Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 9 - Evidence
OTTAWA, Tuesday, February 11, 1996
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-216, to amend the Broadcasting Act (broadcasting policy), met this day at 4:59 p.m. to give consideration to the bill.
Senator Lise Bacon (Chair) in the Chair.
[English]
The Chair: We are resuming consideration of Bill C-216. With us today is Ms Martha Jackman. Please proceed.
Professor Martha Jackman, University of Ottawa: Madam Chair, I am a professor of constitutional law at the University of Ottawa, where I work in the area of the Charter of Rights and Freedoms, as well as the division of powers. It is in that capacity that I have come to speak to you this afternoon.
I have been asked to discuss with your committee federal jurisdiction in the area in question, that is, the ability of the federal government to adopt Bill C-216 from a constitutional perspective.
First, I should like to review the source of federal jurisdiction in relation to broadcasting. Second, I will discuss with you the issue of federal jurisdiction in relation to negative-option billing in particular. Third, I will talk briefly about the ability of the provinces to regulate in this area. Fourth, I will discuss the impact that the adoption of Bill C-216 might have on existing provincial legislation in this area.
Federal jurisdiction in the area of broadcasting was established by the Privy Council in 1932 in its decision in the Radio Reference. What the Privy Council had to rule on in that case was whether the federal government had the jurisdiction to regulate Canadian radio broadcasting as it was emerging at that point in time. The Privy Council decided in the Radio Reference that the federal government, that is, Parliament, had exclusive jurisdiction in relation to radio broadcasting. The Privy Council based this decision on the federal government's power over federal undertakings, as well as on the peace, order and good government power.
It was clear from the Privy Council's decision in the Radio Reference that it was preoccupied with ensuring uniform national control over all aspects of the radio broadcasting industry and technology.
The issue of federal jurisdiction over cable television was decided by the Supreme Court of Canada in two 1978 decisions. They are the cases of Capital Cities Communications Inc. and the C.R.T.C. and Public Service Board v. Dionne.
The Capital Cities decision involved a challenge by three Buffalo, New York television stations to the CRTC's decision that Rogers Cable could delete the Buffalo station's commercial messages and then retransmit the broadcasting content to its own cable subscribers in Ontario, with advertising messages that Rogers itself sold to Ontario advertisers.
In order to decide whether the CRTC had the necessary jurisdiction to enable Rogers to do this, the Supreme Court of Canada had to determine first whether cable television fell within federal constitutional jurisdiction. The decisions in both cases were issued by Mr. Justice Laskin, who spoke for the majority of the court in both cases. In the two cases, Justice Laskin applied the Privy Council's reasoning in the Radio Reference to cable television. What he decided is that the federal government's jurisdiction in the field of broadcasting extended to cable television and that the different nature of the technology -- that is, the fact that television messages were being retransmitted to viewers by coaxial cable rather than by Hertzian waves -- did not have any effect on the jurisdictional issue.
Justice Laskin decided for a majority of the court that in these two cases the federal government has exclusive constitutional jurisdiction over cable television in the same way that it does over radio and traditional television broadcasting.
The decision in the Capital Cities case was reiterated in the Dionne case. The Dionne case involved a challenge to efforts by Quebec's Public Services Board to regulate local cable operators in Quebec. Justice Laskin reiterated in the judgment that cable television is a matter of exclusive federal jurisdiction and that there was no room for the Quebec government, or the Quebec Public Services Board, to attempt to regulate in this area. Justice Laskin decided that the cable television system is part of a national broadcasting system which belongs exclusively to the federal government to regulate.
It is clear from the Radio Reference, and subsequently from the Dionne and Capital Cities cases, that the federal government has exclusive jurisdiction in the area of cable television. It has all the powers it needs to adopt Bill C-216. The issue of the relationship between cable distribution undertakings and their clients in terms of all aspects of operations and services and the form and content of programming which cable distributors sell to their clientele are all matters of exclusive federal jurisdiction under the Canadian Constitution.
In summary, there is absolutely no question that the federal government has exclusive jurisdiction over broadcasting. The constitutional validity of Bill C-216 is beyond doubt in constitutional terms.
The next question that arises is: Given the existence of provincial consumer protection legislation in the area of negative option billing, can the provinces validly apply that legislation to broadcasters or to cable companies in particular?
The Supreme Court of Canada, in a third 1978 decision, decided that Quebec's Consumer Protection Act could be applied to prohibit manufacturers and advertisers from directing advertising to children. The Supreme Court of Canada decided that the provinces could validly regulate the practices of manufacturers and advertisers in terms of broadcast advertising. That decision was reiterated in 1989, in the Irwin Toy case, wherein the Supreme Court of Canada held that Quebec's consumer protection legislation could validly prohibit the use of televised advertising by Quebec manufacturers and advertisers.
What is much less clear is whether the provinces can apply their consumer protection legislation to broadcasters, including cable television distributors. It is quite possible that the courts would be unwilling to permit the provinces to apply consumer protection legislation to broadcasters. The Supreme Court of Canada was quite clear in its decisions in the Kellogg's case in 1978 and in the Irwin Toy case in 1989 that it was upholding the legislation in view of the fact that it was designed to regulate the commercial practices of manufacturers and advertisers and that the legislation was not directed to broadcasters.
