Okay, perfect. Thank you.

2702 You recommend that Rogers be required by the Commission to pay at least 15 percent of the value of the interests being acquired in tangible benefits. Can you please elaborate for us how you came to this percentage and why this is a percentage that is commensurate with the level of impact of this consolidation?

2703 The video appears -- can you hear me? Hello?

2704 THE CHAIRPERSON: I think your ---

2705 MR. MAROUF: Can you hear me?

2706 COMMISSIONER NAIDOO: I think -- Mr. Marouf, I think maybe -- because the video is frozen so maybe you should turn off your camera.

2707 THE CHAIRPERSON: Can you hear us?

2708 MR. MAROUF: Okay, I stopped the video. Is it -- can you hear me?

2709 COMMISSIONER NAIDOO: Yes.

2710 THE CHAIRPERSON: Yes, that is better. Thank you, Mr. Marouf.

2711 MR. MAROUF: Okay. I’m really sorry. We lost electricity here in Beirut, Lebanon, and also it is 1:30 a.m.

2712 So the answer to your question -- if you look at the transaction beyond the fact that -- Number one, transfer (audio skip). I mean, I was going to the Corus station's Global Television to its City Television (audio skip) which is part of the -- is diverting part of the community television contribution to, it will mean that Citytv will (audio skip) a subsidy of sorry, $21 million. So 30 millions (audio skip).

2713 THE CHAIRPERSON: Mr. Marouf, I apologize.

2714 MR. MAROUF: Citytv, that will mean a budget of (audio skip).

2715 THE CHAIRPERSON: Mr. Marouf, I apologize for interrupting. You are, unfortunately, clipping in and out, and we need to be able to transcribe your answer.

2716 Would it be possible for one of your colleagues to respond to the question? I'm -- we just, unfortunately, cannot hear you clearly.

2717 MS. MAHEUX: Mr. Chairman, if anybody else is able to answer, we may send them an RFI.

2718 MR. SALMA RAHEMTULLAH: Yes.

2719 THE CHAIRPERSON: Sorry, if I may, before you continue, I also should offer you a different option too. Given the circumstances, we can also send you the question that was just asked in the form of a Request for Information and you could file a written response to the question or questions. If they are more appropriately answered by Mr. Marouf, then we could do that by the November 29^th date when we accept undertakings. But that would just be another vehicle if Mr. Marouf is the best person to respond to the questions. I'm happy to proceed either way.

2720 MR. SALMA RAHEMTULLAH: Thank you very much, Mr. Chairperson. And then we will take the option of filing a written response since this requires some amount of financial detail. So that would be a better option for us. Thank you.

2721 THE CHAIRPERSON: I'll just turn to Commission Counsel to ask.

2722 So shall we simply formulate the questions that we were going to ask orally in the form of an RFI, Counsel?

2723 MS. MAHEUX: Yeah, absolutely. And the RFI will be part of the public record.

2724 THE CHAIRPERSON: And the RFI would -- if you couldn't hear that -- would be part of the public record, and obviously, the response.

2725 Commissioner Naidoo, are there other questions that might go to other members?

2726 COMMISSIONER NAIDOO: I think the last question I can ask, I'll leave the sort of the monetary questions for the RFI.

2727 There is a question. You can let me know whether you're able to answer this one, and if not, we can also send it to you and you can respond by RFI as well.

2728 In your intervention, you commented on the lack of information about current programming on community channels. Additional information from Rogers and Shaw has been added on the record of this proceeding regarding diversity of content aired on their community channels, as well as employment data related to the operation of their community channels.

2729 With respect to the additional information filed by Rogers and Shaw, following your procedural request, which information is related to diversity of content aired on their community channels, as well as employment data, do you, CMAC, have any comments to provide in relation to that information?

2730 MR. MAROUF: I'm wondering if my audio is working now?

2731 THE CHAIRPERSON: It is working, but it worked part of the time previously. We can try, Mr. Marouf, if you would like and go a little further. And if it starts to clip out, then I'll try and indicate that’s the case.

