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TRANSCRIPT OF PROCEEDINGS FOR THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION TRANSCRIPTION DES AUDIENCES DU CONSEIL DE LA RADIODIFFUSION ET DES TÉLÉCOMMUNICATIONS CANADIENNES SUBJECT / SUJET: PUBLIC HEARING EXAMINING NEW MEDIA / AUDIENCE PUBLIQUE SUR LES NOUVEAUX MÉDIAS HELD AT: TENUE À: Place du Portage Place du Portage Conference Centre Centre de conférences Outaouais Room Salle Outaouais Hull, Quebec Hull (Québec) December 4, 1998 Le 4 décembre 1998 Volume 10 tel: 613-521-0703 StenoTran fax: 613-521-7668 Transcripts In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents. However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing. Transcription Afin de rencontrer les exigences de la Loi sur les langues officielles, les procès-verbaux pour le Conseil seront bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience publique ainsi que la table des matières. Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est enregistrée et transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience publique. tel: 613-521-0703 StenoTran fax: 613-521-7668 Canadian Radio-television and Telecommunications Commission Conseil de la radiodiffusion et des télécommunications canadiennes Transcript / Transcription Public Hearing / Audience publique New Media / Nouveaux médias BEFORE / DEVANT: David Colville Chairperson / Président Vice-Chairperson, Telecommunications / Vice-président, Télécommunications Françoise Bertrand Chairperson of the Commission / Présidente du Conseil Martha Wilson Commissioner / Conseillère Cindy Grauer Commissioner / Conseillère Joan Pennefather Commissioner / Conseillère David McKendry Commissioner / Conseiller ALSO PRESENT / AUSSI PRÉSENTS: Carolyn Pinsky / Commission Counsel / Karen Moore Avocates du Conseil Ted Woodhead Hearing Manager / Gérant de l'audience Daphne Fry Manager of Convergence Policy / Responsable de la politique sur la convergence Diane Santerre / Secretaries / Secrétaires Carol Bénard HELD AT: TENUE À: Place du Portage Place du Portage Conference Centre Centre de conférences Outaouais Room Salle Outaouais Hull, Quebec Hull (Québec) December 4, 1998 Le 4 décembre 1998 Volume 10 tel: 613-521-0703 StenoTran fax: 613-521-7668 ii TABLE OF CONTENTS / TABLE DES MATIÈRES PAGE Presentation by / Présentation par: Friends of Canadian Broadcasting 2569 Core Curriculum Group 2599 Canadian Conference of the Arts/ 2641 La conference canadienne des arts Canadian Film Centre 2672 Canadian Independent Film Caucus 2699 Communications and Diversity Network 2733 Bell Satellite Services Inc. 2771 Ms Leslie Regan Shade 2831 tel: 613-521-0703 StenoTran fax: 613-521-7668 2569 1 Hull, Quebec / Hull (Québec) 2 --- Upon resuming on Friday, November 4, 1998, 3 at 0900 / L'audience reprend le vendredi, 4 4 décembre 1998, à 0900 5 11106 THE CHAIRPERSON: Good morning, 6 ladies and gentlemen. 7 11107 We will return to our proceeding now 8 looking at the issues related to new media and the 9 Internet. 10 11108 Madam Secretary, our first party for 11 the day. 12 11109 MS BéNARD: Thank you, Mr. Chairman. 13 11110 The first presentation will be 14 Friends of Canadian Broadcasting, Mr. Ian Morrison. 15 11111 THE CHAIRPERSON: Good morning, Mr. 16 Morrison. 17 PRESENTATION / PRÉSENTATION 18 11112 MR. MORRISON: Mr. Vice-Chair, thank 19 you, and members of the Commission. Thanks for the 20 opportunity to appear. 21 11113 We are here to applaud this 22 initiative, the first that this Commission has 23 undertaken on the issue of convergence in digital 24 technologies. 25 11114 The parameters you have set are not a StenoTran 2570 1 road map to regulation. Rather, they are an important 2 first effort at charting the issues, determining where 3 stakeholders and the interested public stand and 4 avoiding the mistakes of regulators in other 5 jurisdictions. We regret that these laudable 6 initiatives have been misconstrued by some intervenors 7 and commentators. 8 11115 We see this hearing process as an 9 important learning opportunity for the Commission, for 10 intervenors, for other governmental bodies in this 11 country and abroad and for the Canadian public. 12 11116 The record of your discussion with 13 interested parties over two weeks should be considered 14 a state-of-the-art textbook for students of new media. 15 This will add still more traffic to your Web site. 16 11117 Based on data compiled by the OECD 17 for the period December 197 to June 1998, almost one in 18 every 12 Internet users the world over resides in this 19 country. Canadians are 50 per cent more likely than 20 Americans to use the Internet, three times as likely 21 than Japanese or U.K. residents and four times as 22 likely as Germans. 23 11118 The issue for Friends is the impact 24 of the convergence of new media and television. The 25 cultural and industrial goals that underlie Canadian StenoTran 2571 1 broadcasting were framed with television in mind. As 2 new media carry increasing amounts of entertainment 3 programming, Friends' concern is to ensure that these 4 important policy goals are sustained. 5 11119 How or whether the Commission chooses 6 to define new media will be an important outcome of 7 these hearings. The Commission observed in its call 8 for comments that the term is likely to be defined in 9 different ways. 10 11120 Friends notes a range of options 11 before you: the Internet in its current, largely text 12 and graphics form; a future high-bandwidth Internet 13 rich in audio/video; multimedia distributed by private 14 networks; digital television and digital audio, and a 15 complete migration of television to the Internet. 16 11121 Friends urges the adoption of an 17 expansive and forward-looking definition that can 18 accommodate future technological developments. 19 Regulating new media mat by premature, but so too would 20 be inadvertently ruling out such regulation. 21 11122 Friends also supports the 22 recommendation of Netstar Communications that initially 23 at least broadcasting should include all new media 24 intended for reception by the general public. Certain 25 kinds of interactive and bi-directional services that StenoTran 2572 1 are integrated with television programs might also be 2 included. 3 11123 Numerous intervenors advocate a more 4 narrow definition on the logic that new media content 5 will be non-scheduled and on-demand. Scheduling or 6 simultaneity are not required elements of broadcasting. 7 11124 Problems of definition obscure the 8 more important issue of classification. In its 9 submission, Call-Net Enterprises suggested three 10 categories into which new media services might fall: 11 telecom-analogous services, e-mail, telephony, things 12 of that nature; interactive services, 13 information-oriented Web sites for example and 14 broadcast-analogous services. The latter, of course, 15 is what is of great interest to us. 16 11125 Without underestimating the 17 challenges posed by the first two, Friends expects most 18 controversy to arise from the third. The exhibition of 19 exclusive content through new media in a manner similar 20 to its exhibition on television raises substantial 21 regulatory questions both about new media and 22 traditional television. 23 11126 Friends broadly concurs with the 24 majority of industry stakeholders in their opposition 25 to applying traditional broadcast regulations to new StenoTran 2573 1 media. These intervenors are persuasive in their claim 2 that regulation may discourage growth, disadvantage 3 canadian companies vis-à-vis international competitors 4 and drive content producers and aggregators to other 5 jurisdictions. 6 11127 Monitoring would be costly and 7 difficult and with unlimited shelf space, Canadian 8 content in theory should thrive in a competitive 9 environment. 10 11128 Yet the majority of 11 broadcast-analogous content is likely to originate from 12 within the regulated industry. We noted with great 13 interest Mr. Grant's comments yesterday about the 14 copyright as a magnetic field in which this would 15 operate. 16 11129 The Specialty and Premium Television 17 Association has noted that many broadcasters have taken 18 advantage of new media as a cross-promotion and 19 branding tool to attract audience. 20 11130 Increasingly, broadcasters' Web sites 21 offer integrated content such as interactive 22 programming, interactive program guides, discussion 23 forums and electronic commerce. The trend has 24 progressed much further in the Untied States where 25 vertically integrated broadcasters have an enormous StenoTran 2574 1 Internet presence. 2 11131 We congratulate the CBC and a 3 substantial number of specialty channels for their 4 innovative use of Web sites as complements to their 5 broadcast services. These have provided some excellent 6 Canadian content on the Internet. We also note with 7 dismay the failure of Canwest Global or CTV to act on 8 this opportunity. 9 11132 Although full convergence may 10 eventually happen, Friends suggest that the Commission 11 not hold its breath for the technology that will make 12 it possible. We are still waiting for digital 13 television. 14 11133 I passed up a Wall Street Journal 15 from yesterday showing the likely penetration of 16 digital television in the United States to the year 17 2005. 18 11134 Moreover, according to the Specialty 19 and Premium Television Association, no working model 20 yet exists to produce cost recovery, let alone profit 21 from new media. 22 11135 It is questionable, regardless of 23 what is technologically possible, whether viewers will 24 want to be entertained on the same screen that they use 25 to download information on stock prices or the weather, StenoTran 2575 1 or compose e-mail on a television set for that matter. 2 11136 For now, the advent of new media 3 presents traditional broadcasters with unprecedented 4 opportunities to capitalize on technological change, 5 perhaps even to lead it. Yet several intervenors, 6 notably the Canadian Association of Broadcasters, 7 express substantial concerns about new media. They 8 fear losing audience to it and they fear competition 9 from unregulated Internet broadcasters. 10 11137 To the extent that CAB's expressed 11 fears are genuine, the threats they outline are far off 12 if just about all the experts, and we are not among 13 those, appearing before you are to be believed. 14 11138 Notwithstanding these trends, CAB 15 would have us believe that its members stand to face 16 fierce competition from unregulated Internet 17 broadcasters. It argues that its members cannot 18 continue to meet a heavy regulatory burden if this 19 competition is unregulated. 20 11139 In the recently concluded television 21 policy hearings, CAB called for reduced regulation. It 22 now tells the Commission prepare one day to eliminate 23 regulation entirely or jeopardize the survival of the 24 Canadian broadcasting industry. 25 11140 Friends strenuously opposes any StenoTran 2576 1 diminution of existing regulation on traditional 2 broadcasters, now or in the foreseeable future. 3 Somebody once said what is foreseeable future? It's 4 when the Income Tax Act is repealed and you hold your 5 breath ten years. 6 11141 We are supported in our contention in 7 this position by several industry intervenors, 8 including IBM Canada, whose December 1996 discussion 9 paper on convergence explicitly recommended maintaining 10 and preserving the regulatory framework in recognition 11 of the role traditional broadcasting continues to play 12 in furthering cultural policy. 13 11142 Regarding the regulating of new 14 media, we share the view that any regulation of new 15 media must be structured differently from traditional 16 regulation. We suggest the following principles as 17 points of departure, and only points of departure. 18 11143 Viewer access. If and when 19 significant broadcasting content moves to the Intenet, 20 the Commission should facilitate inexpensive access, 21 especially in remote and rural Canada. 22 11144 We believe that limited public 23 infrastructure funding should focus on access. We note 24 that the industry has already achieved substantial 25 infrastructure progress without public funding. StenoTran 2577 1 11145 Content production. Friends believes 2 increasing content production is the best way to ensure 3 a Canadian presence in new media, keeping in mind the 4 need for a balance between content and infrastructure 5 development. 6 11146 We support the idea of a new media 7 production fund, but in agreement with the Directors 8 Guild and others, do not wish to see money diverted 9 from existing funds. 10 11147 We also oppose a blanket tax on 11 Internet providers, many of which remain text based and 12 information oriented. Telefilm Canada has identified 13 preferable funding sources: extending the Canadian 14 Film & Video Production Tax Credit to include new media 15 and using the significant benefits test to raise new 16 funds. We also believe priority funding assistance 17 should go to indigenous productions. 18 11148 Shelf space. Recognizing the 19 substantial resources that traditional broadcasters can 20 bring to new media ventures, Friends supports the 21 removal of barriers whose specific effect is to 22 discourage broadcaster entry into new media. 23 11149 At the same time we endorse Netstars' 24 recommendation that in exchange Canadian content 25 providers be guaranteed fair access to shelf space and StenoTran 2578 1 at least comparable profile to that of non-Canadian 2 content. 3 11150 Prominence. Friends believes 4 prominent positioning of Canadian content should go 5 hand in hand with shelf space. We support Sun Media's 6 proposal that Internet broadcasters and distributors be 7 required to give priority placement to Canadian content 8 on program guides and links pages. 9 11151 We note with great concern, for 10 example, the failure of the major cable companies to 11 offer Canada-firs t platforms in their @home service. 12 Shaw's service, for example, is baldly American in 13 nature, livened up with Newsworld ads. It demonstrates 14 Shaw's true values when they engage in unregulated 15 activities. 16 11152 Promotion. Just as it is on 17 television, Canadian broadcasting on new media will 18 need to be promoted effectively to attain maximum 19 audience and, therefore, cultural value. 20 11153 The CRTC might consider providing 21 regulatory certainty for fledgling broadcast analogous 22 services by an exemption order for broadcasting 23 services found on the internet. 24 11154 Such an order might contain a 25 definition which could address the extent of the StenoTran 2579 1 exemption. The demarcation point could be when 2 licensed broadcasting suffers a significant loss of 3 advertising share based on market requirements. 4 11155 Again I note Mr. Grant's comments on 5 behalf of the Directors Guild. Yesterday he used the 6 word threshold, perhaps a better word than we came up 7 with here. 8 11156 Finally, the policy framework. 9 Friends shares the views of many intervenors that the 10 existing statutes may be inadequate to address certain 11 issues raised by new media. A positive outcome of this 12 public hearing will be a recommendation from your 13 Commission to the government on legislative amendments 14 that may eventually be required to bring your governing 15 statutes up to date. 16 11157 We also endorse the recommendation of 17 Netstar and others that the Commission monitor the 18 progress of convergence, perhaps by convening a 19 further hearing in, say, two years or so. 20 11158 The technology application and 21 content of new media continue to develop at a rapid 22 pace and will require continued vigilance. If you 23 accept this recommendation, we will be there. 24 11159 Thanks. 25 11160 THE CHAIRPERSON: Thank you, Mr. StenoTran 2580 1 Morrison, for your presentation. 2 11161 I particularly note your 3 characterization of a purpose and focus of this 4 proceeding. While I agree with you it has been 5 misconstrued in several fora, that has probably helped 6 to create greater public awareness of the fact that the 7 proceeding is going on and probably resulted in a lot 8 more people participating in the process than otherwise 9 might have been. 10 11162 In that sense it might have been a 11 little bit helpful. 12 11163 MR. MORRISON: It's a new venture for 13 the Commission, a kind of marketing strategy. 14 11164 THE CHAIRPERSON: Yes. For 15 discussion of your views on this, I will turn to our 16 Chair, Madam Bertrand. 17 11165 THE CHAIRPERSON OF THE COMMISSION: 18 Good morning and thank you very much for participating. 19 11166 Unless I was not totally awake, I 20 thought that your presentation this morning followed 21 the chapter heads that you had outlined and began to 22 describe in your Phase II comments as well as 23 incorporating comments on what you have been hearing 24 during the course of the hearing. 25 11167 I see that you have been following StenoTran 2581 1 quite closely. 2 11168 MR. MORRISON: Yes, sometimes when I 3 am very tired, I insist I have the right to be 4 inconsistent. 5 11169 THE CHAIRPERSON OF THE COMMISSION: I 6 didn't read any inconsistency but rather you were 7 responsive to what you heard in the proceeding. That 8 is very much the experience we have had in this dynamic 9 hearing that has evolved from intervention to 10 intervention, trying to really understand the main 11 objective of the hearing, that of exploration. 12 11170 MR. MORRISON: We have been 13 distracted by Liberal caucus committees and challenges 14 to your authority in the courts, but other than that, 15 you have had our complete attention. 16 11171 THE CHAIRPERSON OF THE COMMISSION: 17 We appreciate your intervention at that caucus. Thank 18 you. 19 11172 Coming back to your presentation in 20 this hearing, the definition of new media that you 21 propose, as I see it, elements under the umbrella or 22 the wings of new media, is that how we should read the 23 five points you have made from Internet to complete 24 migration of television to the Internet. For you, it 25 is the whole array of those elements that constitute StenoTran 2582 1 new media. 2 11173 MR. MORRISON: Yes. I will try to 3 restate more clearly. You would be performing a public 4 service, we believe, in doing something that would have 5 longer term viability were you to cast a broad net in 6 your description and definition of new media. 7 11174 THE CHAIRPERSON OF THE COMMISSION: 8 You seem to leave out in that broad net the element 9 that many intervenors have talked about, the digital 10 distribution and the physical distribution, the CD-ROM, 11 the multimedia form that is on the shelf and the 12 problem of it being distributed because it is swallowed 13 up in the corporate world, the global economy, mainly 14 American. 15 11175 You seem to exclude that from what 16 you call new media. Am I right? 17 11176 MR. MORRISON: Perhaps we should not 18 have done so. By analogy, I suppose, it's a little bit 19 like the role of the videotape and traditional 20 regulation. Our concern is as broad as the audiovisual 21 system, if you want to put it that way. It is some 22 concern to other physical forms of distribution. 23 Content should be the focus. 24 11177 THE CHAIRPERSON OF THE COMMISSION: 25 Do you include e-mail and electronic commerce in the StenoTran 2583 1 definition of new media? 2 11178 MR. MORRISON: Yes. We would 3 certainly include it, but with respect to the focus of 4 your attention, we picked up the phrase from others, I 5 think it was Call-Net -- I hope I'm not misquoting 6 then -- the phrase broadcast analogous services. That 7 is in our view the area where the focus of our concern 8 should arise because that is where the two worlds are 9 touching. 10 11179 THE CHAIRPERSON OF THE COMMISSION: 11 In terms of definition, you would be as broad as can 12 be, but when it comes to our focus and attention that 13 would be under the wing of the Broadcasting Act, that's 14 where you concentrate your attention on some form of 15 expression of new media which would be broadcast 16 analogous. 17 11180 MR. MORRISON: Yes. I suppose we are 18 making a distinction which may be somewhat artificial. 19 You have studied this more than we, but between a 20 definition in new media and a classification of new 21 media, in that classification which Call-Net proposed 22 to you, which appealed to us, the focus of our concern 23 will always be on the broadcast analogous. 24 11181 THE CHAIRPERSON OF THE COMMISSION: 25 What is broadcast analogous? Can you take us by the StenoTran 2584 1 hand and tell us when we consider the capacity of 2 broadband services what you see as the expression of 3 that. It's not strictly what we see now, migrated on 4 the Internet. I suppose it's a bit different than 5 that. 6 11182 What would you say? 7 11183 MR. MORRISON: I am reminded of Jean 8 Jacques Cousteau saying he was here to discuss 9 principles. He would not debate the facts. You have 10 given me an opportunity to depart from the floor here, 11 so I will. 12 11184 THE CHAIRPERSON OF THE COMMISSION: 13 Be my guest. 14 11185 MR. MORRISON: It seems to me that 15 our concern is with audiovisual content that is 16 directed at the public, at the broad public out there I 17 suppose to certain targeted audiences. That is the 18 principle that guides our attention to the meaning that 19 Parliament intends around the word broadcast. 20 11186 THE CHAIRPERSON OF THE COMMISSION: 21 Let me challenge you here on your principle here. If 22 we take, for example, community channels that are 23 presently available in the distribution of 24 broadcasting, would the capacity of the net to have 25 community net, targeted almost to the street you live StenoTran 2585 1 on or the neighbourhood in which you live. 2 11187 Where would draw the line in terms of 3 what would be public without being intimate like a one 4 on one, but still very targeted and limited in 5 distribution?" 6 11188 MR. MORRISON: It seems I am 7 worshipping at the feet of Mr. Grant here, but I noted 8 in some of the comments that were put before you 9 yesterday, and I think other intervenors have said this 10 as well, that there is a tendency for broader bandwidth 11 in the foreseeable future to be available in more local 12 arrangements and that the bandwidth is like the 13 bottleneck for audiovisual quality visual distribution. 14 11189 Likely the first onset of television 15 quality signals will take place not on a global basis, 16 but on a community basis. With that in mind your 17 question is particularly apropos. 18 11190 I suppose the analogy to community 19 channel -- I don't like the word that has crept into 20 our presentation, traditional broadcasters, but until 21 we find a better one -- the analogy to the community 22 channel is interesting. 23 11191 You don't actually license community 24 channels. You provide kind of a policy framework to 25 encourage their application. There are a lot of StenoTran 2586 1 problems with that. We will talk about them, I hope, 2 some other day. 3 11192 Those are in our judgement 4 broadcasting. 5 11193 THE CHAIRPERSON OF THE COMMISSION: 6 Without necessarily bringing the whole apparatus of 7 heavy handed regulation. 8 11194 MR. MORRISON: Yes. Some of those 9 instruments right now, one of their strengths and 10 defining characteristics is not too much heavy handed 11 production value added, that they are accessible to 12 people in an inexpensive way. 13 11195 We will on other occasions be coming 14 back to you with concerns about the directions of cable 15 companies, Shaw in particular regarding cable channels, 16 for another day. There is a particular value in having 17 less production added or accessibility in those 18 channels. 19 11196 THE CHAIRPERSON OF THE COMMISSION: 20 Taking your point it is under the umbrella of 21 broadcasting when we come to that category of new 22 media, understanding that it is not your view that we 23 should import and impose what exists as the framework 24 as we know it for lack of a better word than media, 25 that we have known since we were young, and we are not StenoTran 2587 1 any more -- we learned that over the two weeks -- what 2 would be the kind of elements that you would see more 3 appropriate from your understanding of what is new 4 media and, more so, what is broadcast analogous 5 services? What kind of different regime and tools? Do 6 you see a self-regulatory environment? Do you see 7 strictly exemption? What is your view? 8 11197 MR. MORRISON: I think you are in a 9 very good situation right here. You are doing the 10 right thing in that you are looking forward and you 11 have time on your side. 12 11198 Anyone who knows the answer to that 13 question right now is probably wrong. We are all 14 groping towards that answer. 15 11199 With that caveat, we have decided, I 16 guess along with some others, that one of the 17 mechanisms at your disposal which should be used as, 18 not an immediate but a short term measure, and I 19 referred to it and you in your question, the notion of 20 some type of exemption order which contains within it 21 some type of threshold or demarcation line regarding 22 some type of audience surrogate like advertising 23 revenues, the one that occurs to us. 24 11200 We have noticed in the Commission';s 25 behaviour before on the telecom side -- Mr. Vice-Chair, StenoTran 2588 1 you are the expert on all of these things -- you used 2 market share as an instrument to determine when certain 3 things would apply to the predominant formerly 4 monopolistic telephone company in your policies over 5 the years. 6 11201 I have heard as big cable barons as 7 Ted Rogers use market share as "We will be in trouble 8 with our shareholders if the competition gets beyond 10 9 per cent", some type of measure. It seemed to us that 10 the measure might come out of the advertising pie. It 11 might be the point at which some of these emerging 12 services pass a threshold where they ought to concern 13 you and where we think at best premature concerns of 14 the Canadian Association of Broadcasters might come 15 into play. 16 11202 That's our first cut at some specific 17 policy advice. 18 11203 THE CHAIRPERSON OF THE COMMISSION: 19 What would you answer to people, and there are many in 20 this proceeding who have told us of the necessity for 21 more certainty, that they need to know where Canada is 22 going, where the CRTC is going, so that they can invest 23 heavily. 24 11204 Do you think an exemption order, even 25 with a threshold that would be transparent to everyone, StenoTran 2589 1 would not prevent some interesting investments in the 2 creative world as well as the commercial world? 3 11205 MR. MORRISON: Just to understand 4 you. Are you expressing a concern that such a device 5 might frustrate or inhibit some investments that are 6 important investments? 7 11206 THE CHAIRPERSON OF THE COMMISSION: I 8 am repeating what some intervenors have said. Yes. 9 That is the idea of my question. 10 11207 MR. MORRISON: That is the tension, I 11 guess. There are two values that you have to weigh. 12 11208 It would respond to one of the needs 13 of investors, which is a greater degree of certainty 14 and understanding the rules and at the same time not 15 laying a trap down the road, undermine the bedrock 16 cultural policies of the Canadian government expressed 17 through your Commission and otherwise. 18 11209 You have to have great concern for 19 not frustrating investment. I think that you would be 20 making a contribution by giving the potential investor 21 some certainty of what the rules would be. That's the 22 course that we recommend in any event. 23 11210 THE CHAIRPERSON OF THE COMMISSION: 24 Kind of a reassurance for a few years, giving the rules 25 yet not answering totally to the clarity of the StenoTran 2590 1 situation. 2 11211 MR. MORRISON: And a very active 3 watching brief on the situation -- many of our 4 suggestions are derivatives of those of others -- and 5 that you announce at an appropriate time that you are 6 going to revisit the subject. 7 11212 You have a three year planning 8 mechanism. 9 11213 THE CHAIRPERSON OF THE COMMISSION: 10 It should be part of our next Vision II. 11 11214 MR. MORRISON: Vision II. 12 0930 13 11215 Let's come to the opportunity you see 14 there for broadcasters, once we kind of discuss what is 15 new media, what should be under the Broadcasting Act 16 and what kind of treatment. You talk also about the 17 great opportunity for broadcasters. You underlined 18 that Global has not been involved much, or at all. CTV 19 has been from my recollection. From the Olympics it 20 seems to me that they had a Web site and they talked 21 about it. 22 11216 MR. MORRISON: I visited their Web 23 site, Madam Chair, on occasion and I was getting home 24 pages that were a year old. So, I suppose it 25 physically exists, but it might as well not. At least StenoTran 2591 1 Global is more forthcoming because what Global has 2 available is strictly nothing, and I think CTV was 3 something -- nothing masking as something. So, I think 4 they are essentially the same position. 5 11217 THE CHAIRPERSON OF THE COMMISSION: 6 Maybe that's an element in terms of criteria that we 7 should have if ever we go a route like you are 8 proposing, that kind of investment that traditional 9 broadcasters are doing on new media is a sign that 10 something is happening and until that day, even if some 11 advertising revenues are on the net, that doesn't 12 mean -- 13 11218 MR. MORRISON: I like where you are 14 going because it seems to me that we have appeared here 15 with charts and graphs trying to persuade you that you 16 should pay more attention to local and regional 17 expression on television, and our idea is that in the 18 normal course of your work when people come before you 19 saying that they want to acquire somebody else, or that 20 they want to acquire a licence that you have it on the 21 list prominently. 22 11219 It could be that this issue which you 23 are now raising is something else that you would put on 24 the list and that there should be some linkage, just as 25 forcefully I draw to your attention because I happened StenoTran 2592 1 to be in a Shaw market on the weekend and saw their 2 at-home service and it was shocking. There wasn't even 3 the kind of thing that some person with Internet 4 knowledge who would be in our operation could have done 5 to Canadianize the interface. I mean, it was baldly 6 and quite apparently an American important that they 7 were offering to the public, in Victoria in this case. 8 And price of place for Canada, nothing. 9 11220 So, that ought to be embarrassing to 10 Jim Shaw, Jr. and the next time he is sitting up here 11 and one of you asks him about it. 12 11221 THE CHAIRPERSON OF THE COMMISSION: 13 How do you make sure -- what are your ideas on how it 14 is possible to make more visibility and that echoes a 15 lot of interventions we have had on the necessity for 16 better promotion, better marketing because it is new 17 and the branding is not Disney of course, so what are 18 your ideas on how the Commission or governments that 19 will be doing recommendations could encourage so that, 20 you know, Shaw has a better presentation of the 21 Canadian reality or the other players in that world. 22 How do you see that? 23 11222 MR. MORRISON: Knowing the political 24 orientation of their owners, I was impressed, if we are 25 not misquoting them, that Sun Media used the word StenoTran 2593 1 "required". That major service providers and Web sites 2 should be required to put pride of place for Canada, or 3 words to that effect. 4 11223 I think I would -- I mean we did 5 endorse that and we do right now. So, there must be 6 some -- I am not sure what the mechanisms are at your 7 disposal, but the goal ought to be to strongly 8 influence the behaviour of ISPs and Canadian sites, 9 especially major ones, to give more to Canada. 10 11224 I suppose you can also -- I mean 11 there's a push/pull dimension to this as well, or an 12 upward vacuum pulling people to behave properly and we 13 have to give credit where credit is due. 14 11225 At this point, for example, the 15 presidency of the CBC is very much up in the air. We 16 are talking about a new President and we have been 17 thinking about metaphorically the obituary for the 18 current President, and one of the things on the plus 19 side would be the emphasis on new media that the CBC 20 has developed and perhaps there will be some 21 competitive pressure in the world of television from 22 the behaviour of the CBC and the specialty channels 23 leaving the other people behind here. 24 11226 THE CHAIRPERSON OF THE COMMISSION: 25 Tell me, if money was to be made available, and I StenoTran 2594 1 understand from your original presentation, as well as 2 this morning, that you don't see that the actual funds 3 should be either way, to the more traditional form, 4 drama, documentaries and so on, or on site, on the 5 Internet. For you it's different funds and a different 6 approach to it. You wouldn't like to have funds that 7 are kind of limited derived towards the new media. Am 8 I -- 9 11227 MR. MORRISON: Yes, that's right. 10 11228 THE CHAIRPERSON OF THE COMMISSION: 11 But if we were to find ways to create new funds or if 12 money was made available by government to support, what 13 would be for you the appropriate criteria or what do 14 you see that should be put forward in terms of the 15 engine of creating a real development in supporting the 16 initiatives? 17 11229 MR. MORRISON: I suppose I am not 18 really departing from the brief message or the text 19 here to say that there are two competing things. One 20 is infrastructure funding which should be focused on 21 attempting to equalize access in a country such as 22 Canada where there are more geographic barriers to 23 participation in the audio-visual world than elsewhere, 24 that is one of the issues. 25 11230 The other is Canadian content of an StenoTran 2595 1 audio-visual nature in new media, but I am also 2 persuaded that we have some time to address this 3 because of the kinds of factors including that issue 4 regarding copyright, which suggests that much of our 5 attention should be directed at the behaviour of 6 existing broadcasters using new media today. 7 11231 THE CHAIRPERSON OF THE COMMISSION: 8 This will be my final question, the actual behaviour 9 into the new world. Do you think they are the best 10 players we have in order to really have the full 11 flourishing of the promises of the new media; my first 12 question. 13 11232 My second question: How can it be 14 encouraged concretely by the Commission without 15 impairing the capacity of doing all the other things we 16 have talked about in the TV policy, either local 17 programming and the famous 7, 8, 9 categories? Where 18 do you see our role and do you have any ideas to 19 suggest to us? 20 11233 MR. MORRISON: That's a really big 21 one. I guess -- I think the very fact that you are 22 listening and you seem to be listening is a first step 23 and I wouldn't want to denigrate that. That is in and 24 of itself important. 25 11234 The public statements that you make StenoTran 2596 1 following digestion of this important hearing are a 2 first step. You can make a difference with that and 3 you are asking me perhaps about the content of some of 4 those statements, but I just stress for a moment that 5 it seems to us from where we sit and as we have learned 6 from watching the dialogue between you and intervenors 7 before and during this hearing, and we will learn 8 because of the record, that it may decay rather 9 rapidly, but the knowledge that you have acquired and 10 enabled others to share is in and of itself quite 11 valuable and you might consider some efforts to go 12 beyond perhaps what you would otherwise do in a hearing 13 to package or make accessible that knowledge, to 14 indicate what you heard or to commission others to 15 comment on it. Maybe that's a suggestion that should 16 be directed to government, beyond the Commission, I am 17 not sure. That's one. 18 11235 Moving into the content of what you 19 might do, I mean you have to keep your eye on the ball 20 of the current world, the world of 1998 to 2001 and 21 your television hearings. I guess what I am giving you 22 more of a process than a content answer. Your learning 23 from this hearing is something that you put on kind of 24 a matrix; how do decisions we make in the present 25 tense, in the real world, how will they influence these StenoTran 2597 1 new considerations that are now on our radar scope and 2 vice versa. 3 11236 I think that people who could quickly 4 answer your question are probably much wiser than us, 5 or perhaps they have the wrong answers. I guess you 6 are going to play some kind of leadership role by 7 making a first stab at that. 8 11237 The good news is that you will have 9 an opportunity to revisit it because we have got some 10 time. It will be very interesting in a couple of years 11 to see what is happening. First off, that exemption 12 order and working on the threshold and it seems to us 13 that's the concrete thing you could do right now. 14 Otherwise you are more defining issues and 15 understanding territory, your mapping in this exercise. 16 11238 THE CHAIRPERSON OF THE COMMISSION: 17 My last, last question. The CBC is proposing to do a 18 super site for promotion and creating attention from 19 Canadians about Canadian sites. Do you think it is a 20 good idea and do you think it should be done with the 21 existing money of the CBC or should it be funded 22 separately if it was to be the case? Do you think the 23 question can be asked whether it is diversification or 24 what is expected of the CBC? 25 11239 MR. MORRISON: Yes. In principle our StenoTran 2598 1 judgment there would be a little bit like a Jeffrey 2 Simpson column this morning, trust the board of 3 directors of the CBC. That ought to be their decision. 4 I wouldn't want the government -- the Commission would 5 have more right because of your licensing capacity to 6 lean on the CBC I suppose, but number one we welcome 7 it. We think it's a good idea and it begs questions 8 about scarce CBC resources. But it is a leadership 9 role. Somebody has got to do it. We think the CBC is 10 well placed to do it and we actually agree with that 11 initiative, but that is a decision that ought to be 12 left with the CBC. 13 11240 THE CHAIRPERSON OF THE COMMISSION: 14 Thank you very much, Mr. Morrison. 15 11241 Thank you, Mr. Chair. 16 11242 THE CHAIRPERSON: Thank you, Mr. 17 Morrison. We appreciate your presentation here. 18 11243 MR. MORRISON: Thank you for hearing 19 me, Mr. Chair. 20 11244 Madam Secretary. 21 11245 MS BÉNARD: Thank you, Mr. Chairman. 22 11246 The next presentation will be by Core 23 Curriculum Group. 24 11247 THE CHAIRPERSON: Please begin. 25 11248 MR. GUMLEY: Thank you. StenoTran 2599 1 PRESENTATION / PRÉSENTATION 2 11249 MR. GUMLEY: Mr. Chairman, 3 distinguished members of the Commission, I am delighted 4 to be here this morning. My name is Gary Gumley. I am 5 the President and CEO of the Core Curriculum Group of 6 companies. Our group consists of Ingenuity Works Inc. 7 and Software Plus, two Canadian owned and operated 8 companies that have been positively impacting the use 9 of digital technology in education since 1983. 10 11250 Supplementing our initial submission, 11 I intend to provide a perspective this morning on some 12 of the issues that we feel are germane to the survival 13 of educational and cultural content creation in Canada 14 through new media. If you could bear with me, I would 15 like to read the brief this morning into the record 16 that I have prepared, as I think there are a number of 17 points that are pretty valid that I would like to 18 discuss with you this morning. 19 11251 As a teacher for 10 years and then as 20 a businessman delivering digital technology to schools 21 for the past 15 years, I am able to present a unique 22 perspective on the challenges faced by the new media 23 industry today. 24 11252 The focus of this presentation is to 25 describe two specific challenges faced in delivering StenoTran 2600 1 Canadian produced content to Canadians through current 2 and emerging distribution channels. If Canadian 3 culture and content are to be delivered in the future, 4 it is imperative that the CRTC be aware of these 5 challenges and create unique methods of assisting the 6 fledgling industry to survive during these formative 7 years. 8 11253 To be specific, the mission of our 9 company is "to improve the delivery of education 10 through the creation of technology based educational 11 tools that promote understanding through involvement in 12 the process of learning." 13 11254 Since 1983, we have been producing a 14 catalogue of educational software that has been our 15 main marketing vehicle. The catalogue is in the kit 16 that has been provided to you and this is our latest 17 version. This catalogue has assisted thousands of 18 technology-oriented educators across Canada to choose 19 appropriate material for use with their students. If 20 you browse through this catalogue you will find that 21 most of the content is from U.S. based software 22 developers and publishers. 23 11255 In a concerted effort to reverse the 24 dominance of U.S. publishers, we have been producing 25 award winning digital content for education for the StenoTran 2601 1 past 15 years and that's the reason for me putting the 2 display out behind me this morning. I wanted to share 3 some of that with you. 4 11256 In addition, in the kit I have also 5 added what we call our CD sampler which if you have an 6 opportunity to look through it shows all of the product 7 that we have on a CD sample product flyer that we send 8 out to our customers and end users. 9 11257 We have created and/or published six 10 titles with specific Canadian content. Three of these 11 titles have been developed in both French and English. 12 In addition, we have produced a keyboarding title that 13 is the standard used in over 70 per cent of Canadian 14 schools. 15 11258 Of all of the challenges we have 16 faced in the past 15 years, perhaps the greatest is now 17 upon us. How do we attract our customers to our 18 product in the "Internet Age"? IN order to transition 19 from floppy disk and CD-ROM based content delivery, we 20 have for the past three years been creating and 21 publishing content for delivery over the Internet. 22 11259 In 1997, we followed the successful 23 ascent of Mount Everest by two Canadian climbers, Jamie 24 Clarke and Alan Hobson. Their exploits were updated 25 daily during the climb and students could communicate StenoTran 2602 1 with them and their support teams as they made their 2 summit bid. In 1998, we followed the first disabled 3 attempt to climb Mount Everest and happily reported 4 that dreams can come true when Tom Whittaker, a climber 5 with only one foot, successfully reached the summit in 6 late May of this year. Over 2,000 schools purchased 7 access to these products. The feedback that we had was 8 terrific. 9 11260 Now, in 1999 and 2000, our company is 10 embarking on the most difficult stage of our challenge. 11 That challenge is to effectively and profitably deliver 12 Canadian content over the Internet. We have embarked 13 on a project supported by both Industry Canada through 14 Schoolnet and Heritage Canada through Telefilm. 