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TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
Applications to Provide an All Channel Alert Service /
demandes visant la fourniture d'un service
d'alerte tous canaux
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
140 Promenade du Portage 140, Promenade du Portage
Gatineau, Quebec Gatineau (Québec)
May 1st, 2006 Le 1er mai 2006
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
Applications to Provide an All Channel Alert Service /
demandes visant la fourniture d'un service
d'alerte tous canaux
BEFORE / DEVANT:
Michel Arpin Chairperson / Président
Joan Pennefather Commissioner / Conseillère
Helen del Val Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Chantal Boulet Secretary / Secrétaire
Peter McCallum/ Legal Counsel /
Reynolds Mastin Conseillers juridiques
Gerard Bergin Manager, Broadcast
Technology / Gestionnaire
de technologie en
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
140 Promenade du Portage 140, Promenade du Portage
Gatineau, Quebec Gatineau (Québec)
May 1st, 2006 Le 1er mai 2006
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Pelmorex Communications Inc. 8 / 40
Canadian Broadcasting Corporation 160 / 871
Bell ExpressVu 266 / 1492
INVERVENTION BY / INTERVENTION PAR:
Pelmorex Communications Inc. 308 / 1696
Bell ExpressVu 323 / 1774
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon commencing on Monday, May 1st, 2006 at 0929 /
L'audience débute le lundi 1er mai 2006 à 0929
1 THE CHAIRPERSON: Please be seated.
2 Thank you very much. Order, please.
3 Well good morning, ladies and gentlemen and welcome to this public hearing.
4 My name is Michel Arpin and I was born in Montreal and I am the Vice‑Chair of Broadcasting for the CRTC. I will be presiding over this hearing.
5 Joining me on the panel are my colleagues Helen del VAL, Regional Commissioner for British Columbia and the Yukon, and Joan Pennefather, National Commissioner.
6 L'équipe du Conseil qui nous assiste se compose, notamment, du Gérant de l'audience Gerald Bergin, gestionnaire de la technologie de radiodiffusion; de Peter McCallum et Reynolds Mastin, conseillers juridiques; ainsi que de Chantal Boulet, Secrétaire d'audience, auprès de qui vous pourrez vous renseigner sur toute question relative au déroulement de l'audience.
7 During this hearing we will examine three proposals to provide Canadians with emergency alert services. The need for a national alerting system has been apparent for some time, all the more so following the recent weather disasters in North America and throughout the world.
8 Nevertheless, given the crucial role it will play, it is especially important that the merits of each of the proposed alerting systems be carefully considered. That is why we are here today.
9 The panel will first look at the proposal by Pelmorex Communications to amend the licence of The Weather Network/MétéoMédia to enable it to provide an All Channel Alert service to broadcasting distribution undertakings across Canada.
10 The service will broadcast alerts and messages related to imminent and unexpected threats to life or property caused by severe weather disturbances, natural disasters and other emergencies.
11 To implement its project, the licensee is proposing to amend its licence and to increase its maximum authorized wholesale rate.
12 Pelmorex is also asking the Commission to issue a distribution order pursuant to paragraph 9(1)(h) of the Broadcasting Act.
13 Le Comité d'audition entendra ensuite la demande de la Société Radio‑Canada/Canadian Broadcasting Corporation, qui souhaite fournir un service de diffusion publique de messages d'alerte en cas d'urgence par le biais de ses émetteurs radiophoniques.
14 Le Comité d'audition examinera également la proposition de Bell ExpressVu Limited Partnership en vue de distribuer à ses abonnés un service d'alerte en cas d'urgence. Les messages d'alerte bilingues seraient présentés à l'aide de textes fixes par défilement à l'écran sous forme alphanumérique et par un avertissement audio.
15 The CBC/Radio‑Canada and Bell ExpressVu request to be relieved of the broadcasting obligation set out in section 7(d) of the Broadcasting Distribution Regulations in order to obtain the agreement of the operator of the programming service, the network or the distribution undertaking prior to inserting an emergency alert message into the programming service.
16 En terminant, j'aimerais préciser que, pour examiner la demande présentée par le Groupe de Radiodiffusion Astral en vue de renouveler la licence de VRAK.TV, c'est‑à‑dire l'article 6 de l'Avis d'audience publique de radiodiffusion CRTC‑2006‑3, le Comité d'audition sera modifié. En effet, le président du CRTC, monsieur Charles Dalfen, le présidera, en compagnie des conseillères Helen del Val et Joan Pennefather.
17 Before proceeding to our examination of the application, I will now invite the Secretary, Mrs. Chantal Boulet, to explain the procedures we will be following.
18 Mrs. Boulet.
19 LA SECRÉTAIRE : Merci, Monsieur le Président.
20 First, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.
21 For your information, interpretation services are available during the hearing. To obtain an interpretation receiver, please see the technician at the back of the room. The English interpretation is on channel 6 and la traduction française est au canal 7.
22 When you are in the hearing room, we would ask that you please turn off your cell phones, beepers, BlackBerries and other text messaging devices as they are unwelcome distractions for our participants and commissioners as they cause interference on the internal communication systems used by our translators.
23 We would appreciate your cooperation in this regard throughout the hearing.
24 We expect the hearing to take approximately two and a half days. We will begin each morning, starting tomorrow, at 9:00 and finish each afternoon around 6:30 p.m. We will take an hour for lunch and a break in the morning and in the afternoon. We will let you know of any schedule changes that may occur.
25 Pendant toute la durée de l'audience, vous pourrez consulter les documents qui font partie du dossier public pour cette audience dans la salle d'examen qui se trouve dans la Salle Papineau, à l'extérieur de la salle d'audience à votre gauche. Tel qu'indiqué dans l'ordre du jour, le numéro de téléphone de la salle d'examen est le 819‑953‑3168.
26 Please note that the full transcript of this hearing will be made available on the Commission's website shortly after the conclusion of the hearing. If you have any questions on how to obtain all or part of this transcript, please approach the Court Reporter at the table in front of me.
27 The applications being considered at this hearing will follow the four‑phase approach for competitive hearings as follows.
28 First, we will hear each applicant in the agenda order and each applicant will be granted 20 minutes for their presentation. Questions from the Commission will follow each presentation.
29 Au cours de la deuxième phase, les requérantes pourront choisir de comparaître à nouveau, dans le même ordre, pour présenter leur intervention relative aux demandes concurrentes. Elles disposeront de 10 minutes pour le faire, et le Conseil pourra les interroger par la suite.
30 In Phase III, other parties will appear in the order set out in the agenda to present their intervention and 10 minutes will be allowed for each presentation. Again, questions from the Commission may follow.
31 La quatrième phase permet à chaque requérante de répondre à toutes les interventions émises à l'égard de leur demande. Les requérantes comparaissent dans l'ordre inverse et disposent de 10 minutes pour répondre. Le Conseil pourrait, à nouveau, poser ensuite des questions.
32 Finally, I would like to note for the record that documents have been added to the application of Pelmorex Communications Inc.
33 One is a letter from the Commission to the applicant regarding the issue of mandatory digital distribution by Pelmorex of its ALL CHANNEL ALERT signal and the financial consequences resulting thereof, and the other documents are revised financial projections.
34 Both documents are available on the public file in the examination room.
35 Now, Mr. Chairman, we will proceed with item 1 on the agenda, which is an application by Pelmorex Communications Inc. to amend its licence for The Weather Network/MétéoMédia to provide an All Channel Alert service to broadcasting distribution undertakings across Canada.
36 If approved, the service would broadcast alerts and messages related to imminent and unexpected threats to life or property caused by severe weather disturbances, natural disasters or other emergencies in local, regional and national areas of Canada for distribution on the licensee's services and on the other channels offered by BDUs that distribute the licensee's services.
37 Ces alertes seraient diffusées au nom d'organismes fédéraux compétents comme Environnement Canada, de même qu'au nom d'autorités provinciales et territoriales compétentes. Les téléspectateurs des régions touchées recevraient les avertissements diffusés à l'échelle locale, quel que soit le canal qu'ils regardent.
38 Appearing for the applicant is Mr. Pierre Morrissette who will introduce his colleagues. You will then have 20 minutes to make your presentation.
40 MR. MORRISSETTE: Good morning, Mr. Chairman, members of the Commission.
41 My name is Pierre Morrissette, President and CEO of Pelmorex Communications Inc., the licensee of The Weather Network and MétéoMédia. I am pleased to be here today to present our proposal for an All Channel Alert service.
42 With me is our ACA team who have been working on this concept for many years.
43 On my right is Paul Temple, Senior Vice‑President of Regulatory and Strategic Affairs and who has been driving this project for us for many years now.
44 Beside him is Alysia Charlton, our Chief Financial Officer and Senior Vice‑President, Corporate Division.
45 To my left is Luc Perreault, Vice‑President, Affiliate and Government Relations.
46 In the second row from left to right are Marc Bernier, Director, Technical Engineering; Jean‑Pierre Boulanger, Senior Vice‑President and Chief Information and Technology Officer; Tawnie McNabb, Pelmorex's Corporate Controller; and Scott Prescott, our Legal Counsel.
47 We are before you today to request an amendment to the Specialty Television licence of The Weather Network and MétéoMédia to permit alerts and emergency messages to be sent over all channels distributed by BDUs and to allow a fee for the cost of this all channel alerting service.
48 We also request a distribution order so that every Class 1 cable and DTH distribution undertaking distributes the ACA signals once available.
49 These measures will ensure a state‑of‑the‑art broadcast alerting system serving the maximum number of Canadians.
50 Before we begin, we would like to show a short video that share our vision for an All Channel Alert system.
‑‑‑ Video presentation / Présentation vidéo
51 MR. MORRISSETTE: Commissioners, this concept has generated a lot of support in the emergency planning community and with the public. More than 700 people and organizations took the time to write to the CRTC. They include nearly 100 municipalities from Vancouver Island to Gander, Newfoundland; some 20 associations with safety mandates; federal MPs and Senators; and hundreds of concerned individuals.
52 The demand for our ACA service is unequivocal.
53 Cette initiative n'est pas un luxe. Il existe un besoin urgent pour notre service, qui protégera la vie et les biens des Canadiens. Il est évident que le nombre et la sévérité des événements météorologiques violents s'accroissent. Les inondations furent nombreuses et importantes ce printemps, et tout porte à croire que cette situation sera encore pire dans cinq ans.
54 Également, la densité urbaine augmente les risques auxquels les Canadiens pourraient être confrontés. Le terrorisme demeure une possibilité. Les municipalités ont des plans d'urgence, mais le maillon faible est au niveau des communications d'urgence avec le grand public.
55 They are worried about tsunamis on the B.C. coast; forest fires and tornadoes in Alberta; train derailments and transport of dangerous goods in Saskatchewan; flooding in Manitoba; derailments, seasonal flooding and forest fires in Ontario; landslides and winter storms in Québec; natural gas, oil refinery and nuclear safety issues in New Brunswick; and violent coastal weather in Nova Scotia, P.E.I. and Newfoundland.
56 In our consultations with municipal and provincial officials, some told us their biggest concern is aging infrastructure and another tragedy like Walkerton. They know Pelmorex's ALL CHANNEL ALERT will save lives. They want it now.
57 M. TEMPLE: In CRTC Decision 2001‑123, you outlined what an all channel alert system must do to meet your approval. We have listened and responded. We are pleased to present this, our second and improved application for an all channel alert service that features a lower price;
58 a technical solution for every cable head end configuration, both digital and analog;
59 extensive work to ensure an early launch on DTH and MMDS systems;
60 a commitment to implement our satellite solution in the same year service is offered to cable;
61 a commitment to work collaboratively with distributors to provide the technical solutions appropriate to them;
62 an implementation plan involving ongoing consultations with our stakeholders; and
63 a simultaneous alert service to local radio and television stations.
64 Today we would like to tell you why our service is best at meeting the needs of Canadians and why Pelmorex is particularly qualified to operate it. We will look at our business case and we will review in more detail how we have addressed your concerns.
65 Our ACA system offers the greatest benefits to Canadians.
66 First, our service will reach more Canadians than any other proposal. It is required for DTH and large cable systems, reaching 91 percent of households within three years of launch.
67 Second, we offer an end‑to‑end service, taking responsibility for the message from the time it leaves the authorized emergency alert provider.
68 We offer one system, one point of contact, one point of accountability. We will support installation and provide operations, maintenance and ongoing upgrades to equipment.
69 We will make training and public education available. If there are issues, we will follow up and adjust our procedures.
70 Our emergency partners have told us they don't want to deal with a patchwork of systems. With our system, they won't have to.
71 Third, we are the only applicant with a business plan that provides service to all Canadian subscribers at one price. A blended rate makes it affordable for small systems to participate in the safety of their communities.
72 Finally, we have a solid financial plan to pay for equipment, ongoing maintenance, training and upgrades. If our licence amendment is approved, we can deliver.
73 MS CHARLTON: Pelmorex is uniquely qualified to run this service. The Weather Network and MétéoMédia have been in the alerting business for 18 years. We provide vital local weather information to more than 10 million Canadian households in English and in French, including weather alerts from Environment Canada.
74 Our unique enabling technology resides in 1,300 locations from coast to coast.
75 We recently announced an alert service with the provinces of New Brunswick and Québec for a similar service to broadcast authorized local alerts of all kinds on The Weather Network and MétéoMédia. The foundation of the ACA service is in place and it works.
76 We also have the relationships and credibility with emergency authorities to take on this challenge. This is demonstrated by the support from the Canadian Centre for Emergency Management, the Canadian Red Cross, the Canadian Risks and Hazards Network, the Centre for Catastrophic Loss Reduction, the Canadian Safety Association, l'Association de Sécurité Civile du Québec, the Federation of Canadian Municipalities, le Bureau du Coroner du Québec, et la Fédération québécoise des Municipalités.
77 Our technology expertise means that Pelmorex has the vision and capacity to anticipate new opportunities for improved service as technology evolves, and to continuously enhance the ACA service.
78 For all of these reasons, alerting experience, infrastructure, relationships with emergency authorities, technical skills, as well as the business plan, studies and consultation that anchor our application, we can hit the ground running when our licence amendment is approved and deliver over the long haul.
79 Our business case is based on a subscriber‑pay model regulated by the Commission similar to the 9‑1‑1 telephone service. Our $0.08 fee reflects substantial capital costs, ongoing operations and the upgrading necessary for an effective warning system. It reflects service to both analog and digital subscribers and the myriad technologies and systems used by BDUs, whether cable, DTH, MMDS or telco. It reflects the fact we offer alerts and ACA equipment to more than 1,300 cable head ends.
80 We have designed a properly managed and operated alerting system that is fully funded and sustainable over the long haul. This is a serious business: Lives are stake and it has to be done right.
81 We offer this service at one price to all Canadian television subscribers in large communities and small. Our commitment and efficiency ensure good value.
82 We surveyed 1,700 Canadians about paying for a broadcast alert service. Eighty‑two percent said they felt $0.50 a month would be fair, and we are a fraction of that.
83 Many intervenors, including Canada's Association for the 50 Plus, wrote that less than $1.00 a year was a small price to pay for the security an ACA service would provide.
84 M. MORRISSETTE: Our proposal is for an analog and digital solution required for all Class 1 systems. The business model reflects the fact that analog alerting, which is equipment‑based, is more capital intensive than the digital solution, which is software‑based.
85 The analog solution is also more expensive because of the costs of maintaining equipment in the field.
86 Vidéotron has suggested an alternative alerting model whereby an ACA service would be required for Class 1 digital systems, but would be optional for analog. It is an idea we are prepared to explore. This model would allow us to lower our costs and our fee.
87 The trade‑off is that fewer Canadian homes would receive alerts in the short term.
88 Since we filed our application, the Commission has introduced its digital migration framework which will accelerate the phase‑out of analog service. This makes an analog optional model worth exploring.
89 We expect that some major distributors would still opt to provide analog alerting, even if they were only required to alert their digital customers. Should the Commission find this model has merit, we would be prepared to proceed on that basis.
90 Nous avons développé notre demande en tenant compte du feed‑back de tous les intervenants, et notre engagement est de continuer de travailler de concert tant avec les autorités oeuvrant dans le domaine des mesures d'urgence que les distributeurs, les radiodiffuseurs, les regroupements de consommateurs tels les associations représentant les personnes sourdes et malentendantes.
91 Nous sommes particulièrement disposés à travailler avec CANALERT, un projet qui n'existait pas au moment du dépôt de notre demande. Nous travaillons, d'ailleurs, depuis plus de 10 ans avec Industrie Canada et le prédécesseur de CANALERT, le Weather Alert Steering Committee. Nous avons également conduit des tests afin de valider notre technologie durant cette période.
92 Nous nous engageons à utiliser des standards à être développés par CANALERT et considérons que notre proposition est pleinement compatible avec cette dernière.
93 Nous bénéficions déjà des opinions expertes de notre comité aviseur composé de 12 éminents spécialistes qui oeuvrent dans le domaine des mesures d'urgence, représentant trois paliers gouvernementaux.
94 Nous avons également recueilli des commentaires lors de consultations avec des représentants d'une centaine de groupes qui oeuvrent dans le domaine des mesures d'urgence d'un océan à l'autre. Leur feed‑back nous a aidés dans la préparation de notre demande.
95 Nous planifions aussi la mise sur pied d'un groupe de travail, lors du lancement et la mise en service du RAM, composé de radiodiffuseurs et de distributeurs. Ces derniers seront des joueurs clés quant à leur contribution au contenu de la campagne de notoriété publique aux périodes de test du système, ainsi qu'à toute autre activité reliée au lancement d'une telle initiative.
96 Les consultations ne s'arrêteront pas après le lancement du service. Un comité technique permanent composé d'un représentant des distributeurs, radiodiffuseurs et fournisseurs aura pour but de continuer le développement de la transmission des alertes via les décodeurs numériques. De plus, nous proposons de tenir une revue continuelle des plaintes afin de prévenir toute mauvaise utilisation ou tout abus du système RAM.
97 MR. TEMPLE: In February 2001, the Commission noted the merits of our first ACA proposal and laid out the test that any future applications would have to meet.
98 You asked for closer cooperation among broadcasters, distributors and other interested parties. We provided extensive executive and technical briefings to trade associations and major players in the broadcasting and distribution fields.
99 We met with the CAB, the CCTA and the CCSA, the satellite service providers and with individual broadcasters and cable companies. We were thorough, generous with technical information and sought real input.
100 We also met with emergency response and public safety experts. We presented our service concept at the Broadcast Public Alerting Working Group and Industry Canada Steering Committee meetings. We briefed no less than six federal departments and had extensive meetings with provincial governments that have already led, in some cases, to expanded alerting on The Weather Network and MétéoMédia.
101 On costs to consumers, you asked for more detailed accounting. We went back, took changing technology into account and sharpened our pencils. We have lowered our price from $0.13 per subscriber to $0.08 per subscriber, while improving the service. And we have provided you with detailed financial appendices to show where the money is going.
102 With respect to the needs of the visually impaired, our application proposes an audio clip to provide standard audio notice with full information on websites and through a 1‑800 number. The Canadian National Institute For The Blind helped us get feedback through their website. The National Broadcast Reading Service noted our extensive consultation when it again supported us.
103 On the technical side, our appendices fill several binders, and again we have been thorough.
104 You had concerns about interconnecting regional systems. We addressed these with practical, workable solutions for all head‑end configurations. We provided them to the CCTA for review and engaged an independent consultant whose report is included as Appendix I.