2732 MR. MAROUF: Okay. So the numbers that we gave you in the presentation are very clear. Rogers Television and Shaw, both of their community services are failing miserably in delivering any reflection and/or employment for protected groups. The numbers are very startling.

2733 And we were surprised today earlier in the day when the Commission made its ruling that it will not be ordering Rogers and Shaw to release any employment equity numbers for their other media holdings, as we noticed that the hearing yesterday and today, a big part of it was dedicated to the issues of Global Television and Citytv, and both of those, the change in ownership and the change of money direction going to Citytv requires us to, as CMAC, representing all these protected groups, to understand how this change in money and programming will affect employment and reflection for these protected groups that we're here to represent.

2734 And there's no way for us, at CMAC, to comment on that if we do not have the employment equity numbers. So that’s one thing.

2735 The other is that it was clear from the proceedings of this hearing that the Commission felt that CPAC also is important to be heard, and that’s a big issue, the change of ownership with it. And here we are again, CMAC, unable to comment on what will this mean? Is CPAC delivering on its obligations to employment and reflection for protected groups, or is it not? Those are now questions that are on the table, and we have no answer for them because the Commission made this ruling today.

2736 So maybe we can understand why the Commission, that’s something that, you know, I'm asking back at you to understand how the Commission came to the decision that the equity employment numbers for these holdings are not going to be provided when such amount of time was dedicated to these two stations, Citytv and CPAC?

2737 The other thing is that when we are talking about reflection and employment for protected groups, we know right now at the end of this proceeding, if goes through, if the CRTC approves this purchase, that Rogers Television will be holding three national networks, television networks, that are almost wholly subsidized by the public and the subscriptions.

2738 And that means we're talking about Citytv, which will be receiving another 13 million from the Shaw contribution with a budget of subsidized $21 million; Rogers Television, which will continue to be subsidized with $25 million; and OMNI TV with another $15 million from mandatory carrier fees, meaning Rogers will have three national networks subsidized by $61 million.

2739 I don't think the effects of this on equity and reflection and employment have been addressed. And we cannot address them if those equity numbers are not on the table.

2740 THE CHAIRPERSON: Thank you, Mr. Marouf. Your comments are recorded for and part of the record of the proceeding.

2741 The reasons for the Commission's determination were stated earlier today and in the earlier procedural ruling, and they are self-explanatory. And I have no further comment, but I do appreciate the concern you raise.

2742 And as I said, your comments are heard and recorded and part of the record of the proceeding.

2743 COMMISSIONER NAIDOO: Do we want to continue with the questions or -- okay. So I'm going to go back to the questions that we were unable to answer that we were thinking we would have you provide by RFI. But it seems like your microphone is working, so I'm just going to go back and we will see. Hopefully, we will be able to get the answers here on the record.

2744 I'll repeat the question, the first question that I asked you earlier.

2745 You recommend that Rogers be required by the Commission to pay at least 15 percent of the value of the interests being acquired in tangible benefits.

2746 Please elaborate on how you came to that percentage and why that percentage is commensurate with the level of impact of this consolidation?

2747 MR. MAROUF: Yes. Partially, looking at the amount of money that Rogers will be able to play in these subsidies that we just pointed out, the $61 million in subsidies that will come to its multiple national networks, this is -- shows that actually, the gains that Rogers will be, you know, having because of this transaction, are beyond what is visible to the -- without, you know, detailed investigation, Rogers will be put in a position that nobody else will be able to compete with in terms of having these three networks that are subsidised that are national wall-to‑wall.

2748 And they -- you know, looking at how much money already Rogers was siphoning off community television through its, you know, claims that we showed in our presentation are questionable, if not harsher, we can say something harsher, like questionable, you know, this will be a way to increase the possibility of funds that could be directed to other avenues other than the festivals that were, you know, pointed out by Rogers as what they will spend their discretionary funds on.

2749 But you know, looking at the fact -- you know, our intervention was there before we received the disclosures that the CRTC ordered, and as you can see from our presentation, we believe right now that there is another avenue, which is the fine against Rogers and Shaw, similar to the fine that Bell received in CRTC 2020‑356 when it was found to have mismanaged the community television funding and mislabelled its programming to get away with mismanagement.