15 Without the support from these government programs we 16 would not have been able to embark on our Canadian 17 Heritage interactive Journey. 18 11261 I brought along something else to 19 show you. If the Commission would like copies of the 20 posters they could take them later. This is the poster 21 for our journey. It is intended to include students in 22 the process of learning about our country by producing 23 digital technology and putting it over the Internet. 24 Their projects, learning about their community, telling 25 Canada what Canada is like from their eyes, stimulated StenoTran 2603 1 by bicycle teams travelling across the country and 2 stopping at 75 host schools across the country. It's a 3 huge project that launches next April. 4 11262 Already over 2,000 schools have 5 access to the journey, even though the event does not 6 begun until next April. The details of the journey are 7 available at our Web site www.ingenuityworks.com. I 8 invite you to review what we are doing. Please explore 9 the creative way our Canadian programmers and content 10 creators are helping children become involved in the 11 process of learning about Canada. 12 11263 The challenge, as I stated earlier, 13 is to make the transition to this new medium. While 14 you have heard numerous submissions about why the 15 Internet should not be regulated, there will be a 16 tremendous number of consumers that will want to access 17 content and make purchases through the media of CD-ROM 18 and DVD. Tens of thousands of these consumers for the 19 foreseeable future will want to purchase the product by 20 "going shopping". To make a twist on the famous quote 21 of Mark Twain "The death of the shopping mall has been 22 greatly exaggerated, in my opinion." 23 11264 I would like to focus on two 24 initiatives that I feel the Commission needs to address 25 in order to promote the continued success of Canadian StenoTran 2604 1 owned new media companies such as Ingenuity Works and 2 Software Plus during this period of transition. 3 11265 The first initiative is one that has, 4 in my opinion, been exceptionally well outlined by Mr. 5 George Goodwin of McClelland and Stewart, the producer 6 of The Canadian Encyclopedia on CD-ROM. 7 11266 Mr. Goodwin in his submission to this 8 hearing has outlined the difficulties of getting 9 Canadian produced software bundled with hardware sold 10 in Canada. If you have not had a chance to review his 11 comments, I would urge you to do so. I would like to 12 add to his submission some of our findings. 13 11267 In 1996, we concluded eights months 14 of negotiations with Apple Computer Inc. to bundle our 15 award winning educational CD-ROM Adventure Canada with 16 selected Apple titles -- Apple hardware offerings 17 across the country. We negotiated with other hardware 18 suppliers but to no avail, usually because the product 19 they sell is assembled in the United States. 20 11268 Our contract with Apple lasted for 21 one year and then was cancelled because we were told it 22 was not cost effective for Apple in a time of severe 23 constraint to make their software bundles generic to 24 Canada. Since the bundling of Adventure Canada with 25 Apple we have been totally unsuccessful in convincing StenoTran 2605 1 the large U.S. hardware companies to bundle any of our 2 product line, even though it is used widely in Canadian 3 schools. 4 11269 I believe it is imperative that the 5 CRTC initiate action similar to steps taken in the 6 broadcast arena. I wonder if we would ever have heard 7 of David Foster, Celine Dion and Shania Twain, just to 8 name a few fantastic Canadian talents, if the CRTC had 9 not ruled that Canadian radio stations had to have a 10 minimum of 30 per cent Canadian content played over the 11 airwaves. The same goes for the television medium. I 12 submit that our new media industry is no different. 13 Our content combines text, video and voice and will 14 continue to do so as DVD and Internet pipelines have 15 greater capacity. 16 11270 A decision by the CRTC to recognize 17 Canadian developed content for new media in the same 18 way as broadcast media would facilitate an action. In 19 our opinion, a mandate from the CRTC that the hardware 20 manufacturers bundle a minimum amount of Canadian 21 content with their hardware would be of tremendous 22 support to the protection of our culture in the new 23 media age. 24 11271 Obviously, it would be much better if 25 the hardware companies would take this initiative on StenoTran 2606 1 their own. In my opinion, the CRTC could take 2 immediate action to assist this inequity by initiating 3 rules similar to those in the radio and television 4 industry for software bundling in Canada. Over 1 5 million computers will be sold in Canada next year. 6 11272 I would now like to address the issue 7 of gaining retail shelf space for Canadian developed 8 and published software. Ingenuity Works and its 9 predecessor companies have worked tirelessly to 10 penetrate the retail market in Canada. As of this 11 date, our complete retail product line is only carried 12 by Chapters book stores in Canada. We have been able 13 to position only half of our product with The Future 14 Shop chain. Even though for the past five months we 15 have been greatly assisted by Ingram Micro, the largest 16 distributor of computer products in the country, we 17 have effectively missed the Christmas season again for 18 our product line. 19 11273 I would just like to draw your 20 attention to one of the initiative that we attempted to 21 take to make our product stand out, which is a sticker 22 which is on our product called "Great Canadian 23 Software -- Meets Canadian School Standards". We have 24 stuck this on all of our product line to make it stand 25 out and show the difference between our product and the StenoTran 2607 1 U.S. publishers' products. 2 11274 We have created that initiative. We 3 have participated in presentations to resellers in the 4 last seven or eight months. We have provided our 5 product to all of the buyers for all of the major 6 chains in Canada last spring. We agreed to participate 7 in advertising campaigns and other promotional events 8 and we are slowly succeeding, but we have been advised 9 that once we get the shelf space that's only half of 10 the battle. We will have a window of no more than six 11 months to ensure that the consumer seeks out the 12 product and purchases it from the retail locations. 13 11275 I have brought along some recent 14 pre-Christmas flyers from some of the major companies 15 in Canada. I won't bother holding them up at this 16 point in time, but in those flyers if you have looked 17 at them or if you have been into any of the retail 18 stores in Canada, 99 per cent of the software 19 advertised in the flyers originates in the United 20 States. Many of the store shelves have that same kind 21 of product mix on those shelves as well. 22 11276 There are three major points here. 23 You may well ask what is so special about our software 24 that means that it should be carried and advertised in 25 Canada? Well, there are three major points I think StenoTran 2608 1 that we can address. 2 11277 Our keyboarding program "All The 3 Right Type" is used in over 70 per cent of the schools 4 in Canada, as I mentioned earlier. The product seen on 5 almost all of the retail shelves in Canada is "Mavis 6 Beacon Teaches Typing" from The Learning Company. It's 7 a good product, but our product has ben used 8 extensively in Canadian schools for over seven years. 9 Our product has consistently been chosen over Mavis 10 Beacon by educators in this country and it deserves a 11 place on the retail shelves of Canada. We can't get it 12 there. 13 11278 Our math series, "Mathville," is the 14 only product line available to retail that meets 15 Canadian standards for math in Canadian schools. We 16 are consistent in our treatment of metric issues in our 17 math curriculum, as well as correct Canadian spelling. 18 While it may seem unimportant o many, the spelling of 19 "colour" and "centre" among other words in our culture 20 is different from the U.S. spelling. The constant 21 reinforcement of the spelling of these words in the 22 U.S. form will eventually lead to Canadians spelling 23 them in the U.S. way. This has already been happening 24 consistently in the Canadian press. 25 11279 While I admit that this is a StenoTran 2609 1 relatively minor issue, the problem is, in my opinion, 2 that it is indicative of other less visible changes in 3 our culture. We must not allow ourselves to be 4 dominated by other cultures when the product we produce 5 is as good as, if not better, as defined by the 6 consumer who is aware of the Canadian alternative. 7 11280 The third point that I would like to 8 make with respect to the value of our software is that 9 our Canadian content software has been widely sold in 10 the school market. The Museum of Civilization has 11 collaborated with us to secure distribution to the 12 retail market of two Canadian content CD-ROM products 13 that they built and distributed and developed, "Totem 14 Poles" and "Land of the Inuit". We also did the 15 Canadian Treasures program in conjunction with the 16 National Archives of Canada. It is extremely difficult 17 for us to get these products onto the retail shelves. 18 11281 Other producers are approaching us to 19 assist them in positioning their product line in the 20 retail market in Canada, that's other Canadian 21 producers. We must continue to work hard to get 22 Canadian content for Canadian developers on to Canadian 23 retail shelves. Individually, we have no hope of 24 gaining market share from the large players in the 25 industry. We deserve the right to have that market StenoTran 2610 1 share. Canadian developers make excellent product. 2 That is why so many of our programmers are being drawn 3 to the United States. It seems ironic that Canadian 4 programmers cannot get their product sold in Canada 5 first, so that we can keep our valuable intellectual 6 property in this country. By creating a market for our 7 Canadian talent, we will be able to leverage our 8 Canadian success and launch our product to compete 9 globally. 10 11282 What we require as a first step is 11 the ability to let the Canadian consumer know that 12 Canadian produced and Canadian content digital material 13 is available. Our product must get exposure to the 14 marketplace. 15 11283 In order to assist all Canadian new 16 media publishers, my hope is that the CRTC will make a 17 recommendation to either the Heritage Ministry or to 18 Industry Canada to set up an initiative similar to the 19 ones that Industry Canada has created to promote travel 20 in Canada. Generic advertising purchased through the 21 huge discount structure that the Canadian government 22 has negotiated with the media in Canada could be shared 23 with Canadian content new media developers and 24 publishers to more effectively promote their products. 25 Our intellectual property is worth promoting just as StenoTran 2611 1 much as our physical property such as the Canadian 2 Rockies and Atlantic Canada. There is nothing wrong 3 with Ottawa either, by the way. I should add that. 4 It's worth promoting. 5 11284 Such a promotion program would, in my 6 opinion, expand consumer awareness and supplement our 7 efforts to secure shelf space in Canadian retail 8 stores. 9 11285 As we have seen, once our talent is 10 accepted in Canada, we are recognized worldwide for our 11 creativity and our products. Our musicians and musical 12 talent is the prime example of that. 13 11286 In closing, I would like to state 14 that our company and our owners and employees believe 15 that Canadian new media companies must have an equal 16 opportunity to show the Canadian consumer what we are 17 able to accomplish. Initiatives like insisting on a 18 percentage of Canadian content in radio and television 19 broadcasting have been highly successful in raising the 20 profile of Canadian talent. The music industry and the 21 film industry are thriving as a result. 22 11287 In a recent "live chat" with Mr. 23 Colville over the Internet site CANOE that I had a 24 chance to review recently, I was very interested to 25 note the comment that you stated, "our fundamental StenoTran 2612 1 concern," that is the CRTC's fundamental concern, "is 2 to try and ensure access for Canadian content creators 3 to the Canadian broadcast system." I hope I am not 4 taking you out of context, Mr. Colville. I believe 5 that is what you stated. 6 11288 THE CHAIRPERSON OF THE COMMISSION: 7 It comes as a surprise. 8 11289 THE CHAIRPERSON: My colleague is 9 getting tired of hearing it. 10 11290 MR. GUMLEY: Since our new media 11 industry is so young, I believe the mandate of these 12 hearings is to ensure exactly the same thing for our 13 emerging industry. Should the CRTC decide that new 14 media content creation and distribution must evolve 15 outside of the existing parameters of the Commission -- 16 in other words, you haven't defined what new media is 17 in terms of the Commission structure at this point in 18 time, I believe this could be a recipe for devaluing 19 our culture in the new media age. 20 11291 For our part, we are determined to 21 find the answer to effective delivery of digital 22 technology for education, so that students, teachers 23 and parents will not forget our culture, our heritage 24 and the significance of our position in the world 25 order. StenoTran 2613 1 11292 As Canadians, we must continue to 2 celebrate our culture and our heritage and place it in 3 the context of the Internet for the world to see. As 4 you know, we are rated by the United Nations as the 5 number one country in the world in which to live. We 6 must continue to be able to tell our children about our 7 story so that they can become ambassadors to the world, 8 proud of their heritage as Canadians. 9 11293 We have a passion in our company, 10 over 40 of us are dedicated to our work, many of us 11 since 1983. Our struggle has been to maintain our 12 Canadian identity while surviving as a profitable 13 business. So far we have survived and succeeded. Now, 14 however, with the Internet, e-commerce and massive 15 consolidation of educational software publishers in the 16 United States, our existence as a Canadian company is 17 severely threatened. 18 11294 In my opinion, these hearings are not 19 about regulation. They are more about evolution. 20 Hopefully, my suggestions today will move the CRTC to 21 act quickly and assist the Canadian new media industry 22 to evolve effectively to compete in the global economy 23 of the new millennium. 24 11295 I thank you for your attention. 25 1000 StenoTran 2614 1 11296 THE CHAIRPERSON: Thank you for your 2 presentation, Mr. Gumley. 3 11297 I had a whole bunch of questions that 4 I was going to ask you based on your first round 5 submission that was signed by Mr. Stephen Smith. 6 11298 MR. GUMLEY: Yes. He regrets his 7 inability to be here this morning. 8 11299 THE CHAIRPERSON: Your presentation 9 today has pretty much answered all the questions that I 10 had that turned on that. Let's turn to some of the 11 other issues that arise out of your presentation here 12 today. 13 11300 I was curious by your reference to 14 George Goodwin's comments from McLellan & Stewart 15 regarding the CD-ROM business. Having read the 16 submission and also read some newspaper interviews that 17 were conducted with him, my understanding of his views, 18 and I invite your comments on this, while it was 19 interesting that the CRTC was looking at this issue of 20 new media and the Internet, and CD-ROM can be 21 characterized as a form of new media, he acknowledged 22 that there is probably little the CRTC can do in the 23 creation and marketing promotion of CD-ROMS themselves 24 but it was a good forum to raise public attention to 25 the issues, but that there was probably directly we StenoTran 2615 1 could do given our mandate under the Broadcasting Act 2 to deal with content as it relates to broadcasting and 3 the transmission vehicles that fall within that 4 definition and so on. 5 11301 I wonder what your own views are on 6 that. 7 11302 MR. GUMLEY: I thank you for the 8 opportunity to respond to that. It's a good question. 9 11303 I quoted the CANOE comment that you 10 made specifically because it did say in broadcast 11 media. The problem that I have in distinguishing the 12 difference and why I hope actually that the CRTC 13 expands its mandate to include new media is that the 14 content that is delivered over the airwaves in Canada 15 is what the issue is. 16 11304 You mandated that the Canadian radio 17 stations in particular play a certain number of 18 Canadian songs produced in Canada or produced by 19 Canadian talent. In effect by doing that, you were 20 saying that the product that is produced by the singers 21 and the producers of records get their exposure to the 22 Canadian marketplace through the action that you have 23 taken. 24 11305 We don't have that opportunity. We 25 do through the Internet in the future perhaps, but StenoTran 2616 1 that's not where I'm going. I believe there's a fairly 2 significant transition period here that is defining the 3 use of the Internet with respect to Canadian content. 4 11306 What we have right now is a situation 5 where we are producing product that we can't get 6 exposed to the Canadian marketplace. There are a 7 number of companies in Canada that have been producing 8 software that are not here any longer. It's 9 unfortunate because they had so many people. They had 10 exactly the same struggles that we have been struggling 11 with for 15 years. 12 11307 I think that the issue for me is that 13 we are producing the content that you have basically 14 given a market share for, a voice for, through the 15 radio mandate that you have given. I'm suggesting that 16 because this is a completely new industry that you 17 perhaps have to look at your mandate slightly 18 differently and look at the delivery mechanism that is 19 going on here, how are Canadians being affected by the 20 content that is being delivered to their homes through 21 the purchase of computers. 22 11308 I know it's a bit of a difficult 23 stretch, but hey, it's new territory. We have got to 24 look at this. That's why you are looking at this 25 material. StenoTran 2617 1 11309 THE CHAIRPERSON: Well, as others 2 have said over the past two weeks, in some respects we 3 are the only game in town here, so if you have an issue 4 here's the place to raise it. 5 11310 If I go back to the question of the 6 record industry or the film business, we have been able 7 to achieve that because of the specific mandate we have 8 in the Broadcasting Act as it relates to those 9 technologies, if you will. 10 11311 To the extent one might consider some 11 aspects at least of the new transmission or 12 distribution media, the electronic distribution media 13 if you will, and to whatever extent one might see some 14 aspects of the Internet to relate to that, there may be 15 some role for us -- underscore "may". 16 11312 I am having difficulty seeing where 17 through our mandate, either under the Broadcasting or 18 Telecommunications Act, we could get involved in the 19 case of the manufacturer of computers and packaging of 20 the computer and software and the retail marketing of 21 that, which I take it is largely your problem. Witness 22 your example with Apple computer and so on. 23 11313 MR. GUMLEY: Yes. 24 11314 THE CHAIRPERSON: My problem is when 25 you suggest that we -- somewhere here -- take some StenoTran 2618 1 specific action with respect to this, by what authority 2 do you feel we would be able to get involved in 3 ordering some computer manufacturer to package and sell 4 this array of software, which is probably excellent 5 software for Canadian schools, with their computers and 6 whether it is in Future Shop or whatever? 7 11315 MR. GUMLEY: I agree with your 8 interpretation. Currently you don't have that 9 authority. I think that was Mr. Goodwin's point. 10 11316 The point that I am making here and 11 trying to stress is that I think as a hearing, you are 12 looking at all different opportunities. This is a new 13 medium. When the CRTC was created, radio had been 14 around for quite a long time. Television had too. I 15 don't remember quite when the CRTC was created. 16 11317 THE CHAIRPERSON: 1968. 17 11318 MR. GUMLEY: Those two mediums were 18 in place. You had an opportunity to define what was 19 already there, define your role with that. Multimedia, 20 CD-ROM and new media development have come along in the 21 marketplace since the Commission was created, so now 22 instead of looking what was there and setting up the 23 terms of your mandate based on what is there, you are 24 now in place and you have got a new industry that has 25 come along that you have to try and define your terms StenoTran 2619 1 to. 2 11319 I am saying I think you have to 3 expand the terms of the Commission. I think you have 4 to argue that the Commission needs to be expanded in 5 its mandate and scope. Otherwise we are going to get 6 buried. 7 11320 You were able to define the use of 8 Canadian talent and Canadian produced material in the 9 radio and television mediums because they were already 10 there. Yes, there was a big broo-ha-ha about doing it. 11 I understand that. But it was a darn good thing to 12 happen, in my opinion, as I said in my submission. 13 11321 The problem is that the medium has 14 changed and the delivery of that medium has changed. 15 We don't take the DVDs and the CD-ROMS that we are 16 putting together and put them over the television and 17 radio. 18 11322 I am suggesting that the Commission 19 needs to seriously look at its mandate and look at 20 expanding its mandate to incorporate this new delivery 21 of cultural content and cultural material. I think we 22 are similar to the record industry that way. 23 11323 Our talented programmers who don't 24 have a voice because -- they are extremely talented 25 people in front of manipulating a computer and doing StenoTran 2620 1 the wonderful things that they can do -- they aren't 2 getting the same exposure as the artists in Canada 3 through the Radio and Television Commission things that 4 you have decided. 5 11324 THE CHAIRPERSON: Assuming we were 6 able to do that, what sort of action do you think we 7 would be able to take in order to overcome the problems 8 you have identified? 9 11325 MR. GUMLEY: Specifically I think the 10 action should be first a recommendation that computer 11 hardware vendors in particular bundle Canadian content 12 software when they are delivering the computers to the 13 Canadian homes. 14 11326 One of the things that Mr. Goodwin 15 mentioned was that in Quebec they have to bundle the 16 French content and they do it there because they are 17 forced to. They can't sell their English computers to 18 the French marketplace. They do that kind of thing. 19 It's just that they don't have any impetus to do it for 20 the rest of Canada for the English speaking parts of 21 Canada to put English-oriented content in with the 22 bundles. 23 11327 We would like them to take our French 24 and English titles and put them with both their 25 offerings in both Quebec and the rest of Canada, but we StenoTran 2621 1 can't get their ear. 2 11328 THE CHAIRPERSON: I take it that's 3 not because the government has taken any particular 4 action. It is because the nature of the consumer 5 marketplace there demands that they do that, in Quebec 6 I mean. 7 11329 MR. GUMLEY: Yes, that's right, but 8 the point is, in my opinion, it is not equal. It is 9 not equal access. It's inequitable there. It's not 10 fair. 11 11330 THE CHAIRPERSON: I take your point. 12 11331 What about the Internet in terms of 13 overcoming this? A lot of people I guess have sort of 14 taken the view that this whole business of CD-ROMS -- 15 set aside DVDs that may be a little bit of a different 16 situation, I don't know, but you can comment on that -- 17 that there has been a bit of a window of opportunity 18 there for that. In fact, the Internet is probably 19 going to take over in terms of its ability to deliver 20 and provide access to software and the kind of content 21 you have created here. 22 11332 Do you see the Internet as displacing 23 the particular marketing techniques that you have been 24 using? 25 11333 MR. GUMLEY: No, I don't. I see it StenoTran 2622 1 being supplemental. I have seen a number of 2 presentations. Lots of people continue to buy books 3 today. The book business is doing better than it ever 4 has. They haven't dropped reading books because the 5 computer has come along. 6 11334 I said it in my presentation that 7 people will not stop shopping. I think the malls, 8 there's too much invested in the structure of the 9 shopping mall process. People want to handle things 10 and hold things and buy them. 11 11335 Also, I think the Internet, while it 12 is a very hyped medium today with respect to the 13 delivery of material, is not as vast as it would like 14 to be. I heard things about the Internet as long as 15 seven, eight years ago about delivering content over 16 the Internet. 17 11336 I believe it will be probably 10 or 18 15 years before they can start putting content over the 19 Internet effectively and quickly. That's a long time 20 in this business. Lots of things can happen in 10 or 21 15 years. 22 11337 You mentioned DVD. That is 23 compacting more and more information on the CD-ROM 24 delivery mechanism. It will continue to happen. I 25 don't think that we will be downloading material that StenoTran 2623 1 we can create. 2 11338 We are looking at combining, for 3 instance, textbook material that has been produced over 4 the years to assist in education, correlating that with 5 curriculum. 6 11339 Those are the kinds of things that 7 will be facilitated by the Internet, not the content. 8 The content, I think, will be delivered in harder form. 9 11340 THE CHAIRPERSON: Doesn't your 10 content particularly lend itself to that? I can 11 understand if I am going to buy a new suit or a new 12 car, I want to go our and try it on or take it for a 13 drive. 14 11341 It seems to me with this sort of 15 content I can "take it for a drive" by downloading it 16 from the Internet to my computer and presumably go 17 through the sampler which I presume is not worth in 18 itself $795. 19 11342 MR. GUMLEY: No, no, that's a 20 promotion. 21 11343 THE CHAIRPERSON: We wouldn't be 22 allowed to keep it if it was. 23 11344 MR. GUMLEY: No, there's a gift 24 inside. 25 11345 THE CHAIRPERSON: This particular StenoTran 2624 1 technology would seem to lend itself to delivering it, 2 selling it, sampling it, using the Internet. 3 11346 MR. GUMLEY: I agree with you it is, 4 but I don't believe it is going to happen as 5 ubiquitously as the industry is saying it is going to 6 happen. I think there is going to be a considerable 7 length of time of transition. It is that transition 8 period that I am most concerned about. That's what I 9 addressed in my presentation. 10 11347 If you were to open the starting 11 gates today to deliver material over the Internet, we 12 could deliver some of our software that was built 13 probably five and seven years ago over the Internet 14 quite effectively. 15 11348 But at Venture Canada and some of our 16 650 megabyte CDs and Canadian Encyclopedia, no. That 17 can't be delivered. There's too much text. There's 18 too much video in it. It won't be transferred easily. 19 56-K bought modems just won't download and upload the 20 material quickly enough for it to be cost effective and 21 efficient. 22 11349 It's just not secure enough a way of 23 transferring to make sure that there are no bugs that 24 are going to be transferred across as well. 25 11350 With all due respect to CISCO and StenoTran 2625 1 ThreeCom and the rest of the companies that are doing 2 wonderful things with the Internet, it is not going to 3 be widely accepted. The transactions of reviewing the 4 material that we have, sure. They will come to our Web 5 site, they will look at a preview. That's what the CD 6 sampler will do. Yes, that will be available through 7 the Internet, but they won't purchase the product that 8 way. 9 11351 It's the content issue that I am 10 concerned about in this transition period. My biggest 11 concern is that we are struggling so hard to gain 12 market share, gain mind share from the Canadian 13 consumer for the Canadian products that we produce. We 14 are just inundated with American product. 15 11352 I know that you are the only game in 16 town. You mentioned that earlier. It's a forum for a 17 lot of people to speak about these issues, but if a lot 18 of people had been addressing this, there's a very real 19 reason for it. It is that there is a very deep concern 20 by many of us that we are getting shut out. 21 11353 It's absolutely true. I don't want 22 to publicly go into all of the situations that we face, 23 but there are many and they are difficult and they are 24 going to impact Canadian culture. I think that is 25 what's behind the original purpose of the CRTC, the StenoTran 2626 1 protection of Canadian culture. You said it yourself. 2 11354 That's why I'm saying yes, you are 3 right, it doesn't fit the existing mandate of the CRTC. 4 It's a new medium. In my opinion, you need to try and 5 figure out how it can. Otherwise, the development of 6 content in this new media is going to disappear. 7 11355 THE CHAIRPERSON: You mentioned in 8 your presentation, and you were showing us a label on 9 one of them, the typing one I guess -- 10 11356 MR. GUMLEY: Yes. 11 11357 THE CHAIRPERSON: You said the label 12 says that it satisfies or is in accordance with 13 Canadian school standards. 14 11358 MR. GUMLEY: Meets Canadian school 15 standards, yes. 16 11359 THE CHAIRPERSON: Do you think 17 parents understand the value of that trade mark or that 18 brand that you have got on there that that is a 19 Canadian product and it meets Canadian school products? 20 11360 MR. GUMLEY: That's exactly what we 21 want help with. No. We don't yet, but we think we can 22 help Canadians understand. They don't see this. 23 11361 THE CHAIRPERSON: Do you think if 24 Canadian parents better understood that sort of thing 25 that you would have, let's say in English Canada, the StenoTran 2627 1 equivalent of the market driven approach that you end 2 up with in Quebec because of the language situation? 3 11362 MR. GUMLEY: I'm sorry, sir, I didn't 4 understand your question. 5 11363 THE CHAIRPERSON: If Canadian parents 6 understood that they could buy these products for their 7 children when they are buying computers for them to 8 use, after they have bought the computer, when they go 9 to Future Shop or wherever they are going to buy their 10 software, that here's a particular product that 11 satisfies school standards, that that in and of itself, 12 if they were better aware of that, they would be 13 overcoming some of these problems and be more market 14 driven, if you will, just like the market driven 15 approach was in Quebec because of the language 16 situation. 17 11364 MR. GUMLEY: I agree with that, yes, 18 and we have proof of that in the fact that we do sell 19 them into the home through the schools now which is the 20 only opportunity that we have to get to the home user. 21 11365 We sell thousands of CDs to the homes 22 through the schools, but we have to leverage off the 23 schools and that's problematic. We don't think that's 24 a good use of the school's time, to be selling product. 25 11366 It's effective because what it does StenoTran 2628 1 is it helps the children to keyboard more effectively. 2 That's why we encourage it and why the schools do it. 3 We think we should also be using the traditional 4 mechanisms of distributing product through the retail 5 marketplace. 6 11367 We just can't get it on the shelves. 7 Like I said earlier, it is extremely difficult. 8 Parents have told us "Why haven't we seen your product? 9 Why haven't we found it before?" We have been asked 10 that question many, many times. 11 11368 Does that answer your question? 12 11369 THE CHAIRPERSON: It does. I guess 13 what I'm struggling with is how best do you think that 14 we, and I don't necessarily mean we the CRTC, I mean we 15 collectively, through federal and recognizing that 16 education, to what extent some of these packages fit 17 within normal school curriculum. Education is a 18 provincial responsibility to the extent when we get at 19 that level. 20 11370 MR. GUMLEY: Right. 21 11371 THE CHAIRPERSON: To what extent can 22 the governments, federal or provincial, be of help in 23 this respect. 24 11372 MR. GUMLEY: Significantly, I think 25 in the purchasing of advertising and promotion StenoTran 2629 1 situations. I used the example of the tourism industry 2 and what Industry Canada does on behalf of the tourism 3 industry in my presentation. 4 11373 I have racked my brains, believe me, 5 and so have our group of people at the office in the 6 company trying to figure out ways of effectively 7 letting the Canadian consumer know we have this 8 product. That's why I asked if the CRTC could make a 9 recommendation to other departments in the government 10 saying "Look, you need to look at this. You need to 11 address this issue". 12 11374 The Heritage Ministry has appointed 13 Mr. Rene Bouchard as one of the people to look at this. 14 We have been very encouraged by the support that we 15 have had from that, but it's a beginning process. 16 11375 I think generic advertising about the 17 fact that we have extremely talented, very effective 18 Canadian programmers of content, not just Canadian 19 content but just Canadian software in general, would 20 really assist us in getting the message out to the 21 Canadian consumer that there is excellent software that 22 is just as good, if not better, than a lot of the 23 American software that comes up. 24 11376 THE CHAIRPERSON: Do you have some 25 specific ideas as to -- you used the analogy of Travel StenoTran 2630 1 Canada or whatever. 2 11377 MR. GUMLEY: Yes, the Industry Canada 3 initiative through tourism. 4 11378 THE CHAIRPERSON: Do you have some 5 specific initiative in mind that could be developed 6 either through Heritage and/or Industry Canada with 7 respect to making the Canadian public more aware that 8 we have got the software that does meet Canadian 9 education standards? 10 11379 MR. GUMLEY: Yes, and I am not just 11 talking on our own company's behalf. Obviously there 12 are a lot of other smaller companies that need this 13 exposure. There are people in Atlantic Canada. 14 11380 Fortress of Louisburg was produced by 15 a company, Fitzgerald Studios. They also produced 16 Alexander Graham Bell. There is Inuva in Newfoundland. 17 It is producing great Canadian software. There are 18 lots of companies across the United States that are -- 19 across Canada that need this assistance. 20 11381 THE CHAIRPERSON: Strike that from 21 the record. 22 11382 MR. GUMLEY: The specific initiative 23 would be, in my opinion, newspaper and magazine 24 advertising that could be purchased by the Canadian 25 government whereby we could take sections of it. There StenoTran 2631 1 are two components of advertising that are very 2 expensive, the creation of the content, the creation of 3 the ads in particular, the background. 4 11383 We partner with Corel to do this. 5 They took their designers to do that because our 6 company doesn't have the talent to be able -- they have 7 the talent to be able to do it, but they are working on 8 all kinds of other things like the box art and the rest 9 of it. 10 11384 These are the problems that we have. 11 We don't have the art departments, we don't have the 12 graphics departments to do this material effectively. 13 The Canadian government has access to those as shown 14 through what they do with the tourism promotions that 15 they do. 16 11385 Then we can take sections to promote 17 particular components of our product mix as it relates 18 to math or as it relates to English skills or spelling 19 skills or Canadian content issues. Then what I think 20 we would be doing and achieving in that is giving a 21 forum in media which is a place where lots of Canadians 22 see this material and say look, it is different. 23 11386 Like I said, the flyers -- there's 24 one right here. I just quickly point to it. "It's kid 25 days". On that cover which says kid days, there's not StenoTran 2632 1 one Canadian product. There's even spelling blaster 2 plus. I know what centre is going to be like in 3 spelling that. Blaster plus, it's not going to be the 4 Canadian spelling. 5 11387 As I said in my presentation, that 6 may be a small point, but doggone it, it's symptomatic 7 of the erosion of our cultural difference between the 8 United States and Canada. It's one of the few places 9 you can really point to that kind of a difference. In 10 my opinion, it's dangerous. 11 11388 We need to do more collectively, 12 together, to get these initiatives to Canadian people 13 and let them know what's out there so that we can 14 survive and continue to grow with our passion of 15 continuing to make a difference in education and 16 Canadian technology. 17 11389 THE CHAIRPERSON: Is this a problem 18 that you think needs sort of a short term government 19 assistance in order to kick-start it to get you to a 20 stage where the industry could sustain itself because 21 you would have the revenues that you could support your 22 own advertising programs and so on? 23 11390 MR. GUMLEY: At this point in time I 24 think so. The most dangerous challenge that we have is 25 the Internet. It's a wonderful medium. It's going to StenoTran 2633 1 have incredibly terrific opportunities for us to go 2 global with what we have. 3 11391 Our business plan calls for some 4 great excitement and initiatives with respect to that, 5 but there is a transition. While the schools are 6 connected to the Internet at this point in time, they 7 are not using it effectively. 8 11392 There are four, five, maybe ten years 9 of this transition that are to take place. Five years 10 ago, CD-ROM was just coming on the marketplace. Now 11 it's ubiquitous and all the schools have CD-ROM 12 players. Five years is a long time in our business. 13 It is definitely this transition period that we are 14 struggling with. 15 11393 We have to fund the Internet 16 strategies to maintain Canadian culture for education. 17 At the same time, we have to sustain our existing 18 business model. We can't do it because we can't get 19 the shelf space. 20 11394 In the longer term, you are correct. 21 If we can generate these initiatives and we can form 22 these partnerships, I think that it will sustain the 23 industry to allow us to take our cultural content 24 internationally. 25 11395 I think we have a wonderful platform StenoTran 2634 1 in Canada to let the rest of the world know how we have 2 dealt with our cultural differences and our cultural 3 relations. We can create this content and export it 4 over the Internet. It is going to create huge 5 opportunities for our Canadian industry to let the 6 world know how our country survives and does as well as 7 it does. 8 11396 THE CHAIRPERSON: What about the 9 extent to which some of your product might have legs to 10 travel in global markets? You have emphasized that a 11 lot of it is uniquely Canadian because it serves the 12 Canadian educational standards. 13 11397 Some of your products, I presume, 14 would have international appeal. What's the potential 15 there do you think? 16 11398 MR. GUMLEY: It's really exciting for 17 us. May I just reach down here for a second. It's 18 right here. 19 11399 This particular product, Cross 20 Country Canada, has been wildly successful. May I take 21 a second to give you a wonderful story about it? 22 11400 THE CHAIRPERSON: Sure. 23 11401 MR. GUMLEY: It was created about ten 24 years ago. We wanted to upgrade it. We are creating a 25 Cross Country Canada platinum version. It's coming out StenoTran 2635 1 after being on the market for ten years. It was 2 originally created for the Apple II. 3 11402 When we put out the application for 4 the graphics artist to come in and help us with it, one 5 of the applications came in that said "Look, I've got 6 to have this job. I've got to have this job. When I 7 was in grade six, they kept kicking me out of the 8 computer lab because I was wanting to play Cross 9 Country Canada all the time". 10 11403 It was a wonderful way for the kid to 11 apply. We hired him right away. He's sitting there. 12 He's now 21. He played with this program ten years 13 ago. He is poring over the details of this program. I 14 give you that example because that's the importance of 15 what Canadian technology can do to inspire Canadian 16 kids to grow up and become artists in technology. This 17 particular person is working for us now to upgrade the 18 program so that other kids will hopefully do that in 19 the future. 20 11404 This program lends itself to our 21 Cross Country U.S.A. program which has done extremely 22 well. It has been one of our flagship products. It 23 also can be easily taken over to the Cross Country 24 Europe, Cross Country Australia, because of the kind of 25 engine that it is. StenoTran 2636 1 11405 So yes, a lot of our product has the 2 capability to be transported. So does our Internet 3 journey. It doesn't have to be the Canadian Heritage 4 interactive journey. It can be the castles of Britain 5 or the United Kingdom or Europe or whatever. 6 11406 We need to be able to generate the 7 concepts and ideas. The lesson plans that we create 8 around this content assist teachers to teach this 9 material more effectively. Bringing education alive in 10 the classroom is the crucial component of what this can 11 do. 12 11407 We can't let that die. It has to 13 happen from here in Canada because we are good at what 14 we do. We have to let the world know how good we are. 15 11408 THE CHAIRPERSON: When you go to the 16 U.S. market with -- 17 11409 MR. GUMLEY: Cross Country U.S.A. 18 11410 THE CHAIRPERSON: Cross Country 19 U.S.A., are you able then to convince either the retail 20 stores, the Future Shops or whatever or the computer 21 manufacturers to either give you shelf space or bundle 22 the packages with their computers at the point of sale? 23 11411 MR. GUMLEY: To be perfectly blunt, 24 we are just not strong enough. The retail market in 25 the United States has incredible demands with respect StenoTran 2637 1 to NCAP, costing, commitments to advertising. It's 2 tough enough getting into the Canadian marketplace with 3 the promotion dollars that are required to get space on 4 the shelves and in the advertising flyers. 5 11412 THE CHAIRPERSON: You talked about 6 the partnership here with Corel. I was wondering 7 whether the opportunities for partnerships there might 8 be greater if they see the value in the content itself. 9 11413 MR. GUMLEY: Yes, they are and we are 10 exploring them actually. That is an excellent 11 suggestion and we are exploring those opportunities. 