ARCHIVÉ - Transcription
Cette page Web a été archivée dans le Web
L’information dont il est indiqué qu’elle est archivée est fournie à des fins de référence, de recherche ou de tenue de documents. Elle n’est pas assujettie aux normes Web du gouvernement du Canada et elle n’a pas été modifiée ou mise à jour depuis son archivage. Pour obtenir cette information dans un autre format, veuillez communiquer avec nous.
Offrir un contenu dans les deux langues officielles
Prière de noter que la Loi sur les langues officielles exige que toutes publications gouvernementales soient disponibles dans les deux langues officielles.
Afin de rencontrer certaines des exigences de cette loi, les procès-verbaux du Conseil seront dorénavant bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience et la table des matières.
Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience.
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 23, 2008 Le
23 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:
Cindy Ventura 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 23, 2008 Le
23 avril 2008
- iv -
TABLE
DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Shaw Communications Inc. 2398 /13836
Channel Zero Inc. 2597 /15115
The Fight Network 2610 /15184
High Fidelity HDTV Inc. 2622 /15241
Maple Leaf Sports & Entertainment Ltd. 2636 /15307
Canadians Concerned about Violence in 2680 /15546
Entertainment
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon
commencing on Wednesday, April 23, 2008
at 0900 /
L'audience débute le mercredi
23 avril 2008 à 0900
13830 THE
CHAIRPERSON: Good morning.
13831 Madam
Secretary...?
13832 LA SECRÉTAIRE :
Merci, Monsieur le Président, et bonjour à tous.
13833 I would now invite
Shaw Communications Inc. to make a presentation. Appearing for Shaw is Mr. Peter
Bissonnette.
13834 Please introduce
your colleagues, after which you will have 15 minutes for your presentation.
13835 Mr.
Bissonnette...?
PRESENTATION / PRÉSENTATION
13836 MR. BISSONNETTE: Good morning, Mr. Chairman and
Commissioners. My name is Peter
Bissonnette. I am the President of Shaw
Communications Inc.
13837 With me today are
Ken Stein, our Senior Vice‑President of Corporate and Regulatory Affairs;
Michael D'Avella, Senior Vice‑President, Planning; Michael Ferras, our
Vice‑President of Regulatory Affairs; Cynthia Rathwell, the Vice‑President
of Regulatory Affairs and Programming for Star Choice; Jean Brazeau, Vice‑President,
Telecommunications Regulatory Affairs; Dean Shaikh, Director of Regulatory
Affairs; and Chris Johnston, the Senior Adviser to Shaw.
13838 Shaw was very
encouraged last July when reviewed the Notice of Public Hearing that initiated
this proceeding. It was clear from the
Notice that the Commission planned to consider a simplified and sustainable
approach to achieving broadcasting policy objectives in a digital era and that
the approach would be based on putting the consumer first. We were very optimistic about the proceeding
because the focus of Shaw's business is on maximizing innovation, choice, value
and service for our customers.
13839 As we consider how
to modernize the regulatory framework for broadcast distribution, two essential
points about consumers must be kept front of mind.
13840 First, they can
easily leave our broadcasting system if it does not offer them the choice,
value and service that they want; and second, consumers today do not purchase
television service in isolation. In most
cases they purchase it as a part of a broader package that can include
telephone and Internet. In fact, only 6
per cent of our customers now take basic cable service alone.
13841 It is significant,
given overall government policy, that over the last seven years the prices for
a basket of telephony, Internet and basic cable services have actually dropped
25 per cent. At the same time, the
penetration of our bundles due to their value has risen well over 70 per cent
of our customers.
13842 Over 15 years ago
in a structural hearing the Commission updated its regulatory framework to
serve consumers, drive digital and promote effective competition in broadcast
distribution, while continuing to ensure that the Broadcasting Act objectives
were met. BDUs accepted the challenge.
13843 Shaw, for its
part, helped to create intensely competitive broadcast distribution, Internet
and telephony markets. Shaw has done all
of this through risk‑taking, innovation and investment. As a result, Shaw now serves over 3.3 million
customers with high quality broadcasting and broadband telecommunications
services and has nearly 10,000 employees serving our customers.
13844 Since 2000 our
capital expenditures have exceeded $5 billion.
This year alone we will spend another $750 million, and we will do that
to expand our programming offerings by increasing capacity, introducing
advanced compression and modulation technologies, consolidating headends and
segmenting customer nodes into smaller, more reliable serving areas.
13845 We will continue
to provide award‑winning customer service through the introduction of
back office systems. We will make our
distribution systems even more reliable.
We will develop new consumer applications and technologies that will enrich
the viewing experiences, such as advanced interactive capabilities and set‑top
boxes, and finally we will increase consumer access to high definition
television by offering a low‑cost, high definition set‑top box.
13846 Risks and
investments can take time to show a return.
For example, it took seven years before Star Choice became
profitable. Creating a high‑quality,
high‑value service for customers got us there. Ultimately, Shaw's
investment in the provision of both broadcasting and telecommunications
services has contributed significantly to the realization of broadcasting policy.
13847 Our investments
have provided Canadian specialty services, including independent digital niche
services like Game TV, WOW TV and The Fight Network with access to millions of
customers. We have offered customers in
remote communities across Canada a breadth of television and other broadband
services that rivals that of consumers in Vancouver and Toronto.
13848 We have helped to
increase the revenue of Canadian specialty and pay services from $1.3 billion
in 2000 to $2.7 billion in 2007. We have
increased the available customer base for specialty services by close to one
million customers. We have boosted the
capacity of small cable systems, our own and those of others, through our
satellite technology HITS QT. We have
driven dynamic competition in the provision of DTH service, as well as
increased competition between DTH and cable service. We have kept hundreds of thousands within the
legal broadcasting system and used secure technology that cannot be diverted to
illegal use.
13849 On the matter of
fighting the black market and strengthening the broadcasting system generally,
our role out of telephony and Internet service and the sale of service bundles
is helping to increase basic cable penetration, particularly in smaller
communities. By embracing risk and
competition, Shaw contributes to the government's objectives of driving
innovation, investment and fair competition to foster a strong knowledge‑based
economy.
13850 MR. STEIN: We believe that this proceeding is the
logical culmination of a number of CRTC and government reviews that should
ultimately lead to the streamlined regulation of the broadcasting
industry: specifically, the
Telecommunications Policy Review Panel which suggested that broadband's full
potential will not be realized in Canada with asymmetrical broadcasting and
telecommunications regulatory frameworks; the CRTC's 2006 report on the impact
of new technologies and the future broadcasting environment, prepared in
response to a Governor in Council request, which concluded that Canadians are
increasingly likely to use unregulated technologies for programming content;
and then recently the government's Competition Policy Review Panel, to which
Shaw recommended the development of a broadband regulatory framework that would
drive business growth and productivity, support a strong knowledge‑based
economy and maximize Canada's global competitiveness.
13851 As Peter said, we
were very positive about this proceeding when the Commission first initiated
it. We agreed with the focus on keeping
our broadcasting system relevant by allowing cable and satellite to respond
more flexibly to customer demands for service, innovation, quality and value.
13852 For example, the
Commission expressed its desire to increase reliance on market forces. Specifically, your notice concluded, and I
quote:
"It is time to move away from
the current detailed regulation and to take a revitalized approach to both
distribution and discretionary programming undertakings that aims at reducing
regulation to the minimum essential to achieve the objectives of the Act,
relying instead on market forces wherever possible."
13853 Notably, the
Commission's Notice also spoke directly to the need to regulate with a view to
satisfying consumers, saying that:
"In particular, the Commission
seeks to recognize the increasing autonomy of audiences and consumers,
providing them with the greatest possible choice of services at affordable
prices."
13854 Following that
Notice, the Dunbar‑Leblanc Report was released on September 12th, raising
a number of important and forward‑looking issues to be addressed. But somewhere along the line we became
concerned with the overall process of this hearing and, in particular, the
shift in focus from distribution issues to local broadcasting issues. Let's consider what happened.
13855 Following the
publication of the Dunbar‑Leblanc Report on November 5, the CRTC moved to
expand the scope of the proceeding to include fee for carriage.
13856 On November 30 the
Commission confirmed this expansion and added distant signal issues to the
hearing.
13857 Three weeks before
the hearing, on March 14, the Commission announced an assumed distribution
model to guide discussion at the hearing.
13858 And, on the first
day of the hearing, the Commission announced a new approach yet again,
specifically the five key questions that it intended to focus upon with
interveners. The Chairman indicated that
all other questions are secondary or tertiary.
13859 The Commission's
decision to reconsider broadcasters' demands for fee for carriage and consent
to distant signal carriage is totally inappropriate. Broadcasters have been calling for both of
these measures for years. You dismissed
their most recent demands less than six months before this process began, and
there is no new evidence or circumstances to justify any reconsideration.
13860 The profits of the
large private broadcasters pushing hardest for these measures, CTV Globemedia
and Canwest, actually increased following last year's dismissal of their
demands. As well, they have taken steps
to address fragmentation by acquiring a long list of Canada's most popular
specialty services. CTV Globemedia
acquired 17 new specialty services when it purchased CHUM and Canwest acquired
18 additional specialty services with its purchase of Alliance Atlantis. Together they now control 53 operating
specialty services.
13861 On distant signal
carriage BDUs offered to negotiate the matter and the Commission accepted that
proposal in its May 2007 TV Policy Decision less than a year ago. Now new broadcaster proposals for
retransmission consent are being entertained before negotiations have even had
a chance to take place.
13862 The Broadcasting
Act requires the CRTC to streamline regulation and focus on Canadians' needs
and interests as it supervises the achievement of Canadian broadcasting policy
in the competitive digital age. The Act
tells us that the broadcasting system should strengthen the cultural and
economic fabric of Canada and it should be readily adaptable to scientific and
technological change.
13863 We firmly believe
in the Broadcasting Act and its objectives.
The Act makes it clear that Canada has one integrated system in which
every element of the system plays a role with no one role being more important
than another. As such, the diversion of
this hearing to focus on the issues of local broadcasters is completely
unacceptable.
13864 Michael...?
13865 MR. D'AVELLA: So where do we go from here?
13866 Shaw encourages
the Commission to implement a streamlined regulatory framework. Our broadcasting system is now strong enough
to introduce more competition and customer choice. Cable and satellite companies need to be able
to make competitive offerings that respond to consumers and are supported by
new technologies.
13867 Shaw's plan for
streamlining consists of three basic principles: specifically, cable and satellite services
would continue to provide the current basic service and retain the flexibility
to add services to basic in response to customer demands; provide a
preponderance of Canadian services in each package subject to a customer's
ability to add whatever services she chooses on a pick and pay basis, on
digital pick and pay basis; and adhere to the existing undue preference rules.
13868 We believe that
this proposal, while appropriately simple and straightforward, supports the
ongoing achievement of broadcasting policy in the context of the business and
technological realities of the 21st century.
13869 We would now like
to address the Commission's five key questions.
13870 First, regarding
the composition of the basic package, we agree that basic should include core
services and the U.S. four‑plus‑one, but that beyond those BDUs
should have the flexibility to determine its composition. Only 6 per cent of our customers purchase
basic cable alone and we see no demand for a reduced basic service. Removing popular services from basic would be
completely unacceptable to our customers.
13871 Second, we do not
believe that any specialty or pay service should have guaranteed access to
cable and satellite systems. Providing a
preponderance of Canadian services in each package will ensure that the vast
majority are carried. Introducing a
measure of competition will improve the quality of programming services as
access will not be taken for granted.
Removing entitlements will also allow BDUs to ensure that limited
capacity can be allocated to services that deliver the greatest value to our
customers. Only in this way will the
system remain relevant to Canadians.
13872 Let us emphasize
that capacity will always be limited.
While we invest constantly in expanding it, demand will always exceed
supply.
13873 For example, we
have recently reduced the number of channels allocated to our own cable pay‑per‑view
service from 50 to about 30 because our system needs the capacity for new
standard definition and high definition programming services.
13874 On the Star Choice
side, pay‑per‑view channels have been reduced from 50 to 21 for the
same reason.
13875 Third, we do not
believe that genre exclusivity should be maintained to protect specialty
services from competition with other Canadian or non‑Canadian
services. The only requirement for the
admission of non‑Canadian services should be that they hold non‑exclusive
Canadian programming rights. This will
give Canadian programmers ample opportunity to access programming while giving
consumers the choice they want.
13876 In our experience,
customers want Canadian services. They
do not want to be denied choice and they will look beyond the broadcasting
system if necessary.
13877 If BDUs provide
basic service and a preponderance of Canadian services in each package, there
is no need to maintain genre exclusivity and access protections for Canadian
programmers.
13878 On the question of
BDU access to advertising revenue for on‑demand services and local
avails, in our view, permitting such access will maximize revenue within the
system and facilitate more investments in capacity, technology and the
development of new services. At the same
time, allowing cable and satellite companies to access advertising
opportunities will not harm broadcasters or programmers.
13879 The value of local
avails on the U.S. services is less than 2 per cent, approximately
$54 million of the total television advertising pie of $3.3 billion.
13880 With respect to
advertising within VOD programming, we believe distributors and program owners
should have the flexibility to develop business models that maximize new
revenue opportunities.
13881 Peter...?
13882 MR.
BISSONNETTE: And finally,
Mr. Chairman and Commissioners, our answer to the question of whether a
fee for carriage should be introduced is: absolutely not.
13883 The CBC already
receives $1 billion from Canadians in annual Parliamentary appropriations. It also enjoys nearly another $100 million
from Canadians every year from the CTF and it still wants more. For the large private broadcasters, they have
made it absolutely clear during this hearing that the demand for a fee is about
only one thing: increasing their profitability.
They have strongly resisted making any commitments to incremental
spending on local programming or drama.
13884 It is unacceptable
for these large, well‑financed and profitable conglomerates to demand a
fee from consumers that will subsidize their own costs of doing business, their
increasing expenditures on U.S. programming and their recent multi billion
dollar acquisitions.
13885 And let's be
clear, if the CRTC grants broadcasters a fee for carriage, broadcasters will
keep coming back year after year asking for increases to keep fixing more
alleged cracks in their businesses as they arise.
13886 Let's revisit
briefly the entitlements that broadcasters currently enjoy, which include free
spectrum that is a public resource. They
enjoy improved signal reach and quality through the delivery on cable and DTH;
over $250 million a year in Canadian programming licence fee subsidies through
the CTF; federal and provincial tax credits that support Canadian productions
and ultimately subsidize broadcast licence fees; freedom from Canadian
programming expenditures granted as part of the 1999 TV Policy Review;
controlled entry by new broadcast competitors into local television markets;
exclusive access to local television advertising; income tax measures that
shield broadcasters from competition from U.S. border broadcasters;
simultaneous substitution of local Canadian television stations over U.S.
television stations; mandatory and priority carriage on cable; and extensive
specific carriage entitlements on DTH.
13887 Beyond saddling
customers with new costs for broadcasting services that are free over the air,
fee for carriage would lead to calls by U.S. broadcasters and trade officials
for equivalent consent and payment rights.
This could lead to additional annual outflows of up to $570 million to
U.S. broadcasters from Canadian cable and satellite customers.
13888 This exposure, the
breadth of existing protections, and the fact that CTV Globemedia and Canwest
have been clear that this is really about profits are reasons that fee for
carriage must be resoundingly rejected once and for all.
13889 Aside from any
issue of CRTC jurisdiction over fee for carriage, it would simply be bad public
policy to introduce a measure that would have significant costs for millions of
Canadians, including the costs of claims by U.S. broadcasters, for the benefit
of a few private companies and the CBC.
A decision with this kind of impact on the system and consumers should,
in our view, only be considered by Parliament.
This consideration should be undertaken in consultation with the CRTC
and other departments of government, including those responsible for copyright
and trade policy.
13890 Local broadcasting
is not what this hearing was intended to be about. While it is one of the many important
elements of our broadcasting system, nothing in the Broadcasting Act identifies
it as a cornerstone, nor do over the air broadcasters have a monopoly on local
content.
13891 Shaw TV
productions, for example, produces thousands of hours of local programming
every year. This programming is
considered a critical source of local news, information and entertainment in
the communities that Shaw serves.
13892 In closing, this
hearing was initiated to review the framework for broadcast distribution and
discretionary programming services. We
commend the Commission for the understanding it has exhibited in the initial
Notice of Public Hearing that consumer market and technological forces create a
need for more streamlined and flexible regulation of broadcast distribution and
discretionary services.
13893 We hope the
consumer focus of the original Notice of this proceeding can be regained. Looking to the past will leave us unprepared
for the digital future. We encourage the
Commission to accept the reality that continuing to provide Canadians with
strong Canadian programming choices is best achieved through competition,
innovation, not through protection, subsidy and entitlement.
13894 Thank you, Mr.
Chairman.
13895 THE
CHAIRPERSON: Thank you very much for
your submission.
13896 At the outset, let
me say that I am somewhat disappointed in not seeing Mr. Shaw here. Given his vociferous views on this hearing,
his correspondence, et cetera, I thought he would have done us the
courtesy of showing up personally.
Sending you, which in his terminology I would characterize as a "B
Team", I don't think adds to the process.
13897 That being said,
let's deal with ‑‑ this is not meant in any way meant as
disrespect to you. I very much
appreciate your submission and I like the way you orderly went through the
points. But since we have been subject
to his criticisms, I would have appreciated the opportunity to deal with him on
some of these issues one on one, or at least personally in this context.
13898 Now, let's go
through. You have sort of undertaken a
reading of the tea leaves in suggesting where we are going and what we are
doing. Let me assure you, this hearing
is exactly what we stated in the PN.
When I asked five questions at the outset and said these are primary, it
is because my mind works logically and from one issue to another, et cetera.
13899 It seemed to me
until we make a decision on those issues, we can't deal with the other ones
because they are all interconnected.
That does not presuppose any outcome of those. I wanted to know the views of people on those
five issues.
13900 You have heard
them over the last two and a half weeks and now I have yours and let me go
through those with you one by one.
13901 First of all,
basic package.
13902 If I understand
it, you are suggesting basically yes, there should be a basic package that
should be a buy‑through. You,
Commission, dictate what is the minimum that should be in there. We will then, in our commercial judgment,
compose the basic package as large as we think is in the interests of
consumers, consumer interest being your driving motivation.
13903 Is that correct?
13904 MR.
BISSONNETTE: Absolutely. It's about consumer choice and our consumers
have expressed to us through the way they buy our services what they like about
our services. They see value in our
services and we believe that the constitution of the basic cable package is
satisfying the needs of our customers.
And to change it by either skinnying it down or moving maybe higher
content Canadian services but less attractive Canadian services such as news,
you know, which has been suggested, would be not well accepted by our customers
and it would be technically impractical as well.
13905 THE CHAIRPERSON: Okay.
We have heard sort of three basic views here and I would like you to
tell me why one is the one that you put forward.
13906 Another one is
saying there should be a basic minimum package.
It should be all Canadian, no foreign, and basically the emphasis being
on affordable. There are lots of
Canadians who want to have cable or satellite access, but in effect they are
asked to by this package when all they can afford is this little one. That's one.
13907 Another one is
saying that no, there should be a basic package but it should include at least
one fourth of four‑plus‑one.
And then yes, you can add on it, but a least you should offer it to give
in effect consumers the choice: buy the basic or buy the extended basic. And of course you will make the extended
basic as commercially attractive as possible.
This is obviously your interest and you will do it in such a way.
13908 You have chosen
the third option, which we just discussed.
13909 Explain to me why
either one of the other two options, from your view, is not in the interest of
either the system or the Canadian consumer.
13910 MR. STEIN: Well, there has been a lot of blood, sweat
and tears that has gone into the definition of "basic" ever since
1959, and I would just make a few comments about it.
13911 The first is that
the basic has always included the U.S. ‑‑ well, in Edmonton
starting with U.S. one‑plus‑one, and that wasn't very
acceptable. And then that was expanded
into the U.S. four‑plus‑one.
The whole basis for the basic entry point into the provision of cable
services, that first contact is with the consumer is on basic. So it is important.
13912 As Peter pointed
out, only 6 per cent of our subscribers only take basic, but it still remains
is the fundamental access point to the system.
13913 THE
CHAIRPERSON: That is in effect the
enhanced basic. Right?
13914 MR. STEIN: No.
13915 THE
CHAIRPERSON: The one you offer.
13916 MR. STEIN: Basic basic.
The basic, not the enhanced basic; the basic. The basic which ‑‑
13917 MR. BISSONNETTE: The basic we currently offer our customers.
13918 THE
CHAIRPERSON: Okay, let's make sure we
know what you are talking about.
13919 MR.
BISSONNETTE: Yes.
13920 THE
CHAIRPERSON: What is your basic basic,
as you call it? What does that include?
13921 MR. D'AVELLA: Just to provide you with one example ‑‑
we are just looking at the Calgary channel lineup ‑‑ it
consists of about I think about 35 basic services, but only 6 per cent of our
customers only take that package. So the
vast majority of our customers take a combination of packages that would
include the tiers, which are not part of the basic service ‑‑
13922 THE
CHAIRPERSON: Yes, sure.
13923 MR. D'AVELLA:
‑‑ and other services.
It could be telephony, it could be Internet, it could be something else.
13924 THE
CHAIRPERSON: Walk me through the Calgary
basic basic of 35. What is included in
that?
13925 MR.
BISSONNETTE: Okay. We have the local broadcaster CFCN. We have KX ‑‑ we have the
four‑plus‑one services. We
have our French CBC service, the local broadcaster. We have Shaw Television, Shaw TV. We have CMT, Country Music Television. We have KREM, a Spokane service. We have Access Alberta. We have the PBS from Spokane; CBC
Newsworld/Voiceprint. We have Treehouse
TV. We have E!, the local
broadcaster. We have The Weather
Network. We have YTV and TSN; KAYU, the
U.S. of the four‑plus‑four.
We have Score; Home and Garden Television, We have Crossroads, which is a mandated
carriage service. We have CTV Newsnet;
Business News Network; MuchMusic; MTV; MuchMoreMusic; Canadian Learning
Television; APTN; Vision TV; CPAC; CFTM TVA Montréal; and RDI.
13926 THE
CHAIRPERSON: Okay. But if I understand, it is a very small basic
but it is more than what is sort of normally referred to as basic basic, which
is over the air mandatory analog and Cat 1s plus 9(1)(h).
13927 You have a few in
there which don't fall into that category, not many but ‑‑
13928 MR.
BISSONNETTE: Yes.
13929 THE
CHAIRPERSON: If I understood that
correctly.
13930 MR. BISSONNETTE: Absolutely.
We have what we consider to be a fulsome basic service.
13931 And I think, as we
have said to the Commission in previous consultations, our view is for the
foreseeable future that we will offer our customers an analog package, a compelling
analog package. Even though we are fully
digital in many of our systems, customers have three and four outlets, so they
still have their analog television sets and we believe that the value of our
services to our customers in terms of the video services they receive from us
is also captured in that analog offering, which would be available in
children's rooms, in dens, in workout rooms and will be still available on
analog television.
13932 In fact, once we
have fully converted to digital, it is still our intention to convert digital
over the air signals to analog signals so our customers continue to enjoy
analog reception on their TVs. We think
that is a competitive advantage.
13933 The fulsomeness,
if you will, of our basic cable service is something that has evolved over time
and our customers have asked for that type of the basic service. We believe that they see the value in that
service and it is, if you will, a cornerstone to our cable services, because
from there more attractive but discretionary analog services are available to
our customers.
13934 THE
CHAIRPERSON: Okay. Now help me out on this. This is your basic basic.
13935 MR.
BISSONNETTE: That's our basic service.
13936 THE
CHAIRPERSON: It is a very modest
package. It is what you consider sort
of ‑‑ it is probably affordable to most Canadians.
13937 Now there are some
others, and I'm sorry if I picked the example because it is the only one that
comes to mind, but Rogers in Toronto I'm told the basic package is $65. $65 is not $35 obviously.
13938 I don't know what
the prices are, et cetera, and I don't want to pick on Rogers, but there
are others who have larger packages.
13939 What is our role
here? You are offering a basic basic
which seems to sort of address both consumers' choice and affordability; others
do not.
13940 So what should we
do? Would you just let the market decide
or should we, as the CBC has suggested, mandate an absolute minimum basic that
people have to offer?
13941 If they don't want
to take it, that's fine. If they think
the enhanced basic is better value for bucks, et cetera, let them, but at least
provide this sort of outlet, so that the least well‑off in society have
access to decent television by having this basic mandatory package.
13942 MR. STEIN: We wouldn't really want to comment on the
Rogers' model, because we have always taken the approach of trying to offer a
basic that is basic, and then offering choice beyond that.
13943 We have, in fact,
been criticized more for not having a bigger basic.
13944 Essentially, I
think the rule that we would suggest for the Commission is that the
Broadcasting Act specifies what services or priority services should be
carried. It specifies certain
considerations for the Commission, in terms of coming to mandatory decisions.
13945 And we think that,
beyond that, people should be able to respond in the marketplace.
13946 The marketplaces
are not uniform across the country. The
ability to respond in Calgary and to deal with consumers in Calgary may be very
different from the situation in Toronto.
13947 It is also very
different between Calgary and Lloydminster, and small communities.
13948 There is a
variation there.
13949 I think that the
main consideration we would say is, if consumers aren't complaining about it,
then why change it?
13950 MR.
BISSONNETTE: And what is the cost of
change? And what is the benefit of
change, as well?
13951 We don't see,
frankly, Mr. Chairman, that by removing some of these services, that would
really impact the cost of the services that we offer on basic, just because of
some of the costs associated with providing that service.
13952 THE
CHAIRPERSON: Let me put it differently,
because I want to be sure that we understand.
13953 What if we said,
"Fine, price it however you want, but, at the very minimum, you have to
offer one package which consists of OTA, one set of four‑plus‑one,
mandatory analog and Cat 1, and 91H"?
13954 Price it at
whatever you want, offer whatever extended ‑‑ 1, 2, 3 ‑‑
you want, et cetera, but at least that should be there, and at the price that
you, obviously, set.
13955 So that customers
know, "I want nothing else but the absolute bare‑bone basis. That's what I get for this price."
13956 Would that be
terribly objectionable to you?
13957 MR.
BISSONNETTE: We don't think it would be
appealing to our customers.
13958 We agree that
there are core services that should be in basic, but we also suggest that we
have the flexibility within our packaging to address what our customers are
saying is meaningful to them as part of a basic, over and above the core
services that are proposed by the Commission.
13959 THE
CHAIRPERSON: You didn't answer my
question.
13960 If I asked you to
offer ‑‑
13961 MR.
BISSONNETTE: That was my (b) answer.
‑‑‑ Laughter /
Rires
13962 THE
CHAIRPERSON: What I am trying to get at
is, you say that customers are not interested.
They won't buy it.
13963 That's fine. In that case, there is no harm for you in
offering it on that basis.
13964 On the other hand,
if there is indeed a segment of the population that is interested in that basic
package, regardless of whether it is 2 percent or 10 percent, they would have
access to it.
13965 And I, frankly,
fail to see where the hurt is to you.
13966 MR.
BISSONNETTE: It is just the practical
reality of skinning down the basic. The
method of doing that in an analog environment is to use traps, and in order to
put traps into customers' homes ‑‑ the cost of that would be
prohibitive, and the intrusion, if you will, to what customers are already
enjoying ‑‑
13967 Customers actually
take basic cable, primarily, for the over‑the‑airs and for the four‑plus‑one
services.
13968 Our customers in
Victoria love PBS. In order to make that
a discretionary service, we would have to trap those customers out.
13969 THE
CHAIRPERSON: I fully understand that.
13970 Let's move to
2011. We are now in an all‑digital
world. What is your answer then?
13971 I know you told me
that you are still going to offer analog as part of good marketing, et cetera.
13972 By the way, when
you were down in the States, I understand that the Americans are going to do
that for a period of three years after 2009, as well.
13973 MR.
BISSONNETTE: Yes.
13974 THE
CHAIRPERSON: But we both know that
analog ‑‑ one of these days it is going to be out of the
picture. So, since we are looking
forward and we are talking prospective, I am positing that, with an environment
where everything is digital, what would be your answer in that environment?
13975 MR.
BISSONNETTE: Obviously, if we are fully
digital, which we won't be for a long time, for the foreseeable future, but
when we are fully digital and our customers are able to enjoy digital services
on all of their outlets, we would have more flexibility in making that kind of
package offering.
13976 We could offer a
core service, and then we could, again, make any services beyond the core
service a discretionary service.
13977 However, Mr.
Chairman, for the foreseeable future, we will have an analog offering, and in
order to make that kind of package shift, we would have to trap.
13978 MS RATHWELL: If I may, Mr. Chairman, just from the DTH
perspective, Star Choice is already an all‑digital service, so the
introduction of a basic basic, if you will, would still have a lot of negative
impact for us, even currently. It would
be disruptive to our operations. It
would cause a lot of customer confusion and complaints, and the volume of
interaction with our customer service people, even at that first level, let
alone changes that would be necessary to our billing and provisioning systems,
would be very, very costly and very disruptive.
13979 It's a highly
competitive environment for us, and we are trying to focus all of the resources
we have on increasing our capacity and innovating to meet different kinds of
challenges.
13980 Unfortunately, for
us, this wouldn't be a very useful, or efficient use of our resources.
13981 We have received
no complaints in the last two years, that we know of, concerning the price of
basic, for example. So we are confident
that we are in tune with our customers and provide them with the value they are
looking for on basic.
13982 THE
CHAIRPERSON: You made a dangerous
statement, you opened up Star Choice. I
happen to be a Star Choice customer, so let me just probe what you said a bit.
13983 I don't know
whether there is demand for it. I
certainly don't want a basic basic service.
I am not speaking for myself.
13984 But, surely, when
I signed up with you, you told me, "Here is our basic package. We call it Bronze, and there is Silver and
Gold, and you can add to it."
13985 There is wonderful
flexibility, and everything is differently priced, et cetera.
13986 For the life of
me, I don't understand why, when you say that it would make your life more
complicated to offer in that menu, which is very complex ‑‑
there are all sorts of combinations possible ‑‑ that you put
in there a combination, "Here is our basic basic," which is actually
less than what you call Bronze.
13987 MS RATHWELL: I think the difficulty would be twofold.
13988 In the first
instance, as I noted, it would confuse the market. They are used to getting Essentials. They think it's a good package. They seem to be responsive to the price.
13989 So, suddenly, they
are presented with a choice, and that is going to drive a lot of activity at
our service levels.
13990 Beyond that, in
terms of systems, our current systems have sort of limited capabilities. We have a certain number of packages. It is very flexible, you are correct, and we
would like to continue to try to work on that, but adding another layer of
basic would just add extra complexity to the backroom systems, which we are not
sure we could cope with.
13991 THE
CHAIRPERSON: Okay. Let's go to the next subject, access.
13992 You, I am sure,
have listened to the proceedings over the last two and a half weeks. As you say, there are an awful lot of people
who are arguing for one sort of access or another to be mandatory, or retained,
or to increase the present access, et cetera.
13993 Other than you, I
don't think there is anybody ‑‑ there is absolutely nobody who
has advocated this sort of radical ‑‑ basically doing away
with mandatory access.
13994 How do you explain
you being such an outlier on this?
13995 MR. STEIN: I will start, and I am sure that others will
want to join in on this, in terms of access.
13996 We feel that now,
when you look at the structure of the industry, you have, primarily, the
specialty services ‑‑ and there are other major
organizations ‑‑ CTV, Globemedia, Global Canwest, Corus, Astral,
et cetera ‑‑ they have enough clout to be able to negotiate
access arrangements.
13997 There have been
certain corporations that we have had a lot of success with, and with certain
others maybe a little less success. But,
generally, we have been able to work out commercial negotiations and come to
arrangements about what services we carry and what we don't carry.
13998 It is a very
tricky issue. The thing is, when you put
a service on, as J.R. always says to us, the hardest thing is taking a service
off.
13999 If you only have
ten subscribers to a service, it is difficult, so you have to make a really
conscious judgment about what services are going to be on, and how that works
out.
14000 But for the major
players, it is a game of equals, in terms of negotiating that, looking at what
is attractive and what to put on. So we
don't see the necessity for access.
14001 Now, the
independents do make a good point; that is, they don't have ‑‑
we think they have a lot of clout, but they may not because they don't have tie‑ins
and "I'll carry this, and not carry this" type of arrangements.
14002 On the other hand,
they have a number of distributors that they can go to.
14003 What we found was,
for example, one service, Wild TV, goes to Bell and they get carried by Bell,
and then we get our customers clamouring for it.
14004 It seems to me
that the opportunities for the services are very strong. They can go to at least seven strong
distributors out there ‑‑ there aren't two, there are seven
out there ‑‑ MTS, SaskTel, now TELUS, Bell, Shaw, Videotron,
Bragg Systems, Cogeco ‑‑ and if they get on one of those,
that's a breakthrough in terms of them saying, "Okay. I can now go to Shaw and I can demonstrate
that I have been getting this customer response and it's a good service."
14005 If you look at any
other cultural activity, the shelf life is the most attractive thing you can go
for, but you have to put forward a case for it.
14006 We are staying at
The Chateau Laurier, and when we walk by the Art Gallery, it is very
significant. How do artists get into the
gallery? Nobody regulates that. Nobody protects them as artists. They probably should be, but they aren't.
14007 They have to get
that shelf life, but they have to argue with the galleries. They have to make commercial arrangements
with the galleries. They have to be able
to drive themselves to do that.
14008 We feel that
programmers should be able to do the same thing.
14009 The final point I
would make is that Jay Switzer, in an article in The Broadcaster magazine, said
that we need more failures.
14010 That is part of
the problem. The system gets so clogged
up with a whole bunch of services, that just aren't going anywhere, that you
can't take off. Therefore, it doesn't
allow for the entry of new services, because they just clog the whole system
up.
14011 We feel: Look, why don't we do it this way. Why don't we just say that there is no
guaranteed access, but the Commission has in place rules for undue preference,
for making sure that commercial negotiations are carried on in an appropriate
manner, and we don't disagree with that.
14012 We think that
would work quite well, but there would be no guaranteed access.
14013 I think that André
Bureau made the point ‑‑ we don't always agree with André, but
he did make the point that, a lot of people, once they get on, they put their
feet up and it's like, "Okay. We're
fine. We don't have to do anything any
more."
14014 That's the problem
we see. We think that if people had to
fight to keep on the system, they would do a better job, and they would, in
particular, do a better job on Canadian content.
14015 THE
CHAIRPERSON: I am glad that you
mentioned André Bureau ‑‑
14016 MR. STEIN: Maybe I shouldn't have.
‑‑‑ Laughter /
Rires
14017 THE
CHAIRPERSON: We have heard from all
sorts of people. We have heard from the
independents, whose basic claim is "We have no clout."
14018 We have heard from
Allarco, who actually has mandatory carriage, who says "We can't get
on. A year later, we still don't have a
deal" ‑‑ with you, among others.
14019 We have heard from
Astral, one of the largest specialty owners in this country, who is saying,
"Notwithstanding our clout, we have huge difficulty getting
carriage."
14020 And they also make
the further argument that ‑‑
14021 Essentially there
are five ‑‑ IPTV is not ‑‑
14022 How many are
there?
14023 Three large
terrestrial and two satellite, so that's five.
There are smaller terrestrials, obviously, and IPTV, but those are the
big ones.
14024 If you don't get
carried by one of them, that would put the viability of some of these channels,
right away, into jeopardy.
14025 If you don't get
carried by two, you probably don't have a market case any more.
14026 I find it somewhat
difficult for you to say that.
14027 And then you say,
once you have carriage, it is hard to turn them off; and in the next sentence
you say, "I don't have the ability to turn somebody off, it's mandatory
carriage."
14028 Frankly, I am
hearing an awful lot of dissonant noise here, and I am having trouble sorting
it out.
