TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
APPLICATION FOR NEW BROADCASTING LICENCES FOR FM IN CALGARY/
DEMANDE D'UNE LICENCE DE RADIODIFFUSION VISANT L'EXPLOITATION
D'UNE ENTREPRISE DE PROGRAMMATION DE RADIO FM À CALGARY
|Telus Convention Centre
||Telus Convention Centre|
|120 Ninth Avenue Southeast
||120 - 9e avenue Sud-Est|
|November 2, 2000
||le 2 novembre 2000|
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
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.
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.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Application for new broadcasting licences for FM in Calgary/
Demande d'une licence de radiodiffusion visant l'exploitation
d'une entreprise de programmation de radio FM à Calgary
|BEFORE / DEVANT:|
|ALSO PRESENT / AUSSI PRÉSENTS:|
||Hearing Manager and Secretary / Gérant de l'audience et
||Legal Counsel /|
|Telus Convention Centre
||Telus Convention Centre|
|120 Ninth Avenue Southeast
||120 - 9e avenue Sud-Est|
|November 2, 2000
||le 2 novembre 2000|
TABLE OF CONTENTS / TABLE DES MATIÈRES
|INTERVENTIONS BY / INTERVENTIONS PAR|
|Calgary International Children's Festival
|Calgary International Organ Foundation
|Caribbean Community Council of Calgary
|REPLY / RÉPLIQUE|
|Gary Farmer (OBCI/SDEC) Aboriginal Voices Radio
|Standard Radio Inc.
|Craig Broadcast Systems Inc.
|Telemedia Radio (West) Inc.
|APPLICATION / APPLICATION|
|Saskatchewan Telecommunications (SaskTel)
|INTERVENTIONS BY / INTERVENTIONS PAR|
|Access Communications Co-operative Ltd.
|REPLY / RÉPLIQUE|
|Saskatchewan Telecommunications (SaskTel)
Calgary, Alberta / Calgary (Alberta)
--- Upon resuming on Thursday, November 2, 2000
at 0904 / L'audience reprend le jeudi 2 novembre
2000 à 0904
4622 THE CHAIRPERSON: Gentlemen, if you will please take your seats, we will
reconvene the hearing, Day 4 of the Calgary public hearing.
4623 Mr. Secretary.
4624 MR. BURNSIDE: Thank you, Mr. Chair.
4625 Just a brief explanation of how we will proceed this morning to complete
4626 We will start at Intervention No. 30 and call the five intervenors that
weren't called yesterday. Then we will go back through the list of the no-shows
yesterday, and they will get one chance to come up if they happen to be in the
4627 With that said, I would like to call Intervenor No. 30, John Hyde.
4628 THE CHAIRPERSON: Good morning, Mr. Hyde. Proceed when you are ready.
INTERVENTION / INTERVENTION
4629 MR. HYDE: Thank you for this opportunity to appear before the
4630 I appear as a proud Canadian and southern Albertan whose great
grandfather came to this region from Lower Canada in the 1880s. I represent the
Freelance Jazz Players of Calgary. I also sit on the Board of the Calgary
Musicians Association. As well, I am Artistic Director of the Jazz Studies
Program at the Mount Royal College.
4631 As a player, I have performed over the last 30 years with great Canadian
artists such as Senator Tommy Banks, Brian Hughes, Denny Christianson, Rob
McConnell, Oscar Lopez, Oliver Jones, Guido Basso, Ron Paley, and many more.
4632 International artists I have performed with include: Sheila Jordan,
Marion McPartland, Pepper Adams, Eddie "Lockjaw" Davis, Julian Priester, Mark
Murphy, and many more, locally and internationally.
4633 I have also been a member of the Juno Committee judging for best jazz
album of the year, as well as Calgary International Jazz Festival Artistic
Director and a contributor for the Jazz Report Magazine in Toronto.
4634 I have teaching experience at the Conservatory at Mount Royal College,
University of Calgary, Faculty of Education at the University of Alberta, Red
Deer College, University of Lethbridge. I have been a clinician and adjudicator
for many jazz festivals in the province.
4635 I also administrate a Summer Jazz Workshop at Mount Royal College. I am
very thankful to see that Telemedia's proposal, which was presented to me
several months ago, includes funding for this workshop, which would be able to
increase its scope and lower fees to become more available to the young students
in our city.
4636 I would like to tell you what a jazz station will mean to musicians in
Calgary. We have a lot of hard-working talent in the city and many students
learning the craft. There are many regular venues presenting jazz. I could name
10, if I wasn't so nervous right now.
--- Laughter / Rires
4637 MR. HYDE: Many more private corporations are presenting jazz just as
part of their events. It is becoming a big thing in Calgary. It's a growing
4638 In the last five years I have witnessed explosive growth for the jazz
idiom in Calgary in: attendance, CD sales, concerts and clubs. People in Calgary
are coming out to jazz venues like never before and expressing a real interest
in the art, asking performers many interesting questions and buying our CDs
directly from us.
4639 I believe this is due to the fine teachers of the city who are teaching
young performers the art, history and spirit of spontaneous composition, which
jazz is. We are practising an art which has been created and evolved solely on
this continent. Alberta was the first Canadian province to witness a true jazz
band, and I think the spirit of that performance in the early 1900s has lived on
here. Jazz is the pinnacle of art and music. Students who learn the complete
harmonic spectrum of the jazz language have the knowledge to play any
contemporary sound produced today.
4640 I want to tell you a story about a local singer friend of mine who
started workshops five years ago. She invited all sorts of singers to come out,
people who had never sung before in public but had a dream to sing in front of a
jazz trio, and it was surprising how many people showed up -- 25 the first year.
Every year since she has been full.
4641 What happens in these workshops is they rehearse a tune with the band
and they get up in front of a public audience and perform in a club here in
town. It's packed when they do this. Over 100 people show up, just friends and
4642 What happens afterwards, for years since, you know, from five years ago,
these people who have shown up to watch are bringing their friends and so on,
and it's snowballing. We get a different crowd every year, but the people who
came five years ago are still coming, and so, you know, it's a wonderful
4643 The junior and senior high school students whom I often workshop with,
they also bring their mentors, their friends, their family. They continually add
to the jazz-going public in Calgary.
4644 I am so impressed by the breadth of knowledge they display I have to
share another anecdote with you.
4645 After hearing a very good, young, 18-year old sing, I had to tell her
how mature and excellent her performance was. As I often ask young students, I
asked her to tell me who she listened to. She replied: Diana Krall, Peggy Lee,
Nancy Wilson, Billie Holiday, Nina Simone. I can't tell you how great that was
to hear that from a young, 18-year old kid. Ten years ago I don't think I would
have heard that from a college student, from a university student, and now I'm
hearing it from high school students.
4646 I think my story sort of underlines the importance of jazz and the
culture of this city. It is a growing art. It needs a radio station to help
4647 There is no dedicated radio station in Calgary which is all jazz all the
time. We need a radio station with a format devoted to jazz in order to reach a
wider, more focused audience. Public service announcements about local events
will reach the affluent, sophisticated audience we need to support our art.
4648 We need the programming of Canadian content to provide exposure for
Canadian contemporary jazz artists so our youths will be encouraged to take on
this music as a career. Although jazz is an art form which originates on this
continent, there has not been enough support from private industry to nourish
it. The Canada Council and CBC have done a fine job in the past, but, as we all
know, they are devolving away from the support of this kind of thing, and I
think it is time for commercial institutions to pick up the slack.
4649 This country has produced world class talent and jazz: Oscar Peterson,
Kenny Wheeler, Tommy Banks, Moe Koffman, P.J. Perry, Diana Krall. There are many
of my friends who would have loved to have stayed in Canada, but as a result in
the reductions in government supported institutions like the CBC and Canada
Council have moved to the U.S. to teach and play, Europe also, to continue their
4650 I would like to speak on behalf of all those artists and encourage you
to approve this application so that our children have a future in our country
performing in this art.
4651 I applaud the Telemedia initiative to spend $350,000 on free public
performances for the Jazz Festival Calgary organization. This initiative will
allow local performers to mix with internationally known ones with a twofold
effect. We will see great talent in a live setting, and quite possibly many
local artists on the bill will get a chance to mix with this great talent. It
has occurred in the past in Montreal and many other festivals around the world.
4652 Thank you for listening to my intervention today. I urge you to approve
the Telemedia (West) proposal for Smooth Jazz Calgary.y
4653 THE CHAIRPERSON: Thank you, Mr. Hyde.
4654 This morning Commissioner Noël will lead the questioning.
4655 COMMISSIONER NOËL: Good morning.
4656 MR. HYDE: Good morning.
4657 COMMISSIONER NOËL: And we don't have teeth so we won't bite you.
4658 MR. HYDE: Thank you.
4659 COMMISSIONER NOËL: You mentioned that having a radio station
broadcasting jazz all day long would cater to the affluent and in return you
could count on their support for your jazz initiative. Is that what I understand
you to say?
4660 MR. HYDE: To some degree, yes. I think it would be helpful.
4661 COMMISSIONER NOËL: And you are aware of the -- so it would have a
4662 MR. HYDE: I believe so. You know, most of the people I meet who study
music and support their kids in music are of a more affluent nature, but it does
definitely percolate all over the city. It's not just for them.
4663 COMMISSIONER NOËL: Thank you very much. I don't have any further
4664 MR. HYDE: Okay.
4665 THE CHAIRPERSON: Commissioner Cram.
4666 COMMISSIONER CRAM: I asked this question of somebody in relation to
urban music -- and you actually talked about people getting played on CBC and
getting Canada Council assistance and then having to leave the country -- that I
would assume that they also would have received money from FACTOR to make CDs
and everything else.
4667 MR. HYDE: Yes. Yes, many would have.
4668 COMMISSIONER CRAM: As the case would be now, there is -- I don't even
think there is one outlet for jazz in Canada in terms of a jazz radio station,
except for the Hamilton one that is going to be licensed.
4669 MR. HYDE: The Hamilton station, yes.
4670 COMMISSIONER CRAM: And it has not started, I don't think, has it?
4671 MR. HYDE: I'm sorry, I don't know. I followed the application, but I
don't know where they are at.
4672 COMMISSIONER CRAM: So right now they only have the one outlet in terms
of a dedicated station?
4673 MR. HYDE: Yes.
4674 COMMISSIONER CRAM: Thank you.
4675 MR. HYDE: Thank you.
4676 THE CHAIRPERSON: Commissioner Langford.
4677 COMMISSIONER LANGFORD: I was just wondering, sir, in terms of what we
might hear on this radio. If I could just borrow from your experience for a bit.
You named some people like Billie Holiday and Diana Krall, and that is pretty --
those are obvious.
4678 MR. HYDE: Yes.
4679 COMMISSIONER LANGFORD: But I was wondering where the limits are to what
you might call smooth jazz and how far does it go towards classical on one side
and how far does it go towards hard rock on the other? Where are those limits?
4680 Can you give us some sort of idea of entertainers or names that might be
on the fringes rather than dead in the centre?
4681 MR. HYDE: Oh, sure. From my perspective.
4682 COMMISSIONER LANGFORD: Yes.
4683 MR. HYDE: Well, I know that George Benson, he was an artist who played
with Miles Davis in the early years, but he did go towards the smooth jazz kind
of sound, before the term was invented really. It is, I think, a fairly recent
4684 Brian Hughes was someone I played with 20 years ago in Edmonton that was
mimicking an artist Pat Matheeny and he learned a lot from that. That is a
smoother sound too.
4685 On the fringes --
4686 COMMISSIONER LANGFORD: What I was thinking of -- and I may be completely
out to lunch here, it wouldn't be unprecedented -- but if you get someone like
Gershwin, to go back a bit --
4687 MR. HYDE: Yes.
4688 COMMISSIONER LANGFORD: -- he did opera, he did jazz, he did scores for
4689 MR. HYDE: Right.
4690 COMMISSIONER LANGFORD: Does smooth jazz cover almost that whole spectrum
or where would it stop. Would it stop short of Porgy and Bess on one side and
movie scores on the other? That is what I'm trying to get a sense for.
4691 MR. HYDE: I see.
4692 COMMISSIONER LANGFORD: I find it a difficult term to nail down.
4693 MR. HYDE: It is a difficult term, but my experience of just hearing it,
you know, it's hard to put it into words. I could tell you it is not John
Coltrane playing A Love Supreme, I could tell you it is not Sun Ra. Just like in
classical music, you wouldn't be playing a Penderecki piece on a smooth
classical station, to kind of take a leap.
4694 If you were going to use a classical analogy, I would say Mozart would
be smooth classical music, very tonal classical music, had a key centre that
kept coming back that the listener could relate to. It wouldn't be wandering
4695 COMMISSIONER LANGFORD: So have they limited themselves perhaps too much
by going with "smooth jazz"? Should they just have perhaps said "jazz"?
4696 MR. HYDE: No. There is an American model -- I have a lot of friends, as
I said, playing down in the States, so I think there is a definite genre there.
You know, you require jazz ability to play it, but it's not classical jazz, it's
not like Oscar Peterson typically. It is a much more modern sound, it has some
electronics in it, it has washes of sound, it is relaxing to the listener. It's
not challenging. It doesn't challenge the listener.
4697 COMMISSIONER LANGFORD: It is more Windham Hill than John Coltrane.
4698 MR. HYDE: Yes, absolutely. Very much so.
4699 For that reason it is more popular. You know, I am very happy about it
because it is bringing people who need those jazz skills to the forefront and I
think it is an important commercial development.
4700 COMMISSIONER LANGFORD: Thank you very much.
4701 MR. HYDE: Thank you.
4702 THE CHAIRPERSON: Thank you, Mr. Hyde.
4703 There will be no further questions.
4704 MR. HYDE: Thank you.
4705 THE CHAIRPERSON: Mr. Secretary.
4706 MR. BURNSIDE: I would like to now call the Calgary Board of Education,
represented by D.W. Royan.
--- Pause / Pause
4707 MR. BURNSIDE: They don't appear to be in the room, so I will move on to
the next one.
4708 The Calgary International Children's Festival, represented by JoAnne
--- Pause / Pause
4709 THE CHAIRPERSON: Please be seated.
4710 Please proceed, Ms James.
INTERVENTION / INTERVENTION
4711 MS JAMES: Good morning. That woke everyone up, I'm sure.
4712 Good morning. I am very happy to be here to support the Craig family
Harvard Developments application to launch a new FM radio station in Calgary.
4713 I welcome you to Calgary on behalf of everybody that is supporting these
great initiatives, and I think that they are all superb.
4714 We really like the family and community-minded approach that the Craig
family and the Harvard Developments organization is taking. We feel that there
is a need in the community for a family centred programming approach in radio
and we very much like their proposal.
4715 They are eager to get involved with our organization and here is one of
the reasons why. Did you know that Canadian Living magazine recently named
Calgary the best place to raise a family in Canada?
4716 In her introductory remarks for our Friends of the Festival campaign, Ms
Kit Chan who is the wife of our Mayor Al Duerr -- I don't know if any of you
have had the chance to meet him while you have been here -- opened her campaign
with that question. Two of the reasons cited by Canadian Living were the Calgary
International Children's Festival and Child Friendly Calgary, a program that was
initiated by our festival.
4717 We are fortunate to live in a city that supports world class programs
for children. Our festival is a dynamic event that has become a model of
learning, artistic expression and community spirit. The festival is a five-day
celebration featuring the world's finest performing artists presented right here
across the street in the glorious Calgary Performing Arts Centre.
4718 For five magical days downtown Calgary is transformed by the sounds of
laughter, delight and discovery as thousands of children descend on the Olympic
Plaza, the Performing Arts Centre and the Calgary Public Library in a
multicultural celebration that is held just for them. They experience the best
performances for children that the world has to offer, presented in our city's
finest theatres. In addition, they actively participate in hands-on activities
that include building puppets, playing games, learning dance and building
4719 The support of The Mix, which is the station proposed by the Craig
family Harvard Developments partnership, will help us do the following: It will
help us enable everyone to attend. It is only through sponsorships like this one
that we can keep our ticket prices affordable to everyone. We are able to offer
tickets to world class performances for children for under $5. This is a
fraction of what an unsubsidized ticket would cost to world class performances
in theatre, dance, music, puppetry and more.
4720 It will help us to foster global awareness. Children gain a sense of
themselves as citizens of a bigger world at our festival. We have hosted
performances from Argentina to India, from Sweden to Uruguay. Over 70 countries
have been presented, from Peruvian story-telling to South African Gumboot
dancing. The festival finds a myriad of methods to teach children about the
world. This application would help us to do that.
4721 We can send children a strong, clear message about the value of culture
in their lives. The support of The Mix would be a testament to the vitality of
the arts and their ability to challenge how we see, hear, think and feel. We
would make Calgary a more dynamic place to live.
4722 The festival contributes to the reputation of ours as a world class
city. We contribute to the vibrancy of our downtown core in addition to
generating a significant economic impact for local businesses.
4723 We are very proud of our festival and its place in our community. On a
national basis, we are now considered to be the second largest children's
festival in Canada.
4724 We were proud to welcome Prime Minister Jean Chrétien to the big
birthday celebration here on the Olympic Plaza next door when we had our 10th
anniversary birthday in 1996. It is not often that he is welcomed here by
cheering crowds of Calgarians and our festival was very proud of that, that we
were able to make that happen, and we were also very pleased to receive the
national coverage that resulted on such an occasion.
4725 As we enter our 15th year, some of the unique challenges that we face as
an organization are ones that a sponsorship from The Mix would assist us in
4726 Unlike many of our colleagues in the presentation of festival
programming, we cannot support our operations with beer tents. We face
adult-sized prices in terms of fees, airfares and hotel rooms, but we cannot
subsidize any of these costs with alcohol sales, obviously.
4727 Our audience is short and our ticket prices need to be low. Unlike the
adult-based festivals, we cannot charge adult-sized ticket prices. We also can't
make a small fortune in the merchandising area. Whereas a jazz or folk festival
patron can drop $30 or sometimes $40 on a souvenir sweatshirt on top of his or
ticket price, we are glad if a child is able to buy a $1 clown nose in our
merchandising tent. Still, our costs for renting that tent, cash register,
insurance, venue rental, staffing, et cetera, are all the same as the other
4728 Our largest costs, of course, are the artists.
4729 For your reference, here is how our budget works.
4730 Our production costs are 53 per cent, that means the fees that we pay
directly to the artists and all the costs attendant to that. Our marketing and
community resources programs cost 37 per cent, and our administration represents
about 10 per cent of our budget.
4731 In terms of revenue, from the community sector we bring in 53 per cent;
from box office and merchandising we bring in 28 per cent; and from the public
sector, 19 per cent.
4732 Our spending this year on artists is $201,000.
4733 You might want to note that six our of our 15 companies that we are
bringing to our festival this year are Canadian artists, so that is about 40 per
cent of our programming.
4734 We work very close with the school boards here in Calgary on making the
festival a related program to the curriculum. We have representatives of the
both the Calgary Public and the Calgary Catholic Board on our steering
committee. They help us to develop the festival so that it works very closely
with the curriculum, so that teachers can very easily justify a visit to our
4735 That is a little bit about us. We would be very happy to work with the
people that are putting together this very important family station.
4736 As you can see, our community sector support is very crucial to our
success and we would be very pleased to welcome them to our family of sponsors.
4737 Our presentation of international artists has always been a cornerstone
of our programming. With the support of this initiative we would be able to
maintain our work in that area and expand our presentation of Canadian musical
and artistic talent.
4738 Those are my remarks this morning. If you have any questions.
4739 THE CHAIRPERSON: Thank you, Ms James.
4740 Commissioner McKendry will lead the questioning for the Commission.
4741 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
4742 Thank you for coming this morning. Just tell me a little bit more about
the performers. I think you mentioned 40 per cent of the performs are Canadian.
Are any of the performers from Alberta or Calgary?
4743 MS JAMES: Yes. Yes, many of our performers are from Alberta and from
4744 COMMISSIONER McKENDRY: In terms of the support that Craig/Harvard is
proposing, could you tell us a little bit about what specifically that would
allow you to do that you aren't doing now?
4745 MS JAMES: I would say that it would support the work that we are doing
now. I see maybe the very real possibility of an expansion of our Canadian
programming, certainly being able to support it more fully through the school
system to help us cover the costs of what we are doing now is a big part of it.
I would see the importance of expanding our Canadian presence at our festival
would be part of it.
4746 COMMISSIONER McKENDRY: Thanks very much. Those are the questions I had.
4747 THE CHAIRPERSON: Thank you, Ms James.
4748 There are no further questions.
4749 Mr. Secretary.
4750 MR. BURNSIDE: I would now like to call the Calgary International Organ
Foundation, Timothy Rendell.
INTERVENTION / INTERVENTION
4751 MR. RENDELL: Thank you.
4752 Good morning, gentlemen. My name is Tim Rendell and I am President of
Calgary International Organ Foundation.
4753 I am very pleased to speak in support of the application by Craig
Broadcast Systems and Harvard Developments Inc. to establish a new FM radio
service for the Calgary community.
4754 In my comments I will give you a brief overview of who we are and what
we do, followed by the reasons we strongly support this application by Craig and
4755 Calgary International Organ Foundation, or CIOF for easy reference, is a
Calgary based not for profit organization based right here in Calgary, operating
in the community for the community.
4756 Our sense of mission, we are not about livers or hearts. It is all about
music. Our sense of mission is that music enriches the community through
entertainment and education. Activity in music, whether by listening or by
performing, enhances quality of life for individuals in the community and for
the community as a whole.
4757 Our sense of mission is all about the relevance and power of music, and
how it connects people and helps build community. Our chosen instrument or
vehicle, if you will, to bring music to the community is the organ. At the
centre of our activities is the pipe organ, but our programs embrace the entire
organ family of instruments.
4758 The organ is central to our programs for the community because we
believe the pipe organ is undervalued and misunderstood by so many, and deserves
a better place in our collective minds. The organ has an incredibly rich and
fascinating history stretching across the past 2,500 years of socio-economic
development of the western world.
4759 The organ is by far the oldest instrument of music still played today by
the same principles as when it was invented 2,500 years ago. Today we think of
the organ as a church instrument yet, in fact, it has been associated with the
church for less than half of its life to date.
4760 When a Greek inventor named Cstebius invented the organ 2,500 years ago,
it was built not as an instrument of music, but as a demonstration of man's
genius and engineering prowess: If many can play the pan pipes, can we make a
machine that plays the pan pipes. That tension around the organ, is it an
instrument of music or is it a mechanical contraption, has endured to this day.
In truth, the organ is some of both and all the more fascinating because of that
4761 It was used by the Romans as an instrument of heraldry and
entertainment, literally to accompany games, perhaps even the Christians versus
the lions, certainly gladiatorial battles, a tradition that still lives on today
in the Saddledome and other sportsplexes around Canada and North America.
4762 More music has been written for the organ than for any other solo
instrument, and perhaps for all other instruments combined.
4763 Canada holds a special place on the world stage of organ building, as we
are home to one of the world's leading organ builders, Casavant Frêres of
Ste-Hyacinthe, Quebec, who, over their 150-year corporate history have build
approximately 3,000 instruments that can be found throughout North America and
the rest of the world. And then there are all the related and derivative
instruments that range from the accordion to the harmonium, from the theatre
organ to the Hammond B3 and the whole world of electronic instruments.
4764 As I say, a fascinating family with many fascinating stories to tell.
More on that another time.
4765 We operate at two levels of mandate: the global community and the
4766 While the global part sounds a little grand, I want to offer this very
brief overview of our global activity. We present the largest and most
significant international music competition in organ in the world, largest in
terms of scope and scale, largest in terms of total prize money.
4767 This competition is held once each four years, with the World Finals
here in Calgary. To find the finalists from around the world, we are on the
ground presenting events in Hong Kong, China; London, England; Cape Town, South
Africa and Atlanta, Georgia. These events in these four locations are all
presented by CIOF under the flag of Calgary, Alberta, Canada.
4768 In presenting these events outside Canada we are collaborating with all
three levels of government in Canada, as they and we better understand how
important this international cultural activity is to positioning Calgary,
Alberta, Canada in the global competitive marketplace.
4769 Just a quick fact to drive home a point here. We are a member of the
World Federation of International Music Competitions, a self-regulating
federation of the world's most prestigious international music competitions. In
the year 2000, world wide there are 105 members of that federation covering
every discipline of music performance. Of these 105, only 10 are North American,
which is some comment on the significance of classical music in North America
versus Europe that is home to all the rest.
4770 Of those 10 North American competitions, three are Canadian, and here is
the surprising fact, all three Canadian competitions are right here in the Bow
Valley corridor; that's The Banff International String Quartet Competition, the
Esther Honens Calgary International Piano Competition and the our Calgary
International Organ Festival. This fact, combined with other examples of
Calgary's cultural richness and diversity, contributes to the development of an
enhanced image of Calgary as perceived by Calgarians and as perceived by the
rest of the world.
4771 Second, and perhaps most relevant for this hearing, CIOF operates at a
Calgary community level, bringing programs to the community for the
entertainment and education and the benefit of this community. I will mention a
few examples of our programming to show how we do this.
4772 We present Calgary's longest running series of free non hour concerts
called Organ à la Carte that for the past 12 years has brought about 6,000
people each summer into Jack Singer Concert Hall to hear local talent. That's
talent from Calgary, from the rest of Alberta, from Manitoba, Saskatchewan,
Ontario, Quebec, British Columbia, to perform on the Carthy organ or on the
theatre organ, the Hammond B3, with a huge variety of other instrumentalists,
vocalists and choirs performing along with the organ.
4773 We also present an annual spring concert to celebrate the anniversary of
the inauguration of the Carthy organ, which is a gift to the community from a
private foundation in 1987. This annual celebration sells out each year and is
designed to show that the organ can be associated with pure entertainment. Next
spring our production will use a wide variety of local talent not just in music,
but in dance and drama.
4774 We also present special concerts and special series from time to time,
one ofs, if you will. Our most recent is a Bach 2000 Festival that we presented
this past June in collaboration with the Calgary Bach Festival Society to
celebrate the 250th anniversary of the life of J.S. Bach.
4775 If called upon to identify the one individual who has made the most
significant contribution to music for mankind in the past millennium, many would
immediately name Johann Sebastian Bach.
4776 This four-day festival didn't just result in the five outstanding
concerts that happened and then disappeared. By deliberate design we brought in
three individual who were key international talent, seven individuals who were
world class Canadian talent and all the other talent was local, including three
local choirs, two of which were adult choirs, plus the Calgary Boys Choir, local
musicians from the Calgary Philharmonic Orchestra, from the Mount Royal
Conservatory student orchestra, and all of that local talent, all of those
individuals who were then able to work with the international and national
talent, the result was some outstanding performance experience for audiences and
for the performers.
4777 What was particularly telling was that afterward we had both
professional musicians and amateur student musicians come forward and say that
it was a seminal life-changing experience for them as artists, one that they
would never forget.
4778 Our fourth program area that I want to mention, and perhaps our most
compelling one, is our education program for Grades 4, 5 and 6 students, here in
4779 This program has been developed in collaboration with the music resource
staff in the public and separate school boards over the past three years and is
now going into its fourth year.
4780 You have a little red folder that was handed out as promotion on this
4781 We believe that arts and culture, in general, and music in particular,
is an integral and vital part of the education process. Old think is that school
systems can integrate arts and culture into the curriculum by hiring a music
teacher, much like you would hire a math teacher. When budgets get trimmed, the
frills go first, but the three Rs are untouchable -- music, of course, doesn't
start with the letter R -- and that scene is played out too often across Canada,
and indeed Alberta has experienced this over the past number of years.
4782 A new model is developing across Canada whereby school systems are
collaborating with community arts companies, such as JoAnne's Children's
Festival, and ourselves to bring arts and culture back into the education
process for the middle school levels in particular. This movement of learning
through the arts is far deeper than arts education for art's sake. Although, in
this age when a liberal arts education is taking on renewed importance in the
business world, art for art's sake isn't necessarily a bad thing either.
4783 The objective of our program is to integrate music and drama into core
curriculum areas to help young students better develop an understanding of that
core curriculum area and develop an improved sense of the relevance of music at
the same time.
4784 We have developed three programs that rotate annually so that a young
student progressing through the three years of Grades 4, 5 and 6 can experience
all three with no repetition. All three programs are structured as two-act
plays; Act I happens right there in their classroom, ending in unresolved
tension, and the resolution in Act II happens in the Jack Singer Concert Hall,
with the Carthy organ. For most students, and for some teachers, it's their
first trip to the Calgary Performing Arts Centre and a full-sized concert hall.
4785 Our first program -- I'm going to skip over that.
4786 To create and present this program, we engage a wide variety of local
talent, including drama producers, playwrights, musicians to consult on the
script and story line, musicians to perform in the production, actors, stage
managers, prop designers. It's a major production and, for the past three years,
has played to approximately 6,000 school children each year from approximately
4787 So, those are four examples of what we are doing to move forward in our
mission of music to enrich the community.
4788 In developing these programs for the community, we have been fortunate,
to date, to find sufficient funds through sponsors, donors and grantors. But, in
order to keep these programs operating, and in order to fund the development of
new programs, we are constantly looking for new partners who share a sense of
commitment to serving the community through the promotion and development of
4789 We need funds to continue this Grades 4, 5 and 6 program that I have
explained, and we are now planning a companion program to offer to Grades 7, 8
and 9. This will take significant resource.
4790 We are extremely pleased to see Craig and Harvard propose their Canadian
talent development pool in their application now in front of you to provide
funds to support programs such as ours that operate in the community for the
community, for the development of talent in the community and for the education
of the community.
4791 Corporate support is the much-needed third leg of the stool for programs
such as our education program.
4792 The school boards have the students who represent our future, whose
education can be made better by learning through the arts, whether they are
future talent or future audience. The arts companies, such as CIOF, have the
artistic talent to design and deliver the programs to the students. The
corporate sector has the resource and, in the case of Craig and Harvard, the
community orientation to make the program happen for the benefit of the
4793 It's a powerful triangle -- a three-way partnership between the system,
the arts company and a corporate partner -- that can make a powerful impact and
a significant difference in the community.
4794 In closing, I offer the following additional comments on Craig Broadcast
Systems and their track record to date in the Calgary community, through my
direct experience with A-Channel.
4795 Firstly, their corporate personality, as displayed by the A-Channel, is
an extremely good fit with the Calgary community. The personality that shines
through at the A-Channel is young in spirit, bold, daring to be different,
adventurous, innovative, energetic, passionate -- all words that are appropriate
to the Calgary personality and that we at CIOF feel are appropriate to our
organization as well. So we have a sense of kindred spirit with those
personality traits that we see in the A-Channel.
4796 Second, it's evident to me that A-Channel, and Craig Broadcast Systems
behind them, delivers on their promises. When the A-Channel application came
forward, they promised good coverage of the local community arts and culture
scene. In my experience, they have really delivered. As a member of the arts
community in Calgary, I am constantly impressed with A-Channel's responsiveness
to our story pitches. Any time that TV reporters show up to cover our events,
you can be sure an A-Channel camera will be there. And it's the same at other
events I attend: A-Channel is there letting the community know what's going on.
4797 So, we strongly endorse this application by Craig Broadcast Systems and
Harvard Developments for this new FM radio service in the Calgary community
because they have shown that they can deliver on a commitment to support the
development of local talent for the benefit of the community.
4798 Many thanks for your time and attention.
4799 THE CHAIRPERSON: Thank you, Mr. Rendell.
4800 You spoke, in your presentation, of the Carthy organ, the theatre organ
and the Hammond B3; and I read in your brochure:
"The great Carthy organ, the Calgary treasure which has been called the
finest organ in North America and one of the 10 great organs of the
world." (As read)
4801 Can you tell us a little bit about that before we go on with other
questions specific to your intervention?
4802 MR. RENDELL: A little bit about the Carthy organ?
4803 It is a Canadian-built organ by our friends Casavant Frêres, in Quebec.
It is not a particularly large instrument. It would be at the larger end of a
mid-sized instrument, with about 6,000 pipes, 78 stalks. But what makes it
particularly fine, above and beyond the workmanship of Casavant, who are
outstanding in their tradecraft, what makes it particularly fine is -- I will
back up a small step and say: one characteristic of the organ, more than any
other instrument, it is a symbiotic relationship, such a key relationship, with
the space that it's in, and Calgary has been really fortunate with the
development of the Performing Arts Centre and the Jack Singer Concert Hall
within it, which is an exceptionally good acoustic space, and we have an
experience here that is half science, half artistry, and half good luck, that
the instrument and the hall have fit together in an extraordinarily fine way,
such that that relationship has really been an instance of two plus two being
five, or more. So, a fine hall and a fine instrument have combined to make
something really special. And right from the time the instrument was opened and
its premier performance was done by Mr. Simon Preston, a UK-based leading
conductor, composer and organist -- he was the first one to say this is an
exceptional instrument in an exceptional hall and that that combination is truly
special. And the legend is: the morning after the inaugural performance, he went
back to the giftgivers and said, "Now you've done this and created this
incredible instrument and space. What are you going to do next? Will it, like so
many organs around the world, just gather dust?", and the response was, "Well,
you tell us what we should do, Mr. Preston", and he said, "Hold this festival
and competition in Calgary. Put this instrument on the world map." And Calgary,
being a "can do" place, has done that. It's taken us 10 years but our view is we
are really just beginning.
4804 The theatre organ and the Hammond B3 are just excellent examples of the
balance of the organ family. Without exaggeration, I think it can be said -- we
heard a jazz intervenor a few moments ago. Jazz has developed around southern
Baptist Afro-American roots in the church, driven by -- originating with the
electronic organ. It really is the birthplace of jazz in North America. So the
Hammond organ, or that member of the organ family, has, in many ways, made this
huge foundational -- the origins of jazz as we know there.
4805 You can tell I'm a fan of the organ and the role it has played in music.
4806 THE CHAIRPERSON: Thank you for those comments.
4807 Commissioner McKendry will continue the questioning of your
4808 Commissioner McKendry...?
4809 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
4810 I was just looking through the appendix to your presentation where you
provide a great deal of information about the prevalence of the organ throughout
all forms of music and I was thinking to myself, it won't be long before we have
an application for an all-organ format --
--- Laughter / Rires
4811 MR. RENDELL: We're working on it.
4812 COMMISSIONER McKENDRY: -- the amount of organ music that seems to be
available, and I'm a little disappointed that you left the band off the modern
Canadian music, which I always thought made good use of the organ.
4813 But, in any event, just let me ask you if you could be a bit specific
about what the Harvard/Craig application would mean, in terms of allowing -- if
we approved it -- in terms of allowing your organization to do things that it
isn't doing now.
4814 MR. RENDELL: I want to be clear that Harvard and Craig have, to this
point, made no specific commitments to us. Nor have we asked for any.
4815 Our discussions with Craig and Harvard have arisen out of our sense of
connection with A-Channel and the kindred spirit, in terms of personality. Out
of those discussions, they have made it clear to us their sense around Canadian
talent development pool and rather than making any commitment to us, we have
just had discussions around what they want to do for the community, what
organizations like us in the community need and a very clear sense of connection
that we see operating in the community, for the benefit of the community, for
development of talent, for development of audience, that we share a sense of
spirit and connection on those issues.
4816 I would like to think, if their application is approved, that we would
work with them on specific proposals. Our education program. For example, we are
very much in need of expansion into Grades 7, 8, 9 and the senior grades. We
would like to do something in support of band programs in the school systems
here in Calgary.