12 11414 To be perfectly frank, Corel 13 struggles with exactly the same issues that we do 14 because they are fighting in a market share perspective 15 with the largest company in the world. They have their 16 own issues at this point in time. 17 11415 THE CHAIRPERSON: Thank you. Those 18 are all my questions. 19 11416 I think Commissioner Grauer has a 20 question. 21 11417 COMMISSIONER GRAUER: Thank you. 22 11418 I want to go at this from a slightly 23 different angle. Earlier last week we had IMAT, the 24 interactive multimedia arts, some of these new media 25 companies, content producers. We had a lot of StenoTran 2638 1 discussion about the issues of branding, marketing 2 promotion and how important those elements are with 3 respect to new media companies. 4 11419 In fact, IMAT had recommended what 5 they called four pillars of support, two of which were 6 access to capital for investment, interactive new media 7 products and companies and support for marketing and 8 promotion. 9 11420 I guess what I'm really wondering is 10 when you go to a Future Shop or some of these 11 companies, what you are up against with the large 12 multinationals or American companies is that they have 13 much more cash available to support the distribution, 14 as you say, whether it's buying shelf space, whether 15 it's advertising to support the activities of being on 16 those shelves and whether -- I guess what I'm asking, 17 and I would appreciate your comments on this, is 18 whether some form of support or access to tax 19 incentives or funds to support marketing and promotion 20 along the lines of what Commissioner Colville was 21 saying would go some distance in assisting you in the 22 growth and development of your company. 23 11421 MR. GUMLEY: Yes. Thank you for the 24 question. The tax incentive would be terrific. 25 11422 One of the things we are burdened StenoTran 2639 1 with currently in our company is the amount of debt we 2 have to incur to be able to get into the marketplace. 3 There is a fair amount of capital available from the 4 Business Development Bank who have taken some great 5 initiatives. 6 11423 Telefilm has recently been terrific. 7 Without them we wouldn't have made a couple of the 8 products we have put on the marketplace. They have 9 recently begun to recognize the importance of 10 marketing. 11 11424 Their support comes in the form of 12 debt to our company and we have to repay it, not that 13 we are averse to doing that, but it does make it 14 problematic because it reduces the amount of money that 15 we can put into the investment of more intellectual 16 property and the creation of more content. 17 11425 To answer your question specifically, 18 absolutely. I know that our industry in British 19 Columbia, New Media B.C., is approaching the British 20 Columbia Government for a tax credit similar to what 21 the film industry has been able to secure in British 22 Columbia and initiatives like that. 23 1030 24 11426 One of the initiatives that has long 25 been taken is the initiative for scientific tax StenoTran 2640 1 research, but we have found, unfortunately, in the last 2 few years there has been a significant tightening of 3 the parameters of the tax research from a content 4 development perspective for our industry and new media. 5 Much of our applications for content creation have been 6 turned down for tax credit, which kind of defeats the 7 purpose. It is kind of frustrating. We go back and 8 forth on issues, the definition of what does qualify 9 for tax credit. We can't understand what it is. It 10 seems to be like trying to figure out -- put a nail in 11 jello. It's that amorphous. 12 11427 I think a clearer definition of 13 support for our industry, recognizing the cultural 14 importance of the industry I think would take it out of 15 some of the scientific parameters that the tax credits 16 are currently in and that I think would be an important 17 initiative and recommendation that the CRTC could make, 18 if you can make those kinds of recommendations to other 19 departments of the government. 20 11428 COMMISSIONER GRAUER: Thank you very 21 much. 22 11429 MR. GUMLEY: You are welcome. 23 11430 THE CHAIRPERSON: Thank you very 24 much, Mr. Gumley. We appreciate your presentation here 25 today. StenoTran 2641 1 11431 We will take our morning break now to 2 give you an opportunity to take down your product 3 display. 4 11432 MR. GUMLEY: I sincerely thank you 5 very much for the opportunity to be here today. 6 11433 THE CHAIRPERSON: Thank you. 7 11434 We will take our break now and 8 reconvene at a quarter to eleven. 9 --- Short recess at 1030 / Courte suspension à 1030 10 11435 THE CHAIRPERSON: We will return to 11 our proceeding now. 12 11436 Madam Secretary, the next party. 13 11437 MS BENARD: Thank you, Mr. Chairman. 14 11438 The next presentation will be the 15 Canadian Conference of the Arts, la conference 16 canadienne des arts. 17 11439 THE CHAIRPERSON: Thank you. 18 PRESENTATION / PRÉSENTATION 19 11440 MR. CRAWLEY: Thank you. Thank you 20 once again, ladies and gentlemen. 21 11441 My name is Alexander Crawley. I am 22 the Director at the Board of the Canadian Conference of 23 the Arts for Film and Television -- for Film and 24 Broadcasting. 25 11442 I am sure you have all had a chance StenoTran 2642 1 to look at our submission. In watching the proceedings 2 of this hearing we are quite gratified that a lot of 3 your intervenors seem to be feeling towards a model. 4 The other day we were discussing a model when I was 5 here as the Executive Director of the Canadian Screen 6 Training Centre -- I have to remember which Canadian 7 thing it is. I wasn't empowered to support any 8 particular model at that time. However, there are some 9 very specific recommendations that this committee 10 report -- basically, this submission comes out of a 11 committee because like many organizations we have been 12 feeling towards this moving target called new media for 13 some time. 14 11443 However, we are very happy now that 15 finally and, in fact, this is the first time we have a 16 representation specifically from the sector and some 17 real expertise from the new media sector, in the person 18 of Ana Serrano who is with me. Ana is the Director of 19 the Medialinks Habitat new media development centre at 20 the Canadian Film Centre in Toronto, and also now is 21 serving at the Board of the CCA as a new media 22 representative. 23 11444 So, without further ado I would like 24 to turn this time period over to her to talk about our 25 submission and how our thinking has developed since we StenoTran 2643 1 gave you this submission. Also, since she is the next 2 one our list for the Medialinks Habitat, we could just 3 treat this, with your permission, as a block of time 4 that you have here to discuss the issues with Ms 5 Serrano and ask her any questions that you may have. 6 So Ana. 7 11445 MS SERRANO: Thank you very much, 8 Sandy. 9 11446 I should have brought two hats today, 10 so that you will know from which mouth I am speaking, 11 but I will obviously start with the CCA. 12 11447 I was very pleased when Sandy asked 13 me to sit as part of the Board of Directors on the CCA 14 and came at this fairly recently. So, I have to say 15 that I didn't have a hand in writing this new media 16 submission to the CRTC, but I was extremely happy to 17 see that the tone of the document matched what I felt 18 was important from which artists should be speaking. 19 That is, that I think it is really important that 20 Canadians know that artists are actually quite excited 21 about the opportunities presented by new media and this 22 new technology, and that we should, as artists and 23 content creators, take a proactive stance, rather than 24 a reactive and defensive stance against some of the 25 changes that are taking place in the new economy, and StenoTran 2644 1 in fact can probably benefit from a lot of these 2 opportunities. 3 11448 I think you will notice from the 4 submission that this tone is indeed present in all of 5 the points that were made. 6 11449 I would like to speak about three of 7 them, which I think speaks more clearly about what my 8 personal beliefs are in terms of the relationship 9 between the technology and the arts. The first one is 10 this whole notion of protection of artists' rights. I 11 think that the CCA is quite sophisticated in its 12 understanding of intellectual property, and instead of 13 having sort of this defensive cry against what could 14 potentially be a terrible sot of outcry against the 15 fact that artists' rights -- or artists' copyright may 16 be violated on the net, they actually have put forth a 17 series of recommendations that will allow -- and this 18 is in section 4, I believe, -- a series of 19 recommendations, section 3 and 4, that will look at 20 sort of a hierarchical notion of copyright for artists, 21 and that they would like to play a role in determining 22 what some of these copyright hierarchies may be. 23 11450 The second point that they talked 24 quite clearly about is this whole creation of a new 25 media commission, which I think is terribly important StenoTran 2645 1 as well. Sandy had told me earlier this week that when 2 Robin King from Sheridan had spoken, he had actually 3 mentioned this whole notion, that the new media 4 commission is also important, filled with people on the 5 committee that actually do know something about new 6 media, as opposed to a series of appointees that come 7 from other sectors. So, I think that is also 8 incredibly important. 9 11451 Then, the third point is this whole 10 notion of trying to create some kind of point system 11 that will determine what we mean by Canadian content. 12 I think we all know that the Internet is presenting an 13 opportunity to tape into a global marketplace, so we 14 are not really talking about creating content that's 15 purely Canadian, but instead creating content that has 16 as part of its team a series of Canadian members. 17 11452 The Cavco model, as it stands, is 18 probably not the best one, but I think the CCA placed 19 it in this particular document as a potential model 20 that we can look at for this kind of a point system and 21 new media. 22 11453 So, I would urge that the CRTC look 23 at these three particular points that come from the 24 CCA. 25 11454 Now, we can either sort of talk about StenoTran 2646 1 the CCA's role and this particular document now, or I 2 can segue into some of the points I would like to make 3 on behalf of the CFC. Which would you prefer? 4 11455 THE CHAIRPERSON: The person who was 5 going to question you on the first part prefers the 6 former. 7 11456 MS SERRANO: All right. 8 11457 THE CHAIRPERSON: So perhaps we can 9 do that and we can have a discussion around those 10 issues and then move into the other one. Is that your 11 presentation on that issue then? 12 11458 MS SERRANO: Yes. 13 11459 THE CHAIRPERSON: Commissioner 14 Wilson. 15 11460 COMMISSIONER WILSON: Good morning, 16 Ms Serrano and Mr. Crawley. Thank you for being with 17 us today. 18 11461 I would like to begin our discussion 19 by asking you a number of questions of clarification 20 about statements that you have made in your submission. 21 I am going to do this by taking you through the 22 specific recommendations that you have very usefully 23 summarized at the beginning of your submission. Then I 24 would like to explore a couple of concepts with you 25 with respect to your particular approach to the idea of StenoTran 2647 1 regulating new media, as well as the whole notion of 2 cultural identity in this new environment. 3 11462 Your first recommendation suggests 4 that the federal government amend the Broadcasting Act 5 so that it specifically applies to new media. You also 6 state that this amendment should include the 7 differentiation between traditional broadcasting, which 8 is controlled by a system of licensing and multipoint 9 digital delivery which is not. You then go on to state 10 that it would include a statement expressing the 11 government's policy objective to ensure access to 12 content produced by Canadian on the Internet. 13 11463 First of all, I am curious as to what 14 precedent you are looking to to apply the Broadcasting 15 Act to new media, especially in light of the fact that 16 you are suggesting that new media be differentiated 17 from traditional broadcasting in the Act. Are you 18 saying that new media is broadcasting or is analogous 19 to broadcasting, or is it just sort of -- you are 20 looking for some place to put this and that was your 21 best instinct? 22 11464 MS SERRANO: Do you want to go first? 23 11465 MR. CRAWLEY: Go ahead. 24 11466 COMMISSIONER WILSON: Ms Serrano, I 25 know you said you didn't participate in the writing of StenoTran 2648 1 this. 2 11467 MS SERRANO: Yes. 3 11468 COMMISSIONER WILSON: Please do 4 whatever you want in terms of providing me with the 5 background. 6 11469 MS SERRANO: I think we should just 7 have a conversation with everyone involved here. 8 11470 The way I understand this particular 9 point is that one of the key problems in the new media 10 industry is no one knows who is going to pay for 11 content. So, looking at I think the Broadcasting Act 12 allows -- well, allowed the CCA to look at a model 13 where they can take some of the best practices in that 14 particular model and then apply it for the development 15 of new media content. 16 11471 So, if you notice, one of the points 17 that they actually made was this whole notion that ISPs 18 be mandated to provide at least 5 per cent of their 19 gross earnings, if they make over $500,000, towards 20 content development. 21 11472 So, I think it is just a way to try 22 to fund what is one of the most important things in the 23 industry, which is going to be this whole content 24 development portion of new media. So, I think that is 25 really why they took a look at the Broadcasting Act. StenoTran 2649 1 11473 Sandy, do you have more to add? 2 11474 MR. CRAWLEY: Yes. I think as with 3 several of the intervenors you have heard over this 4 hearing, there needs to be an attempt to specifically 5 define those activities over the net, as the model that 6 we are using now, which are analogous to broadcasting. 7 So, even this morning I think Mr. Morrison with Friends 8 was saying if it's the same or a very similar linear 9 delivery of a continuous story or a product or a 10 program that happens to be delivered by this medium, we 11 have to find a way to capture that in terms of the 12 Broadcasting Act. 13 11475 The example I could give is -- 14 perhaps a negative analogy is that we might not be 15 having this struggle if the powers that be in 16 government had listened to the CCA's position at the 17 time that they removed the word "culture" from the 18 Telecommunications Act. We wouldn't perhaps be having 19 this struggle right now, and that was a very 20 unfortunate decision that we still maintain was a wrong 21 one and perhaps there is a solution there. Perhaps 22 there is a solution that involves not only looking at 23 the Broadcasting Act and bringing it up to a modern 24 standard to cope with the technological developments, 25 but perhaps going back, even though I know it was only StenoTran 2650 1 1991 or so, and looking at the Telecommunications Act 2 and rectifying that. Because if we had the cultural 3 mandate once again in the objectives of the 4 Tele-communications Act, I think the convergence of 5 your responsibilities here at the Commission would be 6 simpler in that sense. 7 11476 But other than that, I think Ana has 8 made the essential point. The practical realities now 9 are for you to decide whether through your legal 10 mandate or through moral suasion, which can be quite 11 effective at times, whether we can get some of the 12 revenues flowing back from the larger ISPs into 13 production. 14 11477 COMMISSIONER WILSON: So the funding 15 is really your central concern? 16 11478 MR. CRAWLEY: In a sense it's the 17 allocation of resources, yes. Also, access and, 18 obviously, the Copyright Act, as you have been 19 exploring -- 20 11479 COMMISSIONER WILSON: Yes, and we 21 will go there later. 22 11480 MR. CRAWLEY: Yes. 23 11481 COMMISSIONER WILSON: Why in that 24 recommendation do you say that multipoint digital 25 delivery would not be licensable under the amendment StenoTran 2651 1 that you are suggesting? You are saying that 2 traditional media is licensed and multipoint digital 3 delivery is not. Why would you make that distinction? 4 11482 MR. CRAWLEY: Again, I have to 5 confess that if we had greater resources I would have 6 the entire committee here with me, but I think that was 7 perhaps the feeling of that committee, that they were 8 accepting the idea that if it's multipoint -- 9 multi-point delivery is not exactly analogous to 10 broadcasting. 11 11483 I feel a bit caught up there because 12 I am not convinced that it isn't, myself personally. 13 So, I am sorry, I have to sort of beg off that one. 14 11484 COMMISSIONER WILSON: That's fine. 15 Maybe as we go along it will become clear, but I guess 16 the reason I am asking about that is that the next part 17 of that recommendation says that the amendment would 18 also include a statement expressing the government's 19 policy objective to ensure access to content produced 20 by Canadians on the Internet. If the multipoint 21 digital delivery is not licensable how would you 22 envision that access to content be ensured? 23 11485 Are you suggesting in that statement 24 that we establish a Canadian content requirement for 25 new media? StenoTran 2652 1 11486 MS SERRANO: I don't think so. 2 11487 COMMISSIONER WILSON: So how are you 3 ensuring access? 4 11488 MS SERRANO: I actually can't talk to 5 that particular point because this is one of the things 6 that I am actually quite -- feel strongly about this 7 whole notion of the fact that what we mean by Canadian 8 content is not necessarily about the content itself and 9 that it should be about the people who are creating the 10 content, or a certain portion of the people creating 11 the content be Canadian because there is no such thing 12 as the Canadian marketplace when it comes to digital 13 network delivery systems. 14 11489 So, it really doesn't make any sense 15 at all to talk about Canadian content as having a 16 Canadian spin requirement in the content itself. 17 11490 And in terms of access, I think that 18 universal access is actually probably going to be a 19 reality and if not in the home, then certainly in 20 public spaces like schools and libraries, et cetera. 21 11491 You can have content aggregators 22 which again the CCA document talks about, this whole 23 notion of perhaps creating a national portal site 24 through the CBC or through some other Canadian 25 recognizable entity, which could serve as the portal StenoTran 2653 1 through which schools and libraries and these public 2 spaces can go through, but that's different from a 3 Canadian content requirement. I don't know if that 4 makes -- 5 11492 COMMISSIONER WILSON: I guess what I 6 am -- 7 11493 MR. CRAWLEY: Sorry, I have just 8 reread this and I am not sure -- as I look at the 9 wording there I am not sure that the intention of this, 10 No. 1, the first paragraph, is not to point out the 11 fact that perhaps multipoint digital delivery, which is 12 not currently licensed needs to be captured somehow. 13 So that it is not saying -- it is not accepting holus- 14 bolus that this could never be licensed in any way. At 15 least that's how I would interpret it from my point of 16 view. 17 11494 So, it's not accepting the fact that 18 multipoint delivery -- it isn't necessarily regulated 19 through a licensing regime of the Commission. Again, 20 it is again trying to capture the different mechanisms 21 that are available, including the Copyright Act, of 22 course. If the Copyright Act comes into line in terms 23 of the digital universe that is avowed public policy 24 now to do some more reform of the copyright regime in 25 order to make sure that creators and producers' rights StenoTran 2654 1 are protected that might serve. 2 11495 Again, it is trying to capture the 3 situation between the pieces of legislation. We 4 understand that all the answers aren't going to come 5 from the CRTC. 6 11496 COMMISSIONER WILSON: I guess that's 7 what I am really struggling with when I go through this 8 because you have sort of taken certain elements of 9 what's in place now with respect to film and television 10 and sort of pulled them together. 11 11497 I just might abandon this plan and go 12 right to the sort of conceptual question. At the end, 13 which is at -- this is quite a controlled model that 14 you have presented, in terms of how to manage new 15 media. I mean, we have had a number of presentations 16 over the last couple of weeks. Some people have said, 17 "Keep your hands off it." Some have even gone as far 18 as to say that, you know, the way that new media is 19 going to develop will require you to dismantle the 20 broadcasting regulatory regime because that will be 21 meaningless in this new environment. Others have 22 suggested sort of a light-handed approach to the 23 regulation of new media, perhaps through the notion of 24 an exemption order with a threshold. We had a 25 discussion with Mr. Grant from the Directors Guild StenoTran 2655 1 yesterday. 2 11498 But this model that you have 3 presented is very detailed and pulls out a whole lot of 4 the elements of the existing system, and I am trying to 5 figure out how they all fit together in terms of what 6 you are really saying about what you want us to do with 7 new media. Do we license it? Do we apply Canadian 8 content regulations and the notion of the Cavco 9 criteria? Are you suggesting that those be used to 10 assess whether or not to fund Canadian content, or 11 whether or not it is Canadian content? 12 11499 If you are suggesting that we use it 13 to determine whether or not it is Canadian content -- 14 well, what's the point if there is no requirement? So, 15 these are the questions that I am sort of tossing 16 around in my head. I guess I am just wondering if in 17 all of this, and, Mr. Crawley, you have been here quite 18 a lot during the last couple of weeks, thinking about 19 the comments that have been made by a number of the 20 people who work in this industry, that if you start 21 trying to apply these regulations from the traditional 22 broadcast medium, the old paradigm, if you will, that 23 you are going to drive this industry out of the 24 country. If you start requiring Canadian content, 25 requiring -- I mean that's the nub of their argument StenoTran 2656 1 really, that they can locate anywhere. They don't have 2 to be here and they can still offer their services. 3 They can still create their content and still make it 4 available to Canadians from across the border or from 5 across the ocean, it really doesn't matter. 6 11500 So that's what I am struggling with 7 because from what I have read and from what I have 8 heard over the last two weeks, this is by far the most 9 controlled model of regulation that has been presented. 10 11501 MS SERRANO: I would like to reply to 11 that. I think I come at this with sort of a slightly 12 objective eye because I didn't participate in writing 13 this document. I have to admit that when I first read 14 the document my instinct was similar to yours, and then 15 I thought, like wow, everyone has been talking about 16 how we shouldn't be regulating the Internet. In fact, 17 I was talking to a colleague of ours earlier today and 18 she had mentioned that she was in an elevator recently 19 with three what seemed to be computer geek guys, and 20 they were saying, "Did you hear that the CRTC is going 21 to regulate the Internet?" and all the hype that 22 surrounds these particular hearings. 23 11502 What I came to realize after having 24 pondered this document is that there is always going to 25 be -- there has been extremes in this debate for so StenoTran 2657 1 long, for five years or more, especially in the United 2 States. 3 11503 There was this wonderful article, for 4 example, written in the Atlantic Monthly, I think two 5 months ago, three months ago, on the whole notion of 6 copyright, where they were looking at the two extreme 7 positions. On the one hand, the libertarian movement 8 in the States, led by the digurodi(?), like Ester Dyson 9 and John Perry Barlow, who say that, you know, digital 10 bits should be free and that we should not regulate 11 them at all. All the way to the other extreme, who 12 claim that everything should be sort of coded, so that 13 you know exactly where everything comes from. 14 11504 COMMISSIONER WILSON: These are the 15 digital watermarks. 16 11505 MS SERRANO: Yes, exactly, which 17 technologically speaking may or may not work. 18 11506 So, when I reread this document, I 19 think what became clear is that the CCA has actually 20 presented just a document that is not necessarily -- I 21 didn't read it as a prescriptive document the second 22 time around, but more like a document that presented 23 the best parts of certain models in the broadcast and 24 telecommunications industries that could be applied to 25 the -- I hesitate to use the word regulation, but to StenoTran 2658 1 the sort of shaping and development of the new media 2 industry. 3 11507 That's why in my introduction -- I 4 was a bit nervous earlier, so I think I can speak more 5 clearly now. In my introduction I was really -- I 6 wanted to stress that these are models that we should 7 look at. It doesn't make sense for us to pull out new 8 models out of thin air, when there are models out there 9 already which we can see how they might apply to the 10 new media industry. 11 11508 I think you are right in saying it 12 looks like a mishmash of things, but to quote sort of 13 Arthur Kessler, sometimes creativity is about 14 mishmashing things and putting them together and making 15 something new. Really, that's how I see the CCA 16 document, as now we can actually take a look at it. It 17 is something tangible that we can then say, "Okay, 18 let's pull it apart, let's see what makes sense and 19 let's throw out the stuff that doesn't make sense." 20 It's more useful an exercise in fact than just saying 21 these grandiose things, like, "Do not regulate the 22 Internet," because how are you supposed to move from 23 that position? 24 11509 COMMISSIONER WILSON: Well, the quote 25 that came to my mind when I reading through it was a StenoTran 2659 1 Marshall Macluhan quote from "The Medium is the 2 Massage," which is we look at the world through a 3 rear-view mirror. We march backwards into the future." 4 Which of course is whenever you are trying to deal with 5 something new you always look back at what is familiar 6 and sometimes hang onto that because you are not quite 7 sure. Certainly the resounding message that we have 8 received is that this is a big unknown. 9 11510 So, I think what we are looking at is 10 do we look back at that or do we make this paradigm 11 shift. 12 11511 MS SERRANO: I think we do both. I 13 don't think you can do anything else but both actually, 14 because you -- I talk a lot about when I was in art 15 school in high school and whenever my art teacher says, 16 "Draw anything you want," people went into a panic 17 because they could draw anything and they didn't know 18 how to do it. So, the results were actually worse than 19 if the teacher had said, "You have a two by two box and 20 you can only use grey ink, draw something." At that 21 point they could actually stretch out of the parameters 22 that were set for them and think of something more 23 creatively. 24 11512 Now, I am not suggesting that we 25 should apply everything from old models into the new StenoTran 2660 1 media industry, but I think it's important to actually 2 have something tangible to hold onto, while still 3 looking into the future. I know it's a more difficult 4 task, but I think it's the more measured, carefully 5 thought out and sensible task that people can do, as 6 opposed to just jumping into this vacuum and then 7 trying to scramble to try to get something pulled 8 together. 9 11513 MR. CRAWLEY: To answer your specific 10 question, and I think it's a good one, in terms of the 11 Canadian content point system, something like that. It 12 is my perception that the committee was looking at some 13 kind of criteria for a public investment or an 14 investment period, a funding mechanism for development, 15 as opposed to saying, "You can't get on the net if this 16 doesn't get Canadian -- Cancon branding --" 17 11514 COMMISSIONER WILSON: Certification. 18 11515 MR. CRAWLEY: "-- for the net," 19 because, as you say, with the current state of affairs 20 it doesn't make any different whether you do or not 21 because it could go on from anywhere. 22 11516 So, I really think it was in terms of 23 the investment, the critical investment that is 24 required. So, perhaps those funds, if we could bring 25 in a regime where ISPs were making a contribution to StenoTran 2661 1 production, development creation, that those funds 2 would then be dispensed based on some kind of criteria. 3 11517 COMMISSIONER WILSON: Let me ask 4 you -- I want to ask you about the CBC and enshrining 5 that, the role of the CBC in the fostering and 6 distribution of Canadian content, and you are 7 suggesting that this be defined in the Act. Would this 8 be similar to the concept suggested by SPTV of creating 9 a super-Canadian Web site? 10 11518 Part two of the question is: Given 11 that the CBC has already stated that it is interested 12 in doing this, in the absence of being designated to do 13 so, why bother? Why would you define it in the Act if 14 they are going to do it anyway? 15 11519 MS SERRANO: Personally, I don't 16 think you need to. 17 11520 COMMISSIONER WILSON: Okay. That's a 18 good, straightforward answer. 19 11521 MR. CRAWLEY: I think there was a 20 recognition there that they were -- that the CBC was 21 trying to get out front of this thing and do something 22 useful, as an aggregator I guess is the word that we 23 have come to use, and that they should be supported. 24 We have been engaged in a number of struggles to make 25 sure that public broadcasting was supported StenoTran 2662 1 appropriately in this country, so this is a bit of a 2 smorgasbord perhaps, a good chance of saying there's 3 something that is going on that relates to this. Let's 4 make sure that if a regime emerges of say Telefilm or 5 some other agency or a new agency is overseeing public 6 investment in new media development, that the CBC might 7 be a logical partner there. 8 11522 I tend to agree that you don't want 9 to put that kind of detail in the legislation. 10 11523 COMMISSIONER WILSON: Maybe it's a 11 good thing your committee members aren't here. You are 12 diverging from their view. 13 11524 MR. CRAWLEY: They are going to see 14 on TV. 15 11525 COMMISSIONER WILSON: The funding 16 approach that you have suggested, I guess we have had 17 some submissions that have suggested direct public 18 funding, but for the most part the creators of new 19 media content seem to be telling us that what they 20 really want is incentives, most of which are tax based, 21 and you do include a couple of tax-based incentives in 22 your recommendations. 23 11526 I guess the rationale put forward for 24 the notion of avoiding sort of the public funding, 25 direct public funding regime is that it can't respond StenoTran 2663 1 quickly enough to the nature of the market. If you 2 have to fill out applications and maybe line up or 3 something, you are not doing what you really should be 4 doing, which is creating, and if you can use the tax 5 incentives then it allows you to move forward at the 6 pace at which you need to and deal with that stuff in a 7 different way. 8 11527 MS SERRANO: I think that in the 9 absence of any kind of private sector capital that 10 small content creators can access public funding for 11 grants and/or loans for original content development is 12 going to be important. Until the private sector, 13 through venture capital firms, through banks, through 14 angel investors, through a number of different 15 mechanisms that are already in place in the States gain 16 a higher tolerance for risk, we are not going to have a 17 lot of original content development happening in 18 Canada. 19 1120 20 11528 I have spoken with a lot of small 21 multimedia companies in Toronto and B.C. and in Ottawa. 22 Many of them who aren't actually here -- most of them 23 probably didn't have the opportunity to present a 24 paper -- would love to have some capital to actually 25 develop content rather than develop corporate Web sites StenoTran 2664 1 that they have been doing for the past five years. 2 11529 It's just really difficult out there 3 now to get money for this kind of stuff from the 4 private sector. I don't know. I don't know how you 5 would legislate people to give money to small content 6 creators, but if they don't then someone is going to 7 have to. 8 11530 Otherwise our gaming industry is 9 going to suffer, our entertainment industry is gong to 10 suffer, our entertainment content industry is going to 11 suffer, new media that is. 12 11531 MR. CRAWLEY: Also, there is an 13 incentive based program that is possible. Obviously we 14 have seen it work in some other sectors. You could 15 come up with a tax incentive that would encourage 16 private investment. 17 11532 If we can in fact get similar 18 contributions coming from ISPs, IAPs or whatever, as 19 the cable has created a critical mass, the distribution 20 centre in the conventional media -- I know a lot of 21 people would want to call it a tax. It's not a tax as 22 far as we are concerned. 23 11533 Is that public funding or is it 24 funding that is overseen in the public interest, that 25 you create a critical mass of investment hopefully. If StenoTran 2665 1 this industry grows the way we have been told for 2 decades now it is going to, we would create the 3 resources there which might be overseen in a public way 4 but it wouldn't actually be coming from tax dollars in 5 that sense. 6 11534 COMMISSIONER WILSON: You just raised 7 this. I want to ask you about the idea of acquiring a 8 5 per cent contribution by the ISPs. This issue has 9 been talked about quite a bit during the course of the 10 hearings. 11 11535 My first question is how did you 12 arrive at the threshold level of 750,000? 13 11536 MR. CRAWLEY: I can't answer you. 14 11537 MS SERRANO: I have no idea. 15 11538 COMMISSIONER WILSON: Can you write 16 me? 17 11539 MR. CRAWLEY: Yes. We will make a 18 note and try and answer that question for you. 19 11540 COMMISSIONER WILSON: Okay. The 20 second question that I want to ask with respect to 21 this, as you were sitting talking about finding sources 22 of funding and what not, you know, in my mind the 23 rationale for requiring funding from cable companies is 24 that they own infrastructure and they control that 25 there and they are called gatekeepers by many people. StenoTran 2666 1 11541 The same is not true with the ISPs. 2 They are customers presently of the people who own 3 infrastructure, just like anybody else. So why would 4 you require of them and again if you did, are you not 5 concerned they would just say "See you! I'm heading 6 south". 7 11542 MS SERRANO: I think one of the main 8 problems -- it's a good idea, but I'm not sure how 9 feasible it is. I know quite a few people who have 10 ISPs in the States. They don't necessarily need to use 11 Canadian ISPs at all. There is going to be an issue 12 there. 13 11543 I'm not sure how that can be 14 resolved. 15 11544 MR. CRAWLEY: To be absolute about 16 it, it may be true that you won't have a local service 17 provider because of that extra cost of doing business. 18 However, I am personally not convinced that is true. 19 11545 I still like to make sure that my ISP 20 is someone that I can communicate with directly in my 21 own country and if I have to go down and knock on their 22 office door because I'm not getting the service I want, 23 I want to be able to do that. I want to see my 24 cultural values reflected there. Maybe I'm just an old 25 fashioned guy. Maybe it doesn't work that way. StenoTran 2667 1 11546 I'm not -- 2 11547 COMMISSIONER WILSON: It may not be a 3 case of what you want because the ISP will be the one 4 deciding whether or not to stay or go. 5 11548 MR. CRAWLEY: Exactly, but I think 6 that the ISP's customers have some say in that. I 7 would like to see some real research done on this. 8 Maybe the Commission has the resources to do that, to 9 see how many people choose an ISP based on the fact 10 that's it's a local company, someone who is 11 communicating directly with them, seeking their 12 business. 13 11549 There is a cultural identity, if you 14 will, even with the ISP. Maybe that's not accurate, 15 but that's what my instincts tell me, that people will 16 still want to go to -- as we found out with 17 conventional media like television. 18 11550 When the Commission has created a 19 critical mass of quality programming through its 20 regulation, people have chosen to go to those service 21 providers for their entertainment because they see 22 their values reflected there. 23 11551 I'm not sure that the same thing 24 can't work in the digital universe. As I said the 25 other day, you know, all culture is local. Maybe it StenoTran 2668 1 was McLuhan who said that originally too. 2 11552 There is still an incentive and a 3 business opportunity based on the fact that you are 4 actually located in the same place, not necessarily the 5 same city or whatever, but that you share a kind of 6 cultural identification with each other, including the 7 people you choose to buy your services from. 8 11553 COMMISSIONER WILSON: That kind of 9 leads me into the final question that I wanted to pose 10 to you. This really had to do with the whole idea of 11 culture and how local it is. 12 11554 We heard from a number of ISPs. Your 13 concern is Canadian content. That's the focus of your 14 submission to us. They have told us that there is 15 really quite a compelling business case for it because 16 people do want to see Canadian things. 17 11555 The appeal of the Internet, of 18 course, is that it's international and you can travel 19 the world on the Internet, but maybe there's a comfort 20 level, you know, starting with Canada or just the 21 convenience or the practicality of knowing what's 22 available in your community or in your country and, you 23 know, not having to worry about whether or not there's 24 duty or anything if you are making purchases. 25 11556 MR. CRAWLEY: Canadian dollars. StenoTran 2669 1 11557 COMMISSIONER WILSON: Yes. They have 2 said there is a really compelling business case for 3 doing this, this is what our consumers are demanding. 4 Why intervene in that? 5 11558 MR. CRAWLEY: I wish I had been here 6 for the particular intervention you are talking about. 7 Did they say they were then going to invest maybe 5 per 8 cent of their revenues into developing Canadian 9 content? 10 11559 COMMISSIONER WILSON: I don't think 11 they mentioned a figure. 12 11560 MR. CRAWLEY: No. But they said they 13 were developing Canadian content. 14 11561 COMMISSIONER WILSON: And giving a 15 prominence on their sites. 16 11562 MR. CRAWLEY: That's great. I think 17 the CCA is firmly in favour of voluntary regimes, if 18 they work. I believe that the power of government 19 policy and of regulatory policy should still be held 20 there as a possibility in case voluntary regimes don't 21 work. These are measurable. 22 11563 I suppose that that's an option, to 23 say pure market forces are going to work in this case, 24 we don't need to intervene at all. I have my doubts 25 personally, but -- StenoTran 2670 1 11564 MS SERRANO: I think one of the more 2 important points to make is what they are calling 3 Canadian content, which is just good business. The 4 Internet works well because it promotes -- community 5 based sites are what sells on the net. We have seen 6 that with e-bay, we have seen that with GO Cities, et 7 cetera. 8 11565 It's kind of, I don't know, 9 interesting that they would call that -- it is Canadian 10 content, of course, but it is also just good business. 11 I mean when they are talking about Canadian content and 12 they are saying "We want to create", I don't think they 13 are talking about creating the sweet hereafter 14 interactive movie when they are talking about creating 15 Canadian content. 16 11566 They are talking about shopping for 17 Canadian goods or putting Eddie Bauer online. I don't 18 even know if Eddie Bauer is still Canadian or not. I 19 think we have to be very careful that we make the 20 distinction between original content development that 21 has at its soul an art to it and content that is, you 22 know, what I call information based content which is 23 typically about electronic commerce, about -- yes, 24 actually about electronic commerce, shopping, and 25 that's different. StenoTran 2671 1 11567 When Sandy talks about voluntary 2 regimes, I think yes, everyone will tell you we will 3 support the creation of Canadian content, but they are 4 talking about Canadian shopping. They are not talking 5 about interactive narratives, virtual environments, 6 whatever, Canada or the Rockies, entertainment titles. 7 11568 COMMISSIONER WILSON: Then, of 8 course, there is the third Canadian content that you 9 pointed to. Actually another intervenor pointed to it 10 as well. That is Canadians creating the content. 11 11569 MS SERRANO: Yes. I mean I think 12 that it's important for us to create the growth of 13 original content development that is entertainment 14 based, that is education based, that is not just about 15 shopping. I think that more and more people will 16 probably want that kind of content in the future. 17 11570 Where I sort of disagree with some of 18 the people that have spoken, to me what Canadian 19 content is is about those people who are Canadians 20 creating the content rather than having a Canadian 21 content requirement in it. 22 11571 COMMISSIONER WILSON: Thank you very 23 much. Those are my questions. 24 11572 MS SERRANO: Great. 25 11573 THE CHAIRPERSON: Thank you, StenoTran 2672 1 Commissioner Wilson. 2 11574 Ms Serrano, did you want to make a 3 brief presentation on behalf of the Film Caucus before 4 we switch horses here? 5 11575 MS SERRANO: Yes. 6 11576 THE CHAIRPERSON: It was not meant to 7 be a pejorative comment on my colleagues. I have to be 8 careful what I say here. 9 PRESENTATION / PRÉSENTATION 10 11577 MS SERRANO: My presentation is 11 actually on behalf of the Canadian Film Centre. For 12 those of you who don't know, the Canadian Film Centre 13 recently received funding to develop a new media 14 department called Media Links Habitat which has been 15 funded in part by Bell Canada. 16 11578 Media Links Habitat's mandate is 17 actually to promote the development of original 18 content. My main point here today is that I think it's 19 really important that one of the key areas in the new 20 media industry is going to be training. 