ARCHIVÉ -  Transcription - Hull, QC - 2000/08/30

HELD AT: TENUE À:

Conference Centre Centre de Conférences

Outaouais Room Salle Outaouais

Hull, Quebec Hull (Québec)

August 30, 2000 le 30 août 2000

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.

Applications for Licences to operate New Pay and Specialty

Services for Digital Distribution / Demandes de licences

visant la distribution numérique de nouveaux services de

télévision spécialisée et payante

BEFORE / DEVANT:

Françoise Bertrand Chairperson of the

Commission / Présidente

du Conseil

Andrée Wylie Chairperson / Présidente

Jean-Marc Demers Commissioner / Conseiller

Ronald Williams Commissioner / Conseiller

Martha Wilson Commissioner / Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

Peter Cussons Hearing Manager and

Secretary / Gérant de

l'audience et secrétaire

Alastair Stewart Legal Counsel /

conseiller juridique

Peter McCallum Legal Counsel /

conseiller juridique

HELD AT: TENUE À:

Conference Centre Centre de Conférences

Outaouais Room Salle Outaouais

Hull, Quebec Hull (Québec)

August 30, 2000 le 30 août 2000

PAGE

PHASE III

GROUPE DE RADIODIFFUSION ASTRAL/

ASTRAL BROADCASTING GROUP 3849

TÉLÉVISION FRANÇAISE 1, (TF1) 3895

BCE MEDIA INC. 3911

THE CANADIAN ASSOCIATION OF BROADCASTERS 3958

CANADIAN CABLE SYSTEMS ALLIANCE INC. 4014

CANADIAN CABLE TELEVISION ASSOCIATION 4051

ASSOCIATION DES PRODUCTEURS DE FILMS

ET DE TÉLÉVISION DU QUÉBEC 4131

CANADIAN CONFERENCE OF THE ARTS 4150

CANADIAN FILM & TELEVISION PRODUCTION

ASSOCIATION/ ASSOCIATION CANADIENNE DE

PRODUCTION DE FILM ET TÉLÉVISION 4176

WIC PREMIUM CORPORATION 4203

CANADIAN SATELLITE COMMUNICATIONS INC. 4225

LOOK COMMUNICATIONS INC. 4252

INDEPENDENT FILM AND VIDEO ALLIANCE 4287

Hull, Quebec / Hull (Québec)

--- Upon resuming on Wednesday, August 30, 2000

at 0830 / L'audience reprend le mercredi 30 août

à 0830

27040 LA PRÉSIDENTE: A l'ordre, s'il vous plaît. Order, please.

27041 Good morning and welcome to the continuation of the third phase of our hearing and it is, I believe, day 13 today. So I hope we have no black cats on the Pet Channel.

27042 We will adjourn, as I said yesterday, at 20 to 12 today and resume at 2:00 and we may work beyond six to at least complete the list of intervenors for the day and maybe even start on tomorrow's list.

27043 Nous vous rappelons que nous allons ajourner tôt pour le lunch, à 11 h 40, pour reprendre à 2 heures et que nous siégerons possiblement plus tard que six heures pour finir tous les intervenants qui sont sur la liste d'aujourd'hui et possiblement en entendre quelques-uns qui sont à l'agenda de demain.

27044 Mr. Secretary, please.

27045 MR. CUSSONS: Thank you, Madam Chair.

27046 Just a couple of announcements to begin our day. Learning and Skills Television of Alberta has now filed the information it undertook in Phase I to provide with respect to the threshold of documentary programming it would consider would cause a service to be directly competitive with its proposed DocsTV service. This filing has been added to the public file.

27047 Also Astral has filed a revised Appendix A to its Phase II oral remarks with respect to the proposed Cinefest service. This revision includes the original Canadian programming hours for each year of the licence. This too has been added to the public file.

27048 Maintenant le premier intervenant ce matin, le Groupe de Radiodiffusion Astral/Astral Broadcasting Group, M. Bureau.

INTERVENTION / INTERVENTION

27049 M. BUREAU: Merci.

27050 Mesdames les Présidentes, Madame et Messieurs les Conseillers.

27051 Je suis André Bureau, président et chef de la direction du Groupe de radiodiffusion Astral.

27052 M'accompagnent aujourd'hui à ma droite, Mme Sophie Émond, vice-présidente aux affaires gouvernementales et réglementaires du Groupe de radiodiffusion Astral et à ma gauche, M. Michel Houle, consultant et auteur d'une étude sur les pratiques d'acquisition de droits multiterritoriaux en Europe et en Amérique du Nord.

27053 Notre intervention aujourd'hui portera uniquement sur la politique relative à l'autorisation des services étrangers de langue française.

27054 C'est une question d'une grande importante pour Astral et pour l'ensemble des radiodiffuseurs canadiens de langue française, comme vous avez pu le constater par leurs interventions écrites et lors de vos discussions avec eux à l'étape de la présentation orale de leurs demandes.

27055 Je voudrais d'emblée préciser que nous n'avons aucune objection à ce que des services étrangers de langue française qui n'entrent pas en concurrence, en tout ou en partie, avec des services canadiens de langue française soient autorisés, comme le veut la politique actuelle.

27056 Nous croyons en fait que de tels services pourraient contribuer à apporter une contribution à la diversité de la programmation offerte aux téléspectateurs de langue française.

27057 Alors sur ce point-là, je veux être très clair: nous ne voulons pas changer la politique du Conseil, nous voulons la maintenir. Nous considérons qu'elle a été -- et qu'elle est plus que jamais -- essentielle pour assurer que le marché de la radiodiffusion canadienne demeure autonome et distinct en termes d'acquisition de droits de diffusion.

27058 Dans notre intervention écrite, comme lors de la comparution des Chaînes Télé Astral, nous avons fait valoir un ensemble d'arguments qui militent en faveur du maintien de cette politique. Bien que tous, à notre avis, soient importants et méritent d'être pris en considération, je n'évoquerai que quelques-uns d'entre eux dans cette brève présentation orale.

27059 Mais avant, j'aimerais réagir au commentaire de M. Paul Racine qui, en réponse à une question que lui adressait Mme Bertrand, a mentionné à quel point les petites câblodistributeurs étaient anxieux d'avoir de nouveaux services de langue française à distribuer.

27060 Je dois dire que ce commentaire m'a un peu étonné.

27061 Tout le monde sait que les services spécialisés canadiens de langue française sont très peu distribués dans les marchés anglophones du Canada. C'est d'ailleurs un problème que le gouverneur en conseil a demandé au CRTC d'analyser et de tenter de corriger.

27062 Ce qu'on sait peut-être moins c'est que ces mêmes services éprouvent aussi des difficultés à être distribués au Québec dans des marchés très francophones qui sont desservis par de petits câblodistributeurs. Cela est particulièrement vrai pour ceux qui ont été autorisés en 1999, mais aussi dans certains cas, pour ceux qui ont été autorisés en 1996. Pour que cela soit clairement établi, nous joignons à l'annexe 1 à notre intervention une liste des marchés francophones desservis par de petits câblodistributeurs où nos services de langue française ne sont toujours pas distribués.

27063 Par exemple, il y a plus de 140 systèmes desservant 225 000 foyers qui n'offrent pas encore les nouveaux services lancés en février. Nous recevons nous autres aussi des téléphones de résidents de Magog, de Val-d'Or, de Rouyn, de Thetford-Mines, de Ste-Adèle, qui voudraient avoir accès à nos services spécialisés canadiens de langue française mais leurs câblodistributeurs disent qu'ils n'ont pas de capacité même si parfois ils en ont trouvé pour placer RFO-1.

27064 Alors je voudrais dire à M. Racine que s'il reçoit d'autres demandes de petits câblodistributeurs qui ont de la capacité disponible et qui sont désireux d'accroître leur offre de services de langue française, il peut nous renvoyer les appels.

27065 Mais revenons en aux questions de fond, Madame la Présidente. Si nous voulons collectivement nous donner des priorités en matière de diversification de l'offre de programmation de langue française, je crois qu'il y aurait des priorités qui s'apparenteraient aux suivantes.

27066 Premièrement, l'amélioration et l'élargissement de la distribution des services canadiens de langue française existants, et ce à la grandeur du pays. Deuxièmement, la création des conditions les plus favorables possible à la réussite des nouveaux services numériques canadiens de langue française que vous allez autoriser. Ces priorités sont d'autant plus essentielles que les services canadiens de langue française oeuvrent, on le dit souvent, dans un marché très exigu.

27067 Plusieurs radiodiffuseurs canadiens ont souligné qu'il serait contraire à toute logique, économique ou autre, d'avoir au Canada des règles qui autorisent un niveau de concurrence étrangère plus grand dans le marché linguistique qui est de loin le plus petit.

27068 Si la politique du Conseil devrait être adaptée pour tenir compte des particularités de chaque marché linguistique, la logique serait qu'elle soit renforcée plutôt que diluée dans le marché francophone.

27069 D'ailleurs si le Conseil devait l'assouplir du côté français, on voit mal comment il pourrait ensuite résister aux pressions des services étrangers qui voudront bénéficier du même traitement dans le marché anglophone, et ce en vertu des principes inscrits dans les traités internationaux de commerce. Les services des États-Unis seront sans doute prêts à prendre des mesures de représailles si le Conseil ne leur accorde pas le même traitement qu'aux services étrangers de France.

27070 Mais je le répète, nous ne demandons pas de modifications à la politique actuelle du Conseil. Nous demandons qu'elle continue de s'appliquer de façon identique et uniforme dans les deux marchés linguistiques.

27071 Cette politique est efficace et elle a fait ses preuves. Plus fondamentalement, elle a été la pierre angulaire sur laquelle s'est édifiée et maintenue l'indépendance du marché canadien en termes d'acquisition de droits de diffusion.

27072 Si elle était modifiée aujourd'hui, cela conduirait à une situation où le marché canadien de langue française deviendrait partie intégrante du marché français. Imaginons un instant que le Conseil autorise demain des services étrangers de langue française qui seraient concurrents, en tout ou en partie, avec des services canadiens. Qu'est-ce qui se passerait?

27073 Dans un premier temps, des conflits juridiques nombreux surgiraient autour de la question des droits des émissions, comme les services canadiens-français achètent actuellement les droits des mêmes émissions françaises, européennes et américaines, la distribution au Canada de services français concurrents aux services canadiens entraînerait inévitablement des poursuites pour non-respect de contrat, bris d'exclusivité, non-paiement des ayants droit, et ainsi de suite.

27074 Le mémoire déposé par nos collègues de TF1 offre d'ailleurs un aperçu du type de problèmes auxquels cette chaîne française doit faire face depuis l'autorisation de distribution de RFO-1 au Canada.

27075 Et la seule façon de se sortir à moyen terme de cet imbroglio juridique sera pour les diffuseurs français qui sont en position dominante, puisqu'ils peuvent compter sur un marché domestique beaucoup plus vaste et lucratif, ça sera d'acquérir les droits internationaux de langue française incluant le Canada de toutes les émissions qu'ils achètent et ils y seront incités non seulement pour résoudre les problèmes juridiques mais parce que les avantages financiers et concurrentiels qu'ils tireront de l'établissement de cette pratique seront considérables.

27076 En termes de contrôle sur l'approvisionnement, ça va leur permettre de choisir en priorité le meilleur de la production française, européenne et américaine et de diffuser eux-mêmes ces émissions en France, bien sûr, et au Canada.

27077 Les services canadiens pour leur part n'auront donc plus accès, comme ils l'ont actuellement, au meilleur de la production internationale en version originale française ou doublée en français. Ils devront se contenter d'un volet de programmation non-canadienne de second choix.

27078 Donc le problème principal n'est pas la concurrence que des services étrangers de langue française distribués en mode numérique pourront exercer en termes de parts d'écoute sur le marché canadien. Le véritable problème c'est le contrôle sur l'approvisionnement dont vont se doter les services-mères étrangers en ce servant du levier du lucratif marché français.

27079 Et ça va affecter tous les services canadiens car en matière de droits de diffusion, il n'y a pas de distinction entre la fenêtre numérique ou la fenêtre analogique. Lorsqu'une chaîne spécialisée ou thématique achètent les droits internationaux en français d'une émission, cela emporte la distribution aussi bien analogique que numérique.

27080 Le résultat net sera, bien sûr, un affaiblissement des services canadiens et la disparition d'une des grandes réussites de la Loi sur la radiodiffusion et les politiques du Conseil, soit l'établissement au Canada d'un système de la radiodiffusion de langue française qui soit à la fois autonome et distinct en termes de droits et extrêmement dynamique dans ses réalisations -- un système que d'ailleurs plusieurs pays nous envient.

27081 Si on met dans la balance d'un côté les avantages forcément limités en termes d'accroissement de la diversité de la programmation qui résulterait de la distribution de services étrangers concurrents, et de l'autre côté les désavantages extrêmement importants qui en résulteraient en terme de perte d'autonomie et de contrôle sur l'approvisionnement pour tous les services canadiens, il me semble évident, Madame la Présidente, que les désavantages l'emportent haut la main.

27082 C'est pourquoi nous demandons au Conseil avec insistance et conviction de maintenir sa politique actuelle. Et nous ne sommes pas les seuls à le demander. Le Groupe TVA, Quebecor/TQS, CTC/RDS et TV5 sont intervenus dans le même sens.

27083 En terminant, je voudrais rappeler une réalité que tout le monde connaît, qui nous est tellement familière et rivée au corps qu'on finit parfois par l'oublier.

27084 Cette réalité c'est que les services de propriété canadienne emploient des ressources canadiennes dans toutes leurs opérations quotidiennes. C'est qu'ils contribuent de façon très substantielle à la programmation canadienne, qu'ils la suscitent, qu'ils la financent, qu'ils la diffusent, qu'ils en font la promotion. C'est qu'ils acceptent, eux, de respecter des critères de non-concurrence avec d'autres services canadiens existants.

27085 C'est aussi qu'ils assument toute une série de responsabilités sociales, que ce soit en terme d'équité en matière d'emploi, de stéréotypes sexuels, de violence, de services aux malentendants, de respect des nombreux codes d'étique et de pratiques élaborés par l'industrie. Ce sont là des responsabilités importantes, intimement liées aux préoccupations et aux valeurs de la société canadienne.

27086 Je ne doute pas que le Conseil voudra bien ajouter cela de notre côté de la balance quand il soupèsera les arguments qui jouent en faveur du maintien de sa politique actuelle concernant l'autorisation des services étrangers.

27087 Je vous remercie de nous avoir donné l'occasion de fournir nos commentaires ce matin.

27088 Nous désirons déposer en annexe 2 l'analyse à laquelle je faisais allusion en présentant Michel Houle, qui est intitulée Entreprises de distribution par satellites de radiodiffusion directe et droits de diffusion nord-américains. C'est une analyse de la problématique qui est toujours pertinente et que nous allons déposer aujourd'hui auprès du Conseil, avec votre permission.

27089 LA PRÉSIDENTE: Merci, Monsieur Bureau.

27090 Madame Bertrand.

27091 LA PRÉSIDENTE DU CONSEIL: Alors bonjour, Monsieur Bureau, Monsieur Houle, Madame Émond.

27092 Merci. D'abord vous nous apportez des informations supplémentaires sur la réalité des systèmes de câbles et de la diffusion des services francophones et en fait, comme vous le mentionnez, en effet nous sommes en train d'entreprendre une démarche fort importante qu'on avait déjà entamée et que le gouvernement a appuyée en élargissant notre enquête.

27093 J'aimerais ce matin -- parce que je vous entends aussi parler de la situation en disant, "Ce n'est pas qu'on est contre la venue de services étrangers. C'est qu'on veut le maintien de la politique. On veut s'assurer qu'on a la possibilité au Canada, puis évidement dans les marchés francophones, de garder notre autonomie". Je pense bien que le Conseil n'a aucun problème à suivre votre raisonnement de ce côté-ci.

27094 Je pense ce dont nous avons besoin c'est un peu l'illustration des choses et comment, lorsque vous dites d'une part, "Nous appuyons la politique et nous ne sommes pas contre le principe. C'est dans le cas précis qui nous occupe et il y a un problème des droits", et donc ça laisse entendre que ce sont les services particuliers dont on parle qui sont en cause et non pas le fait d'amener des services étrangers en soi.

27095 Si, par exemple, il y avait -- j'ai peine à imaginer -- disons un canal qui serait entièrement dévoué non seulement aux animaux domestiques, mais strictement aux poissons de l'aquarium, ce serait tellement précis que là il n'y aurait pas nécessairement ce problème de droits. Alors je comprends que c'est lié au genre.

27096 Est-ce que je me trompe quand j'amène cette...

27097 M. BUREAU: Je pense que vous avez raison, Madame Bertrand. C'est intimement lié au genre de services. Je ne pense pas que ça aille aussi loin que votre exemple des poissons mais que c'est certainement relié au genre d'émissions, qu'il s'agisse soit de films, qu'il s'agisse de documentaires, qu'il s'agisse plus précisément de telle sorte de documentaires ou de telle orientation ou thème de documentaires, et c'est évidement à ce niveau-là que les problèmes se posent.

27098 Maintenant, vous avez probablement eu connaissance à plusieurs reprises du fait que nous avons au Canada plus de services de langue française thématiques qu'il y en a dans d'autres pays de la même langue. Et donc ça veut dire que chez nous on est rendus à un niveau de resserrement en terme de thèmes qui fait que quand on veut s'approvisionner en langue française et que nos collègues des pays de langue française occupent déjà le terrain chez eux dans un thème des fois un peu plus large, il reste quand même qu'ils contrôlent à cause de la grandeur de leurs marchés, ils contrôlent actuellement les droits sur le doublage de ces services-là, par exemple. Ils peuvent décider -- et ça arrive malheureusement bien souvent --que la bande sonore en français ne nous est pas disponible. Ils ne veulent pas nous la vendre, ils veulent la garder de sorte qu'on est obligés de refaire des doublages et ça augmente les coûts, et tout ça.

27099 Mais ça c'est juste pour vous donner un exemple qu'à l'heure actuelle, indépendamment de la question de l'importation des services ici, on a déjà une situation où la force, la taille de certains de ces services-là dans les marchés français, disons en France, fait que ces gens-là contrôlent déjà, dans un certain sens, la distribution de ces programmes-là.

27100 Si en plus de ça on autorisait des services de langue française, qui forcément sont beaucoup plus gros que les nôtres, à venir et à être distribués au Canada, bien écoutez, il faudrait qu'ils détiennent les droits. Alors à partir de ce moment-là, ils vont acheter les droits internationaux en français, ou ils vont acheter au moins les droits pour l'Europe et le Canada, et à ce moment-là, quand on va arriver nous autres pour tenter d'acheter ces droits-là, ils vont être partis, ils vont déjà être détenus par ces gens-là qui ont une force beaucoup plus grande que nous autres. C'est la même chose avec les États-Unis. Le problème n'est pas différent du tout. C'est exactement la même situation.

27101 Alors donc on en arrive à une situation où on risque d'avoir un problème d'approvisionnement majeur. Maintenant, on en est à la phase ici de discuter de la politique elle-même. On aura probablement dans une phase ultérieure à examiner chacune des demandes qui pourraient être proposées puis il y a certainement des cas où en tout cas nous autres on ne s'objectera pas. Au contraire!

27102 On a envie nous autres aussi d'avoir des "packages" attrayants, des bouquets attrayants, pour les téléspectateurs, des bouquets qui vont nous aider à vendre le service numérique. Mais il y en a d'autres où on va être obligés de dire, "Celui-là, on ne peut pas parce que c'est carrément concurrent avec le nôtre".

27103 LA PRÉSIDENTE DU CONSEIL: Mais, Monsieur Bureau, je comprends bien -- donc laissons de côté les cas particuliers parce qu'on aura besoin d'une démonstration du chevauchement des grilles pour mieux comprendre.

27104 M. BUREAU: C'est ça.

27105 LA PRÉSIDENTE DU CONSEIL: Mais par ailleurs, quand on voit sur la question de la politique -- et vous faites vous-même référence à la situation. Vous dites que ce n'est pas différent de la situation américaine, mais les faits sont que même les francophones, même dans les réseaux et systèmes de câbles dont vous parlez, ont accès présentement à plusieurs émissions américaines, diffusées par d'une part les radiodiffuseurs canadiens, mais aussi avec les canaux américains comme tels.

27106 Pourquoi est-ce impossible d'avoir, disons, peut-être en plus petit nombre, mais d'avoir un reflet de ce qui existe en langue anglaise dans les marchés francophones? J'avoue que moi c'est ça qui m'anime dans ma question ce matin. Je pense bien que notre politique, la question de la protection des droits, ce n'est pas de remettre en question l'importance des droits. C'est qu'est-ce qu'il y a de différend dans la réalité francophone que ce qu'on observe sur le marché anglophone ne peut pas être reproduit dans le sens où il y a là aussi des droits internationaux, il y a des droits canadiens, il y a des droits américains, il y a des droits européens.

27107 Comment se fait-il que lorsqu'on arrive à la question de langue française ce ne soit pas possible d'envisager -- bien sûr, on peut comprendre que les contrats devront être -- il faudrait un temps d'adaptation. Alors pouvez-vous m'expliquer?

27108 M. BUREAU: C'est une très bonne question.

27109 LA PRÉSIDENTE DU CONSEIL: Merci, Monsieur Bureau.

--- Rires / Laughter

27110 LA PRÉSIDENTE DU CONSEIL: Alors je ne sais pas si on gagnera le prix ce midi, mais ça va bien ce matin.

--- Rires / Laughter

27111 M. BUREAU: Bon. Je recommence.

27112 Je pense que la situation est assez différente. Je vais essayer de vous exprimer comment je le vois. Quand on se parle de la présence de programmes américains ou de services américains dans les systèmes de distribution canadiens, d'abord on parle des télévisions conventionnelles américaines, des services conventionnels américains et ça historiquement on a accepté de diffuser ces canaux-là au Canada. Non seulement ça, mais on a trouvé des formules, comme la substitution simultanée, pour en arriver à permettre aux services canadiens qui diffusaient des programmes en provenance des États-Unis d'en bénéficier, de ne pas perdre les bénéfices de l'auditoire.

27113 Bon. Le Conseil a eu des mécanismes de ce genre-là pour essayer d'amortir l'impact de la venue de ces services étrangers-là. Quand il s'agit des services spécialisés, le Conseil a eu une attitude différente. Le Conseil a dit, "On va commencer par permettre à des services canadiens de s'établir, d'occuper le terrain, d'avoir à l'intérieur de leurs grilles des programmes en provenance des États-Unis qui vont faire partie de l'ensemble de la programmation du service canadien, et qui vont faire que les Canadiens au bout du compte vont avoir accès à la meilleure programmation américaine et à la programmation canadienne sous un chapiteau canadien". Je ne devrais pas dire "chapiteau" à vous, Madame Bertrand, mais c'est un mot qui me fait encore frémir.

--- Rires / Laughter

27114 LA PRÉSIDENTE DU CONSEIL: Je ne suis pas rancunière, Monsieur Bureau.

27115 M. BUREAU: Je l'efface. Je vais en trouver un meilleur.

--- Rires / Laughter

27116 M. BUREAU: Alors donc, on a trouvé cette formule-là, mais on a dit au départ, "On va établir les services canadiens. On ne laissera pas entrer les services américains concurrents chez nous. On va permettre aux services canadiens d'aller chercher la programmation". C'est comme ça, par exemple, qu'on a Family Channel. Disney est venu ici devant le Conseil en disant, "Je veux être au Canada". Il y a même un membre du Conseil à ce moment-là qui avait dit, "Vous êtes tellement fantastiques qu'on ne peut pas attendre plus longtemps". Et à ce moment-là le Conseil avait dit, "Bien, la décision n'est pas encore prise. On va attendre un peu". Mais c'est comme ça que ça s'est passé. Disney fait partie de Family Channel.

27117 Quand on a regardé TSN, TSN est venu mais ESPN voulait être là aussi, évidement. TSN a dit, "Je vais présenter un service canadien qui va être vraiment canadien puis j'irai chercher des programmes chez ESPN". Effectivement, on a le meilleur service canadien de sports dont on peut rêver à l'heure actuelle avec TSN et tant mieux! On a réussi donc à bâtir un système canadien de services spécialisés qui ont occupé le terrain les premiers et qui ont amené avec eux le meilleur de la programmation étrangère à l'intérieur de leurs services.

27118 Mais le Conseil n'a jamais permis à ESPN d'être diffusé au Canada. Le Conseil n'a jamais permis à d'autres services spécialisés de langue anglaise...

27119 LA PRÉSIDENTE DU CONSEIL: A&E.

27120 M. BUREAU: Pardon?

27121 LA PRÉSIDENTE DU CONSEIL: Il a permis à A&E -- il y a quand même une liste d'éligibilité...

27122 M. BUREAU: Oui, parce que personne n'avait fait de demande.

27123 LA PRÉSIDENTE DU CONSEIL: Il y a une liste...

27124 M. BUREAU: C'est rien que dans les cas où il y a personne qui avait fait de demandes, jusqu'à aujourd'hui, je pense, que le Conseil c'est dit, "Bon, puisque personne ne veut offrir un service de cette nature-là, on va permettre à un service étranger de venir occuper cette case-là". A&E est un des rares, Madame la Présidente, où ça s'est fait.

27125 LA PRÉSIDENTE DU CONSEIL: Le Golf.

27126 M. BUREAU: Pardon?

27127 LA PRÉSIDENTE DU CONSEIL: Le Golf et le Speed, dans des niches très précises.

27128 M. BUREAU: En effet, tellement précises qu'on ne les voit pas dans les BBM. Mais de toute façon, ce sont les seuls cas où le Conseil a jugé qu'étant donné que personne ne les voulait -- que personne n'était prêt à prendre le risque de lancer un service tellement pointu -- qu'à ce moment-là le Conseil a autorisé ces services-là on ne s'objecte pas à ça. On pense justement que la politique actuelle est excellente. On veut qu'elle soit maintenue comme elle est et on dit simplement quand on arrive du côté français, on devrait avoir la même approche, on devrait regarder les services existants, ou ceux qui veulent venir, s'assurer que les services canadiens de langue française occupent le terrain les premiers, qu'ils importent de partout, que ce soit d'Angleterre, de France, des États-Unis ou d'ailleurs, les meilleurs programmes, qu'ils fassent partie de la grille du service canadien, et puis s'il y a des cas où les services canadiens il n'y a personne qui vous demande de licence pour ces services-là bien à ce moment-là on importera des services étrangers de façon à ce que les Canadiens partout aient accès à ce qu'il y a de mieux.

27129 Mais aujourd'hui avec les demandes que vous avez devant vous pour des services numériques de langue française, je ne sais pas si on a un très grand besoin, mais je n'entrerai pas là-dedans. Je pense qu'au moins on a la démonstration au niveau de ce processus, dans lequel vous êtes impliqués et nous aussi, de voir qu'il y a de l'intérêt pour occuper le terrain dans des niches très petites. Quand on regarde l'exiguïté du marché de langue française, c'est assez étonnant de voir le nombre de demandes qui sont devant vous.

27130 Mais je dis, si au-delà de ça, quand vous allez rendre votre décision, quand vous allez décider du nombre de services qui doivent obtenir une licence, qui méritent d'obtenir une licence en langue française, s'il reste des thèmes qui ne sont pas couverts par ces services-là et qu'il y en a qui existent déjà ailleurs, je ne pense pas qu'il y a de problème à les laisser entrer mais ils ne sont pas en concurrence à ce moment-là et surtout -- ce n'est pas qu'une question de concurrence, encore une fois -- ils ne seront pas dans une position pour fermer la valve, nous alimentant en programmation dans ces thèmes-là parce qu'il n'y en aura pas, ici au Canada, qui dépendent de ça.

27131 LA PRÉSIDENTE DU CONSEIL: Mais reprenons ça. Admettons l'hypothèse où la politique est maintenue. Comment peut-on, dans la mesure où cette politique est maintenue, mais toutefois que le principe est accepté, et vous l'admettez, qu'il y aurait possibilité -- et il ne s'agit pas de fermer une porte de coffre-fort pour empêcher des services étrangers.

27132 Quelles seraient à ce moment-là les modalités qui permettraient de -- quelles seraient les considérations parce qu'il demeure quand même -- et puis je reviens avec A&E, l'exemple étant que A&E est sur la liste d'éligibilité. Par ailleurs, beaucoup des émissions qui sont diffusées par A&E se retrouvent dans d'autres formes présentées de façons différentes, même en langue française d'ailleurs. Prenons les séries Biographie, on les a sous d'autres visages.

27133 Là où j'ai de la difficulté -- et c'est mon ignorance certainement, mais c'est important pour le dossier public -- en quoi, tout à coup, lorsqu'on est dans le domaine francophone ou dans l'espace francophone, y-aurait-il un univers qui soit blanc ou noir dans la mesure où s'il y avait un service étranger de langue française -- parce qu'on va reconnaître qu'à part TV5 il n'y en a pas. Même TV5 est un service canadien qui se veut l'expression du meilleur de l'expression francophone. On sait qu'il y a bien des choses qui échappent parce que justement une question des droits empêche de pouvoir avoir accès à ce qui serait souhaité par le comité de programmes parfois.

27134 En quoi la question des droits en langue française se différencie tellement qu'on ne pourrait pas retrouver la possibilité d'avoir un marché français, avoir un marché américain, comme il semble y avoir -- et je sais qu'on a parlé beaucoup d'une tendance maintenant à avoir un marché nord-américain qui ne souhaiterait plus distinguer le Canada, mais on s'aperçoit -- enfin, on a des opinions et des admissions un peu différentes à ce chapitre-là. Certains radiodiffuseurs nous disent, "Ce n'est pas vraiment le cas, au contraire".

27135 M. BUREAU: Votre question est très bonne, Madame la Présidente.

--- Rires / Laughter

27136 LA PRÉSIDENTE DU CONSEIL: Vos réponses aussi, Monsieur Bureau, sont très, très bonnes.

--- Rires / Laughter

27137 M. BUREAU: Elle a de multiples facettes. Je vais essayer de les prendre une par une -- et je vais peut-être en oublier, vous me les rappellerez.

27138 Mais il ne faut pas oublier que les services de langue française qui sont diffusés -- enfin je ne parle pas des services conventionnels. Je parle des services thématiques, c'est surtout ceux-là que je connais. Alors je vais essayer de me limiter à cette dimension-là.

27139 Les services thématiques en France, ils sont comme les services thématiques au Canada. Ils ne sont pas comme les services thématiques américains dans le sens que leur programmation, elle aussi, est tributaire de programmes étrangers. Autrement dit, si on importe ici au Canada un des services thématiques de France, on importe un service dans lequel, bien sûr, il va y avoir de la production originale française, mais il y a aussi beaucoup de programmes qui proviennent de l'étranger, de l'Angleterre et des États-Unis si bien que ce n'est pas la même chose que du côté américain. Si du côté américain on parle de ESPN, on parle de n'importe lequel des services américains, c'est en très grande partie -- à part A&E qui achète beaucoup à l'extérieur -- c'est en très grande partie des émissions américaines.

27140 Quand on va du côté français, par exemple -- je ne veux pas prendre un service en particulier parce que ce n'est pas le forum. On le fera plus tard. Mais qu'on prenne n'importe quel service français, ce sont des services qui comportent une grande partie de programmes américains ou de programmes de la BBC ou de choses comme ça, si bien qu'on en arrive à cette situation assez étrange que nous autres on a besoin d'acheter des programmes étrangers, que ce soit de France, d'Angleterre ou des États-Unis, et ces gens-là les détiennent pour l'Europe. Ce n'est pas rien que leurs programmes français de France. C'est tout l'ensemble des programmes.

27141 Alors la problématique au niveau de la question que vous posez en ce sens que comment ça se fait qu'on est pas capables de répliquer ou de faire le parallèle avec ce qu'on fait aux États-Unis, c'est que aux États-Unis on a un marché où ils produisent quasiment à 100 pour cent leurs programmes -- ou qu'ils achètent, mais en tout cas -- et que donc quand on les importe ici on importe quelque chose qui est entièrement américain.

27142 Quand on veut acheter des programmes ou qu'on pense, pardon, à l'importation d'un service de France, on pense à un service qui est semblable au nôtre, qui comportent dans sa grille des émissions qui viennent d'un peu partout. Alors l'impact au niveau des droits est bien différent. Quand on importe un service américain, ces programmes ne sont pas ailleurs, ils ne proviennent pas d'une autre source où on peut aller les acheter. Ils proviennent de la station ou du service lui-même. Tandis qu'en France, quand une chaîne veut venir au Canada, il y a peut-être 50 pour cent de sa grille qui est faite de programmes dont la source est extérieure et si eux autres achètent les droits de ces programmes-là on n'y a plus accès nous et on en a besoin dans la portion étrangère, programmes étrangers, de notre propre grille.

27143 Bon, je pense que je n'ai pas été clair.

27144 LA PRÉSIDENTE DU CONSEIL: Oui, vous êtes clair.

--- Rires / Laughter

27145 LA PRÉSIDENTE DU CONSEIL: Oui, oui, vous êtes clair. C'est peut-être moi qui a la compréhension pas claire. Ce n'est pas vous qui n'êtes pas clair. Mais je comprends bien et je pense que M. Roy expliquait ça lorsqu'il était avec nous la semaine passée, ou l'autre semaine, comment, en effet, les chaînes françaises ne sont pas que françaises. Elles ont comme nous un reflet de l'ensemble, mais je ne vois pas comment la question de droits devient différente parce qu'aussi ce dont on parle ce sont les questions de doublage aussi. Ce que vous dites c'est que quand ça transite ç'a été acheté par les chaînes françaises. Ils achètent des droits plus larges que ce que nous pourrions -- c'est ça que je ne comprends pas, en quoi c'est différent. Si on parle d'une émission américaine qui passe là, en quoi est-ce différent qu'une émission française?

27146 M. BUREAU: Je pense que la différence c'est que l'émission américaine elle apparient à 100 pour cent au service américain. Alors quand on l'achète, on l'achète point et on s'en vient avec et on fait la traduction ou le doublage et on repart chez nous.

27147 Quand on veut acheter une émission qui est déjà en français, disponible dans le marché français de France, ou bien ils ont les droits internationaux et là ils décident s'ils nous les vendent ou pas, ou bien ils ont des droits pour le territoire de la France et ils décident de garder la version française, le doublage français, et nous autres on va aller acheter le programme lui-même à la BBC ou ailleurs, pour pouvoir l'importer ici et on fera le doublage qu'on voudra à ce moment-là. Mais ça c'est en l'absence de la venue de services. On vous parle de problèmes auxquels on fait face déjà, même en l'absence de la venue de ces services-là chez nous. Ils ont déjà un certain contrôle sur notre approvisionnement.

27148 Ce que je dis, c'est que si en plus de ça on va plus loin, et puis on dit, "Le service lui-même est disponible au Canada". A partir de ce moment-là, il faut qu'ils aient les droits pour être distribué au Canada.

27149 La tentation, le bon sens, la logique pour eux c'est d'acheter les droits internationaux, ou d'acheter au moins les droits territoriaux pour l'Europe et pour le Canada et à ce moment-là pourquoi est-ce qu'ils nous feraient le plaisir de nous laisser la possibilité d'acheter ces programmes-là? D'abord, même s'ils le faisaient, même s'ils disaient, "On les achète non-exclusivement" pour essayer de continuer à nous donner accès à ça, bien là à ce moment-là on dit, "Quelle sorte de diversité qu'on va avoir si on a le même programme sur le service français et le programme qu'on achète pour notre propre service?". L'élément de diversité est amoindri considérablement.

27150 Ce qu'on essaie de voir c'est comment dans la pratique on peut s'organiser pour avoir un système canadien fort avec les meilleures émissions possible et qu'on ait pas quelque part, quelqu'un qui a le pouvoir de fermer le robinet sur l'approvisionnement chez nous en produits de grande qualité.

27151 On ne veut pas être obligés d'acheter de la seconde qualité.

27152 LA PRÉSIDENTE DU CONSEIL: Mais pourquoi -- et je comprends bien la question de la diversité. Ça c'est une question, et la question éventuellement de mesurer mieux les chevauchements dépendant des projets, c'est une autre question.

27153 Mais en quoi la question des droits -- pourquoi les Français ne voudraient-ils pas avoir des occasions d'affaires aussi nombreuses que les Américains ont voulues en multipliant leurs possibilités d'avoir des fenêtres...

27154 M. BUREAU: C'est tout à fait normal, c'est tout à fait raisonnable qu'ils aient ce raisonnement-là. Mais moi je dis pourquoi est-ce qu'il n'y aurait pas les mêmes conditions pour eux qu'on a pour les Américains? Je ne vois pourquoi que pour les Français on ferait des conditions plus faciles pour eux pour entrer dans notre territoire qui est déjà tout petit, dans lequel on a déjà un peu plus de misère, pourquoi est-ce qu'on leur ferait ça? Qu'est-ce qu'on leur doit?

27155 LA PRÉSIDENTE DU CONSEIL: Nos racines, Monsieur Bureau.

27156 M. BUREAU: Nos racines, ouais! C'est creux.

--- Rires / Laughter

27157 M. BUREAU: Mais, Madame la Présidente, moi je les aime bien, mais les Français ils nous ont déjà volé un couple de services qu'ils sont venus copier ici et qu'ils ont lancés en France sans notre contribution. On a offert de participer avec eux et on s'est fait jouer le tour deux fois déjà -- et je peux nommer les services si vous voulez. Alors à partir de ce moment-là, moi je n'ai pas du tout de préoccupation pour dire, "Ces pauvres Français, pourquoi est-ce qu'on ne leur donne pas la chance à des conditions plus favorables?". Je ne vois aucune raison pour ça. Je dis qu'ils aient les mêmes conditions que les autres, point à la ligne.

27158 LA PRÉSIDENTE DU CONSEIL: Mais dans les faits, les marchés francophones n'ont aucun service étranger de langue française sauf ce qui est amené via, bien sûr, la programmation des services canadiens, incluant TV5 et, bien sûr, Les Chaînes Astral.

27159 M. BUREAU: Oui, et puis? Ce n'est pas de notre faute si en France ils ne sont pas développés.

--- Rires / Laughter

27160 M. BUREAU: Quand ils auront des services qu'on n'a pas, et pour lesquels on n'a pas fait de demande, on les accueillera à bras ouverts.

27161 Madame Bertrand, je ne suis pas gêné d'aller comparer ce qu'on a ici avec ce qui se passe en France. Je pense qu'on a ici un ensemble de services dont on doit être pas mal fiers. Selon la taille de notre marché, ce n'est pas mal extraordinaire. Si en France on est capables d'identifier des services --encore une fois, on n'est pas contre -- qui n'ont pas leur correspondance ici, on devrait les avoir. C'est ça qui est fondamental.

27162 C'est la raison pour laquelle au fil des ans on n'a pas importé beaucoup de services, indépendamment là de la transmission elle-même de TF1, par exemple, qu'on voudrait tous avoir ici, et des gens d'Antenne 2 ou d'autres comme ça, des services conventionnels. Ça je pense, comme vous, que c'est le genre de choses où on aurait probablement avantage à avoir la réciproque de ce qui existe avec les Américains.

27163 Quand on arrive au niveau des services spécialisés, on est au moins aussi développés qu'eux autres, sinon plus, et à partir de ce moment-là, ils ont commencé après nous, Madame la Présidente, si bien que, effectivement, le fait qu'ils ne soient pas ici n'a rien d'autre qu'un facteur historique. On était là avant eux autres, on l'a fait avant eux autres.

27164 Aujourd'hui, s'ils sont capables d'arriver avec des services qu'on n'a pas, pour quelle que raison que ce soit, bravo!

27165 LA PRÉSIDENTE DU CONSEIL: Mais à ce moment-ci...

27166 M. BUREAU: Et aux mêmes conditions que les autres.

27167 LA PRÉSIDENTE DU CONSEIL: Mais à ce moment-ci, Monsieur Bureau, dans la mesure où les chaînes satellites aussi en France se développent parce qu'ils ont découvert la magie d'un certain choix -- je ne sais pas si les téléspectateurs les suivront, mais enfin, ils ont plus de choix qu'ils ont déjà eu. On peut imaginer qu'ils vont continuer à les développer. Si éventuellement, en suivant votre raisonnement, ce que je comprends c'est que vous avez un regard différent pour les chaînes conventionnelles que pour les chaînes spécialisées. J'avoue que ça...

27168 M. BUREAU: Bien moi c'est peut-être parce que je ne connais pas ça.

27169 LA PRÉSIDENTE DU CONSEIL: Parce que la question des droits ça sera la même chose.

27170 M. BUREAU: Oui, mais ça je laisse à TVA de venir en parler, s'ils le veulent. Ils vous ont déjà fait part de leurs commentaires et je suis sûr qu'il y a des problèmes qui se posent de cet ordre-là aussi. Moi je n'aurais pas dû faire ce commentaire-là du côté des chaînes conventionnelles. Je connais moins ça. Je connais plus la situation au niveau des chaînes thématiques, et s'il vous plaît, ramenez-moi dans ce domaine-là...

27171 LA PRÉSIDENTE DU CONSEIL: Je vous ramène dans le chemin des canaux spécialisés.

27172 M. BUREAU: ... pour parler des canaux spécialisés parce que de l'autre côté je ne suis pas en mesure de vous en parler.

27173 LA PRÉSIDENTE DU CONSEIL: Je poursuis puis ça sera mes questions finales. Si, avec un foisonnement qu'on espère réussi du côté français de chaînes qui pourraient venir compléter l'offre canadienne en langue française, quelles seraient, selon vous, les mesures qui devraient être mises de l'avant? Est-ce qu'on devrait avoir des mesures particulières ou des mesures semblables à celles qu'on a eues? Vous parliez tantôt, par exemple, de substitutions simultanées qu'on a établies par rapport aux chaînes conventionnelles de langue anglaise pour à tout le moins maximiser la situation des revenus publicitaires.

27174 Est-ce que vous voyez si on laisse entrer des chaînes dans l'esprit de la politique, des mesures à mettre en place pour maximiser d'une part l'offre au consommateur, parce que c'est de ça dont on parle.

27175 M. BUREAU: Absolument.

27176 LA PRÉSIDENTE DU CONSEIL: Je comprends très bien que d'un point de vue d'entreprise qui gère et qui détient des chaînes spécialisées, il y a des questions qui se posent, mais du point de vue du consommateur de langue française, il y a aussi des questions qui se posent. Et puis je comprends bien, vous dites que les chaînes spécialisés sont en avance au Canada. Elles ont choisi le meilleur des émissions, mais il demeure que dans l'esprit et dans le travail quotidien, ou enfin dans l'acte quotidien du consommateur, lui il ne choisit pas. Le choix a été fait pour lui. Il est dépendant du choix fait pour lui, qui commence avec le Conseil, je le reconnais.

27177 M. BUREAU: Écoutez, Madame Bertrand, la situation en français ne devrait pas être différente de la situation du côté anglophone. Nous sommes tout à fait d'accord pour laisser venir chez nous des choix additionnels qui ne sont pas concurrents avec les services existants en français, comme c'est la politique du côté anglais. On ne voit pas pourquoi dans un marché plus petit, on aurait des règles plus larges, plus ouvertes que du côté anglophone.

27178 Mais ceci étant dit, si on peut nous faire la démonstration que ces services-là sont des services différents des nôtres, et qu'ils ne causeront pas de problèmes au niveau de l'approvisionnement des programmes pour les chaînes canadiennes existantes, à partir de ce moment-là, bravo, bienvenue et immédiatement -- non, pas immédiatement là, mais selon le processus normal -- qu'ils soient acceptés ici, qu'ils soient distribués. Tant mieux, tant mieux, il n'y aucun problème de ce côté-là, mais on ne voit pas pourquoi il y aurait des règles spéciales.

27179 Maintenant la règle de la substitution simultanée risque d'être très problématique, comme vous le savez déjà, non seulement parce que sur le plan technologique il peut y avoir des problèmes -- sur le plan technique -- mais aussi sur le plan des droits parce que, encore une fois, les chaînes européennes ne sont pas à 100 pour cent françaises. Il y a une partie de leur programmation qui est française, une partie de leur programmation qui est étrangère. Bon, alors pour essayer d'organiser la diffusion simultanée de programmes dont ils ne sont pas les propriétaires à la source qu'ils mettent dans leur grille sans qu'on le sache, à toutes fins utiles, c'est une situation bien différente de l'achat de programmes de la part de la source elle-même aux États-Unis.

27180 Alors donc il se pose non seulement des problèmes techniques mais aussi d'autres problèmes pratiques pour assurer que la substitution simultanée puisse être mise en place.

27181 Alors je ne pense pas que la substitution simultanée soit le remède dans ce cas-là, d'autant plus que dès qu'on parle de substitution simultanée on veut dire qu'il y a moins de diversité de programmes. Et donc je ne pense pas que ce soit la formule, je ne pense que cette règle-là puisse jouer le jeu qu'elle joue du côté des chaînes conventionnelles en particulier.

27182 Moi je dis qu'appliquons les mêmes règles que du côté anglais. C'est tout ce que je demande. C'est tout ce que je dis. On ne vient pas demander de resserrer les règles. On ne vient pas empêcher ce qui est permis du côté anglophone. On vient tout simplement vous dire qu'on pense qu'il n'y a pas de raison d'élargir les règles pour les émissions de langue française ou les services de langue française.

27183 LA PRÉSIDENTE DU CONSEIL: Mais vous comprenez...

27184 M. BUREAU: Et on ajoute la dimension internationale, Madame Bertrand, parce que chaque fois qu'on dit, "Est-ce qu'on ne devrait pas à cause du marché, de son étroitesse ou de l'absence de ces services-là, est-ce qu'on ne devrait pas trouver une façon de faciliter l'entrée de ces services-là?".

27185 Nous vous alertons en disant, attention, parce que la minute que vous allez avoir des règles différentes par rapport à des produits étrangers pour le rentrer au Canada, on risque de se retrouver dans la situation où les Américains vont dire, "Moi aussi je veux ces règles-là", et qu'à ce moment-là, parce qu'ils sont exemptés en vertu du NAFTA, ils vont pouvoir exercer des mesures de représailles. On ne veut pas se retrouver là-dedans. On sait qui gagne et qui perd dans ces affaires-là.

27186 Alors le premier geste qu'on va poser de ce côté-là pour avoir des règles différentes avec les Français par rapport à leur entrée ici, par rapport aux Américains, on va l'avoir derrière la tête, et puis vite, de la part des Américains.

27187 Alors donc il ne faut pas se leurrer. Si on le fait du côté français, on va avoir le même problème du côté de langue anglaise.

27188 LA PRÉSIDENTE DU CONSEIL: Mais vous comprenez, par ailleurs, Monsieur Bureau, quand vous dites, "On ne demande de rien de plus différent au marché francophone que ce qui existe au marché anglophone", il demeure que dans les faits il y a une différence et il y en a toujours eu une différence au sens où on a toujours compris au Canada le fait d'une communauté, de communautés plus petites, et que donc on a pris des mesures qui permettaient une croissance au rythme des réalités francophones, et dans les faits aujourd'hui, si je suis consommatrice de télévision, les émissions de langue française je les ai toutes à travers le filtre d'un diffuseur canadien, ce qui n'est pas le cas en langue anglaise.

27189 Alors quand vous parlez de l'équivalence de la règle, elle est vraie d'un point de vue pour vous d'Astral, d'un canal spécialisé, mais quand on le regarde du point de vue des téléspectateurs et de son offre, elle est différente.

27190 M. BUREAU: Vous avez raison et ça ne tient pas rien qu'à nous, ça tient à l'absence de services étrangers de langue française qui pourraient entrer chez nous aux mêmes conditions qu'on a laissé entrer chez nous les services américains. Ce n'est pas de notre faute.

27191 LA PRÉSIDENTE DU CONSEIL: Je ne vous accuse pas.

27192 M. BUREAU: J'ai l'impression à un moment donné d'être coincé, mais ce n'est pas de notre faute si les Français...

27193 LA PRÉSIDENTE DU CONSEIL: Non, mais c'est important que nous comprenions ce qu'a été la démarche parce qu'il est vrai que dans le marché il y a cette absence-là, et quand vous dites, "Donnez-nous la même chose qu'en anglais ou laissez au marché francophone... on ne devrait pas faire l'exception à l'inverse", c'est vrai dans la démarche réglementaire, si on veut, mais au niveau du téléspectateur, au niveau du consommateur, lui ou elle a l'impression de ne pas avoir eu le choix, ou le même choix, que le consommateur anglophone.

27194 M. BUREAU: Je vais demander à mon releveur de venir, mais je continue à pratiquer et je vais revenir.

--- Rires / Laughter

27195 M. HOULE: Comme le disait André, Madame la Présidente, si il y a moins -- de fait il n'y a pas de services étrangers de langue française ou très peu qui sont actuellement distribués, c'est pour des raisons historiques qui n'ont rien à voir avec la nature de la politique mais avec le fait que les chaînes thématiques se sont développées en France beaucoup plus tardivement qu'ici.

27196 Tout ce qu'on dit c'est qu'effectivement là on assiste avec le développement des satellites à une éclosion de chaînes thématiques françaises. Donc tout ce qu'on dit c'est que maintenant il y a une offre qui pourrait venir ici et que cette offre devrait, maintenant qu'elle peut exister, être traitée de la même façon que l'offre américaine a été traitée au Canada anglais, elle devrait donner les mêmes résultats.

27197 Tout ce que nous disons c'est que si le Conseil juge qu'il n'est pas opportun, comme il l'a fait historiquement, d'autoriser un service américain pour enfants directement concurrent avec un service canadien pour enfants ou d'autoriser un service de musique vidéo Country américain, et cetera, il devrait avoir la même préoccupation exactement avec les services français au moment où il y a maintenant une diversité de services de langue française et ils peuvent faire des demandes.

27198 Évidement si des services étrangers ne font pas la demande, ni vous ni nous n'y pouvons rien et c'est la situation historique qui s'est passée et qui n'avait rien à voir avec la nature de la politique.

27199 Donc on pense que la politique est toujours le bon outil dans le nouveau contexte qui émerge du fait qu'en France maintenant, et en Europe en général, il y a des bouquets de chaînes thématiques beaucoup plus nombreux et on dit que dans cette situation-là la meilleure façon de faire face à cette nouvelle situation c'est toujours d'adopter la même politique du côté français que du côté anglais.

27200 LA PRÉSIDENTE DU CONSEIL: C'est ça que vous vouliez dire?

27201 M. BUREAU: C'est ça que je voulais dire.

--- Rires / Laughter

27202 LA PRÉSIDENTE DU CONSEIL: Merci beaucoup. Moi ça complète mes questions. Merci.

27203 LA PRÉSIDENTE: Monsieur Bureau, est-ce que certaines de revendications que vous faites s'appliqueraient aussi si nous importions au Canada, par exemple, des chaînes de langue anglaise qui ne sont pas Américaines et qui incluraient probablement de la programmation américaine aussi?

27204 M. BUREAU: Madame Wylie, c'est rendu que je suis en train de faire des revendications. J'ai dit au début qu'on ne demande rien d'autre que le maintien de la politique. Mais pour répondre plus spécifiquement à votre question, la même règle devrait s'appliquer. Les mêmes règles devraient s'appliquer pour tout le monde. On ne voit pas l'utilité de changer les règles à l'heure actuelle parce qu'elles fonctionnent bien, parce que tout le monde les connaît, parce que, effectivement, elles ont permis d'ajouter à l'offre et elles ont permis en même temps d'assurer que les services canadiens dont on est tous très fiers fonctionnent bien et on est fiers vraiment parce qu'on regarde les cotes d'écoute de ces services-là -- je ne parle pas des nôtres, je parle en général -- et ça fonctionne bien.

27205 Alors oui, les mêmes règles devraient s'appliquer pour les services étrangers de langue anglaise provenant d'autres pays en fonction de votre politique actuelle. Oui, oui, les mêmes politiques ou la même politique...

27206 LA PRÉSIDENTE: Non, ma question était plutôt est-ce que les problèmes de droits, parce que ces chaînes-là seraient constituées sensément de programmation américaine de langue anglaise aussi. Est-ce que ça ne causerait pas -- parce qu'ici, comme Mme Bertrand relevait évidement, il s'agit de chaînes américaines, ou des chaînes de langue anglaise, alors si c'était des chaînes, par exemple, très développées de langue anglaise...

27207 M. BUREAU: D'Angleterre.

27208 LA PRÉSIDENTE: Britanniques ou d'autres pays de langue anglaise, comme l'Australie dont l'approvisionnement serait aussi en partie des chaînes américaines, vous verriez un problème...

27209 M. BUREAU: On verrait le même problème que du côté français, sans doute, parce que, effectivement, leur combinaison de programmes est comme les programmes qui sont faits en France -- comme les chaînes, pardon, qui sont faites en France.

27210 On aurait probablement les mêmes problèmes, mais ça il va falloir les regarder une par une en fait pour voir si effectivement elles risquent de créer un problème soit au niveau des droits ou ultimement de la concurrence.