There is definitely some doubt as to whether the provinces could attempt to apply consumer protection legislation to regulate broadcasters or cable companies. If, however, the courts were flexible in this area and were willing to uphold provincial legislation, then Bill C-216 would not have any effect because both provincial legislation in the area of negative option billing and Bill C-216 have a compatible objective. That is to say, both sets of legislation are designed to prevent cable distribution undertakings from using negative option billing as a marketing practice.
In summary, Bill C-216 is clearly within federal constitutional jurisdiction. The federal government has all the necessary constitutional powers to adopt this legislation. It is unclear whether the provinces can regulate in this area in relation to broadcasters and cable companies.
However, if the courts were willing to uphold the application of consumer protection legislation to cable companies, then Bill C-216 would not have an effect because these are not conflicting pieces of legislation. They have the same objective.
[Translation]
Ms Jackman: Madam Chair, do you think it would be useful for me to repeat my comments in French if translation is available? This is what I wanted to explain to you this afternoon; of course I'll be pleased to answer any questions you would like to ask me about my presentation.
[English]
Senator MacDonald: You said, "if the courts upheld the provinces' right to intrude." You used the word "if". Is one of these pieces of legislation, that is, the legislation in British Columbia, Nova Scotia and other provinces, and Bill C-216, ultra vires?
Ms Jackman: The point I am attempting to make is that if adopted, Bill C-216 is clearly within the constitutional jurisdiction of the federal government. This is clearly valid legislation. It is far less clear whether the courts would uphold the application of provincial consumer protection law to federal broadcasters and federal cable companies, which have been held by the court to be within exclusive federal jurisdiction.
If either set of legislation is in doubt, it is the provincial legislation.
Senator MacDonald: Is the Consumers' Association appearing before this committee as advocates or supporters of Bill C-216? Why are we to hear them?
Ms Jackman: You would have to ask the representatives of the Consumers' Association that question.
The Chair: Ms Jackman is a law professor. You can ask the next witnesses that question, Senator MacDonald.
Ms Jackman: My objective was to explain to you the reasons why Bill C-216 is constitutionally unobjectionable.
Senator Forrestall: I know where I should not tread. Does being brought forward by a private member of the House of Commons give this bill the authority you just mentioned, or would that have to be a matter which emanated from the government benches, from cabinet?
Ms Jackman: Legally speaking, the legislation has been adopted by the House of Commons. If it is adopted by the Senate, it becomes valid federal legislation which is constitutionally unobjectionable. The origin of the bill as a house matter or Private Member's Bill from a constitutional perspective is not determinative at all.
Senator Forrestall: That has no bearing whatsoever on the provincial case with respect to consumer protection.
Ms Jackman: Some members of the House of Commons conveyed the impression that Parliament could not validly adopt this legislation because there is pre-existing consumer protection legislation in a number of provinces dealing with negative option billing. The point I am making is simply that while provincial consumer protection legislation is clearly constitutionally valid, it may not be applicable to broadcasters or cable companies because these have been held by the Supreme Court of Canada to be matters of exclusive federal jurisdiction.
Senator Forrestall: You have confused me again. There is something wrong, and I am not sure what it is. I have a concern about the federal authority finding itself in the position where we have, from one province to the next, a different set of regulations in the consumer protection field, yet having that exclusive jurisdiction because the courts have found it to be a matter of transmission.
Ms Jackman: If the federal legislation is adopted, we have legislation across Canada which prohibits cable distribution companies from engaging in negative option billing practices. Some provincial jurisdictions have parallel provincial legislation which also prohibits such practices. From a constitutional point of view, there is federal legislation which is valid. In some provinces, the courts might hold that cable distribution companies must also comply with provincial legislation which also prohibits them from engaging in negative option billing. Potentially, there could be federal and provincial legislation which say the same thing.
Senator Forrestall: Now we are getting into the murky area that can only work to the disadvantage of the consumer.
Ms Jackman: Only if you believe that it is not in the interests of consumers to be protected from negative option billing. You could take the perspective that consumers in certain provinces are doubly protected from that practice.
Senator Forrestall: Hypothetically, if we were to approve this and it became the law of the land, you are not suggesting that there would not be a challenge from one of the provinces.
Ms Jackman: I think it would be highly unlikely that a provincial government would attempt to apply provincial consumer protection legislation to a cable distribution company. Attorneys general would advise provincial ministries of consumer affairs not to attempt to apply provincial consumer protection legislation to cable distribution companies because of the risk that the application of such legislation to a federal cable undertaking would be deemed unconstitutional.
Senator Roberge: Which provinces have similar legislation on negative option billing?
[Translation]
Ms Jackman: Unfortunately I am not an expert in consumer law but my research on federal legislation leads me to believe that there is provincial legislation in Quebec, British Columbia and Nova Scotia generally prohibiting the use of that marketing technique. So it would be so much advertizing by a manufacturer or a provincial company in the area of any provincial product.
[English]
Senator Forrestall: Are you saying that three provinces have on their books legislation or a process by which they could attempt to afford protection against negative option billing, but the rest of the provinces do not?
Ms Jackman: To my mind, it would be quite possible that the courts would invalidate any effort by a province to apply consumer protection legislation to a federal broadcasting undertaking, including a cable company. From a constitutional point of view, it is unlikely that provincial consumer protection legislation in a province would protect consumers.