21 11579 It's really important for us to 22 remember that right now we are still at the infancy of 23 this medium. Most people don't even know what it is. 24 I'm sure when you looked at all your submissions, there 25 are many different definitions of what new media is and StenoTran 2673 1 what it could be. 2 11580 Certainly in our submission, we spoke 3 a lot about how new media is actually quite different 4 from film and television and print. We are in the 5 early stages of trying to define what the salient 6 characteristics of this media might be. 7 11581 The Film Centre believes that the 8 type of training that people need is going to be more 9 than just about software training. All of you know 10 that content is going to be king in this industry and 11 for this industry to evolve, we need to have more and 12 better content in the future. 13 11582 The training of content developers is 14 crucial. Training content developers is not about 15 training them in software, but about providing them 16 with both soft and hard skills. The Canadian Film 17 Centre is committed to doing that. 18 11583 In fact, it is more than just 19 training in the new media industry. We also believe 20 that they have to be trained how to be successful 21 knowledge workers. 22 11584 To that end, we believe in team 23 building and leadership training because we think that 24 people who will be working in the future have to have 25 particular skillsets that aren't really being met in StenoTran 2674 1 traditional educational institutes right now. 2 11585 Skills like entrepreneurialism, the 3 ability to create a vision for themselves and 4 articulate that vision with others; the ability to 5 oscillate between working individually and working as 6 part of the team. 7 11586 Secondly, the reason why we put the 8 new media design program together is that we felt there 9 was a vacuum in the marketplace in terms of training. 10 You either had higher education universities doing a 11 lot of research and development in new media and then 12 you had private training institutions doing these 13 typical software training courses. 14 11587 There was no middle ground where 15 people were actually thinking conceptually about what 16 this media might be and creating solid conceptual 17 frameworks, not only for the content but also in terms 18 of business models -- how do you make money on the 19 net -- as well as organizational models, what's the 20 most appropriate kind of company to form for this 21 industry, as well as doing production base training. 22 11588 The new media design program has done 23 that. Really that is the main point that I would like 24 to make on behalf of the Canadian Film Centre, that is 25 there are enough training institutions out there that StenoTran 2675 1 are pumping out sort of robots who know particular 2 software applications. 3 11589 We need to start creating and helping 4 people become better critical thinkers and better 5 creators for this industry. 6 11590 THE CHAIRPERSON: Thank you very 7 much. 8 11591 MS SERRANO: Thank you. 9 11592 THE CHAIRPERSON: I will turn the 10 questioning to Commissioner Pennefather. 11 11593 COMMISSIONER GRAUER: The other 12 horse. 13 11594 THE CHAIRPERSON: Commissioner Grauer 14 has had trouble containing herself here, so she may 15 have a question or two at the end. 16 11595 COMMISSIONER PENNEFATHER: Thank you 17 very much. You have actually begun to answer some of 18 my questions which I was really anxious to hear you on. 19 11596 I would like to start, if you don't 20 mind, by going back to your "definitions". I think in 21 your paper you talked about the convergence of the 22 creation, the commerce and the communication or 23 transactions. You raised this point earlier, how 24 important it is to understand that those are all 25 different but they are all happening sometimes through StenoTran 2676 1 the same media. 2 11597 Could you just help us again with 3 your take, your vision on what new media is. There are 4 a number of definitions, but where I am heading, and 5 you can just keep going with this if you want, is also 6 to tell us then what kind of courses, what kind of 7 specific training relates to that. 8 11598 You mentioned earlier too virtual 9 reality and three dimensional environments. You could 10 describe those and, therefore, what skills would be 11 developed. It's really just expanding on what you said 12 already. 13 11599 MS SERRANO: Sure. One of the 14 philosophies that we have at the new media design 15 program, and we have a faculty of seven -- one of them 16 is Daryl Williams who founded the media arts program at 17 Ryerson and actually was a colleague of Marshall 18 McLuhan's. Another faculty member is an associate 19 professor at York. We come from diverse backgrounds. 20 11600 The first philosophy we have is that 21 diversity is important in this industry. Simply 22 because you are going to have Bill Buxton from Alias 23 Way who actually calls it the new multiculturalism, 24 which is not about ethnicity but about a series of 25 people in a cluster, working as a team, from specific StenoTran 2677 1 specializations. This could be an artist, a screen 2 writer, a programmer, a film maker, et cetera. 3 11601 Part of that philosophy involves this 4 notion that we still don't know what new media actually 5 is. There's no definitive definition of it because, as 6 I said, it's changing all the time. It's still in its 7 infancy. We don't actually know what the ultimate 8 delivery channel is going to be. 9 11602 However, having said that, what is 10 important is that it is a communications medium. It is 11 two ways and it is non-linear. It has as part of its 12 grammar a spacial and temporal thing about it. 13 11603 Cinema is simply temporal and so is 14 television. New media encompasses both. That's where 15 you find the terms information architects coming from 16 because it's really about architecting a space in this 17 virtual world as well as creating a story or something 18 like that. 19 11604 I don't know if that helps in terms 20 of the definition of new media, but we do think that 21 because it is a communications medium, that's why you 22 have growth of community based sites, the growth of 23 chats, the growth of forums. That's why people like 24 using that stuff because you can in this particular 25 medium. StenoTran 2678 1 11605 It's known that your nature is also 2 very interesting to us because that's where you might 3 get new entertainment genres emerging. This whole 4 notion of interactive story telling or this notion of 5 virtual reality is part and parcel of that. the notion 6 that one could choose to go into spaces as opposed to 7 being led through those spaces. 8 11606 In terms of those two things, we are 9 definitely clear that those are salient characteristics 10 of the medium. 11 11607 In terms of what the language for 12 creation in this medium might be, and what I mean by 13 that is things like in film, for example, you have the 14 jump cut and the closeup and the pan. In new media we 15 still don't have that grammar, so that's part and 16 parcel of what we are trying to do and define and find 17 out about in our programs. 18 11608 COMMISSIONER PENNEFATHER: That's 19 very, very interesting because the tendency is always 20 when discussing this to imagine a finished product 21 which is something that has a beginning and an end or 22 it has a defined "script" which is delivered to me as a 23 user via television or via the Internet or I pick it up 24 at the store. 25 11609 You are entering into a world where StenoTran 2679 1 there is artistic work going on in the medium of 2 communication, so it may have an ongoing life. 3 11610 MS SERRANO: Yes. 4 11611 COMMISSIONER PENNEFATHER: If you 5 take something like virtual reality or 3D environments, 6 and let's get to the delivery point now. We hear a lot 7 of talk about the Internet and we have almost merged 8 the two discussions together. 9 11612 Will you be able to participate in 3D 10 environments via the Internet? 11 11613 MS SERRANO: Absolutely. You can 12 now. 13 11614 COMMISSIONER PENNEFATHER: In that 14 sense, what is the impact of the Internet on the kind 15 of art that you are developing and on the kind of 16 skills that you feel we need to develop in the training 17 side of things? 18 11615 MS SERRANO: I would just like to 19 talk about this whole notion of art. 20 11616 One of the things that we believe in 21 is that we are not just -- even though we do research 22 and development, or you could say that we do research 23 and development, we don't just sort of do experimental 24 artwork. 25 11617 One of the most important things StenoTran 2680 1 about our program is we actually want to see what kind 2 of interactive entertainment and entertainment genres 3 will be commercially successful in five years time. 4 11618 As part of the training, we also look 5 into business models. That's where I talked a lot 6 about transaction. I think I talked a little bit about 7 what are some of the revenue models in the submission 8 that I gave, how you have to be able to combine a 9 different series of revenue models. 10 11619 One of them might be advertising. 11 One of them might be sponsorship. One of them might be 12 transaction. One of them might be data mining. You 13 want to be able to see which combination of those 14 things would fit into the art or entertainment content 15 that you are developing. I just wanted to make that 16 clear. 17 11620 In terms of virtual reality, the 18 major skillsets that I think are going to be important 19 for that is in fact not about learning how to use the 20 SGI machine, but learning how to conceive of space. 21 11621 Architects actually make very, very 22 good new media developers because they have a good 23 understanding about the relationship between humans and 24 space. In terms of virtual reality training, I would 25 say that is probably one of the most important things, StenoTran 2681 1 how does one create positive space as well as negative 2 space in an environment and then how does the user then 3 navigate through that space so that it's simple, it's 4 easy to use and they don't get lost. I think that's 5 important. 6 11622 Perhaps, you know, a series of case 7 studies on traditional buildings and talking about how 8 they function as good uses of space. A series of 9 lectures on that as well as some software training that 10 will allow people then to start using these tools to 11 implement some of their ideas. 12 11623 I don't know if that sort of answers 13 your question on the skills based. 14 11624 COMMISSIONER PENNEFATHER: What I 15 hear is not just new media as an art form in itself, 16 but how new media is used in other forms of art or of 17 such things as architecture or industry development or 18 anything else. It seems also to be a tool of a 19 different kind of learning. 20 11625 You do mention the term lifelong 21 learning. 22 11626 MS SERRANO: Yes. 23 11627 COMMISSIONER PENNEFATHER: And Media 24 Awareness brought that term to us. 25 11628 MS SERRANO: Yes. StenoTran 2682 1 11629 COMMISSIONER PENNEFATHER: What does 2 it mean, lifelong learning, for you? 3 11630 MS SERRANO: Well, lifelong learning 4 to me is about this whole notion of the creation of the 5 knowledge worker. 6 11631 I think what we are finding is that 7 the whole definition of education is changing. 8 Lifelong learning is about the ability to have the 9 appropriate kinds of skills to know when to say "You 10 know what? I don't know this stuff" and then to be 11 able to have the skills to be able to research or ask 12 people on those things that you don't know and to be 13 able to be open to change and learning and to perhaps 14 potentially use technology as a tool to facilitate your 15 learning when you are on the job. 16 11632 Lifelong learning is actually about 17 developing an insatiable curiosity and a set of skills 18 that will allow you to satisfy that curiosity and build 19 on your knowledge assets. 20 11633 COMMISSIONER PENNEFATHER: You are 21 obviously developing courses in skills training in all 22 these areas. You mentioned that Media Links at Habitat 23 is funded by Bell Canada. 24 11634 MS SERRANO: Yes. 25 11635 COMMISSIONER PENNEFATHER: With that StenoTran 2683 1 in mind, a couple of questions. 2 11636 Is there a link between the courses 3 that are developed and where the students will end up 4 working and the funder? 5 11637 MS SERRANO: At the moment no. It's 6 funny. If you work in a multimedia firm, you end up 7 working for Bell Canada at some point. Either you 8 create their corporate Web sites or you create some of 9 the floppy discs they need. Indirectly they end up 10 working for Bell anyway. 11 11638 They typically tend to be hired on by 12 development companies rather than the telcos or Bell. 13 11639 COMMISSIONER PENNEFATHER: We have 14 heard a lot in fact about the importance of skills 15 development in the country and also the importance of 16 keeping people in the country. 17 11640 What are you hearing from your 18 students in terms of the challenges, what they need in 19 terms of skills development and the job opportunities 20 that are or are not available in Canada? 21 11641 MS SERRANO: One of the biggest 22 challenges that my students face is that in our 23 program, which is four months long, they actually 24 create a prototype, so it's a prototype that they can 25 potentially develop further for commercial StenoTran 2684 1 distribution. 2 11642 One of the challenges they have is 3 that they love doing that. They love the idea of 4 working on a team, working on a project from concept to 5 prototypical delivery. They find that most jobs out 6 there don't have these kinds of activities or they 7 don't do these kinds of activities. They do fee for 8 service work. 9 11643 They would love to have an 10 opportunity where -- in fact some of my students have 11 done this, where they have formed their own companies 12 because they refused to work for other people and just 13 do your sort of run of the mill corporate Web sites and 14 are now starting their own companies and trying to 15 develop models for funding projects that they want to 16 do. 17 1150 18 11644 Right now there aren't any mechanisms 19 out there for helping people who want to develop 20 original content to do that. 21 11645 COMMISSIONER PENNEFATHER: What would 22 you suggest would be those mechanism? You mentioned a 23 really important thing earlier and that's risk and the 24 difficulty now in this country. I think it was another 25 intervenor or two or three, also mentioned the same StenoTran 2685 1 problem, particularly at the start-up point. It's just 2 the segue you were leading to there. 3 11646 MS SERRANO: One of the things that 4 is missing is that most of the capital that is being 5 given by the private sector and by the government 6 actually, Telefilm, et cetera, they typically fund 7 medium to larger-sized companies, or what they look at 8 is a degree of professional history in many of the 9 management teams that they would fund. 10 11647 Now, I am not saying that is a bad 11 idea. I think that's probably a good idea. However, 12 this industry, as you know, is actually populated by a 13 lot of young, really successful people. I mean, if you 14 look at the companies that have done well in the 15 States, their CEOs are under the age of 29, so how do 16 you balance this seemingly competing notions that on 17 the one hand you want a certain level of maturity 18 because you want to make sure that your investment is 19 protected, but on the other hand the people with the 20 creativity, the people with the chutzpa typically tend 21 to be younger. 22 11648 So, one of my recommendations, and 23 this is something that we would like to work on at the 24 Canadian Film Centre, is the creation of an 25 incubator-type idea, where the management expertise is StenoTran 2686 1 provided by a mature, or you know -- I don't know, 2 someone who has had a long career, set of people, but 3 it actually funds a whole host of smaller companies 4 that may be populated by younger people. That's one 5 model. 6 11649 I know that Canada has had a long 7 history of incubators in its universities, et cetera, 8 and some of them haven't been very successful at all. 9 However, again in the U.S. there is a good model run by 10 Bill Gross, called The Idea Lab, which seems to be 11 doing really well. So, that's one model that we could 12 use. 13 11650 Another one is again, as much as I am 14 a proponent of kickstarting entrepreneurialism and 15 people, I think grants do help, especially for these 16 young people. They don't have to be large. They can 17 just be small development grants that they can get 18 access to, so that they can then market it or large it 19 to a larger sponsor who is in the private sector. 20 11651 COMMISSIONER PENNEFATHER: Thank you 21 for that. I think my colleague might take up that 22 point again a little later. 23 11652 So, let me ask you to get back to -- 24 what you were describing could be part of what a number 25 of players in this country could take on as a strategy StenoTran 2687 1 to support new media. We have had suggestions like 2 yours and I appreciate it and I really want you to 3 focus on the training and development side, although I 4 know you made some comments on the production and 5 delivery or marketing as well. 6 11653 But, if we put all of this together 7 what role do you see for the CRTC in all of this? 8 11654 MS SERRANO: I was hoping you weren't 9 going to ask that question. 10 11655 COMMISSIONER PENNEFATHER: Let me ask 11 it another way then. Let me go back to your point, all 12 of this discussion and a lot of what you have been 13 saying fits the larger discussion which is, of course, 14 part of the presentation earlier about regulation is 15 one piece of a series of things done in this country to 16 support the culture of this country through its 17 artists, through its artists in technology, as our 18 previous intervenor said, through to the 19 infrastructures themselves, that they be Canadian for a 20 number of reasons. 21 11656 So, those objectives are part and 22 parcel of the Broadcasting Act and because of the 23 nature of the infrastructure and the communication 24 medium that is represented by what is interpreted in 25 the Broadcasting Act, there are regulations which StenoTran 2688 1 support that content. 2 11657 To some that word means -- limits 3 that content, but to some it means it supports that 4 content and it has certainly had success in terms of 5 film production. We could also include national 6 institutions which have supported film production, 7 either through producing or granting, and we have had 8 other mechanisms inclusive of regulation that, for 9 example, have brought Canadian music artists to at 10 least their own audience, let alone a world audience. 11 11658 How does this paradigm then fit the 12 new media? We will come back then if there is any 13 place for regulation. You have a place on one point I 14 think for regulation, but we can talk to that too. 15 11659 MS SERRANO: I think one of the key 16 challenges that the CRTC will have for the future if 17 they decide, let's say, to adopt some kind of Cavco 18 model is that the people who are going to be part of 19 the new media industry in about five years, seven 20 years' time, are young people who have no conception of 21 what this kind of regulation may mean. 22 11660 What I mean by that is that the 23 students that we teach, and we have a large gamut of 24 them from 23 to 45, but most of them from about 35 on, 25 including myself, have lived in an environment where we StenoTran 2689 1 have been taught that government support is bad, where 2 we have been taught that government regulation is bad. 3 11661 Now, we may not agree with that 4 ideologically, but there is a learning curve I think 5 that this particular demographic needs to go through in 6 order to feel comfortable, (a) accessing some of the 7 funds that the CRTC may create or may mandate someone 8 else to create to see themselves as being part of this 9 government shaping of the industry, as opposed to being 10 outside of this government shaping industry, and that's 11 probably what the challenge is. 12 11662 I don't know whether you have noticed 13 that most of the people that you have talked in the new 14 media industry have this same sort of stance. I don't 15 think it's so much that they actually don't want help 16 from the government. It's just psychologically it's 17 alien to them. 18 11663 So, I think one of the things that 19 the CRTC could actually do is if they were to put in 20 place some form of regulation of content that's not 21 obviously onerous or let's say just requires one person 22 to be a Canadian producer, et cetera, I think it's 23 important that accompanying that particular piece of 24 regulation should be some kind of, I don't know, a 25 series of training that will tell people why actually StenoTran 2690 1 you are doing it and why it might be of benefit to them 2 because they may not -- I know that some of my students 3 just don't even consider the government as a potential 4 source for funding for a lot of their projects. They 5 would much rather go to the States because it's quicker 6 and easier and all that sort of stuff, to try to get 7 some kind of angel investor to think that they would 8 have to jump through the hoops to get some kind of 9 government funding. 10 11664 I don't know if that makes sense to 11 you at all. 12 11665 COMMISSIONER PENNEFATHER: It's a 13 fascinating perspective. I appreciate you bringing it. 14 My son always reminds me, it's your point of view, 15 mother, and your history, not mine. 16 11666 I appreciate that and it brings me to 17 your other point. If that's the case and that's the 18 reality, it is important, however, that Canadians as an 19 artist find the training here and find access to the 20 tools they need to develop here, as opposed to going to 21 the States. 22 11667 MS SERRANO: Yes. 23 11668 COMMISSIONER PENNEFATHER: Is it not 24 your thesis then that the effort has to be placed in 25 the training and the skills development and job StenoTran 2691 1 opportunities and, therefore, the content will follow? 2 I would assume this is your thesis, that Canadian 3 content is defined by the team, by the people actually 4 doing the work? 5 11669 MS SERRANO: Yes. 6 11670 COMMISSIONER PENNEFATHER: How does 7 their creation survive in the global marketplace then? 8 Are we going to have sufficient people working to have 9 a Canadian presence in the marketplace of the world? 10 It's an age-old problem here, the size of our market. 11 Now we have this huge market, so there shouldn't be a 12 problem, but it still remains a little mystery of how 13 you still maintain your particular voice and your 14 particular stories. 15 11671 MS SERRANO: Yes. It is a problem 16 and most people will probably say so what/ 17 11672 COMMISSIONER PENNEFATHER: Ah ha! 18 11673 MS SERRANO: Which is that clusters 19 are formed. I forget this management consultant's 20 name, but he calls them clusters and they are like 21 communities. Hollywood is a cluster. The Silicon 22 Valley is a cluster, et cetera. But more and more you 23 are going to find transcontinental clusters forming, so 24 these are people who are macromediasts authoring 25 specialists and they chat to each other from Hong Kong StenoTran 2692 1 to -- you know. 2 11674 So, some people may argue that that 3 doesn't matter, that there is no Canadian branded stamp 4 on content that gets distributed across the world. I 5 think then that perhaps one way of ensuring the Canada 6 brand on content, without having to instill some kind 7 of Canadian content requirement on Canadian content 8 that gets developed is to create some kind of, if you 9 will, brand committee that looks at all the different 10 Canadian brands out there in the global marketplace and 11 then promotes them as Canadian content to Canadians and 12 the international community. 13 11675 So the onus of branding Canadian 14 content does not necessarily belong to the creator 15 themselves, but belongs to some other form of -- some 16 government body that will market Canada through the 17 products that she creates, as opposed to putting that 18 responsibility on the creator. 19 11676 COMMISSIONER PENNEFATHER: I am going 20 to leave some time for Commissioner Grauer to ask you 21 some questions. I may come back. 22 11677 MS SERRANO: All right. 23 11678 THE CHAIRPERSON: I will turn to 24 Commissioner Grauer, but I am worried that you have so 25 piqued our curiosity -- StenoTran 2693 1 11679 COMMISSIONER GRAUER: No, I won't be 2 long. 3 11680 THE CHAIRPERSON: I just remind you 4 both that it's twelve noon and most of us are going to 5 want to eat sometime in the next few hours. 6 11681 COMMISSIONER GRAUER: Yes. I won't 7 keep you long because I know you have been here a 8 while. 9 11682 One of the things that I was really 10 interested in is when you talked about the 11 multi-disciplinary approach and what we have heard a 12 lot actually throughout this hearing is this whole 13 notion of partnerships. One of the things I have been 14 wrestling with is are we talking about people working 15 together in different ways in this environment than in 16 traditional business, if I can even put it that way. 17 So I was intrigued by that and your discussion of the 18 skills required, like learning leadership skills and 19 team building and that kind of thing. I wonder if you 20 could just elaborate a little on that piece of it. 21 11683 MS SERRANO: Sure. 22 11684 I think what happened was that as the 23 new media industry was growing there was also this 24 parallel movement happening, which was that the 25 traditional way of doing business was being questioned. StenoTran 2694 1 So, at that time, you know, the whole sort of command 2 and control hierarchy, the whole notion of wearing 3 suits to work, I mean as sort of banal as that, was 4 being questioned at the same time that the new media 5 industry was growing. 6 11685 So what in fact started to happen was 7 you noticed that the IT companies, and especially the 8 more creative IT companies, started to develop -- 9 started to adopt the new theories that were being 10 placed on the traditional business community. So, in 11 fact it was the new media industry that first promoted 12 the whole notion of teams, project-based teams, this 13 whole notion of open spaced concept workplaces, 14 tele-working or the ability to work at home, and all 15 these new sort of -- part of this new re-engineering 16 movement that occurred in the business community. 17 11686 I think that one of the key parts of 18 that movement, I mean there are some that have been 19 proven not to work, but one of the key mainstays of 20 these particular movements was this whole notion of 21 interdisciplinary teams. 22 11687 It is quite different from just 23 traditional business partnering, in that the team 24 itself becomes in essence a small company within a 25 larger company and the skills required to create a new StenoTran 2695 1 media product are so diverse that each member of the 2 team actually has equal say in the development of the 3 product. 4 11688 While typically -- and the film 5 industry is a good analogy to this. You can say films 6 are created by teams too, but their organizational 7 structure is hierarchical in nature, in that it's the 8 producer who typically gets the money and the director 9 calls the shots for everyone. 10 11689 In a new media team that can't happen 11 because there is no such thing as design being more 12 important than programming or the video or audio 13 elements, et cetera. So, it has to be flatter, 14 although the requirement for a project manager becomes 15 even more important when you have these kinds of teams. 16 11690 So, yes, it's sort of the same in 17 that it grew at the same time as this whole notion of 18 team building and the business community, but it's 19 different in that at the end of the day the product is 20 actually created equally by all the team members. Does 21 that sort of answer your question? 22 11691 COMMISSIONER GRAUER: Yes, and that's 23 very helpful. Thank you. 24 11692 Just again with respect to some of 25 the financing issues, and you talked about the lack of StenoTran 2696 1 risk equity, which Commissioner Pennefather said other 2 people have as well. I am wondering if -- I mean this 3 has been a traditional problem in Canada, the lack of 4 venture capital and I mean there's nothing new about 5 this, but if we were going to be making recommendations 6 to other parts of government or doing a report, I 7 wonder if it is not worth -- well, I guess I should 8 come back and talk about it seems that what is required 9 here, and someone else has used the term, is a climate 10 of innovation in Canada in order to really nurture, 11 incubate and develop this talent and let's say on the 12 business side. 13 11693 We have had some recommendations. I 14 guess I would just like your response to that, and if 15 you have anything specific to add. 16 11694 MS SERRANO: Are you going to -- 17 11695 COMMISSIONER GRAUER: Yes. IMAT, who 18 talked about four pillars of support, which was support 19 for research and development, for content development, 20 education and training support, support for marketing 21 and promotion and access to capital for investment in 22 interactive new media products and companies, and that 23 was what they called four pillars of support. 24 11696 Torstar had some specific 25 recommendations with respect to education and training StenoTran 2697 1 and tax incentives. I would appreciate your views on 2 that, and also appreciating that you talked about the 3 need that there may be a place for government grants in 4 there as well. 5 11697 MS SERRANO: I tend to agree with all 6 the tax incentive recommendations that a lot of the 7 different associations have talked about. I think 8 definitely that's quite important. 9 11698 I think that obviously the whole 10 notion of supporting training is equally important, but 11 I think what we haven't figured out yet is how to 12 actually create sort of a partnership between the 13 government and the private sector to share risk for 14 investment and new media product, or new media content 15 development. I think that's something that we can 16 definitely do. That way you might skirt around the 17 whole issue of do I get a government grant or do I go 18 to an angel investor. 19 11699 If there was some kind of model where 20 the risk is shared by a company and the government, and 21 then that can be even -- a new fund could be created 22 based on that shared partnership or a shared risk, then 23 that might actually be really useful for a lot of 24 different people. 25 11700 The more important thing is to have StenoTran 2698 1 sort of tiered investment or tiered funding activities, 2 so that it's not only products that are going to be 3 placed in the market that are mature, but also seed 4 capital funding for small firms. 5 11701 There is obviously investment in 6 products and investment in companies, so creating those 7 kinds of distinctions and having a whole series of 8 services, if you will, or funds that this body or this 9 particular fund can create. 10 11702 COMMISSIONER GRAUER: That's very 11 helpful. Thank you. I really won't keep going on and 12 on. 13 11703 THE CHAIRPERSON: As much as you 14 would like to. 15 11704 COMMISSIONER GRAUER: As much as I 16 would like to. 17 11705 THE CHAIRPERSON: Commissioner 18 Pennefather, did you want to go? 19 11706 COMMISSIONER PENNEFATHER: No. Thank 20 you very much. 21 11707 MS SERRANO: Thank you. 22 11708 THE CHAIRPERSON: Counsel? No. 23 11709 Thank you very much, Ms Serrano. It 24 has been an interesting discussion. 25 11710 We will take our lunch break now and StenoTran 2699 1 reconvene at 1:30. 2 --- Recess at 1210 / Suspension à 1210 3 --- Upon resuming at / Reprise à 1330 4 11711 THE CHAIRPERSON: Good afternoon, 5 ladies and gentlemen. We will return to our proceeding 6 now. 7 11712 Madam Secretary, would you call the 8 next party, please? 9 11713 MS BÉNARD: Thank you, Mr. Chairman. 10 11714 The next presentation will be the 11 Canadian Independent Film Caucus. 12 PRESENTATION / PRÉSENTATION 13 11715 MR. BOWIE: Good afternoon. Let me 14 begin by thanking you for giving us the opportunity to 15 present to you today. 16 11716 My name is Geoff Bowie. I am a 17 member of the national board of the Canadian 18 Independent Film Caucus, known as the CIFC. 19 11717 My colleague is Andrew Male of our 20 New Media Committee. 21 11718 Our organization represents over 300 22 private sector independent production companies from 23 across Canada that primarily produce broadcast 24 documentaries. 25 11719 Increasingly, our members are also StenoTran 2700 1 producing on-line content, as well as CD-Roms for the 2 educational and home markets. 3 11720 Over the last few years, the CIFC has 4 made several submissions to the CRTC on issues of great 5 concern to our membership. These have included the 6 hearings on convergence, Bell Canada's broadcast 7 trials, and most recently, the Canadian Television 8 Policy Review. 9 11721 The difficult issues before the 10 Commission today are no less important. Given that new 11 media will revolutionize the way independent producers 12 create and do business, we are eager to present our 13 perspective to assist the Commission in its 14 deliberations on the role of new media in our 15 communications system. 16 11722 Communications has the fundamental 17 importance of providing a stage for the public debate 18 that is so crucial to democratic societies. This 19 public debate is not restricted to news and current 20 affairs. Rather, communications should be thought of 21 as providing a stage for the public debate in the 22 broadest cultural sense. It refers as well to the 23 expression of visual artists, performers, writers, film 24 makers, dancers, song writers, composers and designers. 25 11723 It is the play of expression of all StenoTran 2701 1 these groups that forms the crucial public debate for 2 Canadian society; and it is the vitality of this 3 ongoing debate that creates Canada's culture and 4 defines our national identity. 5 11724 It is perfectly consistent for a 6 government that values this kind of citizenship and 7 community to use regulation to limit the influence of 8 free market forces to achieve these higher values; to 9 ensure social inclusion and equality of citizenship. 10 11725 The CIFC believes this certainly 11 applies to the Information Highway communications 12 system and new media content as much as it does to 13 broadcasting. 14 11726 Our excitement over the opportunity 15 of the Information Highway stems from its potential of 16 being more inclusive, less homogeneous, than the 17 traditional broadcasting system. 18 11727 More specifically, the free market 19 forces that government regulation is required to limit 20 is the undue influence of large vertically integrated 21 media companies. Their influence needs to be limited 22 to foster the production and availability of a diverse 23 range of Canadian new media on the Information Highway 24 and a plurality of political standpoints. 25 11728 The CIFC envisions a structure for StenoTran 2702 1 the Information Highway that fosters the greatest 2 diversity and quantity of high quality Canadian new 3 media content. In our remarks today, we would like to 4 expand on this vision and to suggest regulation to 5 support it. 6 11729 MR. MALE: We echo the need for a 7 broad partnership among key stakeholders expressed by 8 many intervenors, particularly the Digital Media 9 Champions Group, Communications and Information 10 Technology Ontario, and the Interactive Media Arts and 11 Technology Association. The key stakeholders are the 12 distribution sector, the technology provider sector and 13 the production sector. 14 11730 The distribution sector divides into 15 two groups, the carriers, including cable, satellite, 16 wireless and telephone companies; and the ISPs, 17 broadcasters, electronic publishers and other 18 distributors of content. 19 11731 Technology providers are the foreign 20 and Canadian companies that provide the software and 21 hardware to run both the production and distribution 22 sides of the information highway. 23 11732 The content production sector 24 includes all the producers, performers, artists and 25 technicians who create new media content. StenoTran 2703 1 11733 If these three key stakeholders can 2 be made to work together as equal partners, it will 3 harness Canada's full productive capacity. To achieve 4 this kind of partnership regulation is needed that 5 encourages structural separation between the 6 stakeholder sectors. This means there should be 7 vigorous competition within each sector; and, at the 8 same time, each sector's jurisdiction should be 9 acknowledged and respected. 10 11734 This is most important for the 11 independent production industry, historically a less 12 capitalized weaker sector than either the distribution 13 or technology sectors. The independent Canadian new 14 media production industry will remain marginal and 15 fragile if carriers, broadcasters, ISPs or technology 16 companies are encouraged to vertically integrate into 17 the production sector. This is already occurring. 18 Many companies from the distribution or technology 19 sector produce content or own production companies. 20 11735 Only regulations, such as those at 21 the Canada Television Fund, for instance, that reserve 22 access to independent production companies, somewhat 23 check this free market trend towards vertical 24 integration. 25 11736 The production industry will be able StenoTran 2704 1 to partner on an equal footing with the distribution 2 and technology sectors if regulation encourages the 3 recognition and protection of the jurisdiction of the 4 independent production industry over the production of 5 new media content. 6 11737 This is the basis for Canada's 7 Information Highway to move ahead in a horizontally 8 integrated manner. 9 11738 What does this vision for a 10 horizontally integrated Information Highway suggest 11 about regulation in the new media environment? 12 11739 MR. BOWIE: Financing new media 13 content production; we have some ideas for generating 14 funds for the production of new media content. Similar 15 to regulation governing broadcast distribution 16 undertakings, all companies with Internet revenues over 17 $750,000, which we will talk about later I am sure, 18 earned from distributing new media audiovisual content 19 should contribute 5 per cent of gross revenues to the 20 production of new media. This would include the 21 carriers' revenues earned from ISPs and other 22 Internet-based companies. These contributions should 23 be divided equally between the industry development 24 fund -- an industry development fund and a Canadian 25 content fund, as proposed by the Wall study. StenoTran 2705 1 11740 Secondly, new media related 2 technology companies operating in Canada with gross 3 revenues exceeding $5 million annually should be 4 encouraged to contribute 1 per cent of gross earnings 5 to a new media production research and development 6 fund. 7 11741 The federal government, we would 8 recommend, should match the contributions raised 9 through these measures for the first five years. 10 11742 For any policy-created production 11 funds established, it is important that the board of 12 directors be independent, with only minority 13 participation from the distribution technology and 14 government sectors. This maintains the principle of 15 the production sector becoming an equal partner with 16 distribution and technology sectors and handing the 17 production sector the tools to control its own future. 18 11743 The role of the board of each of 19 these funds should be to carry out a new media agenda 20 that is determined by the production sector itself. 21 This agenda will be set with a view to achieving the 22 public interest communications goals of Canada, as set 23 by government in the Broadcasting Act. 24 11744 Broadcasters and others from the 25 distribution sector should not have access to programs StenoTran 2706 1 and incentives designed to encourage the production of 2 new media content. Broadcast programming undertakings 3 are rightfully in the distribution sector. It 4 contradicts the principle of equal partners respecting 5 each other's jurisdictions if broadcasters are 6 encouraged to vertically integrate into new media 7 production. 8 11745 Also, the CBC should not be the focal 9 point of public support for new media production. It, 10 too, is a broadcaster, and should not be encouraged to 11 use its access to public money to produce its own new 12 media content in competition with the private sector. 13 11746 Rather, we see the CBC as becoming a 14 very important partner of the independent new media 15 production sector. We should strive together to 16 develop leading edge interactive broadcasting for new 17 programming that is in the public interest -- new media 18 programming that is in the public interest. 19 11747 The CBC archive could be an important 20 resource to create a wide range of new media content, 21 if it is made affordably available to the independent 22 production sector. 23 11748 As mentioned by the Directors Guild, 24 the Canadian Film and Television Producers Association 25 and the Friends of Canadian Broadcasting, financing for StenoTran 2707 1 new media program production and for research and 2 development should not come from diverting existing 3 sources of funding for traditional film and television 4 production. The financing sources ideas mentioned 5 above should provide enough capital to successfully 6 kick-start the production of new media. 7 11749 In the medium term, if regulation 8 encourages the independent new media production 9 communities jurisdiction over content, these companies 10 will become self-sustaining from revenues earned from 11 the licensing of their rights. 12 11750 MR. MALE: The licensing; today's 13 Internet does not have the capacity for broadband 14 communications that we equate with the Information 15 Highway. While the Internet is experiencing phenomenal 16 growth and changing quickly, it remains a narrow band 17 communications system. It is not capable of providing 18 broadcast audiovisual content in a linear 19 video-on-demand fashion, let alone interactively. 20 11751 It is too soon to contemplate 21 changing the regulations of the broadcasting system 22 because of the similarity in competitiveness of new 23 media content on the Internet with broadcast material. 24 We agree with the Friends of Canadian Broadcasting and 25 strenuously oppose any reduction of existing regulation StenoTran 2708 1 on traditional broadcast at this time or in the near 2 future. 3 11752 Similarly, it is too early to decide 4 on how to appropriately regulate the Internet. We 5 agree with the submission of Netstar that the 6 development of the Internet needs to be monitored 7 closely, and in two years the question of regulation 8 should be revisited. 9 11753 In the meantime, services that are 10 distributing audiovisual and new media content over the 11 Internet, that could be considered broadcasting under 12 the definition of the Broadcasting Act, should operate 13 under exemption orders. 14 11754 In the longer term, we suspect that 15 licensing all companies connected to the Internet and 16 attaching complex conditions of licence, as in the 17 current broadcasting system, may not be feasible or 18 desirable. 