105 We have also worked hard to document digital solutions. Our consultant's report showing there are no technical barriers to targeting local information to satellite subscribers in Appendix J is borne out by ExpressVu's application.
106 M. MORRISSETTE : En conclusion, je voudrais réitérer le caractère essentiel de ce service, dont le besoin est immédiat, mais qui doit être conçu et déployé de la bonne façon. Toutes les instances publiques qui sont intervenues lors de cette audience et qui ont fait état de leurs besoins en termes de communications d'urgence nous ont tous fait part du fait que l'absence d'un réseau de communications d'urgence constitue le chaînon manquant de leur planification et que tout délai dans la mise sur pied d'une telle initiative leur est inacceptable.
107 Our application is fully funded, with a responsible, sustainable business plan. It maximizes the distribution of alerts to Canadians, whether they live in large communities or small ones. It is based on 18 years of alerting experience and comprehensive consultation with emergency experts, with broadcasters and distributors from coast to coast.
108 Canada must be ready to meet the challenges of climate change and other emergency situations. Its citizens, communities and emergency organizations have expressed a real need and urgent demand for this service.
109 Our proposal will provide Canada with the leading emergency alert system in the world. We are proud to have initiated this process, and hope to play an expanded role in improving the safety of Canadians.
110 We would now be pleased to answer any questions you may have.
111 LE PRÉSIDENT: Merci, Monsieur Morrissette.
112 For those in the room, if I'm wearing a headset it is because I have a hearing problem. So I am listening to the floor sound, I am not listening to translation. So don't be afraid, I am hearing you very well with the headset.
113 I will now ask Mrs. Pennefather to initiate the questions.
114 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.
115 Ladies and gentlemen, good morning. Thank you for your presentation which, as you remarked, is detailed, as are your many binders of documentation. I thank you for some of the appendices which were labelled in layman's terms. They were considerably helpful.
116 I have, on behalf of my colleagues, questions in four basic areas, areas dealing with policy, technology, financial issues and legal issues.
117 I think you will find that we cross back and forth, however, when we are talking in these different areas with some of the same points, but looking at it from different angles.
118 Obviously I have all the material, but we will be particularly referring to your application and the supplementary brief to some of the appendices, particularly D, F and G, your deficiency response and your reply.
119 In asking the questions and in your responses there are some general areas that I hope we can come back to to get further clarification as we go through all the questioning.
120 Some of these would be, for example, coordination of your proposal with existing and future other alert systems, should they go forward; the coordination with the broadcasting industry and the distribution industry going forward; and details of implementation and system usage.
121 You will find me coming back to these points consistently in each of the areas.
122 If you are ready, we will begin in the policy area and I have some rather specific questions that really try to fine‑tune our understanding of how it will work, particularly starting with language.
123 When subscribers get the message ‑‑ and thank you for the demonstration this morning ‑‑ they will be sent through the system and they will see a text message as we saw in the demonstration today, either a crawl or a full message, and a generic audio message. We understand that you intend to transit English alerts on English channels and French alerts on French channels.
124 Is that correct?
125 MR. TEMPLE: Yes. Depending a bit on the way that a cable operator would do the wiring, it would be possible to send the English message for display on English‑language channels and the French text on the French‑language channels.
126 COMMISSIONER PENNEFATHER: That decision would be made by the distributor, by the BDU?
127 MR. TEMPLE: It's subject to how they're able to do the ‑‑ do the wiring and connection. There are a number of different options they have available to them, depending on how they process signals, but if they're doing a crawl, then they would be able to do the wiring so that they could select English onto English channels and French onto French.
128 I guess they could also do it if ‑‑ I better check before I tell you something incorrect.
129 Yes, and if they do a ‑‑ what we call an intrusive or a ‑‑ go to a full screen, they would also be able to set it up so that English would appear on English channels and French on French channels.
130 COMMISSIONER PENNEFATHER: Now, let's go further, if we are talking about an area where there's a significant population, minority population in either French or English, would we be able to see the text in both languages?
131 MR. TEMPLE: If the service ‑‑ if the authority who is issuing the alert issues the alert in both languages we will send the alert in both languages.
132 We don't propose to do translation, because that raises a bunch of issues related to liability, but it doesn't matter who the authority is or where they are in Canada, if they send us the alert in English and French, we'll send the alert out in both languages.
133 COMMISSIONER PENNEFATHER: If you send it out, however ‑‑ just forgive me if I want to make sure I thoroughly understand ‑‑ in both languages, but at the head end if you said previously that the BDU would then attach the English version to the English and the French version to the French, is it possible that someone watching ‑‑ let's say a francophone watching an English‑language channel would also be able to read the text in French? Is it possible that they would read both languages at once?
134 MR. TEMPLE: If the authority wanted to send English and French as one message, that would be possible. In other words, if they're sending us two messages then we'll route them by language, but if they sent us one message with both languages as ‑‑ within the one message, then you would see both languages. It might make for a long message, so there are other considerations there, but it's possible.
135 COMMISSIONER PENNEFATHER: What about other languages?
136 MR. TEMPLE: That gets a little more complicated.
137 COMMISSIONER PENNEFATHER: Do you have any suggested solutions?
138 MR. TEMPLE: Well, it depends, as we get into ‑‑ it depends in a sense on the language itself. Once you start getting away from standard characters it gets a little more complex, so if you're ... if you're not following the standard ... you know, if you're get into Mandarin or something, then that may be a more complex challenge.
139 We have been asked this a number of times by different public authorities. One of the suggestions that have been made is that within the text of the message that is issued there's a location reference for other language groups to get the information on the warning, so it might appear in English, but there would be a reference as to where you might get the message in Punjabi or Mandarin or things of that nature, but again it gets ‑‑ it is a awkward ‑‑ it is an awkward situation, because if you start making the message too long, you have English and then another language, it just makes the message too long. People are worried about it.
140 COMMISSIONER PENNEFATHER: Bottom line, what would be your comment if the Commission were to give you a COL to oblige the display of alerts in both official languages? I don't mean at once; I mean as you first described, that on an English channel we would see an English and on a French channel, a French.
141 Would you have any comment on that?
142 MR. TEMPLE: No problem at all. That's our plan.
143 COMMISSIONER PENNEFATHER: Again, you mention translation and it is our understanding that the wording in the messages will be standardized so that translation isn't necessary.
144 But could you elaborate a little bit on the fact that ‑‑ is there any way, however, would it be useful to change to have non‑standardized language, to allow for customized alert messages? Is there any way that, for example, if one of the key features here is the localization of the message from a technical point of view, but would it be possible to add specific detail regarding that particular area?
145 Explain a little bit more what you mean by standardized wording and how that wording could be customized to alert people in particular areas to particular problems.
146 MR. TEMPLE: Well, there's two elements to the message. One is the text and that is fully customizable.
147 The public authority enters in whatever message they want, so there is no ‑‑ they can just type in whatever the message is in as much detail as they wish. So that is fully customizable.
148 On the audio end of things, as I think a first generation, we proposed a standard audio message that would alert people to the fact that there is a warning or emergency in their area, so that ‑‑ for the audio only, that is where we get into a standardized message.
149 I think over time we're hoping that that would change so that we could actually download a specific audio message as well, but we're reluctant to promise that, because I think the first generation we know we can do and that will be a standard audio message, but future generations would provide, I think, for a customizable audio message.
150 But I just don't with want to promise things that we can't deliver right off the bat.
151 COMMISSIONER PENNEFATHER: We are going to get to what is one of the most important parts of this, is the consistency of languages, the reliability, the authorized use of the system and so on.
152 Just before we get there, though, our assumption was that the audio description of the emergency could be used as well by radio stations; is that correct?
153 MR. TEMPLE: We undertook to ‑‑ in our application to send whatever alerting information we received. We would also send that to local radio and television broadcasters in the community being impacted by the warning.
154 We are prepared to work with the industry in terms of providing that in a way that may allow them to automatically insert it, but at a minimum, we would send it to them just so that they are aware of it.
155 I think what we were trying to show is that we are not completing with local broadcasters. We are not trying to get something that they don't have so that, you know, we are first out with the news on it. That is not what this is about at all.
156 So at a minimum we would send the information to local broadcasters and if there is a way we can do in a way that would permit them to automatically insert the information we would do that as well.
157 COMMISSIONER PENNEFATHER: Just so I understand, what would be sent to the radio station is the same language, the text exactly, audio message exactly as prepared by and sent to you to the ACA service sent back to the head end, but the message as created by the authorized authority.
158 MR. TEMPLE: Right, we would just be sending them the exact message we are receiving from the public authority. And, bear in mind, I want to ensure that if the public authority doesn't send us an audio message, we are not ‑‑ we are reluctant to create an audio message, because again, it creates liability issues. If there is a mispronunciation of a name place or a mistranslation or anything like that, any changing of the message creates liability issues, so if the authority sends us an audio message that is something we can make available on the 1‑800 or on the websites, we can send it to local broadcasters, but if they don't send us an audio message, we can't create one.
159 COMMISSIONER PENNEFATHER: I understand. And we'll come to questions of liability obviously through the legal questioning.
160 I do note in this morning's presentation you do say:
"We offer an end‑to‑end service; taking responsibility for the message from the time it leaves the authorized emergency alert provider."
161 What do you mean by "responsibility" there?
162 MR. TEMPLE: Well, it is our responsibility to take that message once it has been approved and authenticated by the issuing authority, and to take responsibility to map that and send it by ‑‑ through our system and deliver it to the appropriate cable head ends and satellite subscribers in the area affected.
163 COMMISSIONER PENNEFATHER: Okay. Back to the radio and the generic audio message.
164 So the text received to ‑‑ as you say on your application on page 8, "The alert is
165 sent simultaneously to participating local radio and television news rooms so local media can provide follow‑up and further information as the event occurs."
166 What do you mean by "participating"?
167 MR. TEMPLE: Well, I think we would set up a process, most likely through the CAB, so that we would have contact numbers and names for radio stations and television stations throughout the country.
168 I mean there has to be some kind of registration process or something just so that we can identify, if it is in Lloydminster, this is where ‑‑ you know, these are the people that we should be contacting and here is how they want to be contacted.
169 COMMISSIONER PENNEFATHER:
170 Considering this is presented as a service to the public and that it is in the public interest for the Commission to agree to your proposal and all that comes with it, I would assume that reaching the maximum number of Canadians is important in this concept and obviously I asked you previously about different languages, Canadians across this country who may speak different languages as their mother tongue, aboriginal Canadians.
171 Do you see any aspect of the piece of the puzzle wherein the local radio and television newsroom would pursue ‑‑ receive the text and then work with it in terms of their local alert? Do you see any advantage there that we could look at?
172 MR. TEMPLE: Oh, I think if a public authority issues the warning in multiple language we are happy to make that available ‑‑
173 COMMISSIONER PENNEFATHER: Sorry, Mr. Temple, that wasn't my point. The point, let's assume that the alert is issued ‑‑ the public authority issues the alert in English, for the sake of argument. That same alert is sent to participating local radio and television newsrooms, correct?
174 MR. TEMPLE: Yes.
175 COMMISSIONER PENNEFATHER: And you say that they will follow up as they would, as a local community station. And as I understand it the CAB has guidelines in terms of alerts as well for local private radio.
176 Therefore we could assume that the local radio stations would be able to adapt the message in different languages, could we not?
177 MR. TEMPLE: Yes, that would be their choice.
178 COMMISSIONER PENNEFATHER: Would it be possible for the commission to address, in looking at this application, a requirement that the participating local radio and television stations include both ethnic and native radio stations?
179 MR. TEMPLE: Just to ensure I would the question, you're asking us whether it would be appropriate to impose a requirement on radio stations?
180 COMMISSIONER PENNEFATHER: No, I'm not. I did not say impose a requirement.
181 MR. TEMPLE: Oh.
182 COMMISSIONER PENNEFATHER: I actually asked what is your comment on the possibility that the Commission could indicate its interest that the participating, to use your words, local radio and television newsrooms include ethnic and native radio stations.
183 MR. TEMPLE: Oh, include. Oh, certainly.
184 COMMISSIONER PENNEFATHER: Let's go on, then, to talk about the theme of the coordination with the broadcasting industry.
185 It is an area, as you know, where there is a lot ‑‑ there is concern and certainly you have tabled your points again today that you have undertaken a considerable amount of consultation.
186 But the focus of the questions are really to focus on specifics and practical, tell us how it is going to work in three instances: If the Commission approves another alert service in this process; and/or if CANALERT and when CANALERT goes ahead; and the fact of the matter that currently broadcasters insert alert messages on their local stations.
187 Now, one of the questions that has come up if in the latter case television broadcasters add your alerts or an edited version to their off‑air signals, would there be situations where cable subscribers would see two alerts perhaps superimposed on each other or even offering different messages?
188 What coordination procedures would you suggest are necessary to forestall such possibilities?
189 MR. TEMPLE: In the situation where a local TV broadcaster is inserting an alert, if they are inserting the same alert from the same authority that we are, which is presumably the case, then there wouldn't be different messages.
190 So if Mississauga were to issue an evacuation notice, we would air Mississauga's message verbatim and presumably a Toronto TV station would be doing the same, so you would be seeing the same message. Unless they changed the message some way for some reason I don't think the consumer would be seeing different messages.
191 As to whether they would be seeing multiple messages, that is a possibility. We are certainly prepared to co‑ordinate with local broadcasters to try and minimize the disruption with duplicate ‑‑ you know, duplicative messages appearing on the TV screen.
192 If they are able to take a feed from us and automatically insert it, then we may be able to eliminate that possibility altogether, but our proposal doesn't require them do that. It is basically up to them what they want to do and when they want to do it.
193 But we are certainly open to working with over‑the‑air television broadcasters through the CAB or individually to make sure that that kind of duplication is minimized.
194 COMMISSIONER PENNEFATHER: Have you actually discussed possible procedures to date with them ‑‑
195 MR. TEMPLE: Yes.
196 COMMISSIONER PENNEFATHER: ‑‑ on this specific problem?
197 MR. TEMPLE: Yes, we have met with CAB staff on several occasions over the last number of years to discuss this issue.
198 We even sent a proposal in terms of crawl location, so that we wouldn't be ‑‑ if we had a crawl at a certain location on the TV screen that CAB members may want to identify a separate location, just to make sure that crawls are not bumping into each other, that type of thing.
199 So we've discussed it on several occasions.
200 COMMISSIONER PENNEFATHER: Now, what about CBC, have you discussed this matter with them?
201 MR. TEMPLE: Same thing, the same issues and on several occasions.
202 COMMISSIONER PENNEFATHER: And have you discussed or thought through the coordination procedures should the Commission approve the CBC proposal brought forward in this process?
203 MR. TEMPLE: The CBC proposal in terms of providing warnings to their radio stations is not ‑‑ I think we are quite complimentary with that.
204 The CBC proposal in terms of providing service to BDUs, I think, is problematic.
205 COMMISSIONER PENNEFATHER: Well, we'll get to that. My focus is the coordination with what if, as I said, the three possibilities, the current alerting that broadcasters do, the CBC proposal goes forward and CANALERT goes forward.
206 Obviously the proposal and considerable amount of time in your application deals with the importance of clarity, reliability, consistency, and the most Canadians as possible getting the message.
207 MR. TEMPLE: Um‑hum.
208 COMMISSIONER PENNEFATHER: And a message. And yet there is a possibility before us of several messages going forward.
209 In your reply you say ‑‑ I'm not sure I totally understood. You said at page 17 of your reply in paragraph 73:
"It must be emphasized that the ability of broadcasters to warn the Canadian public in advance of imminent threats to life or property is limited."
210 Could you expand on that?
211 MR. TEMPLE: Well, there are several. I mean, over‑the‑air television broadcasters face several problems. One is their signal covers typically a large area and is re‑broadcast, and so for local emergencies they're faced with a decision as to whether to put a message on and inform as much as half a province for what might be a local emergency.
212 I think you'll find that sentiment when you hear from some of the appearing intervenors later in the proceeding. So that's an issue that broadcasters have to face.
213 The second issue is just the ability to get a message on quickly. There is no system for them to do that. I mean, if a public authority decided to issue a message right now, I don't think there's any system in place for them to even necessarily know who to call, how to get the message to them, how to display it.
214 So while some broadcasters do display warnings, I think that it's not as prevalent as people might think because of those issues.
215 On the other hand, our system will take that message and put it on the screen within a minute. And when you are dealing with emergencies, time is of the essence. You typically don't have a lot of time to figure out who the right person is or whether they are able to get a message on the TV screen.
216 COMMISSIONER PENNEFATHER: Well, obviously one of the points we're looking at is considering, I'm sure the broadcasters will speak to this, and they have in their interventions, that they do play across this country an important role in alerting a community to an emergency, and the concern here is what does the ACA service add?
217 MR. TEMPLE: Well, I think broadcasters play an excellent role in following up once an emergency situation has occurred. I think typically ‑‑ I'll take the example of a tornado.
218 Environment Canada issues a tornado warning. There may be fifteen minutes of advance notice. The tornado may strike a community. In terms of warning the community in those fifteen minutes before the event, our system will deliver that message within the minute.
219 Once the event has occurred and people are trying to find out how to get fresh water or where to go for relief or how to find missing relatives and things of that nature, no one covers that better than the local broadcaster and that's not what we're proposing to do anyways. So I think we're quite complementary.
220 I guess the second point I'd like to make is no system is going to be perfect and people may get two messages. The alternative is they get no message, and that's the greater harm. So for our point of view, if a local broadcaster puts a message on, that's wonderful.
221 There are people without cable and satellite service and we're not going to reach them, and if they are able to reach those people that is wonderful. If we have to put the message on or another system puts the message on and they see it twice, that is a small price to pay to protect people.
222 COMMISSIONER PENNEFATHER: Thank you, Mr. Temple. Just to conclude, I'm sure we'll come back to this point in interventions, but assuming then that ACA service goes forward, and assuming, as you do, that local broadcasters will continue to alert the public and play a strong role in not only alert, but in follow‑up and support to the community and to the region, have you, in fact, sat down with individual broadcasters, including the CBC, and worked out specific procedures to coordinate ‑‑ assuming you are going forward and assuming they continue with their duties and responsibilities to the communities ‑‑ have you worked out specific coordination procedures to this date?
223 MR. TEMPLE: Not specific procedures. I suspect that is a little premature until we know whether we have a license and what the conditions are, but I think we all feel that we are ‑‑ the groups are working together in good faith.
224 This will all get sorted out and the particulars of the details of where exactly one person's crawl is and where the other person's crawl is and those types of issues just get ‑‑ will just get sorted out.
225 COMMISSIONER PENNEFATHER: Okay.
226 MR. MORRISSETTE: If I could just add, it's our commitment to consult with all broadcasters, television broadcasters with respect to the orderly launch and evolution of this service.
227 Our initial commitment obviously is to provide the information, the message from the authorized authorities in English and French. Yes, questions such as additional languages down the road will be the subject of consultation with the authorized authorities as well as the various broadcasters and distributors in terms of how we do that.
228 But the other point too on local broadcasters and the messaging that they provide, local distributors carry hundreds of channels beyond the local broadcast signals which viewers are watching to a large, significant extent. And so obviously that is a gap that is not covered by local broadcasters that we would be covering.
229 COMMISSIONER PENNEFATHER: Thank you. I am going to go to the other end, from the broadcasting to the beginning of the message and to the authorized "user" of the system and the definition thereof. Secondly, to the definition of emergency.
