ARCHIVÉ -  Transcription

 

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                      SUBJECT / SUJET:

 

 

 

Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services /

Révision des cadres de réglementation des entreprises de

distribution de radiodiffusion et des services de

programmation facultatifs

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

April 11, 2008                        Le 11 avril 2008

 

 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services /

Révision des cadres de réglementation des entreprises de

distribution de radiodiffusion et des services de

programmation facultatifs

 

 

BEFORE / DEVANT:

 

Konrad von Finckenstein           Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Leonard Katz                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Michel Morin                      Commissioner / Conseiller

Ronald Williams                   Commissioner / Conseiller

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secretaire

Cynthia Stockley                  Hearing Manager /

                                  Gérante de l'audience

Martine Vallée                    Director, English-Language

                                  Pay, Specialty TV and

                                  Social Policy / Directrice,

                                  TV payante et spécialisée

                                  de langue française

Annie Laflamme                    Director, French Language

                                  TV Policy and Applications/

                                  Directrice, Politiques et

                                  demandes télévision langue

                                  française

Shari Fisher                      Legal Counsel /

Raj Shoan                         Conseillers juridiques

 

 

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)

 

April 11, 2008                    Le 11 avril 2008

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PRESENTATION BY / PRÉSENTATION PAR:

 

 

Telesat                                           793 / 4369

 

Association of Canadian Advertisers               822 / 4565

 

MTS Allstream Inc.                                852 / 4769

 

 

 

 

 

 

 

 

 

 

 

Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Friday, April 11, 2008 at 0857 /

    L'audience débute le vendredi 11 avril 2008 à 0857

4360             THE CHAIRPERSON:  Good morning.  First of all, a short announcement.

4361             For those of you who may have wondered what happened to Commissioner Cugini, her appointment terminated yesterday.  However, she was reappointed before midnight so she is here now for another four years.

‑‑‑ Applause / Applaudissements

4362             THE CHAIRPERSON:  Welcome back, Rita.

4363             COMMISSIONER CUGINI:  Thank you.  It's good to be back.

4364             THE CHAIRPERSON:  Now, Madam Secretary, go on with today's agenda.

4365             THE SECRETARY:  Thank you, Mr. Chairman.  Bonjour tout le monde.

4366             We will now proceed with the next intervener, Telesat.

4367             Mr. Paul Bush will introduce his colleagues, after which you will have 15 minutes for your presentation.

4368             Mr. Bush...?

PRESENTATION / PRÉSENTATION

4369             MR. BUSH:  Thank you very much.

4370             Good morning, Mr. Chairman, Commissioners and Commission staff.  My name is Paul Bush and I am Vice‑President of North American Sales for Telesat Canada.

4371             Joining me today, on my right, is Michele Beck, Director of Engineering, Sales Engineering.  On my immediate left is Len Lawson, Director of Broadcast Sales; and to his left Bob Power, Director of Regulatory and Government Initiatives.

4372             Telesat appreciates the opportunity to appear at this hearing.  As you know, Telesat filed a submission in this proceeding on October 19th of last year focused on the satellite capacity available to serve the Canadian broadcasting community, as well to identify future planned capacity.

4373             Our purpose today is to provide an update to that submission, tell you that we have capacities available now to service in the transition to HDTV and that we are in the process of procuring more capacity.

4374             Furthermore, there are technological solutions which can be used to carry more signals using the existing capacity.

4375             First, however, I would like to give you a brief overview of the types of satellites that we own and the kinds of services that they provide.

4376             Telesat owns and operates two types of satellites within two distinct neighbourhoods used to serve the Canadian broadcasters:  FSS, which stands for fixed satellite service; and BSS, which refers to the broadcast satellite service.  These are ITU, or International Telecommunications Union, designations for different services, but in fact both platforms are ideal for the distribution of television signals for direct to cable, IP TV and direct to home applications.

4377             FSS satellites primarily operate in two frequency bands, C‑band and KU‑band.  The BSS satellites, which are also referred to as DBS, operate in the other portion of the KU‑band.

4378             Telesat, in conjunction with the broadcasting industry, has over the years created these two neighbourhoods for the Canadian broadcasters that enable the distribution of services to the national networks, cable providers, telephone companies and the DTH players.

4379             While we provide a wide range of telecommunications services across Canada, and now around the world, broadcasting continues to be a major user of capacity on Telesat satellites.  Our focus today is on the services that we provide to the Canadian broadcasters.

4380             Shaw Star Choice is our largest customer on the FSS platform, while Bell ExpressVu is our sole BSS customer.  Both of these DTH service providers operate their own respective technology platforms and control their signal quality and programming lineup to provide a variety of direct to home and direct to cable services.

4381             Telesat also provides a wide range of services directly to the broadcasters for national and regional distribution of programming.  This includes satellite capacity, teleport uplink services and engineering support.

4382             Our presentation today covers the underlying satellite facilities which the broadcast signals are carried upon.

4383             We have brought a slide ‑‑ and in fact it is at the back of my presentation today, and for the audience we have put it on a chart ‑‑ that shows the North American orbital arc to illustrate where the Canadian satellites are located.

4384             Telesat also has four satellites which are located in non‑Canadian orbital positions serving other regions of the world.  We acquired these former Loral Skynet satellites as a result of the Telesat sale in 2007.  However, these have little or no coverage of Canada and are therefore not included in our slide.

4385             Starting with FSS capacity and referring to the slide, I will describe our capacity on the FSS satellites.

4386             This is our fleet of Anik satellites which carry our traditional business.  Anik F1 provides services at the 107.3 degrees west longitude location and is dedicated to South American coverage.  North American services from this orbital position are provided by Anik F1R.

4387             Anik F2 is located at the 111.1 degrees location.  These two orbital locations form the Canadian broadcasting neighbourhood where most of the existing cable headends and Star Choice subscribers have their antennas pointed.

4388             Finally, we have Anik F3 launched last year into the 118.7 position.  That is well‑suited to telecom, cable and IP TV services.

4389             All of our FSS satellites carry both KU‑band and C‑band payloads.  KU‑band is used for small dish applications such as DTH and private business networks.  All of our KU‑band capacity is utilized today, with 54 of 64 transponders on F1R and F2 being used by Canadian broadcasters.  The other 10 are dedicated to enterprise and government applications.

4390             The KU‑band capacity on F3 was not well suited to Canadian DTH service and has now been fully leased for U.S. services.

4391             C‑band capacity is also used by the Canadian broadcasters as the frequency is very robust and ideal for cable distribution.  There are also a number of traditional non‑broadcasting applications such as telephone and business services on the C‑band.

4392             The good news is that with the recent launch of Anik F3, coupled with Anik F1R and F2, there is C‑band capacity currently available for the distribution of additional programming services.  Within the 107.3 to 118.7 neighbourhood some 30 to 40 satellite transponders are available today, which could be used for the delivery of broadcasting signals to cable and IP TV systems.

4393             Using today's MPEG‑2 technology this bandwidth translates to channel capacity able to support approximately 90 to 120 high definition signals.  With the new technologies, MPEG‑4 and DVB‑S2 and statistical multiplexing, this number of broadcast signals is expected to range between 200 and 300 high definition signals.

4394             BSS capacity.  Today Telesat's BSS platform carries all of Bell ExpressVu signals.  BSS satellites use a frequency which is ideal for small dish use in a different portion of the KU‑band than is used on our FSS satellites.

4395             Our Nimiq BSS fleet, as they are called, consists of Nimiq 1 and the Nimiq 2 satellites, which are located at 91 and 82 degrees west, respectively.  In essence, Bell ExpressVu has created its own neighbourhood in the eastern portion of the arc.

4396             We are fortunate to be able to have secured a number of interim DBS satellites to supplement the capacity on Nimiq 1 and Nimiq 2 and also provide critical backup.  These satellites, renamed Nimiq 3 and Nimiq 4iR, supplement the reduced capacity available on Nimiq 2 as a result of a power system failure early in its life, as well as allowing certain transponders to operate at a high power mode, thus increasing the available throughput.

4397             Today ExpressVu has contracted for all 32 available frequencies in both of these orbital positions 91 and 82, for a total of 64 transponders.

4398             Telesat has an additional two BSS satellites under construction today, Nimiq 4 and Nimiq 5, and ExpressVu has contracted with us for all of the capacity on both of those satellites.

4399             Nimiq 4 is expected to be launched later this year into the 82 degrees west position and will replace Nimiq 2 and its 32 BSS frequencies, as well as provide eight regional KA‑band transponders.

4400             KA‑band its being deployed as a broadcasting band in the United States by DirecTV and, while still new, is being deployed rapidly throughout the U.S.

4401             The Nimiq 4 satellite was originally scheduled to launch in June to be in service in July, but a recent failure of the Russian proton launch vehicle last month has delayed its availability.  In the meantime, the two satellites currently in operation are able to continue providing service.

4402             Nimiq 5 is also under construction and scheduled to be launched late in 2009 into the 72.7 west location.

4403             Future capacity.  In July 2006 Industry Canada announced a call for applications for 29 available satellite spectrum licences.  As a result of that process, the Minister of Industry announced in June that Telesat would be awarded four licences in the 17 GHz BSS frequency band, which is expected to be the next major broadcasting band to be utilized suitable for DTH applications.

4404             While we fully expect the 17 GHz band to be a broadcasting band in the future, it will be many years before it will be feasible for a Canadian service provider to offer an affordable DTH service using this technology.  The key driver will be the adoption of this band by larger markets such as the United States with large scale equipment production runs driving down unit costs to consumer affordable levels.

4405             Providing a near‑term expansion capacity solution for the Star Choice system has been a focus of Telesat.  Telesat has the authorization for the extended KU‑band at the 107.3 west position, a frequency band potentially of interest to Star Choice which is immediately adjacent to the current conventional KU‑band used by the Star Choice DTH service.  Consumer DTH equipment is already available since this band is commonly used for DTH in Europe, Asia and South America.

4406             We understand from Industry Canada that the use of the extended KU‑band for DTH is under serious consideration and it is the Department's intention to address this concern when it concludes its licence award process which is expected in the very near future.

4407             In regard to the 17 GHz band, one of the four licences which Telesat expects to be awarded is located at the 118.7 degrees west position on the western end of the arc.  The other three are located at 86.5, 82 and 72.5, all on the eastern portion of the arc where they would be ideally positioned for future expansion capacity in the Bell ExpressVu neighbourhood or for other users.

4408             Advances in technical standards.  Equally as important an issue as new satellite capacity is how to maximize the efficiency of what is already in place.  Getting more throughput would improve the efficiency of both current and future satellites.  Telesat has carried out considerable research and development work to test different technologies and standards and believes that there is significant gains available for satellite undertakings.

4409             Converting from MPEG‑2 to MPEG‑4 coding standard, which is applicable throughout the industry, combined with the use of DVB‑S2 satellite transport modulation scheme and statistical multiplexing, the throughput is expected to result in anywhere from four to six times the number of signals carried within the same bandwidth today.

4410             This conversion, however, will come at a cost, both in terms of equipment changeouts as well as complex technology transitions at the uplink, cable and IP TV headends and customer locations.

4411             Telesat has been actively involved with the DTH and SRDU licensees and has provided all of the necessary support, but ultimately only they are in a position to be able to evaluate this option and the deployment costs associated with these new technologies.

4412             In conclusion, the long‑awaited market adoption of HDTV has begun and with it comes a number of challenges.  Telesat is actively working with the various players to consider the transition models, the new technologies and additional satellite capacity.  We have concrete plans in place to increase BSS capacity with the launch of Nimiq 4, BSS and KA‑band, Nimiq 5, as well as continuing to complement our fleet with interim BSS satellites while we provision new satellites.

4413             We are actively pursuing options for FSS DTH service, including the use of the extended KU‑band frequencies.

4414             Last, Telesat has ample C‑band capacity available today for direct to cable services, IP TV services, Canada‑wide distribution or broadcast signals and for use by the industry in the transition to HDTV.  Telesat will continue to work closely with its broadcasting customers to address their satellite capacity needs.

4415             This concludes our formal remarks today and we would be pleased to answer any questions that you may have.

4416             THE CHAIRPERSON:  Thank you very much for your presentation.

4417             Can I take you back to page 4 ‑‑

4418             MR. BUSH:  Sure.

4419             THE CHAIRPERSON:  ‑‑ where you talk at the top of Anik 3 and you suggest it has been fully leased to U.S. services.

4420             MR. BUSH:  The KU‑band, yes.

4421             THE CHAIRPERSON:  Yes.  Then two paragraphs down you say:

"Good news.  With the recent launch of Anik F3, coupled with Anik F1R and F2, is that the Canadian C‑band capacity currently available for distribution of additional program services."  (As read)

4422             MR. BUSH:  Yes.

4423             THE CHAIRPERSON:  Isn't there a contradiction?

4424             If you fully leased it out, how come you then have still capacity available for Canadian distribution?

4425             MR. BUSH:  So there are two bands on that satellite, Mr. Chairman.  There is the KU‑band and C‑band.

4426             The KU‑band has been fully leased out, but the C‑band, today we have some four transponders that are being used on that.  So we have fully 20 transponders left in terms of use for broadcast signals.

4427             THE CHAIRPERSON:  Okay.

4428             You have somewhat overwhelmed me here with technical details ‑‑

4429             MR. BUSH:  Yes.

4430             THE CHAIRPERSON:  ‑‑ so maybe you can bring it down to a level that a lawyer can understand it.

4431             MR. BUSH:  Okay.

4432             THE CHAIRPERSON:  The C‑band on which you say you have ample capacity nowadays, could Star Choice use it, could ExpressVu use it to distribute their channels direct to home?

4433             MR. BUSH:  This capacity is used primarily for direct to cable.  It is into larger dishes.

4434             As an example, in the U.S. all direct to cable services are on C‑band.  So for distribution from the programmer to the cable headend, that is all done in C‑band.

4435             In Canada it is a combination of the two.  The C‑band is well‑suited because it tends to be more of a robust technology.  The telephone companies use C‑band for all of their networks.

4436             When it comes to direct to home, in the case of ExpressVu they are on a different frequency.  It is KU‑band, but it is a DBS KU‑band and it is well‑suited to 45 cm small antennas.  C‑band cannot be used for that.

4437             In the case of Star Choice, their neighbourhood is really between the 107.3 and the 111 position because that is where their antennas look at.  The C‑band capacity does not help them either.

4438             It is really well‑suited for direct to cable services as opposed to direct to home.

4439             THE CHAIRPERSON:  But both of them, ExpressVu and Star Choice, supply customers and supply cable companies.

4440             MR. BUSH:  Yes.

4441             THE CHAIRPERSON:  Are you suggesting that they could migrate all their supply to cable companies to the C‑band and thereby free up more capacity to supply directly to the DTH customers?

4442             MR. BUSH:  No, but we have customers today, CBC, CTV, the French broadcasters, a number of customers that provide their own services directly to the cable headend.  So the programmers themselves can do that.

4443             If you are going to go through Star Choice and ExpressVu, then they can still provide services to the cable headends but not through using the C‑band.  They have to use either KU or the DBS frequencies.

4444             THE CHAIRPERSON:  What I'm trying to get at, what I don't understand is the DTH people tell me there are capacity limits, especially as we are coming to HDTV and then the HD channel takes up roughly four traditional digital channels, et cetera.

4445             So as we go to digital in 2011, and if we do the double jumping, not only go to digital but we go to mostly HD, is there going to be a capacity problem or not?

4446             MR. BUSH:  I think the DTH players have a unique challenge, that's true, in terms of because they are limited in terms of the frequencies that they have.  So from the DTH players' standpoint, yes, there is a limited amount of capacity for them to be able to expand and grow.

4447             I did mention in terms of the new frequency bands, Mr. Chairman, that we are pursuing, that will help, but it is still some time out.  I mean, to build and launch a satellite is three years and these new frequencies are just coming on board.

4448             But yes, the C‑band does not help the DTH players.  It is specifically for direct to cable services.

4449             THE CHAIRPERSON:  Last, when you talk about advances in technical standards on page 7, you say something like "complex technology transition at the uplink cable IP TV headends and customers' locations"; especially the last one, customers' locations.

4450             Does that mean every customer needs a new black box?  Is that, in layman's language, what you are talking about?

4451             MR. BUSH:  Yes.  So the move to MPEG‑4 ‑‑ the move to the new technologies, both in terms of the coding and in terms of the modulation, requires a new box.

4452             Now, a number of the boxes that are being built now come equipped with the ability to be able to upgrade later, but it is a wholesale change‑out in terms of moving to the new technologies.

4453             THE CHAIRPERSON:  But I mean Star Choice has what, roughly 1‑1/2 million customers?

4454             MR. BUSH:  Star Choice has roughly 850,000 and ExpressVu has roughly 1.8 million.

4455             THE CHAIRPERSON:  Yes.

4456             MR. BUSH:  And if you look at boxes, it is not just a straight one for one.  I mean I think on average it is 1.6 boxes per household.  So yes, it is a large change‑out and our view is it will be done over time as opposed to immediately.

