Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 12 - Evidence
EVIDENCE
OTTAWA, Tuesday, April 8, 1997
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 3:31 p.m. to give consideration to the bill.
Senator J. Michael Forrestall (Deputy Chairman) in the Chair.
[English]
The Deputy Chairman: Honourable senators, the committee does have the authority to hear evidence in the absence of a quorum, so we will continue our hearings on Bill C-216.
We welcome our first witnesses, who are from the Canadian Radio-television and Telecommunications Commission. Please proceed.
Ms Françoise Bertrand, Chairperson, Canadian Radio-television and Telecommunications Commission: Good afternoon, honourable senators. This is a first for me. Apparently until you come to a committee of the House of Commons or of the Senate, you cannot be the chairperson of a federal agency fully.
I am pleased to be here today with my colleagues. To my left is Mr. Wayne Charman, Director General of our Broadcast Distribution and Technology Branch.
[Translation]
On my far right is Ms Anne-Marie Des Roches, Manager of French Language Broadcasting; and finally, Mr. Alastair Stewart, our legal counsel.
I would like to take this opportunity to provide an overview of the current state of television distribution, and the developments in this area which are now under way, to provide you with a context and a perspective against which the bill should be understood.
Let me say at the outset that on the issues being debated here, the CRTC supports the interests of consumers and their right to make enlightened choices among affordable and diversified programming and distribution alternatives. As I will explain to you shortly, the CRTC believes that competition among a variety of distribution alternatives is the essential condition for ensuring that consumers have choices among distribution services, choices of programming services, as well as a choice in competitive, fair- market pricing for services.
Technological developments and alternative modes of distribution are evolving so rapidly that it is fair to say that events have overtaken most of the concerns addressed by the bill. The period that we have now entered calls for an entirely different approach to controlling unwanted marketing practices.
The rhythm and velocity of change in broadcasting and other technology-dependent industries have brought about a fundamental shift away from technology-driven choices to the new, more potent consumer-driven demand for choices. This new reality, the empowered consumer, forces established and new service providers to respond positively, or perish in the marketplace.
Admittedly, for the last three decades, cable has been the monopoly provider for distribution of television signals. It happened this way because the development of the infrastructure of the cable industry was pursued as an instrument of national policy by successive governments and as a means of achieving the objectives of the Broadcasting Act.
Charged with the mandate of implementing the act, the CRTC has encouraged the development of a home-grown industry providing production of Canadian programming and content on television screens, with the intent of giving Canadians common sources of news and information, and distinctive broadcasting services that incorporate and reflect Canadian values.
The fostering of Canadian content is the cornerstone of the Broadcasting Act. That objective has not changed. However, the dramatic change, the new period I just referred to in which we find ourselves, involves the means of getting that Canadian programming to Canadian homes. The government has decided that with the technological choices now available, the key objectives of the Broadcasting Act can better be achieved by way of competitive distribution of programming services.
[English]
The commission has responded. Alternatives to cable as the sole source of distribution have already been introduced, and over the next 24 months the available options to the consumer for the reception of television signals will change significantly as companies compete with each other to provide the services consumers want at prices they are ready to pay.
The monopoly in programming distribution has come to an end, with alternatives now available through direct-to-home satellite and multi-point distribution in some parts of the country. In the foreseeable future, the likely introduction of local multi-point communication systems -- LMCS -- technology will have numerous applications, most likely including broadcast distribution. As well, the telephone industry has expressed an interest in the distribution of broadcasting services. I will elaborate on alternative modes of distribution in just a few moments.
In such a competitive environment, cable companies, like new service providers, know that it is not in their business interests -- bottom-line interests -- to use marketing and pricing practices that will alienate their customers, because in a competitive environment, customers can and will shop around. These developments are consistent with the emphasis which the government is now placing on competition as a means of providing consumers with affordable, diversified choices, encouraging technological development, and promoting economic development.
It is for these reasons that we hold to the view that the legislation is not necessary. Moreover, we are concerned that the bill, in spite of its aim, is not consumer-friendly and that its possible effect may be to adversely affect consumer choice, programming diversity and affordability. In other words, we are concerned that the bill, if enacted, while intended to deal with one issue, will create difficulties in a wide range of other areas that are not now problematic.
When the commission called for applications for the new specialty services which were granted licences last September, it was made clear by us that we were predisposed to consider applications for English-language programming services that would be generally offered on a discretionary basis. Producers and distributors clearly understood this underlying premise that any new services would be offered as discretionary. The business plans of both the producers and distributors who intend to offer any of these new services are based on this assumption.
To reach the largest number of subscribers at affordable prices and to appeal to the widest range of tastes, the new services will, in most instances, be grouped together into packages that have the greatest appeal and the greatest likelihood of financial success.
Honourable senators are aware that the current technology -- analog technology -- places a definite limit on the number of channels a cable distributor can offer. Moreover, it is not now economically feasible for most cable firms to add and delete individual specialty channels to suit the needs of each customer. To put it simply, you either take a whole package and pay for it, or you do not take the package at all.
Allow me to give an example of the advantages to consumers of flexible packaging of programming options. Let us say the cable company has an existing optional package of services and believes there is sufficiently widespread interest to add one or two or three of the new specialty services. Some customers may want the new, additional channels and be ready to pay for them; others will say no. Those customers who say yes get to keep the existing channels they know and like, plus some new ones. The customer who says no does not get the new service and loses the package he already enjoys. For the reasons I have just explained, packages cannot be tailored to individual subscribers.
A useful analogy is the daily newspaper. A daily contains numerous sections -- political news, editorials, sports, business reports, fashion, want ads, and so on -- in order to serve the reading and information interests of the greatest number of subscribers. However, if the newspaper were compelled to produce individual sections on a stand-alone basis for a limited number of customers, obviously this would not be feasible. It would not be practical from the manufacturing, marketing, advertising, distribution, or cost points of view. The cost to produce each section of the newspaper as a stand-alone tabloid would be prohibitive for both the newspaper and the subscriber. In other words, the cost for each subscriber goes down if the paper is bought as a complete package.
The same basic rule of economies of scale applies to television distribution. To keep the per-service cost down, services are grouped into packages, and the higher the penetration of the services, the lower the unit cost to the consumer.
Here are two examples that illustrate this point. The recently licensed specialty service ROBTV, Report on Business Television, on a stand-alone basis, would cost subscribers $2.95 a month. As part of a package with medium penetration -- that is, from 45 per cent to 70 per cent -- the cost tumbles to 32 cents. With high penetration -- that is, from 70 per cent to 100 per cent -- the cost falls to 25 cents per month for subscribers. This example illustrates the clear advantages to everyone <#0107> producers, distributors, and mainly to consumers -- of the availability of services that reach a high penetration level.
In sharp contrast, a stand-alone, low-penetration service is significantly more expensive. An example of this is South Asian, a newly licensed stand-alone pay television service, which will cost subscribers $19.95 per month.
[Translation]
Our primary concern is the potential impact that the bill could have on the entire Canadian market. However, there is no doubt that the bill would create particular problems for French- language services. It is a well-known fact that the Canadian market, be it English or French, is small. The viability of Canadian services in both markets is precarious. We believe that the lack of marketing flexibility that the bill would impose generally would have a particularly limiting effect on the ability to market, and sustain financially, viable French-language services in Quebec and across the country.