27211 LA PRÉSIDENTE: Oui, je relevais que c'était un problème en sus du problème de concurrence dans le genre.

27212 M. BUREAU: Oui.

27213 LA PRÉSIDENTE: C'est un problème de droits...

27214 M. BUREAU: Absolument.

27215 LA PRÉSIDENTE: .. qui est très particulier à la situation...

27216 M. BUREAU: C'est vraiment le problème fondamental.

27217 LA PRÉSIDENTE: ... de tout le monde -- pas tout le monde, mais certainement une large partie du monde font provision aux États-Unis. Donc ça cause un problème.

27218 M. BUREAU: Vous avez raison. On a dit tout à l'heure que ce n'était pas fondamentalement le seul problème de la concurrence. C'était plus fondamentalement le problème de l'approvisionnement en programmes qui était l'enjeu dans ce cas-ci.

27219 LA PRÉSIDENTE: Et qui est qu'on semble pouvoir, jusqu'à maintenant au Canada, gérer quand ce sont des droits américains plus facilement.

27220 M. BUREAU: Oui, parce qu'on a établi au Canada un marché distinct et on a toujours insisté pour ça, pour dire, le marché canadien est un marché distinct et on ne laissera personne entrer ici ou avoir les droits canadiens et nous empêcher d'y avoir accès. Et on a pris toutes les mesures pour essayer de protéger ce marché canadien. C'est fondamentalement le problème auquel on a à faire face, et nous disons, votre politique actuelle, la façon dont vous la mettez en place, a d'une part permis l'entrée d'ajouts intéressants à notre programmation et d'autre part permis de protéger ce marché canadien. Et on dit qu'il n'y a pas de raisons pour lesquelles on verrait qu'il faut la modifier à ce moment-ci.

27221 LA PRÉSIDENTE: Monsieur Bureau, le document que vous avez proposé, déposé, est-ce que c'est un document qui est accessible facilement?

27222 M. BUREAU: C'est une étude qui avait été faite par Michel Houle pour le Ministère du patrimoine. Alors c'est un document qui est un document public. Ce n'est pas un document confidentiel pas du tout.

27223 LA PRÉSIDENTE: Ou propriétaire. Il est accessible facilement.

27224 M. BUREAU: Oui, oui.

27225 LA PRÉSIDENTE: Merci.

27226 Nous vous remercions, Monsieur Bureau, Monsieur Houle, et...

27227 M. BUREAU: Merci.

27228 LA PRÉSIDENTE: ... Madame Émond.

27229 M. HOULE: Merci.

27230 LA PRÉSIDENTE: Monsieur le Secrétaire, s'il vous plaît.

27231 M. CUSSONS: Merci, Madame la Présidente.

27232 La prochaine intervention, Télévision Française 1, TF1.

INTERVENTION / INTERVENTION

27233 Me HYLTON: Bonjour, Madame Wylie.

27234 Moi je m'appelle John Hylton, un avocat de Toronto avec Borden Ladner Gervais et avec moi aujourd'hui, à ma gauche, Mme Letitia de Giacomoni, conseiller juridique de TF1, un diffuseur privé en France. Elle vient d'arriver hier soir assez tard.

27235 Aussi je peux indiquer que Mme de Giacomoni représente RFO, ça veut Radio-France Outremer, une chaîne, et aussi France-2 et 3 des diffuseurs publics.

27236 Avec nous aussi Maîtres François Rioux et Geneviève Bergeron, avocats de Borden Ladner Gervais à Montréal.

27237 Si je peux commencer, Madame, je voudrais bien indiquer un peu la question devant nous aujourd'hui et pour ça si je peux parler en anglais.

27238 This is a narrow issue in the sense that it is a question of geography -- and a rather strange question of geography. As indicated in our presentation, TF1 has authorized Radio-France Outremer, RFO, to distribute its signals and TF1 acquires the rights for its programming to be broadcast in France.

27239 Radio-France Outremer has the mandate to distribute its programming overseas and as it happens part of the territories of France, as you well know, are in St-Pierre-et-Miquelon and these signals, again through geography, can be picked up over the air in Newfoundland and these are captured by licence SRDUs in Newfoundland and redistribute it.

27240 It is that perhaps accident of geography that we are talking to today and in doing that we are asking, perhaps quite simply, that the Commission could solve the problem that is created by the distribution of the programming of TF1 throughout Canada by imposing an obligation on those who pick up its signal to request its permission. That has been done before. It is not a particularly difficult task for the CRTC and I think I can indicate to the Commission that over the years the Commission has not hesitated where there has been an anomaly, perhaps one created by geography alone, to work on solutions to that problem.

27241 For example, KCND of North Dakota, eventually became CKND. Windsor, South of Detroit, has had special problems and required special solutions and rules. Bellingham in Washington State was exploiting the market in Vancouver, special rules developed for that. And going way back, the cable companies in Calais, Maine, and Sault Ste. Marie were cut off from serving Canada.

27242 So it's not so unusual to ask for a solution that is in the public interest when there is some particularly unique situation which has developed.

27243 I would just like to indicate that the problem is one that perhaps turns on issues relating to the distribution of program rights and consequently is not one that is easily solved, but it is one, I think, that the Commission can address.

27244 If I may then ask for some comment from Mme de Giacomoni.

27245 Madame, s'il vous plaît.

27246 Me de GIACOMONI: Madame la Présidente, Madame et Messieurs les Conseillers.

27247 Je représente donc aujourd'hui TF1 ainsi que RFO et France-2, France-3. Je vais peut-être expliquer ce qu'est RFO. RFO est la voie de la France en outremer, notamment pour vous à St-Pierre-et-Miquelon. TF1, chaîne privée -- première chaîne privée en Europe -- ainsi que les chaînes de services publics françaises, France-2 et France-3, ont l'obligation de par leur cahier de charges de donner gratuitement, d'offrir des programmes -- l'intégralité, si RFO le souhaite, de ces programmes pour que les Français en outremer puissent avoir la même télévision que les Français en métropole.

27248 Contrairement à ce qui se passe certainement au niveau des chaînes thématiques, TF1, chaîne généraliste, achète le plus fréquemment ses droits uniquement pour la France et les territoires d'outremer et en aucun cas des droits monde et vraiment pratiquement jamais pour le Canada, notamment face aux "major" américaines pour les films, le cinéma, mais même face à des producteurs français qui veulent se garder les droits hors France.

27249 Le problème est donc le suivant. TF1, en respectant son obligation de transmission de ses programmes à RFO, et en se voyant exproprié son signal à St-Pierre-et-Miquelon, voit ses programmes au départ ne devant être diffusés que sur les territoires français, diffusés sur le territoire canadien en toute infraction.

27250 Je vais rappeler que l'intention de TF1, France-2, France-3 et RFO n'est nullement de priver les téléspectateurs canadiens de programmes en langue française dès lors que l'accord préalable des ayants droit aura été obtenu. Le problème principal est donc un problème juridique d'obtention de ces droits pour le Canada que nous ne détenons pas.

27251 Me HYLTON: Maître Rioux.

27252 Me RIOUX: Si je peux poser le problème comme suit en terme du régime actuel d'attribution de licences qui a été mis sur pied par le Conseil pour les entreprises de distribution par les satellites, ce serait le suivant. Les problèmes qui sont perçus par TF1 et RFO peuvent entraîner des effets, selon nous, sur les producteurs canadiens qui seraient néfastes et préjudiciables à l'intérêt public comme suit -- et ces audiences sont une occasion, selon nous, pour que le Conseil se penche sur ces problèmes créés par la rediffusion par satellite, par relais satellite, à Pointe May, à Terre-Neuve, d'émissions qui originent de la France.

27253 Alors essentiellement ce que nous voudrions souligner au Conseil c'est l'absence d'obligations de la part de ces entreprises qui diffusent par relais satellite de conclure des arrangements contractuels avec les ayants droit étrangers qui sont les producteurs des programmes ou de la programmation qui est rediffusée en territoire canadien par les entreprises de distribution par relais satellite.

27254 Alors ce régime-là qui n'exige par que des arrangements contractuels soient conclus, selon nous décourage le marché canadien, les producteurs canadiens de langue française, d'exporter leur programmation vers la France. La raison est comme suit. C'est que si les producteurs canadiens de langue française exportent leur programmation en France ces programmes reviennent au Canada par l'entremise des entreprises de distribution par relais satellite et aucun droit n'est payé pour les producteurs canadiens de langue française qui, jusqu'à la venue de ces entreprises-là, pouvaient compter sur le paiement de royautés lorsqu'ils vendaient leur programmation en territoire français.

27255 Aussi, le régime actuel, selon nous, décourage la prise de convention de coproductions entre des chaînes françaises et des producteurs canadiens de langue française, comme il est décrit dans nos commentaires écrits. La raison est comme suit. C'est que ces travaux qui sont co-produits sont à leur tour, lorsque distribués en France, retransmis au Canada par l'entremise des entreprises de distribution par relais satellite sans qu'il y ait de paiements ou de compensation payée aux ayants droit producteurs canadiens ou français.

27256 De sorte que ces deux effets-là ne peuvent que contribuer à décourager la production d'émissions originales canadiennes de langue française par des producteurs canadiens, et donc nous comprenons que ce serait contre l'intérêt public tel que décrit dans la Loi sur la radiodiffusion pour le Conseil d'encourager ce régime-là de continuer étant donné que ça rend la vie beaucoup plus difficile aux producteurs canadiens de langue française de produire des programmes originaux au Canada.

27257 Sans parler, bien sûr, des préjudices qui sont causés aux producteurs étrangers dont les travaux sont rediffusés au Canada sans paiement de royautés et qui causent préjudice, bien sûr, aux producteurs français.

27258 En somme, cette importation de programmation étrangère de langue française par relais satellite sans compensation équivaut à une expropriation de droits et de droits qui seraient payables aux producteurs canadiens de langue française et aux producteurs français et a l'effet pervers de décourager, selon nous, la production d'émissions de langue française originales par des Canadiens.

27259 Donc, nous suggérons que le Conseil devrait considérer sérieusement cette question dans les présentes auditions et considérer possiblement convoquer une audition à l'avenir pour discuter de cette question où les traités internationaux et les droits d'auteur seraient également au menu, et où les intervenants étrangers et canadiens pourraient exprimer leur point de vue sur cette question.

27260 Pour finir, bien cette situation est d'autant plus surprenante pour nous puisque le régime antérieur, lorsque le Conseil était appelé a émettre des licences pour la diffusion de programmation étrangère, antérieurement la diffusion par satellite, exigeait que le diffuseur canadien obtienne les arrangements contractuels appropriés avec les ayants droit des travaux à l'étranger, ce qui n'est pas le cas à l'heure actuelle pour les entreprises de distribution par relais satellite.

27261 C'était mes commentaires. Je vous remercie de votre attention.

27262 LA PRÉSIDENTE: Je vous remercie, Monsieur Hylton, Madame de Giacomoni, et Maître Rioux.

27263 Le Conseiller Demers, s'il vous plaît.

27264 CONSEILLER DEMERS: Bonjour, Monsieur Hylton, Maître.

27265 J'ai très peu de questions mais peut-être pour faire le lien -- ça va en français, Monsieur Hylton?

27266 Me HYLTON: Oui.

27267 CONSEILLER DEMERS: Préférez-vous que je --

27268 Me HYLTON: Bien entendu.

27269 CONSEILLER DEMERS: Pour faire le lien avec ce que disait M. Bureau tout à l'heure, vous représentez un radiodiffuser conventionnel.

27270 Me de GIACOMONI: Je pense que ce que vous appelez conventionnel c'est public. En fait, on est tous conventionnés que ce soit radiodiffuser privé ou public, nous sommes tous conventionnés par l'équivalent du CRTC qui s'appelle le CSA. On a tous une convention avec le CSA.

27271 CONSEILLER DEMERS: Est-ce que vous vous considérez comme chaîne spécialisée tel qu'on l'entendrait ici?

27272 Me de GIACOMONI: Nous sommes une chaîne généraliste.

27273 CONSEILLER DEMERS: Merci.

27274 Si j'ai bien compris, votre demande enfin c'est d'avoir un processus subséquent au processus actuel, en fait une décision et votre demande est à l'effet une suite procédurale à votre demande. Vous référez, évidement, à des questions importantes comme l'expropriation d'oeuvres et que la politique du Conseil serait la raison pour laquelle il y aurait cette expropriation de droits.

27275 Vous indiquez aussi qu'il devrait y avoir des ententes. Est-ce qu'il en existe? Est-ce que c'est à ça que Me Hylton faisait référence lorsqu'il parlait de Bellingham, par exemple, ou de Calais, Maine, Sault Ste-Marie?

27276 MR. HYLTON: In this particular case, I would ask Madam de Giacomoni to follow the chain of the various rights which are causing the problem. There are contractual agreements and the result of the signal being received over the air from St-Pierre-et-Miquelon is that these agreements are being breached and I would just ask Madam de Giacomoni to speak to that.

27277 Me de GIACOMONI: La réglementation française oblige TF1 à ne produire que très peu d'oeuvres en interne. Pour simplifier, seules les émissions d'information sont des émissions 100 pour cent produites en interne, donc sans problèmes de droits. Tout le reste sont des oeuvres qui sont soit achetées le plus majoritairement, soit co-produites, donc où toutes la problématique des droits reprend sa vigueur.

27278 Comme je l'expliquais tout à l'heure, face aux "major" américaines on n'a pas le pouvoir économique de négocier autre chose que les droits France et même en matière de coproductions de grande envergure européenne très souvent on a l'Europe mais pas plus.

27279 Même en matière d'achats de droits, notamment d'achats de droits d'émissions de variétés, de fiction, on n'achète que des droits France, on n'a que ce pouvoir économique-là.

27280 CONSEILLER DEMERS: Est-ce que j'ai bien compris que s'il devait y avoir des négociations pour les droits, ce ne serait pas TF1 ou RFO qui sont les détenteurs de ces droits-là.

27281 Me de GIACOMONI: Non, il faudrait qu'on les renégocie, qu'on arrive à les négocier au cas par cas et qu'on revoie notre politique pour l'avenir pour les autres coproductions, les autres achats de droits. Ce serait du cas par cas.

27282 CONSEILLER DEMERS: C'est ça. Alors la personne au Canada qui voudrait les rediffuser devrait retrouver les propriétaires des droits d'émissions.

27283 Me de GIACOMONI: Oui, c'est ça.

27284 CONSEILLER DEMERS: Merci beaucoup.

27285 Je n'ai pas d'autres questions, Madame la Présidente.

27286 LA PRÉSIDENTE: Madame Bertrand.

27287 LA PRÉSIDENTE DU CONSEIL: Il y a une chose que je ne comprenais pas très bien. La représentation ce matin se fait par rapport à RFO mais sur TF1 seulement? Le problème n'est pas là pour France-2 et France-3?

27288 Me de GIACOMONI: En fait, RFO est un diffuseur très spécifique qui est alimenté en programmes de TF1, de France-2 et de France-3.

27289 LA PRÉSIDENTE DU CONSEIL: Oui.

27290 Me de GIACOMONI: C'est à ce titre-là, en fait, que je représente à la fois le pool privé qui est TF1 et le pool public composé de RFO qui a une mission de diffusion que sur les DTOM, départements et territoires d'outremer, et France-2 et France-3 pour le public, diffuseur public.

27291 LA PRÉSIDENTE DU CONSEIL: Donc vous représentez RFO ce matin et non pas TF1 uniquement. C'est que j'avais...

27292 Me de GIACOMONI: Bien je représente TF1, RFO, France-2 et France-3 mais je suis moi même conseiller juridique à TF1.

27293 LA PRÉSIDENTE DU CONSEIL: D'accord.

27294 Me de GIACOMONI: Je suis salariée de TF1.

27295 LA PRÉSIDENTE DU CONSEIL: D'accord. Merci.

27296 THE CHAIRPERSON: Mr. Hylton, in our eligible list at the moment -- assuming I have the very last edition which may not be the case because it changes quite often -- would we find RFO on that list?

27297 MR. HYLTON: That's correct, yes.

27298 THE CHAIRPERSON: And doesn't it say that:

"In the case of signals received from a licensed SRDU, ASN, the CBC English and French-language television services and U.S. satellite services licensees are required to enter into the necessary contractual arrangements for such carriage". (As read)

27299 MR. HYLTON: I had understood that to be the case and, therefore, if that is still the rule then we don't have very much difficulty here if RFO is required to give its consent. As I understand it, RFO did consent at one time and then has withdrawn its consent and consequently this has caused a particular difficulty. I believe this was with CANCOM. In other words, we had an arrangement between RFO and CANCOM at the time. This application now by BCE is a new application and to our knowledge there is no contractual arrangement.

27300 If the Commission has in force that requirement -- and there was some difficulty on my part to find out that it was in fact the present rule with respect to the carriage of RFO -- then we may not have a particular problem and RFO would have to give its consent.

27301 THE CHAIRPERSON: Subject to this having been abandoned in the currently applicable list -- because unfortunately I don't have the last version in and, as you know, it is altered fairly often because services are added in, but right now at the one I am looking at, in Mr. Grant's book -- unfortunately, as I say, I don't have the very latest version -- there is an asterisk besides RFO which indicates that it is received from a licensed SRDU and then authorization for the above noted services is subject to the following, and I read you what the rule was.

27302 I leave it to you to check whether this is still in the very last version of the list.

27303 MR. HYLTON: I want to make the point too that I would like to be assured that it doesn't just cover the reception by the cable companies, but that it covers the reception by the SRDUs.

27304 The reason I say that is that the uniqueness of our situation is that the signal can be received over the air in Newfoundland. That is the geographic uniqueness, so that if there was a cable company sitting at Point May in Newfoundland, it could receive that.

27305 THE CHAIRPERSON: Your problem would then be narrowed to a small population base.

27306 MR. HYLTON: Indeed, you are absolutely right, and in this particular case, as we understand it and subject to what we will hear later, we believe that the SRDUs are picking that signal up from Point May which causes distribution throughout Canada.

27307 THE CHAIRPERSON: But what I read you addresses the cable companies who receive signals from a licence SRDU.

27308 MR. HYLTON: Yes, and it that is in good standing and if both the companies ExpressVu and CANCOM are in agreement with that, then my understanding is that they do not have the necessary permission.

27309 THE CHAIRPERSON: It should give you some work in the next month or so.

27310 MR. HYLTON: It should give TF1 some relief, Madam, I hope.

27311 THE CHAIRPERSON: Depending on your skills at addressing the problem.

27312 MR. HYLTON: Yes.

27313 THE CHAIRPERSON: These are our questions.

27314 We thank you very much.

27315 Oui, allez-y.

27316 Me de GIACOMONI: Je voulais juste préciser. Au niveau de l'entente entre CANCOM et RFO que cette entente était soumise à une condition suspensive d'obtention d'autorisation des ayants droit et cette condition, cette consigne n'ayant pas été obtenue, l'entente était devenue caduque au moment où CANCOM l'a fait valoir auprès du CRTC.

27317 C'était très clair dans la convention.

27318 LA PRÉSIDENTE: Nous vous remercions, Madame de Giacomoni, et nous vous souhaitons la bienvenue au Canada. Vous ne repartez pas dès aujourd'hui, j'espère.

27319 Me de GIACOMONI: Demain.

27320 LA PRÉSIDENTE: Demain? Alors vous ne pourrez pas voir tout le pays.

27321 Me de GIACOMONI: Non.

27322 LA PRÉSIDENTE: Merci. Merci, Monsieur Hylton.

27323 Me de GIACOMONI: Merci beaucoup.

27324 LA PRÉSIDENTE: Monsieur le Secrétaire, s'il vous plaît.

27325 M. CUSSONS: Merci, Madame la Présidente.

27326 Le prochain intervenant, BCE Media Inc.

27327 LA PRÉSIDENTE: Good morning et allez-y quand vous êtes prêts.

--- Pause / Pause

INTERVENTION / INTERVENTION

27328 M. RACINE: Mesdames les Présidentes, Mesdames et Messieurs les Conseillers, bonjour.

27329 Je me présente. Paul Racine, premier vice-président, programmation française de BCE Media.

27330 M'accompagnent ce matin, à ma droite Frédéric Vinzia, directeur général de MultiThématiques qui représente aujourd'hui le service français Planète et à ma gauche, Serge Lamagnère, directeur du département audiovisuel et du développement de Media Overseas qui agit ici à titre d'agent des chaînes françaises et européennes, EuroNews, Paris-Première, Muzzik et Tropic. Et plus à ma droite, Luc Martineau, notre avocat.

27331 Multithématiques est le plus important éditeur de chaînes thématiques en Europe. Media Overseas est un distributeur satellitaire français opérant dans les Caraïbes, l'Océan Indien, le Pacifique, l'Amérique du Sud et bientôt les États-Unis.

27332 BCE Media salue l'initiative du Conseil d'examiner la possibilité d'autoriser de nouveaux services internationaux de langue française aux fins d'accroître la disponibilité et la diversité des émissions de langue française au Canada. Trois raisons principales militent, selon nous, en faveur de cette autorisation.

27333 Tout d'abord, cela est important pour assurer une diversité culturelle francophone au Canada. Il va de soi que la diversité culturelle ne doit pas d'office exclure la francophonie internationale.

27334 Lorsqu'on consulte la liste des services autorisés pour distribution au Canada on retrouve un très grand nombre de services étrangers surtout américains mais aussi allemand, japonais, philippin, polonais, russe, et le seul service étranger francophone autorisé est RFO.

27335 La deuxième raison est d'ordre technologique. Les progrès de la technologie numérique permettent en effet l'importation maintenant de produits étrangers francophones en plus grand nombre et à prix abordable. Ces services sont déjà présents dans les Caraïbes et seront bientôt disponibles ailleurs aux Amériques, dont aux États-Unis.

27336 Il serait dommage que les francophones et les francophiles des États-Unis aient accès à certains de ces services avant les francophones du Canada.

27337 La troisième raison qui milite en faveur d'une ouverture plus grande envers les services étrangers francophones c'est que leur importation passe forcément par un partenariat entre exportateurs français et importateurs canadiens.

27338 Ce partenariat a des conséquences positives à plusieurs points de vue. Il permet de choisir les signaux les plus complémentaires à l'offre canadienne déjà existante. Il permet d'exercer un certain contrôle de la nature de la programmation et ouvre également des perspectives d'expansion nouvelle pour nos producteurs.

27339 Je vais maintenant examiner plus en détail ce troisième point en commençant par une définition de la notion de concurrence directe entre services étrangers et services canadiens. Selon nous, pour qu'il y ait concurrence directe trois conditions devraient co-exister.

27340 Premièrement, le service devrait porter principalement sur le même genre d'émissions. Deuxièmement, le traitement de la thématique serait largement similaire, et troisièmement, le public-cible devrait être le même ou très similaire.

27341 Ces trois critères devraient être cumulatifs. Prenons l'exemple d'un service européen d'information continue comme, par exemple, EuroNews -- un bel exemple. Si l'information sélectionnée est analysée dans une perspective principalement européenne ou s'il s'agit uniquement d'images d'actualité commentées par une voix hors champs, dans un tel cas, on pourrait dire qu'il n'y aurait aucune concurrence directe puisque le traitement de la thématique serait différent. La clé serait la complémentarité.

27342 D'autre part, nous sommes sensibles aux réalités commerciales particulières du marché canadien de langue française, spécialement la question des droits de programmation. Aussi, nous proposons que les candidats à l'ajout assurent le Conseil que les droits de programmation pour le Canada seront libérés. De plus, ces services s'engageront, ainsi que le Conseil l'a proposé dans son avis public CRTC 2000-6, à ne pas détenir ou exercer des droits de programmation préférentiels ou exclusifs en rapport avec la distribution d'émissions au Canada.

27343 Nos partenaires sont prêts à prendre de tels engagements qui devraient assurer qu'aucun programmeur canadien ne se verra interdire l'accès à un programme et nous nous porterons garants de tels engagements.

27344 Maintenant, je passe la parole à Frédéric.

27345 M. VINZIA: Merci, Paul.

27346 Mesdames les Présidentes, Mesdames et Messieurs les Conseillers.

27347 MultiThématiques est très fière de s'associer avec BCE Media pour proposer l'ajout aux listes de la chaîne Planète et est prête à prendre les deux engagements que Paul vient de mentionner.

27348 D'emblée, je voudrais souligner que la programmation de Planète sera spécialement adaptée pour le marché canadien de langue française. En effet, notre position d'éditeur de chaînes thématiques nous permet de commercialiser et d'exporter un service international qui sera très différencié de l'offre des entreprises de programmation canadiennes.

27349 Nous veillerons avec beaucoup de soins à ce que tous les droits soient libérés pour le Canada. La querelle dont fait état nos amis de TF1 au sujet de la captation au Canada du signal RFO ne risque donc pas de se produire ici.

27350 Je tiens aussi à préciser que le marché des droits audiovisuels concernant le genre documentaire est un marché très ouvert qui se matérialise chaque année par de nombreuses rencontres, des marchés et des festivals internationaux. Les droits de diffusion se négocient pour chaque pays, territoire par territoire. Les catalogues offrent aussi une très grande variété. Chaque année à travers le monde c'est près d'une dizaine de milliers d'heures qui sont produites par l'ensemble des producteurs et proposées ainsi aux diffuseurs.

27351 Les craintes d'éviction ou de surenchère soulevées par certains intervenants nous apparaissent donc singulièrement disproportionnées, d'autant plus que nous nous engageons formellement à ne pas détenir ou exercer des droits préférentiels ou exclusifs pour le Canada.

27352 Soyez également assurés que nous respecterons scrupuleusement les fenêtres d'exclusivité générées par les accords de coproduction impliquant des entreprises canadiennes de production ou de diffusion. Ainsi, ces dernières pourront continuer à diffuser en primeur sur le territoire canadien les programmes co-produits avec d'autres pays.

27353 En terminant, je me permets de vous rappeler que c'est grâce au dynamisme de seulement une vingtaine d'employés que Planète est devenue aujourd'hui la première chaîne documentaire dans le monde francophone. Aussi, après douze ans d'efforts concertés, nous sommes très heureux de souligner que Planète est diffusée en France, en Belgique, en Suisse, en Italie, en Pologne et en Afrique francophone subsaharienne et que 80 pour cent de sa programmation est en première diffusion.

27354 Si je me permets d'insister sur ce réseau international c'est que nous invitons les producteurs canadiens intéressés à nouer avec nous des accords de production et de distribution ce qui leur procurera de nouveaux débouchés internationaux.

27355 Et je laisse maintenant la parole à mon ami Serge.

27356 M. LAMAGNÈRE: Merci, Frédéric.

27357 Media Overseas représente les chaînes EuroNews, Paris-Première, Muzzik et Tropic. Media Overseas veillera à ce que tous les droits soient libérés pour le Canada et vérifiera également que ces chaînes ne puissent détenir ou exercer de droits de programmation préférentiels ou exclusifs pour le Canada. A ce chapitre, en acquérant des droits de programmation non exclusifs pour le Canada, nous n'avons aucun désir ni intérêt à verser des primes aux ayants droit, ni à faire de la surenchère ou à vouloir exclure des entreprises canadiennes.

27358 Seulement quelques remarques additionnelles.

27359 D'abord, notre participation à titre d'actionnaire de Canal Évasion nous permet de miser sur les synergies de nos partenaires canadiens pour élargir l'espace de l'univers francophone canadien et international grâce à notre réseau satellitaire international.

27360 Déjà, nous étudions la possibilité de distribuer Canal Évasion l'année prochaine et d'autres signaux canadiens dans le cadre de nos bouquets francophones.

27361 Deuxièmement, je ne crois pas que l'arrivée au Canada des services que nous proposons, et que nous comptons notamment distribuer aux États-Unis, représente une menace pour l'industrie canadienne. La programmation très largement européenne de ces services ne bloquera d'aucune manière la fluidité des droits. De plus, peu de films, sinon aucun, sont diffusés par ces services.

27362 Je laisse à Paul le mot de la fin.

27363 M. RACINE: L'ajout de nouvelles chaînes francophones internationales de qualité à un prix abordable et disponibles en mode numérique et analogique enrichira incontestablement l'offre de services de langue française et constituera une valeur ajoutée.

27364 L'autorisation de nouveaux services étrangers de langue française assurera un meilleur équilibre entre les services de langue française et les services de langue anglaise, répondant ainsi au voeu formulé par le Conseil en mai 1999 lorsqu'il a créé un deuxième volet francophone. Cette mesure permettra aussi de mieux desservir les petits systèmes, quoi qu'on en dise, ainsi que le minorités francophones hors Québec.

27365 De plus, l'ajout de ces nouveaux services stimulera notre industrie de la production et de la distribution. Des occasions de nouveaux partenariats et des débouchés prometteurs seront ainsi générés pour la diffusion de nos produits audiovisuels sur la scène internationale.

27366 Les engagements que nous proposons répondent à l'ensemble des préoccupations exprimées par le Conseil et divers intervenants à propos de l'importation, notamment sur la question des droits.

27367 En terminant, il nous apparaît souhaitable que l'autorisation de nouveaux services étrangers de langue française fasse l'objet d'une décision le plus tôt possible de façon à conférer aux distributeurs canadiens une flexibilité accrue dans l'assemblage de nouveaux bouquets distinctifs et attrayants.

27368 Merci de votre attention et nous serons heureux de répondre à vos questions.

27369 LA PRÉSIDENTE: Merci, Monsieur Racine, et vos collègues.

27370 Et aujourd'hui et dans votre intervention écrite, il semble que vous recherchez une exception.

27371 On a entendu ce matin M. Bureau nous dire qu'il ne recherchait aucun changement à la politique qui existe en ce moment, qui constitue à ne pas permettre la distribution de services étrangers lorsqu'ils sont directement en concurrence avec ceux qui sont déjà accessibles sur le territoire canadien et qui sont canadiens.

27372 Au paragraphe 7 vous parlez justement d'une exception, très clairement vous utilisez le mot "exception" dans votre intervention écrite, mais au paragraphe 24, et encore ce matin dans votre présentation, vous établissez des barèmes quand même qui devraient être utilisés pour déterminer si un service devrait être autorisé pour la distribution au Canada.

27373 Je n'ai pas eu le temps de les examiner exactement, mais je suppose que ce sont les mêmes.

27374 M. RACINE: Oui.

27375 LA PRÉSIDENTE: Alors donc vous acceptez qu'il devrait y avoir des barèmes ou des critères quelconques et ça semble basé sur la concurrence.

27376 M. RACINE: Oui.

27377 LA PRÉSIDENTE: Ce que j'aimerais que vous nous expliquiez c'est quelle est la différence puisqu'il s'agit d'exceptions mais que vous acceptez qu'il devrait y avoir des barèmes, quelle est la différence entre la politique du Conseil et les barèmes élaborés à la page 3 de votre présentation et au paragraphe 24 de votre intervention?

27378 M. RACINE: Madame, lorsque nous parlons d'exception, il s'agissait tout d'abord de savoir s'il convenait d'ouvrir la porte à des services étrangers à ce moment-ci.

27379 Nous croyons, nous, que oui, il y a lieu d'ouvrir la porte à des services internationaux francophones à ce moment-ci, que le moment est particulièrement bien choisi de le faire au moment où des programmateurs auront à leur disposition en mode numérique toute une série de nouveaux services et nous croyons que ça serait bien de pouvoir aussi enrichir, avoir une valeur ajoutée en ayant des services internationaux francophones disponibles.

27380 Autrefois, le critère était qu'il y ait des concurrences, je pense, en tout ou en partie. Dans l'avis que vous avez émis sur les services numériques, on parle de concurrence directe. Nous disons que le critère de concurrence, en tout ou en partie, franchement c'est quelque chose dans l'univers où nous sommes avec la multiplication des services qui est un barème très difficile à maintenir à la lettre et puis la concurrence directe  -- et nous essayons de l'encadrer parce qu'on sait très bien que ça prête à interprétation, nous essayons de l'encadrer avec ces critères-là -- nous croyons que c'est un peu plus facile.

27381 C'est clair que les services étrangers devraient être complémentaires, devraient enrichir mais je donnais l'exemple de EuroNews. C'est clair qu'il y a des services de nouvelles continues qui sont distribués sur le marché canadien, alors la nouvelle, c'est la nouvelle, c'est la nouvelle. Cependant, ce qui est nouveau, ce qui est différent dans ce service-là c'est la façon, le point de vue et la formule qui est utilisée.

27382 Alors on dit simplement, on propose des critères pour encadrer la définition de concurrence directe pour aider le Conseil à déterminer s'il s'agit vraiment de quelque chose qui est complémentaire ou de quelque chose qui va être directement concurrentiel.

27383 Il existe déjà dans les services existants qui ont été approuvés, que ce soit en français et en anglais, des recoupements. Il y a des recoupements dans de nombreux domaines parmi les services qui existent en ce moment. On le sait, dans le domaine que quelqu'un mentionnait, les Biographies, on en retrouve dans tout. On en retrouve dans les services d'information, on en retrouve dans les services d'histoire, on en retrouve dans d'autres services.

27384 Alors qu'il y ait des recoupements à l'occasion, nous ne croyons pas que ça devrait être le facteur qui disqualifie automatiquement un service.

27385 LA PRÉSIDENTE: Mais par exemple, EuroNews, si j'utilise vos critères, le même genre d'émissions.

27386 M. RACINE: Bien ce sont des informations.

27387 LA PRÉSIDENTE: Troisièmement le public cible.

27388 M. RACINE: Ce sont les gens qui aiment les informations.

27389 LA PRÉSIDENTE: Alors à ce moment-là vous vous accrocheriez sur ce que le traitement de la thématique ne serait pas similaire.

27390 M. RACINE: Oui. C'est un exemple un peu extrême parce que dans le cas de l'information vraiment c'est la même matière brute carrément. On peut avoir bien des sortes de genres de documentaires sur plusieurs sujets mais quand on est dans l'information pour prendre cet exemple-là c'est vraiment la même matière brute pour tout le monde. Alors dans ce cas-là la différence c'est la formule. On pourrait faire aussi des discussions sur la musique. La musique c'est la musique, mais il y a différents genres de musique, il y a différentes catégories de musique.

27391 LA PRÉSIDENTE: Donc au départ vous êtes d'accord qu'on continue à utiliser la politique qui servirait à trouver si oui ou non il y a complémentarité aux concurrences, mais vous établissez des barèmes qui, si on les appliquait comme vous les comprenez, créeraient une exception. Nous aurions des barèmes différents en examinant cette question au Canada en langue française qu'en langue anglaise qui, à ce moment-là, justifierait le mot "exception" au paragraphe 7.

27392 M. RACINE: Oui, si vous me demandez si on devrait faire une différence entre les services de langue anglaise et de langue française, absolument, oui.

27393 Voici pourquoi. C'est très clair. On regarde les listes. On voit très bien que pour des raisons historiques qu'on peut comprendre tous les services de langue anglaise de quelle qu'importance que ce soit sont déjà présentes sur les listes. Je dois dire aussi que historiquement ce n'est pas uniquement dû à la politique du Conseil. On sait très bien qu'un grand nombre de ces services-là ont été "grand-pèrisés", étaient déjà là, on les a maintenus.

27394 Dans les services nouveaux ou plus récents qui ont été approuvés, je pense à, je ne sais pas BBC World, c'est un bel exemple. Alors là de toute évidence ça doit retoucher quelques-uns des domaines qui sont traités par nos services d'information Canada mais c'est une formule différente, un esprit différent.

27395 Alors en anglais je pense que tous les services sont là. J'ai remarqué hier, je pense que c'est Mme Logan qui disait, elle disait, "Vous savez, pour les nouveaux services canadiens, je ne vois pas beaucoup de services étrangers locomotives dont on aurait besoin". Je pense qu'elle a parfaitement raison. En anglais ils sont déjà tous là sur les listes et ils sont déjà présents.

27396 En français, à l'exception de RFO, il n'y a rien. Il n'y a rien pour des raisons historiques qu'on comprend très bien. Il y a des raisons technologiques, des raisons financières qui ont été résolues, mais le fait est que nous partons avec peu de choses.

27397 Cependant, l'occasion nouvelle est offerte de le faire maintenant et c'est un marché international qui est en train de se créer, un marché international francophone qui est en train de se créer, et nous pouvons, nous, rester chez nous puis dire, "Bien, non, nos règles de protection qui ont si bien marché dans le passé, qui ont marché, qui ont créé un fort secteur francophone au Canada, devraient continuer comme ça". Mais je pense que nous avons intérêt à regarder vers l'avenir.

27398 Le passé était très, très bien décrit ce matin. Je pense qu'on a intérêt aussi à regarder vers l'avenir et aux possibilités d'avenir, d'ouverture de marché et de complémentarité et aussi de collaboration. Alors voilà.

27399 LA PRÉSIDENTE: Est-ce que vous rejoignez l'argumentation de M. Bureau quand vous dites que les critères appliqués doivent être plus flexibles? La part de son argumentation qui est, nous n'en avons pas parce qu'il n'y en n'a pas qui sont différents, si on ne peut pas appliquer les mêmes critères qu'au Canada anglais, pourquoi? Est-ce que la flexibilité est requise parce que, de fait, il n'y a pas de services que nous n'avons pas, ce qui, je crois, a été un de ses arguments?

27400 M. RACINE: C'est aussi un peu le mien. C'est qu'à l'étape où nous sommes rendus du développement du système audiovisuel au Canada et en France, je ne vois pas, à moins de choses très, très précises qui ne me viennent pas l'esprit, je pense que dans l'ensemble, ils ont un peu l'équivalent de ce qu'on peut avoir ici.

27401 Ce n'est pas vraiment ça, je pense, la raison d'importer des systèmes européens, des systèmes français internationaux ici.

27402 La principale raison c'est qu'ils peuvent offrir... Je suis d'accord, vous savez, que ça ne soit pas directement compétitif. Il ne faut quand même pas exagérer.

27403 Ce qu'on essaie de faire ici, ce qu'on a essayé de vous présenter ce matin, c'est un point d'équilibre entre présenter quelque chose de différent, présenter quelque chose de complémentaire, présenter quelque chose d'enrichissant qui ne vienne pas tout saborder dans le système canadien. C'est pourquoi vous avez vu que nous avons porté une attention particulièrement grande à la question des droits pour s'assurer qu'il n'y ait pas d'avantage indu par ces soi-disants colosses européens.

27404 Mais dans ce contexte-là, c'est un point d'équilibre que nous essayons d'établir.

27405 LA PRÉSIDENTE: Monsieur Racine, quand vous parlez de la nécessité de libérer les droits pour le Canada, est-ce que ce n'est pas une des inquiétudes du Groupe Astral? Justement, c'est que le besoin de libérer les droits pour le Canada enchaînera, justement, un problème de droits pour l'acquisition de programmation dans le futur.

27406 M. RACINE: Bien justement, c'est pour nous adresser directement à cette inquiétude-là que nous avons souscrit à une proposition, je pense, du Conseil, pour que les droits qui seront acquis pour le Canada ne soient pas exclusifs.

27407 Alors quand il n'y a pas d'exclusivité sur un marché, c'est très difficile de procéder par paiements de primes ou de se faire attribuer des escomptes. Qu'est-ce que vous voulez? Vous n'avez pas l'exclusivité, vous n'avez aucun intérêt à avoir recours à ces outils traditionnels du colosse qui veut dominer le marché.

27408 Frédéric, je pourrais vous laisser élaborer à ce sujet-là.

27409 M. VINZIA: Oui, je pourrais compléter la réponse de Paul sur la fluidité des droits et sur le danger de l'appréhension de droits canadiens qui serait prise par des entreprises françaises.

27410 N'oublions pas que sur un certain nombre de domaines de gens, nous intervenons au niveau international sur un marché très, très ouvert avec, en termes de stocks de droits, un nombre assez considérable d'heures qui ont été produites. Ceci est d'autant plus évident pour, par exemple, des domaines qui ne sont pas liés à l'actualité. C'est-à-dire que ces stocks de droits peuvent être régulièrement ré-utilisés ou diffusés à partir de productions des années antérieures, ce qui nous donne une très, très grande latitude et très grande marge de manoeuvre dans la programmation, et on peut établir une sorte de code de bonne conduite avec les diffuseurs locaux pour intervenir en toute complémentarité dans la programmation.

27411 Et l'effet de surenchère, moi, je crois que ça paraît limité dans la mesure où en plus, il est assez rare de pouvoir dégager des droits en version linguistique. Je m'explique.

27412 L'habitude -- enfin, d'après la pratique que je peux avoir depuis une douzaine d'années sur ce terrain-là, la pratique des acquisitions est plus -- de la part, d'ailleurs, des détenteurs de droits -- plus orientée vers une politique d'acquisition par territoire et non pas par version linguistique. C'est-à-dire qu'un détenteur de droits aura plus souvent l'occasion de vendre un droit pour la France et un droit pour la Belgique, alors qu'il pourrait très bien faire une vente "package".

27413 Pourquoi il est plus intéressé par ce système-là? Eh bien, parce qu'il espère que un plus un fera, dans ce cas-là, plutôt trois que deux. C'est-à-dire qu'il maximisera sa recette alors que s'il le vendait par "package", il aura, en général, -- enfin, il peut avoir en général une recette moindre. D'ailleurs c'est une politique que les détenteurs de droits américains connaissent bien en Europe. Ils ne concèdent que très rarement un droit linguistique.

27414 Vous avez les "major" européennes sur les films. Eh bien, ils ont un représentant en France, ils ont un représentant en Belgique et ils ont un représentant en Suisse, et ces derniers ne détiennent que des droits territoriaux et non pas les droits de la version linguistique. Le même phénomène peut évidemment se produire pour le Canada.

27415 LA PRÉSIDENTE: Je comprends votre engagement sur l'acquisition de droits exclusifs, mais il reste quand même que même si c'est territorial, je crois qu'un des arguments est que si -- les droits vont être très difficiles à obtenir pour le Canada si la programmation est déjà transportée par l'entremise d'un service qui est sur la liste canadienne éligible avec les droits libérés pour le Canada. Je crois que c'était un des arguments que si les droits sont achetés pour le territoire français et le territoire canadien, même si ce n'est pas pour le monde, cette programmation-là est quand même au Canada avec les droits libérés et un des arguments est que ça rend tout à fait difficile à une titulaire canadienne d'obtenir les droits pour cette même programmation.

27416 M. RACINE: Oui, je devrais préciser ici quelque chose avant de passer la parole à Frédéric. C'est que les signaux d'importation dont nous parlons, ce sont des signaux qui seront préparés pour l'exportation. Il y a un certain nombre d'émissions qui seront retirées pour l'exportation, notamment des émissions américaines ou des choses comme ça, et les émissions qui seront programmées le seront spécifiquement pour des marchés internationaux.

27417 Nous avons indiqué que nous n'étions pas du tout opposés à ce que des Canadiens puissent acquérir des droits, et si c'était le cas, je pense que nos partenaires nous ont indiqué qu'ils seraient très heureux de tenir compte des achats opérés par des Canadiens.

27418 Frédéric.

27419 LA PRÉSIDENTE: Voilà, ce serait ces partenaires.

27420 Maintenant, est-ce que vous proposez qu'il y aurait une condition rattachée à l'exportation de tous services à cet effet? Parce que, quand même, nous avons devant nous aujourd'hui certains services.

27421 M. RACINE: Là, évidemment, vous savez que nous avons déposé des demandes pour cinq services. Alors nous avons discuté avec les responsables de ces services-là.

27422 Pour ces services-là, nous pouvons nous porter garants que les choses se passeront comme je viens de vous le décrire.

27423 Est-ce que ça doit être une condition générale? Est-ce que ça serait... Je vais demander au directeur de la plus importante chaîne multithématique de France si ça serait...

27424 M. VINZIA: Je ne peux... A ce stade-là de l'audition, je ne peux pas prendre l'engagement au nom de mes collègues français. Ils ne m'ont pas mandaté pour les représenter devant votre Conseil.

27425 Je vais dire très pratiquement et très prosaïquement qu'en fonction des opportunités de diffusion que pouvait proposer le territoire canadien, des accords spécifiques pourraient tout à fait entrer dans ce cadre-là. Et je dirais là aussi, thématique par thématique, ou service spécialisé par service spécialisé, en fonction, justement, du domaine traité, on pourrait arriver encore à ce que je nommais tout à l'heure un code de bonne conduite avec les diffuseurs canadiens dans un souci d'équilibre, parce qu'il ne serait bon pour personne de se lancer dans une surenchère imbécile de droits.

27426 Nous ne venons pas ici en rouleau compresseur pour essayer d'imposer un modèle ou un système. Nous essayons tout simplement d'élargir la possibilité de diffusion de nos programmes à partir d'un territoire qui nous semble bien complémentaire avec le nôtre.

27427 LA PRÉSIDENTE: Monsieur Racine, voilà une question bien canadienne.

27428 M. RACINE: Oui.

27429 LA PRÉSIDENTE: Vous nous dites qu'il devrait y avoir un meilleur équilibre entre les services de langue française et les services de langue anglaise, et ce serait probablement assez facile de trouver ces mots-là dans nos documents à nous aussi.

27430 M. RACINE: Internationaux.

27431 LA PRÉSIDENTE: Et vous nous dites aussi à la page deux, qu'il serait bien dommage que les francophones et les francophiles des États-unis aient accès à certains de ces services avant les francophones du Canada.

27432 Etes-vous d'accord avec nous, par exemple, et peut-être avec M. Bureau, que nous nous devons de justement chercher un équilibre qui tient compte de la réalité de la distribution des services au Canada français et du désir de protéger ou nous assurer que ces services canadiens ne soient pas -- n'aient pas de désavantage indu quand nous essayons d'établir un équilibre que nous nous devons d'équilibrer -- notre désir d'équilibrer l'offre dans les deux, mais en tenant compte des réalités, d'autres réalités.

27433 Je crois que l'article qui nous exige expressément d'examiner la situation au Canada anglais et au Canada français en ce qui implique la radiodiffusion peut être utilisé à cet effet-là aussi, de dire, on ne peut pas équilibrer les deux parce qu'il y aurait un déséquilibre dans le tout.

27434 M. RACINE: Merci, madame de nous donner cette excellente question.

--- Rires / Laughter

27435 M. RACINE: Je répondrai en trois points là-dessus.

27436 Le déséquilibre qui existe auquel j'ai fait allusion, je pense que c'est le déséquilibre qui existe entre l'offre de produits étrangers en anglais et l'offre de produits étrangers en français. C'est clair que c'est 10 à zéro ou dix et demi. Alors, c'est ça le déséquilibre.

27437 Le deuxième point c'est que ces services étrangers, nous pensons, en les choisissant bien puis en s'arrangeant pour qu'ils soient complémentaires, ça peut être un enrichissement de la programmation. Mais comme le disait bien M. Bureau lui-même, ce n'est pas un danger pour la concurrence. Personne ne croit, au Canada, qu'un service étranger français va venir au Québec et va détruire un service canadien. Personne ne croit ça. Et M. Bureau nous a dit qu'il ne le croyait pas non plus. Alors je le crois.

27438 Troisièmement, il nous a dit que la vraie question, c'est la question des droits, que ça c'était la question importante. Il a bien raison là-dessus aussi.

27439 Je pourrais laisser mon collègue Frédéric expliquer quel genre de colosse est Planète, par exemple, mais disons que les assurances que nous donnons quant à la possibilité pour les programmeurs canadiens d'acheter les droits, les assurances que nous donnons sur le fait que nous sommes d'accord avec le Conseil pour ne pas acheter de droits exclusifs, les assurances que nous donnons que les co-producteurs canadiens auront le droit d'avoir une meilleure fenêtre au Canada, qu'on ne viendra pas leur passer sur la tête et venir dévaster leur marché, toutes ces assurances-là, nous les avons mises sur la table justement en pensant à la question des droits qui est vraiment importante.

27440 Alors ces trois éléments-là étant présents dans nos offres, je crois que ça devrait démontrer que ce que nous cherchons, ce n'est pas de jeter un gros pavé dans la marre, mais c'est plutôt que d'ajouter de jolies fleurs aquatiques sur cette marre.

27441 LA PRÉSIDENTE: Monsieur Racine, maintenant que vous avez reconnu la qualité d'une de mes questions, j'abandonne!

--- Rires / Laughter

27442 LA PRÉSIDENTE: Conseiller Williams, s'il vous plaît.

27443 COMMISSIONER WILLIAMS: Good morning, Mr. Racine. I will ask my questions in English and trust the interpreters to make the appropriate French connection.

--- Rires / Laughter

27444 COMMISSIONER WILLIAMS: So let me begin.

27445 MR. RACINE: I will try to trust my own knowledge.

27446 COMMISSIONER WILLIAMS: Earlier this morning, Mr. Bureau of Astral raised the spectre of U.S. and other foreign service providers taking retaliatory measures. I think he specifically said, if the Commission would relax its policy on the French side, it's difficult to see how it could then resist pressure from foreign services that would be seeking the same treatment in the English language market.

27447 I guess I'm interested in your comments on that point of view.

27448 MR. RACINE: As you know, the Americans would like to see the whole broadcasting policy of Canada go down the drain. It's been like that for a long time. It's nothing new. Most of the important signals, the ones they would like to export, are already here on the market. There is not a more open market in the world to all kinds of American signals. I mean, it's so open, it's almost incredible. I fail to see what more they would like to ask for.

27449 But what we're saying basically is that the criteria that the Commission has proposed, direct competition, is fine with us. I think it should be applied.

27450 I gave, this morning, a few points as how it could be interpreted, because I believe that it depends, you know, how you look at it. You can have a very, very restrictive attitude and say, well, there is, in this programming compared to this one, a few similar programs, so that is to disqualify this signal.

27451 I believe that it should be a little more flexible than that, and I gave the example of EuroNews. EuroNews is a very good example, because -- and I could go into more detail about some musical signals that we're proposing, but let's take EuroNews because it's so crystal clear.

27452 I don't know if you have seen EuroNews, how it's done. But basically, it's about news. So the Soviet sub that sinks and what happens in Israel -- the subject-matter is news. But the way they treat it, the way it's presented with the European perspective, with no on-air reporter but just voice-over, quick graphics, I mean, it's quite different. It's something different. It's a contribution of 19 European countries. So I think it's quite as distinctive, for instance, as BBC could be from Newsworld.

27453 So I'm saying, in this particular case, it should be pretty clear that it's not because they are treating the same basic subject-matter that they should be disqualified. It has to be a little more flexible than that.

27454 But basically, my answer to your question is that the criteria should be basically the same. So if the Americans don't like that, well, it's not the first thing they don't like about the CRTC, as you know.

27455 COMMISSIONER WILLIAMS: I guess I take it from that you would also support the Commission's intention to invite applications for auditions to the eligible satellite service lists in respect to English language services soon after the Category 1s have been licensed.

27456 MR. RACINE: Yes, absolutely. My only point pertaining to the French services is that, you know, in recent past, the CRTC licensed four analog services. In that decision, they said, well, you can enrich this new tier with French services, international French services. There weren't any available. So it was not done, despite the repeated requests from distributors, small and big, who said, oh, we would like to do that, we would like to be able enrich this "volet" with international French services. Do you have any? We didn't have any. Some used the only one that was available at the time, which is RFO.

27457 We're saying that there's already this need, unfulfilled on the analog side, and there will certainly be a similar one which, I hope, will be fulfilled on the digital side when the decision comes.

27458 COMMISSIONER WILLIAMS: Thank you very much. I have no further questions.

27459 LA PRÉSIDENTE: Monsieur Racine, un des exemples que vous avez utilisés, ce sont les nouvelles. Il faut se rappeler... Moi, je crois qu'une des raisons pour lesquelles on a CNN, par exemple, c'est que les services de nouvelles se sont déclarés expressément satisfaits qu'on garde le service de nouvelles américain, qu'on le permette. Je ne crois pas faire erreur en disant que expressément, les requérants pour un service nouvelles ont justement dit qu'il n'y avait pas de problème à ce que CNN soit diffusé au Canada. C'est un des critères.

27460 Évidemment, ce n'est pas seulement de... Il faut, même si nous appliquions notre examen de concurrence, je crois que nous avons toujours aussi pris en ligne de compte la possibilité que la requérante soit satisfaite qu'un certain service qui est finalement concurrentiel soit diffusé quand même. Donc, il y a toujours eu, je crois, deux aspects, deux volets à l'exercice.

27461 M. RACINE: Oui, je dois dire qu'en ce qui concerne... Là, évidemment, aujourd'hui, j'étais prêt à discuter les principes généraux, mais cependant, en ce qui concerne, par exemple, ce domaine particulier de l'information, on peut regarder, nous avons fait des études comparatives entre les projets qui sont proposés pour distribution au Canada et nous allons incidemment verser ces études en appui à la demande précise.

27462 Nous avons regardé quels étaient les regroupements dans les programmations qui ne sont pas très grandes, et là où il y avait -- en ce qui concerne les nouvelles, il y a une tendance à la diminution. Et nous avons déjà dit que toutes les informations, toutes les émissions d'information qui sont rendues disponibles en ce moment par Europe à des services canadiens seraient maintenues sans problème. Même s'ils veulent les augmenter, ils peuvent les augmenter, ça va nous faire plaisir.

27463 Mais jamais les extraits qu'ils vont prendre ne rendent compte de l'esprit et de la forme de la chaîne. Ils donnent des extraits, mais ça n'a vraiment rien à voir avec l'esprit de la chaîne en son entier.

27464 Alors je suis conscient de ce que vous dites, madame, et nous faisons ce que nous pouvons pour nous assurer que ça ne dérange en aucune façon le fonctionnement des chaînes existantes.