230 Now, in reading your material and obviously the material related to this whole matter of emergency alert, and thank you for such an extensive array of material. We did read it all. One of the concerns which you addressed, which others have addressed, is the definition of authorized user.
231 In looking at the material, we could have a concern that the number of authorized users could be a very extensive list. So what I'm trying to get at is a sense of your understanding of who these authorized government agencies or authorized users, because they could be not government agencies, who they are and how you intend to treat this matter going forward.
232 You said you received the message and you send it back, if I understand, to confirm that, in fact, it came from an authorized user. And forgive my layman's approach to the technology, but inevitably you are going to verify that it came from somebody authorized to send and that it contains a message according to protocol, correct?
233 MR. MORRISSETTE: Yes.
234 MR. TEMPLE: Yes, my understanding is layman's too so we're ‑‑‑
235 COMMISSIONER PENNEFATHER: I should say mine's a layperson's actually.
236 MR. TEMPLE: To address the first question or the first element as to who an authorized user is, I guess there is the principle and then there's the practical application. So as a principle we said well, if an authority has the right to declare a state of emergency, it makes sense that they would have access to an emergency alerting process so that is the first kind of principle.
237 So most provincial statutes grant municipalities the right to declare a local state of emergency and therefore we think they should have right of access to issue an emergency warning. It doesn't mean that they have to declare a state of emergency to issue a warning. The purpose of the warning is hopefully to avert the emergency, but that is the first principal.
238 And the second principle is that there are certain departments or government agencies, Environment Canada being the prime example, who don't necessarily have the right to declare a state of emergency, but have a clear legislative mandate to warn the public of extreme weather.
239 So if there are other government agencies who have similar legislative obligations to warn the public, they should have access. So those are the principles that we took.
240 In practic what does that mean? I think you will find in ‑‑ certainly we found in our discussions with provinces and through our own advisory board that most of the provinces intend to supervise access within their respective jurisdictions as to who will have access. I think you will find that the provinces will want to ensure that people within ‑‑ or potential users within their province are properly trained, that there are certain security measures in place in terms of who they want to have access.
241 A good example is what we're doing now with New Brunswick. We put in place a system with New Brunswick last fall where we are now putting provincial alerts onto the weather network in MeteoMedia and we sat down with them.
242 As part of this pilot project we have people, security measures in place so that only authorized users and only from an authorized terminal can access the system.
243 COMMISSIONER PENNEFATHER: Authorized in that sense, in this example of New Brunswick, by the provincial authority?
244 MR. TEMPLE: Exactly. And so it may differ a little bit in Quebec or Ontario may want to have a different process and BC something different again, but I think you'll a find that in practice or in application each of the provinces will want to coordinate within their specific jurisdictions, and we're quite happy to work with them on that.
245 COMMISSIONER PENNEFATHER: So as I understand the tone of your deficiency response as well where you discussed this, you are looking to all that matter of authorized user and definition of emergency to be solved, in effect, by the authorities in question.
246 Can I ask you, though, if we wanted a little bit more clarity and definition in this area, I have in front of me the guidelines for CANALERT, and you did say this morning that:
"Nous nous engageons à utiliser des standards à être développés par CANALERT et considérons que notre proposition est pleinement compatible avec cette dernière."
247 COMMISSIONER PENNEFATHER: There is in the CANALERT guidelines at section 9 what comes close to a definition of a guideline which, again, would be the encadrement, I would assume, of your position.
248 Do you have any comment on the possibility of these definitions being the basis of ‑‑ that we could go forward on? I'm looking at Section 9.2, which refers ‑‑ defines the term "Public authority" and goes on to describe who would be, could be, the authorized users?
249 MR. TEMPLE: I don't have that document in front of me, but if I can get a copy I'll...
250 COMMISSIONER PENNEFATHER: It's available on the Industry Canada website and obviously would have been part of your consultations and discussions with Industry Canada and presentations made by them over the last few months, I imagine. So if you wanted to have a look at that, you could get back to us on that point.
251 MR. TEMPLE: Certainly.
252 COMMISSIONER PENNEFATHER: As well, the same document takes us into the definition of emergency and what would constitute an emergency. In other words, when you get a message and you are looking at it, you have got it from the authorized user, as you have been studying this and working on this project for sometime, what is your thought on the definition of emergency?
253 In fact, it is important because you propose change to your COL, which includes a definition of emergency in the sense of your ability to carry such a proposal.
254 And what I am talking about here is the proposal that would inform the public with unexpected threats to life or property of the public at large. To inform the public of imminent or unexpected threats to the life or property of the public at large. Again, the CANALERT guidelines discuss what constitutes an emergency and in certain sections of this they refer only to threats to life, not to property.
255 I know in the CAV guidelines the threat is to life and property, but what if we were to say that, for example, since we have to address this in terms of your COL proposal, that the imminent threat would be just to life, as indicated in the guidelines of CANALERT. Would you have any comment on that?
256 MR. TEMPLE: We have no problem with that. I mean we put forward a proposal based on feedback we had received, based on a lot of the legislation and practices in place in the United States where state jurisdictions issue guidelines, but I think everyone is kind of on the same page, so to speak. So if it is better to emphasize or to narrow the definition, we have no problem with that.
257 COMMISSIONER PENNEFATHER: So, again, when you are talking about "nous engageons" ‑‑ I'm translating the standards developed by CANALERT ‑‑ I'm proposing that those standards would resemble the guidelines that I have in front of me here, both in terms of authorized user and definition of emergency, which is at length to describe severe high and low level emergencies, somewhat similar to the way the CAV guidelines are, would you agree that we could use the CANALERT guidelines as a guide for the definition of your service?
258 MR. TEMPLE: Yes, I mean I will check the references you've made. I am sorry, I don't have the document with me, but I will confirm that. But basically we have been an active participant with CANALERT and with Industry Canada long before CANALERT was established and we intend to remain a participant.
259 We have had input into most of their material and we are quite comfortable with it so I don't think there is a concern there.
260 COMMISSIONER PENNEFATHER:
261 Continuing on the system usage, you have also referenced the matter of responsibility this morning and we have talked about it in terms ‑‑ we have not talked about it in terms of liability. We will get there.
262 But in terms of safeguards in the use of the system, you do reference in your deficiency response at the answer to question 10C that you will require all authorized users, and now we have some sense of who they might be, to enter into a formal agreement. All authorized users, who may be a fairly extensive list, to enter into a formal agreement that will document the roles and responsibilities of the parties prior to allowing them access to the ACA service.
263 Now, could you discuss with us this proposed formal agreement and outline the roles and responsibilities of ACA users as you see them?
264 MR. TEMPLE: Certainly. The agreement is modeled, or the concept is modeled along the lines of an agreement we have in place with Environment Canada and it simply spells out the responsibilities of each of the parties so that there is no misunderstanding.
265 Confirmation that the authority takes responsibility for the content of the message and for its delivery to us, issues like security. I suspect that the agreement again will likely be customized by province.
266 We are certainly hoping that it would be much easier and more practical to do an agreement with the province that covers its municipality than actually going out and doing an agreement with each municipality, but if the province wants us to deal individually with each municipality, we will do that.
267 But again using the example of New Brunswick, we just entered into a simple letter agreement to confirm that they took responsibility for the content. We have to be protected on that. If they send a message out and it's the wrong information or someone decides they want to sue, that we are held harmless because of the content.
268 COMMISSIONER PENNEFATHER: What ‑‑ do you have either this agreement, is it available or do you have a template of such an agreement that you could share with the Commission?
269 MR. TEMPLE: Yes, we can provide the Commission with the agreement.
270 COMMISSIONER PENNEFATHER: In that agreement, or perhaps you could explain to us what consequences you would impose for misuse of the system, you Pelmorex, for misuse or improper use of the ACA service. What consequences would you impose?
271 MR. TEMPLE: I don't know if there is a specific consequence in the agreement. As part of our application, we have undertaken to establish a review process, so that if there is misuse, or perceived misuse, there is a complaint process.
272 Whether it be the public or a broadcaster or a BDU who feels that the system is being misused, we would have a complaint process in place that would bring the parties together.
273 We hadn't got to the part about sanctions or punitive action. I don't think that would be necessary. I think that just bringing the parties together to talk about a concern would be sufficient.
274 I think that everyone is trying to do the same thing, which is to protect the public. I think our view is that any problems can just be worked out among the parties.
275 COMMISSIONER PENNEFATHER: I guess that is why, among other things, it is important to see the formal agreement, because at some stage Pelmorex is operating the ACA service, and we would want to know what is in place for you to exercise some control over the use of that ACA service.
276 You do say that not the content, the text is created by the authorized user, but you are dealing with that authorized user and it is going through your system.
277 MR. TEMPLE: Yes, and there is no provision in it for us to refuse a warning. Even if someone were, in anyone's view, misusing the system, we are not cutting them off.
278 It is not our position to judge that.
279 After a warning goes out, perhaps in hindsight, people would say, "That shouldn't have been issued," or whatever the case may be, but we are not proposing to prevent authorized users from having access.
280 COMMISSIONER PENNEFATHER: Could you comment on the Commission requiring you to have formal agreements which would stipulate safeguards and guidelines for the users of the system?
281 Would you comment on the Commission having a requirement that you have such an agreement, which, again, would outline the safeguards and guidelines for use?
282 MR. TEMPLE: That would be fine. It would probably make our lives easier.
283 COMMISSIONER PENNEFATHER: We will come back, then, to CANALERT. You did say that you would ‑‑ "nous engagons" ‑‑ to use the standards of CANALERT. Would you accept as a condition of licence the obligation to coordinate with whatever framework might be developed in the context of Industry Canada's CANALERT initiative?
284 MR. TEMPLE: Yes.
285 COMMISSIONER PENNEFATHER: We are discussing this morning, and throughout the next day and a half, a service for all Canadians, and you did raise in your comments this morning, and in your proposal, your revised approach for visually impaired Canadians, and I believe that this approach is fundamentally related to the audio message and an alert to visually impaired Canadians to go to a 1‑800 number.
286 Is that correct?
287 MR. TEMPLE: Yes. Where the issuing authority has released an audio version of the alert, then we would make that available on the 1‑800 number.
288 COMMISSIONER PENNEFATHER: Considering your comments that you are not in charge of the content of the message, both visual and audio, what assurances can you give us that, in fact, the authorized users will include instructions for visually impaired Canadians; not only "Here is your 1‑800 number," but that the 1‑800 number will provide you with further details on the emergency, and also describe, to some extent, the importance of going to that 1‑800 number?
289 Since you don't control the content, what assurances do you have that an authorized user would actually do this?
290 MR. TEMPLE: There is no guarantee that they will provide an audio message. I think that we are certainly prepared to encourage them to do that, and I think that most authorized users want to be able to provide an audio message.
291 Again, there may be situations, perhaps in smaller municipalities, where that may be difficult, but I think that over time, really, with technology, it will be a fairly simple process to send an audio file to us, along with a text message, and we will put it right into the 1‑800 system.
292 COMMISSIONER PENNEFATHER: It is really a sense of, yes, you can do it technically, but my question is more that you, as a service ‑‑ since you are proposing that you have reached out to the visually impaired community and solved the problem, can you assure us that in fact the content of that message will be appropriate?
293 Do you have any sense of a way that one could be assured of this?
294 I grant you that it is technically feasible, but can we be assured of this?
295 MR. TEMPLE: You have to bear in mind that while there is an obligation on us, which we are prepared to undertake, to disseminate, there is no obligation on the authority.
296 COMMISSIONER PENNEFATHER: That's my point.
297 MR. TEMPLE: Conceptually, an authority may not even want to participate. They may not even want to issue a text message.
298 I can't go out and tell Municipality X that they have to send me messages, and they have to do it this way, and they have to do it that way.
299 So I can't guarantee that. That is just a practicality.
300 I suspect, however, that in most cases they would want to send the message, and if we make the means available to them, then, in practice, they will. But I can't make a municipality or an authorized user do anything they don't want to do.
301 COMMISSIONER PENNEFATHER: Okay. I have your answer on that.
302 Regarding the hearing impaired, in your reply at page 18, paragraph 75, you indicate that you are working with the CAD on the concerns about closed captioning.
303 Have you an update for us on that?
304 MR. PERREAULT: Commissioner Pennefather, the RQST, le Regoupement québecois pour le sous‑titrage, has been extremely active, and we have been very involved with Mr. Richard McNichol in the ACA project.
305 They didn't intervene this time around because they saw no change from our past proposal.
306 In the past proposal, what we did with the RQST was, we organized six focus groups across Quebec to present our project and gather feedback from their constituents, and the feedback we got from them was actually what you saw on the screen earlier, whereby the crawl is in the middle of the screen, not to interfere with closed captioning at the bottom. The colours, the font, the typeset ‑‑ everything was verified in these focus groups, and they were satisfied.
307 With our reply to interventions, we filed a letter with the Commission coming from the RQST, saying that they are still satisfied with this proposal.
308 So we heavily consulted with them. We invested time and money in creating the focus groups for the RQST, and I think that we had very good feedback from their constituents.
309 CONSEILLÈRE PENNEFATHER: Merci.
310 Je pense qu'on peut prendre notre break maintenant, monsieur le Président?
311 LE PRÉSIDENT: Nous prendron une interruption de dix miunutes. Nous reprendrons à 11 h 00.
‑‑‑ Suspension à 1050 / Upon recessing at 1050
‑‑‑ Upon resuming at 1100 / Reprise à 1100
312 THE CHAIRPERSON: We will resume the review of the application by Pelmorex with Ms Pennefather.
313 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.
314 Welcome back.
315 Are we all alert?
‑‑‑ Laughter / Rires
316 COMMISSIONER PENNEFATHER: I waited two hours. I had to do something with it.
317 Again, thank you for Appendix F, which, as you say, describes in layperson terms how it will work.
318 We will use Sections F and G now for some technical questions.
319 Again, as I said before, things tend to go back and forth in the various areas. We may repeat ourselves, but that helps in terms of clarity.
320 I am going to address the standby operations.
321 In your application you noted that the standby operations centre will only be staffed during daytime hours. If the main operations centre goes down during non‑daytime hours when the standby site is unattended, can you confirm that the standby site can handle all of the network requirements when it is unattended?
322 And how long would it take to staff the standby site in the event of a failure of the main operations centre?
323 MR. TEMPLE: The standby centre is, I guess, what you would call a hot standby. I don't know if that is the right phrase, but it would be always fully operational.
324 In off hours staff would be, obviously, on call ‑‑
325 I should check, first, to find out how long it would take to get people back into the centre. If you could give me a moment, I will make sure that I am giving the right information.
‑‑‑ Pause / Pause
326 MR. TEMPLE: The two centres are fully automated and operational at all times, so if one centre failed, the other centre would take over.
327 In terms of getting staff on‑site, they tell me that that should happen within an hour of them being called.
328 COMMISSIONER PENNEFATHER: All right. On page 5 of Appendix F, when you say that the standby centre will be staffed to handle the demand of launching hundreds of individual ‑‑ et cetera ‑‑ the standby centre will be staffed, meaning if the other centre goes down?
329 MR. TEMPLE: No, the plan is to have the standby centre staffed during ‑‑ I think it is 16 hours, but I will check that to make sure I haven't misled you.
330 It will always be staffed during daytime hours, or the 16 hours, to provide service to authorized users and BDUs, because during the actual implementation there will be an awful lot of work. We are talking about the coordination, installation and testing of equipment in hundreds of sites across Canada, so there will be an awful lot of work to do.
331 So those people will be quite busy in terms of working on the actual roll‑out of the service, quite apart from the ongoing monitoring and supervision of the system.
332 People will be there 16 hours a day at the standby site.
333 COMMISSIONER PENNEFATHER: So how long to staff is a mis‑question, then.
334 The standby centre, is it already staffed on a permanent basis, or is it empty and then ‑‑
335 Forgive my layperson's language.
336 MR. MORRISSETTE: If I could add, we operate two broadcast centres ‑‑ or media centres as we now call them ‑‑ one in Oakville, Ontario, which is our main one, and one in Montreal. Both centres operate 24/7.
337 The actual control activities for receiving and distributing alerts ‑‑ both centres will have a 24/7 capability.
338 The Montreal centre, obviously, handles our French alerting requirements, as well as English.
339 The actual messaging part is 24/7 redundant. The operations centre is involved in managing the roll‑out, the launch, liaison, testing, and the many, many activities that go on over and above just the messaging capability. One is around the clock, and the other is the 16 hours per day process, but messaging is fully redundant 24/7 in two locations.
340 COMMISSIONER PENNEFATHER: And the standby is the 16‑hour operation?
341 MR. MORRISSETTE: That's correct.
342 COMMISSIONER PENNEFATHER: Thank you. That was not clear.
343 Moving on, you stated that you will employ satellite signal return monitoring to verify that every alert is correctly transmitted. However, you went on to note that it will not be possible to monitor every cable head end to check that every alert is properly received and identified.
344 Have you given any thought to equipping at least the major head ends with return links that would enable you to verify that each alert was properly received and identified?
345 MR. BOULANGER: Yes, we have done so. The design of our system is that we can retrieve from the major sites the acknowledgment of reception there. It is not a technical issue, it is more a financial question, if we were to do that for all of the sites.
346 We can recover the acknowledgment and re‑transmit if it has not been received at the site.
347 COMMISSIONER PENNEFATHER: So it is possible to get that verification back, and the return links ‑‑ the major head ends, certainly, you would be able to verify.
348 MR. BOULANGER: Yes.
349 COMMISSIONER PENNEFATHER: There was Appendix F, and then there is Appendix G. This is a little different.
350 Again, it was written clearly, but there are those wonderful schematics, which I will not go into, but which are a lot of fun to look at.
351 Let's focus a bit and turn to Appendix G, page 69. I want to talk about the implementation of the ACA system on ExpressVu.
352 You state here that further discussions are required to finalize the design and select the best manner in which to implement it.
353 Can you briefly outline what is involved in this implementation?
354 MR. BOULANGER: In the case of the digital solution, mainly in a case like ExpressVu, the solution involves the development of software, which will be downloaded to the set‑top box, and will be able to receive the alert and display in the areas that are affected.
355 There are multiple ways of doing that. In a sense, the software can be made to operate in different ways.
356 It is important that there be discussion with the operator, in this case ExpressVu, or even initially we talked about OpenTV, because it would be adding functionality to their basic software, which is not required in their case, in such a way just to adopt the less impacting way of doing the thing.
357 That means it could be that we format one way versus another way, or we use non‑volatile memory instead of the hard disk, and stuff like that.
358 It is definitely not an issue to implement an ACA target ‑‑ ACA in both languages ‑‑ on a platform like ExpressVu at this time.
359 COMMISSIONER PENNEFATHER: On the same page, just to carry on that point, you mention that for the non‑Open TV set‑top boxes used by ExpressVu, it would not be practical to add the ACA functionality to the existing EPG applications.
360 I think that is what you just addressed.
361 How long do you think it will be before all of these boxes are replaced by Open TV units?
362 MR. BOULANGER: I believe it would be more ExpressVu that could answer that question, to be honest.
363 COMMISSIONER PENNEFATHER: Have you discussed this timing point with them? Have you any sense of it?
364 MR. BOULANGER: We have discussed the notion of doing it or not, and their premise was that by the time we get there, and the quantity of bucks remaining, it is probably not worthwhile to do it on the non‑Open TV box.