As I have illustrated with the Report on Business service, high penetration levels are a prerequisite to lowering costs to subscribers and to ensuring the financial strength of a particular service. Given that the French-language market is smaller, penetration levels with a critical mass of subscribers become even more important.
In Quebec, as committee members know, the availability of broadcast services has evolved in its own way in response to the unique characteristics and needs of this small market. The success of new offerings has relied heavily on their availability as part of the basic package, which guarantees them a higher penetration level.
We believe that it is an accurate assumption by the industry in the province that some new services, to reach acceptable levels of penetration, would have to be offered as a minimum as part of a high penetration tier.
As for the availability of new French specialty services elsewhere across the country, they must first attain a critical mass of subscribers in Quebec to make it financially feasible to offer the services to smaller French-speaking markets spread thinly across the country. Otherwise, unless they are part of a package of diversified, competitively priced services, they will have to be offered in some instances on a stand-alone basis. The example I gave above of South Asian television illustrates how prohibitive this could be to subscribers.
[English]
It has been our understanding from the start that the intent of the bill was to address possible problems associated with the marketing of new specialty services that will eventually be offered to consumers -- that is, the services that were licensed last September 4.
One of our concerns is that the current wording of the bill will go beyond new services and also capture the marketing of existing services. If, as we believe, existing services are likely captured by the legislation, that could cause some cable firms to move services that they are currently carrying as part of a high-penetration tier to separate and possibly higher-priced packages. We believe that this may go further than the original intent of the legislation. Licensed service providers and others have also raised these concerns about the bill's possible effect.
Allow me to return now to the importance of competition and the alternatives to cable, which I referred to at the opening of my remarks.
We agree that safeguards against possible pricing and marketing abuses are sometimes necessary in a monopoly market. For many years, the cable industry was such a market. This is no longer the case.
Alternative distribution technologies for programming services are now being introduced throughout the country. A competitive market that relies on giving consumers alternative choices of distributors and competitively priced, attractive packages of services is emerging today.
The commission has approved optional delivery services that are in head-to-head competition with cable. AlphaStar is already offering direct-to-home satellite service, and other licensed DTH services will be launched this year. Multi-point distribution services, MDS, are currently offering an option to cable in Manitoba and licences for similar services have also been granted in Saskatchewan. The commission has scheduled hearings to consider MDS applications for most of Southern Ontario, and we will schedule additional hearings in the near future for similar applications in other parts of the country. As well, Industry Canada has granted three LMCS licences which are ready to offer yet another alternative to distribution service across the country.
In addition, the commission has also licensed competing cable operators in single markets, for example at Concord Pacific Place in downtown Vancouver. The telephone industry has also indicated its interest in getting into the broadcast distribution business. Most likely, additional programming services such as video on demand could one day be available.
It is inevitable, with this growing list of distribution alternatives, that choices in the marketplace will impose fair, competitive marketing and pricing of services.
[Translation]
I would like to remind the members of the committee that the telecommunications and broadcast industries are sectors of the economy that are being opened up to new entrants with the aim of increasing the number of alternative services and ensuring a competitive marketplace. Members are probably familiar with the most recent agreements at the World Trade negotiations that have moved Canada and other countries extremely far down the road to allowing greater access to new entrants in the telecommunications sector.
Undoubtedly members also know that the Commission will soon announce the new regulatory framework for competition in local phone services, on the heels of competition for long distance services established by the Commission in 1992.
This new telecommunications regulatory framework is consistent with a similar broad framework announced last month by the Commission which sets the course for full TV program distribution competition. These new policies, we said, are:
...designed to foster fair competition in the broadcast distribution market in a way that will benefit consumers and strengthen the presence of high quality Canadian programming.
As well, we said:
Competition in broadcast distribution will allow consumers to choose their supplier of broadcasting services from among different competing distributors. This should result in better service, new product offerings and price competition.
Mr. Chairman, given that this is the current state of play and the environment that we are headed for, we feel that the imposition of new regulations on distributors, which by ricochet would adversely affect programming services, are contrary to policies intended precisely to foster choice, competition and fair pricing.
If the legislation was aimed at rectifying an on-going, broad and persistent problem, it would suit the purpose. Two years ago, the monopoly of cable and marketing practices used by some operations caused a great deal of concerns to subscribers of English-language services. I would remind members of the committee that the industry took immediate action to rectify this problem and did this in response to consumer demands, not because it was compelled to by legislation. Many in the industry went further and publicly committed themselves to never again approach marketing in this way. Is legislation in response to a one-time exceptional situation which, as I have mentioned, has corrected itself, necessary?
In conclusion, we believe that the developments in the marketplace which I have described here today are the developments that consumers have been asking for: alternatives in distribution, diversity in programming, and competitive prices that they are ready to pay for.
Thank you for your attention. We will be pleased to answer any of your questions.
[English]
The Acting Chairman: Thank you very much. You have left us with a clear impression.
[Translation]
Senator Poulin: Thank you for your presentation, Ms Bertrand. We greatly appreciate your painting for us a picture of the cultural and commercial context. Drawing an analogy with newspapers to illustrate just how costs can become prohibitive makes the situation clearer for us as well.
I was very happy to hear you say that protecting the consumer is one of your priorities. This objective is equally important to us. Does the CRTC have the responsibility and the authority to impose conditions at this time on cable operators with respect to negative option billing?
Ms Bertrand: First of all, thank you for your comments about our presentation and let me just say that I was pleased to join the CRTC given its vast expertise. I believe we have an obligation to share our expertise and to impart information to each and everyone, particularly when confronted with a major decision such as this.
As far as responsibility and authority is concerned, I will turn the question over to our legal counsel to ensure that you are given the correct information and are not mislead in any way. While I am not a lawyer, I do see one socially.
Mr. Alastair Stewart, Legal Counsel, Canadian Radio-television and Telecommunications Commission: In our opinion, the answer to that question would be yes. The Broadcasting Act gives us the authority to set conditions as far as this practice is concerned.
Senator Poulin: Which section of the Act gives you this authority?
Mr. Stewart: First of all, we have to look at section 3 which sets out the aims. This provision, I submit, enables us to set conditions governing the practice to which you referred. We could set conditions by way of regulations, pursuant to section 5 of the Broadcasting Act. I believe that Parliament has conferred a great deal of power on us. It has left it to us to find the best way of regulating the broadcasting industry in Canada.
Ms Bertrand: If I could just say a word, we believe that if we were to exercise this authority in a general way, or even case by case, we would really be interfering with laws arising from the new competitive environment. This is what is driving our philosophy at the present time and my first announcement, my first press conference when I arrived on the scene in September, concerned specialty services.
It was very important to us to not fall into the trap of time and place management. We are moving from a monopoly market, as I described, to a competitive environment and we want to stay on course. We know that a transition is taking place, but we truly want to leave the responsibility in the hands of the people involved in this competition.
Senator Poulin: Ms Bertrand, as a independent Commission, you have the responsibility under the Act to implement the legislation; if a network or cable operator came to you to apply for an exemption, would you hesitate to grant it out of consideration for the marketplace?