4817 So we are not short of specific proposals on talent development that we
think we could work with Craig and Harvard and the new mix FM station, given
their commitment to this Canadian talent development pool.
4818 COMMISSIONER McKENDRY: Thanks very much.
4819 Those are my questions, Mr. Chairman.
4820 THE CHAIRPERSON: Commissioner Langford...?
4821 COMMISSIONER LANGFORD: Thank you.
4822 I have a question about your educational initiatives.
4823 We had hoped to hear from the Board of Education this morning, but I
guess they just couldn't make it, and that's unfortunate.
4824 We have asked a number of intervenors this sort of question, and what it
comes down to is the sort of red tape, or however you would describe, that might
stand between groups such as yourselves that want to work with the schools and
with the children and the work you do.
4825 We don't -- I shouldn't say "we", but I don't yet have a sense for how
easy it is to do good things in this city. For example, if you want to go and
work with the children, do you have to be a member of a teachers union? Or do
they allow people in to teach master classes and to tutor? If you want to buy
some instruments for children to learn on, do you have to get permission from
the school board to spend money in that way? Or how is it done? And can you
earmark your money for certain things?
4826 It's important to me because there have been a number of issues -- not
just the Craig one -- but a number of the applicants have pledged to see what
they could do to help out at the school level. So perhaps you could just, in a
couple of minutes, share with us your experience of dealing with the school
board and what it's like to get in there and help and if there are any problems
in that area.
4827 MR. RENDELL: Wow! Broad area. And good question.
4828 I think like any other field of endeavour it is a question of
relationship building. I'm proud of the fact that our organization, and the
people within in it, are collaborative by nature and have been able to work very
successfully with the school board, in terms of developing relationships.
4829 Yes, there are operating difficulties. It's a bureaucracy and it's
large. It is further complicated by the fact that for our initiatives in Calgary
we are working with the Calgary Public School Board; the separate school board,
which is the Catholic school system; we are working with the charter school
system; we are working with the private school system, which is yet again
different from the charter school system; and, we are working with a fifth
entity called the Home School Association.
4830 Out of the 80 schools that came to this program this year, we had
representation from all five school systems, if you will. So we have not had any
problems with sort of trade unionism at all. We have run into some bizarre small
4831 We like to supply equipment. The organ is built around pipes. Some are
wood, many are metal, and metal pipes are made with lead. We realized we had
lead pipes, and we were going into the schools and the kids are putting them in
their mouths and blowing on them. Well, big potential public relations problem
feeding children lead.
4832 There are all sorts of issues. But I believe the school boards --
certainly from our experience, the school boards have been very open to working
collaboratively with us. Nobody wants to work with someone who is going to come
and tell them: We are smarter than you are; we know what you need; we know how
to do it and you don't. It has to be really a collaborative spirit. We go in
saying that we can bring product to the school system. We can help them. And we
ask them: How can we best help; what are your needs as you perceive them?
4833 I think that a truly collaborative spirit and approach -- you know, by
their "DDs" you will know them, you work with people -- the school board is just
as good or sometimes just as bad as anybody else in developing those
4834 Our experience with the school boards has been excellent. They want the
help. They are short of resources. What I mention in our presentation and why I
am so happy to see Craig come forward is that there is this sense of a triangle.
The government can't just keep throwing money into the education system, but if
we have corporate citizens that are community-minded like Craig and Harvard with
this Canadian talent development thing, we have product, the school systems have
the need, if we can collaborate together we can make some good things happen,
and we have shown so far that it can happen, it is.
4835 COMMISSIONER LANGFORD: Thank you very much.
4836 THE CHAIRPERSON: Thank you, Mr. Rendell. There are no further questions.
4837 MR. RENDELL: Thank you.
4838 THE CHAIRPERSON: Mr. Secretary.
4839 MR. BURNSIDE: I would like to now call Gloria McRae.
4840 THE CHAIRPERSON: Good morning, Ms McRae. Please proceed when you are
INTERVENTION / INTERVENTION
4841 MS McRAE: I support the application of The Peak in a twofold manner:
number one, as a new radio station to Calgary; and, the m.PLAY program.
4842 As a radio station, I believe it will give more selection to the
audience. Number two, I believe they would support more prairie province artists
with airplay that is into the musical format of mainstream. This would validate
the golden objectives of the m.PLAY program to inspire the youths in the
4843 This leads to the m.PLAY program.
4844 As I cited in my letter to the CRTC, I support this program in its
efforts to give the youths of today opportunities that could enhance their
wellbeing as valuable persons.
4845 I received my musical degree from McGill University with a concentration
in music psychology, sociology, and music therapy. Since graduation, I have
become a professional accompanist, singer and songwriter.
4846 As an educator, teaching children and youths in private piano
instruction has allowed me to use all the disciplines that I have been taught --
except for stage performance anxiety. Yikes!
4847 THE CHAIRPERSON: Given the majority in that department, don't feel
--- Laughter / Rires
4848 MS McRAE: I tell you. Okay.
4849 The most important lesson I have learned is how responsible we are for
shaping a young person's mind. m.PLAY has ideas for placing mentoring programs
within the music education system in schools. I feel that if this were to occur,
youths would have a chance to learn more about themselves as individuals in a
musical setting and a potential as a contributing member of society. It would
give children a chance to learn: number one, goal setting; number two, a work
process; number three, learning self-discipline and self-control to obtain
objectives; and, number four, to give outlet for creativity -- when I say
"giving an outlet for creativity", I mean, for example, songwriting.
4850 Songwriting is a healthy alternative for expressing emotions as opposed
to a student shutting down emotionally and not communicating, potentially
harming themselves in a lot of different ways just by shutting down. These cases
I believe can be reduced by mentoring programs, one-on-one contact with a music
professional giving the individual his or her space and freedom to communicate
in a supportive setting.
4851 In my own private practice, that is what I encourage. I teach classical,
I teach pop, and I also teach improvisation and songwriting. There have been
children that would come to me and they would have their own difficulties at
home. One way that I would help them out is, "Why don't you just stay here and
why don't you just play a little bit", on the piano, because that is, again, my
main instrument. Sure enough they would be able to come out with a song.
4852 A number of things can happen when a student does create on the spot in
front of somebody. It builds their confidence and self-esteem. They get a better
sense of themselves, and a sense of achievement. I believe these are all very
positive feelings. They can go home and their parents are happy.
4853 Number five: Achievement. Obviously a sense of achievement.
4854 Music doesn't lie. This is what all my students will say too. One works
at it, one gets better. One doesn't work, one doesn't get better.
4855 I believe where there is one-on-one teaching in a school situation, such
as this mentoring program that m.PLAY is trying to support, the child can get a
sense of what he/she must do, again, in order to become a responsible citizen
and to feel better about themselves and find their potential.
4856 Obviously, the music doesn't lie. One works at it, one gets better. It
applies to all of life. Giving you the chance for better music education through
mentoring programs, et cetera, for m.PLAY allows them to discover who they are
and what the students can become.
4857 In closing, I feel the m.PLAY program could inspire youths through
musical intervention in order for them to become assets to society and an asset
4858 Thank you for your time.
4859 THE CHAIRPERSON: Thank you, Ms McRae.
4860 Commissioner Noël will question your intervention.
4861 COMMISSIONER NOËL: Good morning.
4862 MS McRAE: Good morning.
4863 COMMISSIONER NOËL: Are you from Montreal originally or did you only
study at McGill?
4864 MS McRAE: Luckily, I only studied -- luckily, I had the opportunity to
get to Montreal.
--- Laughter / Rires
4865 MS McRAE: No, no, no, I'm sorry.
4866 Yesterday I had my little girl here -- no babysitter. I really believe
in this program of mentoring. That is why I'm here. I'm a little bit tired. But,
no, I was lucky enough to get to Montreal.
4867 I'm originally from Edmonton. Unfortunately, the University of Alberta
was -- they didn't want to accept my audition, but McGill -- just because of my
academic average in school -- but McGill said, "We want you. In two weeks please
come here. We only accept 10 people in performance programs." So I was very
lucky to get to Montreal.
4868 I stayed there for seven years. After my degree I have always been
employed in music. I'm sure you know Mark Hamilton.
4869 COMMISSIONER NOËL: And you are still teaching music, as I understand.
4870 MS McRAE: Yes.
4871 COMMISSIONER NOËL: What do you think a program like m.PLAY, which is
limited in time, can do to better music education of the kids? You know, it is a
seven-year investment, basically.
4872 MS McRAE: Yes. I think the investment that they could do for seven years
in the system is far better than if they didn't have the opportunity at all. I
think, again, this one-on-one instruction from a mentor, the mentor actually
being allowed to have that one-on-one time, again being able to spend that time
with one student, seeing what they are made of -- if a student has problems, and
there are barriers, psychological barriers, again, not believing in themselves,
a teacher in the education system that is dealing with 32 students in one
classroom, they cannot address those situations. The student then gets lost in
the system. So what I believe, for seven years, if we can have individuals that
go into the music education system, being able to have one-on-one progress with
a student can really help out.
4873 COMMISSIONER NOËL: Make a difference.
4874 MS McRAE: I definitely believe so. Yes, no question.
4875 COMMISSIONER NOËL: Thank you very much, Ms McRae.
4876 THE CHAIRPERSON: Thank you, Ms McRae. There are no further questions.
4877 MS McRAE: Thanks.
4878 THE CHAIRPERSON: We appreciate you being able to make it. We understand
your problem with obtaining a babysitter and that. We are glad you were able to
4879 MS McRAE: Well, if I can make a difference for her growing up by being
here, then I'm glad I'm here.
4880 Thank you.
4881 THE CHAIRPERSON: Thank you.
4882 Mr. Secretary.
4883 MR. BURNSIDE: I would like to now begin the recall.
4884 I will call No. 10, Hipstar Productions, Mr. Craig Glen.
4885 THE CHAIRPERSON: It is Mr. Glen, is it?
4886 MR. GLEN: Yes, it is.
4887 THE CHAIRPERSON: Please proceed when you are ready.
INTERVENTION / INTERVENTION
4888 MR. GLEN: Hello. I am here today to support the Newcap application.
4889 Basically, I will tell you a little bit about myself. My name is Craig
Glen. I started my own company here about a year ago called Hipstar Productions.
I started it up after working in a recording studio here in town.
4890 I moved out from Toronto after graduating from the Fanshaw College Music
Industry Arts Program.
4891 In the last almost year I have been managing a band, Recipe From a Small
Planet. In that time have had numerous bands approach me for management and for
booking. I do a lot of booking across this country and right now I have
currently about 10 bands that I am working with. I don't have the time myself to
be doing all this work, and I am hiring on two other people in the new year that
are coming out and we are expanding.
4892 What I am getting at here is there is a lot of talent out there right
now, a lot of talent that just needs that extra push to get to the next level,
and that is where I think Newcap can help out with commercial radio.
4893 These bands, Recipe From A Small Planet, in particular, when their CD
came out, it was in the top three of CJSW, which is a college station here in
town. For 16 weeks it was in the top three. However, it did not appear on any
commercial radio. They are filling nightclubs across the country right now. They
have sold out just on the weekend -- actually, sorry, a couple of nights ago for
Halloween, yet they are still not getting support on commercial radio.
4894 It is hard to get support around here unless you have a name or a big
huge budget. Right now I work with sort of what you might want to call the
underdogs. The talent is there, but specifically the advertising budget isn't
there, so they might not have been heard of, say, like some bigger bands in
4895 Now, what Newcap is proposing is that they will have one hour a week of
local music programming, which would enable these bands to get the opportunity
to be played in what some people might call the big time with well-known acts.
4896 Also, what they propose is, every Friday, as far as I understand, they
will be taking a live recording from clubs here in town to support this local
talent. I think that is fabulous because people will listen to what they are
4897 I believe that very strongly the youth will listen to any mainstream
radio station and pretty much enjoy most of what they hear on it in regular
rotation. To have these bands, that are local, getting supported on there, even
if it is minimal rotation, they are still hearing this and comparing it to some
of these other bands that have a well-established name for themselves.
4898 I think that can only benefit these bands and benefit the station and
the community of Calgary by supporting this local talent in that way.
4899 Also, they are proposing 40 per cent Canadian content, which is 5 per
cent above what the mandatory is. I also think that is great. I don't think you
can ever have too much Canadian content in the programming.
4900 As far as Canadian music goes, I think the more of it the better. If
people listen to it more -- like I said, they will listen to what they are
given, and if people get used to hearing Canadian content on a regular basis
they are going to appreciate it more for what it is.
4901 Also, if we have a strong sense of community, of loving Canada for what
it is and what it produces, the great talent it produces, that will spread over
into the States. Like bands like Barenaked Ladies getting their chance, bands
like The Tea Party, 54-40, this is the kind of programming that I believe that
they would be doing and it can only help out our culture, I believe.
4902 We have nothing to be ashamed about as Canadians and often it is looked
down upon: Oh, Canadian music, we have to put this 35 per cent in. I think we
should want to and I think that it is a great thing that these guys are doing
4903 Now, Recipe From a Small Planet, I'm using that as an example because
they are the biggest band, the breakthrough band that I have right now on the
go. They have been touring around Canada since May and they have been getting
played on college stations around the country and on private radio stations out
on the Island in Vancouver, it's just getting them to that next step that is
rather hard without a major label behind you.
4904 I am really proud of them and I am proud to be Canadian and I would like
for them to have this opportunity in Calgary to be on a major station. It is
very hard to get that kind of publicity. They are on CJSW all the time and they
have a great following here in Calgary. They are selling out everywhere they go.
The other night at the Night Gallery, there is line-ups around the corner. At
10:00 at night they were sold out.
4905 You would think that a band with this kind of support from their
audience and their fan base could get onto radio stations, even just a little
4906 I will jump to my next point, which is that this band right now is going
into the studio again in January to record their next album. We have a bit more
of a budget now, we have found a private investor and we want to take it to the
4907 What we are also doing is, we are applying to FACTOR. I think FACTOR is
a fabulous program, very hard to get, and I think it is well-deserved if you do
get it because there is a lot of work that goes into a FACTOR application. That
is also what Newcap is proposing, is to donate a specific amount of money to
FACTOR and to support FACTOR, and that in turn supports this local talent that
is out there that works hard enough.
4908 I'm not saying that everyone who is out there should get played on the
radio, because I don't believe everyone out there deserves it, but there are a
lot of bands in this Alberta region, as well as Edmonton, that do deserve a
chance like this to get onto mainstream radio. It would help them. They would be
doubling their audience. They would be taking it from somewhere like the Night
Gallery to Mac Hall and then maybe to the Jubilee, you know. It would just
escalate. That way the word would get out around the country and it can only
continue from there.
4909 Something like this that supports local talent would be fabulous because
there is very little support, other than I find Shaw TV and the A-Channel to be
outstanding in their support and they have helped us out on television quite a
bit. But as far as radio, it is very hard unless you have, like I said, that
4910 There has to be something out there with all this local talent because I
can't do my job. I don't have enough time. I have myself, I have my wife who
helps me out, and I am hiring two other people. Still, with those two other
people, I am still going to be turning away great talent that I think should be
represented properly and I just can't do it. There is too much out there.
4911 Right now, as far as promotion goes for the bands that I work with, the
main way we promote is through postering campaigns, which get torn down about 10
minutes after you put them up, so that doesn't work.
4912 So we have resorted to handbilling. We will go out on a given day and
hand out like 3,000 handbills at the colleges and universities. Now, if we had
this radio promo, we wouldn't have to go and spend so much time out of their
practice, rehearsal, out of searching for record deals, et cetera, et cetera,
going out to these places and standing there handing out handbills hour after
hour to get people out to the clubs.
4913 Radio has a lot of power and it really influences the youth, and I think
to have local bands on a major radio would even inspire other younger students
from the schools who are taking music or trying out in bands and it might enable
them to get a little further with what they want to do. They can see other bands
that are sort of -- not big, but are coming out of this Calgary area, the scene,
the music scene here, and they might want to give it a little bit more of a
chance before they give up.
4914 The band I manage, none of them have day jobs. This is their job. They
work really hard. They are supporting the scene in Calgary. The scene in Calgary
is lacking a bit. If you look at clubs like The Republic, Java Sharks which was
going for a while on 17th Avenue, they have both closed down due to lack of
public support. It is just not there.
4915 I think to have support like this on a major radio station would improve
business all around, just to keep the scene going other than college radio.
College radio is great and supportive, it's fine, but at the same time it is not
getting the listenership that these bands greatly deserve.
4916 In closing I would just like to say that a band that can get on college
radio and hold the top three for 16 weeks in a row and now is sold out of their
CD, three pressings already, has toured the country twice, I think something
like that should be noticed by major radio and I think that for them to have the
opportunity, even if it is once a week to be played or to go and have their live
show covered would be fabulous.
4917 The only radio support we have by major radio is the CBC. This band that
I manage, one in The Key of A, it is a program they do, and they got supported.
They came out and they taped it live. That was fabulous. They got on the radio
and lots of people heard it and it really helped them, it is good for their
press pack, and I think more of this kind of programming should occur, I really
4918 In closing I would just like to say I think Newcap has the right idea
here. That's it.
4919 Thank you.
4920 THE CHAIRPERSON: Thank you, Mr. Glen.
4921 Commissioner Langford will question your intervention.
4922 COMMISSIONER LANGFORD: I think you were very clear on your support of
Newcap and why, so I will set that aside.
4923 MR. GLEN: Okay.
4924 COMMISSIONER LANGFORD: You were just very clear on it and I would like
to just sort of borrow from your experiences a little bit to explore a few other
4925 We have heard a lot of different applicants here today talk about how
they want to get into the community and help in different ways. This is really a
common thread, that they feel that there is a way they can help musicians,
particularly young musicians.
4926 Where do your musicians come from? I will be a little more clear on
that. Are they self-taught in their basements or are they originally music
students from high schools that have then gone their own way. Is there a kind of
typical background to the members of the band you manage and are managed around
Calgary or is it just so eclectic that it is impossible to say?
4927 MR. GLEN: I tend to side with the eclectic. I'm tired of that.
4928 I know the band that I manage, they are trained. The guitar player, for
instance, and lead vocalist, he works at a guitar shop in town. He is a guitar
technician and he gives lessons to other younger children who come in for guitar
lessons. He has done that in the past. He has had to give it up because his
touring schedule is really hectic right now. He was doing that.
4929 The keyboard player is trained. I'm not sure what grade of piano he has,
but he is phenomenal, an absolutely phenomenal musician.
4930 The drummer also has been trained throughout high school in music class
-- they were all in music class, as far as I understand -- and he, until his
touring schedule got hectic as well, was teaching drums at Johnny Cruise Music.
The guitar player was at the Guitar Connection and they were both giving
4931 As far as the base player, I think he just sort of picked it up way back
when and liked it and continued it.
4932 Other bands that I work with, it is really hard to pinpoint it down, but
I think they all do come from a musical background in high school somewhere.
4933 I know that myself, I started playing music when I was in Grade 4. It
was on the recorder. You know, you start up back then and then you move on from
there. I continued all through high school and made a career out of it. That is
what I went to college for.
4934 COMMISSIONER LANGFORD: What is your sense now? You have obviously been
at this since Grade 4 so you have some experience. What is your sense of the
quality of musical education through the school system, elementary and high
school? Is it as good as it has ever been or is it worse or is it better or is
it just different?
4935 Do you have any sense of what has happened or can you gauge it by the
level of the musicians that are coming to you and looking for your sort of
4936 MR. GLEN: Yes. Well, I am always amazed when I see how young these
people are and how diverse they are at their instrument, how trained they are.
The band that I manage is all roughly about 21. They have been at it for years
and years. When I was 21 I couldn't even begin to think about playing as well as
4937 I am from the Ontario background. I moved out here about two years back,
as I said. The music curriculum there I think is great, it has helped me through
it, but I don't think it is pushed as much in school as it should be. You have
your math and science and everything, and that is all important, but then you
sort of lose a bit of the creative side. They don't really push for art in high
school. They don't push for music or drama. I took all of those.
4938 I gave up on math and stuff in grade 10 and I got my required amount of
credits and I did take drama, music and art throughout the rest of my stay in
4939 Now, as far as Calgary schooling goes, I wouldn't be the person to ask.
I don't really know. All I can say is the musicianship that I have seen has been
fabulous and seems to be a little bit ahead of some of the younger bands I have
seen in Ontario.
4940 There are more bands in Ontario, more musicians in Ontario just per
capita, but here I think the quality is great. I think some of these bands, I
can use the name Interstellar Root Cellar, which is a band that has sort of been
really big in the last little while and just from pure lack of support I think
they have sort of fizzled out. I don't want to see that happen to more younger
bands that are making a name for themselves here.
4941 COMMISSIONER LANGFORD: Thanks very much.
4942 MR. GLEN: Thank you.
4943 THE CHAIRPERSON: Thank you, Mr. Glen. There is no further questioning.
4944 MR. GLEN: Thank you.
4945 THE CHAIRPERSON: Mr. Secretary.
4946 MR. BURNSIDE: I would now like to call Caribbean Community Council of
Calgary, Lorna Ann Murray.
4947 THE CHAIRPERSON: Good morning, Ms Murray. Please proceed when you are
INTERVENTION / INTERVENTION
4948 MS MURRAY: Good morning, Mr. Chairman and members of the Commission. My
name is Lorna Ann Murray and I am the President of the Caribbean Community
Council of Calgary. Our council is comprised of seven Island members
associations and hosts Canada's second-largest Caribbean festival, "Carifest".
4949 I am very pleased to be appearing before you today to support Standard's
application for an Urban music radio station. We believe that Standard's
proposed station, The Rhythm 98.5, will be a very positive and welcome addition
to our community here in Calgary.
4950 There are a number of compelling reasons for which we have decided to
support Standard in this public process.
4951 First, The Rhythm will provide a wonderful forum for the development and
exposure of Canadian Urban music and artists. This is a wonderfully diverse type
of music that encapsulates various types of music, such as Rhythm & Blues,
Hip Hop, Dance, Soul Reggae and World Beat. There is a wealth of Canadian talent
out there right now, both in Calgary and across Canada, that is getting very
little, if any, airplay on the radio.
4952 Licensing The Rhythm will be a step in the right direction for
rectifying that situation. It will provide the much needed exposure on radio to
this music and our artists, as well as satisfy the unquenchable demand for Urban
music at this time.
4953 The second reason for our support of Standard's proposal is that The
Rhythm will provide a voice to the Afro-Canadian, as well as other ethnic
communities in Calgary. We have a wonderful ethnic community here in Calgary. It
ranges from Chinese, South Asian, Filipino, to Arabic, Latin American and, of
course, Afro-Canadian. We are very active, i.e. Carifest, the Latino Festival,
Africa Today, to name a few. We have a very rich diverse culture.
4954 There is currently nowhere on the radio dial in Calgary for these groups
to express themselves, or share their knowledge and talent with others. There
are also no radio stations in Calgary that discuss community and cultural
events, or provide information that is relevant to the ethnic communities. There
is most definitely a void in Calgary's radio industry in this regard.
4955 The licensing of The Rhythm will therefore provide much needed
opportunities for members of our community to bring their cultures, music and
history to the broadcasting system. It will allow radio listeners in our great
city to learn more about what has taken place, what is happening, and what is
head that is of interest and relevance to them.
4956 If you decide to licence Standard's service, Calgary's airwaves will
definitely be richer, more diverse, and dare I say spicier.
4957 The third reason for our support is that we view The Rhythm as an
opportunity for the ethnic and non-ethnic communities to come together, in the
same way that Calgary's Carifest brings these groups together every year.
4958 Carifest is a week-long celebration of Calgary's Caribbean community. It
has grown to be one of the largest and most respected ethnic festivals in
western Canada since 1981. Its aim is to allow all Canadians to become more
familiar with the culture and warmth of Caribbean people.
4959 Every year we attract somewhere in the neighbourhood of over 50,000
people. This exciting event hosts concerts and showcases Calypso and Reggae
music. It also hosts open sky luncheon events coupled with live entertainment,
as well as the revered "Taste of Carifest", and to mention the vibrant and
intoxicating "Carnival Parade".
4960 Carifest is supported by ethnic and non-ethnic communities by way of
attendance and participation in the events, such as Carnival Parade, Taste of
Carifest and Sunshine Festival and Princess Island Park.
4961 It is at Princess Island Park that participants will experience the very
Canadian artistic talent, particularly Canadian Urban music artists.
4962 We were thrilled to learn of Standard's proposal to provide financial
support to Carifest in the even that The Rhythm is licensed. We will use the
$25,000 annual contribution to showcase Canadian artistic talent, which is
always a highlight at our festival.
4963 The final reason, but by no means the last important, for our support of
Standard's proposal is due to its commitment to provide employment opportunities
to individuals within the ethnic communities. You can have all of the talent in
the world, but without a laboratory to use it it is difficult to flourish and
4964 The presence of The Rhythm in Calgary will provide heightened
opportunities for members of our ethnic communities to gain experience in
broadcasting, to develop their skills, teach others what they know, and advance
their careers. There is a lot to be said for that.
4965 In closing, I would like to say that we are very excited about the
prospect of an Urban music radio station here in Calgary. It will add diversity
and flavour to our airwaves. It will also provide a long overdue voice for our
ethnic communities on the radio, and it will be a key source of cultural
information for members of our community.
4966 Finally, The Rhythm will be a place for the launch and development of
careers in broadcasting, and it will provide much needed financial support for
our tremendously popular Carifest festival.
4967 It is without a doubt that Standard's financial support will not only
significantly contribute to the continued success of our festival, but will also
allow us to develop other avenues to showcase throughout the year budding
talents, in particular Canadian urban artists in music.
4968 Mr. Chairman and members of the Commission, thank you very much for the
opportunity to provide you with my comments today.
4969 THE CHAIRPERSON: Thank you, Ms Murray.
4970 Commissioner Cram will question your intervention.
4971 COMMISSIONER CRAM: Thank you for coming here today.
4972 Ms Murray, I wanted to get some idea of the population in Calgary of
people from the seven islands that your community council consists of. Do you
know how many people?
4973 MS MURRAY: The last time, to my understanding, I heard there were over
30,000 members of the different communities, not all necessarily being members
of our association.
4974 COMMISSIONER CRAM: Yes.
4975 Then when you were talking about the larger ethnic community, have you
any idea of that size in Calgary?
4976 MS MURRAY: No; I don't know for sure. But I have attended several of the
other ethnic communities -- i.e, the Latino Festival, Afrikaday Festival -- and
from those festivals I have seen, you know, well over 20,000. I know the Asian
or the Chinese population, they are very big, too, in Calgary, but I do not have
a definite figure as to how many there is.
4977 COMMISSIONER CRAM: Then I heard you say Carifest is the second largest
festival in -- sort of Caribbean festival -- in Canada. And I look at -- I'm
assuming Toronto is the first, is the biggest.
4978 MS MURRAY: Yes.
4979 COMMISSIONER CRAM: And yet, there are a lot of communities in Canada --
the Vancouver area, for one, that has, if my memory is right, somewhere around
700,000 ethnic people in the Greater Vancouver area. And yours is the second
biggest. How have you done it?
4980 MS MURRAY: Second largest Caribbean --
4981 COMMISSIONER CRAM: Oh, okay.
4982 MS MURRAY: -- festival.
4983 COMMISSIONER CRAM: But I guess maybe I'm assuming -- and I know that
means make an ass of me -- but would you say there would be more people from the
seven islands in other places, in addition to Toronto, than here?
4984 MS MURRAY: Yes, you probably would say so. In Vancouver -- and I don't
know specific figures -- but there is a large Caribbean community there also. In
Winnipeg, I understand that there is also a large Caribbean community. Montreal.
And other places.
4985 COMMISSIONER CRAM: So, can I say, then, that the success of Carifest may
have something to do with the fact that non-Caribbean people are interested in
the music --
4986 MS MURRAY: Oh, yes. Definitely.
4987 COMMISSIONER CRAM: -- here compared to other places?
4988 MS MURRAY: Definitely, yes.
4989 Compared to other places, we do also have support from Caribbean
communities outside of Calgary that come, you know, and participate, for
example, in our parade, because that is, you know, very vibrant, very colourful.
We even have people from south of the border that come up and participate in our
parade also. So it's not just necessarily the people here in Calgary, but people
from outside, you know, will come and support us also.
4990 COMMISSIONER CRAM: Thank you.
4991 I wish you continuing success.
4992 MS MURRAY: Thank you.
4993 THE CHAIRPERSON: There's no further questions, Ms Murray.
4994 Thank you very much.
4995 MS MURRAY: Thank you.
4996 THE CHAIRPERSON: Mr. Secretary, it's nearing 10:30. If there's only a
few more, maybe we can finish them first.
4997 MR. BURNSIDE: My understanding -- we have four more on the list, but my
understanding is there is only one person in the room; so we may only have one
more to do, if you want to finish that before break.
4998 THE CHAIRPERSON: That will be fine.
4999 MR. BURNSIDE: If it turns out, perhaps, that there are all four here, we
5000 THE CHAIRPERSON: Well, we will do this one more and then take a break
and see where it goes.
5001 MR. BURNSIDE: Okay. I would like to call the White Raven Group of
5002 They don't appear to be in the room.
5003 I would then like to call the Tsuut'ina Nation. Roy Whitney.
5004 They don't appear to be in the room.
5005 I next would like to call Exit303. Cameron Ambrose.
5006 THE CHAIRPERSON: Mr. Secretary, Number 13, Choclair, have they --
5007 MR. BURNSIDE: I'm searching. That is a list that you are working from;
we are working from the one that's in the agenda.
5008 They withdrew prior to the hearing.
5009 THE CHAIRPERSON: Thank you, Mr. Secretary.
5010 Please proceed when you are ready, Mr. Ambrose.
INTERVENTION / INTERVENTION
5011 MR. AMBROSE: Good morning, Commissioners.
5012 My name is Cameron Ambrose. I'm here to support the Newcap application
for a forward-thinking, modern adult contemporary/ modern rock station in
5013 I represent the interests of Exit303, a reasonably successful
independent modern rock band based in Edmonton, Alberta.
5014 To give you a little background on myself: I am an electrical engineer
by training, a computer programmer/analyst by trade, the owner of a part-time
recording studio and, most importantly, the key voice for the band Exit303.
5015 I have been involved in music for most of my life and involved
professionally for the last 10 years.
5016 Having run the band's business aspects for the last year, I have learned
the limitations of the independent band, as it relates to the music industry in
general. I have learned that the music industry is not geared towards developing
new talent. For the most part, independent music has the greatest resistance
against it. This shows in radio and it shows in lives venues.
5017 It is difficult, at the best of times, to find a venue that will
dedicate their prime time to an original act. These bands usually find
themselves playing for their immediate friends or to mostly empty clubs.
5018 To illustrate this point: we have been recently trying to book into some
of the major venues in Edmonton and they have actually, categorically, stated to
us that they will not book local talent because it does not fit into their
schedules -- which I find to be quite alarming.
5019 This is not to say that it is impossible to be a successful original
artist. Exit303 has found successes here through a lot of hard work and, often,
a great deal of luck. We have used the resources available to us; namely, the
Internet, mailing lists and poster advertising. In the end, we have a sound that
audiences find interesting and a live show that leaves viewers entertained.
5020 I said earlier that Exit303 is a reasonably successful band. I say
"reasonably" because, for all the successes we have achieved, and for the demand
we have seen at our live shows, we have yet to have our music playlisted on any
applicable radio stations.
5021 Radio provides a source of new listeners and, with that, new fans.
Without radio, widespread support for a band comes at a glacial pace. Word of
mouth is a very powerful tool but it is limited to the frequency of the band's
performances -- and, as I said, live performances are limited by a scant
selection of venues amiable to original music.
5022 All in all, it is a daunting task for any independent band to reach
commercial success; and, in the end, musical diversity suffers.
5023 I'm here because I believe that the Newcap application addresses some of
the shortcomings found in current modern rock radio stations. Calgary currently
lacks a modern AC/modern rock format station. Not only does this application
promise to fill that vacancy but it also proposes an open and accessible
atmosphere that is more accommodating to local independent music.
5024 This is the first step in creating a relationship with the independent
5025 Current radio stations, for the most part, are foreboding and
intimidating institutions. The promise of an open and accessible atmosphere is a
5026 As I stated in my original letter of support, I believe that one's music
should be judged by one's peers -- in this case: the public.
5027 The current success of an original band is dependent on the whims of
A&R directors and where the artist's music fits into the sound of the day.
These people have the control of what the public hears and what they don't.
Instead, I would prefer that the public decide what it wants to hear.
5028 To that end, I appreciate Newcap's proposed Like it or Spike it Program
where the audience decides what new songs should make it into regular rotation.
Including independent acts in this program would provide these artists not only
with a possible inlet into rotation but feedback on the public perception of
5029 Programs Locals Only and Virtual Calgary, coupled with at least 21
announcements per week of Canadian and local artists' performances, would also
be a big win for independent artists. Independent acts need all the advertising
they can get. Outside of regular rotation, on-air advertising of gigs and
occasional spins reach a greater audience than a band could hope to reach on its
5030 The contribution of $100,000 per year to FACTOR for the development of
local artists is also worthy to note. Exit303 has benefited from FACTOR funding
and believes that FACTOR makes it possible for independent acts to achieve goals
that would not otherwise be attainable.
5031 Newcap's contribution is another great support of local independent
talent; especially considering that FACTOR has allowed the contribution to be
specifically aimed at developing Alberta-based artists.
5032 The Newcap application has Exit303's support because it's taking
departure from the normal operations of current conventional radio stations.
Independent artists need radio support. They especially need support in their
hometown. The special programs that have been proposed and the more open
atmosphere would create a new and, currently, very rare relationship between
artists and stations. We believe this is a very good thing.
5033 In closing, I would like to say that, as a studio operator, I have been
involved in the creation of a great deal of quality original music. As an
independent artist, I realize the struggles and roadblocks that these acts face.
Great music is being created by independent artists and with Newcap's help, that
music may find it's way to the public ear.
5034 THE CHAIRPERSON: Thank you, Mr. Ambrose.
5035 Commissioner Langford will question your intervention.
5036 COMMISSIONER LANGFORD: Mr. Ambrose, I won't keep you long. Your position
is very clear and understandable and I don't have any questions on the main
thrust. It doesn't mean I didn't hear it; it's clear enough that I don't have to
follow it up.
5037 I would like to pursue, just for a minute, the same line of questioning
I pursued with Mr. Craig Glen, who was here earlier -- I don't know whether you
heard him -- from Hipstar.
5038 I'm just trying to get a sense of an idea where your bands come from,
because there has been so much talk of education and helping and mentoring and
getting into the community.
5039 Are most of the players you know, your own band, yourself, other bands,
did they begin their musical education in the schools? Or what's the background
5040 MR. AMBROSE: I started piano and vocal lessons at five, from private
instruction. I did pop into the musical system in the schools in junior high
because we had an excellent vocal teacher there.
5041 I think I'm the only person in our band who has actually trained. The
rest of our musicians are self-taught.
5042 My comment on the current state of -- as I have seen it; I have been out
of the school system for over 10 years so I'm not exactly certain of the current
standing, but I know for the few years after I had left I was actually -- I grew
up in Stetler, which is about an hour and a half from here, and it's a small
community, 5,000 people in the town, serving a community of about 50,000, and we
were very fortunate to have some very excellent private instructors in both
piano and vocal instruction. What I have seen since then, in that school in
particular, is that the music programs have seemed to disappear.