2750 And so if we -- if Rogers and Shaw are fined, which they should be, for these failures to abide by their obligations, then there will be much more funds available for the CRTC to direct towards the BPF, and there will be no need to increase the tangible benefits, you know, from 10‑percent to 15‑percent. This fine could, as we pointed out, we would like it to go to the BPF, which will stabilise its funding for the foreseeable future until any changes in the Broadcasting Act. You know, if the CRTC decides that not -- you know, not all this money will go to the BPF, there will still be enough to distribute on other possibilities, as our colleagues before us were talking about, some funding for community -- independent community television, non‑profits, that it will be available too.

2751 COMMISSIONER NAIDOO: Thank you for that. Should the value of the transaction be increased by the Commission, do you think that an increased percentage of 15‑percent would still be appropriate?

2752 MR. MAROUF: Yes, it will be still appropriate because of how much benefit Shaw -- Rogers will have from this transaction. We heard earlier today all the independent broadcasters talking about, you know, the negotiation power that Rogers will have. We also heard from the community TV stations and their representatives about the problems negotiating to get on air with Rogers, to get on their cable packages. So a increase in the tangible benefits would be a great thing, and the CRTC, as it heard for the last two days, it will hear more over the week, many groups are -- and sectors in --- that are dealing with broadcasting are reeling from the cutbacks.

2753 COMMISSIONER NAIDOO: I am going to discuss BPF in a -- in a moment. I just wanted to ask a question before I get to that.

2754 Should the value of the transaction be increased by the Commission, can you tell me what you think would be an acceptable distribution of tangible benefits?

2755 MR. MAROUF: Well, definitely the BPF should be a priority. I know we're going to talk about it more. None of the interventions by the public interest groups that you will see over the week would be possible without BPF funding. In fact, you know, the -- you know, the way Rogers decided not to fund the BPF in its proposal feels vindictive because of the -- you know, they would like it that all these public interest groups stop harassing them at the CRTC with information that is detailed and investigating their claims.

2756 If the BPF wasn't funding CMAC's presentation today, we wouldn't be able to have highlighted the financial mismanagement and, you know, the questionable claims that are there, and this would have flown under the radar. So it feels vindictive that Rogers is deciding it doesn't want to fund the BPF; and therefore, it is the place of the CRTC to step in and to make sure that the BPF is funded.

2757 COMMISSIONER NAIDOO: I'd like to give you the opportunity to explain how allocating funds to the BPF would positively impact the Canadian Broadcasting System.

2758 MR. MAROUF: Yes. Look, CMAC is a unique organisation. We are the only one in the country presenting at the CRTC on the issues of equity in employment, reflection, and access for the protected groups. And you know, if we -- if the BPF wasn't there we wouldn't be able to make this presentation.

2759 And if you look at the history of CMAC's interventions over the last six, seven years, you will see that without CMAC's presence in these hearings there will none discussing these issues and/or presenting the research and the academic work that details the rights of these groups and remedies to help these groups achieve their rights to access, reflection, and employment in the broadcasting sectors.

2760 So the BPF, for us at least, and the communities we serviced, it's very clear is crucial, and without its funding of our activities we wouldn't be here today. And I presume it is the same for almost all the other public interest advocacy groups.

2761 COMMISSIONER NAIDOO: All right. My final question to you is why are the proposals made by Rogers with respect to its tangible benefits package unacceptable to you in your view?

2762 MR. MAROUF: Well look, if you noticed the way that Rogers chose all these festivals, it felt like that it's trying to get as many people to come to the hearing to support its proposals in general, and therefore, it feels like almost a bribe. And you know, that's -- it's one thing to genuinely want to fund all these activities of festivals happening across the country, it's another to only do it under the condition that the CRTC approves its, you know, requests here for a merger.

2763 So it's -- you know, it's a carrot hanging in front of these small organisations, small festivals that this money, you know, is crucial to, and it's only available to them if Rogers gets what it wants. And so you know, while we are not advocating that this -- you know, these festivals shouldn't get their money or get some money, we are advocating that the CRTC finds ways to make sure that the other groups and avenues in the broadcasting sector are also funded through these tangible benefits.