Mr. Stewart: If a cable operator applied for an exemption, we would have to take into consideration the fact that no prohibitions exist and that therefore, there is no exemption to be granted. I am talking from a strictly legal standpoint. My previous answer was also given from a strictly legal standpoint.
Senator Poulin: The Consumers' Association of Canada appeared before us several weeks ago. We were informed that in 1993, the Association had asked you to take the necessary steps to deal with negative option billing. The members of the committee wondered at the time why you had not taken any action back then.
Ms Bertrand: As you know, I was not there. While I was told what happened, perhaps Mr. Charman can better relate the facts to you.
[English]
Mr. Wayne Charman, Director General, Canadian Radio-Television and Telecommunications Commission: In 1993, we did have a public hearing to establish and revise our broadcasting policy with respect to cable. We believed at that time it was important that consumers be fully aware of all the choices available to them from their cable distributor. We placed our emphasis on requiring the cable industry to inform subscribers fully to ensure that they clearly understood the options and choices so they could make informed decisions. That was what we believed to be the most important approach. No matter what particular marketing technique is used, the consumers must understand the choices they have.
Senator Poulin: When we look, as the Broadcasting Act wants us to do, at the cultural interests across the country, one question I have often had with regard to past decisions of the commission is why certain francophone services were not included in the basic service.
Ms Bertrand: That question is often asked.
[Translation]
Ms Des Roches, who is really responsible for French-language services, would be better able to answer that question.
Ms Anne-Marie Des Roches, Manager, French-Language Broadcasting, Canadian Radio-television and Telecommunications Commission: With respect to French-language services outside Quebec, mention was made of RDI. When it comes to marketing French-language services outside the country, it has been to our advantage to offer a package of services.
In several cases, be it in Ontario, Alberta or Saskatchewan, the Commission has reached an agreement with the Fox Network to bring in foreign programming or cable operators have decided to make RDI services available in non-francophone markets. This has truly facilitated the distribution of RDI services.
As a result, the penetration level of RDI is 84 per cent in Ontario, while the rate for TV5 is almost similar, and perhaps even as high as 89 per cent markets. The penetration level is very high in some markets. The practice of packaging services has allowed us to make inroads in non-francophone markets.
The Acting Chairman: Our Chairman, Senator Forrestall, must leave for a few moments, but he will be back shortly.
Senator Roberge: I want to take this opportunity to welcome you to your first, but certainly not last, meeting with us. Section 3(1)(c) of the Broadcasting Act draws a distinction between English-language and French-language broadcasting services, particularly in so far as requirements and operating conditions are concerned. Bill C-216 before us imposes requirements that are unique for the two markets. It seems to me that the legislator is putting himself in a rather contradictory position. I would be interested in hearing your views on this.
Ms Bertrand: I see you looking at Mr. Stewart and perhaps he should take that question.
Mr. Stewart: Section 3 sets out a number of objectives and some of these may appear contradictory. Parliament has given the Commission the responsibility of settling disputes when they arise. Section 3 is truly the basis of the Broadcasting Act and everything else flows from this provision.
Section 3(1)(c) that you referred to is an extremely important provision in that it sets out the Commission's power to distinguish between francophone and anglophone markets. Parliament included this in the legislation for a very specific reason, namely to allow the Commission to reflect what is going on in the country.
Senator Roberge: Your explanation was not very clear to me.
[English]
If the government or legislator imposes general principles on you, and then comes in with a bill which separates those objectives by a unique positioning, is that not contradictory?
[Translation]
Mr. Stewart: In fact we do not feel that the bill falls within the context of section 3. From a strictly legal standpoint, the language used does not jibe with that found in the objectives set out in section 3. There may indeed be contradictions and it is up to the Commission to clear them up, to the extent that they exist. This is the vision of the Broadcasting Act as determined by the Canadian Parliament.
[English]
Senator Roberge: I want to get back into this again. We have a legal opinion regarding sections 3(1)(c), 3(1)(d) and 3(1)(k). These three objectives outline general policies. Bill C-216 on the other hand contains specific, detailed, restrictive policy objectives. Since they do contain detailed, restrictive policy objectives which are contrary to the basic objectives, we are told that that takes precedence over the general provision which has been established for the CRTC.
Mr. Stewart: That is a view that has been expressed by a law firm, I understand. While we respect that view, we do not completely agree with it. We believe that the objectives set out in section 3 must be considered and balanced equally by us, but we do realize and acknowledge that there is doubt on this matter, that others have other points of view, and we understand that an opinion has been tabled before this committee to that effect.
Senator Roberge: I will probably come back on the second round. Our chairman has already asked some of the questions I had intended to ask.
[Translation]
Senator Maheu: Earlier, you hinted that the CRTC's raison d'être was to protect the interests of consumers. You also stated that everything flows from section 3 which gives the Commission the power to intervene. You also stated during your testimony that the CRTC was extremely reluctant to intervene in what it viewed as private sector competition, if I can use that expression as I do not recall your exact words. While section 3 gives you the power to protect French-language and English-language broadcasting services and while they may have certain features in common, they are nonetheless different when it comes to the conditions under which they operate and to their requirements. It seems to me that section 3 reflects the desire on the part of the Canadian government to paint a picture of our country from coast to coast, not just a picture of Quebec, but also one of Franco-Ontarians and Franco-Albertans. Are you suggesting that since you are afraid to use section 3, that it should be removed from the broadcasting legislation? If not, please explain to me why you are afraid of using it when the need to do so arises?
Ms Bertrand: I am sorry if I was confused. It is also my first appearance before the committee, so I am sure you will understand. I will start over. We are not afraid of invoking section 3, that is our responsibility and we try to discharge it on a daily basis, and we do not avoid the linguistic and cultural diversity aspect any more than any other feature of that section. That is our responsibility, we are proud of it, and we try to be equal to the task the government has entrusted to us.
What I was trying to say earlier was that we also bring an understanding of the whole picture to the application of these objectives. Currently, competition is one element in the broadcasting environment which is very important to further the interest of consumers. We think this is what leads to a variety of choices, increased quality of Canadian programming and, we believe, in the end, the best possible prices. In this regard, when we set rules for competition, we have tried to pursue that aim, and we have actively sought to encourage competition with this in mind; we think it is important to remind stakeholders of the rules of the game, but we think we should abstain from intervening constantly as competition plays out.
We continue to have that power and we do not deny our responsibility. We think this is the best way of taking care of the interest of consumers at this point. There is competition, which was not the case when the famous crisis occurred which in fact raised the whole issue that is before us today.
The consumer or cable subscriber could not turn to another distributor who could offer him better services at a better price, with an interesting approach. That possibility did not exist then.
What we are saying, and this is really the basis of our intervention, is that the universe is changing. In fact, we spend our time saying that the communications universe is constantly evolving. Competition is becoming a factor in that universe. It was not present in distribution previously. It was present in broadcasting as such, but where distribution is concerned, this is a first, and we felt that our responsibility to the consumer was to set up a competition framework that would give him or her the choice. We have a responsibility involving the way we interpret the public interest under section 3.
Senator Maheu: Whatever the needs of francophone channels or of the French-speaking audience outside Quebec?
Ms Bertrand: We are very attentive to the needs of francophones. In this regard, when we granted licences to the francophone channels, we gave them dual status to allow them not only discretionary status, but also to give them the possibility of being distributed as part of a basic package.