5043 Actually, I was surprised, years after I had left, band programs were no
longer available in high school. And the thrust in vocal training, in junior
high, had evaporated quite a bit. I don't know if that was because of the
quality instructors had disappeared, because we had an excellent music
instructor in junior high. Actually, in that case, he was moved out of that, he
was moved out of music because -- actually, I have no idea why he was moved out,
but he was, and the vocal instruction seemed to dry up a lot.
5044 What also interested me there, when I went back, is that there were more
bands. Music was more accepted, from a band perspective. When I was growing up,
in school, I was actually looked down on. The athletes were popular and
musicians were not. When I went back, I did a competition for the school a few
years after I left and I went back and I was amazed to see how that had almost
turned around and the kids that were playing in bands were looked up on and were
heralded as doing something original, and I was quite amazed to see that and I
really appreciated that.
5045 COMMISSIONER LANGFORD: Does your old school still have a football team?
5046 MR. AMBROSE: Yes, it does.
5047 COMMISSIONER LANGFORD: Interesting.
5048 Thank you very much.
5049 MR. AMBROSE: Thank you.
5050 THE CHAIRPERSON: Mr. Ambrose, as you may or may not know, we are
streaming the audio of this public hearing over the Internet, on the CRTC Web
site, and other intervenors have been able to provide us with samples of their
music and we have, in most cases, been able to accommodate them and put them on
during either our breaks or the lunch break, or that type of thing.
5051 So if you have a sample of your music, you are more than welcome to
leave it with the Secretary and it may, in fact, be on between 12 and one today.
5052 MR. AMBROSE: Okay. Thank you.
5053 THE CHAIRPERSON: You are welcome.
5054 Mr. Secretary...?
5055 MR. BURNSIDE: I have just been informed that our final intervenor that
was to appear, Mr. L'Heureux, will not be attending the hearing, so this would
end Phase III.
5056 THE CHAIRPERSON: Thank you, Mr. Secretary.
5057 Well, then, I propose we take a 20-minute break prior to commencing
5058 MR. BURNSIDE: We will reconvene at 11 o'clock.
--- Upon recessing at 1040 / Suspension à 1040
--- Upon resuming at 1108 / Reprise à 1108
5059 THE CHAIRPERSON: Ladies and gentlemen. We will resume the Calgary public
5060 Mr. Secretary.
5061 MR. BURNSIDE: Thank you, Mr. Chair.
5062 Before I call the next presenter I would like to remind everybody we are
now in Phase IV. Each of the applicants has a maximum of 10 minutes to do their
rebuttal. The applicants are called in reverse order from Phase I.
5063 I would now call Gary Farmer on behalf of a company being incorporated.
5064 MR. FARMER: Thank you.
REPLY / RÉPLIQUE
5065 MR. FARMER: Mr. Chair, Members of the Commission, Commission Staff, I'm
Gary Farmer on behalf of Aboriginal Voices Radio. The members of our team are
pleased to be before you again today to offer our few final remarks.
5066 With me are Marilyn Buffalo, Bob Kennedy, and Margaret Rider.
5067 We wish to take only a few minutes to provide the Commission with
assurance that licensing Calgary's first aboriginal radio service is the right
5068 MS RIDER: Members of the Committee, AVR will be a completely new voice
in Calgary, a first service to Calgary's estimated 40,000 aboriginal people.
Licensing AVR is the best use of the 88.1 frequency.
5069 The Calgary community has overwhelmingly said they wanted AVR's urban
aboriginal service. Local native broadcasters have said they want to accept
AVR's network programming at Siksika and in Morley. We want to offer our own
programming back to the network.
5070 Calgary needs aboriginal radio now.
5071 MR. FARMER: We have committed to roll out more local programming as
resources become available. We will start with as much local programming as CBC
Radio Two. It is our goal to have more local programming like Radio One by the
end of our first term of licence.
5072 Our network service is inclusive. It is national in scope, not a Toronto
repeater. AVR will give and take aboriginal programming from across the country.
5073 We are cautious about our commitments. We promise what we know we can
5074 MR. KENNEDY: Our business plan is based on conservative revenue
projections that move our revenue base towards greater national advertising
sales and away from program underwriting and other fund raising.
5075 Newcap's Calgary benefits will allow us much faster roll out of our
local programming, including a news bureau with local full-time staff. We are
creating an accountable corporate structure and an experienced team that can
meet our objectives. This structure, and our inclusive community process, will
ensure accountability as we run our Aboriginal Voices Radio business.
5076 MS BUFFALO: Commissioners, the need is urgent. There is no doubt the
need is well established. All the elements are together now. Aboriginal Voices
Radio can afford to launch in Calgary now; Calgary can't afford to wait. This is
the right time. Commissioners, grant us the licence and we will succeed.
5077 Thank you.
5078 MR. FARMER: Thank you, Commissioners. Thank you, Commission Staff, and
all the local support we have gotten. We would like to thank our intervenors at
this time as well, and our corporate partner of course, Newcap Broadcasting.
Also, we would like to thank all the people of Treaty 7 for being with us in
--- Native language spoken / Langage autochtone
5079 Thank you.
5080 THE CHAIRPERSON: Thank you, Mr. Farmer and panel members. There are no
questions at this time.
5081 Mr. Secretary.
5082 MR. BURNSIDE: I would now like to call the representatives of CHUM
--- Pause / Pause
5083 THE CHAIRPERSON: Good morning, Mr. Waters. Please proceed when your team
REPLY / RÉPLIQUE
5084 MR. WATERS: Good morning.
5085 Mr. Chairman, Members of the Commission. After four days of hearings I
don't think I can add much to the public record.
5086 I do want to thank all of the intervenors, both those who appeared at
this hearing and those who took time to write to the Commission in support of
The Peak and in support of m.PLAY.
5087 We are impressed at the level of community activism in Calgary and the
pride of purpose of all the people and organizations with whom we have consulted
over the past month.
5088 As you heard yesterday, Calgary has many educational institutions and
volunteer organizations that are universally in need of additional support from
the private sector. As you have heard from the intervenors, it is not just one
or two Calgarians who go on to the international stage. It is many people in
many different genres of music.
5089 Starting children in music education at a young age can elevate them to
the world stage. There are dozens, possibly hundreds of young people, who are
reaching that critical stage where they will either commit their lives to music
or move on with frustrated dreams. m.PLAY will help make dreams come true.
5090 Several times yesterday and again this morning, intervenors have been
asked: how will funds find their way through the bureaucracy of the school
system to the designated recipients?
5091 As has been stated by virtually every intervenor, for m.PLAY and other
applicants' private initiatives, music training in the schools, instruments,
materials and cash funding would be welcomed with open arms.
5092 Based on our community consultations, there are no bureaucratic barriers
to legitimate contributions and other assistance from corporate and other
outside sources. Parent committees and volunteer groups for these purposes are
the norm in the Alberta schools system, not the exception. That message has been
delivered loud and clear by all intervenors.
5093 Further, the purpose of the m.PLAY symposium is to submit such a
collaborative process with all stakeholders so that funding can be directed to
recipients with no impediments whatsoever.
5094 Again, several times this morning and yesterday, intervenors were
questioned concerning the effectiveness of a seven-year commitment for funding.
I would like to make clear that m.PLAY is a formal COL commitment to an initial
licence term of seven years.
5095 As demonstrated by our experience in establishing and sustaining funding
mechanisms such as FACTOR, ArtsFact, VideoFact and BravoFact, it is our
intention to extend the m.PLAY program beyond a single licence term in Calgary
and throughout CHUM Group Radio, subject to our ongoing evaluation of the
achievements of this initiative.
5096 You have asked the question: what criteria should the Commission use in
evaluating competitive applications where each applicant proposes significant
Canadian talent development benefits.
5097 In your last revue of Canadian talent development held in 1995 and 1996,
the total nationwide contributions of the radio industry stood at $11 million a
year. Of that amount, a total of $4 million a year was being contributed by
licensees of new radio services and those who had acquired existing radio
5098 I think it is important to look at that annual $4-million national CTD
expenditure, in light of the excellent proposals before you here. CHUM proposes
over $4.2 million for m.PLAY over the licence term, and that money would stay
right here in Calgary developing local talent.
5099 We also note in Public Notice 1996-114, which put the new CTD policy
into effect, the Commission recognized that licensees had the relatively simple
choice of contributing exclusively to national organizations such as FACTOR, or
had the option of making contributions to community-based organizations
including, and I quote:
"...music organizations, performing arts groups, schools and scholarship
recipients." (As read)
5100 We think there was an important and clear message in the 1996 CTD
policy. Licensees could make an easy choice and work with national
organizations, or do the much harder thing and disperse the money locally where
it is needed.
5101 Chairman, Members of the Commission, CHUM chose to follow both paths by
providing FACTOR more than double the annual benchmark, and our m.PLAY
initiative follows the second, more difficult path. You have heard from a wide
group of organizations, and the performers themselves. They need this money to
move to the next level. For that reason, CHUM believes that the m.PLAY
initiative distinguishes our application.
5102 You have heard from a number of people that Calgary needs more diversity
and radio choices. You have also heard evidence from many of the applicants that
there are sufficient frequencies to accommodate at least three new Calgary radio
stations and possibly more.
5103 You have before you CHUM's modern AC format application and at least two
specialty format applications. CHUM believes that the Commission could licence
at least three applications, possibly a fourth, and provide Calgary with
diversity, a broad range of new Canadian music which is not being played on
existing stations, additional news voices, and millions of dollars of Canadian
talent development money spent locally.
5104 CHUM is ready and willing to work with other successful applicants to
ensure that new radio services utilize the allocated radio frequencies in the
best possible way.
5105 Last, Mr. Chairman, I have attended CRTC hearings for many years. This
hearing has been unique. Not one applicant in a highly competitive proceeding
chose to intervene against its competitors. I think that speaks volumes as to
the quality of the applications and the excellent services being proposed.
5106 We thank you again for a stimulating and thorough hearing and await your
5107 THE CHAIRPERSON: Thank you, Mr. Waters.
5108 There will be no questions.
5109 MR. WATERS: Mr. Chairman, one additional point that I might just offer.
5110 We did a little bit of homework last night on the frequencies and we
have a sheet here, if you would like me to read it into the record, or I will
just file it with the Commission if you would like that. It is just a little bit
of further information on the frequencies.
5111 So if it would be useful to you we would be happy to file it, or --
5112 THE CHAIRPERSON: I will ask legal counsel to make a ruling on that.
5113 MR. BATSTONE: Well, I am just concerned that entering new evidence at
this point in the proceeding could be -- there may be other parties in the room
who would be concerned about that.
5114 MR. WATERS: It's not a problem at all. We thought it might be helpful.
We can file it, if you like, at a later time, and send copies to everyone, if
that would be suitable -- or not, that's fine.
--- Pause / Pause
5115 MR. BURNSIDE: It's not necessary.
5116 THE CHAIRPERSON: It is not necessary to file it, but thank you very much
for the offer and for the effort that you put into it.
5117 MR. WATERS: Thank you, Mr. Chairman.
5118 THE CHAIRPERSON: Thank you, Mr. Waters.
5119 Mr. Secretary.
5120 MR. BURNSIDE: Thank you, Mr. Chair.
5121 Before I call the next item, I was remiss at the beginning of Phase IV
because there were seven applicants, of course, in Phase I, but the seventh
applicant, Golden West Broadcasting, waived their right to the rebuttal phase
and I just wanted to clarify that.
5122 I would now like to call the representatives of Standard Radio Inc.
--- Pause / Pause
5123 THE CHAIRPERSON: Please proceed when you are ready, Mr. Grant -- or, I'm
sorry, Mr. Peacock.
5124 MR. PEACOCK: Tom Peacock.
5125 THE CHAIRPERSON: Mr. Peacock.
REPLY / RÉPLIQUE
5126 MR. PEACOCK: Good morning, Mr. Chairman, Members of the Commission.
5127 My name is Tom Peacock and I am the General Manager of the two Standard
radio stations currently operating in Calgary. With me is Peter Grant, our
5128 Gary Slaight asked me to offer his apologies this morning as he was
unable to appear. He was called back to Toronto last night due to an illness in
5129 We would like to take this opportunity to thank all of the intervenors
who have been before you yesterday and today, and we would also like to thank
the many intervenors who wrote letters supporting our application.
5130 There were no negative interventions. We would, however, like to address
one question that was brought up earlier this morning by Commissioner Cram
regarding the ethnic composition of the City of Calgary.
5131 To do that I would like to ask Mr. Grant.
5132 MR. GRANT: Thank you, Mr. Peacock.
5133 Mr. Chairman, this morning Commissioner Cram asked Ms Murray from the
Caribbean Community Council about the ethnic composition of Calgary. Ms Murray
didn't have the Statistics Canada numbers in front of her, but I do have them
5134 Just to deal with that question, the 1996 Statistics Canada numbers show
that the total population of Calgary is 762,790, and of that amount 126,050 is
made up of visible minority populations, which is about 16.5 per cent of the
population. Of that number, a little over 10,000 is made up of black population.
The rest of the visible minorities are Chinese, South Asian, Arab and West
Indian, Filipino, and a number of others.
5135 Now, in looking at those numbers it is important to bear in mind that,
as indicated in the opening presentation for The Rhythm, the audience for The
Rhythm will come from both the visible minority groups and the rest of
5136 From that perspective, the Angus Reid study filed with the application,
if you go into the detail, they do break out the responses between visible
minorities and others and it becomes clear that about 30 per cent of the
audience for the station will be from this visible minority group, so
disproportionate to their amount in the community. But 70 per cent of the
audience will come from Calgarians who are not among the visible minorities and
that reflects the broad audience interested in urban music.
5137 So on that basis I would urge you to bear in mind that this format is
not a specialty format, it is a mainstream format, but it will have a
disproportionate interest among the visible minorities because they will be
about 30 per cent of the audience although they are only representing 16.5 per
cent of the actual statistics of the city.
5138 Thank you.
5139 MR. PEACOCK: Thank you, Mr. Chairman, for allowing us that opportunity.
5140 That concludes our reply.
5141 THE CHAIRPERSON: Thank you, Mr. Peacock and Mr. Grant.
5142 We have no questions.
5143 Mr. Secretary.
5144 MR. BURNSIDE: I would now like to call the representatives of Craig
Broadcast Systems Inc. on behalf of a company to be incorporated.
--- Pause / Pause
5145 THE CHAIRPERSON: Mr. Cowie, please proceed when you are ready.
REPLY / RÉPLIQUE
5146 MR. COWIE: Thank you.
5147 Good morning, Mr. Chairman, Commissioners and Commission staff.
5148 I am Bruce Cowie and with me is Jennifer Strain on behalf of the
application by Harvard Developments and Craig Broadcast Systems for a new FM
licence offering a hot AC format with the best music from the eighties and
5149 Our reply comments will be brief and they will focus primarily on our
Canadian Talent Development Fund.
5150 First of all, we would like to thank all of the intervenors who wrote in
support of our application, and particularly those intervenors who took the time
to come here and appear before you in person: Ian Hogg from TGS Properties; Ron
Renaud from Rencor Development; Colin Jackson from Calgary Performing Arts
Centre; Brenda-Ann Marks from the Calgary Opera; Jim Finkbeiner from the MidSun
School; Mike Walters from the Mount Royal College Foundation; JoAnne James from
Calgary International Children's Festival; and Tim Rendell from the
International Organ Foundation.
5151 We hope that these intervenors have given you a sense of the kinds of
programs and organizations that exist here in Calgary for music and other
artistic endeavours and of the links that already exist between performing arts
groups and public education.
5152 The attractiveness of our $5 million CTD plan is that it will make use
of the organizations and contacts and programs that already exist here in
Calgary. The money will not be spent on setting up more layers of
5153 Through our volunteer advisory board, which will cost nothing and will
include members of the Calgary arts and education community, we will focus on
getting Canadian talent development funding directly into the hands of artists,
performers and students, to find those initiatives which offer the most "bang
for the buck", as Commissioner Cram put it.
5154 The infrastructure is already here, mentoring programs are already here
to develop new talent. These organizations just need more money.
5155 Commissioner Cram, we think that you asked a very good question about
whether the Commission should consider not just the magnitude of the CTD
commitment, but the impact it will have.
5156 I don't think that any of us in this room here today can tell you with
certainty, what kind of program will have the biggest impact. I do think that
providing music education programs to kids is an important part of it, but it is
likely not the whole answer. We are confident with members of our Advisory Board
that we can assess this very issue in each and every case where we receive a
request for funding from an eligible third party organization.
5157 We are very excited about the prospect of being involved in Mount
Royal's Music Bridge program. We think if ever there was an opportunity to get
real bang for the buck and to create stars, it is this program. We would very
much like the opportunity to replace the corporate funding that this program has
5158 We will leave you with that thought on our Canadian Talent Development
5159 Second, we want to say a word about our western Canadian ownership.
5160 We do not subscribe to the view that an eastern Canadian-based
broadcaster cannot come in here and do an excellent job of serving the Calgary
community. They are doing it now. We are suggesting that this proceeding is an
opportunity to license an new, diverse voice in a highly concentrated market.
Our proposed station will offer not just a new format but a distinct, regional
perspective in its news programming and in its coverage of community events.
5161 Section 3(1)(d) of the Broadcasting Act says that the broadcasting
"...serve to safeguard, enrich and strengthen the cultural, political, social
and economic fabric of Canada."
5162 We believe that the existence of regionally diverse owners is an
important part of fulfilling that objective.
5163 Third, we want to reiterate that our business plan is sound. It was
developed on the basis of independent research that shows high consumer demand
for the format that we are proposing. Our revenues are a little higher than some
other applicants because the format is very attractive. Indeed, it is a distinct
and popular format in many markets across the country.
5164 Finally, the added benefit of licensing our application is that it will
help us maintain the services we operate in the smaller and much tougher markets
of Brandon, Winnipeg and Regina. This application is very important to solidify
Harvard's and Craig's existing radio operations.
5165 This concludes our remarks. We than you, Chairman Williams,
Commissioners and Commission staff for what we believe is a very thorough and a
very thoughtful examination of all of these applications. We would be honoured
to be rewarded with the licence. Thank you very much.
5166 THE CHAIRPERSON: Thank you, Mr. Cowie and Ms Strain. There will be no
5167 MR. COWIE: Thank you.
5168 THE CHAIRPERSON: Mr. Secretary.
5169 MR. BURNSIDE: I would now like to call the representatives of Newcap
5170 THE CHAIRPERSON: Mr. Steele and Mr. Templeton, please when you are
REPLY / RÉPLIQUE
5171 MR. TEMPLETON: Thank you, Mr. Chairman, Commissioners, staff. I am Bob
Templeton and with me is Rob Steele, who will be making our closing comments.
5172 We are pleased to be before you again in this final phase, Phase IV.
Before I call on Rob to conclude our remarks, I would like to thank the numerous
intervenors, both appearing and non-appearing who wholeheartedly supported our
5173 MR. STEELE: While Newcap has appeared at this hearing before, this is my
first time in front of the Commission. I must say it is quite an experience.
5174 Over the last several days we have had the chance to hear from all the
applicants. I'm absolutely amazed at what's on the table.
5175 We are all mindful of the value of a Calgary licence and it's wonderful
that the market can afford everyone the ability to offer what I consider to be
spectacular benefits packages. So I can appreciate what a difficult task you
have in ultimately deciding who gets the licence.
5176 This is a huge opportunity and there is a lot of money at stake. To
pretend otherwise is silly because we all know what a tremendous business
opportunity this is. It is also an opportunity to give something back to the
community. And I guess that's the purpose of this exercise.
5177 So why would you consider the Newcap application over the others?
5178 Well, what Newcap offers is this. The package in its totality is
comprehensive and it meets the objectives as outlined in your licensing criteria
and I will be brief.
5179 Our thorough research has identified the format that most listeners
5180 Our format is distinctly different from the existing stations in the
5181 We propose a 40 per cent Canadian content.
5182 We will also provide a new and high quality news voice to Calgary.
5183 We propose to spend significantly more money on programming than any
5184 Newcap will provide over $2.3 million to Aboriginal Voices Radio.
5185 And also, we are offering $700,000 of tangible local talent development.
5186 Finally, the strengthening of a smaller player will maintain diversity
in an increasingly concentrated media environment.
5187 Those are our commitments and when we make commitments we keep them. Our
credibility is important because we know we are going to be in front of you
5188 It is interesting to note that most applicants here are undergoing a
generational change, and that's certainly the case with us.
5189 My brothers and I wish to grow this business but, quite frankly, we have
to do it by winning licences because it is cost prohibitive in most cases to pay
the high multiples that existing stations are selling for. We have been able to
expand to some degree by purchasing stations, such as our Edmonton purchase in
the late eighties and then again in '97, our purchase of Newfoundland stations
from CHUM in the early eighties and, of course, VOCM last year. But these
expansions do not give us anywhere near the critical mass of most of the other
applicants at this hearing. In fact, we have to compete with the nationals in
our own backyard.
5190 So we have to grow beyond Atlantic Canada. There are simply few
opportunities left there and we need a stronger foundation.
5191 We want to win licences one at a time based on the quality of our
applications. We believe that we have demonstrated at this hearing that we
deserve, and we would be honoured to receive a licence here in Calgary.
5192 Thank you for your attention. I appreciate it very much. We wish you
well with your deliberations.
5193 THE CHAIRPERSON: Mr. Steele and Mr. Templeton, thank you. There will be
5194 Mr. Secretary.
5195 MR. BURNSIDE: Thank you, Mr. Chairman.
5196 For our final rebuttal I would like to call the representatives of
Telemedia Radio (West) Inc. on behalf of a company to be incorporated.
REPLY / RÉPLIQUE
5197 MR. BEAUDOIN: I am Claude Beaudoin and with me is Nanon de Gaspé
Beaubien and on my right is Dave Calder and Hugh McKinnon.
5198 Mr. Chairman, Commissioners, staff, Telemedia is gratified and humbled
by the significant public support for this new non-mainstream specialty format,
Smooth Jazz 98.5 FM. We would especially like to recognize and thank the
intervenors who took the time to underline the depth of support for this format
in Calgary, Kevin Wilms, high school educator and Vice-President of the Alberta
International Band Festival; John Hyde, a jazz musician and educator at Mount
Royal College; Professor Edwards, University of Calgary, and Calgary Councillor
Ray Jones. The 425 letters of support on file with the Commission make the point
far more strongly than I ever could, that Smooth Jazz 98.5 FM will find an eager
audience in Calgary.
5199 We note that you did not receive any opposition from the other
applicants on Telemedia's application to increase our Canadian content level to
35 per cent weekly in both Category 2 and Category 3. We have made this change
largely in response to the jazz musicians and educators who demonstrated through
their interventions that there is a depth of material available to make this
commitment. However, the Commission will decide whether to accept this amendment
or not, and we respect this process.
5200 Many of the intervenors who have appeared support many initiatives that
contribute to the development of individual talent, and replace government
funding in Calgary. These individuals and groups are excited to have new sources
of funding and it is important, but it is important, however, that these
initiatives also support in a tangible way the Canadian broadcasting system.
5201 We ask the Commission to consider the comments made by John Hyde and
Kevin Wilms. They made the point that what is really needed is to expand the
opportunities in the Canadian broadcast system for Canadian jazz artists who now
receive little airplay. Investment through Canadian talent development is half
of the equation. Telemedia also delivers the committed specialty format that
expands opportunities for Canadian artists.
5202 Our last point, in the intervention phase the Commission heard comments
from applicants about the alternative frequencies. After listening to the
various responses we believe each of the applicants expressed a willingness to
consider an alternative if the Commission issues moire than one licence.
5203 Telemedia wishes to underline the fact that we are in a unique position
with respect to the use of the frequency for which this call was issued. At the
tower site where Telemedia is planning to locate, none of the alternative
frequencies are technically possible, while the other applicants appear to have
alternative frequencies on the site they have chosen to locate on.
5204 And for the very last few words, Nanon.
5205 MS de GASPÉ BEAUBIEN: Merci, M. Beaudoin.
5206 Calgary has told us it is ready for Smooth Jazz 98.5 FM. Mr. Chairman,
Commissioners and CRTC staff, thank you for your attention and the opportunity
to present to you this week.
5207 THE CHAIRPERSON: You are welcome, Ms Beaubien.
5208 There will be no questions for the Telemedia panel, Mr. Beaudoin.
5209 Mr. Secretary...?
5210 MR. BURNSIDE: That now concludes all the four phases of the seven radio
applications that were heard.
5211 I will now call the representatives of Saskatchewan Telecommunications,
better known as SaskTel, who are applying for a broadcasting licence for a cable
distribution undertaking to serve a number of communities in Saskatchewan which
are listed on page 7 of this agenda.
5212 THE CHAIRPERSON: Mr. Secretary, perhaps we could take a brief 3 to
5-minute break while they are getting organized.
--- Upon recessing at 1140 / Suspension à 1140
--- Upon resuming at 1145 / Reprise à 1145
5213 THE CHAIRPERSON: We will reconvene the public hearing, Mr. Secretary.
5214 MR. SECRETARY: You can proceed when you are ready.
APPLICATION / APPLICATION
5215 MR. CHING: Good morning, Mr. Chairman, Members of the Commission and
5216 My name is Don Ching. I'm the President of SaskTel and Saskatchewan
Telecommunications Holding Corporation.
5217 I would like to thank you, on behalf of myself and my colleagues, for
the opportunity to come here this morning and address you.
5218 Before I begin my formal presentation, I would like to introduce the
other members of our panel.
5219 On my immediate left is John Meldrum, who is the Vice-President,
Corporate Counsel and Regulatory Affairs.
5220 On my immediate right is Kelvin Shepherd, Senior Vice-President and
Chief Technology Officer.
5221 And over on the left is Candice Molnar, who is the General Manager of
5222 I am pleased to be here before you today to discuss SaskTel's
application for a broadcast licence. As you may know, this is one of the first
appearances by SaskTel before the Commission.
5223 It may seem a bit ironic that we are dealing today with broadcast
matters but, in some respects, it's a sign of the times, reflecting the
convergence that is occurring between the broadcasting and telecommunications
5224 SaskTel is the third telephone company to seek Commission approval for a
broadcast licence. The New Brunswick Telephone Company, of course, was the first
-- obtaining their licence in 1998. The technology that SaskTel is proposing is
very similar to that which has been rolled out successfully by NBTel and it is
the same technology which will be utilized by MT&T, in conjunction with
their recently-approved broadcast licence.
5225 Our proposed service is a fully-integrated Internet and broadcast
service that we refer to as "DIV", digital interactive video. It is convergence
as envisioned by the federal government in the convergency policy statement of
5226 Our first steps towards becoming a convergent communications provider
have been met with a particular amount of comment and opposition. Having
reviewed the comments filed by intervenors, it appears that the majority of the
opposition relates to who we are versus what we propose to deliver. In other
words, these intervenors have focused on our status as a crown corporation
rather than on what we intend to deliver to potential customers. With all
respect, it's my view that that strikes the wrong emphasis.
5227 Yes, there are some issues related to our crown corporation status --
and I will address those in a few moments.
5228 But, first, I would like to speak about our service offering and the
benefits which we believe it will bring to customers in Saskatchewan.
5229 We at SaskTel have been conducting an employee trial of our interactive
TV service for approximately one year. We are very excited about the service and
the potential benefits it will bring to potential customers in Saskatchewan.
It's not simply broadcasting over another medium; it is bringing Internet and
entertainment together on a single device to provide full-featured interactive
5230 We have brought with us a very short presentation of our service
5231 At this time, I would ask Kelvin Shepherd to briefly outline the
features of our DIV service.
5232 MR. SHEPHERD: Thank you, Don.
5233 This is slide is an example of the DIV home page all customers will have
access to. Whenever a customer turns on their set-top box or hits the "home" key
on the remote control, they will come to this screen.
5234 This home page serves as the launchpad for all of the services available
with DIV that customers can access with a simple click of a button on their
5235 Let's start with the interactive guide.
5236 The interactive guide is the gateway to the broadcasting content. All of
the broadcasting and audio channels are displayed and the customer can scroll
around to see what programs are available, up to seven days in advance, and read
a quick description of each. The guide also includes a TV manager function,
which allows parents to password protect channels they wish to restrict from
their children, as well as any pay-per-use services. The customer selects the
channel they want by entering the channel number, or by hitting the "select" key
on the remote for the channel they have scrolled to.
5237 At any time, the customer can return to the home page to access the
5238 DIV includes an e-mail service, local weather information, and we also
have a video-on-demand service. Customers will have a library of movie titles to
choose from and they can view the movie when they want. The customer will rent
the movie for a period of time, for example, 24 hours, and they will have full
VCR-like control with the movie.
5239 DIV also provides a high-speed access to the Internet and, in
particular, "point and click" access to community information. Customers will
have the ability to roam all over the World Wide Web but we will also provide
them easy access to Saskatchewan and local content. A customer can choose their
local community, for example, Prince Albert, and we will provide them with a
variety of categories that are linked to information and content to Prince
Albert. Under the sports category, for example, the customer could choose to
access information about the Saskatchewan Roughriders.
5240 From the home page, the customer can access other services, such as the
audio services which DIV will provide, a self-help area, or view their SaskTel
bill on line and contact us.
5241 Finally, because DIV combines both broadcasting and the Internet on one
device, interactive TV will be available to Saskatchewan consumers. For example,
you will be able to watch and play along with Regis during "Who Wants to be a
Millionaire?", or you can shop or bank on line while keeping tabs on your
5242 As you can see, DIV will provide customers with more than just
broadcasting. The customer is in control of what type of content they choose to
see and can switch back and forth between broadcasting programs and Internet
content on demand.
5244 MR. CHING: We believe the added choice and functionality this service
provides over traditional broadcasting and Internet services will be welcomed by
the people of Saskatchewan. There continues to be a block of customers who do
not own a personal computer and, for those customers especially, this service
offers the opportunity to become connected to the World Wide Web.
5245 In focus group testing conducted recently, where groups of participants
were shown our interactive TV proposal, approximately 50 per cent of the group
indicated that they would consider purchasing our bundled Internet/TV service.
Of the focus group participants without a home computer, nearly 70 per cent
indicated interest in purchasing our interactive service.
5246 Consumers desire choice and access to innovative new services.
Certainly, the letter of support filed by the Saskatchewan branch of the
Consumers Association substantiates this claim.
5247 As the CAC noted; quote:
"It has long been our policy to encourage workable, competitive markets that
stimulate innovation, customer choice and increased efficiencies. The consumer
interest can best be protected by open competition in all areas of the
5248 We trust that, having reviewed our application, the Commission will
agree that SaskTel's proposal will provide Saskatchewan customers with both
choice and innovation.
5249 It is important, I believe, to emphasize that our service is more than a
simple competitive alternative to that of the cable companies and has the
potential to deliver significant benefits to the Saskatchewan customer base.
5250 SaskTel's integrated Internet and broadcast service will support the
development of Saskatchewan Web-based content and commerce. By providing a focal
point for local Web sites and information, it will encourage the development and
use of the Internet in Saskatchewan.
5251 But, more importantly, in our view, our service provides an alternative
medium for accessing the Internet, a medium that is both economical and familiar
to consumers. That medium is the television set.
5252 Much has been written about the widening digital divide that exists in
Canada today. For a number of reasons -- many of them social and economic --
there is a large segment of Canadians who do not have access to the Internet
and, absent government programs or innovative service solutions such as SaskTel
is proposing, are likely to remain unconnected, for the foreseeable future.
5253 We believe that our service can help to narrow the divide in
Saskatchewan by making the Internet available to those consumers who do not own
a computer. In fact, our business case relies upon it. We have estimated that
approximately 60 per cent of the customers using our service will be new,
high-speed Internet adopters.
5254 The term "digital divide" is also sometimes used in relation to urban
versus rural and remote communities. We fully support the federal government's
goal of making high-speed broadband Internet services available to all
Canadians. In fact, we have a similar objective and believe we have a vital role
to play in making the federal government's goal a reality in Saskatchewan.
5255 I am proud to say that SaskTel has long been a leader in bringing the
people of Saskatchewan, including those in rural and remote communities, the
latest in technological and service innovation.
5256 For example, we were the first telephone company in Canada to provide
individual line service to all customers. We were the first telephone company in
Canada to deploy a commercial fibre optic network, and one of the first to have
an all digital switching network.
5257 We were at the forefront in Canada to offer universal Internet access to
both urban and rural residence without long-distance charges, and we were the
first company in North America to offer high-speed Internet service using DSL
technology. Today, more than half of Saskatchewan residents can access SaskTel's
high-speed Internet service, and SaskTel will continue to extend broadband
access as quickly as it is economically feasible.
5258 As a Crown corporation, SaskTel has a responsibility to further the
social and economic development in Saskatchewan. We believe we have been
successful in the past and can continue to be successful in contributing in this
way in the future.
5259 As we stated in our written response to the interventions filed opposing
our application, there are no other communications providers operating in
Saskatchewan who are more committed or better positioned to extend high-speed
broadband access to all of Saskatchewan. But to deliver broadband to the home
within rural and remote communities in a commercially viable manner, SaskTel
will require the economies of scale and scope that accrue from serving both
urban and rural customers, and from carrying more than just traditional
5260 The ability to provide a convergent package of broadcast and Internet
services will contribute to making the extension of high-speed Internet a
commercially viable proposition and supports the continued viability of a strong
communications network in Saskatchewan.
5261 As a point of clarification, SaskTel is not requesting a broadcasting
licence for all of Saskatchewan at this time, but rather approval to operate
within Saskatchewan's nine largest centres where our broadcast network is
capable of offering this service.
5262 With Commission approval to proceed, SaskTel will roll out its
interactive TV service to all of these nine centres within approximately one
year from Commission approval.
5263 The near term launch of our service is a critical factor to the success
of our business proposal. I would like to emphasize that SaskTel is the new
entrant into the broadcast distribution market and we are in a race against two
strong established competitive forces.
5264 Firstly, there are the incumbent cable companies. Some of these
companies, such as Shaw, have stated that they will soon launch interactive TV
services. But, more importantly, in the areas where they operate, as in other
parts of Canada, the cable companies have the largest share of the high-speed
Internet services market.
5265 A rapid launch of our interactive TV service is necessary if SaskTel is
to retain its market share and provide an attractive service proposition to
5266 Secondly, there are the DTH providers. An ever-increasing number of
dishes are appearing on the walls and rooftops of Saskatchewan homes. Our view
is that a customer who makes the commitment to move to satellite service, not
only invest the money but physically attaches the dish to his or her home, that
is a customer who is lost to SaskTel and the cable companies for a period of
approximately five years. In our view, SaskTel must quickly enter the market
before customers who may be dissatisfied with the services of their traditional
cable companies move to DTH providers.
5267 Before closing, I would like to return to the issue of our Crown
5268 There have been four general arguments put forward by parties opposing
our application, and I would like to quickly address each of them.
5269 First, there are those who philosophically oppose a Crown corporation
competing against private industry.
5270 In response, I would note that the federal government's convergent
policy statement and the subsequent order in council that amended the
eligibility requirements to hold a broadcast licence, clearly illustrate that
the federal government intended that all communications carriers, including
SaskTel, are eligible to hold a licence, assuming of course that the eligibility
criteria are met.
5271 Secondly, there are parties who have suggested that SaskTel's Crown
Corporation status provides us with a competitive advantage that would allow us
to dominate the market.