14029 I hear somebody
like Astral, who has been in the business for many years, who is successful,
saying that getting access is a huge issue, and then you come along and say,
"Well, it's no problem. We should
have a free‑reigning system. And,
yes, there are five of us, but we will put people on, because if one of us
carries it, the other one has to carry it."
14030 And, yet, that's
not the case, you don't have identical offerings.
14031 MR. STEIN: First of all, I don't want to be confusing
about this. Let me be very clear. We don't believe in access rights. Right?
Let's be clear about that.
14032 Secondly, the
reason that the negotiations are tough and difficult for people is that, when
we do put something on, we realize that it is difficult to then take it
off. So we want to make sure that, when
we put it on, we have some assurances that this is going to be successful going
in.
14033 The third point is
that when you say there's, like, three large terrestrial distributors, well, you
know, MTS and Sasktel are horrendous competitors as far as we're concerned.
14034 I mean we lost in
Winnipeg 25,000 or more subscribers to MTS and in Saskatoon we have a huge
battle going on with SaskTel and I'm sure Access is having the same thing in Regina.
14035 So, there is lots
of opportunities for people to go to competitors and say, look, I can
differentiate you. I can make ‑‑
you know, if I give you my package, you put me on your system, then you can
sell against Shaw.
14036 I remember sitting
down with the Premier of Manitoba saying, well, I'm recommending ‑‑
you know, I'm recommending, you know, this kind of a package because, you know,
that will help you beat the other guys, whether it's Bell or whatever.
14037 So, there's lots
of opportunities out there. I think that
people are just presuming protection and it gives them a different mindset
about going in.
14038 And I think that
the more you're able to respond to consumers and the more that we're able to
emphasize Canadian content as an advantage, then I think the better the system
will be.
14039 MR. D'AVELLA: The only other thing we might want to add
here is, you know, with respect to the two that you mention in particular, the
Allarco and Astral, these are business negotiations. We got a deal done with Allarco. It's a tough deal.
14040 There are four
standard definition channels they want launched and two HDs. It's a big package. It took us time to work it out, but we
finally got it done.
14041 With respect to
the other one, I'm not sure specifically what Astral was referring to but, you
know, a lot of these guys come to us and say, carry this service and, by the
way, we want digital basic carriage.
14042 And we're saying,
well, wait a minute. We offer a
discretionary digital service here. If
you're prepared to take the chance, if you think you've got a good enough
service and you think customers are going to buy it, we'll offer it the way we
offer everything else. But we're not
going to give you digital basic carriage, it's too expensive for us, customers
don't want it in that fashion.
14043 So, these are all
business negotiations. It's all part of,
you know, the dynamic process of actually negotiating with these programmers
who do have a certain amount of clout.
14044 THE CHAIRPERSON: Well, I understand that. I mean, I have no problem with business
negotiation and each party looking out after their own.
14045 But the argument
that is being presented to me and that is, No. 1, it is very unequal a
negotiation, you have all the trump cards, the others have none, if they don't
get on they're dead.
14046 Secondly, in terms
of economic size, other than Astral, the others are really pygmies compared to
the BDUs and certainly that even once getting on, on what terms and how do you
get treated.
14047 Yesterday for
instance we had APTN here talking here about not being treated contiguously,
notwithstanding that they are mandatory carriage, get bounced up all over the
schedule and are hard to find, et cetera.
14048 So, I hear a
litany of complaints from everybody about the BDUs' power being totally
disproportionate to that of the broadcasters, basically running the roost and
pushing broadcasters around.
14049 The two things
that are protecting them they say, and they are minimal protection according to
them ‑‑ and that is what I wanted to hear from you ‑‑
access is one, genre is the other ‑‑ we'll come to genre in a
moment, let's stay with access, so...
14050 And, as I say, you
are the only one who basically says preponderance and that is all. We can carry anybody, Canadian or foreign as
long as, I presume, and you say an offering of performance, most of the others
say a subscription of performance, that means at least they have to buy 50 plus
one.
14051 So, I would
like ‑‑
14052 MR. BISSONNETTE: Mr. Chairman, we ‑‑
14053 THE
CHAIRPERSON: So, I would like to
understand why you feel this extreme position in your field?
14054 MR.
BISSONNETTE: Well, Mr. Chairman, we have
said that the packages that we will provide in a digital realm will be preponderance
packages.
14055 So, these would be
delivered to a customer. So, a package
that is delivered to a customer will have a preponderance of Canadian services
and that's why we take the position that having those kinds of preponderance rules
provides programmers with an opportunity to be made ‑‑ to be
put in front of our customers.
14056 And then I guess
the factor that differentiates them is the quality of their programming.
14057 THE
CHAIRPERSON: Okay. Let me just understand that.
14058 Because I read
your submission last night again ‑‑
14059 MR.
BISSONNETTE: Yes.
14060 THE CHAIRPERSON:
‑‑ the February 28th.
And you are telling me, which you say in your February 28th, that it is
a preponderance of offering, but you say by way you offer it, so packaging it
in effect, de facto, will be a preponderance of subscriptions.
14061 MR.
BISSONNETTE: Exactly. The services that customers will receive when
they receive a package will be a preponderance of Canadian services.
14062 THE
CHAIRPERSON: Okay.
14063 MR. D'AVELLA: Provided we don't restrict their ability to
buy a single service after they've purchased the basic tier.
14064 MR.
BISSONNETTE: Which still is a ‑‑
14065 THE
CHAIRPERSON: Explain that to me, please.
14066 MR.
BISSONNETTE: I think what Michael is
saying is that the basic tier has Canadian services on it and where a customer
is subscribing to our basic tier, that they also have the flexibility through
the technology to order a pick‑and‑pay service in a digital realm.
14067 THE CHAIRPERSON: So, can I through pick‑and‑pay
service wind up with more American channels than Canadian?
14068 MR.
BISSONNETTE: No.
14069 MR. D'AVELLA: No.
14070 MR.
BISSONNETTE: It would be impossible.
14071 THE
CHAIRPERSON: Why?
14072 MR. STEIN: It would be impossible to ‑‑
14073 THE
CHAIRPERSON: I thought I just heard that
pick‑and‑pay is not subject to preponderance.
14074 MR. D'AVELLA: No, but ‑‑ I mean, the
objective of pick‑and‑pay is to allow them to buy one or two
channels, it's not to allow them to buy 15 channels on a pick‑and‑pay
basis.
14075 Any package we
create in a digital world will be preponderantly ‑‑ is that a
word?
14076 MR.
BISSONNETTE: Yes.
14077 MR. D'AVELLA: Canadian.
So, we just can't restrict their ability to say, look, I've bought the
basic package which consists primarily of Canadian services, but I do want to
buy Fox News on a stand‑alone basis as one service, but overall he is
predominantly Canadian.
14078 THE
CHAIRPERSON: So, if as a regulator I buy
into the Shaw scheme, at the end of the day there won't be a single Canadian
who will have a preponderance of foreign channels over Canadian channels buying
from Shaw?
14079 MR.
BISSONNETTE: That's correct.
14080 MR. FERRAS: They would have to buy our basic service and
then in our basic digital basic there are so many Canadian services in there
and you need to have that pieces of equipment in order to get the digital and
with the digital, our digital service there's already Canadians bundled in
there.
14081 And we're also
making the commitment that any digital package that we offer will have a
preponderance of Canadian services in it.
14082 So, on top of that
a Canadian can buy a pick‑and‑pay Canadian or U.S. service, but
there's just not enough U.S. services to buy on that basis to ever get to that
situation you're describing.
14083 THE
CHAIRPERSON: Okay. This was an elaboration of what Mr.
Bissonnette says, but it doesn't take away from his clearcut answer which was
no.
14084 MR.
BISSONNETTE: Yeah. That's exactly the answer.
14085 THE
CHAIRPERSON: Okay.
14086 MR. STEIN: Can I just make a point because you raised
the issue about people finding it very difficult to talk to us and not liking
us and all this type of thing.
14087 But, you know, we
have 3.3‑million customers who love us and they love us because we give
them choice and that is something that the programmers never liked from the
beginning.
14088 I mean, most of
the battles and disputes we've had with the Commission are people say, oh, we
want to be on this package, we want to be on that package, and we've always
said no. We want our customers to have a
choice.
14089 We've been having
this battle with programmers ever since ‑‑ in the late
70s. And, you know, J.R. and Peter and I
went, when the negative option disaster took place, we went across and met
every Minister of Consumer Affairs in the provinces we served and we said, we
have two conditions in terms of how we offer our services.
14090 One is, we never
take anything away from anybody that they don't want taken away; and, No. 2 is,
we never force them to take something they don't want. So, those are the two rules we had going in
when we launched digital.
14091 And we also
launched digital on the basis that we gave ‑‑ and maybe it
wasn't from our point of view, even our point of view the best thing to
do ‑‑ was a pick‑and‑pay environment where you
could pick five services and people loved that.
14092 We didn't just
complicate them with all kinds of packages, et cetera, et cetera, it was a
pick.
14093 Now, the programmers
didn't like it and some of them have argued at this proceeding, they compare
our penetration rates for their services on Shaw as opposed to ‑‑
or Star Choice as opposed to other services.
14094 But we give
consumers a choice and if the programmers don't like us because we give people
a choice, that's their problem because we have 3.3‑million customers out
there who like it.
14095 And the
preponderance model ‑‑ just to finish ‑‑ the
preponderance model actually guarantees them more access because we have to be
able to offer the Canadian services.
14096 Those are the ones
we really want to have are good, Canadian services.
14097 THE
CHAIRPERSON: Nobody has said that Shaw
doesn't treat its customers well, but the complaints are that Shaw doesn't play
by the rules.
14098 MR. STEIN: J.R. ‑‑
14099 THE
CHAIRPERSON: That is quite a different
rule, that is quite a different issue.
14100 MR. STEIN: Yes.
14101 THE
CHAIRPERSON: Whether it is justified or
not, I am not commenting on it. I am
just saying, all these things we have heard here in two and a half weeks,
nobody says Shaw treats its customers badly, that was never the issue.
14102 The issue was,
what are the rules, do they favour them?
Does Shaw abide by them? Do they
play it fast and loose or do they interpret them extremely?
14103 That is the issue.
14104 MR.
BISSONNETTE: And we say we do follow the
rules. We're in compliance on all
carriage obligations. We have
independent and large specialty conglomerates represented on our cable network.
14105 One of the
challenges that we explained to you when we were chatting with you a couple of
months ago was that we have capacity constraints and our energies are very,
very much focused on expanding the capacity of our systems in order to
accommodate more services.
14106 The issue with the
pay television ‑‑ the Allarco application was a commercial
issue. We met with them. We offered, in fact, to carry them prior to
December on the basis that we would give them a launch of their standard
definition channel, but they said, no, you know, we think that's an undue
preference, we don't think you're being representative of our services.
14107 So, we were able
to, through the course of negotiations, add four standard definition, one hi‑definition
in an environment where we have constrained capacity. We've had to do things in order to continue
to add services, and we will.
14108 Wild TV was one we
didn't frankly think would be attractive to our customers. We had hundreds and hundreds of calls from
customers wanting Wild TV, a small, little independent that thought he had no
bargaining power, but his bargaining power was in the content that he offered
our customers, and so he's now on.
14109 THE
CHAIRPERSON: Okay. Now, you said in your access model the only
thing that protects people is the undue preference rules, is what you are
suggesting.
14110 As you know, there
have been suggestions that we strengthen those and build in a reverse onus so
that if anybody complains about access or ability to add that, in effect, the
BDU has to demonstrate that they have abided by the rules, et cetera.
14111 MR.
BISSONNETTE: Yes.
14112 THE
CHAIRPERSON: What is your view on those?
14113 MS RATHWELL: If I may, we'd like to respond to your
question and we will on the undue preference.
14114 But just a final
point on access that probably bears mentioning is that, as we've emphasized
throughout our submission, our focus really is customers and there's customer
choice and customer value.
14115 And one of the
problems that we find with the access rules is that the value proposition often
slides as a result of the guaranteed access.
14116 And, so, we have a
situation where, for example, several Category 1 services that have had
guaranteed access and a presence on our system for seven years now are still
failing to attract any significant number of subscribers which leads to the
question, who is the access ultimately benefitting? Is it benefitting the Canadian broadcasting
system if nobody's watching it? Is it
benefitting our customers if they're not watching it?
14117 You know, we have
to ask those questions and we submit, you know, with respect, that it's not
beneficial for either the system or for our customers.
14118 And then with
respect to your question on the reverse onus, in our experience, the current
undue preference rules and the process that accompanies that is more than
satisfactory. We don't recall a
situation at Shaw where we haven't felt compelled to put on the record in
response to an undue preference or an undue disadvantage complaint all of the
information that was relevant to the dispute.
14119 These don't always
enure to our benefit ultimately and, you know, sometimes we're successful and
sometimes we're not.
14120 But we're not
aware of any significant flaws with the current process and we'd recommend the
maintenance of the current approach.
14121 THE
CHAIRPERSON: Okay. So, just to terminate on access. If I understand it, if I accept the Shaw
proposal, the only people who have access are OTAs and 9(1)(h)?
14122 MR.
BISSONNETTE: That have guaranteed
access.
14123 THE
CHAIRPERSON: Yes.
14124 MR.
BISSONNETTE: That's correct.
14125 THE
CHAIRPERSON: Yes.
14126 MR.
BISSONNETTE: Yes.
14127 MR. STEIN: Yes.
14128 MR.
BISSONNETTE: The other ones ‑‑
14129 THE CHAIRPERSON: On guaranteed access means just that, or are
they automatically part of the basic?
14130 MR.
BISSONNETTE: Those are automatically
part of the basic.
14131 MR. STEIN: 9(1)(h).
14132 MR.
BISSONNETTE: Yes.
14133 THE
CHAIRPERSON: And it is a contiguous
basic?
14134 MR.
BISSONNETTE: Did you say a contiguous
basic? We're talking in terms of our
basic, that those 9(1)(h) services ‑‑
14135 THE
CHAIRPERSON: No, I mean that the
channels are one next to the other.
14136 MR.
BISSONNETTE: Oh, I see.
14137 THE
CHAIRPERSON: That 9(1)(h) doesn't find
himself up in the 600s while all your basic packages are ‑‑
14138 MR.
BISSONNETTE: No, that ‑‑
so, that's not in our view.
14139 THE
CHAIRPERSON: So, they are part of your
basic package, but they may be anywhere where you think they are best
positioned in terms of marketability?
14140 MR.
BISSONNETTE: That's correct.
14141 THE
CHAIRPERSON: Okay. Sorry, Mr. Stein, did you want to say
something else?
14142 MR. FERRAS: I was just going to follow up with what
Cynthia was saying.
14143 We just think that
whenever we have to respond to a complaint from the industry we really have to
do a full and detailed response to the Commission to make our case.
14144 So, there really
is a big onus on us now to respond to a complaint and explain exactly what
we've done and why we've done it and there's no short cuts.
14145 We've done a few
of these, to say the least, and there really are no shortcuts. You really have to explain to the Commission
in policy terms and in market terms and to the complainant what we have done.
14146 That's why we feel
that the process is working.
14147 And we really
think there should be an onus on the person making the complaint as well to
make their case, otherwise we're going to end up with a lot of frivolous
complaints with unsupported evidence that, you know, every time we make a small
change are we going to be in a situation where just the letter comes into the
Commission saying Shaw just moved a channel ‑‑ it might not
even be their channel ‑‑ and then we have to do a huge
response.
14148 We think there
should be an onus on the complainant as well, but we think the process is
working.
14149 THE
CHAIRPERSON: I have some trouble
accepting that because, as you know, programmers are very reluctant to take on
BDUs and drag them before the CRTC. So I
don't think you want to face an avalanche of complaints. It is certainly not the experience that we
have seen so far.
14150 But on your last
answer, Mr. Bissonnette, why not contiguous? It is the basic package. It is the buy‑through; you are offering
it as one and yet some of the people, especially the 9(1)(h)s, are complaining
bitterly because they are not being placed contiguously.
14151 MR.
BISSONNETTE: In the analog world, it is
not contiguous. If there was a digital,
a pure digital world, we could see where contiguous would work.
14152 THE
CHAIRPERSON: Educate me. Why is it difficult in the analog world?
14153 MR. D'AVELLA: In the analog world, I mean these lineups
have evolved over time. Services were
launched at different times. But it
would be virtually impossible for us to move the tiers. The tiers are kind of fixed in place.
14154 I mean, we would
have to go out and start changing traps.
It is just not a practical way to run the business. In a digital world we could do that.
14155 THE
CHAIRPERSON: Okay, let's go on to genre
then.
14156 You have heard
everything under the sun on genre here in the last two weeks from people saying
the system is fine, don't touch us.
Rogers is saying streamline it; keep genre but keep buckets of genre,
sports, lifestyle, music, dah‑dah‑dah‑dah. Others saying the system doesn't work,
strengthen it, et cetera. Some
people are saying you don't need it for domestic, but you certainly need it to
keep the foreigners out. Certainly some
of the independents and certainly the creators have said that the genre is
absolutely the essence; it is part of the Canadian system. The Act mandates diversity; it demands access
for everybody. Given the small market,
given the small returns, the only way that you can have a specialty channel and
make it exist is if you at least know you own this genre. You still have a battle to get carriage, to
get advertising, but at least nobody can come and take this genre away from you
if you own this slice at least.
14157 I would like to
understand why you are coming basically saying with the key argument that I
have heard several times: it has been a
great success. Why tinker with success? Why abolish it, et cetera, and throw it into
the unknown and all you're going to have is a morphing towards the middle. Everybody is going to chase the biggest
audience and essentially, you know, you are going to lose what you achieved
through regulation, which is diversity.
14158 Now I appreciate,
like Mr. LaRose said, everybody who appears before me makes self‑serving
arguments, so I take all of this with a grain of salt but I would like to hear
from one of you.
14159 MR.
BISSONNETTE: So we won't be self‑serving.
‑‑‑ Laughter /
Rires
14160 THE
CHAIRPERSON: That would be refreshing.
14161 MR.
BISSONNETTE: We will just tell you what
our customers tell us.
14162 We would like to
have more programming services and we would like to have the flexibility to
choose which programming services we have.
As a recent example, I think the Commission received our application for
the USA Network and on the basis of a conflict in genre which was, in our view,
minimalistic at most, that service was denied.
Here is a service that is one of the more popular non‑Canadian
services available to us and only conflicted on I think some strip programming
with one of the Canadian ‑‑ is it Category 1 or 2?
14163 MR. STEIN: Two.
14164 MR.
BISSONNETTE: A Category 2 service. Other than that, you know, we were denied
access to that service and our customers feel disadvantaged because they can't
get that service.
14165 I think what we
are suggesting on genre exclusivity is that as long as the non‑Canadian,
whether it be an American or other foreign service, doesn't have exclusive
rights to that programming, that they should be able to be carried on our
cable, our distribution systems.
14166 Ken...?
14167 MR. STEIN: With respect to the Canadian services, we
think the genre rules should be eliminated entirely. We don't agree with Rogers about five broad
categories. We think that that would
probably start to become more complicated in terms of making judgments.
14168 We feel that if
people want to change the nature of their service, they would presumably
discuss that with distributors to see exactly how that would unfold. But we feel that people who are creative and
business people should be able to have the ability to say: You know what, I'm not making it as a book
channel, I want to be a sports network.
And if they can go out and try to find programming that fits that kind
of situation, then they should be free to do that.
14169 THE
CHAIRPERSON: You keep coming back to
your central theme, which is customer satisfaction and what the customer wants,
et cetera. The problem is, we are
administering the Broadcasting Act which doesn't say do what the customer
wants, customer satisfaction is your number one priority. It sets a huge number of objectives, which
you are much more familiar with than I, but I usually say that there are
basically three basic themes ‑‑ two basic themes. One is make sure there is Canadian content;
the other is to make sure there is access to the Canadian system both by
Canadians as producers or as participants or as viewers.
14170 You know, there
are all sorts of other sub‑issues, very important ones, like 75 per cent
independent production, and so forth.
14171 So saying that is
what my customer wants is not the only answer.
I mean, we have to look at everything through the prism of the objective
that Parliament prescribed and how do we marry those?
14172 If I adopt your
scheme of absolutely no genre protection, what guarantee do I have that this is
exactly what the people predict will happen; that you will have a morphing
towards the middle, you will have in effect two, three, five, what do I know,
general categories where everybody is chasing the biggest and these very
valuable, very appreciated small, discrete genres that we have created and that
Canadians watch will no longer be viable and will disappear?
14173 MR. STEIN: Well, we agree with you on the Broadcasting
Act objectives. It's a matter of the
means of achieving those objectives.
14174 We feel that the
best way to achieve the objectives set out in the Act is by giving Canadians what
they want. We find that with kids, with
children, they are the strongest viewers of Canadian content and somehow we
beat it out of them by the time they become adults. I think that if we were able to have a system
that put more emphasis on having Canadian content that would achieve it by
meeting customers' needs, we would have that kind of diversity.
14175 I find it really
interesting that the broadcasters keep arguing about local broadcasting as
being the cornerstone and local broadcasting, you know, being the central and
needing more support, when in fact it is the most popular part of the
programming and it is protected from foreign competition, not by the fact that
it is protected. I mean, I can watch the
Detroit news if I want to, but who would want to?
14176 So I think there
is a mindset here that we don't agree with, and we believe that a competitive
system will achieve more diversity and that ‑‑
14177 MR.
BISSONNETTE: And sustainable.
14178 MR. STEIN: Yes, exactly ‑‑ and that
will achieve the objectives set out in the Act.
14179 There is no ‑‑
the rules are eliminated ‑‑
14180 THE
CHAIRPERSON: And the risk is worth
taking?
14181 MR. STEIN: Pardon?
14182 THE
CHAIRPERSON: The risk is worth
taking. I mean, the CAB says don't do
that, you are going to destroy the Canadian system, you are never going to be
able to re‑created.
14183 MR. STEIN: They didn't argue that on radio. They argued the opposite on radio.
14184 THE
CHAIRPERSON: I'm talking about TV. We are talking about TV here. You heard them. They were here. You listened to them on the Internet I'm
sure, so you know exactly what they said.
14185 MR. STEIN: I was rolling around.
14186 THE
CHAIRPERSON: Okay. Now, there are several variations. You don't like the Rogers approach, I gather
that.
14187 Canwest suggested
keep the present one, but allow more or less a 10 per cent deviation. You know, have everybody stay in their genre
but, you know, don't make it too tight.
As long as their programming is 90 per cent in that genre, 10 per cent
they can in effect transgress and have programming that belongs to another
genre.
14188 I know you don't
like genre, but get over that first of all for the purposes of the argument.
14189 MR.
BISSONNETTE: I have to eat my peas.
‑‑‑ Laughter / Rires
14190 THE
CHAIRPERSON: For the purpose of the
discussion, what do you think of that suggestion?
14191 MR.
BISSONNETTE: Ken...?
14192 MR. STEIN: Well, it's hard to get over the first hurdle.
14193 THE
CHAIRPERSON: I said for the purpose of
discussion, Mr. Stein.
14194 MR. STEIN: Well, I take it from what you are saying that
you're not going to go away from genre protection.
14195 THE
CHAIRPERSON: No. Please, you know, we are having a very
serious discussion here and I have to look at all the options.
14196 MR. STEIN: Okay, I appreciate that.
14197 THE
CHAIRPERSON: I understand what you are
saying. You are saying get rid of
genre. I said okay, but for argument
sake if I don't accept that argument, there are other things that are being put
forward and I would like to know where Shaw stands on these things.
14198 One of them is a
relaxation by allowing this sort of 10 per cent deviation. That was a new idea that was put on the table
and you as one of the main criticizers of the very rigid genre system now, I
was wondering whether you thought this would be helpful or not or if this
basically makes no difference, whatever your position is.
14199 MR. STEIN: Well, I think that if you aren't going to
go ‑‑ I mean, we would prefer no genre protection, but of
course any kind of variation would be better than what we now have.
14200 THE
CHAIRPERSON: Okay. Astral came forward with a different
thing. It essentially suggested that in
each ‑‑ they made the parallel, if I understood them
correctly, to Allarco. We allowed
Allarco in, notwithstanding that in effect that genre was occupied, because we
felt there was enough room for a third player in pay‑TV.
14201 So could we do the
same principle on genre and say look at the various genres; some of them are more
successful than others, and where they are and give a sort of five‑point
criteria. You hold a hearing and
say ‑‑ let's say for argument's sake, Home and Garden. There is really room for maybe a second
player or third, et cetera, as long as that player would present a new aspect
or a different aspect and in effect contribute to the diversity, and on that
basis we might allow some of these genres to grow or be double occupied or
triple occupied.
14202 What is your
feeling on that?
14203 MR. STEIN: Well, we can always go for the option that
would maximize consumer choice.
14204 MR.
BISSONNETTE: Choice. You have done it with sports, essentially
with Sportsnet and TSN and Score. I know
they squabble amongst themselves as well; we are not the only ones they
squabble with. On genre you certainly
will see more of that.
14205 Again, we think
that the more the merrier, and to the extent that they can sustain themselves
by attracting customers that that is the best of all worlds.
14206 THE
CHAIRPERSON: And what do you say to the
argument that most people who defend genre protection say it is really an issue
of market?
14207 Most of these
genres exist foreign and if we don't have genre protection, then bringing in a
foreign channel is going to be cheaper for them; selling into Canada is just
icing on the cake. They make their money
in their home market, et cetera, while we produce the Canadian version. Yes, we have a Canadian content, but whether
Canadians are willing to pay for that extra to the extent of the cost is very
much open and, in effect ‑‑ Home and Garden is a perfect
example ‑‑ you will wind up with an American Home and Garden
and ours will die on the vine if you take away the genre protection.
14208 MR. STEIN: Well, Home and Garden is probably a good
example. I mean, I don't think that Home
and Garden ‑‑
14209 THE
CHAIRPERSON: I didn't want to pick on
them. I just picked one that came to my
mind.
14210 MR. STEIN: No, no, it is easier to deal with specific
programming issues rather than broad generic terms.
14211 If you had a Home
and Garden that was telling you how to grow vegetables in southern Georgia, it
wouldn't be of much relevance to somebody in Alberta who is trying to shovel
snow out of their driveway. So I think
that most areas, a lot of areas ‑‑ we find in our surveys that
Canadians want Canadian programming.
It's just a matter of how you get there.
14212 You know, our
surveys indicate 85, 90 per cent of people want there to be Canadian
programming services, want there to be Canadian programming. We feel that Canadian programming, to the
extent that it is suffering difficulties, would be better if it had to be more
competitive with the U.S. programming and differentiate itself and make itself
more relevant to Canadians.
14213 So I think that is
the view we have in terms of this.
14214 If we're looking
at genre protection, getting more flexibility within that is fine.
14215 And if the
American services can't have exclusive rights to the programming that they do
have, then we feel that they should be able to come in.
14216 THE
CHAIRPERSON: You keep harping on this
exclusive rights, but isn't that a bit of an empty right?
14217 First of all,
especially when we are talking foreign, but even on domestic, is the rights
also owned by somebody else? Then first
of all it is a question, yes, you as a Canadian channel can get them, but you
are directly competing with somebody who has the same program, et cetera, who
probably gets it on better terms because he is buying it for a bigger market, et cetera,
and is now competing with you.
14218 And third, how do
we enforce it? How do we enforce program
rights from ‑‑ do we go to each one of them and say show us
that your program rights are non‑exclusive; that you have negotiated open
terms?
14219 A lot of these
folks who hold the program rights are not part of our jurisdiction.
14220 MR. STEIN: Well, I think the first problem we have is
that if you look at the current situation ‑‑ and we were quite
concerned about, as you know, the rejection of the USA Network.
14221 What was
fascinating to us is that when people look at the Broadcasting Act, the reason
that we were rejected was because we overlapped on series that were
American. So we say okay, that is
strange. So we were rejected on that
basis for, you know, a minimum overlap, but also an overlap not on anything
other than the U.S. programming that they had.
14222 So our view is
that we would prefer there to be ‑‑ we understand the issue if
a service is trying to come in and it says, you know ‑‑ I
don't want to use specific names, but it comes in but comes and says to the
programmer in Canada: We are not going
to allow you to have the rights because we are going to come in on our own.
14223 So we don't think
that would be appropriate.
14224 But let's also
look at the reality of it. ESPN is not
going to come into Canada. ESPN owns a
good chunk of TSN. You know, there are
similarities in the programming that are apparent to anybody who goes to the
U.S. and comes back to Canada.
14225 Canadians aren't
interested in basketball to the same extent.
We want to make sure there is lots of hockey ‑‑
unfortunately, the Flames got knocked out.
14226 So when it comes
down to it, I think that the reaction of "oh, the Americans will come in
and they will take over the whole system" is really an over‑reaction. We are talking about just having the ability
to pick and bring in specific ones, making sure that they are appropriate
within the Canadian system.
14227 And the
preponderance rule will ensure that the system remains Canadian.
14228 THE
CHAIRPERSON: As you know, this issue
really came to the fore with the whole issue of RAI, et cetera. The net result of our decision now is that
you can get RAI here; you can also get Italian football on Telelatino, and it's
non‑exclusive. But I bet you
anything what Telelatino pays is a different price than what RAI pays in Italy.
14229 Therefore, you
know, giving them this rate of non‑exclusivity may very well be a very
empty right. It just does not
commercially make much sense.
14230 MR.
BISSONNETTE: Any comment?
14231 MR. D'AVELLA: Well, in that particular instance I mean you
are addressing ‑‑
14232 THE
CHAIRPERSON: I'm just using this as an
example of what was the issue. I'm not
trying to revisit that decision.
14233 MR. D'AVELLA: I mean, Corus will come up and talk about the
success of Telelatino. I think
Telelatino has been able to do very well despite the entry of RAI. RAI is a discretionary service. I mean we offer it in some markets where
there are, you know, enough Italians to kind of justify the service.
14234 But I don't think
it has fundamentally changed their economic model or changed anything from
their perspective.
14235 Just to add to
Ken's point, I mean clearly you're not going to see an ESPN in this country
because they are a significant owner of TSN.
But even things like first‑run movies, I mean the relationships
between companies like HBO and the Canadian pay licensees are so strong, are so
embedded, they have developed economic models over the past 20 years where HBO
probably wouldn't want to change that.
14236 So we are really
talking about services that are really on the margin, on the fringe, services
like USA which do try to be distinctive.
14237 And there will
always be a variety of venues for strip programming, for movies. I think I have seen The Matrix on APTN, on
American Movie Classics, on Lonestar ‑‑ I'm not sure how that
is a western movie, but it was on Lonestar.
I have seen it on Action. So
everyone is buying movies.
14238 We are buying
movies in VOD. We are buying them in
different windows. We are buying old
movies; we are buying new movies.
14239 It is really about
providing customers with here is a variety of ways to get this
programming. How do you want it? We can provide it to you in this particular
format, in another format. We don't see
any harm to the Canadians as a result of it.
14240 THE
CHAIRPERSON: Our whole system of access
and genre is really meant to leave our Canadian content the way it was and
contributions to Canadian programming, et cetera.
14241 If we adopted the
Shaw approach, isn't the net result that every programmer will say what is the
minimum that I can do to keep my Canadian audience and, on the other hand,
increase my returns to my shareholders?
14242 I no longer have
genre protection. I don't have
access. I have to compete with these
guys. Does it make sense to have 50 per
cent Canadian content, and so on, or can I live at 35 or can I live at 25,
et cetera?
14243 Isn't that
inevitably the net result of your ‑‑ that the contributions to
the Canadian system, whatever form they are, are going to be driven down?
14244 MR. STEIN: We don't agree with that, and I think that
it's ‑‑ it's a model.
We can use different models of policy approaches, but we think that the
model of protectionism is a bad policy approach and it doesn't work in many
sectors.
14245 We, in our western
Canadian roots, use the transportation as an example. I mean, we heard stories ten years ago about
the Canadian railroad system was collapsing and we had to, you know, continue
to protect it and subsidize it, et cetera.
And we transformed it by privatizing it and going to a deregulated
competitive approach.
14246 Now, people say
well, culture is not like transportation.
Well, culture, you look at the strong Canadian cultural contributions to
the world and they aren't protected, whether it is artists, Jeff Wall from
Vancouver, writers, authors, Margaret Atwood, they aren't protected and they do
extremely well around the world.
14247 Musicians. I subscribe to Rolling Stone. Every week there is a lot more in Rolling
Stone about Canadian musicians than there is in Variety about Canadian
television.
14248 So I sit there and
I look at it and I say, you know, maybe the model is wrong. Maybe going to a model which is more
competitive, which encourages people to be ‑‑ you know, look
at films, "Little Miss Sunshine", $10.5 million, made a huge amount
of money; "My Big Fat Greek Wedding", whatever. Lots of examples that are outside the Hollywood
ambit.
14249 I think we get too
focused on the fact that, you know, we are a small country and we can't
compete. We have said this time and time
again, that we don't agree with that. We
think that there would be lots of room for dealing with the American situation,
which we recognize is strong, by trying to develop a more competitive situation
here in Canada.
14250 We believe that
eliminating the access rules and not having guaranteed access, but sticking
with preponderance, you know, we think that would be a better approach and
would help ‑‑ would be stronger in terms of developing support
for the objectives laid out in the Act.
14251 THE
CHAIRPERSON: You are dealing with a
former free trader, a former Commissioner of Competition. I am not used to being called protectionist
and I don't have a protectionist viewpoint.
14252 MR. STEIN: I wasn't calling you protectionist, but
certainly the CAB is protectionist. You
are being asked to protect.
14253 THE
CHAIRPERSON: But I am also aware that
the requirements under the Broadcasting Act are not market‑driven. They are cultural, they are social, and a
whole bunch of them which you cannot achieve by free market alone. That is why I am on record as saying we will
always have regulation in the broadcasting.
The question is let's make sure that it is smart, it is targeted to
achieve the objectives without interfering more than is necessary with free
market.
14254 But to suggest
that culture is like transportation and both of them will benefit if you just
let the viewers ‑‑ you cannot demonstrate to me in any
convincing way that some of the objectives of the Broadcasting Act can be
achieved by pure market forces alone.
Surely you are not saying that.
14255 MR. STEIN: By free market forces alone?
14256 THE
CHAIRPERSON: Yes.
14257 MR. STEIN: No, I'm not saying it's strictly by free
market forces, but we are saying that the balance has gone way, way, way over
to the one side of it, which is the protectionist side of it, and that you need
to have certain rules in place.
14258 You know, getting
back to ‑‑
14259 THE
CHAIRPERSON: Okay, but what are the
rules then? Preponderance, period?
14260 MR. STEIN: Yes.
Period, yes. Preponderance
and ‑‑ yes, and having a basic cable service, and
preponderance would be exactly the way to go.
14261 THE
CHAIRPERSON: Okay.
14262 MR.
BISSONNETTE: It's very simple.
14263 THE
CHAIRPERSON: Yes. But, I mean, my question was: If I buy your model, do I not automatically
drive down the contributions to Canadian content, to Canadian distribution, et
cetera, because the market forces ‑‑ I mean, if you want to
talk market forces, you have the reality that this is a smaller market. You earn your bucks on a smaller base than
you do in the States, et cetera. So there
are different economies of scale here.
You have to take this into account.
14264 You are not going
to ‑‑ everybody is going to try to get the biggest market
possible and you are not going to do that by being differentiated in having
small separate niches as we have right now.
You are going to have a morphing towards the middle.
14265 We can argue
whether the morphing will be towards five channels, 10 or 12, but to suggest it
is going to stay the way it is right now with the number of specialty channels
we have, I think it is basically illusory.
14266 MR. STEIN: Let me go to another example, is going to the
Internet and looking at what ‑‑ I mean, it's interesting, we
met with one group of government officials who said to us you know ‑‑
we said we are concerned about this kind of protectionism ‑‑
not of your view, Mr. Chairman, but of others who have expressed ‑‑
and they said why are you worried about it?
The CRTC is irrelevant to anybody under 30.