4457             THE CHAIRPERSON:  All right.

4458             MR. BUSH:  Michele, any ‑‑

4459             MS BECK:  The only thing that I would like to add is that the DTH service providers are also SRDUs and so when we talk about the complex change‑out, it's not just their consumers that they have to be concerned about, it's all the equipment at the headends as well that need to be transitioned to the new technologies to provide continuation of service to their cable customers.

4460             THE CHAIRPERSON:  All right.

4461             Ron, do you have some questions?

4462             COMMISSIONER WILLIAMS:  Yes.  Thank you, Mr. chair.

4463             Good morning, Mr. Bush and Telesat panellists.

4464             I guess the essence of your report is to reassure us on the capacity issues on a going forward basis.  You say you are procuring more capacity now and the transition to HD is secure; that we should be able to do it.

4465             Last July 47 channels in Canada were on HDTV from information you have provided.  How many are using HDTV today?

4466             MR. BUSH:  Len, can you hazard a guess?

4467             No, I don't know off ‑‑ I would say ‑‑

4468             COMMISSIONER WILLIAMS:  More than 47?

4469             MR. BUSH:  Yes.  I think if you look at any of the ‑‑ I think you would have to compare the lineups of all of them, Commissioner Williams.  But yes, I would say it is more than 47 today.  How many more, I'm not sure.

4470             COMMISSIONER WILLIAMS:  All right.

4471             MR. BUSH:  I also hope that ‑‑ I mean, we are here to say that there is capacity, but the transition is not without its challenges.  So in other words, the challenge to HD actually requires more capacity as you double up, because you will still be carrying SD and HD at the same time.

4472             So there is capacity.  It is at a premium in the DTH markets.  In the cable markets where C‑band is, it still is not without its challenges and we have to be very cognizant and work very closely in terms of that transition.

4473             COMMISSIONER WILLIAMS:  All right.

4474             Your fixed satellite services utilizing extended KU‑band and Anik, I guess the preferred by Shaw Star Choice, versus Bell being on the broadcast satellite services on the Nimiq satellites, what is the difference in the cost of equipment for each of these technologies?  Like is there a competitive advantage for one DTH provider over the other?

4475             MR. BUSH:  I think that in terms of the cost of the technologies, one is on a Motorola platform, the other is on an EchoStar platform.  I think over the years they have come very close together, so I think at the consumer end and at the uplink end there is really very little difference in terms that it really is a volume thing.  I think that the volumes over the years on both sides of the border have brought the cost of that equipment down.

4476             COMMISSIONER WILLIAMS:  So there is a similar deployment then on each?

4477             MR. BUSH:  I would say yes.

4478             COMMISSIONER WILLIAMS:  You talked about extended KU providing new capacity to the fixed satellite services.  How much capacity would extended KU bring should that be approved?

4479             MR. BUSH:  It could bring a full satellite worth of capacity, so an additional 32 transponders.

4480             COMMISSIONER WILLIAMS:  And with MPEG‑4 times four to six, that number for television channels, then?

4481             MR. BUSH:  I'm sorry, Commissioner, what was the question?

4482             COMMISSIONER WILLIAMS:  Would that FSS, like the full satellite capacity, also use MPEG‑4, which would give you the four to six times?

4483             MR. BUSH:  Yes.  So that could use the MPEG‑4 and I would assume that at the time it was deployed ‑‑ I mean, we are seeing deployment of MPEG‑4 today, so three years down the road if we were to start building a satellite today, then yes, you would employ the MPEG‑4 technology and the ‑‑

4484             COMMISSIONER WILLIAMS:  So 120, a 130 some channels would be available then?

4485             MR. BUSH:  Yes.  Yes, in fact even more.

4486             COMMISSIONER WILLIAMS:  Okay.  With these changes to capacity and these new satellite dishes being launched and put into service, will consumers need to use multiple or elliptical dishes in order to receive all the programming?

4487             MR. BUSH:  Yes, and that's a good point.  I mean, over the last several ‑‑ I think in the mid‑90s there was a big push to have 45 cm dishes and 18 cm dishes and as you have seen the demand for more programming and capacity go up, you now see multi‑feed antennas and in fact triple‑feed antennas where you are looking at three orbital slots at a time.  So those dishes have gotten larger.

4488             But I also think that the consumer acceptance of it is no longer a 45‑cm antenna.  They seem to be accepting of a larger antenna to be able to get three times the amount of capacity.  That will continue.

4489             So as ExpressVu adds the 72‑1/2 satellite to their fleet, that will be a 3‑feet antenna.  They are already using ‑‑

4490             COMMISSIONER WILLIAMS:  So consumers with existing smaller antennas would have to upgrade their antenna?

4491             MR. BUSH:  They would upgrade.  They would upgrade.  At that point there would be an upgrade, and it would be some type of upgrade in terms of either getting an HD package or getting an expanded package at another orbital slot.

4492             And that is the plan, that it would be phased‑in upgrade as you add another satellite, but definitely it would require multiple feeds to be able to increase the capacity.

4493             COMMISSIONER WILLIAMS:  Would that be the same in Star Choice's case?  I think they already use elliptical.

4494             MR. BUSH:  Yes.  Star Choice today has a dual feed, so they have an elliptical dish in place today.  If Star Choice was to go to an extended KU‑band or additional frequencies, then they would add another feed to that antenna.  So their antenna is already ‑‑

4495             COMMISSIONER WILLIAMS:  Would they be able to use the same antenna?

4496             MR. BUSH:  They would most likely be able to use the same antenna that they have today, yes.

4497             COMMISSIONER WILLIAMS:  Is that primarily because KU has a very tightly focused beam compared to C‑band?

4498             MR. BUSH:  No.  Primarily because in the case of Star Choice, they installed in most cases elliptical antennas so they are already set to be able to do that.

4499             COMMISSIONER WILLIAMS:  Okay.

4500             MS BECK:  Can I just clarify?

4501             COMMISSIONER WILLIAMS:  Yes.

4502             MS BECK:  The issue is the extended KU‑band that we are talking about is at the 107.3 location, so they are already there looking at that orbital slot.

4503             What it is, is they are just using additional frequencies at that position.  So it is a change‑out of the LNB.  It's the little noise block‑down converter, and not actually the feed arm.

4504             COMMISSIONER WILLIAMS:  Yes.  That concludes my questions leading to understanding the technical part of your presentation.

4505             Just out of curiosity, could you tell me what the word "Nimiq" means?

4506             MR. BUSH:  It was actually a national contest that we had across the country and, believe it or not, the person that won it was in Ottawa.  The last time that the person won it, they got an all expense paid bus trip to Ottawa.  Well, this time the person who won the naming contest got a trip down to see the satellite being built ‑‑ her name was Sheila Rogers ‑‑ and it means something that ties or binds together.  So it's an Inuit word for something that ties or binds together.

4507             COMMISSIONER WILLIAMS:  Ties or binds together.  Thank you very much.

4508             That concludes my question, Mr. Chairman.

4509             THE CHAIRPERSON:  Michel...?

4510             COMMISSIONER ARPIN:  It is more a matter of curiosity than anything else.

4511             How many Canadian clients do you have on C‑band?

4512             MR. BUSH:  On C‑band today ‑‑ in the broadcasting side?

4513             COMMISSIONER ARPIN:  Yes.

4514             MR. BUSH:  Yes.

4515             MR. LAWSON:  We have all the major networks use C‑band, CBC, CTV, Global for occasional services.

4516             COMMISSIONER ARPIN:  Any specialty services?

4517             MR. LAWSON:  Yes.  We have a number of Francophone services, RDI, RDS for example, out of Montreal.

4518             COMMISSIONER ARPIN:  And the music channels?

4519             MR. LAWSON:  Pardon?

4520             COMMISSIONER ARPIN:  And the music channels?

4521             MR. LAWSON:  And the music channels, TV5.

4522             COMMISSIONER ARPIN:  The same ones that have been there since the beginning of specialty services?

4523             MR. LAWSON:  Yes.  Initially when the specialty services were launched in the 80s, C‑band was the technology of choice.

4524             COMMISSIONER ARPIN:  Yes, exactly.

4525             MR. LAWSON:  Certainly the most important user on C‑band is of course the MétéoMédia, The Weather Channel services because of their unique service.

4526             COMMISSIONER ARPIN:  Thank you very much.  That was my question.

4527             THE CHAIRPERSON:  Len...?

4528             COMMISSIONER KATZ:  I want to come back to the capacity question because I don't think I quite understood it.

4529             Your opening page, the second paragraph talks about the fact that you have capacity.  It's available now to service the transition.  You are in the process of securing more capacity and technological solutions can be used to carry more signals using the existing capacity.

4530             So is there a capacity issue with regard to DTH today?

4531             MR. BUSH:  I think there are two distinct DTH markets.  As you know, on the BSS side, we are in the process of building two additional satellites: one to be launched, Nimiq 4, this year and want to be launched next year.

4532             Even in terms of that, I think you would have to ask ExpressVu, and I think ExpressVu actually did respond in terms of how they are going to use that capacity.

4533             On the other side, Commissioner Katz, we have been working with Star Choice in terms of freeing up capacity on our existing facilities, and even today in our presentation I know that over the next couple of weeks we are freeing up one more KU‑band channel for Star Choice on the existing Anik F2 satellite.  So actually they will go up one.

4534             So we are doing everything we can to be able to shoehorn more capacity.  And ultimately at the Star choice locations it's a combination of new technology in terms of the new technologies to increase capacity and future decisions in terms of adding more capacity at that slot.

4535             COMMISSIONER KATZ:  But those are years off, I would imagine.

4536             MR. BUSH:  In the case of a build of a satellite, yes.  The build of a satellite is three years out, two to three years out.

4537             COMMISSIONER KATZ:  Are there satellites that ‑‑ I don't know what the legal implications are ‑‑ that can be leased from other countries ‑‑

4538             MR. BUSH:  Yes.

4539             COMMISSIONER KATZ:  ‑‑ that would serve the same purpose?

4540             MR. BUSH:  Yes.  And we have over the years I think been very successful with agreements with American carriers.  AT&T, Loral, DirecTV, EchoStar, we have leased capacity.

4541             So is there the ability to move satellites in, in an interim, until you get them?  Yes, and we have done that.  We have done that in the past and that would be certainly something that we would pursue in the event that we were building a new satellite at one of our existing orbital slots.

4542             COMMISSIONER KATZ:  Thank you.

4543             THE CHAIRPERSON:  Just one last point, purely out of curiosity.

4544             You said Anik F1 is dedicated to South American service.  I thought these were national slots.

4545             It is assigned on a country basis.

4546             MR. BUSH:  Yes.

4547             THE CHAIRPERSON:  So therefore you can have a slot and you can have a satellite on it but not serve your own country?

4548             MR. BUSH:  Yes.  So over the years, Mr. Chairman, certainly when I started a Telesat, Canada served Canada and Mexico served Mexico and Brazil served Brazil.  What has happened with the WTO, and leading up to the WTO ‑‑ and satellites in many ways, as we all know, overflow borders.

4549             But in terms of the competitive regulations, now we are each able to compete in each other's territory.  So we now provide coverage of the U.S., Mexico, Latin America from the Canadian orbital slots, and there are 75 satellites licensed to compete with us in Canada.

4550             So a national slot, while it is administered by Industry Canada, now can coordinate to be able to provide service into all the regions that the satellite can effectively see.

4551             THE CHAIRPERSON:  But presumably for the purposes of ‑‑ let's say take Mexico ‑‑ serving Mexico, you are required to comply to the rules of the Mexican CRTC and you get licensed by them, et cetera?

4552             MR. BUSH:  Yes.  You would have, in the case of Mexico, a Mexican concession to provide services within Mexico and that typically, in terms of compliance, would refer to your ground systems.

4553             In other words, your satellite covers the territory, and when you go to get a licence to be able to operate your ground systems in that territory, they ensure compliance to their rules and regulations, yes.

4554             THE CHAIRPERSON:  But that also means, if I understand it correctly, that you could sell all of your services to the States if you wanted to, and, presumably, get a better return.

4555             Our Canadian DTH, et cetera, actually are competing with, say, Direct TV or with ‑‑

4556             MR. BUSH:  No, on the DTH it is still with exception do we use.

4557             So, in the case of DTH, it is on an exception basis that the DTH players ‑‑ yet ‑‑

4558             The pure and simple fact of competing in DTH is, when you have 850,000 or 1.8 million dishes looking at the slot, and you create a neighbourhood, it is much more difficult to, then, swing all of those dishes over.

4559             But in terms of the regulations, today the DTH players on both sides of the border use Canadian facilities in Canada and U.S. facilities in the U.S.

4560             THE CHAIRPERSON:  Okay.  Thank you very much.

4561             Madam Secretary.

4562             THE SECRETARY:  Thank you.

4563             I will now call the next intervenor, which is the Association of Canadian Advertisers, Mr. Bob Rheaume.

‑‑‑ Pause

4564             THE SECRETARY:  Mr. Rheaume, when you are ready, you can go ahead with your presentation.  Thank you.

PRESENTATION / PRÉSENTATION

4565             MR. RHEAUME:  Thank you.

4566             Good morning, Mr. Chairman, Commissioners and Commission Staff.

4567             As you have heard, my name is Bob Rheaume, and I am Vice‑President of Policy and Research at the Association of Canadian Advertisers.

4568             I am very pleased to have this opportunity to appear and comment before you today, to represent the views of advertisers in Canada.

4569             The Association of Canadian Advertisers is the only association solely representing the interests of advertisers in this country.  Our members, over 200 companies and divisions, represent a wide range of industry sectors, including manufacturing, retail, packaged goods, financial services, and communications.  They are the top advertisers in the country, with estimated annual sales of close to $350 billion.

4570             While we recognize that the focus of these proceedings is to examine the regulatory frameworks for BDUs and pay and specialty stations, we would ask that the Commission consider in its deliberations the pivotal role that advertising plays in security the financial sustainability of the broadcasting system in Canada.

4571             Without the significant funding that broadcasters derive from advertising revenues, the ability to preserve editorial quality over the long‑term would be seriously undermined.  It is this business case for maintaining a vibrant broadcasting system through advertising support that we would like to address in our remarks.

4572             As we have pointed out before, advertising in Canada is a primary resource sustaining the Canadian broadcasting system.  In all its forms, advertising is estimated to represent an annual $13.7 billion investment in the Canadian economy.  Of this total amount, approximately $3.2 billion is invested annually in television advertising, almost $1 billion of that on specialty television.

4573             Obviously, advertising is a substantial contributor of funds to the Canadian broadcasting system.

4574             Considering the significant revenues, the role of advertising is critical to a healthy and robust broadcasting system in Canada.  It is advertising that substantially pays for the programs that entertain, inform and educate Canadians.

4575             Furthermore, in this way, advertising makes it possible for the system to fulfil the public objectives established by the Broadcasting Act.  In short, advertising is the essential economic underpinning to the system.  At least it has been.

4576             While we believe that advertisers are critical to a healthy broadcasting system, a healthy broadcasting system in Canada is critical, as well, for advertisers; and though our interest in television broadcasting is essentially a commercial one, we think of our role as being somewhat like that of a silent financial partner, and, as such, we feel strongly that we have made a long‑term investment in commercial broadcasting, an investment as an advertising medium, and we want to protect that investment.

4577             Television has been a great commercial marketing tool for advertisers, and we want to ensure that it remains so.  For the sake of a healthy broadcasting system in this country, we respectfully suggest that you should want it to remain so also.

4578             But this means ensuring not only a nourishing system for culture, but also a powerful marketing system for commerce that remains competitive, uncluttered, effective and efficient.

4579             You have heard in these proceedings that conventional TV is facing some change, and this is certainly true.  Share of audience and ad spend both are reducing on conventional stations.  But, overall, television itself, as an advertising medium, remains very strong.

4580             Since 1995, for instance, TV's annual share of total Canadian ad spend has always been, without exception, between 23 and 25 percent.

4581             Year‑in and year‑out, TV has continually attracted about a quarter of all advertising spend in Canada.

4582             1995, by the way, was the first year that advertising appeared on the internet.  This advertising medium ‑‑ we can hardly call it new any more ‑‑ the internet ‑‑ now attracts just as much ad revenue per year as specialty stations in Canada, yet the TV medium, as a whole, seems to be holding its own.  Revenues are, indeed, flowing from conventional to speciality, but I would suggest to you that this is largely because specialty stations are over‑subsidized by subscription fees and a re‑balancing of free market funding and consumer direct pay must be done.

4583             The Commission has also asked for comments specifically on the possibility of increasing the 12‑minute per hour limit on traditional advertising for specialty licensees.

4584             A serious concern to advertisers is the issue of clutter on television.  Multiple regulatory exemptions from the 12‑minute limit rule have created the environment today where dozens, or more, commercial interruptions per hour are quite common.

4585             This diminishes the effectiveness of the television medium for the advertiser, and only encourages viewers to seek out ways to practise commercial avoidance.