5272 SaskTel's written response to the interventions provides a full
discussion of these perceived advantages we believe clearly illustrating that
the advantages we derive from our status as a Crown corporation are not
significant and in fact are less than the competitive advantages of the
incumbent cable companies. It is the incumbent cable companies who dominate the
market when measured against the relevant markets of Internet and broadcast
5273 Thirdly, some parties have suggested that SaskTel might cross-subsidize
its broadcasting activities with revenues earned from its telecommunications
operations and, as a result, the Commission should delay providing a broadcast
licence until further regulatory reviews are completed.
5274 To that point, I would argue that SaskTel should be treated no
differently than any other telephone company in Canada. SaskTel has aligned its
telecommunications policies with those of the other regulated telephone
companies, and a regulatory framework has been established for us.
5275 This framework includes safeguards to protect SaskTel's utility services
customers and assure against cross-subsidy of competitive telecommunications
services. These same safeguards will provide assurance SaskTel is not
cross-subsidizing its broadcast activities.
5276 Finally, parties have argued that SaskTel does not meet the criteria of
an "independent carrier". We are aware that the Commission must find that
SaskTel is not directly controlled by the provincial government and that SaskTel
enjoys freedom of expression and journalistic creative and programming
independence. As detailed in our written response, SaskTel maintains there are a
number of factors that dictate against SaskTel being found to be directly
controlled by the provincial government.
5277 SaskTel's governance model has, at its core, an independent board of
directors which, together with the management team, is responsible for the
day-to-day operations of SaskTel. When we compare the statutes governing SaskTel
to those of the CBC, for example, it would appear that the federal cabinet has
greater control over the CBC than the provincial government has with respect to
5278 Similarly, a review of provincial statutes suggest that SaskTel, a
commercial Crown corporation, operates with greater freedom than SCN, a Treasury
Board Crown that was found by the Commission to be an independent corporation
and not directly controlled by the provincial government.
5279 SaskTel's operating autonomy is also evident by its actions. We have
been involved in Internet service since 1996, and providing movies in hotels
since 1993, and at no time has the Government of Saskatchewan interfered with
the content of these services. In fact, the Chairman of SaskTel's board has
attested to the fact that since his involvement with the Board in 1992, the
Government of Saskatchewan has never interfered with any of SaskTel's day-to-day
5280 In addition, attached to this presentation is a copy of a recent order
in council that confirms that SaskTel has freedom of expression and journalistic
creative and programming independence. In our view, all of these factors
collectively illustrate that SaskTel meets the requirements of an independent
5281 In closing, I would like to summarize that we believe SaskTel meets all
of the requirements necessary to hold a broadcast distribution licence and that
the customers of Saskatchewan will benefit from our application if it is
5282 I would like to thank the Commission and the staff for your time and
attention on this matter.
5283 Thank you very much.
5284 MR. MELDRUM: Mr. Chairperson.
5285 THE CHAIRPERSON: Please proceed.
5286 MR. MELDRUM: We have filed with the Secretary copies of the 1999 Annual
Report of Regina Cablevision Co-Operative, now named Access Communications, one
of the appearing intervenors today.
5287 We are proposing to file this since we believe we may be making
reference to excerpts from the report in response to questions from the
Commission and as well in support of statements that we have made in our
5288 THE CHAIRPERSON: I understand the information has been filed with the
Secretary and has the permission of Access, so there is no problem there.
5289 Thank you, Mr. Ching and panellists, for your opening presentation.
5290 We will now take an hour and 20 minute break for lunch and then we will
reconvene the hearing.
5291 Mr. Secretary.
5292 MR. BURNSIDE: We will reconvene at 1:30.
--- Upon recessing at 1206/ Suspension à 1206
--- Upon resuming at 1330 / Reprise à 1330
5293 THE CHAIRPERSON: Good afternoon.
5294 We will now continue on with the Calgary public hearing.
5295 Mr. Secretary.
5296 MR. BURNSIDE: We will now start the questioning phase of this applicant.
5297 THE CHAIRPERSON: Commissioner Cram, if you would lead our questioning,
5298 COMMISSIONER CRAM: Hello. Welcome.
5299 I guess I better start off with a few little definitions because I know
we are going to be going through a fair bit of the legalities.
5300 So when I use the terms "the holding company" or "holdco" I am referring
to Saskatchewan Telecommunications Holding Corporation.
5301 When I use the term "Sasktel" -- and SaskTel, if I understand it
correctly, is the applicant here. Is that correct?
5302 MR. CHING: That's correct.
5303 COMMISSIONER CRAM: I am referring to the subsidiary of the holding
company and it is SaskTel that is incorporated under the Saskatchewan
5304 MR. CHING: That is correct.
5305 COMMISSIONER CRAM: When I refer to "CIC" I mean the Crown Investments
Corporation. They are, of course, governed by the Crown Corporations Act, 1993,
and I will simply call it the "CIC Act" for ease.
5306 Then I will be referring to "the directive", which is the government
directive to us, amended, I believe, 1997, on eligibility. It is the direction
to the CRTC "ineligibility to hold broadcast licences". So we all are speaking
from the same page.
5307 I wanted to start off, of course, with the directive, which is the issue
that appears to be of concern to the intervenors, and of course the wording of
subparagraph (a), the salient wording is:
"...not directly controlled by Her Majesty in Right of any province". (As
5308 Do I understand your position to be that this essentially means control
directly by the provincial cabinet without any intermediaries?
5309 MR. CHING: I think it is actually a little bit different flavour than
that, although that is certainly part of it.
5310 As I interpret that reference, the key issue is the extent to which the
entity that is seeking the licence has operating freedom so that his day-to-day
activities aren't controlled by the political arm of government, if I can put it
5311 The extent to which it is distanced from the organs of government which
represent the political arm of government I think speak to the issue, but they
aren't necessarily the only factors in play, if I can put it in that manner.
5312 COMMISSIONER CRAM: So can I then sort of ask you what you believe the
mischief that is being addressed by subparagraph (a), and in particular the
mischief that is to be addressed by the word "directly"?
5313 MR. CHING: I guess I would say that I think what the federal government
did not want to have happen was that broadcasting entities become the play thing
of the political arm of government. I think that is the best way of putting it.
So I think that what they were looking for is evidence that the actual decisions
on broadcast content would be sufficiently insulated from the political arms of
government that it would give to the operating entity a degree of journalistic
freedom from the, I guess, idea of a political play thing.
5314 If we look at CBC for instance, there is an entity which could have a
major aspect which would be troublesome, I'm sure, to any free and democratic
society because it is owned by the federal government.
5315 If it were used in a manner to perpetuate the political entity that
presently controls a federal government, then I think that that would be
perceived as being an excellent example of the mischief that might very well be
potentially at play and a danger to the system.
5316 So I think that one may look at CBC, they try to make sure that there
are sufficient safeguards between the CBC and the federal cabinet to make sure
that the CBC functions beyond the, I guess, political aspects of the federal
5317 Now, the truth of the matter is, that on the other side of the ledger,
that when the people of Canada elect a federal government and un-elect the one
that is already there, they want to see change. That may very well be change in
institutions like the general approach which CBC takes. But I think that they
don't expect that when they cast their ballot to either re-elect a government or
to change a government, that they are turning over to the political entity that
makes up that government the power to run its way down into the actual
day-by-day activities as an institution as powerful and pervasive as the CBC so
as to simply perpetuate the party in power.
5318 I think that, as I read the directive and the order in council that
followed, it is aimed at trying to, on one hand, recognize the fact that within
Canada there are a number of entities which are ultimately owned by the people
through their government and, at the same time -- and allowing them to
participate in things like broadcast licences, but at the same time making sure
that if they are owned by the government there are adequate protections against
them becoming a political play thing.
5319 COMMISSIONER CRAM: So can I suggest to you when we talk about political
play things, that -- I'm sorry, somebody is turning me on back there.
--- Laughter / Rires
5320 COMMISSIONER CRAM: Turning my microphone on.
--- Laughter / Rires
5321 COMMISSIONER CRAM: When you are talking about a political play thing,
though, there are the two parts, there is the (b) of the directive, which is
journalistic freedom, but would you agree with me that (a) is really directing
itself to the fact that ensuring that it will not be a political play thing in
perpetuity, or at least for so far as based on the structure we see?
5322 MR. CHING: Well, I think that the very existence of this order in
council indicates that there is an acceptance of the concept that a
government-owned entity can have a broadcast licence. If that were not to be
permitted, I mean, OC itself -- I'm sorry, the directive would be nonsensical.
5323 So obviously I think that the federal legislators were trying to wrestle
with the issue of how to allow that to happen, but at the same time protect
against the abuse that could arise from a powerful institution such as a
broadcast medium being in the hands of an entity which has obviously a very
large political flavour to it.
5324 COMMISSIONER CRAM: Now, when you use the words "could have been", then I
take it that you agree with me that we should be talking not only about what is
happening now, but the potential.
5325 MR. CHING: I think that certainly the Commission should be wary that it
isn't something which in the short term is going to reverse itself.
5326 In other words, you may come to the conclusion that an entity like
SaskTel is indeed operating separately from the political arm of government to
the extent that is necessary to fall within the four corners of the directive,
but you should also, I think, be comfortable that there is no impending doom in
5327 But I think that, as with all of the requirements which you, as a
Commission, put upon recipients of licences, you obviously have the capacity to
police those requirements, and I would assume that you don't have to necessarily
be 100 per cent sure that there isn't some danger that could arise 5 or 10 years
from now because indeed you have the policing power of reviewing those licences
on a routine basis.
5328 COMMISSIONER CRAM: Directing it to the issue of potential, if there lies
within the legislation a potential for direct control, we can't give a licence
and take it back if that control -- that potential is then exercised, can we?
5329 MR. CHING: I think you can give a licence on the condition that the
political control is not there and that it ought not to be in the future.
Clearly if some evidence arose that there was a an interference with day-to-day
operations, that could bring it back in front of the Commission and you could
exercise the powers you have under the statute to review that, I would submit.
5330 COMMISSIONER CRAM: You believe we can actually revoke a licence based on
the fact that we made a finding that there was no direct control and then there
then became direct control.
5331 MR. CHING: I think if you made your decision on the basis that there
should be no direct control and that you came to the conclusion that there was
no direct control, if at a later point there was evidence of direct control then
I would assume that the very basis of the order that you made giving us the
broadcast licence would be completely undermined.
5332 COMMISSIONER CRAM: You mean sort of like a fraud issue.
5333 MR. CHING: That's right.
5334 COMMISSIONER CRAM: A misrepresentation.
5335 MR. CHING: That's right.
5336 COMMISSIONER CRAM: If, though, Mr. Ching, there was the seed of what you
call "impending doom" in what we have with us today -- "impending doom" meaning
direct control -- you would agree with me that we would then say we cannot issue
5337 MR. CHING: Let me see if I can try to focus in on what may be bothering
5338 Clearly always I think in the end the Government of Canada has the power
to control CBC, and in the end the Government of Saskatchewan has the power to
control SCN, and in the end the Government of Saskatchewan has the power to
5339 I think the most that you can hope for under these circumstances, and
this is why I think the directive and the OC, when they are read together, seem
to walk a bit of a tightrope, is that there is no question in my mind that if a
government coming to power in Saskatchewan decided to misuse SCN and to
transgress what I would consider to be the directive, then I would assume that
the CRTC would hear about that, that it would be brought forward before you and
that you would review the matter.
5340 Certainly you review the licence in a routine manner anyway and would
examine those sorts of things, but it has to be renewed on a regular basis, as I
understand it, and so in that renewal process you would review it automatically,
but I think that if an abuse occurred in the meantime it would be open to
anybody who was troubled by that to bring it back in front of the Commission.
5341 It is fundamental to the existence of that broadcast licence, I believe,
that there is a finding that it is not directly controlled by the government. If
that finding falls away or is undermined by the behaviour of a future
government, or even the present government under different circumstances, then I
believe the very foundation of that broadcast licence has been destroyed.
5342 COMMISSIONER CRAM: In your rebuttal -- which I can't find, I think it
says, starting at about paragraph 9, you talked about the fact of direct control
and without intermediaries, et cetera. I think it is starting at 9. Yes, your
5343 So you are talking about:
"`directly controlled' means control in a direct manner, not obliquely or
roundabout and without intermediaries." (As read)
5344 Is that your position today?
5345 MR. CHING: I think that you come to the conclusion that we are directly
or indirectly controlled on the issue of our journalistic freedom, then I think
we have got problems with our application.
5346 COMMISSIONER CRAM: What about if you are indirectly controlled through
an intermediary as to your independence of decision-making?
5347 MR. CHING: Well, in my mind I am not sure that, for instance, if one
came to the conclusion that CIC, which is our holding company, were prone to
interfering with our journalistic freedom, I suspect that would be just as bad
as if the Cabinet was because the board of directors of CIC is in fact seven
members of Cabinet.
5348 COMMISSIONER CRAM: Do I then understand you that you think the directive
only refers to independence of decision-making as it affects journalistic
5349 MR. CHING: Yes, I think that is the primary thing. When I look at it, I
look at it and say to myself, as you did, what is the mischief that is lurking
about here that the directive is meant to try to deal with? My view is that the
mischief is exactly as I have mentioned to you already, political interference
in what would be areas of journalistic freedom.
5350 From my vantage point I think that's the crux of the issue. Clearly, the
government has the power, for instance, to review our capital budgets and I
guess it is conceivable in some way, shape or form that in doing that they could
impact on how we go about our day-to-day business, but it is extremely indirect
and is not the sort of thing that one would I think expect to have been
forbidden by the directive and the OC and the words surrounding that.
5351 COMMISSIONER CRAM: So no problem with direct or indirect control in any
area, except journalistic freedom, freedom of expression. That's what you think
the directive tells us?
5352 MR. CHING: That's what I believe.
5353 COMMISSIONER CRAM: In terms of decision-making and independence of the
board, in any other issue you believe is irrelevant to the applicability of the
5354 MR. CHING: No. I think, as I that it is conceivable that other ways can
get at the issue of journalistic freedom.
5355 If you came to the conclusion that other controls which the government
has over SaskTel could conceivably influence journalistic freedom, then I think
you should be on your guard and look into those issues and pry into them. I
think that's a legitimate area for your investigation, absolutely.
5356 COMMISSIONER CRAM: And so you would agree then we should be looking at
independent decision-making ability and independence of the board of directors
5357 MR. CHING: Yes. The critical thing I think is the board because in the
end the board really is the entity that has the day-to-day operation of final
5358 You will see from the material that we filed that the board is not only
through its requirements vested upon it by the government required to act in the
best interests of the corporation and not in the interests necessarily of the
government in such a way that that requirement vests itself upon each individual
board member individually. They are required to abide by that responsibility,
even at the risk of either being replaced or reprimanded, open to sanction if
they violate it.
5359 COMMISSIONER CRAM: We have talked about the CBC and SCN and you have
provided the matrixes of SaskTel, CBC, SCN. You of course know that the
direction doesn't prevent licensing Her Majesty in right of Canada or its
5360 MR. CHING: Yes.
5361 COMMISSIONER CRAM: So of course that's something we have nothing to do
5362 IN terms of SCN, you know it was licensed as a complement
non-competitive educational service provider.
5363 MR. CHING: Yes. I would suggest to you that those distinctions are
significant distinctions, but looking at the issue of the mischief, what was
meant by the directive, what the federal government intended to do and not to do
I think it is still useful to look at those examples, even though they aren't on
all fours necessarily with the application which we are filing, as good examples
of I guess the thinking behind the directive and the effort to walk this balance
between trying to allow government-owned entities to have broadcast licences,
but at the same time avoid mischief that might do harm by putting in the hands
of the political arm of government the day-to-day control over a broadcast
5364 COMMISSIONER CRAM: In this case though, SaskTel is not asking for a
complementary non-competitive service. We are talking about something that would
compete with BDUs.
5365 MR. CHING: Yes.
5366 COMMISSIONER CRAM: Given that, do you think our direct control test
should be more stringent in a case such as this?
5367 MR. CHING: Actually, in some respects it probably could be less
stringent. The reason that I say that is the very suggestion that you are in the
business of competing with some other entities goes to show that there is
another foil out there active in exactly the broadcast activity that one worries
about with regard to this whole question of governmental control.
5368 When you look at something like SCN which sort of has an area to itself,
if I can put it that way, in some respects there is even greater risk because if
there is abuse in that particular realm there is no sort of secondary entity
which is clearly operating beyond the realm of the government, and hence it
really has something of a monopoly.
5369 In the case that we are looking at here of SaskTel, there are a number
of other entities out there in the broadcast industry in Saskatchewan that would
be competing with us and we with them, and so in some respects you are I guess
less locking in the consumer to a medium which could be abused.
5370 COMMISSIONER CRAM: On the other hand, in a competitive market it is
SaskTel, an agent of the Crown -- of the government, asking against private
entrepreneurs. So again I ask would that be the other side in favour of a
5371 MR. CHING: I don't think that the issue of whether we are competing
against somebody or not competing with somebody was meant to be the issue around
which the directive took shape.
5372 COMMISSIONER CRAM: I was just asking the level of vigilance I guess in
terms of the test of direct control. Are you actually suggesting we should be
less vigilant about the issue of direct control in a competitive situation?
5373 MR. CHING: Well, let me change around this way, if we were the only
broadcast media in Saskatchewan and there weren't cable companies, I think you
as a tribunal might want to be more vigilant than under the present
circumstances where we would not be the only game in town so to speak.
5374 Clearly, if we were the only broadcast medium in Saskatchewan and there
was the slightest hint of abuse of political interference, I would think that
that would have larger ramifications than if we were simply one as would be one
of four participants in this particular industry.
5375 That's not to say that you should waive merrily if there is some clear
indication of political interference in our activities. All I am saying is that
if I were sitting in your place I think I would be even more troubled if there
was a single entity of the nature of SaskTel than if SaskTel was one of four
entities all in that broadcast medium.
5376 COMMISSIONER CRAM: Okay. If we could start with the holding company and
I have mentioned the boards of directors, can you off the top of your head, and
I don't want you to look it up, tell me the gross revenue of the holding company
5377 MR. CHING: I think it was about $700 million.
5378 COMMISSIONER CRAM: And the gross asset value?
5379 MR. CHING: On our books it would probably be about $700 million I think.
That would not be the market value in my opinion.
5380 COMMISSIONER CRAM: I hear you.
5381 At the holding company level there are 12 directors?
5382 MR. CHING: That's correct.
5383 COMMISSIONER CRAM: And do I understand it correctly that they are at
Schedule 5 of your application?
5384 MR. CHING: I believe that's both the directors and the officers, yes.
5385 COMMISSIONER CRAM: Yes. If we could just go to the directors, and do I
understand this, are these joint appointments, SaskTel and the holding company?
5386 MR. CHING: Yes.
5387 COMMISSIONER CRAM: And what I would like you to do, if you could, is
briefly go through each of the individuals and talk about their business
experience, any links they have with government past and present and if they
have any other appointments by government to other boards.
5388 MR. CHING: Sure. The Chairman of the Board is Mr. Tom Kehoe. He is
presently resident in I believe it's a resort about 30 miles south of Swift
Current. At the present time he works in Swift Current and he is a salesperson
with I believe it is the GMC dealer there. I could be wrong on which make.
5389 Before that he was the President and CEO of a company based in Swift
Current which was in the making of hardware. His company was subsequently
acquired by a larger company and he left there.
5390 He had a fair amount of business experience not only in the capacity of
CEO of that particular company, but in previous iterations of that company and I
believe spent much of his career -- he originally was born I believe in Ontario
-- and grew up within the Black and Decker corporate structure.
5391 COMMISSIONER CRAM: The next part was links with government, past and
5392 MR. CHING: I believe he is a professional engineer incidentally.
5393 To the best of my knowledge he has no connection with any political
party that I am aware of and has held no positions within government that I am
5394 Mr. James Scharfstein is a solicitor in Saskatoon. I think he practised
law for some period of time in rural Saskatchewan, maybe in the Melfort region,
and then I think, for the last 20 years, has been in Saskatoon. He, I think,
focuses primarily on corporate and commercial.
5395 Again, to the best of my knowledge, he has never been in government, in
any capacity whatsoever.
5396 Mr. Allan Blakeney, formerly premier of the Province of Saskatchewan, is
retired now. He may have some connection with the University of Saskatchewan, in
Saskatoon, and I know that he sits on a number of other boards, including
Algoma. I think he was on Cominco's board, but I think he has retired from
5397 COMMISSIONER CRAM: How long was Mr. Blakeney the premier?
5398 MR. CHING: He held office from 1971 to 1980, I believe. He was the
premier during that period of time.
5399 Incidentally, prior to that, and during all that period of time, he was
an MLA, member of the legislative assembly, elected in Regina, and held some
portfolios in the government of Mr. Douglas and the government of Mr. Lloyd,
which would have been in the early sixties, I believe.
5400 Incidentally, prior to that, I think, was secretary to the creature that
predated CIC, an entity called the Government Finance Office. I think he was the
secretary of that entity. And before that, I believe he lived in Nova Scotia and
practised law in Nova Scotia.
5401 Delores Burkart is a businesswoman in Saskatoon. She, I think, sits on a
number of boards around Saskatoon and, I think, does public relations work, if I
5402 To the best of my knowledge, she has not held either an elected or
appointed position in government.
5403 Mr. Byers, Wayne Byers, is one of two people on our board of directors
-- the other one is Karen Leir, a little further down -- who are there
representing our inscope employees.
5404 While they are ultimately appointed by order in council, they are
selected, actually, by the union that represents our inscope employees. Our
union has got a structure which creates I think it is nine executive positions,
and those nine executive positions annually review the two appointments and
either elect or unelect them from their vantage point. The government still has
the power to ignore the recommendation of the union but I think, without any
variation, has always honoured those appointments.
5405 The arrangements with the union is that, because our workforce is
roughly half male and half female, one of the union appointees will be male and
the other one will be females, and I believe that their system of selection is
that on one year they will review the male position and on the next year they
review the female position and, as a result, the person is really on a two-year
tenure, if I can put it that way, and obviously very much plugged in with the
inscope employees and their union, the CEP.
5406 COMMISSIONER CRAM: Business experience?
5407 MR. CHING: Mr. Byers has worked for the company, I think, virtually all
of his life. He's an installer/repair individual. He's based in Lloydminster, I
5408 In the case of Karen Leir, she's part of our IT staff and is based in
5409 Mr. Byers is relatively recent to our board. I think he's only been on
our board less than a year.
5410 Whereas Karen Leir, I believe, is in her second term, so she will have
something like three years under her belt as a member of our board, maybe closer
5411 Again, Karen Leir, to the best of my knowledge, is a long-term employee
with the corporation, and I really can't say if she's had a job other than with
5412 Obviously, my name is next. I have had an association with not only this
particular government but also with the government of Mr. Blakeney, during the
5413 I'm a lawyer by profession, practised originally in Saskatoon,
subsequently joined the Blakeney administration in the fall of 1971 as a Deputy
Minister of Labour for the Province of Saskatchewan. I held that portfolio for
approximately three years.
5414 After that, I moved over to become the head of the organization I
referred to a few moments which was a predecessor of CIC, called the Government
Finance Office, and I held the position of Executive Director, which is
essentially the CEO of that organization, for approximately one year.
5415 After that, I became the Executive Vice-President of an entity called
the Potash Corporation of Saskatchewan which, at that point, was a crown
corporation; it since has been privatized.
5416 I left government service in January of 1979 and practised law in
Saskatoon through until November of 1991, when I became the CEO of CIC, which
was essentially the same I had held for one year earlier. I held the job of CEO
of CIC for, I guess, about four years, approximately. Left there. Actually had
intended to be the President and CEO of a subsidiary of SaskTel which, at that
time, was operating in Lester, England, and a buyer came along for that
particular operation that was so attractive that SaskTel sold it and, suddenly,
I was out of a job. And so, for a period of something like seven months, or
something of that nature, I did some consulting work around Saskatoon.
5417 Then I applied for and became the President of SaskTel in April of 1996.
5418 Richard Gladue is a person of aboriginal ancestry.
5419 There's a general rule of thumb that every one of the crown corporations
in Saskatchewan will have a person from the First Nations community on the board
5420 Richard is, I believe, Chief of the Flying Dust Indian Band up, in the
northwest part of Saskatchewan. I believe he is also of the Chief of the Meadow
Lake Tribal Council, which is a group of something like I think it's nine of the
bands in and around Meadow Lake. I believe that he holds at least one and maybe
two university degrees. He's a major farmer in that northwestern part of the
province; very active within the First Nations community in Saskatchewan.
5421 I mentioned Karen Leir earlier.
5422 Don Lowry is the President and CEO of Epcor, which is the power company
based in Edmonton.
5423 Don's past is that he used to be the Chief Operating Officer of Telus.
Before that, I believe, was the Chief Operating Officer of Alberta Government
Telephones, which as you know evolved into Telus. And I know that Don sits on a
number of other boards of directors.
5424 John MacDonald. John is based in North York, in Ontario. He is presently
the President and CEO of Leitch Communications. Before that, of course, he was
the Chief Operating Office of Bell Canada. Before that, he was, I believe, the
Chief Technology Officer for Bell Canada. Before that, I believe he was the CEO
of NBTel. Before that, I believe he might have been the Chief Technology Officer
5425 COMMISSIONER CRAM: And those are the two gentlemen that were appointed
after the ministers were removed. Is that what happened?
5426 MR. CHING: That's correct.
5427 Alison Renny is a professor at the University of Saskatchewan, in
Saskatoon. I believe she is a department head in the College of Commerce. Her
degrees, obviously, are in the area of commerce. Originally from Great Britain.
I believe has been teaching at the University of Saskatchewan for at least the
last 15 to 20 years. Her expertise is obviously in the financial area.
5428 Garf Stevenson. Garf Stevenson is presently retired. He used to be the
Chairman of the Board and President of Saskatchewan Wheat Pool and was a major
5429 The way in which the crop system in Saskatchewan, or at least the major
producer of crops in Saskatchewan are set up is that the person who's elected as
Chairman also holds the position of President. Under that, there is a CEO who is
actually the Chief Operating Officer. Garf was not the Chief Operating Officer;
he was the Chairman of the Board and President of the Wheat Pool for quite a
number of years and a major farmer around Saskatchewan.
5430 If you go back through them, because I didn't answer some of the
questions, to the best of my knowledge, the following people have not held
either an elected or appointed office with the Government of Saskatchewan: Garf
Stevenson; Alison Renny; John MacDonald; Don Lowry; Karen Leir; Richard Gladue;
Wayne Byers; Delores Burkart; James Scharfstein; Tom Kehoe.
5431 The ones who have held positions with the provincial government, at one
time or another, would be myself and Allan Blakeney.
5432 COMMISSIONER CRAM: Wasn't Mr. Stevenson appointed to the Regina Health
Board and wasn't he the government appointment?
5433 MR. CHING: I believe you are right. Yes, he was the Chairman of the
Regina Health District Board, and I believe may still be a member of that board
but is no longer the Chair.
5434 COMMISSIONER CRAM: I want to talk about the process of appointment.
5435 For all save yourself, is the vacancy advertised?
5436 MR. CHING: No, it is not.
5437 COMMISSIONER CRAM: For all save yourself, do people put applications in?
5438 MR. CHING: No. What happens is that -- first of all, you have to go back
because some of the board was appointed at a time I think when the process was a
little less distant from government. That would be Mr. Kehoe, Mr. Scharfstein,
and Mr. Stevenson. They are the longest-serving people on my board. I believe
that Tom Kehoe goes back to somewhere around 1992.
5439 COMMISSIONER CRAM: Both he and Jim Scharfstein do.
5440 MR. CHING: Yes. I believe he and Scharfstein go back there. And Garf
would be maybe six months or a year later.
5441 I don't know how they came to be appointed. I simply wasn't associated
with SaskTel at the time, and so I'm not familiar with that.
5442 COMMISSIONER CRAM: Let's talk about today what happens.
5443 MR. CHING: Okay.
5444 At the present time, the board of directors has a governance committee
and that committee is charged with the responsibility of coming up with
potential candidates to be appointed to the Board. They have the obligation to
review those appointments and to pass on their recommendation to the board, the
entirety of the board, who then have the responsibility of passing it on up to
5445 It then becomes CIC's decision as to whether or not that person is
actually appointed to the board. So far, all appointees to the Board, since the
changeover that I referred to a little while ago, have been generated within the
Board. Nobody has been appointed to our board other than people that we have put
forward by way of suggested names.
5446 COMMISSIONER CRAM: And that is the new structure that came out of the
Crown Corporations Review Task Force?
5447 MR. CHING: That's right.
5448 COMMISSIONER CRAM: So you nominate, CIC recommends, and --
5449 MR. CHING: And cabinet appoints.
5450 COMMISSIONER CRAM: -- cabinet approves?
5451 MR. CHING: That's correct.
5452 COMMISSIONER CRAM: In the nomination process, when you are looking for
people, do you advertise the vacancies?
5453 MR. CHING: We do not.
5454 COMMISSIONER CRAM: Do you take applications from people?
5455 MR. CHING: Certainly we would. I mean, if anybody came forward showing
some interest, and that has happened from time to time, we have indicated to
them that we would be very interested in receiving the proposal or a CV or
something of some nature from them.
5456 Mostly what happens, I can tell you, though, is that -- for instance,
the most recent appointments to our board -- other than Wayne Byers who as I
told you goes through the process of being recommended by the union -- in the
case of, for instance, Mr. MacDonald and Mr. Lowry, those were two individuals
which I knew from previous association with them as part of the Stentor
alliance. I knew that they each had expertise in the industry, the
telecommunications industry. Both were very astute individuals.
5457 In the case of Mr. Lowry, one of the things which strongly recommended
him was that he had been very much associated with the international activities
of Telus before he left Telus. On our board, one of the things which had been
identified as a potential weakness on our board was the fact that while there
were a number of people who had investment experience, there was really nobody
on our board who had any experience particularly with international activities.
So that recommended him very strongly to us.
5458 Those two names then came forward as a result of my suggestion to the
governance committee, and the governance committee interviewed both of them and
then made recommendation to the board, which went on through the decision-making
5459 COMMISSIONER CRAM: I take it, then, if there are no applications filed,
there are no interviews, there are no grading of the individuals. It is simply
who you know and --
5460 MR. CHING: I think that our board appointments are made in approximately
the same way that most board appointments across Canada are in the private
sector, that is to say that if some other member of the board knows of somebody
who they think would be skilled and knowledgeable, or somebody on the senior
management team knew of somebody who was skilled and knowledgeable, those people
would be contacted.
5461 As you can imagine, being appointed or being considered for a board of
this nature is not something which -- you can't get really skilled and good
people by approaching them and then not appointing them. You have to be fairly
sure that the person that you are approaching, that there is a fairly strong
likelihood that they are the type of candidate that would be very strong on your
board and very good on your board and work well with the other people around the
board. You simply don't get a person, for instance, of the quality of a guy like
John MacDonald by sort of going fishing for him, so to speak.
5462 In the case of John MacDonald, I had a pretty good idea that he would be
well received as a possible candidate for our board and I approached him and
asked him if he would be interested. When he signalled that he would, bang, the
process then started to unfold. He was interviewed at some length. I think it
was about a three-hour interview of him by the governance committee of the
board. It was only after that interview that his name went up then to the full
board and through the decision-making process.
5463 COMMISSIONER CRAM: You realize, Mr. Ching, that we all applied for our
jobs and we all had interviews. It was a fishing expedition by the federal
government, to use your terms. I hope they did get good appointments, but I will
let that go.
--- Laughter / Rires
--- Pause / Pause
5464 COMMISSIONER CRAM: Once we got up to your recommendation, and this
process where you nominate, approve and appoint, when did that start?
5465 MR. CHING: That would have started, I believe, in about 1997.
5466 The only recommendation I think that we have put forward so far that has
been rejected through the decision-making process was the inclusion of myself on
the board. We strongly recommended against that, but cabinet made a decision to
appoint me to the board regardless of the wishes of both myself, the governance
committee and our board of directors.
5467 COMMISSIONER CRAM: Who is the governance committee?
5468 MR. CHING: The governance committee is chaired by Jim Scharfstein, I
think Tom Kehoe is on it, Karen Leir, and Garf Stevenson.
5469 COMMISSIONER CRAM: Eventually, we get to the appointment process and the
5470 MR. CHING: Incidentally --
5471 COMMISSIONER CRAM: Sorry.
5472 MR. CHING: -- it might be useful to add that there are four committees
of our board and the board itself selects those positions. Those are not
appointed by me or by the shareholder. The board itself subdivides its duties,
if I can put it that way. The boards are very active.
5473 As a matter of fact, the more significant review of management's
decisions takes place at the committees. The board generally hears a report from
the committee and may question that, may send it back to the committee for
further activity, but most of the activities that occur, that go up to the
board, are scrutinized by one or other of those four committees
5474 COMMISSIONER CRAM: And the Lieutenant Governor in Council appoints them
-- that's cabinet.
5475 MR. CHING: Sorry?
5476 COMMISSIONER CRAM: The Lieutenant Governor in Council appoints them,
when we get to that stage, as board of director.
5477 MR. CHING: Appoints the board but it doesn't appoint the committees.
5478 COMMISSIONER CRAM: Yes. I understand that.
5479 Under the holding company statute, there is no specific term but there
is a limit on it. Not more than five years. Is that correct?
5480 MR. CHING: I know that CIC has been wrestling with the issue of term of
appointment. I don't believe that a final decision has been made. Although my
understanding is that they are virtually fixed on two-, three-year appointments.
But that issue of tenure has been bouncing around as a decision within CIC and,
to the best of my knowledge, no final decision has been made.
5481 At the present time, they appoint the board members for fixed periods of
time and review those appointments at the end of that time.
5482 COMMISSIONER CRAM: But the Act says, at section 3(3)(a):
"Persons appointed pursuant to subsection (2)..."
5483 Which is the board of directors:
"...hold office for a period not exceeding five years and until a successor
is appointed." (As read)
5484 MR. CHING: That's correct.
5485 COMMISSIONER CRAM: So you agree that there is no definitive terms and
they are just up to five years?
5486 MR. CHING: That's correct.
5487 COMMISSIONER CRAM: I am assuming that it is the practice that when
government changes a goodly number of the directors change.
5488 Sorry, Mr. Meldrum. Go ahead.
5489 MR. MELDRUM: I would say that when it says "and may be reappointed" --
5490 COMMISSIONER CRAM: Yes?
5491 MR. MELDRUM: -- I believe that the position would be that they could be
reappointed for a further term.
5492 COMMISSIONER CRAM: Sure. Yes.
5493 MR. MELDRUM: Okay.
5494 COMMISSIONER CRAM: In other words, it is pretty indefinite.
5495 MR. MELDRUM: Yes.
5496 COMMISSIONER CRAM: My point in this is there is no specificity to the
5497 MR. MELDRUM: That's correct.
5498 COMMISSIONER CRAM: Yes.
5499 I am assuming that the practice is that when government changes, i.e. in
1982, and in 1991, a goodly number of the board of directors change.
5500 MR. CHING: I believe that all of the board changed in 1991. I think that
virtually all of the board has changed since then.
5501 COMMISSIONER CRAM: Except Mr. Scharfstein and Mr. Kehoe.
5502 MR. CHING: I believe that Messrs Kehoe, Scharfstein and Stevenson are
the only ones who did not change.