So, from the moment the licence was granted, we recognized the importance of the situation in interpretation and our analysis of our responsibility under section 3. So, we did take this different reality into account and we were attentive to it.
I understand the situation of francophones very well, but I think that what we want to say here is that the situation of francophone channels may be more critical, but that is a problem that has repercussions on Canadian services as a whole. If we want diversity in Canadian programming and want to avoid being overwhelmed by the diversity of American programming, we really have to take steps to see to it that all of the French and English-language services can achieve a decent level of penetration, and see to it that the consumer has real choice, at the end of the day.
[English]
Senator MacDonald: Madam, you are aware that this is a private member's bill, are you not?
Ms Bertrand: Yes.
Senator MacDonald: You are aware that the aim of the bill, on the surface, is laudable. Its aim is to abolish an unpopular marketing technique. No one in this committee opposes that laudable aim.
Ten members of the cabinet voted for this bill at second reading; they supported it in principle. However, the government announced on September 19 that it was withdrawing its support of this bill. Therefore, no cabinet minister was present when this bill was passed.
The government found this glitch which has been preoccupying us for a few weeks now. You are the chief regulator. I do not hear, from what you have said, that you have a specific solution to the problems that we are persuaded exist, which affect the French-language services.
You have spoken of competition and things of that nature. Do you not think you should have a solution? Do you not think that when the government withdraws its support from a bill, it is important that the federal regulator of broadcasting in Canada come up with a more specific suggestion to deal with the matter?
Ms Bertrand: We expended our efforts in analyzing the bill in a broad sense. In that sense, while we are preoccupied, as I said in my opening remarks, mainly with francophone services, we are also dealing quite seriously with all the new services. We think that if the bill were adopted it would certainly be a worst-case scenario for the francophone services, but it would be quite dramatic as well for the English services, considering the multitude of American channels coming in. We know that there will never be a wall high enough to prevent us from receiving the signals from American channels.
We must ensure that we have strong Canadian programming. That is our obsession in terms of complying with our responsibility in article 3, under which we feel that we must, in the public interest, support Canadian programming at an affordable price. We believe that consumers want Canadian services at an affordable price.
We think there is a solution to the francophone problem but we did not invest in that because we thought the problem was broader and existed also with respect to English services. I and the commission share with our friends from Quebec the view that the problem is very acute, and I do not wish to contradict them, but we feel that the problem is serious on the English side as well.
Senator MacDonald: You used the word "acute". Our colleague Senator Gauthier wrote a letter on September 26 to all senators in which he urged us to vote against this bill because, in his words, it "threatens Quebec's cultural survival".
Do you think he was exaggerating? You said the problem was acute. He says it threatens Quebec's cultural survival.
Ms Bertrand: I will leave to him the impact, but certainly I see it as serious.
Ms Des Roches: This bill deals with two issues. There are francophone markets and non-francophone markets. One possible result of this bill is that in anglophone markets, where there is a minority of francophones, the anglophone majority would have to ask for services on a case-by-case basis. The risk is that the francophone services would not be requested in a package. In this case, this bill does impact on the francophone market outside Quebec.
We have always striven to get a maximum of services on air in French in Quebec. Whether we have a lot of anglophone services or American services, we will end up with an anomaly of balance between the amount of English services and French services.
Is the survival of French services the question? We are striving to balance the number of French services and ensure that they survive. In non-francophone markets, which are outside Quebec primarily, with 41 markets, a minority will not receive the services if the majority votes against it.
[Translation]
Senator Gigantès: Thank you, Madam Chair. As I look at this legislation, it seems to me, and perhaps I am mistaken, that it would give anglophones outside Quebec the possibility of voting against all programs in French that would not be profitable. They would thus be withdrawn, and if I went to stay with friends during holidays in Vancouver there would no longer be any French channel. However, if I go and stay with some separatist relatives I have in Alma, and if I want to balance the news I watch on the RDI channel by listening to NewsWorld, which I do everyday when I am in Hudson, I will no longer have that possibility because there will not be enough people in Chicoutimi who will vote to keep NewsWorld.
In a country that claims to be bilingual, we absolutely must make sure that even if I am the only anglophone in Chicoutimi I can listen to NewsWorld. Even if I am the only francophone in Terrace, BC, I can listen to RDI. I do it because I am a masochist, but I listen to it every day in any case. And I listen to CNN to get the American news.
Senator Roberge: There are Greek programs.
Senator Gigantès: No, I do not watch at the Greek programs, they are very bad. So, am I paranoid? Should we be afraid of that happening? You talk about protecting French services in Quebec; that is easy. You talk about protecting English-language services in the rest of Canada; that also is easy. But protecting English-language services in Quebec and French-language services in the rest of Canada, that is a horse of a different colour; does this legislation threaten that principle, in fact?
Ms Bertrand: We feel there is a danger in that regard. We do not think the threat is as real as it seems to you, but we think that it is an outside possibility.
Senator Losier-Cool: Thank you, Madam Chair. I must also congratulate you for this very informative report on the Commission. I am a francophone from New Brunswick, and so I took a particular interest in this bill, perhaps not in as paranoid fashion as my colleague, but it does lead one to ask oneself questions, and after your presentation, I wonder whether we really need such a bill after all. This may be the question that you raise yourself at the end of page 8. Would you accept an amendment to the bill defining the Commission's role in connection with the bill? Could we amend the bill to give the CRTC that responsibility? Would you accept?
Ms Bertrand: I am going to give the floor to Mr. Stewart, the legal advisor who is with us. On the matter of the Commission's authority, we have full responsibility under section 3 of the Broadcasting Act. That is our responsibility.
We do not think the Commission needs the bill because we think it is a response to a problem that existed in the past but which is disappearing since we are now in a competitive context. That is our position. On the matter of amendments to the bill, I will let my colleague answer.
Senator Losier-Cool: I suggested an amendment because that would allow us to meet the concern about negative billing; that was one of the purposes of the bill.
Mr. Stewart: Senator Losier-Cool, I think we would have to see the exact text of such an amendment. Section 3 gives us far-reaching powers, as I said. We think, although others do not share our opinion, that we can make the distinction between francophone markets and anglophone markets, with the powers we have currently. But this perspective is not shared by everyone. If you feel an amendment is necessary, we would suggest that the amendment respect the vision embodied in section 3, and that it allow the Commission to weigh objectives in light of the circumstances involved.
Senator Losier-Cool: To a greater or lesser extent?
Mr. Stewart: Yes.
Senator Gigantès: But do those needs correspond to the preservation of services in English in Quebec, and to the preservation of services in French outside Quebec, whatever the majority thinks? That is the issue.
Mr. Stewart: Those are factors that we would certainly take into account, and under the terms of section 3, we are in fact obliged to take them into account.
The Acting Chair: We are very sorry to have to bring this meeting with you to a close, but we must hear seven other witnesses before the end of the day. Our day is far from over, as you can see.
[English]
The Deputy Chairman: Senators, we have a bit of housekeeping to which we must attend. It has to do with the need for approval, in an interim way, of our budget so that the subcommittee might travel to Washington next week.
We are dealing with an application for budget authorization for the period ending March 31, 1998, for the Subcommittee on Transportation Safety of the Standing Senate Committee on Transport and Communications. The amount of the interim budget is some $73,870. We agreed generally at a meeting of the subcommittee in Halifax with respect to this amount.