4586             Again, given the importance of advertising revenues to the system, we urge the Commission to refrain from any consideration of raising or eliminating the 12‑minute limit of advertising per clock hour for specialty stations.

4587             The Commission has also asked for comments on other new revenue opportunities.  We believe that the recent Rogers' video‑on‑demand application to amend their licence to modify the authority to distribute programming containing commercial messages has great potential.

4588             Rogers has sought authorization to exhibit previously aired programs from, and with the permission of, Canadian licensees on the VOD platform and dynamically insert new advertising content.  Advertisers would benefit from such a change, because the value of advertising on the VOD platform would be enhanced.

4589             Dynamically updated ads that are targeted on a geographic and demographic basis will be more relevant to the consumer, and more valuable to the advertiser.

4590             Broadcasters would benefit, as well, from enhanced revenue opportunities, since they will be able to segment and sell more of their total program audience on this platform.

4591             Targeted ads displayed to on‑demand, high‑value viewers would have more appeal for advertisers.

4592             This is but one example of innovative ideas that can enhance the effectiveness of the TV medium.  There are many others, such as the INVIDI dynamic ad insertion system that is being tested in the U.S., and soon in Canada.

4593             Advertisers have become increasingly concerned with clutter on television generally, and regard the growing popularity of digital video recorders, with their commercial avoidance capabilities, to be a consumer coping mechanism.

4594             By the way, advertisers do not refer to them as DVRs or PVRs, we call them CAMs, which stands for "commercial avoidance machines".

4595             We believe, in fact, that DVRs will most affect the very type of priority programming that the Commission is trying to encourage, episodic dramas and comedies.

4596             As DVR penetration increases, advertising support for this type of program on linear television will diminish, and VOD may very well become the primary platform for their exhibition.

4597             Another new opportunity that has great potential, we believe, is reclaiming lost Canadian audiences by allowing the insertion of local advertising into U.S. local availabilities and other inventory.

4598             Canada's advertisers have had to cope over the years with increasingly restricted access to Canadian audiences.  Approximately one‑quarter to one‑third of all viewing in this country is to signals that cannot be commercially accessed by advertisers in Canada.

4599             Imagine initiatives, such as we have seen from the cable industry, 49th Media, and Only Imagine Inc., would allow advertisers access to lost audiences and help to redress this inequity by repatriating audience and revenue to Canada's broadcasting system.

4600             We frequently hear complaints from advertisers who cannot access sufficient effective TV commercial inventory during certain times of the year.  We believe that these types of proposals will help grow TV advertising revenues in Canada, thereby contributing significantly to Canadian programming, and will accomplish all of this without creating any new fragmentation of audience.

4601             The system is particularly imbalanced in English Canada in this regard, as audience disappears hourly and continually into the American ether.  It is a wasted resource.  It may seem like a simple point, but it is worth repeating here once more:  it is the audience that is the financially valuable thing, and Canadians have freely chosen to watch these programs.

4602             Innovative proposals, such as the ones mentioned above, accept the reality of Canadian viewers' choices and choose to capitalize on it, not ignore it.

4603             Proposals like these face market facts squarely and take concrete steps toward repatriating Canadian audiences, turning an unused natural resource into much needed funding for Canadian content, and they will do it all with minimum disruption, and virtually no new fragmentation.

4604             Commissioners, if you want to continue to have advertising play a role in financing the broadcasting system ‑‑ and we certainly hope you do ‑‑ then you are going to have to embrace some of these innovative proposals.

4605             We think you will have to free television in order to keep television free.

4606             I want to thank you again for the opportunity to participate in this important public process.  We wish you well in your deliberations, and, time permitting, I would be pleased to try to answer any questions that you might have.

4607             THE CHAIRPERSON:  Thank you very much for your presentation.

4608             Excuse me, but I seem to detect a certain contradiction here.  When you talk about specialty advertising, you say that we should retain the 12‑minute limit rule because there is clutter and ‑‑

4609             You say:

"...refrain from any consideration of raising or eliminating the 12‑minute limit of advertising per clock hour for specialty stations."

4610             But then you talk about local avails, which is 2 minutes, and you say "fill those up with advertising".

4611             Either there is too much or there isn't.  I can't reconcile those two statements.

4612             MR. RHEAUME:  As I understand it, the local avails would be on the conventional stations only.

4613             Conventional stations are now at 14 minutes an hour ‑‑

4614             THE CHAIRPERSON:  Yes.

4615             MR. RHEAUME:  ‑‑ and they have the local avails.

4616             I don't think the specialty stations have local avails.

4617             THE CHAIRPERSON:  No, but that means that, in conventional, you have 14 plus 2 ‑‑ 16.

4618             MR. RHEAUME:  We have the 2 now, and they are being filled with commercials for ‑‑

4619             THE CHAIRPERSON:  Promotions, yes.

4620             MR. RHEAUME:  Yes, exactly.

4621             Better to have some advertising in those 2 minutes that can repatriate some revenue to the broadcasting system and go toward Canadian production, rather than have just promotions.

4622             THE CHAIRPERSON:  Okay.  Then, let me put it the other way around.

4623             Why can conventional TV put up these 14 or 16 minutes, but specialty TV cannot?

4624             Why do you want us to retain the restriction on specialty?

4625             MR. RHEAUME:  Because it is still currently only at 12.

4626             We were not in favour of raising it to 14 on conventional stations.  We think it should have remained at 12, as well.  We think there is too much advertising, and that is what is causing consumers to move away from the medium.

4627             So, if we still have an opportunity and chance to keep it at 12 at least in one sector, we should do that.

4628             It probably does not go unnoticed, from your point of view, as well, that specialty stations do have a subscription fee cash flow option.

4629             THE CHAIRPERSON:  Yes, but what is your economic interest in restricting specialty TV to 12 minutes?

4630             How would that benefit you as advertisers?

4631             MR. RHEAUME:  Clutter.

4632             It creates a better advertising environment.

4633             If you are 1 of 24, instead of 1 of 40, you will get noticed better.

4634             THE CHAIRPERSON:  And you, as the advertiser ‑‑

4635             I am still trying to figure out how this reflects positively on you as an advertiser ‑‑ on your cash flow.

4636             I mean, you have less opportunity to sell your message.

4637             MR. RHEAUME:  But we have a better environment to sell it in.

4638             THE CHAIRPERSON:  Therefore, you can charge more.

4639             MR. RHEAUME:  I would say so.

4640             THE CHAIRPERSON:  Yes, okay.

4641             Rita, you have some questions?

4642             COMMISSIONER CUGINI:  Good morning, Mr. Reaume.

4643             MR. REAUME:  Good morning.

4644             COMMISSIONER CUGINI:  I think that in these proceedings, to say that advertising has a pivotal role is an understatement.  You must be feeling like the belle of the ball.  Everybody wants more advertising, while others are saying that it is because of advertising that we are in trouble, or lack thereof.

4645             MR. REAUME:  Some want more subscription fees.

4646             COMMISSIONER CUGINI:  Right.

4647             MR. REAUME:  It is not all just advertising.

4648             COMMISSIONER CUGINI:  And since you did raise that, and maybe I have missed a nuance in your oral presentation, you said:

"A rebalancing of free market funding and consumer direct pay must be done." (As read)

4649             What does that mean?  Are you supporting fee‑for‑carriage?

4650             MR. REAUME:  Well, we take no position on fee‑for‑carriage but I will suggest to you that specialty stations are ‑‑ speaking of belles of the ball, specialty stations are the sort of apple of our eye these days and it is not just because they can offer niche audience.  That is certainly part of it but viewers of these stations are not one‑dimensional.

4651             If you watch Home and Garden, sure, you are probably interested in home decorating and gardening but you still are probably washing your clothes and brushing your teeth and shampooing your hair, and so advertisers purchase these specialty stations not just for the niche qualities that they can deliver but because they deliver audiences of a general nature.

4652             It is no secret that specialty stations because they are in a very competitive market can offer better rates to advertisers and I would suggest to you that money is flowing to specialty, away from conventional, because specialty can offer better rates to advertisers and they can offer better rates to advertisers because they are oversubsidized, I would say, by their subscription fees.

4653             When I say rebalancing between the free market and consumer pay, I would suggest that advertising can take more of this load.  We can put more money into the system and consumers can get a break on their cable bill.

4654             COMMISSIONER CUGINI:  You can put more money into the system by advertising more on specialty and therefore you are suggesting that we should reduce the wholesale fees charged by specialty services?

4655             MR. REAUME:  Right.

4656             COMMISSIONER CUGINI:  Okay.  And is that what you mean by, at the very end, when you say:

"We think you will have to free television in order to keep television free." (As read)

4657             MR. REAUME:  Well, that is part of it.  Specifically, at the end, what I meant was we are going to have to free up the regulations a little bit and allow some of these innovative proposals like let's get the value out of local avails, let's get the value out of dynamic ad insertion and put it back into the system.

4658             Let's move on to the next step in the evolution of advertising on television and free it up a little bit, let us experiment a little bit, and in that way let's try and keep it ‑‑ it is not going to be totally free for the consumer but let's try and keep it a partially free system still.

4659             COMMISSIONER CUGINI:  Maybe we can go back to basics for just a moment, and if you could, give us a crash course in media buying 101 for this $3.2 billion that is invested in television advertising in Canada.

4660             MR. REAUME:  Boy, oh boy!

4661             COMMISSIONER CUGINI:  A crash course.

4662             MR. REAUME:  What do you want to know?  We want to reach consumers and the television stations have properties that aggregate consumer attention, so it is the perfect spot for ‑‑

4663             COMMISSIONER CUGINI:  Well, what is your first consideration when deciding what would be the most effective tool for an advertiser?

4664             MR. REAUME:  It depends on the product and what they are trying to do with the product and what their target group is.

4665             So if you have, for instance, a lot of explanation that needs to be done, you probably are not going to select television, you are going to select newspapers because you have a lot of space to explain your product and your service.

4666             For television, it is a very intrusive, high impact medium, emotional medium as well, sound and motion and emotion.  So ‑‑

4667             COMMISSIONER CUGINI:  If you are Procter & Gamble, do you look at conventional first and do you spend the majority of your advertising budget on conventional and then whatever is left over goes to specialty?

4668             MR. REAUME:  Not necessarily.  I can't speak for a specific company but large companies like Procter & Gamble with multiple brands, you might say that they are buying tonnage, they want a lot of television time.

4669             To them TV is TV.  It doesn't really matter if they are watching a program on a specialty station or a conventional station.  They don't differentiate.  What they are interested in is the audience and so I can't really say that they are buying conventional first and then specialty.  They are buying it all at once.

4670             COMMISSIONER CUGINI:  And they are buying shows as opposed to ‑‑

4671             MR. REAUME:  Exactly.

4672             COMMISSIONER CUGINI:  ‑‑ my ad needs to be on CTV or it needs to be on a true network?

4673             MR. REAUME:  Exactly.

4674             COMMISSIONER CUGINI:  If you were sitting up here and you had to prioritize all the requests that we have received over these proceedings, and that is allow advertising on VOD, dynamic ad insertion, local avails, we have heard you on eliminating specialty limits but we have had requests for freeing up those specialty minutes, how would you prioritize this list?

4675             MR. REAUME:  You are talking about the 12‑minute limit right now?

4676             COMMISSIONER CUGINI:  Well, I am talking about the four things:  VOD advertising, dynamic ad insertion, local avails and freeing up the specialty.

4677             MR. REAUME:  Well, I don't think ‑‑ my first priority would be the specialty stations, I think, should remain at 12 minutes.

4678             COMMISSIONER CUGINI:  Right.

4679             MR. REAUME:  I think that dynamic ad insertion is something the broadcast industry has to take very seriously because on the internet, when video really gets up some steam on the internet, they will be able to do it quite easily.  So this is a measure that broadcasters can take to retain some of the revenue that might otherwise flow to the internet.  So I would say dynamic ad insertion might be second.

4680             Local avails, we have lived with that two‑minute patch in hours for many, many years.  We do think it is unfair, very unfair that cable companies are able to advertise their own products in those two minutes of time because it is a competitive unfairness when a cable company can advertise their internet service in those two minutes and competitive internet service providers cannot have access to that time.  That is extremely valuable real estate that the cable companies have in that regard.  So I would put that at the bottom of the list.

4681             And I have forgotten your third one.

4682             COMMISSIONER CUGINI:  VOD.

4683             MR. REAUME:  Third.

4684             COMMISSIONER CUGINI:  And do you think that if we allowed those three things, VOD, dynamic ad insertion and local avails ‑‑ well, local avails to a lesser degree.  But certainly, VOD and dynamic ad insertion, if we allowed those two things for broadcasters, do you think that the advertising potential on those two platforms eventually is enough to compensate the decline in advertising on conventional broadcasting?

4685             MR. REAUME:  VOD and...?

4686             COMMISSIONER CUGINI:  And dynamic ad insertion.

4687             MR. REAUME:  Well, I guess it depends what the split is going to be.  I mean presumably you are thinking about some kind of split between cable and broadcasters and I guess, you know, how big is big?  Tell me the split and the rates and I can offer an opinion but really, you have to do the math and you have to do a study.

4688             COMMISSIONER CUGINI:  Yes, we will get some of that in the reply phase of these proceedings.

4689             MR. REAUME:  Yes.

4690             COMMISSIONER CUGINI:  Thank you, Mr. Reaume.

4691             Thank you, Mr. Chairman.

4692             THE CHAIRPERSON:  Michel?

4693             COMMISSIONER ARPIN:  Mr. Reaume, I will refrain myself to local avails and target of ad insertions in VOD.  To whom should the money go, to the BDU or to the broadcaster?

4694             MR. REAUME:  It is your decision.

4695             COMMISSIONER ARPIN:  Yes, thank you.

‑‑‑ Laughter / Rires

4696             COMMISSIONER ARPIN:  We are seeking help.

4697             MR. REAUME:  Okay.  It has got to be a split in some percentage.  I couldn't begin to ‑‑ I don't know the costs involved and the ‑‑ I do know that the value of the time, the market will set that rate.  The market will find its level and those rates for what that time is worth will become apparent.

4698             We can make estimates about that but in terms of the technology needed to do this, that is something that experts have to take a look at.

4699             COMMISSIONER ARPIN:  You have been referring to foreign ad media, to online imaging, I think, and you probably have yourself done some math.  What is the value of local avails?  We have heard here it is as low as $20 million to as high as $60 million.

4700             MR. REAUME:  Yes.  Again, I am at a disadvantage because I have not read ‑‑ I understand there have been at least three studies filed on this and I am familiar with the $20‑million figure but I really couldn't say with any kind of authority that I have looked at them that closely to render an opinion on that.

4701             COMMISSIONER ARPIN:  Because $20 million for the whole country doesn't seem to be significant and you are arguing that it is a big money loss for the system.

4702             MR. REAUME:  It is because between a quarter and a third of all viewing that takes place in this country is for naught.  I mean we should be able to ‑‑ you know, as I mentioned in my presentation, it is the audience that is monetizable.

4703             COMMISSIONER ARPIN:  Yes.

4704             MR. REAUME:  Yes, we want to have programming that Canadians want to watch, they want to see themselves reflected in the programming, but the part that we can turn into money that we can do something with is the audience and if we just ignore a third of that opportunity just going to waste ‑‑

4705             COMMISSIONER ARPIN:  An area that you didn't cover but that is an area of concern or request that we allow advertising is the community channel.  How do you see advertising fitting in community channel, particularly from the perspective of your members?

4706             MR. REAUME:  I think there would be a number of advertisers, probably not my members but probably local small business advertisers who may want to take advantage of that opportunity and I think it should be allowed.

4707             We generally have a policy that we think there should be universal access.  I don't want to get into a controversial area but for years we have been saying that CBC radio could really profit considerably by selling some kind of advertising on CBC radio.

4708             COMMISSIONER ARPIN:  And particularly with the rating that they are currently getting ‑‑

4709             MR. REAUME:  Well ‑‑

4710             COMMISSIONER ARPIN:  ‑‑ on Radio One?

4711             MR. REAUME:  Yes.  Yes.  But the Chairman is right, we shouldn't read into this area.

4712             My point being that we believe that universal access for advertising should be available and that includes educational broadcasting, community channel, conventional specialty, et cetera.

4713             COMMISSIONER ARPIN:  Thank you very much.

4714             COMMISSIONER KATZ:  Good morning, Mr. Reaume.

4715             I have got one question.  I am trying to understand the interest to your members here and where they lie.  You are representing the advertisers.  What they are looking for, I believe, is reaching the audience at the lowest possible price per eyeball basically?

4716             MR. REAUME:  Sure.

4717             COMMISSIONER KATZ:  In which case surplus inventory is to their benefit, is it not, because it drives the price down?

4718             MR. REAUME:  Well, supply and demand, of course, yes.  If there is too much supply, then prices adjust.  If there is too little supply, then prices generally go up, yes.