365 Again, it is not technical, it is more an operational impact on them, more than anything else.
366 COMMISSIONER PENNEFATHER: In the case of Star Choice, on the same page you mention that most of their set‑top boxes do not have Open TV at this time either. However, you were of the view that it would be possible to add ACA functionality to them. But, as you say, some software development would be necessary.
367 Again, could you be clear on what software development is necessary?
368 MR. BOULANGER: In the case of Star Choice, because they don't have a platform, really, like Open TV, which allows you to download additional software, the only way of doing it is to modify the basic software, which Star Choice is doing from time to time, but it is something that is more ‑‑ you have to pay more attention when you touch that software. It has the potential to have more arrays and that means that you have to pay attention and do a lot more testing.
369 But, again, technically, it is feasible.
370 In the case of Star Choice, they are doing this kind of stuff themselves. They have modified the software, provided by Motorola, and adapted it to their system. That is the only solution they have so far on the non‑Open TV box.
371 COMMISSIONER PENNEFATHER: In the latter case we are closer to a solution, then, on the non‑Open TV set‑top box.
372 MR. BOULANGER: It is not that it is closer to a solution, the solution is simpler to implement.
373 COMMISSIONER PENNEFATHER: All right. The point being that this would affect the timing of ‑‑ the availability of the service to satellite subscribers.
374 MR. BOULANGER: Yes.
375 COMMISSIONER PENNEFATHER: Where can we get a sense of how that is moving along?
376 MR. BOULANGER: The timing is influenced ‑‑ if we say that we don't modify the basic software, the timing is influenced by the supplier. We spoke to Scientific Atlanta, we spoke to Motorola, Open TV and other guys, and they were very candid in saying that there is no real issue to put it there, but until they have a bit of pressure, either from their main clients or from some government authority, they will not put energy in putting it there.
377 We discussed that both with Motorola and Scientific Atlanta. Implementing a national alert service, according to them, will add more incentive, and they should implement that, but they didn't provide dates.
378 COMMISSIONER PENNEFATHER: Another question regarding DTH is addressed on page 76 of Appendix G, and it is the localization information section. In other places it is called targeting.
379 This is a very important piece of your proposal.
"It takes DTH companies some time, even hours, to update all of their subscriber accounts, because, for obvious financial reasons, they use relatively narrow band data channels. It will be necessary to target alerts to particular provinces, regions, cities, municipalities, and perhaps even to citizens living within, say, a kilometre of a railway track or a nuclear power station."
380 At page 76 you mention several means by which this problem could be addressed, but then "the necessary capabilities are not yet all in place."
381 Could you tell us what targeting options are available, for example, in targeting railway corridors? And, once the system is in place, how long will it take to activate the various classes of targeted set‑top boxes?
382 MR. BOULANGER: I will have to answer in several answers, in a sense.
383 The supplier has, in their development, the notion of implementing additional functionality to help targeting, but it is not there yet.
384 The solution we are proposing ‑‑ and we are implementing on ExpressVu and other products ‑‑ is that we pre‑zone the box. In other words, we map them across the country, and we save on what is called a non‑volatile memory the equivalent of a group of zones, or zones in a hierarchy, which means that when the alert comes in, we don't have to send it to individual boxes. That takes a lot of time and bandwidth. We would just use the pre‑zoning that has been done hierarchically.
385 In the case you mentioned, if you have a corridor and it has been mapped as a zone, and the identification of that zone has been saved in the non‑volatile memory of the box, just sending the alert once to that zone should activate the message there, and timing should not be an issue.
386 COMMISSIONER PENNEFATHER: So your answer is a pre‑zoning of the boxes ‑‑
387 MR. BOULANGER: That is one scenario.
388 COMMISSIONER PENNEFATHER: And the implementation time for that?
389 The pre‑zoning, is it based on postal codes? Is it based on subscriber information?
390 How does that work?
391 MR. BOULANGER: There are, again, multiple scenarios for doing that. You could use postal codes, but postal codes for some areas of Canada are not feasible at all. For example, some provinces have only two postal codes, roughly, to cover the whole province.
392 The other way is to obtain some information from the billing and authorization system; no sensitive information, strictly the city and language. You could use that to pre‑zone a hierarchy of zones.
393 The other alternative is to ask the person to identify themselves.
394 As far as the implementation, we will be launching next week with ExpressVu products for our main products.
395 COMMISSIONER PENNEFATHER: So you are starting to work on the pre‑set ‑‑
396 MR. BOULANGER: Yes.
397 MR. TEMPLE: If I could add a couple of comments; as Jean‑Pierre just mentioned, we are hoping to be able to launch interactive content on our channels on ExpressVu before the end of the month, which is, in many ways, a precursor to the ability to send warnings.
398 We will be able now to send local weather information to viewers of ExpressVu; and, really, applying that basic framework, which will be in place, it is a relatively simple step next to send alerts, just as we do on conventional cable.
399 So a lot of that work is already in place.
400 In terms of the number of boxes, I think, for very good reasons, ExpressVu views those numbers as competitively confidential. They don't want their competitors to know how many boxes, of what kind, are out in the field, and who can do what, but it is certainly our sense, in working with them, that probably the majority of their subscribers, if not more than the majority, have boxes capable of displaying ‑‑ or accommodating warnings, and that number is increasing all the time.
401 So, certainly by the time that we would be in a position to launch service to ExpressVu, most of them would be able to be served.
402 Finally, in terms of the zoning, or pre‑zoning, I think it is important just to point out that it gives the opportunity to almost make it more precise, because if we can establish zones ‑‑ I mean, I don't think there is any practical limit to the number of zones that we create. So that our ability to send warnings to subscribers on satellite, on ExpressVu for example, may be actually a little more precise than on conventional cable.
403 So I think we are ‑‑ I will call it "excited" about the possibility of being able to do that work on satellite.
404 COMMISSIONER PENNEFATHER: Thank you.
405 I want to move on to installation and launch of the ACA service and, more particularly, installation and testing and to explore some of those implementation and coordination issues that could delay or lengthen your rollout schedule.
406 Could you outline what potential implementation problems you foresee and what specifically could be done to forestall them?
407 For example, ACA equipment will have to be installed, interconnected and tested in cable head ends.
408 On page 9 of Appendix G you noted that Pelmorex would supply the ACA units, but that installation and cabling would be the responsibility of the cable operator.
409 What sort of coordination process would you establish?
410 MR. TEMPLE: As part of our application we propose that a launch and rollout committee would be established that would certainly involve BDUs and broadcasters, as well as public alerting authorities. So one of the first steps would be to establish that and start working our procedures and guidelines with those interested groups.
411 Concurrent with that, I think a separate team would ‑‑ for obviously reasons we can't just go and pre‑manufacture all these devices in the hope that the Commission approve our application. We might end up with a rather hefty bill, only to find out we are not approved.
412 So we can't manufacture the devices in advance of approval, but a lot of the design work can be done and so a separate group would begin working on the physical manufacturing of the units. We put together, again in consultation with the BDUs, instructions in terms of installation, likely even more complicated than Appendix G.
413 I think as part of our application we have included, under marketing or support, installation video so that they understand exactly how things are to be installed, how things are to be tested. Staff would be hired at the operations centre to support BDUs with questions in terms of installation and testing.
414 So that's general.
415 I guess in terms of what kind of problems, I mean the only problem is ‑‑ I mean, I guess there could be hundreds of problems, but we just have to be prepared to deal with them, just like you have to deal with issues that come up in the launch of any service or initiative.
416 MR. PERREAULT: To that extent, Commissioner Pennefather, Pelmorex has experience with this. When we launched the network we had to install our own equipment at every cable head in the country. So we have experience in distance helping, if you wish, the head‑end technicians in installing equipment. We have people in‑house that understand that relationship.
417 We are into our fourth generation of head‑end equipment, so we did that four times actually, changing this equipment.
418 Moreover, when we went digital in 1995‑1996 we had to install and modify equipment in the 1,300 head ends, so again we are there to support the operators. That communications procedure is in place and have staff on hand to help the cable operators and satellite operations and all affiliates into performing these technical changes on par and we never missed a deadline. So experience is going to be very helpful in rolling out ACA.
419 COMMISSIONER PENNEFATHER: Thank you for that.
420 So you referenced in your reply a technical committee, and this technical committee then would also be available at the different locations? Because as I understand, you are offering some flexibility in terms of particular network configurations, so there would be sometimes different problems with different cable head ends, different conditions to address.
421 Have you worked through the potential coordination of all of that beyond the committee? Are there any particular technical problems which would forestall the rollout?
422 MR. TEMPLE: I think just to clarify a little bit, there are two committees we propose. One is the launch and rollout, which is a coordination of exactly that, the launch and rollout of the service.
423 Separately, a technical committee to deal with technical issues, but also the development of enhancements and new features and capabilities. So there's actually the two groups.
424 What we have tried to do is set up and provide for the BDU instructions or guidelines so that they can select the manner best suited to them to install the equipment and configure their head end.
425 That's one of the reasons why we want two operation centres, because we expect that we are going to get a lot of calls and a lot of people, you know, "What's the best way" or "How do I do this?" You can give someone instructions. I'm probably the best example. I never read the instructions, I just kind of take it out of the box, whatever it is, and start playing around with it.
426 COMMISSIONER PENNEFATHER: Judging from those schematics in Appendix G, that would not be wise.
‑‑‑ Laughter / Rires
427 MR. MORRISSETTE: If I can just add, our goal and commitment is to achieve a very successful rollout. In that regard, the relationship with the BDUs is one that we envisage to be a very positive one. We want to super serve. We want to super support. We will do what we have to do to provide the guidance, support to the extent required.
428 For example, 24/7 hotlines on technical matters. Basically hand‑holding in certain key technical problem‑solving, and so on and so forth.
429 So the commitment there is really to super serve, so that the success of this very, very important launch rolls out successfully.
430 COMMISSIONER PENNEFATHER: I would like to go back to the question of localization or targeting, but in terms of analog cable systems.
431 In terms of analog cable systems with broad services areas, you indicated that viewers will rely on the location pinpointed in the emergency message to know whether it affects them directly.
432 Would it be possible to reduce the number of alerts that subscribers would see that aren't meant for them?
433 For example, can ACA equipment be installed within a large system at certain key distribution nodes, or at system interconnection points, rather than just the head end?
434 MR. PERREAULT: To that effect, Commissioner Pennefather, we already have done some experiments with two cable operators, one being Vidéotron, the other one being Rogers, for our actual weather services.
435 Montréal is currently subdivided in five different zones for actually weather forecasting and weather alerting principles, and the GTA in Toronto is subdivided into 16 different zones. So that kind of already exists in our current thinking and delivering weather information with larger BDUs.
436 So with their cooperation it is possible to do so.
437 COMMISSIONER PENNEFATHER: And not only possible, but you see the point is that the feature here is to target news where it's happening, the alert where it's happening.
438 Turning to HD and the deficiency reply of February 9 at page 5, you note that total costs ‑‑ and I'm selecting from the paragraph:
"... do not, however, include ongoing investments beyond the launch period to accommodate HDTV and other technological changes."
439 When do you envisage upgrading your ACA technology to handle HDTV and would the upgrade to HDTV have an impact on the subscriber rate?
440 So the first part of the question is, one of the technology changes going forward would clearly be the handling of HD and how do you envisage that upgrade? How would it be done?
441 MR. BOULANGER: HDTV per se exists only in the digital world. That means by that time you have to have a set‑top box, which means the solution is similar to the digital approach.
442 For the DTH or that kind of stuff, the ACA box as is known today will not be required for HDTV because it will be a software approach and not a hardware approach.
443 COMMISSIONER PENNEFATHER: And on the digital cable side, the HD, will that ‑‑ say we go forward today, what ‑‑ and there is supposed to be, as you say, financially as well ongoing investments beyond launch.
444 Will one of these investments not include the upgrading of the technology to include HD? Will have an effect, in other words, on the ACA service on digital cable systems?
445 MR. BOULANGER: If I do understand correctly your question, the effect ‑‑ because the solution is a software we don't need to upgrade the physical boxes, but we need development to develop the software or adapt it. Because the HDTV will be using the digital set‑top box, as is the case for DTH or other digital approach.
446 COMMISSIONER PENNEFATHER: So it would be another point. In addition to the targeting it would be another aspect of the set‑top box to prepare the software for the HD?
447 MR. BOULANGER: But the HD is just a higher bit rate and having a higher resolution. The notion of receiving the alert, finding the area will be exactly the same. That is not typical to HDTV.
448 MR. MORRISSETTE: If I can just add, the high definition capabilities is an example of a new generation that we will have to deal with. There will be other enhancements over time as technology continues to evolve, and our commitment and our plan is a long‑term one. It is not a static "Here is a box, here is a piece of software and there it is forever."
449 On the contrary, it is a moving target, moving towards continuous progress and enhancement and all of this is our commitment to make those investments within the context of the business plan that we filed.
450 COMMISSIONER PENNEFATHER: I think as we move into the financial issues, if you would keep that in mind as we differentiate between investments by Pelmorex and investments by the cable ‑‑ or the BDUs shall I say, because my understanding certainly at the get‑go was the ACA unit was provided by Pelmorex but the installation costs and maintenance costs and ongoing development were the responsibility of the BDUs.
451 That's, I think, the principle going in, is it not?
452 So assessing the costs to the BDUs is an important part of this proposal.
453 MR. TEMPLE: Yes. Just to clarify, we supply the equipment, the ACA equipment at our cost and we bear the costs of upgrades and enhancements. The cable operator or BDU is simply expected to install the equipment as best suits their head end and how they process the signals and that's basically it.
454 I mean obviously it's located at their head end, so they are expected to, you know, provide a safe home for it, and power and things of that nature, but if there is a failure in the equipment for any reason, we replace the equipment at our cost.
455 We even cover the shipping cost. They call us up and tell us what's wrong, we ship them a new unit right away, or in some cases we may even provide them with a standby unit. So they are not expected to spend money repairing anything.
456 COMMISSIONER PENNEFATHER: So taking any upgrades that we have discussed to this point, they would be included in your financial projections as part of your repair and maintenance costs of the ACA units?
457 MR. TEMPLE: Yes.
458 COMMISSIONER PENNEFATHER: This is our segue into a financial discussion. Again we can clarify that point if I don't have it properly.
459 As we know, you have tabled with us ‑‑ and it is on the public record and available ‑‑ new financial projections based on a proposal called "Analog Optional", which you noted in your reply could be a model you would look at where mandatory distribution order, as you have proposed, would apply only to digital.
460 So if the questioning is a little disjointed you will forgive me, but I'm going to ask you some questions based on this new proposal first and then go back over some of the principal questions related to the creation of your financial projections, and again make sure we have it clear.
461 In the new proposal you have tabled some assumptions. One is:
"Class 1 systems, representing 16 percent of subscribers, are assumed to launch a digital‑only service. The balance of Class 1 systems are assumed to offer both analog and digital."
462 What is the basis for the 16 percent and how many class systems does this represent?
463 MR. TEMPLE: The basis of the 16 percent is really just based on the fact that one large MSO expressed interest in ‑‑ or a preference for digital only, so we took their approximate percentage of their subscribers among all Class 1 systems and said, "All right, let's just assume for the sake of argument that they did do a digital‑only service." The other BDUs or cable companies who filed comments didn't ‑‑ or the other Class 1 operators didn't indicate a preference for digital‑only so we just assumed that they would stay on the original model.
464 So it was just based on, I guess, the proposal put forward by Vidéotron, and they are 16 percent of the Class 1 system so we said, "Okay. Well, what happens if we did 16 percent digital only?"
465 I guess there are numerable models, but we had to start somewhere so we just figured, "Well, let's try that one and see how it works."
466 COMMISSIONER PENNEFATHER: Just to clarify for me, Mr. Temple, that represents how many Class 1 systems, the 16 percent?
467 MR. TEMPLE: I'm sorry, did you want to know the subscribers?
468 COMMISSIONER PENNEFATHER: The number, yes. The number of Class 1 systems ‑‑
469 MR. TEMPLE: The number of systems.
470 COMMISSIONER PENNEFATHER: ‑‑ that 16 percent represents.
471 MS CHARLTON: Twenty‑two.
472 COMMISSIONER PENNEFATHER: Again on the new material you have a capital outlays page, as you did in your original Part D Appendix, Part 1.
473 Could you file with us, if possible, the reconciliation of the capital outlays, that is numbers X1 to X7, in comparison with the original application?
474 Would you be able to file that?
475 MS CHARLTON: That's not a problem. We can do that.
476 COMMISSIONER PENNEFATHER: Thank you. Can you do that by the end of the day or by tomorrow?
477 MS CHARLTON: We would have it by the end of today.
478 COMMISSIONER PENNEFATHER: Thank you.
479 Just on the question also of the 16 percent and the 22 systems, you have described where you got it from, but if you are not right what would be the impact on your business plan if there were more Class 1s going digital only?
480 MS CHARLTON: Our model is predicated on the fact that the larger systems ‑‑ which the exception obviously of one ‑‑ will still choose an analog option.
481 Again, as Paul mentioned, we didn't get anything in the interventions indicating that they were against analog. I think in general everybody wants to meet as many Canadian needs as possible and I think that over the short term, the next couple of years, there still is going to be a number of analog services out there, either hybrids between analog or digital or homes that have several analog TVs in addition to a digital box.
482 COMMISSIONER PENNEFATHER: Have you put that in consideration of the new digital migration policy in terms of the timing?
483 MS CHARLTON: The systems that choose digital, we are ‑‑ our roll‑out assumes ‑‑ I think it is in the assumptions, but our roll‑out assumes it follows somewhat the digital migration policy whereby 85 percent by 2012 would be fully digital.
484 COMMISSIONER PENNEFATHER: Okay. So what ‑‑ we understand the basis of the 16 percent and the number. You're going to look at the capital.
485 I don't know if you would want to also look at a different scenario with an increased number of digital‑only cable systems and what impact that would have on your financials, but we understand where you were going there.
486 The other point that is really interesting in the assumptions here is now we have a six cents per describer rate instead of the eight cents.
487 How did you arrive at the six cents in the new scenario?
488 MS CHARLTON: In essence, as the assumptions break out what we did was we modified the ‑‑ we removed basically the analog capital associated with ‑‑ other than the Class 1s and that one MSL we talked about. The analog capital comes out, the roll‑out of the digital systems obviously impacts the rate as well.
489 When you run all of this together between the capital, the revenue and there are some operating expenses which are variable to revenues or to capital, when you run the model basically in order to make it hold to what our original model was, it comes to six cents.
490 COMMISSIONER PENNEFATHER: In reviewing very quickly what we received this morning staff have pointed out to me that the new capital costs are almost half of what they were in the original application, which brings me to the question of profitability and I'm going to go back over this point because we want to have questions which are based on the original application for the record as well.
491 But here in analyzing profitability, since the capital costs have come down that significantly, I think we would be looking at a PBIT analysis in terms of profitability and, very quickly, if we look at the PBIT in terms of the original application and in terms of the new proposal, it would appear that the PBIT in the new application in year 7, for example, is 36 percent and the PBIT margin in the new proposal is 40 percent.
492 So even with the change, with the capital costs, about half at six cents we are still at a PBIT margin in year 7 ‑‑ let's take your 4 of 26 percent versus 26 percent, 36 percent in year 7 in the original and 40 percent, you still have a fairly significant PBIT margin here. Would you agree?