[Translation]
Senator Poulin: Ms Jackman, I would like to thank you for your excellent presentation. I would like to make sure I have understood correctly. Because cable operators come under federal broadcasting legislation, it would be unconstitutional to add an amendment to the Act relating to a consumer activity since such activity falls under provincial jurisdiction.
Ms Jackman: I did not explain myself clearly, I meant to say quite the opposite. Broadcasting, including cable broadcasting, is an area of exclusive federal jurisdiction. The regulation of this type of marketing belongs exclusively to the federal government. I am questioning the province's ability to apply consumer protection regulations to cable operators. Constitutionally it is not at all certain.
Senator Poulin: I did not quite understand. It was not clear.
[English]
Senator MacDonald: If one was to be absolutely certain that negative option billing was to be prohibited, would it require the passage of Bill C-216? If this bill does not pass, would market operators in provinces such as Alberta and Saskatchewan be free to do as they see fit?
Ms Jackman: That is absolutely right. If one wanted to ensure that all Canadian consumers were protected from negative option billing by cable companies, then federal legislation is clearly required. I say that because the provinces may not be able to extend their consumer protection legislation to broadcasters and cable distribution companies since the Supreme Court holds these matters to be under exclusive federal jurisdiction.
The Chair: At the federal level, is a legislative amendment the best way to goShould the government legislate or should the CRTC regulate?
Ms Jackman: I see that as a policy issue for your committee. That is to say, from a constitutional perspective, CRTC regulation and legislation via the Broadcasting Act would have the same constitutional character. It really is a policy issue as to whether one is preferable to the other.
[Translation]
Senator Poulin: You may be surprised, my question is quite a simple one. We have heard from several witnesses that words do not always have the same meaning. What is the meaning of negative option billing?
Ms Jackman: Under consumer law, in contract law, the traditional view is that I must make you an offer and you are free to accept. That is a contract. The drawback with this type of marketing from the point of view of consumer law is that an offer is made and if you do not answer, your acceptance is presumed. The burden is on the consumer to make clear that the product or service is not desired whereas the traditional consumer view is that a contract is entered into only at the time when it is accepted. It is really a kind of reversal of the present procedure. This is the basis for the objection under the traditional contract expectations.
[English]
Senator Forrestall: We will be talking to the Consumers' Association of Canada later today. There is a feeling and a belief out there, as they expound it, that this is not universal. This does not protect. It is too broad a statement to say this protects against all negative option practices in the broadcasting industry. This bill does not do that at all.
If I do not want the gardening channel, I do not want it. Whether I tell somebody that or not, I do not want it and I do not want to pay for it. Is that true? Is that your understanding of Mr. Gallaway's bill?
Ms Jackman: Yes. I agree with you that Bill C-216 restricts certain forms of what is popularly understood as negative market billing by cable distribution undertakings.
Senator Forrestall: But not all?
Ms Jackman: No, it is not a blanket prohibition. It is a prohibition of practices that I suppose were considered particularly egregious in the last round of hearings on the introduction of specialty television channels.
Senator Forrestall: I am not saying it is selective, Madam Chair, but there is something about the whole thing that bothers me. I do not know why the government did not drag out the act, do it properly and have done with it.
Senator Poulin: The description that you have given of negative option billing in legal terms is very helpful to us because that is what it is in theory. However, in the discussions we have had, we have been told that some people believe that the billing will prevent you from receiving the gardening channel if you do not want it. Technically, that is not possible today because the cable service is delivered to the consumer in packages. It is a package which you either accept or reject; it is not something which is done on the basis of an individual channel. It is very interesting that you should raise that question, Senator Forrestall. I hope I am not wrong on this, Madam Chair.
Senator Forrestall: I understand that. What if you do not want the CBC channel? Can you opt out of that, or is CBC part of the package?
Senator Poulin: Any great Canadian would choose CBC.
Senator Forrestall: That was a rhetorical question, but you see my concern, senator. There is a shortcoming in the bill which does not address fully this difficulty. It seems that we will need to revisit it. We are going through a very expensive, enlightening and educational process, but it is not doing everything that, perhaps, it should be doing.
[Translation]
Senator Roberge: How do you explain the fact that if there is Quebec legislation protecting consumers from negative billing, a case of negative billing occurred in 1995?
Ms Jackman: There is an explanation for the situation you describe. A number of members of the House claim that legislation in this area was already applicable in Quebec. Unfortunately for consumers this is probably not true. The Quebec government dit not attempt to apply Quebec consumer protection legislation to cable operators because of the doubt relating to the constitutional validity of such an application. It is not true to say that Quebec consumers already are protected from this practice on the part of cable operators.
In the case of someone selling soap or vacuum cleaners door-to-door, Quebec consumers are indeed protected. Cable broadcasting is a service considered to be of federal jurisdiction. Quebec consumers along with consumers in other provinces are not adequately protected by provincial legislation. What is required is a federal law.
[English]
Senator Spivak: Does the fact that cable companies offer a package affect the constitutionality as you have explained the contract?
Ms Jackman: No.
Senator Spivak: Does that make any difference at all?
Ms Jackman: No. Broadly speaking, the constitutional issue is which level of government has the constitutional authority to legislate the matter.