27465 LA PRÉSIDENTE: Madame Bernard.

27466 LA PRÉSIDENTE DU CONSEIL: Merci. Bonjour, messieurs.

27467 J'avais trois questions à vous poser. D'abord, vous parlez de la question des droits que vous seriez prêts à reconnaître la politique, demander des exceptions en créant plus de flexibilité alentour des critères d'exceptions, et aussi de donner des garanties quant à la non-exclusivité des droits dont il est question.

27468 Cependant, dans la réalité d'affaires, ce n'est pas simplement l'accès, c'est le coût auquel on peut avoir les droits. On sait que le marché francophone étant plus petit, les équilibres de coûts qui font en sorte qu'on puisse avoir une santé financière qui permet, par ailleurs, la production d'émissions canadiennes, l'encouragement et les fenêtres nécessaires au talent canadien seraient donc menacés d'une certaine façon si on ne peut pas en même temps... Parce qu'on sait bien que le jour où la concurrence joue, il demeurerait, j'imagine, que ces services satellitaires ou ces chaînes thématiques-là seraient intéressées à avoir des parts de marché. Elles ne viennent pas ici, j'imagine, comme nous, si on avait la chance d'être reçus par le CSA, j'imagine qu'on ne veut pas aller sur les territoires simplement dans un esprit de missionariat. On veut faire des affaires.

27469 Donc, dans la mesure où on a des marchés plus petits ici au Canada qu'il en existe en France, je comprends bien la question de non-exclusivité.

27470 Mais qu'en est-il de l'impact sur les coûts qui immédiatement ont un impact sur les revenus de ces chaînes-là qui ont des pourcentages liés à la production canadienne? Est-ce qu'il n'y a pas un danger d'amoindrir la capacité de faire qui est vraiment l'essence du système de la réglementation canadienne dans la Loi sur la radiodiffusion?

27471 M. VINZIA: Sur cette question, je voudrais apporter deux considérations.

27472 D'abord, il ne faudrait pas sous-estimer la taille du marché francophone canadien par rapport à la réalité du marché des chaînes thématiques franco-françaises. Les ordres de grandeur sont assez comparables, aussi bizarre que cela puisse paraître, puisqu'on évoque ici, je crois, pour une chaîne thématique de langue française, un potentiel, je crois, d'environ un peu de deux millions de foyers qui peuvent bénéficier, donc, de cette chaîne. C'est, je crois, un ordre de grandeur moyen.

27473 En France, une chaîne thématique, quand elle se lance, elle ne se lance pas sur le marché des 22 ou 23 millions de foyers. Elle se lance sur le marché du câble et elle se lance sur le marché du bouquet satellitaire français, les deux bouquets satellitaires français.

27474 L'ensemble de ce marché, câble plus deux bouquets satellitaires français, ne dépasse pas à l'heure actuelle les quatre millions de foyers.

27475 Pour vous donner un autre paramètre -- et pardon de faire encore référence à la situation française -- mais sur des genres qui peuvent apparaître aussi, je dirais mineurs par rapport au cinéma ou par rapport au sport, des genres comme le documentaire, sachez qu'en France, il y a 10 chaînes documentaires. Je dis bien 10 chaînes documentaires qui se partagent ce marché, ce marché, donc, d'à peine quatre millions de foyers.

27476 Ce qui fait qu'une chaîne documentaire, quand elle arrive en France -- et je reviens sur le problème des droits et de la surenchère sur le coût de droits -- eh bien, a l'habitude de traiter avec cette réalité-là. En comparant le potentiel de diffusion francophone sur le réseau câblé, je mets à côté les opérateurs satellites qui viennent encore renforcer ce potentiel -- je pense à Bell ExpressVu et à l'autre bouquet -- eh bien, nous arrivons dans des ordres de grandeur comparables. Ça veut dire que l'unité de mesure pour le coût à l'heure des droits est, à quelque pour cent près, le même.

27477 Donc, il ne faudrait pas exagérer la force de frappe que posséderait une chaîne française par rapport à une consoeur canadienne, parce qu'elle joue à peu près dans le même terrain et les mêmes règles du jeu.

27478 Et l'avantage, justement, -- le formidable avantage que l'on a sur des genres spécifiques comme le documentaire, c'est que nous avons un vivier d'approvisionnement énorme. Nous pouvons, à partir des mêmes sources de programmes, et je dirais même à partir des mêmes fournisseurs de programmes, considérer que, pour un même territoire -- j'ai pris l'exemple des chaînes françaises puisqu'il y en avait 10 -- eh bien, les fournisseurs, ces mêmes fournisseurs peuvent vendre à des coûts comparables différents programmes à l'ensemble des services qui veulent exploiter, donc, leurs programmes sur le genre qu'ils recherchent, sans provoquer en cela un déséquilibre financier important, parce que le marché n'étant pas un marché malthusien, étant un marché ouvert, eh bien, la fluidité et tout simplement les relations commerciales que nous entretenons avec les détenteurs de droits font qu'il n'y a pas de dérive ou de surenchère économique qui mettrait à mal les exploitations.

27479 Vous avez raison, tout à fait, de souligner que quand nous nous présentons devant vous pour une diffusion ici au Canada, nous ne venons pas non plus dans un esprit de missionariat.

27480 LA PRÉSIDENTE DU CONSEIL: Vous me rassurez.

27481 M. VINZIA: Voilà. Et...

27482 LA PRÉSIDENTE DU CONSEIL: Ça nous est déjà arrivé ça.

--- Rires / Laughter

27483 M. VINZIA: Et c'est en tenant compte, justement, de cette réalité économique, avec justement l'appréhension du marché et sa photographie que nous pouvons vous assurer que nous ne sentons vraiment un déséquilibre flagrant par rapport à la situation qu'on peut trouver même en Belgique ou en Suisse, puisque nous avons les mêmes ordres de grandeur.

27484 LA PRÉSIDENTE DU CONSEIL: Mais je comprends bien par ailleurs que c'est une opportunité d'affaires et que vous la regardez en ce sens-là. Nous aussi. Et je pense bien que c'est ce dont on parlait quand on parle de la question des droits. Il y a une question noble de s'assurer que les ayants droit sont respectés, mais il y a aussi une question d'affaires et nous, dans un marché qui est plus petit, on a un ensemble -- madame la Présidente parlait des questions d'équilibres, ce sont des équilibres fragiles.

27485 Je remarquais, tout en vous écoutant converser avec madame la Présidente, -- j'allais voir la liste des Catégories 2, parce que les Catégories 1, maintenant, on les connaît bien par coeur dans le marché français, et je ne voyais pas aucun des titres qui sont ici en partenariat dans des Catégories 2.

27486 Par ailleurs, la démarche dans laquelle nous sommes engagés depuis le début de l'avis public pour la recherche d'un choix judicieux de chaînes numériques mettait quand même de l'avant en termes d'objectifs, avant d'importer des signaux étrangers, donc de toucher à la liste d'éligibilité, mettait quand même de l'avant les radiodiffuseurs canadiens et encourageait, plus particulièrement par la Catégorie 2, -- puis je m'adresse plus à M. Racine maintenant parce qu'il connaît mieux ces questions que vous, on peut revoir que dans... C'est-à-dire, l'objectif de la Catégorie 2 était de créer des partenariats avec les chaînes étrangères pour faire en sorte que, oui, on accueille les chaînes étrangères, mais en même temps, on s'assure qu'il y ait une portion des contenus qui soient canadiens et qu'il y avait aussi espoir, dans cette provision-là, qu'il y ait, non pas simplement une place ici au Canada pour les contenus canadiens, mais qu'il y a une espèce de réciprocité à travers les chaînes existantes sur d'autres territoires.

27487 Alors quelque part, j'avoue qu'il faut prendre l'âge, si on veut, des chaînes francophones là où il est. On a une historique. C'est vrai qu'on n'a pas la même pénétration de chaînes étrangères qu'en langue anglaise, mais au moment où on s'en parle, on s'en parle pendant l'audience concernant une sélection de signaux numériques à faire, et au fond, qu'est-ce qui est mieux pour le système canadien, qu'est-ce qui est mieux pour le téléspectateur, parce que j'aimerais toujours le remettre en termes du téléspectateur parce qu'on peut épiloguer longtemps sur ce que les uns et les autres, soit des intérêts d'affaires, soit des intérêts de réglementation, peuvent rechercher, mais ce qui est important, c'est qu'on travaille ensemble pour le téléspectateur. Qu'est-ce qui est le mieux.

27488 Et c'est là où je me pose la question des craintes qui sont exprimées par certaines intervenantes, mais dans le soin qui incombe au Conseil de s'assurer qu'on poursuit les objectifs de la loi de la façon la plus harmonieuse mais aussi la plus déterminée possible.

27489 Est-ce que c'est la solution qu'il faut à ce moment-ci dans notre système, c'est-à-dire entretenir l'idée d'exceptions dans l'esprit d'une plus grande flexibilité.

27490 M. RACINE: Tout d'abord, madame, je dois dire que nous sommes tout à fait en faveur des partenariats. Nous l'avons prouvé dans le passé, et nous pouvons nous vanter d'avoir été parmi les premiers à avoir convaincu des intérêts français non seulement à nous vendre les choses, mais à nous en acheter en retour et à investir dans des signaux canadiens. Et ça continue et ça va continuer. Alors de ce côté-là, nous sommes d'accord.

27491 Nous avons bien mentionné aussi dans notre présentation qu'il est en train de se créer un marché international des produits francophones. Je crois personnellement que nous devrions en faire partie.

27492 Le marché québécois n'est pas, comme le disait Frédéric, dans la francophonie, si petit que ça. Nous avons plus de francophones au Québec qu'il y en a en Suisse et en Belgique réunies. C'est le deuxième marché francophone dans le monde. Et nous savons très bien qu'il y a des opportunités pour la distribution de services francophones un peu partout autour de la planète, y compris aux États-unis.

27493 Alors si nous voulons entrer dans ce marché-là, je pense qu'il doit y avoir, pour utiliser une expression bien française, un peu de "give and take".

27494 Mais troisièmement, ce que nous proposons, d'une certaine façon, c'est un peu différent. Ce n'est pas de refaire TV5. TV5, c'est ça. C'est, on prend du contenu international francophone, suisse, belge, français, on met ça avec un peu de canadien et on fait un signal "canadianisé" avec beaucoup de contenu étranger.

27495 Ce qu'on propose de faire, ce n'est pas de refaire TV5. Je pense que c'était une très bonne formule à l'époque où cela a été fait, pour les raisons que cela a été fait, dans le contexte où cela a été créé.

27496 Mais aujourd'hui, avec ce marché international de produits étrangers qui sont distribués partout, ce que nous disons, c'est qu'il y a une partie des consommateurs, une partie des consommateurs -- ce ne sera pas, je pense, une majorité de consommateurs. Ce ne sera pas un mouvement général avec des démonstrations dans les rues disant nous voulons Planète. Non, non. Mais il y aura une partie des consommateurs qui voudra avoir accès à quelque chose de différent, fait dans un esprit différent, dans un contexte différent. De la même façon que c'est un plaisir pour certains maniaques des nouvelles, de regarder la BBC. Pas qu'on s'ennuie de Bernard Derome, pas qu'on...

27497 LA PRÉSIDENTE DU CONSEIL: Il y a longtemps que vous n'avez pas regardé Radio-Canada, Monsieur Racine!

--- Rires / Laughter

27498 M. RACINE: Alors donc, c'est parce qu'on voit quelque chose d'une saveur différente.

27499 Alors c'est dans ce contexte-là qu'on veut importer des signaux étrangers. Alors évidemment, dire, est-ce que vous ne devriez pas faire un partenariat au Canada et puis "canadianiser" un peu ça, bien ça ne serait pas exactement l'esprit dans lequel c'est fait.

27500 Alors ce qu'on essaie de faire, c'est combiner deux choses. C'est d'une part, donner ce supplément, cette différence, cet enrichissement, mais d'une façon qui tienne compte des préoccupations bien réelles qui existent sur le marché canadien.

27501 Alors s'il y a quelque chose qui marque ce chef-d'oeuvre d'équilibre qu'était notre présentation, c'est bien cette tentative de dire, bon, offrons quelque chose de différent sur le marché canadien qui est disponible à travers le monde de plus en plus, et en même temps, faisons-le d'une façon qui ne vienne pas pénaliser indûment, injustement les distributeurs et les producteurs canadiens.

27502 LA PRÉSIDENTE DU CONSEIL: Merci. Merci, messieurs.

27503 LA PRÉSIDENTE: Madame Wilson.

27504 COMMISSIONER WILSON: Mr. Racine, the Chair of the Commission asked Mr. Bureau this morning -- and by the way, I think when Commissioner Williams was talking about the French connection, he was referring to your co-panel members, not to you.

27505 MR. RACINE: I'm not a member of any French connection.

--- Laughter / Rires

27506 COMMISSIONER WILSON: I'm sure he was just making a joke, but...

27507 Madame Bertrand had a discussion with Mr. Bureau this morning about the idea of taking a system that we use in English Canada and to sort of putting it into the French market in a slightly different way, and that's the system of simultaneous substitution, and whether or not that might be one way of putting the existing French Canadian broadcasters at ease with respect to the issue of rights.

27508 I'm just wondering if you have any comments on that. Have you thought about it? Is it something that you have considered, and if you haven't, would you consider it right now and share your views?

27509 MR. RACINE: Yes. Thank you for this other very good question.

27510 In fact, in one of our many submissions to the CRTC, I remember that we have offered since the very beginning that if there was eventually a program that would be on a Canadian signal and on one of the imported French signals, we could technically proceed to simultaneous substitution.

27511 We have already offered to do that. I think it's technically feasible. I have checked with Frédéric. If, for instance, they have the habit of starting the program at the hour or five minutes later or ten minutes later, he tells me that now they are doing like us and they are starting, certainly for the export program anyway, they will start at the hour, so it will be possible technically to do it.

27512 So, yes. The answer is yes, we are ready to do it. If you ask me will it be used very often, will it happen very often, I don't think so, but if it happens, we are ready to do it. I think the better guarantees are in the non-exclusivity of rights, but yes, we are ready to do it.

27513 COMMISSIONER WILSON: Thank you.

27514 Maître McCallum.

27515 Me McCALLUM: Merci. Juste une question de clarification, si je peux.

27516 A la page 3 de votre présentation de ce matin, vous avez fait une suggestion pour la politique du Conseil en disant que vous proposez que les candidats à l'ajout assurent le Conseil que les droits de programmation pour le Canada seront libérés.

27517 Ma question est, est-ce que cette assurance serait applicable non seulement aux productions venant de la France, mais aussi des versions françaises de productions américaines ou étrangères?

27518 M. VINZIA: Sans aucune difficulté, parce que si je me réfère à notre programmation originale française, comme vous le savez, nous respectons un cahier des charges qui nous a été édicté par l'équivalent du CRTC, c'est-à-dire le CSA, et nous obéissons à une règle qui fait que nous diffusons plus de 60 pour cent d'oeuvres européennes déjà.

27519 Nous, nous faisons mieux, puisque nous diffusons plus de 73 pour cent d'oeuvres européennes. Et la partie des oeuvres américaines que nous diffusons représente aujourd'hui, sur le programme documentaire, par exemple, une proportion d'environ 15 pour cent maximum, ce qui fait que nous n'avons aucune difficulté pour, effectivement, au cas où ces programmes nous intéresseraient pour le marché canadien, à négocier des droits pour le territoire canadien, et si ce n'est pas possible, eh bien, nous remplacerions ces programmes par des programmes d'autre provenance et des programmes français, par exemple.

27520 N'oublions pas non plus que nous produisons, nous co-produisons un certain nombre d'heures par an et nous avons aujourd'hui en stock à peu près 200 heures de co-production avec lesquelles nous pouvons très facilement constituer un matelas de substitutions pour certaines heures qui poseraient problème pour la libération de tel ou tel territoire.

27521 Me McCALLLUM: Donc, juste pour compléter, les droits seraient libérés à non-préférentiels et non-exclusifs. C'est l'assurance que vous suggérez.

27522 M. VINZIA: Oui, oui, tout à fait.

27523 Me McCALLUM: Merci, madame la Présidente.

27524 LA PRÉSIDENTE: Merci M. Racine, M. Vinzia et M. Lamagnère. Bien que nous débattions si nous sommes prêts à souhaiter la bienvenue à vos services, vous êtes tous les deux très bienvenus au Canada.

27525 M. RACINE: Ils y viennent depuis tellement longtemps.

--- Rires / Laughter

27526 LA PRÉSIDENTE: Nous prendrons maintenant une pause de 15 minutes.

27527 We will take a 15 minute break. I would remind everyone that is the case, unfortunately, for today, that there may be a separation. Lunch may intervene in between. We have no choice.

--- Upon recessing at 1055 / Suspension à 1055

--- Upon resuming at 1110 / Reprise à 1110

27528 THE CHAIRPERSON: Welcome back.

27529 Mr. Secretary, please.

27530 MR. CUSSONS: Thank you, Madam Chair.

27531 Our next intervention is by the Canadian Association of Broadcasters.

INTERVENTION / INTERVENTION

27532 MR. McCABE: Good morning Madam Chair, Madam Chairperson, Commissioners. The Canadian Association of Broadcasters is pleased to have this opportunity to appear before you in this digital licensing hearing.

27533 My name is Michael McCabe, President and Chief Executive Officer of the Canadian Association of Broadcasters. With me to my left is Sylvie Courtemanche, who is our Executive Vice-President, Policy and Regulatory Affairs.

27534 To my right is Sean Kiely, the CAB's recently appointed Vice-President, Specialty and Pay Services. Mr. Kiely comes to us with extensive experience in the specialty television sector, having served in an executive capacity at YTV and, most recently, as Vice-President, Consumer Markets at Fundy Communications.

27535 This proceeding marks an important development in the history of Canadian television. The Commission has received an unprecedented number of applications for the new digital services. A great many of these applications have substantial merit and would make a significant contribution to the Canadian broadcasting system.

27536 In May 1999, and again in July of this year, the CAB presented comprehensive submissions to the Commission which, we hope, helped establish the framework that is now driving the licensing of new Canadian digital services. Both of these submissions were built on our FuturePlan blueprint for the digital age.

27537 The digital licensing hearing enables us to address the opportunities and challenges of --

27538 THE CHAIRPERSON: Mr. McCabe, you don't have to rush.

27539 MR. McCABE: I'll slow down.

The digital licensing hearing enables us to address the opportunities and challenges of bringing to Canadians a multitude of new Canadian programming choices in the digital environment.

27540 The CAB believes that the key elements for a successful launch of digital specialty services are the need to provide choice and value to Canadian consumers, the need to ensure equitable access through an industry code, and the need to address important launch issues as soon as possible. These are the three fundamental issues that our presentation will focus on today.

27541 In our July 7 submission, the CAB stated that:

"...the promotion and marketing of affordable and attractive programming packages will be the best means of continuing the current success of Canadian specialty and pay services and the best means of providing choice and value to Canadian customers."

27542 We believe that providing both choice and value is critical to success.

27543 Given the unprecedented quality of the applications and the repeated assurances by distributors that digital capacity will not be an issue, the CAB encourages the Commission to consider licensing more than the ten Category 1 services you have suggested.

27544 It is in the interest of the Canadian viewing public to ensure that the greatest amount of diversity in the system is achieved as a result of this licensing round. The Commission is in a position to ensure diversity by licensing Category 1 services in all remaining significant genres. Choices made by others may not serve the interests of diversity, and may well result in U.S. services occupying genres that could be filled by Canadians.

27545 Providing real choice to consumers is ultimately based on providing the best opportunities for programming services to succeed and providing maximum value to consumers. To date, the best means of providing choice and value has been through an approach that gives priority to promoting all-inclusive packages and then theme or general interest packages at affordable and attractive prices.

27546 As part of their July 7 submission, the Canadian Cable Television Association presented a survey promoting à la carte marketing as the ultimate form of choice. The CAB disputes the value of the CCTA survey.

27547 Perhaps the most serious problem that we have identified is the lack of any attempt to provide respondents with an understanding of the serious cost implications of pick and pay programming. As well, we noted that CCTA research entirely ignored the nearly one million DTH households that represent the vast majority of the current digital subscriber base.

27548 Canada's most successful distributor, Bell ExpressVu, provides an impressive example of how innovating packaging and pricing has driven the penetration of Canadian specialty services. Approximately 80 per cent of their subscribers choose to receive all Canadian specialty services.

27549 In the U.S., AT&T Broadband is, as we speak, abandoning à la carte distribution for theme or general interest packages that provide more choice and value to subscribers. Attractive packages drive penetration and keep prices low for consumers.

27550 Pick and pay could not have sustained existing Canadian services and is not, in fact, the ultimate option for consumers. It will prove even more problematic for new digital services since these will be essentially unknown programming options for subscribers.

27551 Since packaging, marketing and pricing are vital to ensuring the success of the new digital services, it is essential that programmers have an opportunity to meaningfully negotiate these elements with the distributor and not be forced into unacceptable à la carte arrangements.

27552 The negotiations will only be successful if the Commission redresses the current imbalance by expressly specifying that any à la carte distribution be tied to the completion of an affiliation agreement between the programming service and the distributor. Where the proposed packaging, marketing and pricing options are equitable, then à la carte becomes an acceptable means of distribution.

27553 The CAB firmly believes that if distributors truly intend to offer choice and value to subscribers, the à la carte option should only be made available if it reflects the true cost of the individual take-up of programming services. Value packaging and pricing is a better deal for Canadian subscribers and Canadian services.

27554 Mme COURTEMANCHE: La deuxième question qui nous préoccupe aujourd'hui, c'est celle de l'accès équitable. Le Conseil a, dans son règlement sur la distribution de radiodiffusion, inséré une disposition traitant des préférences ou désavantages indus conférés par les distributeurs.

27555 Il a également affirmé son intention d'instituer un règlement réciproque qui aborderait la question des préférences indues conférées par les programmateurs.

27556 La question de l'accès équitable sera un facteur clé du succès des nouveaux services numériques. Les services numériques non-affiliés doivent avoir la possibilité de négocier un contrat d'affiliation équitable. Cet objectif sera réalisé par la mise en place d'une série de normes industrielles clairement définies et comprises qui s'appliqueraient tant aux distributeurs qu'à leurs services affiliés.

27557 De l'avis de l'ACR, il serait possible de régler la question de l'accès équitable en créant un code d'industrie qui inclurait les principes et les directives régissant la répartition de l'accès équitable à tous les services dans une environnement numérique.

27558 Lorsque le Conseil aura approuvé un tel code, les titulaires de licence devraient y adhérer.

27559 Suivant l'exemple choisi par le Conseil concernant les questions liées à la migration des services analogiques vers une plate-forme numérique, un groupe de travail de l'industrie accrédité par le Conseil pourrait élaborer une code régissant l'accès équitable. Un tel code serait publié au même moment que les décisions concernant des licences de services numériques et le Conseil devrait en assurer l'application rapide et efficace.

27560 Ce code devrait être complet et prendre en compte les éléments suivants: Un, les conditions équitables de distribution; qu'il n'y ait aucun service à la carte sans entente d'affiliation; un partage équitable des coûts et des risques de lancement, et enfin, un accès équitable au guide électronique de programmes et aux disponibilités locales des services provenant des États-unis.

27561 MR. McCABE: The introduction of digital services next year will represent the single largest and most complex launch in the history of Canadian television. Many issues will need to be addressed in advance of the launch if it is to prove successful and avoid the mistakes of the past.

27562 These issues include such critical questions as launch coordination, packaging and pricing models, the sharing of marketing costs and free preview periods.

27563 The CAB is reiterating its call for the creation of a Joint Marketing Committee to be made up of representatives from both the distribution and programming sectors. This committee will work to achieve an orderly launch of the new services in a way that will share the costs and risks of this undertaking and ensure the best chance of success for all parties involved -- most importantly, the Canadian viewing audience.

27564 The Joint Marketing Committee should begin its activities at the same time as the Commission announces its digital licensing decisions. This will provide approximately six to eight months of solid planning and will ensure that the launch of Canadian digital specialty services in the fall of 2001 is the most successful in the history of the industry.

27565 We urge the Commission, at the time it licenses digital services, to support such a joint marketing initiative.

27566 In conclusion, I would like to briefly recap the main points of our presentation today.

27567 First, we strongly urge the Commission to licence Category 1 services in all significant remaining genres to ensure diversity and pride of place for Canadian programming.

27568 Second, choice and value will be key to the success of digital specialty television in Canada. These will only be realized by making the new services available to Canadians in attractive and affordable packages. We urge the Commission to require signed affiliation agreements before à la carte offerings can be made.

27569 Third, the CAB urges the Commission to initiate a process for the creation of an industry code to ensure equitable access for all digital services. This code should be put in place at the same time as the Commission announces its digital licensing decisions.

27570 And, finally, the CAB is calling for the early creation of an industry-wide Joint Marketing Committee responsible for overseeing the efficient and equitable launch of these exciting new Canadian services.

27571 Madam Chair, Commissioners, thank you for the opportunity to appear before you today. We would be pleased to respond to your questions.

27572 THE CHAIRPERSON: Thank you, Mr. McCabe, Madame Courtemanche.

27573 Madame la Présidente.

27574 LA PRÉSIDENTE DU CONSEIL: Merci. Bonjour.

27575 Alors comme Madame la Présidente l'indiquait, we could interrupt our dialogue to pursue it at two o'clock. Before we enter into really what is the core of your presentation, which was really part of your written intervention as well, I just want to touch upon a few elements and just seek your comments, if you have any, in terms of what we have been discussing with most applicants in terms of the presence of independent production, the elements of competitiveness, the elements of the importance of Canadian program expenditures. Do you have any, you know, comments to make to that?

27576 The other question is the one we have been discussing this morning abundantly, which is in the French market, the addition of foreign services. I don't want to force because I realize that your presentation is very focused this morning, but I wouldn't want to, you know, not give you the opportunity of commenting on some elements that have been largely discussed with the applicants.

27577 MR. McCABE: So this is sort of a free-flow answer you would like. We can handle that.

I will count on Sylvie and Sean to kind of give me the subject matter here as we move along.

27578 First of all, you raise the question of independent production. I recognize that the Act in fact talks about the independent production. This has been one of the concerns of the Government of Canada and of this Commission over the years.

27579 We have built in this country a very powerful independent production industry -- I was going to say company, maybe that's right too --

27580 CHAIRPERSON OF THE COMMISSION: It's like the broadcasters.

27581 MR. McCABE: We have built a very powerful independent production industry that indeed has served us very well. Our members who have appeared here before you have made commitments with respect to how much of their programming they will in fact get from independent producers.

27582 I guess what they can't say, because it's difficult for them as applicants to talk about this because it may tend to undermine your faith in their belief in independent production, is something I can say.

27583 You have seen from our strategic plan that we are very concerned about the globalization of media. We are very concerned about the ability of Canada to continue to compete. We have in our approach to the years ahead said that we will have to look to building strong, integrated companies that are able to engage in broadcasting, production, distribution.

27584 This will continue, I think, to be a theme that we will press. It's one that I think we have got the attention of the Government of Canada on, in particular the Department of Canadian Heritage. I think it's important that we now think beyond the sort of silo approach that we have taken in public policy where we have said these folks are the producers and these folks are the distributors and these are the broadcasters over here.

27585 I don't think that's going to work very well much longer. I think there will continue to be independent producers. They will continue to be an important supplier to us. It is fair that commitments be made with respect to amounts of programming.

27586 It is also important for public policy and for this body and, I think, for us too as public policy players to begin to think about how we strengthen Canadian players with integration so that we can in fact continue to have a strong Canadian presence in the communications world that is emerging.

27587 One particular aspect of that obviously is one of the things that's clear in a market this size is that obviously services will want to, if you licence them, look to foreign markets. That becomes more difficult if the services are -- if the programming is not in fact owned by the service provider.

27588 That's a concern we should be looking at as we are looking at these applications. I think it's a policy concern we have to have going forward, that we begin to think about the evolution of -- the necessary evolution of the industry and not merely stick with the tried and true formula of we must have large commitments to independent producers. Elizabeth MacDonald will not like me for that.

27589 What's the second subject here?

27590 MS COURTEMANCHE: Could I just add on the independent production, we are not advocating a particular percentage. You have heard everything from zero to 34 per cent. We wouldn't necessarily go there.

27591 I guess one of the things that the Commission needs to look at is what is the actual definition and then how is that definition applied. In some types of programming, obviously it makes much more sense for the -- to have a higher level of in-house production.

27592 The Commission has showed that kind of flexibility in the past with, you know --

27593 CHAIRPERSON OF THE COMMISSION: News, for example.

27594 MS COURTEMANCHE: Exactly. We would expect that that flexibility should continue. It may, as Michael has said, for greater purposes -- for purposes of selling your content world-wide, you may need even more flexibility in that area on a going forward basis. I just wanted to add that, certainly with competitiveness.

27595 MR. McCABE: Competitiveness. You are talking again of the licensing of services and whether they are -- what we have said in our brief, as you will recall, is that we think that the way you do it now works very well, and that is what we recommend for this round. That is, that you examine the programming proposals of the applicant. You can take into account the impact no existing services and on other applicants, and that in your wisdom make the judgment as to whether they are indeed directly competitive.

27596 We thought through -- spent some time trying to think this through in other ways. We were not able to find a way that is better than the way you do now. I don't think it's possible to in fact derive some easy rules that you can say, "well, just follow these rules." We have put them on the grid and we have sorted them all out.

27597 We think that in the marketplace, as we see it today, you have applied your judgment well and the system has benefited from that. We have had, as we have indicated in our brief, been able to find two different kinds of news services in each language, different kinds of sports services and so on.

27598 I think that you should be looking at it in the same light in which you have addressed it in the past.

27599 CHAIRPERSON OF THE COMMISSION: But, as you know, the wisdom of the Commission is always enlightened by the comments and suggestions of applicants and intervenors.

27600 MR. McCABE: Indeed.

27601 CHAIRPERSON OF THE COMMISSION: So I am trying to -- you know, the case by case is certainly an approach that is valid, but in a world where we know there has been many more services the analysis becomes more delicate, might we say. When I see that you are putting forward in your intervention this morning value and choice for consumers --

27602 MR. McCABE: Yes.

27603 CHAIRPERSON OF THE COMMISSION:  -- what will be the value and choice for consumers? We might talk here about many elements that we know have been at the basis of the regulatory system and the broadcasting system in Canada, but does it turn itself into a value and choice proposition to the consumer? Have you got any ideas on how we could do it?

27604 I will have to stop here. Is that what you are saying?

27605 MR. McCABE: I was just about to say --

27606 THE CHAIRPERSON: I knew one day I would find a way to silence the Chairman.

27607 Alors, Mr. McCabe, we hope you have a good lunch.

27608 MR. McCABE: Thank you.

27609 THE CHAIRPERSON: We will resume at 2:00.

27610 Nous reprendrons à 2 h 00.

--- Upon recessing at 1140 / Suspension à 1140

--- Upon resuming at 1400 / Reprise à 1400

27611 THE CHAIRPERSON: Welcome back to the hearing.

27612 Just to show you that we also think having fun is important, I have been asked to remind those of you who may be not detained tonight because you are intervenors who may want to join our Ottawa Chapter or the Regional Capital Commission Chapter of the Canadian Women in Communications at the Hard Rock Cafe in the market -- I believe it is York Street -- between 5:30 and 9 o'clock to say goodbye to summer. Some of us I guess saw some summer.

27613 Alors pour vous montrer que nous sommes aussi en faveur d'avoir du plaisir, on m'a demandé de vous inviter, le Chapitre de la Région de la Capitale nationale de l'Association canadienne des femmes en communication, qui célèbre la fin de l'été au Hard Rock Cafe au marché -- je crois que c'est sur le rue York -- entre 17 h 30 et 21 heures.

27614 Maintenant ce n'est pas une excuse pour ne pas être là pour votre intervention évidement.

27615 We are not that much fun.

27616 Madam Chair.

27617 LA PRÉSIDENTE DU CONSEIL: Alors les intervenants vont me permettre avec fierté et la chance d'être en ondes cet après-midi, parce que nous avons demandé une longue heure de lunch parce que nous avions à participer à un déjeuner offert par l'Institut d'administration publique du Canada et nous revenons avec le premier prix, et je pense que l'occasion est vraiment en or de pouvoir remercier tout le monde qui a participé.

27618 The Institute of Public Administration of Canada presented the CRTC the award today at IPAC's annual conference. The theme of this year's award was collaboration, new approaches to policy and management.

27619 The CRTC won for developing a collaborative approach to creating solutions for problems and issues in the telecommunications industry through the CRTC's Interconnection Steering Committee, known as the CISC Committee. The CISC group comprised industry representatives, consumer and public interest groups and CRTC staff.

27620 I want to say thank you to all of them.

27621 Je pense que c'est une façon intéressante, novatrice, d'attaquer des questions qui sont nouvelles et qui sont aussi complexes.

27622 Nous avons d'autres initiatives de même ordre. Le groupe qui a été créé pour la migration des services du côté analogique vers le numérique et certainement depuis que nous avons entrepris l'audience présente, des hypothèses ont été mises sur la table. Nous aurons la chance de pouvoir en discuter plus avant dans les prochains jours et certainement au moment de l'analyse aussi, mais je pense que c'est important de dire que le succès de ces initiatives est important pour l'avancement des dossiers au CRTC, réclame vraiment la collaboration de tous. On se rappellera que dans le premier plan stratégique du Conseil en 1997, on parlait d'une approche moins réglementaire au sens traditionnel du terme et de miser sur une approche de collaboration.

27623 Je pense que le prix que nous avons reçu aujourd'hui démontre que le Canada est capable de cette approche à condition, bien sûr, que tous les intervenants et tous les participants se donnent la main et je veux féliciter, encore une fois, tout le monde qui ont participé et plus particulièrement toute l'équipe du CRTC sous la direction de M. Léo Melville.

27624 Alors merci, et merci, Madame la Présidente, de m'avoir permis ce message publicitaire.

27625 LA PRÉSIDENTE: Merci.

27626 Monsieur le Secrétaire, s'il vous plaît. Ou simplement nous continuons avec l'intervenant qui a déjà été présenté avant le lunch.

27627 We will proceed, then, with the intervenor that we rudely interrupted to go and get this award.

27628 Go ahead, Madame la Présidente.

27629 CHAIRPERSON OF THE COMMISSION: Do you remember where we left off? Probably you know better than I where we were.

27630 MR. McCABE: Perhaps I could, before we start, congratulate you on this award. I can say from where we sit that this Commission has been innovative. Sometimes it has been painful, but we have greatly appreciated the fact that you have been innovative and collaborative. This has been for us a great ride over these past few years, and it is good to see that you are being recognized for the innovation you have brought to the process. It has opened it up, and I think it made a significant contribution to the capacity of the Commission to move effectively and relate to albeit the incredible changes that are occurring in the industry.

27631 Congratulations and we hope that the spirit will carry into the CISC-like exercises in the migration of analog to digital and also a new fairness code which we have mentioned.

27632 That is my commercial.

--- Laughter / Rires

27633 CHAIRPERSON OF THE COMMISSION: This is directly at the core of your presentation this morning.

27634 Et j'avais voulu laisser ce point pour cet après-midi -- because I think you are putting forward in your written intervention already the idea of the code, but you are kind of adding to that code today and building on what you heard, I suppose, since the beginning of the hearing, the idea of a committee.

27635 I would like to hear how you see that developing concretely. What are your ideas? What are you expecting? What kind of code would be helpful?

27636 Definitely by the framework that the Commission has put forward for those digital licences there is a need and an understanding coming out of the public process that kind of led to that framework the necessity to embark in that new world; not denying the past but really keeping the heart and the soul of the past, in terms of the Canadian content of the broadcasting system, yet embarking in this new world with a new approach and new eyes and really allowing this new world to deploy. Otherwise, it would not happen. And a lot of flexibility was required.

27637 How do you see the fit of that approach with what you are proposing?

27638 MR. McCABE: I think I might start and then ask Sylvie if she would complete it.

27639 As we have looked at this new world, we recognize the spirit in which you have approached it in the sense that it has to be new; we have to recognize that there is a new kind of competitiveness. But I think in any competitive situation a couple of things are important.

27640 One of them is to have some rules, to know what they are and to all agree that we are going to follow them, number one.

27641 And number two, it seems to be important that there be some balance as among the players because then your chances of coming to a mutually satisfactory approach to that marketplace that can benefit all of us and in which we can compete effectively and fairly is more likely.

27642 In proposing a code, in some senses it is part of a broader approach which we have before you here. It is in many ways the first part.

27643 What we are saying is -- if I may, the three parts would be: the code, the fairness code; the need for affiliation agreements; and third, a joint marketing committee and joint marketing effort.

27644 Our approach to the code has been that you have in your call laid out the basis for Category 1 and Category 2 service. In Category 1 you have said, in effect, that services must be carried -- if they are to be carried on an à la carte basis, they must be carried as well in a package. And in Category 2 you have laid out your five-to-one rule. We think these are good starts.

27645 You have, as well, in recent years put into the regulation the prohibition against undue preference.

27646 It is building on these that we think what we need to do is to, in negotiation and discussion with the distributors, agree upon first of all in respect of the provision in the regulation with respect to undue preference -- agree upon what that means in detail so that we can approach this marketplace with some sort of balance between us.

27647 The distributor is, after all, still the gatekeeper here. Even your requirement with Category 1 licensees that there must be carriage in a package first still leaves the distributor in a position to in effect put the services on in a package chosen by the distributor and in a manner that may not be acceptable to the licensee, which is why we have said: Let us look to -- and this would be incorporated into a code. Let us look to the requirement for an affiliation agreement.

27648 Then building on that we have suggested that there could be other aspects of a code that we could agree between us. I don't think this is something that we need the Commission to set for us. Nor are we in this kind of marketplace, the more competitive marketplace that you are suggesting, proposing that you set any particular requirements on your own for that code, but rather that you, in a CISC-like process if you will, tell us to go away and get ourselves a code and come back and have you bless it at a time prior to the launch of the new services so that it is in place at that time, and that that code be binding, by condition of licence if you will, on both programming services and on distributors.

27649 We think that is an essential element of a fair marketplace going forward.

27650 I would like Sylvie, I think, to just add to that to give you some broader sense of what it is we are talking about in terms of the nature of the code.

27651 MS COURTEMANCHE: What we are looking for are guidelines and parameters that will basically, from an industry perspective, set out what is not an acceptable practice. At the end of the day I think it will be very difficult to sit down and create a code that says "This you cannot do", but at least it sort of sets forth the rules of the game as to how we should sit down and talk, how we should negotiate a fair package, you know, what is a fair package and how do you go about constructing that.

27652 Fair negotiation pricing, as we know -- and we have said many times that packaging and pricing are going to be key to the success. Everybody understands that there has to be a multitude of options, but can we lay those options out in a way that ensures the best circumstances of success for the programming service and the distributor as well, as well as what offers an opportunity for Canadian consumers as well as having various options.

27653 I think the other thing we would like the code to do as well is to remove from the Commission -- because the Commission is looking at in the fall of 2001 the single most comprehensive launch in Canadian history, and in that context if there was a framework that was established by the industry as to what is fair play and what doesn't constitute fair play, you would end up having to -- well, you would have, I think, far less disputes or that nature of complaint that would be set forth to the Commission.

27654 People, if they feel that they are not being treated equitably prior to the launch, are going to say to the Commission "Guess what, they are just not giving me a fair deal. What they are offering just does not work. There is no way I can make my business case", and you would have to resolve all of those disputes. There could be very many, given the number of services that you are likely to license as a result of this process.

27655 So if we can all get together and agree to what is an acceptable practice and what isn't, then at that point we think that it will be -- well, it will help the launch but, more importantly, it will help the Commission in having to avoid getting involved in all of the details with respect to --

27656 MR. McCABE: I think it would be helpful if you gave some more specific examples of what you are talking about so I could understand it.

27657 CHAIRPERSON OF THE COMMISSION: Yes, what you have in mind.

27658 MS COURTEMANCHE: Just moving on to that, we had -- we looked at some of the issues or areas that could cause specific areas of concern, but the key elements that we think the Commission should hit on are the fact that services should have an opportunity to be carried on terms that are no less favourable than -- a nonaffiliated service should have an opportunity to be carried on terms that are no less favourable than an affiliated service.

27659 So a practice or guideline could be the industry, the distributors commit that they will not carry an affiliated service on terms that are less favourable than a nonaffiliated service or it would be on terms that are less favourable than an affiliated service. So that would be an example of a practice, a guideline that they would have to commit to.

27660 Another example --

27661 CHAIRPERSON OF THE COMMISSION: But isn't it what undue preference means?

27662 MS COURTEMANCHE: Well, you see, the problem with undue preference is what constitutes "undue".

27663 I mean, we all agree that in the environment today there can be preferences. For instance, subscribers who lived in a multi-unit dwelling might benefit from a lower cable rate for economies of scale for instance, and that constitutes a preference, but it won't be an undue preference.

27664 So the issue is: When do you cross that line of undue preference?

27665 If we can sort of agree that the line in the sand is here, well that will certainly avoid a lot of requirements for the Commission to sort of delve in a case-by-case basis. It won't resolve all of the issues. That is not a possibility. There will always be cases and circumstances that differ, or whatever, but it will at least attempt to draw a line in the sand that says "Okay, once you have carried me on terms that are less favourable, then that constitutes an undue preference. Let's agree that is an industry objective and, okay, that won't happen". So you avoid a lot of problems.

27666 CHAIRPERSON OF THE COMMISSION: But isn't there a new situation going into the digital world where you have more players, and actually the player in the digital universe as we know it that has the most subscribers is somewhat of a new player in the game, but there are alternatives.

27667 Isn't there larger broadcasting undertakings than there used to be that has more power of negotiation than there used to be, because there is like a portfolio of undertakings that allows for a better positioning in terms of the negotiation. So some would say that given the way that the broadcasting universe has been developed in Canada, that the maturity of all the players allows for the forces of the market to operate better.

27668 MR. McCABE: I think that it is that maturity that leads us to a code. I think it is possible for us to sit down with these players in particular -- because there is some more competition in the market on the distributor's side now -- and agree in advance how to specify what is meant and what we mean by "undue preference".

27669 So that it becomes a problem -- a set of problems that we deal with in advance rather than -- as we have today, despite the competition that is increased competition in the marketplace, we still had -- at the end of the last term we still had services not carried that ought to have been carried, we still had a great deal of concern about some of the judgments made by distributors about their carriage and their terms of carriage.

27670 So we have ongoing problems with -- and I have never been able to figure out whether they are real or unreal -- about the use of local avails.

27671 It seems to us that the industry has matured. We have now created -- you have, in a sense, created a situation in which we can sit down and in advance of this launch and sort through some of the guidelines so that we all agree in advance that we aren't going to battle about these things, about the --

27672 MS COURTEMANCHE: The launch costs, the making -- you know, the launch costs and making sure the risks are equitably shared and also that distributors are accountable for those launch costs, because they are looking to programmers to provide some of those launch costs, but those have been provided in the past and there was no accountability. This time programmers would say "Yes, we are prepared to help with launch costs. We want some accountings of those. We would like the industry to agree that that would occur."

27673 But let's just go back a bit on the maturity of the industry and where we are going.

27674 We are still in a very narrow digital distribution environment, and so a programmer that is going out there, for the most case, is going to need not just one little piece of that digital environment, but most if not all. So, you know, there will be some difficulties to face.

27675 But looking at it the other way, which is what you were bringing up, you know, the reciprocity, I would envisage such a code to be reciprocal so that the obligations are not just on the distributor but there would be obligations on the programmer not to act in an unduly preferential manner as well. So it would be a two-way street.

27676 I agree with you that we are at that point in the industry where we can both play games and let's just agree to play a fair game.

27677 CHAIRPERSON OF THE COMMISSION: When you talk about sharing the costs of the marketing and the launch, certainly it is a valid proposition out there, but isn't it somehow getting into the business of what is the distributor's business?

27678 How would the broadcasting undertakings react if the distributors would go and say "Well, the program you should choose in order to please my customers should be this one". Isn't there somehow -- although I can see the merit and the validity, because it is going to be a very challenging launch and although we can hope that the Commission -- and I know we will make a wise choice, at the end it will still be a very challenging launch.

27679 But when you are talking about that, on one hand it could be "séduisant l'idée de" -- sharing the costs, but isn't it infringing somehow on the business of the distributor itself?

27680 MS COURTEMANCHE: Well, I guess what we are not -- we are not advocating a code that would say you can only package one service in a specific manner across the industry. That does not make sense. It doesn't allow for a competitive distribution industry and it would be, quite frankly, unworkable. So that is certainly not what we are advocating.

27681 What we are advocating is that we think the programmers do have some ideas as to how to market, not just exclusively distributors, and that they should have an opportunity to have a meaningful input and be in a position to meaningfully negotiate. That is what we are trying to construct with a code, is that they do have an opportunity to say. Now they have no opportunity. How fair is that?

27682 Yes, you could say at the end of the day that the distributor knows best, but I think that in some cases there have been enormous successes and in other cases there have been some failures.

27683 Where somebody is achieving 80 per cent penetration on a tier, they are not the ones that are arguing. Where there are the problems is where you are having penetration rates substantially under 50 per cent. Why wouldn't a programmer -- shouldn't have the opportunity to speak to the distributor and say "Do we agree that this particular packaging formula is not working? Let's talk. Let's work something out. Maybe there is another option here that will make it work and I will help you with those promotion costs and let's market this thing in a different manner if it's not working." If it's working, great.

27684 But in a digital environment it is not going to be clear what will or will not work and there may have to be some risks to take, you know, well, we will try this or we will try that. Maybe a distributor would say "Well, let's try this the first time" and the programmer will say "Sure, but if it doesn't work, if within a year we don't achieve penetration rates in excess of whatever, let's try it my way the next time." It's give and take we are talking about here.

27685 CHAIRPERSON OF THE COMMISSION: Let's leave the code. I understand more what you are proposing.

27686 But one thing I'm not clear about is the idea of the affiliation agreement. Do you have the same perspective put forward for -- I think it is Astral who talked about it first and then CHUM came.

27687 Is it in the idea that nothing should be done until the affiliation agreement is done that there should be like a six month -- or what is your view of the affiliation agreement? Do you see it as a condition strictly before we talk about a possibility of an offer to the consumer as a stand-alone once the affiliation agreement is signed? I wasn't sure.

27688 MR. McCABE: Yes. I think you have, in a sense, created the base when you have said in respect of Category 1 services that they cannot be carried à la carte unless they are part of another package.

27689 Our concern is -- and there is no such provision in respect of Category 2 -- our concern is that it is still in the hands of the distributor in effect to construct the packages at the price it wishes and without benefit of agreement, go ahead with that and then sell it à la carte as well.

27690 Our view is that in order to rebalance the marketplace here, you should require that there be, in respect of both Category 1 and Category 2, an affiliation agreement signed prior to the distributors being able to in effect put the services on.

27691 It seems to us that that's normal business practice, but that it is not always followed in this industry. There is an ability on the part of the distributor to be able to, as I say, proceed as they wish with a package, whether the broadcaster likes it or not, and on that basis put him in a particular kind of package, put him on à la carte.

27692 As we thought this through, we felt that in respect of both Category 1 and Category 2, the instrument that gave some balance in the marketplace but required you to intervene the least is just the requirement that there be an agreement. It seems to be normal that if you are going to put my service on, I should have to agree to doing that.

27693 I guess we are talking about what we think should be a normal business practice, but has not necessarily been in our industry. They are asking that you require that.

27694 CHAIRPERSON OF THE COMMISSION: Am I reading rightly that you don't see that as part of what could be a code of ethics, that it has to be included as a specification in the decision of the Commission, or can it be in the code of ethics?

27695 MR. McCABE: It could be part of the code as long as you were prepared to make the code binding upon both distributors and broadcasters.

27696 CHAIRPERSON OF THE COMMISSION: Well, are there other ways? If you are proposing a code of ethics, if it's not to be binding for all parties involved, what's the value of the code of ethics? Isn't the challenge of a code of ethics that everybody is bound by it?

27697 MR. McCABE: Yes, and that's what we would -- we would hope that that would be the nature of the code and the nature of the arrangement. It certainly could be the requirement that there be an affiliation agreement. It could be part of that. Yes.

27698 CHAIRPERSON OF THE COMMISSION: As far as the timing goes, we thought about it and we said, you know, requiring that these affiliation agreements be signed six months ahead of time may be very difficult, given that the licensing is probably going to occur late this year or, at the latest, early in January.

27699 MS COURTEMANCHE: We have cancelled Christmas.

27700 CHAIRPERSON OF THE COMMISSION: Oh, you have cancelled Christmas. Okay.

27701 MR. McCABE: Are you the Grinch?

27702 MS COURTEMANCHE: That would only leave a three month window of opportunity to negotiate all of these affiliation agreements. That might be a tad difficult.

27703 What we looked at was, you know, under your broadcasting and distribution regulations, if there are to be changes in character, whatever, you have a 60 day window. We said if we also need to incorporate a 30 day window in case there needs to be resolutions of disputes that could occur, then we thought that if the affiliation agreements were completed 90 days before the launch, that would be more workable. It would give people more time to actually have a meaningful negotiation before the actual drop dead date.

27704 CHAIRPERSON OF THE COMMISSION: Isn't there any downside to the affiliation agreement in terms of the day we recognize that undue preference can work both ways or it can be a reality both ways? Isn't there a danger that the affiliation agreement doesn't get signed and it's harmful to the potential launch date for one thing, but also in terms of the success, all the conditions for that launch.

27705 MS COURTEMANCHE: That's why you would have that 30 day window for the dispute resolution because if you get to that period 90 days before it starts and you haven't come to an agreement, that's why you need that 30 day window to work out an agreement. At that point you would have to exercise your discretion, but probably you would have to work towards some kind of baseball type of arbitration in which case, you know, the two parties would put their proposals on the table and you would pick A or B and bang, the launch goes ahead.

27706 We are not trying to prevent a launch here. We think the launch needs to go ahead. We think that with that kind of incentive -- if people know that at the end of the day "If I don't agree by such and such a date and then my only recourse is a 30 day window to do baseball arbitration, in which case I either win big or I lose big", it's a huge incentive to negotiate and come up and strike a deal.

27707 CHAIRPERSON OF THE COMMISSION: Well, let me be very upfront about something. There have been cases in the past where -- I will say some cases -- where the perception, rightly or wrongly, is that sometimes not the best effort is made out there in the market to resolve the problems. There's a kind of a waiting that goes on in saying "Well, we will get to the dispute resolution and the Commission will be the referee and will decide".

27708 What's the comfort in this approach you are proposing given the environment that we are all trying to design together? What's the level of comfort that those ideas today would be more successful than what seemed to have worked in the past?

27709 The concern we have is before the launch we might have so many people at our door and not enough people like Leo Melville and his team to do the dispute resolution mechanism. Isn't there some kind of a danger there?

27710 MR. McCABE: It seems to me, as you have suggested, you are faced with that problem today and those people may be on your doorstep. What we are trying to do with the trio of measures here, that is a code, affiliation agreements and a joint launch committee, is to try to cut down the incidence of those things.

27711 What we are trying to do is in effect have you say in an assist-like proceeding, if you will, "Go way and work out a code here". The existence of that code and the discussion that arrives at some agreement starts to first of all sort out some of those problems in advance.

27712 A joint marketing committee in which -- if you were to say, for instance, in a Public Notice that often accompanies a lot of decisions that you favoured  -- expected a joint approach to this, even without that I think we can pull such a committee together.

27713 It seems to me that starts again to create another circumstance in which you -- I would hope we would help you avoid having a lineup of folks at your door. The affiliation agreement is another piece of that, in other words, a negotiation, a requirement that there be such an agreement as a normal business practice so that again as another measure which says -- none of these in a sense are ways in which you intervene. You are telling us to get on with it.

27714 Can I give you comfort that these are going to in effect shorten the line at your door of those who have problems? No. But I do think that they have the potential to in fact ensure that we work together as an industry to achieve what we want, the successful launch of this, without intervention.

27715 With all due respect, some of the time we say "Maybe we better sort this out ourselves because if we hand it to the Commission, who knows what they will do?" It scares the hell out of them sometimes, I will tell you.

27716 MS COURTEMANCHE: One of the elements of the code, if we could get the industry to agree to this, and certainly I would be prepared to put this on the table, is have the industry be its own arbiter and not go to the Commission and say "We agree with the 90 day date and we will go to commercial arbitration at that point and we will not involve the Commission".

27717 That's something that could be an element in the code. At that point you would be guaranteed not to see us. That's another way of, you know, removing that burden from your shoulders.

27718 Michael's right. That burden is there today. You are facing it. In absence, something more than what's there today. I'm not sure how it is going to be manageable. That's why we are trying to, you know, construct these processes that will hopefully help you in that regard.

27719 MR. McCABE: Because we are deeply concerned that as we head into this new world, we take the opportunity to see if we can't -- recognizing the difficulty of it and the greater competitiveness -- that we take the opportunity now to see if we can't create the instruments that are not onerous, don't require you to do an awful lot but create the kind of playing field in which we all have a chance to succeed.