14267 Now, what you are
saying is that ‑‑ so does that mean that all those people who
are under 30 are less Canadian? In fact,
they are more Canadian. They watch more
Canadian TV.
14268 You know, as part
of the Shaw Rocket Fund board, we meet with people who are involved in youth
and youth studies, et cetera, and they say the number one most important thing
to kids is their cell phone and most important application is message
texting. The next most important
application is the Internet and YouTube and Facebook and all those kinds of
things. And then number three, and
probably a distant number three, is television.
They love it, they like it, but it is certainly number three.
14269 So what we feel is
that if you want to build cultural industries, you have to be in to respond to
those kinds of expressions and need that are out there by Canadians. And as that generation grows up and also has
more influence over the older generation, then we are going to have to make
sure that we have an industry that is able to satisfy that. And that is what Canadians want. That's what we want.
14270 THE
CHAIRPERSON: That's what we want. We are right on the same wavelength. I'm concerned about the media. You know we are going to have a big hearing
on this issue. I'm concerned about being
relevant. I am concerned about having
something that Canadians want. There is
no question about it.
14271 The question is
you are going from one extreme to the next.
Part of this hearing is to determine, as we said at the outset, what we
can take off you basically saying, unless I misread you, is let her rip. The only protection is going to be consumer
preferences and preponderance. And I say
fine, if I buy that I still ‑‑ you tell me what assurance or
what likelihood is there that the broadcasters' contribution to hold Canadian
content will stay where they are.
14272 I guess you are
telling me you hope that it will be in the self‑interest to do that, but
that's about the only assurance you can give me
14273 MR. STEIN: Well, right now I would say let's judge it by
the experience we are having. If you
look at the analog services, the Cat 1s and the Cat 2s, the services that have
to be the most responsive to the marketplace, to dealing with distributors and
consumers, are the Category 2s.
14274 So what we are
suggesting ‑‑ you know, you are saying we are suggesting a
total abandonment of the rules. We are
not. We are saying as we move into a
digital environment, everybody becomes a Category 2. Right?
Fine.
14275 THE
CHAIRPERSON: Yes.
14276 MR. STEIN: And what's wrong with that? They are great services. They are doing well and they will continue to
do well, and they will meet the expectations.
14277 Again, Canadians
want Canadian services.
14278 THE
CHAIRPERSON: Okay. As you know, Cat 2s have a lower Canadian
content and they have no CPE, so you are making exactly my point of all coming
down to the Cat 2 level.
14279 MR. STEIN: Well, to us it's not a question of coming
down. It may well be a question of
coming up as well.
14280 You know, we just
firmly believe that in competitive markets we have to respond to the demands of
our customers and having content providers also in this world that we are
facing over the next number of years have to respond as well to that.
14281 It's interesting,
when you did your Technology Review there was one common view that everybody
expressed and that is that the world is changing. Right?
14282 But then there was
two very distinctly different approaches to dealing with that change. There was a whole group of people who said
oh, my goodness, the world is changing.
We have to come in off all these regulations and all these protections
and all these subsidies to ensure that the world we have is sustainable through
that time period, and a whole group of other people, of which we were one, who
said no, if you are going to deal with this new world, you have to mirror
it. You have to become deeply immersed
in it and involved in it and have to be able to respond that way.
14283 So that is the
view that we have: that by being able to
respond to that kind of environment ‑‑ I mean, I see more in
the programming side from looking at it from the perspective of the Rocket
Fund, and it is amazing what Canadians are able to do on that side. It's amazing the kind of reputation we have
around the world for what Canadian creative people are able to do with
children's programming and link it into the web, et cetera. And unleashing that to me would be the most
important thing we could do.
14284 My view is that
the current system does not allow that to happen.
14285 In fact,
children's programming is a perfect demonstration because the amount of money
being invested in Canadian programming by broadcasters and others has
absolutely declined over the last number of years.
14286 THE
CHAIRPERSON: Okay, I think we have
beaten this subject to death.
14287 By the way, don't
read anything into my question. All I'm
doing is testing the ideas that are put forward against yours, which are
different. Where we come out is to be
decided by us and the entire Commission.
14288 So as you have
done until now, as I say, don't read the tea leaves. I am giving everybody a hard time, asking
everybody the same question from the other side.
14289 Let's go to fee
for carriage.
14290 Your position is
very clear. You are against it. Essentially your basic argument is they don't
need it. Both the two largest services
in Canada have just made massive acquisition and they clearly, you know ‑‑
if they were suffering financially, they wouldn't have been able to buy either
Alliance Atlantis or CHUM.
14291 Second, I mean I
heard their submissions; you heard them, as everybody, it was somewhat self‑serving,
you know. I don't for one second believe
that they went to their bankers and said we have this flat over the air
business, it is not going, it is not going anywhere, but please finance us for
$1 million to buy all these specialty channels.
Yes, there will be some synergies, but they are minor.
14292 That is how it was
presented to us. Clearly that is not the
case. It was a sober business decision
and they saw great potential in cross‑marketing, in joining their OTA
with the specialty channels to convince their bankers and their investors that
this was a good deal.
14293 We approved them
and I wish them all the success.
14294 With that being
said, they are in the OTA business and the OTA business is our prime vehicle
for local content. All the figures show
it is flat. It has now been flat for two
years, and I don't see any indication that it is going to grow.
14295 You say well yes,
but this is corporate family and they can cross‑subsidize, et
cetera. We both know cross‑subsidization
is economically irrational behaviour. If
you have a business and you have several divisions, one of them works and one
of them doesn't work, one is fruitful, et cetera, yes, you will maintain them
but you will try to cut down the costs and you are going to try to turn the
unprofitable one profitable rather than support it with the proceeds from the
other.
14296 If you do that,
what is going to suffer is the local content, yet that is one of our key
considerations. This is our prime
vehicle for local content.
14297 You in your
submission this morning say they have violently rejected any tying of the fee
for carriage to local content. You have
heard something differently than we. I
heard sort of a lukewarm response, but I didn't hear violent response. But be that as it may, I thought we made it
quite clear that we said if there is a fee for carriage, we are asking the
question: Should there be one? What should be the amount and what should be
the obligations?
14298 It is not sort of
an ongoing free operating subsidy for OTA.
That is not anybody's suggestion.
14299 So in that
context, is there any form of fee for carriage that to you would be acceptable
if it is tied, let's say, to incrementality or specifically to local content or
if it is time‑limited; you say yes, this is the cornerstone of part of
our local content, there is no question, but we want to make sure that this is
really ‑‑ that you are also taking some steps to fix it,
et cetera.
14300 So rather than
taking the position that you are saying a flat no, are there variations on the
theme?
14301 MR.
BISSONNETTE: Absolutely not. I mean, I think we have given you 50 reasons
why fee for carriage shouldn't be considered by the Commission.
14302 In terms of the
enterprise, you are absolutely correct that the enterprise comprises of
specialty services and over the air broadcasters and they have it within their
purview to make decisions to bolster the over the air side of the business if
they choose to. They are now in a better
position to do that by virtue of the synergies that they are going to benefit
from from the acquisition of those specialty services.
14303 They are now a
much stronger conglomerate, with much more moving parts, with much more
creative groups that they can call upon.
There is nobody restricting them in terms of making their over the air
broadcast services more attractive than themselves. If they chose to do more local programming,
it is absolutely within their discretion to do so.
14304 So we think that
there is not one iota of an argument that there should be a fee for
carriage. You know, they have discretion
to change their advertising rates if they want.
They can be more appealing to advertising. They can do things within their own operating
structure in terms of becoming more efficient.
We know that that is one of the drives that they have.
14305 But we don't see
one iota of an argument that they should be passing on their costs to our
customers.
14306 THE
CHAIRPERSON: What would you do without
OTA?
14307 MR.
BISSONNETTE: Well, you know it's ‑‑
14308 THE
CHAIRPERSON: Isn't OTA something that
Canadians really do want to watch? It's
one of the prime things. You put it in
your basic package. You would put it in
there even if we didn't force you to.
14309 I mean, when I say
it is a cornerstone of the system, let them do what they want.
14310 MR.
BISSONNETTE: Well, we are not saying
that. We say that they have a role
within the broadcasting system. They
have a responsibility within the broadcasting system to program with each of
their "B" contour locations and they do a very, very good job of
that. We just don't buy the argument
that they for some reason have overnight become unprofitable based on their
behaviour.
14311 They have priority
carriage. We have given them all of
the ‑‑ you know, we work very closely with broadcasters. We actually work very collaboratively with
them in our local regions where they have ‑‑ you know, where
in the past they have had technical issues and we have worked together with
them. We recognize their
importance. But we also recognize they
are just one small portion of what we provide to our customers.
14312 They have control
over the viability, economic viability of those over the air transmitters.
14313 MR. STEIN: In terms of the over the air, I mean it is
interesting in the Bell submission they filed evidence in terms of the viewing
of Canadian broadcasters and pay and specialty, and the most fascinating
probably about that is the success of the combination of broadcasting and now
they own those services.
14314 So we are not
saying the over the air is not important.
It's just that with that kind of a combination, the corporations are
strengthened. That was the whole basis
of their submissions when they appeared before you, is that they are
strengthened.
14315 So their ability
as over the air services to meet the responsibilities is still there.
14316 So we think that
to go to Canadians and say to them well, you know, the world has changed and
you are now going to have to pay for it ‑‑ and, by the way, we
are not asking the people who have over the air receivers and aren't using
cable to do this; we are asking just cable and satellite subscribers to pay for
this.
14317 So it seems to us
to be a bit ironic, if not contradictory, to be able to tax cable and satellite
subscribers to fund over the air services.
14318 THE
CHAIRPERSON: Oh, come on, 90 per cent of
Canadians, or somewhere in that neighbourhood, receive their over the air via
cable or satellite. So I mean that is a
little bit of a facetious argument to say you are asking the cable
subscribers. They are the very ones who
receive the service.
14319 MR. STEIN: Well, we don't ‑‑ our
penetration rates are 50 per cent; they are not 90 per cent.
14320 THE
CHAIRPERSON: Not yours, but ‑‑
14321 MR.
BISSONNETTE: In terms of the overall
conglomerate of BDUs, you are saying 90 per cent get it through that; that's
correct.
14322 MR. STEIN: Well, if you have a black‑market dish,
you don't have to pay.
14323 I think the thing
is that to go to people, to go to 9 million, 10 million Canadian households,
and say to them that you are going to pay $5‑$10 a month to support three
or four companies, this seems to us to be not a good policy and that that is
something that we think is inappropriate.
14324 THE
CHAIRPERSON: Okay. But three or four companies, you say. First of all, we talk about a local
broadcaster and then more than three, but there are three big ones, I agree
with you.
14325 But secondly, what
we talked about is it being incremental and it going to the actual local
station, not going to the network, right, so that the fee for carriage would
actually ‑‑ so that is one of the questions my colleague
Michel Arpin posed: Shouldn't it go to
that local station in Moose Jaw who are putting on the content for Moose
Jaw? They should get the money so that
it is incremental over what they get presently from ‑‑ let's
take CTV or whatever ‑‑ from their parent.
14326 MR. STEIN: They are already getting money through Star
Choice and Bell. I mean at the last
hearing the small broadcasters from those areas said that they had a home run. So their PBITs have improved significantly.
14327 So I don't think
it is appropriate to use those small systems as an example.
14328 But to say to the
people of Toronto that you have to pay, or the people in Calgary, that you have
to pay extra because CFCN requires that money to do their local programming, we
just don't think that is going to fly with Canadians.
14329 THE
CHAIRPERSON: I am being reminded by my
colleagues of the call of nature here.
14330 I am not finished
with you, but let's take a 10‑minute break.
‑‑‑ Upon recessing
at 1042 / Suspension à 1042
‑‑‑ Upon resuming
at 1102 / Reprise à 1102
14331 THE
CHAIRPERSON: We were on fee for
carriage, your favourite subject.
14332 As I mentioned,
tying it to local content, incremental, and putting a period of time on
it ‑‑ let's take a period, five or seven years or something,
and then to revisit or review.
14333 That does not make
the concept any more acceptable to you, I gather. You still think it is, basically, wrong.
14334 MR.
BISSONNETTE: Mr. Chairman, you have
ascribed a kind of cornerstone positioning for local broadcasters, and I think
that Alex Park, who is our Vice‑President of Programming, would be
rolling his eyes right now, because in Calgary alone we produce over 8,000
hours of local programming, local relevant programming, that is intended to be
attractive and meaningful to those in each of the communities that we serve,
and we have no exclusivity, if you will, on local programming.
14335 The broadcasters,
as an example, have created certain voids within local programming that we are
quite happy to fulfil, because our customers really appreciate what we do in
terms of animating the local communities that we serve.
14336 As an example,
last year and the year before, and this year, we had the blessing of being able
to carry Western Hockey League hockey games, which are taking place right in
our communities, whether it is in Saskatchewan, Saskatoon, or Vancouver, or
Calgary, or Prince George, and our customers really appreciate the fact that we
have taken the time and made the effort to make those games available to them.
14337 The broadcasters
could easily do that. Instead of
spending money buying U.S. programming, they could do more, and focus more on
the local communities with those resources.
They could do, we are sure, a tremendously good job.
14338 We do that good
job. So, in terms of a being a
cornerstone, local, over‑the‑air provider, we are a cornerstone
cable‑casting local provider of community programming, and it is greatly
appreciated by our customers.
14339 There are more
than just the over‑the‑airs that are doing that kind of
programming.
14340 But they have a
choice to make, and they made the choice to spend more of their dollars on
acquiring U.S. programming, in competition with each other, driving up the
prices of that programming, as opposed to doing more local programming.
14341 THE
CHAIRPERSON: That kind of goes back to
what I said, that the OTA is the cornerstone of the system, and that has been
so historically.
14342 We started off
with having OTA ‑‑ we imposed upon them obligations on Canadian
content, on exhibition, prime time, et cetera.
At one point in time they had CPE, et cetera.
14343 Then we developed
the whole specialty system, and then along came the BDUs, of course, which
added great, enhanced distribution, et cetera.
14344 This all started
with the OTAs, so that's why I talk about the OTA as being the cornerstone.
14345 And, yes, you are
saying that they are spending far more money than they should on foreign
programming, and that is really what their problem is, rather than ‑‑
14346 That may be right.
14347 And, of course,
they say: That's how we get the viewers,
who then stay for the Canadian programming.
14348 I am not going to
get into that, but what I clearly see is that the local programming, which is
not exclusive, you are absolutely right ‑‑ their community
channels vary ‑‑ their specialty channels ‑‑
but, by and large, local programming is delivered by them, and it has been
progressively reduced, cut back, et cetera, yet it is a very key part of the
system.
14349 One way to address
this issue, which they have come forward with, is fee for carriage.
14350 In fact, I went
one step further and said, "Well, if that's how you justify it, then let's
tie you to it. I want to see some bang
for the buck."
14351 Rogers was here
and said: Why are they getting fee for
carriage? They will get exactly the same
after the fee as before.
14352 I said: Well, that can easily be changed. If you specifically tie it, you provide an
incremental, et cetera. If you provide
it, it goes to the local ‑‑
14353 By the way, as a
parenthesis, Rogers, I owe you an apology.
Your basic package is not 65 in Toronto, but 38. CBC misrepresented you, so my apologies,
panel.
‑‑‑ Laughter /
Rires
14354 THE
CHAIRPERSON: Back to OTA.
14355 MR. BISSONNETTE: I know that you are being provocative ‑‑
14356 THE
CHAIRPERSON: No, I am trying to say,
"Here, look ‑‑ "
14357 MR. BISSONNETTE:
‑‑ but what evidence have they given us ‑‑
what evidence have they shown you that they have the need?
14358 We haven't seen that.
14359 And in terms of
the purpose of fee for carriage, what did they tell you with their own
voices? They told you that it is, in
fact, to increase their profitability.
14360 And even cajoling
them, as you did, to try to get some commitment on increasing their Canadian
content, they resisted that by saying:
No, this is just to fix the cracks .
14361 They haven't shown
any evidence that they have the need.
They have the resources and they have the wherewithal to do more local
programming, if they choose to do it, and they have chosen not to do it. They have said: We just need this to improve our PBIT.
14362 THE
CHAIRPERSON: I thought it was CBC who
said that it was to fix the cracks, but there have been so many
representatives ‑‑
14363 MR. BISSONNETTE: There have been too many cracks here, haven't
there?
‑‑‑ Laughter /
Rires
14364 THE
CHAIRPERSON: Let's go to the related
subject of distant signal. We spent a
lot of time on it here. First of all,
Rogers was saying: We are not the
problem, it's the DTH.
14365 And the DTH was
saying: No, we're not the problem. We pay, too ‑‑ et cetera.
14366 Then, when CTV and
Canwest were here, they said: Yes, well,
they pay something, but this isn't the value for it, and this is our
signal ‑‑ the position of CTV basically being that sim‑sub
is the second best anyway.
14367 We pay for the
Canadian rights, so we should have exclusivity.
If you want to protect us, that's fine, but then make it ‑‑
14368 And when you do
time delay, or station shifting, we lose the value of those programs that we
paid for. So the only way to do it ‑‑
and it's very simple ‑‑ give us the right to ‑‑
that they have to negotiate consent from us for a distant signal.
14369 What do you say to
that?
14370 You say in your
submission that you offered to renegotiate, which, by the way, was news to
me. But, even so, obviously those
negotiations have not been taking place.
14371 MR.
BISSONNETTE: Yes. We are able, willing and ready to negotiate,
as we committed at the last hearing, and that hasn't taken place. Essentially, they have no interest in talking
about that.
14372 We have a package
of distant signals, and we have it because, once again, our customers have
really made it clear to us that they enjoy having those distant signals.
14373 I don't think
there is any lack of recognition by the broadcasters that that is the
case. In fact, when we were constituting
our packages of distant signals, they were very clear that they wanted to be
included in that package, because they saw value in it.
14374 So it's not just a
take, if you will, which is being characterized as us just taking these signals
and willy‑nilly putting them somewhere, they wanted to be included in
those distant signals.
14375 And to the extent
that they can monetize the benefit of those, again, we think that they have the
full capability to monetize those distant signals.
14376 And to the extent
that you would give them an easier path, or a path of least resistance to
getting money for those, that is the approach they are going to take.
14377 But sitting down
and collaboratively talking about what is the benefit to our customers, what is
the value to our company to have those services, and how do we do that, we
haven't had those discussions.
14378 THE
CHAIRPERSON: From that, I take it that
if we accede to Canwest and CTV and say yes, they cannot retransmit without
your consent, so then negotiations will ensue, you will negotiate and you will
cut a deal, because customers want it.
14379 I have heard for
the last two and a half hours that the customer is king. Shaw wants to please its customers. So, if the customers want time shifting, you
will offer it. In order to do that, you
have to cut a deal with CTV.
14380 So what is the
problem with us acceding to Canwest ‑‑
14381 MR.
BISSONNETTE: You are characterizing them
as apostles, that they are very enlightened, and that they are easy to deal
with, and they are not.
14382 THE
CHAIRPERSON: That's your word, it's not
mine.
14383 MR.
BISSONNETTE: The reality is, it's not
that simple.
14384 We have commercial
negotiations with broadcasters all the time.
14385 We would love, for
instance, to move TSN to basic. They
don't want that. We say that you get
more eyeballs if you are on basic. They
say: No, the rates of those services are
greatly differentiated. The economics
don't make any sense to us.
14386 It is not as
simple as just saying: They will give you your consent because they are
enlightened. It doesn't work that way.
14387 THE
CHAIRPERSON: Let's stay with this. Why would CTV not ‑‑
14388 I mean, you say
that there is customer demand; they say that there is a value in it, which you
don't recover right now.
14389 Now, obviously,
you would have to strike a deal, but why would it be not in their interest to
negotiate with you?
14390 MR. STEIN: The background on the distant signals ‑‑
14391 Let me start on
the satellite side first, because there were a number of negotiations with
respect to that.
14392 Distant signals
have been part of a satellite subscriber's package for years, because of Cancom
and picking up Detroit signals and making them available.
14393 When there were
first proposals to come to a satellite system in Canada, the government
rejected the Commission's approach, which was to be a controlled, regulated kind
of approach, and said: No, we want a
dynamically competitive one.
14394 So we went to a
dynamically competitive model, which also has to be competitive with cable, and
we tried to balance it, and I think we did succeed in balancing it by
saying: Okay, we are going to carry a
lot of different signals across the country, but in order to be able to do
that, we have to make them available to our customers across the country.
14395 Because they have
advocated a local kind of approach, it just won't work. We don't have the capacity. You couldn't have a competitive market for
satellite in Canada if you forced that on the satellite business in this
country. Geography, et cetera, wouldn't
allow you to do that.
14396 The signals are up
there, and we carry them. We probably
have more up there than we actually want, but that was part of the negotiation.
14397 So they are up
there. Are we willing to compensate for
that? On cable we do.
14398 On the satellite
side ‑‑ and Cynthia can go into this more ‑‑
we already pay the uplink. We pay to put
them up there. We pay to deliver them
into their local market. We pay into the
Small Market Fund at the CAB, as well.
14399 We also pay for
the transponders.
14400 So there are a
number of costs to the satellite side in providing those signals, and the
benefit of that is that we are able to offer them to our customers.
14401 We are able to do
two things. We are able to offer them in
the local market, and we are able to offer time shifting to our customers.
14402 If we went to CTV
and they said, "No, we don't want you to carry that any more," then
we would say, "Okay. Does that mean
we don't have to carry it into your local market?"
14403 It would be very
difficult for us to have to carry it, put it on the satellite, and then not be
able to deliver it to people.
14404 So that's where it
is.
14405 And then, when you
get into the negotiation, the retransmission consent becomes difficult.
14406 We feel that if we
are required to carry the service, then we shouldn't require their consent to
be able to offer that into another market, but we are willing to sit down and
negotiate a commercial arrangement.
14407 THE
CHAIRPERSON: I'm sorry, I don't follow
at all. I don't see why the negotiations
between you and CTV regarding distant signals would be any more problematic
than any other negotiations between you and the broadcaster.
14408 They are
problematic. They are difficult. I am sure that both sides struggle with them,
et cetera, but why is the distant signal a special case? I don't follow.
14409 MR. STEIN: We are willing to negotiate; it's the consent
that is the issue.
14410 THE
CHAIRPERSON: But you have to do that
now. You do that when you negotiate
with, for instance, a Cat 2. Right?
14411 You can't
distribute them unless they consent.
14412 On the other hand,
they want to be carried by you, so there is an obvious meeting of interests
somewhere in the middle.
14413 It's the same
here. If CTV's distant signals are
carried by you, it is more money for them.
They can monetize. They can
charge more for their advertising. It's
a cost to you. You have to come
together, but why are these negotiations in any way different from any other
negotiations between broadcasters and BDUs?
14414 MR. STEIN: Because the consent ‑‑ they
still require us to carry it.
14415 So the consent
isn't to carry it, the consent is to carry it into a different market.
14416 THE
CHAIRPERSON: The distant signal you
wouldn't have to carry.
14417 MR. STEIN: No, but I have to put it up there.
14418 THE
CHAIRPERSON: Why?
14419 MR. STEIN: Because you people ‑‑
because I am told that I have to.
14420 THE
CHAIRPERSON: On cable?
14421 MR. STEIN: No, on Star Choice.
14422 THE
CHAIRPERSON: I am talking about cable.
14423 What requirement
do you have to put on, in Toronto, a distant signal from Halifax? None.
14424 MR. D'AVELLA: On cable, they are already compensated. There is no issue on cable, they are getting
paid.
14425 The issue in
satellite is, we haven't even begun negotiations. They don't want to talk about it because they
are waiting for the consent hammer.
14426 If they get the
consent hammer, then it shifts to them.
They have the ability to say: You
are not going to carry any of them.
14427 That is contrary
to what they actually want. They want
them all carried.
14428 THE
CHAIRPERSON: And you want them.
14429 You want it
because of the customers, and they want it because they will make more money.
14430 I still don't see
how ‑‑
14431 MR. D'AVELLA: That's our point. Let's have a discussion. Let's have a negotiation.
14432 If the negotiation
doesn't work, then the Commission could take another step.
14433 MR. STEIN: I think it is important to distinguish
between the DTH and the cable situation.
14434 With the DTH
situation, it's a requirement that the signals be up there, and if the signals
are going to be up there, and we aren't able to time shift those signals, the
whole economics of the competitive marketplace in Canada will fall apart.
14435 THE
CHAIRPERSON: Okay. Let's assume, for argument's sake, that I
will accede to that argument. That still
doesn't mean that we couldn't say: Fine,
we will have one rule for DTH, but another one for cable.
14436 And, on cable, you
can't do time shifting without consent.
Logically, from everything you have said, DTH does not apply to cable.
14437 MR. STEIN: We are not in Geneva, I guess, but Canada
doesn't recognize retransmission consent, as you know. So what we are saying is: Why would we apply in Canada what we refuse
to apply internationally?
14438 MR. FERRAS: I think there is a big problem, too, with
that idea. Those signals are already up
there, and they are serving the broadcasting system very well. They are very popular with customers.
14439 And, suddenly, if
there was a consent requirement, and we couldn't get it, and they took them
down as a condition of the negotiations ‑‑
14440 We have to think
about consumers. Those signals are up
there. It's not like it's a Cat 2 that
is trying to get access, or any other service that is trying to get access; we
have a situation where the Commission approved cable to carry these services in
2000, for a very good reason, and we are distributing those signals.
14441 Just to be clear,
there is no impasse in terms of the discussions, there just haven't been
any. The plan, as presented to us by the
broadcasters, was, "Let's wait for the Commission's decision on TV
Policy." And then this hearing
happened, and they said, "Let's wait for that decision, and then we will
sit down and discuss."
14442 So, just to be
clear, there is no impasse in terms of negotiations.
14443 THE
CHAIRPERSON: I see.
14444 There is a sort of
flavour to all of this. You are not
against negotiation as long as you have the hammer, but if the other side has
the hammer, you don't like it.
14445 MR.
BISSONNETTE: No. Actually, nobody has the hammer now, but you
are going to actually hand the hammer to them.
14446 In terms of real,
legitimate, good‑faith bargaining, negotiations, discussions, between
ourselves and the broadcasters, giving a hammer to either one of the parties,
in fact, creates an imbalance in those discussions.
14447 That is all we are
saying, that the consent is a hammer. Do
not consent; there are other ways of dealing with that, and they are good,
commercial negotiations.
14448 And we are
prepared to pay for those signals. So it
is only a matter of degree. And if the
degree doesn't work, then we come to you.
14449 MS RATHWELL: Mr. Chairman, just to build a bit on
something that both Ken and Mike alluded to, Ken noted that there are
proceedings currently going on in Geneva ‑‑ or, he said that
we are not in Geneva.
14450 What is happening
in Geneva, albeit it is a very long process, is movement toward an
international signal rights treaty.
14451 This is a copyright
matter that is under consideration in that forum. Progress toward a draft has been slow, but
this is a slow process that BDUs and broadcasters have been engaged in with the
Department of Canadian Heritage and the Department of Industry, to talk about
potential ramifications on an international level of the introduction of
retransmission consent.
14452 It has been the
position of the BDUs, as a group, that this could result in two scenarios that
are not necessarily in the best interests of cable and satellite consumers in
Canada.
14453 What Michael was
speaking of, in the context of, I think, narrowly Canadian signals, but which
is equally problematic, is the notion that this could lead, and reasonably
could be assumed to lead to demands by U.S. broadcasters for retransmission
consent.
14454 That could lead to
denials of service that would be simply unacceptable to our customers.
14455 Secondly, it could
lead, plausibly, to demands for remuneration.
14456 A study was
prepared, which we tabled with the government a couple of years ago ‑‑
and I believe it was tabled by Bell in the TV Policy Hearing last year ‑‑
where the value of lost revenue ‑‑ or lost value to our system
going to U.S. broadcasters could range anywhere from $350 million a year to $570
million a year for the carriage of distant U.S. broadcasters in Canada. That model was built on conservative
estimates of what U.S. broadcasters are currently charging within their own
retransmission consent regime in the United States.
14457 So I think that
this issue goes far beyond what is necessary to produce local programming, or
whatever, and we have to look broadly at the issue.
14458 THE
CHAIRPERSON: I'm sorry, I don't buy that
at all. I am very familiar with
retransmission. I know what is going on
in Geneva. It has no implication on
this.
14459 And by the time
Geneva comes around, we will all be retired.
‑‑‑ Laughter /
Rires
14460 THE
CHAIRPERSON: Let's stay with the issue
before us.
14461 And we are not
talking about U.S. signals here, we are talking about Canadian signals,
retransmission with Canada, a regime that is here.
14462 As far as the
retransmission of U.S. signals, we dealt with that in the FTA and NAFTA.
14463 But let's not go
there, we are not talking about the FTA and we are not talking about trade
issues.
14464 What about the
related issue of station shifting, which Canwest and CTV raised?
14465 You do
simultaneous sub for stations in the same market for the first set of four‑plus‑one's,
which I understand, but not for the second set.
14466 Let's say, if a
program is seen in Toronto at the same time as in Buffalo, there is
simultaneous substitution. But if that
same program is also on a second set of four‑plus‑one, let's say,
from Syracuse or something, then the sim‑sub doesn't apply and people, in
effect, can shift stations and watch it, et cetera.
14467 If I understood
them correctly, they felt that it should be across the board. You should do the simultaneous substitution
on everything that you offer in the same time period, so that a CTV
program ‑‑ let's say "Desperate Housewives", which
seems to be everybody's favourite. If it
appears on another U.S. station, regardless of whether it is the first four‑plus‑one
or the second or the third, it should be all simultaneous substitution.
14468 MS RATHWELL: I believe that if it is the same time zone we
do simultaneous substitution.
14469 At Star Choice, we
have an original channel override capability that does that across our system.
14470 And what's more,
both on the cable and on the satellite side, we do pay 25 cents per sub per
month to the broadcasters for the carriage of the second U.S. four‑plus‑one.
14471 Just to set the
record straight, I know there has been some implication before that Star Choice
pays nothing currently for the retransmission of Canadian distant signals, but
we have calculated the value of money and in‑kind costs of carrying local
broadcasters, and it works out to about 96 cents a month for the distant
Canadian ‑‑
14472 THE
CHAIRPERSON: I know. I appreciate that. But in the CTV and Canwest submissions, they
talk about the distant signal, the time shifting and the station shifting. They said that there are two related issues.
14473 Let's say that you
are in Winnipeg. You can watch the news
of one of the Toronto stations, thanks to time shifting.
14474 But they also were
worried about station shifting, in terms of simultaneous substitution.
14475 You are in
Winnipeg, yes, but there is no simultaneous substitution because it is a
different time period, yet the program is being shown on a four‑plus‑one,
presumably coming out of Minnesota or something, and it would have the American
ads.
14476 Am I talking
rubbish here, or are you following me?
14477 MS RATHWELL: No, I think perhaps what we are talking about
is same time zone/same network viewing.
14478 So if you are in
Toronto, you would have the option of watching another Eastern Time Zone signal
of the same network.
14479 That would be not
time shifting, but ‑‑ I guess one could call it station
shifting.
14480 For Star Choice,
within the small markets ‑‑ and we recognize the challenges of
those markets ‑‑ our system is technically capable of
effecting simulcast over same network/same time zone signals, and we have been
very good at doing that.
14481 Our system cannot
sustain doing substitutions in the larger markets. It is technically impossible for us to make
that many substitutions, because they occur at the set‑top box level.
14482 We do our best,
and we do it very well, compared to other DTH companies on that count, but we
think it's a substantial contribution as it is.
14483 THE
CHAIRPERSON: There will be an
opportunity to make further submissions, and I would ask you to look at the
CTV/Canwest submission on station shifting and what they ask for ‑‑
whether you can accede to it or not, or what problems it would cause.
14484 At first glance,
it sounded like a very reasonable request.
14485 The last issue is
BDU advertising on VOD, SVOD and local avails.
14486 You are clearly
asking for it, and so ‑‑ surprise, surprise ‑‑
is every other BDU.
14487 We have heard an
awful lot of submissions here about the danger of VOD ‑‑ and
let's deal with the first issue first ‑‑ of VOD and SVOD ‑‑
because it's controlled by you and you have acquired the rights, it has a
danger of becoming ‑‑ there is a fear of bypassing regulation,
in effect, offering linear programming at any time in another guise of VOD or
SVOD.
14488 I have asked
others, and I am asking you the same thing.
Where is the golden thread? Where
is the logical dividing line between VOD and SVOD showing again from a linear
program and regular linear program ‑‑
14489 How should we
approach this?
14490 This is turning
out to be a major issue of concern to most broadcasters.
14491 MR. D'AVELLA: Mr. Chairman, I will start.
14492 The VOD part of
our business is still a very small part.
It is really in its infancy, and it is going to be driven, obviously, by
the growth of digital set‑tops.
14493 Most of what we
buy we buy directly from program owners, as opposed to broadcasters, because
most broadcasters don't really own any VOD rights for the programming they
buy. Some do. Some are buying more rights.
14494 And the models
right now are entirely pay‑per‑views. If you have decided that you want to watch
the Rocky movie on VOD, you are going to pay whatever the price is, $4.95 or
$5.95, and that is always a revenue share with the program owner.
14495 We offer very
little free‑on‑demand. Free‑on‑demand
is something that Comcast has done extraordinarily well with, because they have
a lot of it. They can get a lot of
programming, and they have a means of paying for it by, essentially, inserting
advertising.
14496 It is clearly an
opportunity for the Canadian broadcasting system, and we think that, as
broadcasters and programmers actually get their minds around the VOD
opportunity and actually start acquiring some of those rights, we are quite
happy to do these deals.
14497 There are deals
where, if CTV wants to make "Corner Gas" available on VOD, we are
happy to do that.
14498 You can do it on
an episodic basis, you can buy the entire series, you can do whatever you
want. And, typically, the model would
be: Let's make it a free‑on‑demand
service, but we are going to figure out how we split the advertising, or share
the advertising.
14499 Or, some of the
proposals we have seen are: Why don't
you pay us a few hundred thousand dollars, and then you can make it available
any way you want.
14500 We have no ability
to recover that, if we make it a free‑on‑demand service.
14501 We do some
subscription video‑on‑demand.
It is not free, it's pay, and it is largely from the premium movie
services. They are the ones providing
the content for that.
14502 Apart from the
Hollywood studios, which, essentially, own all of this product, there are very
few other companies that are licensing VOD content, let's say, in sort of the
North American market, if you will.
14503 The real
opportunity here, for both us and the broadcasters, is, once they get their
minds around acquiring VOD rights for U.S. network programming, that's where we
think the opportunity really begins to make some sense.
14504 THE
CHAIRPERSON: Thank you for that
description.
14505 But I was looking
forward. I mean, what the broadcasters
are worried about is that you somehow disintermediate them, that is really what
it boils down to.
14506 And what they are
wanting to ‑‑ and what has been suggested to us, that
everything that goes on, VOD or SVOD, you should be obligated to buy it from
the Canadian rights holder and can't go directly to, let's say if it is a
foreign rights holder or something like that; and, secondly, so that clearly
you have to do a deal with them, and also, if there is any advertising on those
or if there is any dynamic advertising substitution or something, that should
be subject to a sharing basis with the rights holder, the Canadian rights
holder.
14507 That is what was
put to us by various people in different formats.
14508 What is your
position on that?
14509 MR. D'AVELLA: Well, with respect to buying the rights, I
mean, that's clearly their prerogative.
They have the ability to do that and they're probably in the best
position to do that since they're paying the most money for the first run
rights in any event.
14510 And what we do
know from reality is, you know, you can't buy a program from NBC for VOD
because they're basically saying, look, I've already sold this program to CTV
or Global and I'm not going to jeopardize that business by selling you a VOD
right.
14511 So, they're
already No. 1.
14512 THE
CHAIRPERSON: Just on that point ‑‑
I'm sorry to interrupt you ‑‑ but I heard exactly the same
opposite from somebody and he's saying, every time you want something
different, a different right you have to pay for it, just because CTV has a linear
program does not mean they have the VOD right and if you want SVOD there is
another right, et cetera, but, in effect, each time the counter runs again.