May I have a motion that the budget be approved?
Senator Roberge: I so move, Mr. Chairman.
The Deputy Chairman: Honourable senators, I should like to introduce the Honourable Francis Fox, who is responsible in no small way for our being here this afternoon.
Mr. Fox, please proceed.
The Honourable Francis Fox: Mr. Chairman, I have some brief remarks to make, after which I will be available to answer whatever questions members of the committee may have.
[Translation]
First of all, Mr. Chairman, I want to thank you for the opportunity of appearing before the committee today.
My personal and professional interest in the development of what is generally known as the "francophone audiovisual space" goes back more than 15 years. And if I am before you today it is because I firmly believe that if this bill were adopted as is it would have destructive and disastrous consequences not only for the companies that would be affected but also for the French component of our radio and television broadcasting system, and consequently, for our country as a whole.
I do not intend to do a critical analysis of the legislative texts here this afternoon, since the associations that will follow me and the Commission that preceded me has done so in one case and surely will in the other.
Rather, I would like to broach the topic from a different angle, that of the history of the concerted efforts made by successive Canadian and Quebec governments to ensure the development of a rich francophone audiovisual space, rich both through its quality and its variety. The promoters of Bill C-216 -- and I do not doubt their good faith for a moment -- are diametrically opposed to all of these efforts, so much so that one is led to wonder whether they had any knowledge of them.
A well-conceived policy should promote and enhance creation, development, production, post-production and distribution; those are the key elements. The frontal attack on distribution in Bill C-216 affects the whole production aspect, and consequently, the very creation of new works. Those who work in this field say that without distribution, there is no production. Indeed, if you attack distribution directly, you will inevitably affect all the other links in the chain.
I do not intend to discuss anglophone broadcasting, where the issues are quite different. Insofar as francophone broadcasting is concerned, the question of supply has always been the basic issue.
A dozen legislative, administrative and regulatory initiatives have been taken successfully since the 80s to ensure the development of that francophone audiovisual space in our country. All of those initiatives were based on the premise that special measures must be taken in the Canadian context if we want to ensure not only the survival, but the development and expansion of francophone audiovisual reality here.
That premise was recognized first of all in a White Paper which I signed myself in 1983 and which was entitled: "Towards a New National Broadcasting Policy". It was the subject of an agreement between the federal government and the government of Quebec in a report entitled: "Report on The Future of French Language Television, 1985". It was reiterated in the report by the task force on broadcasting policy commonly known as the Sauvageau-Caplan report.
It was given legislative recognition in a bill presented to the Canadian Parliament by the Conservative government in power at the time, a bill that was supported by the vast majority of members in all parties on both sides of the House, and in it, of course, one finds section 3(1)(c) quoted by Senator Roberge a few moments ago.
And during the same period of time, a series of initiatives were taken to support the francophone audiovisual component by Liberal and Conservative governments in Ottawa, and by Liberal and Péquiste governments in Quebec.
At the federal level, the following initiatives spring to mind: co-production treaties with France in 1983, the results of which went far beyond our wildest expectations. Treaties signed by the Minister of Culture, Mr. Lang, and the Minister of Communication, Mr. Filioud, which last year made possible more than 200 million dollars worth of production in the greater Montreal region; the creation of Téléfilm Canada in 1983, in which I participated, and the addition by Minister Massé of the feature film and distribution category in 1986 or 1987. All of these initiatives have taken us to a point where 37.5 per cent of the Téléfilm funds are channeled into French language productions, bearing witness once again to the fact that it is important to have measures that are tailored to the French-language market. I might also mention specifically initiatives taken by the Minister of Canadian Heritage, Ms Copps, who managed to substantially increase production funds in a period of government restraint.
I would now like to mention the CRTC's regulatory initiatives: there was TVFQ 99, TV5, the new TQS service, the specialized services introduced by the CRTC, and at the provincial level, I might also note Bill 109 which was supported by the National Assembly as a whole.
I might also mention SODEQ and its precursors whose mission is to promote French-language programming. I am also thinking -- it is too bad your Chair is not here today -- of the first agreement signed by the Motion Picture Export Association of America with any government, be it provincial, federal or at any other level, the agreement known as the Bacon-Valenti agreement, the effect of which was to promote distribution in Quebec of certain products which had until then been distributed by the members of the MPEAA.
And I would add the most recent of all reports at the federal level --
[English]
-- the report of the Information Highway Advisory Committee, which reported last week, and which indicated in its press release of April 4 the importance of having special measures if French content on the information highway is what is wanted.
[Translation]
Mr. Chairman, there are a whole series of consistent features in these texts, regulations and decisions.
I recognize one in particular: French language broadcasting in Canada has needs and requirements that differ from English language broadcasting. This was mentioned earlier, and has now been recognized in section 3 of the Broadcasting Act as passed by the Canadian Parliament in 1991.
As it stands, Bill C-216 will either not allow new French-language services to get off the ground or will prevent them from doing so at a reasonable cost, thus depriving francophones from having access to programming in their language that would be more varied and richer, even though this would be eminently feasible.
This bill merits your attention. This bill must be modified for the reasons I have already enumerated, to which I would add: this is legislation that flies in the face of everything that has been done over the past 15 years by successive federal governments. It is a bill that finds no place in the positive vision of what our system should be, as expressed in the main article of the Broadcasting Act.
[English]
For the first time in our history, we are introducing to section 3 of the Broadcasting Act, which is the most important section of the act, something which has been drawn in negative terms. In no place in the Broadcasting Act, other than in section 3, do we talk about not doing something. This was brought to my attention by a professor at the University of Montreal who is the author of the seminal work in French Canada on broadcasting and broadcasting law. This does not have a place in section 3. It is a regulatory measure and a negative measure. It is not a vision measure or a measure referring to objectives.
[Translation]
Moreover, it is a text which changes the rules of the game which were set with full knowledge of the facts by the organization considered to be the expert body in this field: the CRTC, as the chairperson of the Commission as just explained. It is a text which changes the rules of the game ex post facto, between the moment the licence is granted and when the service begins, making a mockery of the most elementary rules of natural justice.
It is a text that takes no account whatsoever of the francophone context and issues, be it in Quebec, New Brunswick, Manitoba or elsewhere in the country. The provision of new, extended French-language services becomes utopian. If they cannot exist in Quebec, they will not be extended to other parts of country.
And what can we say about the production sector, creation? All of these commitments taken before the CRTC by license holders will vanish like morning dew, whereas the effect of the CRTC decisions was to consolidate the high technology industry in Montreal.
Allow me to mention the production companies that owe at least part of their success to the support I have just described and that are the pride of the industry: Coscient, Cinar, Productions de la Fête, Sovimage, Prima, SDA, Malofilm. The APFTQ calculated that the works of independent producers alone in 1995-96 amounted to $350 million and all of these people will be affected if the distribution sector is touched.
And what can one say about the role of the Canadian government which has always acted zealously as a promoter and trustee, at the federal level, of French culture in North America?
Mr. Chairman, it is not surprising that all of the French-speaking members from all political parties in the House voted against this bill on third reading. They understood that the bill as it stands would be calamitous.