5503 COMMISSIONER CRAM: Yes.
5504 So there is nothing, then, if I understand it, to prevent a government
from housecleaning the board of directors if they are unhappy with the actions
of the board of directors?
5505 MR. CHING: There is no question. I think that the government --
supposing the government were to fall in Saskatchewan and change tomorrow, there
is nothing which stops an incoming government from passing an order in council
removing all of the people who are on the board of directors and replacing them
with a new group of board members. Unless they went on then to change some of
the requirements for how those board members act, they would then be bound by
the obligations which sit upon the shoulders of the present board.
5506 But indeed a government, if it was up to it, could go forward and
actually change the circumstances under which those board members function, as
well as who actually sits on the board.
5507 COMMISSIONER CRAM: Yes.
5508 And indeed the issue of an indefinite term was addressed in the Crown
review -- the review of Crown committees. The Saskatchewan Crown Corporations: A
New Era, June 1997 -- I think they called themselves TASC --
5509 MR. CHING: Yes.
5510 COMMISSIONER CRAM: At page 7, the second last paragraph, it says -- do
you have that?
5511 MR. CHING: I do not. I think I have it.
5512 COMMISSIONER CRAM: Page 7 of 8. I don't know what schedule it is in.
5513 MR. CHING: Yes, okay.
5514 COMMISSIONER CRAM: You have it?
5515 MR. CHING: Yes.
5516 COMMISSIONER CRAM: Page 7, the second last paragraph:
"With CIA and Cabinet retaining the ability to remove Crown board members
and/or CEOs based on their performance, ultimate control is still vested in the
agents of the people of Saskatchewan." (As read)
5517 MR. CHING: That's correct.
5518 COMMISSIONER CRAM: Yes. So it is a deliberate decision, thus far, to
retain the ability to dismiss directors of the board summarily?
5519 MR. CHING: I think that is right.
5520 I think that if you read through that report what you will find is that
the Government of Saskatchewan, or that particular committee which was struck by
the Government of Saskatchewan, was wrestling essentially with many of the same
issues that are caught up in that whole issue of the directive, of trying to
find some balance between ultimate authority being vested in the government, but
at the same time trying to restrict the government's interference or involvement
in the day-to-day operational activities of the entity.
5521 COMMISSIONER CRAM: Indeed, this power to summarily dismiss, it came to
me fairly strikingly about a couple of weeks ago, there is at least one cabinet
minister in Saskatchewan that has chosen to exercise a power to summarily
dismiss board members. Is that not correct?
5522 MR. CHING: That is correct.
5523 COMMISSIONER CRAM: I believe it was Mr. Laudermilk(ph), was it?
5524 MR. CHING: Laudermilk.
5525 COMMISSIONER CRAM: Who summarily dismissed an entire board by a fax, by
sending them a fax. Is that correct?
5526 MR. CHING: I don't know the details of that.
5527 My suspicion is that he may have notified the board members that they
were dismissed through a fax, but my understanding is he would have had to have
obtained an order in council to have effectively done what was done.
5528 COMMISSIONER CRAM: Okay.
5529 Also the review, the TASC -- T-A-S-C Review --
5530 MR. CHING: Could I just perhaps make another comment on it?
5531 COMMISSIONER CRAM: Yes.
5532 MR. CHING: I must confess that I am not intimately familiar with the
incident that you refer to.
5533 The creature in existence was not a Crown corporation.
5534 COMMISSIONER CRAM: I know.
5535 MR. CHING: It was, in effect, a board of a local research council, but
it is not governed by the same set of apparatus that governs the board of a
commercial Crown corporation.
5536 COMMISSIONER CRAM: I hear you.
5537 My point was that ministers seem to be aware of their ability to do
that, at least one member of the cabinet, and I think you would agree with me.
5538 MR. CHING: I think that is right.
5539 COMMISSIONER CRAM: The TASC Review also talked about ministers being
removed from the boards of the Crown corporations, and they were removed in
5540 MR. CHING: That's correct.
5541 COMMISSIONER CRAM: If I understand it, then --
5542 MR. CHING: Earlier perhaps than that. In 1998.
5543 COMMISSIONER CRAM: In 1998?
5544 MR. CHING: Yes.
5545 COMMISSIONER CRAM: If I understand it, then, the relevant Act, the
SaskTel Act and the Holding Company Act were amended to delete the requirement
to have ministers on the board?
5546 MR. CHING: That's right.
5547 COMMISSIONER CRAM: Why, if the government -- and I know you can't speak
for the government, but do you have any idea why, when the government went to
the trouble of deleting the requirement, they didn't insert an inability to sit
on the boards by ministers?
5548 MR. CHING: I am sure that that is what they had in mind, because the
debate that went on there was part of a whole process that was going on.
5549 You will be aware of the fact that the government of the day was very
interested in trying to understand how the people of Saskatchewan wanted their
commercial Crown corporations to be structured and to function in relationship
to the government.
5550 You will be aware that the government actually struck a committee
external to government which held a series of regional meetings around the
province and went in at some great depth into trying to enter a dialogue with
people in Saskatchewan as to how they wanted their corporations to be
5551 One of the things that came out of that, I think very loud and clear,
was that people of Saskatchewan seem to be very content and happy with the idea
of retaining Crown corporations as owned by the government, and they wanted the
government to take ultimate responsibility for the affairs that go on with the
corporations, but they also wanted to remove and minimize the degree to which
political decision-making came into play in the affairs of the Crown
corporations as operating entities.
5552 Certainly that was the underpinnings of the move to remove ministers
from boards, but I don't know why they didn't go on to prohibit it.
5553 COMMISSIONER CRAM: I have to tell you, I don't think either the drafters
or people in government are lacking in grey matter, but the point of the issue
is there still is nothing preventing a minister from sitting on a board.
5554 MR. CHING: That is correct. The history had always been that there was a
requirement for a person to be on the board -- a minister to be on the board. I
think most people in Saskatchewan probably saw the removal of that as addressing
the issue. Whether they should have gone one step further and made a prohibition
against ministers being on board, it is an interesting question.
5555 COMMISSIONER CRAM: Yes.
5556 Again I am talking about potential and that is why I wanted to raise
that issue, is that the potential still exists, that some future government or
the present government may choose to have a cabinet minister on the board.
5557 MR. CHING: I would be somewhat astonished if the present government did,
knowing the flavour of their view on this issue.
5558 COMMISSIONER CRAM: Yes, but there is --
5559 MR. CHING: But it is a possibility.
5560 COMMISSIONER CRAM: Yes.
5561 Likewise, there is nothing preventing MPs being appointed, although that
5562 MR. CHING: That's right.
5563 COMMISSIONER CRAM: Likewise, there is nothing preventing MPs from being
appointed on the board.
5564 MR. CHING: That's correct.
5565 COMMISSIONER CRAM: Now, I also see that the holding company, the Act,
the Lieutenant Governor appoints both the chair and the vice-chair.
5566 MR. CHING: That is correct.
5567 COMMISSIONER CRAM: And section 5:
"The board is responsible to the minister who is appointed to be responsible
to the executive council." (As read)
5568 MR. CHING: That is correct.
5569 COMMISSIONER CRAM: What statutory safeguards do you see that would
safeguard, that would keep the independence of the board safeguarded?
5570 MR. MELDRUM: I think the main section would be section 46 of the Crown
Corporations Act that sets forth the duty of care that is expected of the board
5571 COMMISSIONER CRAM: If I read section 46 -- and this is the safeguard for
the independence of the board. That is your position?
5572 ME. MELDRUM: Yes.
5573 COMMISSIONER CRAM: Section 46 talks about in exercising the power and
performing their duties -- and I'm not going to quote it directly -- they shall:
(a) act in all honesty and in good faith, et cetera;
(b) exercise the care, diligence and skill that a reasonably prudent person
would exercise, and comply with this Act;" (As read)
5574 The Crown Corporations Act.
5575 We will be going into that further because, of course, CIC can direct
SaskTel to do what they would wish them to in a lot of areas, in section 6.
5576 Against that safeguard is, again, the ultimate control, as stated in the
TASC report, the ability to remove.
5577 MR. CHING: I think that is right. But I think you have to bear in mind
that nothing, the Act which gives the CIC the power to direct removes from the
shoulders of the board members their obligations under the statute.
5578 In other words, I think that if a board member were faced with some
directive that required them to act in a manner that they considered to be
either dishonest or not in good faith but to be in the best interests of the
corporation, I would think that the board member has an obligation to decline to
accept the directive from CIC. Certainly as a board member I would.
5579 COMMISSIONER CRAM: So you don't see the obligations in (a), (b) and (c)
of 46(1) as equal?
5580 MR. CHING: I consider that nothing in there overrides my obligation as
set out in 46(1)(a).
5581 COMMISSIONER CRAM: You think that there is some sort of a paramountcy in
5582 MR. CHING: No. I just simply think that if you are obliged by statute to
act honestly and in good faith I don't think you can look to another section and
say something told me to do it.
5583 MR. MELDRUM: I would say because (a), (b) and (c) are joined by the word
"and" I would say each and every one of those is an expectation of the statute
on the board of directors.
5584 COMMISSIONER CRAM: Silly me, after only practising for 20 years, I would
say they would be equal obligations, but I mean that's certainly subject to any
-- I mean I understand we are all lawyers here, so it doesn't really --
5585 I wanted to go then to SaskTel, the same people, the same appointment
type, but in the SaskTel Act there is in fact no length of appointment stated in
the SaskTel Act, or have I missed it?
5586 MR. CHING: I don't think there is any term that is dictated by the
5587 COMMISSIONER CRAM: Section 6 again refers to responsibility as such
member of the Executive Council as designated by the Lieutenant Governor in
Council. So each of them are responsible to one member of Cabinet via CIC. Is
that how the structure goes?
5588 MR. CHING: Yes. It's a little bit more complex than that, but that's
5589 John Nilson is designated as the minister responsible for CIC and as
such becomes essentially the minister on the Crown side of government. He has as
board of directors, I believe made up of six other Cabinet ministers, who
functions as his board and I suppose to some extent all members of CIC board
have some responsibility for the Crown sector, but clearly John Nilson as the
Chair of the CIC board is the minister identified in Cabinet as being the
minister of the Crown side.
5590 COMMISSIONER CRAM: Can I get this straight, if you are responsible to a
minister and that minister is a member of Cabinet, do you think that that is a
5591 MR. CHING: Well, bear in mind we are not responsible in a direct sense
to John Nilson. Our board would be responsible to CIC and hence to John Nilson
as Chairman of that board.
5592 COMMISSIONER CRAM: Or to such member of the Executive Council as
designated by the L.A.?
5593 MR. CHING: Yes.
5594 COMMISSIONER CRAM: So it would be Mr. Nilson?
5595 MR. CHING: He or his replacement, yes.
5596 COMMISSIONER CRAM: In fact, the Act, the Crown Corporations Act or the
CIC Act refers to CIC supervising the activities of SaskTel and the Crown
5597 MR. CHING: Yes, and they have a fairly extensive process of supervision.
They review our capital budgets and actually approve or disapprove them.
5598 They also review our operating budgets, but do not exercise approval or
disapproval of them, and they set out for us a series of operational targets
which they expect us to make part and parcel of our annual plan and budget. They
expect us to perform up to the targets or better.
5599 The targets tend to fall into two categories. One is financial and the
other tends to be things like number of aboriginal people in our workforce or
number of females in senior management positions or non-traditional positions
within the corporation. That tends to be the sort of directive that they give to
5600 With the exception of those sort of obligations to be better corporate
citizens, if I could put it that way, their directive to us tends to be purely
5601 COMMISSIONER CRAM: Thank you for telling me what is happening now.
5602 I must say the potential for what they could do is likewise there, that
they may under section 6(1):
"(a) make orders and issue directive to subsidiary Crown corporations
respecting any of the matters set out in 5(2), which is objectives, goals,
revenues, expenses, expenditures, investments, operating results, administrative
policy, management practices, systems, accounting policies, financial
relationships and any matter in addition to those that the Lieutenant Governor
in Council may assign." (As read)
5603 So they can order you on -- what can they not order you on? What would
be independent and I am talking potential again. We have to talk not only the
factual situation, but the potential.
5604 MR. MELDRUM: There is an interesting provision 5(1)(a) that says that:
"The CIC is the holding company for all subsidiary Crown corporations and
shall exercise its supervisory powers granted by this Act in the interests of
all Saskatchewan residents." (As read)
5605 So there is a bit of an overriding statutory direction in terms of going
to that particular board.
5606 COMMISSIONER CRAM: Let me put to you a scenario, the government changes
and they may have a different view of the interests of Saskatchewan residents
and some member of Cabinet who is the head of CIC and they choose to make orders
and issue directives under 5(2), what does that leave to the management of the
board of directors?
5607 MR. MELDRUM: I think that takes us back to section 46. It continues to
state that she has to act in the best interests of the corporation.
5608 COMMISSIONER CRAM: So we are getting down to then your rebuttal, what
you said in your rebuttal, which was there are 14. If the minister ordered
something, it would need to be reviewed by the board.
5609 MR. CHING: You see, I think one of the things you have got to stop and
say to yourself, I mean clearly wherever you have got a Crown corporation
ultimately -- ultimately the government, which has established that Crown
corporation and at whose behest it exists, has always got the power to interfere
5610 You can build whatever you want to in statute or in order in council or
in regulations or, for that matter, in practice. The fact of the matter is an
incumbent government or a new government coming in can choose to change all of
5611 The federal government, for instance, could change the statute under
which the CBC functions.
5612 COMMISSIONER CRAM: Or we operate.
5613 MR. CHING: Or you operate, certainly.
5614 So if you want us to acknowledge the fact that as the ultimate owner of
SaskTel that no matter what structure is built in there to try and give us
operating independence, that there is a way around that, then you have our full
acknowledgment that that is true.
5615 I am not sure that you will ever find a circumstance that the human mind
can dream up where on the one hand you can have a Crown corporation created by a
provincial or federal government where ultimately that government hasn't got the
power to jerk the chain to whatever level it wants to in that particular Crown
5616 So then you have to say to yourself if that be a truism, why did the
federal government issue the directive? Because you are absolutely correct, if
you strip it all down you can put into existence anything you want to to try and
give SaskTel independence. But if ultimately that is dependent on government and
government can change it, then obviously it is one of those protections which
could easily go away. Maybe not easily, but it could certainly go away.
5617 So you are in a situation where if you follow the logic of that, then
you inevitably come to the conclusion, which I think perhaps even a predecessor
board of this nature came to, which is that you can never issue a broadcast
licence to an entity which is the shape and form of a Crown corporation.
5618 But the government I think has looked at that and said, "No, no, there
are circumstances where on an operational basis the government makes an effort
to try to give operational independence to the entity which is a Crown
corporation, and those entities should be allowed a broadcast licence."
5619 Therein lies the dilemma that I think we are all wrestling with here and
the dilemma that I think is endemic to the issue of public ownership and the
idea that you shouldn't allow a broadcast facility to be used by a political
entity to thwart the basic fundamentals of our democratic society.
5620 But, nevertheless, there is the directive from the federal government
saying, "But you can't just simply say, `If ultimately we have got a way of
getting at the creature as a government, there can't be a licence issued'".
5621 COMMISSIONER CRAM: Thank you.
5622 THE CHAIRPERSON: Thank you, Commissioner Cram.
5623 We would like to take a five-minute break, Mr. Secretary.
5624 MR. BURNSIDE: We will return at 10 to three.
--- Upon recessing at 1442 / Suspension à 1442
--- Upon resuming at 1453 / Reprise à 1453
5625 THE CHAIRPERSON: Ladies and gentlemen, if you will take your seats we
will re-open the hearing.
5626 Mr. Secretary...?
5627 MR. BURNSIDE: I don't think I have anything to do right now. I guess
Commissioner Cram will resume her questioning.
5628 THE CHAIRPERSON: Commissioner Cram...?
5629 COMMISSIONER CRAM: Thank you.
5630 In discussing your -- and just for terms of shorthand, I will call it
the "all or nothing argument" that if the directive would be of no use
whatsoever if we considered that the rent control was ultimate control or was
control as a consequence of ownership, would you agree that the reason -- the
very issue of the directive is to look at whether the control is direct and also
the degree of control? Because, otherwise, I think you are right, in terms of a
crown corporation, that the directive would be meaningless.
5631 MR. CHING: I think that's correct.
5632 Clearly, the federal government was trying to, I think, on one side, say
that it's proper for a crown-owned entity to hold a broadcast licence, provided
it meets the basic criteria, but, on the other side of the fence, it shouldn't
ought to be, I guess, abusing that privilege. And therein lies, I think, the
dilemma that you are obviously probing around on.
5633 COMMISSIONER CRAM: Yes. And so, when I talk about -- and I'm trying to
get at the issue of the independence of the board in managing the affairs of the
holding company in SaskTel -- in the event that the CIC exercised all of their
powers under 5(2), pursuant to 6(1)(a), what would be left for the board to
5634 MR. CHING: I think that this goes right back to the issue that we were
discussing prior to the break.
5635 I mean you will always find that a government has got ultimate control
over a crown corporation. Probably the most interesting thing that you can look
to is: what has the government tried to do in the way in which it actually
operates. And the fact of the matter is, I think, that any fair observer would
look at the way in which the Government of Saskatchewan has tried to operate not
simply SaskTel but the other commercial crowns is to try and distance the
political decision-making of a government from the operations of the crown
5636 Now, one might focus in on this word, or this phrase, and say, "But it
gives them the power sometimes --"
5637 COMMISSIONER CRAM: And we do have to talk about potential, don't we? I
mean because --
5638 MR. CHING: Well, I mean my colleague makes an argument that you don't
have to -- and he will come to that in a few moments when he addresses the
actual legal interpretation of the section under which we are functioning.
5639 But I think that -- I guess what I would invite the Commission is not to
be unduly troubled by this phrase or that phrase because it doesn't matter what
the phrases say when you scrape it right down to the bottom. The power is always
vested in the legislative creature that creates the crown corporation to change
whatever that phrase is. The phrase may lead you to believe that there's
independence, but the fact of the matter is they legislatively enjoy the power
to remove that section. Or they can legislatively change and make it more
5640 So, ultimately, the power is vested in the government creating the crown
corporation to do with that crown corporation as it sees fit. That's true at the
federal level; it's true at the provincial level.
5641 COMMISSIONER CRAM: So, then, do you think ultimate control is direct
5642 MR. CHING: No; I think that what I would suggest to you is this: I think
that the directive was meant to convey the message to the CRTC that, number one,
automatically, you shouldn't assume that because it is publicly owned or owned
by a government that a crown corporation is disentitled.
5643 The second thing is that it's put upon your shoulders the very difficult
decision that we have just been debating and wrestling with. Trying to judge in
your mind whether or not the right of a crown to be considered favourably as any
other applicant for a broadcast licence is thwarted by the way in which that
entity operates is a danger to political interference in the journalistic
freedom which is exercised within that broadcast licence.
5644 Now, understand that in this particular case, first of all, we already,
in some respects, I suppose, broadcast almost as much as this broadcast licence
would allow us to. We have been running an Internet service for quite some
period of time. And, in many respects, the ability, I suppose, to exercise
journalist input is as significant in what we are already doing as would exist
under the aegis of this particular broadcast licence, if you saw fit to extend
it to us.
5645 So, I guess what I would invite the Commission to do is to look at the
way in which the government in Saskatchewan has tried to craft its relationship
with the crowns, the way in which we have been actually functioning, and say to
yourself, "Given the level of journalistic input, is there a danger here?"
5646 I would urge upon you, of course, the argument, given the level of
journalist input that is really being contemplated here, the answer to that
question is, no.
5647 However -- and maybe at the end of the day that this troubles the
Commission to the point that the Commission wants to attach to the broadcast
licence certain conditions which relate to this issue of journalist
independence, I think we would be prepared to dialogue with staff to try and
come up with something that addressed this issue, because I don't think that
there's any disagreement, at our end that the danger, the mischief that we
talked about earlier, is a mischief to be protected against.
5648 The key thing here, I think, is that it's not necessarily answered by
simply saying, "You are a crown corporation, you can be ultimately controlled by
a government and, hence, you should not be entitled to a broadcast licence". I
think, for better or for worse, that option is probably not available, simply by
virtue of what the federal government itself has done.
5649 COMMISSIONER CRAM: I want to sort of go back to SaskTel as a subsidiary
of the holding company.
5650 Would you agree with me that SaskTel itself is -- well, that the holding
company has supervisory powers over SaskTel?
5651 MR. CHING: Oh, the truth of the matter is that the management of the two
entities is interwoven. The board of directors is essentially the same. There
are some issues about how they are run, which distinguishes one from the other.
When we have our executive meetings, for instance, there is an agenda for the
holdco part of the agenda and then another for the telco part. And the same is
true with regard to the board of directors: they deal with holdco items and then
they deal with telco items. So they run with some degree of separation, but the
truth of the matter is, there's one CEO, there's one board of directors, there's
one management team and there's two corporate entities.
5652 COMMISSIONER CRAM: What, then, can you tell me is the difference between
the holding company and -- how do you distinguish it from being a subsidiary of
5653 MR. CHING: Well, ultimately, it is. I mean the way in which it's
corporately structured, it's a subsidiary of the holding company which, in turn,
is a subsidiary of --
5654 COMMISSIONER CRAM: Oh, I was talking about the holding company being a
subsidiary of CIC.
5655 MR. CHING: Oh, yes, it is. It is. It's contemplated as being and, in
law, I believe that it is a subsidiary --
5656 COMMISSIONER CRAM: And in operations it is also, would you say?
5657 MR. CHING: Yes. In certain areas they involve themselves in our
activities; in certain areas they do not.
5658 COMMISSIONER CRAM: And so, in terms of the independence of the board,
they would be responsible to CIC?
5659 The independence of the board would be subject to the directions of CIC?
5660 MR. CHING: You know, I don't believe that to be the case. I don't
believe that CIC has got an unfettered right to direct the board of directors of
either SaskTel Holding Corporation or SaskTel as it sees fit.
5661 As a member of that board, I can only speak for myself and what I
believe to be the general demeanour of the other board members. If I found that
the direction from CIC was offensive, that it offended the obligations that I
have got under the Crown Corporations Act, I mean frankly I would refuse to do.
If CIC wanted to, they could obviously replace me -- cabinet can, not CIC. And
they could do that with the rest of the board.
5662 I mean, the board of directors of CBC, I'm assuming, could be replaced.
Now, it may require an order in council, it may require a legislative activity,
but they can be replaced. I believe that each and every one of them know that.
5663 But I think that each one of them is expected to take their personal
integrity to the board table. I think if they found that they were being obliged
in any way, shape or form, direct or indirect, legal or illegal, to allow
political favouritism to creep into how they did their job, especially on
something as critical as the journalistic content, I can't believe that those
individuals wouldn't do the very same thing as our board.
5664 COMMISSIONER CRAM: Once again we are talking about the individuals on
your board. The individuals may change, and so I think I would like to look at
the statutory issues.
5665 If we looked at SaskTel as a private company, its own board of
directors, and then we look at the reality in sections 5 and 6 of the Crown
Corporations Act --
5666 MR. CHING: But I think you could even go further than that. I mean, the
truth of the matter is that perhaps with some limitation on their authority
under the Canadian constitution, I suppose the Government of Saskatchewan, if it
set about trying to interfere with the journalistic activities of any one of the
private companies in Saskatchewan, they could do that too. I mean, the
legislative power of our governments is very powerful. I don't think we can sort
of sit here and say to ourselves: Well, look, the Government of Saskatchewan
could go a little crazy or a little bit strange and start to interfere with how
CHAB is run and, therefore, CHAB shouldn't have a broadcast licence.
5667 It seems to me that those possibilities, with all due respect, are not
the hitchpin of your decision.
5668 COMMISSIONER CRAM: I go back to if SaskTel were a private entity, a
private corporation, scenario one, scenario two is SaskTel the way it is with
sections 5 and 6 of the Crowns Corporations Act, how much do you believe the
independence of the board of directors is impaired?
5669 In other words, from scenario one, where it is 100 per cent independent,
just like any private corporation, how much do you think it is impaired by
sections 5 and 6 of the Crown Corporations Act in terms of their independence:
10 per cent, 30?
5670 MR. CHING: I'm not sure I can offer any meaningful response to the
estimation. I mean, the best I can do is try and tell you the extent to which I
believe the government has expected the board to operate independently and the
degree to which it has operated independently.
5671 The issue of whether or not a government could use either the power that
is set out in the statute or the power to pass statute, to change that or alter
it, either for us or for any other broadcast creature, is I think a matter of
speculation that I just don't find myself competent on.
5672 COMMISSIONER CRAM: Okay.
5673 In fact, right now, how much does sections 5 and 6 impair the
independence of the board of directors?
5674 MR. CHING: We are required to submit, for instance, our capital budget
to CIC for approval, so our entire capital budget, theoretically, is subject to
the yes or no of CIC. The issue of the appointment and the salary of the CEO is
a matter reserved to cabinet. The appointment of the board itself is reserved to
cabinet. There is a lot of power vested in the Government of Saskatchewan, as it
deals with any of the Crown corporations, including SaskTel.
5675 I guess in some respects it would be strange if it would be otherwise,
because the electors of the Province of Saskatchewan are the ones who gave to
each one of the Crown corporations their seed capital. Ultimately, the people of
Saskatchewan own SaskTel and the other Crown corporations. It would be strange
indeed if somehow or other we were out there floating in the ether uncontrolled
ultimately by the people who are elected by the people of the Province of
5676 COMMISSIONER CRAM: So, Mr. Ching, how much does sections 5 and 6 of the
Crown Corporations Act impair the independence of the board of directors? Not
cabinet appointing a CEO or...
5677 You ran your own law business. You know what independence is.
5678 MR. CHING: Yes.
5679 COMMISSIONER CRAM: Now you are in a business where you are supervised by
5680 How much does that, right now, impair the independence of your board?
5681 MR. CHING: If you are asking on a day-by-day basis as to how we operate
at the present time, it is virtually no impairment at all.
5682 If you are asking me whether or not they have the power to say no, they
have never done so yet, but whether they have the power to say no to one of our
capital budgets, it is 100 per cent.
5683 COMMISSIONER CRAM: Yes.
5684 Some of the other things -- and capital budgets are one -- the other
part, some of the other parts that interested me was submitting for review and
prior approval "any rate charges and prices." That in fact does happen. I mean,
you have to go to CIC.
5685 MR. CHING: That is now I guess a little bit in the murky area because,
of course, as you know, prior to us coming under the responsibility of the CRTC,
we were in a situation where we submitted to the provincial cabinet any request
for changes in our rates. The cabinet then immediately downloaded that into a
review panel which reviewed that issue and did public hearings on it, and then
made a recommendation back to cabinet, and cabinet made the ultimate decision on
whether or not those rates would be proceed with.
5686 I believe that we still have an obligation to request the permission of
our shareholder before we would submit a request to the CRTC to change our
5687 COMMISSIONER CRAM: Well, it's still in the Act, so --
5688 MR. CHING: Yes.
5689 MR. MELDRUM: It is just that the word "may" I think precedes the whole
thing, so these are just simply powers. If CIC decided that they wanted us to --
5690 COMMISSIONER CRAM: Or they could dispense with it.
5691 MR. MELDRUM: Or they could dispense with it, yes.
5692 And the current status, as far as I know, is that it has been dispensed
5693 COMMISSIONER CRAM: Oh. As of when?
5694 MR. MELDRUM: Well, when the Saskatchewan Interim Rate Review Panel was
set up, which is the entity which prior to June 30th we actually had to go to
approve rates. It was very clear that the mandate of that entity would expire
with respect to SaskTel effective June 30th.
5695 Certainly the new creature that has come after the Saskatchewan
Independent Rate Review Panel has no jurisdiction or powers with respect to
SaskTel, and any discussions that at least I have been privy to have indicated
that SaskTel was now regulated by the CRTC and that is where, ultimately, we
will go, and I don't see any requirements to pull it back to CIC before we go to
CRTC, although that power does still exist.
5696 COMMISSIONER CRAM: So your knowledge is that CIC no longer requires you
to submit for review and prior approval any rate changes?
5697 MR. MELDRUM: That's correct.
5698 MR. CHING: They still have that power, however.
5699 COMMISSIONER CRAM: Well, they still have the statutory power.
5700 MR. CHING: Yes.
5701 COMMISSIONER CRAM: Yes.
5702 I mean some of them -- "submit for review, evaluation and approval, the
results", what would be the consequence of non-approval?
5703 MR. CHING: Which section are you referring to?
5704 COMMISSIONER CRAM: I'm sorry. It's right after -- it's (k).
5705 MR. CHING: They have, that is CIC has, what they call the balance
scorecard evaluation of us.
5706 What they do is that they -- in approximately this time of year we are
expected to go to CIC and to take forward our capital budgets and our operating
plan. They will then review that and come back to us and say: No, we are not
happy that you have set it up in such a way as to make a dividend of this size;
we would like it to be larger. Or: We would like you to pay down your debt a
little bit more because we want the debt of the government in its totality
reduced, and here is the place where it is going to have it. Or they may say to
us: We are not happy that you have the proper targets for the number of
aboriginal employees that you have, or something else of that nature.
5707 They set those targets for us approximately this year for a plan and a
budget which is essentially based upon a calendar year. So we will then be back
in front of them at the end of that year, and they will do what they call their
balanced scorecard on us.
5708 If they set for us a target of having 65 employees of First Nations
ancestry and we come up with one that is -- well, if we came up with one that
was 64, I'm not sure there would be a whole lot of problems, but if we came up
with a thing which said there is 55 or actually down from the 58 that we had
going into the plan, I rather suspect that CIC would want to have a clear and
concise explanation as to why we had missed the target that they set for us.
5709 That is the sort of process that you see going through here.
5710 They also expect us to earn a certain amount and to pay down our debt a
certain amount or to handle our debt in a certain amount, and they set those
targets for us this time every year. They come back and monitor them this time
every year. If we don't have a good explanation as to why we are missing our
targets, I rather suspect that our life would be kind of uncomfortable.
5711 Whether they would go so far as to fire the CEO is something that I
really haven't plumbed with any great enthusiasm, and you can imagine why.
--- Laughter / Rires
5712 COMMISSIONER CRAM: I want to go back to a private company versus SaskTel
and what is the actual impact of the fact that Treasury Board can issue
directives and orders that would impact on you?
5713 MR. CHING: I didn't follow your question. About a private company?
5714 COMMISSIONER CRAM: Private companies and a Crown corporation and what is
the reduction in independence by virtue of being subject to directives and
orders that are issued by Treasury Board?
5715 MR. CHING: I think the only thing that Treasury Board can do with regard
to a commercial Crown corporation is to decide whether we can go out and raise
debt in our own capacity.
5716 I could be wrong in that regard, but I believe that the Financial
Administration Act says that we require Treasury Board approval before we can
actually go out and raise money in our own name.
5717 COMMISSIONER CRAM: Mr. Meldrum will now show you section 5(3).
5718 MR. CHING: I think Treasury Board may also have some scrutinizing role
vis-à-vis the use of derivatives by a Crown corporation as well.
5719 MR. MELDRUM: I think what I was just discussing with Don there is that I
believe that the Treasury Board would actually have to have some legislative
powers with respect to CIC, and I think what Don was describing was what those
powers were. I don't think they can just sort of decide, in the absence of a
statutory power, to issue a directive concerning a Crown corporation.
5720 COMMISSIONER CRAM: Section 5(3) talks about CIC being subject to any
directives or orders respecting finances and accounting policies and practices
that are issued by Treasury Board that apply to Crown corporations.
5721 MR. CHING: That's right. I think they fall into three categories, and
I'm flying a little with one wing here, but I think that it the issue of raising
money in our own right, it is the issue of how we handle derivatives, and I
believe that there is also the responsibility on the shoulders of Treasury Board
to deal with the accounting practices required by the provincial auditor.
5722 The provincial auditor exercises certain powers over the Crown
corporations and from time to time the provincial auditor and Treasury Board
will agree that the accounting process will change somewhat or slightly this way
or that and they will issue -- that is Treasury Board will issue -- a directive
to all the entities of government to comply with this particular accounting
practice which has been agreed to with the provincial auditor. We are subject to
those sorts of directives.
5723 COMMISSIONER CRAM: Has Sasktel, in your tenure, Mr. Ching, ever received
any orders or directives under section (6)(1)(a) to (z) and said "No, I refuse"?
5724 MR. CHING: You know, I guess I have been associated with either CIC or
its predecessor GFO and/or Crown corporations that have come under the
responsibility of CIC for probably a total of somewhere in the neighbourhood of
15 years, in two separate times, and I have never seen an order issued under
5725 MR. MELDRUM: I guess I have been at SaskTel for 22 years and have never
seen an order or a directive pursuant to those sections.
5726 COMMISSIONER CRAM: Even verbal?
5727 MR. CHING: I beg your pardon?
5728 COMMISSIONER CRAM: Even verbal? Even verbal?
5729 MR. MELDRUM: Pursuant to those sections, no.
5730 COMMISSIONER CRAM: Would you agree that there would be -- or that we
could foresee -- I guess you can't agree what we think.
5731 Would you agree that there would be more independence, or at least a
perception of more independence of the board if the CIC consisted of ministers
and non-ministers? I will call them "normal people".
5732 MR. CHING: Well, I think that if you look at what the situation was with
regard to the boards of the freestanding Crowns where there was a mixture of
ministers and non-ministers, I think there was a belief that ministers should be
removed. Because whether you put independent people on or not, there was a
perception, I think, out there that the ministers dominated the decision-making
even though there might be non-ministers on the board.
5733 If that would be the case with regard to SaskTel or SaskPower, I would
assume it would also be with regard to CIC board as well.
5734 I think you could add non-politicians or non-practising politicians to
the CIC board. I'm not sure that you would change the optics of it terribly.
5735 You know that for a period of time the previous administration under
Grant Devine did in fact have non-ministers on the CIC board. I don't think that
there was any less of a perception that the CIC was what it was.
5736 COMMISSIONER CRAM: So the only way perception would be changed was if
CIC were all non-ministers?
5737 MR. CHING: But even then you would still be left in the dilemma that we
have been wrestling with here. You would still be in a situation where those
appointees would be there at the behest of the government of the day, ultimately
the government would have the power to do as they saw fit to influence the
direction taken by those individuals. Those individuals would then have to
decide whether or not that offended their personal point of view or their
dignity and, if they didn't, they would capitulate to that and, if they did,
then they would dig in their heels.
5738 So, I mean, from my vantage point, even if all of the members of the
board of directors of CIC were non-cabinet ministers I think you would be left
with the same dilemma that we have been wrestling with whether or not they were
all ministers, half ministers or all non-ministers.
5739 COMMISSIONER CRAM: You had been using, throughout your brief, the CBC
analogy and the fact that Treasury Board approves their capital budget and
corporate plans. CIC essentially does the same with you? Is there a distinction
5740 MR. CHING: There is a bit of a distinction and that is that at the
present time under its set of rules CIC does not approve or disapprove of our
5741 But again, our point in making references to that was simply to convey
the argument that Crown corporations can be made independent or non-independent
by the behaviour of the government that has the responsibility for it.
5742 COMMISSIONER CRAM: I want to go on to board duties.
5743 You have talked about section 46. Section 46 talks about public policy
"...while taking into account the public policy and business objectives".