14513 So, that is the
experience of the broadcasters. Is that
not true?
14514 MR. D'AVELLA: Yeah, absolutely. They don't necessarily buy the VOD rights and
they don't buy the rights because they probably don't see a means of monetizing
them.
14515 THE
CHAIRPERSON: But does that prevent you
then from buying the VOD rights?
14516 MR. D'AVELLA: It typically does because the U.S.
programmer, the guy that actually owns these rights, is not going to sell them
to us because he's saying, wait a minute, I've got this great business with
CTV, I'm not going to jeopardize it by selling VOD rights to a company that's
got 800,000 VOD customers. It just
doesn't make any sense for them.
14517 And the only ‑‑
you know, this is going to evolve and it
would be in their interest and the broadcasters' interest to become, obviously,
much more active in this. And they know
all about it, I mean, there's no news here.
14518 And, again, a lot
of the models we've seen from them are, you do what you want with it, but you
pay me $3‑million for this particular series of program and then you can
decide whether you want to charge for it or whatever.
14519 Advertising within
VOD programming, targeted advertising or whatever, is a good concept, it's an
interesting idea, there are ways of doing this, it's another way of generating
revenue.
14520 It's not
necessarily something that we would want to push because not every model's
going to be the same. I mean, if they
come to us and say, I've got "Desperate Housewives", I've got the VOD
rights to it but here's how we're going to work out the revenue share. We've sold this advertising, we're going to
pay ‑‑ you know, we're going to share that with you guys if
you make it available free, or they'll say, charge whatever you want for it but
I'm already compensated because I've already sold the advertising on it.
14521 So, it's not ‑‑
none of this is cast in stone, it's still very much evolving.
14522 THE
CHAIRPERSON: But two different points
here.
14523 On your first
point that they don't want to jeopardize the right, I would have thought the
Hollywood ‑‑ let's say a Hollywood rights holder says, here,
I've got this relationship with CTV, I sold them the linear program, maybe
they'll give them the right of first refusal to the VOD, but if CTV doesn't buy
it, why not sell it to Shaw and get an extra dollar and you don't jeopardize
the rights by giving CTV the right of first refusal.
14524 I don't see that
that necessarily means that you don't have access to those rights.
14525 MR. D'AVELLA: That's correct, but that's not where the
discussions have been to date.
14526 THE
CHAIRPERSON: I see.
14527 MR. D'AVELLA: And look, I mean, if they don't want them,
then obviously somebody else is going to buy them.
14528 THE
CHAIRPERSON: Okay. The second point, we have heard a lot about
this dynamic ad insertion and tailoring ads to the customer.
14529 And you as a BDU
are in an unique position of knowing who's watching, when, what, et cetera.
14530 As this outfit
Invidi, I'm sure you have heard of them, who made a big presentation to us that
they actually can identify the viewer by terms of gender, age, income, region,
locality, et cetera.
14531 I don't know,
let's assume they can do it. Mr. Rogers
thinks there are all sorts of piracy issues, there may be, maybe they can be
solved, maybe they can't, but potentially this is an area where I would have
thought where you can make advertising much more targeted, therefore, more
lucrative and you also can prevent migration of advertising from the
broadcasting system to the Internet where one of the great advantages is that
you really know who's clicking on and you can tailor it.
14532 And the example
that we have heard, and I'm sure you have heard it, you could sell the ad to GM
and say, look, we'll do five, we'll do a truck, we'll do a sports car, we'll do
a sedan, we'll do a family van, et cetera, and we'll make sure that the women
who watch it see the family van, the 20‑year‑old males watch the
sports car, et cetera, and you could change.
14533 Combine that with
SVOD or VOD, you know, and even more the customer pays, so you really have a
good database of who's watching what.
14534 And I sense people
are on one hand excited about it, on the other hand scared and I don't
know. Do you see this as (a) a gross
opportunity; (b) a way of preventing the migration to the Internet; and, (c) if
you are going on that, would you do that on a shared basis with the
broadcasters as they demand or not?
14535 MR. D'AVELLA: Well, maybe Peter will want to talk about the
privacy issues.
14536 But we see it as
an opportunity, we don't know how big the opportunity is. Obviously, any time you can actually target
advertising and make it buy more effective, advertisers are going to be very
interested in paying for that.
14537 Is it going to
divert anything from the Internet? We
don't think so. I mean, the Internet is
a completely different space from an advertiser perspective, different type of
usage patterns, different consumption.
14538 You know, it will
be something that you could present to an advertiser and say, rather than
spending $50‑million on Google, why don't you spend five per cent of that
on our system because we can provide you with this kind of targeted
advertising?
14539 So, it is an
opportunity. We think the best way to
approach it is, it's going to be some sort of a model that we develop with the
broadcasters if they own the rights; if they don't own the rights, then we'll
deal with the rights holders, whoever they may be.
14540 MR.
BISSONNETTE: And on the privacy, as you
know, Mr. Chairman, from your previous life that PIPEDA and privacy are
sacrosanct to us and our customers and that continues to be. We don't share information with respect to
our customers to any third party and we would continue to take that approach.
14541 THE
CHAIRPERSON: But you wouldn't have to
share it, you could ‑‑
14542 MR. BISSONNETTE: Yeah, we're very reluctant ‑‑
14543 THE
CHAIRPERSON: It would still be your
information, you would just make sure, in my example, that that ad goes to that
customer.
14544 MR.
BISSONNETTE: Well, first of all, we
don't have the sophistication at this time to do what you just described, but
if we had that capability, sharing information still creates problems for us
internally in terms of our own value systems and integrity.
14545 And our customers
appreciate the fact that their information is held by us as very, very
sacrosanct and we'll continue to do that.
14546 THE
CHAIRPERSON: So, what is your position
then on BDU advertising? You want
advertising on local avails, I know that.
14547 MR.
BISSONNETTE: Yes, absolutely.
14548 THE
CHAIRPERSON: And on the rest of VOD and
SVOD?
14549 MR.
BISSONNETTE: Yeah, we think so, yeah.
14550 THE
CHAIRPERSON: On a shared basis, or on
a ‑‑
14551 MR.
BISSONNETTE: Well, Michael described the
commercial relationships which are ‑‑ you know, they are on a
sharing basis right now.
14552 THE
CHAIRPERSON: But that wouldn't apply to
local avails?
14553 MR.
BISSONNETTE: No, local avails we think
provides us with an opportunity to earn something from those avails which, you
know, have come to us through a series of negotiations with those U.S.
programmers and we don't think that it's inviolate that we would have the
ability to generate some advertising from those and we will put those funds to
good use as most of our funds do go in terms of re‑investing in our own
infrastructure.
14554 THE
CHAIRPERSON: But right now local avails
are being used as a promotion vehicle; right?
14555 MR.
BISSONNETTE: That's right.
14556 THE
CHAIRPERSON: It's either you own both
those or ‑‑
14557 MR.
BISSONNETTE: That's correct, both our
own as well as broadcasters.
14558 THE
CHAIRPERSON: Yes.
14559 MR.
BISSONNETTE: Yeah.
14560 THE
CHAIRPERSON: So, that would discontinue,
they would be sold, in effect, in competition with broadcasters?
14561 MR.
BISSONNETTE: No, I think they would be ‑‑
you know, I guess if you take everything to the farthest extent that ultimately
could happen.
14562 But, you know,
there are ways and means of us ensuring that broadcasters still have access to
those avails at market rates, that we still have them and we still value them
in terms of promoting our own products and we would see that as still very,
very important.
14563 But we believe
that there should also be the opportunity to sell those local avails to others
that see them also as valuable.
14564 THE CHAIRPERSON: You were here or you heard on the Net the
presentation by Telus who talked about NPVR?
14565 MR.
BISSONNETTE: Yes, we actually designed
the network PVR five years ago.
14566 THE
CHAIRPERSON: Wonderful, and welcome, the
first person who has appeared before me who actually knows something about
it. So, tell me how it works?
14567 MR.
BISSONNETTE: Well, we actually have a
trademark on it and the network PVR very simply is a process where we would be
able to store programming in a central repository and that that programming
would be available to customers who don't have a PVR but do have a digital box
and they would essentially have, no different than an Internet customer has a
mailbox, they would have a box that essentially stores things that are
available to them when it's more convenient to them.
14568 So, technically it
works that way.
14569 THE
CHAIRPERSON: You don't offer it right
now?
14570 MR.
BISSONNETTE: No, we don't. We've chosen not to for two reasons. One is because of contention, contention on
the network. Two ‑‑ the
second reason is an extension of a technical reason which is, what programs do
you store? So, do you confine our
customers to, say, 10 channels that they could store, or do you confine them to
broadcast services, do you confine them to sports programming?
14571 So, where the
programming actually comes from, because that creates obviously mass storage
kind of complications.
14572 And third, of
course, is the whole issue of copyright.
14573 THE
CHAIRPERSON: What about the access? Would the access be on a sort of program
basis. Like I'm a Star Choice customer,
I could run back for one week or two weeks and pick out, or would it be on the amount,
or how would you do it?
14574 MR.
BISSONNETTE: So, first of all, it technically
couldn't be available to Star Choice customers because they don't have a bi‑directional
infrastructure.
14575 THE
CHAIRPERSON: Okay, cable. Let's go with cable.
14576 MR.
BISSONNETTE: So, it would just be cable
and that's the other challenges; do you keep it for a year or do you keep it
for a week? And clearly, you know,
that's a consideration.
14577 But the fact is
we've had the capability to do this for a long time and we haven't done
anything with it. In the mean time our
customers with their own PVRs continue to grow and that I think kind of meets
their needs.
14578 Some of the older
boxes as well, you know, in our generation over the last five years, you know,
we've seen higher and more sophisticated boxes with more and more storage capability
and the real benefit to the network PVR was that you could take your whole
system, customers that have none‑PVR boxes and all of a sudden provide
them with that feature.
14579 But PVRs are
becoming now the dominant box that customers are buying and they like to
control it themselves and they like the fact that the storage capacity on those
is growing every year.
14580 And, so, we've
chosen not to do anything in that area.
14581 THE
CHAIRPERSON: Would that access be on
demand or just on the linear programming that you are offering right now, going
backwards?
14582 MR.
BISSONNETTE: I didn't understand that.
14583 THE
CHAIRPERSON: Assume I'm a Shaw Cable
customer, I missed "Desperate Housewives" three weeks ago. Can I just push in "Desperate Housewives"
and all of a sudden ‑‑
14584 MR.
BISSONNETTE: Well, right now they can
with their PVRs.
14585 THE
CHAIRPERSON: No, no, in the end PVR,
when it's ‑‑
14586 MR.
BISSONNETTE: So, I don't want to give
too much weight to the NPVR because, frankly, it's not ready for prime time
because there are a whole host of things that have to be dealt with and we're
saying, maybe it was a great invention at the time and maybe it was one ‑‑
it was like Nabu, it was a great invention but it had no practical applications.
‑‑‑ Laughter /
Rires
14587 THE
CHAIRPERSON: Some of us were involved in
Nabu, so...
14588 MR. STEIN: Somebody always has to be first, right?
14589 MR.
BISSONNETTE: That's right.
14590 THE
CHAIRPERSON: But before we leave this
NPVR, I appreciate there's a rights issue, but of course the great advantage is
you don't have to think beforehand about what you want to ‑‑
you can just go and visit backwards.
14591 And my colleague
Mr. Katz pointed out last time, it doesn't take a genius to figure out that if
you marry this with dynamic advertising, et cetera, you could ‑‑
actually here is, take my example, somebody wants to watch "Desperate
Housewives" from one month ago, et cetera and he can watch it, but you put
in a different ad now than there was a month ago, et cetera. So, there's a tremendous revenue opportunity
there, assuming you can overcome the rights issue.
14592 MR.
BISSONNETTE: Well, technically the
answer is you could do that.
14593 THE
CHAIRPERSON: But this is not something where you are working on ‑‑
14594 MR.
BISSONNETTE: No.
14595 THE
CHAIRPERSON: Is anybody else, that you
know of?
14596 MR.
BISSONNETTE: Well, Comcast has NPVR
capability and, as you know, that's something that's before the courts. Am I right?
14597 MR. D'AVELLA: Cable Vision.
14598 MR.
BISSONNETTE: Sorry, Cable Vision.
14599 MR. D'AVELLA: Cable Vision on Long Island are being sued,
so...
14600 THE
CHAIRPERSON: Okay. Well, as I mentioned before there is an
opportunity to make some further submissions.
14601 The sole issue of
VOD, SVOD and NPVR, which is slightly different but, and the distinction
between a linear program, their programming, the rights of the BDUs and the
broadcasters' concerns are quite a bit and we would ask you, like everybody
else, to share with us your knowledge, your experience and where you think this
is going.
14602 MR.
BISSONNETTE: Yeah, we'd be pleased to.
14603 THE
CHAIRPERSON: Okay, thank you.
14604 I think I have
given you enough of a rough time, I will now pass it over to my colleagues.
14605 Michel.
14606 COMMISSIONER
ARPIN: Thank you, Mr. Chairman.
14607 I think I am going
to take the issues in the reverse order.
So, I will start with advertising.
14608 And in your oral
presentation this morning on page 14 regarding local avails, you have set them
to be for a value of $50‑million.
Is that amount gross or net, first?
That's on page 14, that's your middle paragraph where you say:
"The value of local avails on
the U.S. service is less than two per cent..." (As read)
14609 MS RATHWELL: It's a net figure.
14610 COMMISSIONER
ARPIN: It's a net figure. And obviously it's not only for Shaw, it's
for the whole avails across the country, or is it the value for Shaw?
14611 MS RATHWELL: It's for all of the avails.
14612 COMMISSIONER ARPIN: It's all the avails in the country.
14613 And in your mind
is it made up of national advertising or local advertising or a mix of the two?
14614 MR.
BISSONNETTE: A mix.
14615 MS RATHWELL: Yeah.
14616 MR.
BISSONNETTE: It's a mix.
14617 MS RATHWELL: I believe it's a mix, yeah.
14618 COMMISSIONER
ARPIN: It's a mix of the two. And in your submission in paragraph 40 you
are also talking about advertising on the community channel.
14619 And again my
question, is it made up of national advertising, local advertising or a mix of
the two?
14620 MR. FERRAS: I think ‑‑ I can start on
that.
14621 We'd like very
much to get into that field. I think our
assumptions would be it would be mostly local because of the nature of the
content itself and because of the nature of our relationships with our
communities.
14622 When you look at
some of the programming we do right now that's limited to sponsors' messages,
it's all very local and our real problem there is just being able to exploit
that opportunity fully, so, that when we have an advertiser and we say to him,
well, we can give you a 15‑second spot ‑‑ or, sorry, a
30‑second spot with a little bit of video, but we can't promote a
favourable image of you. And they go,
what do you mean?
14623 So, all we're trying
to do is improve that relationship with the existing way we run the system and
the existing advertisers that we have and it would be mostly local.
14624 COMMISSIONER
ARPIN: Now, in the same paragraph you're
dealing with about two ‑‑
14625 MR. STEIN: Can I just make a comment?
14626 COMMISSIONER
ARPIN: Yes.
14627 MR. STEIN: Because your paragraph you referred to, 40,
also talks about DTH.
14628 COMMISSIONER
ARPIN: I'm coming to that, that was my
sub‑question.
14629 MR. STEIN: Okay.
Sorry, sir. Okay.
14630 COMMISSIONER
ARPIN: I was there.
14631 MR. STEIN: Okay.
14632 COMMISSIONER
ARPIN: Because I was saying, in the same
paragraph, exactly, you are talking about your wish to have a DTH community
channel.
14633 And, again, which
community are you thinking of and will it be supported by advertising, and
obviously in that instance the likelihood that you have local advertising is
probably dim.
14634 MR.
BISSONNETTE: So, first of all it would
be available nationally and, but it would be a consolidation, if you will, of
small vignettes from small communities or large communities across the country.
14635 So, we would try
to make it relevant to Star Choice customers and that would be through having
local productions taking place throughout communities, having mobile ‑‑
small mobile units travelling from community to community and packaging
programming that is of interest of Canadians.
14636 And, so, the
notion of a community channel is a yes and I think we're looking forward to
making that presentation to the Commission in the future.
14637 And then in terms
of how we support it, it would be through sponsorships and advertising.
14638 COMMISSIONER
ARPIN: Now, are you contemplating having
a French community channel and an English community channel, or only one
community channel?
14639 MR.
BISSONNETTE: Well ‑‑
sorry. You know, the options are
open. You know, we have a very loyal
French Canadian subscriber base in Quebec and the Maritime provinces and they
love our programming and we think, you know, that by doing something that is
absolutely unique to them or for them, that that would make sense.
14640 COMMISSIONER
ARPIN: And you have the capacity to
offer one or two new channels?
14641 MR.
BISSONNETTE: Well, that would be ‑‑
that would have to be a part of the consideration as well. And as we mentioned in our notes, that we're
looking at many different ways of creating additional capacity.
14642 And maybe this is
a bit ‑‑ maybe not the right time to talk about this, but I
think there's never the right time ‑‑ but, you know, we're
looking at some of the redundant broadcast services that we currently carry,
that would mean we would have to look at doing something there to free up
capacity for services that may not be redundant but be unique in terms of their
programming nature.
14643 You know, as the
Commission knows from our last presentation, that we've introduced 8‑PSK,
which is phase‑shift keying, which allows us to carry more services
within our transponders.
14644 And, so, through
those kinds of modulation and compression techniques, you know, we would be
challenged to find that capacity.
14645 But we think it
would be a really compelling national kind of a channel that gives us great
excitement when we think about the nature of that program whether it's, you
know, talking to customers in Fort Alberni or in New Brunswick or way up in
Inukshuk, that programming on that channel would have some relevance to them.
14646 COMMISSIONER
ARPIN: Talking about capacity on Star
Choice, I don't know if you had a chance to hear the presentation that Telesat
made regarding ‑‑
14647 MR.
BISSONNETTE: Yes, sir. Yes, we did.
14648 COMMISSIONER
ARPIN: And are you concluding anything
from what they said, or...
14649 MR.
BISSONNETTE: I conclude they're trying
to sell us satellite space.
‑‑‑ Laughter /
Rires
14650 MR.
BISSONNETTE: You know, before we get to
those kind of steps, there are a lot of things that we can do in advance to
that.
14651 I mean, as you
know, there's no satellite up there right now, so if this thing came down in a
flaming ball, there's no other option.
14652 MS RATHWELL: There is one point of clarification I think
we should make on the Telesat submission because they did address it, but just
in case there was any confusion about it, we'd just like to emphasize that the
availability of C‑band capacity is not of assistance to Star Choice, it's
not compatible with our network, it's not a small dish application.
14653 So, you know, I
know they started by saying there's lots of capacity for HD on C‑band but
that's not going to work.
14654 MR.
BISSONNETTE: Yes. So, it doesn't work. It would be like having Mickey Mouse ears
trying to receive signals. You know,
they used to do just fine but, you know, we're DTH.
14655 But, you know,
we're creative, we're working with them, we're working with CL, we're looking
at other long‑term options.
They're much more expensive than the kind of things we're doing.
14656 We've been able to
re‑purpose some transponder space in order for us to launch HDs, we're
launching new HDs next week for our customers and we've done that through
either harvesting new compression technologies.
We're looking at MPEG‑4 which will allow us to even add more
services and, in order to do that, of course, customers that want those services
have to have an MPEG‑4 compatible box.
14657 So, our
engineering staff are doing a lot of work to try and maximize the capacity that
we have right now because there is no satellite up there right now.
14658 COMMISSIONER
ARPIN: One question that we've asked of
BDUs after we heard Allarco, and the question that we asked them was, while you
were having negotiation with Allarco regarding Super Channel, did you launch
any other services of any kind?
14659 MR.
BISSONNETTE: Well, they've given you a
litany of services that they say we launched and that we knowingly launched
those somehow to pre‑empt them from being carried, but that's not the
case.
14660 Their attribution
of motives ‑‑ they're absolutely erroneous.
14661 You know, with
Allarco the first thing we thought was that they were actually licensed for one
service and one channel, and through the course of our discussions they made it
very clear that that wasn't the way they were going to program their service.
14662 They initially
told us they would have a prime service which would be the best of all of the
others and, so, we attempted to provide them with access on that one standard
definition channel.
14663 They indicated
their real desire to have an HD channel, which we ultimately agreed that we would
carry.
14664 In the mean time
we were, in fact, going through an 8‑PSK on our satellite transponders to
accommodate what we already have.
14665 We've now come to
an agreement, as you know, and we're launching those services I think within
the month.
14666 And we
offered ‑‑ frankly, Mr. Arpin, we offered to launch them at
Christmas time where they could take advantage of the, I'll call it the
national launch, the national preview and because we weren't launching all of
the services at one time, they chose not to take advantage of that.
14667 So, to the extent
that we've tried to be as helpful as possible by getting it launched, they
wanted to ‑‑ they said basically it's all or nothing.
14668 COMMISSIONER
ARPIN: Now, when did you launch Yes TV,
the shopping service ‑‑ the Corus shopping service?
14669 We have heard
Torstar here.
14670 MR.
BISSONNETTE: Yes TV?
14671 COMMISSIONER
ARPIN: Yes.
14672 MR.
BISSONNETTE: I would ‑‑
what's that?
14673 COMMISSIONER
ARPIN: Was it Yes TV or ‑‑
14674 MR. D'AVELLA: It's Eyes On TV and we're just trying to
remember the timing. It probably
launched in the past six months.
14675 COMMISSIONER
ARPIN: In the past six months?
14676 MR. D'AVELLA: Yeah.
14677 COMMISSIONER
ARPIN: But prior. Now, we also heard Torstar, and if you don't
have their reply you could always answer at the end of ‑‑ in
the next couple of weeks, but we heard Torstar arguing that they've approached
Shaw for their own shopping service and they were told that you didn't have
enough capacity to offer their exempted service.
14678 And they made to
us some request regarding the exemption rules saying that even if the
Commission was looking at removing some access rules for existing services,
they should keep them regarding exempted services, particularly shopping
services.
14679 MR.
BISSONNETTE: So, are you asking whether
or not we said no, we don't need another shopping channel?
14680 COMMISSIONER
ARPIN: No. Well ‑‑
14681 MR.
BISSONNETTE: Because we ‑‑
you know, in our view we don't. You
know, customers haven't said they'd love to have another shopping channel and
to the extent that, you know, the Shopping Channel's been there for a long,
long time and it seems to have a following, but in terms of, we have no
obligations to carry it and, therefore, no desire to carry it.
14682 COMMISSIONER
ARPIN: There's a rule that says if you
have, or one of your affiliate has a shopping network, you must offer to
anyone ‑‑
14683 MR.
BISSONNETTE: Yeah.
14684 COMMISSIONER
ARPIN: ‑‑ well, to at least one non‑affiliate or non‑owned
a shopping network, and that's the exemption order that the Commission has
issued years ago.
14685 Anyhow, in the
transcript you will find the Torstar presentation, and I will invite you to
look at it and if you have any comments to make I would suggest you make them
in the reply ‑‑ at the reply stage because when they came they
specifically talked about Shaw.
14686 MR.
BISSONNETTE: Well, I guess the first
thing ‑‑ thank you, Mr. Arpin.
14687 The first thing is
when they approached us I wasn't even aware of the Yes Channel or Eyes On TV
Channel. No. 2 is, we do carry Rogers
Shopping Channel so, you know, I would think that that meets our requirements.
14688 COMMISSIONER
ARPIN: No. That's what the rules says. If it also a BDU owned, even if it's not
a ‑‑ it is perceived by the Commission as undue
preference. So, anyhow ‑‑
14689 MR.
BISSONNETTE: Yeah, we'll look at ‑‑
we'll respond to you.
14690 COMMISSIONER
ARPIN: Yes, please.
14691 MR.
BISSONNETTE: Thank you.
14692 COMMISSIONER ARPIN: Please.
14693 Now, we'll get to
VOD questions. You said that you are
acquiring VOD rights for feature film directly from the studios or through
their Canadian distributors?
14694 MR. D'AVELLA: Some of them are represented by Canadian
branches but most of them actually do it directly out of their Hollywood
studios or offices.
14695 COMMISSIONER
ARPIN: Okay, thank you.
14696 I want to give
them some kind of an order. Well,
distance signal. In some of the other
jurisdictions, I'm thinking most European countries, Australia, the over‑the‑air
signals are not on satellite and are not even on cable, and only for the sake
of discussion, what will be your views if the Commission was to come to the
conclusion that the best way to resolve the issue of the over‑the‑air
broadcasting was to forbid the carriage by cable or DTH of the Canadian over‑the‑air
and all over‑the‑air services, including the U.S. services?
14697 MR. STEIN: We will let you handle our customers.
14698 MR.
BISSONNETTE: Are you saying though, just
so we understand the question, so you would say from now on we can't carry CFTO
or BCTV in Vancouver; it only is available with bunny ears?
14699 COMMISSIONER
ARPIN: Yes.
14700 MR.
BISSONNETTE: Yes. Well, it would give us more capacity, but I
don't know if our customers really appreciate the inconvenience of having to go
to the bunny ear reception, particularly given propagation issues of all the
inconveniences of dialling and twisting knobs and interconnecting boxes.
14701 COMMISSIONER
ARPIN: So what you are telling me is
that the over the air broadcasters are important for you.
14702 MR.
BISSONNETTE: You know, I watch Global
news every night in Calgary. That's all
I watch on Global is their news, because it is relevant to me in Calgary. I don't think anybody has ever said that they
aren't important and they aren't important to our customers and to not have
them would be an inconvenience.
14703 But I don't know
if that goes to the value.
14704 COMMISSIONER
ARPIN: The thing is that it will remove
you of the obligation of having to do programming substitution, simultaneous
substitution. It will give you more
capacity. And on the other hand, they
will have the benefit of having to monetize the full value of their signal so
that they ‑‑ because they will not have to compete with
distant signals, they will not have to compete with, in most instances, say
take Calgary or Edmonton, with the U.S. stations that you are carrying.
14705 MR. STEIN: Well, the first thing is that in terms of the
carriage where there are signals, I mean the Broadcasting Act requires the
carriage. I mean it is clear in the Act
under 3(t) that carriage of local over the air signals is a requirement.
14706 Our point is that
we don't question the carriage of the over the air signals. What we are saying is only in reference to
fee for carriage. That is the only issue
we have.
14707 We feel, as we
pointed out in our opening statement, that the advantages that over the air
broadcasters have with respect to priority carriage, simultaneous substitution,
they don't have to pay for the spectrum, that all of the advantages that Peter
enunciated are sufficient advantages.
14708 The other part of
this is that one of the things that gets lost in all of this is the fact that
cable became, through the '70s and '80s, the essential means by which Canadians
received their local signals. So that to
go into the city of Vancouver and, with the mountains, et cetera, and then say
okay, you are not going to carry this on cable any more, people would just go
to their own systems to do it.
14709 I mean, the over
the air reception of those services is difficult. We did studies ‑‑
14710 COMMISSIONER
ARPIN: In analog, but in digital they
have to get it or they won't get anything.
14711 MR. STEIN: But they will go off the system then. Basically what they will do ‑‑
yes, there is going to be ‑‑ because when the Americans go to
digital there will be an improvement in over the air signals, but you will be
driving people from the system because they will be able to get the ‑‑
if you don't have the U.S. four‑plus‑one on your cable in
Vancouver, then people will find means to get it in other ways.
14712 So I don't see
what the advantage would be.
14713 But going back to
the cable, cable became the means of distribution of those signals. I remember at the hearing in 1993 Ray Peters,
who is the President of BCTV ‑‑ and you can look it up ‑‑
said: "Commissioner, I remember the bad old days before cable when we had
to compete directly with the U.S. broadcasters over the air."
14714 I remember Mr.
Perrin Beatty in 1992 said, you know, cable, which was once thought of as a
cancer on the broadcasting system, became its saviour. That is because we were able, through cable,
to provide Canadians with wonderful colour signals, with no shadowing. You know, we forget all of those kind of over
the air issues.
14715 Now, those issues
go away to some extent when we move to a digital environment, as the Americans
are now moving to, but that is only going to increase the capability of
Canadians to receive those signals.
14716 So why would you
drive them off the cable or the satellite system? And they will say okay, well, they are not on
my cable or satellite so I will go over the air. By the way, if I go over the air, why do I
need my cable and satellite service to begin with?
14717 So I don't see
what the objective would be in terms of moving that way.
14718 We think that the
over the air signals, we are not denying their importance. What we are saying is that we feel that they
receive sufficient advantages now through simultaneous substitution, priority
carriage, all those things that Peter listed, now, and that they do not require
a fee for carriage in addition to those.
14719 COMMISSIONER
ARPIN: Regarding fee for carriage, I
heard your argument in specific regarding CTV and Canwest. At the same table we also heard Quebecor
agreeing with fee for carriage and obviously this afternoon we were supposed to
hear TQS, but for some obvious reason they won't be here today, at least that
is what they have notified us.
14720 Star Choice is
offering a service to the French market.
14721 I have been
looking on page 16 of your oral submission and I have gone through the list of
your objections regarding fee for carriage.
14722 Do you have the
same objections regarding the French over the air broadcasters?
14723 MR. STEIN: Well, they were the ones who pressed us to
carry. They were the ones who basically
said that if the satellite didn't carry them, particularly in the smaller markets
where there is a much higher penetration of satellite, that if we didn't carry
them that they would go under. So that
carriage on satellite services was essential.
14724 So we came up with
this whole balanced approach, which the Commission reaffirmed, to carry those
services and to make them available on the satellite.
14725 I would be hard
pressed to imagine why they would want us to take them down.
14726 COMMISSIONER
ARPIN: I am not looking at ‑‑
I have moved towards fee for carriage specifically and fee for carriage for the
French.
14727 Are the French
broadcasters having a different situation than their counterparts in English
Canada?
14728 I am seeking your
views because you are serving the French community. I could read your argument on page 16 which
is clearly aimed at CTV and Global and I'm asking you: What are your arguments regarding TVA and
TQS? Are they the same?
14729 MR. STEIN: Well, as Quebecor points out, there is a
different situation in Québec.
14730 Cynthia will
probably comment on this one, as well, in terms of our Star Choice situation.
14731 We feel that our
carriage of the TVA and TQS signals, that we pay for the uplink, that we pay
for the transponders, that we ensure that they are there to provide service in
the area, that that is ‑‑ you know, that that is what we
should be doing and that that is the proper policy.
14732 We carry their
signals. We make them available in the
communities they serve. We give them a
real advantage to do that and that that is sufficient.
14733 MS RATHWELL: Just to add briefly to that, yes, there are
two strands to our opening remarks. One
is there is a whole list of benefits that all over the air broadcasters
receive, and that would apply equally to English and French language over the
air broadcasters.
14734 Then there are the
particular circumstances of CTV and Canwest that we addressed in terms of, you
know, their own business situations and their need for this and all that.
14735 But primarily I
think our point across the board for both cable and satellite is that there is
already a regulatory bargain in place, you know, and there is free spectrum and
a host of other things and that should be sufficient without fee for carriage.
14736 COMMISSIONER
ARPIN: Somehow I could say that the list
that I have on page 16 is written in a certain priority order so that you are
putting simultaneous substitution and mandatory and priority carriage on cable
towards the last benefit?
14737 MS RATHWELL: I don't think they rank hierarchically. It is just a list.
14738 COMMISSIONER
ARPIN: It is just a list.
14739 MR. STEIN: We have more, actually.
14740 COMMISSIONER
ARPIN: You have more.
14741 But do you have
anything specific for the French market, because surely the simultaneous
substitution ‑‑ well, you are not in the cable business in
Québec, but it doesn't work because obviously they are substituting amongst
themselves. There is no time shifting,
there is only station shifting.
14742 MR. STEIN: Well, essentially I would say that clearly
when we were going through these discussions our view was that we need not
carry, because of the explanation you just gave, we need not carry all the TVA
and TQS services in Québec in the French language market. We did need to do that. We could have one Montréal TVA and we would
have one TQS. The programming is pretty
much the same.
14743 It was the TVA and
the TQS people, supported by the CAB, who said no, no, no, we want you to carry
all of the services. So we are carrying
a whole range.
14744 How many TVAs do
we have?
14745 MS RATHWELL: I believe we have six.
14746 MR. STEIN: Six TVAs and a range of ‑‑
we can deal with the numbers.
14747 MS RATHWELL: Yes, we can get the numbers.
14748 MR. STEIN: But we carry all of those services not
because they offer overly significant advantages to our Star Choice subscribers
in those markets, but basically to meet the obligations that ‑‑
to meet their point that they could not survive if satellite subscribers in
Trois‑Rivières or in the Saguenay did not have those signals, because we
made up such a high degree of penetration in those areas.
14749 So that was the
argument. The argument was from their
side to convince us to carry them. It
would be kind of ridiculous to add that we should pay fee for carriage on top
of that.
14750 MS RATHWELL: With respect to numbers, yes, we carried
eight TVAs, and two of them are small market, and five TQSs
14751 COMMISSIONER
ARPIN: Ms Rathwell, in reply to one of
the Chairman's questions, you said a certain number of the services that claim
access and have been granted access by CRTC policies are getting minor results.
14752 Were you referring
to the French services that you have to carry out west?
14753 MS RATHWELL: No.
Actually, I was referring to Category 1 services that we have to carry,
English language.
14754 COMMISSIONER
ARPIN: English language, okay.
14755 MS RATHWELL: Yes.
14756 COMMISSIONER
ARPIN: Are those Category 1 services on
a stand‑alone basis or are they included in packages?
14757 MS RATHWELL: As required by the regulations, we offer them
both in packages as well as on a stand‑alone basis.
14758 COMMISSIONER
ARPIN: So you were not referring to
Pride TV?
14759 MS RATHWELL: Well, no.
There are others besides Pride.
14760 COMMISSIONER
ARPIN: So there are others?
14761 MS RATHWELL: Yes.
14762 MR.
BISSONNETTE: And we don't carry
Pride. We carry OUTtv.
14763 COMMISSIONER
ARPIN: OUTtv. They have changed names.
14764 MR.
BISSONNETTE: Yes.
14765 COMMISSIONER
ARPIN: It's the same ‑‑
it's the same service?
14766 MR. BISSONNETTE: Yes.
14767 COMMISSIONER
ARPIN: I'm not saying it is the same
programming.
14768 MR. STEIN: I think Pride turned into ‑‑
14769 COMMISSIONER
ARPIN: It is the same licence who has
over time changed names; but, yes.
14770 MR. STEIN: Yes.
Although we did have a dispute on it.
‑‑‑ Laughter /
Rires
14771 COMMISSIONER
ARPIN: During the exchange with the
Chairman, you stated that you are contemplating down‑converting into
analog digital services, including the U.S. four‑plus‑one at the
time they will turn out to be only a digital.
14772 Could you tell us
under which authority you could tamper with the broadcasting signal, because it
is currently forbidden by section 7 of the Regulations.
14773 MR.
BISSONNETTE: Well, we are going to ‑‑
they will be converted ‑‑
14774 COMMISSIONER
ARPIN: In the case of the U.S.
obviously ‑‑ well, I'm listening to what you have to say.
14775 MR.
BISSONNETTE: Well, we had not considered
that we were actually forbidden from doing that. We were going to take the signal and make it
available in its entirety, in its context.
It would be essentially transparent to any conversion from digital to
analog. So the entire programming will
be maintained in its context.
14776 I guess it is no
different than what we do right now when we convert analog signals to digital.
14777 MR. D'AVELLA: Just to be clear, this is the standard
definition signal. The HD signal is
carried in HD.
14778 COMMISSIONER
ARPIN: So you are talking it's the
standard definition signal, the digital signal that you are contemplating down‑converting.