19 11755 It may be workable in the future to 20 have a simpler registration system for Canadian ISPs 21 and other new media distribution entities attached to 22 the Internet. 23 11756 The money generated by a registration 24 system would go to the production of new media content. 25 Companies will choose to register to become eligible StenoTran 2709 1 for any government incentives available to the key 2 stakeholder sector to which they belong. 3 11757 Registered broadcasters, for 4 instance, will be eligible for government incentives to 5 develop their interactive broadcasting capacity. 6 Registered broadcasters and other new media 7 distributors would also be required to acknowledge the 8 jurisdiction of the independent production sector over 9 new media production. 10 11758 In the case of the independent 11 production industry, companies and individuals that 12 register could gain more affordable access to 13 production technology and computer services and become 14 eligible to access public and private new media 15 production funds. 16 11759 MR. BOWIE: Finally, we have noted 17 the energetic resistance to any form of regulation of 18 the Internet and new media expressed by, for example, 19 the Interactive Media Arts and Technology Association, 20 and other new media organizations. These groups clearly 21 regard regulation as an inhibiting rather than an 22 enabling tool. 23 11760 The regulation of broadcasting, 24 restricted access to the distribution system to all but 25 a relatively small number of broadcast programming StenoTran 2710 1 undertakings who gatekeep the system; the unregulated 2 Internet has been just the opposite. It is a level 3 playing field where access is affordable and available 4 to anyone. Many are afraid that regulation will ruin 5 this democratic access. 6 11761 The CIFC believes that the role for 7 regulation is to enable the growth of independent small 8 companies, like the majority of the members in IMAT, 9 the CIFC and in the CFTPA, as well as the growth of 10 Canada's self-employed artists, performers and 11 technicians. Regulation following the principles we 12 have outlined is meant to limit the ability of large 13 vertically integrated media companies from taking over 14 or marginalizing the independent new media production 15 sector. 16 11762 Building a strong independent new 17 media production sector is the way for Canada's 18 Information Highway communications system to 19 demonstrate social inclusion, diversity of voices and 20 equality of citizenship. 21 11763 We would like to thank the Commission 22 for giving us the opportunity to speak. We would be 23 pleased to answer any questions that you may have about 24 either our written or our oral presentation. 25 11764 THE CHAIRPERSON: Thank you very StenoTran 2711 1 much, gentlemen, for your presentation. For a 2 discussion of your views, I will turn to Commissioner 3 Pennefather. 4 11765 COMMISSIONER PENNEFATHER: Thank you. 5 Good afternoon and welcome back. 6 11766 MR. BOWIE: Thank you. 7 11767 COMMISSIONER PENNEFATHER: I was 8 wondering earlier if you had brought any e-mails this 9 time. 10 11768 MR. BOWIE: We got one. Our friend 11 in Quyon is obsessed with the CAB, and it was so full 12 of expletives that we didn't think we could bring it. 13 11769 COMMISSIONER PENNEFATHER: Too bad. 14 11770 By saying that I do not mean in any 15 way that I am not looking forward to my discussion with 16 you viva voce; and I would like to go through your 17 written presentation, but I have to say that, listening 18 to you today, unless I am mistaken, I hear a few 19 changes or different wording to some of your ideas. So 20 I would like to revisit the main points of your 21 position and hope that I have heard them correctly 22 today. 23 11771 Just as a start, in your written 24 presentation, and I think the fundamental underpinnings 25 of your recommendations are based on your historical StenoTran 2712 1 review, in which you state that the development of new 2 media, in terms of its production and distribution, is 3 no different than that of old media and, therefore, you 4 proceed to suggest the various measures that you are 5 suggesting, for example, measures of regulation to 6 prevent vertical integration which we will come back 7 to. 8 11772 I did pull a couple of comments from 9 other intervenors. You have mentioned yourselves IMAT, 10 where they have said very clearly that: 11 "As creators of interactive new 12 media content in Canada, IMAT 13 and its members do not seek the 14 projection of regulation." 15 11773 Sheridan College: 16 "New media is without borders or 17 boundaries which renders 18 meaningless any discussions 19 about the pros and cons of 20 attempting to impose a 21 regulatory framework. 22 Regulation evolved from the 23 history of licensing, and 24 regulating finite and measurable 25 entities, such as bandwidth and StenoTran 2713 1 content where control was 2 possible. The environment has 3 taken the next evolutionary step 4 where neither limits nor control 5 can be defined, much less 6 enforced." 7 11774 This is a very different view of the 8 nature of new media versus traditional media and the 9 value of a regulatory approach. 10 11775 I wonder if you could expand on your 11 comments in that regard. 12 11776 You quoted IMAT, if I am right, this 13 afternoon, in one sense, and my understanding was they 14 didn't want any kind of regulation whereas -- 15 11777 MR. BOWIE: That is what I -- 16 11778 COMMISSIONER PENNEFATHER: -- your 17 proposal, as I read it in your written submission, 18 certainly brought to new media some of the existing 19 approaches for regulation in this country, for a number 20 of reasons. I am not sure how you react to that. 21 11779 MR. BOWIE: I think in the written 22 submission, and in the oral submission, I think our 23 concept is similar with IMAT's on one side and not on 24 the other. I think, as we have said in the written 25 submission, in terms of the kind of licensing that StenoTran 2714 1 exists now for the broadcasting system, won't work for 2 the new media -- for the distribution outlets. 3 11780 I think one of the main things that 4 we hope that regulation can do is provide a system for 5 getting funding into the production of content because 6 I think, as you mentioned this morning, there is a 7 perennial problem with finding the money to produce 8 distinctly Canadian content, whether it is about 9 international issues or about particularly Canadian 10 stories. 11 11781 COMMISSIONER PENNEFATHER: I think 12 you have put your finger on it. My point is that they, 13 and others, have recommended other means than 14 regulation to support new media content. 15 11782 MR. BOWIE: Tax incentive. 16 11783 COMMISSIONER PENNEFATHER: I think 17 Commissioner Grauer listed four different versions of 18 that. 19 11784 Certainly, our presenter this morning 20 had other ideas and other models have been presented, 21 all of which do not include regulation, and yet you 22 seem to be including regulation in principle. 23 11785 MR. BOWIE: Yes. The reason for 24 that, I think, is that it is the -- it is the creators 25 in the traditional area that have the most experience StenoTran 2715 1 with creating the kind of Canadian content that we are 2 interested in as far as -- as new media is concerned. 3 11786 The new media companies basically 4 come from a computer background; and, as IMAT has 5 pointed out, most of their work is fee-for-service work 6 that's corporate and training and so on. I think it 7 comes from being in the -- more in the sort of 8 traditional cultural sector and understanding the 9 history of that that makes us, I think, value the 10 important role that regulation can play. 11 11787 We, frankly, don't see any difference 12 in trying to make distinctly Canadian new media content 13 available to Canadians than the traditional media. 14 11788 COMMISSIONER PENNEFATHER: Just to be 15 clear, when you say "new media content", what are you 16 referring to? 17 11789 MR. BOWIE: I am referring to 18 interactive, audiovisual material, and I think our 19 vision is for a broadband highway -- Information 20 Highway where there is full video, full motion video, 21 and full audio, and the capacity of having what we call 22 database programming, which means you could have -- 23 take any subject and have a database of material and 24 have many different ways into that material. They 25 could be from 30-second segments done by a poet to a StenoTran 2716 1 half an hour linear presentation. It is just a million 2 ways into -- into new media content that would be 3 server based. 4 11790 COMMISSIONER PENNEFATHER: So the 5 element of interactivity, which many have said is a 6 defining feature of new media, is still, for you, the 7 product would be a program, even if it were 8 interactive? 9 11791 MR. BOWIE: I didn't quite understand 10 that. 11 11792 COMMISSIONER PENNEFATHER: A new 12 media product, even if it was interactive, which I 13 gather from many here is one of the defining 14 characteristics of new media. 15 11793 MR. BOWIE: I agree. 16 11794 COMMISSIONER PENNEFATHER: If such a 17 product was interactive, would it be a program as we 18 understand it under the Broadcasting Act? 19 11795 MR. BOWIE: Yes. My understanding -- 20 at first I was confused, you know is new media 21 broadcasting? If you look at it technically, I would 22 say not. 23 11796 For me, the interactive distribution 24 Information Highway will be point to point whereas 25 broadcasting is point to multi-point -- it is "broad" StenoTran 2717 1 casting. On that basis, it would not -- new media 2 would not be broadcasting. 3 11797 But my understanding is that in the 4 Broadcasting Act it is really not about technical 5 issues at all. It is about audiovisual material; and 6 it doesn't matter if it is distributed simultaneously 7 or on an individual basis or to many people at once. 8 11798 So I would say that, then, any 9 audiovisual material that is not alphanumeric text 10 would come under the Broadcasting Act. 11 11799 COMMISSIONER PENNEFATHER: Different 12 people are drawing different lines there. One of the 13 reasons I am asking you is to discuss with you this 14 licensing process which you have proposed in your 15 written submission. You called it a registration 16 system today. Is that one and the same? 17 11800 MR. BOWIE: Yes. 18 11801 COMMISSIONER PENNEFATHER: Why have 19 you called it a registration system as opposed to the 20 licensing process? I am curious. Why did you change 21 the description? 22 11802 MR. BOWIE: The wording? 23 11803 COMMISSIONER PENNEFATHER: Yes. 24 11804 MR. BOWIE: I think I was a little 25 embarrassed by saying it was like getting a licence for StenoTran 2718 1 your car. 2 11805 COMMISSIONER PENNEFATHER: The motor 3 vehicle? 4 11806 MR. BOWIE: The principle of it, I 5 think, is different than what we have now with 6 broadcasting. Instead of trying to impose regulations 7 on the resistant broadcasters to get them to do their 8 bit, this would provide incentives. I think it goes to 9 the SPTV -- I thought the SPTV idea of a web ring kind 10 of connects with it and, that is, you need to get the 11 players to buy into the Canadian system and there 12 should be incentives, tax incentives or whatever kind 13 of incentives we can think of for each sector to become 14 registered, to make a contribution. 15 11807 So, for instance, I mentioned the 16 broadcast sector. There could be incentives for them to 17 develop their interactive broadcasting capacity. 18 11808 The basic principle we have is that 19 if those three key sectors all can focus on what their 20 main business is, and work together, you are going to 21 be able to develop a very powerful interactive media 22 system that will -- and you will be able to develop it 23 differently than the United States; and, if we got on 24 it, more quickly. And that would be a huge advantage 25 to all three sectors and to the information economy StenoTran 2719 1 generally. 2 11809 COMMISSIONER PENNEFATHER: Let me -- 3 I still am not sure I understand, you having explained 4 that the purpose of this licensing process is 5 incentives. Just to be clear, it is a registration or 6 a licence that you would issue to all Canadian program 7 undertakings attached to the digital network. You 8 state that every Web site owner may be licensed in a 9 similar way -- sorry to the licensing of motor 10 vehicles -- but the cost of a licence should be on a 11 sliding scale from a nominal fee for small Web sites 12 engaged in very limited economic activity to a 13 percentage of gross revenues for entities connected to 14 the digital network with economic activity exceeding 15 $750,000. 16 11810 Given the sheer number of Web sites 17 attached to the network, how would you monitor such a 18 system to ensure that no one was operating without a 19 licence, for example? 20 11811 MR. BOWIE: I think the thing is that 21 people who were operating without a licence, or may 22 very well be, but they wouldn't be eligible for any of 23 the benefits that are there for people who do become 24 registered and who buy into the system. 25 11812 COMMISSIONER PENNEFATHER: So the StenoTran 2720 1 purpose of this licensing regime is to register and 2 therefore you have the right to other incentive 3 programs? 4 11813 MR. BOWIE: Yes. 5 11814 COMMISSIONER PENNEFATHER: What would 6 be the objective for licensing a small Web site engaged 7 in very limited activity, because you note the economic 8 activity exceeding $750,000 would seem to put the 9 emphasis on the larger company; and, as Commissioner 10 Wilson asked earlier, where did this $750,000 come 11 from? 12 11815 MR. BOWIE: I was one of the -- 13 ironically enough, I was one of the people on the 14 committee that the Canadian Conference of the Arts 15 brought together to draft the report that was presented 16 this morning. 17 11816 It was a committee that met about 18 five times in telephone conferences from across the 19 country. There was -- Adam Frohman from IMAT was on 20 the committee. There was a new media distribution 21 company from Edmonton. There was a production company 22 in Vancouver. There was a company from Halifax, 23 Montreal. 24 11817 It was, generally -- I think it was 25 mainly put forward as a figure by the distribution StenoTran 2721 1 company in Edmonton. It is a little bit of a grab from 2 the air, but it is kind of, well, it is companies that 3 are making that amount of money that are -- that have 4 achieved a level where they really have a business and 5 anything beneath that shouldn't be -- shouldn't have to 6 contribute. 7 11818 COMMISSIONER PENNEFATHER: Shouldn't 8 have to contribute but could have a licence and 9 therefore access to incentive programs, is this your 10 idea? 11 11819 MR. BOWIE: I guess I think of the 12 smallest Web sites as being production, you know, 13 production Web sites or people that are making content 14 and using their Web site to present it. They would 15 want to become registered in order to be part of a 16 production network that would be eligible for the 17 various funds that are there to -- for new media 18 production. 19 11820 COMMISSIONER PENNEFATHER: I want to 20 be sure I understand that what you are talking about 21 is, bottom line, a levy on the ISPs, for example, 22 percentage of their revenues towards the creation of 23 new media content. How do you respond to the 24 intervenors who have said that that form of incentive, 25 as you say, would simply drive ISPs or Web sites out of StenoTran 2722 1 the country because it would be to them -- and again 2 IMAT says very clearly that they not only do not need 3 this kind of protection but these kind of regulations 4 and licensing procedures would be a barrier to their 5 growth? 6 11821 MR. BOWIE: I think -- to me, there 7 is a bit of a contradiction because I think IMAT and 8 other organizations support the Wall study, support the 9 idea of an industrial fund, and they kind of value more 10 the industrial fund than they do value the Canadian 11 content fund. 12 11822 To me, those funds are going to come 13 about because of some kind of regulation, or some -- 14 who is going to contribute to those funds? I think the 15 problem at this stage and the confusion is that it is 16 early in the development of the Information Highway or 17 the Internet and exemption orders kind of -- the idea 18 of having exemption orders and them operating under 19 exemption orders until they are making a significant 20 amount of revenue from their "broadcasting 21 distribution", I think that is sort of why it is 22 confusing because we don't know yet if they are going 23 to make any money at distributing this kind of content. 24 11823 COMMISSIONER PENNEFATHER: This kind 25 of content. Let's be clear that if you got a licence StenoTran 2723 1 in your process, it would go to the Web site or the 2 Internet service provider, who in fact is providing a 3 variety of services, as I understand it, and very 4 little of that, and you yourself have said at this time 5 certainly not of the quality we call for the long-form 6 program, but most of what they are delivering is text, 7 or others have defined it as interactive analogous 8 communication as opposed to broadcast. 9 11824 If you asked for a licence to act as 10 an ISP, are you then licensing all of these services, 11 in effect? Under what authority would you do that if, 12 for example, alphanumeric text is not in any way 13 broadcasting and therefore not within our jurisdiction, 14 for example, here to licensing? 15 11825 MR. BOWIE: I think maybe we have 16 kind of crossed over where now we are talking about the 17 idea of licensing the ISPs rather than having the kind 18 of programs where the ISPs would want to be registered 19 and would want to pay for that; and then that kind of 20 system, if that could be set up, would work, and then I 21 think the 5 per cent of gross revenues, we won't be 22 able to do that until it has become clearer that how 23 that new media content, that is, broadcasting is 24 distributed and they are making money with it. 25 11826 COMMISSIONER PENNEFATHER: Are you StenoTran 2724 1 saying that your concept would not take effect 2 immediately because I think this afternoon you said 3 that it is too early to regulate the Internet? 4 11827 MR. BOWIE: Yes. I think the -- we 5 could take steps towards the registration idea, 6 although it is fairly involved, as far as organizing 7 that. 8 11828 COMMISSIONER PENNEFATHER: Who would 9 do this registration and under what authority would it 10 be done? 11 11829 MR. BOWIE: I don't know. That would 12 need to be developed. I suppose it would be some -- I 13 guess a body that is attached to government. 14 11830 COMMISSIONER PENNEFATHER: Let's go 15 to another mechanism for support which has been 16 recommended, and you talked about SPTV. They suggested 17 a super Canadian site be established as a central 18 clearing house or focal point for Canadian content 19 because we have certainly -- you are addressing the 20 financing of the content provider. 21 11831 This point is also addressing the 22 marketing and the visibility of the Web site and/or the 23 products that are carried by that Web site. What do 24 you think of this concept of the super Canadian site? 25 Would it serve as an effective way of promoting StenoTran 2725 1 Canadian new media? 2 11832 MR. BOWIE: Yes. What it has sort of 3 made me think of is a kind of, on a broader scale, on a 4 bigger scale than just an aggregation of Canadian 5 sites. Kind of a web ring, network, where those three 6 key stakeholder sectors could all be participating. It 7 would be almost -- it would be -- what would be 8 registered, everything that belonged to that. That web 9 ring, for want of a bigger term, would be the focus of 10 Canadian regulatory policy. 11 11833 COMMISSIONER PENNEFATHER: You 12 mentioned the role of the CBC. The CBC has also come 13 up in terms of being the leader, exercising a 14 leadership role in terms of not only a new media super 15 site, if you will, a Canadian site, but also in the 16 production of new media content. I think you had a 17 different point of view on that. Why is that -- this 18 is in your area? 19 11834 MR. BOWIE: We think the future 20 should be in the self-employed private sector 21 performers, producers, artists, technicians; and that 22 the CBC's role is as a distributor. 23 11835 We have this problem with the CBC in 24 the current broadcasting environment where they are in 25 competition basically. They are going into business to StenoTran 2726 1 protect their copyrights, to produce their own content 2 that they own and can sell. It is almost like there is 3 a public sector -- they have a monopoly on public 4 sector money. I mean that is not the case any more; 5 they used to. We think that the process -- it would be 6 more fruitful for both of us if the independent 7 production sector was doing the production and working 8 with the CBC more as their -- as an important public 9 sector distribution partner. 10 11836 COMMISSIONER PENNEFATHER: When you 11 are talking about the independent sector, you are the 12 film caucus, are you including in that the producers of 13 new media content? 14 11837 MR. BOWIE: Yes. 15 11838 COMMISSIONER PENNEFATHER: And 16 calling them the independent sector? 17 11839 MR. BOWIE: Yes. IMAT, I would say 18 would be the representative organization for them. It 19 is the producers association, at least; and I think it 20 should also include the performers and writers and 21 artists and technicians and their associations. There 22 should be a kind of a converging of that whole 23 production milieu, I think. 24 11840 COMMISSIONER PENNEFATHER: Well, 25 certainly, one of the members of the committee for CCA StenoTran 2727 1 was also here with the Association des Producteurs en 2 Multimédia de Québec, M. Allard, and, again, just to 3 be -- try to be clear on why you are proposing a system 4 of support which would include regulation, he certainly 5 did not feel the need for any form of regulation. 6 Quite contrary to what you said in the beginning, the 7 business models would really move this forward and that 8 the content production side of the -- this new business 9 really should not be fettered with any regulation 10 whatsoever or any component of it. 11 11841 MR. BOWIE: I just don't understand 12 how that could ever work. I just -- I mean, part of 13 the problem of being Canada next to the United States 14 is that if you want to make -- you know, if you want to 15 have even public interest programming, if you want to 16 have other kinds of content other than what is the most 17 commercial kind of U.S.-style programming, how are you 18 going to get that? 19 11842 It is not to say that you can't have 20 Canadian content that becomes internationally 21 successful. We all know examples where that has 22 happened. 23 11843 In other cultures, the best work that 24 is most successful is deeply rooted in their local 25 culture and in their national culture; it is not StenoTran 2728 1 generic drama series. That is what you are always 2 striving for, and you will have successes but you have 3 got to have support. 4 11844 I think one of our points is that the 5 production sector, historically, hasn't had that 6 connection to distribution. It has always been kind of 7 cut off from it. There has always been money at the 8 front end but never money at the back end. You 9 couldn't control your rights and make, you know, use 10 them to make an income. We want to strengthen that so 11 we can become self-sustaining. 12 11845 I think that is the whole point to 13 what I am talking about the production funds and that 14 the board of directors be independent and be carrying 15 out an agenda that is set by the production industry, 16 not with, you know, broadcasters and carriers and all 17 those with their vested interests basically controlling 18 it. 19 11846 COMMISSIONER PENNEFATHER: Yes, I 20 took that point in this -- it is difficult when there 21 is such a convergence of new media content with a 22 delivery system called the Internet. It is difficult to 23 see how they can be kept that separate and not assure 24 growth of both components. 25 11847 But I wanted to focus on another StenoTran 2729 1 point you just raised. You state, and you just said, 2 that it is important to deal with rights, the rights 3 issue and in your written submission you state that it 4 is important that copyright clearance for new media 5 products be streamlined. 6 11848 Can you elaborate on how you believe 7 this might best be accomplished? 8 11849 MR. BOWIE: Yes. We think that -- I 9 think there is a couple of parts to that. We think the 10 producers associations, like IMAT, the CIFC and the 11 CFTPA should be negotiating a new media production 12 contract with the creative community, with the writers 13 and the artists and the performers and the technicians. 14 That would govern a kind of a production network that 15 would be comprised of all those people, and then there 16 should be a model like the electronic rights licensing 17 agency model, where once you have a production contract 18 that includes this whole -- all these producers and 19 creative community, which sort of details a sharing of 20 royalties for their creative work, that will itself 21 facilitate the clearance. 22 11850 So, you will already have -- the 23 whole production community will have come up with a 24 fair arrangement and, then, through an electronic 25 rights licensing agency, that money -- that is a StenoTran 2730 1 one-stop shop for the distributors and a disbursing of 2 the income to the production side. 3 11851 COMMISSIONER PENNEFATHER: From what 4 we have heard this week and last from associations 5 representing various artists and performers and record 6 producers and so on, this is an important point, and a 7 long discussion internationally, and it is a very 8 serious bottom line issue for one intervenor until this 9 issue is resolved. In fact, there won't be a lot of 10 certain kinds of content on the Internet, such as 11 long-form cinema. 12 11852 MR. BOWIE: It should be a big 13 bottleneck. I mean anybody even now trying to clear 14 rights for documentaries for archival footage or for 15 music, it is a complicated and expensive process. 16 11853 COMMISSIONER PENNEFATHER: Just in 17 summary, you have, I think, some suggestions here for 18 financial incentives, but that includes a licensing 19 process, but you would not regulate the Internet as 20 such, you would wait until you saw how things evolve? 21 11854 Just one last point. You said at the 22 beginning that this is a stage for public debate for 23 citizenship and community. That component of the 24 Internet and its global medium, you say will not be 25 achieved by free market forces and, therefore, as I StenoTran 2731 1 understand it, the need for regulation. Yet, many have 2 put to us, and I am sure you would agree, in fact you 3 said yourself that it is going to be as easy to be a 4 content provider as a user of the Internet. 5 11855 When you come to regulation, many 6 would interpret that as saying that you are preventing 7 access by individuals to content; you are controlling a 8 medium which is the ultimate, as you yourself have 9 said, in creating a plurality of standpoints. 10 11856 How do you reconcile those two things 11 because this is a medium unlike some of the media that 12 you have been talking about that, historically, we have 13 dealt with, does have this global communication aspect? 14 It is a communication medium. It is a transaction 15 medium. It is a content providing medium. 16 11857 I am sure you recognize that. So one 17 of the interesting things to think about is this 18 combination of content, providing delivery to a product 19 to a user, traditional, to this also being a forum for 20 public debate in which many would say freedom of 21 expression is the ultimate goal and must be preserved 22 at all costs and no regulations whatsoever. 23 11858 MR. BOWIE: I think the real world 24 that we are living in is that there are huge media 25 conglomerates and the Internet is at its -- in its StenoTran 2732 1 early -- it is even less now, but it is in its anarchy 2 phase, and it is not even certain that the broadband 3 highway is going to be the Internet. I mean if the 4 Internet -- I am not an expert on this, but from what I 5 have heard, the Internet runs on a protocol called 6 TCPIP and it comes down from the military and it has 7 this feature to it about if you send something this way 8 and it gets interrupted because a bomb drops, it can go 9 the other way and it will still get there. It is a 10 great system, but it might not be a great system for 11 broadband and they talk about ATM systems as being the 12 protocol. 13 11859 So you might end up with, in an 14 interoperable world of network of networks, that the 15 Internet is going to be one network that is alongside 16 the broadband network, and that broadband network is 17 not, perhaps, going to be quite as anarchic. It is 18 going to tend towards, you know, the kind of huge 19 investments that are being made in it are from those 20 largest corporations in the world. That is what is 21 going to tend to having that system, which is probably 22 going to be the most -- the one with the most 23 interesting content, perhaps, and most powerful one, 24 most widely accepted one, having less diversity of 25 voices, becoming more homogeneous. StenoTran 2733 1 11860 COMMISSIONER PENNEFATHER: Thank you 2 for your comments. Thank you, Mr. Chairman. 3 11861 THE CHAIRPERSON: Thank you, 4 Commissioner Pennefather. Thank you very much, 5 gentlemen. We appreciate your being here today. 6 11862 MR. BOWIE: Thank you. 7 11863 THE CHAIRPERSON: Madam Secretary. 8 11864 MS BÉNARD: Thank you, Mr. Chairman. 9 11865 The next presentations will be the 10 Communications and Diversity Network and Professor 11 Karim H. Karim. 12 11866 THE CHAIRPERSON: Good afternoon, 13 ladies and gentlemen. I will let you proceed when you 14 are ready and in the order that you wish to go. 15 PRESENTATION / PRÉSENTATION 16 11867 MS KORAH: Mr. Chairman, and members 17 of the Commission, I would like to introduce this 18 group. We are called the Communications and Diversity 19 Network. It is a loosely knit organization of groups 20 and individuals. Our main goal is to ensure that a 21 variety of voices and perspectives are included in the 22 Canadian media. 23 11868 To my right here is Dr. Karim Karim. 24 He is a professor of mass communications at Carleton 25 University; and next to Mr. Karim is Heather de Santis. StenoTran 2734 1 She is a research consultant. She specializes in 2 issues relating to cultural policy and media and she 3 has recently done a paper on combatting hate on the 4 Internet. 5 11869 To her right is Anne Clarke. She is 6 the Executive Director of the Pearson Sharama Institute 7 which researches issues of inclusive policy. 8 11870 Behind me is Kamal Jama. He is an 9 Internet consultant involved in developing Web sites 10 for non-profit organizations. 11 11871 And next to Kamal is Mr. Rubin 12 Friedman. He is a research associate of the Pearson 13 Sharama Institute, and a member of the Diversity 14 Network. 15 11872 My name is Susan Korah. I am a 16 freelance writer and communications consultant. I have 17 recently been involved in creating curriculum materials 18 to combat hate on the Internet. 19 11873 So, now it is over to Dr. Karim. 20 11874 MR. KARIM: Thanks, Susan. 21 11875 Good afternoon, Mr. Chairman, 22 Commissioners. 23 11876 The Communications Diversity network 24 is delighted to have this opportunity to present this 25 brief to the CRTC's public consultation on new media. StenoTran 2735 1 You will recall that the network has appeared before 2 you over the last weeks to present its briefs on the 3 Canadian Television Policy Review and in support of the 4 national application for the Aboriginal Peoples 5 Television Network. 6 11877 We shall attempt today to address a 7 few of the issues raised in the CRTC's call for 8 comments regarding new media, as they reflect the 9 interests of our network. 10 11878 At the outset, we would like to state 11 certain key principles that we believe should guide 12 governmental involvement in the new media. These are: 13 a) assisting the development of Canadian content; b) 14 ensuring the inclusivity of and access by all 15 Canadians; and c) advancing social justice and 16 equality. 17 11879 Secondly, the network would like to 18 address certain issues which frame the consideration of 19 the new media. One: Are the new media either 20 broadcasting or telecommunications services? 21 11880 We would like to suggest that such 22 categorization limits the understanding of the services 23 and technologies that include on-line media, such as so 24 many technologies, such as the Internet, the worldwide 25 web, electronic bulletin boards, Usenet, List Serve, StenoTran 2736 1 Internet Relay -- I will summarize here because you 2 have the document -- as well as web TV and off-line 3 technologies like compact disks, CD-Roms, digital video 4 disks, as well as other emergent hybrid forms. 5 11881 The new media present us with new 6 paradigms of communication that merge in varying 7 degrees the one-to-one model of telephony and the 8 one-to-many model of broadcasting. Therefore, policies 9 for the various new media need to be placed within 10 innovative frameworks that address their unique 11 characteristics. Perhaps, the way to avoid constantly 12 second-guessing what policy and regulatory challenges 13 the next generation of new media technology will put 14 forth is to focus our attention away from the 15 technology and on the contents that they carry and the 16 users of their contents. 17 11882 Two: Who are the users of the new 18 media? 19 11883 It is common to think of the users 20 only as consumers. However, this aspect of users' 21 identity only speaks to the business sphere of 22 activity, which is important but should not eclipse the 23 identity of users as citizens. Revalorizing 24 citizenship in our national discussions about the new 25 media helps to underline the issues of access, equality StenoTran 2737 1 and social justice. 2 11884 The network would like to urge the 3 Commission to maintain the critical balance between the 4 needs of citizens and consumers with respect to the new 5 media. 6 11885 Three: Who should develop the new 7 media? 8 11886 Even the U.S. government, which has 9 favoured massive private sector control of the 10 development of the new media, has poured enormous sums 11 of money into, first, establishing and maintaining the 12 Internet network, as well as into the production of 13 digitized education and heritage materials. 14 11887 The American government has also 15 supported the involvement of minorities in the 16 production, management and operation aspects of the new 17 media industry. The network believes that the 18 successful development of the new media in Canada 19 cannot be carried out without the close collaboration 20 of government, industry and community groups of all 21 background. 22 11888 The governments at all levels, 23 particularly the cultural and educational departments, 24 and the private sector, especially telecommunications 25 firms, broadcasters and cable companies, have a key StenoTran 2738 1 role to play in financing community participation. 2 11889 I will now move on to our key 3 recommendations. 4 11890 One: Access, use and participation. 5 11891 The network generally supports the 6 recommendations of Telecommunities Canada, which has 7 presented its brief to you earlier, regarding access to 8 the new media. Research has indicated that the poorer, 9 the less educated, and the older a Canadian is, she is 10 less likely to have access to the Internet. Certain 11 provinces are doing better than others, and urban over 12 rural areas. 13 11892 We have less information on access by 14 ethnicity, however, but if the U.S. is any indication, 15 certain disadvantaged minorities tend to have much less 16 access than the average population. 17 11893 In any case, with the bulk of the 18 content on the worldwide web being in English, 19 aboriginal peoples, unilingual francophones, and ethnic 20 minorities without a facility in only that official 21 language are not able to fully utilize the medium. 22 11894 While the gender gap is gradually 23 being closed, men still tend to be the heavier users of 24 new media. 25 11895 Another disadvantaged group is StenoTran 2739 1 composed of persons with disabilities. 2 11896 However, we need to distinguish 3 between access, use and participation in the 4 information society. Access in itself does not 5 guarantee that the technology will be used. For 6 example, even though a community may have a number of 7 computers with on-line services available at the local 8 library, for example, an elderly immigrant with a 9 limited knowledge of either official language would 10 find it difficult to compete for the use of a computer 11 with other more savvy users of the technology. 12 11897 Secondly, even though people may be 13 using the new media, are they participating socially, 14 economically or politically in the development of the 15 country? One of the most heavily accessed material on 16 the Internet is pornography. Does this lead to 17 positive participation in Canadian society? 18 11898 Therefore, access does not 19 necessarily mean use, and use does not necessarily lead 20 to participation, as producers and consumers of new 21 media products. 22 11899 Our interpretation of the data on new 23 media access should be tempered by this realization. 24 We need to develop policy and regulatory mechanisms 25 that encourage positive social, political and economic StenoTran 2740 1 participation with the use of the new media. 2 11900 Assistance should be priorized with 3 preference given to community groups, non-profit 4 groups, independent producers, artists, collectives and 5 other independent voices of all cultural backgrounds 6 over major corporations. 7 11901 The second recommendation: 8 Encouraging the development of Canadian content. 9 11902 We firmly hold that there needs to be 10 a clear strategy to support the development of Canadian 11 content. The Broadcasting Act lays down the principle 12 of the development of radio and television content that 13 reflects the diversity of the Canadian population. The 14 global nature of some of the new media and the current 15 environment of trade liberalization takes this issue 16 into the transnational context. 17 11903 One set of calculations suggests that 18 less than 5 per cent of material on the Internet is 19 Canadian made. Assuming that this figure is accurate, 20 let us put it in to perspective. Given that Canadians 21 make up 0.006 per cent of the world population, one 22 could argue that we are already doing quite well. 23 However, such a comparison would be fatuous, since much 24 of humanity has little access to telephones, let alone 25 the Internet. StenoTran 2741 1 11904 If the question is how to address our 2 competitiveness in global new media markets, we need to 3 address the needs of the future users of what is 4 expected to become a much more widely used medium 5 around the planet. 6 11905 We have all heard about the enormous 7 potentials of the markets in places such as China, 8 India and Latin America. How are we preparing to serve 9 those markets? Are we looking at our own linguistic 10 and cultural resources to build the human 11 infrastructure that will put us in a position, 12 nationally, to meet the needs of overseas markets? 13 11906 Unfortunately, previous work, like 14 that of the Information Highway Advisory Council, 15 largely disregarded this vital aspect of our 16 preparation for what is touted as the "global 17 information society". However, a singular focus on 18 markets should not preclude the cultural production by 19 those Canadian minorities who do not have ready access 20 to markets abroad. 21 11907 Therefore, the network recommends 22 that the CRTC develop bench-marks for public and 23 private support for the development of Canadian content 24 for the new media that meets the diverse cultural needs 25 of all Canadian citizens and consumers, as well as the StenoTran 2742 1 potentials for overseas markets. 2 11908 One of the means of enhancing 3 relevant material may be through co-production 4 agreements with other governments, models for which 5 already exist in television and film production. 6 11909 Three: Recognizing the globality of 7 the new media. 8 11910 Certain new media, particularly those 9 based on open electronic networks and digital 10 broadcasting satellites, have allowed for 11 inter-continental communication among individuals and 12 groups of a kind -- a communication of a kind that was 13 not possible before. We have seen how people in 14 different parts of the world can link together around 15 particular issues, such as the opposition to the 16 Multilateral Agreement on Investment, human rights and 17 environmental issues, opposition to land mines, and 18 even the recent crash of the Swissair airliner off Nova 19 Scotia. 20 11911 I have already submitted a written 21 submission on "New Media Use Among diasporic 22 communities" and will only sketch some of the main 23 points of the this topic here. 24 11912 Global migration trends have produced 25 transnational groups related by culture, ethnicity, StenoTran 2743 1 language and religion. Whereas members of some of 2 these groups had generally operated weekly newspapers 3 and occasional broadcast programming to meet the 4 information and entertainment needs of their 5 communities, the emergence of digital technologies is 6 enabling them to expand such communication activities 7 to a global scale. 8 11913 The relatively small and widely 9 scattered nature of diasporic communities have 10 encouraged them to seek out the most efficient and cost 11 effective means of communication. Technologies that 12 allow for narrow casting to target specific audiences 13 rather than those that provide for mass communication 14 have generally been favoured. Ethnic broadcasters, 15 having limited access to space on the electromagnetic 16 spectrum, are finding much greater options opening up 17 for them through DBS in Canada, the U.S. and Europe. 18 11914 Indeed, in certain cases, ethnic 19 media have led the way in the adoption of this 20 technology and are in competition with mainstream 21 broadcasters. Not only are they disseminating their 22 material to audiences in their regions, but also 23 intercontinentally, for example, the Spanish-language 24 network Univision in the U.S. reaches Hispanic homes 25 coast to coast and Latin America; and the programming StenoTran 2744 1 of the Orbit Network in Europe, which broadcasts 2 Arabic, English and French, is received in Europe as 3 well as in the Middle East. 4 11915 National regulatory bodies which have 5 prohibited the growth of ethnic media find that their 6 minorities are tuning in to programming disseminated 7 from their respective home countries or diasporas. 