27720 From the consumer's point of view, there is a successful launch of these services.

27721 CHAIRPERSON OF THE COMMISSION: The last question is about the joint marketing committee. You see that as separate, on one hand a group to develop a code. One element of the code could be an affiliation agreement and you are proposing to the Commission to kind of signal the necessity of an affiliation agreement. That's what I understand.

27722 On the other hand, the position, not necessarily to the Commission, but rather to the industry at large to say it might be helpful to get into a joint marketing initiative. Am I hearing you correctly?

27723 MR. McCABE: I think that is correct. They happen at different points in time, if you will. To start with, the code has to be ready before launch or at the time of licensing so that the discussions may proceed with some surety.

27724 But the marketing process, it becomes difficult to get the process under way without knowing what the product is, but it seems to me that once that is known it then becomes incumbent upon us and indeed the distribution industry to work together to do this.

27725 You will recall the problems that flowed from the last launch and those need not be repeated.

27726 My sense is that while there is always reluctance I think in a situation where one party the distributors have had a fairly free hand in these things, always reluctance to give that up, but I think there is a sense that we could come together and have a joint approach to this that is satisfactory to both of us.

27727 I think it would be helpful, as these things always are, if you were to signal that this would be a useful thing from your point of view and you would favour it.

27728 CHAIRPERSON OF THE COMMISSION: Because the options offered to the Commission are already kind of entrenched in the framework we have put forward, which is really not necessarily forgetting everything we have done, but kind of a change of approach no doubt.

27729 Frankly, I am trying to understand what are your propositions and really inviting other intervenors to react to them because I think that's how we will get what kind of consensus is developing and from there to see how we can be supportive of what has to come from the "les premiers intéressés" who are the players themselves because both the broadcasters, the distributors have really an interest to seduce the viewer, unless the viewer is not really part of the equation, the Broadcasting Act is certainly not served, but certainly there is no business either.

27730 MR. McCABE: Yes, we both have that interest, but we both have other interests too and that's in a sense my concern, that those other interests interfere. It may be that distributors feel that, "well, it is not in our economic interest to move forward as rapidly with the next generation of boxes because our business is just fine today and the technology is still kind of emerging. Maybe we can just put that off somewhere."

27731 When all of a sudden the business cases of a lot of the people you have licensed are in real difficulty.

27732 It seems to me -- so that I say there are other interests or other factors that have to be taken into account and are taken into account by both sides of the equation.

27733 It seems to me that what we are asking you to do is in a sense quite minimal and that is in respect of the joint launch committee to indicate your expectation that we would work together. So that does put pressure on people. It puts it on us. I know it will put it on others.

27734 It's useful pressure on behalf of a licensee that you will have licensed to provide services that have certain amounts of Canadian content, et cetera, et cetera, and provide some diversity in the marketplace.

27735 The second thing that we are asking you to do is in respect of a code, that our view in coming to this table had been that we would ask that you in your Decision require, in respect of a code, that following this proceeding that you in effect call together, in the same way as you have done in the migration issue, and we will carry out the process and bring something to you. We would like at that point for you to in effect embed that in the conditions of licence of the players.

27736 The third part, the affiliation agreement could be embedded in the code, as you have suggested, but if not, we would ask that you require it in your Decision.

27737 CHAIRPERSON OF THE COMMISSION: And in that industry initiative or kind of joint effort do you see a place for consumers?

27738 MR. McCABE: Absolutely. I think probably it's admission on our part. I think in respect of both processes the consumer should be at the table through some organized, either PIAC or some other such body.

27739 CHAIRPERSON OF THE COMMISSION: My last question, I forgot to ask you, the same way you are seeing a joint marketing effort or partnering, do you see joint sharing of interactive revenues? You know, in the deployment of those set-top boxes there will be enhanced boxes. Do you see a possibility of the revenue sharing?

27740 MS COURTEMANCHE: With respect to delineating commitments and the benefits of interactive programming, I guess I would see that as a possibility.

27741 I would probably venture to tell you that the first version of the industry code could not solve those questions. It's the early days yet. We would probably have to wait a year and a half to two probably before we would have a subsequent process. The industry would have to get together and discuss those issues.

27742 But if we are going to make this work, we are going to have to share the risk, but we should also share the benefits and that's the best way of going about it.

27743 CHAIRPERSON OF THE COMMISSION: Thank you very much. Merci, Madame la Présidente.

27744 THE CHAIRPERSON: Thank you.

27745 Commissioner Williams.

27746 COMMISSIONER WILLIAMS: Good afternoon, Mr. McCabe, Ms Courtemanche.

27747 Given that distributors and service providers have many similar goals and interests, mutual co-operation would certainly appear to be a key success factor.

27748 How about another form of binding arbitration, where each side would select their own representative, but then mutually select a neutral third party. They meet and decide by a majority decision and the parties live with that decision.

27749 This would be more of an industry-based solution, rather than getting the regulator involved. In effect, you resolve your issues together or you cast your fate to a neutral third party and then live with the result, with perhaps time frames that could forces these issues to be resolved prior to the September 2001 launch.

27750 If the Commission took the view that it would be preferable that the industry solved their own difficulties, how would you feel about that?

27751 MR. McCABE: We would agree to that. I think that may be a very good way to go. Sylvie put on the table the sort of final offer approach to arbitration and this is another approach, which may indeed provide some more flexibility and I think that would be a good way to go at it.

27752 COMMISSIONER WILLIAMS: Thank you.

27753 THE CHAIRPERSON: Commissioner Wilson.

27754 COMMISSIONER WILSON: One quick question. Are you proposing to extend the terms of the code to Category 2 services as well? You talked about -- I heard you talk about having a very big lineup of services at our door just prior to launch.

27755 Well, if we only licence 10 Category 1s, or approximately 10 Category 1s, then we would have only 10 people at our door, since we were quite clear about how the Category 2s would be dealing with one another and the distributors in more of an open-entry approach. So I was just curious as to whether or not you were suggesting that the code would apply to Category 2 services as well?

27756 MR. McCABE: Yes. In our proposition, yes, it would. Our sense has been that while they come into the world with a different regulatory approach, as you have set out with respect to Category 1 and Category 2, at the end of the day they are all in that world together, competing for the audience.

27757 I think the rules of fairness ought to apply within the strictures that you have applied to 1 and within the provision you have made with respect to Category 1 services. So I think they are all in that world competing together and in effect would have to see the same code applied to them.

27758 Again, sort of casting ourselves forward a bit further when the migration group has done its work, we are going to see a world in which we are all digital services in that same market and we are going to have to think now about impacts on that future. So I think as we did the work of this task force, yes, it would be applying itself to the services that are to be licensed in this proceeding, but we will have to keep our eyes on the services that are eventually to come into the digital world.

27759 MS COURTEMANCHE: Just to be clear though, we are not advocating that there is a must carry requirement, not at all. What we are saying is that in the context of if a distributor is interested in carrying a particular Category 2 service and everybody or there seems to be a good consensus at this hearing that the best success for both the Category 1s and Category 2s is that there be a joint launch at the same time, if you are buying into that kind of a premise, then to the extent that those two services, the ones that the distributor chooses to carry, then they should have fairness applied to them as well. Why wouldn't they?

27760 As Michael said, in a digital environment a subscriber will not know the difference between a Cat 1 and a Cat 2. It will still come down to issues of packaging and pricing.

27761 MR. McCABE: Those issues of packaging and pricing, as I say -- our sense is that packages are not going to be just Category 1s. They will be Category 1s and 2s and presumably some foreign services as well.

27762 Our sense is going to have to be that they are going to have to be looked at together to make sure that indeed the packaging and pricing is fair in respect of those services and that in fact the real cost of pick and pay, for instance, is taken into account in respect of the prices that these services are offered in the marketplace or packages are offered in the marketplace, and other such issues.

27763 COMMISSIONER WILSON: I guess it leads me -- you know, I sort of sit here with a bit of a smile on my face, because it leads me to think that here are the Commissioners sitting around a table proposing an open entry approach for Category 2 services, and we have the private sector essentially coming to us and saying: No, we don't want open entry. We don't want market forces to work. We want regulatory oversight. We want protection.

27764 That is the message that I am getting.

27765 I remember a memorable exchange between the Chair of the panel and one of our broadcasters who talked about being a private enterprise; you know, let us know what you want and then get out of our way.

27766 In the framework the Category 2 services, when the Chair of the Commission talked about moving to this new environment where we have the transition of the Category 1 services and the regulatory support that we bring to those, and then the Category 2 services where the best and the brightest will survive, the viewer will choose.

27767 That is the Commission giving the viewer a very real role in deciding what programming they want to see.

27768 Doesn't that help build the quality of Canadian programming if it is the best and the brightest of those that will survive? Some will fail; maybe many will fail. But it is more of the marketplace decides. It amuses me, when I sit and listen, that the regulator is saying we will take open entry, and the people who are in the marketplace are saying: No, don't.

27769 Is it your view -- this is a very long preamble. But is it your view that we are ever going to be able in this country to have programming services that are not given significant regulatory support in order to survive?

27770 MR. McCABE: If the marketplace were going to decide this issue, I would be right there alongside you on this. But there are no perfect marketplaces, and the one that we are launching into is decidedly imperfect.

27771 It is not the market that is going to decide. It is the cable industry and the satellite industry that is going to decide. All we want to do is have a hand in that decision. Marketplaces only work when there is some balance. When there is imbalance, as there is today, marketplaces don't work.

27772 COMMISSIONER WILSON: Are you happy with what DTH has done in their marketing?

27773 MR. McCABE: Yes, we are.

27774 COMMISSIONER WILSON: And they are the dominant supplier in the digital universe.

27775 MR. McCABE: Yes. But we have also engaged in heated discussions with LOOK, who go an entirely different way, and seem, at least to date in discussions, determined to pursue a way that doesn't work from the point of view of the services in respect of one of the major cable companies we are faced with ongoing -- and I may use the term again -- heated discussions and exchanges of correspondence which seem to suggest that they are going in the same direction; that they are going to go in a direction which demonstrably doesn't work.

27776 Why? Well, they say it is for competitive reasons; we have to compete with apparently LOOK. Why, I don't understand.

27777 And then we see a study from the Canadian Cable Television Association which in effect says: We are going to go with this. This is the ultimate form of choice.

27778 So it does not make a lot of sense to us. It seems to us that the best interests of the distribution industry, the production industry, and indeed of the viewers is served by an approach similar to ExpressVu's, which seems to offer a value there at a price. And people like both the value that is offered and the price.

27779 If we were in fact thinking -- if we thought we could enter into a reasonably balanced marketplace, fine. But what we are trying to do here is create the conditions in which the marketplace will work.

27780 I don't think we are going to guarantee the success of any of these services. I think we are trying to get a hand in the game.

27781 MS COURTEMANCHE: Let's understand. Even with Category 2 services, you did not create a strictly marketplace-type service because you do have undue preference rules that apply. In addition, you have the --

27782 COMMISSIONER WILSON: And the five-to-one --

27783 MS COURTEMANCHE: You have carriage five-to-one, and you have Canadian content and Canadian programming expenditure requirements where you say you don't get on the system unless you do this much. So if it were truly an open marketplace system, it would be open on both sides, not just one side.

27784 That is what we are talking about, an imbalance. It is an imperfect system, and we are just trying to redress a little bit that imbalance so that it makes it easier to shine and to contribute to the system and provide that diversity.

27785 Like you say, it won't guarantee that everybody will be a winner and a star but it will be more conducive to the success. We know this because of the experience that happened in the early 1980s when there was nothing.

27786 We are saying that as we are making that transition -- because everybody agrees we are in that transition where we are moving to a more open marketplace system -- let's not just throw away everything that happened before. Let's take the best of the past, carry it forward until they can truly fly on their own.

27787 COMMISSIONER WILSON: I think that is consistent with the framework that we put out.

27788 MS COURTEMANCHE: Yes.

27789 COMMISSIONER WILSON: The only conclusion I would reach after this discussion is that the rumours of the CRTC's demise have been greatly exaggerated. It sounds like there is a role for us yet.

--- Laughter / Rires

27790 MR. McCABE: There may be more awards in your future.

27791 THE CHAIRPERSON: Thank you, Mr. McCabe, Madam Courtemanche.

27792 Mr. Secretary, please.

27793 MR. CUSSONS: Thank you, Madam Chair.

27794 I would now like to invite the Canadian Cable Systems Alliance to come forward and present its intervention, please.

--- Pause / Pause

27795 THE CHAIRPERSON: Good afternoon.

27796 MR. WECKERS: Good afternoon.

INTERVENTION / INTERVENTION

27797 MR. WECKERS: Madam Chair, Commissioners, I am Walter Weckers, President and CEO of the Canadian Cable Systems Alliance Inc. It is with pleasure that we take part in this important hearing to add some brief comments to our written submission.

27798 First, permit me to introduce my colleagues.

27799 On my immediate right is Alyson Townsend, who is General Counsel and COO of CCSA.

27800 On my immediate left is Jan Pisko, who is Vice-President and General Manager of Monarch Cablesystems in Medicine Hat, Alberta.

27801 On my far right is David Baxter, President and CEO of Westman Communications Group in Brandon, Manitoba.

27802 CCSA has consistently been supportive of the creation of quality digital programming with a minimum or regulatory requirements. CCSA agrees with the fundamental goal noted in the Licensing Framework Decision: that new services should enhance diversity and choice for viewers.

27803 The customer has been promised quality and choice through the implementation of digital technology. CCSA Companies are committed to fulfilling this promise.

27804 CCSA is, incidentally, a buying group, not a regulatory lobby agency, of about 91 cable companies active in every province of the country. We represent the commercial interests of independent distributors often serving communities distant from large metropolitan areas.

27805 These independent operators are committed to delivering to the Canadian consumers the best possible technology and services at affordable cost. They are seeking and finding ways to provide their communities with the connectivity and the choices that the Canadian consumer expects and deserves. These companies represent, in our view, the independent entrepreneurial spirit.

27806 There are great challenges for CCSA companies in this new world of digital technology. Of the 410 systems represented by CCSA, only 22 are currently large enough to be considered Class 1 systems. From a pure economic point of view, most CCSA companies are too small for the acquisition and operation of their own digital television platforms.

27807 Yet, all of these companies, without exception, are urgently defining the manner in which they will distribute the new channels the Commission will license. They must do so for strategic competitive reasons, not because of regulation.

27808 Today, the manner in which they will do so is unclear, as are many of the commercial variables they confront. Some have already invested in their own digital head-end equipment. Others are about to do so. Some are forging new alliances with neighbouring systems to share a common digital platform.

27809 CCSA companies are struggling with technology, the pricing, and the fact that they must rely upon a direct competitor for transport of digital signals.

27810 In spite of the challenges, all distribution undertakings, no matter how small, must find their own digital solution.

27811 While a great deal is unknown, CCSA is mandated to seek commercial parameters to assist in planning. We hope that these parameters will foster the beginnings of mutually successful partnerships with new digital licensees.

27812 MS TOWNSEND: To establish an effective partnership, CCSA considers the following principles paramount to their ability to serve their customers:

27813 There should be no requirement for a "digital basic" package. Digital offerings must provide true choice to the consumer.

27814 There should be no packaging restrictions expected by contract or license. Consumers have consistently stated since the Structural Hearing that they want flexibility and choice. Stand-alone pricing should be available and reasonable.

27815 Satellite transponder positions must be co-ordinated to make efficient distribution possible. CCSA suggests that this be done through a Technical Implementation Committee.

27816 Programmers must be responsible for delivering the signal to the head-end in a suitable format. Any costs of "transport' should be a cost of the programmer's business, including pay per view services.

27817 CCSA will request a Master Agreement to be available to all CCSA companies, aggregating all CCSA subscribers and providing for its standard administrative provisions.

27818 If there is to be penetration-based pricing, the penetration must be based upon the universe of digital subscribers -- not the total number of analog subscribers.

27819 CCSA will seek a strong commitment to marketing from new licensees.

27820 CCSA is concerned that a number of successful licensees will have ownership in existing analog services. In negotiations, we have already seen distribution and terms for one service tied to distribution and terms for another service. Concentration of ownership potentially limits choice for distributors and consumers. This hearing is an opportunity to introduce new voices in Canadian programming.

27821 We are pleased to confirm the statements made here earlier by Stornoway Communications and our commitment to new voices is illustrated by way of a fully executed distribution agreements that will take effect as and when Stornoway is granted one or more licenses by the Commission. These agreements served as a litmus test that CCSA's commercial framework is reasonable and respectful of the needs of the programmers.

27822 MR. BAXTER: Westman serves 28,000 cable customers in 35 cable systems throughout western Manitoba. We were the first small cable company in Canada to offer its customers the benefits of digital distribution. We have been asked to speak to the practicalities of digital implementation.

27823 In the fall of 1999, Westman made a significant capital commitment by purchasing digital head-end equipment. This substantial cost, which is similar in magnitude regardless of system size, must be recovered from a relatively small digital customer base. It is critical that our digital customer base grows to justify our investment. Westman's digital investment is reliant on the approval of strong Canadian digital services that set the stage for other future new services, including those that are fully interactive.

27824 While the continuing costs for digital set-top boxes are significant, the deployment of these devices means we have a customer willing to purchase digital services, providing a new source of revenue.

27825 Yet costs are still unknown. For example, an interactive program guide was implemented, the cost of which is uncertain and our bargaining power is limited as there is currently only one supplier. Transport costs to deliver many of the digital signals to our head-end -- such as paying for the delivery of critical pay per view channels -- virtually eliminate any opportunity to achieve a margin.

27826 We launched digital technology knowing that it is the future of distribution even though our challenges are very different than those faced by large, consolidated and vertically integrated distributors. We must plan carefully and translate our vision into business reality as soon as possible.

27827 MS PISKO: Monarch Cablesystems Ltd. launched its digital offering last Friday, August 25th. With significant unknowns Monarch, like Westman, is certain that the capital risk is necessary to the future of our company.

27828 We are here today, however, representing not only Monarch and Westman, but also many smaller CCSA companies. Monarch, having 21 Class 3 systems is well acquainted with the fact that the economics and uncertainties increase exponentially as subscriber numbers decrease. CCSA represents 387 Class 2 and 3 systems. By current definition all under 6,000 subscribers.

27829 The issue CCSA takes with the framework outlined by the Commission is the stringent distribution requirements and limitations for small systems. The economics of digital are so overwhelming for these systems that "must carry" requirements discourage digital implementation if it is mandated in a manner that requires an "all or nothing" approach.

27830 Small systems must have the flexibility to add services on a schedule that meets the financial and technical resources available. The CCTA has made a proposal to limit mandatory carriage to Class 1 systems serving over 20,000. We wholeheartedly support this position.

27831 In the licensing framework decision, only Class 3 systems would be allowed to distribute these new services in analog format. This limits the distribution of these new services in Class 2 systems that have not yet an economically viable digital solution.

27832 The framework decision also requires digital distribution in systems interconnected with a Class 1 or 2 system. This again penalizes these systems, and their customers, that truly cannot afford the digital investment at this time. The simple fact of interconnection does not create a business case for digital distribution. The focus for small systems must be flexibility and not technology. Real, affordable digital options for small systems do not exist at this time.

27833 MR. WECKERS: We have presented to all applicants the principles we propose that should guide distribution agreements. We have focused these parameters on creating an environment that we believe reflects the objectives of the Commission as well as the expectations of programmers and the needs of small independent distributors.

27834 But, in the end, most central to our vision is the desire to afford the customer quality, affordability and true choice.

27835 Thank you.

27836 THE CHAIRPERSON: Thank you, Mr. Weckers and your colleagues.

27837 Commissioner Demers, please.

27838 COMMISSIONER DEMERS: Thank you, Madam Chair.

27839 Good afternoon. I think my questions will start first with your written observations that were already with us, but I could see from your oral presentations that they are all knit together, but you may wish to refer me to your oral presentation if I tend to forget about it.

27840 The first -- and it is something you have underlined today -- the digital challenge of small cable systems that you represent.

27841 In your written intervention you note the challenge faced by small cable companies in rolling out digital services given the uncertainties in market demand, revenues and expenses, and you have of course underlined that today, and you said and that:

"The successful convergence of affordable technology and desirable programming is fundamental to the implementation of the digital services." (As read)

27842 Can you provide us your views on what steps the Commission can take to ensure that this successful convergence takes place?

27843 MR. WECKERS: As we said today, we are in support of the initiative that you are undertaking now.

27844 The reality is that there is an appetite in the investment community and probably in the marketplace for a wide selection of services. So we believe that they should be funded, they should have an opportunity to exist, and we encourage that.

27845 What we are trying to say -- what we did say in our written submission was that this is a true -- the word is overused today perhaps, but it is a true partnership. There is a programming content side to the equation and there is a distribution side, a retail side to this equation and one cannot live without the other.

27846 So we believe that your initiative to license, presumably a large or potentially a large number of services, is in our interest, is in the interest of the programming community, but it should be and it is done with an eye on what kind of services should Canadians have access to.

27847 Beyond that, we quickly start to diverge sometimes it would seem, but when we read these things, sometimes I think -- I'm saying the glass is half full and someone else is saying the glass is half empty. At the core of it lies a true coming together of programmers and distributors who must make this work. We are all trying to grapple with how is that done.

27848 We like to think that the competitive marketplace has achieved greater inroads in this whole equation than it is sometimes given credit. Ironically, it is perhaps because of the vertical integration of these services and these companies that this is taking place.

27849 One would assume that a large company that is vertically integrated will have an interest to support and form the launch of its own services. They will be persuaded in some form and are persuaded in some form to bring along services of others. That then all of a sudden creates a marketplace, or at least a presence in the marketplace, of these new services.

27850 If you accept that, and that is in fact the truth, then you can look beyond that launch scenario at companies like those represented within CCSA's bargaining unit, if you will, and look at how they would react to that. In reality, they would react to it by having to assess a decision not to distribute the service that is readily available from a direct DTH or an MDS competitor in their own marketplace. They would have to make very careful assessments dealing with the risk of either introducing or not introducing a given service.

27851 If the decision is not to introduce it, it has to be because they believe the marketplace will let them not introduce the service, but my prediction is that in most cases, if not in all cases, the desire on the part of a small independent cable company is to provide as many services as possible.

27852 This is why we have made the argument, for example, that pay per view services that are not available today in any of the small cable systems in Canada at all should be made readily available at their cable head end in analog for analog or digital distribution so that they in fact have a small measure of economic benefit from doing that.

27853 It may be worth noting, for example, that in today's environment it would cost a small cable company -- well, any cable company that receives these pay per view channels over the air or by satellite rather, would have to pay approximately $1.92 per set-top box, be that analog or digital, which exceeds the margin of a movie.

27854 If you assume a 100 per cent buy rate, in other words, there is a negative margin before you have costs of selling, marketing, collecting orders, billing orders, et cetera, et cetera. It's those elements in the marketplace that we are trying to address.

27855 I know I have been drifting away from your basic question. We believe it is an issue that we work together with the programmers. The vertically integrated companies are in fact going to be responsible for the launch, will in fact create a certain imbalance in the marketplace that we will have to respond to.

27856 COMMISSIONER DEMERS: Thank you. We will get to some of the ingredients, I think, as we go along. The first point, and this is something you have covered in your presentation today, is the package. It was quite clear that you have clear ideas about what the Commission should do in the case of the package.

27857 Could you elaborate on what your concerns are in this regard and why you feel it is necessary for the Commission to clarify this matter.

27858 MS TOWNSEND: In relation to the packaging, what we are suggesting is that the services be available on an à la carte basis. Now, the reality of the marketplace may well be that there are options of all kinds, but this is an option that the consumers have been saying that they have wanted since the early nineties.

27859 The companies that we represent are absolutely positive that this is something that they need to be able to offer. Insofar as the clarification goes, perhaps that was an overstatement, but already the marketplace was talking in terms that echoed analog distribution rather than digital distribution. They were talking about digital basic.

27860 We knew that because we were negotiating agreements and possibly that was not necessarily common knowledge, but already there was talk of digital basic, digital tier.

27861 When the Commission came out with the decision about the Category 1, that became equated in the marketplace with digital basic, so we wanted to bring that to your attention. It may well be that that was never the intention of the Commission.

27862 MR. WECKERS: I would like to add that while we say that there should be à la carte distribution available, it doesn't automatically mean that that's the only way that it can be bought. We do favour packaging. We believe there is an absolute need for intelligent, smart packaging.

27863 We finally got through to you.

27864 THE CHAIRPERSON: We did an impeachment last week. Now it's the Senate.

27865 MR. WECKERS: It's another awards calling in. These things come in threes, you know.

27866 We believe that there will be packaging. What we really are saying, though, is that there has to be a decision made that we are confident as a group or as a Commission or as programmers that the programming that's going to be created by these new licensees is relevant and is of a good quality.

27867 I have to admit that it sounds almost like a little bit of fear on the part of some of the licensees that perhaps they are not as good and they need some protection here. Well, if our customers perceive that we are in fact limiting choice, as they have been telling us for the last ten years, thanks to the nature of analog trapping, they have been telling us that this is not a suitable solution for them.

27868 If we are going to be in tune with our marketplace, then we cannot say that lack of flexibility that is mandated is something that is good for us and, therefore, good for the consumer. We don't even think it's good for the programmers.

27869 We say give a customer the chance to buy something if that is really all they want. If you look at some of the genres that have been proposed here as Category 1, I would say there are some that an individual may say "That's the one I want and I don't want to buy the other ones".

27870 If we are perceived as the party that limits that choice, not the programmer but us, then we have a problem. Only recently -- last week in the Star Jim Bodel was writing about this. You know, the cable guys are loath to give up their packaging rights. Well, we are not.

27871 We have been saying for quite a while now that we believe that the customer should have the choice. We also agree at the same time with the programming community that intelligent packaging is a natural. It is already proven, by the way, with ExpressVu where apparently, I'm told by CAB today, 80 per cent of their customers take all.

27872 In spite of giving that opportunity to choose, the majority of their customers buy everything. Well, if that is the truth in the marketplace today, then why are we afraid of offering choice? We shouldn't be.

27873 COMMISSIONER DEMERS: Thank you very much. I will move along. On the number of Category 1s, you have indicated in your presentation today that there should be quite a few. How many would be the question today?

27874 MR. WECKERS: Actually, we would like one category only, all the Category 2s, to be honest with you, but we are not going to get that.

27875 We are practical. We do bring your attention, as Ms Pisko mentioned, that to impose as a must carry to smaller cable systems who are still grappling with the very investment that they have to make in digital technology, it serves more as a distraction than it is a help.

27876 I think with that by and large, with the exception of that important statement, we have passed that bridge. We are not fighting that battle.

27877 We do like a lot of programming choice. We hope it is good. We hope it is affordable to both us and to our end user and that it will be presented in such a way that it in fact supports the digital investment that we have to make.

27878 It serves repeating or it bears repeating that we make the investment in an enormous distribution that is competitive with the DTH business. We will ultimately in the small communities be the way in which diversity can be offered at the retail level.

27879 COMMISSIONER DEMERS: So the suggestion that the Commission made in its Public Notice of approximately ten Category 1s is not -- what would you say to that?

27880 MR. WECKERS: Go ahead.

27881 COMMISSIONER DEMERS: You have particular comments on the Category 1s in the French language as to the number that the Commission --

27882 MR. WECKERS: I respectfully, regretfully, would like to not answer that question. The reason is at this point in time the CCSA companies do not include any companies from Quebec. Actually I made a mistake in my presentation by saying "all provinces". I apologize for that.

27883 On the basis that we do not represent the commercial interests of companies in that community, it would be presumptuous on my part to offer comment and I apologize for that.

27884 COMMISSIONER DEMERS: Thank you. As far as the launching date, I don't recall any comments that you made in your presentation on that.

27885 So on the launching really, generally, the launching date, the time between the Commission's decision and the launch, do you have comments on that as to make it a successful launch?

27886 MR. WECKERS: Yes. The comment that we have specifically singled out is one to take a look at what digital streams these new channels will be travelling on. It would make it far less attractive financially for smaller companies to launch digital service if each of the, say, 10 services were to take a position on a transponder that requires us to buy one of these so-called digital pods.

27887 Whereas, they could all be, theoretically, accommodated on as few as two. So that is the first problem, that if left unattended, for argument's sake, this could surprise us.

27888 It would not be of any great consequence to larger companies, but it would be quite substantial to smaller companies.

27889 That is a little bit compounded by the nature of the business. If I was one of the programming licensees who has a number of analog services today and was successful in getting new digital services, I would take a hard look at my compression rate for the analog service and see if I could squeeze out a few more -- a little bit of bandwidth to accommodate the digital service.

27890 If that were to be the case and you look at how these existing incumbents are positioned on the satellite and, in fact, the likelihood of the smaller companies having to invest in multiple pods for a handful of services is more likely to happen.

27891 I have perhaps already identified the crux of the matter here, that it's nice to have the theory but in practice this is a bandwidth that these companies are buying already. If they can make the best use of that they will try and do that, but it would be at our expense to make a greater investment at the head end.

27892 MS TOWNSEND: Excuse me, you know it's interesting that the talk here has been about a launch, as if there is going to be one particular period of time this is all going to come down, but there are two companies represented here that have actually already launched digital, who are standing by waiting for the product. I know because they keep phoning me and asking me when we'll have agreements and that sort of thing.

27893 But I have heard Dave Baxter say that it's as soon as possible. And when the product is there, I believe it will be launched.

27894 MR. BAXTER: Maybe I can provide some follow-up to Alyson's comment. We, as I indicated in our opening remarks, are extremely interested in increasing the deployment of digital services. We made the investment in a digital head end and now it's a matter of getting a critical mass of services that our customers want, they desire, they can afford and offers them choice.

27895 I think with those components and providing that additional source of services on a digital box will make them more receptive to wanting one, to introduce that technology into their homes, and with that critical mass then comes the ability to really expand it

27896 I think that's both to the programmer's benefit and to ours because having more people with digital technology at their disposal I think builds a stronger business case going forward, both in advertising and subscription revenue bases and for us growth in our customer services' revenues.

27897 As far as actual launch dates, that would depend on in part when the suppliers, the programmers, are ready with a quality product, the licensees.

27898 As well, there is a certain ideal window for launch and that tends to be not in the summer, for example. So, we would like to see it, certainly if it is not before January, February, we would like to see it in the fall, but certainly time is of the essence and we are keenly interested in launching those additional services.

27899 COMMISSIONER DEMERS: Thank you.

27900 Do you have any comments to make with respect to some of your members who would not be "à la page" as the two that you have with you, as far as launching is concerned?

27901 MS TOWNSEND: I think as far as those companies are concerned the critical question is when they can afford the equipment and whether there are ways that in particular the small Class 2s, part 3s, even the small Class 1s will be able to afford the capital investment.

27902 So their concern right now is not launch, but how to actually technically do this.

27903 MR. WECKERS: If I may add to that, the cable industry is really the industry that has to deal with the transition of the technology. The new licensees, the DTH, MDS, of course, are by nature digital already.

27904 So it means that the relative cost and relative profitability of the new services is of great importance to us.

27905 We believe these services will be launched some time in the fall of next year.

27906 Most of the CCSA companies, therefore, use that as a yardstick and as a deadline to say "I'd better have my act together between now and then." Because it is not the fact so much that they are launching, but that they would be instantly available in my territory through at least two competitors and sometimes three competitors that will give them the absolute need to make their decisions and have us help them make their decisions from a financial and from a commercial point of view.

27907 So we expect that the launch will take place in the fall of next year.

27908 COMMISSIONER DEMERS: Thank you.

27909 You have recommended a technical implementation committee. Do you think that this committee needs to be established by the Commission?

27910 MR. WECKERS: Not by definition. I believe that it's possible for industry groups or large players to get together if they agree on the need for it.

27911 As I pointed out in my small diversion on that particular topic, there will be some obstacles even to have that group work effectively because of what I see as a vested interest on the part of some licensees.

27912 That apart, I would hope -- there's always a chance for the players to get together and not to rely on the Commission to start out. That may be wishful thinking on my part, but it's the first option I would prefer.

27913 COMMISSIONER DEMERS: Thank you.

27914 On packaging and marketing you have of course made reference to that, but the point I want to raise is that in your written intervention you state that contractual agreements must permit cable distributors to match the degree of packaging flexibility offered by competing DTH and MDS. Could you describe the discrepancies now existing in the packaging flexibility?

27915 MR. WECKERS: At this time there are a number of analog services that are packaged differently by the DTH providers than we do, by virtue of the fact that they have an addressable digital technology and we have, say, two or three unscrambled analog tiers. The very nature of an analog tier limits choice, as you know.

27916 That's already working at our disadvantage. We hope to bring more flexibility to that particular situation as a result of the migration from analog to digital, which is a different topic, and we certainly would expect that with any future licensees when we are using the same technology anyway that the same level of flexibility be afforded to us.

27917 Not necessarily more, but we hope, as we said before, that there would be a stand alone "à la carte" option for a customer, given that we believe overall packaging would be still beneficial to the whole.

27918 COMMISSIONER DEMERS: Thank you.

27919 I have a last point on interactivity. You touched on this subject today.

27920 In your written intervention you refer to the open and non-proprietary tenders. In what ways are you contributing to the development of such standards, your association or your members?

27921 MR. WECKERS: CCSA itself does not. It's not our mandate to participate in those activities. A number of our companies are members of CCTA, as you know, and a number of them are also member of CableLabs and participate there, but it is not within our mandate to make a direct contribution.

27922 COMMISSIONER DEMERS: Thank you.

27923 Are there any -- and maybe this is for the two members of your team that are already digital, are there any particular interactive features that have been proposed that your current or proposed set-top boxes will not be able to support? I am sure you have followed the hearings.

27924 MR. BAXTER: I am glad you prefaced it with that because I haven't followed the hearings in that much detail to note what the different interactivity plans are.

27925 I think I would, though, caution the Commission that while we are keenly interested in more expanded forms of full interactivity, as are the programmers, I think that's still some time away. There's the development of standards that needs to happen for there to be a broader commercial roll-out of the technology which enables it.

27926 From our standpoint, I should mention, as well, there are some head-end type solutions, server-based solutions, that are starting to emerge as ways of providing interactivity.

27927 For a smaller cable operator, such as ourselves and Monarch -- and there's a lot of CCSA members that are much smaller than us -- we don't have the capability to make the investment in the head-end-type servers. Our preference is to have an advanced digital box which, in essence, makes that, then, a variable cost, because of the low number of digital customers that we have to spread that cost over.

27928 So we are waiting for a standard-spaced inter-operable digital box which will have additional processing power, memory capabilities, which, then, can result in more advanced applications which integrate more fully with a programmer's plans and their programming.

27929 COMMISSIONER DEMERS: We have asked all the applicants whether distributors should be obliged to carry the interactive set-top box components of the services that would receive Category 1 licences.

27930 So, what is your opinion on this matter?

27931 MR. WECKERS: We have identified that in our submission by saying that the interactive aspects of the service ought to be the subject of subsequent negotiations as and when there's more clarity.

27932 It's our hope -- and I think it's the programmer's hope -- that, indeed, there is a positive revenue stream there, which they should benefit from because they would create the content and the demand and we would contribute to by providing them with the infrastructure to collect all that information.

27933 So there has to be a balance and, hopefully, a negotiated approach to solving that issue.

27934 But, fundamentally, of course, we are in favour of interactive programming and the commercial opportunity that that should represent for us.

27935 COMMISSIONER DEMERS: It has been suggested that the Commission hold a process to address issues such as cost sharing and access to the set-top box.

27936 Do you agree with this suggestion for a separate process? And if so, a time frame, if you have? But, first -- the first question first.

27937 MR. WECKERS: No, we don't agree with that. We think that this is something that leads us down to more regulation rather than market forces.

27938 We believe that we should have an opportunity to look at the business proposition that exists and that even -- it doesn't exist today, by the way. It's too easy to come to the Commission and say, "You fix it". I fundamentally don't believe in that -- and many of our members are of the same view.

27939 Although, just to be perfectly complete with that answer, that is not something that has been thoroughly canvassed within our group. But it is our fundamental attitude to support less regulation and to recognize that the marketplace is having a very strong influence and that this will likely also apply to interactive services.

27940 COMMISSIONER DEMERS: Thank you very much.

27941 Thank you, Madam Chair.

27942 THE CHAIRPERSON: Commissioner Williams...?

27943 COMMISSIONER WILLIAMS: Good afternoon.

27944 Last week, when questioning the Stornoway proposals, they indicated that they had reached an agreement with your Association -- as you also mentioned in your remarks today -- on the packaging distribution issues surrounding the new Category 1 applications.

27945 Would you be prepared to share the details of this agreement and comment on the strengths and advantages that it provides to both parties to it?

27946 MS TOWNSEND: I would really like to do that but, unfortunately, as in all of our agreements, there are confidentiality provisions that we cannot discuss the particular contents.

27947 However, what I can say --

27948 COMMISSIONER WILLIAMS: Then talk, maybe, about the framework of it and the strengths and the advantages that would be offered to both parties, as opposed to the exact nature.

27949 MS TOWNSEND: Well, I think that much of it would have been covered in what we talked about as our proposed parameters for negotiations. Those are the parameters that we are going to sit down with every digital licensee and we are -- those are the principles that have been mandated to us by the companies that we represent.

27950 So, in the broadest terms, there were our issues, and we have reached a satisfactory conclusion.

27951 COMMISSIONER WILLIAMS: Okay. Thank you.

27952 My other comments were -- I have been listening, with interest, to your concerns about the challenges of funding new services and the boxes and head-end equipment and -- it's not a new -- it's not a new challenge.

27953 In the early 1980s, when the pay television services were being introduced across the country, many of these same questions arose.

27954 I know, at that time, I was involved in the 2,500-subscriber Yellowknife cable company, very small, northern ,isolated, but we wanted our customers to have the same or better entertainment options as our southern counterparts. Our bankers, understandably, were nervous. It's a new service. We were a small company. We were in a remote area. The decoder box that we selected and the associated equipment came out to about $70 a unit, based upon the quantities that we were buying. We had determined that we would need 400 subscribers to make a profitable business case, $28-30,000, which we didn't have. But we still wanted to bring this service to our customers. We felt that they would enjoy it as much as anyone, maybe even more so because of the northern remote location.

27955 So, I sent our marketing manager out with the challenges of raising a $75 deposit from 400 customers, who would knock on their door and say, "Look, if you give us $75 and I'm able to convince 400 of you to do so, we are going to order the equipment, we are going to introduce pay television to this community and you have to do it in two months" because we wanted to participate in the launch along with everyone else and we needed the time to order the equipment.

27956 Well, the challenge was daunting. It was July 1. This guy goes out and starts asking for a cash deposit for a service that may or may not be introduced unless the target of 400 was achieved.

27957 Well, to make a long story short, we succeeded and launched pay TV along with the rest of Canada.

27958 So I guess my point to that is, in a small system, where flexibility and innovation have to be the rule in order to achieve the success, you can't go by the cookie-cutter arrangements that have worked in other places because you have to do it differently, and that was in the early eighties.

27959 A few years later -- fast forward -- it's 1990, and the company is now a 4,500-basic-sub-company and it's offering more television services than any other cable company in the country -- and that's on 4,500 subscribers.

27960 So, I'm of the view that a small cable company, because of its innovation and flexibility and lack of bureaucracy and agility, can succeed very well in this type of environment, provided that the creativity is there and the will and the means.

27961 Now, I recognize it's a little more complicated now because you have got competitors, like Look and ExpressVu, looking over your shoulder and they have got their national pricing plans; so you start bumping up financial concerns relatively quickly if you are not careful. But you do have the bulk of the customers in all these small communities, now, and if you don't keep up, then that will change. But you do have to keep up.

27962 MR. WECKERS: Well, that's why we said our companies want to be in the business and they are not sitting there saying, "We should sell out". Some of them do, by the way -- and you see it happen on a fairly regular basis. But there's still a large number of them there that are fulfilling a local need, that are local businesses and they want to continue that. So they are not throwing in the towel and they are looking very much toward us to try and aggregate their business and get reasonable commercial deals so that they can, in fact, move forward. But that underscores, basically, our belief that there should be flexibility, light-handed regulation, which we hear so much about, is always welcome and they will deliver, and they will compete -- given a chance.

27963 THE CHAIRPERSON: And you thought all of us were boring, non-entrepreneurial regulators!

--- Laughter / Rires

27964 MR. WECKERS: We never would think anything of the kind.

27965 THE CHAIRPERSON: Not now!

--- Laughter / Rires

27966 MR. BAXTER: If I can just add to the remarks that Mr. Weckers provided.

27967 I think the circumstances in our industry have changed a great deal, over the years. We are in a competitive environment, no longer a monopoly environment. We now -- as we do digital upgrades, we upgrade our systems to additional channel capacity to effectively compete in a 150-plus-channel universe, there's no guarantees that all of the customers in that community are going to go with our service. So the population of potential customers, digital customers, is somewhat lower. The digital head-end is much more expensive, by several magnitudes, compared to the analog pay TV head-ends. Similarly, the $100 analog box is now a $500 digital box, and with very complicated technology.

27968 In Westman's case we have done it, and I am not here to complain. We certainly made that decision to make that investment with our eyes wide open.

27969 On the other hand, I would not point to the rest of the small system operators in Canada and say that this is an easy decision to make this investment. They are certainly motivated to be competitive. They want their businesses to thrive and grow in a competitive environment. If they can possibly find a way, any way they can, they are going to do it. Certainly they are business people who see the need to expand their services and become competitive. They are looking at all kinds of different options to achieve that.

27970 We intend to get there some day. We, by the way, have systems that are not digital. We are striving to find a way in those smaller systems, even smaller than the systems where we have launched digital, to find a solution to that.

27971 I think, though, that in the medium term that is not going to all happen overnight. I think one of the things we are asking for is some flexibility in smaller systems, some leeway to give us that opportunity in the meantime to compete.

27972 THE CHAIRPERSON: Thank you very much, Mr. Weckers and your colleagues. We appreciate your presentation.

27973 MR. WECKERS: Thank you.

27974 THE CHAIRPERSON: We will now take a well-deserved break of 15 minutes.

27975 Nous reprendrons dans 15 minutes.

--- Upon recessing at 1545 / Suspension à 1545

--- Upon resuming at 1600 / Reprise à 1600

27976 THE CHAIRPERSON: Welcome back to our hearing.

27977 Nous vous resouhaitons la bienvenue. Je voudrais vous avertir que nous avons l'intention de finir la liste des intervenants qui sont à l'agenda pour aujourd'hui. Donc nous allons siéger possiblement jusqu'à huit heures ou un peu plus tard.

27978 Nous prendrons une pause vers 6 h 30 pour une demi-heure. Je voulais vous avertir à l'avance pour que vous puissiez aller vous chercher du café ou ce que vous voulez avant que tout ferme ici.

27979 Je suis certaine que le panel lui sera libéré avant le temps. Donc vous ne pouvez pas vous lever et aller vous acheter un sandwich.

27980 We will complete the agenda today, which may require us to sit until possibly 8:00. We will take a break at 6:30 for about half an hour. I wanted to let you know so that you can get a sandwich or coffee, if you need, before everything closes -- except for the panel, of course. They are not allowed to get up.

27981 Mr. Secretary, please.

27982 MR. CUSSONS: Thank you, Madam Chair.

27983 We will now hear the intervention by the Canadian Cable Television Association. We have Ms Janet Yale and her colleagues.

27984 Ms Yale.

INTERVENTION / INTERVENTION

27985 MS YALE: Thank you and good afternoon.

27986 Before I proceed to the formal presentation, I just wanted to add our note of congratulations to the award that you won earlier today. As many of our members are, and have been, active members in CISC processes for a long time, it is certainly encouraging to see that all of our hard work has been recognized.

27987 My name is Janet Yale, and I am President and CEO of the Canadian Cable Television Association.

27988 Allow me to introduce our team.

27989 With me today at the front table are, starting at my far left, Colette Watson, Vice-President, External Relations, Rogers Cable Inc; Ken Stein, Senior Vice-President, Corporate and Regulatory Affairs, Shaw Communications Inc.; Pierre Gagnon, Vice-President, Public and Regulatory Affairs, Vidéotron Communications Inc.; and Tom McCutcheon, Vice-President, Marketing and Communications, Cogeco Cable Systems Inc.

27990 At the back table we have, again starting on the left: Mike Lee, Vice-President General Manager of Interactive Television Services, Rogers Cable Inc.; Chris Kelly, President, The Strategic Counsel; Chris Taylor, Senior Vice-President, Law and Regulatory Affairs, CCTA; Michèle Beck, Vice-President Regulatory Engineering, CCTA; and Lysline Parenteau, who is Director of our Francophone Systems at the Cable Association.

27991 As we have watched and listened to the hearings over the past few weeks, we have been struck by two things.

27992 First, we have been impressed by the creativity and enthusiasm of the applicants and the quality of their proposed services. Clearly, Canadian television viewers can look forward to seeing some tremendous new digital services in the near future.

27993 Second, it has become increasingly clear to us that we are no longer operating in the old analog world. Indeed, the emergence of the Internet has both fundamentally changed consumer expectations about how information and entertainment are received and has created incentives for traditional broadcasters to replicate the cutting edge innovations of new media enterprises.

27994 We are pleased to note in this respect that CPAC, the Cable Public Affairs Channel, in addition to televising this hearing, is streaming the video on its Web site in real time.

27995 Your digital framework decision has clearly brought us to a new and exciting era in Canadian broadcasting. And frankly, we can't wait to get on with it.

27996 Selon des rapports récents publiés par l'industrie, actuellement au Canada il y a plus de 1,25 millions d'abonnés aux services numériques dont la majorité est abonnée aux services par satellite.

27997 Au cours des dix dernières années, les membres de l'ACTC ont consacré six milliards de dollars pour mettre à niveau leurs réseaux analogiques. Aujourd'hui, plus de 5,5 millions de foyers sont en mesure de recevoir les services numériques.

27998 L'industrie du câble est très fière des réalisations accomplies pour permettre à ses abonnés de bénéficier de la technologie numérique.

27999 We believe that the Commission got it right when it established the policy framework for the licensing of new digital services. A balanced and creative approach, it recognizes that ultimately the key drivers for increased penetration of digital services will be consumer appeal, reasonable prices and packaging flexibility.

28000 The framework also recognizes that the very nature of the digital environment demands a regulatory approach that reflects its inherent risks and opportunities. An overlay of analog rules in the digital world would prevent both programmers and distributors from being able to fully deliver to consumers the many advantages of digital distribution.

28001 For this reason, the Commission has set out a framework that is not predicated on detailed codes and regulations. Instead, it provides a few specific rules and some broad guidelines within which distributors will have the necessary flexibility to respond to competitive pressures and customer demands.

28002 Some of the parties in this proceeding are asking the Commission to revisit both the spirit and the letter of the digital framework. We strongly urge you not to do so. This is, after all, the new frontier and we must all share in the risks and rewards that accompany a new and uncertain endeavour.

28003 In this respect, the Commission's existing approach to allegations of undue preference is more appropriate than trying to devise a detailed code of behavioural "dos and don'ts".

28004 The key rules have been established, and beyond this specific allegations of undue preference can be addressed by the Commission under the regulations.

28005 With respect to the launch of the new services, we want to emphasize at the outset that we are committed to working co-operatively with the licensees to ensure that the new services are launched successfully. Obviously, it is in everybody's best interest to launch as many new services as possible, to package these services as attractively as possible, and to promote them as aggressively as possible.

28006 In this regard, we note that several applicants have suggested that launch issues could be worked out in a joint industry forum or CISC-like working group.

28007 In our view, although CISC is a very useful tool for working out technical or administrative issues of common industry concern, it is a process ill-suited to the negotiation of commercial agreements. In a highly competitive environment, these contracts will necessarily have to be negotiated on a bilateral basis in response to market conditions.

28008 As we noted earlier, there will be every incentive for all the players to ensure that the new services are launched in a co-ordinated and co-operative fashion. In the event of an impasse, the Commission can deal with the dispute in an expedited manner under its dispute resolution process.

28009 In terms of a launch date, we note that Canadian viewers have already waited a long time for new attractive digital content. In "Internet time", a year is awfully long.

28010 We think it would be unfair to consumers to make them wait to receive a new Canadian digital service that is ready to launch.

28011 Il nous fait plaisir de souligner que pour le lancement des services numériques, après avoir investi d'importantes sommes dans la mise à niveau des réseaux, les plus grands systèmes de câble seront en mesure d'offrir tous les services de Catégorie 1 ainsi qu'un grand nombre de services de Catégorie 2 à la condition, bien sûr, que le nombre de services de Catégorie 1 demeure dans les limites annoncées par le Conseil.

28012 La situation est cependant différente pour les petits systèmes. Dans la plupart des cas, au moment du lancement, et sans doute pour quelques années à venir, la capacité de ces systèmes ne sera probablement pas suffisante pour satisfaire aux exigences actuelles et futures du Conseil en matière de distribution numérique.

28013 Par conséquent, nous proposons que l'obligation de distribuer tous les services numériques de Catégorie 1 soit limitée aux systèmes de Classe 1 qui desservent 20 000 abonnés ou plus.

28014 Il est évident que plusieurs petits systèmes, particulièrement ceux situés dans des régions éloignées, subissent d'énormes pressions de leur concurrentes.

28015 Ces petits systèmes sont déjà forcés de trouver une solution le plus rapidement possible de façon à pouvoir distribuer les services numériques.

28016 In assessing the various applications, it is our strong view that the primary licensing criteria must be consumer appeal. The Commission has the opportunity in this proceeding to solidify and augment the production of strong, high quality Canadian programming. To do this, however, services have to be attractive to consumers.

28017 You have heard much about the promise of interactive technology during the course of this hearing. It is evident, however, that underneath all the hype, interactivity in the near term will be limited to Web site interactivity.

28018 Fully interactive programming is dependent on the development of inter-operable, non-proprietary standards, which is still several years off. Next generation set-top boxes capable of advanced functionality are not yet in the market and will not be widely deployed until at least the middle of the first licence term.

28019 Don't get us wrong. We are excited about the opportunities for interactivity that will emerge through the use of digital technology over the course of the next five to seven years. We just want to make sure that expectations don't get ahead of reality. As was the case with the Internet, it will be important to let the market for interactivity work itself out over time.

28020 With respect to the issue of packaging, as the Commission has noted on numerous occasions, one of the key advantages of digital distribution is addressability. In a digital environment, individual consumers will expect and demand the ability to choose customized packages of services.

28021 As indicated by consumer research undertaken for the CCTA, there is strong demand among Canadian consumers for choice in the selection of new digital services. More significantly, the likelihood of penetration of services increases with enhanced choice and control in the selection of new digital services.

28022 Having said that, it is impossible to predict at this point how individual distributors will choose to package and market the new digital services. Theme packages, pick-packs and standalone offerings are all possibilities. But ultimately, distributors must deliver services in a manner that responds to competitive offerings and viewer preferences. Consumers want to choose and distributors need to offer choice. That is the reality of the digital era.

28023 In conclusion, the cable industry is ready and eager to move quickly to bring fantastic new digital services to Canadian television viewers. The Commission has established a workable, balanced framework for digital licensing and the Canadian broadcasting industry clearly stepped up to the plate with innovative plans for new digital services. We thank them for their efforts and their ideas. Now it's our turn to bring these services to our subscribers. So let's get on with it.

28024 Thank you. We would be pleased to answer any questions that you might have.

28025 THE CHAIRPERSON: Thank you, Ms Yale.

28026 Commissioner Wilson.

28027 COMMISSIONER WILSON: Good afternoon.

28028 MS YALE: Good afternoon.

28029 COMMISSIONER WILSON: Welcome to you all. I am going to take you through some of the questions that we have been asking the intervenors and we will sort of work our way up to the more interesting topics as we go through those questions.

28030 In your intervention and again in your opening remarks, Ms Yale, you talked about the criteria that -- the selection criteria that you think we should use. You have emphasized both times that consumer appeal, including research and reasonable wholesale rates, were critical in terms of ensuring that you would be able to roll out your digital services to subscribers.

28031 I noticed -- I didn't notice in your intervention, but I noticed in your remarks that you included Canadian content. I was going to ask you if that was implicit in consumer appeal. I'm wondering if you could just talk to us a little bit about -- you have heard a lot of different views expressed over the course of the last two and a half weeks. I wonder if you could just talk to us a little bit about why you put your emphasis on these particular criteria.

28032 MS YALE: I would be happy to. I guess first and foremost we emphasize consumer appeal because for us the digital environment is really fundamentally different than the analog environment. It is really the attractiveness of the services in the marketplace that is going to drive their success.

28033 Each service is going to have to be independently of significant consumer appeal to be successful. That's another key departure from the analog world where we were limited from a technological perspective to a one size fits all solution, so that as long as some services in a package were appealing, consumers would be interested in taking the entire package.

28034 In a digital environment where the technology allows much greater packaging flexibility, it's really significant for each service to have a broad consumer appeal as a critical success criteria.

28035 Having said that, you could then say "Well, what does that really mean from a practical perspective? How do we know what's appealing? Everybody is putting forward services to you that they think are appealing".

28036 I guess from our perspective we think it's important to think about appeal in terms of services that have clearly defined genres so that consumers clearly understand from the service that's being offered what it's about.