4719             COMMISSIONER KATZ:  And yet you are posturing the notion of leaving the number of minutes of advertising on specialty as it is rather than increasing it.  Can you explain the dichotomy there for me please?

4720             MR. REAUME:  Sure.  Yes.  We have always said we don't need more minutes on the stations we have, we need more stations with less minutes.  If we could have more conventional stations, and specialty for that matter, that were maybe at an eight‑minute per hour rule, that creates a much better environment.

4721             The example I like to use occasionally is a sporting event.  If an advertiser purchases one‑quarter sponsorship of the signage in an arena and you are told there are 12 signs in the arena and you get to the arena and there are 40 signs, suddenly your investment is diluted, your impact is diluted.  You are one of 40 instead of one of 12.

4722             And so that is our position, that this environment ‑‑ a consumer sits down at a program and if it is during the day, they can be faced with 40‑45 commercials in that hour.  Sometimes one‑third of the 60 minutes is advertising, so there are too many interruptions.  But if we had that program and we had just, well, 12 minutes, it would be a much better advertising environment.

4723             So that's ‑‑ I hope that helps the ‑‑

4724             COMMISSIONER KATZ:  You were opposed then or your members were opposed to the CRTC decision to increase?

4725             MR. REAUME:  Indeed, yes.

4726             COMMISSIONER KATZ:  Thank you.

4727             THE CHAIRPERSON:  Michel.

4728             COMMISSIONER MORIN:  Yes.

4729             And up to now I have just listened one number, $20 million.  In your oral presentation you didn't talk about any numbers.  So I'm wondering if you have in mind or if you have some studies to support it.

4730             With all those measures you are talking about what will be the number of commercial ads you can get over the next three years for example.  Do we have a big number we can oppose or compare with some issues here?

4731             MR. REAUME:  I presume you are talking about overall spending on television?

4732             COMMISSIONER MORIN:  Yes, of course.

4733             MR. REAUME:  Yes.

4734             COMMISSIONER MORIN:  All the measures you have talked about.

4735             MR. REAUME:  Well, currently it's about $3.2 billion.  That's the advertising expenditure on television and that's both conventional and specialty.  And that has consistently been about one‑quarter of the $13 billion in total advertising spend of all media in the country.  It's consistent back over decades.

4736             So I think we can conclude ‑‑ as a matter of fact I will take bets that next year will also be about one‑quarter of all the ad spend will be on television and the year after that and the year after that.  I won't go any further after that.

4737             So will the 3.2 increase?  It almost certainly will.  It could go to 3.6 the next year and then 4 and then 4.2.  So growth will not be extraordinary in television in terms of advertising spend but it will be steady and it will continue.

4738             What will happen is how advertisers use that medium will change.  I think I have suggested in my presentation that those programs that are susceptible to PVRs because consumers tape them and zip past the commercials, there will come a time when advertisers will stop supporting those shows because it will simply be that the economics will not be there.

4739             But TV will still be bringing us live programs and news and weather and that type of programming that is not as susceptible to PVRs and we think that's what the television medium will be doing very well and will be compensated for in the future.

4740             COMMISSIONER MORIN:  So if we have this commercial avoiding ‑‑ I don't remember how you ‑‑ commercial avoidance machines ‑‑

4741             MR. REAUME:  Yes.

4742             COMMISSIONER MORIN:  ‑‑ the PVR and you have the targeted audience too.  So one, it's the ‑‑

4743             MR. REAUME:  You are right.

4744             COMMISSIONER MORIN:  Yes.

4745             MR. REAUME:  That machine helps us or can help us if we adopt dynamic ad insertion.  It's the very same box that can help us target a little bit better with dynamic ad insertion, you are quite right.  It's that same box that ‑‑

4746             COMMISSIONER MORIN:  Is the effect neutral?

4747             MR. REAUME:  That's a difficult question.  It can probably be studied but we haven't done that study so I don't know if it's neutral.

4748             COMMISSIONER MORIN:  Thank you.

4749             THE CHAIRPERSON:  Okay.  You were here on Monday, I believe, when Rogers was here; were you?

4750             MR. REAUME:  I was not but I have been trying to keep ‑‑

4751             THE CHAIRPERSON:  Rogers obviously asked, like most of the BDUs, for the ability to advertise on VOD and also to use the local avails for advertising.

4752             They also made a very strong pitch for dynamic advertising and dynamic ad insertion and targeted advertising along the lines of Invidi ‑‑ I can never pronounce that name ‑‑ Invidi or whatever, and we have seen presentations by them, et cetera.  And they suggest that that type of advertising would actually grow the pie.  It would actually make advertising more valuable.  It would be a good competitor to the internet because now through the medium of television you could individualize to a much greater extent the target audience than you can now and come close to what you can do by the internet.

4753             What would you think would be the effect if we took Rogers by their word and say, "Yes, you know we agree.  The pie should be great.  You can advertise on VOD.  You can advertise on the local avails but only in this targeted ad insertion format"?

4754             So you say the same thing, grow the pie, use those minutes to grow the pie?

4755             MR. REAUME:  I think it's an excellent idea.  I mean it is almost leaping over one step into the future faster.  So I think it's a ‑‑

4756             THE CHAIRPERSON:  And it wouldn't cannibalize the existing advertising on conventional TV or specialty TV?

4757             MR. REAUME:  Well, you have to understand how this will ‑‑ how the system works now and how this will work.  I'm thinking especially of the Invidi system and there are others.

4758             THE CHAIRPERSON:  Yes.

4759             MR. REAUME:  Right now a TV station has a program that has 200,000 audience;  112,000 of that is women 18 to 49 and then ‑‑ and then of course there are some men who watch it, some teenagers, et cetera, et cetera, but their largest group is women 18 to 49.  So they price that program to deliver the women 18 to 49.  So that's a price, let's say $1,000.  All the other viewers come with it but really the advertiser is buying the women 18 to 49.

4760             If we were to use Invidi that extra audience, the men, the teenagers, et cetera could also be sold.  So the $1,000 for the women 18 to 49 is still paid and then Invidi says, "We know the TV sets in the households that men are watching during this program.  We will send them a different commercial.  We will send Dad who watches in the den a car commercial.  We will send mom a shampoo commercial.  We will send the teenager daughter a cell phone commercial".

4761             Now, you can sell your entire audience instead of having to price each individual show just based on your largest chunk.

4762             THE CHAIRPERSON:  Okay, thank you very much.  That's a fascinating answer.

4763             Okay.  I think, Madam Secretary, we will take a 10‑minute break before we start with MTS.

4764             Thank you.

‑‑‑ Upon recessing at 1008 / Suspension à 1008

‑‑‑ Upon resuming at 1020 / Reprise à 1020

4765             THE CHAIRPERSON:  Madam Secretary.

4766             THE SECRETARY:  Thank you, Mr. Chairman.

4767             We will now proceed with the presentation of MTS Allstream Inc. and Mr. Kelvin Shepherd will be introducing his colleagues.

4768             After which you will have 15 minutes for your presentation, Mr. Shepherd.

PRESENTATION / PRESENTATION

4769             MR. SHEPHERD:  Good morning.  My name is Kelvin Shepherd.  I am the President, Consumer Markets, for MTS Allstream.

4770             With me today are my colleagues on my immediate right, Teresa Griffin‑Muir, Vice President, Regulatory Affairs, and to my far right Jenny Crowe, Director, Regulatory Law.

4771             With close to 80,000 customers MTS TV has effected one of the earliest and most successful DSL‑based television distribution deployments in North America.  Since the launch of MTS TV in 2003 MTS Allstream has captured approximately one‑third of the terrestrial broadcasting distribution market in Winnipeg.  This is quite an achievement given that MTS TV had to prove itself against the well‑entrenched incumbent cable operator in the market and has faced a substantial disadvantage in negotiating the carriage of programming services given its relative size.

4772             To attract customers MTS Allstream has made and continues to make significant investments in the Canadian broadcasting system to ensure that it is offering customers a superior product, a top quality viewing experience, new and innovative features and by giving customers increased choice and control over their viewing experience.

4773             In order to meet the customer demand for more control over their viewing experience and to differentiate ourselves, MTS Allstream offers customers a wide selection of small theme‑based programming packages in addition to its basic programming package.  This allows MTS Allstream's customers to focus their subscriptions on the types of programming that interest them and which under traditional BDU‑tiering models may not have been financially accessible to many subscribers.

4774             Our recognition that customers want to have more control over the content they purchase has been central in creating an exceptional product, a product that has proven attractive to Winnipeggers since many have switched to MTS TV from the existing cable or DTH provider.

4775             As the Commission has recognized in this proceeding the need to respect the autonomy and the choices of customers has become more critical in light of the ever increasing alternative sources of programming content available to Canadians.

4776             Therefore, it's critical that that regulatory framework be adapted in order to provide customers with the greatest possible choice of services at affordable prices.  It is our view that the very relevance of the current distribution model depends on the ability of the regulatory framework to successfully adjust to this market reality.

4777             In the Canadian broadcasting system it is the distributors that deal directly with customers through the programming offered and the rates charged.  As a result it's also distributors that bear the brunt of any customer dissatisfaction when they are told they cannot get a particular service or when their basic rates are set to increase.  This places distributors in the first line of fire should the broadcasting system fail to respond adequately to the evolving expectations, tastes and demographics of Canadian viewers.

4778             In order for us to be able to continue to respond to the rapidly evolving expectations of customers in the emerging digital environment, the regulatory framework must give distributors the flexibility that is needed to provide customers with the very best and most accessible source of programming content.  The distribution model proposed by MTS Allstream recognizes this reality.

4779             MS GRIFFIN‑MUIR:  In keeping with the principle of maximizing customer autonomy we are proposing programming packages ‑‑ oh, sorry ‑‑ proposing that basic programming packages should at the most be required to contain only local and regional over‑the‑air services.  This simplified basic package would ensure that Canadians have affordable access to a core set of Canadian programming services with excellent picture quality while at the same time offering customers the ability to choose the services that they pay for and watch.

4780             It is also important that any requirement to provide all subscribers with a basic service be framed in a technologically‑neutral manner that mandates the same set of services to be carried by all terrestrial distributors.

4781             The rules today discriminate against those terrestrial BDUs, such as MTS Allstream, that are fully digital by allowing hybrid analog digital distributors to offer on top of their analog basic package an expanded digital basic package that includes programming services that fully digital BDUs are not permitted to include in their digital basic service.

4782             Under MTS Allstream's proposal distributors would no longer be required to carry on basic those programming services that currently enjoy mandated basic carriage under section 9(1)(h) of the Broadcasting Act.  This too is consistent with the principle of customer choice but in our opinion it would also help create stronger Canadian programming.

4783             Even if there is a requirement for every subscriber to take a particular programming service there is no way of forcing customers to sit down and actually watch that programming.  It is our view that the best way to ensure the success of Canadian programming is to tie the success of a programming service to creating and distributing programming that Canadians want to watch.  Guaranteeing access to the distribution system regardless of viewership will not achieve this.

4784             Moving beyond the basic package we support the Commission's proposal to eliminate the bulk of the current distribution and linkage rules in favour of a simple preponderance requirement defined as 50 percent plus 1.

4785             Again, in keeping with the principle of maximizing customer autonomy the preponderance rule should only require that each subscriber receive a majority of Canadian services.  In this regard all programming services would count equally in calculating a preponderance, including all programming services distributed on a basic service and regardless of whether a programming service is offered in standard definition or high definition.

4786             It is unnecessary to further complicate the preponderance rule by adding more levels to the rules as the overall subscriber preponderance rule would already ensure that each customer has access to a majority of Canadian services in their home.

4787             A subscriber preponderance rule along with competitive market forces would also be sufficient to ensure that each distributor offers a wide and attractive selection of Canadian services.  Without such a variety of choice eventually customers would simply look to other BDUs or to emerging mediums for programming services.  A simple subscriber‑based preponderance rule will ensure that all Canadians that subscribe to a BDU service continue to receive a broad array of Canadian voices while allowing distributors the flexibility to develop packaging options that appeal to the viewers and respect the fact that Canadians will increasingly have alternatives to the BDUs.

4788             On the issue of carriage of specialty services we think that there should be a new category ‑‑ that there should not be a new category of must carry specialty services regardless of whether any customers decide to subscribe to them.

4789             Requiring BDUs to carry a particular programming service does not guarantee the success of the service or even that any customer will subscribe to the service, nor should it.  It is the quality and relevance of the programming aired on the service that will determine the success of a channel.

4790             Since a simple subscriber preponderance rule would ensure that Canadians have a wide variety of Canadian programming services to choose from there is no need to force distributors to offer any particular Canadian programming.  Under this proposal a distributor that limits the Canadian services it offers would by default also have to limit the selection of foreign services that it offers.

4791             Customers would only become frustrated and dissatisfied with the distributor if that BDU offered a long list of available foreign services but precluded customers from buying very many of them because the number of foreign services could not be balanced with the available Canadian programming services.

4792             On the issue of genre protection we again feel that the reality of customer choice should drive the solutions.  As far as genre protection between Canadian specialty services is concerned, we propose that the current rule that protects the analog specialty services and the Category 1 digital specialty services have now served their purpose in creating a strong set of Canadian services and are no longer needed.

4793             The programming services that enjoy genre protection have had sufficient time to establish their brands.  If there are new entrant programming services that feel that they can do a better job of serving a portion of the viewing audience they should be allowed to try to do so.  Competition in this regard can only be expected to result in better programming that Canadians want to watch.

4794             When considering the appropriate contribution to the creation of Canadian programs from various participants in the broadcasting system, the Commission must be mindful of the fact that it is Canadian customers who will ultimately pay into any funds for Canadian programming and who are ultimately the intended beneficiaries of such a scheme.  The Commission cannot lose sight of the fact that this is a finite pool of funds and that the greater the demands on the Canadian ‑‑ sorry ‑‑ the greater demands the Canadian broadcasting system places on Canadians the less that that system is serving Canadians.

4795             This must be the starting point in the Commission's consideration of any proposals for new funding for Canadian programming whether these proposals purport to obtain new funds from BDUs, Canadian programming undertakings or foreign programming undertakings.

4796             The issue of funding that BDUs contribute to Canadian programming was very recently examined in the Commission's proceeding to examine contributions to the Canadian Television Fund.  In that proceeding it became clear that there are serious concerns about whether the CTF funds are currently being used to the best effect.

4797             However, if the Commission does pursue ways to increase CTF funding we note that the easiest and most effective rule, as we suggested during that proceeding, would be to expand the base of contributors to the CTF to include not only the BDU sector but also broadcasters and producers who most directly benefit from CTF funding.  This would not only create a return on the investment; for example, requiring producers who benefit most from the CTF subsidy to feedback into the Fund in proportion to their success, but would also increase the overall amount available to the CTF while minimizing the burden imposed on one sector.

4798             MS CROWE:  In this proceeding the Commission has also been exploring the opportunities offered by the video‑on‑demand platform to grow the advertising pie and to develop as a source of increased revenues in the broadcasting industry and increased funding for Canadian programming.

4799             Our MTS TV service includes a VOD service consisting primarily of feature films.  Last year we also took advantage of this flexible platform to launch Winnipeg On Demand, a source of community programming that gives the Winnipeg community new opportunities to view and participate in locally‑produced programming.

4800             The opportunities presented by VOD, the VOD platform, continue to grow and VOD services represent an important tool in providing Canadians with anything any time viewing that they are now demanding.

4801             So allowing more advertising on VOD, including the ability to insert fresh advertising content in previously‑aired programming would be the most effective way of using VOD to grow the advertising pie.  In fact, the Commission has been gradually extending flexibility of VOD licensees to include advertising.

4802             For example, the Commission has permitted various licensees to distribute programming with embedded commercial messages and to charge a fee to subscribers for such programming.  These types of licence amendments allow VOD licensees to develop new services in cooperation with programmers and, in MTS Allstream's view, should be permitted across the board.

4803             For the same reasons we feel that video‑on‑demand licensees should be permitted to explore new advertising opportunities such as dynamic ad insertion as the technology and software develops for such advertising.

4804             We believe that such advertising flexibility is also wholly appropriate in light of the Canadian content requirements that apply to VOD licensees and the contribution VOD licensees must already make to Canadian production funds.

4805             Our conditions of licence require that all Canadian feature films suitable for VOD exhibition must be included in the feature film inventory and that overall at least 5 percent of the English‑feature films and at least 8 percent of the French‑feature films on our VOD inventory must be Canadian.

4806             We also must remit to the rights holder 100 percent of the revenues earned from the exhibition of any of these Canadian films.  This is in addition to the contribution to Canadian program production fund that MTS Allstream must pay based on its gross revenues.  In fact, because the MTS TV service includes both BDU and video‑on‑demand elements, MTS Allstream actually pays more than the typical 5 percent on its gross revenues from any VOD purchases, once as BDU gross revenues and half again as VOD gross revenues.