14779 MR. D'AVELLA: There is no loss of quality here. This will be as good a signal in analog as it
is in digital. The only difference is HD
and the HD is carried on a completely separate ‑‑
14780 COMMISSIONER
ARPIN: In doing that, aren't you
creating for yourself a capacity problem?
14781 Is it not for you
a much better business case pushing your subscribers towards digital?
14782 MR.
BISSONNETTE: Well, sometimes people
don't recognize that when you make a change to a customer and you all of a
sudden remove the entire basic service that they have been enjoying for the
last 45 years or 40 years and you force them on every outlet that they want to
enjoy that outlet to go and get a digital box, it creates really negative
relations with ourselves and our customers.
14783 Yes, we will have
to look at the extent of our analog offerings and we would think that one of
the first elements of the analog tiers would be one of the tiers moving into a
digital domain from which we will harvest and make available more digital and
high definition services.
14784 But the basic
service we think is still really important to our customers, and it will be
available on all of their outlets. And
to make a change to digital by basically turning them all off one day and
saying if you don't have a digital box, you can't get them, is not consumer
friendly.
14785 That's why we say
in the foreseeable future there will be an analog offering.
14786 As you know, HD
signals take a lot more capacity. In
time we are going to have to look to the three tiers in the space that they
occupy as being probably the first to move to provide the kind of capacity we
need to accommodate more high definitions.
14787 So yes, there is a
capacity consideration.
14788 COMMISSIONER
ARPIN: Finally, my last question is, we
have heard some interveners here that came dealing with the satellite
eligibility list saying that the Commission should initiate a review of the
list and remove some foreign services from that list which have had the
opportunity for many years to be carried and during that period of time could
have been in a position to make arrangements with Canadian broadcasters to turn
up to be Canadianized and contribute to the Canadian system.
14789 And names that
were mentioned among the list were A&E and CNN; that the Commission should
contemplate removing them from the eligibility list because in the
meantime ‑‑ the argument was used as saying with Food Network,
which was carried as an American service and became a Canadian one, so A&E
and CNN have found a partner like ‑‑ well, it came later on,
but ESPN joined with TSN.
14790 I don't know if
you have any views on that.
14791 MR. STEIN: Obviously, we wouldn't want to remove any
services.
14792 We think that as
Canadian services become stronger, then you can look at down the way of saying,
well, the subscriber ‑‑ or the popularity of particular U.S.
services may be at issue, but I wouldn't want to venture forth to remove U.S.
services that are still popular with our subscribers.
14793 COMMISSIONER
ARPIN: Well, Mr. Chairman,
those ‑‑
14794 MR. STEIN: Particularly if we meet the preponderance
rule.
14795 COMMISSIONER
ARPIN: Mr. Chairman, those were my
questions. Thank you.
14796 THE
CHAIRPERSON: Len...?
14797 COMMISSIONER
KATZ: Thank you, Mr. Chairman.
14798 I'm going to turn
back to access and genre matters for a couple of minutes.
14799 When I look at the
system I see three basic pillars: the
customer, the retailer or the distributor in your case, and the broadcaster,
which in business terms would be called the manufacturer or the wholesaler.
14800 Your focus has
consistently been the relationship between the distributor, yourselves and the
customer. If I can use the analogy, you
are following the money basically. You
are saying you can't go wrong if you follow the money principle.
14801 Virtually all the
concerns, or the majority of the concerns that have come before us in the last
three weeks now, have been the relationship between the distributor and the
manufacturer, and it has been exacerbated by the claims that the larger
distributors are vertically integrated and as a result of that it makes it that
much more difficult for the independent manufacturers, broadcasters,
wholesalers, to get a foothold.
14802 Have you got any
comment as to how this Commission should deal with that relationship between
the manufacturer, the broadcaster and yourselves in light of the fact that
there is vertical integration taking place?
14803 MR. STEIN: Well, there seems to be a number of issues
with respect to the relationship between distributors and broadcasters and
programming services. I think that from
our point of view, what we attempt to do is ensure that we treat all the same.
14804 In other words, I
know sometimes people raise the situation with respect to Corus, but we feel
that that relationship from a regulatory point of view would be more of a
disadvantage when we couldn't launch Scream, for example, because it was Corus
affiliated, even though it was a very popular service.
14805 So let me be clear
about the relationship between Shaw and Corus.
We are both separate companies.
We are both run by totally different individuals. They are both listed separately on the
Toronto and New York Stock Exchanges.
There are clear rules and regulations about how we deal with each other
because they are affiliated companies, which we have to ensure that we do not
benefit one or the other because of the implications that has for shareholder
rights.
14806 So we are covered
by a whole range of rules in terms of the situation between the two.
14807 In terms of
carriage arrangements, we don't deal with John Cassidy and his people any
differently. In fact, I think sometimes
they feel we deal with them more harshly than we deal with others, with anybody
else.
14808 So I think in
terms of the relationship that is there, yes, programming costs are our highest
costs. We do have other suppliers. There is a relationship issues there that
needs to be dealt with. We had really
very positive relationships with some suppliers. I'm not going to mention names because some
of them have emerged or whatever.
14809 But, you know, we
always found that where we were able to sit down with people and talk about our
relationship with our customers and have that discussion with the distributors,
with the broadcasters, that that always ended up in a positive solution.
14810 And where
broadcasters came in and basically said well, we have a right to do this and
this is what we are going to do, that tended not to go as well.
14811 So we try to
manage it on a week by week basis and in terms of particular negotiations.
14812 Could the
relationship be improved? Yes,
absolutely it could be improved.
14813 But we feel that
the more that we are able to do it between the two entities, the better we will
be going on into the future.
14814 Michael may want
to have something to that.
14815 MR.
BISSONNETTE: So the answer is no, we
don't feel disadvantaged and we are not vertically integrated.
14816 MR. STEIN: No.
14817 COMMISSIONER
KATZ: With regard to the smaller
programming entities that appeared before us yesterday as well, you feel that
it is much more difficult for them to come before you on a balanced basis, if I
can call it that, from a negotiating perspective.
14818 We have had
various proposals put to us. I think the
Commission actually floated an idea in our PN with regard to a reverse
onus. I see on page 11, I think it is,
of your submission this morning you want to adhere to the existing undue
preference rules, which leads me to believe you don't support the notion of the
reverse onus that we ‑‑
14819 MR.
BISSONNETTE: We think the reverse onus
will actually take more of your time and we don't think that it would be any
more effective.
14820 As Michael Ferras
indicated, we think there will be more frivolous kinds of complaints and we
think that the process right now works very well for both parties.
14821 COMMISSIONER
KATZ: They feel it doesn't work well for
them. I gather you are saying it works
well for you.
14822 MR.
BISSONNETTE: Well, no. I think it works well for both.
14823 You know, the
number of times that we are able to resolve these things before it even comes
to you or it is in the process with you is reflected I guess in the public file
with respect to any complaints that have come to you, that we have been able to
resolve them.
14824 MR. STEIN: I mean, the contrast over the past number of
years has been quite amazing. I remember
three years sitting in the back yard at my house in Toronto, bailiffs at the
door trying to subpoena me with papers being served by a particular network on
a Sunday because they wanted to take us to court on Monday. And fortunately we were able to sort of ensure
that we understood the CRTC had jurisdiction over this issue, or the question
that was at issue.
14825 Basically what it
has come down to, I think that it is not that either of us has won; it is that
the CRTC dispute process, although sometimes slow ‑‑ and Mr.
Brazeau has some comments about applying some of the things from the telecom
side to it. So sometimes being a bit
slow, but I think a lot of it has been because the dispute group within the
Commission has absolutely tried to make sure that they come to a solution that
is consistent with the Act and the objectives of the Act and sometimes that
takes a little bit longer to sort out.
14826 We have always
come to a solution, and I think that is what is most important in terms of
this.
14827 I think that
trying to come up with other kinds of rules is not the way to go.
14828 In terms of the
independents, we are very conscious of the fact that they are smaller
players. We have the same situation in
the cable industry and the CCSA stepped in to address that in terms of dealing
with people and has done it very successfully.
You know, maybe that is something the independent programmers want to do
as well.
14829 But essentially
they have a number of distributor ‑‑ I think the key point
here is they have a number of distributors they can go to. We are not talking about ‑‑
you know, people say there are three large terrestrials, but you know we
compete locally. I mean, in Winnipeg it
is battle time with MTS and in Saskatoon it is battle time with SaskTel. And, you know, TELUS isn't going to lie back
when they start launching their product.
14830 So it seems to me
that as an independent distributor, they can go to these people and they can
say look, here is what we can do. We are
not on Shaw but that will give you a huge advantage. And that has happened in certain
circumstances.
14831 THE
CHAIRPERSON: Come on, Mr. Stein,
please. With all due respect, that's
not ‑‑
14832 MR. STEIN: It's happened.
14833 THE
CHAIRPERSON: It may happen in Winnipeg,
but how much is Winnipeg worth to the national audience?
14834 If I'm not on
Shaw, then I'm losing 30 per cent of my income, or whatever it happens to
be. So to equate the difference of MTS
and Shaw is really not ‑‑
14835 MR.
BISSONNETTE: Let me just ask, and I'm
asking this maybe a little naively. Let's take an independent provider that is not
being carried right now. So you license
them as a Category 2 service provider.
They came to you in the full light of day saying we would like to have a
licence to provide this service, and you have said to them in the full light of
day that, you know, having a licence doesn't necessarily translate into
carriage.
14836 So will that
person with the reverse onus then be able to come to you and say for some
reason, you know, that the rules have changed and that there is an obligation
now for Shaw to carry them where there is no market demand for them and there
is no customer demand for them, and that somehow because they have now used
this reverse onus argument that we have done something wrong because we haven't?
14837 If we can't
accommodate them or if our customers don't want them, we are not going to put
them on just to put them on to occupy space where space is so short a resource.
14838 So I don't
understand. You are going to have
complaints from some of the Category 2 people or to the licensees that aren't
being carried, but having a reverse process isn't going to change the fact that
our customers don't want those services; and if they did, they would express
the desire to us.
14839 Setanta is a
perfect example of a small provider of soccer programming. We heard that Setanta was going to be
available on ExpressVu and our customers let us know that they weren't going to
be able to get their soccer somewhere else, and we carried them and they have
done very, very well.
14840 We respond to our
customers' demands. Is the complaint
process going to change the actual rules?
14841 COMMISSIONER
KATZ: How does your customer let you
know, say Setanta was ‑‑
14842 MR. STEIN: They write to us, they phone us.
14843 COMMISSIONER
KATZ: But it's not being broadcast
initially in Shaw's territory, so it is a brand‑new entry. How do your customers even know it exists?
14844 MR.
BISSONNETTE: Well, let's just give
you ‑‑ I will just give you ‑‑
14845 MR. STEIN: Wait a minute.
14846 MR.
BISSONNETTE: Let's just give you ‑‑
all three of us.
14847 MR. STEIN: We have general managers in each of the areas
that we serve whose job it is day by day, you know, minute by minute, is to
listen to what people in that community and that area you are serving. If you don't think we don't hear from Calgary
or Medicine Hat or Prince George what services people want, we hear it all the
time. They phone, they call. You know, our call centers get call centers
all the time: Do you have this? Don't you have that?
14848 So that is all
tracked, right, because we are a service company, and first and foremost we
have to know what our customers want and we have to be able to deliver it to
them.
14849 So we depend very
much on our employees, on our management.
We spend millions of dollars on leadership training and management
training and the whole focus of the company is on listen to the customer.
14850 So when I go to
Saskatoon and I go to the Premier's dinner and I'm sitting with the Mayor of
Saskatoon and he says you know what, you are the best local company
around. You focus entirely on what we
need in Saskatoon and he says as the Mayor of Saskatoon I am willing to go to
Ottawa and tell them that. Right?
14851 So that is how we
know what our customers want, and we do focus groups and we do surveys and all
that type of thing.
14852 But we depend on
our 10,000 employees to also have a relationship with our customers, to say
here is the kind of stuff that people need out there and we have to be able to
respond to that.
14853 We feel that we
have a very close relationship with our customers and that we feel that we know
what they want and if people come to us and say will you offer this to
our ‑‑ can we offer this?
Then we are willing to go with that.
And we do things like with Wild and Fight ‑‑
14854 MR.
BISSONNETTE: And you asked how our
customers actually know about these services.
They know through advertising on local avails, through the print media,
through advertising on broadcast television.
They know that a service has been launched in our area irrespective of
who the BDU is.
14855 And if it is not
available to them ‑‑ and many times the local programmer will
actually say only available on ExpressVU, and customers hear that in the public
domain.
14856 COMMISSIONER
KATZ: Okay. I want to come back to I guess something that
the Chairman just asked now and you responded to, and I will ask it in a
different way.
14857 What per cent of
the market for BDUs does Shaw have in Alberta and British Columbia, in those
two provinces? Between Star Choice and
Shaw, what per cent of the customer homes do you actually reach?
14858 MR. D'AVELLA: Well, as a measure of our homes passed, we
would probably be in the 65 per cent range, but in terms ‑‑
14859 COMMISSIONER
KATZ: Who has the other 35 per cent?
14860 MR. D'AVELLA: Well, they are either ‑‑
they could be Star Choice, they could be ‑‑ well, some of them
may have nothing. They could be
ExpressVu, they could be TELUS.
14861 COMMISSIONER
KATZ: I'm putting Star Choice in there
as well, because obviously Shaw has both terrestrial as well as satellite.
14862 MR. D'AVELLA: Yes.
14863 COMMISSIONER
KATZ: If we put both of those two in
there, what does that number amount to?
Is it 75, is at 80, is at 85?
14864 MR. STEIN: No, no, no.
Under 75.
14865 COMMISSIONER
KATZ: It's under 75 per cent.
14866 MR. STEIN: Yes, it's below 70.
14867 COMMISSIONER
KATZ: Some folks have come to us in the
last two weeks suggesting that the BDU business is a protected business in
Canada as well. You were talking about
the fact that we should be letting go on the broadcasting side. Folks have come to us saying that the cable
business is protected as well right now.
You don't allow the Direct TVs into the country.
14868 How do you respond
to that?
14869 MR. STEIN: That's a surprise. I was driving down the street the other day
in Toronto and my wife and I were stopped at a stop light and we were on
Dufferin Street, and right along one side there was 12 dishes. One of them was Bell, one of them was Star
Choice and the 10 others were all illegal dishes.
14870 So the thing is,
when people say, you know, let the foreigners in, okay, let them in; they are
here. But by the way, why don't you hit
them with the CTF tax and the GST and all the other taxes that we pay as well.
14871 So these are
services that are here. We are willing
to compete with those services, but, you know, it's always the case of the
obligations that people carry in terms of the services.
14872 We feel a huge
privilege in having the licences that we have, and with that goes the
responsibilities that we have to deliver to the Canadian broadcasting
system. We may disagree on the means to
achieve those objectives, but we very strongly believe in those objectives.
14873 For people to come
in here ‑‑ I think Mr. Audet said it well. I mean, listen in on the analyst calls. If people don't think this is a competitive
business, listen to the conference calls that we have to hold every quarter in
terms of our results, what we have to do to justify the investments that our
shareholders make.
14874 So we believe that
we are in a very competitive business.
We don't think that ‑‑ we think that people who come
forward and say well, they are protected, are just being disingenuous. We don't feel protected at all and every day
we have to deliver results for our shareholders and our investors.
14875 As Peter pointed
out before, people don't just buy the television product any more. They buy the telephone, the Internet and the
cable package and it is government policy that we be competitive in all of
those areas. It has been to a huge
advantage of our consumers. The services
are better and the price they pay for the package is less. And that is all because of competition.
14876 COMMISSIONER
KATZ: Mr. Stein, I want to take you up
on that comment you just made.
14877 On page 2 of your
submission this morning you say that:
"Over the last seven years
prices for a basket of telephony, Internet and basic cable services have
dropped by 25 per cent."
14878 I imagine that is
the basket. Can you tell us what your
basic cable service rates have done in that period of time?
14879 MR.
BISSONNETTE: Yes, we can. The cable rates have gone from approximately
$20 to $32, but again offsetting those increases in basic cable have been the
reductions in the prices of Internet and telephony.
14880 So in a basket of
services the overall cost of those services has actually come down by 25 per
cent.
14881 As Ken alluded to,
it is a very, very competitive market we are in. When we launched our Internet service, we
launched it at a $55 price point. It is
now available in the $29 price point but also with much more speed. We offer a light speed Internet service which
wasn't available previously.
14882 On our telephone
service, as you know, we have 500,000 telephone customers. The price of telephone service has come down
substantially since we entered the market.
Even our own pricing has diminished to the point where we have now three
different tiers of telephone services available to our customers, whether it is
the all‑in like product and a basic telephone product.
14883 So customers have
the ability now to get each of those products at a significantly lower price
than they were available seven or eight years ago.
14884 THE
CHAIRPERSON: But surely you are not
suggesting that you cross‑subsidize between services?
14885 MR. STEIN: No.
14886 THE
CHAIRPERSON: Each one of them is
profitable on their own?
14887 MR. STEIN: Yes, that's right.
14888 COMMISSIONER
KATZ: My last question is tied to fee
for carriage and we will start with a hypothetical.
14889 Let's assume that
the Commission, in their wisdom, decides that there shall be some degree of fee
for carriage for whatever reason, we will start with the hypothesis: Do you think that the CBC should be included
in that equation?
14890 MR. D'AVELLA: No. We
always find ourselves reluctant to get into hypothetical situations because all
we are doing is enabling the kind of thought processes that go into the way
that these things kind of evolve. Well,
we talked to Shaw and they didn't think CBC should be in there. You know, they gave a little bit here.
14891 We have absolutely
the strongest feelings ‑‑ and we have expressed those to you
today ‑‑ why there shouldn't be fee for carriage. So to get into hypothetical discussions
doesn't really feel like it is a proper process to do this. We have made our thoughts known on that.
14892 So to give a
little bit for the CBC who, frankly, for all the reasons we have said are doing
quite fine, leads us down a path that we really don't want to go down. We just don't want to talk about fee for
carriage in terms of giving it some kind of endorsement. We don't endorse it.
14893 COMMISSIONER
KATZ: Those are my questions.
14894 THE
CHAIRPERSON: Just on that last point,
fee for carriage or not, is the CBC in your view a different category than the
commercial broadcasters?
14895 MR. D'AVELLA: Well, yes, they are subsidized.
14896 THE
CHAIRPERSON: I mean, you are suggesting
we don't give a fee for service. I
appreciate that.
14897 But if there is a
fee for service, would we have any reason to treat them differently or would we
have to treat them as everybody else?
That is really what my colleague is after.
14898 MR.
BISSONNETTE: It is. It's like I am a Catholic, it's hard to talk
about other ‑‑ you know, it's the notion of what you are
talking about just doesn't feel comfortable with us.
14899 The CBC has a fee
for carriage right now. They get
paid. You know, Canadians pay taxes to
support the CBC. That is the fee.
14900 THE
CHAIRPERSON: It doesn't come through
the ‑‑ I mean, whether you feel that because CBC is publicly,
whether we should have a different regulatory approach to them than the commercial
broadcasters. That is really what the
nub of the question is.
14901 MR.
BISSONNETTE: Is it warranted?
14902 MR. STEIN: I think what Peter is trying to say is
that ‑‑
14903 THE
CHAIRPERSON: I don't want to answer
it. I got that.
‑‑‑ Laughter /
Rires
14904 MR. STEIN: Well, I was going to say that Canwest's
newspaper The National Post is running a series on Canada's big mistakes, and I
think if we went to a fee for carriage, whether it is for the private
broadcaster or the CBC, that hopefully in a couple of years they would be
running that article as well.
14905 We just don't feel
over ‑‑ you know, I think we felt very strongly overall that
fee for carriage was not a good idea 15 years ago. It wasn't a good idea last year and it's not
a good idea now.
14906 THE
CHAIRPERSON: You have the disadvantage
of being on the second‑last day so everybody else's ideas are being run
past you. On the other hand, you have
the advantage of commenting.
14907 We will break for
an hour for lunch and I will continue with you after lunch.
14908 Thank you.
14909 MR.
BISSONNETTE: Thank you.
‑‑‑ Upon recessing
at 1240 / Suspension à 1240
‑‑‑ Upon resuming
at 1341 / Reprise à 1341
14910 THE
CHAIRPERSON: First of all, I guess it's
my day to apologize.
14911 First, I do apologize
to Rogers, but I gather in our exchange with you, Mr. Bissonnette, I referred
to smaller cable companies as pygmies and I want to just make clear there was
no disparagement of them as I was purely talking in terms of comparison of
market size. I realize their importance
and their contribution to the Canadian broadcasting system.
14912 So I apologize and
hope nobody took offence.
14913 Rita, you had some
questions?
14914 COMMISSIONER
CUGINI: Yes, thank you, Mr. Chairman.
14915 Just a couple of
follow‑up questions.
14916 Mr. Stein, I
believe it was you who almost in the first exchange with the Chair this morning
you said that the independents made a good point to substantiate your claim
that the large broadcasting groups have quite a bit of clout when it comes to
negotiating with distributors.
14917 But the
independents made a number of other points as well, and I won't qualify them at
this point. One of them was that because
they have no clout, because they have no leverage with BDUs, they should be
granted special status.
14918 They asked for
mandatory carriage on basic, but I will ask you for your reaction to just the
issue of mandatory carriage, period.
14919 MR. STEIN: No. I
think that when I said that they had a point, I think the point that they have
is that they aren't able to tie together proposals because they are
independent. So they can't come and say
we have this and this and let's do this.
So they don't have that advantage in the negotiations.
14920 I do think, as
well, that in terms of trying to, you know ‑‑ in order to gain
access, I think there are ways of dealing with it other than giving them
mandatory carriage, certainly not giving them mandatory carriage on basic.
14921 But I don't think
you have to give them special status. I
think you have to take them into account.
14922 I think what you
have to do is impose on the distributors a requirement that is not a regulatory
requirement as such, maybe almost a competitive or a consumer focused
requirement that says look at their situations and listen to what they have to
say and really look at the product that they have in terms of ‑‑
14923 COMMISSIONER
CUGINI: But don't you do that already?
14924 MR.
BISSONNETTE: Don't they get that
already?
14925 COMMISSIONER
CUGINI: Don't you do that already?
14926 MR.
BISSONNETTE: We do, yes.
14927 MR. STEIN: Yes.
14928 MR.
BISSONNETTE: Yes, we do.
14929 MR. STEIN: That's why we have said, Peter has said that
we launched them, like Wild and Fight, et cetera. So we don't think they need anything extra.
14930 I think the thing
is we just have to continue to be conscious of that.
14931 COMMISSIONER
CUGINI: Okay.
14932 On the issue of
genre exclusivity when it comes to foreign services, you said this morning that
the only requirement for the admission of non‑Canadian services should be
that they hold non‑exclusive Canadian programming rights.
14933 Well, that is a no‑brainer. I mean, we already require that of foreign
services who want to be on the eligible list.
14934 So my question
is: By removing the competitive test,
what program variety are you offering your consumers?
14935 And I will take
U.S.A. Network as an example, because you have raised it a number of times, and
I don't want to argue why we decided that it would be competitive or not.
14936 When I look at
their schedule, "Law & Order SVU" and "Law & Order
Criminal Intent" are stripped across Monday to Friday. "Monk" is on and "JAG" is
on. These are all titles that are
available from Canadian broadcasters today, so what kind of additional choice
or variety, in terms of program diversity, would you be offering your customers
if we removed all competitive tests when it comes to foreign services?
14937 MR. STEIN: With respect to U.S.A. ‑‑
and I think that Michael and Cynthia may want to jump in on this, as well ‑‑
I think that there are differences.
There are certain things that they carry that are different. People are exposed to them. People go down south, they see the networks
that are there. They see what they have,
and then they come back and ‑‑
14938 We are responding
to a demand. People come back and they
say, "Geez, we should have the U.S.A. Network."
14939 Maybe it's the
timing of when they do the strips. Maybe
it's the other kind of programming they have, as well, in terms of certain
sports, et cetera. People say, "I
would like to be able to see that."
14940 That is what we
are responding to, the demands from our customers.
14941 COMMISSIONER
CUGINI: But it just one example,
obviously.
14942 If we were to open
this up to all other U.S. services which currently aren't on the eligible list,
again, aren't we just bringing more of the same, or more of what is currently
available ‑‑ unless it's a really unique service.
14943 MR. D'AVELLA: Not necessarily. You are obviously going to get some overlap,
because they are all buying the same programs, but there are dozens of unique
services in the U.S. It is the most open
and competitive market in the world.
14944 Just thinking of
one offhand is the Tennis Network. The
Tennis Network doesn't exist in Canada.
14945 I don't think that
anyone would be able to put one together.
There probably isn't enough programming to justify it, but they can make
it work.
14946 Or the Sundance
Film Channel.
14947 You might argue
that some of those movies are being bought, but if you look at their schedule,
a lot of it is not seen.
14948 I mean, you travel
to the U.S., we all do, you look at channels and you say, "I have never
seen that program before."
14949 There is going to
be plenty of diversity.
14950 COMMISSIONER
CUGINI: All right. In terms of what is available, or what will
be available, according to your model, to the customers, the first point of
contact between a BDU and the customer is the CSR. I am curious as to what kind of training your
CSRs receive today to enable your customers to make informed choices.
14951 MR.
BISSONNETTE: First of all, I think it is
great that you are acknowledging the CSR and their role in representing our
customers' best interests to ourselves.
14952 I think one of the
toughest jobs that we have in our company is that of a CSR, because they have
to be fully knowledgeable on all of the products we offer. They have to be knowledgeable about packages. They have to be knowledgeable about content
with respect to the services we offer.
14953 And in order to
make that available to them, first of all, there is probably an eight‑week
training period for our customer service representatives, and then the tool
that we provide them with ‑‑ Oasis in our case ‑‑
is one that, in fact, allows them to drill down into all of the products that
we offer, into a description of the programming services that are available to
them, the combination of programming services that they can make available to
them, the price points of those services, and not just in programming, but
internet services, what are the different speeds, et cetera.
14954 So they have a
vast database of information that is readily available to them, and they do it
in the most skilful way. While they are
talking to a customer, and they determine what the customer's interests are,
they are able to put something together that makes sense to the customer.
14955 And many times
they do it in response to a customer: I
would like to get the Discovery Network, or the Planet service, or whatever.
14956 So there is
extensive training that our CSRs initially go through, and then it is constant
training. They are constantly updating,
because our world changes dramatically from month to month, as we add new
services.
14957 For instance, this
week they will be learning about some of the new HD services that we are
launching, whether it is a movie service, or TLC, et cetera.
14958 They have a
knowledge base, and as real‑time changes to the business occur, we make
sure they are aware of those.
14959 COMMISSIONER
CUGINI: And Shaw provides the training?
14960 MR.
BISSONNETTE: Yes, we do.
14961 COMMISSIONER
CUGINI: How do you work with the
broadcasters to ensure that the content is constantly updated, and that it is
the content they want you to promote?
14962 Or, do you work
with the broadcasters to get that information from them?
14963 MR.
BISSONNETTE: Yes, that's a good point.
14964 We work with
programmers, whether they are specialty service providers ‑‑
whether it is TSN telling us that the Nascar races are going to be available
next weekend, and to draw attention to them ‑‑
14965 If a customer
calls in and says, "I want to have auto racing," our CSR is aware
that this weekend ‑‑
14966 They have all of
the schedules, as well, available to them.
14967 As you can see, it
is a broad, broad database of information that our CSRs have to have at their
fingertips.
14968 We have the
programming services ‑‑ The Movie Network people coming in and
training our CSRs on the movies they offer.
14969 In the case of
Vancouver, we work with Fairchild, in terms of differentiating their services
for those customers who may be interested in Chinese programming.
14970 We work with B4,
you know, APTN ‑‑ or ATN, sorry ‑‑ to give
our customer service reps a better understanding of programming.
14971 Sometimes it is
basically taking that information, putting it into a database and saying: If you want information about The Golf
Network ‑‑
14972 It could be
describing a change, and the rationale for a change.
14973 We do all of that
in‑house.
14974 COMMISSIONER
CUGINI: Let me ask you this point
blank. I do, obviously, recognize, Mr.
Stein, what you said about the separation between Shaw and Corus; however, the
Corus services are considered BDU affiliated.
14975 What is stopping a
CSR from saying to a customer: You want
a premium movie service? Pick Movie
Central. Don't bother with Super
Channel.
14976 MR. STEIN: They probably wouldn't know about that
relationship, or we wouldn't emphasize that relationship. We would want to make sure that they chose
the service on a neutral basis.
14977 I mean, if
somebody said to me ‑‑ if you want to see the difference
between Shaw and Corus, read our submissions.
They don't stand the test of comparison.
14978 THE
CHAIRPERSON: Are you suggesting that
your CSRs don't know what channels are owned by Corus?
14979 I find that
somewhat difficult ‑‑
14980 MR.
BISSONNETTE: No, they don't.
14981 We don't make a
point of letting them know that. We
don't think it is material.
14982 They are there to
sell products and packages, and if they can sell Super Channel when Super
Channel launches, more power to them.
14983 COMMISSIONER
CUGINI: I have one other question, and
it is out of pure curiosity. The Setanta
Sports package, that is an international sports package?
14984 MR.
BISSONNETTE: Yes.
14985 COMMISSIONER
CUGINI: And you offer it as a
subscription VOD?
14986 MR.
BISSONNETTE: No, we offer it as ‑‑
14987 It's a VOD
service.
14988 We actually have a
channel right now, which is Setanta, which covers soccer 24 hours a day.
14989 COMMISSIONER
CUGINI: And customers pay on a monthly
basis or on a weekly basis for access to that service?
14990 MR. D'AVELLA: They pay on a monthly basis, but it is
essentially a monthly pay‑per‑view‑type service.
14991 I think they are
trying to flip it into a channel.
14992 COMMISSIONER
CUGINI: And you negotiated those rights?
14993 Shaw negotiated
for the VOD or pay‑per‑view rights directly with Setanta?
14994 MR.
BISSONNETTE: They own the rights.
14995 MR. D'AVELLA: They own the rights.
14996 Rogers represents
them, I believe, so they own the rights.
14997 COMMISSIONER
CUGINI: And it's purely international
programming.
14998 MR. D'AVELLA: Yes.
14999 COMMISSIONER
CUGINI: Okay. Thank you.
15000 Thank you, Mr.
Chairman, those are my questions.
15001 THE
CHAIRPERSON: On this point of the CSR,
wouldn't they have to know what is owned by Corus, so that they can make sure
that they don't violate the self‑dealing rules?
15002 MR. BISSONNETTE: They can't self‑deal if they don't know
what they are dealing, and we don't make a point ‑‑
15003 THE
CHAIRPERSON: No, no, but ‑‑
15004 MR.
BISSONNETTE: I am being very genuine
here. We do not ‑‑
15005 THE CHAIRPERSON:
‑‑ you don't want the CSR to sell a package that is in
violation of the rules, surely.
15006 MR.
BISSONNETTE: I don't know if you have
been to our website, but you could go onto our website right now, without the
aid of a CSR, and you could go through all of the Category 1 and specialty
services, and you could hit a button that says that you are going to have
"Discovery Kids", you are going to have "BBC Canada", and
you are going to have The Golf Network ‑‑
15007 THE
CHAIRPERSON: That's not the question I
asked you. I asked you whether your CSR
knows ‑‑
15008 MR.
BISSONNETTE: No, we do not make a point
of telling them what is or what is not Corus.
15009 THE
CHAIRPERSON: Okay.
15010 Ron, you had a
question?
15011 COMMISSIONER
WILLIAMS: I have a few.
15012 I have another
question on the CSRs.
15013 Are your CSRs
commission compensated in any way for selling programming service packages?
15014 MR.
BISSONNETTE: The CSRs have a base
salary, which is probably 90 percent of what they can make, and they are
commissioned on selling a product, such as the internet or telephone. They are not commissioned on any specific
packages.
15015 COMMISSIONER
WILLIAMS: It is broken into the
categories of internet, telephone and television services.
15016 MR.
BISSONNETTE: Yes.
15017 COMMISSIONER WILLIAMS: Thank you.
15018 This morning,
during an exchange with our Chair on the issue of the community channel, you
were talking about how the community channel was funded.
15019 What percentage of
community channel costs are derived from the sponsorship revenues?
15020 MR.
BISSONNETTE: Are you asking how much
sponsorship revenue do we derive that goes back into programming?
15021 COMMISSIONER
WILLIAMS: Exactly, into local
programming. I think that was what you
were speaking of.
15022 MR. STEIN: It would be quite minimal. It is more a target on the kind of
programming.
15023 The importance of
the WHL is, that is out‑of‑studio programming that has its own
costs, in terms of mobile, et cetera. It
is a higher cost. Therefore, the
corporate sponsorship would deal with those costs.
15024 COMMISSIONER
WILLIAMS: Would cover those costs.
15025 MR. STEIN: It is more the incremental costs for a
particular project that are important in terms of corporate sponsorship,
because we already have a lot of sunk costs and operating costs in terms of
running the community channel, both in terms of the studio and the people, and
that type of thing.
15026 COMMISSIONER
WILLIAMS: Your community channel, I
guess, is funded through ‑‑
15027 MR.
BISSONNETTE: Through contributions.
15028 COMMISSIONER
WILLIAMS: ‑‑ your regulated contributions, the 4 percent or
the 5 percent or ‑‑
15029 MR.
BISSONNETTE: Two percent, yes.
15030 COMMISSIONER
WILLIAMS: I guess we are to understand
in that case, then, that Shaw's customers are paying a fee for the local
content through the payment of their basic cable bills.
15031 MR.
BISSONNETTE: Yes. Some of our revenue is used ‑‑
in accordance with the CRTC's contributions, a portion of our contributions go
to the community programming channel.
15032 COMMISSIONER
WILLIAMS: Is the community channel going
to be totally funded with that 2 percent, or do you have to inject additional
moneys, other than what we talked about with sponsorship and special projects?
15033 MR.
BISSONNETTE: We have to inject
additional money.
15034 COMMISSIONER
WILLIAMS: Approximately how much is
regulated funding and how much comes from Shaw's contribution?
15035 MR.
BISSONNETTE: We will have to get back to
you on that. I don't want to give you an
answer that isn't accurate.
15036 COMMISSIONER
WILLIAMS: Okay. That's no problem.
15037 Those are my
questions, Mr. Chair.
15038 THE
CHAIRPERSON: Just as a conclusion to Mr.
Williams' question, to some extent the local content or the community channel
is paid by fee for carriage.
15039 MR.
BISSONNETTE: No.
15040 THE
CHAIRPERSON: It is a different fee for
carriage, but it is still ‑‑
15041 Your main argument
against fee for carriage is that it shouldn't be coming from subscribers, so
subscribers should not have to pay for local content.
15042 It seems to me
that you just, in answer to my colleague, made it clear that your community
channel, local content, is funded by subscriber fees indirectly.
15043 MR.
BISSONNETTE: Everything we do is.
15044 Our installation
personnel are funded through the revenues that we derive from our customers.
15045 Our cable plant,
which we build, is funded through the revenues that we derive from our cable
customers.
15046 The whole
enterprise is.
15047 THE
CHAIRPERSON: But your principal argument
this morning was that there should be no fee for carriage for broadcasters,
that they should not be paid for by subscribers, and yet here we have a
broadcaster, albeit the community broadcaster, who is getting a fee from
subscribers.
15048 There is a certain
inconsistency here.
15049 MR. STEIN: Yes, but every hour of programming produced
on the community channel is produced by the community channel. That is number one.
15050 Number two, they
don't have access to the $3 billion in advertising that Canadian broadcasters
have.
15051 Fee for carriage
fundamentally changes the over‑the‑air broadcasting model.
15052 The community
channel model has been based, since the fifties and sixties, on a model set out
in the regulations, so that is the model that is there. It happens to be a model that works, but it
is a model that is set out in regulation, and it is set out and has to be done
in particular ways, which are not commercially focused.
15053 So it is a totally
different situation.