493 MS CHARLTON: The PBIT margin on just the annual basis looks a little high.
494 What we look at are two things. Number one, over the seven‑year period and in the analog optional model we are looking at a PBIT over the seven years of just about twelve and a half percent. In our original filing it is about 17 percent.
495 However, it is still a fairly capital‑intensive project and in both cases at the end of seven years our cash position is still negative by give or take two million dollars and I think that is probably one of the more telling signs of this investment.
496 There is still a great deal of risk associated with the technologies. We've talked about to a certain extent HD. We've talk about the risk associated with if more systems decide to do digital only and we are only penetrating 50 percent of their market or 60 percent of their market or 40, the impact on the revenue is fairly extreme in some cases. So there is still a fair bit of risk associated with this model.
497 The other thing that we look at is an internal rate of return. And in this initial filing ‑‑ both in the original filing and this, the rate of return is negative.
498 You know, I like to use the example if I gave my financial advisor, you know, $100 every year for the next seven years and at the end of it he hands me back 650 I'm not all that happy.
499 So there is a return. It is a longer return. We are in this for the long haul, but it is a serious business and there are certain costs that will be about there regardless.
500 COMMISSIONER PENNEFATHER: So even with the less ‑‑ at least by half capital costs you still maintain that this is a fair rate of return.
501 And I guess I have a question that I'll come back to as well in the analysis of the original application. Why do you feel that this is an appropriate level of profitability for such a service?
502 MR. MORRISSETTE: If I can maybe jump in.
503 We are talking about a proposal which generally speaking is of capital‑intensive nature and for that reason we view that the more appropriate measurement for this type of business fundamentals is to look at the cumulative cash flow result and the appropriate IRR for the period.
504 There are risks involved in this project. It is a significant long‑term undertaking. There will be a need for reinvestment over time and in that regard we expect a fair return.
505 The other reality is that the Commission will be in the position to review on a regular basis and definitely at the appropriate licence renewal periods the inherent profitability and rates of return associated with this project and to act in whichever way it seems appropriate at that time.
506 As we sit today, we've done an analysis and, quite frankly, we've developed a seven year business plan that shows still a significant amount of negative cash flow on a cumulative period at the end of the seven years and that has been our modelling and the new model that reflects the analog optional proposal as an alternative ultimately demonstrates a very similar result on a net cumulative cash flow basis as our original financial plan.
507 COMMISSIONER PENNEFATHER: So even if the capital costs in the new plan have been reduced by half, you still feel that it is a viable measure of profitability to compare yourself to the level of cable capital costs, as you did in the original application?
508 MR. MORRISSETTE: Yes, we do, because the ‑‑ the end game, the ultimate cumulative result, is a negative cash flow position of a few million dollars and a negative internal rate of return for that seven‑year period.
509 At the end of that period or during the course of that period there will be opportunities to review that.
510 COMMISSIONER PENNEFATHER: I'll go back to the cash flow point ‑‑ did you have something to add, Mr. Temple?
511 MR. TEMPLE: Just on the model, just to make sure, we talked about the 16 percent reduction in Class 1, but we also assume that all other cable systems, smaller cable systems, would go digital and that is why the capital is reduced.
512 We took the CCSA filing. They didn't express a preference for analog either, so we just assumed that smaller systems also would opt for analog and that is the reason why ‑‑ or they didn't express interest in analog, so that is why we assumed that they would opt for digital and that is the reason for the ‑‑ for the reduction in capital.
513 The model was simply ‑‑ we put the model out because ‑‑ based on the filings. There is innumerable permutations. If more BDUs ‑‑ I think your question earlier was if more BD ‑‑ Class 1 cable operators opted for analog only, the financial attractiveness of this model would worsen.
514 If more small BDUs than what we modeled did want analog, the financial attractiveness of this model would worsen.
515 So there is a fair element of risk associated with this model, but we wanted to put something forward for the Commission to look at, because, you know, the whole issue of analog optional is an issue that has been raised.
516 We don't know how it will play out, but we wanted to give you something based on the filing that had been made.
517 COMMISSIONER PENNEFATHER: Fair enough. We'll come back to the model. Just before I leave it, to ‑‑ we asked for comparisons on capital costs.
518 The other difference between the two models is the ACA licence fee. I think I see a considerable difference in that fee.
519 Can you clarify that?
520 MS CHARLTON: The ACA licence fee is based on 5 percent of the revenues associated with the ACA service, so with the fluctuations with revenues there is also the impact on the ACA fee. It actually will go down by about 600,000.
521 COMMISSIONER PENNEFATHER: The reason for the ‑‑ where did the 600,000 go?
522 MS CHARLTON: There is ‑‑ under the analog optional model the revenues themselves dropped by about 30 percent and therefore there is an associated drop in a variable expense, such as the ACA licence fee.
523 COMMISSIONER PENNEFATHER: On the licence fee in your original application you note what it will cost Pelmorex, I think about a million three, a million four, to support the ACA. Has that cost changed at all in the new model?
524 MS CHARLTON: No, that cost will remain. That's the ‑‑
525 COMMISSIONER PENNEFATHER: That will remain the same?
526 MS CHARLTON: That will basically remain the same.
527 COMMISSIONER PENNEFATHER: Even with the different scenario with fewer analog BDUs?
528 MS CHARLTON: That is going to be the risk of the agreement that we have with Pelmorex Media.
529 COMMISSIONER PENNEFATHER: There may be some other points in the new scenario that we'll come back to, but I'm going to almost back up a little bit and take us through the original application and some of the same questions.
530 I particularly want to go back to the question of profitability and how you have looked at it. We take your point of the analysis and the comparison with cable because of the intensity of capital costs. We also would want to table again the potential to look at profitability in terms of PBIT.
531 Just starting in your application ‑‑ and I'll rely a lot of the deficiency response, again very detailed ‑‑ a quick question regarding the ‑‑ in the application you state:
"The cable companies will be able to pass through their implementations costs directly."
532 Again, what do you estimate these implementation costs to be for the different cable systems and could you also tell us what you expect the implementation costs to be under your new proposal?
533 MR. TEMPLE: The implementation costs vary depending on the way that the cable operator processes their signals and how they want to do it, whether they are going with a base band crawl or they are doing switching and how the ... how many channels they have, so there is a number of factors that go into estimating the cost.
534 As part of ‑‑ I believe it is Appendix I, Mr. Anderson estimated the installation costs. If I recall correctly ‑‑ I'll check it ‑‑ but I think it was anywhere from $2,000 to ... a number that was obviously ... he says on his executive summary page 1:
"The labour, equipment and cabling costs will vary somewhat, but an 80‑channel head and AC configuration could be installed for $2,000 to $15,000 depending on the types of processing technology used by the cable operator."
535 So that ‑‑ I don't think that would change under the models significantly ‑‑ well, if they weren't installing analog, if they went digital only, then their installation costs would be significantly less.
536 COMMISSIONER PENNEFATHER: But do you have some sense ‑‑ I believe the Anderson report deals with analog systems.
537 Do you have any sense of the costs with a digital only? You said it would be less, but do you have something more specific than that?
538 You can get back to us if you would prefer.
539 MR. TEMPLE: Rather than me winging it, that is probably a safer option, so I'll take you up.
540 COMMISSIONER PENNEFATHER: I'm going to ask another question about administrative expenses. I think the question still applies in the new model.
541 The administration expenses which you've supplied are costed at 3 percent of total revenues. Correct? And that assumption remains in the new model?
542 MS CHARLTON: That's correct.
543 COMMISSIONER PENNEFATHER: In your deficiency response, I believe it is page 7, we have a chart here where the administration fees charged to ACA are a percentage of total operating costs in that chart.
544 Why do you propose to base the charge to the ACA on revenues as opposed to expenses?
545 MS CHARLTON: I think what we were doing with that chart was trying to outline the fact that the administration costs associated with the ACA system are actually less than what is it is in the current Weather Network/MeteoMedia services.
546 It is based on revenue ‑‑ the revenue is very tied in essence to the operating costs and the capital costs and therefore the workload associated with the administration office, be it the people, the financing, the capital, asset management, et cetera, so we feel that is a more fair comparison.
547 COMMISSIONER PENNEFATHER: Well, you did the comparison, but in terms of the financial proposal in front of us, why percentage of revenues not a percentage of cost? Forgetting the comparison for a moment, why did you do it on revenues as opposed to costs?
548 MS CHARLTON: That is actually currently our policy as well with The Weather Network and MeteoMedia. We simply applied the same policy.
549 COMMISSIONER PENNEFATHER: On revenues to the ACA system.
550 MS CHARLTON: Yes.
551 COMMISSIONER PENNEFATHER: And why the 3 percent? What was the basis for 3 percent?
552 MS CHARLTON: The 3 percent, again, is what we have found is we did kind of a combination of things. We didn't feel it was necessary to actually hire specific staff for ACA that could do the multitasking of a payroll function, and HR function, a finance function. We would lever off the expertise currently within the staff that we have, although it will increase their workload, and we may have some extra staff hired within the parent company.
553 But if you do hire a senior finance person to handle all the finance functions, an HR payroll person, a clerical person to deal with the asset management procurement, things like that, it will run easily $250,000 a year and that roughly equates to what 3 percent of the revenues is.
554 COMMISSIONER PENNEFATHER: Thank you.
555 You also address in your application at page 17 that:
"the ACA service is a stand‑alone operation receiving administrative support from Pelmorex that is being costed on an incremental basis."
556 What synergies will be derived from the relationship between the proposed ACA service and Pelmorex?
557 MR. MORRISSETTE: I might just kick that off in terms of a big‑picture response.
558 This new service builds on just about everything that we do as a company. It takes advantage and benefits from a very elaborate infrastructure that is in place that is been evolving since inception eighteen years ago.
559 Our company is all about aggregating dynamic information that is changing all the time, processing and managing that information. It is about profiling, it is about scheduling, it is about delivering the information in a very localized and targeted manner, so that everything ends up at the right place at the right time within milliseconds.
560 We operate a huge database service. We have this competency of dealing with all kinds of different technologies and standards and modes of distribution, so everything that we stand for, which is unique in the Canadian broadcasting system, the ability to operate a national network distributing localized information, we are the only people who do that, and it is an expertise that we are very proud of, that has required huge amounts of investments over time.
561 So that is what we have in place and that is why creating an emergency broadcasting system or the foundation for that kind of system in Canada is a very natural extension of what we do, of what we ‑‑ we are all about.
562 We have been distributing alerts since inception, eighteen years ago, but it's only been to our own services and targeted areas. Now, this goes the extra mile of a long journey, mind you, but the extra mile to share those alerts with all other channels, because people don't just watch one channel.
563 So that's the very significant benefit of our proposal. It builds on our track record, it builds on our expertise, it builds on our credibility of doing it and doing it right. It builds on our relationships and so on and so forth.
564 Turning to the new project, we said, well, we have got all this in place, we have invested large amounts, we have a great infrastructure, but this new project we have looked at strictly an incremental basis and everything has been costed and priced on that basis.
565 So we're not charging a few for all of our expertise and what have you. That's a given. What we are ‑‑ all of our pricing and so on is based on a purely incremental costing case.
566 So that is ‑‑ I don't know if that answers your question, but there are huge amounts of synergies based on what we already have.
567 COMMISSIONER PENNEFATHER: Well, I am looking at the deficiency plots on page seven, and in terms of the financial scenario going forward, you would propose that those are relying on the parent company to provide the following additional back office scenarios and some specifics are ‑‑ that is the synergies. Is there anything over and above that, other than the big picture point that you made?
568 MR. MORRISSETTE: Well, as we develop ongoing new technology and for our existing activities and so on, this will facilitate and enhance the ability to roll out some of these changes in the all channel alert service. But, again, anything that we do going forward is going to be on an incremental basis.
569 But, yes, you have to imagine, I guess, this end to end infrastructure that we already have. We deal with every BDU almost in this country. We deal with all the different technologies in this country and we have relationships with all these people. And so as we continue to evolve all that, there's no question that that will transcend into the ACA service.
570 COMMISSIONER PENNEFATHER: Thank you. I am going to go back to the ACA license fee and asked a question based on the original application and I'm assuming the answer will apply, if it doesn't please tell us, to the new proposal.
571 The financial ‑‑ if we are looking at the financials it's item C1, ACA license fee. And you note in your deficiency response that the total costs for the above, namely the services provided by PMI, are estimated to be 1,350,000, and I just mentioned to you that in a ‑‑ a few moments ago, and they're in addition to investments already made by PMI.
572 So the first question, does the total cost estimate of 1,350,000 cover the entire ten year period of the agreement?
573 MS CHARLTON: That is the estimate, yes.
574 COMMISSIONER PENNEFATHER: And can you provide any more detail as to the amount that PMI has already invested in relation to the ACA's activities?
575 MS CHARLTON: I don't have it in front of me, but I think I've got ‑‑
576 COMMISSIONER PENNEFATHER: You can get back to us on that?
577 MS CHARLTON: I can get back to you on that, yes.
578 COMMISSIONER PENNEFATHER: Thank you. Now, according to the financial projections for the ACA, and again I am on the original application, the license fees total two million six, let's say, over seven years and this is a significant part of the operating expense items.
579 We calculate that the total ten year expense would likely be around four million, and if we looked at the new proposal and we put it forward to ten years, we might also find the two million rising again.
580 Can you provide the financial projections used to conclude that PMI expects to break even over the ten year term of the agreement, including the projected costs to PMI associated with its commitments to ACA?
581 MR. TEMPLE: We'll have to ‑‑ because we have to get the specific amount that's already been expended, we'll address that specifically when this additional question ‑‑ when we have that number, but just as a matter of ‑‑ just by way of background, the agreement is such that these are estimates.
582 If it costs more for them to develop then they bear the risk. I mean, there's a risk to PMI of ‑‑ in the agreement. If it's more difficult for them to develop the enhancements that are required of them, then they're going to be out of pocket. So there is risk there, but when we get the specific amount that has already been expended, we will be able to show you not only that amount, but how it works over the course of ten years.
583 COMMISSIONER PENNEFATHER: That would be very helpful. If, too, we could do that in terms of both the original and the new, we can see the methodology, but we can also see the numbers, is that all right?
584 MS CHARLTON: That is no problem.
585 COMMISSIONER PENNEFATHER: On another expense item is the communications, training and education. I am doing a quick look. Have the numbers changed significantly in the new? I don't see that they have. I don't think so.
586 Just generally, these expenses continue out ‑‑ throughout the process, and I think in your deficiency and as you explained the reason for the continuing training, education and so on, and why, though, do the costs remain the same if it's a refresher continuing? Why would the costs for communication, education, training, implementation, high at first, but why would they not decrease gradually over the seven years?
587 MR. TEMPLE: A lot of the materials that we are preparing are to assist employees of BDU's, whether they're technicians, CSRs, TSRs. The general public users, they all ‑‑ they all experience turnover. Anyone who has been involved in a cable call centre knows that there is a significant amount of turnover. You can train everyone in year one and in year three you will be a little hard pressed to find the same crew there.
588 The same is going to be with ‑‑ among users. I mean, people are changing all the time, so it's not sufficient just to provide materials. I know Luke gets requests for materials all the time for the Weather Network and MeteoMedia, and we have been around for a number of years. So there's always going to be a demand for that.
589 I guess the second thing is, one of the first questions we get asked when we go and talk to a public authority is what kind of training and support are you going to provide, and that is a significant portion of these costs and they are ongoing.
590 We plan to make enhancements and changes, so it is ‑‑ in our view it would be ‑‑ it would be foolish not to recognize the fact that those costs are always going to be in place. And in perspective, they are higher as a percentage at least of revenues, they are higher in the first years, but overall I believe that in year seven they are about 8.6 percent of revenue, which is basically what analog services spend as a percentage of sales and marketing costs now.
591 So we are not really out of line, I don't think. But we recognize the need that we have got to keep people fully trained.
592 MR. MORRISSETTE: If I could just add, we are talking about a large scale, national undertaking reaching most ‑‑ the vast majority of Canadians in the vast majority of communities, rural areas, two languages. It is not just a uni‑lingual service here. A lot of the information has to be duplicated. Lots of travel.
593 There is going to be ‑‑ this is a very major large scale undertaking, not just at launch, but ongoing, dealing with many, many stakeholders. And when we look at the level of costs here for the size of responsibility that is being assumed and the extent of reach that this kind of service has and impact, it has got to be done right. And skimping on probably one of the most important elements of the plan, communication, training, education, is ‑‑ would be very ‑‑ well, probably shortsighted.
594 So we think that we have an optimal amount budgeted, given the task at hand, which is a never‑ending process.
595 COMMISSIONER PENNEFATHER: Thank you. Just let me ask a general question. I noted ‑‑ I was trying quickly to compare the line D1 between the two. With this new proposal today with the new analog optional numbers, you did say in your reply that you expected that the approach for an analog optional model would provide cost savings. Are there ‑‑ it doesn't seem that that is one of the expense items where there would be cost savings.
596 Could you tell us where the expense items are where you would have saved in the new model?
597 MS CHARLTON: Most of the savings relate to the expenses that are variable again to revenues or to the capital itself. As we talked about the ACA license fee. There would be some savings there. On the repair and maintenance side, obviously if the ‑‑ because it is based on a percentage of the capital, there are some savings there.
598 In terms of partner education and communication, we don't think that whether we go based on our original model or an analog optional model that that communication and education and training is something that we would cut. Most of it is not necessarily variable in nature, so that stays the same.
599 In terms of the administration expenses, the admin fee, bad debt expense, copyright, and to a certain extent other administration are all reduced slightly as well.
600 COMMISSIONER PENNEFATHER: Okay. And if we have ‑‑ we might have further questions on that, but certainly looking at the comparisons and some of the questions I've raised with you might clarify further.
601 Let's go back again to the question of profitability, both with the current ‑‑ with the existing application and the model, the new model. The question of profitability again.
602 Now, originally ‑‑ we do take your point about capital intensity perhaps giving you another approach to analyze rate of return as opposed to the PBIT approach. Again, with the new model perhaps it is not as applicable because the capital costs have been cut in half, although I think you have said it remains a more appropriate analysis for rate of return.
603 In looking at this matter, Staff have analyzed, in fact, what the rate of return or the profitability would be using, in fact, return on average net fixed assets values which is used for cable, analysis of cable assets.
604 Again, looking at your 8 cent proposal profitabilities levels in year four of 31 percent and year seven, 73 percent, if we look at comparing class one cable in Canada, return on average net fixed assets in 2004, twenty percent.
605 So again we find that ‑‑ again, I am looking at a thesis here where if we look at PBIT margins for the ACA service the way Staff have analyzed it, and there is a small point there of difference in the way you have put it together, we are still in the range of 36, and under your new proposal, forty percent.
606 The question there is if ‑‑ is this not an opportunity, for example, if you come in at six cents and your profitability is, we estimate, in the range of forty percent and your seven, is this not an opportunity to say that that rate of six cents could be lowered to four cents, for example?
607 The bottom line question is what's an appropriate rate of return for such a service? And going in to analyze on the basis as you have done on the rate of return, more appropriate, more related to intense capital cost endeavours such as cable may not be an appropriate analysis, but there you are, you did it. We also look at it in terms of PBIT.
608 Without going into too many details on the analysis of your cash flow chart at this point, one question I could ask you, it seems that no matter what methodology we use we come out at a certain percentage of profitability, which could allow for more flexibility in terms of the rate, for example.