4807             As a result, in the case of the Canadian films like we have been talking about distributed on VOD, the contribution to a Canadian production fund on top of the requirement to remit all revenues to the rights holder means that Canadian films produce a financial loss to VOD operators.  Clearly, this gives little incentive to carry additional feature films on VOD in the absence of a model that is at least compensatory.

4808             Making more use of the local availabilities and U.S. services is another way to grow the advertising pie and through greater revenues increase the available funding for Canadian programming.  Currently, few Canadian programming services take advantage of the local avails on MTS TV to promote their services while a certain percentage of the total local avails could still be made available to those Canadian programming services that do seek this space.  It only makes sense to open up the remainder of this valuable airtime to paid advertising.

4809             MR. SHEPHERD:  MTS Allstream is opposed to any fee‑for‑carriage of over‑the‑air broadcasting stations.  Like new contribution to the creation of Canadian programming, it is the Canadians who subscribe to the basic services of the BDUs who end up paying for what they can otherwise get for free over the air.

4810             Moreover, the available evidence indicates that the conventional television sector remains steady and healthy and is not in need of a new subsidy.  None of the forecasts of the downfall of OTA services have come to pass since the Commission most recently rejected fee‑for‑carriage less than a year ago.  Despite the dire predictions of the OTA services, the statistics show that they remain profitable companies with steady viewership and revenues.

4811             According to the Commission's last broadcasting monitoring report, viewing to Canadian English‑language public and private conventional OTA services has remained steady over the past few years with a 27 percent share of total viewing in 2006.  To the extent that the OTA services have lost viewing to the pay and specialty services over the past decade, the conventional OTA services have responded rationally by launching and purchasing specialty services themselves.

4812             Over the 2000 to 2007 period the advertising revenues of the Canadian public and private conventional OTA services has also remained steady and on average increased by approximately 2 percent per year.

4813             As with viewership, to the extent that the conventional television share of the overall increasing advertising pie has decreased, the conventional television ownership groups now own a large proportion of the specialty and pay services that now compete for advertising dollars.

4814             According to the Commission's latest statistics for 2007 the revenues of the conventional television stations were steady from 2006 to 2007 and the overall PBIT margin rose from 4.24 percent to 5.2 percent during the same period.

4815             Private conventional television stations increased their spending on foreign programming from $688 million in 2006 to $718 million in 2007.  At the same time these private OTA stations decreased their spending on Canadian programming from $624 million in 2006 to $611 million in 2007.  During this same time period the pay and specialty services increased their spending on Canadian programming for a total of $890 million in 2007.

4816             Like the other participants in the Canadian broadcasting system the conventional television sector is a business.  As the statistics show, in demanding fee‑for‑carriage the conventional broadcasting sector is asking the Commission to further boost their already profitable business at the expense of customers.  Any new OTA fees at this time would be to the detriment of the distribution sector that deals directly with customers and to the Canadian broadcasting system as a whole in this era of increasing alternative sources of programming.

4817             In closing, it's important to remember that the Canadian broadcasting system is ultimately there to serve Canadian viewers and the success of the system depends on a framework that provides these customers with the widest choice in distribution and content.

4818             That concludes our remarks.  Thank you very much for the opportunity.  We will take any questions that you may have.

4819             THE CHAIRPERSON:  Thank you very much for your contribution.  Thank you.

4820             The first person who appeared before us who suggested there be a basic package that doesn't include 9(1)(h), what led you to that conclusion?

4821             MS GRIFFIN‑MUIR:  I guess a few things.  First, even in making the distinction between what services should fall under 9(1)(h).  We couldn't come with a consistent criteria that would make them available to all subscribers because it doesn't appear to be simply on the basis of viewership and so it becomes a very vague dynamic.

4822             And also because of who we are in the market where we are a digital provider but terrestrial.  So we still have the requirement for basic and as we compete with the larger, traditional BDUs they have a lot more flexibility as to what goes into their basic and what doesn't because of that analog digital hybrid basic and because we don't have as much flexibility with programmers generally in negotiations.  We felt that if basic were the same for everybody and only was local and regional it would cover the need for Canadian content.

4823             And obviously, what has distinguished us in the market from our BDU competitors is our ability to offer more choice to customers and package services differently and bundle those services with some of our traditional market services.  So by having a stripped‑down basic we felt that does really offer customers more choice.

4824             THE CHAIRPERSON:  But 9(1)(h) services that the Commission in its wisdom has felt are of benefit to all Canadians and all Canadians should receive, you are now suggesting you will carry them but it's up to the customer to decide whether to purchase it or not.

4825             So essentially now all Canadians won't receive it.  Aren't you running counter to the very provision for which 9(1)(h) was put in the Act?

4826             MS GRIFFIN‑MUIR:  To a certain extent that is true.  However, fundamentally we just think if the customer wishes to receive it the customer will select it.

4827             THE CHAIRPERSON:  Okay.  On page 3 you make this statement which I would like you to elaborate.  You say:

"The rules today discriminate against terrestrial BDUs such as MTS that are fully digital by allowing hybrid analog digital distributors to offer on top of their analog basic package an extended digital basic package that includes programming services that fully digital BDUs are not permitted to include in their digital basic service."  (As read)

4828             THE CHAIRPERSON:  I am not aware of what you are referring to.  So maybe you can explain to me what you are talking about?

4829             MS GRIFFIN‑MUIR:  Certainly.

4830             What we are talking about is actually there is a requirement for distribution of a basic channel and within that context there are rules around what programming services are allowed to be included in that channel, what must be included obviously.  And the way for example our traditional competitor in our market would interpret their requirement for basic, and that interpretation has in fact been supported by the Commission, would be that they meet their basic requirement with their analog service.

4831             So when they have digital basic it can include services that we, having only one basic package were it just digital, cannot include.  So for example, certain programming services or channels that we are not allowed to include, for instance Family Channel, in our basic package, our competitor is allowed to include in their digital basic ‑‑

4832             THE CHAIRPERSON:  Let's stay with that example.  Family Channel is an analog channel?

4833             MS GRIFFIN‑MUIR:  I don't know.  I don't know if I can stay with Family Channel.

4834             It's not analog, though.  What we are talking about is digital.  Their analog package looks like our digital basic.

4835             THE CHAIRPERSON:  Yes.

4836             MS GRIFFIN‑MUIR:  But then they also offer a digital service.  So their digital basic includes Family Channel and our digital basic is precluded from including Family Channel.

4837             THE CHAIRPERSON:  By whom?  By whom?

4838             MS GRIFFIN‑MUIR:  By you, the Commission.

4839             THE CHAIRPERSON:  I see.  So what you are advocating is that there be one basic ‑‑ we are all looking forward, we are looking forward to an age when everything will be digital.  So this discrimination, if it exists now, will automatically cease, will it not, in 2011?

4840             MS GRIFFIN‑MUIR:  It depends on the interpretation.  If they continue to have analog television, no, because they would interpret their requirement for basic to be confined to analog and those customers who continue to have an analog set, or don't subscribe to their digital service.  So they would continue to have flexibility in what they include in their digital basic package.

4841             THE CHAIRPERSON:  You are contemplating a situation that after 2011 the BDUs would supply analog via cable, continue to supply analog via cable?

4842             MS GRIFFIN‑MUIR:  Yes.

4843             THE CHAIRPERSON:  I see.  Thank you.

4844             Len, do you have some questions?

4845             COMMISSIONER KATZ:  Yes.  Thank you, Mr. Chairman.

4846             Can we go back to your bare‑bones basic local and regional only?

4847             What would be included in local and regional?  What channels?  How regional is regional?

4848             MS CROWE:  I guess there are some regional television services.  I am not sure what those are in Manitoba.

4849             We are pulling out our list of channels here.

4850             It would be the over the air stations that could be picked up in Winnipeg.

4851             COMMISSIONER KATZ:  Would those be only those broadcasters that are national in scope, the CTVs, the ‑‑

4852             MS CROWE:  No.  We are including, in Winnipeg for example, OMNI I believe broadcasts over the air.  It's not one of the big conventional broadcasters anyway.

4853             COMMISSIONER KATZ:  With regard to French language programming, what would you be advocating there in your basic package?

4854             MS CROWE:  In Winnipeg, the only over the air French language broadcaster is CBC, so that is what we would be including.

4855             COMMISSIONER KATZ:  Do you see that package as being the bare‑bones package that would be priced to consumers that way or would that be a package, as we have heard from other folks that came before us this week, that it would be the minimum, but it wouldn't be available necessarily unless you chose to offer that as a bare‑bones basic?

4856             MS CROWE:  I think we would be prepared to make that the bare‑bones package.

4857             COMMISSIONER KATZ:  You would have a basic and then basic plus in tiers or package, or whatever you want?

4858             MS CROWE:  Right.

4859             COMMISSIONER KATZ:  Okay.

‑‑‑ Pause

4860             COMMISSIONER KATZ:  Interesting, on your page 4 there is a bold print saying "guaranteeing access does not guarantee viewers".  I could continue that statement by saying "but by not providing access, you guarantee no viewers", which is sort of the contra to that statement as well.

4861             What has been MTS Allstream's practice with regard to making access available on your network?

4862             MR. SHEPHERD:  I take it you are talking access to programmers?

4863             COMMISSIONER KATZ:  Yes.  Carriage.

4864             MR. SHEPHERD:  Clearly as a new entrant, it is in our interest to have the broadest possible programming available.  We are competing against a very well established conventional cable BDU that has a large variety of programming, and by and large we have attempted to at least match or provide additional programming choice over and above that.

4865             As with any system, be it cable or satellite or, in our case, DSL, there are certain limitations in terms of capacity and other technical limitations that we continue to invest in to be able to evolve our capability.

4866             But generally we intend and continue to add channels and try to make all channels that are available that make sense we feel to our audience or that are required to be carried available to our customers.

4867             COMMISSIONER KATZ:  We have had representation earlier this week from Allarco as one example ‑‑ I'm sure there will be others as well coming before us as well ‑‑ saying they are having difficulty getting access and they were deemed to be a must carry as well.

4868             How does MTS Allstream address customers who come to you for access?  And is there a priority system where if it really is a Commission ordered must carry, does it get preference over anybody else that you may be negotiating with?  Or do you just look at them all in terms of what you think the audience wants to see and what you believe is in your best interest?

4869             MR. SHEPHERD:  Clearly, if it's considered a must carry or mandatory from the Commission or regulatory point of view, we are clearly going to work with that programmer and make arrangements to carry them.

4870             Sometimes there are difficulties in terms of the specific timing or the implementation.  In the case of the one example you mentioned, clearly our intention is to conclude an agreement with that programmer and to carry them and we expect to do that, you know, in a reasonably short period of time.

4871             We had some particular limitations in our system that we were making investments and rearrangements in order to be able to make that particular content available, but those arrangements are proceeding and we expect that we will reach an agreement with that particular programmer to carry the content.

4872             Beyond the must carry requirements, yes, it is a combination of looking at what we think our customers are demanding.  We look at our competitive environment to see what choices our competitors offer and we obviously want to have a competitive product.  We then try to make the right decisions in terms of the priorities balancing, you know, what our customer requirements are in order to make them available.

4873             COMMISSIONER KATZ:  From the time ‑‑ I'm going to use the Allarco case because they were must carry.

4874             MR. SHEPHERD:  Sure.

4875             COMMISSIONER KATZ:  From the time they first approached you and sought carriage, have you put anybody else on the network?

4876             MR. SHEPHERD:  From the time they first approached us, so to begin with when they first approached us we had already made plans and commitments to other programmers to make certain rearrangements to our packaging and so those were commitments that were already in place.

4877             We did have a discussion with them where we talked about a phased implementation and we offered to carry their main channel, which is really the mandatory channel, immediately and over a period of subsequent time, several months, to make additional channel capacity available.

4878             That was not considered acceptable to them so we continue to negotiate with them and I think probably will end up in a situation where we carry all four of their channels and launch them simultaneously, which seem to be what they wanted.

4879             But in terms of the timing involved, no.  We had previous commitments that for certain channel capacity that would have precluded us launching all of the channels that they wanted us to launch simultaneously, but we did make offers to proceed in a phased deployment and launch one channel followed by additional channels at a later date.

4880             COMMISSIONER KATZ:  And between the time when they first approached you, you haven't made any other commitments with anybody else that has been turned on?

4881             MR. SHEPHERD:  We haven't made ‑‑ we have just recently launched, I think as you would have seen an announcement, nine additional channels, but that was part of a previously committed package change arrangement that was already planned and well under way before they approached us with their Super Channel request.

4882             COMMISSIONER KATZ:  That was the only one?

4883             MR. SHEPHERD:  That's the only one, to my knowledge.

4884             COMMISSIONER KATZ:  Were you here or did you hear the CAB presentation yesterday?

4885             MR. SHEPHERD:  I did not personally hear it, no.

4886             COMMISSIONER KATZ:  I will try to summarize it a bit.

4887             MR. SHEPHERD:  Teresa perhaps?

4888             COMMISSIONER KATZ:  They basically indicated that the status quo is where they think things should remain.  They strongly believe that if it isn't broken, it doesn't need to be fixed at all and the system is working very, very well right now.

4889             You are advocating virtually the opposite to what some might say is to an extreme when you are asking for even 9(1)(h) to no longer be broadcast on a compulsory basis.

4890             How do you reconcile your views and your position with the results and the findings that the CAB brought forward to us yesterday?

4891             MS GRIFFIN‑MUIR:  I guess we looked at it in terms of what we brought to the market in Winnipeg.  So I think you have to look at it through the eyes of how we actually appealed to our customers with giving more choice than traditionally has been given from BDUs, by having basic, which is what we are required to carry as basic, and then offering, as Kelvin was saying, smaller theme‑based packages.

4892             What we found was that when the customer was given the opportunity to actually pick the programming they wanted, they came with a set of programming that included obviously the required amount of Canadian content but a pretty different look than your traditional BDU package because of the way we offered it and gave the customer more autonomy.

4893             So our philosophy was to continue to do that in making these suggestions.

4894             Today not only are we faced with the competition from other BDUs, but there is an emerging source of programming through the Internet and we are just trying to package the services in a way that is affordable to customers and gives them the autonomy that they feel they may be able to get elsewhere.

4895             So it was a more forward‑looking point of view that recognized customers obviously do like having choice because, you know, there are other features of our service just because it is a DSL‑based service and can be integrated with your phone service so to speak.

4896             But a big part of our popularity and success has been on that customer autonomy, and going forward they will have more autonomy, not less.  So we were looking at trying to appeal to that.

4897             COMMISSIONER KATZ:  But the quid pro quo to that is that the obligations inherent in the Broadcasting Act will be less respected and less focused, and there is an obligation pursuant to the Broadcasting Act to uphold Canadian programming, Canadian content, genre protection, open access and all those components.

4898             MS GRIFFIN‑MUIR:  But we are not suggesting there not be a preponderance of Canadian programming.  We are suggesting that you set it up a little differently.

4899             But there is still a majority that each individual subscriber in their home would have 50 plus 1 per cent Canadian programming.  They would just get to choose the Canadian programming that they wish to have in their home.

4900             COMMISSIONER KATZ:  When you look at genre protection, for example, is it MTS' position that there should be genre protection or not?

4901             MS GRIFFIN‑MUIR:  We looked at genre protection in terms of the Canadian market, so we are talking Canadian content.  And in terms of the Canadian market, we do not think there should be genre protection.

4902             So what I'm saying is for Canadian programming, two Canadian services coming forward with, let's say House and Garden type television, they should be able to compete with each other so Canadians could choose the Canadian programming that they wanted in a certain genre.

4903             We didn't actually think of it in terms of foreign.  We do recognize there are some difficulties there so that if you had Movie Central as an example, that offers a service similar to HBO and would have, I guess in our view, some difficulties as a Canadian service competing with HBO.

4904             We didn't look at eliminating those kinds of genre protection.  But certainly in terms of Canadian programming services, we do think that there should be ‑‑ that genre protection should be eliminated.

4905             COMMISSIONER KATZ:  So within the Canadian context, morphing from your perspective is perfectly acceptable; the morphing from one genre to another genre?

4906             MS GRIFFIN‑MUIR:  Yes.

4907             COMMISSIONER KATZ:  Notwithstanding the fact that there are certain obligations by genre that exist today with regard to percentage of carriage, percentage of exhibition, percentage of Canadian programming?

4908             MS GRIFFIN‑MUIR:  Well, the percentage of Canadian programming would still exist to a certain extent just because the viewer would have to have a preponderance ‑‑ the subscriber of Canadian programming.

4909             COMMISSIONER KATZ:  But there are obligations today on these broadcasters, depending on their genre.  Certain broadcasters, certain genres have a higher proportion of programming expenditures, others have a smaller one.

4910             MS GRIFFIN‑MUIR:  Okay.  In terms of the broadcasters, we didn't actually look at it in terms of changing anything for the broadcasters.  We just looked at it that if someone had a competing Canadian service and met whatever requirements are associated with it, they should be able to launch that service.