15054 It would be a hard
sell to sell three hours of city council meetings in Moose Jaw to an
advertiser.
15055 THE
CHAIRPERSON: Well, let's agree to
disagree.
15056 Mr. Morin?
15057 COMMISSIONER
MORIN: Thank you, Mr. Chair.
15058 If, by hypothesis,
the Commission gets rid of access rules, as you suggest, would the French
channels be in jeopardy?
15059 TVA West or RDI
are currently on your basic tier, I think; right?
15060 MR.
BISSONNETTE: That's correct.
15061 Would they be in
jeopardy?
15062 COMMISSIONER
MORIN: Yes.
15063 MR. STEIN: The situation in French‑language
broadcasting is that many of them ‑‑ I wouldn't say they would
be in jeopardy. Many of them have very,
very low subscriber numbers, in some cases 10 or 15, but some of them are very
popular, so there would still be ‑‑
15064 With TVA being a
mandatory situation, and with Radio‑Canada, and with a range of others
that are popular services in French‑language communities, or that are
just generally popular, we would see those continuing.
15065 I think what we would
do, as with all of the services, is that we would look at the subscriber
numbers and try to focus on ‑‑ consistent with the
Broadcasting Act, focus on making sure that the minority language individuals
in our areas are well served.
15066 Whether we would
want to carry the whole range of them, probably not, but we certainly would
want to make sure that we did carry a range that would satisfy the interests of
our customers.
15067 MR.
BISSONNETTE: And, of course, on
satellite, that wouldn't be the case, because we have a large subscriber base
that really enjoys those services in Quebec and in Ontario, et cetera.
15068 MR. STEIN: Especially if you are a Montreal Canadiens'
fan.
‑‑‑ Laughter /
Rires
15069 COMMISSIONER
MORIN: I understand.
15070 This morning you
repeated that you are in favour of the preponderance rule, 50 percent plus 1,
at the consumer level, instead of at the entry of the system.
15071 I am wondering
why, with your consumer focus, you made the choice to put this preponderance
rule at the consumer level instead of at the entry of the system.
15072 Some people here,
since the beginning, have said that they are in favour of a double
preponderance rule, and some of them a double‑double preponderance rule,
but with your focus, I am wondering why it is at the consumer level, because,
of course, the consumer will have less choice.
15073 MR. STEIN: We actually changed our position.
15074 Our position going
in was that there would be a preponderance rule only on our obligation. In other words ‑‑
15075 MR.
BISSONNETTE: We would offer it.
15076 MR. STEIN: ‑‑
we would offer it, but we wouldn't require consumers to take it on a
preponderance basis.
15077 What we did today
in our ‑‑
15078 COMMISSIONER
MORIN: You changed your position today.
15079 MR. STEIN: Yes.
Today we changed it by saying:
Okay, beyond the basic package, to which the preponderance rule
absolutely applies ‑‑ beyond the basic package, any package we
offer would have a preponderance of Canadian services.
15080 The issue that we would
adhere to is that, if somebody had the basic package, or perhaps basic digital
or an Essentials package, beyond that they could select ‑‑
15081 MR. BISSONNETTE:
‑‑ à la carte.
15082 MR. STEIN: If they took a standalone service, they could
pick out whatever they wanted.
15083 So the
preponderance rule would not apply to the standalone or à la carte purchases,
but it would apply to a package.
15084 That was a change
in our position.
15085 COMMISSIONER
MORIN: To a package and to the basic, of
course.
15086 MR. STEIN: Yes.
15087 MR.
BISSONNETTE: We also acknowledge that,
even with the à la carte flexibility, there still would be a preponderance of
all services received by that customer.
15088 MR. STEIN: Just in the nature of the way the system was
structured.
15089 But we certainly
don't want to be in the position of telling consumers that ‑‑
we don't want to affect their ability to make the choices they want to make.
15090 COMMISSIONER
MORIN: Thank you very much.
15091 THE
CHAIRPERSON: I have one last question,
and then I will let you go.
15092 Just before lunch,
when Commissioner Katz was asking you about the various lines of business that
you follow, et cetera, I asked you, Mr. Bissonnette, whether you cross‑subsidize,
and you said no, you don't, that each of your divisions is profitable on its
own feet.
15093 Isn't that exactly
what you are asking the OTAs to do?
Aren't you asking CTV and Canwest to cross‑subsidize from their
profitable specialties to their OTAs, which are not making money?
15094 Why is it a rule
that you don't follow yourself, but you advocate it for them?
15095 MR. STEIN: We are not suggesting that they cross‑subsidize
at all. What we are saying is that they
are strong corporations, that their over‑the‑air ‑‑
15096 We haven't seen
any evidence to indicate that their over‑the‑air services require
any kind of subsidy. We think that the
over‑the‑airs, on their own, are quite profitable.
15097 And there was no
evidence filed that indicates that their local programming is suffering.
15098 We are not
suggesting cross‑subsidizing, I think what we are saying is that they
obviously believe in the system in totality, because they have made the
investments they have made to buy further services and to make those
acquisitions.
15099 THE CHAIRPERSON: I guess we would have to take apart the
financing of the various divisions of, let's say, CTV, to see whether local
content is running at a deficit or not.
15100 MR. STEIN: I presume that they would be running it the
same way that we run our company. Every
person responsible for a division in our company has to make money. There is no cross ‑‑
15101 I guess the best
example of that is Star Choice. It is
probably the only satellite distributor in the world that actually makes a
profit, and the basic view of that is that they are required to do that. That is the measurement by which people who
run divisions are measured, and I would presume that it would be the same for
CTVglobemedia and the same for Canwest.
15102 THE
CHAIRPERSON: Thank you very much for
your appearance.
15103 Just before you
leave, I want to announce that it seems to be in vogue these days to write to
the Prime Minister and copy the CRTC on these proceedings.
15104 Today we got a
letter from CTVglobemedia commenting on Mr. Shaw's letter, again written to the
Prime Minister and copied to us.
15105 So, in the
interests of consistency, we will place this on the record as well.
15106 Thank you very
much.
15107 MR.
BISSONNETTE: Thank you. We appreciated the time with you, and we look
forward to your decisions.
15108 THE
CHAIRPERSON: Thanks very much.
15109 We will take a
five‑minute break while the next panel gets set up.
‑‑‑ Upon recessing
at 1407 / Suspension à 1407
‑‑‑ Upon resuming
at 1412 / Reprise à 1412
15110 THE CHAIRPERSON: Madam Secretary.
15111 THE
SECRETARY: Thank you, Mr. Chairman.
15112 We will now
proceed with the next four intervenors:
Channel Zero Inc., The Fight Network, High Fidelity HDTV Inc., and Maple
Leaf Sports & Entertainment Ltd.
15113 We will hear each
presentation, which will then be followed by questions by Commissioners to all
intervenors.
15114 I would now invite
Channel Zero to begin their presentation.
PRESENTATION / PRÉSENTATION
15115 MR. PODZYHUN: Mr. Chairman, Vice‑Chairs,
Commissioners and Commission Staff, my name is Roman Podzyhun, and I am
President of Channel Zero. We are
licensees of the Silver Screen Classics and Movieola Category 2 services.
15116 Today I have
brought my A Team. With me is Cal
Millar, our Vice‑President and General Manager of Channel Zero, who will
be giving our presentation; and behind me is Paul Brown, our consultant on
Regulatory Matters.
15117 Silver Screen
Classics exhibits films from the 1930s to the sixties. We launched the service in 2003.
15118 Movieola, the
short film channel, was the world's first channel dedicated to short movies
when licensed in 2001.
15119 In 2006 we
launched What Media, which is now the second‑largest short film
distribution company in the world.
15120 As entrepreneurs,
we are supporting Canadian, French and English‑language films and
filmmakers by distributing their films around the world to broadcasters and to
audiences on Hulu, Joost and Verizon Wireless, among others.
15121 As an
international distributor, we know that audiences around the world choose and
embrace Canadian programming, yet, as a Canadian broadcaster, we know that
Canadians have their choice of such programming restricted by market‑dominant
BDUs.
15122 Channel Zero is a
Canadian independent programmer ‑‑ independent because we are
not affiliated with any BDU, nor are we a part of any of the large Canadian
broadcasting conglomerates.
15123 MR. MILLAR: This hearing is really about Canadian
programming and how to achieve the objectives of the Broadcasting Act.
15124 We don't believe
Canadians say to themselves, I want to spend money on cable and satellite, they
say, I want to watch TV. Without
programming services, cable and satellite have no television to sell to
Canadians.
15125 BDUs are an
oligopoly operating in a regulated market that legally prohibits foreign
competition. Today most Canadian
households receive television services from one of three regionally dominant
cable operators or from one of two national DTH distributors.
15126 As this chart
you'll see now dramatically shows, Canadians don't have much choice among
BDUs. In virtually every province, one
cable operator dominates the market.
15127 In Western Canada,
Shaw has 85 per cent market share in B.C., 85 per cent in Alberta, 56 per cent
in Manitoba. In Ontario, Rogers has 73
per cent of the market and in Quebec, Videotron has 68 per cent. In Atlantic Canada, Rogers has 100 per cent
of New Brunswick and 49 per cent of the market in Newfoundland.
15128 We have two
national DTH BDUs, Bell ExpressVu has 67 per cent market share and Star Choice,
who you just heard, is owned by Shaw.
The red line indicates 45 per cent market share.
15129 Let me give you an
example of how market forces operated in this concentrated situation where
Category 2 services are not guaranteed access and have to negotiate access with
these dominant BDUs.
15130 In 2002, Channel
Zero called Shaw Cable and Star Choice to offer them our proposed old movies
channel, Silver Screen Classics, which we told them was kind of like Turner Classic
Movies. They wouldn't even let us pitch
the concept, claiming they had no channel capacity.
15131 In 2003, after we
launched the service to better than expected market success on other BDUs,
including Rogers and Bell ExpressVu, we were again told by Shaw and Star Choice
that "We don't want an old movies channel, nobody will watch just old
movies and, besides, we have no channel capacity."
15132 In 2004 I actually
showed up on Shaw's doorstep and was told the same thing again, we have no
channel capacity. They're nothing if not
consistent.
15133 In 2005, imagine
my surprise to learn that Shaw Cable and Star Choice launched not one but two
foreign‑owned old movie channels:
Turner Classic Movies and American Movie Classics.
15134 Not only that, the
cable division launched them in analog packages to millions of subscribers and
taking up the very same channel capacity that might have accommodated up to 12
digital channels.
15135 Not only was the
licensed Canadian service shut out, but we also now faced unfair competition
from a competitor with no costs of operations in Canada, who makes no
contribution to the Canadian broadcasting system.
15136 This foreign
competitor charges BDUs two and a half times what we would charge to make our
programming available for comparable distribution. Those fees are equal to more than $20‑million
annually that flow south of the border.
15137 The addition of
TCM and AMC to the analog service of cable BDUs is a perfect example of the
outdated nature of the current rules.
15138 At a time when the
Commission and BDUs themselves are encouraging digital conversion and HD
migration, the addition of U.S. services to the analog band is, to say the
least, counter productive.
15139 We agree BDUs must
be able to respond effectively and creatively to the demands of their
subscribers and, in that sense, market forces should be able to operate with a
minimum of constraints.
15140 However, BDUs are
merely delivering mechanisms in a broadcasting system that Parliament has
directed must create and exhibit Canadian content.
15141 When BDUs tell you
they want to allow market forces to operate what they're really saying is that
they want to exercise their dominant market power in negotiations with the
programming services. Their objective is
not to offer more programming but to maximize their own profitability.
15142 This experience
has led us to create and propose a new licensing model. We believe that Canadian programming services
that make significant contribution to Canadian content and substantial
expenditures on Canadian programming should be guaranteed access to the BDUs.
15143 We're not saying
that they must be guaranteed access to the basic package, but they must be
available on the digital shelf for Canadians to select. I believe this is called choice.
15144 To accomplish this
we propose two categories of licence programming: Category A and Category B.
15145 Our proposed
Category A services would have high levels of contribution and, as a result,
would qualify for guaranteed access. These
services would be subject to a minimum Canadian content requirement of 50 per
cent and subject to an annual Canadian programming expenditure requirement of
at least 50 per cent of the previous year's gross revenues. BDUs would be required to carry all Category
A services.
15146 The Category B
services in contrast would have minimum Canadian content requirement of 25 per
cent and in lieu of any CPE requirements would still contribute 10 per cent of
gross revenues to a production fund. At
this level of contribution to the creation of Canadian programming, Category B
services would not be entitled to mandatory carriage on any BDUs.
15147 In our written
submissions we have proposed transitional arrangements from the current
framework to the proposed model.
15148 Category A
services would be licensed by you, the Commission, and we have proposed a
competitive licensing process. We would
be pleased to discuss those arrangements with you further during questioning.
15149 We think that our
proposal for guaranteed access for services that have high contributions to
Canadian content is consistent with recommendation 7(1) of the Dunbar Leblanc
Report. It is forward looking,
strategic, straight forward, flexible and equitable.
15150 We believe that
there should be a complete moratorium on the addition of any new foreign
satellite services to the eligible lists.
We also believe that a substantial change in the format of a foreign
service should make it subject to being removed from the lists upon the
application by any interested party.
15151 Non‑Canadian
satellite services no longer play a supportive role in the Canadian
broadcasting system. If foreign
programmers wish to participate in the Canadian broadcasting system in the
future, they should only be permitted to do so by holding minority investments
in licensed Category A or B services.
15152 After access, the
most important component of a balanced system is effective dispute
resolution. More effective and timely
dispute resolution is very important to independent players, both program
services and, I believe you heard, independent BDUs. The current process is not even available to
Category 2 services in any circumstance.
15153 In our written
submissions we have outlined four important components under an effective
dispute resolution process. Dispute
resolution should be available in all circumstances.
15154 We have reviewed
and fully support the proposed process set out in the report prepared for
Astral Media by Hank Intven.
15155 Some programmer
BDU disputes could be avoided altogether we believe. In one of our last renewal negotiations a BDU
began the discussion by tabling our detailed financial return to the
Commission. The BDU then said, "We
see from the CRTC reports that you earned "x" amount last year. We want that money, you will reduce your
wholesale fees or we'll take your service down."
15156 We propose that
all broadcasting licensees should be treated equitably with respect to the
public disclosure of financial information.
The Commission should either disclose publicly the detailed information
of BDUs, or cease disclosing publicly the detailed financial information of the
discretionary services.
15157 Section 3(1)(f) of
the Broadcasting Act provides that:
"Each broadcasting undertaking
shall make maximum use and, in no case, less than predominant use of Canadian
creative and other resources in the creation and presentation of
programming." (As read)
15158 MR. MILLAR: The objective here is maximum use. Predominant is supposed to be the minimum.
15159 Channel Zero
therefore proposes, like many interveners in this proceeding, that there should
be a two‑thirds Canadian preponderance requirement for BDUs and that the
requirement should apply both to services offered to and to services received
by subscribers.
15160 With a true
preponderance requirement replacing the current preponderance requirement and
with reverse onus undue preference provisions, BDUs should be allowed
considerably more flexibility in the packaging of services.
15161 In particular,
most of the complicated and outdated distribution and linkage requirements that
currently apply to BDUs should be eliminated.
However, we do propose that the 5‑to‑1 linkage rule between
BDU affiliated and non‑affiliated services should remain.
15162 In addition, we
believe it should be extended to services owned by these large broadcasting
conglomerates that we've been discussing.
Such a rule would help ensure that independent services receive access
in addition to those owned by the BDUs and conglomerates; that is, if you want
diversity of ownership.
15163 We agree with BDUs
on another point, that on‑demand services are important to allow the
regulated broadcasting system to compete with unregulated alternatives, but on‑demand
is just a delivery mechanism employed by the BDUs.
15164 We do not believe
that BDUs should be allowed to serve as their own programming
undertakings. The Commission is aware of
BDUs offering channels on an on‑demand basis that are not authorized for
distribution in Canada.
15165 On‑demand
programming should be acquired exclusively from licensed Canadian programming
undertakings. We believe that changes
are required to the regulatory framework to address the increasingly likely
prospect that on‑demand services owned by BDUs will become substitutes
for licensed linear programming services.
15166 At this point
we're going to just deviate, if you could turn the page, we'll be referring to
the five questions asked by the Chair.
15167 The first question
was: What should be the size of the
basic package? We take no position on
the minimum size of the basic package.
The basic must, by definition, include 9(1)(h) services, could also
include local and regional OTA services provided that there is no fee‑for‑carriage. We're not advocating that core specialty
services, the proposed Category A services, must be in basic.
15168 While we want BDUs
to have flexibility in packaging, including in deciding what to offer in the
basic, no specialty services we believe in which the BDU has an interest, other
than a 9(1)(h) service, and no foreign services other than one set of four‑plus‑one
should be included.
15169 All other
practices relating to the basic package can be addressed using a reverse onus
no undue preference provision.
15170 Should there be
guaranteed access for certain Canadian specialty services, which ones and on
what terms? We believe that BDUs should
be required to distribute what we've called the Category A services in the
digital service.
15171 I touched on that
earlier. We only ask that they be
guaranteed a spot on the digital shelf available for selection by Canadian
consumers.
15172 Should there be
any type of genre protection for guaranteed services; and if so, should they be
protected from Canadian services or only from foreign services?
15173 To paraphrase,
even further than what's in the script, we suggest that the genre protection
rules have provided us with in fact the diverse system and selection of
programming that we have today and that is a hallmark of Canadian programming.
15174 We believe that
there should be a complete moratorium, as we discussed in our presentation.
15175 We believe that
certain core services, again our Category A services, that are in genres that
can support only one Canadian provider or a few Canadian providers in the
economic production of Canadian content, should receive genre protection from
both Canadian and non‑Canadian services.
15176 To question
four: Should there be fee‑for‑carriage
for over‑the‑air broadcasters; if so, how much and on what
terms? Fee‑for‑carriage
would only increase the cost of television services to consumers and reduce the
money available to support the distribution of Canadian pay and specialty
services that, unlike the over‑the‑air broadcasters, can only be
provided to Canadian via BDUs.
15177 And to question
five: Should BDUs have access to
advertising revenues from on‑demand services or from local avails? We believe in a nutshell that on‑demand
programming should be acquired exclusively from licensed Canadian programming
undertakings that we believe would deal with the issue of them selling
programming.
15178 Roman to conclude.
15179 MR. PODZYHUN: Channel Zero's approach will not only
increase the creation of Canadian content and also the distribution of such
content to Canadians, but it also allows the regulatory framework to be
streamlined.
15180 We'll be pleased
to respond to your questions after the others have spoken as well.
15181 Thank you.
15182 THE
SECRETARY: Thank you.
15183 I would now invite
the Fight Network to begin their presentation.
PRESENTATION / PRÉSENTATION
15184 MR. BURGER: Mr. Chairman, Commissioners, as President and
Chief Executive Officer of TFN Global Inc., the parent company of the Fight
Network, and on its behalf, I would like to thank the Commission for providing
us with the opportunity to present our views in this proceeding.
15185 We believe this
proceeding is both timely and critical and may, depending on the outcome, be
remembered as the key inflection point in the development of Canadian
broadcasting in the wireless and broadband era.
15186 It is also our
view that the presence of the Fight Network is particularly appropriate and
important. This is because the Fight
Network's business model is very different from the typical Canadian
broadcasting business model, be it OTA and specialty and can be regarded as
what might become more prevalent if, indeed, these proceedings represent that
inflection point.
15187 What makes the
Fight Network so different is this: It
is the first unique specialty channel, genre, developed solely in Canada which
has the potential to become a truly global sports media brand on the scale of
the Golf Channel and Speed Vision.
15188 To our knowledge,
we are the only channel in the world that provides wall‑to‑wall 24‑7
coverage of the fight game in all of its popular forms, including mixed martial
arts, boxing, wrestling and kick boxing.
15189 We deliver
original news content and live events with an equal strategic focus on
television, mobile and broadband.
15190 The credit for
this ground‑breaking concept belongs to Mike Garrow, the founder of the
company who had no previous broadcasting industry experience whatsoever. He just knew a good idea when he got one and
ran with it. He hunkered down and completed
a Category 2 licence application, submitted it and was in business. He asked for no hand‑outs, no
guarantees, no protection. He believed
in the concept and that it would prove itself.
15191 In fact, that is
exactly what we see happening. Today the
Fight Network, despite a limited subscriber base due to its placement on less
widely distributed packages by some BDUs, is consistently at or near the top
ranks in ratings among the dozen Category 2 sports channels. Indeed, it ranks in the low 20s among the 70
or so digital channels in both categories regularly beating many channels with
four, five or more times as many subscribers.
15192 While we continue
to work tirelessly to persuade the BDUs to place us on more widely subscribed
packages, many of which have sports channels which we regularly deck in the
ratings, we cannot depend on being rewarded for our excellence and exceedingly
disproportionate popularity among consumers as other decisions appear to drive
the decisions of some BDUs.
15193 Instead, we have
put an equal focus on exporting the brand around the world, taking advantage of
the fact that it is as unique a concept outside of our borders as it is within
them.
15194 We are moving
opportunistically and quickly, seeking to plant our flag in at least 10
additional territories within the next 18 months and developing a dedicated
community of 100‑million television households and online and mobile
users who look forward to our content every day.
15195 In fact, we
recently launched the Fight Network in the U.K. where we are carried on BSkyB
and seen in nearly 9‑million homes and we are currently negotiating
carriage or joint ventures in four other territories.
15196 We believe that
all of this unique potential has developed because we effectively operate in a
totally unregulated market.
15197 Yes, we are based
in Canada, but derive few of the benefits that most broadcasters in Canada have
and have made forceful submissions during these proceedings not only to
maintain, but expand.
15198 Had this market
been less regulated, had the entrepreneurs who obtain valuable broadcasting
licences in this country been less protective and less secure in the belief
that those protections would assure them of all the growth that they could ever
aspire to, I doubt that the Fight Network would be the first original genre
developed in Canada to be exported to the U.K. and other markets.
15199 After all, the
Golf Channel, Speed Vision, Discovery and many other channel genres could have
just as easily been conceived here. The
strength of those ideas with our proximity to the U.S., which is seldom seen as
a benefit, could have been sold and developed just as easily by Canadians and
major Canadian broadcasters at that.
15200 No one can say
what could have been, but that could at least have been one probable outcome of
a less regulated market.
15201 And had that taken
place, and had a handful of global brands been launched out of Canada,
broadcasters would not be here today justifiably threatened by a fragmented
possibly borderless future.
15202 At least that is
our view, and that view serves as an introduction to our additional submissions
to the Commission on several of the five questions to which the Commission has
requested responses.
15203 In our written
submission which we provided last fall, we focus primarily on the issue of
genre protection. Today we would like to
address that a bit more and also speak to the issues of guaranteed access and
carriage fees for OTA broadcasters.
15204 The policy of
genre protection stems from the size of our TV market. The basis for awarding licences has always
been to provide some form of benefit to Canadian culture and, in particular, to
help finance the development and production of Canadian TV content.
15205 For this reason,
it was always held to be important that a licensee survive and prosper, and in
a market this small the belief had been, and may continue to be, that
competition would lay waste to all competitors, as was almost the case in the
early days of pay TV.
15206 Protecting
licensees from competition to enable them to survive and prosper may have been
a good idea at the time, however, we believe the times they have changed and
those with protected licences have prospered well beyond the expectations of
the Commission and, indeed, themselves.
15207 Channels like
Discovery (Canada), TSN, SportsNet, History Television, Space and Bravo are
huge cash generating machines, so powerful that they are stealing business from
their OTA siblings.
15208 As such, questions
have to be asked why they still merit protection today, whether protection has
had its day and, indeed, whether protection actually undermines market growth
of specialty channels as a whole.
15209 And, in any event,
based on their own strength, not to mention that of their parent companies,
they have such market dominance that ongoing regulatory protection would be
superfluous. In fact, any new competitor
would most likely be entitled to protection from them.
15210 But on the policy
point, in terms of creating a player that will prosper and be able to support
Canadian content, how much prosperity is enough? At what point does growth outstrip the
wildest expectations of the licensees themselves?
15211 I can provide a
first‑hand illustration of this.
In 1995 when I was an executive at Alliance Communications we came up
with the idea of the History and Entertainment Network, or then. We thought it was a pretty cute name, but
marketers persuaded us to change it to History Television.
15212 In developing the
model for the first seven years of operation we came up with growth that led to
an operating income of approximately $1.4‑million in year seven.
15213 Now, I know
everyone sandbags the models they submit with their licence applications to the
Commission, but even so I remember fantasizing about building a channel that
would one day be worth $35‑million and would serve as a platform for our
content.
15214 That year seven in
real time was 2002. In that year,
History Television's operating income was in fact nearly $11‑million. That translated into a value of between 100
and $150‑million. Today I expect
it is at least twice that much.
15215 So, they hit their
marks and then some. What if a
competitor were allowed? What if History
on TV offered more than World War II news reels, endless repeats of
"JAG" and, of course, that historical chronical "CSI: NY"?
15216 It may mean that
the incumbent's expansion would slow or its operating income might fall, but
the CRTC is not in the business of ensuring growth for its own sake. So, if a new, well financed competitor came on
the scene, the incumbent might be adversely affected, but the History genre pie
would grow, offering consumers a choice and making more TV time and more money
available for Canadian content.
15217 Virtually all the
protected services enjoy financial performance far beyond what was ever
anticipated when they were granted protection.
There is no longer any justification, in our view, to continue to extend
that protection and keep consumers from enjoying the choice in genres enjoyed
by those in the U.S.
15218 In fact, it is
most likely the market would not be swamped with competing genres. BDUs and the market, as seen in the U.S.,
effectively limit most genres to one service, but that does not mean new
entrants should be kept out. We do,
however, feel strongly that the new entrants in any genre should be Canadian,
not direct U.S. feeds or subsidiaries controlled by U.S. parents.
15219 Diversity can be
achieved without any cost and most likely with benefit to Canadian content,
only if ownership remains a level playing field and CPEs and exposure
requirements in the long term remain the same across the board.
15220 We would, however,
recommend some short to medium‑term allowances to be made to new
entrants. The Commission in the past has
had a propensity for allowing new entrants only if they assumed greater CanCon
obligations and obtain fewer privileges than incumbents. This hinders, rather than enhances
competition.
15221 This brings us to
the issue of guaranteed access. I guess
the simple honest comment would be, we don't have it, why should anyone else?
15222 But to some extent
whatever success the Fight Network has achieved may be the result of not having
guaranteed access. We have to market,
program, design and build our brand as if our life depended on it because it
does.
15223 The same can't be
said for channels who are in the black the minute they turn the lights on. But guaranteed access enjoyed by many others
does affect us adversely because those with such a licence benefit take a
valuable channel in packet slots, whether their popularity merits it or
not. It becomes very difficult for a new
popular channel to get on a viable package if the BDU can switch non‑performing
services out.
15224 However, there is
the danger of deserving channels being pushed out anyway to make way for BDU‑owned
specialty services.
15225 We believe access
rules in that regard need to be maintained and BDU strategies diligently
monitored to ensure their roles as gatekeepers do not keep deserving brands
out.
15226 So, we recommend
that no specialty service have guaranteed access, but that access rules
limiting BDUs be maintained and strengthened, if needed.
15227 Finally, we have a
couple of brief comments to make about carriage fees.
15228 First of all, we
think commenting on this is very much our business, though it has been
suggested otherwise. We do not believe
the market is infinitely elastic. We
acknowledge that RPUs have skyrocketed to levels no one ever dreamed of even a
decade ago and the capacity for TV content and new TV technology consumption
among Canadian consumers is, to say the least, robust.
15229 However, when you
are a channel in the margins in some BDU package structures where that last
package or a la carte buy might be stretching things a bit for a consumer who
worry about the impact of additional fees added to their bills which by some
estimates might be as high as $300‑million per year, that is a lot of
money to drain from the pool, especially when the consumer is not getting
anything new.
15230 If we lose one
potential or existing subscriber so that the OTA services can make even more
money while we fight for every dollar, then the system will once and for all
choke off any new concepts, ideas, initiatives and players.
15231 Secondly, we agree
with other comments that the OTA business cannot be looked at in
isolation. Diversification into
specialty services by OTAs was undertaken precisely to protect against market
erosion. As specialties grow, OTAs might
contract. The result is at worst zero
sum, but most likely specialty growth will well exceed OTA erosion.
15232 We understand the
argument that OTAs cannot continue to fund news and other local content at the
same levels, but that argument only makes sense if there was some economic
justification for viewing the specialties as distinct profit silos.
15233 Cross‑subsidization
happens in all businesses every day. If
for some reason that is unacceptable, we would recommend a different approach
be taken to specialty CanCon expenditures, perhaps allowing the specialties to
get credit if the related OTAs spend those monies on news and local.
15234 After all, there
are just so many cooking shows on the Food Network that are essential to
Canadian culture.
15235 In summary, we
believe that how these three issues will be resolved will have a direct impact
on how broadcasters approach innovation, risk and the development of brands
that will withstand technology and the accompanying erosion of borders.
15236 Continued
protection, benefits and subsidies not only erode competition within Canada,
but the competitiveness of Canadian broadcasters in the world.
15237 We believe a new
approach to these issues is needed before it is too late.
15238 Thank you.
15239 THE SECRETARY: Thank you.
15240 I would now invite
High Fidelity HDTV Inc. to begin their presentation.
PRESENTATION / PRÉSENTATION
15241 MR.
PATTERSON: Thank you.
15242 My name is David
Patterson and with me today is John Panikkar.
We are High Fidelity HD TV.
15243 We are Canada's
leading HD broadcaster. We operate four
24‑7 true HD Category 2 specialty channels offering premium programming
to Canadians.
15244 We also produce
top quality Canadian HD content for exhibition on our channels and for export
to foreign broadcasters.
15245 We are 100 per
cent Canadian owned and operated. We are
a new entrant in the Canadian broadcasting system. We are free market driven, consumer focused
and international in perspective.
15246 We've been granted
other licences, Cat 2 as well, and we would like launch those services soon.
15247 We are not members
of the CAB and we are not members of the Alliance of Independent
Specialties. We are, if you will, an
independent independent.
15248 MR. PANIKKAR: We're here today to give you some insight
into our operating reality and we will, of course, be doing that over the next
few minutes.
15249 We're also here to
urge the CRTC not to fall prey to the kind of scare mongering we've heard over
the past two and a half weeks from the likes of Shaw and Cogeco.
15250 They claim that in
the foreseeable future Canadians en masse will abandon the regulated system
unless such BDUs are given everything that they've demanded. Although Hi‑Fi is pleased to be 100 per
cent customer focused, it's the CRTC that is and must remain in charge of the
Canadian broadcasting system, not the consumer and the big cable BDUs as Shaw
and Cogeco would have it.
15251 We think there are
many areas in which the Commission is remarkably in the dark and we think your
current rule book for the Canadian broadcasting system needs a complete re‑write
to make it simpler, more streamlined and more market focused.
15252 We also think that
you're often stated goal of ensuring a meaningful Canadian presence in the
Canadian broadcasting landscape is in serious jeopardy and we believe you don't
really know all of the reasons why.
15253 However, before we
get to some of those reasons, we should start by answering your five essential
questions.
15254 MR.
PATTERSON: As to the size of the basic
package, we believe it should include those services that are considered
essential by the CRTC to achieve the broadcasting policy for Canada as set out
in the Broadcasting Act.
15255 More specifically,
the basic package should include local OTA services, the applicable Canadian
educational service, mandatory services and any local BDU Community Channel,
and it should be made available to Canadians at the lowest possible price.
15256 In addition, each
BDU should have limited reasonable flexibility to enhance its specific version
of the basic package through innovative additions that are consumer friendly
and, most importantly, affordable.
15257 As to your second
question, there should be no guaranteed access for Canadian specialty and pay
services. We at High Fidelity want to
serve Canadian audiences and we believe this is best done in a competitive
marketplace. We think that the time has
passed for the CRTC to effectively be picking the winners and losers between
Canadian services.
15258 With respect to
your third question, we believe there should be no genre protection as between
Canadian services but that there should be protection vis‑à‑vis
foreign satellite services. These days
the current genre protection rules are more often than not effective only as a
fundamental barrier to entry for new Canadian entrants and innovators like High
Fidelity.
15259 As to the proposal
for a fee for carriage for the OTA broadcasters, the simple answer is no. We do hope that the CRTC sees through the
audacity of this request.
15260 Finally, as to
your fifth question, BDUs should have, in our view, access to advertising
revenues from on‑demand services and from local avails.
15261 MR. PANIKKAR: Throughout our comments today we urge you to
remember that Hi Fi occupies a unique place in the Canadian broadcasting
landscape. We are Canada's only 24/7
true HD independent broadcaster. Nobody
else is innovating and taking the risks that we are, and since our start‑up
more than two years ago nobody has had the courage, some might say
foolhardiness, to try to follow in our footsteps.
15262 We have spent
about $30 million and counting so far building up our business, creating top‑quality
Canadian HD content, as well as bringing to Canadian viewers the world's best HD
programming, almost all of it never before seen in Canada. Every dollar ever invested by our
shareholders and every dollar of revenue ever earned by our company has been
plowed back into our business.
15263 From a personal
financial perspective, I can certainly tell you that my family and David's and
our partner Ken's families, have bet almost everything we have that Hi Fi will
continue to grow and prosper.
15264 And where has that
gotten us, at least so far?
15265 We are delighted
to be carried nationally by Bell ExpressVu, which was the first BDU to step up
and recognize the tremendous consumer value in offering our channels. We are also happy to have launched our
channels on a handful of the smaller BDUs in Canada and we were thrilled to
hear on the first day of this very Panel hearing that Rogers spoke very
glowingly of us and our channels and to state publicly what they have told us
privately, and that is that they intend to launch our channels very soon.
15266 The other big BDUs
have so far expressed little or no interest in launching our channels. In light of the successful international
sales of our in‑house production service unit, it is indeed a great irony
of your current rules that more viewers in places like the United States and
Asia have been permitted to enjoy our programming, while customers in the areas
controlled by Shaw, Vidéotron and Cogeco have not.
15267 It is an irony
that Shaw can launch TLC HD very shortly, if not tomorrow ‑‑ I
think I saw a press release to that effect ‑‑ while Canadian
services such as ours fall by the wayside.
15268 The Shaw folk told
you this morning Canadian programming would be better if it had to compete
more. Well, our programming can compete
with anybody's in the world and is seen around the world, yet you,
Mr. Chairman, are unable to see it because you have Shaw Choice.
15269 They also told you
that you should let market forces decide.
I wonder whether that view would extend to allowing another cable
company to overbuild in Shaw's area. I
suspect the answer to that would be an emphatic no, and indeed we heard them on
that very question earlier.
15270 MR.
PATTERSON: To be perfectly clear, the
number one issue in this hearing for independent new entrant HD broadcasters
like Hi Fi is access to and profile on the systems of the Canadian BDUs.
15271 The number two
issue is ensuring that there is a level and fair playing field on which
broadcasters like us can compete.
15272 We need you to
understand that we are more than willing to compete against any broadcaster,
big or small, Canadian or non‑Canadian, regulated or non‑regulated,
provided that the playing field is level and fair. But at this time, and for many years now, the
playing field has been tilted against Hi Fi and other new entrant Canadian
broadcasters.
15273 With respect to
our number one issue, which is the absence of access and profile, the simple
sad fact is that BDUs like Cogeco will only very reluctantly provide access and
launch Canadian services like ours.
Sometimes we are told by them that our channels are not on the dial
because of their bandwidth constraints, and sometimes we are told it's because
our programming and brands are not known to the consumer.
15274 Well, I worked for
TSN and our partner Ken Murphy and John also worked for TSN. And Ken, if he was here, would tell you that
TSN was an unknown brand in 1984 and John would tell you that Discovery Channel
was an unknown brand in 1994. We know
because we were there.