609 Taking us that ‑‑ you already went from eight to six. Why not go to another rate or have a variable rate or would the rate be the same for analog optional as it is for digital only? Is there a way, because there seems to be some room to manoeuvre here in terms of the rate of return. Not in any undermining what you're looking for as a business, but just trying to see from the public interest point of view what would be different options we could look at.
610 MR. MORRISSETTE: If I can just kick off the answer to quite a few questions there. The first point is that the fundamentals of our business plan from a financial and economic return point of view is that during the seven year period of our plan that we come close, don't necessarily have to, come close to a cumulative net cash flow figure which is neutral. In other words, we have recovered our investment cumulatively over time.
611 The end result of both plans show that it is approximately two million dollars in the hole and a negative IRR. What kind ‑‑ we view this project as a hybrid between a capital intensive cable plan and a specialty television service kind of plan. One approach for either would not necessarily be a perfect fit here. Hence our guiding principles have been cumulative free cash flow and IRR.
612 If we were, let's say, to have extended ‑‑ if we were to apply a reduced rate, the only ‑‑ you suggested four cents, the net result at the end of the seven years would be our negative two million dollar number would be increased significantly and the IRR would be even more significantly negative, and that is ‑‑ over a long term period we view a fair return, because there is risk associated with this project, in the range of about fifteen percent on an IRR basis.
613 Again, I repeat that the Commission will have regular opportunities to review profitability and the rates of return. This is not a cash grab, as some have suggested. It is a question of a fair return relative to the risk involved.
614 COMMISSIONER PENNEFATHER: That is the nature of my question and I appreciate your response. It leads me just to make sure we understand then, to amplify your point, the way you've done the cash flow, and I have just a couple of questions on that just to make sure we have understood how you have arrived at the cash flow analysis you have.
615 And, for example, is it your intention ‑‑ if we look at the cash flow, and I am going to ask a couple of questions on the capital costs then, is it your intention to pay for the annual capital costs with cash from operations or do you plan on taking out loans every year, as indicated by the increasing interest expense?
616 MS CHARLTON: We would assume arranging a loan, a line of credit in advance of the project to finance this.
617 COMMISSIONER PENNEFATHER: Why have you included, then, in your cash flows each year both the interest on the loan and the disbursement of capital, instead of the interest on the loan and the repayment of a portion of the principal? Does this not distort the cash flow statement?
618 MS CHARLTON: No, because even though we will ‑‑ basically the line of credit will allow us to be in a deficit position to ‑‑ I believe, it is a cap at almost 12 million dollars. What we are hoping to be able to do is through the roll out maximize the cash flow, the positive cash flow by rolling out the larger systems first, thereby impacting the most Canadians possible and allowing the most positive impact on the cash flow.
619 However, it does take quite some time to pay back.
620 But it would be, basically, a loan of, give or take, $12 million.
621 COMMISSIONER PENNEFATHER: You can see why I am asking, because the influence of your approach, wherein you are looking at both interest and the disbursement of capital, instead of interest on the loan and repayment of a portion of the principal, does make it a more difficult ‑‑
622 What is the word I am looking for? Dire or difficult or ‑‑ negative.
623 This is very much the point that we were discussing with Mr. Morrissette, what is a fair rate of return, and we have backed our way through the cash flow statement.
624 Is it as severe as ‑‑ it could be less severe, perhaps, with a different accounting of the loan and interest on the loan and the principal payment on the loan.
625 Would you have any comment on that?
626 MS CHARLTON: No. I think what we were trying to do here is indicate what the net cash position would be for the company under this scenario, and I think it does show that.
627 MR. MORRISSETTE: It also reflects that we have structured the financial plan for this service on a totally incremental basis, with borrowed funds used as the source of funds to fund the project.
628 COMMISSIONER PENNEFATHER: Finally, on the financials, both the revised and Part D, as submitted, what would be the impact on your financials if the Commission were to decide that the CBC's proposals should be implemented, and/or, secondly, if the Commission were to approve the ExpressVu application?
629 MR. MORRISSETTE: It is clear that it would have a very material impact on our financial plan, segmenting significantly the revenue derived from our distributors to support this project.
630 The operating cost would stay roughly the same, and the end result would be that it would no longer be viable.
631 The licensing of alternative services, or several services, in this instance, we don't view as being a favourable model.
632 Going back to what I was saying earlier, this is a very large‑scale, major undertaking, with the lives of the public at risk. We do not believe that there is a business model here where you can have a competitive process and many different players acting in the dissemination part of the end‑to‑end chain. It should be one party that is responsible and accountable in dialoguing with all BDUs, with all emergency authorities, holding consultation with all of these people, working on the ongoing evolution of the system and the next generations of the system.
633 To fragment that, I think, would create a double‑headed dog, which, in our experience, doesn't work very well, and, on that basis, we would not be prepared to consider the significantly augmented risk and exposure and liabilities that are associated with this kind of venture.
634 COMMISSIONER PENNEFATHER: Let me see if I have understood you correctly, Mr. Morrissette.
635 In your application and deficiencies you make very strong points about the complementarity of the ACA service with other warning systems, be they through CANALERT ‑‑ and I had thought I had read, and I thought we had discussed this morning, with the role that over‑the‑air broadcasters would play, that local broadcasters would play.
636 Did you, in answering my question coming out of our financial discussion, say that, should the Commission go ahead with the CBC proposal and/or the ExpressVu proposal, your service, the ACA, would not be viable?
637 MR. MORRISSETTE: No, what I was saying was that the CBC proposal, as it relates to their over‑the‑air broadcasting activities, is fully compatible. That is not an issue.
638 If we create redundancy in the distribution of messaging to BDUs, that creates the issues that I was describing earlier, and that is problematic.
639 So it is that part of the chain.
640 COMMISSIONER PENNEFATHER: That part. It is slightly different, and we discussed that, in some ways, earlier, in terms of coordination, and that is why my questions, because you, yourself, have said that redundancy would create serious problems. So one would assume that coordination efforts had been made.
641 From a financial perspective, what is your comment on the ACA service should the Commission agree with the CBC proposal, should the Commission approve the ExpressVu approach?
642 MR. MORRISSETTE: It materially and adversely affects the financial model that we have proposed.
643 It would result, I guess, in considering much higher pricing.
644 Another very important feature of our approach is the concept of cross‑subsidization. There is no question here that we are seeking to achieve the most successful national result, in both languages, at the lowest cost possible, in a fully managed way, end to end. To fragment that would go against that particular philosophy.
645 There is no question here ‑‑ and we must be very, very clear ‑‑ that this whole business plan assumes that large systems support small systems, cross‑subsidize small systems, which enables this service to reach the largest number of Canadians possible ‑‑ large centres, small centres, rural, et cetera.
646 COMMISSIONER PENNEFATHER: Thank you. You can see the relationship, though, with the profitability discussion, in terms of how much flexibility you have. I was very interested in hearing how you addressed profitability, because, in our view, it gives us a sense of ‑‑ at 36 percent profitability, give or take, and we use the PBIT, or we use other forms of discussing rate of return, how much room there is to absorb the financial impact of other alert services.
647 This brings me to the legal questions, and I would hope that my legal colleagues don't get too concerned. I passed the mark with my technical colleague, but I am going to ask you some questions now to help us understand some of your proposals.
648 Let's go back to legal liability, which, Mr. Temple, you raised early in the discussion. We will go back to the formal agreement that you propose be entered into with ACA providers ‑‑ authorized users, if I could use that term.
649 I am looking at page 19 of the deficiency letter for that formal agreement.
650 We looked at it before in terms of guidelines and definitions and some sense of clarity as to how responsibly the system would be used, but now I want to look at it from a legal and regulatory perspective.
651 Who will bear the legal responsibility for misuse of the system, or the consequences of false or misleading alerts, and for system failure to deliver or display the alerts?
652 MR. TEMPLE: As I mentioned, the issuing authority will take responsibility for the content of the message. So if it is false or misleading, then it is their responsibility.
653 In terms of issues such as Pelmorex not delivering the message, or sending it to the wrong place ‑‑ sending Halifax's message to Red Deer ‑‑ then that would be our responsibility, and that is one of the reasons why a significant element of our costs is insurance.
654 COMMISSIONER PENNEFATHER: Yes, I did see that liability line.
655 From a legal perspective, though ‑‑ and I am repeating your view that the originator, or originators, of the alert messages are ultimately responsible for the content of the alert messages ‑‑ would this not constitute a de facto network broadcasting undertaking that should be licensed or exempted from licensing agreements? If not, why not?
656 MR. TEMPLE: I will start, but Mr. Prescott will help me out on this question.
657 One of the reasons that we want to have an agreement is because, as a licensee, we do have to take responsibility. We want to ensure that, through the agreement, the rules are made clear.
658 MR. PRESCOTT: Pelmorex will exercise a degree of control. They will have control over the system and the delivery of the message, and they will exercise that control through these agreements, the same way as you would through a program supply agreement. They would have control over receiving the message and then sending it out.
659 COMMISSIONER PENNEFATHER: What is your comment on the legal question, though, if the content is in the hands of the originator that we have here, a network broadcasting undertaking?
660 MR. PRESCOTT: I don't really think ‑‑ it is possible that it could be a network undertaking that would have to be licensed ‑‑ approved by the Commission as part of this, but the content is ‑‑
661 I don't see a great deal of difference in the degree of control that Pelmorex will exercise over the content for this aspect of its service, as opposed to other aspects of other services. Local broadcasters receive emergency alerts from local authorities and they immediately put them on in the form that they receive them, so they are not giving up control, they are still offering the system. They are entering into an agreement to exercise control over that system.
662 Ultimately, the theory is that you don't want to mislead the public in some way, so you want the message provider to be the one who actually decides what the content will be.
663 COMMISSIONER PENNEFATHER: Continuing on that line, with the control, as you have defined it, as far as Pelmorex is concerned, how would Pelmorex propose that the Commission have end‑to‑end recourse against the licensee, Pelmorex, in case of misuse of the all‑channel alerts, or false or misleading alerts, or system failures?
664 MR. PRESCOTT: One way to do it would be to have an agreement that would be approved by the Commission that would set up the controls over access to the system, and who would use it, and what kind of messages would be ‑‑ what would be the nature of the emergency. And you would have a definition of an authorized user, a definition of an emergency.
665 You could exercise control that way.
666 I guess that it could be done through a regulatory ‑‑ that would be a complicated way to do it ‑‑ a regulatory amendment, or a mandatory order. You would put that information right in there.
667 But you could also do it through having a standard agreement that would apply to all users and would require Pelmorex to exercise a degree of control over who is ‑‑
668 COMMISSIONER PENNEFATHER: This is the formal agreement that is mentioned ‑‑
669 MR. PRESCOTT: Yes.
670 COMMISSIONER PENNEFATHER: That's why previously I was discussing what would be in that formal agreement, looking at a template.
671 In terms of that, if complete enough, you are saying, if I have heard you right, that that would allow the Commission to have end‑to‑end recourse against the licensee, Pelmorex.
672 MR. PRESCOTT: Yes.
673 COMMISSIONER PENNEFATHER: Let's get to the question of jurisdiction. In the proceeding leading up to the denial of the previous Pelmorex application, that is, Decision 2001‑123, intervenors argued that the Commission had no jurisdiction to deal with the application because it would have meant dealing with a service that was primarily an alphanumeric service.
674 In Decision 2001‑123, the Commission rejected this argument.
675 In Pelmorex's view, is the present application similar to the previous application, such that the Commission could come to the same conclusion as in 2001, and what are the material elements that the Commission should consider in this regard?
676 MR. PRESCOTT: The ACA system is functionally the same. It has been updated and it has evolved, but it is functionally the same service that it was in 1999 ‑‑
677 Was that when we applied for the first time?
678 COMMISSIONER PENNEFATHER: That's correct.
679 MR. PRESCOTT: So the same rationale that was applied at that time in Decision 2001‑123 would apply to this case.
680 And Pelmorex is proposing to offer this service ‑‑ this system ‑‑ this ACA system ‑‑ as part of its existing programming undertaking.
681 Pelmorex already offers weather warnings and weather alerts on its two services now, which are operated under one licence. It is simply asking that that be extended, so that those alerts would be visible on other channels.
682 It is important that the Commission has the authority under the Broadcasting Act to license programming undertakings, and a programming undertaking is permitted to broadcast programs. And then you follow it down to the definition of a program, and programs are defined under the Act to include any combination of sounds and visual images, provided that those visual images do not consist of predominantly alphanumeric text.
683 The alphanumeric visual images that are broadcast by all programming undertakings, which include things like on‑screen movie credits, closed captioning, news crawls, weather alerts, those kinds of things, are currently provided as part of an existing programming undertaking. They are not a separate undertaking when somebody offers that alphanumeric visual text.
684 Similarly, if the ACA is approved, the ACA will offer it as part of the programming undertaking, and the alerts will be visible on the Weather Network and MétéoMédia.
685 Pelmorex will exercise control over the system. Pelmorex will put those alerts on its own two services, and they will be visible on other channels.
686 So it will be part of the same undertaking. We are not proposing to operate something completely different.
687 The other thing that I think is important to understand is that the one aspect of our application that some intervenors have suggested makes this a distinct service, or a separate service, is the fact that the alerts will be visible on channels other than those that are used to distribute the Weather Network and MétéoMédia. Nobody has intervened in this proceeding to say that Pelmorex doesn't have the authority to broadcast alerts on its own two services ‑‑ on the channels that are used to distribute its own two services.
688 Pelmorex is distributing alerts now on those two services, and nobody is saying that that turns those services into something that is non‑programming. Eighty percent of the service, or more, is moving video images.
689 The reality is that the Commission has licensed a whole host of services to operate on more than one channel. VOD services, pay‑per‑view, the movie networks, specialty services that have an HD TV conditional licence, all operate on more than one channel.
690 Similarly, substitution rules require programs from one service to be distributed on another channel.
691 If that is the only aspect that has led people to believe that this is a separate service, then it can't be a separate service. It is not a separate service. Each of these HD channel services are offered by one undertaking under one licence, and that will be the same approach for ACA. It is going to be one service, once licence, except that the programming that is on that service will be visible on other channels.
692 COMMISSIONER PENNEFATHER: My question was ‑‑ and I want to pursue the question. I fully understand the Commission's decision in 2001‑123 and its comment on this point. It is not that I am questioning that or that I have a different opinion, but I do want to push a couple of other options.
693 One of the points here is, has there been any factual change between the application as presented in 1999, decided on in 2001, and today?
694 Let me ask you about your comment on the fact that in your application you propose a change to your Condition of Licence 1(a)(ii) ‑‑ and I take your point that you mention in reply that you currently distribute weather‑related alerts, but in this application you add, in addition to "weather‑related", "national disasters and other emergencies".
695 Does this alter your position at all?
696 MR. PRESCOTT: That's why we have asked for the condition of licence, so that expands the kinds of alerts that Pelmorex is authorized to provide.
697 I think, but I can't remember, we proposed last time that we would expand the condition of licence to extend to other kinds of alerts as well.
698 It hasn't changed.
699 COMMISSIONER PENNEFATHER: It doesn't change your position ‑‑
700 MR. PRESCOTT: It doesn't change ‑‑
701 COMMISSIONER PENNEFATHER: ‑‑ in terms of the decision.
702 Let me ask you again from another point of view, again remembering that the ACA service is now more than weather‑related, it is proposed as an alert regarding weather disturbances, natural disasters and other emergencies, which we have discussed at length cover a number of possibilities, and we have agreed, more or less, to work within the CANALERT Guidelines.
703 Some would argue, and this is your point, your portion, the AC portion of your signal, is not predominantly alphanumeric, and that remains your position. And that remains your position even if this alert is viewed on another channel.
704 Is that correct?
705 MR. PRESCOTT: Yes, because it is part of the same undertaking.
706 COMMISSIONER PENNEFATHER: But some would argue that even if it remains not a predominantly alphanumeric text, but the fact that it can be seen separately on another channel means it is no longer integral to the original service.
707 What is your comment on that?
708 MR. PRESCOTT: My comment on that is that there are multichannel services that are authorized by the Commission, even services that overlap with one another. I mean network operations are an example of where programming from one service is visible on another.
709 As I mentioned, the simultaneous substitution rules allow for the same thing, you are programming from one service to be visible on another.
710 The Commission doesn't licence undertakings that operate on a channel‑by‑channel basis on a single channel. Even Pelmorex has two services that operate on separate channels.
711 COMMISSIONER PENNEFATHER: So as I understand your position, it remains not predominantly alphanumeric, it remains a programming service whether seen on The Weather Network or on other channels.
712 Is that your position still?
713 MR. PRESCOTT: That's correct, and it's just because this is an enhancement to the existing service. It's something that Pelmorex is already doing and the only change is that it's going to be visible on other channels.
714 COMMISSIONER PENNEFATHER: Well, it's not quite what they are already doing, because as I made the point before, it's more than weather‑related.
715 MR. PRESCOTT: Exactly. Exactly.
716 We have applied for that amendment to the licence as well, to expand the category of alert messages that we could provide.
717 COMMISSIONER PENNEFATHER: Some have also raised the point that the Commission laid out, in Decision 2004‑82, certain criteria and I'm wondering if you could not comment on each of those criteria and their applicability to this particular situation?
718 MR. PRESCOTT: I don't see the applicability of this test at all program‑related. The program‑related test is something that what put into section 7 of the Broadcasting Distribution Regulations and the test that the Commission has come up with the WGN, or the variation of the WGN test, is applying section 7 in the context of interactivity and what kinds of services that BDUs will be required to pass through to subscribers.
719 The words "program‑related" don't appear in the Broadcasting Act, in the definition sections of the Broadcasting Act. And this is something that was created to ensure that BDUs only pass through certain kind of information or, are required to pass through certain kinds of information or certain kinds of content and do not alter or delete that content. So it would have to be program‑related.
720 So in my mind it's in a completely different context and it's not something that should be applied to determining whether an ACA system is a separate programming undertaking.
721 COMMISSIONER PENNEFATHER: So in your view it does not apply these criteria. Regarding program‑related interactivity does not apply to the circumstance in front of us wherein you say that the ACA service is an integral part of The Weather Network service?
722 M. PRESCOTT: Yes. The ACA system will be an integral part of The Weather Network service and MétéoMédia.
723 COMMISSIONER PENNEFATHER: Even if this enhancement ‑‑ which again is a term used in 2004‑82 ‑‑ even if this enhancement can be seen on its own on other channels it remains part of the programming service and remains not ‑‑ if I can use it that way, in a negative way ‑‑ not alphanumeric?
724 MR. PRESCOTT: Precisely, because it is an undertaking. An undertaking is, you know, according to a reference case, it's an arrangement under which things are used. That is precisely what Pelmorex is doing.
725 Pelmorex is already providing weather alerts. They have a localized technology in every head end, or almost every head end, and they are providing alerts now. The fact that those alerts will be visible in other channels doesn't alter the fact that it is still part of the same programming undertaking.
726 COMMISSIONER PENNEFATHER: Thank you. I have your position on that.
727 Mandatory nature of the ACA service. Here we are dealing with the original proposal in which you asked the Commission to use paragraph 9(1)(h) of the Broadcasting Act to require all Class 1, cable, DSL, MDS, BDU, and all satellite, DTH, BDUs, to distribute the ACA enhancement and authorize the broadcast of emergency messages on every channel carried by BDUs serving the effective areas.
728 What is the effect of the comment in your reply regarding the Vidéotron intervention to require mandatory digital only on your position?