4911             COMMISSIONER KATZ:  Okay.

4912             MS GRIFFIN‑MUIR:  Actually because we thought it would force both Canadian services through the competition with each other to produce something Canadians wanted to watch.

4913             COMMISSIONER KATZ:  Could we go on to the fee for carriage, obviously something that you are opposed to.

4914             Has MTS Allstream increased their fees for the broadcasting services since you introduced them?

4915             MR. SHEPHERD:  Yes, we have.

4916             COMMISSIONER KATZ:  Has there been a noticeable drop‑off in penetration or in growth from those customers?  Obviously you are still growing; you are relatively new.  I understand that.

4917             But was there a noticeable drop‑off in customers that were on your network as a result of your increase?

4918             MR. SHEPHERD:  No, I don't believe that I would attribute ‑‑ let me back up a bit.

4919             Obviously as a new entrant and we are competing and growing our market share, clearly we are growing.  Even though we have increased prices, clearly that has not stopped our growth.

4920             But to your point, which I think the question you are asking is did we see a large churn in customers or customers leave when we increased fees, I would say largely no.  There are some, but that has clearly been offset by our other marketing initiatives and growth initiatives which have allowed us to offset whatever that churn was with in fact new customers.

4921             COMMISSIONER KATZ:  Would you believe that the introduction of a fee for carriage would result in a customer leaving your system?

4922             MR. SHEPHERD:  Our belief is that the customers ‑‑ the fees, when we have increased our fees, we have offset that increase with other elements of value, whether that is greater choice, whether it is new features, such as video on demand or our e‑mail service on our TV or our local community programming, or in fact better bundling with other services.

4923             So overall the increases we have made, perhaps made to our TV service, we believe we have delivered value and customers have recognized that value.

4924             We don't believe that customers see any value in this OTA fee increase and therefore we believe yes, some customers ‑‑ it's hard to of course say how many, but we believe a significant number of customers will see that as nothing more than a fee increase for no additional value.

4925             COMMISSIONER KATZ:  All right.

4926             You have talked quite a bit about VOD service and the opportunities, and in your evidence today and in your evidence you filed previously there is an awful lot of focus here on the fact that there is no money in the VOD advertising for MTS because, I think as I read it, you are spending 105 per cent of whatever you take in.

4927             Can you elaborate on that?

4928             MR. SHEPHERD:  Yes, let me try to take that in two separate pieces.  I think there are two separate issues there.

4929             One point we are making is that the way the fee arrangement is structured, we are disincented in fact from promoting and showing Canadian feature film content because in fact we lose money every time a customer watches one.  It's inherent in the fact that we remit 100 per cent of the revenue, and then on top of it we pay additional fees on our overall revenue which in effect includes the 100 per cent of the revenue we already remitted.

4930             So one point we are trying to make is that if you want to encourage Canadian content and you want to encourage BDUs to promote viewers to watch that content on mediums, interactive mediums such as video on demand, there has to be something in it for the BDU to do that, because in effect we are doing much of the promotion and advertising of that content.

4931             So obviously we are carrying the content, we are required to carry a percentage of Canadian content and we comply with that.  But it is reluctant because as soon as customers watch it, we lose money, which doesn't seem to make a lot of sense if you are looking at the objective of actually promoting viewership and people actually watch that content.

4932             Now, in terms of actually advertising on VOD, we are suggesting that there is an opportunity there for the overall advertising pie to be grown and clearly that advertising revenue which we feel we could generate, you know, will come back into the Canadian broadcasting system in one form or another and be available, certainly a portion of it, for Canadian production.

4933             COMMISSIONER KATZ:  We have heard an awful lot about Indivity and ad insertion.  Have you looked at that at all?  Have you been experimenting at all with its abilities?

4934             MR. SHEPHERD:  I too have trouble pronouncing the name.

4935             I would say that we are aware of it but we haven't at this point taken steps to actually trial or experiment with it.  Certainly we believe it and similar technologies are promising.  We think it provides new opportunities, we would agree as yet unproven, but new opportunities that may bring capabilities to the broadcast system that are clearly going to be there in other mediums such as the Internet.

4936             COMMISSIONER KATZ:  When you say "new opportunities", are you saying at the same time ‑‑ and I don't want to speak for you ‑‑ incremental opportunities or just alternative opportunities?

4937             MR. SHEPHERD:  I believe there would be both.  I mean, there will clearly be some substitution and change in the system, which I think is inevitable given the technology revolution and the wider variety of choice and the different mechanisms for advertising that are clearly going to be there.

4938             So there is clearly going to be some substitution, but belief would be that overall there will also be incremental opportunities that should bring more advertising and revenue into the system.

4939             COMMISSIONER KATZ:  Do you know how far away we are from seeing this thing live and operational?

4940             MR. SHEPHERD:  I do not know.  As I said, we have not actually tested or trialled the equivalent but I believe, based upon what I read and I hear, that it is not years and years.  It is closer than that for sure.

4941             COMMISSIONER KATZ:  My last set of questions centre around dispute settlement and dispute resolution.

4942             The Commission had put forward the suggestion of seeing whether there is interest in this reverse onus positioning where if there is a perception that there is an undue preference or a gatekeeping role being played, there is a reverse onus on, in your case, the BDU.

4943             What is your position on that?

4944             MS GRIFFIN‑MUIR:  Well, we agree with changing that to the reverse onus, yes.

4945             I guess for us, just who we are in the market ‑‑ well, in general we agree with it anyway, but we are caught actually between our competitor at times and the programmers who are pretty well‑established, have distribution through our competitors already established and therefore we don't have ‑‑ they don't have the same incentive.  So I would say we are not at a level playing field in the same manner as the incumbent BDU in even negotiating with the programmers.

4946             COMMISSIONER KATZ:  Thank you.

4947             Those are my questions, Mr. Chairman.

4948             THE CHAIRPERSON:  This disincentive that you mentioned about showing Canadian films, in answer to Commissioner Katz, I haven't heard it mentioned by any other BDU.

4949             Does it apply to everybody or only to you?

4950             MR. SHEPHERD:  It applies to VOD in a way ‑‑ I'm going to let Jenny provide the details here.

4951             But it does apply to us because of our VOD licence and the way the licence is structured. I believe.

4952             MS CROWE:  I believe it's standard conditions of licence in all the VOD licences.  That's where it is found for us.  It is not in any of the regulations, but in the specific conditions of licence for each licensee.

4953             THE CHAIRPERSON:  So if I understood you correctly, it basically means you have to make enough money on the showing of foreign films in your VOD service in order to make up the loss that you have gained from showing Canadian films?

4954             MS CROWE:  That's right.  But any time one of our viewers is watching a Canadian film that we are losing money on, they are choosing not to watch something that we can make money on.  I think that is sort of the dilemma.

4955             THE CHAIRPERSON:  Okay.

4956             Rita...?

4957             COMMISSIONER CUGINI:  Thank you.

4958             I too want to go back to your concept of basic.

4959             Will you include U.S. services in your basic package?

4960             MS GRIFFIN‑MUIR:  No.  No, it would be all Canadian basic.

4961             COMMISSIONER CUGINI:  So you don't even want the flexibility to be able to include U.S. services?

4962             MS GRIFFIN‑MUIR:  No.  Actually, we want that local and regional Canadian programming over the air.

4963             COMMISSIONER CUGINI:  I too, like the Chairman, am quite surprised that you would ask us to ignore the Broadcasting Act when it comes to 9(1)(h) services and say to you well, the headline in the paper tomorrow will say "The CRTC tells MTS it doesn't have to carry those services that have been mandated as such under the Broadcasting Act".

4964             Help me through this.

4965             MS GRIFFIN‑MUIR:  Well, I guess we looked at it that you had discretion under the Broadcasting Act, that we are not ‑‑

4966             COMMISSIONER CUGINI:  But you do realize that to get a 9(1)(h) distinction, designation ‑‑

4967             MS GRIFFIN‑MUIR:  Yes.

4968             COMMISSIONER CUGINI:  ‑‑ it's a huge bar that these services have had to cross.  It's not like we give away 9(1)(h) status like candy.

4969             MS GRIFFIN‑MUIR:  No, we appreciate that.  I guess what ‑‑ a huge bar.

4970             I guess the way we would have looked at it is not so much that you are actually giving it to MTS TV, it is a more general.  So it is not only us.  I mean, the basic is the basic for everybody.

4971             But I guess the way we looked at it was we are looking at what viewership is.  So the perception in your basic package ‑‑ because in order to get to other packages that you want, I mean you are actually paying for basic, because that is the way the model operates.

4972             And even if you have a stripped down version of basic that we are proposing, you are still paying for that, just to pick whatever else you want.

4973             So our philosophy, if you will, was not so much we don't recognize that you have the discretion to designate services as 9(1)(h); it is more to minimize the number of services the customer has to take before they get to elect.

4974             COMMISSIONER CUGINI:  Are you suggesting that the services that currently have 9(1)(h) status should be stripped of that status?

4975             MS GRIFFIN‑MUIR:  No, not at least for the time being; but yes, eventually yes, there would be some sort of phase‑out of those services.

4976             And then if a viewer ‑‑ bearing in mind that CPAC actually has that status and is providing this service today.

4977             If viewers wish to watch us here today and they could subscribe separately to some sort of package ‑‑ in our case we have theme‑based packages and so if there were some, you know, public government package, it could form part of that package.

4978             COMMISSIONER CUGINI:  Would they have mandatory carriage status?

4979             MS GRIFFIN‑MUIR:  Well, of course, we are not suggesting there be any with mandatory carriage, although we ‑‑ there were certain things, for example new entrants and potentially I guess 9(1)(h) services, where if there were to be mandatory carriage, there would have to be a set of criteria that was transparent, that was obvious to everybody as to why there was mandatory carriage.

4980             COMMISSIONER CUGINI:  Just one final question.

4981             In order to meet your preponderance proposal, you make no distinction between Category 1 or Category 2 services.  Is that correct?

4982             MS GRIFFIN‑MUIR:  That is correct, yes.

4983             COMMISSIONER CUGINI:  So conceivably the subscriber could take all Category 2 services?

4984             MS GRIFFIN‑MUIR:  Canadian, yes.

4985             COMMISSIONER CUGINI:  Yes, Canadian.

4986             MS GRIFFIN‑MUIR:  Yes.

4987             COMMISSIONER CUGINI:  Yes.  We don't have Category 2 U.S. services.

4988             MS GRIFFIN‑MUIR:  Right.  Yes.

4989             COMMISSIONER CUGINI:  Okay.  So that could be possible?

4990             MS GRIFFIN‑MUIR:  Yes.

4991             COMMISSIONER CUGINI:  Would you still offer packages, theme packages?

4992             MR. SHEPHERD:  I think our expectation is we would offer ‑‑ I mean, packaging might evolve, but we certainly would offer theme packages.  But you could potentially also offer more flexibility in terms of individual package selection as well.

4993             COMMISSIONER CUGINI:  Should we impose a preponderance rule on those theme packages?

4994             MR. SHEPHERD:  Our position is no.  We feel that the overall per subscriber preponderance really negates the requirement to go below that end.  For example, say, in this package you have to have 50 percent in the package, because ‑‑ the reality being, if the customer picks, say, a package that is 100 percent non‑Canadian, they are going to have to offset that with other packages that make up the 50 percent plus 1.

4995             COMMISSIONER CUGINI:  Okay.  Thank you very much, those are my questions.

4996             COMMISSIONER ARPIN:  Coming back again to your basic definition, particularly the 91H and the services ‑‑ and, again, regarding CPAC, which you mentioned ‑‑ over and above having 91H status, an order‑in‑council has been issued by the Governor General regarding the carriage of CPAC.

4997             What you are telling us is, forget about the order‑in‑council, forget about the Broadcasting Act, and you will put CPAC wherever you wish.

4998             That is the main thrust of your approach.

4999             MS GRIFFIN‑MUIR:  I have to admit that I wasn't aware of the order‑in‑council.

5000             We weren't particularly focused on CPAC, I just picked CPAC because they are here today.

5001             If there are particular requirements, like an order‑in‑council, obviously you can't forget it.

5002             But that is not the case with every 91H service.

5003             COMMISSIONER ARPIN:  Do you have any francophone subscribers at MTS?

5004             MS GRIFFIN‑MUIR:  Yes.

5005             MR. SHEPHERD:  I am absolutely certain that we do.

5006             COMMISSIONER ARPIN:  You do.  And you are going to remove them ‑‑ TVA ‑‑ from your basic distribution.

5007             MR. SHEPHERD:  We are suggesting that the French programming will be made available.  We are not suggesting, as I explained before ‑‑

5008             I mean, it is in our interest to have more programming content, and more programming variety.  In our view, having a very minimal, stripped‑down basic package actually will give those customers the ability to select more of the programming they want, in this case French programming, with their available dollars.

5009             What we see happening is not that customers spend less when you give them more choice, they spend about the same amount of money, or sometimes more, because you are giving them the ability to choose what they want.

5010             What frustrates customers is when they have to spend half of their available budget on channels they don't really want.

5011             Back to that point, I think ‑‑ I am certain that our French‑speaking customers, given the choice to subscribe and spend more of their money on French‑language services, would do so, and they would have the flexibility to do that, because they are spending less on their basic package ‑‑ the stripped‑down basic on things that they may not want.

5012             COMMISSIONER ARPIN:  The MTS licence is for the whole province?

5013             MR. SHEPHERD:  No, I don't believe it is.  I think our current MTS TV licence is for Winnipeg.

5014             I believe we asked for a licence for the province, but I think what was actually granted was Winnipeg.

5015             COMMISSIONER ARPIN:  Start with Winnipeg and then ‑‑

5016             MR. SHEPHERD:  Yes.

5017             COMMISSIONER ARPIN:  We had a question regarding APTN, but if your service is only for Winnipeg, we may ask the question further down the road, whenever you ask to expand your territory.

5018             I want to come back again to your preponderance rule.  I heard Ms Griffin‑Muir saying that there are no differences between Category 1 and Category 2 in your model, and it would be the same for analog, I would suspect.

5019             Now, some do have higher content requirements than others.

5020             At the end of the day, if we were to follow your rule, should we expect that Category 1 services, and analog services, will diminish their Canadian content to be able to compete with Category 2?

5021             We heard a different approach, particularly by Rogers, which was breaking it down into categories, and was suggesting an average between multiplicity of the type of services, so that, at the end of the day, significant Canadian content would still be made available.

5022             MR. SHEPHERD:  I am not an expert on all of the different requirements, and I understand that there are different requirements for the different tiers, but let me describe it more from somebody I do understand, which is our customers.

5023             They don't understand those things.  They know that they want to watch certain programming, and they will understand a simple preponderance that says, "I have to take half the channels that are Canadian," but I don't think they will understand it if you complicate that rule down to the extent of trying to say, "Well, this channel is one‑and‑a‑half times Canadian and this one is half Canadian."

5024             I believe you have to look at this from what a customer can understand, and how the packaging can be made to work in the market.

5025             COMMISSIONER ARPIN:  But we are seeking your help in trying to find a solution that will be satisfactory in meeting the objective of the Act, which is to promote Canadian content.

5026             MS GRIFFIN‑MUIR:  I guess what you are referring to are the actual requirements of the programming service itself, and we would think of it in terms of balancing those requirements, so that there would have to be, on average, between those different programming services, a preponderance of Canadian.

5027             I understand that there are different requirements for Category 1 and Category 2, and we thought they could be balanced, actually, in terms of what the viewer actually starts to receive.

5028             COMMISSIONER ARPIN:  At the end of the day, what you are saying is, subscribers could choose whatever they want within the system, but prior to them having that ability, the Commission will have to come to a determination of the quantity of Canadian content that the service will have to offer.

5029             MS GRIFFIN‑MUIR:  That's right.  It would, I guess, eliminate the distinction, in a sense.

5030             We are looking at it from the perspective of what the customers ‑‑ or at least our customers ‑‑ have expressed a desire for, and by simplifying it and making it more uniform, you take away the status of Category 1 and Category 2, but you change, maybe, the requirements of those particular services ‑‑ or, at least, the overall requirement ‑‑ so that the customer has a majority of Canadian programming services when they exercise that autonomy in picking their packages.

5031             COMMISSIONER ARPIN:  Going back to advertising issues, on your VOD service you have "Winnipeg‑on‑Demand", which is the community channel of MTS.

5032             Are you inserting commercials in "Winnipeg‑on‑Demand" programming?

5033             MR. SHEPHERD:  I don't believe we are, no.  I believe we have free content, but it is not advertising ‑‑

5034             COMMISSIONER ARPIN:  Supported.

5035             MR. SHEPHERD:  Yes.

5036             COMMISSIONER ARPIN:  It is totally supported by the 5 percent.

5037             MR. SHEPHERD:  Yes.

5038             COMMISSIONER ARPIN:  Some BDUs who have appeared before us, so far, have made the request that advertising be allowed on the community channel.  We even heard, this morning, Bob Rheaume, from ACA, saying that all platforms should be allowed to advertise.