15275 For our part, we
think it is probably a simple margin analysis for the BDUs such as Shaw and
Cogeco who, as you must know from Shaw's appearance this morning, want you to
get completely out of the way so that they can do what they want to do, which
is to launch low‑cost high‑margin foreign satellite services like
TLC HD which John mentioned.
15276 This is of course
on their part a perfectly rational thing to do.
They are in the business to make money and they are taking advantage of
the rules that exist.
15277 Whatever the case,
in the end all we know for sure is that our channels are not being made
available to the millions of Canadians who we know would choose to purchase
them if they could see them. Our growth
rate, for example, on SaskTel has never been below double figures each and
every month that we have launched them, since our channels were launched by
them in 2006.
15278 I mention SaskTel
in particular because it did come up in the Shaw presentation. They said that they were fighting for market
share against SaskTel and we know how successful our channels have been with
SaskTel. So I suppose we should be
expecting a call from Shaw soon wanting to get our channels for those areas
that are served by SaskTel.
15279 MR. PANIKKAR: We mentioned a few moments ago that we think
you are more or less unaware about our operating realities. For example, the Commission appears to have
little or no idea about how foreign satellite services actually operate in
Canada.
15280 We have heard in
this hearing an estimate that those services are sucking $250 million out of
Canada each year. That number could be
$250 trillion. The point is, the real
number is unknown. It is absurd that for
this entire hearing we Canadians are going to beat each other up about how to
regulate ourselves when there is at the same time no meaningful regulation
whatsoever on the foreign satellite services.
15281 Why isn't there
anyone present at this hearing from Spike or TLC or any of the other foreign
services?
15282 Simply put, they
know that they don't need to be here.
And that is a pity.
15283 Simply put, they
know they have carte blanche to operate as they see fit and leave it to the
sucker Canadians to make the only meaningful contributions to the system.
15284 Does anyone in
this room seriously believe that anybody at The Nashville Network worried for
one second about what the CRTC might think or might do when TNN morphed into
Spike?
15285 Here is another
example. For months now you have been
aware that HDNet programs a separate Canadian feed with approximately half of
its program schedule for Canada being completely different from its U.S. feeds,
and there are many of them. In other
words, you have been unaware that HDNet, the one that you approved, is not the
one that is being dumped into Canada and yet nothing has been done about it.
15286 In the meantime,
HDNet is using up bandwidth that could be allocated to a Canadian channel, such
as one of ours. We believe it will not
be long before HDNet begins to sell Canada targeted advertising in its Canada‑specific
feed in the same manner that CNBC has been doing for some time now with its
Canada‑specific feed.
15287 Is that really
what the CRTC intended when it created the foreign satellite services list?
15288 We don't think so,
but that is what the system has come to.
15289 One more example. Apparently you are unaware that foreign
satellite services demand and receive preferential carriage terms from Canadian
BDUs. Obviously this creates an anti‑competitive
playing field and eliminates access and shelf space for Canadian services such as
ours. For high fidelity, channels like
HDNet represent at least a triple whammy.
They use up precious bandwidth, they get preferential carriage terms and
they compete with us for program rights, advertisers and audiences.
15290 MR.
PATTERSON: Unfortunately, the current
rules have created an oligopoly of the large and coddled Canadian broadcasting
entities. It is ironic to hear the
Commission indicate publicly and often that it would like more new entrants to
the Canadian broadcasting system well at least so far leaving the rules in
place which tilt the playing field unfairly away from such new entrants like
ourselves.
15291 We asked the
question, as Mr. Burger did: Does
History Channel still need protection, Discovery Channel? What about Astral, do they need protection
from High Fidelity HDTV? We think not.
15292 Another recent
example that has confounded us has to do with the CBC, who within the last
couple of weeks have recently transformed the service previously known as
Country Canada into a service called Bold.
This was done apparently without asking your permission, even though
they are required to get that.
15293 In some respects
we applaud the CBC, because we think that they are finally doing what foreign
satellite services do, which is to say act rationally and be market focused.
15294 On the other hand,
we point out to you that our licence would prohibit us from making a genre
change like that that has been made by the CBC.
15295 MR. PANIKKAR: Mr. Chairman, you have asked a number of interveners: So what would you have us do?
15296 We say, simply
put, that things should be simple. We
won't pretend to have all of the answers to the complex questions at hand in
this hearing, and there are many of them.
So we can only focus on the unique story that is high fidelity and say
that in the spirit of keeping things simple, you should simply stop regulating
new entrant, independent HD specialty broadcasters such as us, except to ensure
a reasonable contribution to the Canadian broadcasting system.
15297 What is
reasonable? Well, in 2008 and beyond we
say you need to level the playing field to encourage new entrants to the
Canadian broadcasting system, particularly those who are independent and
leading the way into high definition, as we are. That means declaring a complete moratorium on
the approval of any new foreign satellite services in Canada until the
Commission better understands, perhaps through a public hearing, what the
benefits and costs are permitting such services to operate in Canada.
15298 You can make that
simpler still by exempting from regulation any new entrant like Hi Fi who meets
the following criteria, and there are only four: the new entrant must be Canadian owned and
controlled; the new entrant must not be effectively owned and controlled by a
big BDU or a big broadcaster; the new entrant must be all HD 24/7; and the new
entrant must certify to the CRTC each and every year that it has met a minimum
20 per cent CPE requirement.
15299 In fact, on that
last point, we say that the CRTC should consider eliminating licence conditions
altogether, such as Canadian content, heresy I know in Canada. But why not bring in place in replace of that
a system that requires everybody ‑‑ and we do mean everybody,
broadcasters, Canadian and foreign ‑‑ that they must meet a
minimum spend on Canadian content as a percentage of the previous year's
revenue earned in Canada.
15300 Now, that would
level the playing field.
15301 MR.
PATTERSON: We urge you to see that if Hi
Fi and others that would try to follow in our footsteps are not encouraged to
grow and prosper, the dominance of the big BDUs and big domestic and foreign
broadcasters in Canada will only become further strengthened and
entrenched. This will not allow the CRTC
to fulfil its mandate.
15302 We also urge you
to see that the current rules are fundamentally broken and in need of
significant change. If the only choice
was between tinkering with the current system or simply blowing it up, we would
prefer the latter solution.
15303 Frankly, the
existing rules are doing nothing for us and other would‑be new
entrants. They are simply there to serve
the interests of others and we have nothing, or virtually nothing, to lose if
you should scrap those rules.
15304 We do appreciate
the opportunity to provide our thoughts to you and would be delighted to answer
any questions.
15305 THE
SECRETARY: Thank you.
15306 I would now invite
Maple Leaf Sports & Entertainment Ltd. to begin their presentation.
PRESENTATION / PRÉSENTATION
15307 MR. ANSELMI: Thank you, and good afternoon, Mr. Chairman,
Commissioners and staff.
15308 My name is Tom
Anselmi. I am the Chief Operating
Officer of Maple Leaf Sports & Entertainment Ltd.
15309 To my left is
Chris Hebb, MLSE's Senior Vice‑President, Broadcast and Content; Astrid
Zimmer, MLSE's Associate Counsel; and Aaron Lafontaine, MLSE's Director of
Business Development.
15310 To begin, we would
like to thank the Commission for the opportunity to appear before you
today. Maple Leaf Sports is relatively
new to the broadcast industry and so we appreciate the privilege to offer our
perspective in these proceedings, the same proceedings as seasoned veterans
like Rogers, CTV and Global, Shaw and others.
15311 Although MLSE is
fairly well‑known in Toronto, we recognize that some people might not
know exactly who we are or what we do, so we thought a little bit of
information about our company might be helpful for the Commission.
15312 MLSE is a 100 per
cent Canadian owned privately held company, a global leader in sports and
entertainment. So we are large in the
sports industry, but small and new to the broadcast industry.
15313 MLSE owns the
Toronto Maple Leafs of the NHL, the Toronto Raptors of the NBA, the Toronto
Marlies of the AHL and Toronto FC of major league soccer.
15314 Our facilities
business includes the Air Canada Centre, home of the Leafs and the Raptors, BMO
Field, the home of Toronto FC; Ricoh Coliseum, the home of the Marlies; and
Maple Leaf Square, a 1.6 million square‑foot mixed‑use
entertainment development.
15315 Finally, as you
probably do know, in 2001 MLSE stepped into the broadcast and content business
with the launch of two Category 2 specialty services, Leafs TV and Raptors NBA
TV.
15316 MLSE employs 515
fulltime people, 1,850 part‑time people.
Of those employees, about 142 fulltime equivalents, or about 25 per
cent, are employed as part of our broadcast business now.
15317 Our business is
about bringing sports to the Canadian public.
We believe that sports makes a unique and important contribution to our
Canadian identity, to our culture, to our society as a whole. As an organization, we work hard every day to
compete on the ice, on the court, on the field and in the market to strengthen
our contribution to the sports industry.
15318 As broadcasters we
are looking for a fair opportunity to compete and contribute just as
significantly to the Canadian broadcast industry.
15319 To tell you more
about how this is relevant to these hearings, I am going to turn it over to
Chris Hebb.
15320 MR. HEBB: Thank you, Tom. Thank you, Mr. Chairman, Commissioners.
15321 In 2000 when the
Commission issued two Category 2 licences to MLSE to operate Leafs TV and
Raptors NBA TV, we intended to be contributing players in the broadcast
industry. We secured carriage, we built
a facility and, in September 2001, we launched both services.
15322 Since then, we
have continuously invested time, resources and innovation in trying to create
compelling services that could compete in and contribute to a vibrant and
healthy Canadian sports broadcast industry.
In fact, we would assert that we have been model Category 2 licence
operators.
15323 Together our two
services, Leafs TV and Raptors NBA TV, have spent close to $34 million on
programming; represent almost 17 per cent of all Canadian programming
expenditures by Category 2 services in 2006; launched an HD version of Raptors
NBA TV and produced all the regular season games broadcast on Leafs TV in high
definition as well; entered into carriage agreements that have ensured broad
distribution; have met or exceeded all CRTC mandated guidelines, including
closed captioning.
15324 However, despite
all our efforts, instead of seeing growth in our businesses, we are
experiencing the exact opposite. We have
been stalled in our quest to be relevant to the Canadian sports viewer and to
contribute to the broadcast industry in general.
15325 There are many
reasons for this, but the main reason, as you have heard from others in these
proceedings, is the Internet. Since 2001
when we launched, the availability of sports information and content on the
Internet has exploded. More striking is
the availability of sports video on the Internet, which was almost completely
non‑existent in 2001. Through the
Internet, with just a few keystrokes, users can access any and all sports
information, statistics and even video when they want it and how they want it.
15326 Since 2001 the
Internet has caused a significant change in the sports content landscape. The Internet is the ultimate niche programmer
and has rendered our services slightly redundant to sports content consumers.
15327 And we don't see
that getting better, as newspapers, magazines and even user generated content
continue to compete in our niches. The
singular nature of our services makes the impact of the Internet particularly
acute.
15328 We want the
ability to compete, to invest and to contribute more. However, the Commission's application of the
genre exclusivity policy leaves us with such a narrowly defined niche it gives
us no options for growth within the sports broadcast industry. We have been left scratching our heads
asking: Where do we go from here?
15329 Then, when the
Dunbar‑Leblanc Report was released recommending the elimination of genre
exclusivity among Canadian services, we thought we had found an answer. As evident in our first written submission,
we thought that a wholesale elimination of genre exclusivity would be the
vehicle to allow broadcasters such as MLSE to amend the licences of our
existing services and explore different licensing possibilities with the
Commission, different ways to expand our services to strengthen and enhance the
Canadian broadcast landscape.
15330 However, during
the course of these hearings and different party submissions, we have been educated
as to the practical complexity of applying such a recommendation and this has
made us rethink our position.
15331 As a result, our
recommendation to the Commission today is a simple one: to give parties the opportunity to persuade
the Commission to make exceptions to the one‑to‑a‑genre rule
for sports, whether through allowing a new general interest sports service,
allowing amendments to existing licences or a combination of both.
15332 We cannot and do
not purport to know whether our suggestion with respect to the sports genre
would have any applicability to other genres, but with respect to sports we
think the evidence is clear. Since 2001
there has been proof that Canadian viewers and the Canadian market are ready
for more sports services, more Canadian sports programming and more investment
in Canadian sports production.
15333 For instance, in
November 2006, recognizing that there is a significant amount of sports
programming that does not get to air, the Commission approved an application
permitting separate feeds of TSN to be distributed simultaneously. Although limited in terms of the amount of
permitted programming, the separate feed approved by the Commission amounts to
a separate general interest sports feed.
15334 The Commission
approved this new general interest sports feed as stated by the Commission in
its decision:
"... to provide viewers with
more sports viewing choice and diversity."
15335 Rogers launched
the Setanta International Sports Pack which has emerged as a broad sports offering
on a pay‑per‑view platform.
We understand that the CBC has made an application to the Commission for
a new national general interest sports service.
The Canadian Olympic Committee has made an application for a general
interest sports licence.
15336 There has clearly
been a lot of activity around the sports genre since 2001, and in light of
these other applications it seems that we are not the only ones who believe
that there is room for a greater Canadian contribution to the sports genre.
15337 In fact, Mr.
Chairman, the applications we mentioned may currently be awaiting review by
your staff. If this is the case, we
would hope that prior to gazetting or otherwise making a determination on those
applications the Commission would allow others to present their case as to how
they wish to open up the sports genre.
15338 Allowing
competition in a closed genre such as general interest sports would not be a
first for the Commission. In fact, in
2005 the Commission made a call for applications for parties wishing to obtain
a broadcasting licence to provide a national general interest pay television
undertaking. In that case, the
Commission recognized that there may be room in the industry for another player
and invited parties to prove their case in this regard.
15339 Sports was the
second genre to launch over 20 years ago and is now mature, robust and
significantly larger than pay television.
We are asking for the Commission to review the sports genre in the same
vein. We believe that if given the opportunity,
we could demonstrate to the Commission that consumers, the Canadian production
sector and the Canadian broadcast industry would all benefit from competition
and greater participation in the general interest sports genre.
15340 If we were
successful, then the Commission would be making a change that would result in
furthering the policies of the Broadcasting Act and, after all, that is what
these hearings are about and that is why we are here today.
15341 Mr. Chairman,
Commissioners, we do hope we have given you something to think about and thank
you once again for giving us the opportunity to appear before you today and to
make these recommendations.
15342 THE
CHAIRPERSON: Thank you for your
presentations. They are certainly
diverse points of view.
15343 First of all, I
would like to say something to High Fidelity TV.
15344 This is now the
third time I have heard you, last time was in our consultation. Each time you make a submission to us, it is
more abrasive and more offensive. To be
called shamefully in the dark, woefully ‑‑ I'm failing to
understand, et cetera.
15345 You can obviously
say that, but in my hearing and that of the Commission, our willingness to
accede to your arguments does not increase with the level of attacks that we
receive from you. I have no problem with
you saying that we are wrong, et cetera, but I think that kind of language is
uncalled for.
15346 MR. PANIKKAR: Would you mind if I just respond briefly to
that?
15347 THE
CHAIRPERSON: Please, be my guest.
15348 MR. PANIKKAR: They always say for these things "Check
against delivery", and I do hope that you took note that we did modify and
moderate our language. Sometimes the
mood in which you write depositions like this is not the mood in which you
deliver it.
15349 We don't wish to
give offence and that is why we self‑edited as we went to make sure that
we did not use the kinds of words you just referred to.
15350 THE
CHAIRPERSON: It is page 4 of your
presentation and I heard you speak today, too, and I heard ‑‑
let's not go there. My point is made.
15351 Let's deal with
the substance which I think we are both more interested in.
15352 I find it
fascinating that the first representative, you really basically support genre
and access and the other three of you don't, especially for the Fight
Channel. You basically see genre and
access rules as inhibiting you.
15353 Is this because
you are ‑‑ I'm sorry, I forgot, you are not in the sports
genre, you are partially sports, but you are more towards that.
15354 Is this because
they are talking about a different activity?
Your service is obviously old movies and here ‑‑ is
this because we are talking about a different nature of offering that you have
had this different approach?
15355 I am surprised
that you feel that genre and access is actually not helpful to you because up
to now, all the small independents have said exactly the opposite. They like genre, they think it is ‑‑
which was more along the line of what Channel Zero said.
15356 Is sports sui
generis or how do you explain this difference?
15357 I mean, you have
followed this hearing until now. You
have heard basically every independent has urged us to maintain access,
increase it, sanction genre, et cetera.
15358 MR. BURGER: First of all, just to clarify, it is The
Fight Network, not the Fight Channel. We
are building a brand.
15359 THE
CHAIRPERSON: I apologize.
‑‑‑ Laughter /
Rires
15360 MR. BURGER: Well, actually, we are not entirely speaking
from our point of view from a theoretical place. I mean, at this particular point in time we
don't really care about those issues that much in terms of how they affect us.
15361 The genre
protection issue obviously is irrelevant to us because we have our genre but we
know very well that it is subject to competition. We also know that we face competition every
day from the protected services because they show fights from time to
time. So we just have to live with that.
15362 To the extent that
that matters to us, it is because if for whatever reason we chose to expand our
business and enter into other broadcast opportunities, we would like to take
advantage of a clearer field and wish to make our selections in terms of how we
want to extend.
15363 As far as the
access is concerned, again that is somewhat theoretical because over time we
have been somewhat fortunate in our dealings with the BDUs and we have managed
to carve out access. We have carriage on
both of the satellite services and probably about 95 per cent of the cable services.
15364 I think there,
however, we do run up against the issue that they don't have places to put us
because they are essentially stuck with carrying a bunch of other losers.
15365 So I think from
that point of view ‑‑ and that is my word and their word.
15366 So I think that to
the extent that you somehow allow or create a system where better products are
entitled to greater reward, I think until then there is going to be inevitably
inequities in the system.
15367 THE
CHAIRPERSON: What you think of this
halfway house that we just heard of who say that sports really is now so mature
that we should entertain other application to the sports genre?
15368 Let's stick with
sports for arguments sake here. They
mention the Olympic Channel ‑‑ Olympic Committee, which has
applied I'm sure to Tennis Network, or somebody might apply, et cetera.
15369 Essentially we say
genre exclusivity, at least in sports, is subject to openings as long as you
can make out your case.
15370 MR. BURGER: In many respects, I think my record with the
Commission is pretty clear in terms of what I feel about competition in
genres. I think the reality is that it
is very hard for me to really discern the particular protections that these
channels have. They tend to sort of
somewhat blend into each other and I'm just not sure that it really matters any
more.
15371 I think from a
general policy perspective I am completely in favour of MLSE's position. I think that if there is room for another
general interest sports channel, and I think there probably is, again TSN, like
the example I gave with History Television, is doing extraordinarily well.
15372 So I think that
they don't really need to fear too much from competition from other points.
15373 I think at the end
of the day if the market wants and is able to support another general interest
channel, by all means I think that they should be entitled to take that risk.
15374 MR. PANIKKAR: We would certainly agree with that.
15375 The thing about
genre protection is that for those who want to operate in between those
genres ‑‑ genre protection is like a genre straitjacket in a
way, and our point around that is that any channel that comes into Canada that
is a foreign service can at any time at the drop of a hat rebrand itself in any
way.
15376 If you are not
allowed to operate in a certain genre because a channel has that one locked up
because it is a Category 1 or whatever, then our flexibility to adapt and
innovate in terms of what our customers want ‑‑ dare I quote
Shaw ‑‑ if we can innovate in a way that our customers want,
we don't have the flexibility that we need to do that in an era where every
Canadian broadcaster has its own niche and nobody else can go there.
15377 I share George's
view. I think if there is another
general interest sports network that would like to start up, TSN doesn't need
the protection; SportsNet does not need the protection. And there is lots of sports out there that is
not getting covered.
15378 I played rugby for
20 years. I never see rugby on channels
anywhere, and I would like to. Nobody carries
that, except once in a while in repeats.
15379 THE
CHAIRPERSON: It is carried on Sunday
morning ‑‑ I forgot what channel it is ‑‑
because I regularly watch it. But
anyway, your point is made.
15380 What do I say to
Headline Sports? You were here. It was The Score I think they called it and
they said ‑‑ you heard their argument. They are a very lucrative business, but they
say we survive because of our genre. If
you take genre away, then tomorrow morning they are going to have a TSN
Headline Sports.
15381 It is very easy
for them to produce it on the side and they basically will wipe me out in no
time because for them it would just be a sideline, but for me it is the whole
existence.
15382 MR. PANIKKAR: Well, I think I heard earlier in these proceedings ‑‑
and I can't remember the attribution ‑‑ but perhaps not every
channel needs to survive.
15383 THE
CHAIRPERSON: Okay.
15384 Len, you have some
questions?
15385 MR. MILLAR: Mr. Chairman, if I could just add, you
suggested perhaps the distinguishing factors between film and sports. Perhaps a different perspective.
15386 Channel Zero
launched our first network in 2001 which, with the exception of MLSE, the other
two entrants haven't had to go through a renegotiation with the BDUs. I think that has been a recurring theme
through these hearings, is the unbalanced playing field; that when we enter
into negotiations where Category 2 has no roots, it is like growing a plant on
a sandy beach. It is very difficult,
notwithstanding the success in the market, notwithstanding the success
internationally with our films, we just have no way of negotiating.
15387 So perhaps that is
a different perspective on the same question.
15388 THE
CHAIRPERSON: Okay. Thank you.
15389 Len...?
15390 COMMISSIONER KATZ: Let me try and take you one at a time. If anybody wants to pipe in on one of the
questions, you are certainly free to.
15391 Channel Zero, I
guess Mr. Millar, you have put forward a model with a Category A and a Category
B distinction. Under your Category B
distinction you are basically saying there should be no mandatory carriage.
15392 If we followed the
model through, wouldn't we be in the same boat at some point in time where
someone who is in a Category B has been denied access, no different than a
Category 2 is not getting access, and you will be sitting around this table at
some point in time saying what do we do about those guys that are in Category B
that are being hard done by?
15393 MR. MILLAR: It's a great question because we obviously
struggled with that as we tried to put together a comprehensive ‑‑
we called it an ecosystem or a model.
15394 The difference
that we draw from it is that in the Category A and Category B services would be
eligible to apply for a change of category.
So you could in fact start off as a Category B, establish a brand and
perhaps come to the Commission and say, you know, we actually have discovered
that we thought that we were going to need a lot of foreign content, but we
don't. We can make a bigger contribution
but we are having some trouble.
15395 So there would be
an access model we proposed a competitive licensing.
15396 The second thing
is it allows new entrants into very niche ‑‑ just call them
what they are, specialty networks for Canadian broadcasters to look at a
specialty area and develop a business model that does in fact rely on a fair,
balanced and level playing field between the BDUs, where we can take a project
and present it to the Commission. The
Commission, if they find it worthy, would then open up a call, a competitive
call, and people ‑‑ the same thing that happened with
Spotlight Television with the pay call.
A number of people came, presented, and there was an award.
15397 Again, in our
detailed description of how the model would work, it is possible the Commission
would say no, we don't find that there is room or it too closely impinges on
the categories and the genres that we have chosen to protect.
15398 COMMISSIONER
KATZ: Your model also I guess as a
Category A contemplates a 50 per cent Cancon requirement.
15399 Have you sort of
run the model to see whether this is a zero‑sum game and the CPE and the
contributions that are currently flowing into the system would remain
essentially the same under your model?
15400 MR. MILLAR: Yes, as best as we can, we have. We believe that ‑‑ first of
all, the 50 per cent in both, given that it would require a competitive
licensing hearing, is probably the minimum.
I think that the currency at that stage becomes the contribution to the
system and the objectives of the Act.
15401 But no, we believe
that it would bring new dollars into the Canadian broadcasting system because
you would have new entrants with a method and a manner of launching new
services that are sustainable beyond the first licence renewal.
15402 COMMISSIONER
KATZ: Okay. When you advocate the dispute resolution
mechanism, does that apply equally for Cat As and Cat Bs in your model?
15403 MR. MILLAR: That is a question I'm not entirely prepared
for, so I will look to Roman or Paul to see if they have a better answer. But I will attempt it.
15404 We did make the
comment in another place that fundamental to any new model is dispute
resolution, and under the current rules Category 2s cannot access dispute
resolution.
15405 Therefore, if I
just bring those two pieces together, I would say that I think it is
fundamental that the Category Bs should have some access to a dispute
resolution mechanism when there is any unequal negotiating power.
15406 COMMISSIONER
KATZ: I think it was Mr. Bureau of
Astral that commented that if there is no mandatory carriage or access and you
go to a dispute resolution and for whatever reason the BDU loses, you are still
not under the obligation to carry the service anyway. So you have gone through all this and at the
end of the day there is nothing to be gained by it other than legal costs and
perspiration, I guess.
15407 MR. MILLAR: I guess my answer would be that it
seems ‑‑ and I think that Mr. Bissonnette this morning said
that an awful lot of disputes get settled before they actually are decided upon
by the Commission. The sheer fact of
coming before the Commission or coming before a baseball style arbiter may in
fact cause the parties to come together on a more business oriented basis
rather than ‑‑ not to keep pulling out the clichés, but the
one party just using the hammer on the other.
15408 COMMISSIONER
KATZ: But at the end of the day if it is
a Cat B or a Cat 2, it comes to the same thing.
You have a baseball arbitration and the BDU, if that is the case, loses
he is still not under any obligation to carry.
15409 MR. MILLAR: Yes.
15410 COMMISSIONER
KATZ: The parties come together,
but ‑‑
15411 MR. MILLAR: Or perhaps, as I said, if there was some
mechanism to bring parties together, perhaps during the term of the contract
perhaps the mechanism could be used to allow the parties to come and start a
negotiation and deal with that very issue before the expiry of the contract,
but during the term of the contract.
15412 COMMISSIONER
KATZ: You also support one of Pelmorex's
alternatives with regard to in certain genres opening it up, and you say:
"... where one Canadian
provider or a few Canadian providers can prove that it is economically
efficient, effective..."
15413 Doesn't that put I
guess the CRTC in another subjective role as to deciding what someone's
business case is or is not and how it will infringe upon someone's going
concern, someone who is already financed, been in business, been to the bank,
raised money based on a certain assumption and now suddenly the Commission is
here with an application and we are going, "You know, you made 15 per cent
last year. We think the market can
support somebody else, so we will let somebody else in." And then suddenly
there goes the business plan and suddenly bells go off.
15414 MR. MILLAR: I guess two points.
15415 Number one is that
model is used in radio and over the air television competitive licensing. Again, I'm not an expert on it, but that is
partly how we see it.
15416 And partly is that
we use the concept of substitution, direct substitution, in evaluating whether
genre protection was appropriate. If in
fact the alternative service is a direct substitute for the existing one, I
don't know what's gained in terms of diversity programming to the system by
allowing a second network, a second service, in that same genre.
15417 But as we've heard
from the panel, in sports apparently there is almost unlimited sub genres that
can in fact make the viable business case.
15418 COMMISSIONER
KATZ: Thank you.
15419 Moving on to the
Fight Network, I am really interested in hearing how your negotiations went in
the U.K. with BSkyB and comparing it to how you negotiated in Canada.
15420 Is there a
difference at all in the timelines, the process, the requirements, the
obligations?
15421 MR. BURGER: No.
Actually, the U.K. business is a free to air one. We are in all of the homes that BSkyB is in. It is based on an advertising model.
15422 I could possibly
provide some insight into discussions that we are having with Australia, which
is again a different place ‑‑ and it is really a very
different place.
15423 The
Commission ‑‑ actually, it is a place where I think the
Commission would be completely out of place.
I think that the entire market is largely dominated primarily by the
News Corp Group and the PBL Group, the Packer Group, and it is essentially they
are the gatekeepers to whatever gets on television. They are the first port of call, and really
the last one.
15424 So in many
respects it is a much more simplified process.
There aren't a lot of BDUs to deal with.
There is really primarily only one and perhaps two, and there is almost
no regulatory requirement or restrictions with respect to a foreign entity
setting up shop there.
15425 COMMISSIONER KATZ: Do you own the rights to the programs that
you put on?
15426 MR. BURGER: We own the rights to the programs that we
create and certainly to the rights that we acquire. Some of them we acquire for longer periods,
some for shorter periods. So it is a somewhat
more conventional programming model. We
don't stage all the fights ourselves, no.
15427 COMMISSIONER
KATZ: I think we had The Score
here ‑‑ and I guess it is questions for Maple Leaf Sports as
well ‑‑ and they were saying that their concern about the
genre protection is notwithstanding the fact that there is a lot of competition
in sports, it is a lot easier for a bigger player with deeper pockets to get
into their space than it is for them to migrate into somebody else's space,
primarily because of the rights.
15428 I guess if there
is one thing that Maple Leaf Sports & Entertainment has is you are
vertically integrated. You actually own
the rights to everything that you put on your program I would imagine right
now, which gives you an awful lot of leverage and an awful lot of control to
sit down across the table from a BDU and basically say you can't get anywhere
else. Either you put me on under my
conditions or else you're not putting it on, whether it is the Leafs or the
Raptors or whatever, which gives you an awful lot of credibility and power.
15429 MR. HEBB: It has definitely helped us in negotiations
with the carriers to be in that position.
15430 MR. BURGER: Oh, you are looking at me.
15431 Well, in our case
there is no question that we would be susceptible. As the areas of Fight sports that we carry
become more and more popular, there obviously is some interest on the part of
the majors to carry them.
15432 However, what we
are aiming for is the community, the audience of people who are really rabid
Fight fans and they are the ones who check in every day on how their favourite
personalities are doing, what is coming up and so on.
15433 We keep really
making the analogy to The Golf Channel.
When The Golf Channel started up, a lot of high‑end golf was
carried on the major networks. They
certainly were in no position to even bid for that, but they targeted their
audience and those people who ‑‑ you know, it is a somewhat
small portion, obviously a substantially smaller portion of the audience which
were very enthusiastic golfers or golf fans and they built their brand based on
that.
15434 The advantage that
we have, to some extent, is that the very entertaining fight content that we
are able to get is not always necessarily at the most expensive, most brand
aware levels. So there are extremely
exciting fights that take place in different promotions which are not
necessarily the ones that the majors would necessarily want to buy in any
event.
15435 I speak, for
example, of UFC and one or two others, WWE.
These are the big drivers or the major sports carriers here and that's
not necessarily where the best action takes place.
15436 COMMISSIONER
KATZ: I think it was The Score that
mentioned they carried WWE, I guess it is, or whatever it is called now.
15437 Do you guys
compete for rights? Is that the way it
works?
15438 MR. BURGER: Not for WWE.
We are very happy with carrying several other sports wrestling brands
like TNA, ROH. So we have our own
suppliers.
15439 COMMISSIONER
KATZ: Okay. So you don't carry them.
15440 The more I listen
to a lot of the independents, yourselves and those that came before you as
well, the real issue that I'm trying to come to grips with is the vertical
integration that exists between the BDUs who are in the broadcasting business
as well, and everybody else.
15441 Is that how you
see it as well? Is your biggest
competitor, your biggest threat, the distributor that has the potential to
distribute their own programming at the exclusion or at the expense of yours?
15442 Or are you
concerned, whether it is genre protection or access, with other folks getting
into your space?
15443 MR. MILLAR: Commissioner Katz, I think the answer to that
is yes. The BDUs are one‑time
competitors to us. They own programming services. They are competitors in terms of new
technology and new on‑demand services.
But they are also our customers and it leaves us in a very vulnerable
position to come before you and point out that in fact our primary customers
are also our competitors and there perhaps is an uneven negotiating strength
when we are in the room together.
15444 MR.
PATTERSON: From High Fidelity's point of
view, we are prepared to compete against anybody, as we said earlier. In fact, we have no protections vis‑à‑vis
any BDU wanting to launch a Category 2 service that is duplicative of our
channels.
15445 So we are already
living in that world.
15446 We, generally
speaking, have exclusive rights to all our programming, which we think is
premium programming. We think we can
program our channels and build our brands better than the BDUs could, or
anybody else who is more well‑heeled than we are. We simply want the ability to compete on a
fair and level playing field with anybody else who is a Canadian who is
prepared to take us on.
15447 COMMISSIONER
KATZ: But as a Cat 2 when you went into
this business, you weren't guaranteed access.
15448 MR.
PATTERSON: Absolutely. Nor do we ask for any kind of access
guarantee now.
15449 COMMISSIONER
KATZ: So how can the system support your
type of endeavour if you can't get carried and you are not even looking for
access?
15450 MR.
PATTERSON: Oh, we would love to have
access and we expect to earn our way onto the dial, just as we have done since
day one.
15451 We do believe that
eventually companies like Cogeco and Shaw will wake up to the fact that they
are behind people like Bell ExpressVu, and we hope very soon Rogers. So we do believe we are going to get there,
and it is going to be because of the quality of our programming and because we
are nimble managers of a small enterprise and because we have a product which
is 24/7 HD programming that nobody else out there has.
15452 We are a unique
broadcaster I would argue inasmuch as MLSE has a unique product.
15453 COMMISSIONER KATZ: So if I'm correct, then, the reason you are
here before us today is your big concern is foreign companies having a
disproportionate value proposition than a Canadian company?
15454 MR.
PATTERSON: From a competition point of
view, our concern would be the foreign satellite services. If we could have the freedom to operate the
way foreign satellite services do in this country, then we would be fine.
15455 But the reality is
that we have our hands tied. We as
Canadians tie each other's hands and we let the Americans and the Brits and the
other foreigners run around this country sucking ‑‑ excuse my
language ‑‑ millions, billions, I don't know, trillions of
dollars out of this country, and they are the ones who need to be in front of
you to answer the questions about what their dealings are with Canadian BDUs.
15456 MR. PANIKKAR: I wonder if anybody really thinks that people
have been ringing Shaw's phone off the hook to say you must give me TLC
HD. You must do that. I don't believe that for one second.
15457 Three million
subscribers, if they had 10 letters, I would be astonished.
15458 So the current
rules make it far more easy for a BDU to launch a low cost, high margin service
than to launch a service like ours. This
is the inequity that we are really focused on vis‑à‑vis the foreign
services and the ability of the BDUs to use those foreign services to drive
margins.
15459 They are in the
business to make money. We are not
saying they shouldn't make money. But it
is far easier to launch a channel like TLC HD than it is to launch a Canadian
channel like ours, and we think it ought not to be.
15460 COMMISSIONER
KATZ: Mr. Burger...?
15461 MR. BURGER: I think it depends on what territory the BDUs
would want to encroach on. For example,
if you go through a loosening of the genre protection rules, I think it is
probably most likely that the BDUs are immediately going to go south of the
border and start forming partnerships with potential brands that are not here
because that genre is already occupied and with the relaxation of the rules
there might be room for them.
15462 I think that to
some extent when you are having, you know, a Food Channel one against an
American Food Channel of another sort and the BDUs going to that, that is one
kind of competition at that level.
15463 I would be more
concerned if you have a homegrown Canadian concept ‑‑ so for
example Showcase, which turned out to be an extremely successful brand, if a
couple of years or three or four years into that one of the BDUs would have
decided, you know, we kind of like this Showcase idea, I think we are going to
move into that, and used their strength and their power to elbow Showcase out
of the market, certainly I don't think that you would have necessarily had a
Fight Network because then we would have looked at what they did to a
successful homegrown Canadian brand and we would say well, gee, what's the
point?
15464 So I think what
you run into really is going to be a stifling of any kind of new brand
building, any kind of new initiative and new energy coming from the Canadian
market.
15465 I think that has
to be something that the CRTC should be concerned with in how this new
landscape shapes and, if in fact it is going to be changed.
15466 MR. ANSELMI: I think the word unique was used a few
minutes ago and I think if we have learned one thing in the last seven years it
is that as far as the smaller players in the industry, there seems to be a lot
of different unique circumstances.
15467 To just touch on a
previous question, you were talking about leverage as an owner of programming,
i.e., games, and leverage that may give us in the distribution market. You know, our four teams have 270 games a
year that they play and we have about 50 of them on our channels right
now. We got distribution before we had
any of those games on, likely on the strength of our brands.