Senator Spivak: I do not mean constitutionality, but the definition of a contract. I am sorry if I misspoke.
Ms Jackman: Again, it is an issue of offer and acceptance whether I am offering you an individual channel or a package. I am sure the Consumers' Association will speak to this. One of the objections is to the historic practice within the cable industry of not offering products in a way that it is easy to know what you are accepting to buy. The whole issue of tiers and packages makes it confusing for consumers.
Senator Spivak: Apparently, they have to do that.
Ms Jackman: I believe this legislation is designed to regulate one aspect of the practice of offering a product and seeking an acceptance from the consumer that entails them paying for it.
The Chair: I now call upon the Consumers' Association of Canada.
[Translation]
Ms Gail Lacombe, President, Consumers Association of Canada: Madam Chair, I am a member of the Quebec section of the Consumers Association of Canada and National President of the CAC.
I am accompanied by Ms Irene Seiferling, who is a member of our Saskatchewan chapter as well as Chair of our national board of directors. Ms Seiferling is also consumer representative with the National Council on the Canadian Information Highway.
Before asking Ms Daly Todd to give you a brief presentation on Bill C-216, we would like to thank you for giving us this opportunity to meet you to present and defend our position on this subject. In adopting this legislation the House of Commons voted with the interest of Canadian consumers in mind. We hope that your committee and the Senate will do likewise.
[English]
Ms Rosalie Daly Todd, Executive Director, Consumers' Association of Canada: Madam Chair, in the process of reviewing my file to put together what will be a brief presentation, I found a quotation from Senator Whelan of October 1, 1996, when he moved second reading of this bill. In my opinion, Senator Whelan outlined the issues as well as they could be outlined. I begin by quoting the senator, who said:
Many of you may recall the great cable revolt of January 1995 when consumers protested against the outrageous practice of negative-option billing by cable companies. At the heart of this protest was a demand from Canadian consumers that legislators put a stop to negative-option billing once and for all.
The fact is that nothing has changed since that time. Even after the consumer revolt, after the complaints to the CRTC, after all the calls and letters to members of Parliament, the cable monopolies continued to use negative-option billing to market the last round of specialty channels. The onus was still on the consumer to somehow cancel the new service before it showed up on their bill.
In September of this year, the CRTC licensed 23 new specialty channels chosen from 40 applicants, including the gardening channel, the cartoon channel, and the horse network. The question remains: who will protect consumers from future cable rip-offs? The answer is simple. We will protect consumers by passing Bill C-216, and finally levelling the playing field among the industry, the regulator, and the consumer.
The facts are that Bill C-216 only applies to non-mandatory pay or specialty television services. The CRTC will continue to decide whether or not a channel is mandatory. This bill does not affect existing channels such as RDI, CBC, CTV, TSN or MuchMusic. The small cable companies -- less than 2,000 subscribers, which are mostly in rural areas -- have been exempted from this bill. This bill does not prevent cable companies from substituting one channel for another, provided that the price does not increase$.
In passing Bill C-216, we can protect consumers by including two simple words in the policy section of the Broadcasting Act, namely, "prior consent." Imagine that if this bill passes, then the cable company or other distribution undertaking would actually be required to obtain prior consent from the consumer before charging for the new service.
I would like to say that CAC has long been an opponent of negative option marketing in general and by the cable industry in particular. We raised the issue prior to the cable revolt of January 1995 at the cable structural broadcasting hearing in March of 1993.
CAC has six offices across Canada, five of them manned by volunteers. When some cable companies used a negative option marketing technique in 1992, to move most consumers from basic service to an extended basic service, our offices received many calls from angry consumers who did not like the negative option methodology, even though its use at that time did not cost them more money. CAC listened to the consumers and made the point early, prior to January 1995.
After the controversy in January 1995, we wrote to the then Minister of Canadian Heritage, asking for an amendment to the Broadcasting Act to outlaw this practice. This letter of January 13, 1995 was signed by CAC and PIAC, the Public Interest Advocacy Centre from whom I believe you will hear in March. I quote:
The latest controversy points out the glaring lack of protection for consumers in the regulation of the cable industry monopoly. We believe that the government must direct the CRTC through substantive changes to ensure that cable TV consumers are protected from price gouging or unscrupulous practices on the part of the cable monopoly.
I would like to add a few more comments for the record. In the House of Commons, on September 25, 1996, the Minister of Canadian Heritage said:
This government opposed negative option billing last year. It opposed negative option billing this year. It will oppose negative option billing next year. As long as we are the government of Canada, there will be no negative option billing.
Richard Stursberg, President of CCTA in the September 27, 1996 issue of CCTA's newsletter Communiqué wrote:
Nobody is going to be told that they can only keep their current package if they take new services at a higher price. Nobody is going to make any subscriber pay for any service they don't want. It's positive option all the way from now on.
Last year, Keith Spicer, who was chairman of the CRTC at the time, stated before the House of Commons Canadian Heritage Committee:
Negative option marketing is dead. Go ahead and bury it.
CAC is very concerned that at many times in the debate on this bill the facts have been lost or deliberately obscured. The result has been to raise the fears of many, fears which are unfounded. Senator Whelan's quotation summarized some of these facts, but I will do so again, adding a few of my own.