28037 Implicit as well in that, as you pointed out, is the contribution to the Canadian system. I think that there is this perhaps ongoing fallacy from a public policy perspective that what is good for public policy may be at odds with what is appealing to consumers and somehow for promoting Canadian and somehow we are not promoting what's appealing.

28038 I think there are more than sufficient applications before you that prove that what's appealing is also strong from a Canadian content perspective.

28039 COMMISSIONER WILSON: I guess we have had at least two views presented to us over the course of the hearing the applications about what constitutes consumer appeal and what will drive people to switch to digital, whether that's purchasing or renting on a monthly basis the set-top box or deciding to buy a satellite system.

28040 One view was that a significant level of Canadian content was what would attract subscribers. The other view was that having services, and I guess this goes to what you were saying about services that have clearly defined genres, drawing together all the programming in a certain genre and putting it together in one place where subscribers can find it.

28041 In your view, what's going to be the more successful model in terms of attracting the subscriber? I mean I would think as a viewer that you have got to have channels where I feel like I am going to see something that I absolutely can't see in the analog world, so I have got to go out and get the box and sign up for the services.

28042 MS YALE: I hate to say that's a good question because we have heard that a lot today. I guess it is -- I think the short answer is yes, it's all of the above. Some of the services that you may choose to licence have more emphasis on one thing than on others.

28043 From our perspective as cable distributors, and that would be different from satellite providers who are all digital, our dilemma has been what's going to drive the rollout of digital boxes? As you pointed out, it has to be something that you don't already get.

28044 They have to make that first decision that they are prepared to make the investment in the box, whether they lease or buy it, and then move to the second question of "Well, what services will I take?".

28045 So there has to be something significant they don't already have.

28046 But picking up on another point that you made, I think the Internet is really changing the way people think about content. If you think about searching the Web, you don't want to just have one site, one Web site for any particular kind of information you are looking for. You really like to think that you are getting -- when you search the Web you think of multiple sources of a particular kind of content is what you are looking for, whether it is travel or something else. You don't want to just have one place and that is the only place you get that information.

28047 So you can imagine if you translate that to this environment where you are talking about digital programming services that it may well appeal to consumers to have thematic packages that build on each other and that there are multiple kinds of content in a particular genre.

28048 That doesn't necessarily mean that those are all Category 1 services. It may be a mix of Category 1s and Category 2s that together create an interesting thematic package that really kind of responds to consumer expectations in an Internet world.

28049 COMMISSIONER WILSON: We will pursue the issue of packaging a little bit later.

28050 Mr. Znaimer of CHUM suggested that we should consider licensing, since this is sort of the last chance that -- in his view the last chance that services will be licensed with some regulatory support, that we should consider whether or not the services are socially useful and that that should be one of the criteria that we use in licensing.

28051 For example, we might want to license services that might not be able to attract carriage or negotiate carriage otherwise.

28052 MS YALE: Well, our view on that is that services that do not have consumer appeal will not succeed in a digital environment and that our interest -- and I think here we have a coincidence of interests with those who receive licences -- is that we want to see these services succeed and we want to drive the roll-out of digital boxes and the only way to do that, from our perspective, is to focus on consumer appeal.

28053 COMMISSIONER WILSON: Now, when you say "reasonable wholesale rates", what is the range that you are looking at as being reasonable?

28054 MS YALE: What is the range of reasonableness?

28055 COMMISSIONER WILSON: We have seen everything from 19 cents to 65-70 cents service for the Anglophone market. Of course, they are quite a bit higher on the French side.

28056 MS YALE: I'm not sure that there is an absolute number from a wholesale perspective because, of course, it depends on the kind of content that someone is proposing. Certain kinds of content are much more expensive to produce than others.

28057 COMMISSIONER WILSON: I just thought since it is one of your criteria that you might have a range in mind of what, as a distributor, you would consider, or as the representative of the distributors you would consider, or they would consider was to be a reasonable range if they are building a package based on those rates.

28058 MS YALE: I think that the kinds of ranges that we are seeing are reasonable. I think it is a question, as I said, of value for money in the sense that the higher prices should presumably be related to programming services that have much higher production costs because of the nature of the programming that they are offering.

28059 When you get to prices, what we are thinking about is at the retail level what we are able to offer to customers, and their customers in the marketplace are going to make that calculus in terms of looking at the kinds of packages that are available and making their own judgment about whether or not they get good value for money based on the size of the package and the overall price at which it is being offered. Different groups of customers are going to have different preferences along that continuum.

28060 COMMISSIONER WILSON: In terms of the number of services that we should license, you have heard, I'm sure, the range of discussions that we have had on this issue, everything from the 10 -- or approximately 10 that we talked about in the framework -- to as high as 22 or 25 Category 1 services.

28061 I'm not clear when the 22 or 25 was suggested whether or not that included French services, but what is your view about the magic number and how many would be in English and how many would be in French?

28062 MS YALE: I would say that the kind of expectation that the Commission has set around the licensing of 10 or so Category 1 services and a smaller number of French services is a good guideline, but I would suggest that if at the end of the day when the Commission reviews the applications they believe that there are other deserving applicants that suggest that they should go beyond the 10 that we would be supportive of going beyond the 10 as long as the Commission keeps in mind the criteria that each of those services must have the kind of consumer appeal that is going to allow them to be successful in the marketplace, because at the end of the day these services are must-carry from a distributor perspective but not must-take from a customer perspective.

28063 COMMISSIONER WILSON: It has a whole different meaning in the digital world, the notion of must-carry.

28064 With respect to the issue of direct competitiveness, you have recommended in your intervention that the Commission take a broad approach to genre competition. You refer to the need for a very high threshold that would have to be met prior to finding the service to be in direct competition, and I'm just wondering if you could expand on what you mean by a "high threshold". How high?

28065 Again, we have heard a range of suggestions from 5 per cent to 25 per cent to 30 per cent.

28066 MS YALE: I don't know that I have a specific percentage to propose to you.

28067 I guess the reason for our recommendation really flowed from the comments I was making earlier about the way in which we believe customers are going to make purchasing decisions for digital services in this new environment, which is driven by customer expectations, we believe, that flow from their expectations from how they search the Web and the Internet environment.

28068 So, for example, coming back to the idea of a theme package, if you want to build on a Category 1 service that may have been licensed with some similar but related Category 2s to create an interesting mix, within the same theme for a niche that is particularly attracted to that, say in the area of health. You can imagine a variety of sub-genres, if you will, within the health category.

28069 So our concern is that if the Commission is overly restrictive in the way it approaches this, that some of the very interesting opportunities for packaging and offering services to consumers in this new environment will be missed.

28070 COMMISSIONER WILSON: Let me ask you a question: Do you think that we should be looking at the notion of direct competitiveness in a different way as between the digital services and the analog services? Because there have been interventions made and comments made during the hearing, most of which assume that the digital services will be direct competitors with analog.

28071 I guess I'm talking about the cable world here because it is still split, there are two platforms, the analog and the digital.

28072 Do you think that the digital services within their first license term are going to be able to pose a threat to analog services which have had the benefit of being in the system a long time with brand recognition and equity that they have built up over a long period of time and very strong business plans and the ability to sort of maintain the loyalty of their viewers? And if that is the case, should we be more lenient in the digital environment in terms of evaluating direct competitiveness?

28073 MS YALE: I agree with the idea that directly competitive has to mean something different in the digital world for the kinds of reasons you have outlined.

28074 That sort of builds on what I was getting at in the description that I gave you of the kinds of packaging arrangements you might contemplate, which would be precluded if you continued to apply the old test, if you will, or the analog test of what constitutes a directly competitive service.

28075 It seems to me that the applicants have come in knowing and understanding that they are moving into a different environment, which is much riskier from a business perspective and in which the ability to count on certain levels of penetration just doesn't exist the way that it did in the past.

28076 I don't know if I have answered all of your question.

28077 COMMISSIONER WILSON: Yes. I'm not sure if you have answered all of my question either. Maybe you don't want to, maybe you can't.

28078 MR. STEIN: Well, just to try to add something, I think the most important thing here is that as we move into this world, clearly, we are in a different situation because we aren't the dominant distributor. Most of our subscribers are analog subscribers at the moment.

28079 The challenging thing here is that whatever date is picked for a launch, whether there is a date that is picked for a launch, most of our subscribers when we say "hey, September 1st we've launched all these services," they won't see them because they won't have boxes.

28080 It's a very different situation then for the satellite people who will be able to launch it in much the way we have done previous launches, where they are there and then they can go at it.

28081 So we are going to have to find in that set of services a very distinctive way of marketing it and making it attractive to people. We are going to have to do that from the start.

28082 So what we need -- to us I think what is more important than the competition, the competitiveness between the genre, is to make sure that we have a distinct set of services, so that people will feel, yes, I want to get that service. And to do that I will buy the box.

28083 Whether that's because a different service in terms of documentaries or parents, or computers or whatever, it has got to be something different than now exists.

28084 I think that's what is important. It is sort of -- to me the more appealing criteria is that diversity criteria rather than the competitiveness criteria. It has got to be something that our marketing people can go out there and sell as being something that you can't get this on ordinary television. This is distinctly different.

28085 The other things that has to happen is that it has to be good from the start. It can't be something where we say we have got two to three years, find your feet and launch this.

28086 This has to be high-quality product because people are going to have a box, they are going to look at it and if they aren't impressed from the start they will send the box back. That is not something that we want to see because in our systems they will have that opportunity of saying "well, I like my analog television, thank you very much, here it is."

28087 So I think we are going to have to forge a partnership with the programming services that are licensed to make sure that we can go out there and have a launch that may be an ongoing kind of launch that's going to be this is a distinctive package. This is something you can't get anywhere else.

28088 People are used to that, as Janet was indicating with the Internet, people are used to finding distinctive Web sites.

28089 I think this is Janet's story. You don't go on the web and look for one travel site. You want lots of travel sites. You want a richness in that kind of experience and to that extent people's expectations are going to be quite high. With the digital set-top box they are going to have something that is very different and very diverse and that's of a very high quality and that's relevant to their needs.

28090 That's going to be the most important criteria I think in terms of making this successful.

28091 COMMISSIONER WILSON: And taking that into account, Mr. Stein, in terms of I guess part of what I am hearing you saying is you want diversity, but you want lots of product to go to the marketplace with, so that you have lots to use to attract subscribers to the box in the first place.

28092 But if we take that point, I guess what I am trying to get at, considering that in the framework we have said that we are not going to license Category 1 services that are directly competitive with existing services or Category 2 services that compete with Category 1 or existing services. You have talked about having a very high threshold in terms of establishing what is directly competitive.

28093 Part of what I am trying to work out in my mind is if you have an analog service like YTV, and we have an application for Girls TV and clearly there is overlap in those genres of programming in the way that they are going to target programming, because YTV has such a huge base of subscribers in analog and even if they go out and get the digital box, they are still going to have those subscribers. Is that a part of what we look at in defining direct competitiveness?

28094 I don't know if I am explaining myself well enough, but I actually read this in one of the interventions, saying the analog services they have such a jump on these digital services and the digital services will have such a small number of subscribers, relatively speaking, over the course of their first licence term.

28095 So does that give the Commission room, more room than they might have if these services were launched in an analog environment where there was 8 million subscribers and they might go to 5 million very rapidly? Am I explaining myself?

28096 MS YALE: Yes, that was helpful.

28097 I think the short answer is that with a more limited penetration level, obviously the potential harm to the existing licensees is substantially reduced, compared to if they were launching in the old analog world. That can give the Commission, I suppose, some comfort that if there was a service that seems to have the kind of consumer appeal and to add diversity in the way that we have been talking about that there may not need to be the same concerns about competitive harm as would apply if these services were being licensed on an analog basis.

28098 Having said that, given the other things that we have said, the more distinct the services are and, therefore, the less directly competitive they are, the more likely consumers are going to react to say "you know what, this is something I don't already get, in whole or in part, from somewhere else and, therefore, I am more likely to sign up for digital."

28099 So I would think that from a Commission perspective the more the services have consumer appeal and the more distinct they are from what's already available on analog, certainly from the cable industry perspective, the better served we believe the consumer will be.

28100 COMMISSIONER WILSON: You said in your opening remarks, if I understand you correctly with respect to the launch, we have had, I would say, fairly wide consensus amongst the people appearing before us that September 1, 2001 was a good time to do a co-ordinated launch and that a co-ordinated launch would greatly assist in the roll-out of the services and likely digital distribution into the homes in the cable world.

28101 You don't seem to agree with that. You seem to think that -- I think you have said as soon as you get product you will want to roll it out, that people have been waiting for it and you want to give it to them.

28102 MS YALE: I'm glad to have the opportunity to elaborate on what's necessarily kind of a cryptic comment in the opening remarks.

28103 We have no problem with the idea of having a co-ordinated launch as sort of last date, if you will, by which we should expect services to be ready to go.

28104 So, if it is September 1, 2001 and we say by then the Category 1 services should be ready and if one or two aren't that's their problem. We don't have to hold up any longer to wait.

28105 So from that perspective to have sort of a focus on a hard launch date of September 1, 2001 doesn't trouble us.

28106 However, if there are Category 1 services that are ready to go sooner than that, then we would like to see the ability to do what I would call a soft launch. In other words, from our perspective anything we can do to drive the roll-out of digital boxes in advance of the hard launch makes the sell on September 1 that much easier because you have more boxes and homes and people aren't making that first decision, do I want a box, as opposed to the next decision, which package would I like, now that all the services are up and running.

28107 So it seems to me that we shouldn't hold back the ability to get started sooner if some services are ready to launch that much sooner. That's the only point we are trying to make in our submission.

28108 COMMISSIONER WILSON: Do you think that Category 2 services that are ready by September 1, 2001 should be allowed to march as well?

28109 MS YALE: Absolutely. Absolutely.

28110 I think it is important that the packages that we are able to put forward in the marketplace include a mix of Category 1 services, Category 2 services, perhaps some additional distant Canadian services if they are not already out there, four plus ones, foreign services.

28111 I think that creativity in packaging is really going to drive the success of this launch.

28112 COMMISSIONER WILSON: There has been quite a lot of discussion about the notion of setting a deadline by which time all affiliation agreements would have to be concluded between Category 1 services and the BDUs. It has been suggested that is three months or six months prior to the common launch date.

28113 I probably don't need to ask this question, I can probably guess what your views are, but I would like to hear what you have to say.

28114 MS YALE: Well, we don't support the idea of sort of pick a line in the sand and say everything has to be done by such and such a date.

28115 From a practical perspective, if you think about six months, for example, it's hard to imagine that if the Commission comes out with a licensing decision late fall, if you work back six months from September the 1st, it leaves you, maybe, two months to conclude affiliation agreements -- and if you think about it, this is very different than previous launches. We have many different distributors, not just cable distributors -- the dominant distributors, as you have heard, many times, is satellite. There are several different satellite providers, there's Look, there's cable companies. So you have a multitude of distributors, on the one hand, you have another multitude of service providers, on the other, and I just don't think it's realistic to think that's going to happen, in that kind of time frame. And, frankly, I just don't see the point.

28116 It's not clear to me that those processes, in terms of preparing for launch and negotiating affiliation agreements, can't happen in parallel. I don't see why they have to be sequential. I haven't heard anything that suggests to me that there's an inability to proceed to prepare for launch without a signed affiliation agreement.

28117 COMMISSIONER WILSON: I guess it's tied to the notion that there would be a co-ordinated launch on September 1 and that, in order for you to be able to carry the services, you would have to have an affiliation agreement.

28118 MS YALE: Well, we have agreed that there should be a co-ordinated launch September 1. I'm not sure what turns on having a signed affiliation agreement six months in advance of that date. Certainly, the objective will be to have affiliation agreements concluded prior to the launch of the services. But, as you know from past experience, even that isn't always possible and it hasn't kept us from having successful launches. So it's not clear to me that that, in and of itself, is a pre-condition to working on launch plans.

28119 COMMISSIONER WILSON: I think the suggestion was that that would allow more time for the services and the BDUs to get together and to talk about how to most successfully launch the services.

28120 MS YALE: And we intend to be having those discussions. As you would also note from our submission, we would intend to be having those discussions, on a bilateral basis, very early on, to ensure that we meet the launch date.

28121 So, all I'm saying is that I don't see that the one has to precede the other.

28122 Certainly for Category 1 services, they must carry services; it's not -- you know, it's not like that there aren't things that can't be done in parallel. That would be our only comment on that.

28123 COMMISSIONER WILSON: With respect to your research, I hadn't read Mr. McCabe's intervention, nor had I heard his opening remarks when I prepared my questions and I thought I had been very clever to notice that you didn't test any price points on pick and pay. And, of course pick and pay has been talked about for years and there's considerable consumer pent-up demand for pick and pay. I guess I want to talk about the reality of pick and pay and the notion that that's where you are driving, that that's what you want to do, and that's only what you want to do, which is what's been suggested here, and in terms of how the research drives you to that point, and so, I'm going to offer you and Mr. Kelly the opportunity to correct me if I'm wrong, but it seems to me that if a subscriber wants choice and they are being asked about it, in theory, during a survey, that they are going to say, "I want the ultimate in choice". It's kind of like motherhood. You know. For sure, pick and pay would be the best. But pick and pay costs. There's a cost associated to it that can sometimes be a disincentive to take up in the marketplace where they might look at a package if they actually see what the cost might be associated with pick and pay they might say, "Gee, if I'm going to pay three bucks a service for three services and I can get a package of 10, including those three services, for $5 why would I pay $9?" You know. "I will get those three services that I want, plus six others, for just over half the price."

28124 I think it raises some question as to whether or not -- I mean I can certainly agree with the notion that pick and pay is very popular, and you tested, but if you don't go that next step and test with your respondents what the actual cost implication of that might be, how might that affect the research?

28125 And have you done -- I know not in this particular survey because I, you know, read through the questions and looked at the results -- but in any of the other work that you have done, in terms of digital television, have you looked at the cost implications of pick and pay and talked to people, in focus groups or in any other way?

28126 MS YALE: I'm going to kick it off and then I will turn it over to Chris Kelly who, I'm sure, has some comments he would like to add.

28127 Let me start by saying that one of the things we have heard about from our customers, for many years, is their frustration with their inability to choose in the current environment. They are very frustrated with what they consider to be the "one-size-fits-all approach" of the analog world. And we have had to explain to them that, from a technological perspective, that with analog technology and the limitations of trapping, we had no choice but to offer one-size-fits-all packages.

28128 Now, along comes digital technology and, for the first time, we are not constrained in that same way to a single offer as services comes available. And so, what was very important to us to present to you, in this proceeding, was a prospective all on the kind of flexibility that consumers are looking for coming out of this proceeding. And so, I think it's a bit of a mischaracterization to suggest that that's our preferred marketing approach. All we were trying to demonstrate, through the research, is that customers would like to see a variety of options, and so, we tested the variety of options that come to mind as the potential ways in which services might be packaged and offered, in a digital environment, and what the research clearly demonstrates is that people like the opportunity to customize and exercise some control over the packages and the way they are offered to them, and the implication is that if that's not one of the options available to them, they are going to be very angry because they know, technically, for the first time, that it's certainly possible to do it.

28129 Having said that, I think that any customer, any consumer, knows that with any product and service on the marketplace, when you buy things one at a time, you don't get as good value, you pay a premium, compared to buying in bulk. It applies to any product or service you might choose to buy. Why wouldn't it apply in the case of digital television services?

28130 So, consumers implicitly recognize that they pay a premium for the privilege of buying à la carte and it's not the best value.

28131 And then, the final comment I would make before I turn it over to Chris is to say that it isn't our preferred marketing approach. We haven't made a decision, yet, about the way in which we are going to market and package these services. But what you can expect us to do is offer a variety of packaging arrangements, ranging from à la carte, pick packs, large packages, theme packages and so on, and we just want to make sure that that flexibility is preserved coming out of this proceeding and that we certainly know and understand that the kinds of "take rates", if you will, for the privilege of à la carte will be substantially lower than the percentage of interest that might be expressed without price points and it was really more about making sure that the flexibility is there coming out of this proceeding than trying to suggest that there is a preferred marketing arrangement.

28132 But I would like to let Chris --

28133 COMMISSIONER WILSON: If I can just, before we go to Mr. Kelly -- I'm just wondering if I can maybe ask you to explain when you say that the flexibility is preserved.

28134 What we said in the framework was that no Category 1 could be offered on a stand-alone basis without also being offered in a package.

28135 So, from that, what would lead you to believe that we had to be convinced that -- I mean considering that the current digital distribution undertaking, satellite, is offering services in all the ways that you talk about in your research, what would lead you to think that we would not extend that flexibility to the cable distribution undertakings?

28136 MS YALE: We had been led to believe that some intervenors and some applicants might insist on being packaged exclusively in packages of minimum sizes or in a large all-inclusive package, at the expense of the opportunity to also be offered à la carte. And we absolutely believe that your role is more than sufficient to preserve the flexibility.

28137 So it was nothing that was coming from the Commission that led us to conduct the research, it was more a concern that some of those who were going to come before you were going to suggest that that option not be available.

28138 So maybe I can turn it over to Chris.

28139 MR. KELLY: Thanks, Commissioner Wilson.

28140 As you pointed out, we have seen for some time that consumers have been demanding choice in the selection of services and part of what we wanted to achieve with the research was to demonstrate that that in fact continues to be the case.

28141 We looked at a number of different options and you will see that there is clearly a hierarchy there in terms of their level of interest. Where choice or input into the selection of new services increases overall interest increases. Not only that, interest in the consideration of digital increases if that preference is available.

28142 One of the things that we wanted to find out was: Did that kind of choice in fact have a positive influence on the penetration of the box? I think the research is quite clear in that.

28143 You are right in saying that price will have a significant influence on how consumers view this, and there may well be a scenario where a large package that is value-priced is the consumer preference even though they want choice.

28144 I think what is particularly important out of the research is that element of choice needs to be there to encourage consideration of the digital box. If consumers hear that a new package of services or a new tier of services -- of digital services is being offered and there is no choice in the selection of those services, the level of interest I think in digital will diminish.

28145 They have to know going in that there are choices there. They may decide to pick packages that are value-priced, but that element of it I think is essential to be there.

28146 COMMISSIONER WILSON: In fact that, according to BC Media, is what has happened with their subscribers. The majority of their subscribers take the large packages.

28147 I think CAB referred to 80 per cent, but I believe that Monsieur Gourd said 70 per cent of their subscribers have subscribed to large packages.

28148 MR. KELLY: Yes, that is correct as I understand it.

28149 But on that as well, I think what is important to understand about those subscribers is they are what we would call premium subscribers. So they are most interested in those services anyway, so they are the most likely to be taking those services.

28150 What we want to ensure is that all consumers have access to that kind of choice and may well, as you say again, choose to buy a large package, but they want the option of being able to go other routes as well.

28151 COMMISSIONER WILSON: I see some hands poised over the buttons.

--- Laughter / Rires

28152 MR. McCUTCHEON: I just might add to that.

28153 I mean, in the real world it is hard for me to imagine that our company would not offer a big package to customers who wanted to buy everything that we have. I mean, that's what we do. Most of our subscribers are in high-valued bundles and highly penetrative tiers. So we do that well.

28154 We see flexibility as really -- I think the Commission has laid it out as well -- has a way to maximize those penetrations. So we have big packages, we have theme packages, we have à la carte, we are going to have subscribers in a number of different pools which will create higher penetrations, higher revenues for all concerned.

28155 The à la carte or small packages also is an entry level position for -- whether it is an affordability issue or whether it is a potential upgrade to a bigger package, it serves any number of purposes, as well as the example you gave, Commissioner Wilson, of demonstrating value. So if you add up the services and you save 50 per cent buying a bigger package, it makes a whole lot of sense.

28156 So we are not suggesting pick-and-pay as a prime method, I think it is required by customers, we have to address that, but it fits into the whole goal of maximizing penetrations and revenues and giving a choice at the same time.

28157 MR. STEIN: I think it's kind of ironic that the competitors say packages is work and in all their advertising they argue -- they point out that cable doesn't offer you the choice. So it seems to me that there is a little bit of a self-interest on their part in terms of trying to say, yes, we think it should be stuck to -- you should be stuck to these packages.

28158 I think that what we have to recognize in cable is that we do not have a large base of digital subscribers out there. In the digital world we are not the dominant distributor and we are going to have to sell boxes. We are going to have to be able to say to people "Here is a great mystery/suspense channel and if you people phone in and say `I want to get that channel' and we say `Well, that is part of this package', they will say `Well, I thought you people were changing. I thought we had a new technology here. What is going on?'"

28159 So I think we do have to have that option available.

28160 Now, I do think that the number that Bell ExpressVu used is right in the sense that once people look at services and they see one service and then they look at the other services and they say "Wow, this is a great package of things, I would like to see that", then that becomes successful.

28161 But you don't sell top-down. You know, you don't go in there and sell the Cadillac first, you go in and sell a basic product first and then you build on that with the customer and then get their -- they are then attracted to the other sets of services and then they purchase them.

28162 I think that is a hurdle that we have to go through as an industry in terms of the sister services that we have to offer because of the kind of technology that we have had. So it is a different set of circumstances.

28163 The other point too is: Why would a really good programming service want to be fenced in? I find this an interesting argument that their associations seem to be putting forward that we all want to be part of the same package and all go together.

28164 What if it is just a fantastic, terrific service that everybody in the country wants to get and we have lines coming down the street trying to get boxes because they want this service. I would think that they would want to be able to break out of the box to be able to really show to people what great service it is.

28165 COMMISSIONER WILSON: Okay. Thank you.

28166 I want to move on to the issue of interactivity. I just have a couple of questions, maybe some very short little questions, from the CableLabs Report.

28167 There have been a lot of proposals for interactive elements which, as you noted, Ms Yale, in your opening remarks, are mostly Web-based even if they are offered through the set-top box.

28168 Did you see any interactivity proposed in any of the applications that would not be possible right now or do you think that the programming services the applicants have pretty much pegged where the technology is right now and have proposed interactive elements that are appropriate? Did you see anything that can't be done?

28169 MS YALE: I'm going to let Mike Lee take that question.

28170 COMMISSIONER WILSON: I figured.

28171 MR. LEE: All in all I was quite encouraged by the amount of support that interactive TV is going to have over the next few years. For most of the applicants who have proposed some sort of transitional strategy where they started off with a Web-based presence to complement the programming service and then transition into sort of a single-screen experience, I think for the most part the expectations were fairly real.

28172 I would say that if I had to pick and choose and isolate a single example where maybe the expectation of what the environment would be may not be matched to what the reality would be when they actually go too deeply would be something like TVtv, which is the concept of having an electronic programming guide that is facilitated or delivered through a browsers technology. The premise being that I think I heard statements of the nature of all set-top boxes have access to the Web today, that all set-top boxes have modems and that this would have little to no impact on the resources, whether it be from a bandwidth perspective or from a head-end perspective.

28173 I think that there are a lot of ideas out there and technology is able to foster a lot of imagination from people, but at some point you do have to hit some of the realities of what technology will or will not allow you to do.

28174 In the particular case of something like TVtv it is a great example of something that would not be easily facilitated if at all possible. I think they reflected that in their remarks in the sense that it was impractical and, in certain cases, impossible.

28175 COMMISSIONER WILSON: Okay. I wonder -- actually, maybe while Mr. Lee has his microphone on I will ask him the questions about -- I assume that you have read the CableLabs Report yourself. I'm just wondering if you could clarify. There were two or three things that were mentioned in the report that I had never heard of and I was wondering if you could enlighten me.

28176 What is "Wink"?

28177 MR. LEE: Okay. What I will do is I will take a first shot at that answer and then Michèle Beck may want to comment as well.

28178 COMMISSIONER WILSON: Okay.

28179 MR. LEE: "Wink" is a technology that has been in the market for about three to four years now which provides sort of a store and forward-type of technology for interactive television. What I mean by that is that it provides the ability for a programmer to actually enable interactive buttons onscreen, but that when the user presses that button the interaction is not directly back live with the server back at the programmer or some centralized location. What it does is it stores that response in a set-top box.

28180 COMMISSIONER WILSON: Right. And forwards it later.

28181 MR. LEE: And forwards it later.

28182 It was built in a time, or conceived of in a time when there was no guarantee of this return path directly to a set of services so that you would, at the end of a day say, be able to use a modem that dials home and downloads all of those transactions.

28183 So it is what we would probably classify as a technology that is something that can be deployed today to provide some of this utility.

28184 It doesn't provide all of the functionality that -- sort of the second generation, sort of what we would look at that the Transport A or Transport B would provide you, but can simulate some of the elements of interactivity in a world where we don't have perfect system.

28185 COMMISSIONER WILSON: Okay. That answer is pretty clear.

28186 There was also a reference to the fact that the U.S. direct broadcast satellite companies are deploying a certain level of interactivity, and I'm wondering if anybody can comment on the kinds of things that they are doing?

28187 MS BECK: Yes. I think it's primarily a broadcast-type interactive application, very similar to what Mike had just described. A lot of it is downloaded to the set-top box and the interaction takes place between the user and information that gets stored in the box.

28188 DBS services do have a return path. Typically it is via a telephone line. So while you can do some level of interactivity back to a server or some type of location to do e-commerce, that sort of thing, it is done today via a dial-up modem.

28189 COMMISSIONER WILSON: Okay. What about carousel-based services?

28190 MS BECK: Carousel-based services is very similar to a broadcast service.

28191 A carousel, if you can imagine, basically downloads a bunch of services and it time shares over this delivery medium. So you have a carousel, you know, it sends down information relating to one service, another interactive service, and the consumer basically picks. But it has to wait for that information to be downloaded through that carousel so there might be a slight time lag from the head-end or the central point where it comes down.

28192 It's very effective if you don't have a return path, but a lot of applications currently were developed that way when return paths, especially high speed return paths, you know, didn't seem like a reality.

28193 COMMISSIONER WILSON: Thanks for that explanation.

28194 MR. LEE: I would just like to add as well. You will see in the U.S. marketplace right now with DBS providers that it's a great example of where we are with regards to standards in this industry where you have single companies like EchoStar, Direct TV, supporting three and four competing initiatives, competing interactive initiatives.

28195 It's as a result of the fact that we are at a very immature stage with regards to the technology and it's a very competitive marketplace from a technology perspective.

28196 We are moving towards standardization, but there's going to be a lot of forks in the road as we go along.

28197 COMMISSIONER WILSON: Thank you. With respect to the sort of policy implications regarding interactivity, it was suggested that we actually conduct a separate process to talk about the distribution of interactive elements that are related to a programming service. There was a lot of discussion about the early stage interactive elements that didn't require a lot of bandwidth and the more advanced stage interactivity which could eat bandwidth or require as much as an entire separate channel's worth of bandwidth.

28198 What's your view on how that should be approached?

28199 MS YALE: Let me make a couple of preliminary comments and then I am sure there are a couple of people in the back who are going to want to jump in.

28200 Generally speaking, from an interactivity perspective, we are prepared to pass through program-related data subject, as you have mentioned, to some of the capacity issues that arise as well as to the interofferability of that information with the set-top box.

28201 As Mike has noted, we really are in early days. One of the things that is really exciting about this marketplace is that it's evolving. From our perspective, we would be really reluctant to start to assume that there are policy issues that can't be worked out and that might actually limit the kinds of market opportunities that we see emerging through interactive programming.

28202 For example, some of the technical standards around the ability to offer once, for example, and I will pass it back to the technical people to talk a little bit about some of those cable labs initiatives.

28203 The standards are being developed. The entrepreneurs in the marketplace are starting to figure out how to play in that marketplace. So I think it's really almost too soon to launch any kind of proceeding because it's not clear to me that there are issues that are ready to be addressed from a regulatory perspective as opposed to a marketplace perspective.

28204 Maybe I can just let my two technical colleagues make a comment each.

28205 MR. LEE: I would concur with a lot of what Janet said. We are in very early stages right now. To a degree, a lot of what we are seeing and will see with interactive TV does not bear any relationship to what's happened on the Internet and in certain cases it will.

28206 Business model and revenue model and value creation for both the programmer and distributor and the consumer will be something that will work out over time. It has to have a certain amount of flexibility. I think it's one of the great opportunities right now for us to really align interests between all parties through the process of working together at a business level.

28207 If we create structures which don't allow for that flexibility and the ability to change quickly, I think that we are going to run into a certain amount of problems going forth just because, as we have seen on the Internet, a company's business model can change dramatically from the start of a planning year to the end of a planning year.

28208 We have to have structures and processes and relationships between the organizations to be able to reflect the ability to make those changes.

28209 COMMISSIONER WILSON: Thank you.

28210 MS YALE: There was something I forgot to say, and I apologize.

28211 COMMISSIONER WILSON: It happens to all of us.

28212 MS YALE: There is a joint industry group already looking at some of these issues. That's the CDTV group which has representation from every sector in this industry, including broadcasters, all distributors, equipment manufacturers and so on.

28213 That group has just agreed to focus on three issues over the next little while, one of which has to do with the interactivity. The CRTC staff are observers in that process.

28214 There is a forum. While it is early days, it is going to be taking on this issue on a sort of cross-industry working group basis to look at these issues as they arise.

28215 COMMISSIONER WILSON: With respect to -- thank you for that, Ms Yale -- with respect to foreign services, you have recommended that the CRTC open up its list of eligible services as soon as possible. I am just wondering what your views are on the suggestion made at this hearing that additional foreign services should not be allowed to launch before Category 1 services are launched.

28216 MS YALE: I think our view is that those services should be available for inclusion in packages at the time of the launch of the digital services in order to ensure that there are interesting and creative packages out there.

28217 That's not to say that these services, the new services, won't be interesting and entertaining. It's just to say if we are going to have a coordinated national launch for these digital services, it seems to me that the time is right to make sure that we as distributors have the opportunity to put together packages that reflect the full array of services that might be possible rather than sort of launch and then launch again in terms of adding services to the mix over time.

28218 Once the Commission has made its licensing decision about which genres of Category 1 services that it wants to see licensed, it seems to me that we have more than enough information to figure out which foreign services can be added to the list of eligible services.

28219 COMMISSIONER WILSON: I don't know if you listened to the discussion that we had this morning with respect to French language services, but I wonder if you could tell us what you think about whether or not we should maintain our current approach or adopt a more lenient approach.

28220 MS YALE: I'm going to turn that over to Pierre Gagnon.

28221 COMMISSIONER WILSON: Okay.

28222 MR. GAGNON: Yes. I listened with interest to the presentation this morning. What we have -- well, first of all, there are some issues that need to be considered. Certainly the rights issue is something that should be considered.

28223 After listening to representations from the services themselves, I think there are ways to come to grips with that particular issue. I sensed at least a willingness at that level to work cooperatively so that issue can be resolved with some kind of satisfaction to all parties involved.

28224 There remains some issues with respect to other types of foreign services that may want to come into our markets in Canada. I'm certainly not in a position to really comment on those issues more particularly.

28225 I sense that there were some issues -- the World Trade Organization, free trade agreements -- that could have an impact and it should be looked at carefully.

28226 That being said, one of the experiences that we have in the French market with respect to digital services is a lack of distinctive French services which result, quite honestly, in our subscribers -- a significant portion of our subscribers switching back to analog because essentially they do not find on the digital box a significant difference in terms of services to what they were used to, and since navigating on that box is somewhat different than what you experience on an analog box and for those considerations, some of them decided to switch back to analog.

28227 So that illustrates to a certain extent the need for distinctive French specialty services that would be available in digital format, so that we can get the box out and complement the offer.

28228 We will be complementing the offer with some additions like Net TV or interactive television that we plan to launch within the next few weeks, but still there is certainly a need for additional services in the French speaking -- the French markets.

28229 What we also have to consider in this particular context is the fact that in this market what attracts viewers is content that is linked to their reality. That's why we never experience much difficulty meeting Canadian requirements in the French specialty services or in the French regular television, if I should say, because of that specific need in this market to have a content that is directly linked to the reality of the French-speaking community or the French market.

28230 Those services, we have to recognize, are foreign services. They are somewhat niched. They will attract viewership probably to a lesser extent that a more generalized or services that is more linked to our reality, but still it would be from our perspective a valid addition to the offering that we can present to our consumers.

28231 The concern we have with respect to this particular issue is the issue of sponsorship. We are in a situation in this particular case where one Canadian company is sponsoring those particular services, which is also a competing distributor with us and we have some concerns with respect to undue preference with respect to that. We would certainly support this issue of undue preference because the regulatory harm that the Commission would have in such a situation is pretty light.

28232 We would probably suggest that as a condition being added to the list that those services treat all distributors with no undue preference.

28233 So that's a concern that we have in the back of our mind with respect to that particular arrangement that we are seeing in the marketplace.

28234 If it was our company that was sponsoring some new specialized or new digital services, foreign digital services, we would certainly have no problem agreeing to some undue preference mechanism in the same context.

28235 That's in a nutshell what our view is at this point.

28236 COMMISSIONER WILSON: What do you mean you would have no problem agreeing to some undue preference mechanism in that context?

28237 MR. GAGNON: As a sponsor, obviously if we were Vidéotron sponsoring some services and act like the sort of exclusive agent in Canada of this service, we would have no problem if the services in question would be subject to treat all distributors with no undue preference. That's the point I am trying to make.

28238 What I am saying, essentially, is that if I suggest it should be a consideration in the case of that particular contractual relationship, I am also consistent in saying that I would have no problem agreeing to the reverse if that was the case in similar circumstances applying to us.

28239 COMMISSIONER WILSON: Thank you.

28240 I will just say that actually your comments on undue preference lead me right to the last area I am going to discuss with you.

28241 You talked in your opening remarks about some of the suggestions that have been made during the course of the hearing with respect to the CAB, for example, suggesting the joint marketing initiative and establishing an industry code and some of the suggestions that SPTV made as well.

28242 You have said that it's your view that no additional measures, in addition to what we have already set out and the undue preference provision of the BDU regs, that no additional measures are required.

28243 You said there will be every incentive for all the players to ensure that the new services are launched in a co-ordinated and co-operative fashion, but clearly they don't feel that way. Their argument would be that the fact that you say that no additional measures are needed is completely predictable, since the view is that the flexibility benefits the gatekeeper.

28244 So, I guess what I am trying to sort of find out from you, we have the CAB and SPTV on this side and you on this side and in the spirit of the prize which we won today for collaboration, what comfort can you give us? I mean, Ms Logan said yesterday that she couldn't get to first base with the cable association and I don't know what the status of -- well, Mr. McCabe said he had exchanged some heated correspondence I think.

28245 So clearly this is not a love-in for the cable industry and there is a lot of discomfort with how you might proceed in launching the digital services.

28246 So how do you convince us that we should not be prescriptive and not get involved, aside from saying we think it's sufficient, it's in the spirit of what you have said in the framework?

28247 MS YALE: I have a number of comments to make on this issue, as you might imagine.

28248 First of all, let me say and I know Ken Stein has said it already, we are not the dominant distributor for the launch of these services. So we have to keep in mind that in terms of the successful launch of these services it's our competitors who have sort of an upper hand relative to us.

28249 Having said that --

28250 COMMISSIONER WILSON: I will acknowledge that. I will accept that. We know that there seems to be more movement on their side to establish some kind of an industry code, so they are looked after from that perspective.

28251 MS YALE: We have never said we are not prepared to have an industry code. I think our position on this has not been accurately reflected in terms of the reference "we never got to first base".

28252 We are certainly prepared to work collectively on a number of issues. Let me just start by saying which issues we think should not be the subject of a code or a joint process. Those are issues that are of a competitively sensitive nature. Those have to do with the issues that we believe are going to be the subject of business negotiations between the parties which are appropriately conducted on a bilateral basis. Those are issues around price, packaging, marketing and advertising.

28253 The reason I say that is that I think it's unreasonable to think that we are going to sit down in a room with our competitors and have a collective discussion around issues where we are going to be striving to differentiate ourselves from our competitors.

28254 Let me give you an example of the kind of situation that could arise. With respect to Category 2 services, as you know, there is no must carry obligation. So say one cable company thinks: I have looked over the applications out there and there are a few Category 2s that I think are real winners in this marketplace and I am going to try and make a deal to bring them on, whether in a theme pack or a general interest package or whatever.

28255 I may not even want the other distributors to know I am having those negotiations because I don't want to give them a heads up that I think this one is a winner and that at launch I may want to put this one out and have something that differentiates me, if you will, from the satellite provider in that marketplace.

28256 So that's the reason I say that those kinds of issues are more appropriately dealt with as business negotiations on a bilateral basis. So I would leave those aside.

28257 With respect to a code, we struggled with this question very hard. In the meeting that Jane Logan referred to, I indicated that we had been thinking how could we put some sort of meaningful code of conduct together that would deal with this issue of is there something over and above the undue preference standard that we could put forward that would be helpful.

28258 What I said at the time and what I would say to you now is that it's very hard to think of anything that would be of any practical benefit.

28259 So say, for example, with respect to the issue of packaging, we say let's agree that there would be in the code a standard that says there can be no preferential packaging arrangements or packaging arrangements shouldn't be done in an inequitable way.

28260 If you look at the SPTV kind of list, those are the kinds of words and that's the kind of language that appears, preferential, inequitable.

28261 My concern with that is that -- I mean, we may well be prepared to agree to it. I just don't know what that says, other than the undue preferences standard. Because, at the end of the day, if there's a rule that says you cannot engage in preferential packaging arrangements, we propose a packaging arrangements, we propose a packaging arrangement to a particular service provider, they say, "That's preferential", we say, "No, it isn't". Then what happens? We end up in front of the Commission, in a dispute, and the Commission will rule on all the facts and circumstances of the case as to whether or not that packaging arrangement violates the undue preferences standard. So, we are certainly happy to sit down and work together.

28262 But what I said, at that time, and what I would suggest, now, is that we had a hard time coming up with anything that would actually be a practical benefit and provide substantive guidance that wouldn't actually just say, "You can't do an undue preference, but say it in a different way". So, then, unless you get really, really, specific -- so, then, say we are going to get really specific, and I look at the CAB list and they say, "Well, you can't do something like have a package that only involves the services of one service provider", because that would be -- prima facie, that would be preferential.

28263 Well, say, for example, a service provider like CHUM, for example, comes forward and says, "We have a really interesting idea and it involves one of our Category 1s" -- assuming they get one -- "and a bunch of 2s and we have a really interesting idea for a theme package we would like to put to you". And a cable operator says, "That sounds like a great idea". Then Alliance Atlantis comes along and says, "We have one, too. Here's our 1 and here's the 2s we would like to do". And we say, you know, "We don't think that one will win in the marketplace. We don't want to have that as a separate theme package." Well, the rule, as put down by CAB, if it was a rule that was set up in advance, would prohibit that kind of arrangement because it would say it's preferential.

28264 Is it preferential?

28265 I mean you would have to look at all the facts and circumstances of the case. It seems to me, that when you get too specific you can kind of take out of play certain kinds of very interesting packaging arrangements in advance, and we don't even know what's going to be licensed.

28266 So, I'm prepared to work together and work on a code, I just -- what I was concerned about six months ago, when we had the first conversation, is that I'm concerned the code would be either too high a level to be of any practical level or so specific that it might end up unnecessarily constraining the marketplace in ways that are unintended.

28267 Those are caveats I put forward, at the time. Those are still the concerns that I have. But it's not because we don't want to work together to see its success. It's because we -- I haven't been able and, collectively, we haven't been able, to come up with anything that would actually help give them the assurances they are looking for. But we are absolutely prepared to work together and see if we can make some progress.

28268 COMMISSIONER WILSON: Okay. Thank you, Ms Yale.

28269 I think that concludes my questions, and I will turn it back to the Chair and she can pursue...

28270 THE CHAIRPERSON: Madame la Présidente...?

28271 CHAIRPERSON OF THE COMMISSION: Good afternoon -- or good evening.

28272 That's definitely one element that is very important. It's important to you. You call yourself the non-dominant but, you know, who knows, with the optimistic scenario, you will be the dominant again, eventually, and given -- well, yes, but -- and StarChoice is not too far from the cable distribution, you know, family.

28273 So, for me, that element is valid, but is not really what we are debating or really struggling with. I think what we are struggling with is give consumers the choice, because new technology is there and there is new ways of taming the beast, in a sense, and there will not be really a great possibility to deploy digital unless that flexibility is there, and I think that's what the Commission has recognized by the framework we established.

28274 But what Mr. McCabe was saying, earlier this afternoon, is give the consumer choice goes through a channel, that is the BDU, whether we talk about the dominant in the digital world today or the one of tomorrow, and good luck to you, still, it's not really first and to the consumer. It has, like in many other industries, to go through a distribution route and that is where -- because, for cable and satellite and for broadcasting undertakings, contrary to other businesses, there's been, like, a pact, a regulatory pact, in order to, all together, provide the assurance that, in Canada, the broadcasting system would meet some objectives that were of importance to everybody.

28275 And in this, was the production and, really, the sustainability of the Canadian program industry, if we can call it that way, that kind of takes everybody under the roof, and the concern, and what I'm debating while we are discussing that aspect of the question in front of us right now, is: how do we try to harmonize, recognizing the new world, recognizing the flexibility needed, recognizing the value at a right price we want to provide to Canadians but, yet, recognizing the importance of quality, Canadian production, in the future, and allowing not one company to survive or to be a success but the, really, possibility of Canadian programs to develop and be strong and be capable of even appealing more, even, to Canadians in the future but, also, to other public outside of the boundaries of Canada.

28276 So that's where, when -- I hear you. I hear that the technology will provide the choice and you want to be capable of doing that. What is the guarantee or the comfort you can give us, in terms of this will be an important element of your consideration and of your "démarche", because, at the end of the day, you can sell the boxes with a lot of foreign services and news and sports, or film and sports, and what we have had in front of us is a lot of diversity, much more diversity, in all the genre of Canadian programs. So, what kind of, you know -- in terms of the choice, what will be -- really, other than, really, a partnering with all the players, what will be the comfort to allow the flexibility as if, really, at the end of the day, it is really the consumer that will choose, where we know that, for the time being, there is, like in any other industry, a distributor that will make the choice?

28277 MS YALE: Well, I really believe, and I think we all believe, that what makes digital different is that we are all in it together in a way that really is different, in the following sense:

28278 We have made -- from a cable side, we have made the investment, up front, to upgrade our networks to support digital services and we have, as you may be tired of hearing, over 5.5 million homes that are digital-ready and, yet, we have something less than half a million digital customers, and the shortage is content. We need the content to drive the penetration of digital boxes.

28279 And so, we really believe that we are in a partnership on this, together with the programming services, because it's only through the delivery of that content that we are going to be able -- that we are going to be really able to succeed in our business and help them succeed in their business. It is truly a parternship, in terms of ensuring the success of the services. The more services we sell, the more boxes go out there, the better off everybody is.

28280 I really think it's as simple as that, that what -- we have made the investment, up front, we have been content-starved, if you will, for some period of time, waiting for these digital licences and so, we find it, you know, a little bit frustrating that there isn't that sense that we are in it together, because it is in our common interest to see these services thrive. It really is.

28281 CHAIRPERSON OF THE COMMISSION: Madam Yale, there is a difference in this new world too. The Commission has allowed equity of the distribution undertaking.

28282 So you are in there together, but with a different interest or more interest than you had in the past, which is in a sense an incentive to be really even better partners in a sense. But that really raises all the kinds of concerns that we have read, that we have heard and that I am sure that we'll hear some more on.

28283 So I am trying to get from you how -- you know, I was writing down when you said, "you know, it's very difficult. We sat down and it's very difficult to get substantive guidance in what is undue preference."

28284 And, as you know, I am not a lawyer, and when I heard you say that I said "that's my point and that's my concern."

28285 As a regulator, in order to put, you know, no undue preference, how can I get not too many people at our door knocking for dispute resolution is to make sure that the rules are clear, or that either there is no rule and, you know, the market takes it all, or there is a rule that is clear enough that it's clear for all the partners involved and the consumer because we cannot forget him or her.

28286 And to really make sure that it's clear for everybody, so that, you know, the attention of everybody is put where it should be, which is really providing the best services possible, you know.

28287 So when I hear you say it's difficult to get a -- to agree or to define what could be substantive guidance and undue preference, I feel like saying that's my point, that's my concern and please, if you have any element to give me some comfort that would be -- I think in terms of what the concern has been in terms of what has been raised by other intervenors, but also what I can, you know, foresee as being one of the elements of discussion in the analysis after the hearing is definitely around that element.

28288 MS YALE: Let me make three very brief comments and then I think there's a lineup of people from the various members who would like to say something.

28289 When I said that it was hard to come up with it, if I look at some of the things that SPTV has described, all I meant was if I was a member of SPTV I would not take much comfort from the examples that are provided in their list because all they say is you can't do something in an inequitable way. They don't get more specific than that.

28290 And I agree that we wouldn't do it because, of course, you can't do anything in an inequitable way. That would contravene the undue preference standard.

28291 The question is: What specifically are we talking about? And so having said that I wouldn't take much comfort if I were them.

28292 I am happy to sit down and try and work together to do that and there are a couple of forums in which we are working co-operatively. For example, the working group that has been established on migration issues has said that they are going to work on these very questions in the context of analog migration.

28293 So we are happy to see if we can make some progress on that, but the more fundamental question is what assurance do you have about the behaviour because at the end of the day the thing that's most important, it seems to me, is not having the kind of behaviour that will cause you to have to engage in dispute resolution and the real discipline is the marketplace.

28294 That's what fundamentally makes this launch different than others. We have two major competitors on the satellite side and a major competitor from Look who are going to be the best discipline there can be because if there is a service that we don't offer in a way that's appealing to consumers they will go to our competitors. It's that simple.

28295 We have a huge discipline on us that didn't exist before in the absence of competition. I think at the end of the day the marketplace is always the best way to ensure that we focus on what customers want and deliver it to them in a way that maximizes value for them and for all of the players.

28296 So, with those preliminary comments I will turn it over first to Colette Watson.

28297 MS WATSON: Thank you.

28298 I think what I am hearing is, if I can create an analogy, as the Vice-President of Public Relations at Rogers customer complaints get escalated to me. So when they get to me they are angry.

28299 So at the end of some days I can go home thinking all of our customers really hate us.

28300 And so, if you apply that analogy -- and they don't, you know, because we go out and meet our customers and out of the 2.5 million that we do most of them like us.

28301 So there are a number -- you know, at Rogers we have I think 52 affiliation agreements. That means 52 relationships with different suppliers. You may hear -- you hear it at the end of an escalation process. So you may have the perception that all the relationships at antagonistic, which has created this element of distrust between the supplier and the distributor.

28302 Certainly the groups preceding us, SPTV and CAB, demonstrate that they don't trust us. The last thing a Rogers person is going to do at a hearing is say "don't worry about it. Trust us."

28303 But it's covered under your undue preference framework. It's covered in there. There's nothing new here that isn't already covered in your process.

28304 If I go back to Commissioner Wilson's question to Michael McCabe, it is a new world and so we need to put the analog world aside and start thinking in terms of new distribution, new relationships.

28305 This licensing process kind of has a foot in one camp and a foot in the other, with respect to you are going to grant a licence. Some will have preferential carriage over others. You may or may not mandate a wholesale fee, so the negotiation really is kind of moot.

28306 You know you have to carry it. You know what you are going to have to pay for it. What else is there to negotiate? Thank God in the digital world you don't have to talk channel placement, but then there's packaging.

28307 We just don't want to limit options. We heard Daniel Lamarre say he would like to see a TVA pack. Well, maybe we would too, but under these constraints we would have to say no, forget that, that's not in the code. That contravenes the code.

28308 What if Alliance came to us with a package, to further Janet's point and their channel, say it's the book one, would be great with the Global mystery one, books, mysteries. It might be a neat combination, but they want to have their package -- they want to be packaged with their stuff.

28309 It's not undue preference. It's trying to figure out, trying to anticipate what a customer wants.

28310 If I can address your Canadian issue, there are many new Canadians to this country who may want to take a foreign ethnic channel just so they can stay in the Canadian system, that they don't have to get a grey market dish and buy from Echo Star the Lebanese channel that comes across. They want to stay in the system. They want to be Canadians, but they wouldn't mind having access to this and wonder why they can't.

28311 So, perhaps we would want to have a list of services that are à la carte because there is a niche market for that. We just don't want to limit ourselves with that.

28312 So to that point I would say it's hard to have this discussion without knowing what you are going t licence and what the variety is going to be and what the possible combinations could be because we just don't want to limit those options ahead of that decision coming out.

28313 CHAIRPERSON OF THE COMMISSION: We don't know yet, we are not at the end -- and far from being at the end of the process.

28314 En français.

28315 M. GAGNON: c'est ce que j'allais suggérer.

28316 Et je veux juste mettre l'emphase sur une chose. Il est vrai que dans le marché dans lequel on s'en va on est en concurrence et on peut dire ce n'est pas vraiment une réalité. Je pense que ça va générer des relations contractuelles totalement différentes avec les distributeurs avec lesquels on est habitués de faire affaires.

28317 Je peux comprendre à la limite une certaine méfiance de certaines situations ou incidents passé puis une certaine "angoisse" de certains distributeurs ou de certains diffuseurs, mais je pense sincèrement que notre plus grand angoisse à nous c'est de trouver un équilibre et une équité dans le marché par rapport à l'ensemble des concurrents avec lesquels on va être confrontés et je prends le pari que si on en arrive à une entente qui rencontre le critère de préférence indue, c'est probablement une entente qui va nous défavoriser dans le marché, qui va être perçue soit par nos consommateurs ou qui va être facilement combattue par l'ensemble de nos concurrents.