729 MR. MORRISSETTE: First of all, we have listened carefully to Vidéotron and what they had to say with regards to what is going on in the marketplace. We have experienced what is going on in the marketplace. That is the whole reality of the evolution towards a totally digital environment.
730 When we first submitted our first application back in 1999 there were very little digital subscribers. Today we find ourselves in approximately the 50 percent threshold. And there is no question that by the time we reach let's say the end of the planned rollout period that the digital environment will be significantly higher than the current 50 percent. level. Several BDUs may already be fully migrated in the digital way.
731 Since we filed our second application almost two years ago, or a year and a half ago, a major development has been initiated by the Commission itself, that is the digital migration procedures and policy. So that also has kind of established some time lines, benchmarks on what is happening.
732 Now, the major part of our business plan has been clearly to invest significant amounts in the analog technology, but with the reality of digital migration and the Commission's policy and the rapid evolution towards digital, it is legitimate to question a plan that would invest so significantly in a technology which is being phased out.
733 Now, there is no question that we stand by our original application but, having said that, since the original application there has been change and we could not ignore that change. Therefore, the proposal of an analog optional service, digital required, is one that has merit, that ought to be considered.
734 And if that were to be the outcome of these proceedings, this is an approach that we would support and would follow through with.
735 We think, our assumption, is that the larger systems, given the realities of second and third and fourth outlets being analog for quite a while, given the realities that a significant part of their subscriber base today is analog, given the realities of public responsibility, that they would nonetheless implement an analog solution as well as a digital one. The smaller systems would be the ones that would most likely opt for the far more efficient digital approach.
736 COMMISSIONER PENNEFATHER: In your view, then, since we are discussing your proposal for mandatory order under 9(1)(h), would your proposal now be, just pursuant to those comments, to impose the mandatory order on all systems or just on the digital systems or on analog, large systems and digital? Is it the same approach, or have you varied your approach to the 9(1)(h) mandatory order?
737 MR. TEMPLE: In terms of 9(1)(h) the approach would be the same, it would just be adjusted to reflect the fact that it would be required of Class 1 for digital as opposed to digital and analog, but it would still be a requirement of ‑‑ or we would still be looking to an order under 9(1)(h).
738 COMMISSIONER PENNEFATHER: One of the rationales you give for the 9(1)(h) is that you:
"... serve the most Canadians possible in the fastest amount of time."
739 Under this latter proposal what do you expect the timing to be? Let's assume for the sake of argument that the voluntary application, the voluntary sending of the messages does not occur ‑‑ just for the sake of argument, no comment on the fact that probably it would ‑‑ what is your sense of timing? How long will it be until we get to as many Canadians as possible?
740 MR. MORRISSETTE: Well, I think the time lines that have been outlined in the digital migration rules or approach sort of form a pretty clear framework as to what some expectations might be.
741 We speak to some BDUs who hope to be fully digital before the end of this decade. We would expect that many of the smaller systems that use the hits approach would be substantially digital.
742 I don't know if that answers your question, but I think the framework of digital migration kind of outlines that.
743 COMMISSIONER PENNEFATHER: Turning, then, to other matter legal regulatory in this proceeding, as you are aware there has been discussion about as well the section 7 of the Regulations and an amendment to that section.
744 In its application the CBC has proposed that section 7(d) be changed and be worded as follows:
"... be changed for the purpose of transmitting ..."
"... for the purpose of transmitting an authorized public alert message."
746 Do you agree with this proposal?
747 MR. TEMPLE: We don't think that's the most appropriate approach. It makes it really permissive and there's not an obligation to do alerting by the BDU. So I think we still prefer the approach that we put forward, which would be an order under 9(1)(h).
748 COMMISSIONER PENNEFATHER: Assuming, though, that the Commission did move for other reasons to amend 7(d) along the lines that the CBC has proposed to change the wording of 7(d) to:
"... for the purpose of transmitting an authorized emergency public alert."
749 Do you have any comment: Should we proceed?
750 MR. TEMPLE: If we were to be licensed but the wording ‑‑ if we were to be licensed and the Commission changed section 7 as you propose, then it would just be an optional service. There would be no obligation for any BDU to take it, so it would be difficult for us to make the investments and offer the service not knowing whether anyone was going to take it.
751 COMMISSIONER PENNEFATHER: So in your view, just changing the regulation to allow "for the transmission of an authorized emergency public alert message" without the current wording, which is "in accordance with agreement entered into with the operator of the service or network responsible for that service", to you it is of no use?
752 MR. TEMPLE: Not in terms of providing the type of system, a comprehensive system to serve Canadians, not the kind that we are proposing.
753 I mean, in a sense they can do that now with the permission of the programming service, put warnings on. You just get into a system of volunteerism that may or may not work. That we don't believe is really providing the public alerting service that Canadians need.
754 COMMISSIONER PENNEFATHER: So in your view, an order under section 9(1)(h) of the Act would suffice to grant mandatory carriage of the ACA service?
755 MR. TEMPLE: For Class 1s. I mean, clearly, as Mr. Morrissette mentioned earlier, by being able to require Class 1 systems to provide the service, (a) there's large coverage, but (b) it creates a situation where it makes it more affordable for smaller systems to do so.
756 Under our proposal, because we can spread the costs of services over a wider base, then it's more affordable for small systems. But if people can just kind of opt in and out as they wish, there is really no service there at all.
757 COMMISSIONER PENNEFATHER: Continuing to explore options other than or in addition to 9(1)(h) and altering the regulations, for example could mandatory carriage be accomplished via an amendment to the distribution linkage rules or through amending the access rules of section 18?
758 Have you explored those options?
759 MR. PRESCOTT: We thought about it. When we came up with the idea of a management order we thought about other options and it becomes complicated for a few reasons.
760 One is that I think multiple sections of the regulations would have to be, especially for ‑‑ let me start again.
761 Especially for the ACA proposal, and the way that Pelmorex has proposed to implement it, would require multiple amendments to the regulations if it was to be done that way. It couldn't just be done through section 7 unless you insert a ‑‑ in this current scheme of section 7 unless you blow it out.
762 I mean, I think that there would at least be six or seven sections, including the definition section, section 7 and section 18, 19, 33, 38, a whole bunch of sections would have to be amended for DTH for cable, for small cable, plus you would have to amend all of the ‑‑ not all of the, the two small cable exemption orders to ensure that those cable systems would be authorized to distribute this ‑‑ would be authorized to make the decision to distribute this portion of the service or decide not to.
763 And you would also have to work into ‑‑ you would have to take into account the rollout schedule, I think, that Pelmorex would have to implement in order to ‑‑ the service wouldn't be available to everybody at the same time. So that would have to be worked into the regulations as well, which wouldn't seem to appear to me to fit within the regulations very easily.
764 So the simplest way, I think, would be to just have a distribution order in the same way that it was done for CPAC and for others, that would set out all of the different requirements for carriage, when would have to be rolled out, who could opt in, who could opt out. So I just think it's the simplest way.
765 Having said all that, I mean we wouldn't be opposed to a significant overhaul of the regulations that would allow ‑‑
766 COMMISSIONER PENNEFATHER: Don't get carried away.
767 MR. PRESCOTT: Yes, exactly.
768 So I think it just would be simpler, in the same way it was done for APTN and CPAC and others, to just put it in one distribution order and lay out all the rules for everybody.
769 COMMISSIONER PENNEFATHER: Ah, my last question is exactly that: Could you propose wording for it? If this is your preferred option, do you have wording you could propose to us for such an order?
770 MR. PRESCOTT: We have thought this and we've gone through potential wording, but I don't have the actual wording that we want to propose ‑‑ give our wording for this, but we would undertake to provide that, if you ... if you need it.
771 COMMISSIONER PENNEFATHER: I think that would be helpful.
772 And thank you very much for your patience. Merci beaucoup. Merci monsieur le Président.
773 THE CHAIRPERSON: Thank you, Madam Pennefather. Commissioner del Val?
774 COMMISSION del VAL: Thank you. I'm taking note of the comments by other parties on the intrusiveness of the nature that they ‑‑ of this service that you're proposing that they feel.
775 Now, how would it work? What would the world look like if our government saved us here, the CRTC and they decided to pass legislation and say okay, all BDUs must participate in an alert system, but we are not going to legislate what system or what technology you use. Okay?
776 And then in my ideal world all the of the BDUs and broadcasters got together and they agreed that to avoid all of the equipment problem of what event types to program into their equipment, the BDUs and the broadcasters decided that ‑‑ you know how one of your options was in case of an alert it could switch to a screen and they all decided that The Weather Network would be that screen and so the only thing that the ‑‑ that we would see, say if I were watching "This Hour Has 22 Minutes" on CBC, it would say, "Weather Warning" or "Emergency Alert, switch to Weather Network."
777 Would that work for you?
778 MR. TEMPLE: In many ways that is essentially what's happening, but rather than switching to our network they are switching to ‑‑ they can at their options just switch to a page that gives that information. So conceptually that is what's happening.
779 When we ‑‑ I'll try not to make this too technically complicated, because I'll probably confuse myself, but the equipment that we put in place creates ‑‑ we'll just talk about the full page. You can get more elaborate with crawls, but we'll just talk about the full page.
780 The equipment that we put into the cable head end creates that page right there and so rather for them to switch to our channel, which I don't think broadcasters would be too comfortable with, we've created a non‑branded, generic ‑‑ there is no, you know, it doesn't advantage one broadcaster over another. They just switch to this kind of phantom channel that shows the message.
781 So that is ‑‑ what you're talking about is conceptually exactly what we are doing.
782 The equipment at the cable head end creates that page and all the channels are switched to it and everyone sees the same message and they are not going to The Weather Network, so there would not be a ‑‑ you know, sometimes you have the branding or the logo burnt in or there is nothing ‑‑ and that is fair, because it is not about us, the warning is about the warning, it is not about The Weather Network.
783 So that is really what we are suggesting.
784 COMMISSION del VAL: I guess one of the points that I was trying to make was the importance of co‑operation and co‑ordination to make something like this work and to probably take ‑‑ take away the feeling of some of the interveners who feel that they are having something rammed down their throats.
785 Now, you know, one of the comments you made in your opening was that our emergency partners have told us that they don't want to deal with a patchwork of systems and this really goes to the same point.
786 I was reading the intervention of I think the British Columbia Ministry of Public Safety and Solicitor General and they talked about in B.C. an all‑alert system is likely to reach only 20 percent of the population during daylight hours and, for example, in the Kelowna fire it was door‑to‑door that was the most effective.
787 Is it realistic for us to expect that we not have to work with a patchwork of systems?
788 MR. TEMPLE: There is I guess patchworks and then there is patchworks.
789 Public alerting officials, and I think you'll be talking to a number of them tomorrow and I suspect most of them will tell you that they need it to be as simple as possible.
790 It is quite right that there is no one perfect way and we've never suggested that. If you're driving in your car a television‑based system isn't of much use. Having said that, we all know that TV is a very powerful medium and it can reach a lot of people very quickly.
791 So I think public alerting officials want as many means as possible to reach the public: Sirens, radio, TV, wireless, internet, you name it. They'd love it all.
792 However, within that I think what they'll also tell you is I don't ‑‑ if I'm going to put a warning on cable I don't want to deal with 27 different people.
793 I don't want to have to phone this cable operator if it is in that area or I got to figure out who to call here. I want as much as possible a simplified approach.
794 In many ways I think we'll see over the evolution of time CANALERT helping solve some of those problems, so that we'll ultimately get to the stage where you input the warning once and it goes to all these separate medium simultaneously, but that doesn't exist and we don't know when or if it will exist, but in the interim we can provide that and we are happy to ‑‑ we won't necessarily be one‑stop shopping, but we can deliver the warning to any BDU within their jurisdiction. They don't have to worry about who has this coverage area or who is licenced over there.
795 And, as we've mentioned, we are happy to provide that to other broadcasters so that they can deal with the alerts and as they see fit.
796 So we are trying to move to that one‑stop shopping. We are not quite there but that is part of our goal.
797 COMMISSION del VAL: And why do you think it should be the CRTC to mandate this carriage? Why shouldn't it be the government to say that this is an initiative for ‑‑ for this type of an initiative, you know, should be mandated by legislation? And because one of the reasons being, you know, if I look at the ‑‑ all the paper and the technology where did our expertise come from?
798 MR. TEMPLE: Our view is that you are experts in regulating the broadcasting industry and that is what we are doing. We are putting alerts through the broadcasting industry and no one is more qualified to do that than the Commission.
799 I think the government through CANALERT and the activities of Industry Canada have identified that it is important, but when it comes time to setting the rules of how it should work within the broadcasting industry, our view is that is the Commission.
800 COMMISSION del VAL: Then on your ‑‑ on your application there was ‑‑ on page 2, I believe, you said that consequently the ACA service we propose would work in tandem with any service to over‑the‑air broadcasters and then you talked about the costs and that the costs could slightly increase, if anything, if Pelmorex were required to deliver alerts using different protocols to accommodate the different equipment used by various over‑the‑air broadcasters.
801 So now your financials, I'm not clear as to ‑‑ they have not included your ‑‑ the ‑‑ the contingency of needing to increase your cost to accommodate over‑the‑air transmission?
802 MR. TEMPLE: What we were trying to explain is we ‑‑ we will provide ‑‑ we will provide the messaging, the content of the alerts to broadcasters, but we would not provide the equipment they need to insert alerts. That is not part of our business plan.
803 So we can ‑‑ it is kind of the taking ‑‑ what's the saying? Taking the horse to water, but you can't make them drink.
804 COMMISSION del VAL: Okay.
805 MR. TEMPLE: I mean, we'll take it to them, but we can't ‑‑ we are not proposing ‑‑ I mean, the CBC application, I think just for their own radio is 16 million dollars for their transmitter, so we've not included that in our business plan, but if we can work with broadcasters to at least get the message to them and then they can invest however in their own funds or government grants or whatever, to insert it, then that is wonderful.
806 COMMISSION del VAL: So I think I'm confused, because you then go on to say:
"However, using the ACA network to alert over‑the‑air broadcasters and their audiences of local emergencies will certainly cost the Canadian Government far less."
807 So my one question is far less than what? And then I'll go on.
"And allow for a quicker provision of service than establishing a ESA type service in Canada on a standalone basis, it will also provide operational simplicity for authorized alert providers."
808 So the first question is less than what? CBC?
809 MR. TEMPLE: Less than the Government of Canada replicating all the work that we'll have already put in place. We'll already have operation centres and whatnot there, we'll already have the signals on the satellite so there is no need to replicate that, so if we are licenced our view is that there is an opportunity there for the Government of Canada to save money should they want to extend the service to other broadcasters, because we are going ‑‑ you know, we wouldn't say, no, you can't use our system. I mean, of course we would let them have access.
810 So there is an opportunity, rather than creating a second distribution service.
811 COMMISSION del VAL: So your proposal as it stands does not include over‑the‑air except to give them the message.
812 MR. TEMPLE: That's correct.
813 COMMISSION del VAL: Is that correct? Okay. So you are coming back for Phase II, aren't you? Definitely?
814 MR. TEMPLE: We haven't decided that.
815 COMMISSION del VAL: Okay. Because I do have questions that are more appropriate for Phase II.
816 So if you're not coming back then maybe we should take a lunch break.
817 MR. TEMPLE: If you would like us to come back we can come back. Whatever is most convenient for you.
818 THE CHAIRPERSON: I hear you that you will be coming back, so we'll ask the questions at that point.
819 COMMISSION del VAL: Then one thing, if you could prepare for, is I'm not ‑‑ I'm really not clear from statements like this from your letter that you filed against the CBC, what exactly is it that you're objecting to? They are asking really basically at this point of the proposal over‑the‑air for radio, which you said that you're not doing, and then they are asking for the 7(d) amendment and I think I've got your position when you discuss the 7(d) amendment slightly, but I also see the two as complimenting each other, so I'm ‑‑ if you want to answer it when you come back for Phase II, is I'm not clear what it is that you're objecting to.
820 And then I'll have other questions in Phase II. Thank you.
821 Thank you, Mr. Chair.
822 THE CHAIRPERSON: Thank you, Commissioner del Val. Legal, Mr. McCallum.
823 MR. McCALLUM: You made a series of undertakings this morning and I just wanted to see if we can fix a time for them. I think with respect to the capital outlays you said you would be prepared to file those at the end of the day.
824 But then there were other undertakings that were made both before and after and I'm just wondering if there is sort of one time when you can respond to the various undertakings that were made this morning?
825 MR. TEMPLE: Well, we've made a number of them and I'm not even sure my list is complete, so if it is all right just to be on the safe side, I would like to say we'll respond to all the undertakings by tomorrow morning, if that is all right.
826 MR. McCALLUM: I think with the permission of the Chair, I think that would be satisfactory.
827 There was one matter that didn't come across quite as clearly as I was hoping in terms of the official languages of the messages.
828 As I understood your answer this morning, if a public alerting authority issues an alert in one language, you will distribute that alert in one language, is that correct?
829 MR. TEMPLE: That's correct.
830 MR. McCALLUM: And if the alerting authority issues it in both languages you would distribute it in both languages.
831 MR. TEMPLE: That's correct.
832 MR. McCALLUM: And you would accept a condition of licence to do that?
833 MR. TEMPLE: That's correct.
834 MR. McCALLUM: But then at the receiving end, at the BDU receiving end, as I understand it, whether they receive the alert in English on an English channel or in French on a French channel depends on how the BDU wires the undertaking. Is that a correct summary of your answer this morning?
835 MR. TEMPLE: Yes. If ... it gets complicated when you get to the cable head end, depending on how they are processing the signals. In most cases you could accommodate placing English channels ‑‑ or English messages on English‑language channels and French language messages, but it ... it could be ‑‑ it could be very expensive, depending on how the cable operator is processing their signals.
836 An alternative might be to put both on the channels and I'll give you a example. If they are doing ‑‑ and I expect my colleagues in the back to correct me, but if you're doing a comb generator and you are basically just substituting the message for all the channels, if you've got a couple of English channels and a French channel and then a couple of English channels, now all of a sudden it gets real complicated, because what you're basically doing is switching all of them. So now you have got to switch some and not switch these ones there and so it can get a little complicated. I'm not describing it technically, but hopefully you are getting the idea that it is awkward.
837 So one alternative might be to make available both languages in a single message, if that is a requirement, but it does make it complicated.
838 MR. McCALLUM: So if that were a concern for the Commission, that in the case of the alert be being issued in both official languages that they be available on a distribution system in both languages, that Pelmorex would accept a condition of licence to make them available in both official languages and in some cases it would be implemented by issuing a bilingual alert in one message. Is that a fair summary?
839 MR. TEMPLE: Right. But the condition of licence would apply to what we send, if I'm understanding you correctly, not what would be the obligation of the BDU.
840 MR. McCALLUM: What I'm trying to see is if there is a way to ensure that the message is received at the receiving end by the subscriber in some bilingual manner and, as I understand it, you are saying that in some cases it is technically difficult because the BDU may not have the technology to insert French on French channel, English on English channel and you said you would address that by putting a bilingual assert in such cases.
841 Did I correctly summarize you?
842 MR. TEMPLE: Let me just make sure I haven't misspoken.
843 As with most things technical, it is always a little more complicated than you think.
844 Theoretically, yes. It was pointed out that one of the practical problems is that the messages don't arrive at the same time. A case in point is often we will get a message from ‑‑ well, we'll use the example Environment Canada in English, if it was issued in English and sometime later we'll get the French version, because it has to go through processing or translation or the opposite could happen, depending on which office issues the original warning for what area, so it can get a little complicated, because we couldn't send the French until we got the French and if it came five minutes later, we'd have a bit of a problem.