8 11916 For example, when France's Conseil 9 supérieur de l'audiovisuel excluded Arabic stations 10 from licensed cable networks, the Maghrébin-origin 11 population in southern France put up the pizza-sized 12 dishes to receive programming from Northern Africa. 13 11917 Diasporic communities are similarly 14 maintaining links through the Internet and worldwide 15 web services. Web sites are already creating global 16 directories of individuals, community institutions and 17 businesses owned by members of diasporas. 18 1430 19 11918 Instead of viewing this as a threat 20 to our sovereignty, we should be putting ourselves in a 21 position to take advantage of the growing transnational 22 connections that can foster trade, global cultural 23 co-operation. 24 11919 The Network recommends that the CRTC 25 take into account the global nature of some of the new StenoTran 2745 1 media in developing its policies and regulations. 2 11920 The final area, four, offensive 3 material. 4 11921 The Network has already submitted the 5 written report by Heather De Santis titled "Combatting 6 Hate on the Internet: An International Comparative 7 Review of Policy Approaches". Heather is present. She 8 is sitting next to me today. 9 11922 We have several views on this issue 10 among our members of the Network. One may be 11 overstating the case in saying that hate propaganda is 12 pervasive in the new media and that a user comes across 13 a hate site as soon as he or she logs on to the World 14 Wide Web. On the whole, we feel that the presence of 15 hate materials is a serious issue that has to be 16 addressed by the Commission. 17 11923 Given that there are very different 18 kinds of new media, we feel that the operation of 19 certain services, such as DBS, should continue to come 20 under the Broadcasting Act whereas it may be more 21 difficult to apply this legislation to other services. 22 11924 The Network favours a multifaceted 23 approach to dealing with hate in the new media. The 24 Australian government, for example, plans to adopt a 25 multifaceted approach in consultation with the StenoTran 2746 1 community, the online industry, the states and the 2 territories and international organizations. It is 3 also encouraging the development of awareness through 4 educational materials. 5 11925 We would like to support the Media 6 Literacy Awareness Network's recommendation for what it 7 calls web literacy to make users aware of the dangers 8 of hate-related material in the new media. 9 11926 Our final recommendation is that the 10 CRTC work with a variety of partners to deal with the 11 issue of hate materials in the new media. These 12 partners should include community groups, researchers, 13 Internet service providers, telecommunications and 14 cable companies as well as federal and provincial human 15 rights commissions, departments of the attorneys 16 general and police forces. 17 11927 Thank you. 18 11928 THE CHAIRPERSON: Thank you for your 19 presentation, Dr. Karim, Ms Korah. 20 11929 To discuss your views, I will turn 21 the microphone to Commissioner Grauer. 22 11930 COMMISSIONER GRAUER: Thank you. 23 11931 Thank you very much for your 24 presentation and also your very substantive written 25 submissions. StenoTran 2747 1 11932 Your submissions and your 2 presentation today covers quite a wide range of areas. 3 What I would like to try to do initially is focus in on 4 those areas where perhaps we have jurisdiction and try 5 and get your sense of that and then go from there. 6 11933 I'm not sure from your presentation, 7 or if it is something you have reached any conclusive 8 position on, as to whether or not the Internet and new 9 media fall in your view within our jurisdiction on the 10 Broadcasting Act or the Telecommunications Act. 11 11934 It's not so much a technical 12 question. Really it leads to pursuing some of the 13 specific areas in your presentation and what we might 14 be doing and how we might approach it. 15 11935 MR. KARIM: I will start off and then 16 the other people will respond as well. 17 11936 We did discuss that. One of the 18 things, as I said in my presentation, that sort of 19 frames our understanding of this issue is that the new 20 media as such are comprised of a variety, a very broad 21 variety of technologies and services. 22 11937 There are certain aspects which may 23 be considered broadcasting, as I said DBS, whereas 24 others may not. It is difficult for us to have a 25 blanket approach on all new media as such. StenoTran 2748 1 11938 Certainly so far as the Internet uses 2 telephone lines, I would imagine it does come under the 3 Telecommunications Act. Insofar as DBS is a 4 broadcasting system, it would fall in our understanding 5 under the Broadcasting Act. 6 11939 I guess our approach has been to 7 suggest to you that this be looked at on a case by case 8 basis. The paradigm is new because many of these media 9 are hybrid media. Perhaps we need to approach the 10 whole issue from a totally different paradigm. 11 11940 As I said in my presentation, the 12 hybrid is off the one to one model of the telephone and 13 the one to many of broadcasting. Even that is 14 simplifying issues. 15 11941 We really need to develop an innovate 16 paradigm which looks at this whole unique set of media 17 in a very, very fresh way. Unfortunately, I don't have 18 a complete answer. 19 11942 COMMISSIONER GRAUER: That's just 20 what I was going to ask you. Where is the paradigm? 21 11943 MR. KARIM: There is a paradigm, at 22 least a graphic model that I have developed with some 23 of my colleagues. Again, that is only for certain 24 media like the Internet. Unfortunately, I don't have 25 it here, but perhaps I could submit it for the next StenoTran 2749 1 stage of submissions. 2 11944 Whereas in broadcasting we had a very 3 linear, centralized model in which you have the source 4 which is providing content, whether it has developed it 5 itself or through a production company, and along the 6 line then uses a medium, television or radio, and then 7 after this linear progression is continued up to there, 8 it sort of branches out to one to many, but there is a 9 very linear centralized approach as far as the source 10 material, content and medium in which it is possible to 11 have certain kinds of regulation because this can be 12 cut off. 13 11945 This linear hierarchical centralized 14 approach can be cut off at various points, either at 15 the point of the source or in terms of the kind of 16 content we just produced or the limitations of the 17 medium or the restraints and constraints which can be 18 put on the medium. 19 11946 On the other hand, what we have in 20 network technology is that there are so many different 21 sources who are all, or many of them, are producing 22 content. There are all kinds of receivers. 23 11947 Sources are also receivers. It's 24 interactive. It's two way, three way. One source can 25 send out to so many so it can be broadcasting, it can StenoTran 2750 1 be one to one, a whole combination and permutations of 2 so many different. 3 11948 In a way, that's something that we 4 have been able to at least develop graphically at least 5 as far as the Internet goes, so in terms of developing 6 regulations and rules, we obviously need a very, very 7 different model that begins to think in terms of 8 networks, which are decentralized, lateral or 9 multilateral, definitely non-hierarchical. 10 11949 Obviously if you are thinking in 11 terms of control, control is very, very difficult, so 12 even the paradigm of what we would like to control or 13 regulate has to be rethought, in what manners, in 14 collaboration, self-regulation, education. 15 11950 We prefer sort of the multilateral 16 approach, the multipronged approach. 17 11951 COMMISSIONER GRAUER: Perhaps then 18 what I could do -- I don't know if you heard some of 19 the presentations we had from some of the intervenors. 20 Some of the interpretations by legal communications 21 lawyers who really understand this, some have suggested 22 that what we might do is while it might technically be 23 considered broadcasting, we talk about new media for 24 the moment and the Internet and those activities, that 25 the Commission should consider issuing a broad StenoTran 2751 1 exemption order, perhaps for a certain period of time, 2 which would exempt all of these activities that weren't 3 broadcast quality. 4 11952 I am paraphrasing and perhaps quite 5 unfairly, but maybe for the sake of this discussion if 6 we were to say given we don't know exactly how it is 7 going to evolve and we don't know what the model should 8 be because it's so early that we should exempt many of 9 these activities and continue to monitor their 10 development, would it be fair to say that that kind of 11 an environment, given the attention you have given to 12 some of the concerns you have raised by various 13 government bodies, might fit for you? 14 11953 MR. KARIM: I would like to just 15 quickly answer and perhaps Anne might want to say 16 something. 17 11954 I think perhaps we need to move away 18 from a technology centred approach of regulation and 19 policy towards content and a human centre of users, 20 citizens and consumers. That might provide us with a 21 better understanding of what is the end result of our 22 regulation and our policies that we seek to create. 23 11955 What you said about sort of the 24 moratorium or sort of hiatus in terms of regulatory 25 restrictions assumes that somewhere along the line we StenoTran 2752 1 are going to have a stable structure that has evolved 2 before we go into a future stage. 3 11956 From what we have seen, to give the 4 example of a paper -- I can only read newspapers on a 5 weekly basis -- the Globe and Mail has this column 6 every week on new media. Every week there is some 7 development or the other which is reported on. 8 11957 It's almost like the terrain is 9 constantly shifting. I don't think it would be wise to 10 assume that five years, seven years, ten years down the 11 road we will have achieved some sort of stability and 12 we can start regulating then. 13 11958 I think we should prepare for 14 continual change because that seems to have been the 15 trend. 16 11959 Coming back to my original point, 17 perhaps because of this environment of continual change 18 the safe route perhaps is to move to content and 19 audiences or basically citizens and consumers so as to 20 understand, you know, what's the end result of our 21 policies. 22 11960 COMMISSIONER GRAUER: I am interested 23 to hear you say that any sort of exemption order or 24 moratorium assumes that we would get to a stable place 25 at which time we would regulate. I don't think that's StenoTran 2753 1 what was intended. It was absent a clear understanding 2 of what we might do at this point was one route. 3 11961 I am interested in your proposal, but 4 I'm wondering what specifically you have in mind. Do 5 you know what I'm saying? I understand what you are 6 saying, that our goal should be looking towards the end 7 user and consumer and meeting those needs and our 8 pluralistic values in this country, but I'm not quite 9 sure what mechanism you would suggest we use to achieve 10 those goals. 11 11962 MR. KARIM: I have to confess that I 12 myself have not been able to come up with a specific 13 mechanism in mind. I don't know if some of my other 14 colleagues would like to suggest certain mechanisms or 15 elaborate on this topic generally. 16 11963 MR. FRIEDMAN: We, as you know, we 17 have had an opportunity to look at this. It's exactly 18 correct that the problem is that there is no limit or 19 barrier in moving from one medium to the other. 20 11964 Basically you are dealing with the 21 flow of electrons and electrons don't care whether they 22 are flowing through a telephone wire or a cable or 23 whether they are being transformed into electromagnetic 24 waves. 25 11965 Given that fluidity, I would say StenoTran 2754 1 that's why people are looking for a moratorium. No one 2 is yet sure how you set up the borders, how you pass 3 from where is the correct point to say at this point we 4 can consider it to be like sort of in a black box. 5 11966 Think of it as the black box model. 6 It's inside the black box. Now it has come out of the 7 black box. Now we are going to call it broadcasting. 8 I think that's where it becomes difficult. 9 11967 Someone has mentioned an individual 10 who is rebroadcasting broadcasts on the west coast. 11 It's very hard to control the person because they are 12 doing it over the Internet. They are using their Web 13 site as a broadcast source. 14 11968 It does become difficult. I think in 15 the current state individuals are not yet at the point 16 where they are producing a lot of programming that is 17 being broadcast all over the world. We are not there 18 yet. 19 11969 It does require us to sit down and 20 watch what kind of balance will be developed in the 21 next few years. I understand that the balance may be 22 temporary. It may last a year. But we are looking for 23 what will happen in terms of the economics and social 24 and cultural forces that Karim was talking about. How 25 will these balance out, especially factoring in the StenoTran 2755 1 fact that most of it is in English right now. 2 11970 Is that going to continue? Are we 3 going to see some kind of massive change? Right now we 4 are dealing with a small semi-universe where English 5 predominates. Will we then have five universes 6 competing in different languages? Will that happen 7 down the line? We aren't really sure. The whole 8 dynamics will change if that does occur. 9 11971 That's why I think people are looking 10 for a moratorium, those two reasons. One is no one is 11 quite sure of the rapidity of the change and no one is 12 quite sure at this point where to draw a particular 13 line. 14 11972 As some of the lawyers said, you 15 could argue that it is broadcasting. Some uses of the 16 Internet could be deemed as broadcasting. A lot of 17 other uses you can't argue that they are broadcasting. 18 You know e-mail isn't broadcasting. Electronic 19 bulletin boards isn't exactly broadcasting. 20 11973 There are all sorts of things that 21 you can't really claim that they are broadcasting. On 22 a first step perhaps, following up on Karim's lead, 23 what we can do is at least identify the things that are 24 not broadcasting and then simply deal with everything 25 else. StenoTran 2756 1 11974 COMMISSIONER GRAUER: Thank you. 2 11975 Just so I am clear with respect to a 3 moratorium or exemption order, it would just be to 4 ensure that it's not done in such a way that people 5 would assume at the end of the period that we were 6 going to put it into a box and use certain 7 prescriptions that may in fact not be appropriate. 8 11976 Is that a fair characterization? 9 11977 MR. KARIM: I would like to reiterate 10 that -- there's a colleague of mine at Carleton 11 University in the mass communication program who has 12 done some groundbreaking research looking at the 13 archives of policy development over the last several 14 decades. I believe it goes back to the beginning of 15 the century when the technologies of telegraph, 16 telephones, broadcasting, were emerging. 17 11978 There were, according to him, very 18 specific decisions which were taken both by government 19 and by the industry to keep broadcasting and 20 telecommunications separate. 21 11979 In a way, this is a policy 22 construction. We talk about this being the great era 23 of convergence. He is arguing that convergence has 24 been possible all along. It's just that decisions were 25 made to keep the technology separate. StenoTran 2757 1 11980 Perhaps we need some historical 2 understanding of how we came about first of all 3 separating the technologies and then developing the 4 regulations and policies around them as we now enter 5 this new phase. 6 11981 If we are to put a moratorium, it 7 should take into account the history of our 8 policymaking, of our separation of spheres, as well as 9 coming back to my earlier point, moving away from a 10 technologically deterministic approach in which the 11 technology is determining how we should regulate and 12 moving on to understanding what sort of a world do we 13 want as citizens primarily and then consumers. 14 11982 This sort of a human centred approach 15 I think will really help us redevelop. I know I am not 16 giving you specifics. 17 11983 COMMISSIONER GRAUER: No. 18 11984 MR. KARIM: But I think we are at the 19 threshold of developing a paradigm. It hasn't been 20 sort of expressed yet, but these are the kinds of 21 thinking that I hear around me. 22 11985 COMMISSIONER GRAUER: I guess what 23 I'm trying to get at, and I don't want to put words 24 into your mouth. I am not trying to do that in talking 25 about a moratorium. StenoTran 2758 1 11986 What I am trying to do is say the 2 points you are making are valid in terms of something 3 that is evolving, but what do we do right now until we 4 have a sense of what to do? Part of the issue for us 5 and part of the rationale for this hearing, one of the 6 reasons is that we are hearing from many people who 7 might be inclined to be making investments that they 8 are looking for an indication from the Commission are 9 we going to regulate or not and what will the rules be 10 and what will the regulations be to just create a 11 little more certainty, as someone put it, in a very 12 uncertain world. 13 11987 It's that I am just struggling with 14 in terms of what you are saying. To say there's a 15 period right now and yes, in fact, it is evolving. 16 11988 MR. KARIM: I would suggest before an 17 exemption order is granted that perhaps there needs to 18 be some sort of study as to what the possible effects 19 might be, if this is going to be for five years, ten 20 years, however long the window is, what sort of effects 21 there would be primarily on Canadians. 22 11989 That would be sort of the bottom 23 line. If it's a carte blanche in which you can do 24 basically anything you like, there may be a certain 25 rather regrettable kind of consequences which we may StenoTran 2759 1 basically regret. 2 11990 I would imagine we would need to 3 understand, at least in terms of the trends, yes, it is 4 an uncertain universe, but in terms of the trends, I 5 think we can speculate over the next three, five years 6 what sort of technologies and beyond that what sort of 7 social consequences that they will produce. 8 11991 Obviously we can't know everything, 9 but there are certain things that we could do. I would 10 suggest this is a course that perhaps may be taken. 11 11992 COMMISSIONER GRAUER: Thank you. 12 11993 MS DE SANTIS: I would just like to 13 add a comment from the controversial content point of 14 view, which is one of our specific points of interest 15 and my area of specialty in particular. 16 11994 If we take a look at the examples in 17 the report that was submitted to looking abroad, 18 looking to other countries who have a similar social, 19 cultural, legislative background as Canada, aside from 20 some very distinct examples which get a lot of 21 publicity, such as the Communications Decency Act in 22 the United States and the German telecommunications 23 laws that do attempt to regulate content on the 24 Internet, specifically pornography or you could say 25 hate, it falls into that auspices, countries such as StenoTran 2760 1 the Netherlands, the United Kingdom, New Zealand, 2 Australia, the appropriate body or their equivalent of 3 the CRTC or their government ministry or department has 4 taken instead of a regulatory role, the role of a 5 facilitator, in coming up with some kind of 6 non-regulatory framework that does establish certain 7 criteria that are relative to citizens that address 8 issues of controversial content. 9 11995 For example, encouraging responsible 10 user activities such as educational programming or 11 literacy or voluntary filtering in the home, for 12 example, by parents, encouraging ISP codes of conduct. 13 Certainly I'm sure that none of the ISPs that have been 14 here would say that they could possibly monitor the 15 content on their side. 16 11996 Codes of conduct, agreements with 17 users, for example, user recourse action. For example, 18 if -- part of what we are talking about here is citizen 19 use. We are not talking about consumer. 20 11997 If citizens have a sense that they 21 are empowered in some way, if they come across a site 22 that they find offensive, that may or may not be 23 illegal -- that's up to the Human Rights Commission or 24 whatever body to decide -- that they know who to 25 contact. They know to contact the police or the StenoTran 2761 1 authorities. 2 11998 There have been cases where they have 3 called the police, the police have directed them to 4 somewhere else in Canada, for example. 5 11999 Perhaps the role of the CRTC or 6 another body, that's not for us to decide here, we are 7 not lawyers, is to facilitate a framework that citizens 8 feel is addressing the issues, but is not regulating 9 the Internet because it is in its infancy. 10 12000 Nowhere in the world have we seen 11 successful legislation or successful regulation of the 12 Internet because of its international jurisdiction. 13 12001 COMMISSIONER GRAUER: I have some 14 questions for you on just those areas. I was also 15 going to ask -- I think your study is about a year old 16 now. A year is a long time in the world of the 17 Internet. 18 12002 I was wondering if you had any 19 updates that would be of interest to us. 20 12003 MS DE SANTIS: I must admit I haven't 21 been watching my file as closely as I should have been. 22 I have been clipping, but I haven't been reading. 23 12004 There was a case in Germany which 24 when I was writing the report at the time, I don't 25 think it had yet been in front of the courts with StenoTran 2762 1 CompuServe and Philipson, who was the person in control 2 of the server over there. Are you familiar with the 3 case at all? 4 12005 COMMISSIONER GRAUER: No. 5 12006 MS DE SANTIS: Correct me if I'm 6 wrong. Jump in because the details are sketchy. 7 12007 The service provider there was 8 hosting child pornography, I believe. The authorities 9 stepped in and deemed it to be illegal under the new 10 Telecommunications Act. If it's within reasonable 11 expectation that an ISP server is aware or could have 12 been aware of the content, then they are criminally 13 liable. 14 12008 They shut down the site. What 15 happened was the site was mirrored then by civil 16 libertarian groups all around the world. It 17 demonstrated that you can't shut down sites because 18 there is going to be a haven, particularly the United 19 States. It is always pointed out as the example for 20 the haven for controversial sites. Mirrored sites will 21 pop up. 22 12009 He did go to court and he was 23 convicted because in Germany the ISP is considered to 24 be responsible. 25 12010 ISP servers in Canada and certainly StenoTran 2763 1 in most countries that I surveyed argue that there is 2 no way that they can possibly monitor all the content 3 on all their servers. However, if they do have 4 knowledge of a site, most of them agree that yes, if 5 they are aware a site is illegal and a site is on their 6 server then they will shut it down. 7 12011 I believe we saw that in British 8 Columbia earlier this year. There were ISPs that shut 9 down sites. 10 12012 Another interesting finding I just 11 found the other day was that Sweden has also passed a 12 new Telecommunications Act specifically on DBS 13 services, but the legislation -- a few academics say 14 that it will apply to Internet services, web services, 15 even though it is specifically targeted to DBS. They 16 say the same thing, that Internet service providers are 17 not responsible for monitoring their content unless 18 there is a reasonable way they could have known about 19 it. 20 12013 What they have done instead is they 21 have set up a tribunal or some kind of body in which 22 users can report the illegal content or what is 23 perceived to be illegal to this agency, this body, this 24 tribunal, which will then determine whether it is and 25 then pass it on to the authorities. StenoTran 2764 1 12014 Sweden, which is generally seen as a 2 rather liberal country, we often find parallels between 3 Canada and Sweden. It has also attempted to regulate, 4 but this is yet to be tested before the courts. 5 12015 I am a researcher, but I will always 6 say that there is more research to be done in this 7 area, a tremendous amount of research. 8 12016 In terms of a moratorium, I would 9 certainly agree that this technology is in its infancy. 10 There are a number of multilateral organizations that 11 are working on this issue, the European Commission, 12 UNESCO, the United Nations. 13 12017 If anyone wants to jump in. From the 14 information that I have read, the Swedish law, the 15 German law they are so new, the German law has only 16 been tested before the courts, there is no way of 17 telling just yet whether or not they are going to be 18 successful. 19 12018 It is a matter I think of wait and 20 see instead of maybe a moratorium. 21 12019 COMMISSIONER GRAUER: I will never 22 now be able to find my way through my notes between 23 your various papers. 24 12020 If I can just on this matter then. 25 You have done a lot of research, even here in Canada I StenoTran 2765 1 take it, with ISPs and what's happening here. We have 2 had the Canadian Association of Internet Providers 3 here. They have a code of conduct. 4 12021 Would you say that for the most part 5 the Internet service providers in Canada, 6 notwithstanding your suggestion that there is perhaps a 7 facilitating role for ourselves or some other part of 8 government, that for the most part these matters are 9 being dealt with in a timely way by the industry? 10 12022 MS DE SANTIS: I would say so. I 11 would say in Canada and abroad that generally there is 12 co-operation between industry and government. From a 13 consumer point of view, I don't think it's imminent in 14 ISPs' interest to host sites that the majority of users 15 will disagree with or take offence to. 16 12023 Even from just a business point of 17 view, it is not in the server's interest to carry sites 18 that users are going to take offence with. 19 12024 I will admit that I am not as 20 familiar with what is going on in Canada at the moment, 21 but the service providers that I am familiar with, and 22 I participated in a workshop in Montreal sponsored by 23 the Canadian Human Rights Commission. I was in a 24 workshop and there was somebody representing B.C.Tel 25 there. StenoTran 2766 1 12025 By all means he was certainly 2 agreeable that ISPs do have a role to play, but it's 3 not a monitoring role of their content. I would say 4 generally that the Canadian industry is agreeable. 5 12026 COMMISSIONER GRAUER: I know a lot of 6 your work or your research was looking at what is 7 happening internationally. You talked about the need 8 for co-operation between Canada and these other 9 countries. 10 12027 Is that happening? Is there a fair 11 amount of work taking place intergovernmentally and 12 within the industry internationally? 13 12028 MS DE SANTIS: Definitely. 14 Particularly in Australia, which is one of the examples 15 I pulled out of my study to recommend in terms of 16 policy recommendations that the industry is working 17 hand in hand with government and with different levels 18 of government. 19 12029 It's still not certain in some 20 countries at which level this responsibly falls, 21 whether it's the state or the province or the federal 22 government. 23 12030 Also, for example, in the U.K. we 24 have seen that the industry is quite active in 25 developing rating systems, not filtering but rating StenoTran 2767 1 systems in terms of something that would pop up and say 2 the site is applicable for children or good for 3 children, that kind of thing. 4 12031 Yes. It is also in industry's 5 interest to come up with a non-regulatory alternative. 6 If that means a code of conduct, if that means a rating 7 system, I am sure it is more in their interest to have 8 those types than have the CRTC, for example, come in 9 and say it is your responsibility to make sure these 10 types of materials are not on your site. 11 12032 Do you feel, for the most part, 12 that -- I know we have heard from various organizations 13 about, you know, the role of the Internet in allowing 14 for freedom of expression and more ability to combat 15 hate, and other people have said, "No, it perhaps 16 incubates and nurtures hate groups." 17 12033 On balance, I take it from what I 18 have read that you feel that it is more a force of good 19 than a force of evil. Is that a fair characterization? 20 12034 MS KORAH: I think it is a 50/50 21 two-way street thing because I have been involved, as I 22 said, in developing curriculum materials specifically 23 aimed at students in the secondary level and elementary 24 level where they are particularly vulnerable. Research 25 has shown that secondary school students, adolescents, StenoTran 2768 1 are particularly vulnerable to hate materials, 2 offensive materials; but the answer seems to be to 3 develop other alternatives to teach them critical 4 thinking skills. 5 12035 So I would say it is a 50/50 thing. 6 It is a force for enormous good, as well as it can be a 7 destructive force. 8 12036 COMMISSIONER GRAUER: So the real 9 challenge, then, for us is to promote awareness, media 10 literacy, critical thinking skills, as opposed to 11 attempting to censor or restrict access? 12 12037 MS KORAH: I would agree. 13 12038 MS DE SANTIS: If I could just add 14 that we need to become more savvy, just as hate mongers 15 have become more savvy. Research has shown that, 16 initially, when -- well, the Web in its infancy hate 17 mongers tended to go to interactive sites in which you 18 could -- like discussion groups. So, for example, you 19 could go on site with a hate monger, refute their 20 views, have an intelligent conversation in which you 21 were combatting the hate directly through dialogue and 22 discussion and, certainly, that is constructive and 23 positive. 24 12039 What research now shows is that they 25 are not necessarily using interactive sites any more StenoTran 2769 1 but they are retreating to non-interventionist Web 2 sites, so Web sites that look just like magazines, that 3 there is no fora for discussion within the site. So it 4 makes it less easy to refute such views. As I say, 5 they have become more savvy and now it is time for the 6 other side of it to just become more creative in ways 7 of educating users. 8 12040 COMMISSIONER GRAUER: Thank you. As 9 I say, with three separate papers, I am not really 10 going to have a chance to get into all of them, but I 11 did want to ask specifically Dr. Karim, and I know this 12 was also in your paper, you refer to national 13 regulatory bodies which have prohibited the growth of 14 ethnic media find that their minorities are tuning into 15 programming disseminated from their respective home 16 countries or diasporas. I wonder if you could -- I 17 know you have referred to France and I am wondering 18 how -- where the CRTC and the Canadian regulatory 19 agency fits in all of this, or if you are referring to 20 non-Canadian bodies? 21 12041 MR. KARIM: Generally, I think -- 22 well, the problem has been that every country has a 23 limited amount of space on the electronic spectrum. 24 The priority in most countries is to serve mass 25 audiences, first of all. So, in Canada, if you are StenoTran 2770 1 going to take the example of Canada, our priorities 2 first of all is to serve Canadians in English and 3 French. 4 12042 So, certain licences may not have 5 been -- more licences may have been refused for ethnic 6 broadcasters than, perhaps, for others. Generally, 7 what I have seen in Canada is, especially recently, a 8 more opening up to ethnic broadcasters, even on DBS 9 television, TeleLatino, in Spanish and Italian, the 10 Salvation Network, the Chinese network, Fairchild 11 Television, and other -- radio channels as well. 12 12043 The example I gave of France was, 13 perhaps -- I don't know -- I haven't studied -- done a 14 global study, but certainly it was a clear example in 15 which those people found alternative sources for 16 entertainment and information. It is this particular 17 kind of technology which is making it easier and 18 easier. This -- obviously, it was much more difficult 19 before. You might have newspapers from the old country 20 or you might produce a weekly yourself, and so on. 21 Broadcasting was much more difficult to obtain, 22 broadcasting content; and now, since people are using 23 satellites, this is what we are faced with. So, if we 24 don't provide these services to our minorities, they 25 are going to get them from somewhere else. That is the StenoTran 2771 1 situation we face, whether it is through satellites or 2 Web TV or other digital media. That is the point I was 3 making. 4 12044 COMMISSIONER GRAUER: Thank you. I 5 could go on for quite awhile but I think we have some 6 other -- thank you very much. 7 12045 THE CHAIRPERSON: Thank you. Thank 8 you very much, ladies and gentlemen. We appreciate 9 your participation in our proceeding. 10 12046 I think we will take our afternoon 11 break at this point and reconvene at 3:25. 12 --- Short recess at / Courte suspension à 1508. 13 --- Upon resuming at / Reprise à 1525. 14 12047 THE CHAIRPERSON: We will return to 15 our proceeding now. 16 12048 Madam Secretary, would you 17 introduction the next panel, please? 18 12049 MS BÉNARD: Thank you, Mr. Chairman. 19 The next presentation will be by Bell Satellite 20 Services Inc. 21 12050 THE CHAIRPERSON: Good afternoon, Mr. 22 Gourd. 23 PRESENTATION / PRÉSENTATION 24 12051 MR. GOURD: Mr. Chairman, Madame la 25 Présidente, Commissioners. StenoTran 2772 1 12052 I am Alain Gourd, President and Chief 2 Executive Officer of Bell Satellite. I have with me 3 today on my immediate right Mr. Chris Frank, Vice 4 President, Government Relations & Corporate Development 5 at Bell ExpressVu; Mr. Terry Snazel, Vice President, 6 Technology; and Mr. David Elder, our regulatory counsel 7 for this proceeding. 8 12053 I am pleased to be with you today to 9 discuss the new media services which is important for 10 our company, Bell Satellite. 11 12054 Today, I would wish to address you 12 from a broadcasting perspective, as a broadcaster who 13 views the future of the broadcasting sector with 14 considerable enthusiasm. I will limit my part of the 15 presentation, if you agree, to three key areas: First, 16 the Broadcasting Act; second, the regulatory context; 17 and, third, new opportunities coming for multimedia for 18 broadcasters and independent producers. 19 12055 Monsieur le Président, permettez-moi 20 donc de commenter par un certain regard sur la Loi sur 21 la radiodiffusion et son application au monde des 22 nouveaux médias. 23 12056 Premièrement, ce que je voudrais 24 souligner d'entrée de jeu, en tant qu'ancien 25 sous-ministre des Communications à Ottawa, est que, StenoTran 2773 1 comme on l'a dit et redit, la Loi sur la radiodiffusion 2 de 1991, dont je fus l'un des artisans, se veut 3 évidemment technologiquement neutre. Elle a donc 4 vocation à s'appliquer à toute forme de transmission 5 d'images et d'informations couvertes par la définition 6 de la radiodiffusion à l'article 2. Cette définition 7 s'applique donc à la radiodiffusion conventionnelle, à 8 la radiodiffusion sur le câble, sur le SBM, au système 9 de diffusion multipoints, sur le satellite, et nous en 10 sommes, ou sur l'Internet. 11 12057 Évidemment, la définition de 12 radiodiffusion vise la distribution de programmes et 13 non le texte alphanumérique qui constitue, et 14 constituera pour de longues années, l'immense majorité 15 des contenus Internet. 16 12058 À mon sens, l'objectif du législateur 17 en révisant la loi de 1968 était certainement de 18 s'assurer que les autorités réglementaires canadiennes 19 aient tous les outils nécessaires pour continuer de 20 régir le système canadien de radiodiffusion en tenant 21 compte de l'intérêt public, mais aussi des changements 22 technologiques. 23 12059 En effet, comme vous le savez, le 24 législateur a également prévu, par son article 3(d), 25 que le système canadien de radiodiffusion devait StenoTran 2774 1 s'adapter aux changements scientifiques et 2 technologiques. L'article 5, particulièrement aux 3 sous-sections (c) et (f), cherche aussi à favoriser le 4 progrès scientifique et technologique. 5 12060 Par conséquent, à mon sens, la Loi 6 sur la radiodiffusion fournit au Conseil la latitude 7 voulue pour établir des règles appropriées pour 8 favoriser l'évolution de la radiodiffusion canadienne, 9 y compris sous sa forme nouveaux médias. 10 12061 Le contexte réglementaire maintenant. 11 Nous croyons à ce sujet, comme tant d'autres, que la 12 réglementation de la radiodiffusion, sur l'Internet, 13 par exemple, devait être la plus légère possible, entre 14 autres pour favoriser l'évolution technologique prévue 15 par la loi. De plus, le Conseil pourrait envisager un 16 certain nombre d'initiatives qui favoriseraient une 17 synergie entre les différents partenaires de la 18 radiodiffusion et des nouveaux médias. La neutralité 19 technologique ne veut pas dire évidemment un traitement 20 réglementaire similaire. 21 12062 C'est ainsi que le Conseil pourrait 22 choisir de fonctionner par exemption de licence dans le 23 secteur des nouveaux médias, comme il l'a fait dans 24 d'autres secteurs, c'est-à-dire si une entreprise 25 rencontre certains critères de base, elle pourrait être StenoTran 2775 1 exemptée d'avoir une licence de radiodiffusion. 2 12063 Le Conseil pourrait aussi envisager 3 de reconnaître certaines dépenses de titulaires de 4 licences de radiodiffusion dans des programmes 5 canadiens destinés à la fois aux médias traditionnels 6 et aux nouveaux médias. 7 12064 Dans la même veine, le Conseil 8 pourrait évaluer la possibilité de nouveaux fonds 9 destinés à la production de programmes canadiens 10 destinés à la fois aux médias actuels et aux nouveaux 11 médias. On pourrait aussi procéder à l'ajustement de 12 fonds existants. 13 12065 D'autre part le Conseil pourrait, 14 d'un commun accord avec le ministère du Patrimoine 15 canadien, envisager d'élargir la définition d'une 16 coproduction dans le domaine du cinéma et de la 17 télévision, pour inclure le traitement multimédia d'une 18 production télévisuelle ou cinématographique. 19 12066 On pourrait également envisager 20 l'établissement de nouvelles mesures fiscales -- par 21 exemple, un crédit d'impôt pour la création d'un 22 traitement multimédia pour une production télévisuelle 23 et cinématographique. 24 12067 Au niveau des opportunités que 25 représente le multimédia, je voudrais vous mentionner, StenoTran 2776 1 comme vous le savez, que Bell a lancé un fonds Bell de 2 la radiodiffusion et des nouveaux médias en septembre 3 1997, avec comme objectif de favoriser et d'accroître 4 la production de contenu canadien à la fois sur les 5 nouveaux médias et la radiodiffusion au Canada, et 6 stimuler les partenariats entre ces secteurs. 7 12068 Doté d'un capital de 12 millions de 8 dollars, ce fonds a déjà accordé à ce jour un peu plus 9 de 5 millions de dollars pour la production de 28 10 projets. Pour qu'un projet soit reçu, il est 11 nécessaire qu'un producteur indépendant y soit associé. 12 12069 Les projets sélectionnés touchent 13 divers secteurs d'intérêt: séries éducatives et 14 documentaires, productions destinées aux enfants, 15 émissions de variétés, et séries dramatiques. 16 12070 Les productions multimédias associées 17 à ces projets ont misé sur un vaste éventail 18 d'expressions, allant à des sites de références aux 19 jeux interactifs, en passant par les forums de 20 discussion et le laboratoire virtuel, utilisant pour ce 21 faire des sites Web, des CD-ROM branchés, ou encore des 22 services en ligne. D'ailleurs, les responsables du 23 fonds de la radiodiffusion et des nouveaux médias de 24 Bell ont déposé hier un premier rapport très positif 25 sur la performance du fonds. StenoTran 2777 1 12071 La synergie entre les industries de 2 la télévision du multimédia et du secteur de la 3 production indépendante se confirme. À titre 4 d'exemple, signalons que Robert Lepage, qui bénéficiera 5 de l'assistance financière du fonds Bell, prépare 6 actuellement en parallèle une version télévisée et une 7 version Internet de sa prochaine production. 8 12072 D'autres exemples d'alliance entre 9 les producteurs et les télédiffuseurs qui ont bénéficié 10 du fonds Bell sont les émissions bien connues: 11 "Riverdale", au réseau CBC, et "Diva", au réseau TVA. 12 12073 La raison pour laquelle je me suis 13 attardé, monsieur le Président, un peu plus longuement 14 sur le fonds, c'est que nous souhaitons aujourd'hui 15 indiquer au Conseil notre désir de rendre ce fonds 16 permanent, en consultation avec son conseil 17 d'administration et l'industrie. 18 12074 Comme il se doit, après avoir 19 finalisé, en consultation, les détails de ce projet, 20 nous serons heureux de le présenter au Conseil pour 21 approbation. 22 12075 Bell Satellite a donc l'intention de 23 participer activement au développement de programmes et 24 de services pour les nouveaux médias, entre autres en 25 effectuant prochainement un investissement majeur dans StenoTran 2778 1 une importante compagnie canadienne de multimédia. 2 Notre but est d'optimiser les contenus de 3 radiodiffusion à la fois sur les mécanismes de 4 distribution traditionnels, tels le satellite, et 5 l'Internet. 6 12076 Enfin, Bell Satellite a conclu [une 7 entente] avec le laboratoire de recherche sur les 8 nouvelles technologies du département de communications 9 de l'Université de Montréal, dirigé par M. Caron, le 10 professeur Caron. Cette entente nous permettra de 11 réaliser en commun des travaux de recherche sur 12 l'exploitation des multimédias et sur leur application 13 dans le secteur de la radiodiffusion. 14 12077 Mr. Chairman, Madame la Présidente, 15 Commissioners, I am confident that, as we have done in 16 the past, both the Commission and the industry will 17 strive to maximize the potential benefits being offered 18 to us through the new media. 19 12078 The Canadian Broadcasting System must 20 fully participate in the new media universe which is 21 developing not only in Canada but also internationally. 22 12079 I believe that the Commission and the 23 government can continue to play a role in ensuring a 24 stronger Canadian content presence in the multimedia 25 universe. StenoTran 2779 1 12080 I would now ask Mr. Frank to continue 2 with our presentation, particularly regarding the 3 satellite new media capability of Bell ExpressVu. 4 Merci. 5 12081 MR. FRANK: Thank you, Alain. 6 12082 Bell ExpressVu, BSSI's direct-to-home 7 distribution system, has not as yet launched any new 8 media transport services. Our inability to do so has 9 been caused largely by our lack of satellite capacity. 