I will conclude with a quote taken from the press release issued September 24, 1996 by the Minister of Culture and Communications of Quebec, Ms Louise Beaudoin. After having done her own analysis of the destructive effects of this bill on the francophone audiovisual space, she raised the following questions in the last two lines of her press release:
Who claims that francophone culture, that Quebec culture, is protected in a united Canada?
That is the question she raised at that time and I hope senators in this room will reply to her through an appropriate amendment at the end of the day.
Senator Roberge: Mr. Fox, you are a former Minister of Communications?
Mr. Fox: I do not like the word you are using in French, "ancien".
Senator Roberge: "Ancien" does not mean old. In your case, it certainly does not. But I must admit that during your mandate you did excellent work, as you did today with your presentation; an excellent presentation, I congratulate you.
Mr. Fox: Thank you.
Senator Roberge: According to you, should the negative billing problem be solved through legislation or regulation?
Mr. Fox: I listened with great interest to what the chairperson of the Commission had to say a few moments ago and if I understood correctly, she stated that the bill was not necessary in the present context since there are new means of distribution.
Secondly, the Commission's legal advisors stated that the Commission already had all the necessary powers to intervene if ever there were abuses by those who hold distribution licenses.
My point of view, and I did not want to examine the anglophone side because there seemed to be a certain consensus in the country, is that it seems quite clear that insofar as the development of the television industry is concerned, of broadcasting, in a francophone context, this bill is nefarious and would probably prevent new services from starting up. Should it do that, we could not say that there is availability and choice for francophones in Quebec. And if you cannot say that, it is an illusion to think that there would ever be an extension of services to other parts of Canada.
Senator Roberge, since you raised the question, I think that if we prevent francophones from having access to a greater variety of programming in their language, in this universe of 500 channels we are always hearing about, there will be a flood of anglophone programming available. And it could be said then that the federal government would be partly responsible for the anglicization of francophone populations in Canada. And so, I would opt for continuing what federal governments, Liberal as well as Conservative, have done so far and I say this with no spirit of partisanship whatsoever. We have always attempted to approach broadcasting issues in Canada in a non-partisan way. The 1969 Broadcasting Act was carried unanimously in the House of Commons, as was the 1991 Act; I think there were only a few negative votes cast at that time.
And I find it extraordinary to think that such an important bill, which normally is studied by the departments, and senatorial and parliamentary committees before sent on to the next stages has been brought to this point through the efforts of a person who wanted to promote a valid idea but who dit not, obviously, give sufficient thought to the consequences of this bill for the francophone part of the population.
Senator Roberge: In fact, one gets the feeling that even the Cabinet and the Minister responsible missed the boat here. It is as if something had happened and they only realized it later.
Mr. Fox: I think you might ask those who hold licenses for specialized services. Everyone will tell you that when the bill was before the parliamentary committee no one thought that it would be taken seriously. The consequences are so destructive that no one last summer thought that anyone would seriously consider passing such a bill, one which will have the consequences I have just described.
Senator Roberge: Thank you for your excellent presentation.
Senator Gigantès: Thank you, Mr. Fox. I share your concern over the future of French-language programming if demand declines. But do not you think that we should look at the problem both for French and English at the same time? I know that the threat to French is greater, but I think that it is also necessary to ensure that English-Canadian programming will be available in Quebec.
I know that American channels will be available through satellite transmission. We want to protect the francophone minority outside Quebec insofar as access to French-Canadian programming is concerned on the one hand; we should also do so for the anglophone minority within Quebec so that it can have access to English programming within Quebec.
Mr. Fox: I do not disagree with you. My thinking was that the English language sector is so well represented and so articulate that it would very clearly let its position be known on this bill. I also thought that on the francophone side it was important that a few persons, as individuals or as representatives of professional sectors, point out the dangers. I share the opinion of the chairperson of the Commission who told us that bill as such is unnecessary.
But if the bill must go forward, for reasons I do not share, I think it would be useful to amend it to exclude broadcasting in francophone markets in Canada. If you look at the Commission's opinion, the Commission of course has great expertise and wisdom in this sector. The Commission can set conditions in granting licenses to ensure not only a presence, but the conditions surrounding marketing. The Commission seems to be saying that the context surrounding this bill is different from that of two or three years ago. The Commission chair also pointed out that the technological context was evolving extremely rapidly: she said that today the bill was no longer necessary.
I do not know why you would want to legislate when it is unnecessary.
Senator Gigantès: I agree with you that it is not necessary, but there is a political reality we must deal with.
The bill has been introduced. The media in some parts of the country have seized upon it and it has made the headlines and certain pressures have developed which we cannot ignore. That being the case, we have to lance the boil. And to do that, we need two scalpels, one francophone and one anglophone. We have to think of the interests of the anglophone minority in Quebec when we want to defend the interests of the francophone minority outside Quebec.
Mr. Fox: For the francophone minority outside Quebec the situation is of course much more difficult than for the anglophone minority in Quebec. I will explain that statement, because it is too easy to say that without explaining it.
It is more difficult because, of course, if new services are not made available in Quebec, they will certainly not be extended beyond its borders.
However, in the rest of the country, in the anglophone market where the cabledistribution market is approximately four times the size of the market in Quebec, it is quite obvious that if new specialty channels are offered to English-speaking Canadians they will also be available in Quebec.
I think that the cabledistributors' association will be testifying this afternoon and will talk to you about the situation outside Quebec. I would simply leave you with these two figures: there are 1.6 million cable subscribers in Quebec, and 6 million in the rest of Canada. This gives you some idea of the wisdom contained in section 3(1)(c) which states that we must look at the two components of our broadcasting system, the francophone component and the Anglophone component, and not be afraid of dealing with the differences involved.
In other words, we need a custom-made system for the francophone market, rather than imposing a custom-made system to the entire Canadian market, one that simply conceived solely for the anglophone side. And if you want to go further than that, I of course would not object, but my purpose here today was to share with you my point of view on the effects of this bill on important policies that have made Canada proud over the years: they have governed the way we have developed our broadcasting system by allowing both the francophone component and the anglophone component room to grow.
And in today's context, the effects of this bill on the francophone component give great cause for concern, as Ms Bertrand has also pointed out.
Senator Gigantès: I am very glad to hear you say that. I do not want you to think I am criticizing lawyers; there are five in my family and I like them very much, but I had the impression when the legal advisor for the CRTC was speaking that it was neither fish nor fowl. He said that excess of caution could turn into timidity. Perhaps I did not understand him well, even though I am used to listening to lawyers speak around me; you taught one of them in fact, my daughter.
Should we not pass a small amendment which would stipulate that the CRTC has to do certain things?
Mr. Fox: Absolutely not, Senator Gigantès, if you did that you would increase the CRTC's administrative burden. The CRTC normally must act within a regulatory framework. It has recognized expertise in this sector and we must have confidence in our organizations. We must trust our institutions within their general parameters. They have all the necessary powers to put an end to abuses should there be any.
Senator Gigantès: You say they have a burden. Perhaps we could help to lighten their load by making some cuts at the Auditor General's Office, which is the part of the public service that is growing the fastest, both in expenditures and in personnel. We could take one of these auditors and assign him to the CRTC.