First, rural consumers will not be affected by this bill in most cases because it exempts small cable systems of 2,000 subscribers or fewer because of their specialty distribution problems.
Second, it does not apply to existing services. The example of RDI has been used to incite concern about French channels outside Quebec; the fact is that RDI is almost universally carried now across Canada and would not be affected.
Third, it does not affect new channels which the government or the CRTC feel are of cultural importance. The CRTC can add them to basic service on a mandatory basis, something which is provided for in the legislation. They can be marketed, therefore, in a negative manner. This bill would not affect that.
Fourth, it allows the cable companies to substitute channels and to do so using negative option marketing, as long as the price is not increased. Put another way, the CRTC has licensed four new English channels and three new French channels for distribution this September on what is known as a modified dual option basis. If the CRTC is concerned that any of these new services cannot survive on a positive option basis, then they have the power to change the terms of that licensing to mandatory basic which could be marketed using a negative option.
Fifth, if consumers really want new services, they will take them on a positive option basis. The proof of this lies in the experience of cable companies with marketing second discretionary tiers after the so-called cable revolt of January 1995. In New Brunswick, where negative option marketing was outlawed and it was not tried by the cable companies, the overall penetration ended up being the same as in other provinces where negative option marketing was used.
In closing, I want to repeat the question Senator Whelan asked: Who will protect consumers? I hope that you will.
Before I conclude, I have two additional points that I want to include in my presentation. One concerns the CBC. If the point was not made already, it is that the CBC is part of the priority carriage cable rules. There are a whole list of services, including the parliamentary channel, the provincial educational channel, CBC, CTV and Global which are considered priority carriage on cable. That is to say, everyone must have them as part of the basic service. The only way you could not have the CBC is by not having cable or by not having a television set because they are part of conventional television. Unless you do not have a TV in your home, you will receive the CBC forever.
I want also to make the point that this technique is outlawed in almost every province, when it comes to products. We heard mention today that three provinces also outlaw it when it comes to services. They are New Brunswick, Quebec and B.C.
Senator MacDonald: I trust that you and your colleagues are aware of the fact that there is no senator in the entire chamber, let alone in this committee, who is in favour of negative option billing. Do you understand that; or would you accept it?
Ms Todd: I am pleased to hear it. We should see an early passage of the bill, then.
Senator MacDonald: The question arose because a number of senators -- mainly from Quebec, but not all from Quebec, and approximately 10 in all -- were wondering whether this bill had unintended consequences which would affect the survival of new French language services.
I am a unilingual Nova Scotian. You may ask why I should be concerned. I am because I have been convinced by some of my colleagues that there are some very definite impediments which arise as a result of Bill C-216. I was particularly offended by a letter from your association in which it was stated that it is beyond argument that Canadian consumers have the right to decide which goods and services they may purchase -- and that is granted. However, the letter also says that that issue is being obscured by emotional, misleading references to culture and French language rights.
You will recall that the letter to which I refer was penned by the Consumers' Association of Canada. Will you defend that particular paragraph, which I consider offensive?
Ms Todd: Senator, you are referring to but one paragraph in that whole letter. I want to tell you that, first, the bill was specifically amended to ensure that there would be no harm to French language services. Therefore, this letter was written after that had happened. We stated I the letter that we have made sure that this is just a consumer marketing issue and we are concerned that those facts are being obscured. That was the intent of the letter. If you read the preceding paragraph in the letter, you will see that they flow together. There was no intention to raise the concerns to which you have referred. In fact, we made sure that the amendment was still in place so that this would not be an issue. We were concerned that no one was reading the bill and understanding what it meant.
Senator MacDonald: Is the bill as amended the bill which we have before us?
Ms Todd: Yes.
Senator MacDonald: Do you have a copy of the amendment? I do not.
Ms Todd: I have the bill as amended.
Senator MacDonald: Could you read the amendment which you say assuages our concerns regarding survival of the French channels?
Ms Todd: Senator, you have it in front of you. It is the word "non-mandatory" that does the trick. The Broadcasting Act states that the CRTC specifically has the power to mandate to the basic package any service anywhere in Canada that they think fulfils one of the cultural imperatives of the Broadcasting Act. They can take the new French language headline channel and ensure that it is broadcast all across Canada, if they want. This bill contains that specific language.
The other amendment was the inclusion of the words "2,000 or less". There are small rural cable systems which have special distribution problems. When the government was made aware of those problems, the bill was amended to cure them.
That is also the case with the substitutions. There were really three amendments that came out of the House of Commons.
Senator MacDonald: The revolt in British Columbia started over the actions of only one cable company, Rogers. It was not as a result of the actions of all cable companies. However, forgetting that for a minute, I want you to give me an example of a CRTC decision which required placing one of these new channels on the basic service package in place of another.
Ms Todd: They have not had to do that because, for language service, they use modified dual option or just dual option. They say to the cable companies, and to the channels, "You get together and decide. Do you want to be on basic?" What happens is that the channel is put on basic. The only choice consumers then face is whether they want to give up their cable or not. Most people will not give up their cable if something is added. Basic is a core package. This is but an additional element of protection.
Yes, if the CRTC and the government felt strongly enough about a particular channel, they could ensure that it is taken by all consumers, anywhere they want, just by using the legislation. They have not had to use the legislation because it is working without using it. However, if they are really concerned, as I said, the power is there.