5744 I need you to tell me the difference between "public policy" and
5745 MR. CHING: Well, I mean, I'm not in the business of jousting on
semantics, but what I can tell you is this: is that CIC requires certain things
of us which fall into the category which I think one would call good corporate
citizenship but arguably would not necessarily be at least in the short term
interest of a shareholder, which might not be considered to be commercial in
5746 The words "commercial activities of a corporation" can be stretched and
pulled in a whole series of different directions, and if I were looking at a
corporation and saying to that corporation "I expect you to be around for 25
years and to perform well and to have a good image in the community", then a
whole bunch of social obligations fall out of that.
5747 But if I am a short-term investor and I am in for the next year or so,
whether or not that corporation is rigorous about some social obligations may be
of less importance to me, then I might characterize that as being not
commercially prudent to spend a whole lot of time, effort and money, for
instance, including groups of people in your workforce who are significant
portions of the workforce but not necessarily significant portions or similar
proportions of your workforce.
5748 So at the present time CIC looks at a number of things and they so far
have been things like employment within the province and creating employment,
hiring of people of aboriginal ancestry, hiring people who are disadvantaged.
Those have been the category of things which there have been directions to us in
the course of scrutinizing our operational budget and setting our operational
targets that CIC has required of us.
5749 At no time has there been something that looks like you have to put out
ads at this time or that have this flavour to it, or you have to do something
else that might be looked at as being political interference in the operational
activities of the corporation.
5750 COMMISSIONER CRAM: In fact, if I read your supplementary brief you refer
to public policy, it's page 37, I don't think you really need to look it up --
public policy referring to the social and economic policies of government.
5751 MR. CHING: That's right.
5752 COMMISSIONER CRAM: And I looked at this review --
5753 MR. CHING: Could I just add a comment there? I am not sure that when we
talk about the balancing exercise that the directive the OC deal with, I am not
sure that it would be my view that that directive suggests that the government
ought to have no involvement in the activities of a Crown corporation and
thereby negative their ability to hold a broadcast licence.
5754 Surely, if we go back and look at the very issue which you raised with
me in your first question, what is the mischief here? Surely by requiring us to
hire a larger number of aboriginal people and maybe even dictating that to us,
that can't be the mischief that was worried about when the directive was put in
5755 I would say that the mischief is something which leads any reasonable,
independent third party to draw the conclusion that here is a government trying
to thwart the democratic process by using the broadcast capacities of a company
to improper purposes.
5756 There is no question, we are obliged by CIC to follow certain public
policy endeavours which the government has committed itself to. If that answers
the question, then I guess we are doomed in our application.
5757 COMMISSIONER CRAM: Maybe wait for the questions and then --
5758 I look at the TASC review and I look at the part about SaskTel that is
at page 35, the public policy -- did I pronounce that right, TASC?
5759 MR. CHING: Yes.
--- Pause / Pause
5760 COMMISSIONER CRAM: I will have two more questions.
5761 THE CHAIRPERSON: I am mindful that we are approaching the time of our
afternoon break, so that would be great.
5762 COMMISSIONER CRAM: Are we at page 35, Public Policy, Part 3 of the TASC
report? Clearly you guys haven't found out the value of post-it notes.
5763 MR. CHING: All right.
5764 COMMISSIONER CRAM: What that is is the public policy that we were
talking about. I was seeing it in the CIC Act and there is sort of the public
policy. Number one is:
"Advance social and economic policies based on community values." (As read)
5765 It talks about job creation, support to business, developing skills,
economy, and CIC sets that. Is that correct?
5766 MR. CHING: What happens is that we come forward with a list of what we
consider to be objectives that we set for ourselves. They may add to those or
they may focus on another one, but it is us coming forward with a set of policy
objectives for the ensuing year and CIC reviewing those, satisfying themselves
with them and perhaps adding or modifying them.
5767 COMMISSIONER CRAM: I notice that the social and economic policies is
number one. Number two is what I always thought SaskTel did, which was provide
universal essential services to the people of Saskatchewan. Is that an
indication of priority?
5768 MR. CHING: No. I think it is they had to be in some order. We certainly
don't treat one of those as being pre-eminent over another.
5769 COMMISSIONER CRAM: After the break I want to talk about sort of the
expectations of the board of directors when business objectives and public
policy objectives clash. So you can think about the homework over the break.
5770 THE CHAIRPERSON: Mr. Secretary, I propose our normal 20 minutes would be
5771 MR. BURNSIDE: We will return at five minutes to four.
--- Upon recessing at 1535 / Suspension à 1535
--- Upon resuming at 1555 / Reprise à 1555
5772 THE CHAIRPERSON: I will reconvene the hearing and Commissioner Cram will
continue with her questioning of the SaskTel application.
5773 Commissioner Cram.
5774 COMMISSIONER CRAM: Thank you.
5775 We were talking about the clash between public policy and business
objectives and clearly that would happen in SaskTel?
5776 MR. CHING: Yes. We actually run into this on a fairly routine basis, as
you can imagine. Let me give you a few examples.
5777 First of all, our shareholder sets for us an earnings target and a
dividends target. That clashes with other business objectives. We may, for
instance, want to take some of our retained earnings and plough it back into
some capital investment.
5778 It may also clash with a social objective. For instance, over the last
three years I think we spent something around $20 million improving the access
to I believe it was 32 or 36 First Nations communities in Saskatchewan. Clearly,
that is money that comes right out of the up-front available money for dividend
payment. That's one where the decision was made to accept the less robust
financial target, but go ahead with the social objective of making sure that
First Nations communities have better access than they had in the past.
5779 COMMISSIONER CRAM: That was the extension of services to the reserves.
Is that correct?
5780 MR. CHING: That's right.
5781 On the other hand, you will find another type of situation arising. We
do not cover 100 per cent of the province of Saskatchewan with our cellular
service. We get pressed by some communities who are not covered by our cellular
service to extend cellular service to them. When we do our review it is quite
clear that it is simply not a commercially sensible proposition to extend that
5782 There is a situation where perhaps the social objective has taken second
fiddle to the financial objective of making sure that all the cellular sites are
expected to be good financial investments.
5783 So you are right, we routinely run into a whole series of issues that
arose. We had a service, for instance, in Saskatchewan called GMTS which is a
mobile radio service which extended throughout the province. It was clear that
that service was not paying its own way. We moved to curtail that service.
5784 In the end, because of pressure from our shareholder, because of
pressure from our customer base, it became clear that we would be wise to shut
down the southern portion of that system where there were viable alternatives
based upon our cellular system and our fleet system, but in northern
Saskatchewan where the alternatives were really very high priced, by and large
satellite based, that we should not discontinue that service. Again, a typical
example of balancing our social obligations on one side and our commercial
obligations on the other.
5785 We have a program of I guess community assistance and, as you can
imagine as a high-profile corporation in Saskatchewan, along with a lot of other
corporations, we are inundated by requests to fund this organization for this
particular type of a program. As you know, we support, for instance, the Jazz
Festival in Saskatoon and various other festivals and programs and organizations
of that nature, and we could obviously double or triple that part of our budget
which is aimed at supporting community organizations, but there has to be a
trade-off at some particular point between being socially responsible to those
organizations, but commercially prudent, and again there is a balance between
5786 COMMISSIONER CRAM: In your brief you talked about this being the making
of uneconomic decisions as being similar to good corporate stewardship. You
would draw a distinction, though, between sort of donations as private companies
give and sort of these uneconomic decisions that pursue a social value?
5787 MR. CHING: I think that practically every program that is identified as
a social program when looked at over a long time span can be said to be
5788 For instance, the $20 million expenditure in extending service to First
Nations communities in Saskatchewan, if you look at that over one or two years
and you balance the doing of that program as against the ability to pay
dividends and you could call it a social program.
5789 But if you look at the province of Saskatchewan and look out 25 or 30
years and hopefully SaskTel is going to be a viable corporate entity during all
that period of time and beyond, it simply is the right thing to do.
5790 It is not simply right in a social sense, but it is also right in the
commercial sense because if the First Nations community isn't given the tools
with which they could find their way into the middle of our economic structure
that we have made for ourselves within our society and are going to remain on
the periphery, which unfortunately many of them have been relegated to, then in
the long run commercially that is going to be extremely negative from the point
of view of any company like SaskTel.
5791 So to some extent when one looks at so-called public policy or social
programs, if you look at them on the short term you have to characterize them
that way. If you look at them in the long term, in my mind they are good common
sense practical business activities.
5792 COMMISSIONER CRAM: I said it before, but I think I will say it again and
sort of fit it in with your brief, you talked about the difference between owner
control and direct operating control. If I said owner control is like
shareholder control, sort of what I would call ultimate control and direct
operating control is management, would you agree with that?
5793 MR. CHING: I think that is probably as good a dividing line between the
two parts of it.
5794 COMMISSIONER CRAM: And so if we equated in some way what a shareholder
could do with what the government could do --
5795 MR. CHING: I think you have to refine that just a little bit, if I may
be so bold as to suggest.
5796 If you have a single shareholder, I think you start to have vested in
that single shareholder, in the private sector, something roughly akin to what a
government shareholder would represent, with regard to a crown corporation.
5797 Where you have a widely distributed corporation, with a lot of shares
out there, one individual shareholder -- I may hold a share in General Motors,
and to think that I somehow or other have an influence over its activities is --
doesn't have much reality behind it. But, on the other hand, if I owned all the
shares of General Motors, I guess I would probably have something akin to what a
government would have vis-à-vis a crown corporation.
5798 COMMISSIONER NOËL: I suggest you wouldn't be sitting here either.
--- Laughter / Rires
5799 MR. CHING: No; I would probably --
5800 COMMISSIONER CRAM: If you did, you wouldn't be here.
5801 COMMISSIONER NOËL: You would be a missionary.
--- Laughter / Rires
5802 THE CHAIRPERSON: If in the unlikely or likely or any event that we the
Panel should find that there were some problems in relation to the issue of
direct control, would there be a willingness to review, say, the cabinet
authority over a CEO appointment and salary?
5803 MR. CHING: That is an issue which -- I simply can't answer that
question. I simply don't know. The cabinet has reserved that right to
themselves. It's an issue which never arose in our dialogue with our
shareholder, in conjunction with this application, so I'm not sure that if we
went back to them and said, "Look, this is a bone in the throat of the
regulator. Would you do something about it?", I don't know how they would
5804 One of the things you might consider -- and bear in mind that our base
proposition to you is that we have the level of freedom which is anticipated or
required by the drafters of the directive. But if this whole area troubles you,
especially on a go-forward basis, one of the alternatives you might want to
consider is issuing a licence which is conditional upon the existence of either
legislation or some other act of the government which is as the efficacy of law.
For instance, you have before you, I think, an order in council from the
Government of Saskatchewan which is really meant, I think, to emphasize the
argument we are already making, which is that there is independence already. But
if a licence is issued subject to the continuance of that order in council and
it's efficacy in law, then the moment that it ceased to be in existence our
licence would be forfeited, and I would argue that the existence of that order
in council would not only bind our board of directors and our management, but
also CIC, to functioning in accordance with that order in council.
5805 I would still urge upon you the proposition that you should, as a
tribunal, come to the conclusion that regardless of the order in council that we
have the required independence. But if you came to the conclusion that you were
still troubled by the issue of political interference, that might be one easy
way to, I guess, ram home the proposition that any political interference would
put into jeopardy the existence of a broadcast licence.
5806 Clearly, from the point of view of the board members, while they still
are open to appointment or unappointment, it would put them into the position
where to fail to honour that would not only bring upon them any sanction that
was inherent in your legislation but would clearly also put them in a position
where they would be in violation of the Crown Corporations Act.
5807 COMMISSIONER CRAM: I know it's your belief that you are in compliance,
but if the Panel doesn't agree that you are, are you aware whether or not there
would be a willingness that cabinet would decline its powers under the creation
5808 MR. CHING: Again, I simply don't know.
5809 COMMISSIONER CRAM: What about --
5810 MR. CHING: My suspicion is that they would not accept that. And the
reason that I say that is because you will recall that some years ago the
Government of Saskatchewan got into a lot of problems, and part of those
problems were occasioned by the creation of some subsidiaries not within the
freestanding crown corporation such as NCPC, and some of those subsidiaries
really incurred some very large financial negative consequences for the province
and, as a result, I know that the provincial auditor and his office and the two
standing committees of the legislative assembly for Saskatchewan have really got
a very negative attitude about forming a subsidiary without public exposure of
that and they have got a very negative attitude, also, towards the creation of a
subsidiary that hasn't got the -- that relieves the parent organization of some
obligation at law. Because that was done for a number of years as well. And so,
there has actually been a fair amount of attention on making sure that any time
a crown corporation in Saskatchewan creates a subsidiary that that must receive
an order in council approval, and the reason for that is that orders in council
have to be made public within I believe it is 10 days or seven days of their
passage by the Lieutenant Governor in Council and it was deemed, I think, by the
provincial auditor, and a couple of other agencies, that the fact that that was
made public was in itself a very significant restriction on the abuse of that
5811 COMMISSIONER CRAM: But that isn't the issue. The issue is that cabinet
would no longer approve it. I mean that's -- not that it wouldn't be publicized
5812 MR. CHING: Yes. Well, there could be other ways of accomplishing the
publicity. The way in which the provincial auditor, I think, focused on was: If
you force the government to pass an OC, then they had to make the existence of a
subsidiary open for public scrutiny.
5813 COMMISSIONER CRAM: What about -- and with the same preface -- if we
required that cabinet, or CIC, would no longer have to approve a utility rate
application? Like they are not doing it now; they have waived it now. So,
presumably that wouldn't be a problem?
5814 MR. CHING: That one I don't think there would be any problems with.
5815 COMMISSIONER CRAM: What about if we required that the CIC would no
longer approve the appointment of auditors?
5816 MR. CHING: That I suspect would be blocked. They guard that power very
jealously. They consider it to be a shareholder right. And, frankly, I'm not
sure that it would be good governance to allow the board of directors, or the
management, to appoint the auditor.
5817 COMMISSIONER CRAM: What about the requirement, or a choice of
requirements, that board appointments would be for a specific term?
5818 MR. CHING: That I think is not only a welcome suggestion but I believe
that probably by year end there will be, at least in policy if not in statute, a
set term for board appointees.
5819 COMMISSIONER CRAM: What if we would, then, or alternatively, talk about
the setting up of an alternate corporate structure as an alternate to all of the
above, or perhaps in addition, that SaskTel would set up a subsidiary with
directors for a term specific, the chair to be independently appointed, no
telcom employees or related companies, different directors?
5820 MR. CHING: Bear in mind that, in my mind, creating a further
bureaucratic web I don't think addresses the fundamental question, because I
think we are agreed with you that, regardless of how intricate that web gets, it
always stands in the power of the legislative creature to reach through it if it
5821 Worse yet from our vantage point, if you follow along sort of the
process by which we got in front of you, we have obviously been trying to find
technology that allows us to do more with the plant that we have in the ground.
So the twisted pair which we take to the individual home was always believed to
have very limited capacity to carry voice and data.
5822 As a matter of fact, at one time I think it was generally agreed that a
twisted copper pair to the home could transport voice pretty good and probably
fax, and suddenly it was bumping its head.
5823 Then out came ADSL technology and we started to realize that we can put
broadband down a twisted pair. This is the ADSL solution.
5824 Initially, I think, most people believed that that was going to be
around one or two megabytes of capacity. Now of course, we can see that we are
already in a position where the technology is well tried and we can put six to
eight megabytes. Of course, as soon as we get into that range we are in a
situation where we can stream video. Because we can stream video, now it
presents us with the technological ability to basically provide a product
similar to what cable companies can through their particular technology.
5825 They, in turn, are evolving their technology to be able to move into the
telephony region. They are on the verge, if not already there, with the
technical capacity to basically do what has been our traditional lines of
business through the cable plant.
5826 What we are doing here is we are increasing the ability of our plant to
handle broadband solutions. It starts out with being a focus on high-speed
Internet, but clearly if you can stream video through a high-speed Internet type
of solution, then you can also do some of the things which fall into the
category of being broadcast or entertainment.
5827 So this project isn't sort of a separate thing over there. It is
intricately interwoven with the high-speed Internet strategy of SaskTel. To try
and run the video portion of it as a separate business really becomes very
problematic from our vantage point.
5828 COMMISSIONER CRAM: Independence and journalistic freedom. What does this
mean to you?
5829 MR. CHING: I can only give it an interpretation within the reality of
what we are actually doing. If one looks at it very closely, the truth of the
matter is we don't manufacture any programs. Our program doesn't contemplate
that we do. It isn't as if we are preparing editorials for the Star Phoenix or
for The Globe and Mail. We are not doing those things so obviously journalistic
freedom doesn't make any sense in that sort of context.
5830 When you really boil it down, the truth of the matter is we don't
exercise any significant journalistic powers within the context of our DIV
product that are as great as, I would argue, the journalistic freedom which we
already bring to bear on our Internet, our dial-up Internet and our high-speed
5831 So, first of all, understand that we are talking about here a relatively
small issue of journalist freedom. It simply doesn't arise in any significant
way with regard to what we are actually doing. It does with regard to, I guess,
the selection of programs that we put out and the order in which they appear.
But you have to really rummage around to find a journalistic input related to
our DIV project beyond that.
5832 So when you ask me what it means, it really means probably those two
things: what programs do you select to put out over your particular service, and
what order are they arranged in. If you turn it on, do you normally start with
CBC or do you start with a religious program?
5833 COMMISSIONER CRAM: Or a French channel?
5834 MR. CHING: Or a French channel or an aboriginal channel or a women's
network, or whatever. There are certain places obviously on the channel that are
more prized I suppose than others so, when it comes right down to it, the level
of journalistic input that we will make isn't a terribly big thing; and, to the
extent that we do, from my vantage point I find it hard to try to put my finger
on very many occasions where the political arm of government would really have a
whole lot of interest in it.
5835 COMMISSIONER CRAM: You have said you are not going to have a community
channel and that you put 5 per cent of the gross receipts into the CTF and
another fund. Would you agree to a COL, that you won't have a -- a condition of
licence -- that you won't have a community channel?
5836 Ms Molnar is nodding like this.
--- Laughter / Rires
5837 MR. CHING: The question was whether or not to answer yes or reserve on
the issue. My colleagues seemed to have voted --
5838 COMMISSIONER CRAM: Out voted you, yes.
5839 An alternate I guess to should we have any concerns about journalistic
5840 MR. CHING: Just let me make one more comment.
5841 My understanding is, and correct me if I'm wrong here, but my
understanding is that if we wanted to move from the format that we are
suggesting to a community channel format, we would have to come back to the
Commission and ask for permission to do that.
5842 COMMISSIONER CRAM: If you agree to a COL that you won't have one, that
is exactly what will happen --
5843 MR. CHING: Even if you didn't do that, I think we would still have to
come back, as I understand it, and ask for your permission.
5844 COMMISSIONER CRAM: An alternate, should we have concerns, would be an
independent programming committee. Would you have a problem with that?
5845 MR. CHING: No, no problem with it at all.
5846 How would you see a creature like that being selected?
5847 COMMISSIONER CRAM: Mr. Ching, do you remember when I was practising law
and I used to say "I ask the questions; I don't answer them"?
--- Laughter / Rires
5848 MR. CHING: All I want I guess really is a workable solution. That's
really the only reason for making a reference to that.
5849 COMMISSIONER CRAM: Yes. And I want to make this very clear. My
colleague, Commissioner Noël, wants to know -- and this is the big test in terms
of independence and journalistic freedom -- the movies in hotels since 1993, do
you offer porn?
5850 MR. CHING: I think we offer an array of movies, which include triple "X"
5851 COMMISSIONER CRAM: Oh, man.
5852 MR. CHING: I may say incidentally that that issue did not go unnoticed
by the legislative assembly, was the subject matter of some extensive debate,
and a bit of a thrashing of the government by the opposition, but it did not
result in any, any, even mild suggestion to us that somehow or other this issue
was beyond our control.
5853 COMMISSIONER CRAM: That was a good tip. Now she is going to immediately
-- are you at the Hyatt? Are you working on the --
--- Laughter / Rires
5854 COMMISSIONER CRAM: You appended the OIC, dated yesterday, to your
submission today, and on page 7, on the third last paragraph --
5855 MR. CHING: Seven of the OC?
5856 COMMISSIONER CRAM: No, not the OIC, the presentation itself describing
5857 MR. MELDRUM: Your speech.
5858 MR. CHING: Mine? Oh, okay.
5859 COMMISSIONER CRAM: Yes, your speech.
--- Pause / Pause
5860 COMMISSIONER CRAM: You refer to the OIC in the third last paragraph,
second last sentence:
"In addition, attached to this presentation is a copy of a recent
Order-in-Council that confirms that SaskTel has freedom of expression and
journalistic, creative and programming independence."
5861 Now, again, based on the fact that I am certain that the people in
council are very, very bright, I look at paragraph 4 of the OIC, the second
paragraph under that, and it refers to "empowering" SaskTel.
5862 MR. CHING: Yes. What our legislation, which I believe is the legislation
under which this OC is issued, the cabinet, as you know, can't simply issue an
order in council, it must issue it under a legislative power given to it by the
legislative assembly. This particular OC is issued under the Saskatchewan
Telecommunications Act, and that act says that the Lieutenant Governor in
Council may give to the corporation certain powers, and that is why the OC is
couched in the terms I believe that it is.
5863 COMMISSIONER CRAM: Okay. But you say it merely confirms the fact that it
5864 MR. CHING: When we received the interventions which raised this issue,
we passed that information along to Minister Nilson. I can tell you that his
immediate response was: Well, there is simply nothing to it because you enjoy
that operating independence already. I said: Well, yes, but it has been raised,
and the issue is is there anything which needs to be done. One of the things we
raised with Minister Nilson was whether or not a letter which explained what the
government's position would be, whether it would be fair to do that.
5865 I think that when he considered the matter it appears -- and I must say
that I was away when this happened -- it appears that, after considering the
matter, he and his colleagues felt that they should go further and issue an
order in council. Hence the document you have in front of you.
5866 COMMISSIONER CRAM: So then my next question is whatever can be OICed can
5867 MR. CHING: I think that is correct.
5868 COMMISSIONER CRAM: And what happens then?
5869 MR. CHING: Well, I would of course argue that this OC simply sanctifies
what is already there. So whether it exists or doesn't exist I think is an
irrelevancy in reality, but it does emphasize what is already the operating
5870 On the other hand, I mean clearly the one good thing about the order in
council is that when we were worrying a little earlier about the issue of the
responsibilities of the board of directors and whether or not a director from
CIC could issue so as to require the board of directors to function in a certain
manner, as long as that order in council exists I don't think there is any
question what the responsibility of the board of directors would be. They simply
couldn't pay any attention or heed to a director from CIC that might offend the
power that is set out as vested in the corporation by that order in council.
5871 COMMISSIONER CRAM: Does this really say -- and I'm sorry -- does it say
that you can only then accept a licence from us on the condition that such
licence is operated by you:
"...with freedom of expression and journalistic creative and programming
independence"? (As read)
5872 MR. CHING: That's correct.
5873 COMMISSIONER CRAM: So we could only give you a licence that says
"Conditional, that you operate with freedom of expression and journalistic
creative and programming independence"?
5874 MR. CHING: I think what I read that order in council to say is that if
we did not exercise the independence that is contemplated that we would have to
forfeit our licence.
5875 COMMISSIONER CRAM: "Until such time", then, kind of thing? So you would
only be authorized to carry the licence until such time?
5876 MR. CHING: That's right.
5877 COMMISSIONER CRAM: Okay.
5878 MR. CHING: If we were not able to discharge that independence, as I
understand it, we would have to voluntarily forfeit the licence, regardless of
whether or not you people took a negative attitude about it or not. That is what
I understand that OC now to be saying.
5879 COMMISSIONER CRAM: Okay.
5880 This is, of course, as you know -- I mean, we are talking about BDU, a
competitive issue. We are not necessarily talking about programming.
5881 Is it in the plans at the present time of SaskTel to go further into the
broadcasting business and perhaps apply for a Category 2 in the digital world?
5882 MR. CHING: No. I think it is correct to say that our intention is to
endeavour, as much as we possibly can, to roll high-speed Internet out to as
many localities in Saskatchewan as we can find a commercial sound basis for
5883 We would also, I think, try to roll out digital interactive digital to
as many locales in Saskatchewan as we can find a commercially sound basis for
5884 At the present time, however, we have extended our high-speed Internet
beyond the cities within Saskatchewan -- we are in the process of doing that --
but at the present time we can only find a viable business case for DIV and
high-speed Internet within Regina, Saskatoon and, I believe, seven of the eight
5885 COMMISSIONER CRAM: At page 28 of your brief you were talking about that
you don't propose to bundle this service with local telephony.
5886 MR. CHING: That's correct.
5887 COMMISSIONER CRAM: If we granted you a licence, what would stop you from
5888 MR. CHING: I guess the fact of the matter is that we, or any other
company in Saskatchewan, could bundle as we saw fit. The fact of the matter is,
all of our services are unbundled.
5889 For instance, Access Cable, if they wanted to put together a bundle
which included local service they really have two choices, they can acquire that
service from us, we have an obligation to supply it to them, or they could
deploy that particular service through their own technology. I think that is
true of any other supplier of communications or cable services in Saskatchewan.
5890 COMMISSIONER CRAM: You can certainly reserve on this.
5891 Would you agree to a COL that you not bundle it with your telecom?
5892 MR. CHING: I think we would -- we certainly have not discussed it
amongst ourselves, as you can see, and perhaps we should reserve on that one.
5893 COMMISSIONER CRAM: Maybe you can come back in Phase II with that.
5894 MR. CHING: Yes.
5895 COMMISSIONER CRAM: Because clearly that affects the market and the
market dominance issues and the whole ball of wax that goes with that.
5896 MR. CHING: I think one of the problems that we might have with that --
and I don't want to --
5897 COMMISSIONER CRAM: Phase III, I'm sorry.
5898 MR. CHING: -- pre-guess this, but it would leave us in a position where
our competitors could put together that sort of a bundle but we could not.
5899 COMMISSIONER CRAM: Yes. And the issue then, though, would be the market
in which we would be talking about.
5900 MR. CHING: You see, one of the things I think that is happening is, as
we move through the technological and convergence process that is going on, is
that more and more I think the issue of whether or not you have a successful
package of components is being left to the consumer. If you have a good package
and if you have a good price, you are going to get a good response from the
marketplace. If you don't have a good package and if you don't have a good
price, you aren't going to get a very positive response from your customer base.
5901 So in my mind it strikes me that probably the best restriction on what
should or should not be in bundles and what prices should be attached to those
bundles is really the marketplace.
5902 COMMISSIONER CRAM: I only say that because in your speech you were
talking at page 6 under your "Secondly" that:
"...the Crown corporation status provides us with a competitive advantage ...
allows us to dominate the market." (As read)
5903 Then the last sentence of that is:
"It is the incumbent cable companies who have the dominant market position
when measured against the relevant markets of Internet and broadcast
distribution." (As read)
5904 A totally different issue if we are talking about the bundling of the
three. Wouldn't you agree?
5905 MR. CHING: Yes, that's -- I think it is legitimate to say that a cable
company might have 80 per cent penetration in cable, we might have 80 per cent
penetration in local service. They have the ability to bundle the two things
together, we have the ability to bundle the two things together. I'm not sure
that that necessarily somehow or other gives us a big leg-up over the cable
5906 COMMISSIONER CRAM: Then you talked about "a lost customer for five years
because of DTH". Well, you wouldn't necessarily lose the customer in local
telephony if you lost them in Internet or if you lost them in broadcasting.
5907 MR. CHING: No, I think that is correct.
5908 The point I was making there was that delay from our vantage point was
dangerous because if we sat back and didn't go forward with regard to a
broadcast thrust, to the extent that DTH were able to come in and secure a
customer, it is very difficult to pry that customer loose from DTH simply
because of the capital and commitment that has to be made to get plugged into
that level of service.
5909 COMMISSIONER CRAM: But if you could bundle all three you would have an
advantage over DTH?
5910 MR. CHING: Yes, but DTH could bundle all three as well. So, to some
extent, they are right back with their -- to the extent that they have an
advantage with their base product, they probably have an advantage over us,
because they certainly have the access to bundle our product, less clear as to
whether we have a right to bundle theirs.
5911 COMMISSIONER CRAM: So I think what I am going to do is leave the issue
of dominance until we get back to the answer about the bundling.
5912 The one thing I wanted to talk about in terms of cable dominance was at
paragraph 47 of your brief.
5913 Do you have that?
5914 MR. MELDRUM: Yes.
5915 COMMISSIONER CRAM: You actually only talk about cable dominance in
Regina and Saskatoon.
5916 MR. MELDRUM: I'm sorry, which document?
5917 COMMISSIONER CRAM: It is the supplemental brief I believe.
5918 Oh, it could be your rebuttal, I'm sorry.
--- Pause / Pause
5919 COMMISSIONER CRAM: It would be the supplemental.
5920 It is paragraph 47 of your rebuttal.
--- Pause / Pause
5921 COMMISSIONER CRAM: Yes.
"Sasktel noticed that the cable companies currently hold the majority share
of the Internet market in both Regina and Saskatoon." (As read)
5922 You make no reference to the rest of the areas that you are applying to
5923 MR. CHING: Well, I think it is correct to say that the cable companies
occupy the video dominance in all areas they seek to.
5924 The issue of Internet is much more complex and more difficult for us to
estimate there, but as nearly as we can make out, certainly in Regina and
Saskatoon the cable companies, I believe, have an edge over us in high-speed
5925 COMMISSIONER CRAM: Then you talked about the lack of application for
forbearance at page 51.
5926 I don't know, it has been brought to our attention by the Class 3s that
our policy in that is pyrrhic.
5927 In other words, even if they have lost 5 per cent they are lost 5 per
cent they are not going to apply to us to deregulate because then the world
knows they are a failure.
5928 MR. CHING: Boy, the telcos didn't have any trouble screwing up their
courage to come looking for forbearance when they lost market share and they
didn't treat it as being necessarily an impediment to maintaining market share.
They treated it as being an opportunity to enhance their market share.
5929 COMMISSIONER CRAM: You then talk about the fact that once you have got
the critical mass you can expand to the rest of the province. Timing in your
business plan, when will Price Albert South be covered totally?
5930 MR. CHING: With DIV?
5931 COMMISSIONER CRAM: Yes.
5932 MR. CHING: Or high speed?
5933 COMMISSIONER CRAM: DIV.
5934 MR. SHEPHERD: I guess in terms of time, the specific area that we have
asked a licence for we expect to cover within a year.
5935 If we look at areas outside of those geographic areas, we haven't
committed to any specific timing in our business plan. Our view is that some of
those areas we will be extending high speed Internet to and clearly are already
in the process of doing that, but we will have to undertake specific studies of
the business case and the economics in each area to determine whether there
would be future potential for DIV.
5936 Certainly the take rate of high speed Internet would be one of the
indicators of the readiness of the market for advanced services in those areas.
5937 COMMISSIONER CRAM: In addition to the potential for dominance, we hear
from the intervenors that you have loans on demand. As VCC says, the only limit
on your resources are Cabinet. What do you say to that?
5938 MR. CHING: That we have which, loans on demand?
5939 COMMISSIONER CRAM: Yes, from Cabinet. The only limit on your resources,
on your financial resources -- in other words, getting loans, is Cabinet?
5940 MR. CHING: Well, there is no question that there is one factor at work
which is the issue of getting approval to receive a block of funding.
5941 There is also the issue of the impact of carrying that debt load on our
books and the financial restraint. We have a requirement to maintain a debt to
equity ratio as one of the obligations put upon our shoulders.
5942 So for us to simply acquire big blocks of debt not only would put us off
side with regard to our debt to equity ratio target of 45/55, but in addition to
that, I mean, it would incur a carrying cost that would weigh down our operating
side of our budget in a way that frankly we are not terribly interested in.
5943 We have to find a business case that justifies the deployment of any
capital. We can't simply go out and willy-nilly ask our shareholder to deliver
up more capital to us. They simply won't do it.
5944 COMMISSIONER CRAM: At what interest rate because what I notice is I
think the interest rate that the government pays, plus a carrying charge.
5945 MR. CHING: Yes. I think, first of all, you will recall that a few years
ago the Government of Saskatchewan got into a lot of financial difficulties and,
frankly, they are still not out of it.
5946 Some of those difficulties were borne out of simply strange usages of
capital, but some of their difficulties were borne out of the fact that various
agencies were rating capital over here and over there and over there, and not
only did this sort of give to the government overall a bit of a loss of control
over how capital was being deployed within the government at large, but in
addition to that you had the strange phenomenon of the price of capital going up
for various component parts of the government because the suppliers of capital,
the capital marketplace, was being approached by more than one entity.
5947 The result of it was that about 10 years ago the government as part of
their financial restraint program issued an edict to all parts of government
that nobody was to raise capital without express permission of the Treasury
Board, other than through Treasury Board.
5948 They simply had to do that for the very simple reason that the province
of Saskatchewan, both on the treasury side and on the Crown side of government,
was in a situation where its debt load was simply beyond its capacity to repay
it. The government I think was looking very closely into the eyes of, if it is
possible, provincial bankruptcy.
5949 As a result, at the present time there is a requirement that all units
of government, including SaskTel, raise all of its capital through the
Department of Finance and Treasury Board.
5950 So, if we want capital we make our arguments, our business arguments for
doing it. There are approvals for it, but then we go to the Department of
Finance who approaches the money markets, raises the necessary capital and they
may raise a block of maybe $400 million, of which SaskPower will use a chunk of
it, SaskEnergy will use a chunk. The Treasury side might be replacing some of
the capital rollover that they have continually got and SaskTel may want $30
million for a project we are working on.
5951 Then they download that money to us and the cost that it takes them to
raise it, including the costs which they have to pay in the form of interest.
5952 COMMISSIONER CRAM: As I read it there was also what I call a carrying
5953 MR. CHING: Yes. I include that. The cost that they have got of actually
the interest that they would pay, plus the cost that they incur in putting that
into place, that is the Department of Finance puts into place.
5954 COMMISSIONER CRAM: So are the interest rates that you pay actually lower
than somebody in the private market, a private company?
5955 MR. CHING: It depends a little bit on where you are in the private
market. If you were, say, Bell Canada with a triple A rating, it probably raises
money much more cheaply than the Government of Saskatchewan which, as you know,
was floating around at single A, single A-plus.
5956 COMMISSIONER CRAM: That wasn't --
5957 MR. CHING: It's coming back gradually.
5958 There was a point at which, frankly, three out of the four major rating
agencies rated the province of Saskatchewan as being below an A rating, in the B
rating, which meant that the sources of funding for the province of Saskatchewan
was restricted to about 25 entities in North America. At that particular point
the cost of our capital was probably higher than most companies that we do
5959 COMMISSIONER CRAM: The second issue in terms of dominance and what I
call a barracuda in the marketplace is the allegation of having a close
relationship with government and I think that's fair. In your reply to
deficiencies you refer to a lack of a statutory requirement by government and
Crown to use SaskTel. Tell me, in terms of the Internet business for not
bundling, do you have any idea of what proportion of government business you
5960 MR. CHING: I am not sure I can even make a sensible guess at it.
Certainly there are agencies of government who source their telephony needs and
their communications needs from sources other than SaskTel. But you are right,
the fact that we are owned by the province of Saskatchewan, the Government of
Saskatchewan, there is a natural tendency on the part of certain agencies to
look to us first.