Mr. Fox: I think that your committee has to make a decision. I hope that my clear, specific testimony will help you in some way. You should exempt francophone markets from the application of this law, even it goes forward.
Moreover, the chair of the Commission has stated clearly that: "This bill as such is no longer necessary in today's context". So, do you really want to legislate in sectors where the recognized experts tell us that it is not necessary? That may be the case, but for francophones, the effects are so clear, specific, and destructive that we beg you to exempt at least the francophone sector.
And if the anglophone sector wants to present the same argument, they have the opportunity of appearing before the committee and I think they will be here this afternoon.
Senator Gigantès: What this bill does is attempt to protect cable subscribers from having to spend 52 cents to write to cabledistributors to say: "I do not want this new package of services you are proposing to me". That is all. It is not very difficult to write a letter. And even the poorest Canadians can afford to spend 52 cents once.
Mr. Fox: People are consulted. Cabledistributors will tell you so. I am not a cabledistributor, I am a subscriber. We are consulted, we are asked whether we want a given service or not.
Senator Gigantès: No, they provided me with a new package of services when I lived in Gatineau without consulting me and they sent to me a bill; I wrote to them to tell them I did not want the new services. I had not been consulted, and they withdrew the services.
Mr. Fox: You will have them before you this afternoon, and they will reply. You can ask them the question, and I presume they will answer. I cannot really answer that type of question myself.
Senator Poulin: Mr. Fox, thank you very much. I think that you have shed light on the importance of continuity. If you look at the situation in our country today and compare it with that of other countries, we can see that our Broadcasting Act has served us well, both in English Canada and in French Canada, from coast to coast.
I have a question, in light of your suggestion. You said: "If we prevent negative billing in anglophone markets, an exception should be made for francophone markets". Did I understand you correctly?
Mr. Fox: That is correct.
Senator Poulin: Since our objective -- and senator Macdonald expressed this very well earlier -- is to ensure that we protect the consumer, and everyone agrees with that, would we not be setting a double standard and sending out a message that the consumer in English Canada needs to be protected, whereas the consumer in Quebec does not?
Mr. Fox: I think it is more a matter of recognizing what can work in on market but will not necessary work in another.
Report after report has indicated clearly over the course of 15 years that if we want a vibrant, rich and dynamic francophone audiovisual space in a small market such as the French-language market in Canada we have to be ready to take different measures.
Of course, we have not heard the same kind of protest from French Canada as from English Canada.
I think we are in a very different situation. Three years ago, cabledistributors had a monopoly on program distribution in Canada. Today, we are talking about DTH cabledistribution, about the arrival of new services. We are looking at a situation where if a cabledistributor tried today in English Canada to use the same kind of practice it used two or three years ago, it would be unthinkable.
Secondly, look at the bill from the technological point of view. What the bill is proposing cannot be implemented. Ms Bertrand also pointed this out. Say you have three services in a given package that you like very much, and I call to tell you that we will be adding a fourth one, and ask whether you want it or not; you might say no, you do not want it. But given the current level of technology you will have to give up the whole package if you do not want this additional service.
The bill is poorly drafted in several respects. It does not take several realities into account, and one of them is technology.
Indeed, one can have the best intentions in the world when setting out to amend legislation as fundamental as the Broadcasting Act, but one must look at all of the possible consequences. It seems clear that all of the consequences have not been examined insofar as technology is concerned, the francophone reality or the evolution of the broadcasting system in Canada.
As far as I am concerned, this bill should have died a long time ago, but since there seems to be a political will to have it passed, we urge you not to annihilate the French-language system because a few backbenchers want a bill that will make their life easier during the election campaign. Am I clear?
Senator Gigantès: You have not addressed the issue that we cannot really protect the francophone system if we do not protect the anglophone side, even if it is only a matter of perception. As you say, perceptions during an election campaign are very important. We need to do something that will protect both sides, even though one side needs a lot of protection and the other side needs very little.
Mr. Fox: These things are beyond me, but not you. They are your responsibility, not mine.
[English]
Senator MacDonald: Mr. Fox, I totally agree with you and Madam Bertrand that this bill to outlaw negative optioning is totally unnecessary. That practice has been legislated against in three provinces. The cable association is on record as being against it. It is the Consumers' Association which says, "Ah, yes, but those fellows, regardless, will find a sneaky way to get it back in again, unless we do this." Even though it is totally unnecessary, it would be a brave member of this committee who would vote against this bill. I would be stoned in Chester, Nova Scotia. We are left with the option of passing Bill C-216 because of its primary purpose but amending it.
I gather that you do not support an amendment which would cause the continuing intervention of the CRTC.
Mr. Fox: First of all, I accept what you are telling me. This bill is before the committee, and it is the committee's job to deal with it. It is our job to come to you and tell you what we perceive to be wrong with the bill and to plead for an amendment. Obviously, from my point of view, if it is to pass, there ought to be an amendment.
I would suggest that the amendment ought to be more of a general nature, perhaps excluding certain sectors of the broadcasting industry. I have tried to make a case for excluding the French-language markets from the application of the law, but I assume that there are other general wordings which would ensure that the legislation is interpreted in the light of the more general objectives of the Broadcasting Act and which would not override the more general objectives of that act. That is an amendment that should be brought by others than myself.
To require the CRTC, in each given case, to hold hearings as to whether or not negative optioning should be accepted would entail long, detailed hearings on a case-by-case basis, whereas they could deal with a lot of them by a more general application of the principle. For instance, an amendment that would allow the CRTC not to deal with it on a case-by-case basis but to do as it did in the case of the French-language speciality services, which was to include the overall scenario in its call for applications, would be a much better way of proceeding. That is what the CRTC did in the case of French-language services. Its call for applications indicated that its expectations were that the new service would be included in an existing high-penetration bouquet of services. That to my mind would be a better way of proceeding than forcing the commission, on a case-by-case basis, to hold a hearing on this subject which, as we all know, tends to be an emotional subject.
Senator MacDonald: I gather the CRTC members are concealing their enthusiasm for becoming involved.
Mr. Fox: I understand that you will have representatives from Heritage Canada before you this afternoon. You might ask them if they have some way of reconciling all these purposes.
The Deputy Chairman: From your experience, would you anticipate there would be a steady stream to the board in Ottawa looking for exemptions?
Mr. Fox: I do not think so. I think the problem has been worked out in the marketplace. However, if you put it in legislation, you would force people to come to Ottawa in a steady stream. To my mind, one should allow the marketplace to sort it out, and if there is indeed an abuse in a specific case, then the commission has, according to its legal counsel, the power to intervene. That is how you should proceed. We should not be forcing people to come to Ottawa to defend their point of view. Rather, we should ensure that the commission has the power to deal with that occasional abuse if it occurs. The commission told us today that it has that power.
The Deputy Chairman: I suspect this is why backbenchers should stay out of very complex matters.
We appreciate your attendance, Mr. Fox.
Our next witnesses are from the Consumers' Association of Quebec. Welcome, and please proceed.
[Translation]
Ms Françoise Drolet, President, Association des consommateurs du Québec: First, I want to thank you, honourable senators, for giving us this opportunity to speak to you today. Our consumers' association will be presenting a brief on Bill C-216. Allow me to introduce myself: my name is Françoise Drolet, and I am the president of the Association des consommateurs du Québec (Québec consumer association). I am accompanied today by Mr. Claude Ouellet who is director general of the Association des consommateurs du Québec. I will briefly give the floor to Mr. Ouellet so that he may describe the role our association plays.