28318 La meilleur façon, je pense, de s'assurer d'une discipline dans le marché c'est justement le fait qu'en ce qui nous concerne -- et c'est le cas de tous les autres -- on va avoir trois autres concurrents aguerris dans le marché de la distribution numérique avec lesquels on va essayer de jouer d'astuce pour pouvoir trouver la meilleure combinaison d'offres qui va attirer la clientèle chez nous et qui va bénéficier d'un ensemble des services qu'on va avoir à offrir.

28319 L'autre solution -- et c'est peut-être une solution intermédiaire et puis j'y vais un peu "on top of my head", sans en avoir parlé aux autres -- mais attendons donc de voir...

28320 LA PRÉSIDENTE DU CONSEIL: Il parle en français.

--- Rires / Laughter

28321 M. GAGNON: Je veux dire un processus de conciliation ça peut se mettre sur pied assez rapidement. Attendons donc de voir ce qui va être autorisé, attendons donc de voir s'il semble apparaître dans les relations entre les distributeurs et les radiodiffuseurs des problèmes qui pourraient amener de la préférence indue et à ce moment-là essayons dans un contexte peut-être plus rapide, mais essayons de voir avant de trouver, d'essayer de trouver tout de suite une solution à un problème si on a véritablement un problème.

28322 Je prends le pari qu'on n'en aura pas de problème.

28323 LA PRÉSIDENTE DU CONSEIL: Je compte sur vous.

28324 Merci.

28325 THE CHAIRPERSON: Commissioner Williams.

28326 COMMISSIONER WILLIAMS: Thank you Madam Chair.

28327 So if I have heard you right, it's viewer choice, entertaining and attractive content, flexible and innovative packaging, value pricing, clever marketing.

28328 Mr. Stein and Ms Yale, would these words accurately summarize digital market success à la CCTA?

28329 MS YALE: I think it would be a challenge to meet all of those, but I think that would be pretty accurate in terms of what it will take to succeed.

28330 COMMISSIONER WILLIAMS: Okay. Thank you.

28331 THE CHAIRPERSON: Counsel.

28332 MR. STEWART: Thank you, Madam Chair.

28333 Do you have any comments on the operation of the access rules with respect to bilingual Category 1 digital services that may be licensed?

28334 MS YALE: Well, understanding that you have a process under way with respect to those licences, we would propose in those markets where we have customers warranting that need that it would be certainly something we would consider right off the top with respect to offering services that would appeal to the customer base in that market.

28335 As far as the access guidelines go, we will be submitting our comments in the parallel process.

28336 MR. STEWART: I don't know if Mr. Taylor wishes to make a further contribution.

28337 MR. TAYLOR: Let me rephrase the question and then we will see whether or not we have an answer.

28338 The question is actually if the service itself is bilingual and therefore would be a must carry Category 1 service in both an English-language market and in a French-language market. Is that the question?

28339 MR. STEWART: Yes, and would you consider that it should be I guess a must carry in both of those markets. I am just seeking comments, again, on the operation of the access rules with respect to those bilingual digital services that may be licensed and that we have before us.

28340 MR. TAYLOR: I think it raises difficult issues of characterization so that I think it would be preferable if in licensing a service, the Commission could characterize it as one or another, and I am just thinking, if there are going to be multilingual channels, we don't necessarily know where we stand.

28341 So in general, I would have thought that it would be for clarity of negotiation and carriage, et cetera, more appropriate for the Commission to indicate with respect to a particular service that this service is being licensed as an ethnic service, a service being licensed as an English-language service or a French-language service. To give a double character to a service, to be very frank, is not something that I particularly turn my mind to, but I could see it leading to some confusion or difficulty. It certainly could lead to some marketing challenges and things of that sort.

28342 MR. STEWART: So you would appreciate clarification from the Commission when it came to the licensing of the service.

28343 MR. TAYLOR: I mean, in the absence of clarification from the Commission, if there is a service that would wish to characterize itself as being both a Category 1 French and a Category 1 English, I think you could anticipate that you would be asked to clarify it some time in the following months.

28344 So it would probably preferable for the Commission to do so at the beginning and save us all some time.

28345 MS WATSON: Does it double the linkage?

28346 MR. STEWART: Thank you very much. Thank you, Madam Chair.

28347 THE CHAIRPERSON: Thank you very much, Ms Yale and your colleagues.

28348 Right on the dot at six.

28349 We hear one more intervention before breaking for dinner.

28350 Mr. Secretary, please.

28351 M. CUSSONS: Merci, Madame la Présidente.

28352 Le prochain intervenant, l'Association des producteurs de films et de télévision du Québec.

INTERVENTION / INTERVENTION

28353 Mme SAMSON: Merci. Madame la Présidente, Mesdames, Messieurs les Conseillers.

28354 Je suis Claire Samson, présidente-directrice générale de l'Association des producteurs de films et de télévision du Québec. Je suis accompagnée de M. Jacques Blain, producteur et président de Cirrus Communications, membre du conseil d'administration de l'APFTQ.

28355 Comme vous le savez, l'APFTQ représente plus d'une centaine d'entreprises québécoises de production qui réalisent environ 95 pour cent de toute la production indépendante en cinéma et télévision au Québec.

28356 Depuis plusieurs années, nos membres ont largement contribué à offrir une programmation de qualité au public de plus en plus nombreux des chaînes spécialisées.

28357 Dans un premier temps nous tenions à intervenir sur la demande de licences numériques francophones de Catégorie 1. Nous nous prononcerons ici sur les principes généraux qui, selon nous, devraient guider le Conseil dans l'octroi de nouvelles licences.

28358 Les décisions du Conseil auront des répercussions importantes sur le système canadien de radiodiffusion. Par ses choix et ses exigences, l'un des rôles du Conseil consiste selon nous à assurer le maintien d'un équilibre essentiel entre producteurs, télédiffuseurs et distributeurs.

28359 Dans un deuxième temps, nous expliquerons la teneur de notre vive opposition à un traitement préférentiel pour les services non-canadiens de langue française qui souhaitent être distribués au Canada.

28360 Au sujet des nouveaux canaux spécialisés numériques, je ne vous cacherai pas que nos membres sont inquiets. Un grand nombre de demandes de nouveaux services spécialisés francophones ne pourrait évidement être absorbé par notre petit marché.

28361 Même une faible augmentation du nombre de services créera une pression accrue sur les fonds publics et privés des sources limitées mais indispensables au financement de la production francophone.

28362 Un plus grand partage de la même tarte risque de se faire au détriment de la qualité des émissions canadiennes, et en ce sens, sur les dizaines de canaux de Catégorie 1 que le CRTC compte octroyer, les services francophones ne devraient, selon nous, pas dépasser 30 pour cent du nombre de licences accordées en tenant compte du pourcentage de Canadiens de langue française.

28363 M. BLAIN: Nous croyons que ces nouveaux services spécialisés numériques devraient répondre aux mêmes exigences et mêmes critères que les services spécialisés analogiques. Voici nos six recommandations à cet effet.

28364 Le Conseil doit s'assurer que les distributeurs respecteront des règles d'accès équitable aux services spécialisés canadiens de langue française. Le Conseil doit, dans le cas de tout détenteur de licence de télédiffusion, veiller à limiter son intégration verticale pour qu'il ne soit pas à la fois producteur, télédiffuseur et distributeur des produits qu'il programme. Et enfin, restreindre son intégration horizontale quant à la propriété de licences de réseaux conventionnels et de services spécialisés.

28365 De plus, un tel télédiffuseur devrait garantir des droits distincts évalués à leur juste valeur marchande pour l'acquisition et la production d'émissions diffusées à la fois par son service conventionnel et par ses services spécialisés et que cela soit inclus dans sa condition de licence. L'APFTQ s'attend à ce que le Conseil accorde préséance aux demandeurs qui proposent un haut niveau de contenu canadien de qualité dans sa programmation.

28366 Le Conseil devrait exiger des requérants des engagements en matière de contenu canadien et de dépenses de programmation canadienne qui soient proportionnels et réajustés en fonction de l'évolution du nombre d'abonnés ou des recettes, et ce de façon à ce qu'à mesure que le nombre d'abonnés et les recettes -- je m'excuse, je recommence.

28367 Il faudrait que le nombre d'abonnés et des recettes soit réajusté en fonction de l'augmentation des abonnés et de l'augmentation des revenus, et à ce moment-là que les critères et les conditions qu'on impose aux canaux spécialisés ressemblent aux canaux conventionnels à mesure que les revenus et les abonnés ressembleront à ce qu'ont les canaux conventionnels.

28368 Le Conseil doit exiger de tous les détenteurs de licence de services spécialisés lorsqu'il souhaite acquérir les droits d'exploitation sur Internet de payer des droits distincts établis à leur juste valeur marchande pour l'acquisition de ces droits.

28369 Cette exigence devrait faire partie des conditions de licence de ces services et devrait également s'appliquer sur chacune des fenêtres de diffusion.

28370 Le Conseil doit s'assurer qu'aucune licence de services spécialisés ne sera accordée à une entreprise de télévision conventionnelle ou à une entreprise de services spécialisés sans que celle-ci s'engage à produire ou à faire produire par une entreprise de production qui lui est affiliée un maximum de 25 pour cent de son budget de programmation originale destinée à ses services spécialisés, autres que les nouvelles, les affaires publiques et les sports.

28371 En bref, l'APFTQ considère que le cadre de réglementation doit favoriser l'émergence de services spécialisés qui soient à la fois viables et de qualité, qui contribuent à la diversité de la programmation offerte au public, qui offrent un pourcentage de contenu canadien important, qui consacrent une part significative de leurs recettes brutes aux dépenses de programmation canadienne, qui confient une large part de leur programmation en pourcentage de contenu et de budgets aux producteurs indépendants canadiens, qui ne concurrencent indûment ni ne menacent la viabilité des services existants, enfin, qui tiennent compte de la spécificité des systèmes de radiodiffusion de langues française et anglaise, de leur relative fragilité ainsi que de la capacité de supporter une augmentation du nombre de services additionnels.

28372 Mme SAMSON: Quant aux services non-canadiens de langue française, nos membres s'opposent vivement à ce qu'un traitement préférentiel leur soit accordé pour une diffusion au Canada. Ce traitement irait directement à l'encontre des objectifs de la politique canadienne de radiodiffusion inscrits dans la Loi sur la radiodiffusion. Il menacerait le caractère distinct du marché de la radiodiffusion de langue française au Canada et se traduirait par un affaiblissement des entreprises de radiodiffusion de langue française qui sont la propriété de Canadiens ou sous leur contrôle.

28373 Cet affaiblissement des services canadiens ferait diminuer leur contribution globale à la programmation canadienne et au développement des ressources créatives canadiennes.

28374 L'APFTQ est d'avis que le système canadien de radiodiffusion actuel offre déjà toute la flexibilité nécessaire pour permettre aux services étrangers de toutes langues et de toutes origines d'offrir le meilleur de leur programmation aux téléspectateurs canadiens.

28375 Cela est possible à travers les ententes de partage de propriété avec des entreprises de radiodiffusion canadiennes ou de fourniture de programmes.

28376 En autorisant les services non-canadiens à distribuer au Canada leur signal, et ce même s'il entre en concurrence avec des services canadiens dûment autorisés, le Conseil ferait du Québec un marché intégré au marché française, autrement dit un marché domestique pour la France.

28377 Cela obligerait les entreprises canadiennes à acquérir leur programmation étrangère des diffuseurs français seulement si ces derniers ont choisi de ne pas les exploiter eux-mêmes au Canada.

28378 Les conséquences très préjudiciables que nous entrevoyons pour le système canadien de radiodiffusion nous poussent à nous oppose catégoriquement à un tel traitement de faveur pour des entreprises étrangères.

28379 Voilà qui résume notre position. Il nous fera plaisir de répondre à vos questions.

28380 LA PRÉSIDENTE: Merci, Madame Samson.

28381 Madame Bertrand.

28382 LA PRÉSIDENTE DU CONSEIL: Alors bonjour.

28383 J'ai très peu de questions parce que votre intervention cet après-midi reprend essentiellement votre intervention écrite qui était assez claire. Mais quand même, je vais y aller de quelques points d'interrogation.

28384 Vous parlez en terme de nombre de services francophones, pas plus de 30 pour cent de ce qui pourrait être l'offre, de faire attention aux équilibres fragiles.

28385 Dans l'hypothèse d'un 10 ou 12 ça voudrait dire trois ou quatre services numériques à licencier -- pas à licencier, mais à licencer. Est-ce que c'est suffisant pour avoir un volet ou un bouquet numérique pour amener les abonnés supplémentaires à la voie numérique ou c'est une question qui ne vous inquiète pas?

28386 Mme SAMSON: Honnêtement, on pense que trois ou quatre c'est à peu près ce que le marché peut accepter et dépendant, naturellement, de la nature des licences, il pourrait certainement y avoir un intérêt assez important de la part des consommateurs et des téléspectateurs francophones.

28387 LA PRÉSIDENTE DU CONSEIL: Disons que le dernier lancement n'est pas nécessairement concluant à cet égard-là dans les marchés francophones.

28388 Mme SAMSON: Non, en effet.

28389 LA PRÉSIDENTE DU CONSEIL: Dans quelle mesure une offre numérique qui n'aurait que trois ou quatre services de plus sera suffisante? Est-ce qu'il n'y a pas là, à ce moment-là, un certain risque qu'il y ait un encouragement à plus d'écoute du côté anglophone où il aurait une plus grande diversité ou une plus grande offre? Est-ce que ça ne vous inquiète pas cette possibilité?

28390 Mme SAMSON: Il y a toujours le danger qu'une partie de l'auditoire s'échappe vers une programmation anglophone bien qu'on peut dire qu'à l'heure actuelle les francophones ont accès, les abonnés au câble et au satellite ont accès à une multitude de services anglophones et il semble que, en tout cas, les francophones continuent de préférer consacrer la plus vaste partie de leur temps d'écoute aux émissions françaises et particulièrement canadiennes.

28391 LA PRÉSIDENTE DU CONSEIL: Et particulièrement presque conventionnelle aussi, la télévision conventionnelle qui a encore un très grand espace.

28392 Mme SAMSON: Un très grand espace, malgré qu'on voit les améliorations constantes des canaux spécialisés.

28393 LA PRÉSIDENTE DU CONSEIL: Cet été en particulier.

28394 Mme SAMSON: Cet été en particulier, et il faut dire que dans les sondages qui sont sortis sur les marchés francophones les émissions comme "Survivor" et "Who Wants to be a Millionaire" ne figurent pas. On croyait que tout le monde les avait regardées, mais non.

28395 LA PRÉSIDENTE DU CONSEIL: Ça prend des versions canadiennes.

28396 Mme SAMSON: Oui.

28397 M. BLAIN: Peut-être un commentaire, Madame Bertrand, là-dessus.

28398 LA PRÉSIDENTE DU CONSEIL: Oui.

28399 M. BLAIN: On n'est nullement contre le progrès et puis on souhaiterait qu'il y ait plus de canaux francophones, mais on veut aussi être cohérents avec notre position. Si on veut que ces canaux-là diffusent un important contenu canadien, ça signifie en partie de la production originale et le système de financement actuellement est déjà étiré au maximum, et on ne veut pas se retrouver dans une position où tous les canaux auront des petites émissions à très petits budgets qui ne seront regardées par personne.

28400 Donc c'est un effet pervers -- peut-être que le mot est fort -- qu'on essaie d'éviter en prenant une telle position.

28401 LA PRÉSIDENTE DU CONSEIL: Je pense qu'il y a un consensus de la part de toutes les requérantes qu'on a entendues et les intervenants qui ont commencé à venir à l'audience et tout ce qu'on a lu précédemment à l'audience comme telle, il y a un souci d'amener de la qualité. Il n'y a pas de doute c'est très important, sinon le consommateur ne sera pas au rendez-vous, il va sans dire.

28402 J'avoue qu'il y a des choses que vous dites cet après-midi qui m'apparaissaient pas si claires dans votre intervention écrite et ç'a trait à lorsque vous dites qu'il faudrait limiter l'intégration verticale, limiter l'intégration horizontale.

28403 Il me semble que ces éléments n'étaient pas vraiment mis en lumière dans votre intervention écrite. Est-ce que j'ai la berlue ou si vous pouvez répondre.

28404 Mme SAMSON: On peut répondre, mais on ne peut pas répondre oui. Non, vous n'avez par la berlue. Peut-être que dans notre mémoire écrit c'est moins une mise en force,mais c'est une préoccupation de la part des maisons de production qui est constante et il y a la question, bien sûr, que les maisons de production indépendantes veulent produire. Je pense qu'elles ont démontré au fil des ans qu'elles contribuent un apport important à la qualité de la télévision de langue française et il a maintenant avec les nouveaux canaux ces intégrations qui se font.

28405 Le soin qu'on veut apporter à ce que les diffuseurs, lorsque les diffuseurs vont acquérir des productions indépendantes, que chaque fenêtre de diffusion fasse l'objet d'une négociation distincte parce que, naturellement, il y a un risque et ça donne au diffuseur qui détient multiples chaînes un pouvoir de négociation assez important et on sait que pour les producteurs indépendants sans lettre de diffuseur il n'y pas de production puisque le diffuseur est toujours un déclencheur d'un mécanisme de financement.

28406 Donc il y a certainement une inquiétude, un souci d'assurer qu'il y ait le plus grand nombre de joueurs possible du côté des diffuseurs pour permettre au marché de s'équilibrer entre l'offre, la demande et les forces de négociation.

28407 LA PRÉSIDENTE DU CONSEIL: Mais dans les faits, on a vu peu de nouvelles figures, de nouveaux visages se présenter dans les requérantes. On en a davantage du côté anglophone, mais du côté francophone on a davantage des joueurs établis et c'est certainement lié à la remarque que vous faites vous-même de dire attention, la réalité francophone et anglophone est différente, c'est une fragilité.

28408 Mais au fond, comment réconcilier votre idée de limiter l'intégration verticale et horizontale quand on observe que la plupart des requérantes -- en fait, les requérantes des services francophones -- sont des joueurs existants.

28409 Mme SAMSON: Les requérantes sont déjà des exploitants d'un service, en effet, et on l'a vu et on l'a remarqué, et c'est pour ça qu'on demande au Conseil de mettre, si dans les chaînes que le Conseil acceptera de licencer, que des conditions de licence spécifiques y soient rattachées, justement des conditions de licence qui reflètent cette particularité peut-être du marché francophone où les émissions qui sont acquises doivent faire l'objet d'une négociation différente pour chacune des fenêtres d'opération, que ce soit pour un canal traditionnel, spécialisé ou l'Internet parce que c'est aussi le devoir du producteur comme entrepreneur culturel vis-à-vis de ses investisseurs, publics et privés, de voir à maximiser la valeur de son produit et de maximiser ses ventes dans toutes les fenêtres, dans tous les marchés possibles, et on pense qu'il serait raisonnable que les détenteurs de licence qui souhaitent élargir leurs champs d'opération acceptent des mesures qui garantissent qu'effectivement les producteurs indépendants on l'opportunité d'exploiter au maximum leurs produits.

28410 LA PRÉSIDENTE DU CONSEIL: Sans par ailleurs nécessairement être un frein aux synergies possibles, effectivement. On peut s'imaginer qu'il y a des possibilités et des avenues qui peuvent être très porteuses pour les diffuseurs à détenir plus d'une licence. On veut juste s'assurer que ça peut être porteur pour tout le monde et qu'effectivement chaque fenêtre doit présenter un potentiel de commercialisation pour le diffuseur, mais aussi pour le producteur et pour ses investisseurs.

28411 LA PRÉSIDENTE DU CONSEIL: Le producteur indépendant il en a été question beaucoup à travers les journées où on a rencontré les diverses requérantes et on était préoccupés de deux questions. Une première, comment déterminer ou définir le ou la productrice indépendante mais d'un point de vue non-affiliée, "at arm's length", pour parler chinois.

28412 Comment le définissez-vous de votre côté? Quel est pour vous la définition d'une entreprise de production indépendante qui serait non-liée?

28413 Mme SAMSON: Pour nous une entreprise qui est non-liée est une entreprise de production qui ne détient pas plus de 30 pour cent d'intérêts chez un diffuseur, et vice versa, et un diffuseur qui ne détient pas plus de 30 pour cent d'une maison de production.

28414 LA PRÉSIDENTE DU CONSEIL: Et vous proposez que le Conseil établisse que pas plus de 25 pour cent de la production dans les heures originales canadiennes soient confiées ou acquises par ces productions ou ces compagnies de production qui seraient liées à la chaîne spécialisée...

28415 Mme SAMSON: C'est ce que nous souhaitons et à ce chapitre-là je dois dire qu'on est assez cohérents puisque c'est la même recommandation que l'APFTQ a faite dans la présentation du dossier sur le Canal des Arts où, effectivement, il y a un producteur indépendant qui va détenir un certain pourcentage et ça existe dans d'autres dossiers au Canada anglais, il y en a d'autres, où effectivement l'APFTQ a toujours demandé à ce qu'il y ait un maximum d'acquisitions qui proviennent des compagnies liées à la détentrice de la licence.

28416 LA PRÉSIDENTE DU CONSEIL: Ne voyez-vous pas le besoin que dans certains genres on ait une flexibilité qui serait plus du cas par cas? Est-ce que certaines requérantes -- et c'est aussi dans certaines interventions -- ont fait état qu'on ne peut pas avoir une espèce de règle universelle qui s'applique à tous ou à toutes, qu'il y aurait des genres qui seraient différents.

28417 Pour prendre l'exemple ultime, peut-être, prenons RDI, un Canal Nouvelles ou Newsworld évidement, ont des réalités différentes, LCN. Ce sont des licences qui opèrent dans un univers différent que si par ailleurs on se retourne vers une licence comme Canal D, par exemple.

28418 Mme SAMSON: Tout à fait, il y a des particularités, des spécificités et quand on demande à ce qu'il n'y ait pas plus de 25 pour cent des budgets de programmation qui soient alloués à des compagnies liées, nous faisons toujours l'exclusion en disant, "A l'exception des sports, des affaires publiques et l'information" puisque, effectivement, les diffuseurs ont tous des facilités de salles de nouvelles, de productions de nouvelles ou de sports, et c'est peut-être là où les synergies sont les plus évidentes pour eux et je pense qu'on peut tout à fait comprendre que RDI puisse s'approvisionner beaucoup plus à Radio-Canada que chez un producteur indépendant. La même chose pour RDI.

28419 LA PRÉSIDENTE DU CONSEIL: Donc dans la plupart des cas, vous recommandez ce 25 pour cent, mais vous reconnaissez qu'il peut y avoir des exceptions dans certains genres.

28420 Ça complète les questions que j'avais pour vous.

28421 Madame la Présidente.

28422 LA PRÉSIDENTE: Madame Samson, quand vous avez défini un producteur non-lié vous vous êtes penchée sur deux situations. Là où il y a une maison de production qui 30 pour cent ou plus des actions d'une titulaire de licence et là où la titulaire de licence a plus de 30 pour cent de la maison de production. Il y a une autre possibilité, c'est que non pas la titulaire de la licence qui soit actionnaire dans une maison de production mais un de ses actionnaires.

28423 Est-ce que vous établiriez la même règle? Comprenez-vous? Par exemple, il peut y avoir la titulaire A qui a les actionnaires B, C et D, qui elle comme société ne détient pas 30 pour cent d'une maison de production, mais un de ses actionnaires A, B, C ou D, peuvent l'avoir. Vous établiriez la même règle?

28424 Mme SAMSON: Un exemple pourrait être le Canal Histoire où on avait Alliance et Astral qui étaient tous les deux actionnaires.

28425 LA PRÉSIDENTE: Et si Historia, par exemple, est une société distincte peut-être qu'elle n'a pas 30 pour cent comme société, mais quant à ces actionnaires-là vous établiriez la même règle?

28426 Mme SAMSON: Je dois dire que du côté des producteurs, si un producteur, une maison de production voyait sa maison-mère détenir plus de 30 pour cent d'une titulaire de licence, cette maison de production-là ne serait plus admissible à être membre de l'APFTQ.

28427 LA PRÉSIDENTE: Ou un de ses actionnaires.

28428 Mme SAMSON: Ou un de ses actionnaires détenait plus de 30 pour cent d'intérêt on considère que c'est lié.

28429 LA PRÉSIDENTE: Oui, donc vous seriez d'accord que les trois situations sont définies pour vous comme étant 30 pour cent des actions.

28430 Mme SAMSON: Des intérêts.

28431 LA PRÉSIDENTE: Que ce soit la titulaire ou un de ses actionnaires.

28432 Mme SAMSON: Ou un de ses actionnaires.

28433 LA PRÉSIDENTE: Dans une maison de production.

28434 Merci. Je crois que ça complète nos questions. Nous vous remercions tous les deux.

28435 Mme SAMSON: Merci beaucoup.

28436 LA PRÉSIDENTE: Et nous vous souhaitons une bonne soirée.

28437 Nous allons, comme prévu, prendre une demi-heure de pause et nous reviendrons donc à 7 heures.

28438 We will be back at 7:00 after a half-hour pause.

28439 We have five intervenors left on today's list and the Independent Film and Video Alliance has kindly to be here in case we were able to hear them. So we will hear them as well.

28440 So we have five intervenors left on today's agenda and the Alliance who is already here.

28441 Thank you very much.

--- Upon recessing at 1825 / Suspension à 1825

--- Upon resuming at 1900 / Reprise à 1900

28442 LA PRÉSIDENTE: Nous vous resouhaitons la bienvenue à notre audience.

28443 Welcome back to our hearing.

28444 Thank you very much for accommodating our late hour.

28445 Mr. Secretary, please.

28446 MR. CUSSONS: Thank you, Madam Chair.

28447 We will now hear the intervention by the Canadian Conference of the Arts.

INTERVENTION / INTERVENTION

28448 MS WILLIAMS: Good evening, and thank you for breaking for dinner before meeting with us. That was great.

28449 The Canadian Conference of the Arts appreciates the opportunity to present our views to the CRTC on the Category 1 digital specialty services.

28450 I'm Megan Williams. I'm the National Director of the Canadian Conference of the Arts.

28451 I am accompanied, this evening, by Alexander Crawley, who is an actor, musician and performer, and a member of the CCA, and by Monica Auer, who is our researcher and adviser.

28452 The CCA is an arts advocacy and service organization whose members first met in 1944 -- long before the CRTC existed. We represent artists, cultural workers, arts organizations, producers, who span the nation from every province and every territory and every arts discipline. We, therefore, welcomed your last call, in February, for the new digital programming applications.

28453 Canadian viewers, and our own members, may both benefit if new services are licensed through new programming choices and employment opportunities.

28454 The overwhelming number of applications that you received is clear evidence of the economic strength of Canada's broadcasting sector.

28455 As the new services began to solicitor CCA's support, we decided that most interesting approach, for us, would be to produce a ranking, based on our own criteria.

28456 Given the CRTC's decision to grant licences to the applicants for Category 2 services which met basic minimal criteria, we focused our attention on the 89 applications for Category 1 services.

28457 We support the licensing criteria that the Commission set out in its February call, particularly, with respect to exhibition and expenditure commitments for Canadian content.

28458 We also agree that services' business plans must be reasonable. In this context, we considered the financial performance of existing specialty services distributed on analog to a large subscriber base.

28459 We found that though there will be fewer digital subscribers for some time to come, both WETV and The Justice Channel proposed annual average revenues that would be higher than those now earned by existing specialty services with a much larger subscriber base and audience reach.

28460 Since we agree that business plans must be realistic, we, therefore, decided not to support these two applications.

28461 We also considered the impact of new specialty services on existing services.

28462 Canadians already enjoy a wide variety of programming, particularly, with respect to news and sports. We believe that licensing still more news and sports services contributes little to program diversity but will fragment the audiences to existing services and reduce their advertising income.

28463 This would be especially hard on Newsworld and RDI since the CRTC and the public alike expect more from these services rather than less. We, therefore, dropped the news and sports services from our assessment, as well.

28464 This left us with only 85 applications to consider.

28465 We then looked at the applications, in terms of their ownership.

28466 Over the last 30 years, more services have been licensed to fewer and fewer owners. In the case of Canada's existing pay and specialties, eight companies now control 54 of the 64 services and, last year, accounted for 93 per cent of this sector's total revenue.

28467 In theory, consolidating ownership may strengthen broadcasters' financial wherewithal, but it may also limit the opportunity for new voices to be heard and reduce opportunities for Canada's independent producers.

28468 To give new entrants a kick at this can, while acknowledging the role that stronger companies can play, we decided to give the new applicants a small competitive advantage by awarding them one extra point.

28469 In the end, we used 19 different factors to rank the Category 1 applications, most of which involve Canadian content, technology and audience appeal.

28470 We also assessed applicants' contributions to Canada's performing arts, to children's programming and to schools.

28471 The final results of our analysis confirmed what many who are watching this process may have already concluded: that the majority of the applications are of extremely high quality.

28472 All three of Craig's applications, for instance, ranked among the top 10 of our results. But, since we believe that diversity should be maximized in both programming and ownership, we narrowed our selection of the top 10 applications we could support by dropping applications that duplicated programming offered by existing services and by keeping only one application per ownership group.

28473 Based on our analysis of the applicants' proposals, the CCA, therefore, supports the following applications, in this order: The Dance Channel, Stornoway Communications; The Book Channel, Alliance Atlantis; Festival, Craig/Lions Gate; TVtv, CTV; Cinefest, Astral; The Canadian Documentary Channel, Corus; Digipix, TVA; Biography Canada, Rogers; 13th Street, CanWest; and PrideVision, Levfam.

28474 These results are available for viewing on our Web site.

28475 Apart from the obvious benefits of licensing channels that deal, specifically, with Canada's performing, literary and media arts, these services would benefit the broadcasting system in other, more tangible ways. The services plan to spend $265 million on Canadian programming, of which $176 million would be spent on programs acquired from other Canadian producers.

28476 The total cost of this package of 10 services comes to $3.67 a month, in Year 1, with no increase up to Year 7.

28477 We also considered the applications, in terms of the criteria outlined by the CRTC in its licensing framework and call for applications.

28478 We took the liberty of coming up with a series of measures for these criteria and, again, applied them to the 89 applications.

28479 Half of our choices -- TVtv; 13th Street; Festival; PrideVision; Cinefest; and The Dance Channel -- also did well, in terms of measurable factors that fit the CRTC's own licensing criteria and, although our guess at what you will finally decide to do is just that, a guess, we notice that our package of services does slightly more for the system, in terms of total Canadian programming expenditures, at the same monthly rate for subscribers, while generating commensurate profits before taxes for the 10 services overall.

28480 I will turn to Sandy, now.

28481 MR. CRAWLEY: In closing, we have several recommendations. The first has to do with the arts -- not surprisingly!

28482 In brief, we urge you to license new Canadian services that maximize the artistic and creative input. Canadians already enjoy the programming offered by six sports services.

28483 Although choosing sides is challenging, for any referee -- and we thought, perhaps, you should actually all take a quick course at the "École du Circle", in Montreal, so you can keep 89 balls in the air -- we ask that you level the playing field, or at least tilt it, slightly, in another direction.

28484 Secondly, we applaud the use of technology in business.

28485 We noticed that many applications in this hearing forecast interactive costs that were not covered by interactive revenues. This suggests that broadcast subscriber revenues might be used to cover the costs of interactivity, even though the direct benefits to subscribers, viewers and the Canadian broadcasting system, as a whole, are still far from clear.

28486 Failing specific conditions of licence to prevent this from happening, we recommend that the Commission monitor this situation closely.

28487 Obviously, we would like to see more of that money going into producing programming than into technology.

28488 Third, we would like to tell you how much we enjoyed participating in this proceeding.

28489 Our pleasure could only have been enhanced if the CRTC's application forms for these services had included one extra column, a totals column, summarizing figures presented for each year of the seven-year licence.

28490 We also strongly recommend that specific lines within the financial forecasts indicate amounts proposed for licence fees and intellectual property rights and that the form include a specific area to indicate the hours of independent production that licensees plan to acquire and present.

28491 Madam Chair, that concludes our presentation.

28492 We welcome any questions you may have.

28493 THE CHAIRPERSON: Thank you, Mr. Crawley and Miss Williams.

28494 I will now turn you to Commissioner Williams.

28495 COMMISSIONER WILLIAMS: Thank you, Madam Chair.

28496 Welcome to the hearing.

28497 I see you represent virtually every not-for-profit artist and cultural organization in the country, from sea to sea; for example, in the east, from the Newfoundland Independent Film Co-Operative to the Sandspit Artists Council on the far western shores. So, I have looked through your list of 200-plus members and see that you are a very large lobby group, indeed.

28498 I have also spent a bit of time on your assessment and ranking of the various applications, and I see your mention of "Survivor" last week -- actually last Wednesday; same day as today.

28499 I liken this process of weeding them out to the television program "Survivor" and, since then, I have had the opportunity to give the process a bit more thought.

28500 I guess we are now in the process of evaluating 87 Category 1 applications and in the next while must decide which 10 or more services will be the participants in the September 2001 launch of the Canadian digital television era.

28501 During the course of this hearing it occurred to me that the possible combinations of services could be potentially quite large. I then inquired as to whom on the CRTC staff would be considered as our most talented mathematician or statistician. Well, Mr. John Traversy, our Director of Research and Analysis was recommended.

28502 So as I, like Ms McQueen of CTV indicated earlier, do not like to perform mathematical calculations on live television, I asked John to please calculate the total number of possible service combinations assuming 87 applicants and a package of 10.

28503 His reply is as follows:

"The number I provided you did not consider one per genre, nor did it consider limiting the number of licences one corporate group could obtain. However, it is accurate if you want to know the number of combinations that are 10 that are possible from 87 applications. For example, the odds of winning Lotto 6/49 is equal to how many packages of 6 from 49 possibilities. Therefore, I was not surprised at the four trillion number." (As read)

--- Laughter / Rires

28504 COMMISSIONER WILLIAMS: The answer:

"In fact, the answer is over four trillion combinations. It is four trillion, seven hundred and fifty one million..."

28505 COMMISSIONER WILSON: Billion.

28506 COMMISSIONER WILLIAMS: Million.

"...four, forty-five thousand, two hundred and twenty-six." (As read)

28507 So now you have a better appreciation of the magnitude of the task before the Commission.

28508 A multi-digital challenge indeed.

28509 Thank you, Madam Chair. I will now go into my questions.

28510 THE CHAIRPERSON: Enough to drive you to drink.

--- Laughter / Rires

28511 COMMISSIONER WILSON: Now, in your analysis, which I assume did not go through the four trillion possibilities, you have come up with a few different priorities that have not always included all of the same criteria that the Commission had issued in its call.

28512 I guess I would like you to comment on the licensing of Category 1 criteria that you have heard us discuss throughout the hearing.

28513 And would you rank the relative importance of the other criteria: Attractiveness, affordability, diversity and interactivity? If you could rank those, please, and speak to them if you wish.

28514 MS WILLIAMS: Well, all those criteria were part of the ranking system that we used.

28515 Maybe I will just refer to you, Monica, to be more precise about that.

28516 MS AUER: Thank you very much.

28517 I guess in terms of the CCA's perspective, one of the most important criteria would have to be that already clearly laid out by the Broadcasting Act, in this case commitments to Canadian programming, Canadian content, Canadian cultural reflection. That is not to say that popularity of the services would not be important, but I don't think Parliament has explicitly laid out a requirement that services only be licensed if they are popular.

28518 Nor would it be easy, I think, to combine the notion of popularity with the notion of a niche service. At what point should a niche service require widespread -- an appeal in popularity before it no longer becomes a niche-oriented service?

28519 So, in brief, we included all of those criteria in our small assessment.

28520 But I would have to say that in terms of the importance within our ranking Canadian content, Canadian commitments to programming expenditures, commitments to viewing or to programming provided throughout the prime time period in the broadcast day, those all came out as being dominant within our system. In fact, they made up over half of the factors all together.

28521 MR. CRAWLEY: If I could just add, just to take your exercise, I think I can safely say that interactivity would certainly be at the bottom of that list and diversity probably at the top from the point of view of the arts community.

28522 The more opportunities there are for diverse voices, the better it is for creative people. That is why ownership was a factor for us.

28523 But in terms of interactivity, I think as some of the intervenors that you have just spoken with, including the cable people, have indicated -- at least I take from their remarks -- it is going to be a long time, I think we would all recognize, before the digital television is anywhere near the computer as we know it in terms of its interactivity and the applications thereof, and there are a lot of twists and turns, forks in the road, I think was the term that the gentleman used, before we know how that is going to roll out.

28524 I think it would be a matter of concern to the arts community for sure if a lot of the resources available from the system went into investigating and exploring interactivity as opposed to creativity and human expression.

28525 MS AUER: Commissioner Williams, if I might just add, one thing that I didn't address was the whole notion of what we would have liked to have included as measurable criteria in our small assessment system.

28526 We would have like to have included, for instance, the total number of original independent productions that would have been provided each year of the licence or over the total seven year period. Unfortunately, different applicants provided that information in different ways and it was sometimes difficult to ascertain exactly what specific commitment they were undertaking.

28527 We would have also liked to have seen, I suspect, some greater detail on the notion of licensing fees for independent productions, or for any other production acquired from Canadians, to find out whether in fact programming is getting more resources over time or less. Unfortunately, we weren't able to ascertain that from some of the application forms, hence we couldn't include all of the applications and rank them in a fair and systemic way, which is why we are appealing to have several small lines added to your application form to indicate that information in the future.

28528 COMMISSIONER WILLIAMS: I appreciate the clarification that you are providing us, because in reading your intervention and the replies by some of the others, many suggested that there were problems with the ranking system, maybe not the most appropriate criteria, some elements were overlooked, focus on selected criteria only failing to reflect the broader range of considerations. These are just some of the criticisms that I'm sure you are aware of that the respondents to your intervention filed with the Commission as well.

28529 So I wanted to give you the opportunity to balance that up as to detract the Category 1 criteria and you would be able to speak as to why you feel the way you have ranked as the most important.

28530 MS WILLIAMS: If I may?

28531 COMMISSIONER WILLIAMS: Sure.

28532 MS WILLIAMS: If you look at the table we have provided, our criteria are very, very close to the CRTC's own criteria and we are approaching this from the point of view of working artists and producers. So of course we look at it through that lens.

28533 COMMISSIONER WILLIAMS: Through their eyes, yes. I appreciate that.

28534 MS WILLIAMS: Also, the small -- I think in terms of the CRTC's licensing criteria, there were some specific areas which were different because this is the CCA. We are missing those other three letters "RTC", otherwise we would be up there and you would be down here.

28535 But, in any event, the main differences lie, in fact, with things like programming for children.

28536 I gather that some of the applicants were somewhat concerned that perhaps we were emphasizing something that the Commission itself had not emphasized. On the one hand, this isn't a concern of the CCA that children's programming be made available to that very important niche audience of ages, even though there are a number of services that already provide some programming targeted at that audience.

28537 But, secondarily, it is one point out of a possible 19. So the idea that having children's programming or not having children's programming, perhaps on a news services for instance, just pulling that out of the air hypothetically, it would not invalidate the ranking system entirely.

28538 Indeed, many of the services did not appear to include within their applications specific references to children's programming. That didn't stop them from doing very well in the ranking system.

28539 COMMISSIONER WILLIAMS: Okay. Thank you.

28540 In your written intervention you have provided a comprehensive analysis of all the Category 1 applications with respect to the nature and amount of their Canadian content.

28541 Do you consider this to be the most important element to be considered in our deliberations?

28542 MS WILLIAMS: Yes. Yes.

28543 COMMISSIONER WILLIAMS: Okay.

28544 MS WILLIAMS: Canadian content and diversity of Canadian content, yes.

28545 COMMISSIONER WILLIAMS: How many Category 1 applications should the Commission consider licensing at this time?

28546 Should it license more than 10 English Category 1 applications?

28547 How many French Category 1 applications?

28548 Those are three questions.

28549 MS AUER: If I could -- you will have to repeat the three questions, I was trying to --

28550 COMMISSIONER WILLIAMS: Sure.

28551 MS AUER: I stopped listening after the first two because we were debating who would pick up the baton, as it were.

28552 In terms of the package, I think most of the applicants have come in with the clear understanding from the Commission's first announcements in this matter that there would be 10.

28553 COMMISSIONER WILLIAMS: Ten or more.

28554 MS AUER: Ten or more, but most people were going in with 10.

28555 As I think one of the Commissioners has already mentioned, the Commission has not yet faded into the black. It is going to be around for a while. There are going to be more licensing rounds.

28556 The Commission has also indicated that it will be licensing a number of Category 2 services, so it isn't as if there are only going to be 10 digital services, there are going to be 10-plus. We just don't know exactly where the 10-plus will be.

28557 The cable industry, and I think the other distributors, have indicated that they need programming content, so it is not as if they are simply going to ignore the Category 2 services that are going to be licensed.

28558 So that was one question, and I have forgotten the other two.

28559 COMMISSIONER WILLIAMS: Okay. Just on that, though, wouldn't limiting it to 10 also limit diversity which you rank high?

28560 MS AUER: The brilliance of our assessment system is that we have something for everyone in our package. So no, we wouldn't be limiting diversity, indeed --

28561 COMMISSIONER WILLIAMS: I will have to study it more closely.

28562 MS AUER: Indeed I think we will actually be enhancing it.

28563 For example, we strongly supported the notion of a books channel. I think it is a rather interesting concept that you actually use TV to promote literacy, authors, reading. It's a good thing, as Martha Stewart would say.

28564 COMMISSIONER WILLIAMS: Okay. So should --

28565 MR. CRAWLEY: If I can just add, I don't think amongst the membership of the CCA there would be any great cause for alarm if you were to license more than 10. We have other issues that we would like to see represented in the choices that you make and certainly there are other very worthy applications that didn't make our top 10, so I don't think we would have any great objection if you elected to go for 12 or 14, as long as they were good ones.

28566 COMMISSIONER WILLIAMS: Okay.

28567 You have answered -- that's two. Two out of three.

28568 So how many French Category 1 applications do you think the Commission should approve?

28569 MS WILLIAMS: In our ranking there is only one channel, Cinefest, that is one of the bilingual channels, and we have listened today to two intervenors who spoke about the time that is required for services in Quebec to get up to par and to take their place among the digital channels. So we would respect their interventions and urge you to follow their advice.

28570 COMMISSIONER WILLIAMS: Could I get your comments on two other areas of diversity: One, diversity of ownership in the Canadian broadcasting system and, the other, the concept of regional diversity brought up in an example by Salter Street Films and, I guess, the Alberta application.

28571 MS AUER: In terms of diversity of ownership, I guess again we are guided by Parliament and the Broadcasting Act and I think there is a clear expectation within section 3 that diversity of use be enhanced rather than restricted because that's the nature of a democratic country such as our own.

28572 In terms of regional diversity, certainly in terms of ensuring that Canadian culture and Canadian performers across the country have a fair share in the broadcasting system, it seems like a reasonable idea to spread the wealth. I think one can look at some of the marvellous programming that has come out of CBC from the east coast. I'm sure we will see more from the north and from the west if you licence a number of different services.

28573 As you will note from our ranking system, one of the things we did do, going back to the whole notion of concentration of ownership, is that we limited one application per owner, so to speak. The reason is so that we could ensure that the profits and the income that will be generated by these wonderful services will be spread more widely across a broader range of people.

28574 If it's simply restricted to one group of owners, they will be well financed for the global market, but they won't necessarily have the natural inclination to become far more competitive with respect to choosing those who provide programming to them.

28575 In a competitive marketplace such as our own, wouldn't it be a good thing to enhance that competitive entrepreneurial spirit.

28576 COMMISSIONER WILLIAMS: So in effect you might be able to think global, but not necessarily be able to act global then.

28577 MS AUER: Maybe we should act regional, think global and do local. I don't know. There are many combinations of that one too.

28578 COMMISSIONER WILLIAMS: This is a little bit outside, but I noticed it in the response from your group. Earlier today we discussed issues of flexibility and packaging amongst distributors and some of the associations that represent them. Do you have any thoughts in this area?

28579 MR. CRAWLEY: Well, certainly I think you explored the context quite well, as you usually do. I think again this is a question of educating the consumer to realize because I think that the pick and pay concept has been floated for so long without being available that people think it's going to be a panacea. It's clear to us from our point of view that it's not.

28580 In terms of -- I must admit I felt some concern on the issue that brought me back to our brief and my support for the concept of diverse ownership. The concept of packaging by owner, as it were, that was floated by the CCTA, it made me a little nervous to think that, you know, people might go out and buy a package that was all from the perhaps persuasive or prevalent philosophical point of view of one broadcaster in the country.

28581 It wouldn't be best for our constituency if that were the dominant format that finally emerged that, you know, that people will buy the Alliance Atlantis channel package or they will buy the CHUM channel package. I hope we can trust the consumer to have a little bit more diverse interest than that.

28582 It's not a huge matter of concern. I can certainly see that from a business point of view people will be looking to maximize that way. Again, as we always do when we come here, we would urge the Commission to remember its responsibilities under the cultural mandate that it's got under the Act.

28583 Everyone knows that broadcasting is a business. It has to be run well and prudently and so on. But, from the point of view of the arts community, it often seems that distributors and even programmers are more concerned with maximizing their profits than they are with creating excellent programming. If it weren't for the existence of the Commission, they might not produce what we would recognize as a Canadian artistic creative program at all because it would be too busy making money selling works from elsewhere.

28584 I would say it's not a huge matter of concern to us because, again, we trust the Canadian public will want diversity, but it's got to be offered to them in the first place. We will be happy if in your decisions you can also give some guidelines in terms of how these things will be marketed.

28585 Certainly the Category 1, from our point of view, exists primarily to assure that we won't have one or two dominant players swamping some of the, you know, perhaps more adventurous people who might come up with a more distinct program that we haven't seen before.

28586 MS AUER: If I might add, Commissioner Williams. One of the reasons that I think the Commission is so well respected, as it indeed is everywhere, is that you have set up a very nice system of access rules. You have tried to establish your policy interests or the Commission's policy interests in ensuring that Canadian services have equitable -- however that's defined -- access to subscribers and to Canadian viewers in the long run.

28587 One of the nice things though is when you are talking about a playing field, it's just a game. You are going to have winners and losers. You shake hands at the end and you walk away. It's true that in this business we generally talk about having players on the field.

28588 Players need a referee from time to time, otherwise fights break out. Referees have to be fair, independent, impartial and the rules have to be well known beforehand. But in fact, this isn't a game. This is big business. Money is at stake. People don't just walk away. They go out of business or they lose their mortgages or their houses or whatever. That's why it's critical.

28589 It's absolutely fundamental, I think, that the Commission ensures that all those engaged in the industry have an equal opportunity.

28590 COMMISSIONER WILLIAMS: Thank you. Thank you, Ms Williams, Mr. Crawley and Ms Auer. I have enjoyed this time learning more about your intervention. It's late. I am going to pass you back to the Chair. Some of my colleagues may have questions. Thank you.

28591 THE CHAIRPERSON: We don't have any questions, but perhaps we will phone you and negotiate a price for your system.

28592 Thank you very much. We appreciate how you accommodated us by staying us so late. We hope you have a good end of evening nevertheless.

28593 MS AUER: Our sympathies are with you because you are going to be here much longer than we are.

28594 THE CHAIRPERSON: Thank you very much. Good night.

28595 Mr. Secretary, please.

28596 MR. CUSSONS: Thank you, Madam Chair.

28597 I would now like to invite the Canadian Film and Television Production Association to come forward and present its intervention, please.

28598 THE CHAIRPERSON: Mr. Ellis and your colleagues, as soon as you are ready.

INTERVENTION / INTERVENTION

28599 MR. ELLIS: Thank you, Madame Wylie, Madame Bertrand, Commissioners. My name is Stephen Ellis and I am the Chair of the Canadian Film and Television Production Association. I am also the President of Ellis Entertainment, a Toronto based company that has been a Canadian independent producer and distributor for over 35 years.

28600 At various times my company has been affiliated to broadcasting interests as well as a part owner of one, although today we are independent, unaffiliated and arms length from broadcasting. I have a hunch you will be asking a little bit more about those distinctions.

28601 On my right is Marie Christine Dufour, Vice-President of Public Affairs of Cinegroupe. Marie Christine is a member of the association's Board of Directors and an active participant on our Broadcast Relations Committee.

28602 As you know, Cinegroupe is one of Canada's leading producers of children's and animation programming for television, cinema and new media.

28603 On my left is Guy Mayson, the CRTPA's Executive Vice-President. Guy has had a long association with the production sector and during his time in government helped to develop a number of important initiatives in the area of production financing, tax incentives and foreign investment policy for the cultural sector.

28604 On my far right is Tricia Arthurs, the CRTPA's Director of Research and Development.

28605 We are pleased to have this opportunity to elaborate on the issues that we raised in our written intervention. The CFTPA is the national trade association that represents the interests of close to 400 production companies engaged in the production and distribution of television programs, feature films and multi-media from every region of Canada.

28606 Because a number of CFTPA members are involved in some of the applications before you, we wish to state that these oral remarks, as well as our written intervention, were developed on the basis that excluded input from CFTPA member companies with interests in any of the digital pay and specialty applications that are before the CRTC or existing CRTC licensees.

28607 We are encouraged that matters dealing with the creation and exhibition of Canadian programming have been front and centre in your deliberations. Indeed, many applicants have embraced the fact that their future success, like that of the already existing Canadian pay and specialty services, will depend on the diversity of domestic programming that they offer.

28608 In our book, the diversity of Canadian expression achieved so far as been the result of your regulatory foresight, which has required a significant commitment to both hours and spending on original Canadian programming.

28609 We link much of that diversity and output to the contribution of independent producers to the system. And like broadcasters, our end user is the Canadian viewer and, ultimately, if the viewers do not like what we create, we do not exist.

28610 That is why we put forward five recommendations in our written submission as criteria to help guide the selection process.

28611 One, that the Commission give considerable weight to those applications proposing the most significant contributions to the creation and exhibition of Canadian programming, the greatest diversity of Canadian expression, and the greatest use of independently produced productions.

28612 Two, that priority should be given to those services that can demonstrate that they can add diversity to the system, expand the audience base and provide new outlets and financing for Canadian programming.

28613 Three, that programming decisions must be made in Canada; development dollars spent in Canada; and partnerships with foreign parties must respect the existence of a separate Canadian program rights market.

28614 Four, that clear and unequivocal safeguards to limit self-dealing for producer-affiliated broadcasters or broadcaster-affiliated producers must be implemented to ensure fair and reasonable access to the system by independent producers.

28615 And five, the CFTPA recommends that there is a need for separate compensation for the multi-platform element.

28616 MS DUFOUR: The licensing framework that the CRTC made public in January of 2000 addressed many of the concerns of the association.

28617 We believe that diversity is one of the most important selection criteria.

28618 Another essential criterion is a maximum commitment to the creation and exhibition of original Canadian programming. We believe that this public process provides a unique opportunity to create a strong Canadian presence in the digital world. To that end, we encourage you to look at those applicants who are willing to go the extra distance.

28619 We agree with you that interactivity will be critical to driving the consumer acceptance of these services. Many of our members are already creating innovative "cross-platform" products. As an example, at Cinegroupe we approach every project with an interactive application in mind.

28620 Recently, we produced an animated series for Radio-Canada called "Princess Sissy" and subsequently produced "Princes Sissy" games for the Radio-Canada Web site, creating a complete entertainment package.

28621 Multi-platforms for programming raise serious rights issues. While "cross-media" promises tremendous opportunities, there is also a risk that licensees of digital programming services, as gatekeepers to the digital platform, will have considerable leverage over content creators to yield intellectual property rights such as Internet use.

28622 Producers have only one thing from which they derive their revenues -- intellectual property. It may be intangible, but it is the basis of our business. If we are forced to cede global Internet rights to the programming we create for these new services, the future of this industry will be severely impacted.

28623 The Association has always represented the interests of creative entrepreneurs and, in terms of small, medium and large enterprises and we continue to do so.

28624 We are convinced that what has been proven true in the broadcast realm will also be true on the Internet. Working with independent producers makes sense in terms of meeting Canada's cultural and industrial objectives.

28625 MR. MAYSON: Throughout this hearing, various definitions of affiliated, unaffiliated, arm's length and non-arm's length production companies have been proposed. The CFTPA has also been struggling with these definitional issues.

28626 In our written intervention, we recommended that you ensure that appropriate safeguards be in place to prevent "self-dealing" or "undue preference", in order to preserve access to the system by independents.

28627 We are not here to debate legal definitions of "control". We would like to refocus the issue on how to achieve true diversity.

28628 Attempting to monitor these relationships or levels of investment through definitions of "affiliated", then to in turn define programming levels by what is affiliated and what is not, appears complex and problematic. It is for this reason that we have suggested that the type of safeguards should relate to an area that is clear and unequivocal and for which you have readily available information. We have suggested that you have two alternatives that are based on programming.