Ms Irene Seiferling, Chair, National Board of Directors, Consumers' Association of Canada: Madam Chair, I live in Saskatchewan which is serviced only by Shaw. We suffered from negative option billing.
Senator MacDonald: I am not suggesting there was not negative option billing in a number of areas, but the revolt in British Columbia was caused by the fact that when they brought down a new tier of three services, they did not bring down just the horse show or the gardening show. They said, "If you want any of these new services, it has to come with CNN or it has to come with one of the very popular services." Therefore, instead of putting in three new channels about which no one had heard, they made it mandatory to take the other two. The only way they could get them off the ground was by saying that CNN or another popular channel would be put in with them. They were the only company. Shaw did not do that.
Ms Todd: I believe Shaw used a positive option, with no negative impact, which was what I was trying to illustrate when I spoke of the New Brunswick example. The same thing happens with their cable companies, and the "take" rate for that second tier of channels is the same as it is in provinces that did it negatively. We think, and we have said consistently, that consumers generally want Canadian content, and they will take it on a positive basis. They hate this technique. They hate it even when channels are added and they do not have to pay more, as we found out in 1992 much to our surprise. At some point, if the industry uses this technique, consumers will get angry and there will be a backlash against the channels, which would be unfortunate.
Senator MacDonald: I suppose we better get right down to the problem here. Mr. Gallaway has brought in a popular bill. Having managed to get his Private Member's Bill to the surface of the barrel, it was passed by the House of Commons. At the last minute, the government panicked. They realized there was something in the bill which they did not like. That something involved French language services. No member of cabinet voted in favour of this bill. Am I not correct on that score?
Ms Todd: I cannot speak to the procedure, senator. I am the wrong person to respond to that question.
Senator MacDonald: It was not a case of procedure. The story was reported in all the newspapers in the country. Ms Copps went around trying to have the bill changed at the last minute while the Liberal members of the house, who have the majority and who could obviously pass it, said that this was their chance to flex their muscles. They said that they would pass it. They told Ms Copps to go fly a kite.
The Consumers' Association of Canada, an enormously effective and useful lobby, must be aware of the fact that you do not have the Minister of Canadian Heritage, nor all the cabinet, on your side.
Ms Todd: Senator, I just quoted the words of the minister. I have quoted as well from the former chairman of the CRTC and from the head of the cable group.
My point is that in some cases people are speaking out of both sides of their mouths. The fact is that it is a lot easier to do things on a negative basis.
Senator MacDonald: Everyone is opposed to negative option billing.
Ms Todd: Then where is the beef?
Senator MacDonald: We are not talking about negative option. We are talking about an unintended consequence which you say you have eliminated by this amendment. Does the government agree that that solves the problem? The government has been silent thus far, but I suppose we will be hearing from it. However, that is not the message that I hear, and I am not a supporter of this government. If I hear it, everyone in the world must be hearing it.
Ms Todd: I cannot speak for the government. I can only say that I have given you the factual basis for this bill. It was amended specifically to take care of that concern. That is why we are so concerned that the facts are not being disseminated.
Ms Lacombe: Senator MacDonald, I live in Quebec and I signed the letter to which you referred. I have been a resident of Quebec all my life. We were enormously concerned that this measure was being misunderstood by some people who thought that if this bill were to pass it would take away from the French language across Canada. I am French Canadian and I live in Quebec. Therefore, it is of concern to me. However, we were assured that the amendments to the bill cover this concern. If the CRTC feels that it is necessary to put a French channel anywhere in Canada on the basic cable service, it has the mandate and the right to do so.
Senator Roberge: Do you not think that it will prevent the eventual creation of new channels because there is not enough population to demand it?
Ms Todd: If we get Canadian DTH off the ground, it will be wonderful because we will be able to put together a French Canadian audience from across Canada and have many channels, if that is what consumers want. Cable may not be the appropriate technology to do that in the best way.
Senator MacDonald: We are dealing with cable here today.
Ms Todd: Again, the future is digital and the future should be DTH and telco competition. Consumers will have lots of choice in both languages.
Senator MacDonald: Who gave you the advice that this amendment solved any concerns that you had, Ms Lacombe?
Ms Lacombe: I was given that advice by Rosalie Daly Todd, our executive director and legal counsel.
Senator MacDonald: If the CRTC were to decide that a particular program was of Canadian cultural value, they could demand that it be replaced by one of the existing services.
Ms Todd: Or they could add it to basic as part of their licensing. If, for example, they have just licensed a French headline news service for Quebec, which I am sure will be very popular, they could put it across Canada if they wanted. This bill would not stop that.
Senator MacDonald: I wonder what they would take out.
Ms Todd: They do not have to take anything out. They can add it. Again, senator, we are talking about a marketing technique. All this bill does is stipulate that you must write or call and ask whether you want these services added. Under the present technology, as Senator Poulin said, my choice is whether or not to continue with my existing package.
The only way they can bring these new channels in so that consumers will not be totally upset is to put them on a separate tier, something which they probably do not want to do.
Senator MacDonald: They have just done that. I got trapped in negative option billing. I took the service free of charge for three months, did not read the fine print, and then got angry when I was billed for it in the fourth month. I have now received a call from a very pleasant lady who told me that they have three new channels and what the cost would be. She asked me whether I want them. I said that I would think about it. I have not heard from her since.