15468 So the vertical
integration challenge that we face is a different one than I suspect a number
of the others here.
15469 You know, a major
rights‑holder of ours is Rogers Sportsnet. They have more Leaf games that our channels
have, so their parent company obviously is a distributor we are dealing with.
15470 So it is a bunch
of different unique circumstances.
15471 I think where we
have landed, and I think what Chris was trying to articulate, is that just
defining it by genre isn't generally the overall definition and in our case the
genre is just too narrow and then the Internet has made it even more narrow.
15472 COMMISSIONER
KATZ: You also brought up in your
summation this afternoon the issue of new media, how new media impacts your
business. I for one actually used the
play‑by‑play on the Internet for the Raptors rather than
subscribing to the service for the odd game that I want to watch when I'm at
home. So I will sit in front of a
computer doing some work or whatever and have the play‑by‑play in
the upper corner as well.
15473 How do you deal
with the fact that you are losing audiences and there is a disconnect there?
15474 MR. HEBB: Well, I think that's one of the points we are
making, is that we are getting squeezed by the Internet in our particular niche
because it is a very popular niche. And
we are not only competing now against new media being delivered by the
incumbent broadcasters, TSN, Sportsnet and others who have moved into new
media, but through newspapers, magazines and now user generated content.
15475 It is very
difficult to fulfil the promise under this narrowly defined niche in broadcast
when you are faced with that kind of competition being delivered by what is the
next wave of media delivery.
15476 What we are saying
is that we think we need to be able to expand outside of that niche because it
is being served so well by new media.
15477 COMMISSIONER
KATZ: So you are looking at expanding
outside of your genre of Leaf TV or Raptors TV into other sports venues rather
than getting another Cat 2 licence of some sort and broadening out that way?
15478 MR. HEBB: We would stay in the sports genre, just have
a wider capability to move into other sports, especially in our off
seasons. Whether you wanted to do that
through an amendment to our licence, to have another call for applications, we
just think that we have been so narrowly defined that it is really hard to compete.
15479 COMMISSIONER
KATZ: And the economics is such that you
are trying to protect your channel rather than getting another channel, so that
the Leaf channel would only be on during the Leaf season and the Raptors
Channel only during the Raptors season, and you would get some other genre of
other sports franchise, whatever it is, and get another channel, rather than
overlaying the channels?
15480 MR. HEBB: We really don't have the model at this
point. All we are saying is we think
there is more room in sports for general interest services. How that unfolded I think is probably for
another hearing, similar to the way you did things with the pay television
undertakings.
15481 So we don't have a
plan to deliver here today to the Commission.
We are simply saying that that is a highly profitable genre and we think
that there is room for more players. We
would like to show you that we can contribute to the broadcast landscape in
that genre.
15482 MR. ANSELMI: And the current definition of our genre
doesn't appear that it is going to work long term and doesn't have the growth
potential that we are looking for to be major contributors to the system.
15483 When I was talking
about unique earlier, I think one of the things we are seeing is there are some
narrowly defined niches, perhaps the Fight niche, which may make a heck of a
lot of sense.
15484 So there is a
bunch of different unique circumstances here that we would urge the Commission
to look at in sort of unique kind of ways.
15485 COMMISSIONER
KATZ: What differentiates you, though,
is the fact that you do right now own your own rights to the programming as
well.
15486 So unlike I guess
we heard The Score basically say their concern is if the genre is opened up,
TSN are Sportsnet or someone can come in and usurp their space easier than they
go the other way. In your case, no one
can come in and take the Raptors or the Leafs, because you own the rights to
them.
15487 MR. ANSELMI: If we ended up in a place where we were not
selling the rights to our games, then I suppose that could happen. Where we are right now, I mean of our 270
games, as I said, we retain about 40 or 50 of those for our channels and we
sell the other 200 and something games.
15488 Some are taken by
the leagues for national distribution.
15489 For instance, we
just finished being in the market with Raptors Television rights after a few
years and The Score is one of the new proponents. So they competed very nicely for those rights
against TSN and Sportsnet and CBC and the like.
15490 We think the
market is very robust and you know, quite frankly, there are Blue Jay games in
southern Ontario. They are not getting
on television right now. There are
Ottawa Senators games that are forced to go to pay‑per‑view.
15491 So there is a
surplus of that Tier 1 programming in this market as well.
15492 COMMISSIONER
KATZ: Thank you.
15493 Those are my
questions, Mr. Chairman.
15494 THE
CHAIRPERSON: Michel...?
15495 COMMISSIONER
ARPIN: Thank you, Mr. Chairman.
15496 If we stay on the
topic of genre protection, all of you are saying expand the genre or remove it,
but you also are seeking that the Commission keeps some protection versus the
foreign services.
15497 What is going to
be the criteria? If there is no genre,
what are you suggesting that the Commission use as criteria to assess the genre
of the foreign services?
15498 MR. MILLAR: Vice‑Chair Arpin, in fact our position
is that that is exactly one of the reasons that I have in my crib notes for
defending the maintenance of genre protection in certain areas; that it is
impossible to tell a foreign service that they can't come in because there is a
Canadian service already in that genre if in fact there are no genres or there
are these big bucket genres where you can't tell one from another, that sort of
race to the middle.
15499 So that would be
our position.
15500 MR.
PATTERSON: From High Fidelity's point of
view, we think that there are actually more questions unanswered regarding
foreign satellite services than there are answers at this point, and that is
why we were recommending that there ought to be a public hearing regarding
foreign satellite services where we can get into answering exactly the kind of
question you asked.
15501 I think there are
all kinds of possibilities that we can do that will encourage foreign services
to partner with Canadian, or maybe there are instances where foreign services
should not have to partner with Canadian.
15502 These are all the
kinds of questions, along with the contributions that foreign satellite
services should make to the system, that we should analyze in a public hearing.
15503 I think once we
get all of those questions analyzed, then I think that we will be with ‑‑
yes, the answers will suggest themselves because we will actually have some
factual information upon which to make good decisions.
15504 COMMISSIONER
ARPIN: The purpose of this public
hearing was as well to look into that, because if we are doing what you are
requesting, having another public hearing, someone made the request that we
have a specific hearing on VOD, then we are going to have spec‑‑ on
every topic?
15505 What was the
purpose of this hearing?
15506 MR.
PATTERSON: We don't know how much
foreign services are taking out of this country. We don't know what contribution they are
making.
15507 COMMISSIONER ARPIN: I could tell you.
15508 MR.
PATTERSON: We don't know what they are
packaging.
15509 COMMISSIONER
ARPIN: $249.7 million. That is in the data that the Commission
published just before this public hearing.
15510 It is made up of
$27.9 million from the pay side, and $221.8 million from the specialty side.
15511 MR.
PATTERSON: The data that the CRTC has
for foreign services does not come from the foreign services.
15512 COMMISSIONER
ARPIN: No, it comes from the BDUs.
15513 MR.
PATTERSON: It comes from the BDUs.
15514 Does the CRTC have
any information on how much advertising time foreign services are selling in
Canada?
15515 I don't want to go
on about this. My point is, simply, that
you have had no representatives from the foreign satellite services in front of
you here throughout this entire hearing.
I think they need to ‑‑
15516 COMMISSIONER
ARPIN: No, we had a submission from
A&E.
15517 They didn't ask to
appear, but they were here in the very first days of the hearings.
15518 MR.
PATTERSON: Okay. I won't debate it at length with you. Our position is that there must be an in‑depth
analysis about foreign satellite services in this country, because there is no
clarity about the contribution, or lack of it, that they are making to the
Canadian broadcasting system.
15519 COMMISSIONER
ARPIN: I remain with you, Mr.
Patterson. You alluded in your
presentation to HDNet. As a matter of
fact, you made a fairly big statement regarding it. Are you contemplating filing a formal
complaint, or are you using this as an introduction for an eventual formal
complaint to the Commission?
15520 MR.
PATTERSON: No, we have no anticipation
of a formal complaint against the Commission.
We know that the BDUs want HDNet ‑‑
15521 COMMISSIONER
ARPIN: Not against the Commission,
against HDNet ‑‑
15522 MR.
PATTERSON: Excuse me, that's what I
meant to say.
15523 COMMISSIONER
ARPIN: ‑‑ for the carriage of HDNet by BDUs.
15524 MR.
PATTERSON: We have no intention of doing
that.
15525 We know that the
BDUs want HDNet. They are the ones who
brought it into the country, with their support.
15526 We don't bring
complaints against our major customers, who we are begging for access from.
15527 COMMISSIONER
ARPIN: Mr. Burger, did you want to say
something?
15528 I cut you off.
15529 MR. BURGER: It was the beginning of your question about
how do you distinguish ‑‑
15530 COMMISSIONER
ARPIN: Yes.
15531 MR. BURGER: One simple answer that I would have is that,
for example, if the Science Fiction Channel wanted ‑‑ or if
somebody wanted to bring the Science Fiction Channel up here, there are two
ways it could come up, either as a direct service or partnering up with
somebody and starting a science fiction channel, just like you have MTV Canada,
or something like that.
15532 You could have a
Canadian science fiction channel which would be competing with Space.
15533 COMMISSIONER
ARPIN: Those are my questions, Mr.
Chair.
15534 THE
CHAIRPERSON: Ron, do you have any
questions?
15535 COMMISSIONER
WILLIAMS: No, thank you, Mr. Chair.
15536 THE
CHAIRPERSON: Implicit in all of the
answers I heard is, basically, that we should adopt some sort of rule of
obligatory Canadian partnership or participation before letting any foreign
satellite service into this country.
15537 MR. PANIKKAR: We certainly suggest that that would be a
good start.
15538 THE
CHAIRPERSON: Okay. Thank you very much for your
presentation. I think those are our
questions.
15539 MR. PANIKKAR: Thank you.
15540 THE
CHAIRPERSON: We will take a five‑minute
break before hearing the last panel.
Thank you.
‑‑‑ Upon recessing
at 1549 / Suspension à 1549
‑‑‑ Upon resuming
at 1557 / Reprise à 1557
15541 THE
CHAIRPERSON: Madam Secretary.
15542 THE
SECRETARY: Thank you, Mr. Chairman.
15543 I would now invite
Canadians Concerned About Violence in Entertainment to make a presentation.
15544 Appearing for them
is Dr. Rose Anne Dyson.
15545 Dr. Dyson, you
have 15 minutes for your presentation.
PRESENTATION / PRÉSENTATION
15546 DR. DYSON: Thank you.
15547 I would also like
to introduce legal counsel to Canadians Concerned About Violence in
Entertainment. Recently we targeted
Ontario Superior Court Justice Norman Dyson, also a long‑time supporter
and member of C‑CAVE.
15548 I would like to
bring to your attention, as well, that I am here representing at least three
other organizations in addition to Canadians Concerned About Violence in
Entertainment. They are: Science for
Peace, a media working group based at the University of Toronto; the Council on
Global Issues, at Ryerson University in Toronto; and Canadians for Democratic
Media at Simon Fraser in Vancouver.
15549 Early last year it
was announced that the CRTC had made a decision to deregulate advertising on
Canadian television networks, and, as one of countless Canadians objecting to
this decision, on July 16th of last year I received a letter from former
Minister of Heritage Bev Oda. She
advised me that on May 17th of last year, the CRTC had determined that it would
gradually increase the allowable numbers of minutes of advertising per hour
until September of 2009, when time restrictions on advertising would be
eliminated entirely.
15550 She also advised
me that most parties consulted had no objection to deregulating non‑traditional
forms of advertising, such as product placement and virtual advertising, or the
digital alteration of images, but were divided on whether the 12‑minute
per hour limit on traditional advertising should be eliminated.
15551 Last fall I
received another letter, dated October 17th, from Craig Carson, Senior Policy
Advisor to Bev Oda's successor, the Hon. Josée Verner, Minister of Canadian
Heritage.
15552 It was suggested
that I share my concerns with the CRTC, as well, and consequently I am here
before you today to argue that both approaches are mistakes, in our view, and
contrary to the mandate set out for the CRTC by the Broadcasting Act to
safeguard, enrich and strengthen the cultural, political, social and economic
fabric of Canada.
15553 It appears that
neither teachers, Hill professionals, peace activists, cultural and natural
environmentalists, nor media scholars concerned about increasing financial and
commercial encroachment into the lives of us all, but especially children, who
are the most vulnerable members of society, were even included in the initial
consultation process that led to this decision.
15554 This is a
remarkable oversight, given the fact that in the past 12 years the Canadian
taxpayers contributed over $22 billion to the audio‑visual industry.
15555 Furthermore,
history has shown that deregulation and/or media self‑regulation simply
does not work.
15556 Canada's approach
to maintaining high standards in advertising, based on industry self‑regulation,
as emphasized by Mr. Carson in his letter to me dated October 17th, is nothing
more, in our view, than a smokescreen to give both the advertising and
broadcasting industries carte blanche to do whatever they want with the public
airwaves.
15557 As a researcher,
consultant in media education, and an activist for the past 20 years, I know
that Canadian parents and teachers are extremely concerned about increasing
violence on television and the commercial exploitation of children.
15558 Some of you may
recall that in the fall of 1992, public indignation over rising levels of
violence in popular culture enabled 14‑year‑old Virginie Larivière
from Quebec to present Prime Minister Brian Mulroney with a petition signed by
over 1.3 million people, demanding that the government do something about
violence on television.
15559 Findings released
by Jacques Deguire and his colleagues at Laval University in 2004 indicated
that in the previous 10 years violence on Canadian networks had increased 286
percent.
15560 This occurred
after the CRTC decided in the early 1990s to allow the Canadian Association of
Broadcasters to regulate themselves by establishing the Canadian Broadcast
Standards Council.
15561 In his letter,
Carson made several references to the Broadcast Code for Advertising to
Children. He pointed out that originally
adherence on the part of broadcasters was voluntary, but that since 1974 it has
been a Condition of Licence.
15562 Who monitors this
adherence?
15563 Experience has
shown that lack of adherence to standards developed by the Canadian Association
of Broadcasters for themselves is the norm.
15564 In January 2007,
Bill C‑327, to amend the Broadcasting Act, was brought before the
House. It was introduced to ensure that
the public could expect greater accountability from broadcasters who violate
their own code on violence.
15565 Although it was
supported by both Bloc and NDP members, it was defeated by Conservative and
Liberal members.
15566 Despite evidence
of escalating violence in program content, they were persuaded by spokesmen
such as Ron Cohen, Chairman of the Canadian Broadcast Standards Council, that
industry self‑regulation is the answer.
In other words, they concluded that Canadians should be content to let
the fox guard the henhouse.
15567 Mr. Cohen's
article in The Toronto Star on January 29th, 2007, in which he stated his
position on behalf of the council, was followed up by my own letter to the
editor, protesting this misleading and arrogant assumption that the industry is
doing an adequate job in safeguarding the public interest.
15568 We see the same
scenario unfolding in the debate over Bill C‑10, now before the Senate
Committee on Banking, Trade and Commerce, drafted to close a loophole in the
Income Tax Act.
15569 Minister of
Heritage Josée Verner has emphasized in her own remarks before the Senate
banking committee, as have those of us in support of the bill, that there is
content potentially illegal under the Criminal Code, such as hate propaganda
and child pornography, but no provisions in the Act that exclude such material
from public funding through tax credits.
15570 It has also been
emphasized by the minister and others, including myself, that contrary to
arguments from spokesmen on behalf of the aggressive entertainment industry
lobby, mounted in opposition to the bill, it has been part of the tax credit
landscape since its inception in 1995.
15571 It was also
pointed out to the Senate committee on April 16th that a recent Compass poll on
public opinion and customer research indicates that 81 percent of Canadians do
not think that pornographic film should receive funding from the public purse.
15572 I would argue, as
I did before the Senate banking committee myself on April 9th of this year,
that the need for more discretion on how cultural policy is developed in
Canada, including the need to eliminate sources of funding for film and
television productions deemed to be contrary to the public interest, was first
recommended in a report released over 30 years ago, in 1977, from the Royal
Commission on Violence in the Communications Industry, chaired by the late Judy
La Marsh, a lawyer and broadcaster who served in the Liberal administration of
Lester B. Pearson.
15573 I renewed the call
in my doctoral dissertation, completed at the Ontario Institute for Studies in
Education at the University of Toronto in 1995, and in my book "Mind
Abuse: Media Violence in an Information
Age", published in 2000 and distributed by the University of Toronto
Press, and numerous other peer‑reviewed articles, papers and co‑authored
books since.
15574 I am leaving a
copy of this book with the Commission, for your information, as well as a copy
of "The Learning Edge", an online publication that I edit for the
Canadian Association for the Study of Adult Education. It has an article in it entitled
"Shifting the Paradigm Toward a Greener Earth in Media, Business and
Community". It can be accessed
online by logging onto "www.oise.utoronto.ca/casae".
15575 The La Marsh
report, my doctoral thesis, and my book all include a review of thousands of
studies demonstrating harmful effects to the public at large from unregulated
advertising, sexual exploitation and media violence, as well as trends in
policy development, or the lack thereof, in Canada and around the world, and
over 50 recommendations on what could be done about these problems if the political
will existed.
15576 I will also leave
with you a copy of the presentation I made to the Senate banking committee on
April 9th.
15577 Clearly, we are
all grappling with growing physical, mental health, and environmental problems
precipitated by communications technologies.
15578 Indeed, Bill C‑10,
now before the Senate banking committee, is a logical extension of the work
begun by the CRTC under the leadership of Chairman Keith Spicer in the early
1990s.
15579 As Minister Verner
has pointed out the transparent approach to the development of guidelines to
ensure that what is illegal under the Criminal Code, as well as gratuitous
violence in films and video games, for which public support is clearly
unacceptable, she is recommending a model that has been used before.
15580 In the early
1990s, the CRTC, the Canadian Association of Broadcasters, the Canadian
Teachers' Federation, Canadians Concerned About Violence in Entertainment,
child psychologists and others collaborated to develop the Code on Violence.
15581 It continues to
inform the Canadian Broadcast Standards Council in handling viewer complaints
about content on television, but, as I have already pointed out, this
initiative has not gone far enough.
15582 The Canadian
Broadcast Standards Council is still reactive, as opposed to proactive, and its
criteria has not been strictly adhered to by the very members of the broadcast
industry for whom it was first set up.
15583 As a model, it has
not yet measured up to what was originally intended.
15584 The Broadcast
Standards Council has proven to be far more interested in clinging to complete
autonomy on the issue of regulation than to mushrooming problems.
15585 In the early
1990s, it was hoped that the criteria for program development would be applied
within the industry, beyond the members of the CAB itself, both domestically
and internationally.
15586 To great fanfare,
both Keith Spicer and Ron Cohen participated in the International Broadcast
Standards Summit, convened in St. Louis, Missouri, in 1996, prior to the
founding convention for the cultural environment movement at Webster
University, which C‑CAVE co‑sponsored.
15587 I was there, along
with 6,300 other people, from over 250 organizations, in 14 countries.
15588 Since then not
much has happened.
15589 We urge the CRTC
to reclaim its leadership role, instead of moving Canada in the opposite
direction on media issues of increasing concern to growing numbers of people
around the world, due to escalating violence and related health problems.
15590 Last fall an
international coalition of 786 organizations from 128 countries, based in
Geneva, Switzerland, announced November 19th as World Day for the Prevention of
Child Abuse from Exposure to Media Violence.
15591 Pope Benedict
issued his own call for more attention to the problem last week, upon arrival
in the U.S.
15592 In February of
this year, when I attended the 52nd Commission on the Status of Women at the
United Nations in New York City, on behalf of the Canadian Voice of Women,
Secretary General Ban Ki‑Moon announced his initiative to address growing
evidence of violence against women throughout the world, pointing out that one
in three women will be a victim of abuse at some stage in their life.
15593 For years
spokesmen for both Canadian and American medical associations, U.S. Surgeons
General and others have pointed to the serious mental health problems
associated with media violence and sexual exploitation in unregulated
advertising.
15594 Capitulation on
the part of both politicians and regulators in response to fear mongering about
censorship from special interests in the media industries is unacceptable. They purport to act on behalf of the public
interest, but instead are bent on retaining corporate freedom to manipulate our
media guides to conform with their own greed for profits.
15595 It was reported in
the February 2008 issue of Today's Parent "Special Issue on Kids and
Food", by Lisa Murphy, that we now have 1.6 million children in Canada
diagnosed as suffering from obesity.
15596 So far, the CRTC
has chosen to ignore growing alarm across the country about rising levels of
obesity, with numerous other health problems, such as diabetes and heart
disease, surfacing in children.
15597 This is occurring
both from the advertising of junk food and the result of the sedentary nature
of more and more time spent on electronic entertainment.
15598 These problems are
adding to the already well‑known concerns about the ways in which
violence in popular culture fuels aggression, desensitization, learning
difficulties, fear, insecurity, the glamorization of guns and their use, youth
gangs, car theft, and a tendency to resort to violence as a conflict resolution
strategy.
15599 There is also the
obvious need to teach children values that are less consumer driven, if we are
to influence change.
15600 Most countries in
the western world are responding to public concerns about the commercial
exploitation of children by adopting legislation, such as that that already
exists in the province of Quebec.
15601 Norway, Sweden,
Denmark, Australia, New Zealand, Greece, Malta and other parts of Europe banned
advertising directed to children on the basis of research showing harmful
effects to both mental and physical health years ago, in response to concerns
about violence in the media and sexual exploitation.
15602 The U.K.,
Switzerland and Italy joined the list last year.
15603 And on April 7th
of this year, a bill was brought before the Ontario Legislature by NDP member
Rosario Marchese to amend the Consumer Protection Act to prohibit commercial
television advertising for food and drink that is directed to children under
the age of 13.
15604 We believe that
this is an excellent initiative, but it should prohibit all advertising to
children of this age.
15605 Research has shown
that below this age they are simply too young to distinguish between
advertising messages and reality. We
know from our work with the Harvard Medical School‑based Coalition for a
Commercial‑Free Childhood that corporations hire psychologists to market
products to every age category, including children. This is described in the literature as
"The Nag Factor".
15606 It involves
appealing to children to nag their parents to buy a certain product. And there are different categories of these
nag approaches and strategies.
15607 The regulation of
media is becoming even more urgent in the digital age. We are seeing the increasing encroachment of
both cable companies and broadcasters into the production and distribution of
content. Advertising is being inserted
directly into programming. Bids are
being made on the part of broadcasters to charge cable companies for their
content, and cable companies are looking for new ways to expand their sources
of advertising revenue in the competition for a greater share of a shrinking
market, as more and more viewers turn to the internet ‑‑ and
we have been hearing this all day.
15608 Such unimpeded
trends leave the best interests of the consuming public out of the equation
entirely.
15609 THE
SECRETARY: Dr. Dyson, I am sorry to
interrupt, you have one minute remaining.
Please conclude your presentation.
15610 DR. DYSON: All right.
15611 I was announced in
the Globe and Mail ‑‑ I was going to give you an example of
Google doing something that might be of interest and help to you.
15612 Also, there are
indications that the problem of sexual predators on the net is one that is
being not applied in Canada because of the inaccessibility of data, an area
that needs to be addressed.
15613 So, what I would
urge the CRTC to do is resist the industry pressure to move in the direction of
more deregulation that would compromise the safety, physical and mental health
of children in particular.
15614 Greater
discretionary protection of children from advertising should be harmonized with
legislation already in existence in the Province of Quebec and now before the
Legislature in Ontario. Other provinces
should be urged to get on board and only then will we move in the direction of
a healthy and diverse broadcasting system.
15615 To respond the one
question in particular posed by the criteria for these hearings, is there a
need for genre protection? I would say
yes, definitely. Children's programming
should not include any kind of advertising at all, nor should it include excessive
violence.
15616 The young should
also receive greater protection from harmful content such as violence and
pornography and sexual predators on the Internet. It has been a disappointment to many of us
that the CRTC has consistently side stepped the issue of Internet regulation
and protection in this area.
15617 More emphasis is
needed to ensure that broadcasters adhere to the code of violence already
developed for their guidance as a condition of licensure and all broadcasting
distribution undertakings, including telecommunications common carriers and
service providers that fall under Federal jurisdiction, both domestic and
foreign, should be subject to these regulatory provisions.
15618 I have more I
could have said, but I've run out of time.
15619 Thank you so much
for this opportunity to appear before you today.
15620 THE
CHAIRPERSON: Thank you for your
submission.
15621 One little point
of correction. Bill C‑27 has not
been defeated, the vote is actually going to be on May 13. You may be right in the end, that may happen,
but it has not ‑‑
15622 DR. DYSON: I'm sorry?
15623 SPEAKER: C‑20.
15624 THE
CHAIRPERSON: No, Bill C‑27 you
mentioned.
15625 DR. DYSON: C‑327 I mentioned was the one that came
up last January, January, 2007.
15626 Bill C‑10 is
the one that is now before the Senate.
15627 THE
CHAIRPERSON: I know. But you said in your oral presentation that C‑27
was defeated by the Conservatives and the Liberals.
15628 The vote is
actually scheduled for May 13th. Maybe
as of May 13 you will be right, I have no idea what is going to happen to the
Bill, but right now it's actually still alive.
15629 DR. DYSON: Well, that's good news.
15630 THE
CHAIRPERSON: Okay. Now, you are speaking about unregulated
advertising, sexual exploitation and media violence in sort of one fell swoop,
but these are three quite different issues.
15631 And I gather from
your presentation here today you are really concentrating on advertising and
especially children's advertising.
15632 That is your area
of primary concern for today.
15633 DR. DYSON: My primary concern. You say they're different. They can be pretty mixed up.
15634 As I've said in
other parts of my presentation that I didn't have an opportunity to complete,
we know, all of us here, that there's been a convergence in technology, there's
also been a convergence in content and there are many examples of popular
culture products out there in the form electronic entertainment, whether
they're video games, television programming or films, that could fall into the
category of both violent entertainment and sexual exploitation.
15635 Let me give you
one example. "American
Psycho", a film that was developed ‑‑ based on the book
by the same title that was a how‑to manual for the convicted serial
killer Paul Bernardo. Is that violence
or is it sexual exploitation? It's both.
15636 THE
CHAIRPERSON: No, I don't dispute that,
Dr. Dyson, not at all.
15637 DR. DYSON: Yeah.
15638 THE
CHAIRPERSON: And that area, as you so
eloquently point out, easily slips from one to the other.
15639 DR. DYSON: Mm‑hmm.
15640 THE
CHAIRPERSON: I meant unregulated
advertising.
15641 DR. DYSON: Well, unregulated advertising is ‑‑
can also be seen as a part of this.
15642 It has been argued
by many media scholars including myself that too often in the past and now
children's programming can be violent, often with sexual innuendo and basically
not much more than a half hour advertisement for other kinds of commodities out
there, whether we're talking about bubble bath or cereals or T‑shirts or
lunch boxes or the like.
15643 So, what is
it? I mean, is it violent programming or
is it advertising? I would suggest it's
both.
15644 THE
CHAIRPERSON: Just to follow your
thought. You mentioned, take one
example, bubble bath advertising on children's TV. Clearly it pushes the product, I have no
question about it, and you may say that children should not be exposed to
advertising, fine, but unless that's what you are saying, what is the harm of advertising
bubble bath to children?
15645 DR. DYSON: Well, it can be an entire envelope or an
entire immersion in a kind of commercial consumer‑driven value system.
15646 If it's bubble
bath that has a violent dagger struck through the bottle, there's ‑‑
or Darth Vader or something like that, there's a lot of product placement in
children's programming as well as in other kinds and that is, I think, another
example of how there's an overlap between program development and advertising.
15647 THE
CHAIRPERSON: Okay. Michel, do you have some questions?
15648 CONSEILLER
MORIN: Merci, monsieur le Président.
15649 COMMISSIONER
MORIN: The broadcast code for
advertising to children is a condition of licence for all broadcasters since
1974.
15650 Do you think that
it is enforced properly? Do you have
specific examples that you can put on the record for the Commission where the
broadcast code for advertising to children has shown a lack of adherence to
standards developed by the Canadian Association of Broadcasters?
15651 DR. DYSON: Well, my position is that advertising should
not be ‑‑ any kind of advertising should not be available to
children because they are not psychologically and emotionally secure enough.
15652 COMMISSIONER
MORIN: But this is not my point.
15653 DR. DYSON: Well, we're coming from two different
positions. You, like the people who use
the code, Mr. Carson is an example of things working just fine, that somehow
there's nothing morally wrong or inappropriate or exploitive about advertising
to children.
15654 We argue, or I'm
arguing that there is and I have a lot of people who support me on this. The Province of Quebec came to that
conclusion after this particular legislation was fought all the way up to the
Supreme Court of Canada.
15655 Well, they
developed this legislation, it started out as I think a municipal bylaw and it
was argued right through the Quebec system or attempts to dismantle it were,
and eventually it was defended successfully at the Supreme Court level.
15656 And there are many
other countries around the world that have this kind of legislation.
15657 My husband here,
who is a judge, might be able to speak to this better.
15658 HON. NORMAN
DYSON: No, I was just saying it's Irwin
Toy.
15659 DR. DYSON: Oh, the Irwin Toy case was the one that I'm
thinking of specifically.
15660 "Teenage
Mutant Ninja Turtles" was an example of children's programming and it's
still around that had program placement of material in it that was considered
objectionable by many of us.
15661 We know that part
of the history of the development of the Code of Violence with the help of the
CRTC and the Canadian Broadcast Standards Council resulted in "Mighty
Morphin Power Rangers" being taken off the air.
15662 There have been
many reincarnations now without much objection from anywhere.
15663 I just a week or
two ago attended a conference in Toronto entitled: Preventing and Responding to Violence in the
Schools. I mean, some of the statistics
that were being bandied about as to what's happening there among kids.
15664 Does anyone have
any idea of the average age of a child exposed to pornography for the first
time on the Internet? Five years of age.
15665 Those most
vulnerable to sexual predators on the Internet are girls, teenage girls between
the ages of 12 and 18; boys as the most vulnerable group are seven, seven years
of age to 14.
15666 So, the problems
have mushroomed and become very serious and it's unfortunate that we're so late
in even thinking, some of us, of doing something about it.
15667 COMMISSIONER
MORIN: You wrote in November that a new
detection system used by MySpace can be used in the United States to track and
expel American registered sex offenders from the online social network, but
it's still unworkable in Canada because Ottawa's information laws are
preventing detection verification companies from tracking Canadian offenders.
15668 I understand here
that it is a political challenge, perhaps not a regulatory challenge.
15669 DR. DYSON: That's right, I have written that and that's
my belief.
15670 I have also ‑‑
apart from using that example in my remarks presented to you here today, I have
attended three different international symposiums on hate on the Internet held
in Toronto over a period of about 12 years and the most recent one was a couple
of years ago. Members of the CRTC were
there, or legal counsel from the CRTC.
15671 The problems keep
growing and getting worse and I can remember a number of presenters saying that
here in Canada we're pretty lax, we're not keeping up to what countries like
the U.K. and Germany are doing in developing the technology to address these
problems, or applying them or using the kind of regulation that's necessary.
15672 COMMISSIONER
MORIN: Thank you very much.
15673 THE
CHAIRPERSON: Rita, you had a question?
15674 COMMISSIONER CUGINI: Thank you, Mr. Chairman.
15675 Dr. Dyson, I
guess ‑‑ I'm hoping what I'm about to say won't come as a
surprise to you because I'm sure that people will have asked you this before.
15676 But where do the
parents come in in all of this? Because
from the broadcasters' point of view, yes, there is the CBSC, I grant you that
it is a self‑regulating body, but it is one that has been approved by the
CRTC or its standards have been.
15677 V chip has been
implemented, there are viewer advisories on programming, there are bugs which
rate programming so that everyone knows to which audience the program is more
suitable.
15678 There are channel
blocking capabilities, so if you don't want that channel in your home, you just
won't get it on your TV set. We do have
the watershed hour regulations.
15679 We have these
provisions in place to help Canadians make informed choices, not only about
what they want to watch but, more importantly, about what their kids are
watching.
15680 So, where do the
parents and the guardians come into play?
15681 DR. DYSON: Well, just to back track a bit. Parents, of course, have an obligation,
everybody does, but you're saying we have a watershed hour of five o'clock.
15682 I think I indicate
in my remarks that despite that watershed hour, despite the criteria set out in
the Code on Violence with the help of the CRTC and being used to handle viewer
complaints only by the Canadian Broadcast Standards Council, the incidents of
violence on Canadian television went up 286 per cent between ‑‑
in the 10 years preceding 2004.
15683 Now, the point
being that this watershed hour was established in the early 90s, the Code on
Violence was developed in the early 90s and the Broadcast Standards Council
criteria was developed and they were set up to handle viewer complaints in the
early 90s.
15684 But in 2004 on the
basis of a study done by researchers at Laval University in Quebec, it looked
like it wasn't working. I mean, violence
still went up 286 per cent in 10 years with 81 per cent of that prior to the
watershed hour set out for the protection of children to begin with.
15685 So, I feel that's
an example of something that isn't working as well as it's supposed to and, as
I say, it's an example of how self‑regulation is not working.
15686 This problem is so
large and so complex, it is impossible for parents and teachers to attempt to
deal with it themselves.
15687 There was a
report, one of many, that recently came out in the City of Toronto in January
called the Faulkner Report, a thousand page study that was initiated after a
teenager was shot in one of the Toronto schools and, as you probably know,
there's been real problems with youth gang violence in the last few years,
particularly in Toronto.
15688 The headline on
the Globe and Mail the day that report was released was: There's a Culture of Fear That is Pervading
the Schools in Toronto, in particular, the two schools that were singled out
for this study.
15689 So, and they
didn't even mention media in their report partly because they don't know where
to go with this any more.
15690 I mean, the
teachers are quitting on occasion, quitting their posts in schools because of
being drummed out by students through various cyber bullying techniques.
15691 The pervasiveness
of bullying has gone away beyond the classroom and way beyond the parental
home, it's out there in cyberspace.
15692 I don't know if
I'm answering ‑‑ well, also you say that there are lots of
symbols and there are rating systems, we have provincial rating boards, which
is true, we do. But I have in the years
that I have been doing this work, seen a gradual erosion in the criteria that's
set out for classification of various kinds of product, whether it's films or
video games.
15693 And, so, in other
words, the bar is being lowered all ‑‑ a little more every
year as to what gets into the parental guidance category.
15694 Doug Lowenstein
who heads up the International ‑‑ or the American Video
Software Association loves to talk about the classification criteria that has
been developed by the video game industry for the help of parents and saying,
you know there's ‑‑ he said this at a conference that took
place in the States last year, there's only about 15 per cent that even gets
labelled violent.
15695 Well, if you have
a look at the criteria and what's already labelled as appropriate for
teenagers, there's not much left over for the brutal violence category, it's
all in there, supposedly allowed for children all very carefully couched in
language saying, may be harmful to your health, that's to cover themselves
legally, I suspect.
15696 So, the symbols
and the classification criteria are a help certainly, but they're hardly the
only tools or the V chip for that matter that children or parents can use to
protect their children.
15697 As Keith Spicer
used to say when he was chair of the CRTC, classification criteria and symbols
are part of the solution but they're only about 15 per cent. We need much more help from government and
industry.
15698 COMMISSIONER
CUGINI: Well, thank you very much.
15699 Thank you, Mr.
Chair.
15700 THE
CHAIRPERSON: Okay. Thank you very much for your submission.
15701 I think that's it
for today.
15702 What time do we
meet tomorrow morning, Madam Secretary.
15703 THE
SECRETARY: We will resume tomorrow morning
at 9:00 a.m.
15704 THE
CHAIRPERSON: Okay. Thank you.
‑‑‑ Whereupon the
hearing adjourned at 1633 to resume
on Thursday, April 24, 2008 at 0900 / L'audience
est ajournée à 1633 pour reprendre le jeudi
24 avril 2008 à
0900
REPORTERS
____________________ ____________________
Johanne Morin Sue Villeneuve
____________________ ____________________
Jean Desaulniers Fiona Potvin
- Date de modification :