10 12083 With the advent of Nimiq, Canada's 11 new high-powered, direct broadcast satellite, the 12 capacity challenge will be alleviated. Telesat Canada 13 has advised us that Nimiq will launch in April of next 14 year. This means we could have commercial service in 15 May. 16 12084 Current plans envisage the subsequent 17 and near-term roll-out of at least two new 18 applications. First, a fully interactive Internet 19 access service with the out route or main feed direct 20 from Nimiq and the in route or return loop via 21 terrestrial facilities. Second, with the introduction 22 of new set top boxes next year which have interactive, 23 multimedia capability, we hope to provide existing 24 broadcasting services which we distribute with the 25 ability to enhance their respective services and create StenoTran 2780 1 incremental sources of revenue for the broadcast 2 industry through additional data and image capability. 3 12085 For instance, information services 4 such as the Weather Channel could provide additional 5 layers of text, graphic and video information for local 6 and regional consumption. For a national service 7 provider such as Bell ExpressVu, this is an exciting 8 development because it allows for additional, specific 9 information for our subscribers, which is not available 10 from a national feed or takes time to access because of 11 the broad scope of the primary service. 12 12086 Perhaps I can now comment briefly on 13 the three themes that the chairman has raised in his 14 introductory remarks. The first of these themes asks: 15 In what way and to what extent does or will new media 16 affect regulation of the traditional broadcast 17 undertakings of radio, television and BDUs? 18 12087 Mr. Gourd has already stated that one 19 of the key underpinnings of the Broadcasting Act is 20 technological neutrality. As a result, broadcasting 21 services are unaffected, in the public policy sense, by 22 the means of distribution. It is clear that one of the 23 important objectives of the Broadcasting Act is to 24 further the growth and development of the domestic 25 broadcasting system so as to provide all Canadians with StenoTran 2781 1 choice, variety and excellence in programming that is 2 relevant to them. That is, giving Canadians the 3 opportunity to see themselves and their society fairly 4 represented in the broadcast programming which they 5 watch and listen to. 6 12088 We have said in other appearances and 7 submissions to the Commission that Canadian programming 8 is an important point of product differentiation for us 9 from at least one of our competitors, the unauthorized 10 U.S. grey market service providers. Having established 11 our belief in and our need for quality and diversity in 12 Canadian programming and in the present context, we 13 suggest that it is early days for new media and 14 therefore difficult to fully assess this question at 15 the present time. 16 12089 However, what is clear is that new 17 media offers Canadian broadcasters and consumers new 18 opportunities, opportunities that can be developed 19 through prudent fiscal support and light-handed 20 regulation as suggested by Mr. Gourd. 21 12090 I would also note parenthetically 22 that we believe that we are some number of years away 23 from the point where the worldwide Web will actually 24 provide reasonable quality in video delivery thereby 25 providing any degree of competition in the conventional StenoTran 2782 1 television, specialty or premium TV mass markets. 2 12091 The second theme identified by the 3 Commission is: To what extent do some or any of the 4 new media services constitute broadcasting? Or 5 telecommunications? How do we treat them consistent 6 with the objectives of their respective acts? 7 12092 On this matter, BSSI observes that 8 the record of this proceeding demonstrates that it 9 appears difficult to characterize and predict how new 10 media will evolve. What we are seeing on the Internet 11 now, and will continue to see in the short term, is 12 overwhelmingly text-based service, and hence clearly 13 telecommunications. 14 12093 It appears to us that virtually all, 15 if not all, intervenors believe this new media should 16 be encouraged to develop, and that Canadians should be 17 encouraged to be at the forefront of this development. 18 So while the objectives of the Broadcasting Act may be 19 a reasonable starting point in some instances, the 20 tools used by the Commission to achieve those goals 21 should be chosen in a pragmatic fashion, where 22 applicable. 23 12094 The Commission's third theme is: 24 What recommendations should the Commission make to the 25 government on broader policy issues, particularly the StenoTran 2783 1 government's connectedness agenda? 2 12095 BSSI feels that it can make an 3 important contribution to the government's agenda of 4 connectivity. We note that Telesat Canada, originally 5 a mixed enterprise involving both government and 6 Canadian telephone companies, has been instrumental in 7 bringing DBS service to Canadians, which will give us 8 the opportunity to compete with the U.S. grey market 9 services head on and with a comparable platform. 10 12096 Satellite-delivered Internet services 11 will provide all Canadians, and especially those in 12 rural and underserved areas, with the opportunity to 13 access new media services and not be by-passed because 14 of cost constraints associated with terrestrial 15 facilities in thin route/low population areas. Among 16 other things, this will keep rural schools, businesses 17 and homes the opportunity to get on and stay on line. 18 12097 We would now be pleased to answer 19 your questions. 20 12098 THE CHAIRPERSON: Thank you very 21 much, Mr. Frank, Mr. Gourd. 22 12099 Let me first just ask a question, 23 since you have raised it in your presentation, about 24 the grey market. I guess I have been under the 25 understanding that between yourselves and your StenoTran 2784 1 competitor a number of the issues or concerns with 2 respect to the grey market were being addressed and 3 that that had probably been stabilized, if not 4 shrinking, with your presence in the marketplace with 5 some stories we have seen recently in the newspapers. 6 You seem to be suggesting that in fact the grey market 7 may still be growing. I appreciate it is not directly 8 related to our proceeding here today, but you did raise 9 it in your presentation, so maybe we can get a little 10 update on that from you. What is your sense of that? 11 12100 MR. GOURD: Please allow me to give 12 the general introduction and then turn to Mr. Chris 13 Frank for the details. 14 12101 We are pleased to report, indeed, 15 that both Star Choice and Bell ExpressVu, indeed, 16 through particularly specialty programs to facilitate 17 the transfer from the grey market to Canadian DTH 18 undertaking services, that the two combined in our 19 opinion has indeed reduced the grey market. So it has 20 not only plateaued but there were some transfers with 21 broader reduction, which means that the theory that an 22 offering of both the best of foreign services and the 23 best of Canadian services does work. We have no 24 evidence, quite frankly, that there has been a new 25 momentum given to the grey market in recent times. StenoTran 2785 1 12102 Chris? 2 12103 MR. FRANK: I would simply add that 3 although our service has been enthusiastically received 4 across the country, and the service of our competitor 5 Star Choice as well, that DirectTV remains the biggest 6 DTH company in Canada. So we have to be very vigilant. 7 We have to continue to add new services and improve our 8 service to make sure that we are ultra competitive. 9 12104 There is no question this is a very 10 competitive market and it is a challenge, a challenge 11 that we relish. 12 12105 THE CHAIRPERSON: So, are they 13 getting new customers? This story that we saw in the 14 press recently that suggested I think it was -- 15 12106 MR. GOURD: They are probably getting 16 new customers but they are losing customers. So we 17 believe that the net is a slow reduction of the grey 18 market. 19 12107 However, if, for example, Echo Star, 20 with their new deal with Rupert Murdoch and MCI were to 21 increase very dramatically the number of services -- 22 the number of 500 was mentioned in the newspapers -- 23 and the Canadian direct-to-home undertakings would 24 plateau, let's say at 100 TV services, then indeed the 25 grey market would pick up. StenoTran 2786 1 12108 But, if Star Choice occupies some 30 2 transponders on F1, and if we -- if and when we migrate 3 to Nimiq and add significant number of transponders, 4 and add a mix of additional Canadian and foreign 5 services, then we are quite confident that the trend of 6 slow reduction of the grey market would be reduced. 7 But it would be maintained. 8 12109 However, as Chris has said, the 9 expansion of the programming menu, the orderly 10 expansion of the programming menu, using a Canadian 11 expression, in par with the increase of the menu of the 12 U.S. providers will be very important, which will 13 represent additional expenditures on the part of both 14 Canadian licensees. 15 12110 THE CHAIRPERSON: Let's switch -- I 16 guess you are here sort of wearing two hats, one 17 perhaps a little old and dusty, and no grey or white 18 hair. 19 12111 You talked in your presentation today 20 about aspects of the Broadcasting Act. We have had a 21 lot of discussion, as you can probably appreciate, 22 around the broadcasting -- the definitions in the 23 Broadcasting Act and what they mean and what they were 24 intended to mean and so appreciate your comments here 25 today. StenoTran 2787 1 12112 A number of parties have noted and 2 stressed the fact that the concept of regulation of 3 broadcasting was fundamentally based on the notion of 4 scarce resources. I wonder if you would just comment 5 on that aspect of this issue. 6 12113 MR. GOURD: The Broadcasting Act, 7 1968 might have been rooted in that concept of scarcity 8 and, perhaps, it might have been rooted as well in a 9 certain type of delivery mechanism, most importantly 10 conventional television; and, at the last moment, we 11 all know that there was a cable section added to the 12 1968 Broadcasting Act. So cable was covered a bit at 13 the last moment in the parliamentary committee that met 14 during 1967 and 1968. 15 12114 With the 1990 and 1991 parliamentary 16 committee, and I should even say that the attempt to 17 review the Broadcasting Act started even in 1985, and 18 you all know that there were three attempts and a lot 19 of committees. But from day one the various 20 parliamentary committees with the officials that 21 supported them, including yours truly, wanted to 22 achieve a certain number of objectives. 23 12115 I remember endless discussions around 24 these objectives, and positive discussion, because the 25 objective was to further the Canadian identity and the StenoTran 2788 1 modernity of the Canadian broadcasting system. So 2 therefore there was a strong conviction by everybody. 3 Only the means really were discussed, but the 4 objective, the section 3 and section 5 and other 5 sections were the object of a very large consensus and 6 they were, "Let's try to capture the essence of 7 broadcasting programming." So therefore the 8 Broadcasting Act should apply to a certain type of 9 programming. 10 12116 Then, the other complementary 11 consideration was it should not be rooted on any given 12 technology or in any given distribution technique. Of 13 course, at the time, we didn't talk a lot about 14 Internet in 1985. We knew somehow there was a thing 15 called Internet but, basically, we were of the opinion 16 at the time that the telephone system -- we didn't say 17 it is Internet on the telephone system -- but we were 18 saying to ourselves, probably one day the telephone 19 system will become a major delivery mechanism. We were 20 not sure, but there was a strong desire on the part of 21 the members of the parliamentary committee to make 22 certain that if suddenly the telephone system, or any 23 other system, because there was also a consensus that 24 nobody really knew, because nobody had really foreseen 25 cable in the fifties, and then nobody had really StenoTran 2789 1 foreseen satellite when CanCom started, and the members 2 of the committee were saying, "Can we foresee 3 everything? There is probably a delivery mechanism 4 dormant in some laboratory that will emerge one day and 5 we don't know about it." 6 12117 So there was a strong desire, that is 7 my second comment, to make sure that the Broadcasting 8 Act was not rooted in any type of delivery mechanism, 9 in any type of delivery technology. Therefore, there 10 was a conviction that the Commission of the day, within 11 the umbrella of section 3 and the umbrella of its 12 power, would find ways to achieve the objectives of the 13 Broadcasting Act, whether the program is delivered 14 through this delivery mechanism or that other one. 15 12118 THE CHAIRPERSON: But I take it even 16 notwithstanding all that you have said there were 17 certain limitations on the technology that we would be 18 considering. For example, are we are not considering 19 the distribution of content in cinemas. We are not 20 concerned about the distribution of content in video 21 stores. And, even in the act, even where it is using 22 telecommunications for the delivery, for example, it 23 was -- it specifically excluded -- does not include, 24 even if it is delivered using telecommunications 25 technology, programs that are made solely for StenoTran 2790 1 performance or display in a public place. 2 12119 So, the government of the day did try 3 to put some kind of a fence around. We are going to be 4 technologically neutral, but we are going to put a 5 fence around the kind of ways this would be delivered. 6 I wonder if you might comment on how you tried to sort 7 of narrow, if you will, where that fence or -- position 8 is perhaps a better way to put it -- where that fence 9 would be? 10 12120 MR. GOURD: I may have misunderstood 11 your question, Mr. Chairman. 12 12121 THE CHAIRPERSON: I don't think you 13 did. 14 12122 MR. GOURD: There was certainly a 15 desire not to step in provincial jurisdiction. I 16 remember that the members of the committee felt that 17 they should focus on what was clearly a federal 18 jurisdiction, so cinemas, video stores, even display in 19 public places were either square and fair provincial or 20 grey zones. So that was a first fence. 21 12123 Another one was, indeed, the desire 22 to focus on what was the core of the broadcast 23 programming and therefore alphanumeric services were 24 not included. The desire of the part-time member, the 25 chairman, I think it was Mr. Edwards, the chairman of StenoTran 2791 1 the committee, was saying, "Let's focus really on what 2 is the basic core broadcast services, have a definition 3 which is general enough, even though it excludes 4 certain types of activities for the reasons I have 5 mentioned, and then it will be up to the Commission of 6 the day to do the implementation." 7 12124 But you are totally correct, the 8 desire was not to throw so wide a net that it would be 9 very difficult to manage implementation, or so wide a 10 net that it would include non-essential information 11 distributed through these delivery mechanisms, like 12 pure data or things like that. 13 12125 THE CHAIRPERSON: Now, there has been 14 lot of discussion that has been raised over the past 15 two weeks about different sort of characteristics or 16 ways of approaching the technology in the sense of 17 delivery, if you will. There has been talk about push 18 versus pull; that broadcasting is largely understood to 19 be a push technology, that the signal is sent out 20 whether over the radio waves or using wire, from one to 21 many sort of thing, rather than an individual going and 22 pulling out the information. 23 12126 There has been some talk about the 24 question of what has been referred to as simultaneity, 25 whether the same program is delivered to one or more StenoTran 2792 1 individuals at the same time. The notion of 2 interactivity has also been raised in terms of whether 3 or not the subject we are talking about constitutes a 4 program. 5 12127 Maybe I am throwing too many terms 6 here for you to catch up with. I wonder if you might 7 comment on some of those notions that have been raised 8 with us. 9 12128 MR. GOURD: Of course, my perspective 10 is not that of a legal expert because even though I was 11 a long, long time ago a practising lawyer -- it was at 12 least 25 years ago -- I am simply, perhaps, bringing to 13 the attention of the Commission that when the 14 Broadcasting Act was discussed in that parliamentary 15 committee in the House of Commons there was no real 16 focus on push versus pull, on direct focus on 17 simultaneity, or a direct focus on interactivity. 18 12129 However, there was a clear vision, 19 and it is a tribute to the quality of the membership on 20 that committee, there was a clear conviction that 21 things like that would happen, would emerge, and 22 therefore there was a desire to have a Broadcasting Act 23 which would have a set of general objectives that would 24 be kind of the mission of the system, plus enough power 25 and enough flexibility to be able to -- to enable the StenoTran 2793 1 Commission of the day to deal with these issues. 2 12130 Whether or not the legal advisors to 3 the committee would have considered a pull approach 4 broadcasting, or a lack of simultaneity is still 5 broadcasting, or full interactivity as opposed to mass 6 one-way delivery, remains to be seen. But in fact 7 there was simply that basic desire to allow the system 8 and the regulatory component of the system to evolve. 9 12131 THE CHAIRPERSON: Now, there has been 10 some discussion around the notion of the concept of 11 program itself, and you can approach this from the 12 point of view of the definition of broadcasting, which 13 is largely around the technology, and that gets into 14 the delivery, if you will, of programs. 15 12132 If you look at the issue of the 16 program, or of the content, if that is the fundamental 17 concern, is the content regardless of how it is 18 delivered, subject to being in federal jurisdiction. A 19 number of parties have suggested that what was meant by 20 program is largely what we understand to be a typical 21 broadcast program today, something that has a 22 beginning, a middle and an end and even, in some cases, 23 may have some multiple ends, but is for the most part 24 not something that I as an individual can interact with 25 and if I go to, I think the term that Astral used in StenoTran 2794 1 their second round presentation, was the ability of me 2 as a user of this -- or accessor of this information to 3 alter it, to customize it, to tailor it to my 4 particular needs; and some have suggested that that 5 would no longer be a program; or, if it was, it 6 shouldn't be. I wonder what your views would be on 7 that. 8 12133 MR. GOURD: At the time the 9 Broadcasting Act was reviewed, Mrs. Sauvé had stated 10 her famous comment, "Pay TV is inevitable." However, 11 there were no real discussions of pay-per-view, for 12 example. 13 12134 However, at the end of the debates of 14 the committee, there was an a suggestion from certain 15 experts that service à la carte, that pay-per-view-like 16 services would happen one day, and therefore I remember 17 quite clearly that some members said, "Let's make sure 18 that the division of a program or a programming service 19 can allow the regulator to apply it to something like 20 pay-per-view." As I said, full interactivity, I don't 21 remember that being discussed directly. 22 12135 So, therefore, like every definition, 23 like every general statement, there is a bit of 24 discretion at the end of the day. 25 12136 THE CHAIRPERSON: And we have had StenoTran 2795 1 considerable discussion, and kind of gone through 2 almost the hierarchy, if you will, of interactivity, 3 associated with this. You start with plain TV; then 4 you add specialities; go to pay television; then 5 pay-per-view; then video-on-demand, where 6 video-on-demand would be that the timing for me might 7 be, even if it is just milliseconds might be different 8 from the timing that you interact with it, and any 9 individual, depending on what the node size would be. 10 12137 I think it is probably fair to say 11 that there has been at least some acknowledgement that 12 video-on-demand may still be a program because the 13 program itself has not changed. My experience with 14 that program is no different than your experience with 15 it, even though the time may be different. 16 12138 My question was: If you take that 17 next step then, and if I heard you correctly you were 18 saying there was no consideration of that next stage 19 where now I have the ability to actually interact with 20 the substance of the program itself, and possibly alter 21 that, and whether that now takes us out of the realm of 22 what was considered to be a program. 23 12139 MR. GOURD: The definition is 24 quite -- as we know, is quite general because sounds 25 and visual image or a combination of sounds and visual StenoTran 2796 1 images that are intended to inform and entertain. 2 12140 Therefore, I really would agree that 3 the members of the parliamentary committee had in mind, 4 probably, broadcasting content as they knew it. It is 5 true that things have evolved very, very rapidly, and 6 that the technology does enable us to move towards 7 video-on-demand, and towards interactive systems that 8 can impact the content itself. Would it be 9 broadcasting? I don't -- I am not sure we can have the 10 answer now. That is why we are saying that probably 11 the best way to go is to let the system evolve; is to, 12 perhaps, after recognizing that the Commission has in 13 my opinion the tools that could allow it to try to 14 regulate certain components of the system, which are 15 clearly broadcasting, that perhaps since these content 16 are extremely limited as we speak, and they will be 17 extremely limited for quite a number of years, to let 18 the system evolve and review it after a given point in 19 time. 20 12141 There is a point, indeed, where, as 21 you move towards more and more individual reception, 22 more and more individual interactive reception of 23 content, towards an individual interactive reception 24 and content which impacts the content, that at a 25 certain point in time you are probably out of the StenoTran 2797 1 definition. But the definition itself is not really 2 essentially of great use because of its generality. 3 12142 THE CHAIRPERSON: Given that, I am 4 wondering -- we had a discussion yesterday, 5 Commissioner McKendry had a discussion with Peter 6 Grant, who is, I guess one would characterize as, an 7 expert in this field. 8 12143 MR. GOURD: An expert legal mind, 9 which I am not. 10 12144 THE CHAIRPERSON: Of the act and its 11 application. A number of parties have suggested in the 12 proceeding as well that we should consider the use of 13 an exemption order for certain types of programming 14 here. 15 12145 I guess one of the things that I am 16 interested to get your opinion on, given your 17 background here and given what you have just said 18 about, perhaps, the looseness of the definition of 19 program here, when we come to the Internet and think 20 about the possibilities and the capabilities of using 21 that technology, whether one could look, at least, 22 perhaps, three levels, or three approaches here; one 23 being as today virtually all of the material on the 24 Internet is alphanumeric text. Clearly, that is 25 excluded from the definition of program. So that is StenoTran 2798 1 out. 2 12146 The next level could be, or an 3 approach the Commission could take, if you will, would 4 be to interpret the definition of program as to not 5 include programming which could be customized by the 6 individual user of that information or altered to serve 7 their need. 8 12147 My sense is that combination of the 9 first two would probably take virtually everything that 10 is currently on the Internet out of broadcasting today. 11 12148 The third level could be what is 12 understood to be broadcast type programming, which 13 sometimes has been referred to here as long-form 14 programming, and given the current state of the 15 development of that programming on the Internet, and 16 you have acknowledged that in your presentation here 17 today, that that is probably going to be quite some 18 time before the development of the Internet can handle 19 that sort of programming in any sort of reasonable 20 quality, that one would simply issue an exemption order 21 for that sort of programming. 22 12149 I am wondering what your view would 23 be on that approach by the Commission, and I guess in 24 particular the latter two elements of it, because I 25 think all would agree that the alphanumeric material is StenoTran 2799 1 out in any event. 2 12150 MR. GOURD: Radio -- a Canadian radio 3 station based, let's say in Montreal and Toronto, 4 delivered on the Internet is certainly broadcasting 5 because it is a broadcasting content delivered by one 6 additional delivery mechanism. A pure data stream is 7 certainly not broadcasting. So the issue is the grey 8 zone, which everybody tries to focus on. 9 12151 The three level approach that you 10 have mentioned in my mind does make sense provided, in 11 my mind, that it does not create a precedent that would 12 make it difficult later to try to regulate some form of 13 customized content. I think the basic thing we don't 14 really know what it will be in five years. If I put 15 myself back in 1990, we didn't see the Internet coming. 16 I think that is the big truth. Even NMDS and even 17 LMDS, there was no -- we never thought that what we 18 call LMDS would be there, small radius of five 19 kilometres, we never really focused on that. 20 12152 Therefore, yes, I think basically it 21 is a very good structurization of the three layers of 22 content, and understanding that there is some overlap, 23 and certainly to say that every alphanumeric content is 24 not covered, that what is truly customized is probably 25 not covered and therefore refocus on the more StenoTran 2800 1 traditional broadcasting content and it is exempted, it 2 is a good approach. But who knows in five years what 3 the technology will be; and there might be a wish then 4 to try to cover some form of customized content because 5 there might be, in five years from now, many layers to 6 a broadcasting service. 7 12153 There might be the -- partly in terms 8 of specialty services, there might be, let's say, the 9 traditional layer, let's say satellite to cable to the 10 TV set. But with Web TV there might be some continuing 11 delivery of video content that cannot find its place on 12 the main layer, but are still interesting for segments 13 of the audience. They will probably be able to have it 14 in the corner of their screen -- not probably, we know 15 it is being done. They will be able to call it on the 16 corner of their screen. So main video, complementary 17 video. 18 12154 They might be able to then call the 19 data stream and therefore do we -- maybe we should make 20 sure that if it is the right thing to do at that time 21 that we can have some form of regulatory coherency 22 between, let's say, the various components that will be 23 delivered by that service because I am convinced 24 personally that in five years from now specialty 25 services will have a number of information streams StenoTran 2801 1 towards the TV set. Probably, they will have 2 additional information streams to the computer at the 3 same time, on weather, on whatever it is. 4 12155 So, coming back to the conclusion, 5 not to be too long, I think it is a very good 6 structuring, provided that it maintains a degree of 7 flexibility to adjust, if and when a review is 8 conducted some years from now. 9 12156 THE CHAIRPERSON: I suppose it 10 remains to be seen whether or not the very nature of 11 this technology allows us to overcome some of the 12 inherent problems that we have had with access, if you 13 will, since I have been -- it has been referred to me 14 as noting that is a fundamental concern here of content 15 to distribution and then audiences to that content. 16 The very nature of this technology may overcome some of 17 those problems, we may discover at some point in time. 18 It may not, but it may overcome those. 19 12157 MR. GOURD: Certainly. 20 12158 THE CHAIRPERSON: Okay. Some of my 21 colleagues may want to pursue some these issues, I 22 don't know. 23 12159 Let me turn to a couple of other 24 points you raised in your submission. You talked about 25 the Bell fund and how you expect this to become a StenoTran 2802 1 permanent fund and it may change somewhat. Then, you 2 suggested that you might come to the Commission for 3 approval for this fund. 4 12160 I am wondering why -- I was curious 5 to note that you said that. I am wondering why you 6 would come to the Commission for any sort of approval 7 or authorization. 8 12161 MR. GOURD: I will cover the first 9 part and I will ask Chris Frank to cover the rest. The 10 approval, let me start with a general comment. 11 12162 We would really wish to make the fund 12 permanent. We believe that it has performed well from 13 what we see. Therefore, we feel that from our 14 perspective, even though it might represent a 15 continuing financial contribution, that is probably the 16 thing to do. 17 12163 In order to achieve that, there is a 18 need for comprehensive consultation with the board; 19 and, of course, we would not mention that possibility 20 today without some consultation with the board of the 21 fund. But they have to take a formal position through 22 a resolution. We feel also that, most importantly, the 23 industry has to be consulted. 24 12164 In terms of the Commission, what we 25 wanted to make sure is that the fund be recognized; so, StenoTran 2803 1 perhaps, the term "approve" was the incorrect one, but 2 we would wish the fund to be recognized as a valid fund 3 for the purpose of a financial contribution by certain 4 licensees who may wish to put some money in the fund. 5 So the fund has to be recognized in order to achieve 6 that. 7 12165 But since I have the -- our best 8 satellite expert right beside me, and he was whispering 9 in my ear to make sure that I would recognize the 10 complexity of that, I will turn to him right now. 11 12166 MR. FRANK: So much for discretion. 12 12167 The only point I would like to add is 13 that this would be a consultative process. It is early 14 days. We are trying to put the pieces together and we 15 want to keep the Commission involved in the process. 16 12168 THE CHAIRPERSON: Well, when we talk 17 about being recognized in terms of contribution from 18 licensees, I wonder if you would be a little clearer 19 about what you have in mind there. 20 12169 MR. GOURD: For example, in some 21 cases, licensees, like some of our licensees have a 22 certain amount of discretion where they put part of 23 their fund and, therefore, let's say if we were to get 24 a new licence, let's say -- I don't want to focus on 25 some applications we have in front of the Commission, StenoTran 2804 1 but we have some; and, of course, a part of the 2 cross-revenues of these services that we might or might 3 not get can be invested, part has to go to, let's say, 4 the TV fund, and another part might be a bit more 5 discretionary and go somewhere else; or we might wish 6 to come back to the Commission, if and when we have 7 these new licences, and suggest that, perhaps, 20 per 8 cent of the 5 per cent of these -- of the gross volume 9 be invested in the Bell broadcasting and media fund. 10 12170 So that is the kind of thing I had in 11 mind. So therefore the fund has to be recognized for 12 that purpose. 13 12171 THE CHAIRPERSON: I guess I would 14 have to check the details here, but I think today that 15 fund is designed for -- and this may be a bit of a 16 circular argument I guess -- designed for programs. 17 12172 MR. GOURD: But it would be programs. 18 In our mind it would be programs that would be 19 delivered both through the traditional, if I may use 20 the term, traditional delivery mechanism of the 21 broadcast system, plus a complementary form for 22 distribution. 23 12173 THE CHAIRPERSON: So that would not 24 necessarily require an alteration of the rules around 25 the 5 per cent and where that money can be spent. StenoTran 2805 1 12174 MR. FRANK: Perhaps I could just add 2 that with respect to one of those applications that we 3 have in front of the Commission, we are very definitely 4 on the public record as how that money would be -- 5 12175 THE CHAIRPERSON: I don't want to 6 turn this into a hearing about your application. That 7 is next week. 8 12176 MR. GOURD: That is why we want to be 9 very -- 10 12177 THE CHAIRPERSON: Let's just talk 11 about the current one. 12 12178 Looking at this whole 5 per cent 13 issue, and maybe this takes us back into a bit of a 14 definitional question, some of the ISPs appeared before 15 us last week and raised a number of issues and, in 16 particular, some telecommunications issues. 17 12179 A number of them had suggested that 18 they, in fact, probably would or should be treated as 19 telecommunications carriers or, perhaps, at least 20 resellers. During this whole discussion many people 21 have suggested that we should be, in an effort to try 22 to put more money into this business and in terms of 23 content creation, content development, we should be 24 looking at levying a fee similar to the one we have 25 just talked about, this 5 per cent, on certain players StenoTran 2806 1 in this business. Some of those players could be the 2 ISPs. 3 12180 I guess we posed the question to a 4 few of them: By what authority would we levy this 5 5 per cent fee on an ISP? I am wondering whether you 6 have a view on that because some of it -- some people 7 have suggested we should treat an ISP as if it was a 8 BDU, a broadcast distribution undertaking; or, in other 9 words, a cable-like undertaking. Maybe that takes us 10 back to this definitional issue, but I wonder if you 11 have a view on that. 12 12181 MR. GOURD: I will ask Chris and our 13 legal advisor to focus on whether or not there is the 14 authority to impose a levy or a tax or whatever. But I 15 would like to table, first, a general position that it 16 is our belief that to let a thousand flowers bloom, you 17 know, on the new media, it would probably be better to 18 let it alone for awhile. Let it grow. Let's see how 19 it will unfold and then we might see if it's 20 appropriate to gather some of the revenues, whether 5 21 per cent or not, for reinvestment in the content. 22 12182 Just as an aside, I said to my 23 colleagues privately that having worked with a lot of 24 deputy ministers of finance, if and when the government 25 of the day, in five to ten years, decides that it is StenoTran 2807 1 important to get some of the money back, they will find 2 a way. So that is what I said about the creativity of 3 the successive departments of finance. 4 12183 But whether or not it is possible 5 now, maybe I would like to turn to Chris and David. 6 12184 MR. ELDER: I guess we would be of 7 the view that, from the telecom act perspective, there 8 isn't the jurisdiction in the telecom act to impose 9 that sort of a broadcast objective oriented condition 10 on the provision of a telecom service. 11 12185 I don't know that I can say any more 12 than that. 13 12186 THE CHAIRPERSON: Would it be your 14 view that an ISP would be more likely to be 15 characterized as a carrier or reseller than a BDU? 16 12187 MR. ELDER: Definitely. I think 17 there are a number of characteristics that would 18 differentiate an ISP from a BDU. I think mainly of an 19 ISP as providing connectivity. It is a completely open 20 user group. It is not this sort of closed market where 21 the BDU is effectively picking the services and the 22 programming to which subscribers will have access. 23 12188 THE CHAIRPERSON: Going back to your 24 point about letting a thousand flowers grow, a lot of 25 people have raised the issue both before and during StenoTran 2808 1 this proceeding that there is a considerable amount of 2 uncertainty about the regulatory regime around these 3 flowers, and that there could be a number of huge rocks 4 that are preventing the growth of these flowers, and 5 one of these rocks is the question of the potential 6 threat of regulation, taxation and so on, and that in 7 order to remove those rocks from the -- and create a 8 more fertile ground for these flowers to grow, that the 9 Commission should be very certain about the regulatory 10 world that these flowers likely would grow up in and 11 blossom or bloom in; and that the threat hanging over 12 their head of potential taxation or regulation within 13 the foreseeable future will stifle the growth of those 14 flowers and, perhaps, let a lot of weeds grow, I don't 15 know how far to carry this. 16 12189 Going back to my scenario that the 17 Commission might adopt here, what is your view on this 18 issue of the regulatory certainty? I am particularly 19 concerned about this business about, well, if you 20 wanted to do it, you could tax it at some point down 21 the road. Does that not still keep the threat of some 22 sort of regulation or taxation? What would your view 23 be in terms of what the Commission should do to address 24 this question of uncertainty? 25 12190 MR. GOURD: I don't believe that, StenoTran 2809 1 personally, we can have certainty in this world except 2 for a few things like -- 3 12191 THE CHAIRPERSON: Death and taxes. 4 12192 MR. GOURD: That proves my point. So 5 we cannot have certainty that there will be no 6 taxation. If e-commerce on the Internet explodes and 7 becomes a very, very significant -- already there is 8 some form of taxation, and David can speak on that, but 9 at the end of the day certainty is not really possible. 10 12193 Therefore, I would say that, one, the 11 Broadcasting Act can apply to broadcasting on the 12 Internet. Second, I feel personally, like many others, 13 that it is preferable to let it emerge before there is 14 a real regulatory framework put on it. 15 12194 Yes, there are rocks and 16 uncertainties, but that is a bit like life. Therefore, 17 I don't believe that it is really realistic to expect 18 that there can be a certainty that it will be never 19 taxed more or never regulated more. It all depends 20 what it will become. If it becomes culturally and 21 socially critical, there will be some form of taxation 22 and additional regulation. So I think that there can 23 be a consensus on giving it a period of time to emerge. 24 12195 Also, I remember prior to the 25 unfortunate paedophilia events, I remember some inside StenoTran 2810 1 conference where people were saying there will never be 2 any regulation. My reaction then was, if there is a 3 critical targeted -- a public opinion position on 4 something, the government will feel bound to do 5 something about it, and then later that unfortunate 6 event emerged and various governments tried to do 7 something about it. 8 12196 Singapore tried a way; it was a bit 9 drastic. Others are using -- and their way was to put 10 responsibility square and fair on the ISP -- discipline 11 the system. Other jurisdictions used the Criminal Code 12 in order to focus on the person who has -- who creates 13 the offence, and so on and so forth. 14 12197 My conclusion is that, as the system 15 evolves, as pressure points develop, or revenue 16 opportunities develop, nobody can ensure that a few 17 things will never happen. 18 12198 THE CHAIRPERSON: Going back to the 19 taxation question, even if one was to not do it today 20 but consider it a possibility of doing it some point in 21 time in the future, given the comment we just had about 22 ISPs being carriers and no provision under the 23 Telecommunications Act, at what point would you levy 24 this tax? At what point in the value chain would you 25 levy this tax? StenoTran 2811 1 12199 MR. GOURD: Two comments. 2 Personally, I feel, and we feel, that the new media 3 should be given a lot of years to emerge. If the 4 question is: Can there be a technique through which a 5 tax in 25 years can be put on certain activities, I 6 remember that some years ago there was a tax on telecom 7 revenues. There was one and then it was abolished, but 8 there was a specific need. They found a technique. 9 They slapped it on it and then later they removed it. 10 12200 But our position, irrespective of 11 whether or not creative tax lawyers can find a 12 technique, our position is that let's see what form it 13 will take, what forms I should say, plural, how it will 14 emerge. I don't know if colleagues have a special 15 comment on these matters. 16 12201 MR. FRANK: Just a couple of general 17 thoughts, that this is the worldwide Web we are talking 18 about and Canada is a small part of that. We have to 19 stay competitive. We don't want to burden our 20 businesses unless there is a specific public need, 21 public policy reason to do so. To be creative, to be 22 competitive, I think it makes a lot of sense, as Alain 23 said, to give this industry as much freedom as possible 24 to actually grow and mature. 25 12202 THE CHAIRPERSON: Mr. Elder, did you StenoTran 2812 1 have a comment? 2 12203 MR. ELDER: I guess I was just going 3 to say that no matter what unfolds I think down the 4 road you, the Commission, are still going to have that 5 jurisdictional problem if you are talking about the tax 6 in that sense. 7 12204 But, as Mr. Gourd said, I mean there 8 are other means, and those would likely be legislative, 9 I would think. 10 12205 THE CHAIRPERSON: Now, in your 11 comments, in your oral presentation, you said you 12 believe the Commission and the government can continue 13 to play a role in ensuring a stronger Canadian content 14 presence in the multimedia universe. 15 12206 Beyond the issue of the fund that we 16 have discussed, and allowing some contributions to go 17 into support this sort of fund, did you have other 18 specific initiatives in mind for the Commission? 19 12207 MR. GOURD: Perhaps not exclusively 20 for the Commission, but in terms of, for example, 21 co-production agreements, which is an approach where 22 you recognize the content produced by producers of two 23 countries as fully Canadian in Canada and fully 24 Canadian elsewhere, and both the government does that 25 for funding purposes and the Commission for Canadian StenoTran 2813 1 content purposes. There, I remember negotiating myself 2 a certain number of these agreements with France, Italy 3 and Belgium and elsewhere, and of course at the time, 4 1984-1985, we didn't have in mind the Internet and the 5 multimedia. It was pretty straightforward; it was 6 either on the TV screen or on the movie screen and that 7 was it. 8 12208 I feel that we should revisit the 9 parameters of these agreements and make sure that a 10 part of the funding be put on distribution on new 11 media, and also on different packaging of the content 12 for the new media. 13 12209 Another one is the certification 14 program. When a production is recognized, it is 15 entitled in certain -- to certain tax advantages, and 16 we should make sure that the -- a content which is both 17 on the television screen and also repackaged for 18 another form of distribution be able to receive a 19 certain funding there. The percentage of it, is it 10 20 per cent of the total or whatever, could be left for 21 others, like the officials of the department to figure. 