5039             You haven't commented on that, but I am wondering if you have an opinion.

5040             MR. SHEPHERD:  We haven't specifically ‑‑ I don't think we specifically asked for that on our "Winnipeg‑on‑Demand" service.

5041             Clearly, though, we would not be opposed to it.  We think the flexibility to do that could be beneficial.

5042             But, certainly, recognizing that our own service is new, and that it is still being built, the actual advertising opportunity there, from a practical point of view today, is probably small.

5043             But, in principle, I don't think we would think it's a bad idea to offer that flexibility down the road.

5044             COMMISSIONER ARPIN:  Thank you very much.

5045             Thank you, Mr. Chair.

5046             THE CHAIRPERSON:  You are offering a very stripped‑down basic ‑‑ let's leave aside the 91H services for a second.  Are you actually practising what you preach?

5047             Are you offering such a stripped‑down basic service to your customers today?

5048             MS GRIFFIN‑MUIR:  Our basic includes what we are required to include in basic, and that's it.

5049             THE CHAIRPERSON:  Nothing more.

5050             MS GRIFFIN‑MUIR:  No.

5051             THE CHAIRPERSON:  So, if I live in Winnipeg and I want your basic and nothing more, I don't have to buy an enhanced basic, I don't have to buy something else, et cetera.

5052             MS GRIFFIN‑MUIR:  No.  Actually, the way our services are packaged and priced is quite different from the traditional BDU.

5053             We don't have tiering, per se ‑‑ at all, actually.

5054             When we initially launched, we had the basic service, and then we allowed customers to choose from a series of theme‑based packages, which, I believe, included just three.

5055             That is the whole philosophy behind our service.

5056             MR. SHEPHERD:  Maybe to clarify, customers can subscribe to basic.  Basic is what is required to be in basic.  They have to take that.

5057             After that, we have, I think, 27 different theme‑based packages, with, typically, four or five different programs in a theme package, and they are structured in such a way to comply with the content linkage rules.

5058             THE CHAIRPERSON:  I assume that your basic includes 4 plus 1?

5059             MR. SHEPHERD:  Yes.

5060             THE CHAIRPERSON:  Which you are not required to do.

5061             MS GRIFFIN‑MUIR:  Correct.

5062             MR. SHEPHERD:  That's true, yes.

5063             THE CHAIRPERSON:  Okay.  Thank you very much.

5064             I think we will take a ten‑minute break before the next presentation.

‑‑‑ Upon recessing at 1125 / Suspension à 1125

‑‑‑ Upon resuming at 1135 / Reprise à 1135

5065             THE CHAIRPERSON:  Okay, Madam Secretary, who do we have now?

5066             LA SECRÉTAIRE:  Merci Monsieur le Président.

5067             Nous allons entendre la dernière présentation pour la journée et c'est la Fédération des télévisions communautaires autonomes du Québec et monsieur Sylvain Racine nous présentera son collègue.

5068             Après quoi vous aurez 15 minutes pour votre présentation.

5069             Monsieur Racine.

5070             M. RACINE:  Membres du Conseil, bonjour.

5071             Je me présente, Sylvain Racine, administrateur et trésorier à la Fédération des télévisions communautaires autonomes du Québec.

5072             Je suis également directeur général à la télévision régionale des Moulins située à Terrebonne.

5073             Je suis accompagné par monsieur Gérald Gauthier, agent de recherche et de développement à la fédération.

5074             La Fédération des télévisions communautaires autonomes du Québec apprécie grandement que le Conseil de la radiodiffusion et des télécommunications canadiennes accorde ce temps afin que nous puissions nous exprimer dans le cadre de cette importante instance.

5075             Créée en 1998, la fédération regroupe  actuellement 44 télévisions communautaires autonomes constituées en corporations sans but lucratif, aussi nommées TVC autonomes.

5076             Les TVC autonomes membres sont réparties dans 17 des 19 régions administratives du Québec.

5077             La fédération est le regroupement qui représente et défend les intérêts des TVC autonomes.

5078             Le Conseil a reconnu l'importance de ce modèle de télévision communautaire à l'intérieur du cadre stratégique pour les médias communautaires de 2002 et conséquemment dans le règlement sur la distribution de la radiodiffusion.

5079             Malgré que le Conseil ait déjà annoncé qu'il y aura un examen de politique relatif aux questions liées aux canaux communautaires, nous croyons que notre présence ici est toujours essentielle.

5080             Toute l'effervescence observée dans le paysage de la radiodiffusion canadienne suscite une réflexion d'ensemble.

5081             Pourtant, le Conseil semble vouloir compartimenter des aspects de la radiodiffusion pour les fins d'analyse.

5082             C'est sans doute plus efficient d'agir ainsi.  Sauf que, à titre d'exemple, les questions entourant l'avenir du fonds canadien de télévision sont aussi en lien direct avec l'article 29 du règlement.

5083             L'article 29, pour sa part, est en lien avec le financement des activités du canal communautaire, de même l'instance portant sur la télévision en direct dans le cadre du passage au numérique pourrait avoir des incidences néfastes sur la pertinence des licences hertziennes de faible puissance pour les entreprises de télévision communautaire si le Conseil décidait de ne pas maintenir la diffusion hertzienne des stations de télévision en direct après la date du 31 août 2011.

5084             De même dans cette instance, le Conseil voulait des observations au regard de certaines questions qui ont aussi des incidences sur la diffusion communautaire.

5085             Est‑ce que le canal communautaire doit demeurer au service de base des abonnés?  Doit‑on faire précéder tous les articles du règlement de la clause conditionnelle?  Doit‑on réduire les différentes classes de licences existantes en une classe unique?  Devons‑nous permettre des assouplissements substantiels à la publicité sur le canal communautaire?

5086             Il est impensable que les décisions qui seront prises séparément par le Conseil pour chacune des instances  mises en place et à chacune des questions énoncées ne puisse avoir d'impact sur la diffusion communautaire.

5087             Même si le Conseil a reporté à 2009 son examen de la politique réglementaire au soutien d'un développement d'un secteur communautaire sain en radiodiffusion, il se doit d'être cohérent et de prendre en compte les impacts possibles des décisions des instances antérieures.

5088             Nous voulons maintenant réitérer ce qui nous préoccupe dans le cadre de cette révision réglementaire.  Nous voulons mieux comprendre les tenants et aboutissants sous‑jacents à la possibilité d'une classe unique de licences.

5089             Est‑ce qu'une classe unique de licences mettrait en péril le découpage actuel des zones de desserte telles qu'elles existaient au 10 octobre 2002, moment de la parution du cadre stratégique pour les médias communautaires?

5090             C'est en effet à partir du découpage des zones de desserte actuel que se sont calculés les pourcentages de programmation locale et d'accès sur les canaux communautaires.

5091             Est‑ce qu'une classe de licences unique aurait une incidence sur l'article 29 du règlement, lequel détermine la contribution à la programmation canadienne dont celle communautaire?

5092             M. GAUTHIER:  Nous avons une expérience fort négative relativement à la clause conditionnelle.

5093             En effet, nous constatons, depuis quelques années maintenant, que le Conseil répond favorablement à la majorité des demandes des entreprises de distribution de radio diffusion visant des modifications par conditions de licence au regard de l'application des aspects réglementaires liés aux modalités d'exploitation du canal communautaire.

5094             À titre d'exemple, mentionnons seulement le cas de Cogeco qui peut désormais, pour un certain nombre de ses licences, calculer les pourcentages de programmation locale et d'accès sur un ensemble de zones de desserte plutôt qu'une seule, tel que le prévoyaient le cadre stratégique et le règlement.

5095             Il se trouve que l'une des questions analysées par le Conseil dans le cadre de cette instance concerne directement le recours à la clause conditionnelle.

5096             À quoi servirait un examen de la politique en matière de diffusion communautaire si certaines décisions cruciales au respect de son application étaient décidées dans d'autres instances?

5097             Ainsi, si le Conseil décidait à la fin du présent processus de maintenir le recours à la clause conditionnelle, les EDR n'auraient alors qu'à demander d'être relevées de l'application des éventuelles nouvelles modalités de la politique par simples conditions de licence.

5098             Nous nous opposons donc farouchement au recours quasi systématique à la clause conditionnelle qui permet aux entreprises de câble de se voir octroyé une ou des conditions de licence qui facilitent le contournement des articles du règlement associés aux modalités de l'exploitation du canal communautaire.

5099             Les expressions " sauf conditions contraires fixées par conditions de licence " ou " sauf conditions contraires de sa licence " doivent être bannies de tous les articles reliés à l'élément communautaire du système canadien de la radiodiffusion, sinon de tout le règlement.

5100             Le Conseil ne doit en aucun cas permettre l'affaiblissement de l'élément communautaire par des décisions qui précéderaient l'examen de la politique de la diffusion communautaire.

5101             Le recours à la clause conditionnelle lance le message suivant : si les aspects de l'application du règlement semblent devenir contraignants pour les entreprises de distribution de radiodiffusion, il suffit simplement de demander un traitement particulier par condition de licence.

5102             Voilà une manière d'édenter le règlement, d'affaiblir sa portée et de généraliser le traitement particulier.

5103             Recourir à une dérogation au règlement c'est se déresponsabiliser au regard de celui‑ci.

5104             C'est pourquoi la fédération invite le Conseil à retirer la clause conditionnelle de tous les articles du règlement, particulièrement ceux qui ont trait aux dispositions de l'exploitation du canal communautaire et de l'élément communautaire.

5105             La fédération exige également du Conseil qu'il maintienne la distribution du canal communautaire, lorsqu'il est offert, sur le service de base des abonnés.  Qu'importe si ces derniers souscrivent à un service analogique ou à un volet numérique ou les deux.

5106             Évidemment, nous parlons du canal communautaire propre à la zone de desserte autorisée, telle qu'elle était établie dans la licence existante au 10 octobre 2002.

5107             Le service de base est celui qui assure les services de radiodiffusion de première ligne.  Le public doit pouvoir recevoir des services des trois éléments reconnus par la Loi sur la radiodiffusion.

5108             À ce titre, il ne saurait être question d'abandonner la distribution obligatoire d'une station de la Société d'État ou des stations de télévision locale privée dûment constituées dans une zone de desserte quelles qu'elles soient.

5109             Pourquoi le traitement serait différent pour le canal communautaire?   Ne s'agit‑il pas d'un service public de proximité qui, lorsqu'il est offert en conformité avec le cadre stratégique et le règlement, devrait être considéré comme un service de première ligne?

5110             Nous considérons  que le retrait de l'obligation de distribuer le canal communautaire au service de base, comme s'interroge le Conseil, constituerait un net recul pour l'élément communautaire.

5111             La fédération exige également du Conseil qu'il maintienne les articles 18.11.01 et 33.3.1.1 pour la distribution en mode numérique obligatoire des stations de télévision de faible puissance axées sur la communauté et les entreprises communautaires numériques.

5112             Les entreprises de programmation de télévision communautaire ayant les mêmes droits que les stations de télévision locale en vertu du règlement.  Elles doivent donc jouir des mêmes privilèges.

5113             Par conséquent, à défaut de pouvoir être offerts aux services analogiques par certains câblodistributeurs, une entreprise de programmation de télévision communautaire autorisée doit alors bénéficier d'une distribution en mode numérique sur le service de base.  Toute autre approche est inadmissible.

5114             Nous considérons que le retrait de l'obligation de distribuer en mode numérique et au service de base les stations de télévision de faible puissance axées sur la communauté et les entreprises numériques, comme s'interroge le Conseil, constituerait un très sérieux écueil pour le développement de l'élément communautaire.

5115             Enfin, la fédération demande au Conseil de permettre la présentation de messages de publicité traditionnelle locale sur les ondes du canal communautaire, tel que le recommande le rapport Dunbar/Leblanc.

5116             Les TVC autonomes ont un urgent besoin de nouvelles sources de revenus afin d'améliorer l'offre de programmation locale et d'accès et poursuivre l'évolution technologique.

5117             En effet, le potentiel de sources de financement des activités de production d'une TVC autonome est très limité.  Ce potentiel est d'autant plus limité lorsque le câblodistributeur ne contribue aucunement au financement de la programmation d'accès produite par les TVC autonomes.

5118             Il y a aussi les exigences en matière de qualité de production qui sont en hausse constante.  En plus de devoir répondre à ces exigences, les TVC autonomes doivent également acquérir des nouveaux équipements mieux adaptés à la production numérique pour remplacer ceux devenus obsolètes.

5119             Tout cela coûte cher.  Les TVC autonomes doivent pouvoir compter sur de nouvelles sources de revenus, dont la publicité traditionnelle.

5120             Nous rappelons au Conseil qu'un nombre important de TVC autonomes ne reçoit aucune contribution financière des câblodistributeurs ou très peu en contrepartie de la programmation locale et d'accès produite par elles.

5121             Nous favorisons qu'une partie du financement puisse provenir de la publicité traditionnelle.  La structure sans but lucratif des TVC autonomes, semblable aux radios communautaires qui ont le droit à la publicité traditionnelle, assurerait une affectation entière des revenus en découlant pour des activités de production de programmation locale et d'accès et aux mises à jour technologiques nécessaires à la production en numérique.

5122             Cependant, il ne faudrait pas qu'un droit à la publicité traditionnelle se traduise par des contributions moindres des câblodistributeurs à la programmation communautaire locale et d'accès.

5123             Les messages de commandites permis sur le canal communautaire, ceux qui sont permis actuellement, lèsent les TVC autonomes et les commerçants locaux qui sont pourtant des membres de la collectivité.

5124             D'une part, les TVC autonomes ont énormément de difficultés à vendre ce type de produits qui empêchent une description positive des produits et services et la mention de rabais ou d'offres promotionnels.

5125             Les commerçants locaux, pour leur part, ne trouvent pas leur compte avec les messages de commandites.  Ces membres de la collectivité ont besoin d'une véritable fenêtre télévisuelle locale et qui plus est abordable pour promouvoir comme il se doit leurs produits et services afin de conserver leur clientèle face aux commerces de centres urbains plus importants qui peuvent s'annoncer sans restriction sur des stations de télévision autres.

5126             M. RACINE:  En conclusion, nous réitérons au Conseil l'importance qu'il maintienne une cohérence et une vue d'ensemble du paysage de la radiodiffusion canadienne malgré le fait qu'il analyse les aspects de ce dernier séparément par le biais du processus public distinct.

5127             Or, nous croyons l'avoir démontré, il existe des liens entre chacun de ces aspects.  C'est vrai pour tout ce qui concerne l'élément communautaire.

5128             Les décisions qui seront prises dans le cadre des différentes instances, dont celle‑ci, auront des impacts négatifs ou positifs sur le développement sain de la diffusion communautaire au Canada.

5129             Le Conseil doit donc être dès à présent vigilent sur ses décisions et les impacts négatifs possibles avant même qu'il analyse de font en comble les politiques à l'égard de la radio et la télévision communautaire.

5130             Nous vous remercions pour cette précieuse écoute et sommes disponibles pour répondre à vos questions.

5131             LE PRÉSIDENT:  Merci pour votre présentation.

5132             Comme vous avez dit, on va avoir des auditions séparées sur toutes les questions des télévisions communautaires.

5133             Mais vous mentionnez dans votre présentation la migration au niveau numérique.  Est‑ce que c'est un grand défi pour vous et vos collègues ou est‑ce que vous croyez que la date que nous avons mise, 2011, c'est possible qu'à ce moment‑là toutes vos stations puissent transférer au niveau numérique?

5134             M. GAUTHIER:  Nous, on est des producteurs qui utilisons le canal communautaire qui lui est sous la responsabilité des câblodistributeurs.

5135             On considère que c'est le câblodistributeur qui lui doit être prêt pour le passage au numérique.

5136             Mais nous, en tant que producteurs, ça coûte cher d'acquérir des équipements pour produire ces émissions, les caméras en HD et tous les équipements connexes.

5137             Et là on est un peu dans un... on est un peu pris dans un cul‑de‑sac, si vous permettez l'expression, parce qu'on n'a pas nécessairement les moyens de le faire.

5138             On a été longtemps, plusieurs télévisions communautaires, on fonctionnait avec ce qu'on appelle de l'équipement trois quarts de pouce.

5139             Puis certaines ont eu... parce que le gouvernement du Québec nous avait aidés, ont pu acheter les équipements pour le montage de tables informatisés avec des logiciels informatiques pour monter.  Et là il fallait mettre les émissions qui étaient tournées en trois quarts de pouce ou en Betacam en format numérique pour pouvoir faire le montage.

5140             Mais actuellement je vous dirais qu'il y a à peu près peut‑être cinq télévisions communautaires sur les 44 que nous représentons qui ont des équipements prêts au HD.