28629 The Commission could either implement a cap limiting the amount of Canadian programming that can be produced in-house and obtained from affiliated producers; or the Commission could require a licensee to obtain a minimum of programming from unaffiliated sources.

28630 Both of the options proposed leave plenty of room for broadcasters to produce material in-house and acquire from affiliated companies. Given this latitude, a simple and clear definition of unaffiliated company is required. Essentially, there should be no economic interest between the two companies.

28631 The clarity of this approach would allow you to stick to your objective for 2000-2003 to "reduce the regulatory burden". The alternative of attempting to regulate specific ownership levels seems overly cumbersome and time-consuming to enforce.

28632 We are certainly not opposed to equity interests being taken by licensees in production companies and indeed this can be vital to helping to underwrite ongoing production activity.

28633 We are also not opposed to a certain portion of a licensee's schedule being produced by entities in which they have an ownership interest. We would simply maintain that such clear limits would ensure diversity of creative view and an open, competitive market for Canadian programming.

28634 Where we think the flexibility should be applied would be with regard to the particular conditions of licence applied in respect of services in different genres.

28635 MR. ELLIS: In conclusion, Madam Chair, we would suggest that the Commission: Put a heavy emphasis on the commitments made by applicants to the creation of Canadian programming, their spending on such programs and their commitments to the licensing of programming from the independent production sector.

28636 To promote an environment that will respect intellectual property rights, and to set clear and workable safeguards concerning self-dealing.

28637 We believe that this approach will ensure that we all reach our common goal to offer the Canadian viewer the best programming in the world.

28638 It has been a pleasure for us to appear before you today and we are now ready to answer your questions.

28639 THE CHAIRPERSON: Thank you, Mr. Ellis, and your colleagues for being patient waiting for us and looking still wide awake.

28640 Commissioner Demers.

28641 COMMISSIONER DEMERS: Thank you, Madam Chair.

28642 Well, I thought you would not answer all the questions I had, so I have just a few. Of course, by commenting on the fact that it may be difficult to find percentages of ownership and of production it forces me to ask the questions anyway because they are the questions and this is the discussion we had up to now, but maybe your answers can be related to the position you take here.

28643 So I will start with independent films which you haven't dealt with in your oral presentation. What would you consider to be the most appropriate way to define an independent film?

28644 MR. ELLIS: Well, actually, this is an area where it is somewhat easier, certainly within the Canadian production industry because we generally find that it's easier to define independents with respect to particular production, than it is to define it in relation to a particular company.

28645 I know there have been a number of definitions floated, but particularly with regard to independence of a film regardless of its nationality and I know there has been some focus on the Hollywood studio output as opposed to independent. Our concern would be I think with respect to independents within the Canadian market, which would tend to eliminate the Hollywood studio issue.

28646 Is your question, though, aimed at a definition that takes into account the world of film or just the Canadian independent production of --

28647 COMMISSIONER DEMERS: Here I was thinking more of what is an independent film because, as you have indicated, some reference has been made to the fact that an independent film is one that has not been produced by a Hollywood studio. Others have said that it's a film that is on Variety's list of 100 -- that has some reference to Variety's Top 100 Films. These were the words that were around and I was wondering if you have comments on that or not?

28648 MR. ELLIS: All I would add there is that there are, I know the Commission is aware that there are different concepts of independent, particularly in relation to companies. I think there are existing sort of ownership levels required for the current tax credit system, for CRTC regulation.

28649 Telefilm in turn maintains quite a stiffer definition in terms of what they call independents and with regard to their own equity investment, so because of some of the confusion over some of this we felt that the APFTQ has a definition of independent producers and so we felt the issue was becoming kind of bogged down a little bit in the discussion of independents and it might be better focused on the issues of affiliated and non-affiliated.

28650 COMMISSIONER DEMERS: Okay. Let's, then, talk about an affiliated producer, in the context of the applications that we have heard -- and you have made comments on that. But would you be able to be more quantitative in your remarks than you have been here in your oral presentation? I suppose because, if we have to answer that question, we probably will have to describe it in relation to something, maybe at least -- the discussion here, in the last weeks, was that there would be a percentage, in the case of affiliation and in the case of independent producers. So it's in this context that I ask, now, the question.

28651 MR. ELLIS: Well, I think it's important, first of all, to appreciate that where we would propose to make the distinction is not so much in the context of a given company's ownership structure, in relation to a broadcast licensee.

28652 What we are proposing is to, to some extent, sidestep that question and to, instead, look at proposed licensees' total Canadian production, to then draw a line between in house and all affiliated production, regardless of whether that affiliation is at a 1 per cent level all the way up to a 100 per cent level -- and on the other side of that line would be unaffiliated production.

28653 In terms of where that line should be, what percentage would be on either side of that line out of the total production, Canadian production, for a given channel, we think that is where there needs to be, just as a practical matter, some flexibility, on the part of the Commission.

28654 And when we looked at the various applications, it seemed to us that, in the context of this hearing -- which is a very competitive one, within genres of programming and in terms of the limited number of Class 1 licences that might be available -- that each applicant is putting their best foot forward, in terms of what they think they are going to be able to do, in terms of Canadian production, given the rigors of the marketplace that they are facing. And, therefore, I guess our suggestion is that the Commission look at what is appropriate for a proposed licensee's production output for that genre of programming.

28655 Clearly -- and I think our colleagues in the APFTQ made this point, as well -- there are certain types of programming -- news, current affairs, sports -- which are not really the focus of the independent production sector, which tends to be focused on priority programming or the so-called under-represented categories of programming, which is where we have a demonstrable kind of track record in producing at a level that Canadians watch and which win awards and are exportable around the world.

28656 And so, if the Commission first looks at the appropriate balance of in house and affiliated, versus independent, if we were to start with the line, I think our thinking is that, in a theoretical model, you would draw that line at 70 per cent -- 75 per cent unaffiliated, 25 per cent for in house and affiliated production. But where the flexibility is needed is that, clearly, certain applications would tend to lend themselves more to one type of production or the other -- and that's been reflected in the applications before you.

28657 COMMISSIONER DEMERS: Thank you.

28658 You gave me a percentage. At least one.

28659 And you have indicated, in a sense, that it could vary with genre; the genre could make it more flexible, in some cases, rather than in others.

28660 The applicants -- many applicants have indicated at -- I turn to another matter.

28661 Applicants have indicated that they should own their own content.

28662 Could you comment on that?

28663 You have made reference, I believe, in your oral presentation. But, to be more clear on this, what are your comments on that? And this is in the context of interactivity, as you will recall.

28664 MR. ELLIS: Well, certainly, our concern is that the independent sector, primarily, has one source of revenue, which is the exploitation of its rights in the programs that it creates; whereas, broadcasters, typically, have multiple alternative sources of revenues, such as advertising, fees for carriage in various forms of distribution. And so, again, what we are promoting here is the notion that we reserve a significant amount of space, you know, a very substantial majority of the programming, for independently-produced programming that is created largely by unaffiliated producers who would retain copyright ownership with the intention of building their companies, their businesses -- as they have done.

28665 And I think it's important to remember that broadcasters, typically, fund at a level of 25 per cent of the cost of a given production, or less, and it's the production industry that's had to, over the past 15 years or more, go out and find the missing financing in order to create productions that Canadians will appreciate, and some of that's come from public sources and incentives that the government has put in place, but a lot of it comes from other private sector sources and international sources, such as exports and what have you.

28666 So, it's vital that producers are able to maintain control of that exploitation because, in a sense, they are able to produce more and supply more to the system, if they are able to do so.

28667 MS DUFOUR: I think to complete what you say is that we are not looking at 100 per cent independently produced. We are looking at a proper mix and a diversity in the systems and the different sources of production, which means that broadcasters can own part of their content.

28668 And the interactivity, what we are saying is there are some producers that will negotiate because they will have the facilities to do the interactive applications. Others don't. And we are asking that the two be separate, in terms of negotiating rights; otherwise, we will go and we will say, "We will pay you less for this; we will do that" -- and that's just commercial negotiations.

28669 COMMISSIONER DEMERS: But the approach taken in some cases where it's -- when you own the whole -- all the rights, it's easier to go on the international market with it.

28670 Do you have comments on that?

28671 MS DUFOUR: We totally agree. That's our position, too. It's a fact. I mean once you have all the rights.

28672 That's why we want to make sure that we are capable of separating the rights and conserving some of this.

28673 MR. ELLIS: Perhaps I could just add to that, because it relates back to the question of the degree of independence that you have been exploring throughout the hearings.

28674 I think it's important to remember that it's not just the equity ownership of production companies that can be bargained within the system amongst the various players, but it's also the equity ownership of the programs themselves.

28675 And so, one of the reasons we are recommending a fairly simple approach whereby it's the unaffiliated producers that contribute the lion's share to these new licensees is that even if you were, you know, a 2 per cent owner of a broadcaster, or vice versa, a broadcaster was a 2 per cent owner of your company, they still have the ability to offer you, in connection with each of your individual productions, a significant equity investment. And, ultimately, I think, your question, taken to the extreme, is that if they offered you enough money, you would give up the copyright and they would become the owner of your production, as well.

28676 So this is one of the reasons why we think it's a more complex issue than purely the shareholding structure of the companies. But, important to remember, the ownership of the programming is also at stake here.

28677 COMMISSIONER DEMERS: Thank you.

28678 A last question on what, maybe, we could call a benchmark.

28679 Would you have particular comments on the amount of Canadian programming expenditures that the Commission should require or the basis on which these things should be -- the calculations should be done?

28680 There were discussions, during the hearing, on different formulas on that.

28681 Do you have comments on that?

28682 MR. ELLIS: Now, are you referring to some of the ideas put forward that there should be more flexibility within the seven-year licence term? Or --

28683 COMMISSIONER DEMERS: Yes. Partly. And, also, the Commission's own way of figuring out the Canadian programming expenditures. Other people have suggested different ways of doing it.

28684 MR. ELLIS: In our discussions we certainly felt that there is considerable flexibility in the way you do things now and there are certain tolerances, I think, in the first year of the licensees existence, and what have you, in an averaging system that allows for fluctuations in the income streams that a channel would experience from year-to-year.

28685 It seemed to us -- although, you know, I can't say that our view on it is totally expert, but we have consulted various individuals and felt that the flexibility is there in a system that works, that has worked historically, and we didn't see any reason, even in the context of the new digital environment, for that to be particularly overhauled.

28686 COMMISSIONER DEMERS: Yes, go ahead.

28687 MS DUFOUR: I'm sorry.

28688 Part of the answer too, which we have said in the oral remarks, for us ideally instead of number of hours to calculate the programming we would prefer to have it done on dollars spent, if that answers your question more.

28689 COMMISSIONER DEMERS: Thank you, Madam Chair.

28690 I have no more questions.

28691 THE CHAIRPERSON: Mr. Ellis, you posit something slightly different, but I want to see whether you agree with me that it also raises a problem.

28692 We have a number of applications where producers are part of the shareholding of the licensee, the proposed licensee company. So assuming that a producer owns a third or a quarter or 40 per cent of a proposed licensee and we license them, particularly -- presumably the idea is that there will be some synergies there that may well be positive for the system, and suppose that producer is specialized in a certain type of programming, in your view -- suppose we use the hypothetical 25/75, that company could produce 25 per cent of the so-called in-house production of the licensee company of which it is a shareholder and up to 75 per cent or all of the independent production of its competitor, or a similar program genre. Wouldn't that be one of the results?

28693 MR. ELLIS: I think --

28694 THE CHAIRPERSON: If you don't address it at the ownership level of the licensee and you say zero ownership, which is quite seductive because you don't -- and instead, if I understand you, limit the amount of in-house and put in affiliation through any level of economic connection between the two, that production company can produce 100 per cent of the in-house of a non-affiliated licensee who may well be in competition with the licensee in which it is involved.

28695 You don't have a problem with that as a producer?

28696 MR. ELLIS: I think you --

28697 THE CHAIRPERSON: You know, if you accept ownership as a good idea, synergies, whatever, that the Commission should not discount ownership by producers, but then it attempts to do something to limit the closed shop possibility?

28698 MR. ELLIS: Well, if I understand --

28699 THE CHAIRPERSON: There is also a counter argument where the synergies disappear and in fact a possible problem for that production company may exist, in which case it will discourage ownership by producers and licensees.

28700 MR. ELLIS: Well, if I understand your hypothesis here correctly -- and I think it is correct based on the model that we are proposing -- is that a producer with that cross-ownership would be producing within whatever cap is placed on the in-house and affiliated production for the licensee to which it is related, but would also, in the open marketplace, be in a position to compete with other independent producers for shelf space, air-time on any number of other services.

28701 But it seems to me --

28702 THE CHAIRPERSON: Which may well be buying some programming in a type of programming that this producer specializes in.

28703 It may not be a problem, but it would appear to me limiting.

28704 MR. ELLIS: In terms of --

28705 THE CHAIRPERSON: In terms of the ability of producers to get involved into ownership of broadcasting undertakings, particularly of specialty services, that they may find themselves capped with regard to the broadcaster with whom they entered into a shareholding situation and then trying to produce -- their production company trying to produce programming for competitors.

28706 It may not be a problem. You are the expert.

28707 MR. ELLIS: Well, I'm not sure that it's a problem, because what we are trying to promote here is -- and we are clearly acknowledging that there is a value to affiliated production as well as a significant one from independent production, which contributes more to the diversity part of the equation, but it seems to me -- and my colleagues should feel free to jump in and correct me if they think I'm wrong -- that if such a company is able to compete in the open marketplace with other producers that would be members of our association, and to the point where they are in fact able to play substantial amounts of programming, then I think that is healthy competition. That is something that our members --

28708 THE CHAIRPERSON: My question was more related to the licensee with whom it is affiliated.

28709 Suppose you have an Exploration Channel and a Discovery Channel and you can only participate up to a cap in the Exploration Channel and if you sell your good programming to similar programming, like Discovery, the licensee with whom you are affiliated may not be too pleased that you are producing the same type of programming to make the other service, which is somewhat competitive, more appealing.

28710 It is more the relationship within the ownership of the licensee than the problem of the producer competing to produce programming --

28711 MS DUFOUR: At the same time -- I'm sorry.

28712 At the same time, if you have a 15 per cent ownership in a channel we are giving "you" the possibility of selling 25 per cent of the programming of this channel. But also --

28713 THE CHAIRPERSON: Of course, that is your choice.

28714 MS DUFOUR:  -- you have to look at the other side.

28715 THE CHAIRPERSON: Yes. Other ownership arrangements I think were made before any of this type of rule was contemplated.

28716 But do you know what I mean? There is a limit and if you are two shareholders how would you feel if your shareholder's company is producing terrific programming that makes another service more competitive with the one in which you are associated. Your partner may find that difficult.

28717 I think it is one of the fallouts of ownership by producing companies in licensees and then attempting to limit, by whatever method, especially if the ownership is zero.

28718 It is seductive at first glance, but it wouldn't be as limiting if you put the relationship a bit higher before you say that is in-house because there is an economic interest. You may spread the advantages a little better.

28719 MS DUFOUR: I agree, but at the same time we have seen alliances in the broadcasting system of companies that are doing competing -- or competing channels in the specialties.

28720 THE CHAIRPERSON: Yes. Of course in the case of Alliance --

28721 MS DUFOUR: Alliance Atlantis with Astral.

28722 THE CHAIRPERSON:  -- there would not be the type of --

28723 I was thinking more of your production company, Mr. Ellis, which is more specific --

28724 MR. ELLIS: Well, in fact our own --

28725 THE CHAIRPERSON:  -- rather than as broad as the capacity of Alliance Atlantis.

28726 MR. ELLIS: In fact our own experience over a long period of time, because we at one time had a significant shareholding in our production company by McLean Hunter, which had a number of media interests including broadcasting.

28727 Our experience, however, was that because we chose to position ourselves as an independent in terms of our profile in the industry and to make our programming available throughout the system, that we were able to place our programming on a variety of different competing services.

28728 But I think that is a matter of a producer and their co-operating broadcaster interest working out that balance. Once you put a system such as the one we propose in place, then those become the ground rules.

28729 I think you are right, it will affect, perhaps, the level of shareholding in a given situation, it will all relate to specialization of a producer, the goals of that company, but when there is -- though I think it is also important to remember that in this area when it comes to individual programs broadcasters and producers are working together to find the right program for the right channel for the right audience.

28730 I think if you were co-operatively owned by another broadcaster, you would inevitably offer them a show first. If they were to decide it is not appropriate for them, then you would naturally say "Well, it is in our joint economic interest to find the appropriate home for this in the system."

28731 I think by virtue of the cross-ownership both parties would tend to recognize that once they had exhausted the possibility of working in-house together.

28732 THE CHAIRPERSON: Thank you.

28733 I believe those are our questions. Again, thank you for staying with us so late.

28734 MR. ELLIS: Thank you very much.

--- Pause

28735 THE CHAIRPERSON: Mr. Secretary, please.

28736 MR. CUSSONS: Madam Chair, we will now hear the intervention by WIC Premium Corporation.

--- Pause

INTERVENTION / INTERVENTION

28737 MR. ROBERTSON: Madam Chairperson and Commissioners, my name is Paul Robertson, President, Corus Television. With me today is Malcolm Knox, Vice-President of Operations, Corus Premium Corporation, and Kathleen McNair, Vice-President, Regulatory Affairs of Corus Entertainment.

28738 Corus Premium Corporation was formerly WIC Premium TV Ltd. We own and operate Superchannel, Moviemax! and Viewer's Choice Pay Per View which are licensed general interest pay television services in Western Canada.

28739 Since 1983, these services have featured all appropriate Canadian films mixed with foreign features. The vast majority of the content on our services is theatrically released films.

28740 Our pay services are proving to be an important driver in digital roll-out. Today, over 70 per cent of Superchannel's subscribers and 81 per cent of MovieMax! subscribers receive these services via digital technology.

28741 While we embrace the exciting new world of choice that digital offers, we are in total agreement with the Commission's licensing framework that establishes that new services cannot be directly competitive with any existing pay or specialty service.

28742 MR. KNOX: Now we will comment on the independent film channel applications.

28743 We are not opposed to the licensing of an independent film channel provided the service complements the existing movie services and truly adds diversity to the program offerings available to digital viewers. Unless clear and easily enforceable conditions of licence are imposed on an independent film service, it could easily morph into a first run movie channel that would be directly competitive with our movie services.

28744 All the applicants appear to believe that a service featuring independent films would not be competitive with our licensed pay channels. In our view, any such determination will ultimately hinge on the definition of an independent film.

28745 Most of the independent film applicants have suggested that any film other than Hollywood studio releases should be considered an independent film. CHUM has suggested that it be permitted to air a proportion of films that are major studio releases, up to 10 per cent of its schedule. This would be very damaging to our services.

28746 Each year Superchannel offers approximately 370 new movies on the service. Last year the major Hollywood studios only released 121 movies. Assuming Superchannel exhibits virtually all of these new movies, 249 new titles, or over two third of its total offerings would fall within the definition of an independent film proposed by the applicants.

28747 In an effort to facilitate the licensing of a truly complementary independent film channel, we have developed and filed with the Commission draft conditions of licence that would provide the freedom and flexibility to operate a non-competitive independent film channel.

28748 While contemplating the appropriate limits to propose in respect of an independent film service, we were drawn to the Commission's decision, released last January, renewing the CBC's French language television licence.

28749 In that decision the Commission used Variety magazine's annual list of top 100 films to define non-Canadian commercial blockbuster movies. We believe that this definition remains appropriate and should be applied to an independent film service to ensure it does not become a blockbuster movie service.

28750 Blockbuster movies are essential to the success of our movie services. If an independent film channel is permitted to exhibit such films, it would be directly competitive with our existing services.

28751 Additionally, we believe that any definition of independent film must exclude films that are released for distribution by one of the major Hollywood studios, currently being MGM, Paramount, Columbia/Tristar, Universal, Fox, Dreamworks, Warner Bros. and Disney, including Hollywood Pictures and Touchstone.

28752 Since the foregoing definition for independent films would include all Canadian feature films, the exhibition of feature Canadian films is also an issue that must be addressed.

28753 Superchannel has committed to exhibit all appropriate and available Canadian feature films. Our pay television customers expect, since we are providing a pay service, that the first time they see a theatrical film on television, it will be on our service. If the new specialty licensees obtain a first window on Canadian features, it would reduce the perceived value of our pay services to our viewers.

28754 In our written intervention we had proposed that an independent film service should not run Canadian feature films that are copyrighted less than seven years prior to the year in which they are broadcast.

28755 After reviewing and considering the written responses to our intervention, we now feel that this condition could be approached differently in order to maximize distribution opportunities for Canadian producers while ensuring continued access to Canadian films for our services.

28756 We propose the Commission impose the following condition of licence on any independent film service. The licensee shall not acquire any Canadian feature film on an exclusive basis and that has not completed its pay television window. We note that all applicants have endorsed the continuation of an orderly marketplace with the appropriate window for pay television.

28757 In summary, we endorse the addition of a truly alternative film channel to the Canadian broadcasting system provided the licensee (1) does not exhibit any non-Canadian feature film from Category 7(d) that (a) has been listed within the top 100 films of Variety magazine's annual list of top grossing films of the year in the United States and Canada, (b) was released for distribution by one of the eight major studios, (2) does not acquire any Canadian feature film on an exclusive basis and only once such film has had a pay window.

28758 With the foregoing conditions of licence, we believe that a Canadian independent film service could complement our existing pay services.

28759 MS McNAIR: Most Category 1 and 2 applicants have included feature films, Category 7(d), as part of their nature of service definition. We consider it essential that some boundaries be established to ensure that as these services evolve over the years, they will stay true to their definitions of service and do not transform into something else. Therefore, we applaud the Commission's approach during this hearing to examine very closely each Category 1s nature of service in an attempt to establish clear programming limits.

28760 We believe clear and enforceable limits need to be placed on both Category 1 and Category 2 services, particularly in respect to feature films.

28761 Given the number of services proposing films, the cumulative effect on our pay movie services would be very detrimental. If a number of services are licensed without clear limits on movies, the net result would be that feature films would be carried in competition with Corus Premium's existing services. This would lead to a death by a thousand cuts.

28762 It has long been the Commission's practice to limit the exhibition of feature films by specialty services, both by time and by genre. For example, the recent decision concerning The Food Network limits the licensee to one feature film per broadcast week and requires that "all films must have food as a central theme". The MuchMoreMusic licence limits the use of movies to one music related feature film per week.

28763 We agree with this approach. Therefore, we suggest that if Category 1 and Category 2 applicants have proposed programming from Category 7(d), conditions of licence be imposed limiting the amount of feature films.

28764 We propose that the Commission impose the following conditions: No more than 10 per cent of the overall schedule in any broadcast week may include feature films. Two, no more than 10 per cent of prime time, 6:00 p.m. to midnight, in a broadcast week may include feature films. Three, all programming must be consistent with the theme, format or genre proposed by the respective applicant.

28765 We believe that these limitations will allow flexibility and offer a reasonable opportunity to feature genre-specific feature films without making the service directly competitive with our movie offerings.

28766 We would also note that similar restrictions must be imposed in respect of Category 2 applications. In fact, we believe that such a restriction is perhaps more important since the nature of service of those applications have not been closely examined in an open and public proceeding such as this.

28767 MR. ROBERTSON: In conclusion, Corus welcomes the licensing of attractive digital services that will add more diversity to the Canadian broadcasting system and increase opportunities for the exhibition of Canadian programming while respecting the Commission's framework that these services not be directly competitive.

28768 We would be happy to answer any of your questions now.

28769 THE CHAIRPERSON: Thank you, Mr. Robertson.

28770 Commissioner Wilson, please.

28771 COMMISSIONER WILSON: Good evening, Mr. Robertson, Mr. Knox and Ms McNair. Thank you for hanging in there with us.

28772 I know the hour is late and I don't want you to think that because of that I am not taking all of this very seriously because of course I am.

28773 I am forced to admit that I did have a bit of a chuckle when I read in paragraph 4 of your intervention the phrase "freedom and flexibility" followed by the condition of licence that you set out because the two -- it occurred to me that the two in the minds of the applicants for independent film channels might not go together, that their definition of freedom of flexibility would quite likely be quite different than yours because it seemed that -- and I note that you have changed the third proposed condition, but in combination the three proposed COLs are quite restrictive.

28774 I guess what I want to do is just pursue with you in two contexts, one with reference to the independent film channels and one with reference to your other intervention which touched on all of the other services that are proposing to use the feature film.

28775 I guess what I want to understand is -- and maybe we can talk a little bit about your experience in the analog world in order for me to understand this issue a little bit better, but I guess I am trying to understand whether or not this is your opening position. Sort of saying, okay, here's what we really want, all three of these things, or is the sky really going to fall if we don't do this with the independent film channels and with all of the digital specialty services?

28776 I mean, what has been your experience in terms of analog specialties, for example, beating you to the punch on rights for movies that you carry on your pay services?

28777 MR. ROBERTSON: I will begin and then I think Malcolm would like to add in. I will make an overall comment before getting to the analog question that you had.

28778 These services that we run are blockbuster movie services. That's what they do and Superchannel and MovieMAX! in particular, it's totally 7(d) for MovieMAX!. So there is no other programming.

28779 We exist now almost totally on digital. Therefore, the competition that's about to come on the scene will be on exactly the same platform as us and could be pretty quickly up to the same kind of subscriber numbers.

28780 COMMISSIONER WILSON: Has your penetration increased on digital?

28781 MR. ROBERTSON: Yes, it has.

28782 COMMISSIONER WILSON: It has. Okay.

28783 I'm sorry to interrupt you, but I was just curious about that.

28784 MR. ROBERTSON: Yes, it has increased primarily as a result of direct-to-home.

28785 COMMISSIONER WILSON: And has it also increased because I think in some of the Shaw systems they were swapping out the decoders, which is the old set-top box for the new addressable set-top box and they moved pay TV and that was part of the whole program to introduce digital?

28786 MR. KNOX: Yes, that's exactly what happened.

28787 COMMISSIONER WILSON: Right. You were the first phase offering?

28788 MR. KNOX: Yes. Growth in cable for us has been flat everywhere except Shaw, who has very aggressively rolled out digital and also approached it in a very creative pricing approach. That has made quite a difference and we have seen a nice rise in subscriber levels with Shaw.

28789 But just to comment on the programming for a moment, with respect to Superchannel, Superchannel is the premier pay service in the west. Today there is an orderly marketplace that sees movies moved from theatrical release to the video store, pay-per-view, et cetera. That's very much intact, so we really don't have a great deal of difficulty getting movies for Superchannel.

28790 In fact, when we talk about the top 100, we air virtually every movie in the top 100 list and that represents one of the cornerstones of our service.

28791 The only movies that are not available to us in the top 100 are really movies primarily owned by Disney, which are destined for video release and they are just not available to us.

28792 COMMISSIONER WILSON: Right.

28793 MR. KNOX: MovieMAX!, however, is a different animal all together. MovieMAX!, as Paul said, is limited to feature films and theatrical release films, 7(d).

28794 We acquire a lot of films on a non-exclusive basis for MovieMAX! and we are starting to have some difficulty in getting enough Canadian movies and we are competing for foreign titles as well.

28795 COMMISSIONER WILSON: Remind me what your COL is with respect to Canadian movies for MovieMAX!.

28796 MR. KNOX: It's 20 per cent.

28797 COMMISSIONER WILSON: Twenty per cent Canadian.

28798 MR. KNOX: Yes.

28799 COMMISSIONER WILSON: Okay.

28800 MR. KNOX: Granted that's very low, but at the time it was recognized that it's difficult to go back in time and create Canadian content because MovieMAX! is restricted to movies that are at least five years old.

28801 COMMISSIONER WILSON: In your opening remarks you talked about how many movies you run every year and Hollywood only released 121 and the other 249 you had to get from other sources and that included the Canadian films. Everybody talks about how movies are one of the big digital drivers.

28802 MR. KNOX: Right.

28803 COMMISSIONER WILSON: So would you not say that the reason that people are purchasing your service is because they want to see those 121 films, or the top 100 films that are released each year. They are buying it for that reason. They are not necessarily buying it for the other movies?

28804 I know when I bought it, I bought it because I stopped going to theatres as much as I used to because of parking in Toronto and traffic was so awful and I thought I would rather sit in my living room and not listen to people talking all through the movie, which really annoys me, so pay TV was the perfect solution. But it was for the new release movies.

28805 I mean I might have dipped in and out of the other movies that were offered.

28806 MR. KNOX: Certainly.

28807 COMMISSIONER WILSON: Is it your experience from having been at Superchannel that people would buy the service for those top 100?

28808 MR. KNOX: Certainly. Yes, that's what they are looking for, the popular movies. They don't have to rent them from the video store. Mind you, we are a little later than video, but certainly that's what they are interested in.

28809 COMMISSIONER WILSON: And of those 100, what percentage of those would actually be considered independent?

28810 MR. KNOX: Well, we had a look at the top 100 from 1999 and we found 12 titles on it for last year that would be considered independent.

28811 COMMISSIONER WILSON: So there might be an overlap of 12 movies between you and an independent film channel if they were going to take them from the top 100?

28812 MR. KNOX: Correct. If they were allowed to, yes.

28813 MR. ROBERTSON: I might just build on that. Twelve out of a hundred may not seem to be a huge amount. I guess I would reinforce that we would agree with you totally that this is why these movie channels are purchased is because of the top 100, the blockbuster films.

28814 One could take 12 titles and very effectively schedule them in prime time and do some serious damage to our services. So even understanding that we are talking about 12 movies out of 100, we think that that would have a serious impact on our business.

28815 COMMISSIONER WILSON: Okay. I guess maybe I am a Pollyanna, but it just seems to me that people who are interested in independent film it seems to be a philosophical commitment to independent film. Again, I said call me Pollyanna, but their proposals are for independent film channels and they seem committed to that genre and they seem to know very clearly what they think an independent film is and that that's what they want the service to be and God knows I would love that because I am not sure that Hollywood always makes the best movies. You can always tell what the ending is before it even happens.

28816 What do you think would motivate them in the absence of all three of those restrictions? What would motivate them to become a general interest movie service such as you have described, such as you offer?

28817 MR. ROBERTSON: Let me begin and then Malcolm perhaps would add to it.

28818 I think that any service would be -- despite the genre, it would be looking to maximize ratings. And, in this instance, what they would be able to do is take the independent, the, you know, non-Hollywood majors that were on that top 100 list and aggressively schedule them in prime time and that would be our major concern, that they could use those select titles. I mean we are talking about films such as Austin Powers, for example, which, you know, would definitely hit, you know, as No. 4 on the list of top 100. One could spend a lot of prime time on movies like Austin Powers, and we think that that, you know, is not really -- it doesn't really give life to the idea of an independent channel which, if you look at the applications of all the applicants who applied for an independent channel, what they were talking about is, really, movies that don't get seen currently on the air. Well, these movies are getting -- I mean they are in our top 100; they are constantly on the air. So, we don't know how, you know, adding these films to an independent channel would really add to the diversity.

28819 COMMISSIONER WILSON: All right. I'm not sure, Mr. Knox or Mr. Robertson, that you answered my question about the analog specialty services and whether or not they had scooped you on rights -- if that's been your experience in the analog world.

28820 MR. KNOX: To some extent, we have had some difficulty with Showcase getting some -- tying up some movies.

28821 COMMISSIONER WILSON: But, essentially, only with one channel?

28822 MR. KNOX: That's correct.

28823 COMMISSIONER WILSON: Okay. I did have a very pointed question about the third condition but, considering the comments that you made in your opening remarks, I will pass over that question. Because I had read, as you did, the responses to your intervention, with respect to the independent film channels, and found the argument with respect to Canadian movies convincing. I don't make decisions by myself, but I, personally, when I personally read it, thought that there was a good argument, in terms of providing extra windows for Canadian feature films because it is a sector of the industry that faces some challenges.

28824 If we were going to impose only one of the COLs -- only one of the independent film channels has said that they thought both were a good idea, and that's Cinefest.

28825 If we were going to impose only one of those COLs, which one?

28826 Let me be a little more specific because I think they were listed sort of separately before but, now, there's the one with two parts and there's the second one.

28827 If we were only going to do the variety list, the top 100, or the release for distribution by a major Hollywood studio, which one would be more effective, in terms of protecting your service?

28828 MR. ROBERTSON: Well, that is a pointed question, and we have certainly talked about --

28829 COMMISSIONER WILSON: That wasn't the one that I intended to --

28830 MR. ROBERTSON: Yes, well, that's also a pointed question.

28831 Thank goodness you saved the other pointed question!

28832 We think that the core of our movie service is at the top 100. And when we look to protect our interests, it's certainly the top 100 that we are most concerned about.

28833 I think that what the Commission might consider is a combination of the two, with some flexibility, in the sense of restricting the top 100, and also putting a limit on access to studio -- and we were talking about a number of, perhaps, of 5 per cent of the studio list.

28834 So, you know, clearly, we feel that we would be most comfortable with the application of those safeguards and that, then -- but if the Commission feels they need to find some middle ground on this, perhaps that's an approach that you might consider.

28835 COMMISSIONER WILSON: And with respect -- if I can just go to the other intervention that you filed, No. 62, and if you look on page 5 of your opening remarks, where you summarized that, you talk about two things.

28836 First of all, in the second paragraph: the one feature film per broadcast week. And then you say no more than 10 per cent of the overall schedule in a broadcast week. And no more than 10 per cent of prime time hours in a broadcast week. So you are averaging that over the week.

28837 Does that work out to more than one film?

28838 MR. ROBERTSON: It works out to two, in the evening period.

28839 COMMISSIONER WILSON: Okay. And why did you decide that you could live with 10 per cent there instead of the one feature film per week that had been imposed on the Food Network and MuchMoreMusic?

28840 MR. KNOX: We were using the one film per week as an example of a mechanism that you have employed. We felt that because some of the services, obviously, were having a higher level of drama, that two, in prime, would be a more appropriate number.

28841 COMMISSIONER WILSON: Okay. Thanks very much.

28842 Those are all my questions.

28843 THE CHAIRPERSON: Mr. Robertson, would you be less concerned if, of the list of independent film applicants, it were a combination of film and documentaries? Or would your concerns be as high? Because there are eight competing applicants. Some are film only, the way I understand it, and some combine the two.

28844 Would it create a certain level of -- would it be of decreased concern for you because there would be less need to fill the schedule with films?

28845 MR. ROBERTSON: I don't think this fundamentally changes our concern about --

28846 THE CHAIRPERSON: It would make no difference?

28847 MR. ROBERTSON:  -- running the top films in prime, which is probably the --

28848 THE CHAIRPERSON: Because they could still put the films -- but, except that I think there have been limitations put on feature films and prime, if I recall -- and have documentaries in prime. If that were the case, presumably, it would be less of a concern, would it not?

28849 MR. ROBERTSON: If --

28850 THE CHAIRPERSON: Because I'm surprised that you didn't address this. But one limitation would be to not -- if it's a film and documentary channel -- not to have film in the hours that are your prime hours.

28851 MR. ROBERTSON: Well, the main restriction that we saw for the film and documentary channel was that the three safeguards that we mentioned, which is the major Hollywood studios, would be restrictive in the top 100 box office and --

28852 THE CHAIRPERSON: Well, I understand that. I thought, over and above, there may be a greater level of comfort in non-competitiveness if documentaries were shown in prime hours, that are prime for your exhibition of film.

28853 But, anyway, it doesn't seem to be helpful.

28854 Thank you very much.

28855 MR. ROBERTSON: Thank you.

28856 THE CHAIRPERSON: Mr. Secretary, please.

28857 MR. CUSSONS: Madam Chair, our next intervention will be presented by Canadian Satellite Communications Incorporated.

28858 THE CHAIRPERSON: Good evening. More Survivors!

--- Laughter / Rires

28859 MR. GIBSON: I have to say that at about eight o'clock we started to regret requesting an oral appearance in this hearing. But nonetheless, we are here.

28860 THE CHAIRPERSON: Go ahead.

INTERVENTION / INTERVENTION

28861 MR. GIBSON: Madam Chair, Commissioners. Thank you for giving us the opportunity to appear before you today to present our general intervention on the applications for new digital pay and specialty services.

28862 My name is Scott Gibson. I am the VP, Legal and Government Affairs for CANCOM. On my left, Bruce Barr, Senior Vice-President, StarChoice residential services and on his left is Linda Ahern, Vice-President, Quebec of our StarChoice DTH subsidiary.

28863 On my right is David Lewis, Senior Vice-President and Chief Technology Officer of CANCOM and on his right is Wendy Herman, Vice-President, Marketing of StarChoice.

28864 Bruce Barr will begin our presentation.

28865 MR. BARR: Thank you, Scott.

28866 CANCOM's StarChoice subsidiary is one of two licensed DTH services in Canada. We have made significant investments in StarChoice to introduce effective competition among BDUs. Our investments to date have exceeded $400 million and we have accumulated operating losses of almost $300 million.

28867 These losses are a sign of our success since they reflect the rapid growth in our subscriber base. From our launch just two and a half years ago, we now have about 450,000 subscribers to our fully digital service. We have proven that we can sell our programming services effectively. We have a significantly higher penetration from our premium services and have a market-leading response to our new recent launch of new French services. There can be no doubt that we are proving to be effective competitors to cable.

28868 Most of our subscribers to date have been in rural areas. We have not been as successful in urban markets. Why is this the case when our digital service is clearly superior to cable offerings? The number one answer is that residents of urban areas simply do not see us as having a significantly different offering.

28869 We must offer more services and cable to differentiate our program, but we do not yet have access to sufficient services even though we have substantially more capacity than cable. We need lots of new services and we need them now so that we can persuade more Canadians that there are clear advantages to choosing digital.

28870 We have made the investments to address this competitive challenge. CANCOM has committed to expand more than one billion dollars in satellite distribution facilities. By next February, for example, with the launch of ANIK F1 and the deployment of our elliptical dish, our channel capacity will grow to 300. With the launch of ANIK F2, we will be able to offer our subscribers up to 400 channels.

28871 We have also made investments to incorporate interactivity in our set-top boxes so that interactive services may be included in these channels.

28872 David Lewis will be pleased to give you more information on this technology in the question period.

28873 MS HERMAN: Our 300 to 400 digital channels will create intense competitive pressure on cable. They will have no choice but to digitize aggressively and when they do, we like our chances. When consumers have a choice among digital suppliers, our packages, features and prices will be superior.

28874 We need to do a few things to make this happen.

28875 First, we need fabulous, attractive services, with superior content that people want to buy. Viewers buy content, they don't buy empty transmission capacity.

28876 Second, we need lots of new services. We need to have sufficient new services to achieve a critical mass and offer compelling packages to our viewers.

28877 Finally, we need these new services soon. We will have 100 channels to fill up beginning as early as February of next year. But for the delay in the launch of ANIK F1, we would have had that capacity within the next few weeks.

28878 To achieve these goals, the Commission must maximize the competitive pressure on the successful applicants in this proceeding. They must be prepared to make up-front investments quickly, as we have, and face the realities of a competitive market.

28879 Competition among program suppliers is a good thing. As the Commission knows from all of its recent accomplishments in telecommunications and broadcasting, competition drives innovation and imagination, improvements in quality, choices of service and price reduction. Competition brings out the best in all of us.

28880 Mme AHERN: Le Conseil peut adopter un train de mesures afin d'optimiser la pression concurrentielle entre les différents fournisseurs de programmation.

28881 Tout d'abord, les critères d'évaluation d'une concurrence directe devraient être assouplis. A notre avis, vous devriez baser votre évaluation sur la disponibilité et la diversité de la programmation d'un même créneau plutôt que du créneau en soi. Nous croyons que votre premier objectif devrait viser l'augmentation d'une programmation distinctive auprès des téléspectateurs canadiens.

28882 Si les titulaires peuvent démontrer le caractère distinctif de leur programmation à l'intérieur d'un même créneau, alors ils ne sont pas en concurrence directe. S'il subsiste un doute qu'une titulaire entre en concurrence avec une autre, nous croyons qu'il devrait être résolu en laissant place à la concurrence.

28883 Deuxièmement, le nombre de licences de Catégorie 1 qui sera attribué dans le cadre de cette instance, devraient être limitées. Les titulaires de Catégorie 1 sont assurés d'un accès préférentiel à une distribution numérique. C'est donc dire que tous les services de Catégorie 1 obtiendront une garantie d'accès équivalente aux services spécialisés et payants actuels puisque StarChoice utilise une plate-forme de distribution numérique.

28884 Bien que la pénétration des services numériques des entreprises de distribution terrestres soit actuellement limitée, cette réalité est appelée à changer. Ainsi l'accès privilégié à une distribution numérique deviendra alors aussi significative que l'a été l'accès privilégié à la distribution analogique dont plusieurs autres services bénéficient à l'heure actuelle.

28885 Nous ne sommes pas d'accord avec l'avis exprimé par plusieurs que soient accordées dix licences de Catégorie 1. Nous croyons que le Conseil devrait étudier la possibilité d'accorder très peu de licences de Catégorie 1 s'il en est. Le Conseil a favorisé un environnement concurrentiel pour les entreprises de distribution. La notion de droits d'accès privilégiés est incompatible avec un tel environnement.

28886 Nous sommes d'avis que de tels droits ne devraient être accordés qu'aux services qui sont incapables de survivre sans une aide réglementaire et qui desservent l'intérêt public ou social. Nous nous interrogeons quant à la capacité des services proposés de répondre à ces exigences.

28887 Troisièmement, nous avons besoin de façon pressante de services étrangers additionnels pour distribution numérique au Canada. Les services étrangers ont contribué et continuerons de le faire de façon significative à la disponibilité et à la diversité de la programmation distribuée aux Canadiens.

28888 Plusieurs services étrangers n'entrent pas en concurrence directe avec des services canadiens et ils diffusent une programmation qu'aucune titulaire canadienne ne serait intéressée à diffuser.

28889 Plus précisément, nous avons besoin de plus de services de langue française tant domestiques qu'étrangers. StarChoice n'a pas accès à un nombre suffisant de services de langue française. Les services étrangers de langue française énumérés à l'avis public 2000-68 offrent des émissions que nos clients francophones de partout au Canada trouveraient attrayantes.

28890 Nous sommes donc d'avis que l'entrée de ces services au Canada pour une distribution en mode numérique ne devrait pas être indûment retardée ou bloquée.

28891 MR. GIBSON: There must be a sanction on the licensees to ensure that their commitment to offer distinctive digital programming to Canadians is real. We have made our investments in digital capacity and the other BDUs have made their investments.

28892 Our great fear is that some Category 1 services and many Category 2 services licensed in this proceeding will not launch promptly or indeed will never launch at all.

28893 We therefore urged in our intervention that all licences should be subject to a condition requiring launch within six months of licensing.

28894 A number of participants in this proceeding have suggested that the appropriate deadline for launch should be September 1, 2001. There has also been a suggestion that Category 2 service should have a longer deadline. Some say up to three years after licensing.

28895 We do not agree with the September 1, 2001, for Category 1 services. We have been waiting for these services for a very long time and we will have empty satellite capacity available in February. This is very important. We have to pay for the capacity starting in February, whether or not we are using it.

28896 If the Commission's decision in this proceeding were issued as early as October, our suggested deadline of six months after licensing would allow for launch by March 1, 2001.

28897 We certainly do not agree with a longer deadline for Category 2 licensees. Category 2 applicants have known since the beginning of this year that they will, provided they meet specific criteria, receive a licence. If their applications are serious, they would recognize that the first to market advantage is critically important in a competitive world. We would think that they would already be making the investments and preparations required for a quick launch.

28898 Category 2 services will also receive protection against directly competitive foreign services being allowed into Canada in the future. We think it is unreasonable and contrary to the best interest of the broadcasting system to extend such protection to services without requiring them to launch at an early date. They can choose to launch whenever they like, but they cannot sit on their licences and expect that foreign competitors will be denied access indefinitely.

28899 Our view, therefore, is that Category 1 service which does not launch within six months of licensing, which we trust will be very soon after the conclusion of this oral hearing, should become a Category 2 service. A Category 2 service which does not launch within six months of licensing should no longer bar the admission into Canada of a foreign service which is directly competitive with it.

28900 The launch deadline should not prevent services from launching before that date if they are able to do so and distributors should not be prevented from distributing services, including eligible foreign services, as soon as they are available.

28901 On the issue of new foreign services, CANCOM believes that the process outlined in Public Notice 2000-6 should be expedited. It should be possible to identify now those foreign services which are not directly competitive with existing services or with any of the services proposed in this proceeding.

28902 In our view, the Commission should issue a call for new foreign services now and consider submissions in response to the call at the same time as it deliberates on the licensing services. Thus, the licensing decision and the approval of new foreign services could be released at the same time.

28903 MR. BARR: If the Commission adopts the measures outlined by Linda and Scott, we will have the means to provide the broadest possible menu of digital services to Canadian viewers at the earliest opportunity. This will be good for viewers, will enhance competition between DTH and cable and will benefit the new licensees in this proceeding. As Wendy has said, competition brings out the best in all of us.

28904 MR. GIBSON: Madam Chair, Commissioners, this concludes our presentation. We hope that our comments today will assist you and we would be pleased to respond to any questions that you may have.

28905 THE CHAIRPERSON: Madam Bertrand.

28906 CHAIRPERSON OF THE COMMISSION: Good evening and thank you for being patient with us and having waited for tonight. We hope you had something to eat so that you have some energy for some questions, although I don't have that many because your position in the oral presentation this evening is very similar to the one I had read before coming to the hearing.

28907 It is a different type of position, if I may say, from certainly the applicants we have heard throughout the hearing, but also from other intervenors.

28908 My first remark or comment would be where's the Canadian content in your consideration? I understand that you are there with an investment, wanting to really benefit from the investment and be capable of offering to consumers, possible customers of yours, services.

28909 The Broadcasting Act by which you are licensed and for which we have a responsibility in order to implement the objectives has a very definite and central part which is about Canadian content. In resume, if worst comes to worst in the kind of scenario you are putting forward is well, if Canadians are not ready, can I really get on to it in the six months? We will go for foreign services and please put on the eligibility list foreign services as soon as possible.

28910 That's somewhat the message I am -- am I exaggerating? That's what I'm hearing. Where should I be corrected? Please feel free to correct me. Many do.

28911 MR. GIBSON: Thank you, Madam Chair.

28912 I think that it's important to characterize our position as we are completely committed to creating a vibrant Canadian digital industry.

28913 The reason that we have put the kind of intervention that we have put together in front of you today has as its sole purpose driving the participants in the industry into jump-starting the Canadian industry. There is a great benefit to the Canadian broadcasting system in making sure that, for example, the level of service that's now available on American DTH systems, the grey market and the black market, does not outpace that that's available on the Canadian system.

28914 What all of our proposals are designed to do is to say the competitive market needs to be put into place fully so that the Canadian digital marketplace will flourish. If we don't do that, we run the danger I think of the concerns that you have.

28915 What we are saying is look, we have stepped up to the plate and we put the money on the table. It's time for the Canadian programming industry to start taking some risks, to start investing and to really start moving on providing the kind of programming that the viewers want.

28916 I would ask Bruce actually to comment on the kind of advantage that having Canadian programming and vibrant Canadian digital services has in selling the service.

28917 MR. BARR: Just really to build a little bit on Scott's point. What differentiates us in the marketplace is the depth of our programming. Clearly there is no indication from any of our services that consumers don't want to consume large amounts of quality programming, Canadian or foreign.

28918 What this intervention really does is simply say, as Scott has detailed, we really need to make sure there's an impetus to allow us to get the services we need as quickly as we can get them. As I say, there's nothing in our research and there's nothing in our plans in terms of the services we will be offering as we move to 300 and 400 channels that would do anything other than be most respectful of the broadcast rules that we operate under.

28919 CHAIRPERSON OF THE COMMISSION: Well, I find somewhat of a contradiction. On one hand, you say we have made lots of investment to increase our capacity, yet with that capacity you are telling us, for example, that Category 1, where in our framework it's quite clear that we said more or less ten channels, you are saying no, no, no, not ten channels, closer to one and two and probably you would have preferred zero and do you know some Category 2 and foreign?

28920 That's what we are hearing. The capacity, it's almost as if you are saying and, you know, maybe I'm wrong, but what I read into your intervention is almost as though we have enough Canadian, we don't need any more.

28921 What we need, though, is immediate services to be launched to offer new packages, and in order to do that we need more foreign services.

28922 Because there is somewhat of -- I'm posing the question: Is it realistic what you are proposing here, a decision in October?

28923 I have been seeing that the Commission is being pushy a bit when I ask for a decision by Christmas, October is quite -- like tomorrow we will be still in the hearing for another eight days. So the realism of being capable of having a decision in October and a launch in March -- it is not as in deciding on something that is already there on the shelf, it is deciding among applications and then there is negotiations and projects to be put -- comment dire donc -- d'être -- I'm getting tired, I'm losing my English -- but to be borne in a sense that they have to be put together.

28924 It is not something that is already there and, you know, it is not in a catalogue or in an inventory and you just put it on the shelf. That is not how it can be played.

28925 So is it realistic, the kind of calendar schedule you are proposing here, from your knowledge of the system?

28926 MR. BARR: Let me address your first question, which is: Is our intervention directed to disadvantaging Canadian services? The answer is: Absolutely not.

28927 What we are saying in the call for a limitation of Category 1 services is simply we want the marketplace and our customers to be the arbitrators of choice. And it is nothing more than that. It is not an agenda that does anything more than that.

28928 I think on the second question regarding timing, most respectfully I think what we are saying is we want to be able to be in a position to launch these services as quickly as possible and that the notion of a simultaneous launch date a year from now just to us doesn't fit with either our capacity availability or, frankly, our customers' needs and our desire to be competitive in the marketplace.

28929 Again, it is not designed to disadvantage a service in favour of an available foreign service. That was not the intention and if you interpret that intention I would respectfully again say that is not what we meant.

28930 CHAIRPERSON OF THE COMMISSION: Tell me -- I'm pushing you here so that we are all keeping on our toes.

28931 What is the problem of having two or twelve Category 1s if they are presented in packages? And, yes, you have an obligation to carry them, but having all that capacity that is not a problem. It is always at the end the consumer who will have the choice of the package. There is not necessarily an obligation to "you take one, you take them all".

28932 It seems that what we have heard or what has been as interventions, there has been all forms of what the framework was saying is an obligation to carry, not necessarily to be packaged in only one package. You know, it is open to discussion and to presentation.

28933 So you seem to make a direct relationship with the number to be carried with the fact that at the end of the day the consumer has no choice. Especially with 200 at first and then 300 channels, it seems to me that you are really well-equipped to offer all the choices to your consumers that they can be interested in getting.

28934 MR. GIBSON: I think to respond to that question, it is important to understand when we talk about why the marketplace should decide and why there shouldn't be a large number of Category 1 service must-carries. It is important to remember that this negotiation and the launch of these services is going to be quite unlike anything most of the intervenors and applicants that you see in front of you have ever experienced.

28935 The reason is this: There is an equality of interest and a commonality of interest between the distributors and the programmers. We are in it together. The programmers have what we need. We need that content and we need it desperately.

28936 Our fear if there is an inordinately high number of Category 1 services licensed is not related to channel capacity at all, it is related to understanding that in the digital environment the playing field has levelled and this launch or this roll-out as it happens over time is going to be constructed in a conversation among equals.

28937 CHAIRPERSON OF THE COMMISSION: The equals being whom?

28938 MR. GIBSON: Being the distribution -- the digital distributors, ourselves and ExpressVu and the rest, and the programming industry.

28939 CHAIRPERSON OF THE COMMISSION: Where is the consumer?

28940 MR. GIBSON: As Bruce said quite eloquently, our position will be informed 100 per cent by the consumer. It has to be. Because if we don't have what our consumer wants, then they are going to go across the street to our competitor.

28941 CHAIRPERSON OF THE COMMISSION: Last question, because I don't have much question about that, as I said. It was really a mirror of your written intervention.

28942 You haven't commented about an ethical code or ideas that have been put forward by some intervenors or applicants. Certainly you were here earlier this afternoon when we had the discussion with the CCTA, and I don't know if you were already here this morning but with the CAB.

28943 Do you have any point of view to put forward? Do you feel that you are talking about a level playing field between programmers and distributors? Am I to conclude that you don't see any need to define any undue preference or to have a code of ethics? Let the market decide and you feel that the distributor will decide and the market will react and if they are not happy they will go to the competitor. Is that your answer?

28944 MR. GIBSON: That is very close to the answer.

28945 I mean, obviously we will operate completely within the undue preference regime. But absolutely, you have characterized it very well, Madam Chair.

28946 The discipline that we need as commercial players in the marketplace comes to us and it comes to us very loud and very clear from our customer.

28947 CHAIRPERSON OF THE COMMISSION: Well, thank you.

28948 I don't have any other questions.

28949 THE CHAIRPERSON: Perhaps it's late, but I don't understand the logic.

28950 The mantra of the consumer should decide. The Commission said "Well, we will license at least 10 Category 1 which the distributors must offer" -- "offer to the consumer for the consumer to choose from and then a whole array of Category 2s that the distributor may choose to distribute or not, i.e., offer or not." Where is the consumer?