22 But I think it would be a good approach to open a bit 23 this funding mechanism. 24 12210 We can talk about Telefilm as well. 25 I think it would be worth it to consider opening some StenoTran 2814 1 segment to content which would be both on the 2 broadcasting system and on the other delivery 3 mechanism. 4 1630 5 12211 I'm not sure at this point in time we 6 should fund a content which is exclusively delivered to 7 the new media. We might wish to walk before we run. 8 It might be a good step if the content is definitely 9 delivered to the broadcasting system. 10 12212 There is also another version or 11 another delivery, that other version receive some 12 degree of funding. 13 12213 THE CHAIRPERSON: Let me switch to 14 the technology here just a little bit, but not too 15 technical because we had Francois Menard here last 16 week -- 17 12214 MR. GOURD: There's no risk with me, 18 Mr. Chairman. 19 12215 THE CHAIRPERSON: We have had some 20 concerns raised by a number of the ISP in terms of the 21 problem that we have got in this country with the last 22 mile. 23 12216 I think a lot of people would 24 acknowledge that a fairly good job has been done by 25 providing dial-up access throughout the country and in StenoTran 2815 1 many jurisdictions telephone companies serving areas I 2 suppose I should say. 3 12217 Toll free access is provided to the 4 Internet even if there is not an ISP in your own 5 community and so on, but there has been a concern 6 raised about higher speed access. 7 12218 You talked in your presentation here 8 today and in your written brief about some of the 9 opportunities that you might be able to provide through 10 the use of satellite technology. I'm wondering if you 11 could describe for us how that is going to work in 12 general terms, again not too technical. 13 12219 We tend to think about your 14 capability, getting back to push versus pull, as a push 15 technology. You deliver to the ground those signals. 16 You have mentioned here the loop back would be a 17 terrestrial facility. 18 12220 I'm wondering what role Telesat can 19 play in terms of providing higher speed access to and 20 from the Internet, particularly in some of the more 21 rural areas where maybe some of the terrestrial 22 facilities aren't available or aren't as affordable. 23 12221 MR. GOURD: Chris and perhaps Terry. 24 12222 MR. FRANK: Perhaps I can start and 25 very briefly because I will get out of my depth that StenoTran 2816 1 quickly. 2 12223 The two opportunities that we spoke 3 about in our presentation today are the ones we are 4 focused on most directly. That is real Internet 5 service and enhancements to existing broadcasting 6 services. 7 12224 We have the technology or the 8 technology in the services are available today to offer 9 the first. It just requires capacity and that will be 10 available very shortly. As to the second, it requires 11 new set-top boxes which I think Terry can describe and 12 which I understand are going to be available very, very 13 shortly. 14 12225 Having said that, Terry, maybe you 15 could flush out the details. 16 12226 MR. SNAZEL: You said top boxes will 17 be available very shortly. 18 12227 THE CHAIRPERSON: My colleague says 19 we have heard that before and I decided long ago that I 20 am not going to hold my breath waiting. 21 12228 MR. SNAZEL: Before I get into 22 that -- 23 12229 MR. GOURD: They are actually being 24 introduced in Spain by our supplier, so it is coming 25 pretty soon. StenoTran 2817 1 12230 MR. SNAZEL: The new set-top boxes 2 that Chris is talking about are not fictitious. There 3 are some boxes that allow a much greater degree of 4 interactivity than we have now. 5 12231 In a sense, the box that we have now, 6 the box that we use, has a crude form of interactivity 7 within it. I mean impulse pay-per-view and the 8 interactive program guide is a very basic form, but it 9 is actually interacting with data in a data way rather 10 than a broadcasting fashion. 11 12232 Going back to the earlier question or 12 the question I guess you asked was the last mile and 13 how satellites are perhaps different from other 14 broadcast undertakings. 15 12233 THE CHAIRPERSON: In your case I 16 guess it's the last 23,000 miles. 17 12234 MR. SNAZEL: You're right. Actually 18 it's the last three feet, that little connection 19 between the box and the display device. 20 12235 Satellites are quite different 21 obviously from other technologies, particularly a 22 telephone system, because they are asymmetric. They 23 are very good at delivering things one way. They are 24 very bad or very expensive at delivering things in the 25 reverse direction which is interesting. StenoTran 2818 1 12236 Essentially, a lot of the data 2 interactivity is in fact asymmetrical as well. The 3 high speed that everyone wants is in one direction and 4 the interaction and the calling for that speed is 5 obviously slow speed, much less of a pipeline you need 6 to make it work. 7 12237 Satellites can deliver data at much 8 higher speeds than, say, a telephone connection can 9 deliver, but the one satellite connection if you like 10 serves many thousands of people as opposed to the 11 single person on the telephone. 12 12238 Anyway, the issue is that satellites 13 are quite different, I think, than telephones. The 14 opportunity is to deliver slightly services or the same 15 services perhaps in different ways. I think that's 16 where we will see satellites take their part within the 17 system. It will be quite a different way that 18 satellites get utilized. 19 12239 THE CHAIRPERSON: If I went out to 20 the local electronics store and bought my computer, 21 what type of service could ExpressVu provide me in 22 terms of it being able to access the Internet? 23 12240 You said in your written submission: 24 "With the advent of new 25 incremental satellite capacity, StenoTran 2819 1 Bell ExpressVu intends to offer 2 high speed data service through 3 connectivity to the Internet." 4 12241 MR. SNAZEL: The most obvious one is 5 similar to services that already exist whereby you 6 deliver the main high speed data to the subscriber over 7 the satellite. The telephone is used to connect back 8 to the service provider to call down that particular 9 data. That's one way of doing that. 10 12242 The other type of service you can 11 offer is whereby you are putting out a great quantity 12 of data that can be of more general interest and the 13 filtering is taking place in the computer in the home. 14 The person at home is actually deciding what part of 15 that data they want to have access to and to use. 16 12243 It may not be coming down totally in 17 real time. It could be coming down in non-real time. 18 It's transmitted in real time but it's actually 19 accessed in non-real time. The person using it could 20 be looking at it at a totally different time from when 21 it was actually transmitted. 22 12244 Those two sorts of services are what 23 I would call the computer and the data side of 24 multimedia, new media if you like. 25 12245 The other piece of the puzzle, and StenoTran 2820 1 this is where you are going back to the definition of 2 what is broadcasting and what is not broadcasting. It 3 gets to be quite difficult. Perhaps a definition or a 4 partial definition could be the fact that some services 5 are suited only to be enjoyed by a solitary person 6 working with a keyboard and a screen right in front of 7 them. 8 12246 Perhaps entertainment and 9 broadcasting is enjoyed or can be enjoyed by more than 10 one. Members of the family can sit together and look 11 at that. Some of the applications we are talking about 12 are much more suited to the livingroom display upon the 13 television as opposed to the basement person working on 14 their PC. 15 12247 That's the other piece of the puzzle 16 that we would perhaps evolve our service towards. As I 17 mentioned, there are set-top devices. France, for 18 instance, has a fairly interesting interactive service 19 that is using DVB technology, the same technology as we 20 use, to deliver those services whereby you can 21 customize weather reports, travel information. You can 22 listen to various customized versions of commercials 23 and so on. 24 12248 That sort of interactivity would be 25 delivered from the set-top device rather than from a PC StenoTran 2821 1 card or computer connected device. I think ExpressVu 2 will be looking at delivering both kinds of services. 3 12249 MR. GOURD: If I may, Mr. Chairman. 4 12250 THE CHAIRPERSON: Sure. 5 12251 MR. GOURD: In terms of the set-top 6 box, we will conduct very shortly a pilot project in 7 Quebec using the CanalPlus media highway box which is 8 interactive as we speak in France. We will test it in 9 Quebec for business television application, but 10 business TV in a way is broadcasting but it's 11 unregulated. Therefore, it is scattered. It is for 12 commercial purposes. Therefore, it's not regulated as 13 we speak. 14 12252 From a technology perspective, I have 15 to be very careful with that -- 16 12253 THE CHAIRPERSON: We should go back 17 to what you said before. 18 12254 MR. GOURD: Yes. I know. I was 19 listening to myself. Let's stick to the fact, Mr. 20 Chairman. We have an agreement with CanalPlus that we 21 will test their box in the coming months with partners 22 in Quebec. 23 12255 The second comment I wanted to make 24 is you mentioned Telesat. As we know, Telesat as we 25 speak, the high speed Internet capability which has StenoTran 2822 1 been used, for example, to link thousands of school 2 under the SchoolNet program. Therefore, there is as we 3 speak with Telesat that Internet capability that has 4 been implemented partly inside the SchoolNet program. 5 12256 THE CHAIRPERSON: Do you expect to 6 have a service offering that would be functionally and 7 price competitive with that of a terrestrial based ISP? 8 12257 MR. GOURD: Again, I will be rapidly 9 out my depth and I will turn to Terry, but probably 10 not. Again, if I go back to the SchoolNet approach, it 11 is for institutions because of the price point. It's 12 for companies. It's for organizations. 13 12258 Terry. 14 12259 MR. SNAZEL: I think you're right. 15 That form of true Internet interactivity delivered by 16 satellite where there is no terrestrial at all, the 17 option of using something like a V-set technology is 18 still quite expensive. 19 12260 It can work and does work very 20 nicely. You can gather a group of people together like 21 a school or a school board or various other places 22 where it becomes cost effective to use the return path 23 by the satellite. 24 12261 The telephone return path is 25 practical. It works. Obviously there is a service StenoTran 2823 1 that was alluded to that is functioning now. The 2 service that it provides though is quite expensive and 3 it's not quite the same as you would provide on a true 4 full-blown Internet service where you have an 5 individual connection directly by your phone line back 6 and forth and it's symmetrical and so on and so forth. 7 12262 For remote and rural areas, it's a 8 wonderful opportunity to get connected to the Internet, 9 but it's perhaps more likely that a terrestrial service 10 will be more competitive in an urban area. 11 12263 COMMISSIONER GRAUER: If I may again, 12 Mr. Chairman. When I was President of Cancom, the 13 Cancom engineers had developed what we used to call a 14 trunk Internet which was a fully interactive two way 15 Internet by satellite using a V-set platform. 16 12264 It was trunk in the sense that it 17 needed the local ISP, whether the cable operator or an 18 ISP, using the telephone line to have the last mile. 19 12265 Various satellite Internet activities 20 have been introduced in this country, but they face, as 21 compared to the terrestrial ones, some price challenges 22 and, in the case of a full Internet one, some bandwidth 23 challenges as well. 24 12266 That's why the Cancom Internet was 25 really targeted at more remote areas where the number StenoTran 2824 1 of users is naturally a bit more limited, even though 2 usage per user was high. There were some bandwidth 3 limitations, so you could accommodate a certain number 4 of users only per transponder. 5 12267 THE CHAIRPERSON: Thank you. Those 6 are all my questions. 7 12268 I think Commissioner McKendry has one 8 or two. 9 12269 COMMISSIONER McKENDRY: Thank you, 10 Mr. Chair. What is business TV and in light of the 11 points you made about broadcasting, why isn't it 12 broadcasting? 13 12270 MR. GOURD: Because it is delivered 14 in the form of a private network to a single 15 organization normally with delivery of content two or 16 three times per week, for example, typically. 17 12271 Let me give you a specific example. 18 Again when I was at Cancom, we obtained the contracts 19 to deliver business television to first Ford Motors and 20 then to General Motors. These were networks that we 21 were very proud of and very proud to have gotten the 22 contracts. 23 12272 They were designed, quite frankly, 24 for one application which was interactive distance 25 training. Once a week, depending on the program, there StenoTran 2825 1 was really not continuous training activities, so once 2 a week there would be a training activity pertaining to 3 the introduction of a new car for, let's say, the 4 technicians. 5 12273 The trainer would be at the studio, 6 fully automated with one technician, automated robotic 7 cameras, laser beam on the mike, and for half an hour 8 the trainer would push a button so there would be music 9 in the intro. 10 12274 This is the Ford Training Network, 11 FTN, then push another button. A VCR would start and 12 show the car rolling on a platform or whatever. 13 12275 He would then push another button, 14 introducing the engineer, the main engineer from 15 Detroit who would explain how the car was technically 16 built. Then the trainer would move to questions and 17 answers and they would use an electronic path for text 18 and audio interactivity. 19 12276 Each path would be individualized so 20 the trainer would see the name of the caller. There 21 would be one per week, let's say, for technicians. The 22 next one would be two days later for the salespeople, 23 but it would all go to specific boardrooms, fixed 24 points, and, therefore, it was considered as a private 25 network. StenoTran 2826 1 12277 COMMISSIONER McKENDRY: If the same 2 service was delivered over the Internet and required 3 password access for the users in order to keep it 4 private, would it be broadcasting then? 5 12278 MR. GOURD: Again, I would rather 6 rely on my legal advisers. As I said, I was a 7 practising lawyer more than 25 years ago. If it is in 8 the form of a private network towards dedicated points, 9 normally it wouldn't be, but I think I should rely on 10 David for that. 11 12279 MR. ELDER: I would say the short 12 answer is no. I would say a private network is a 13 private network regardless of the means to deliver it. 14 12280 Really what you are talking about is 15 when you are looking at the Broadcasting Act and the 16 definition you are talking about for reception by the 17 public, I know certainly in other instances the 18 Commission has interpreted that as not meaning for 19 reception by a closed user group. 20 12281 COMMISSIONER McKENDRY: On the 21 Internet, if password access is required to a site, 22 then it is not intended for the public and it's 23 private. 24 12282 MR. ELDER: Well, again, you are 25 talking here about a private network, something along StenoTran 2827 1 the lines of distance TV. 2 12283 COMMISSIONER McKENDRY: I am asking 3 if it was delivered on the Internet and password access 4 was required. 5 12284 MR. ELDER: Just to clarify your 6 question. The passwords would only be provided then to 7 the members of this corporation. Then I would say yes, 8 that is also a private network and would not be 9 broadcasting. 10 12285 COMMISSIONER McKENDRY: Would it also 11 apply to a service -- would the same rule apply to a 12 service that was being offered, for example, a movie 13 being transmitted over the Internet but password access 14 was required and one had to be a member of a group to 15 have that password? 16 12286 MR. ELDER: I don't think that that 17 password access, if you are talking about something 18 that's available to the general public, I don't think 19 takes you out of the definition of broadcasting. 20 12287 In your question we are again talking 21 about the Internet. For a number of reasons, a number 22 of arguments, you have heard ad infinitum I think this 23 week, I don't think you are talking about broadcasting. 24 You are looking at predominantly alphanumeric services. 25 You don't have program coherence. You have StenoTran 2828 1 customization of programming. 2 12288 I don't really think that the 3 password is determinative in that scenario. 4 12289 COMMISSIONER McKENDRY: I thought in 5 the training program scenario where the members of the 6 corporation had the password that was in fact 7 determinate. 8 12290 MR. ELDER: I guess it helps assure 9 you that it is indeed a private network. I guess you 10 can come at this two ways. 11 12291 You can look at it and say are there 12 programs being distributed here? If you can conclude 13 that there are programs being distributed but they are 14 only being distributed over the Internet to a closed 15 user group and it involves a corporation, I would say 16 they are still not being distributed to the public. 17 12292 COMMISSIONER McKENDRY: But you don't 18 extend that to individuals who require a password and 19 don't work for a corporation. 20 12293 MR. ELDER: Right. If you make the 21 determination that what is being provided over the 22 Internet are programs and those are being distributed 23 to members of the public who only have to get a 24 password in order to access the service, this would be 25 equivalent to a pay TV sort of service. Not everyone StenoTran 2829 1 gets pay TV, but if you pay your money you get it. 2 12294 If you are talking about that sort of 3 scenario, once you have made the determination that it 4 is programs being provided over the Internet, then that 5 would be, I suppose, a broadcast service, but there's 6 an awful lot of ifs in there I guess is the point I am 7 trying to make. 8 12295 COMMISSIONER McKENDRY: And the use 9 of the password is not determinate in any way. 10 12296 MR. ELDER: I don't think in that 11 situation. If it is to the public and all you have to 12 do is get a password to get on, I think it is the same 13 as accessing the specialty services. 14 12297 COMMISSIONER McKENDRY: It's the same 15 in your situation where you said the password is 16 determinate. Members of the corporation, all they have 17 to do is get a password. 18 12298 MR. ELDER: Yes, but they are members 19 of a restricted user group. They are not members of 20 the public. 21 12299 COMMISSIONER McKENDRY: Surely you 22 don't have to be in a corporation to establish a 23 restricted user group. 24 12300 MR. ELDER: There certainly is a grey 25 area here. I know that the Commission has looked at StenoTran 2830 1 this in other situations. To be honest with you, I 2 haven't looked at some of the case law on this point 3 about exactly what constitutes the public for these 4 purposes. 5 12301 Certainly segments of the public can 6 constitute the public, but the conventional wisdom I 7 guess is if it is not publicly available, it is only a 8 closed user group. There is some unifying 9 characteristic that defines that group. That is not to 10 the public. That is a private communication. That is 11 not broadcasting. 12 12302 I think that is consistent with the 13 intentions certainly behind the drafting of the 14 legislation. 15 12303 MR. SNAZEL: The comment I was going 16 to make was in fact with pay TV or pay-per-view or 17 other broadcasting programs that are available to the 18 public, there is in fact a password. It's an 19 electronic password. People are given access to that 20 program only upon having access to the password. You 21 can call it technically a password which allows them to 22 do that which I think is the analogy you are trying to 23 make. Is it? 24 12304 MR. ELDER: Yes. 25 12305 COMMISSIONER McKENDRY: Thank you. StenoTran 2831 1 12306 THE CHAIRPERSON: Thank you. 2 12307 I think those are all our questions. 3 We appreciate your participation here today and your 4 history lesson. 5 12308 Madam Secretary, our last presenter 6 for today and for this week. 7 12309 MS BÉNARD: Thank you, Mr. Chairman. 8 12310 The next presentation will be by 9 Leslie Regan Shade. 10 PRESENTATION / PRÉSENTATION 11 12311 MS SHADE: This probably will be 12 short and sweet. I reiterate a lot of what Dr. Karim 13 said. 14 12312 My name is Leslie Regan Shade. I am 15 currently an Assistant Professor at the Department of 16 Communication at the University of Ottawa where I teach 17 classes in the history, theory, effects and social uses 18 of mass media, including new media. 19 12313 Before joining the University of 20 Ottawa, I was a consultant on information technology 21 issues in Montreal, Toronto and Ottawa. Some of my 22 clients included the Government of Ontario in a study 23 looking how non-profit groups could use and benefit 24 from e-mail. 25 12314 I did a report for Status of Women StenoTran 2832 1 Canada on how Canadian women's groups are using the 2 Internet and some of the barriers to access and 3 Industry Canada through the Information Policy Research 4 Project at the University of Toronto and a 5 collaborative series of workshops and discussion papers 6 and research on issues of universal access, of which 7 you have heard from Andrew Clement the very first day 8 of the hearings. I have been working with him on a lot 9 of these issues. 10 12315 One of the areas that I am most 11 concerned about are the issues surrounding what I like 12 to call the social infrastructure of the new media and 13 in particular the very vital issues of universal 14 access. 15 12316 Partly what I would like to do today 16 is reinforce the oral presentations of Andrew Clement 17 of the University of Toronto who presented the National 18 Access Strategy, as well the Media Awareness Network 19 who emphasized the need for ongoing web literacy, 20 particularly for Canadian school children, and Mr. 21 Garth Gram who will appear on Monday next on behalf of 22 Telecommunities Canada and the Community Networking 23 Movement in Canada and as well Dr. Karim and his 24 associates. 25 12317 Many of my comments here uncannily StenoTran 2833 1 echo what Dr. Karim was saying this afternoon, which 2 probably isn't surprising since we both graduated from 3 the same university at the same time. 4 12318 Canada has a unique history of 5 providing national communication links through federal 6 government intervention, through subsidies and content 7 quotas and principles of universality, but what we see 8 with the development of new media, or as its also 9 referred to as ICTs or information and communication 10 technologies, the government has decided to let market 11 led forces and industry initiatives prevail, admits an 12 environment characterized by competition, 13 telecommunications, deregulation and increasing cuts to 14 social services, issues of national and cultural 15 sovereignty and citizenship remain crucial. 16 12319 We need to ask ourselves what should 17 be considered essential services to new media and 18 information and communication technologies and what 19 information governments should be required to provide 20 to citizens free of charge. 21 12320 Moreover, how well can such access 22 provision fulfil individual needs and societal goals 23 and how can access to new media and ICTs encourage and 24 enable social, political and economic participation. 25 12321 One of the visions of the information StenoTran 2834 1 infrastructure is that of the electronic marketplace or 2 e-commerce. What is noticeable about the Canadian 3 government strategy towards a Canadian electronic 4 commerce strategy is its neglect in considering issues 5 relating to the social infrastructure. 6 12322 Access is referred to in terms of 7 physical infrastructure only and the policy 8 infrastructure that will support this market driven and 9 competitive environment. 10 12323 If electronic commerce is to be 11 successful for Canadians, it would seem to make sense 12 to consider more carefully the nature of access which 13 is very multifaceted and whether or not there should be 14 some sort of regulations concerning universal access 15 for Canadian citizens. 16 12324 It's important to note that 17 throughout the background documents on electronic 18 commerce that Industry Canada put out, Canadians are 19 referred to as consumers. It is consumers who are 20 concerned with the security of their network 21 transactions over the Internet and consumers who are 22 concerned with disclosure of their personal information 23 over the Internet. 24 12325 In these market driven scenarios, 25 what is the role of the digital citizen? Are we solely StenoTran 2835 1 purchasers and sellers of services and products in the 2 digital realm? Are these transactions interactive or 3 are they governed by a one way flow of information? Is 4 the role os communication here restricted to a 5 merchandising function? 6 12326 If you look at recent surveys on who 7 is connected to ICT services in Canada, it highlights 8 the overwhelming inequities in access across the 9 country. According to various socioeconomic frameworks 10 overall, the figures reveal that even though more 11 people are becoming connected to ICT services, it's a 12 fairly homogeneous group of higher income families and 13 our students who have access through universities. 14 12327 My concern is that we need to be 15 concerned with those citizens that are not connected, 16 those citizens in lower socioeconomic groups, disabled 17 peoples, natives and visible minority peoples, seniors, 18 single mothers. 19 12328 As well, these surveys don't get into 20 the uses and participation, as Dr. Karim mentioned. 21 They mentioned who has access but they don't talk about 22 who is using and who is participating and how with 23 these services. 24 12329 Fortunately, there are some issues 25 that should be solved in terms of institutionalizing StenoTran 2836 1 research into use and participation of ICTs. The 2 Social Science and Humanities Research Council has just 3 set up a new research agenda to look at issues 4 concerning the knowledge based economy society, issues 5 of social cohesion, issues of uses and participation. 6 12330 Hopefully some good research should 7 flow from this research agenda that can help us find 8 out what it is that citizens need and want. 9 12331 Although Canada can brag that it is 10 one of the more technologically advanced countries in 11 the world, boasting major infrastructure advantages 12 including the world's highest penetration of 13 telephones, cable TV and home electronics like the VCR, 14 a schizophrenia exists between the race to implement 15 diverse communication technologies and the fact that 16 often these technologies carry more non-Canadian 17 cultural material than Canadian culture material. 18 12332 Two recurring viewpoints are, one, 19 that culture can colonize minds and, two, that cultural 20 sovereignty is a necessary condition for political 21 sovereignty. This has surfaced again with respect to 22 new media. 23 12333 The twist now is that culture has 24 less to do with proximity and more to do with 25 technology, information and the diffusion of text. StenoTran 2837 1 Some Canadians fear that the global sweep of network 2 technologies that admits an increasing climate of open 3 competition could result in the Americanization of 4 Canada. 5 12334 Will Canadians have equal access to 6 the channels of production and distribution as our 7 southern neighbours? It is here that the role of 8 community networking and universal access for Canadian 9 citizens comes into play. 10 12335 Communicating networking activists 11 have championed the idea of community networks as being 12 a distinctly Canadian communications facility 13 reflective of the goals of the Federal Information 14 Highway Advisory Council, issues of jobs, cultural 15 identity and universal access. 16 12336 In 1994 public interest intervenors 17 at the CRTC information highway hearings reminded the 18 Commission of the continued surge and enthusiasm for 19 community based networks and urged the CRTC to 20 recommend the creation of both social and economic 21 policies to sustain community networks. 22 12337 Given that national and global 23 information infrastructures are now being promoted and 24 legislated in a deregulative, competitive and 25 self-regulated environment where private industry at StenoTran 2838 1 this point can have unbridled, albeit inoperable power, 2 community networks which are indeed a social utility 3 could find themselves in a vexatious position. 4 12338 Community networks occupy the ground 5 between government and the private sector or what is 6 commonly referred to as civil society or civic space. 7 This civic space is voluntary, embraces co-operatism, 8 consensus and the common ground. It is vital that this 9 public space be reinforced and sustainable. 10 12339 It is my hope that the CRTC will act 11 in some capacity to acknowledge the role of community 12 networks and other forms of electronic public space in 13 defence of citizen participation and the need to 14 institute some form of regulatory intervention for the 15 purposes of achieving universal access to new media and 16 ICTs for all Canadians. 17 12340 By access I include notions of the 18 social as well as the technical infrastructure. A key 19 component of that sense of access is this notion of 20 digital or web literacy. How we can achieve that? 21 However, as Dr. Karim said today and as I am sure that 22 you realize, it is really up to discussion. It is just 23 to reinforce this notion that we need to have a sense 24 of a social public space that I want to reinforce this 25 afternoon. StenoTran 2839 1 12341 Thank you. 2 12342 THE CHAIRPERSON: Thank you, Ms 3 Shade, for your presentation. 4 12343 I will turn the questions to 5 Commissioner McKendry. 6 12344 COMMISSIONER McKENDRY: Thank you, 7 Mr. Chair. 8 12345 Good afternoon and thank you for 9 patiently waiting until late in the afternoon. 10 12346 MS SHADE: It's okay. I wrote a few 11 research proposals. 12 12347 COMMISSIONER McKENDRY: Perhaps I 13 could ask you a question that relates to paragraph 8 in 14 your written submission. I will just give you a moment 15 to find that. 16 12348 MS SHADE: Yes. What did I write? 17 Okay. 18 12349 COMMISSIONER McKENDRY: I will just 19 read a bit of that. You indicate that programs such as 20 CAP, SchoolNet and VolNet, and I quote: 21 "-- can boast what their actual 22 and potential access figures 23 are, i.e. how many communities 24 and schools are connected, but 25 what is more important than StenoTran 2840 1 mirror access figures is 2 ascertaining how ICTs are being 3 used by the various communities. 4 What is the use and 5 participation of new media and 6 ICTs?" 7 12350 Then you add in the quote: 8 "In the near future, a research 9 agenda will need to be designed 10 and implemented to look at use 11 and participation rates." 12 12351 I'm just wondering if you could 13 elaborate a bit on what that research agenda should 14 include and who in your view should undertake that 15 research. 16 12352 MS SHADE: Well, fortunately, SHIRK 17 did announce their research proposals and being in an 18 academic context, I am pleased to note that I can try 19 to secure funds along with other like-minded suspects 20 in the academic realm across the country, and community 21 groups as well, to look at this. 22 12353 Research agendas need to look at how 23 people, how communities, how citizen groups are using 24 information and Internet services, what sorts of 25 resources they need access to, what source of content StenoTran 2841 1 they need access to, what source of content they need 2 to develop, how sustainable it is for them in terms of 3 economics. 4 12354 We are there accessing this content 5 whether it be domestically at community access points 6 such as public libraries or community centres or other 7 sorts of institutions and how they can contribute to 8 this content. 9 12355 In terms of use and participation, as 10 well I'm interested in how sustainable is it. When I 11 did research into looking into how woman's groups were 12 using the Internet, one of the big issues was why 13 should we go on the Internet? What is in it for us? 14 12356 What sort of content do community 15 groups need and want? That's one of the questions. 16 One of my concerns is that the information 17 infrastructure is becoming increasingly commodified and 18 there's a lot of corporate information and community 19 based information isn't getting out that needs to be 20 put out there. 21 12357 Does that sort of answer your 22 question? 23 12358 COMMISSIONER McKENDRY: That's very 24 helpful. Just following on that, what are some of the 25 elements that we should consider in evaluating whether StenoTran 2842 1 or not we have achieved a successful access strategy. 2 How would we know when we are there? 3 12359 MS SHADE: It's going to take time. 4 I think it's a long research strategy. It's going to 5 take a long time. As I was waiting to give my talk, I 6 was sketching the outline for a research proposal I 7 need to submit to the university next week. 8 12360 I want to look at how the public 9 library is being used as a public access site for the 10 Internet. What sorts of information or resources are 11 citizens using at the public libraries. 12 12361 Who is not using these resources? 13 What sorts of resources do they need, and why? It is 14 an ongoing process in that sense. 15 12362 It is not a matter just of serving 16 the participants but of asking them questions about how 17 they might design systems that might better accommodate 18 their needs and usages; and considering it as well, and 19 not just information that is digital, but how it fits 20 into other information in their everyday lives. 21 12363 So digital information is a component 22 of information and needs that we have in our everyday 23 lives. There is a balance between that sort of 24 information and other information we use on a 25 day-to-day basis. StenoTran 2843 1 12364 COMMISSIONER McKENDRY: Thinking of 2 the CRTC, what role do you see for us in encouraging 3 communities to use and participate in new media and 4 ICTs? 5 12365 MS SHADE: Reinforcing the need for 6 communities to participate. Reinforcing the need for 7 citizen participation. Reinforcing the need for 8 citizens to participate as Canadian citizens and to 9 reinforce and promote their own content that can be 10 Canadian content, whether it be Canadian cultural 11 content or just content produced by Canadians 12 themselves I think is very, very important. 13 12366 COMMISSIONER McKENDRY: Let me take 14 you back to paragraph 3 in your written submission. 15 You have a quote there from a communications theorist 16 Denis McQuale, and I am going to read one sentence in 17 that quote, and the sentence is quote: 18 "The new communication networks 19 which are developing often 20 cross-cut the older boundaries 21 of place, culture, class and 22 political organization and tend 23 to undermine rather than sustain 24 traditional political ties." 25 12367 I take it you -- correct me if I am StenoTran 2844 1 wrong -- but I take it either he or you or both of you 2 look at that as a negative development. 3 12368 MS SHADE: Yes, I would say it is a 4 negative. I guess I can speak for him because that is 5 the interpretation of what I got from Denis McQuale and 6 why I quoted him. 7 12369 Political ties, I think this whole 8 notion of communication amongst and between government 9 entities should be sustained and encouraged rather than 10 curtailed using electronic media; likewise its 11 communication between citizens, whether or not they 12 live across the country or down the street. 13 12370 So, yes, there should be some 14 enhancement of democratic possibilities, this sort of 15 whole notion of electronic democracy that has been 16 globally referred to in many senses. 17 12371 COMMISSIONER McKENDRY: For the sake 18 of discussion, I would have thought that the ability of 19 new communication networks to cross-cut the older 20 boundaries of place, culture, class, in particular, 21 would be a positive attribute of the new networks. 22 12372 MS SHADE: Yes, it is positive, but 23 my sense as well is that it has to include everybody, 24 okay? It is not just an elite at this point of which 25 mostly who has access to it. StenoTran 2845 1 12373 COMMISSIONER McKENDRY: Just keeping 2 in mind the quote we talked about, I want to just move 3 ahead to a comment you made in your oral comments, and 4 it is made in paragraph 13 of your written comments, 5 the statement that culture can colonize minds. 6 12374 Wouldn't the fact that the new 7 communication networks cross-cut the things that we 8 have talked about work against the colonization of 9 minds that you are concerned about in paragraph 13? 10 12375 MS SHADE: Perhaps. Part of where I 11 am coming from is as an American. 12 12376 COMMISSIONER McKENDRY: I didn't hear 13 you. 14 12377 MS SHADE: Coming as an American. I 15 have lived here for 12 years, and I am absolutely 16 fascinated by this notion of cultural sovereignty, 17 particularly in the Canadian sense. I am constantly 18 asking my students what they think -- name Canadian 19 musical products, name Canadian films, and I am always 20 discouraged because very often they don't pick up on 21 it. They say, "Well, what is it? What is so special 22 about being Canadian? I don't get it. It is all the 23 same. We are all one culture," but we are not. There 24 is uniquenesses, definite uniquenesses. 25 12378 I think it is very important that StenoTran 2846 1 those in the race to implement new media technology 2 that a lot of Canadian content get reinforced and 3 sustained very much so. 4 12379 COMMISSIONER McKENDRY: Let me ask 5 you a question about paragraph 16 in your written 6 submission. In there you warn that, and I will quote 7 again: 8 "Given that national and global 9 information infrastructures are 10 now being promoted and 11 legislated in a deregulated 12 competitive and self-regulated 13 environment where private 14 industry can have unbridled 15 power, community networks which 16 are indeed a social utility 17 could find themselves in a 18 vexatious position." 19 12380 Many parties in the proceeding that 20 we are currently conducting have emphasized the 21 positive impact that ICTs could have upon individuals 22 and communities giving them powers and opportunities 23 that they lacked under traditional communication 24 models, such as broadcasting. 25 12381 Some of them have even gone further StenoTran 2847 1 to argue that such power has to some extent created a 2 levelling effect between corporate interests and 3 individual or community interests. 4 12382 Can you comment on that observation 5 by those parties? 6 12383 MS SHADE: The vexatious position 7 that community networks and electronic public space 8 could find themselves in deals more in issues of 9 sustainability, peer economics, non-profit. How can -- 10 given the sort of climate right now of electronic 11 commerce, and commercialization of the Internet in 12 great big media giants and, you know, AOL and Sun 13 Microsystems and so on, merging and what not, the fear 14 is that a lot of the community groups and community 15 networks in particular and non-profit spaces and 16 educational resources and spaces that can be there for 17 a variety of different citizens in Canada will be 18 side-swiped. They won't be able to afford entry. That 19 is what I mean there in that sense. 20 12384 Indeed, can electronic networks be a 21 great leveller? To a certain extent, but let's look at 22 who has access, and that is my concern. It is -- there 23 are more people that are not -- that don't have access. 24 12385 It is my concern that if this is of 25 paramount importance in terms of lifelong learning, and StenoTran 2848 1 in terms of electronic commerce, and in terms of 2 education and so on, that there be some sort of 3 provisions to make sure that all citizens can have 4 access in some way. 5 12386 COMMISSIONER McKENDRY: Do you have 6 any specific recommendations for us, thinking of the 7 CRTC and its mandate, that we could put in place to 8 develop or sustain community networks? 9 12387 MS SHADE: I think one is the 10 recognition, as you did in 1994 in the hearings here, 11 of the recognition of the viability and the 12 vitalness -- the vital sense that community networks 13 have achieved, and networks -- new media is also not 14 just being delivery of content but as being interactive 15 and a communication mechanism. Public social utility, 16 I think is very important. 17 12388 So I think there is that recognition 18 from the Commission that you could make. 19 12389 In terms of regulating access, I mean 20 this is a huge hornet's nest. How do you do this? How 21 do you set up universal access funds? Do you set up 22 little taxation methods and take away some of those 23 taxes and put it in a universal access fund? 24 12390 Those are issues I think that need to 25 be discussed in wide spread consultations involving, StenoTran 2849 1 industry, public interest groups, citizens, unions, 2 educators, various federal entities, and so on and so 3 forth. 4 12391 COMMISSIONER McKENDRY: Thank you 5 very much for answering my questions. I appreciated 6 reading your very interesting comments. 7 12392 Those are my questions, Mr. Chairman. 8 12393 THE CHAIRPERSON: Thank you, 9 Commissioner McKendry. 10 12394 Thank you, Ms Shade. We appreciate 11 your presentation here today. It looks like there is a 12 lot of potential for research with all this new media, 13 and I wish you well in terms of your application. 14 12395 MS SHADE: As people were saying, it 15 is -- we are in an infancy. In a sense, we are in an 16 infancy; and, in a sense, not. I can remember being on 17 line in 1990, and things have changed dramatically. 18 But, at the same time, things haven't changed that 19 much. 20 12396 But I think in terms of -- I would 21 say probably in the next five years we will know more 22 and we can answer some more questions and you might 23 have to do this all over again, who knows? 24 12397 THE CHAIRPERSON: What we have 25 learned this week represents 35 years in real time, I StenoTran 2850 1 guess, in terms of development of the Internet. Thanks 2 again. 3 12398 MS SHADE: Thank you. 4 12399 THE CHAIRPERSON: That concludes our 5 work for today and for the week. We will reconvene 6 here on Monday morning at 9:00 o'clock. 7 --- Whereupon the hearing adjourned at 1715, to resume 8 on Monday, December 7, 1998, at 0900 / L'audience 9 est ajournée à 1715, pour reprendre le mardi 10 7 décembre 1998 à 0900 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 StenoTran
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