5141             LE PRÉSIDENT:  Cinq?

5142             M. GAUTHIER:  Cinq seulement.

5143             LE PRÉSIDENT:  Bon.

5144             Michel, tu as des questions?

5145             CONSEILLER MORIN:  Oui.

5146             Bonjour.  Je voudrais peut‑être enchaîner, justement, à la question du président.

5147             On a l'impression, à vous lire et à vous entendre, que vous traversez une période où il y a beaucoup d'inquiétudes, que vous ne savez pas très bien où vont les télévisions communautaires, pourtant vous en avez 44 dont 5 sont dotées d'équipements numériques au niveau de la production.

5148             Est‑ce que vous êtes, au point de vue de l'écoute, les télévisions autonomes par rapport à celles qui ont bénéficié de la clause conditionnelle, par exemple, est‑ce que vous êtes en plus forte croissance ou en moins forte croissance?

5149             M. GAUTHIER:  Je ne comprends pas nécessairement la question, mais ce que je peux...

5150             CONSEILLER MORIN:  En termes d'auditeurs, est‑ce que vous avez l'impression que vous êtes plus écoutés même si vous n'avez pas les BBM et tout ça, est‑ce que vous avez l'impression que votre auditoire s'élargit?

5151             M. GAUTHIER:  L'auditoire local, par une étude, une mesure d'impact social et profil d'auditoire qu'on a réalisée, qui a été rendue publique en février 2007, démontre que les émissions locales, produites localement, sont bien reçues et sont écoutées par les gens qui ont le câble.

5152             CONSEILLER MORIN:  Est‑ce qu'elles sont en croissance?

5153             M. RACINE:  Je dirais que oui, effectivement.

5154             CONSEILLER MORIN:  Vous diriez, vous n'êtes pas sûr?

5155             M. RACINE:  Oui, c'est que moi personnellement, je parle au nom de ma télé à Terrebonne, évidemment c'est plus facile pour moi de le faire, c'est en nette croissance.

5156             On réalise qu'on a de plus en plus d'impact sur notre communauté parce que, qu'on le veuille ou non, aujourd'hui avec les moyens de communication qui sont disponibles, tout le monde peut savoir à l'instant près ce qui se passe n'importe où dans le monde, sauf dans son propre patelin.  C'est trop proche.

5157             Alors que notre mandat de média de proximité nous permet, justement, de garder notre population au courant et de pouvoir offrir ce service‑là qui est un service de proximité.

5158             Alors oui, on a définitivement de plus en plus d'impact sur notre communauté.

5159             La difficulté, c'est qu'avec les coûts qui sont très élevés, il y a de moins en moins de télés communautaires en devenir, c'est‑à‑dire que les projets d'ouvrir une télé communautaire sont presque irréalisables de nos jours.

5160             Alors, celles qui sont en place essaient de survivre et les autres sont obligées de passer leur tour.

5161             CONSEILLER MORIN:  Pour une télévision communautaire type, qu'est‑ce que ça coûte pour vous équiper?  Vous faisiez allusion tout à l'heure... en numérique, disons?

5162             M. RACINE:  Ça dépend toujours de l'équipement de base de la télé communautaire, mais je pense qu'aujourd'hui c'est très difficile de penser à monter une station de télévision, en bas d'un demi‑million il n'y a pas grand‑chose à faire.

5163             CONSEILLER MORIN:  Un demi‑million.

5164             M. RACINE:  Un demi‑million, oui.

5165             CONSEILLER MORIN:  Et pour financer ces nouveaux équipements, c'est une des raisons pourquoi vous demandez l'accès à la publicité.

5166             M. RACINE:  Entre autres pour permettre aux télés déjà en place de moderniser leurs équipements pour être capables de faire ce passage‑là.

5167             CONSEILLER MORIN:  Évidemment, vous dérivez vers un modèle plus commercial, il semble que la commandite, ça ne fonctionne pas tellement, que ça ne réponde pas aux attentes, je présume que les décisions du Conseil dans le passé visaient à vous donner ce genre de revenus.

5168             Mais là vous dérivez vers un modèle commercial, est‑ce que vos auditeurs se sentent confortables?  Est‑ce que vous les avez consultés là‑dessus?

5169             M. GAUTHIER:  Je peux parler pour le Québec.  Oui, les télévisions communautaires ont consulté leurs milieux et oui.

5170             Mais ce n'est pas un modèle commercial dans le sens que les émissions sont faites en fonction des revenus de publicité.

5171             Nous, ce sont des télévisions communautaires dites autonomes qui fonctionnent sur un mode OBNL, donc organisations sans but lucratif, et tout l'argent est réinvesti à la programmation, à l'achat d'équipement, on travaille avec une base de bénévoles, c'est uniquement pour être capables d'aller chercher des sources de financement supplémentaire pour supporter tout ça.

5172             Parce qu'actuellement on est en état de sous‑financement et on ne pourra plus offrir la programmation à nos communautés s'il n'y a pas un pas qui est fait en fonction de nouveaux modes de financement.

5173             La publicité locale, et on ne demande pas une publicité... on demande la publicité locale, celle qui est pour la région que nous desservons pour des commerces qui n'ont pas les moyens de s'annoncer sur des grandes chaînes, par exemple, ou qui peuvent profiter peut‑être de stations radiophoniques ou d'inserts dans les journaux, mais qui voudraient aussi profiter d'inserts à la télévision, mais que la commandite ne répond pas à leurs besoins puisqu'ils voudraient quand même annoncer des rabais sur leurs produits ou encore décrire davantage les services, faire connaître leurs commerces sous une autre forme que la commandite telle qu'on nous le prescrit actuellement et dans laquelle aussi on est limité à 15 secondes en mouvement.

5174             Donc, on n'a pas peur à ce que ça devienne un modèle commercial, mais c'est simplement un modèle de financement supplémentaire.

5175             CONSEILLER MORIN:  Mais c'est un modèle commercial à l'écran.  Dans le sens que, bien sûr, ce ne sont pas des profits que vous recherchez, c'est du financement, mais à l'écran, théoriquement c'est de la publicité commerciale.

5176             M. GAUTHIER:  Si vous le prenez dans ce sens, oui ça va être ça.

5177             Mais on ne comprend pas pourquoi on pourrait être traité à un niveau différent que celui des radios communautaires qui ont le droit de faire de la publicité sur leurs stations et qui sont, à ce moment‑là, dans un modèle commercial tel que vous le décrivez.  Ce qui n'empêche pas leur programmation d'être le reflet et d'être faite avec leur communauté.

5178             CONSEILLER MORIN:  Donc, vous devenez un modèle hybride, si je puis dire, avec cette nouvelle possibilité que vous demandez au Conseil d'avoir de la publicité commerciale, est‑ce que vous avez songé, vous parlez de... en moyenne les TV autonomes, c'est combien de membres ou d'auditeurs possibles?

5179             M. GAUTHIER:  C'est difficile de vous dire une moyenne parce que, évidemment, lorsqu'on diffuse sur un classe 3, c'est maximum 2 000 abonnés et on peut aller sur des classes 1 comme mon ami ici, Sylvain Racine, où il y a un potentiel de 25 à 30 000 abonnés.

5180             Je ne peux pas vous faire de moyenne à ce niveau‑là.

5181             Ce qu'on peut vous dire, c'est qu'on rejoint totalement un potentiel de 1 600 000 abonnés au Québec.

5182             CONSEILLER MORIN:  Un potentiel.

5183             M. GAUTHIER:  Hum, hum.

5184             CONSEILLER MORIN:  Parce que, évidemment, si on prend un marché possible de 25 000, si vous alliez chercher une contribution, une souscription auprès des gens de 50 dollars, ça vous donne tout de suite 1 250 000.

5185             Si vous allez en chercher, je ne sais pas, la moitié, PBS fait ça aux États‑Unis, on voit ça tous les jours, est‑ce que vous avez pensé à inviter vos membres qui sont fidèles à la couverture locale à contribuer à télévision communautaire directement?

5186             M. GAUTHIER:  Ça se fait à peu près à dans toutes les télévisions communautaires, il y a un membership.

5187             Mais évidemment, on ne peut pas demander dans des MRC pauvres aux gens de contribuer 50 dollars.  D'autant plus qu'ils paient déjà pour leur service de câblodistribution.

5188             Alors, il y a un système de membership, oui, où les gens peuvent payer entre deux et dix dollars pour être membres, certaines télévisions communautaires dans des marchés bien définis où il y a un sentiment d'appartenance très fort, notamment parce que la télévision joue un rôle à cet effet, peuvent aller chercher 20 000 dollars avec le membership et à ce moment‑là c'est un record si on le compare avec la majorité des télévisions communautaires.

5189             Ce que je peux vous souligner, cependant, et c'est mon expérience personnelle lorsque j'étais dans une télévision communautaire dans la région de Charlevoix, et où à ce moment‑là le câblodistributeur avait le droit en tant que premier service où il n'y avait pas d'antenne autre, de concurrent, de vendre de la publicité sur le canal communautaire.

5190             Pour une communauté de 12 000 personnes que nous desservions, parce qu'il y avait plusieurs câblodistributeurs, il y avait Derry Telecom, il y avait des petites coopératives aux Éboulements, à Saint‑Hilarion, tout ça, ce qui faisait qu'on avait environ autour de 2 700 abonnés, et je vendais pour 125 000 dollars de publicité annuellement.

5191             C'est que les gens, les commerçants, avaient le désir de participer à la réussite de leur télévision communautaire.

5192             Ça c'est un exemple dans un petit marché.

5193             On a perdu ce droit, il y a eu des plaintes une fois qu'il y a eu des antennes de retransmission sur le territoire et la télévision là‑bas est devenue un peu plus moribonde parce qu'elle a moins de revenus, elle a moins de personnel, les équipements deviennent de plus en plus obsolètes avec le temps.

5194             Donc, on défend le modèle hybride dont vous parlez, mais s'il y avait une volonté du Conseil dans une autre instance de parler d'un fonds pour la programmation locale d'accès communautaire, d'un fonds qui, je ne sais pas comment il pourrait s'articuler et d'où proviendrait l'argent, et qui serait distribué de façon équitable à l'ensemble des télévisions communautaires ou des autres producteurs communautaires au Canada, on serait certainement très ouverts à en discuter, si le Conseil ne veut pas donner ou accorder la publicité conventionnelle.

5195             CONSEILLER MORIN:  Il semble qu'il y ait une évolution dans les propositions communautaires, la proposition de Timescape.

5196             Qu'est‑ce qui vous fait peur?  Vous trouvez que c'est une dérive ou quoi?

5197             M. GAUTHIER:  La proposition de Timescape, si ma mémoire est fidèle, repose sur un fonds, justement, un fonds communautaire.

5198             On n'est pas contre. C'est simplement qu'au Québec, la réflexion qui avait été faite avec nos membres, avec nos télévisions communautaires, avec ce que nos télévisions avaient comme son de cloche dans leur milieu, il semblait plus approprié d'aller vers la publicité.

5199             Et Timescape préférerait plutôt que le canal communautaire soit libre de publicité.

5200             Mais dans sa réplique, elle ne s'oppose pas à notre compréhension des choses au Québec.  Et on peut travailler ensemble, et c'est pour ça que j'ai ouvert la porte tantôt en parlant du fonds.

5201             Si dans une autre instance on en vient à trouver une solution qui laisserait le canal communautaire libre de publicité à l'image commerciale, on peut regarder ça en autant qu'on ne soit pas perdant au change.

5202             CONSEILLER MORIN:  Évidemment, l'accès au service de base semble très important pour vous, on l'a déjà.  Vous ne parlez pas du positionnement?  Dans l'univers numérique.

5203             M. GAUTHIER:  Non.  Il faut savoir choisir ses batailles à un moment donné.  Le positionnement, bon, du moment où il est au service de base, on s'occupera de faire la promotion du canal communautaire là où il sera situé, en autant que l'abonné l'ait avec son forfait de base, son abonnement premier, sans tarification supplémentaire pour obtenir son canal communautaire.

5204             CONSEILLER MORIN:  J'ai lu dans les documents que vous vous opposiez, à un moment donné, à la couverture telle que proposée par les EDR, la couverture en direct des conseils municipaux.

5205             M. GAUTHIER:  On ne s'oppose pas du tout à la couverture des conseils municipaux.

5206             CONSEILLER MORIN:  Non, mais dans le cadre des règlements qui sont les vôtres.

5207             M. GAUTHIER:  Actuellement, les conseils municipaux correspondent à de la programmation communautaire locale, elle est comptabilisée comme de la programmation communautaire locale.

5208             Ce que certains câblodistributeurs, et pour ne pas le nommer, Rogers, demandent, c'est que ce soit considéré comme étant de la programmation d'accès.

5209             Or, couvrir, faire la captation d'un conseil municipal, ce n'est pas un traitement de l'information, c'est une captation qui vient prendre du temps et qui serait considérée dans le temps d'accès qui ne serait plus disponible pour les autres producteurs de programmation de la communauté.

5210             Exemple, une télévision communautaire autonome, règle générale, dans son marché couvre soit des conseils d'arrondissement, soit les conseils de ville.  Ça fait partie de son mandat.

5211             C'est correct que ça soit considéré comme de la programmation locale, c'est normal, mais pour elle ce n'est pas de la programmation d'accès communautaire.

5212             Sinon, il y aurait aussi les conseils scolaires, il y aurait les conseils de régie régionale de services sociaux ou tout ce que vous pourrez avoir de ce genre d'instances, qui ont leur place au canal communautaire, mais qui ne sont pas des émissions d'accès.

5213             CONSEILLER MORIN:  Les conseils municipaux, en revanche, ce n'est quand même pas les commissions scolaires, ce n'est pas non plus d'autres instances, c'est quand même parmi les trois ordres de gouvernements, fédéral, provincial et municipal, ce sont trois instances importantes et ça vous affecte directement.

5214             Est‑ce que ce ne serait pas une façon de concentrer vos ressources sur le traitement, justement?  Un conseil municipal, c'est une fois par mois, c'est combien d'heures, une heure ou deux, mais c'est au cour de la démocratie, c'est au cour de la démocratie et je trouve que votre position de ne pas couvrir ça dans le cadre des règles qui sont les vôtres, il me semble que c'est une position idéale peut‑être, mais est‑ce que ce ne serait pas une meilleure façon de prendre ça, d'en faire un rendez‑vous important à tous les mois dans le cadre, justement, de votre canal communautaire?

5215             M. RACINE:  Ce qu'on fait, en fait, c'est qu'on fait une distinction entre la programmation locale et la programmation d'accès.

5216             Mais encore faudrait‑il que les instances municipales nous permettent de le faire.

5217             Moi je peux vous dire, par expérience personnelle, les conseils de ville dans les villes de notre région, je pense à des villes comme Terrebonne, je pense à des villes comme Mascouche, je pense à la ville de Repentigny, ces villes‑là ne veulent pas nous voir, ne veulent pas diffuser l'ensemble de leurs travaux.

5218             Ils acceptent de donner des entrevues après, mais pour aucune considération une caméra est admise pendant les séances du Conseil.

5219             Alors, ce ne sont pas toutes les municipalités qui ouvrent grandes leurs portes pour que les citoyens puissent prendre connaissance de ce qui se passe dans ces salles‑là.

5220             M. GAUTHIER:  Moi je peux compléter, peut‑être en indiquant que ce que nous avons défendu, c'est la position même du Conseil au moment de l'adoption du cadre stratégique pour les médias communautaires.

5221             Les séances de conseils municipaux sont effectivement très bienvenues en tant que programmation locale mais ne doivent pas être considérées comme de la programmation d'accès sinon une bonne partie du temps à l'antenne pourrait être surtout avec les clauses conditionnelles qui permettent l'élargissement de certains territoires et là où on retrouve peut‑être une dizaine, une douzaine de municipalités puis que cette douzaine de municipalités là décide de tenir leurs conseils municipaux de façon décalée de façon à ce qu'elles soient diffusées sur le canal communautaire, alors vous vous imaginez que le canal communautaire, ça va être uniquement le canal de séances municipales.

5222             CONSEILLER MORIN:  Je vous remercie.

5223             LE PRÉSIDENT:  Merci beaucoup, ce sont toutes nos questions.  Merci pour votre présentation et j'espère que je vais vous voir quand on aura l'audition sur les télévisions communautaires dans le futur.

5224             M. RACINE:  Vous pouvez y compter.

5225             LE PRÉSIDENT:  Merci.

5226             Madame la secrétaire, je crois que c'est tout pour aujourd'hui?

5227             LA SECRÉTAIRE:  Oui, Monsieur le Président, effectivement.  Alors, nous ajournerons pour la journée et reprendrons lundi matin le 14 avril à 9 h 00 avec la présentation de Cogeco Cable.

5228             We will resume on Monday, April 14th at 9:00 with the presentation of Cogeco Cable.

5229             Thank you.

‑‑‑ Whereupon the hearing adjourned at 1230, to resume

    on Monday, April 14, 2008 at 0900 / L'audience est

    ajournée à 1230 pour reprendre le lundi 14 avril

    2008 à 0900

 

                      REPORTERS

 

 

____________________      ____________________

Johanne Morin             Monique Mahoney

 

 

____________________      ____________________

Jean Desaulniers          Fiona Potvin