2764 COMMISSIONER NAIDOO: I have no further questions. Thank you very much.

2765 THE CHAIRPERSON: Commissioner Anderson?

2766 COMMISSIONER ANDERSON: Thank you, and thank you for your submissions, and thank you for answering our questions today.

2767 You've referred a lot to employment equity and the submissions you make about employment equity. And I just want to point out that we do have a provision under the Broadcasting Act that says that we don't have jurisdiction to supervise matters that relate to employment equity under the Employment Equity Act, but there are some provisions under the Broadcast Policy that's found at section 3 of the Broadcasting Act that discusses some, I guess, cultural objectives relating to programming.

2768 And so I was wondering, can you just comment on the appropriateness that we do look at or consider employment equity when we're prohibited under one section of the Act in light of the fact that there are other provisions that would indicate that we have to ensure that the broadcasting system serves, enriches, and strengthens the cultural, political, and social and economic fabric of Canada?

MR. MAROUF: Well, it’s very clear that the CRTC doesn’t have power to regulate employment equity. That is in the hands of the Human Rights Commission. But the CRTC is clear from the Act, it needs to review this employment equity in order to reach the reflection.

We know very clearly that there will be no reflection in programming if, in the case, as we see today, Rogers appeared at the hearing with an all-White panel. And if you look at their board of directors, it’s an all-White board of directors, save for one member of the board. And their senior management at the Rogers Media is actually wall-to-wall White, with only four White women out of the 12-board executive of the Rogers Media.

So what does that mean to us? That means that the decisions in the hands of these individuals will definitely effect the kind of programming that we see airing on Rogers Media’s holdings, and therefore, it gives us an indication.

So today, and over the last -- you know, over this process, when we’re interviewing and asking for the employment numbers, we’re not asking for them so we can -- so the CRTC can regulate. Definitely, that is in the hands of the Human Rights Commission.

But this is to give us an indication of where is this corporation going, and how -- what do we expect from it, you know. So these are all just indicators, and it would have been helpful to have this, especially given that we don’t have actual numbers for the programming on CityTV or on CPAC in terms of the reflection of the programming, and that wasn’t either handed over to us. So we don’t either -- neither have the employment, nor the reflection numbers, and therefore we’re handicapped in our presentation here.

COMMISSIONER ANDERSON: Thank you for that clarification. I really appreciate it.

And I hear what you’re saying about the senior management panel maybe not being very diverse. I do note, for instance, that yesterday, Mr. Bruno, I believe, on behalf of Rogers stated -- or he pointed out that as somebody that’s non-Indigenous, he’s not qualified to do an authentic Indigenous program, no more than he is if he was Black. So he’s acknowledging that there potentially is a linkage between diversity and programming.

So in light of the fact -- and I hear what you’re saying about not having all of the information about employment equity but, just generally, do you have any suggestions to Rogers how they could ensure that the proposed transaction would be in the best interests of all Canadians and potentially reflect Canada’s multiculturalism just generally, whether it’s hiring practices or other suggestions?

MR. MAROUF: MR. MAROUF: Yes. I mean, it’s clear that if you compare to the hearing of the CBC that we had just a few months ago -- or now more than a few months ago -- the CBC was questioned on the fact that it’s senior management; it’s the editorial boards; it’s the -- are not reflective of the Canadian society.

And, you know, while we understand that Rogers is a private corporation, and its board of directors will, you know, only reflect the shareholders, it’s problematic when that also carries on to the staffing.

So, you know, maybe we can understand that it’s an all-White board of directors for Rogers Communications, because that’s the owners. But if we look at the management of the Rogers Media, and according to their own Website, there’s no one person of colour, not Indigenous persons there. So that’s something that the CRTC can nudge Rogers towards, you know, and maybe this shaming will help them do that.

COMMISSIONER ANDERSON: Respectfully, Mr. Marouf, thank you for your response, but I do want to point out that there is evidence on the record that Rogers has been praised as a leader in diversity, and so I hope that some of the comments you’ve made will be welcomed by the corporation as they are one of the leaders in diversity. So I do want to just clarify that, or comment on that last comment. Thank you very much for your responses.