Obviously, she, or someone who does the same job as her, has to call every subscriber. They have to show the programs to us first on the three tiers.
Ms Lacombe: She asked you whether you wanted them. Did she tell you that if you did not tell her that you do not want them then you might have to pay for them?
Senator MacDonald: She said, "You have enjoyed these three channels. Do you now want them?"
Ms Lacombe: That is a positive option.
Senator MacDonald: Exactly. That is what the cable association has already said. I agree that French headline news might be considered to be of very great importance. That, Canal Vie, MusicMax, and an animation program are the new French services that have been licensed.
Ms Todd: Again, the way they are put in now, if the cable company and the channel can decide that they are best on basic, then they go to basic. The only choice the consumer then has, whether it be negative or positive, is whether they want to give up their cable. So there is a lot of protection which already exists, not even considering the marketing aspect.
Senator MacDonald: I find myself in a strange position. I have never been in the cable business and I know nothing about it. I only know what I hear from some of my colleagues, and I am impressed by some of their arguments. I do not even know how these things are marketed. I do not think you can yet market one channel. You will be able to in the future when the technology gets to that point.
Senator Forrestall: Did the Consumers' Association ask the government why it did not bring forward a bill? If so, what response did you receive?
Ms Todd: You would have to ask the CRTC.
Senator Forrestall: Did you ask them?
Ms Todd: Yes, we wrote and asked them to do it. When they did not, we were very pleased to support this bill.
Senator Forrestall: Do you know approximately when you did that?
Ms Todd: I think we asked in 1995.
Senator Forrestall: You received not necessarily a negative reply, but you did not get a positive reply.
Ms Todd: I appeared before the CRTC cable structural hearings in March of 1993. At that time, we mentioned that we did not like this technique. That is before all the public demonstration that we were right. At least since March of 1993, CAC has been saying that consumers do not like it. We are saying that on the basis of the calls we receive at our offices. Even when a price is not attached, they do not like the tactic.
Senator Forrestall: I am more concerned about your relationship with the government. The ultimate question is why the government did not go ahead with a piece of legislation that was clearly drawn to their attention. You cannot shed any light on that. You cannot table for us the government's response. If it was a privileged communication, that is different. I am rather curious about what the government said to you when you asked them if they would bring forward legislation.
Ms Todd: Nothing of substance.
Senator Forrestall: That was in 1995. Did you precipitate Mr. Gallaway bringing this legislation forward?
Ms Todd: If memory serves me, I believe they saw letters we had written to the ministers at the time, but you would have to ask representatives of his office. I am speculating here, but the reality is that negative option marketing makes it very easy for the industry.
Senator Forrestall: I know that. I am not talking about that now. I am trying to get at who kick-started this process. Did the minister think, "I do not know what we will do here in the government. Gee whiz, here are a whole bunch of letters. Would you read them over and see if you can prepare a private member's bill? Perhaps that will fly and get us off the hook"? It is probably not terribly important, but I want to know how it started.
It is a good thing. I support the bill, but I do not like the way things have happened between the starting gate and the finish post.
The Chair: Why did you ask the minister for an amendment to the legislation? Did you not believe that through regulations and through the CRTC the CRTC should use its powers under the act to resolve the issue?
Ms Todd: The CRTC has not used its powers, but it could.
The Chair: But you never asked the CRTC to use its powers.
Ms Todd: I appeared personally in front of them in 1993. We wrote to the government in 1995. There was a very public uproar about it and nothing has happened since.
I can tell you that several provinces started putting generic legislation in place after 1995. That was British Columbia and I believe Nova Scotia. Ontario was also looking at a bill at that time because their own constituency was so upset by this, and the CRTC did not move. You will have to ask the CRTC why it did not move. I cannot speak for the CRTC.
Senator MacDonald: We do not have the information.
A newspaper article talked about the government's reluctance. The parliamentary secretary to Ms Copps said that it is impossible for the government to support a bill that would take away the flexibility of the Canadian government. On another day, the same parliamentary secretary, Guy Arsenault, announced on behalf of Ms Copps in the House of Commons that the government was withdrawing its support. Ten members of the cabinet who voted at second reading absented themselves when the bill was passed. That is why we are curious.
The Chair: I think we should get back to Bill C-216 now. We should not be dealing with who is guilty and who is not guilty.
Senator Poulin: We all share the same concern -- the protection of Canadian consumers.
When Senator MacDonald asked if the danger of not having French services made available throughout Canada could be avoided through regulation or a decision by the CRTC, you said that the CRTC has the power through the Broadcasting Act to choose which channels will be part of the basic package. You said that the CRTC has never had to implement that right. Is it because the CRTC never had to implement it, or is it because the CRTC chose never to make that decision?
Let me bring you back in time. History always teaches us great lessons.
When specialty channels first began as a service to Canadians, there was a very strong consumer revolt to the fact that consumers would have to pay extra for the Canadian services they wanted, services that the CRTC did not impose on the cable companies to put on their basic service. In other words, the cable companies could choose how many Canadian services were on the basic package and how many American services were on the basic package. The CRTC never demanded that the number of Canadian channels on that basic service increase because they were afraid, I believe, of a consumer revolt about having fewer American channels. I am wondering how your reply applied to our concern regarding French services.