5961 I have got to tell you that it is a bit of a mixed blessing because --
as is frankly our association with government.
5962 I mean, to some people there is this idea that somehow or other because
we are associated with government as a Crown corporation that we can do
practically anything we want to. Let me assure the Commission that that is far
from the truth.
5963 As a matter of fact, I can tell you that the average person within
Saskatchewan who is our customer demands a level of responsiveness from us that
I think is borne out of the fact that we aren't simply at arm's length from the
average person in Saskatchewan. They expect an awful lot from us.
5964 We get a lot of beating up by the average person in Saskatchewan who
feels that we haven't delivered the level of service to them that they expect of
5965 Frankly, that's also true of other agencies of government. Some of the
toughest grinding that we get in the marketplace is from our so-called friends
in the government structure and some of the business there we might wish upon
5966 COMMISSIONER CRAM: The third item is that you pay no tax.
5967 MR. CHING: Yes, not quite --
5968 COMMISSIONER CRAM: Wait. So, theoretically, you have lower costs, so,
theoretically, your rates could be lower and recognize, of course, I am from the
consumer side. It's a double-edge sword and I recognize that.
5969 MR. CHING: Bear in mind that we do pay an awful lot of tax. For
instance, last year I think we paid something in the neighbourhood of $25
million worth of taxes.
5970 COMMISSIONER CRAM: You are referring to GST and PST?
5971 MR. CHING: And provincial taxes. What we don't pay is federal income
5972 COMMISSIONER CRAM: That's a chunk though.
5973 MR. CHING: Yes, you are right.
5974 I must say though that when our shareholder computes what they consider
to be the dividend payment, they look at what they consider to be average
earnings within basically the industry function. They add to that a premium
which they describe as being an offset for the fact that we don't pay certain
5975 Now, you should also be aware that we pay a pretty healthy dividend.
Some of the cable companies don't pay either dividend of taxes. As I understand
it, a co-operative, for instance, receives an exemption from the federal tax
and, as a matter of fact, you will see from some of the documents that have been
filed that I believe the patronage dividends have not been paid by, for
instance, Access Communications for the cable company.
5976 So, compared to Access, they are probably in a better financial position
to compete with us than we are, just on the issue of taxes and dividends. We pay
much more on those two categories than they do and so if one of us is at a
disadvantage in that particular area it would be us vis-à-vis them, rather than
5977 COMMISSIONER CRAM: Have I missed something? You mean to say you do pay
provincial income tax?
5978 MR. MELDRUM: I thought I would just list the taxes that comes to the $25
5979 COMMISSIONER CRAM: Yes.
5980 MR. MELDRUM: There is the payroll taxes, plus Worker's Compensation. We
pay the capital tax and that came to $4.7 million last year. We do pay all
property taxes. We in effect pay a grant in lieu of taxes. We also pay
provincial sales tax and fuel tax. We do not pay a provincial income tax per se.
5981 COMMISSIONER CRAM: Thank you. I didn't think you did.
5982 And not GST in there either?
5983 MR. MELDRUM: Well, because the GST is refunded in effect, none of the
businesses really pay GST.
5984 COMMISSIONER CRAM: So your point then is the co-operatives are probably
in a better position than you, but Shaw is out to lunch in Saskatoon? Now I have
done it for the record. I don't mean they are out to lunch. I mean they're --
5985 MR. CHING: Certainly as compared to a co-operative we are in a position
where we are at something of a disadvantage. I think we can live with that.
5986 I think probably Shaw, given its economic power could probably live with
whatever advantage or disadvantage they enjoy.
5987 COMMISSIONER CRAM: We have heard the arguments about our regulatory
framework and that we are going to be going ahead to look at your financial
situation and review each and every issue, depreciation and the whole -- and
addressing the other issues of number portability, subsidy, change of fund,
recovery start-up. These are fairly important issues.
5988 Given the concerns about head-start, do you believe it might be argued,
others do, that it is more appropriate for the Commission to await that 18-month
transition and issue a licence only then? What's your response to this?
5989 MS MOLNAR: I have been waiting for the regulatory question. As some of
you know, we spent quite a bit of time before June 30 and preparing for federal
regulations. We went through the process of aligning all our terms and
conditions and our terms for competition, filed our tariffs for approval and
they were approved by the Commission.
5990 We have in place a form of price regulation. Well, not the same as the
others. We think it is certainly providing as much protection to consumers and
to competitors in our market as in other markets.
5991 The fact that there are certain things -- I guess maybe I would talk
financial review separate from head-start because I think they are different
issues. The financial review is, as you said, there are certain items such as
depreciation that haven't been looked at, but what has been looked at I believe
significantly as a precondition to forbearance is the split-rate base. Have we
split the rate base to ensure there is no cross-subsidy and I think that's the
issue that is relevant here. I believe that issue was looked at and there has
been a conclusive decision on that. So I don't think depreciation is really
relevant to that decision.
5992 The other one is head-start. We have in place tariffs for local
competition, the same as every other company. We are working through the
bounding proceedings with all the other companies. I mean, we are in the same
position as them. LNP, we have said that we will adopt it. It is according to
the national framework I believe on demand, so we are in place with the others,
in my view, on every head-start issue.
5993 COMMISSIONER CRAM: I heard you asked to join LNP and they said thank
you, no. Have you applied since after June 30?
5994 MS MOLNAR: No, not to my knowledge. Our view is that as part of our
local competition implementation there are a number of steps that are still in
place to actually get to the stage of interconnecting with the first CLEC and
that is obviously one of our steps. But we have had, to my knowledge, no CLEC
come to SaskTel at this point.
5995 COMMISSIONER CRAM: Do I understand you are not ready for CLEC to come in
terms of the steps or what --
5996 MS MOLNAR: We are ready from the perspective that all of the terms and
prices are in order, but there are certainly things like the interconnection
arrangements you can't do beforehand.
5997 We have tested LNP. We have been testing it for the last year, but to be
honest joining the consortium costs money. We will hold off as long as we can.
5998 COMMISSIONER CRAM: I think that's all of my questions. Thank you very
much. I am sorry it was so lengthy.
5999 THE CHAIRPERSON: Thank you, Commissioner Cram. You have given us a
comprehensive review of the issues involving the independence of SaskTel from
the Saskatchewan government.
6000 Mr. Ching, you are the President of SaskTel, you regularly review
financial performance and return the reports to superiors on the performance of
financial and other targets and goals within the company?
6001 MR. CHING: Yes.
6002 THE CHAIRPERSON: You have told us about debt to equity ratio targets of
45/55 and at the tip of your tongue you had how much tax your corporation has
paid. I am curious as to what your 1999 sales were in SaskTel, your last year's
6003 MR. CHING: The 1999 gross revenue for the telco was $615.5 million. The
gross revenue for holco was $737.7 million.
6004 THE CHAIRPERSON: You spoke in great detail throughout the afternoon
about meeting certain aboriginal targets. What are your targets this year?
6005 MR. CHING: One of the problems we have had here is our target has
bounced around a little bit because we are in the process of a voluntary
severance program to reduce staff head count.
6006 THE CHAIRPERSON: Maybe we will go to last year then. What were your
targets last year, the historical target?
6007 MR. CHING: We will have to give that to you, I'm sorry.
6008 THE CHAIRPERSON: All right. I guess what the targets were and what you
did achieve on those targets.
6009 I have another question. Can you please discuss -- some have alleged
that there has been a departure from SaskTel principles of providing service to
larger urban centres only at the jeopardy of rural and remote residents.
6010 In that your company has targeted 11 of the larger communities within
the province, can you please speak to that?
6011 MR. CHING: Sure. Well, I think it's correct to say that when we had a
monopoly within Saskatchewan there was an expectation -- and this is an
expectation which goes back a long way; this goes back to the period of
1908-1909 when the precursor of SaskTel was originally created -- that rural
Saskatchewan would be treated virtually identically with urban Saskatchewan in
as many respects as one could possibly achieve and I think it's correct to say
that people in rural Saskatchewan, when we extended the basic telephone system,
the hardwire system, received perhaps a little later sometimes than the urban
areas but almost inevitably a roughly equivalent service; that is to say that if
rotary dial came in in Regina and Saskatoon, it was just a question of time
before it came in in my hometown of Oxbow. The same thing with regard to
touchtone, when it replaced rotary.
6012 But, of course, that was under a scheme where the sum total, really, of
SaskTel's activities were local and long distance and Yellow Pages and where the
corporation simply treated its revenue streams as being a revenue stream -- and,
frankly, we have got some pretty expensive hardwire plant out in rural
Saskatchewan which I think had there been a fully competitive marketplace, it
might have been harder to see that plant out there.
6013 If you compare that, for instance, with the cellular, the mobility
system, that came in under an entirely different conceptual regime. There, there
was a duopoly, and it was expected that that system could not be
cross-subsidized from the hardwire system -- that was expressly forbidden by the
6014 Well, as a result, when we deploy our cellular system, the good folks in
Good Soil, Saskatchewan, have a hard time understanding why they can't have two
cellular towers up there. This is a small town in northwestern Saskatchewan.
They look and they see that they have got essentially the same hardwire system
as their cousin in Moose Jaw, but they don't have the same cellular system, and
I think there is a belief that somehow or other SaskTel has done them one in the
eye because we haven't built a cellular system to extend up into Good Soil.
6015 Now, we have spent a lot of time with communities who have raised
concerns of this nature and tried to explain to them that they are two
fundamentally different systems, that was built on a concept of universality and
cross-subsidization and the other system was based upon a fully commercialized
concept, or a fully competitive concept.
6016 One of the difficulties that we have got as SaskTel is being owned by
all the people in Saskatchewan. Regardless of whether they do business with us,
they still own us. And, boy, they expect us to give them levels of service that
make them as happy as they want to be. There's no question that there are people
in rural Saskatchewan who feel that SaskTel is not as in touch with rural
Saskatchewan as it was 15 or 20 years ago. While I don't think it's really a
fair criticism of SaskTel, I can understand how they arrive at it because when
you get your mobility system based upon a commercial basis it's difficult, if
not impossible, to find a business case which allows the good folks in Good Soil
to have access to that.
6017 The same as can true with regard to Internet. It's already happening. We
are trying our level best to extend the Internet, and especially high-speed
Internet, to rural Saskatchewan, but the fact of the matter is we have got to
find a commercial basis for doing so.
6018 So, you have put your finger on one of the difficult public image
problems that we have got out there. People in rural Saskatchewan who look back
10-15 years saw a sense equanimity between urban and rural Saskatchewan that was
very, very powerful. They look at the types of communication systems that are
evolving over the last 15 years and they see themselves not doing as well in a
fully competitive, commercially-based world. And I can talk until I'm blue in
the face and tell the good folks in Good Soil or Frontier, Saskatchewan, or even
my old hometown of Oxbow, that they aren't going to get the quality of service
that the folks in Regina and Saskatoon are getting and explain the commercial
realities of that, but they still give me a little bit of a beating in the
6019 THE CHAIRPERSON: Thank you, Mr. Ching.
6020 You may be aware that the Government of Alberta, for example, has an
initiative of connecting every community of Alberta, regardless of size, as long
as there's a school. I guess the basic criteria is if you are too small to have
a school, then maybe you would have to wait a little while before connecting.
That's one approach. But they don't own a phone company, so it may be a
different answer there.
6021 I guess before we get to that, you talk about the good folks in Good
Soil and I imagine, from your comments, that it's one of the smaller communities
in Saskatchewan -- I'm not from Saskatchewan.
6022 Battleford Cablevision Company, in their intervention, has this
objective of tying together other smaller communities, such as Wilkie, Unity,
Biggar, Rosetown, Kindersley, Lashburn, Maidstone, Meadow Lake, and they are
saying that they need -- they don't need the extra competition because it will
just, in their core centres, where SaskTel really only wants to -- is only
interested in Battleford or North Battleford markets, which is their largest
part of their -- it's the base of their pyramid, so to speak, and it would
affect the roll-out into these smaller communities.
6023 What comment do you have about that? And, because I'm mindful of time,
if you can also work into your comment some discussion about the fairness and is
it appropriate for a government-owned enterprise to be competing with
private-sector business on a competitive basis? Is it a level playing field?
6024 I won't give you too many more than that; you have got two or three
6025 MR. CHING: Well, let me maybe address some comments to the latter,
because I recently gave a speech to the Rotary Club in downtown Saskatoon and in
the question period afterwards, one of the individuals stood up and said, "Why
are you competing against private sector companies?", and I think he was
referring, actually, to a subsidiary that we have created, called Securetek,
which is in the security business and is competing against private sector. But
what I drew to his attention is that every line of business that we are in is
competitive. We don't have anything that looks like a monopoly any more.
6026 If you said to SaskTel, tomorrow morning, that we weren't going to, or
we shouldn't compete with anybody in the private sector, we would simply shut
down, because everything we do is in the competitive sector: local; long
distance; cellular. Every part of our business is in the competitive area.
6027 So, I think some of the people who make the observation that, as a crown
corporation, we shouldn't compete against the private sector haven't had to sort
of really come to rest in their minds yet that it isn't the old days of where we
had a monopoly. We don't have a monopoly any more, and I think they are sort of
forgetting about that. They are sort of like the people who make the direct
equation between when you had a hardwire service, it was all even all across
Saskatchewan, but now that you have got a cellular system it isn't even all
across Saskatchewan. That's right, things have changed in the meantime.
6028 With regard to the issue of the North Battleford Co-Op, we have a
certain amount of sympathy, I think, for the argument that's made there because,
frankly, I can still hear echoes of us making the same argument. We made the
argument to the Province of Saskatchewan, "Don't allow competition in here. Stay
with a monopoly."
6029 I think, when we look back on that, that was a really dumb argument for
us to be making. The fact of the matter is competition has been very good for
Saskatchewan. It's caused us to be smarter; it's caused us to sharpen our pencil
on prices; it's caused to innovate -- that's why we are rolling out a high-speed
Internet product that is the six to eight megabytes, and looking at trying to
get into the broadcast business. It's caused us to look at getting into the
security business, into the entertainment business and hospitals. It's caused us
to take a look at all lines of business that could be reasonably performed by
SaskTel and the way in which we go about it. It's forced us to be more nimble,
quicker off the mark and to innovate and to use the resources that we have got
as wisely as we possibly can.
6030 It has forced us to get into some diversification programs. It has
forced us to try and use our system in a way that we never even thought about
prior to competition.
6031 So I think when, for instance, North Battlefords' cable co-op looks at
SaskTel and says "You are a danger to me", we are really not. Competition may be
a big danger to them, but it is all a question of who brings the things on the
doorstep. It may be SaskTel, it may be ExpressVu, it may be some other
competitor. The danger to North Battlefords' co-op is competition, but it is a
danger only so long as they focus on the fact that it may have some negative
impacts on them. It is going to have a lot of positive impacts too.
6032 They are either going to learn to be quick and to be innovative and to
be good in their customer service -- not just good but excellent in their
customer service. They are going to have to innovate and do the things that they
need to wed themselves to their customer base because they are really doing what
the customer wants or, alternatively, it is just a question of time before they
are dead. Now, it ain't necessarily going to be SaskTel that drives that stake
6033 THE CHAIRPERSON: Okay. I that's great. I think I have an understanding
of your point. Thank you.
6034 We will probably here a bit more from this in Phase II, and certainly we
can hear from you again in Phase III on the same topic if it does come up in
6035 One of the other areas that we talked about was, you know, there are
three major issues, at least in my mind, that we have to try and resolve on this
particular application. One is the independence of SaskTel from the government.
6036 MR. CHING: Right.
6037 THE CHAIRPERSON: And if it is not determined that there is quite enough
distance there, then, you know, what type of safeguards need to be put in place
should their application be approved? There are some competitive issues and
there are some head-start issues. Maybe you are getting into the cable business
before the cable guys are getting into the phone business.
6038 The last area I want to explore right now, though, does deal with those
6039 Briefly, if you can maybe talk a bit about the safeguards that the
Commission should consider placing to combat the arguments of
cross-subsidization, inappropriate allocations of costs and revenues of the
broadband side of the business, fairness in access to support structures, and
then I guess the issue of market dominance, not so much -- because we have heard
your arguments that you are not dominant in that business, but in the broader
communications realm, perhaps you are a larger player than some of the others.
6040 I guess that's my question. If you have it all, great; if not, I will
repeat some of it.
6041 MS MOLNAR: I am going to try. And I was trying to write down your
questions, so we will see.
6042 THE CHAIRPERSON: We have lots of time, so I can repeat it if it helps.
6043 MS MOLNAR: I think what I heard is what are the safeguards that might be
6044 THE CHAIRPERSON: Yes. In your corporation's opinion, what types of
safeguards do you think the CRTC should impose should they decide to approve
this application in order to alleviate some of the concerns that the intervenors
have raised such as cross-subsidization, inappropriate allocation of costs and
revenues from broadband, access to various support structures in the province,
and just the market domination argument that some of the smaller players
6045 MS MOLNAR: I think first off, I guess our position is all the safeguards
are in place. We, as we were talking about earlier, have gone through an
extensive proceeding to establish a transitional framework for SaskTel, and that
set up a split rate base with a cost allocation methodology. We had that in
place since competition was introduced in Saskatchewan. That was reviewed by the
Commission and it was accepted. That is the safeguard that has been identified
by the Commission in the decisions we looked at to ensure that there is no
cross-subsidy between utility services and competitive services, including
6046 That, in my view, as I said, also includes broadcast. I think with that
in place the Commission has established that safeguard. What we also have is
part of our transitional framework, which is different than any other telco,
that is, we are required to report those split rate base results more frequently
than any other telco. We also are required to have those results audited, and no
other telco has to do that -- I guess I should be a little more clear -- none of
the larger incumbent telephone companies.
6047 To me, those safeguards are in place and I think that they are
6048 THE CHAIRPERSON: Okay. Thank you very much.
6049 Commissioner McKendry, do you have questions.
6050 Actually, just before Commissioner McKendry, I believe Mr. Meldrum has a
point to make.
6051 MR. MELDRUM: I would like to have a stab at your question on employment
6052 THE CHAIRPERSON: Hey, if you have done your research already, why not?
6053 MR. MELDRUM: In our application, in tab 13, we do have our 1999 report
on employment equity. Unfortunately, 1999 was a very confusing year in terms of
both targets and results because we did an employee census part way through that
year which changed the percentages within the company in terms of which
employees have self-identified themselves as actually coming from a minority
group. We did, though, and in terms of permanent hiring there wasn't very much
that was going on during the course of that year. But I think the results for
our summer hiring program were quite good. Our equity target was 35 per cent and
the results achieved were actually 37 per cent.
6054 Now, of the 37 per cent, 16 per cent was attributed to aboriginal. So,
in other words, out of 197 hires for summer hiring we hired 31 aboriginal folks,
we hired three people with disabilities, 19 were visible minorities and 20 were
women in non-traditional roles. So we did exceed our target terms of summer
6055 In terms of the year 2000, again, the reason Don just doesn't have it at
his fingertips, the number, is because the census caused the board to reset the
number for us. As part of dealing with the committee of the board, they said: We
want to set a specific target of hiring permanent aboriginal employees this
year. We don't want to just look at the percentages and how things are going. We
want to ensure that you hire X people.
6056 That was just recently changed again as a result of some of the issues
related to the employee census. My recollection is that it is 32 people that we
are required to hire of aboriginal descent.
6057 THE CHAIRPERSON: That's good. I was just wondering how conversant as an
organization you were with your targets. You spent a lot of time earlier this
afternoon referring to these targets, so I figured you would have a fairly ready
6058 MR. CHING: We set a target at the beginning of the year. Then we did the
survey, the result of which was that we discovered that we were actually doing
better than the target we had set for ourselves, so the board then scaled up our
target. Then, in the middle of the year, we engaged in a voluntary severance
program to downsize a little bit. The uptake amongst First Nations folks was
quite significant and as a result our compliance dropped again, so they brought
the target down.
6059 So one of our problems has been that within that particular time frame
they were talking about, our target, we were trying to set it out there as a
stretch target but discovered that we were actually almost bypassing it when we
did our survey, and then we discovered that the stretch target was almost
unattainable when the dust settled on the voluntary severance program.
6060 THE CHAIRPERSON: I'm not really overly concerned about what your targets
are. I guess that is something between your shareholders and yourself.
6061 It was just more how conversant as managers were you of targets set by
your shareholders. Then why I wanted the answer on your level of success, what
you achieved, would be to see how your shareholders, so to speak, would react to
that. What you have told me is they do follow that information and they do
6062 MR. CHING: Yes.
6063 THE CHAIRPERSON: Thank you.
6064 Commissioner McKendry.
6065 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
6066 I just have two things I would like to talk to you about. One, I want to
make sure I understand the scope and nature of the potential mischief that has
been discussed. The other is I want to ask you about the treatment of federal
tax. You discussed that with Commissioner Cram in terms of the dividends. I
would just like to make sure that I understand that.
6067 The scope and nature of the potential mischief, you are not going to
offer a community channel, so it strikes me that there is not an issue there in
terms of the government telling you what to put on or what not to put on a
6068 I took it from your comments to Commissioner Cram that where you saw in
theory the potential mischief was with respect to the priority given to certain
programming services in your channel listing. I'm not sure I quite understood
that. Perhaps I could just refer you to the overheads that you showed earlier. I
take it you were referring to the interactive guide when you made that comment.
6069 Is the potential mischief that -- looking to the next page, the little
window that is on the portal page is expanded. Is the potential mischief that
first window that comes to the viewer will give priority to certain services
that the government has directed you to give priority to? Is that what we should
be worried about?
6070 MR. CHING: I must say that I have a lot of trouble with knowing what our
journalistic input is. As nearly as I can make out, whether or not we included,
for instance, a religious channel, or didn't include a religious channel in our
offering, is obviously a decision that we could make which would have
journalistic import and might also be something that the government might have
in for political reasons or ideological reasons.
6071 The other thing is that the order in which they are presented to the
viewer could have an influence. When you get beyond that you start to run into
some pretty thin soup in trying to find out just exactly what our journalist
activities are going to be.
6072 I struggle with this, because when this whole issue sort of blossomed
out in preparation for these hearings I kept pestering my staff "Exactly what is
the journalistic input that could be interfered with? What are we going to be
doing that a government would want to come and say `Hey, for political reasons I
want you to do it this way rather than that way'?"
6073 I must say that I have a hard time finding out exactly what our
journalistic activities are going to be because, as I say, we are not writing
editorials, we are not making programs, we don't have a community channel. When
you look at this issue I think it behooves the Commission to remember that there
ain't much there insofar as journalistic activity.
6074 COMMISSIONER McKENDRY: Just so I understand this, does this window
6075 MR. CHING: Yes.
6076 COMMISSIONER McKENDRY: So there would be no advantage -- and I assume at
whatever time you turn your TV on you might see one -- because it is continually
scrolling, one time you will see one set of channels and another time you might
see another set of channels. You are not always going to get the same set of
channels, are you, when you turn your TV on, in this little window?
6077 MR. SHEPHERD: Typically what would happen, the window scrolls but only
at the instruction of the user. So the window will typically come up at the last
channel that you were at. So if you were to turn it on it is going to come up at
the first channel initially, if you scroll through it to channel 35 and then
come back later it is going to be at that position.
6078 COMMISSIONER McKENDRY: So it will change, depending on whatever you
ended at the last time you were watching television?
6079 MR. SHEPHERD: Yes.
6080 COMMISSIONER McKENDRY: Okay. Thank you.
6081 In terms of, then, whether or not you carried a channel as the result of
government direction, certain channels you would be required to carry if we
granted you your licence because we require BDUs to carry certain channels, but
there are channels or services that we issue a licence to where it is optional,
and really that is the heart of the potential mischief is that the government
might say "No, don't carry that one" or they might say "Carry that one for
sure", even assuming you didn't want to. That is the heart of the problem, is
6082 MR. CHING: I think that is as broad a display of the problem as one
6083 COMMISSIONER McKENDRY: Thank you.
6084 I just wanted to ask you now about the dividends with respect to the
6085 You don't pay federal tax. I think Commissioner Cram was asking you
"Well, you don't pay federal tax so you are in a position to -- you don't have
to recover that in your prices and your competitors do."
6086 As I understood your response, it was that is not a concern because the
amount that we would otherwise pay in taxes is added to the dividend that we
would pay even if we were paying taxes. So that shouldn't be a concern to us.
6087 My question is: Dividends don't show up as a charge on your profit and
loss statement, only the operating expenses, and so on, of the company do. So
when you set a price for you DIV service how do you factor in this dividend in
the rate-setting process?
--- Pause / Pause
6088 MS MOLNAR: I'm going to take a stab at that.
6089 The price for DIV is not based on cost but on the competitive market and
what in its view the customer would bear with us becoming a new entrant into the
6090 COMMISSIONER McKENDRY: So you could price this below cost if you felt
that you couldn't recover the cost of the service in a competitive market?
6091 MS MOLNAR: I don't believe that is the intent, based on the business
case that is attached.
6092 We certainly view that this is a profitable service, so it is -- it will
6093 COMMISSIONER McKENDRY: But you have told me that you are not going to
set the price based on cost and it is going to be set based on a market price,
or what you believe the market will bear for your service in a competitive
6094 MS MOLNAR: Yes.
6095 COMMISSIONER McKENDRY: My question was: At least in theory the service
could then be priced below cost?
6096 MS MOLNAR: I guess you could say theoretically that would be the case.
That is certainly the case in the Internet market for example and has, I think,
been acknowledged by even the Commission in certain decisions that when there is
a new service that comes on board it could be priced below cost until you reach
the economies of scale and scope.
6097 But that isn't the case with our broadcast. We have, as a condition of
bringing it forward, developed a business proposal --
6098 COMMISSIONER McKENDRY: So the issue -- I'm sorry, were you done?
6099 MS MOLNAR: I'm done.
6100 COMMISSIONER McKENDRY: So the issue of whether or not you recover your
federal tax through -- or whether, in effect, you bear the burden of federal tax
through increased dividends isn't really relevant to set the price for DIV?
6101 MR. CHING: Well, it is in this regard: What happens is that when we go
into our approval phase with our holding company, CIC, they expect us to analyze
the marketplace that we are functioning in and give them an idea as to what the
approximate dividend stream and net earning stream are within that particular
6102 They then set for us a dividend target which is based upon the concept
that we should be equal with the private sector, plus there should be a notional
amount added on that reflects the fact that we don't pay taxes.
6103 Then they set for us a target in all of our planning phase which is
based upon those two items.
6104 We then, when we go into any particular project, whether it is our
thrust into the security business or whether it is our thrust into DIV, have as
part of our financial planning the idea that we are expected to earn that sort
of a return on our business.
6105 So it lurks in the background, if I can put it that way, of all of our
planning for all of our projects. It is not sufficient for us to go into a
project with the idea that somehow or other we will occupy that field but in the
long run we will lose money at it.
6106 I think that, for instance, if you take Securetek, which is our security
operation, clearly it is in the start-up phases, will be probably for the next
year and-a-half or two years. That is when we project that it starts to go
cash-flow positive and start delivering revenue to our bottom line.
6107 So we are prepared to bear the loss of that in the total operation of
SaskTel, but only on the assumption that it is building to a business which is
going to be a successful part of the corporation. If we find after a period of
time that it isn't on a trajectory to be a successful business in that regard,
then we are going to find a way to extract ourselves from that business.
6108 Frankly, there has been things that we have started off on that didn't
prove out to be on-line with the business case as we had originally intended it
and we have discontinued those parts of our business.
6109 COMMISSIONER McKENDRY: Given what you have said about your pricing
approach to DIV, you would be in a position, as I understand it, to
cross-subsidize within your competitive sector the price of DIV. You could, if
you chose, price it below cost and cross-subsidize it from other revenues in the
competitive sector. I understand you couldn't cross-subsidize it in the utility
6110 MR. CHING: Right. I think your statement is correct.
6111 COMMISSIONER McKENDRY: Okay. Thank you very much.
6112 I just have one little question I meant to ask about the potential
mischief and I neglected to ask it. That comes from the third page in your
presentation on DIV, the my.saskcom page.
6113 There is a reference in there to the cybersoapbox. Is that in any way
akin to a community channel?
6114 That is the page that has bread or milk or milk and bread at the top.
6115 MR. SHEPHERD: Because the service is a mix of traditional broadcast and
Internet there clearly will be services delivered that are I guess more Internet
centric and they will include things like news feeds and potentially things like
chat groups around content and those sorts of things.
6116 I don't believe they are equivalent to the traditional concept of a
community channel, but they certainly do start to bring the ability for people
to access information and for other people in the community through the Internet
really to put their own views and their own content out and to make that
available to other consumers through the service, as they basically can today
through web pages and other types of Internet services.
6117 COMMISSIONER McKENDRY: So this is a distinct Internet service. It's not
a part of your broadcast proposal?
6118 MR. SHEPHERD: That's right. This will be essentially a web-based
6119 MR. MELDRUM: In fact, it is an Internet that exists today.
6120 COMMISSIONER McKENDRY: Thanks.
6121 Just as a matter of interest, how does one get on -- just looking at the
first page, the portal page, how does one get onto the Internet? I take it
clicking on the Internet, the icon for myfast.com that takes you to that page.
How do you then get out into the Internet?
6122 MR. SHEPHERD: The main mechanism is that would take you to the
myfast.com home page, which is really just an Internet portal. From that point
you can actually type in the web address and use a search engine or a browser
and just go directly from there to other web pages.
6123 COMMISSIONER McKENDRY: Will your customers be able to stream video from
the Internet up onto their television sets?
6124 MR. SHEPHERD: Eventually, we do see that they will be able to access I
guess what you would call Internet based video streaming services on the set
top, similarly to what they could do on a PC. Much of that is dependent upon the
technological development of the set top. The data service that we have trialed
is not really capable of doing that because it doesn't support the type of
plug-ins that are required for those streaming services, but we do see as we go
forward with set-top development that that capability will exist.
6125 COMMISSIONER McKENDRY: Do you have plans to offer the personal video
recorder as part of this service?
6126 MR. SHEPHERD: That certainly is one of the areas that we are
considering. We have not finalized plans to do that and I guess we are aware of
some of the issues around that in terms of things like copyright protection that
we would have to work through before we could really commercially deploy that
type of a service.
6127 COMMISSIONER McKENDRY: Thanks very much.
6128 THE CHAIRPERSON: Thank you, Commissioner McKendry.
6129 Commissioner Noël.
6130 COMMISSIONER NOËL: On a more humoristic tone, Mr. Ching, and you don't
have to answer that question, you mentioned earlier that you had entered into
the field of providing entertainment in the hospital. Is that part of a larger
conspiracy to accelerate the healing process and get people out of the hospital
and reducing the costs for the Department of Health?
6131 MR. CHING: I don't think the Department of Health sees a whole lot of
use in what we are doing really.
6132 THE CHAIRPERSON: Any other questions?
6133 COMMISSIONER NOËL: No, that's it.
6134 THE CHAIRPERSON: Legal counsel.
6135 MR. BATSTONE: I have one question left and it goes back to some that
you, Mr. Ching, said earlier. You had indicated at one point that Mr. Meldrum
had a response to the question of whether the Commission should look at the
current circumstances of control in respect of SaskTel or the potential ones. I
guess I would just like to hear that particular argument.
6136 MR. MELDRUM: I am not sure I can add my two bits to the issue of whether
or not SaskTel is an independent carrier. I guess my perspective would be that
of a solicitor that has drafted far too many contracts over the years and then
had to interpret contracts as well.
6137 The key section that we have explored this afternoon is the definition
of independent carrier and it is subsection (a). I know it is here somewhere,
subsection (a) in which the key section is:
"where the Commission determines that the corporation is not directly
controlled by Her Majesty in right of any province." (As read)
6138 The key point I want to make is that the drafter of this order in
council, whoever he or she may be, chose the present tense. The key words used
are "is not directly controlled". They didn't choose words that looked to a
future kind of test. Future words would have been something like "will operate
in a manner which does not directly control", that would be both present and
future, or "the commission determines that the corporation is not and will
continue to not be directly controlled".
6139 Again, somebody could have drafted that way, but instead they used the
present tense and it is probably because of the challenges that one would have
as a commissioner looking out into the future to try and say where would the
future take you. I think they deliberately chose the present tense for a reason.
6140 MR. BATSTONE: But would you accept then, I mean if you take that view, I
take it then you would also argue that if the Commission concluded at one
specific point in time that SaskTel was not directly controlled by Her Majesty
in right of Saskatchewan, but then the next day it was and then they issued a
licence, but then the very next day it did become directly controlled, that
there would be nothing to be done there and the direction doesn't speak any
more. Is that what you would be saying?
6141 MR. MELDRUM: I think it might take you back to the conditions of licence
and the degree to which those are enforceable by the Commission if you built
that in as part of the condition of licence.
6142 For example, I was surprised to see -- not necessarily surprised, but
there is a section in the Broadcasting Act that allows for it to be an offence
in the event you are found to be breaching a condition of licence. So the
Commission certainly has a lot of remedies, but again I am not super familiar
with broadcasting and the issuance of licences.
6143 MR. BATSTONE: But it would be your view that absent those conditions the
Commission would be without a power to go back?
6144 I mean another thing that I think factors in is section 24 of the
6145 MR. MELDRUM: Well, I guess section 3 of the direction is again the
section that directs directly to the Commission as to what they can or can't do.
"Broadcasting licences may not be issued and renewals may not be granted...."
unless you fit within the definition of independent carrier. Perhaps it is
only the renewals which again the Commission would have the jurisdiction to deal
with the question of whether or not we were or were not or had not been directly
6146 I would think that if at that point you look backwards and said that we
had breached that, then I think that would likely be the end of the licence, and
woe be somebody who made a lot of investment to provide a service and then all
of a sudden found themselves without a licence.
6147 MR. BATSTONE: I guess I just find it a bit strange, like on that
interpretation you could be not directly in control when you get the licence,
directly controlled in the intervening period and then when you come up for your
renewal make sure you are not directly controlled again and there would be
nothing the Commission could do about it. Myself, I find that strange. To me it
seems to strain the intention of the direction, but I guess I was curious as to
you view on that.
6148 MR. CHING: I guess if I can make an offering here, when you get three
lawyers in the room you generally have three separate opinions. My view of the
thing would be I believe if the court were looking in on this that they would
assume that the sections were meant to make a workable system, not an unworkable
system. Therefore, I believe that if we lost our independence that a court
looking at it would probably go out of its way to find that the Commission had
the authority to do something about it.
6149 Certainly from my vantage point, if I were pleading the case on behalf
of the Commission, I think I would argue very strongly that to find otherwise,
not just simply wrecks havoc in this circumstance because this happens to be one
condition which plagues the issue of Sasktel, but every broadcast licence that
you grant, I am sure, has with it certain things that are important from the
point of view of the act and the Commission.
6150 I can't believe that the Commission would be without a remedy in dealing
of violations of a broadcast licence, whether it was our type of violation or
6151 MR. BATSTONE: Thank you very much.
6152 THE CHAIRPERSON: Thank you, Mr. Ching and SaskTel panel members.
6153 This brings us to the end of Phase I.
6154 We will take a 20-minute break prior to beginning Phase II, which as you
know is the intervention phase.
6155 Mr. Secretary.
6156 MR. BURNSIDE: We will reconvene at five minutes after six. I wish we
could get this on the hour instead of these weird times.