28951 Because your proposition is to offer -- unless you are not responding truthfully when you say that you want to offer as many -- to provide as much Canadian content as possible, you want us to license maybe none, maybe one, maybe two of the services that you must, as a distributor, offer for the choice of that consumer. So there would be none of those.

28952 The Category 2s you have full freedom to offer five, ten. I don't understand the mantra "the consumer should decide". Offering the widest array possible should be the aim if the consumer wants choice.

28953 So we help by forcing some services that we feel enhance the achievement of the objectives of the Broadcasting Act and you must offer them.

28954 I know there is packaging and so on, but we hope some choice will be offered to the consumer.

28955 I just don't understand this at all. Maybe it's late. Where is the consumer? You don't even want us to help in having the widest array of Canadian services possible. I just don't understand.

28956 MR. BARR: The message is very simple and that is we endorse Category 1s that meet the Commission's criteria for social need or public policy. Beyond that the consumer mantra is what takes over.

28957 We believe it's not for us or the Commission to choose what the consumer wants to watch. We believe it's the consumer's choice.

28958 THE CHAIRPERSON: But are you planning to offer services that aren't licensed? If we are not going to license any Category 1, what is it that you are going to have to offer to the consumer who wants a lot of choice?

28959 MR. BARR: An array of 385 Category 2 services that we believe meet --

28960 THE CHAIRPERSON: That you are going to decide?

28961 MR. BARR: No, no.

28962 THE CHAIRPERSON: You the distributor under the framework we have you are going to decide somehow or other what it is among those, that 30 or 25 or whatever, you as a distributor will decide which ones you think the consumer will want; whereas the aim is to ensure, for us as the regulator, that there is an array of offer. But it is late perhaps and so I will leave it.

28963 MR. BARR: I would really like to address the comment. Today we live or die by consumer activity, the number of new subscribers we add and the revenue that we receive from those subscribers.

28964 Every decision that we make regarding programming we consult our consumer. We don't make decisions and will not make decisions on future services in the absence of consumer input.

28965 I would submit that I'm not smart enough, despite my grey hair, to know what the full array of consumer choice is in these 384 new services. We will not be the gatekeepers. The consumer will be the one that decides.

28966 THE CHAIRPERSON: Thank you.

28967 Counsel.

28968 MR. McCALLUM: Yes. Just one question, if I may.

28969 Some of the Category 1 applications that have been heard in this hearing process propose regional distribution. Can StarChoice's DTH service restrict the distribution to the regions proposed by such applicants?

28970 MR. GIBSON: I would ask David Lewis to address that question.

28971 MR. LEWIS: We certainly have the capability to regionally blackout or geocode or postal code a region, deliver the programming only to a certain region.

28972 The downside effect would be the fact that the new satellites that we are going to in January don't have any more regional beams, so we would be offering that service on a geographic basis to all of Canada, yet only selling it into a certain marketplace. So in terms of efficient use of the capacity or the bandwidth that we have in the satellite footprint, from that perspective that would be the downside.

28973 But as far as being able to target or sell only into a certain marketplace and restrict that sales into a certain marketplace, we have the ability in our software and the set-top boxes today addressability to do all of that.

28974 MR. McCALLUM: Thank you. Thank you, Madam Chair.

28975 THE CHAIRPERSON: Madam Bertrand has another question.

28976 CHAIRPERSON OF THE COMMISSION: I was just wondering, is your position coming from what we had heard not so much in this hearing, but maybe more at the time when we have adopted the framework we have adopted, where we heard that it was necessary for DTH and MMDS to get immediate services, so that they can take advantage of their position of being digital ready in a sense and more capacity to offer, especially in the DTH. Do you see that as related or is your position very much one that would be the same a year from now and two years from now more inspired by the digital technology or the digital universe as you see it? Am I clear?

28977 MR. GIBSON: I think I understand your question to be --

28978 CHAIRPERSON OF THE COMMISSION: Are you trying to keep a competitive advantage over -- because even the CCTA this afternoon said that this launch will be done especially by the DTH and MMDS player, that you will be very significant in terms of how that launch will be done.

28979 So in that universe you are call the dominant by the CCTA. Is that your perception and is the position you are having here is related to that fact that you would like to remain in that position after the launch? I am trying to understand if your position is related to that or to the digital context or environment per se.

28980 MR. GIBSON: Our position is related primarily to establishing digital as a purchase option in the consumer's mind. The promotion of the category, as opposed to the promotion of StarChoice itself is critical to incenting the growth of the digital industry.

28981 If that doesn't happen, if as Bruce said earlier if we can't say to the vast majority of Canadian households that we have something different to offer, then the digital-installed base is not going to grow. We are not going to be able to support the kinds of Canadian services that we are licensing in this proceeding.

28982 Our position is related to moving the digital offer into a space that says to the consumer "we have something dramatically different to offer and you should go out and investigate this."

28983 I will say this even crossing party lines, Look and ExpressVu and the digital cable guys would all say the same thing.

28984 Bruce, do you have anything to add?

28985 MR. BARR: I would just add that the notion of dominance is an interesting one. Our sites are set on two large customer bases. One, those customers that are unserved and, as I said in my opening remarks, that's where the majority of our business is today.

28986 But, secondly, there are 8 million cabled households. We have not successfully penetrated those households to the same level that we have with rural customers. That's where the big opportunity lies.

28987 I would think ExpressVu and Look --

28988 CHAIRPERSON OF THE COMMISSION: To get there before cable?

28989 MR. BARR: Clearly, we want -- well, I don't think we will get there before cable. They are there now and moving, but we have made the investment. We are ready to go and we want to move as quickly as we can because we think that again first move or advantage in any marketplace is key to continuing to win.

28990 CHAIRPERSON OF THE COMMISSION: Thank you. Thank you very much.

28991 THE CHAIRPERSON: Thank you very much and thank you for staying so late.

28992 MR. GIBSON: Thank you for having us.

28993 THE CHAIRPERSON: Goodnight.

28994 Mr. Secretary, please.

28995 MR. CUSSONS: Thank you, Madam Chair.

28996 We will now hear the intervention by Look Communications.

28997 THE CHAIRPERSON: Proceed when you are ready.

INTERVENTION / INTERVENTION

28998 MR. HEMINGWAY: Madam Chair, Commissioners and ladies and gentlemen, my name is Mark Hemingway. I am the Senior Vice-President in charge of Legal and Regulatory Affairs and the Secretary of Look Communications.

28999 To my left if Gary Kawaguchi. He is the Senior Vice-President of Sales, Marketing and Customer Care for Look.

29000 To his left is John Medline, the Director of Regulatory Affairs.

29001 To my immediate right is Gord Corlett, Look's Vice-President of Programming.

29002 To his right is Tim Penner, our Director of Broadband Operations.

29003 I first want to say thank you very much for allowing us to participate in this hearing, and we are delighted to be here, despite the late hour.

29004 As both a 100 per cent digital distributor and as a new entrant in this industry, we followed the proceeding, obviously, with great interest.

29005 We, unequivocally, support the addition of approximately 10 new high-quality digital networks to the Commission's eligibility lists.

29006 We trust that the Commission will approve Category 1 applications that demonstrate that they clearly have the ability to appeal to their respective niche audiences.

29007 The quality and the audience appeal of such networks is of vital importance to Look. Our scarcest resource is channel capacity.

29008 The ability of such networks to attract their audience is, therefore, of crucial importance to us.

29009 As you know, however, we have chosen not to support or oppose any particular application to this proceeding. We believe that the Commission and the other parties who you will hear, over the course -- have heard, and will continue to hear, are best placed to conduct this exercise.

29010 We would like, however, to comment briefly on the post-licensing period, which is absolutely critical to the successful launch of these channels.

29011 I think it's important, before doing that, however, that we look backwards and go back to 1993, where the Commission identified universal addressability as a distinct public policy objective, stating that:

"The implementation of universal addressability will allow all cable households to be served and identified individually, and will permit greater flexibility in packaging programming services, thereby providing greater choice and customization of service...."

29012 And, later on:

"The Commission considers that the spirit of the guidelines should, to the maximum possible extent, respect the fact that it should be subscribers, who, by their choices, determine the popularity and success of individual programming services."

29013 In the public notice governing this proceeding, the Commission, again, listed the advantages of digital distribution, including the ability to deliver more services and increased flexibility in the way that programming services may be packaged.

29014 Since our launch, in southern Ontario, just two years ago, Look has always provided customized packaging and championed consumer choice.

29015 We have the most extensive experience providing customized packaging. We believe that individual customers are best able to decide what it is they want to watch. If customized packaging flexibility of the sort used by Look were denied or rendered impossible, due to punitive network penetration tables that charge us more for a less popular channel, one of the best and most obvious advantages of digital technology would be lost.

29016 Throughout this proceeding, the Commission has heard all about network Internet strategies, advanced corollary Web sites, interactive television -- all made possible by digital technology.

29017 It follows that packaging models that are based on the inherent limitations of analog technology must not form the basis of the Commission's licensing decisions.

29018 We urge the Commission to recognize that digital technology fulfils a long-standing policy objective of flexible packaging and to carefully examine the whole rates, the assumed penetration levels and associated penetration tables that form the basis of the Category 1 applications.

29019 Gary...?

29020 MR. KAWAGUCHI: Thank you, Mark.

29021 One week ago today, Look launched looktvi.com.

29022 Looktvi.com is an Internet portal that allows visitors to watch clips of their favourite movies or shows, listen to an array of music, ranging from jazz and classical to country and hip hop, or watch live up-to-the-minute specialty broadcasts and breaking news.

29023 The content is streamed directly to the computer. The portal sets itself apart from more traditional portals by searching and delivering content that is 100 per cent streamed audio and video.

29024 Convergence of the Internet and broadcasting is not the future; it is here. It is the reason for BCE's purchase of CTV. It is the reason for AOL's purchase of Time-Warner. It is the reason for Look's merger, last year, with Canada's largest independent Internet provider: Internet Direct.

29025 This convergence of Internet and broadcasting provides a level of choice and customization that was impossible until today.

29026 This is the environment into which these new channels will launch.

29027 Yet, it has been suggested, by some parties, that consumer's don't really want to customize their own packages and they prefer pre-set or themed packages.

29028 Indeed, it has been suggested, in this hearing, that the Commission should express a preference for larger pre-set packages and that networks should be permitted to opt out of any method of distribution that they don't like.

29029 We believe that the choice packaging currently used by Look is a viable method of selling these networks and should not be foreclosed by the Commission.

29030 Moreover, providing networks with the right to opt out of choice packaging, while mandating that the network be carried, unacceptably tips the balance of negotiating power for distribution towards the network.

29031 The notion that consumers don't want such choice packaging flies in the face of recent studies, our experience and common sense.

29032 The first evidence to the contrary comes from the CCTA, which we heard this afternoon, which commissioned a survey from The Strategic Counsel to examine consumer preferences in the purchase of new digital networks.

29033 The survey overwhelmingly confirmed the common-sense view that consumers want to customize their own television line-up. Sixty-eight per cent found pick packs appealing -- Look calls this the "choice package". Then there's the big fall-off to themed packages -- only 37 per cent found such packages appealing. And only 29 per cent found a large package appealing.

29034 Still, some parties to this hearing have questioned the relevance of the survey that did not include associated consumer costs.

29035 Look has operated its choice package for over two years, with such associated costs.

29036 For example, in southern Ontario, Look currently offers 40 discretionary specialty channels. A consumer can take all 40 specialty channels, for $20. On a per-channel cost of 50 cents, it is Look's best consumer price deal per channel, and just over one-quarter of our customers choose this large package.

29037 On the other hand, Look's smallest discretionary specialty package consists of 10 channels, and it sells for $10 a month. This equates to a $1 per-channel rate, or double the per-channel cost of the larger package, yet about half our customers choose this package.

29038 In other words, most consumers do not judge value on a cost-per-channel basis; they judge value on the ability to design and pay for a package of specialty channels they want.

29039 Most consumers at Look do not want a large package, even if it offers the best supposed value. They want the ability to choose, as long as their customized packages are offered at a reasonable rate.

29040 A critical side benefit of choice packaging is the associated increase in pay television penetration.

29041 A Look customer can choose our basic plus the 10 specialty channels of his or her choice for about $30.

29042 In southern Ontario, TMN is offered for only $10.

29043 The majority of Look customers take basic plus the 10 specialties of his or her choice plus TMN, for a monthly bill of $40.

29044 A typical cable bill of basic plus all three specialty tiers comes to about $40, without TMN.

29045 So, we are seeing a shift in purchase patterns, but not a shift downward in average revenue per customer. That remains relatively constant.

29046 Indeed, we may be seeing that a typical consumer has in mind a set amount that he or she is prepared to spend on television services. When offered more services, they don't increase that spending amount; they choose, from among the greater number of services now offered, the ones that are most valuable to them.

29047 We believe that up-selling Canadians beyond their current budget will happen in small steps, with incremental channels added by customers, based on stimulated demand.

29048 Looks also understands that several networks favour themed pre-set packaging as a compromise position. They believe it offers consumer choice within a set package model. It is the model currently employed by Canada's two DTH companies.

29049 To this suggestion, Look borrows a quote from Ottawa Citizen television reporter, Tony Atherton, who stated:

"The only company that has come close to having what subscribers really want would be Look TV which has offered a program with a basic service that includes the rental of the equipment and then a sort of pick-and-pay option on an increasing basis. That is what, if you put subscribers down in a corner and forced them to answer, they're going to tell you that they want. They want that ability. Cable hasn't been able to deliver it for technological reasons...Satellite has been able to do that, and hasn't for some reason."

29050 I would be remiss if I did not respond to the written comments of the Specialty and Premium Television Association, or SPTV.

29051 The SPTV intervention boldly states that pick and pay and pick a pack -- the SPTV's term for Look's choice packaging -- are factors in Look's allegedly disappointing sales results.

29052 SPTV's conclusions are simply not true!

29053 Look at sales records throughout this summer. In June alone, look at it, over 7,000 video customers.

29054 Despite operating only in southern and eastern Ontario and Quebec, despite directly competing with Canada's four largest and wealthiest cable companies in largely urban markets, despite the constraints of line of sight technology and despite the fact that we only started launching new markets in the past two years, Look has already attracted over 60,000 digital video customers by the end of Q2, almost double our year end 1999 total.

29055 On a digital apples to apples basis, Look is over half the size of Rogers digital customer base. Not bad for a new company. To suggest that Look's choice packaging model is unappealing to consumers and has somehow driven down Look's subscriber basis is simply not true.

29056 Look's growth will triple our subscribers this year over 1999. Look is prepared to let the market decide. We believe that we have a winning choice package and strategy that will continue to be supported by customers and investors. Specialty channels should be willing to be judged on the same basis.

29057 Gordon.

29058 MR. CORLETT: The Category 1 applications before the Commission are niche by nature. Book channels, pet and specialty, music channels, channels about video games. These networks are not designed to and will not appeal to the general masses.

29059 The Commission must ensure that the networks business models do not assume high penetrations and charge higher fees for lower and more realistic penetration levels.

29060 The applicants knew the realities of the digital environment when they prepared their applicants. It is not the distributor's responsibility to guarantee the success of the new networks.

29061 Look recognizes that choice packaging may impact penetration levels of some specialty channels. Look has pledged to work closely with the networks and their associations to help promote, market and increase the number of subscribers to each of the networks in a choice environment.

29062 We recognize the mutual benefits for the networks for Look and the Canadian broadcasting system from such promotion, marketing and sales initiatives. Look has already begun discussions with the SPTV, the Canadian Association of Broadcasters and network representatives to further cooperative opportunities. Indeed, the choice packaging model lends itself perfectly to individual network promotions.

29063 To date the Commission has focused much of its attention on basic rates. Look believes the Commission must shift its attention to discretionary rates when the networks receive mandatory carriage. These digital networks are true discretionary channels and are unlikely to be placed on basic. As such, the Commission must closely examine the discretionary rates in the applications and the penetration expectations associated with such rates.

29064 The Commission should forbid penetration tables and guaranteed floors and should set a rate for all distributors, regardless of the package model chosen or the penetrations received. However, Look believes the Commission should permit reasonable discounts.

29065 We suggest up to 10 per cent for high volume digital subscribers. Such discounts are normal business practice. The discounts would be applied to the Commission's set or recommended wholesale rate.

29066 MR. HEMINGWAY: Thanks, Gordon.

29067 Look notes that the Category 1 networks have already achieved significant regulatory protection.

29068 First, despite their niche nature, they will be granted mandatory carriage on digital systems. This is especially significant for digital MDS systems with limited channel capacity. Ten mandatory carriage channels equates to one fifteenth of our total maximum number of channels. That is our scarcest resource.

29069 Second, Category 1 networks receive the treasured gift of one per genre exclusivity, amounting to unchallenged ownership of a particular programming type. This really equates to a sanction monopoly in an era of choice and competition.

29070 Third, distributors such as Look must adhere to the Commission's distribution and linkage rules which mandate a preponderance of Canadian services in a given package of channels.

29071 Fourth, distributors already subsidize Canadian programming initiatives through hefty contributions to the programming funds. In Look's case, 5 per cent of our gross annual revenues in southern Ontario and 7 per cent of our gross annual revenues in Quebec and Eastern Ontario.

29072 Look also believes that a minimum package size for choice packages, in Look's case ten channels, offers significant protection to these channels. To allow them to opt out of choice packaging would be a step too far, which brings me to affiliation agreements which were discussed at some length earlier today.

29073 It was suggested to the Commission that it's normal business practice to enter into an affiliation agreement. It was suggested to you that it's common to enter into these agreements with the American channels such as A&E and other channels.

29074 I think it's important to note that there's an important distinction between the A&E situation or the other American channel situation and the situation before us today. Those American channels do not receive mandatory carriage on our system. The channels that are before you today are receiving mandatory carriage.

29075 Second, to say that there must be an agreement of the sort that was described by the CAB and the SPTV yesterday is another way of saying that channels have a veto over the business practices of broadcast distribution undertakings such as Look. They are effectively saying that if they do not like the way in which we propose to market their service, they won't sign the affiliation agreements. That would be the equivalent of us saying to them that we must have the right to force them to put on programs that might make the channel more appealing to our customers -- clearly not an acceptable outcome either way.

29076 There seems to be an unwritten assumption among the CAB, the members of the CAB, and SPTV that Look does not have an interest in achieving broad penetration. The Commission must remember that we have a scarce resource. We have no more than 150 channels. We are highly incented to obtain the greatest return possible on each of them.

29077 Here we are obliged to carry ten -- approximately ten new channels and we will want to achieve the broadest penetration possible, but we --

29078 MR. CUSSONS: Sir, I'm sorry to interrupt, but we are just past the 15 minute mark and I believe we ask people to try to stick to ten minutes.

29079 Thank you.

29080 MR. HEMINGWAY: Fine. Would you like me to finish my sentence or shall I stop?

29081 MR. CUSSONS: Madam Chair?

29082 THE CHAIRPERSON: Yes, of course.

29083 MR. HEMINGWAY: But we must be allowed to do it in a way that makes sense to us. That includes allowing us to having choice packaging.

29084 Thank you for listening to our comments. We would be pleased to answer any questions that the Members of the Commission may have.

29085 THE CHAIRPERSON: Thank you, Mr. Hemingway, and your colleagues.

29086 Commissioner Demers, please.

29087 COMMISSIONER DEMERS: Good evening. A few questions.

29088 The first one would be on your presentation. It concerns your suggestion that the Commission must closely examine the discretionary rates and the applications and the penetration expectations associated with such rates.

29089 Probably the question is how and in what way and what really do you mean -- what is the work that you think the Commission would do, especially in rates?

29090 MR. CORLETT: I think what we are looking for is some direction from the Commission. Most of the applications have suggested some wholesale rates based on their business plans.

29091 In order for us to market them successfully, we need rates that are somewhat set. What we need are rates that are not based on penetrations. That would be almost a make whole situation.

29092 For example, if it's a 25 cent rate and we are trying to retail a package of services for, say, $5 to $ 10, then that's fine. But if it's based on a penetration scale where if we only have a 20 per cent penetration, we end up paying $1.50, then it is impossible for us to continue offering the Look model of choice.

29093 So I think that it is important for Look to continue to be able to offer the services, the new services the way we have been offering them, which is, in our opinion, the most consumer-friendly way of offering new services.

29094 MR. KAWAGUCHI: Excuse me. If I could just add to that.

29095 The perspective is, we heard prices ranging from 19 cents to 65 cents for carriage, but they had attached penetration rates that were somewhere in the 60, 70, 80 per cent range -- quite high.

29096 To put that in perspective, 35 per cent of our programming channels today have a cost less than 19 cents. Only 10 per cent of our channels today have a cost greater than 65 cents. That is assuming, of course, we met that kind of penetration table. When we are talking about channels of this sort, it is going to be very difficult to hit 60, 70, 80 per cent penetration.

29097 What hasn't been discussed is the price point for carriage with penetration rates that go below that. That is the source of the business discussions, the source of a lot of grief, I will call it, in negotiating for carriage.

29098 The difficult aspect of all of that, to put it in perspective, is we accept the notion of mandatory carriage. We are willing to do that. But when the network has the ability to opt out of our packaging and to offer punitive rates for carriage, rates that would take the cost to us for more realistic penetration levels well above $1, starts to put it into a price point that becomes very difficult for us to market.

29099 Again, final point, today we charge $20 for all 40 specialty channels. Adding 10 at 65 cents, for argument's sake, is $6.50 in cost or 32 per cent of our revenue. We would have to start taking price points to the consumer to a level that would hurt, we think, ultimately the penetration and the success of the marketing of these channels.

29100 COMMISSIONER DEMERS: Thank you.

29101 I would go back to your written intervention, but also you have carried some remarks tonight, and it concerns packaging and marketing.

29102 The question you have indicated, if I put it in my own words, really that the Commission should not interfere very -- that it should act very lightly on packaging and marketing.

29103 Let's put the question more from the Commission's perspective: Should the Commission be more explicit on rules or guidelines with respect to packaging or marketing Category 1?

29104 MR. KAWAGUCHI: We believe at the end of the day that packaging is one of the fundamental weapons we have, if you will, to compete in this marketplace. Therefore, we would prefer not to see a lot of guidelines put on forms of packaging. Again, it is one of the central positions we have as we market.

29105 COMMISSIONER DEMERS: Thank you.

29106 So up to now the Commission has published, as you know, in its public notice that the Category 1 should not be offered in pick and choose unless they are part of a package first. Have you read that somewhere?

29107 MR. KAWAGUCHI: Just for clarification, when we offer -- in our current packaging model, every channel -- any one of these channels would be available. All of them would be available in our pick them all package.

29108 So, in essence, we have a large package, it is the pick them all package that all the specialty channels are included for one set fee. So they are in fact there and, as we mentioned, 25 per cent or greater than 25 per cent of our customers currently take that.

29109 We are not a pure pick-and-pay model. We are a model that starts off with a package of 10 selected by the consumer, but the consumer is staring off with a base package of 10. Incremental to that, every package beyond that is a package of 11, package of 12, et cetera, going all the way up to pick them all.

29110 So again, we think we comply with all of the requirements. It is offered in our largest package, pick them all, and it is offered in every one of our other packages, if you will. They just happen to be chosen by the consumer.

29111 COMMISSIONER DEMERS: Thank you.

29112 I only have one other question and it relates to the interactive set-top box, which of course you are familiar with that more than others are.

29113 We have asked applicants whether -- and some have suggested that the Commission hold a process to address issues such as cost-sharing and access to the set-top box. Do you agree with this suggestion for a separate process?

29114 MR. HEMINGWAY: We think it is premature at the moment to consider such a process.

29115 The whole question of interactivity is some way away and the form of interactivity that will be offered by the various channels is not decided. It is impossible, I think, today to say what form that interactivity will take.

29116 I think that our position is that the channels and the distributors should be given the opportunity to work through those issues as and when they arise and if there is a need for Commission's intervention at some point in the future, come back to the Commission then.

29117 COMMISSIONER DEMERS: Thank you very much.

29118 Thank you, Madam Chair.

29119 THE CHAIRPERSON: Madam Bertrand has a question, but Mr. Kawaguchi, you made the point, which I understand, about the relationship between penetration, and used figures that are very high.

29120 I'm looking very quickly through the very large number of applications we have for Category 1, but have you counted how many have a penetration rate that is above, let's say, 40 per cent? I thought the figures you were using were very high. For first and second year more of them are in the 30, 35, 40 range.

29121 Did I hear right when you said one of the problems you had is so many of the Category 1s have expectations of penetration that are unrealistic and I thought I heard you use 60, 70, 80?

29122 MR. KAWAGUCHI: Yes. In fact, my understanding is when you go beyond the first year or two of the introduction, where they in fact claim they will have lower penetration rates. Their expectation is for significantly higher penetration rates and that's really the basis before me, their wholesale price.

29123 THE CHAIRPERSON: But you would agree that the penetration rates at the beginning of the process and at launch and so on are quite a bit lower than 60? They are more in the 35 range?

29124 MR. KAWAGUCHI: Yes, but it really comes down to when you get into the business discussion, now understanding their business plan and their expectations down the road, it forms the basis for how they want to set penetration rates and respective pricing.

29125 THE CHAIRPERSON: Over time in their --

29126 MR. KAWAGUCHI: Over time.

29127 THE CHAIRPERSON:  -- in their affiliation agreement. I understand. Because the penetration rates in the early years are really not in that range. They are mostly in the 35, but I understand your point now.

29128 Madam Bertrand.

29129 CHAIRPERSON OF THE COMMISSION: Good evening.

29130 I would like some information. You gave verbally to Commissioner Demers some information about 10 per cent of the services were over a certain rate and can you repeat those figures? That would be helpful please.

29131 MR. KAWAGUCHI: I quoted some numbers based on our current contracted rates, without naming any networks and I said 35 per cent of our current channels that we carry have a wholesale cost to us of less than 19 cents, which was the opening number for the Category 1 channels, and 10 per cent of our current networks that we carry have a wholesale cost greater than 65 cents, which was the high-end number quoted for the Category 1 channels.

29132 So just for perspective, where does it put these new channels in the pricing grid? Bear in mind, as I mentioned, that pricing grid is anticipating on the basis of a pretty high penetration rate.

29133 CHAIRPERSON OF THE COMMISSION: Your 35 per cent current that are less than 19 cents, are they Canadians?

29134 MR. KAWAGUCHI: The majority of them would be Canadian.

29135 CHAIRPERSON OF THE COMMISSION: But you have kind of inherited a partnering that had been going on in the analog world for quite a long time, where high penetration or good penetration numbers have been achieved and it has allowed to kind of bring a lower rate I suppose to the distributor first and eventually that is transferred to the consumer.

29136 In this universe, I would tend to agree with you that the penetration will not be that high. Do you think that there will be really a possibility of bringing good quality Canadian programming and is it a concern to you and your consumers for the kind of range you are providing us with here, which is between 65 cents and 19 cents, and especially when I think about in francophone markets where, of course, we are talking about totally different figures, if we want to even talk about francophone service in the digital format.

29137 MR. KAWAGUCHI: If I could, I will take a start at it and maybe, Gord, you might want to jump in.

29138 I think I understood two parts to your question. One part focused on the need for a certain price point to drive quality programming.

29139 CHAIRPERSON OF THE COMMISSION: Yes.

29140 MR. KAWAGUCHI: I guess I would start off by answering we all want quality programming. But given our position in the marketplace, where we are saying we have limited channel capacity, we want every opportunity to go and sell the maximum number of consumers onto these networks and thereby driving up the penetration rate, thereby creating the largest possible pool for the programmers, for the system in total to continue to generate the kind of quality program to sustain itself.

29141 Starting off with high wholesale rates and leading quickly to punitive wholesale rates puts us onto a treadmill that perhaps never really -- it's not a helpful treadmill to put the whole system in a positive -- gaining some momentum for subscribers.

29142 So I guess what I am saying is we are starting off knowing that these price points are at the high end. It's going to make it difficult to market and that's in essence the most difficult aspect of it because we should be trying to make it the simplest to market. Because again, we want to maximize the value of our channel and the networks have to help us. We are looking for them to help us, as we are going to be helping them drive the penetration rate.

29143 CHAIRPERSON OF THE COMMISSION: Does that mean you would accept to work in a kind of industry type of setting that has been proposed, kind of working in a partnering mode with the programmers -- you know, ideas that have been floating around either in the written interventions or during the hearing? Is that an approach that you see would be conducive to the success of all the partners involved?

29144 MR. KAWAGUCHI: Absolutely. We have had, quote "heated discussions" as has been referenced with some of the associations and, in fact, Gord Corlett, has led the way in offering, if you will, putting forward a proposal to work together to come up with a creative solution.

29145 We have been innovators in packaging and we are not saying this is the only packaging model going forward. We are willing to work with all of the associations in a collaborative effort to come up with -- if there is a better way of doing it we would be the first ones to step up and do that.

29146 CHAIRPERSON OF THE COMMISSION: You think an ethical code would be welcome or "superfétatoire", not necessary.

29147 MR. KAWAGUCHI: I don't think an extensive code is necessary. I think, fundamentally, we are asking for one thing and that is in the licensing of mandatory carriage that the networks not have the opportunity to leverage us by opting out and to leverage pricing. That's the extent of what we are looking for.

29148 CHAIRPERSON OF THE COMMISSION: So you would be welcoming some parameters that would talk about undue preference on the two sides of the fence, from the programmers' point of view and from the distributors' point of view?

29149 MR. KAWAGUCHI: Yes.

29150 CHAIRPERSON OF THE COMMISSION: Thank you very much, gentlemen.

29151 THE CHAIRPERSON: Thank you. We appreciate again your patience in waiting. It's very difficult for us to plan exactly how the day will unfold and we would have one more party who would have to stay overnight unless we heard them.

29152 So we certainly thank you very much to have kept your good humour up to this late hour.

29153 MR. STEWART: Madam Chair, I am sorry.

29154 THE CHAIRPERSON: Sorry. Counsel.

29155 MR. STEWART: Just two very quick questions. You suggested that the Commission should set a rate for all distributors and have you got any criteria to suggest to the Commission as to how that rate should be set?

29156 MR. CORLETT: Well, I think, obviously, the Commission has to look at the business plans from the networks and what they recommend as a rate. You know, we are not against, you know, recommended rates. I mean we deal, like everybody else, with every single network out there, and they all come forward with rates anywhere from seven cents to $1.50. So we will negotiate, in good faith, with whatever rates the CRTC recommends, based on the business models.

29157 I think, you know, what we are trying to say here, today, is that, you know, we are willing to pay fair and reasonable rates to ensure that these networks can fulfil their Canadian content requirements, but they shouldn't have, you know, attachments to them that state that if they only get 20 per cent penetration, in Year 1, that we are paying the equivalent of a higher rate because of that so that they get the guaranteed income from us.

29158 So, you know, base it on their business plans and make it fair to the distributors like Look.

29159 MR. STEWART: Basically, you disagree with the business plans that have been proposed which, as I understand it, are based on penetration rates?

29160 MR. CORLETT: Yes. In a situation like this -- I mean we have been through it already, with the launch of the four French services, in Quebec, and, you know, four quality services that, you know, were launched in a set package, not really -- unproven services that our consumers weren't aware of, and, you know, the rates were tied to penetration and, you know, we have worked very, very hard to build the penetration of this package but, you know, it's a tough sell. It's a tough sell to the consumers. And, you know, maybe they are doing well, at 25 per cent, you know, 29 per cent. But, if we are doing well, at that stage, after three or four months, our rates are punitive, you know. We are being asked to pay them based on a "make hold" type of scenario.

29161 So, yes, if their business plans state that they need rates based on penetration, we are against that.

29162 MR. STEWART: Thank you.

29163 MR. MEDLINE: Gord, if I can add one thing to that, and that was that, at the time of the four French channels, when they launched, the assumed rate, wholesale rate, was going to be $2.79.

29164 We have never seen anything close to that rate, on a wholesale basis, because of the punitive penetration tables, and that was what the assumption was, going in, and that's why we are seeing lower penetrations now, because the rate is so high, at that level.

29165 MR. CORLETT: And it's a vicious circle, you know. Because of us having to pay higher rates, we, obviously, have to charge our customers higher retail; and when you do that, you make less sales. So, it just goes around in circles.

29166 MR. STEWART: My second question is the same one that I put to the CCTA -- I'm not sure if you were in the room at the time -- but do you have any comments on the operation of the "must carry" rule, specifically, with respect to bilingual Category 1 services that may be licensed as a result of this proceeding?

29167 MR. HEMINGWAY: I think, like CCTA, we would like to have some clarification as to where they must be carried.

29168 You know, to say that it's -- I guess our view is that we should come out of this hearing with approximately 10 must carry channels, and we will carry those 10 channels. But if there's a thought that those channels should only be carried in some areas or should be carried in other areas, then that should be articulated.

29169 MR. STEWART: And, essentially, it's up to the Commission to decide and -- that's your position?

29170 MR. HEMINGWAY: Yes.

29171 MR. STEWART: Thank you.

29172 Thank you, Madam Chair.

29173 THE CHAIRPERSON: Madam Bertrand...?

29174 CHAIRPERSON OF THE COMMISSION: I apologize. I don't want to keep you unduly late.

29175 But your last comment -- and I understand that the rates are, in terms of what has been proposed in the application, higher than what we have seen in the analog world, but I would like to know what's your point of view.

29176 The services, from what we could understand of the applications -- and it's true, of course, in French and English, but more so in French -- you know, it is in the bargaining, the regulatory bargaining, of providing Canadian content and providing a real choice to consumers of the best programming that can be. And even with the rates you are talking about, what we see from the average applicants, in French, is, after the fourth year, they are still not really breaking even and they still have PBIT that is negative, you know. It depends whether we take the average or the most optimistic, or pessimistic, but, in French, you have probably no more than 400,000 subscribers.

29177 So, would that mean that, in order to get a price that would be more interesting, from your point of view -- and, eventually, to the consumer -- the only solution is turn our attention when "la loi du nombre" will play and, eventually, there will be no French, we will go for English, and we won't have any English, we will go for American, because it's always where there is a larger market that, of course, the price will always come down.

29178 Isn't there, in your comment, the exact problem of how difficult it's been, over the years, yet how successful we have been, over the years, to develop the kind of broadcasting system we have been able to develop in Canada?

29179 MR. KAWAGUCHI: I will take a crack at that.

29180 We have acknowledge that, in the Province of Quebec, cost of programming is going to be higher -- and that's one of the reasons why, when we look at our program fund contribution, we have got 7 per cent, as opposed to 5 per cent, and it comes down to: there's a need for probably greater subsidization for quality French content. It's a question of who pays for that subsidization.

29181 We are contributing to it also through the program fund, also as a distributor, as a BDU. We are contributing to it in more than we would really like to. The punitive wholesale cost -- we are now operating to the point that wholesale costs are at or above our retail price point and we think that again is another subsidy.

29182 And I guess at the end of the day there is a need to subsidize the industry. How much can the BDU subsidize it because there is only a certain price point --

29183 CHAIRPERSON OF THE COMMISSION: The consumer, you mean, because at the end of the day --

29184 MR. KAWAGUCHI: At the end of the day, the consumers --

29185 CHAIRPERSON OF THE COMMISSION: -- it's the Canadians.

29186 MR. KAWAGUCHI: But there is a limit to how much a consumer is going to pay.

29187 CHAIRPERSON OF THE COMMISSION: Thank you.

29188 THE CHAIRPERSON: Thank you, Mr. Hemingway and your colleagues.

29189 MR. HEMINGWAY: Thank you, Madam Chair.

29190 THE CHAIRPERSON: Have a nice rest of the evening.

29191 We will hear one more before we adjourn.

29192 Mr. Secretary, please.

29193 MR. CUSSONS: Thank you, Madam Chair.

29194 Our last intervention this evening, the Independent Film and Video Alliance.

29195 THE CHAIRPERSON: Mr. Sandmark, right?

29196 MR. SANDMARK: Yes.

29197 THE CHAIRPERSON: We apologize for being so late. Somehow by being cooperative and being here on the second day rather than the first day of interventions you are being punished by being hear at ten o'clock. We appreciate your staying and we are certainly happy to hear you, considering you have to drive back.

29198 MR. SANDMARK: It's a fascinating day, and actually we are happy to be on prime time. We probably have a larger viewing audience.

--- Laughter / Rires

29199 THE CHAIRPERSON: There's a positive way of looking at life.

29200 MR. SANDMARK: Our goal is to get independent film content on national prime time TV and here we are.

29201 THE CHAIRPERSON: That's what we like to hear.

INTERVENTION / INTERVENTION

29202 MR. SANDMARK: So my name is Peter Sandmark. I am the National Director for the Independent Film and Video Alliance.

29203 To my left is Barbara Ulrich, the Quebec Regional Director on our board of directors. Also she is in the employ of the Conseil québécois des arts médiatiques, which is an association like the Alliance for Quebec Film and Video Artists which is fairly recent so it's a very good thing.

29204 I'm not going to stick to the script. I'm going and try to cut to the chase and so apologies to people. You will follow along a brief overview. It's an association -- we are essentially a lobby association representing 47 film cooperatives, video centres across Canada -- every province, I might add.

29205 We have a regional board of directors. We estimate we represent about 7,500 creators. Those are individual members of the organizations and so I actually estimate the community to be much larger because for every person who actually have dues-paying members they have a couple of friends that work with them to make their work. So we are looking at a much larger community.

29206 Actually, Barbara, would you say a few words about the Conseil québécois des arts médiatiques because in Quebec it's a whole community in itself.

29207 MS ULRICH: Yes. I think there is some commissionaires here -- Madam Chair is already aware. I will just say very rapidly that the Quebec Council for Media Arts is a provincial mandated lobby group which supports and represents, individual independent creators, independent organizations in film, video and new media and there are about 18 artists centres or coops or distribution organizations or dissemination organizations and they are in general about 2,000 individual creators within Quebec and I would say that if the Quebec Council for Media Arts was born, it was because -- and we have to thank the Alliance for being there before and we found it was important to create regional organizations because there were regional problems.

29208 We know Quebec has this sort of special cultural identity problem, so that sort of helped it. But I mean, we have our plate full just as Peter has his plate full on the federal level.

29209 MR. SANDMARK: So we are a special interest group and we are here to defend our vested interests. We are specifically commenting on an independent film channel. I mean, that is our expertise. We are not going to comment on the Home and Garden Channel and all that stuff.

29210 All our comments are addressed to the different applications we saw as being independent film-oriented and we are really happy to be here because I went through my old notes looking at this, and a couple of years ago I made the recommendation to the CRTC that they make the establishment of an independent film channel a priority.

29211 So I'm very happy to be here. Things have changed quite a bit and we are on the imminent launch of an independent film channel, I think. So we definitely have some recommendations. I will point to number 3 on the list.

29212 For example, we think that the CRTC should develop criteria for the acquisition of arm's length produced independent film and video productions and require even a minimum percentage of works acquired by the channel to meet such criteria, above and beyond the criteria for Canadian content.

29213 Now this, of course, brings us to the crux of the matter: What is an independent film? And you are fielding all kinds of answers to it. Well, we are here.

29214 MS ULRICH: We have answers.

29215 MR. SANDMARK: I'm going to turn it over to Barbara because we have something to say on this.

29216 MS ULRICH: Yes, since we have been here and we have read the propositions, it's very strange because Canada has been a model in defining independent film and video production, what it is, how it works and how it's funded.

29217 Currently Canada Council distributes $9 million annually to independent film and video and new media artists to create independent works. It sort of irritates me to see that there are proposals here requesting the licence to distribute or to become the digital independent film and video channels. They are using American definitions of what "independent" is whereas in Canada an independent film or an independent video is a work in which the director or the creator has complete editorial control over the work at all stages of production.

29218 Such criteria is recognized by Canada Council. It is recognized by SODEC in Quebec and they have two programs. It is equally recognized by an unofficial fund. It hasn't been officialized at Telefilm Canada. That's the fund under $1 million for independents.

29219 These criteria of independent film and video works are known. We find it sort of strange that the cable carriers and these proposals sort of pussy-footed around a definition. We wonder whether perhaps the definition is not convenient to them.

29220 We also noticed because -- when we look at their schedule we noticed that they continually confuse in-house programming to be independent productions and they confuse that with independent finalized works.

29221 We are here to thank the CRTC for considering the final opening of a window for independent film and video. As such, we know that there are actually currently 10,000 works sitting on shelves across Canada ready to be shown.

29222 Insofar as figures go for theatrical distribution, they are very low. In Quebec it accounts for 2 per cent. This includes independent commercial productions, independent independent productions and independent foreign productions. We can estimate that across Canada the percentage probably of a window of independent works is even lower.

29223 We consider the final choice of the CRTC to be one of vital interest, not economic but creative interest, to independents.

29224 MR. SANDMARK: There's some reference to it in some of the applications where they talk about, you know, creative control, but the definitions aren't hard. Right? That's the problem. We are proposing one, it's in the thing, where the creator retains control of the work, you know.

29225 Perhaps this definition is going to be difficult to monitor, I would say, but I would think that the spirit is there. I think we are seeing it from some of the applications, so the potential is there. You know, we are a watchdog organization too. If you look at percentages of in-house production, if that becomes a -- like if you can put down a percentage of independently produced work that they can acquire, that's something we can really watch and determine. It's not a problem for us to do that.

29226 As I read here, what we are looking at is what are the conditions of licence that you could apply to an independent film channel as a genre because you are looking at different genres, right, one of each different genres for the ten Category 1 licences.

29227 I mention here even we are looking at like how would you preserve the nature of an independent film channel if it even changes ownership. What if they sell it? What's the definition? How are you going to assure this?

29228 I would even argue that independent film is almost a brand already, even before you designate it. I remember one comment earlier in the hearings -- I was watching it on TV -- that it's considered one of the popular -- potentially popular program offerings. I agree with that and I think I agree with some of the surveys that show that there would be a lot of interest in the independent film channel.

29229 If you give that to someone, what the consumer, the audience, wants, they say "In an independent film channel I want independent films". What do they want? They want, I believe, the spirit that we are trying to define here, that this is somebody's creation. This is not just a commercial product. It's somebody's heart and soul, whatever. It's their creative thing. That's what they are wanting to buy. How does the Commission assure that the channels that you define in that genre live up to that potential?

29230 I almost feel like I have a question for you. Can it be done? Is there something that can be applied?

29231 MS ULRICH: I just wanted to add that within the independent genre, the independent mode of production, there exists documentaries, there exists fiction, there exists experimental works and there exists educational works, social intervention works. I mean you run the whole gamut of types of works that can be shown and that do exist and that have -- currently there are very few windows.

29232 I think Peter's concern is a very legitimate one. How can we be assured there was all these new windows opening up? There will be at least one devoted to 100 per cent Canadian production, Canadian imagination and Canadian content.

29233 MR. SANDMARK: Point number four, we recommend that CRTC limits the amount of in-house productions. I heard the figure of 25 per cent, you know. It could be 15 per cent or 10 per cent.

29234 We also think that co-productions in which the owner of the channel is a partner. That shouldn't be counted as an independent production. I think that's pretty straightforward.

29235 I also -- I'm trying to run through my comments. I think I have got 30 seconds left. I think we dispute the idea that there is not enough Canadian content for such a channel. Some points were brought up from some applicants that there wasn't enough Canadian content. There would have to be, you know, recycling of old stuff.

29236 We dispute that because there's so much stuff we know of in the catalogues of the independent distributors that has never gotten on to TV. I think that would fit into the, you know, type of programming an independent channel would put together.

29237 Or you can look at the survey. We did a sort of very quick informal survey of distributors. I think that's again perhaps an underestimation of what's available in some cases.

29238 In fact, even if that was true that there is not enough work to reach the minimum 50 per cent that you have proposed for Canadian content, then why aren't all the independent films and videos that are being produced getting on? There's a logic that's lacking there. That's just not the case.

29239 I think that if an independent channel is certainly going to bring a lot of new content to the audience that they can say "Well, this is something different". Every time I see the few odd works on TV, we mentioned -- I don't know if we mentioned it, Robert Morin's "Yes, Sir, Madame" -- I'm struck by how different it looks from regular -- most TV programming.

29240 MS ULRICH: I would also like to make a comment that came back to us from the Chief of Section Officer of Canada Council's Media Arts. Because the Indie trend is becoming so popular, they find that they have had to sit down and determine and really determine what an independent work is because there are a lot of commercial producers that are trying to cash in on the independent trend.

29241 They have just produced some research material which is very interesting. I think that you must pay particular attention to see who is a true independent and who is an independent getting on the band wagon because it's really trendy and it's going to work and they are going to sell shows and they are going to sell programming whereas independent work has a tradition, it has a style, it has a quality.

29242 I would once again mention that Canada has been one of the first countries in the world to be quite unique in setting forward and in promoting and having worldwide recognized independent creators within film and video.

29243 I implore upon you to research this very, very carefully.

29244 MR. SANDMARK: So there are a few other recommendations hidden in our text here that a channel, an independent film and video channel develop partnerships with the existing independent film community. We even suggest they could have filmmakers on the board. They could certainly reach out --

29245 MR. CUSSONS: Mr. Sandmark, I am sorry, you were correct about those 30 seconds some time ago.

29246 MR. SANDMARK: I was.

29247 Let me just say also then that No. 11, that so far the proposals we have seen do not demonstrate enough dedicated program slots for the purchase of already made independent films. So the CRTC should demand a commitment from the selected independent film channel that they create more windows for the acquisition of independently produced films and videos.

29248 Thank you very much. We are delighted to be here and we are more than happy to answer any questions.

29249 Thank you for staying. I want to say on national TV what a good job you are doing because we are very impressed by what you have to listen to and decide on.

29250 THE CHAIRPERSON: Thank you, Mr. Sandmark and Ms Ulrich.

29251 MS ULRICH: You are starting again in less than 10 hours.

29252 THE CHAIRPERSON: Shush.

29253 COMMISSIONER WILLIAMS: And some of us have to travel to Ontario tonight to sleep.

--- Laughter / Rires

29254 THE CHAIRPERSON: In all fairness, the convolutions about characterizing an independent film using American criteria or manner of determining it was for the purposes of the foreign part, presumably.

29255 I understand you think we should have 100 per cent Canadian, but if not then those services which already are film services and have foreign content are quite anxious to ensure that the foreign content that is independent is independent, and that there is a control over that, which is another story from what you are speaking of I gather.

29256 Now, tell me, when you say you represent video makers as well, is that used in a sense of a term of art or almost the whole range of programming?

29257 MS ULRICH: There are independent video makers that create the same gamut of work. They are documentary, they are experimental, they are fiction. They are educational. They are social intervention and I must say that the first artist run video centre, video co-op, was created in Montreal and was an offshoot of a National Film Board effort which was called Challenge for Change in the 1970s.

29258 Then, when the Film Board ceased to fund that, a group of independents took it over and it became a non-profit organization. So independent video creation has a very long history and you have the same type of directors, cineographers, screen writers, as you do in the film industry.

29259 THE CHAIRPERSON: So it would cover most programming genres except sports and news?

29260 MS ULRICH: Absolutely. Yes.

29261 THE CHAIRPERSON: And most other categories could be covered, including children's programming as well?

29262 MS ULRICH: Absolutely.

29263 THE CHAIRPERSON: What you would like to see is much more than what has been discussed today. You would want a 100 per cent Canadian channel?

29264 MS ULRICH: No. I don't know. I think we would -- Utopia, you know.

29265 THE CHAIRPERSON: Yes. But as high a Canadian content as possible and your view is that there is existing works that would fit a definition of independents and yet be sufficient to create enough product for a very highly Canadian service?

29266 MS ULRICH: And it's also the fact, as I said in Montreal when we were doing the presentation for the arts channels, these works are already subsidized by governments and they are not seen in theatres. So we feel that they should be seen --

29267 THE CHAIRPERSON: Where?

29268 MS ULRICH: Somewhere in Canada. They should be broadcast somewhere in Canada.

29269 THE CHAIRPERSON: Of all the services you have looked at, of course we have heard 87 of them, so I am not sure which one, was it Digipix who addressed something more closer to experimental videos and is that not closer to independent production? I think it was Digipix.

29270 MS ULRICH: Yes, and TVA.

29271 I would have to say that our sort of overall impression of Digipix was that they are like 10 years behind and what they term experimental video it has been, been there, done that away before.

29272 But there was one proposal that didn't seem too bad to us, but was incomplete, was the Alliance. Was that one?

29273 MR. SANDMARK: None of them are perfect and that's why we are not going to come out and say which one and we think that there should be conditions.

29274 THE CHAIRPERSON: I was just trying to understand the types of things that would get closer to your goal, since we are not going to reach Utopia by October.

29275 MS ULRICH: No.

29276 THE CHAIRPERSON: Maybe November, but not October.

29277 MS ULRICH: Sixty per cent?

29278 MR. SANDMARK: Well, Salter Street aims for 60 per cent Canadian content and I have got to admit that they are the only ones who made reference to the independent film and video community in their actual application. I only heard about Digipix about a couple of weeks before the headline when they wanted a letter of support from us, and we had never heard of them before.

29279 They talk about putting five --

29280 THE CHAIRPERSON: Probably you are going to bring them into the 21st century.

29281 MR. SANDMARK: Well, if they make it.

29282 They talk about $500,000 over the seven-year term investment into experimental video artists. That's like $70,000 a year. I mean the Canada Council gives out $60,000 grants to individuals. I mean it's almost a joke -- sorry, but that's why we make recommendations that there should be a commitment to working with the community.

29283 There is a lot of groups and centres out there and there should be more commitment to windows for acquiring that work, and not such a meagre amount.

29284 THE CHAIRPERSON: Is that something that your organization has enough time for, to try to -- I was being facetious because of your comment of being there, been there, done that, of an attempt to advertise yourself and the product you know more about more to broadcasters who may not be in the 21st century with regard to this particular type of programming?

29285 MS ULRICH: We very often -- that's the work of independent distributors. Independent distributors very often will hear the comment "it all depends on the consumer," except that they decide what the consumer would like and we have heard that here today, and that's why we appreciate a lot of the remarks that you made and the questions that you asked.

29286 So it becomes very difficult because they function in a function of ratings, and if they don't get the ratings then they just won't try it. They won't even try it, but then again if the consumer has never been exposed to it because they don't see it anywhere, there has to be a trial period of adjustment.

29287 I know that both on a provincial and a federal level, as far as our budgets permit us to do, we do do public relations work and try and do dissemination work.

29288 In Quebec, Télé-Québec has purchased independent works, Radio-Canada to a lesser degree. I am sure Madam Bertrand knows Télé-Québec has purchased independent works and TVA never ever. They have never purchased independent works.

29289 So, I mean we know them.

29290 If you would like us to do this, what we could do, since we do know the milieu, is furnish you with sort of a list, what is independent, what are the funds being given out, actually, and so on and so forth, if you think that would help you in your study, you know, because this is our milieu; we know the community.

29291 THE CHAIRPERSON: I don't know if either of you watched "Survivor" --

29292 MS ULRICH: No.

29293 THE CHAIRPERSON:  -- especially towards the end, but I'm sure, like me, you have seen the newspaper coverage.

29294 MS ULRICH: Yes.

29295 THE CHAIRPERSON: I must say you two, as "Survivors", have a better sense of humour and a more civilized approach, even surviving to this late day, than the one on the "Survivor" program.

--- Laughter / Rires

29296 THE CHAIRPERSON: I don't know if that's of any interest on your curriculum vitae.

--- Laughter / Rires

29297 THE CHAIRPERSON: But you certainly have kept your good humour. And we are certainly -- you tried to accommodate us, we were happy to accommodate you, and we hope you have a good trip back.

29298 MS ULRICH: Okay. Thank you.

29299 MR. SANDMARK: Thank you very much.

29300 THE CHAIRPERSON: I hope you have some good music in the car, or you can entertain each other about what you heard today.

--- Laughter / Rires

29301 MS ULRICH: We were just asking ourselves, "How can we explain this to our member base?" -- and we haven't found the answer yet.

29302 THE CHAIRPERSON: It's difficult.

29303 Commissioner Williams...?

29304 COMMISSIONER WILLIAMS: Perhaps you should play the longer, uncut and subtitled version of this hearing; it would certainly preserve the integrity of works of CPAC and --

--- Laughter / Rires

29305 CHAIRPERSON OF THE COMMISSION: The director's cut.

--- Laughter / Rires

29306 MS ULRICH: Thank you very much.

29307 THE CHAIRPERSON: I want to thank you very much.

29308 I certainly want to thank my colleagues and the staff, as well, to have "survived" to this hour, and we will be ready to be here at 8:30.

29309 You turn on CPAC tomorrow; we will be here.

--- Laughter / Rires

29310 MS ULRICH: We are going to sleep over.

--- Laughter / Rires

29311 THE CHAIRPERSON: Thank you very much. It was very helpful. Thank you for your presentation. Have a good trip back.

29312 Nous reprendrons à 8 h 30 demain matin.

29313 So we will back here at 8:30 tomorrow morning.

29314 CHAIRPERSON OF THE COMMISSION: At nine in English; at 8:30 in French.

--- Laughter / Rires

29315 THE CHAIRPERSON: Bonsoir.

--- Whereupon the hearing adjourned at 2222, to resume

on Thursday, August 31, 2000 at 0830 / L'audience

est ajournée à 2222, pour reprendre le jeudi

31 août 2000 à 0830