THE CHAIRPERSON: Thank you. I have one final question. And I appreciate Commissioner Anderson probing a little on the last subject. I’d like -- I’m not sure if you heard the previous intervenor before us on Community Television and our discussion about the funding of consumer participation.

I just wonder if I could ask any or all of you a similar question, which is, the Broadcast Participation Fund was created by the Commission to attempt to address a lack of a similar mechanism such as that exists under the Telecommunications Act, and I think, Mr. Marouf, you referenced that in previous proposed broadcast legislation -- and a discussion about policy direction, there was also some discussion about that.

I just wonder if you can answer that question that I posed to the previous intervenor, which is, can you tell me what would be a better mousetrap? Is there a better model for the funding of public interest participation before the Commission or other regulators that wouldn’t just be a cost-recovery model, but rather one that provided for sustainable funding?

I don’t know if you’ve given to thought to that or if you, in fact, would prefer to do it by undertaking but I would appreciate any thought you had about a more sustainable model to support important intervention such as your own.

MR. MAROUF: Yes. A few years ago there was the open discussion with the CRTC in regards to the future of Canadian programming. And we put in a proposal co-signed with many Indigenous distribution undertakings and radio stations.

We can re-deposit it on the record here.

At the time we proposed as if when the broadcasting app is re-written that there should be a clear percentage of the profits of BDUs going to participation of the public. So as we have right now, two percent -- five percent going to the Canadian Media Fund that maybe a fraction of that will be dedicated solely to the participation at the CRTC. And this therefore we can have a permanent funding for public interest groups where they don’t have to come file by file to apply.

So if these public interest groups are subsidized through this permanent funding, it means that actually it will bring down the costs for the CRT and the part, you know -- the current funding mechanisms go file by file and a lot of times these files -- because the public interest groups are not able to hire permanent staff because their funding is so precarious, it means our consultants are, you know, billing at external consultant fees.

Therefore, the costs that come to the BPF are higher than they should be, if there is permanent funding to the groups that are working in public interest.

So we can deposit that proposals that were handed to the CRTC a few years ago again for you to take a look at it. But ultimately none of those will solve the immediate problem at hand. All of that requires rewriting the Broadcasting Act. All of that requires new policies and we are at a very very dangerous moment for the BPF. Even our participation today is only subsidized 75 percent to the dollar -- 75 cents to the dollar for our applications for funding.

2769 THE CHAIRPERSON: I understand, and I do appreciate that. You need not file it if it relates to legislative change. Obviously, that while I -- I shouldn’t even say I support. It is up to the Parliament of Canada and the Minister of Heritage to deal with broadcast legislation; it’s not our jurisdiction. It’s helpful to hear your views, and I’m glad you were able to participate in this proceeding.

2770 So we have no further questions for the group today but I do, once again, want to thank you for taking the time.

2771 In your case, Mr. Marouf, thank you for staying up so late and bearing with us with the connection that got better as we went along.

2772 So much appreciated to all of you for your commitment and your participation in the process.

2773 Thank you, and I bid you good afternoon, or in your case, Mr. Marouf, good night.

2774 MR. MAROUF: Have a nice night.

2775 MS. OMME-SALMA RAHEMTULLAH: Good night now.

2776 THE CHAIRPERSON: Madam Secretary?

2777 MS. ROY: Yes, thank you.

2778 So we will just like to announce that we will hear TLN/Ethnic Channels Group presentation tomorrow morning, and we will start the hearing at 10:30 tomorrow morning instead of 11:00.

2779 Demain matin nous commencerons l’audience à 10h30 et nous entendrons la présentation de TLN/Ethnic Channels Group.

2780 Merci, bonsoir.

--- Upon adjourning at 7:00 p.m.

--- l’audience est suspendue à 19h00

Court Reporters

Dale Waterman

Sean Prouse

Mathieu Philippe

Nadia Rainville

Nancy Ewing

Julie Lussier

Krista Campbell

Kathy Poirier