Ms Todd: I assume you are talking about the old act because this act says that Canadian services will predominate.
Senator Poulin: Yes, but that means that the CRTC never imposed on a cable company that, for instance, ABC be replaced by Bravo.
Ms Todd: My understanding is that they feel that the U.S. channels help market the Canadian channels. Therefore, they probably would not want to do that. What they did was change the linkage rules back in 1991 to one-to-one so that you can only have one U.S. specialty channel for every Canadian specialty channel. I believe it used to be two-to-one. They have made it tighter, which fosters an environment in which we have more Canadian channels.
Senator Poulin: As a representative of the interests of the consumer, do you find that that regulation and practice is truly in the best interests of the consumer?
Ms Todd: I am not sure which regulation you mean specifically.
Senator Poulin: The fact that it is one-to-one.
Ms Todd: I think consumers want Canadian content. I am not sure they like forced packaging. As far as we can tell, they want à la carte.
The reality is that even when the technology allows them to pick and pay, there are packages which are put together on themes. I think there is a matter of principle here. They do not like having a cable monopoly, and they do not like being told what they have to purchase. In other venues, that is called tied selling. However, when things open up and they have more choices, the choices may look a lot like what we have today because I think Canadians essentially like what they have. They like Canadian channels, but they also like freedom and purchasing choice, which they do not have.
Senator MacDonald: In this mystery that we must clear up, it says that the government pulled back because this bill has the potential to kill French language specialty channels in Quebec. I asked, "How do you know this amendment assuages the fears of Quebecers?" You said, "Our legal counsel told us that." What is wrong with the government telling you that? Why is not the amendment the government's amendment? We will all support that. We are all opposed to negative option billing.
Ms Todd: I am losing you. As long as we have a good bill here that outlaws the practice while preserving the ability to have channels in the cultural interest, I do not care who started the process. I am glad we are here today and that there is such a bill in front of you.
Senator MacDonald: The only person you have given as authority that says, "Do not worry about the amendment, fix it," is your own legal counsel.
Ms Seiferling: We are trying to speculate on what members of the government were thinking at the time they chose not to support the bill. I do not see us finding an answer to that question. It may be that you will seek your own legal counsel and interpretation to assuage your own concerns regarding the ability of French language services to be applied where they fit within our cultural context.
The advice the government received led them to make the decision that they did, but you must make your own decision based on legal advice with which you feel confident. I am sure you have those services available to you here.
Senator MacDonald: We have access to legal advice, of course. However, we have a Department of Canadian Heritage and a minister responsible for that department. We have also a Deputy Minister of Canadian Heritage, all kinds of assistant deputy ministers and legal counsel. I would like them to sit where you are sitting and say, "Here is the amendment we propose. Your fears with respect to French language services are not warranted." As soon as we have that information, I will support the bill.
Ms Todd: I would like to be able to ask them, too. Knowing how the bill works, I do not understand the fears.
Senator Forrestall: You must understand as well that some of us are concerned about the means; you are concerned about the end. I, too, have a concern about the end. However, my concern with regard to the means is different from yours. That is the way things go. If you have the answer to that question, I would also be happy to support the bill.
Senator Adams: Are there any channels which broadcast in languages other than English and French in Canada? For example, are Italian language channels offered?
Ms Todd: I believe there are a number of other language channels, yes.
Senator Adams: What languages?
Ms Todd: For example, there is Chinese and Italian. There are quite a few.
Senator Adams: If the bill is passed, would the Chinese and Italians who do not speak English have access to those channels 24 hours a day?
Ms Todd: It is the same thing. You can broadcast anything you want because the CRTC acts in the cultural interests of the country. The goals of the act which govern the CRTC are cultural. I would think that under that act, other languages would enjoy protection as well.
Senator Adams: Would other cable companies be able to forecast subscribers?
Ms Todd: In an analogue environment, in most cable systems, there are only about six slots available. Four of those slots will be taken by those companies awarded licenses by the CRTC, and they have licensed seven for September.
There is not a lot of capability until we go to digital. The impediment is the technology.
Senator Adams: Sheila Copps will direct another $11 million or more to the CBC because we are losing our culture. If Bill C-216 is passed by the Senate, more broadcasts could be received from other countries such as the United States. Right now, we do not understand the culture in which we live. Bill C-216 allows for a more open market. If I wish to receive a certain channel and I do not want another, can I get only what I want to receive? Is that the way it will be?
Ms Todd: The future of digital gives the ability to pick-and-pay what you want, but there will always be a core Canadian package regardless of any other rules that may change.
Senator Adams: Do Canadians have enough satellites to do that?
Ms Todd: Yes.
Senator Adams: We were working on direct-to-home broadcasting a few years ago when we were told that we did not have enough satellites. If you are operating today as you were two years ago -- that is, if you were to keep the Canadian content -- you would have to set up more satellites to receive the signals from the states.
Ms Todd: We have not produced Canadian DTH as quickly as we should have for a number of reasons, including technical reasons. That has led to a grey market. Hopefully Star Choice and Expressvu will get on with it and we will have Canadian DTH.
The Chair: I wish to thank the representatives of the Consumers' Association of Canada for their valuable presentation.
The committee adjourned.