845 MR. McCALLUM: I'm just wondering if ‑‑
846 MR. TEMPLE: We're certainly comfortable having an obligation on us to deliver warnings in both languages and certainly you have our undertaking to work with BDUs to help them deliver warnings in both languages, I'm just not sure there's a way to guarantee that can happen in a reasonable way.
847 MR. McCALLUM: I'm just wondering if ‑‑ in responding to the undertakings, if you could come up with some sort of wording for tomorrow morning that might address that preoccupation.
848 MR. TEMPLE: We'll do our best.
849 MR. McCALLUM: Thank you. This will be kind of a blunt question. If the Commission were prepared to approve your proposal, but grant a rate of six cents per subscriber per month, would Pelmorex go ahead with the proposal?
850 MR. MORRISSETTE: I guess I'm tempted to say that we'll come back to you on that. The financial models that we have developed, and we extensively discussed those earlier today, indicate a negative cash flow at the end of the period and the negative IRR.
851 Six cents would just significantly and materially increase that. We did indicate that an analog optional model could lead to a six cent rate. In fact, if ‑‑ just a few numbers that we have run comparing a six cent ‑‑
852 MR. McCALLUM: I guess what I'm trying to get at really is is a six cent rate such an impediment that you would not implement the service? I understand that it's far less profitable and it would take longer to recover it and there's problems with the internal rate of return, but I really was hoping for a ‑‑
853 MR. TEMPLE: A yes or no?
854 MR. McCALLUM: A yes or no. Because I do have a follow‑up question and that relates to the scenario that you posited this morning.
855 MR. TEMPLE: Yes, our model shows that instead of a 1.6 million negative number at the end of year seven, there would be 13 and a half million dollars negative and a very significant negative IRR, which indicates that relative to the risk involved, that this would not justify a ‑‑ proceeding on that basis.
856 MR. McCALLUM: And with respect to the scenario you've furnished this morning, analog optional and digital mandatory, if the Commission were tempted to approve that model, but impose a rate of four cents per subscriber per month, would you implement that proposal?
857 MR. MORRISSETTE: The same logic applies. I mean, we assess all of these projects on an incremental basis and assess the risk involved and expect a reasonable and fair return. And the lower pricing that you've indicated would not produce that result, so it would make it very difficult for us to proceed on that basis.
858 MR. McCALLUM: I guess ‑‑ finally, I guess, with the indulgence of the Chair, I'd just like to know what ‑‑ you spoke about coordination I think in New Brunswick and I was wondering if the service were approved, what would be your plans to coordinate with emergency officials in the province of Alberta?
859 MR. TEMPLE: The same. I mean, I've gone out and visited with them all. I visited with the emergency ‑‑ emergency measures people in Alberta and we'd coordinated the launch with them.
860 They seem to be ‑‑ I don't want to speak on their behalf, but certainly my meeting with them was very good and they seemed to be quite interested in what we were proposing, so we are ‑‑ we have talked to, I think, all of the provinces or pretty well all of them, and we have coordinated through them.
861 We are hoping to be able to do that. It is certainly much simpler to coordinate with the provinces than with each municipality individually, so that wouldn't pose a problem at all.
862 MR. McCALLUM: In your opinion then, approval of your service would not ride roughshod over the emergency public warning system in place in the province of Alberta currently?
863 MR. TEMPLE: Oh, not at all. We'd work to integrate it and coordinate it so that it is complementary. It is not a replacement. It is not meant to displace what they're doing at all.
864 MR. McCALLUM: Thank you. Thank you, Mr. Chair.
865 THE CHAIRPERSON: Thank you. Thank you, Mr. Morrissette. Thank you to your group. We will break for lunch and we will get back at 2:30 with the CBC/Radio‑Canada application.
‑‑‑ Upon recessing at 1325 / Suspension à 1325
‑‑‑ Upon resuming at 1433 / Reprise à 1433
866 THE CHAIRPERSON: Order please. À l'ordre s'il vous plaît.
867 LA SECRÉTARE: Merci, monsieur le Président.
868 We will now proceed with item 2 on the agenda, which is an application by the Canadian Broadcasting Corporation to provide an all hazard all channel emergency broadcasting public alert service. The messages would be distributed by satellite to the CBC Radio transmission backbone for broadcast by the appropriate transmitters.
869 Selon la requérante, les organismes autorisés à émettre des avertissements auraient la responsabilité d'encoder les messages d'alerte dans un format normalisé respectant des protocoles techniques et informationnels précis. Ces organismes comprendraient entre autres Environnement Canada, la GRC, de même que les organismes provinciaux de secours. La Société Radio Canada n'exercerait aucun contrôle sur l'émission, le contenu ou la fréquence des alertes publiques.
870 Appearing for the applicant is Mr. Steven Guiton, who will introduce his colleagues. You will then have twenty minutes for your presentation. Mr. Guiton.
871 MR. GUITON: Merci. Bonjour. Good afternoon, Commissioners. My name is Steven Guiton and I am executive director, strategy and government relations at CBC Radio Canada. With me today is Mr. Ray Carnovale, vice‑president and chief technology officer.
872 To Mr. Carnovale's left is Mr. Francois Gauthier, senior manager delivery systems at Spectrum Engineering. To my right, Mr. Rob Scarth, director of regulatory affairs, and to Mr. Scarth's right is Ms. Edith Cody‑Rice, our legal counsel.
873 We are pleased to be here today to discuss CBC's proposal for an all channel emergency alert service which would be used by BDUs on both their analog and digital systems to notify the public of emergencies.
874 À l'heure actuelle, le Canada ne possède pas de système national d'alerte au public. Plusieurs systèmes régionaux sont déjà en place ou le seront sous peu, mais il n'existe aucun système national qui peut fontionner à l'échelle du pays au moyen d'indicateurs d'emplacement géographique communs et de protocoles de communication.
875 Le gouvernement du Canada reconnaît la gravité de ce manque et a entrepris d'y remédier.
876 En 2004, le gouvernement a commencé l'élaboration de CANALERT, un système pancanadien d'alerte au public, dans le cadre de la vaste initiative gouvernementale visant à mettre en oeuvre un système de protection civile.
877 Depuis deux ans, j'assume la présidence du groupe de travail des radiodiffuseurs sur les systèmes d'alerte au public, dans le cadre du projet CANALERT.
878 À titre de participant à ce projet, CBC/Radio‑Canada collabore avec Industrie Canada, les gouvernements provinciaux ainsi que diverses sociétés privées, notamment des radiodiffuseurs, des EDR et des entreprises de télécommunications, en vue d'élaborer des protocoles d'urgence et autres éléments clés indispensables à la création d'un système national d'alerte au public.
879 The CANALERT initiative is based on two key principles. First, that no single medium, system or technology can ensure that public alerts will reach all Canadians in an emergency. Consequently, the CANALERT initiative embraces broadcasters, BDUs, cellular providers, internet providers as well as Telcos and other communication providers.
880 The second key CANALERT principle is even more fundamental. In order to have a robust public alerting system that can operate consistently across all of these different distribution platforms, it is necessary to have a uniform approach, using common, open and non‑proprietary protocols.
881 CBC's proposal for an all channel emergency alert is based on this CANALERT vision. We see our proposal as a natural and cost effective way to use CBC's ubiquitous over‑the‑air radio services in conjunction the CANALERT program to enable alerts to be carried over BDU distribution systems.
882 In fact, our proposal is simple and flexible enough to be easily used by other communications media, such as other broadcasters, telephone companies, ISP's, to enable them to provide public alerts as part of the CANALERT system.
883 That being said, we would like to emphasize that we view CBC's proposal as complementary to the other proposals before you today. We are not proposing or seeking any form of exclusivity when it comes to public alerting. In our view, what is important is that there be uniformity in the protocols and alert messages that are used across all communications media.
884 That idea, as I mentioned earlier, is central to the CANALERT initiative. However, it is also important that BDUs and other players implement common alerting standards and protocols, using the technologies and mechanisms that best suit their particular communications systems or network architecture. This will ensure that the CANALERT initiative can be implemented in the most efficient and cost effective manner possible.
885 I would like to now turn things over to Mr. Carnovale to give you an overview of how our proposed system would work.
886 MR. CARNOVALE: As you have just heard, CBC's proposal is based on the CANALERT initiative, and would make use of CBC Radio Canada's national radio transmission system that covers 99 percent of the Canadian population.
887 To start at the beginning, emergency alerts would originate with authorized agencies under the CANALERT system. Those authorities would be the only entities permitted to originate alerts.
888 Alert messages would be based on a predetermined set of protocols. Each event type or emergency would have an assigned code or number. As well, the country would be divided into a sequence of geographic areas and these would be assigned a unique geo code or number. The alerts would consist of a sequence of numbers selected and ordered according to the protocol established by CANALERT.
889 Since the alert code is numeric, each code can be directly linked to an appropriate text message in either English or French or both. Associated with each alert there would also be an audio message that would play and also be displayed as on screen text.
890 When an authorized agency identifies an emergency and issues an alert, that alert would be transmitted to CBC's national alarm centre in Ottawa. The alert would then be up‑linked for satellite distribution across CBC's entire terrestrial radio transmission back bone. Based on geo codes, the alert would be decoded by an EAS decoder at the appropriate CBC transmitter site and broadcast over the air in the affected area.
891 Once the alert message is generated by an authorized user, the process of delivery to the public is almost instantaneous. Satellite delivery of the alert message enables reception and delivery by other entities such as cable, DTH or other BDUs.
892 A BDU that wished to make use of CBC's alerting system could do so in one of two ways. It could receive the alert directly from satellite, which we believe would be the most cost‑effective approach, or it could receive the alert signal off‑air from one of CBC's radio transmitters. In either case, the BDU would require an EAS decoder at its head end that would decode the alert and identify whether the alert was applicable to the BDU's service area.
893 If the alert applied to a BDU service area, it would be distributed to subscribers within that area. The simplest way to do this would be to replace all analog signals with a single broadcast screen that would include the appropriate text and audio message.
894 In the case of digital systems, all digital receivers would be force‑tuned to an alert channel consisting solely of the alert message in both text and audio.
895 If the BDU wished to adopt a more sophisticated approach, such as a text crawl over an existing signal, it could do so.
896 To recap, the alert in the CANALERT protocol would originate with an authorized agency under the CANALERT system.
897 The alert would be transmitted to the CBC national alarm centre and uplinked to satellite for distribution across the country.
898 Using EAS decoders at its radio transmission sites, CBC would broadcast the alert over the air where applicable.
899 BDUs could pick up the alert signal either directly from satellite or off air.
900 EAS decoders within a BDU system would then determine whether the alert was applicable to its geographic area, and, if so, the alert would then be distributed to subscribers.
901 That is our proposed system.
902 We have a short video demonstration that provides you with an overview of how the system works. Before we turn to the video, though, I would like to say a word about EAS decoders.
903 EAS decoders employ existing non‑proprietary technology that has been in use in the United States since 1994, and available from several manufacturers. It is a relatively simple technology by today's standards.
904 We, like the FCC in the U.S., believe it is a robust technology that provides a cost‑effective solution to a very basic but extremely important problem, broadcasting emergency alerts in a reliable and efficient manner.
905 As indicated in our application, CBC has conducted a field trial using the system I have just described, including the EAS decoders. We consider the field trial to be a complete success, and are confident that, from a technical perspective, the system could be implemented across the country without difficulty.
906 Let's turn to the video.
‑‑‑ Video presentation / Présentation vidéo
907 MR. GUITON: I hope that video provided you with a better understanding of how our proposed system would work.
908 I would like to point out that what you heard was a unilingual English version of how a BDU could implement our service. It could also be presented in a French‑only format or in a bilingual format.
909 I would like to take a few minutes to highlight a couple of aspects of the system.
910 First, as I hope is evident by now, CBC would not originate or exercise any control over the nature of the alerts. CBC would simply receive the alerts from authorized agencies under the CANALERT system and then pass those alerts through to both its own radio service and to any BDUs that wished to rely on CBC as the deliverer of alerts.
911 Second, I would like to emphasize that reliance on CANALERT would ensure consistency in the area of emergency alerting across all media and communications technology. We consider this an extremely important feature of our approach, as I indicated earlier.
912 Third, the fact that the CBC's system would use existing technology makes it both simple to implement and very cost effective. It could be easily implemented by all BDUs, including small cable systems.
913 It also has the added advantage of being accessible by any participating broadcaster, either radio or television.
914 Fourth, the cost of implementation would rest with the individual entities involved and would not require a charge to be imposed on BDU subscribers. In particular, BDUs would bear their own cost, which should not be significant on a per system basis.
915 CBC Radio Canada is seeking government funding for its part of the system.
916 Finally, reliance on EAS technology would help facilitate cross‑border coordination with the United States. This is obviously a significant benefit in an emergency alerting system.
917 Given the nature of our proposal, there is only one regulatory change required to permit all‑channel emergency alerting. This is a change to section 7 of the Broadcast Distribution Regulations to permit BDUs to alter the signal of a programming service in order to transmit an emergency alert.
918 Specifically, we believe that section 7(d) should be revised as follows:
"The licensee shall not alter or delete a programming service in a licensed area in the course of its distribution except
(d) for the purpose of transmitting an authorized emergency public alert message;"
919 En conclusion, la proposition de CBC/Radio‑Canada s'appuie sur le projet CANALERT afin d'adopter une approche cohérente, ouverte et non‑exclusive en ce qui concerne les alertes d'urgence dans l'ensemble des médias et des technologies, et ce, de manière sûre et économique.
920 CBC/Radio‑Canada ne cherche pas à obtenir quelque forme d'exclusivité que ce soit en ce qui a trait aux alertes au public. Nous croyons plutôt que chaque entité devrait avoir le choix de la technologie et de l'approche qui convient le mieux à sa situation particulière, à condition qu'elle observe les normes et les protocoles définis dans le système CANALERT.
921 However, in order for CBC's proposal to be put into effect, an amendment to the BDU regulations would be required. In our view, such an amendment would clearly be in the public interest, given the high level of importance that must be given to public alerting.
922 Thank you for your time and attention. We would be pleased to respond to any questions you may have.
923 THE CHAIRPERSON: Thank you, Mr. Guiton.
924 Commissioner del Val.
925 COMMISSIONER del VAL: Thank you for the presentation.
926 I have questions in four main areas, as did Commissioner Pennefather ‑‑ technical, financial, policy and legal ‑‑ but I don't think that I will be able to be as organized in keeping my questions to one issue, so I hope you will bear with me.
927 I would like to start with clarifying some of the areas raised in your application.
928 First, you talked about the field study and the EAS system that you tested, and you described it as providing a basis for estimating the cost of implementing a baseline EAS system. I need some clarification on exactly what the baseline EAS system is.
929 Is it the one that is currently being used by the U.S., without any of the identified weaknesses corrected, except for the satellite transmission, which you are using to correct the daisy chain latency problem?
930 MR. CARNOVALE: Actually, I think that our definition of baseline is the radio‑only system that we have proposed to you today.
931 I would add that several of the deficiencies that were noted in our EAS field trial have, in fact, already been corrected.
932 MR. GAUTHIER: I would add to that that the basic EAS system used in the United States is made of multiple components. One of them is the EAS decoder with the EAS message. As part of our proposal, we are saying that we will provide the EAS decoder segment, the message, because it is a more robust component of the EAS system in the U.S., and we will replace the weak link, which is the daisy chain distribution, by satellite distribution.
933 That is our proposal.
934 COMMISSIONER del VAL: In your field study ‑‑ and I am thinking of the Types 1, 2 and 3 reception systems and those diagrams ‑‑ what exactly did you test?
935 MR. GAUTHIER: Our proposal is slightly different from our test study, to address your first point.
936 In our test study, we tried to test all of the possible ways for a potential user to receive a signal. Type 1 reception was a direct satellite to transmitter transmission, and it was the best approach and the lowest latency approach. This is the one that we are proposing today.
937 Type 2 distribution was using a mix of satellite and maybe terrestrial links coming from original offices. This could create some latency and some kind of daisy chain approach, which is also used in the United States. Again, we tested it for the purpose of the Industry Canada trial, but it is something that we would avoid using in our system.
938 But, again, in our proposal the Type 2 approach could always be used as a back‑up possibility, if the Type 1 link was not possible.
939 The last link was a Type 3 approach, which was using multiple transmitters in an off‑air repeater mode.
940 Again, it is really that there are technical differences between Types 1, 2 and 3, and I could brief you in more detail on the technical differences if you want, but it is really Type 1 that we are proposing today.
941 COMMISSIONER del VAL: So the costs in the financials that you have presented are only for the Type 1, then.
942 MR. GAUTHIER: Yes, that's correct.
943 COMMISSIONER del VAL: So the pro forma financial statements that you have provided include the costs of the centralized satellite distribution and the external originating systems?
944 MR. GAUTHIER: Yes, that is correct.
945 You have to remember that the external originating system, for our part, will only be an access to a server in the National Alarm Centre, and then to have access to the distribution system from the CBC. Each EMO will have to provide their own hardware in order to communicate with us.
946 It means a terminal access. It means to have a computer and to have a communication line with our National Alarm Centre, which could be Internet, phone‑based, ISDN, or another type of connection.
947 COMMISSIONER del VAL: As you are aware, and you have told us, the FCC is still in the midst of a process to study the improvements they can make to the EAS system. In your field study you identified and summarized some of the problems.
948 Are you aware of any other problems identified by the U.S. broadcast community that are relevant to our Canadian system but are not identified in your EAS field study?
949 MR. GUITON: I would like to add a point of clarification. I think you were reading from our application, and since our application was filed, and since we responded to your deficiencies, the FCC, on November 10th, 2005, issued a report ‑‑ it's first report and order for the Notice of Proposed Rule Making on Emergency Alert Systems, and in that report they indicate that they intend to make EAS alerting mandatory for all distributors in the United States, and they endorse the EAS technology.
950 That is just a point of clarification, that their study has been completed.
951 COMMISSIONER del VAL: Yes, but I thought there was another study under way, where they were addressing issues such as the permissive nature of state and local signals, and I thought the comments wouldn't close until the end of April.
952 MR. GAUTHIER: We also want to emphasize that the FCC has clearly stated that the EAS technology, as far as hardware base and robustness, is the one that they want to build on in the future and we strongly agree with the response on that.
953 Regarding the usage of the EAS and the ability to send alerts into that system, our proposal is relying on CANALERT. We fully agree that in the U.S. there are still some uncertainties, but on our side we are relying on Industry Canada's work and all the other community work to provide a CANALERT definition for this part.
954 MR. SCARTH: Commissioner del Val, perhaps if I can just close the loop on the FCC Issue.
955 COMMISSIONER del VAL: Yes.
956 MR. SCARTH: You are quite correct. I mean, there is a further notice of proposed rule‑making which was triggered as a result of the first report that was issued back in November.
957 So they have not concluded their work, but with respect to the sort of basic premise behind the EAS system, the FCC has sort of seen it as a robust technology that they are prepared to see implemented across a variety of distribution platforms.
958 COMMISSIONER del VAL: Great, thank you.
959 So back to the original question: In your field study you have identified some of the problems, so you are not aware of any other that has already been identified in the States that would be relevant to ours?
960 MR. GAUTHIER: No, we are not aware of a States problem that could be common to the problem that we have identified, or problems that are not solved by our proposal today.