6157 COMMISSIONER McKENDRY: Make it 7:00.
6158 MR. BURNSIDE: I think it has been long enough. We will make it five
minutes after six.
--- Upon recessing at 1745 / Suspension à 1745
--- Upon resuming at 1807 / Reprise à 1807
6159 THE CHAIRPERSON: Good evening, ladies and gentlemen. Welcome back to the
Calgary public hearing, Phase II of SaskTel.
6160 Mr. Secretary, are there any matters?
6161 MR. BURNSIDE: No. At this point I would like to call Access
Communications Co-operative Ltd.
6162 Mr. Jim Deane, Derek Aitken and Mr. Scott Prescott, you can proceed when
you are ready.
INTERVENTION / INTERVENTION
6163 MR. DEANE: Thank you.
6164 Good evening, Commissioners. I am Jim Deane. I am President and CEO of
Access Communications Co-operative.
6165 Joining me today, on my left, are Derek Aitken, Senior Vice-President,
Engineering, and, on my right, Scott Prescott of Johnston and Buchan, our legal
6166 Commissioners, Access Communications is here today because we believe
that SaskTel's proposed entry into the broadcasting distribution market would
have a profound impact on the communications industry in our province.
6167 This hearing may very well decide the future of the broadcasting
distribution industry in Saskatchewan.
6168 A decision to allow SaskTel to operate as a broadcasting distributor
would inevitably tilt the playing field so far in SaskTel's favour that we could
witness the demise of some cable operators in Saskatchewan.
6169 The crown corporation would be in a position to offer customers a more
complete range of communications services than any other service provider
operating in the province.
6170 The crown corporation would also have the ability to use its current
position in the communications market and its ongoing relationship with the
Government of Saskatchewan to completely dominate the provincial broadcasting
and telecommunications industry.
6171 Approval of this application would also permit, for the first time, a
telecommunications carrier that is an agent of a provincial government to hold a
broadcasting licence. Based on the record of this proceeding, we do not believe
that SaskTel is eligible to hold a broadcasting licence in Canada. In our view,
SaskTel has provided no credible evidence that demonstrates that SaskTel enjoys
the requisite freedom of expression and journalistic, creative and programming
independence to satisfy the requirements of the direction of the CRTC.
6172 As the Commission is aware, the key to sustained competition is having
more than one strong competitor in a given market. Clearly, it would not be in
the public interest to create a single entity that could dominate the
broadcasting and communications market across all platforms in the Province of
6173 We do not believe that competition will be sustainable if SaskTel is
endowed with the additional advantage of holding a broadcasting licence. As the
Commission is well aware, the advantages that SaskTel already enjoys over every
other service provider in our province are daunting.
6174 First, SaskTel is, by any measure, the dominant communications company
in the province. No other service provider operating in our province is able to
offer the same range of services as SaskTel.
6175 Second, no other service provider operating in Saskatchewan even comes
close to equalling SaskTel's share of the communications market. From its 100
per cent market share of local telephony to its overwhelming dominance of long
distance and cellular markets in Saskatchewan, SaskTel is the undisputed
telecommunications champion. By SaskTel's own admission, well over half of the
communications services purchased in Saskatchewan are provided by the crown
6176 Third, SaskTel has spent years and expended an enormous amount of money
putting fibre into the ground. It has used its monopoly telephony status to fund
the creation of its broadcasting distribution network. It has also used its
monopoly status over rights-of-way and support structures within the province to
hinder our ability to service our customers.
6177 Fourth, SaskTel's status as a provincial crown corporation provides the
company with enormous benefits, including guaranteed funding and loan
guarantees. Regardless of whether SaskTel is currently utilizing such benefits,
there should be no doubt that a company who can turn to the government in the
event of a revenue shortfall would have an enormous competitive advantage over
other service providers.
6178 Fifth, SaskTel provides the Saskatchewan government with virtually all
of its telecommunication needs, including local and long distance telephony,
wireless services and Internet services. We note with interest that SaskTel has
not identified any other company that provides communication services to the
provincial government. These revenues from the Saskatchewan government provide
the crown corporation with clear advantages over the other service providers in
6179 SaskTel has also tried to minimize the advantages that it receives from
its relationship with the Saskatchewan government.
6180 The Commission recognized, a number of years ago, that SaskTel's status
as a crown corporation would provide it with unique advantages if it were to be
licensed as a broadcasting distributor. For example, in the convergence report
which was released on May 19, 1995, the Commission said:
"...in the case of Crown entities such as SaskTel and Manitoba Telephone
System, entry [into the broadcasting distribution market] should be predicated
on regulatory safeguards to address competitive advantages that may arise from
their unique status as Crown corporations."
6181 To our knowledge, SaskTel has not proposed any safeguards in this
proceeding to address the competitive advantages it derives from its unique
status as a crown corporation.
6182 In its reply to interventions, SaskTel has tried to minimize its market
dominance by suggesting that communications companies like Rogers, BCE and Telus
are all much larger. The comparison is hardly fair.
6183 As the Commission is well aware, SaskTel's alliance with BCE prevents
SaskTel from facing competition from companies affiliated with BCE, with the
exception of Bell ExpressVu. Moreover, the realities of the marketplace
effectively preclude companies like Rogers and Telus from offering more than
cellular/PCS services to residents of Saskatchewan.
6184 Another reason why this application should be denied is that SaskTel is
ineligible to hold a broadcasting licence. We do not believe that approving this
application would be consistent with the direction to the CRTC.
6185 We would note, in this regard, that SaskTel has provided an exhausting
discussion of the term "directly controlled" in its reply submission. While that
discussion was interesting, it did not respond to the concerns that were
outlined in our written intervention. We did not argue that SaskTel is directly
controlled by the Saskatchewan government. Rather, Access Communications opposes
this application on the grounds that the crown corporation has failed to provide
any evidence that SaskTel operates at arm's length from the government of
Saskatchewan. We do not believe that SaskTel enjoys the requisite freedom of
expression, journalistic and creative and programming independence to satisfy
the definition of "independent carrier" which is set out in the direction.
6186 We have examined the evidence that is before the Commission in this
proceeding, which includes SaskTel's incorporating legislation and the policy
framework document for crown corporations that was issued by the Saskatchewan
government in 1996.
6187 As noted in our written intervention, this material raises serious
doubts as to whether SaskTel operates independently from the provincial
government. SaskTel's directors are appointed to the board at the pleasure of
the Saskatchewan government. They can, therefore, be removed by the government
at any time.
6188 An example of political interference in the operations of a
government-appointed board occurred early in October of this year. The
Saskatchewan energy minister fired the entire board, and the president, of the
Saskatchewan Research Council.
6189 In addition, the Saskatchewan government has clearly stated for the
record that its crown corporations will remain accountable to the government for
the day-to-day operating decisions of those corporations.
6190 We have also examined those portions of the Broadcasting Act which are
designed to ensure that the CBC operates at arm's length from the federal
government. We have done this because, as SaskTel notes, there are some
parallels between the two crown corporations.
6191 Unlike the Saskatchewan Telecommunications Act, however, the
Broadcasting Act contains provisions which are specifically designed to ensure
that the CBC enjoys freedom of expression and journalistic, creative and
programming independence from the federal government.
6192 For example, the members of the CBC board are appointed for fixed terms.
The board enacts the bylaws of the corporation. In addition, the CBC's
independence from the federal government is guaranteed by subsection 46(5) of
the act. Even the provisions of the act which affect the finances of the CBC are
required, pursuant to subsection 52(1), to be interpreted in a manner that does
not affect the CBC's freedom of expression and journalistic, creative and
6193 We would note that no credible steps have been taken in this context by
the Government of Saskatchewan, or by SaskTel, to ensure the crown corporation
operates at arm's length from the provincial government.
6194 In order to comply with the definition of "independent carrier" set out
in the direction, we believe that it would be necessary for the Saskatchewan
government to enact legislative amendments, similar to those in the Broadcasting
Act, that would guarantee SaskTel's independence.
6195 Based on the record of this proceeding, it's our view that the
Commission should find SaskTel does not qualify as an independent carrier under
6196 Finally, with respect to SaskTel's request to distribute distant
Canadian signals on a discretionary basis, we believe that it would be wholly
inappropriate for the Commission to approve SaskTel's distribution of those
signals. SaskTel has made no attempt to justify the distribution of those
6197 Moreover, no other Class 1 cable distributor operating in Saskatchewan
has been granted the authority to distribute the range of distant Canadian
signals that SaskTel proposes to carry on its systems.
6198 So, for all of the foregoing reasons, Access Communications Co-operative
submits that it would not be in the public interest, or in the interests of the
communications industry that is developing in Saskatchewan, to license SaskTel
as a broadcasting distributor.
6199 Further, we do not believe that SaskTel qualifies as an independent
carrier under the direction and, therefore, is not eligible to hold a
6200 Thank you for the opportunity to appear before you this evening. We
would be pleased to answer any questions that you might have, but before we do,
our legal counsel would like to address SaskTel's introduction of the order in
council earlier this morning.
6201 MR. PRESCOTT: Good evening, Commissioners.
6202 We want to note our objection to the introduction of the order in
council of the Saskatchewan government which was introduced at such a late stage
in this proceeding.
6203 As the Commission is aware, Section 8 of the CRTC Rules of Procedure
prohibits the introduction of new documents without the express permission of
the Commission once the application has been gazetted.
6204 We think it's unfair that this was introduced here today without the
opportunity for interested parties to comment and we think that it should be
struck from the record.
6205 In the event that the Commission permits the order in council to be
entered into evidence, we request that the intervenors be allowed to have a
seven-to-ten-day-period to file written comments to identify the impact that
this order in council has on their eligibility to comply with the direction.
6206 THE CHAIRPERSON: SaskTel, do you have an objection?
6207 MR. CHING: We have no objection.
6208 THE CHAIRPERSON: Okay. So the record states that SaskTel has no
--- Pause / Pause
6209 THE CHAIRPERSON: Based on consultation with the Commissioners and our
legal counsel, we deny the request that this new information be struck. However,
we will give you seven days for a written response in order to prepare your
6210 MR. PRESCOTT: Thank you very much.
6211 THE CHAIRPERSON: I will now begin questions.
6212 MR. BATSTONE: Excuse me, Commissioner. If I could just add at this
6213 Could you please just ensure when you do file your reply that you also
6214 MR. PRESCOTT: Yes. Absolutely.
6215 MR. BATSTONE: Thanks.
6216 THE CHAIRPERSON: Okay, Mr. Deane, I will begin with the questions. I
just have a few different areas to look at.
6217 I guess areas of concern on the ownership has been dealt with
extensively in earlier questioning so I am not going to spend much time there
since we have your written interventions in that area.
6218 Head start. Has your organization, your cable firm, considered getting
into the telephone business?
6219 MR. DEANE: We are watching with some interest the experience I guess of
some cable operators within the country, particularly in the maritimes with
their entry into the business, and also with some interest cable labs, the
industry laboratories, and their recommendations.
6220 To date we haven't seen any credible business case for our entry into
local telephony, but we are watching with some interest.
6221 THE CHAIRPERSON: And Access, formerly known as Cable Regina, would be
considered one of the leaders, I guess, in the cable television industry in
6222 MR. DEANE: I think that we are -- given the convergence, we are one of
the bigger companies now. All things being relative, though, I think we still
consider ourselves a small to medium size operator.
6223 Whether or not a company of our size can continue to swim upstream and
do things differently than the rest of the industry, frankly, no, we can't.
There are economies of scale, and obviously there are limits on the amount of
investment that we can put into the business. But, no, I think we are going to
be followers rather than leaders going forward, is an honest answer.
6224 THE CHAIRPERSON: We talked to the applicant, SaskTel, and requested some
suggestions on safeguards. I'm sure you have heard their reply.
6225 Do you have any ideas on the types of safeguards, should they be
approved -- is there some ways that you feel the Commission, say, can fence them
in to deal with some of the interventions you have raised?
6226 MR. DEANE: I think in the oral presentation here we have suggested that,
apart from legislation by the Saskatchewan government that would bring the
Telecommunications Act provisions closer to, I would say, the act governing the
CBC, you know, the francophone --
6227 THE CHAIRPERSON: Yes. It's a little out of our jurisdiction. That's the
6228 I was wondering more along the lines of what the CRTC could do.
6229 MR. PRESCOTT: I'm not sure we can identify much that can be done. I
mean, I think that it has to be done at the provincial level and it should have
been done prior to this application if they wanted to actually comply with the
direction and actually wanted to meet the safeguards even that were suggested by
the Commission in the convergence report in 1995. I know that the Commission was
concerned with safeguards at that time, but we haven't been able to really come
up with anything that we think at this stage would be an appropriate safeguard.
6230 I guess having said that, there is the -- I mean, we have talked about
cross-subsidization and the potential for that. If SaskTel does get licensed, we
would much prefer that their licensing is delayed for a period of time until the
Commission has had time to examine completely the financial situation of the
6231 Also, just to get a history of regulating the entity, with NB Tel and
with MT&T, and I guess with Bell and Telus as well, the Commission had a
history of regulating them on the telecom side. When they entered the
broadcasting field, you understood the nuances of those entities and how they
act and the behaviour that they engaged in out there in the field and their
relationships with the cable companies. So I think just to have that on your
side would improve your ability to regulate them under the Broadcasting Act.
6232 THE CHAIRPERSON: Are you familiar with the interventions that have been
put forward by the CCTA and Shaw Communications?
6233 MR. DEANE: Yes, we are.
6234 THE CHAIRPERSON: Are you generally in support of those?
6235 MR. DEANE: Yes.
6236 THE CHAIRPERSON: Okay. Thank you, Mr. Deane. I have no further
6239 Okay. Thank you very much.
6240 Mr. Secretary.
6241 MR. BURNSIDE: I would like to now call Battlefords Community
Cablevision, Mr. Charles Day.
--- Pause / Pause
6242 THE CHAIRPERSON: We are just confirming that this document is the same
as that which was filed earlier. We are coming to the consensus that it is.
6243 MR. DAY: Yes. The only thing I did was assure Michael that we wouldn't
take very long to do it.
INTERVENTION / INTERVENTION
6244 MR. DAY: Good afternoon -- evening, I guess.
6245 Mr. Chairman, Members of the Commission, my name is Charles Day and Ray
Wiebe is with me here from Gowling(ph) and Company. I am going to ask him to do
the first part of our presentation.
6246 MR. WIEBE Thank you for the opportunity to present our intervention. I
am going to focus my comments on the eligibility requirements issue that a
considerable amount of time has been spent on already before this Commission
6247 It is our position that SaskTel does not meet the requirements of the
direction that the CRTC is under in granting a broadcasting licence.
6248 The definition of "independent carrier", which is the critical
definition, requires two things. It requires that the Crown corporation not be
directly controlled by Her Majesty in right of any province; and, secondly, that
the Crown enjoy freedom of expression and journalistic, creative and programming
6249 It is our submission that these are separate requirements. They don't
tie together in such a fashion that if you meet the journalistic, creative and
programming independence requirement that you are then over the other
6250 The mischief, I would suggest, that these requirements are aimed at are
twofold: first, the programming independence, which is the second part of the
definition; but, secondly, and I think more importantly in this case, the aspect
6251 If we look at what has happened in terms of SaskTel's current governance
structure, we know that amendments have been made recently to their legislation
which did effect some changes, but I think we have to look carefully at what
those changes were.
6252 The changes were to remove the requirement that a cabinet minister be
the chairperson of the board.
6253 That change didn't have the effect of preventing cabinet ministers being
on the board. It doesn't have the effect of creating a board that no longer has
what I would call a direct relationship to the government. The board in fact
will continue to be appointed by the cabinet.
6254 There are no safeguards in the changes that were effected to tenure.
Board members have no security that their position might not be terminated on
the strength of any particular decision that is made, unlike the provision in
the Broadcasting Act which permits or which requires that the board members of
the CBC have tenure and be dismissed only for cause within that tenure.
6255 The effect of the legislative changes, therefore, is not to create an
independent board. If we compare the status of the SaskTel board with that of
the board of the CBC, we find some stark differences.
6256 Section 35(2) of the Broadcasting Act says that the interpretation of
that part of the Act dealing with the CBC is to be interpreted and applied:
"...so as to protect and enhance freedom of expression and the journalistic
creative and programming independence enjoyed by the Corporation." (As read)
6257 Section 36(3) directs that:
"Directors hold office during good behaviour for a term and may be removed
for cause." (As read)
6258 Section 46(5) of the Broadcasting Act further reinforces these
requirements in stating:
"The Corporation shall, in the pursuit of its objectives and in the exercise
of its powers, enjoy freedom of expression and journalistic creative and
programming independence." (As read)
6259 Similarly, section 52 again reinforces the requirement of independence
for the corporation.
6260 We have nothing remotely similar in any of the legislative framework
that SaskTel is under. That, I would submit, is fatal in terms of meeting the
definition of "independent carrier".
6261 Governments act through legislation. A corporate entity such as a Crown
corporation looks, for its structure and its governance model, to its
legislative framework. We have a legislative framework here that provides no
assurances of independence, no assurances of involvement, and direct
interference, if you will, in the decision-making of the entity.
6262 So the legislative framework, I would submit, has to reflect the model
that this Commission is satisfied will meet the definition of independent
carrier and, if it doesn't, I urge the Commission not to grant a licence in the
6263 Just briefly, in comparing SaskTel with SCN -- and this comparison has
been made in the material -- I would urge the Commission to consider that SCN is
a very different animal, so to speak. It doesn't have, as its motivation, a
profit agenda. It is a non-profit organization. We are not going to be concerned
with that entity about a level playing field and the competition issues that
obviously we are with a Crown corporation.
6264 Accordingly, it is our submission that SaskTel has not gone far enough
in the steps required to remove the control, or a sufficient degree of control
-- and that is what it amounts to, it is a question of degree -- from the
Government of Saskatchewan and, therefore, does not meet the definition of
6265 Those are my comments and I will turn it over to Mr. Day now.
6266 MR. DAY: Thank you, Ray.
6267 I would just like to make a few additional comments. This session has
been long, but I would like to add these things again. They have been brought up
by the Commissioners, and we appreciate that.
6268 We are a licensee of small communities and we are trying to connect all
these communities by fibre optics so we can give them a common service from one
location, reduced costs in terms of headends, provide them with high-speed
Internet access and, incidently, a couple of the communities we are looking at
are no bigger than Good Soil and we still intend to try to provide service
6269 The thing that I object to -- or one of the things I object to most
about a SaskTel licence is that it is simply addressing or going to provide
additional service to people who already have access to their high-speed
services. It is not looking to expand the service area but it is simply looking
at cherry-picking revenue, if you want, out of that community.
6270 That is revenue that we certainly could use when we look at trying to
provide the same kind of service to an individual who is in a town as small as
Lashburn, would give them the same service as, for example, essentially the
communication services that he could enjoy in Toronto.
6271 I certainly don't see anything the matter with that and we are committed
to that. It will just be a lot more difficult to do it, in fact it may mean that
we are not able to do it at all. So that, depending on the revenue that we lost
there, the effect could be very significant.
6272 We don't have huge budgets. Our total revenue for the year would be
approximately $4 million. That is a long way from $1 billion which is enjoyed in
the two arms that SaskTel have. It is certainly a long way from the
$700-and-some million that are there.
6273 So we feel that loss of that revenue is significant and we would ask you
to seriously consider that when you make those decisions.
6274 I think that people in those communities have every right to expect
those services if they can possibly be given.
6275 Second, in regards to community programming, they propose to provide no
community programming, but rather to take that money out of our community and
give it to the programming fund.
6276 We currently do a lot of community programming in North Battleford and
one of the things we want to do when we connect these communities is to put in
one channel that we would offer community programming on. It could come from
these various centres. So that if a licensing is provided, we would seriously
ask you to look at where that 5 per cent would go.
6277 In their application in regards to programming, Sasktel claim that they
will expand content and culture in terms of Saskatchewan. Well, I think putting
money into the programming fund is going to have very little to do with
expanding content and culture in Saskatchewan. I just don't think they go
6278 In terms of competition, we already have extensive competition in our
marketplace. We have Star Choice, we have ExpressVu, we have Image Wireless. We
have a lot of competition already. SaskTel would be an additional competition.
6279 At least three of the four have incredible resources. SaskTel can
cross-subsidize and do whatever it wishes, and I am assuming that if they are
going to fire this up in a year that basically they have already put a huge
amount of that infrastructure in place and that, I'm sure, will fall back
largely, in many cases, onto its phone business because it can use it for one
and the same and how do you start to pull those costs out of there.
6280 So that I think the competition is very unfair and it is just not needed
in that case. I could understand it a lot better if we were talking about
affecting our whole marketplace, but when you look at competition as affecting
only what is convenient to you, I have a problem with that.
6281 In terms of the overall affect on Saskatchewan in our area of the
market, I think that the monies that we are talking about here could be better
spent improving access all around the province. There are not many communities
that enjoy access to the high-speed services.
6282 When we talk about SaskTel indicating in their presentation -- when they
were asked, for example: "Where would you expand to or how long would it take
you to expand to all of the communities you are in, taking a Saskatoon, for
example, and a Prince Albert, for example, or wherever else?" "Well, we will
have to look at that portion of the community and see if it is viable or not."
6283 I would suggest that if that is going to happen with a service we are
talking about here, I hate think what is possible in terms of the other services
over the long haul.
6284 For the legal parts and for the parts that we are attempting to expand
service to communities that could never get it -- they are simply talking about
providing more service to people who already have access to them -- we would to
ask that you deny this application.
6285 I thank you for hearing us and having us here today.
6286 THE CHAIRPERSON: Thank you, Mr. Day.
6287 You raised a lot of good points in the intervention by your
6288 I am interested a little bit about this capital expansion that you are
doing in these variety of communities such as Wilkie, Rosetown, Meadow Lake, et
6289 You talk in some of your information that has been provided to us about
a recent rebuild including fibre that is almost completed. Would that be the
linking of these communities?
6290 MR. DAY: No, that is simply getting fibre into Battleford, North
Battleford and West Park, which West Park is kind of a satellite of Battleford,
a community of that. We have been working on all the crossing routes and things
and next year we will connect fibre to Kindersley, Rosetown and Biggar. That
will happen next year.
6291 THE CHAIRPERSON: That is the $4 million project?
6292 MR. DAY: That will only be one part of it. Thereafter we will do Unity,
Wilkie, and then we have to connect Maidstone and Lashburn. So next year -- that
is all that we will be able to do next year is --
6293 THE CHAIRPERSON: What is your total capital investment?
6294 MR. DAY: The total capital investment will be right around $6 million.
6295 THE CHAIRPERSON: $6 million?
6296 MR. DAY: Yes.
6297 THE CHAIRPERSON: And how much have you deployed so far?
6298 MR. DAY: We have deployed only in Battleford, North Battleford and West
Park. We would have deployed more last year, but we couldn't get fibre.
6299 THE CHAIRPERSON: There has been a shortage we understand.
6300 MR. DAY: Yes. That's all the fibre we can get for this coming year which
is 150 kilometres.
6301 THE CHAIRPERSON: So should SaskTel get a licence would you continue on
with this initiative?
6302 MR. DAY: Yes, I think we would. At some point in time we may not be able
to continue doing what we are doing. Mr. Ching raised the scenario that in fact
there may be less cable companies in Saskatchewan, maybe there would be, but we
are trying to do things better and more efficient. We would hope to be able to
6303 THE CHAIRPERSON: That completes my questions.
6304 Commissioner McKendry.
6305 COMMISSIONER McKENDRY: Thank you, Mr. Chair.
6306 One of the things you pointed out is that there is already competition
for the same customers with respect to BDU distribution, direct-to-home service,
which I guess would be ExpressVU, Star Choice and there is a wireless cable
provider as well.
6307 MR. DAY: Yes.
6308 COMMISSIONER McKENDRY: How have you done in the face of that
competition? Has that had a significant impact on your ability to retain
6309 MR. DAY: We would have lost about approximately 13 per cent of our
revenue over the past three years would have gone to that. It looks like it is
getting more stable in terms of what you are losing and not losing, like there
are a lot of people coming back to cable. There is still a lot of people going.
It's where you can provide the extra services that you are in the greatest risk.
6310 The headends become such a cost that there are so many things to trade
off all the time in terms of getting the system up so that you can cutback on
those things, but they are a very significant factor.
6311 The wireless is not really any factor at all. It is not a big factor
like the dishes are.
6312 COMMISSIONER McKENDRY: SaskTel, if they are successful in their
application, won't be providing a community channel. You do provide one and you
can certainly clarify this, it's my impression that it's a significant community
channel. You have put a fair bit of effort and resource into it. My question is:
Is that a competitive advantage that you have that they won't have?
6313 MR. DAY: I think it's a competitive advantage. The only unfortunate
thing is depending on the revenue you take out, depending on what you are going
to have to scale back on, you will certainly have to look at that as well.
6314 We currently have three people involved full time in community
programming and a number of volunteers and it will affect that too.
6315 I think it's a competitive advantage to the dish market and to the type
of thing where you don't have it.
6316 The thing that I would object to is whatever portion of money they are
taking out of there we would like to see that retained in the community if they
are licensed, so that that money is in fact available for the community channel,
it isn't going any place else.
6317 COMMISSIONER McKENDRY: I just want to make sure I understand that last
point. The money that they are proposing to contribute to the fund, are you
suggesting that it should go back to the cable systems for their community
6318 MR. DAY: Yes, I would suggest that very definitely.
6319 COMMISSIONER McKENDRY: Thanks very much.
6320 THE CHAIRPERSON: Legal counsel. Mr. Batstone.
6321 MR. BATSTONE: No questions.
6322 THE CHAIRPERSON: Thank you, Mr. Day. There are no further questions.
6323 MR. DAY: Thank you.
6324 THE CHAIRPERSON: Mr. Secretary.
6325 MR. BURNSIDE: I would now call the representatives from SaskTel for
Phase III of this presentation.
6326 You may proceed when you are ready.
REPLY / RÉPLIQUE
6327 MR. CHING: Mr. Chairman and members of the Commission, I won't
regurgitate everything that we went through earlier. I am sure that brings a
sigh of relief to you perhaps.
6328 I do, however, want to urge upon you the suggestion that to the extent
that the intervenors are really trying to fend off SaskTel as a competitor that
the Commission, I would hope, would not accede to that. I think for better or
for worse the decision has already been made that competition tends to expand
the market. It tends to make those people who want to participate in the market
better at what they do, offering better prices and more innovative solutions and
ideas and product.
6329 To the extent that you heard from any one of the intervenors, the echo
in their presentation that they simply didn't want SaskTel as a competitor I
think I would ask the Commission to ignore that particular request.
6330 What we found when competition came visiting at our doorstep was that we
really had to get better and the survivors within this industry are going to
offer good service, good products and good prices.
6331 The issue of our independence, I would urge that you look at this from
the point of view I think which was inherent in the questioning from
Commissioner Cram. First of all, I think you have to judge what is the issue
that this is trying to deal with. What is the mischief?
6332 I think we properly identified that as being this whole question of can
the political arm of government interfere in the operation of a broadcast
licence in such a manner as to undermine the democratic system that we all
6333 Then I would ask you to move on and look at our request and try to
estimate or examine exactly how much journalistic activity is inherent in what
we are recommending that we be allowed to do.
6334 Then I think you should worry about the issue of whether or not given
what the mischief is and given the amount of journalistic activity that we will
engage in, are the circumstances that you see before you sufficient to satisfy
you that there isn't going to be something untoward in the way in which the
Government of Saskatchewan deals with SaskTel as it operates a broadcast
6335 I should say that in our estimation we believe that there is the
requisite amount of independence, but certainly from our vantage point if you
saw fit to issue a broadcast licence conditional upon the existence of the OC
which is before you and its continued legal efficacy, we would have no
difficulty with that condition attaching.
6336 There were certain other requests made with regard to whether we would
be comfortable with them as conditions on the licence. The suggestion that we
operated as a separate operational unit, we would request that the Commission
not consider that as a solution to this problem.
6337 Bundling limitations. I think that was a specific item that we agreed to
come back to you with our view on that. We do feel that if there is a
restriction on us about how we could bundle that it would be, (a) out of step
with what you have permitted in other similar applications such as this, (b) put
us at a disadvantage with our competitors who would not have that restriction
and, (c) would really not address the issue of independence.
6338 Lastly, we would ask that you not come to the conclusion that there
should be a delay. It is SaskTel's position that the governance structure in
place today is sufficient to provide that we are not directly controlled, that
we have freedom, that we in fact are in a position where our dealings with the
Commission has satisfied I believe the Commission and its staff, that we do have
the adequate financial protections against undue and improper
cross-subsidization, and hence on the basis of all of the foregoing we would ask
that you issue a licence to us.
6339 Thank you very much for your time and your patience. We have had a long
6340 I want to say that in preparing for this hearing your staff was
especially helpful in assisting us in trying to understand how we should deal
with this process which, will you be aware, we are not particularly familiar
6341 Thank you very much.
6342 THE CHAIRPERSON: Thank you, Mr. Ching.
6343 Questions, Commissioners? Commissioner Cram...?
6344 COMMISSIONER CRAM: You were the guys that said you were only going to do
the two, Internet and your BDU, together. But if we are then talking about no
bundling restrictions, would you agree, when we are looking at it, in terms of
market dominance and issues like that, would you agree with the assertions of
Access, in terms of, as they call it, the size and scope of SaskTel's
communications empire in their intervention, at paragraphs 7, 8 and 9? And they
have actually reiterated them.
6345 MR. CHING: I can remember when competition in the telecommunications
industry first came to Saskatchewan, there was a fair amount of discussion that
if we had our druthers we would like to compete against small competitors, not
AT&T or Sprint. Actually, it's turned out, I think, that, while they are
fearsome competitors, the little guys can give you some real interesting
6346 In my mind, when you go into a competitive environment, pointing at the
other guy and saying that they are big may be an indication that they have got
an advantage on you; it may be an indication that they have a very severe
6347 The real issue, in my mind, is the extent to which a competitor is
focused on customer service, trying to come up with innovative solutions and
products and the degree to which they are prepared to have a sharp pencil when
they are setting their prices. Their size, in many respects, is something which
can either work for them or against them. But it can't solve the problem of good
products, innovative products, good prices and excellence in customer service.
The bigger you are, to some extent, the tougher those things are too.
6348 So, I heard a number of comments about the fact that we have this
awesome power. Gosh, I wish that could be explained to us in some graphic detail
because I have to tell you within SaskTel we don't sort of have an appreciation
of that awesome power. From our vantage point, I think we try to work hard at
giving good customer service. You can see from this application where, indeed,
we come up with innovative solutions, and that's what gets us places. Our size
is one of those issues which can cut both ways. Sometimes we stumble over our
own size, and it can be just as much trouble as it is good.
6349 COMMISSIONER CRAM: Thank you, Mr. Ching.
6350 You answered the question I was going to ask next, but you didn't answer
the first question. Because, first, we have to know your size, and we like to
know that, and I like to know that, and so I want to know if the assertions of
Access -- and they are 7, 8 and 9 -- are correct.
6351 MR. CHING: Could you briefly outline them.
6352 COMMISSIONER CRAM: They said the majority of it -- Mr. Deane said the
majority of it: 1999 fiscal year revenues more than 737 million; assets worth
more than 1.2 billion; serves 643 local cell phone subscribers; at least with
revenues of more than 737 million SaskTel currently accounts for, at the very
least; more than 52 per cent of all communications services offered in the
province; only provider of local; dominant long distance provider with 93 per
cent of the market; largest Internet service provider with more than 56,000
subscribers; mobility largest provider of PCS cellular with more than 188,000
subscribers; and largest employer in the communications industry.
6353 MR. MELDRUM: I think the one that we would take exception to would be
the long distance market. Minutes would be about 85 per cent. They have been as
low as 73 per cent -- and that was information that we would have filed with the
Commission as part of our application for forbearance. It is currently at 85 per
cent of the total number of minutes.
6354 I think the one other comment that I would make is that our largest
competitor in the province is a cable operator, who isn't actually here today
and is perhaps strangely absent, and that's Shaw, and I think that whatever the
Commission thinks about what needs to be done in relation to smaller competitors
also has to be thought of in terms of the large competitor that SaskTel has to
go against. They have a market valuation that varies somewhere between 6 billion
and 6.5 billion. Our market valuation would be somewhere about 1.5 billion. So
we certainly have the same issue of dealing with a very large competitor who,
undoubtedly, will be getting into the telephone business, will be, undoubtedly,
bundling services across all of their various offerings, and I think that needs
to be into account into this whole equation, as well.
6355 COMMISSIONER CRAM: Thank you.
6356 MS MOLNAR: If I could just add something as well.
6357 COMMISSIONER CRAM: Sure.
6358 MS MOLNAR: There is a (inaudible) saying about dominance but I think
what is perhaps more relevant is the ability to exercise market power. Certainly
since June 30th, 2000, any potential ability we have has, you know, been
diminished with federal regulation coming to us. If we look in our competitive
markets, we have looked at the competitive markets and there have been
determinations made through the proceeding we went through that we don't have
market power and cannot exercise market power in the competitive market, long
distance terminal, Internet and so on.
6359 If we look at the market power that might come from us being the utility
provider of local services, you know, there's certainly a lot of safeguards in
place to take away any potential for us to exercise that power. And it's not
just the split rate base and the costing methodology to ensure against
cross-subsidy but there is the pricing regulations that are in place. The
commitment we made, and that has now become part of our transitional framework
that we cannot increase prices on any of our utility services, including, for
example, optional services or others that, you know, can potentially be
increased in other territories. All of those things together, I would say, help
to -- well, don't help but certainly eliminate our ability to exercise market
power in the local market.
6360 COMMISSIONER CRAM: Thank you.
6361 THE CHAIRPERSON: Mr. Ching, are you aware of the NorthwesTel and
NorthwesTel Cable TV project? They were the first phone company to get into
6362 MR. CHING: No, I don't.
6363 MR. SHEPHERD: I guess we are generally aware of the situation. We
certainly don't have any specific firsthand knowledge, but we are aware of it.
6364 THE CHAIRPERSON: Okay, you are aware of it.
6365 They are structurally separate -- you are aware that they are
structurally separate so there's no opportunity for cross-subsidy?
6366 MR. SHEPHERD: Yes.
6367 THE CHAIRPERSON: Can I now get you to refer to page 7 of your slide
6368 Are there any final questions from legal counsel?
6369 Is that your final answer? I've waited a long time for this.
--- Laughter / Rires
6370 THE CHAIRPERSON: Mr. Secretary, are there any administrative matters?
6371 MR. BURNSIDE: Thank you, Mr. Chair.
6372 I would, just for the record, like to note that Items 9 to 22, the
non-appearing applications listed at the back of this agenda form part of the
official record of this hearing and that a decision will be taken and rendered
on these applications in due course.
6373 Thank you, Mr. Chairman.
6374 THE CHAIRPERSON: Thank you, Mr. Secretary.
6375 This brings to close the October 30th, 2000, Calgary public hearing.
6376 I would like to take this opportunity to thank the applicants,
intervenors, translators, court reporters, CRTC legal counsel, CRTC staff and,
of course, our Hearing Manager/Secretary. You have all contributed positively to
making the first public hearing under my chairmanship an enjoyable and
successful event. I hope that you all believe that you have had a fair hearing
and I wish the competitors luck and the applicants and intervenors happiness in
6377 Thank you.
--- Whereupon the hearing concluded at 1900 /
L'audience se termine à 1700