Mr. Claude Ouellet, Director General, Association des consommateurs du Québec: The Association des consommateurs du Québec is the main organization which defends the rights, interests and expectations of consumers in the province of Quebec; it has existed since 1948. For about 30 years it was the Quebec chapter of the Consumers' Association of Canada.
Over the past 20 years it has operated much more independently. We have intervened over the past 50 years in most of the important consumer debates on matters affecting the population of Quebec and the rest of Canada, telecommunications being among these issues. We feel there is an important matter here that may affect all of our members as well as the rest of the population.
We have approximately 30,000 members, individuals and corporations from all regions of Quebec. This gives you a general idea of the nature of our association. I am at your disposal for questions.
Ms Drolet: As you all know, we are not a cable distribution company, nor broadcasters, nor lawyers. The point of view we want to express to you today is strictly that of the Quebec consumer. In our analysis we have examined the effects this bill might have on French-language consumers in the province of Quebec, which constitutes the main market, and, by the same token, on francophones outside Quebec.
Examined from the angle of the interests of the francophone consumer, this bill not only contains drawbacks, but major disadvantages which we feel need to be corrected.
We readily recognize that the bill may have been introduced for very noble motives and may provide advantages to English Canada. We will let others argue these points, however, since our mission is to defend Quebec consumers. We are convinced that the authors of the bill never examined nor understood the disastrous consequences it would have for the country's francophones. Had they understood that, they would surely have wanted to take them into account. In the final analysis, we are counting on their good faith and we hope that they will recognize that our position is well-founded.
Mr. Chairman, in studying this bill we asked ourselves a series of questions, three of which seemed more important than the others for the Quebec consumer.
First of all, will this bill provide consumers with more choice and more varied French-language programming?
Secondly, will this bill provide consumers with more choice at a lesser price? Finally, thirdly, does the CRTC have the necessary powers to correct abuses, should any occur?
In answer to the first question, we feel that in the 500-signal universe that is around the corner, a universe where the English language will necessarily predominate in a North American context, it is important to increase the number of signals available in francophone markets.
I do not know if more needs to be said on that topic. Is it necessary to add that for Quebec consumers, the words "choice of programming" refer not only to programs in English but also to programs in their own language? We believe that the CRTC understood this a long time ago since it refused to impose single regulations throughout the country but rather chose an approach that recognizes that the francophone market has different requirements. In its call for applications to provide specialty French-language services the Commission proposed a system structure that encouraged the provision of a greater number of French-language services. We share that objective.
What aims does this bill pursue? We feel that far from promoting greater choice for the consumer this bill runs the risk of countering the objective we share with the Commission, and with the governments of Canada and Quebec, by making the model proposed by the Commission illegal ex post facto.
We were also struck by the fact that when the bill was passed in third reading, all of the government members present voted against the bill; all of the francophone parliamentarians from Quebec, New Brunswick and Ontario also voted against the bill, whatever their political allegiance.
That simple fact should make the promoters of the bill think twice. Referring now to our second question, one does not have to be a crack accountant or economist to understand that in a market as small as the French-language market one cannot launch new services at a reasonable cost unless those costs can be borne by a large number of consumers.
The effect of the bill would quite simply be to prevent the recruiting of a large number of subscribers and as a result it would prevent the services from getting off the ground because they would not be profitable, and if that were the case the Commission's and the government's objective of making a greater number of French-language services available in a sea of English language services would become totally unachievable. The other effect would be to prevent those services from being offered at a reasonable cost. This concerns us greatly.
Again, one does not have to be a brilliant accountant or economist to understand that if the CRTC's subscription model is set aside there will necessarily be fewer subscribers and higher costs passed on by licence holders wanting their operations to be profitable.
To summarize, our analysis leads us to think that this bill will either prevent the introduction of new services and will thus reduce francophones' access to a greater variety of programming in their language, or reduce the number of francophone subscribers who will have access to it since the cost of such services will only allow the better-heeled subscribers to subscribe to them; that is what we fear.
There are two other consequences that are just as predictable. In the absence of francophone services available at a reasonable cost, French-speaking consumers will have to turn to English-language services. That seems obvious to us. In the absence of viable services at a reasonable cost in Quebec, the extension of those services to francophones outside Quebec will obviously not be a priority.
In brief, those who are promoting the bill are asking you, as legislators, to say no to a greater variety of programming for francophone consumers in Canada; no to the availability of those services at a reasonable cost; and no to the possibility of extending those services to other francophone communities in this country.
Lastly, allow me to add that as it stands, the bill advocates subscription mechanisms that are not possible given the current state of technology. If a consumer is asked to accept or refuse a new service as part of a package, he or she will have to refuse the whole package.
Our last question involved the CRTC itself. We are among those who believe in our institutions and in our capacity to work with them. The Commission has all the necessary powers to counter possible abuses. We will in fact be among the first to urge the Commission to act should abuses occur.
I assure you that we will make it our business. For all these reasons, we believe that this bill has so many flaws that it should not be passed in its current form. We respectfully submit that it should be taken back to the drawing board to ensure that the real interests of francophone consumers will be well protected in this new broadcasting universe.
That is the message we wanted to convey to you. We thank you for your kind attention and we are available to answer questions.
[English]
Senator MacDonald: We heard from the consumers' association some weeks ago. You were present with them at that time, were you not?
[Translation]
Mr. Ouellet: We were not present during that presentation. The Association des consommateurs du Québec did not participate in the presentation and was not consulted on the content of the brief submitted by the Consumers' Association of Canada.
Ms Drolet: Our two organizations are totally independent one from the other.
[English]
Senator MacDonald: You know the position of that association?
Ms Drolet: Yes.
Senator MacDonald: You had no discussions and your position is totally different?
Ms Drolet: Yes.
Senator MacDonald: Your interest is in consumers, as they are subscribers?
[Translation]
Ms Drolet: We carried out our own analysis. The Canadian Consumers' Association did not consult us; they have their own position. We presume that they may have taken greater account of the anglophone side, and we carried out our own analysis that led us to conclude that there is reason to be concerned for francophone consumers.
Senator Roberge: When the Consumers' Association of Canada appeared, their president, who is a francophone from Quebec, gave us the impression that she was also speaking on behalf of Quebec consumers. You say there was no communication between the two of you?
Ms Drolet: That is correct. We did not communicate. Our two organizations are independent.
Senator Roberge: You did not have the opportunity of discussing various federal issues? This never happens?
Mr. Ouellet: It happens on occasion that we discuss certain issues. This is quite recent. In the beginning of our presentation, I said that during about 30 years, the Quebec consumers' association was the Quebec branch of the Consumers Association of Canada. That has not been the case for the past 20 years.
When our two groups went their separate ways, the Consumers' Association of Canada created another group in Quebec, but it has far fewer members than ours.
Senator Roberge: So this means that the Consumers Association of Canada has members in Quebec who are not your members.
Mr. Ouellet: That is the case.
Senator Roberge: Are they francophone or anglophone members?
Mr. Ouellet: Both. The Consumers Association of Canada has branches in all the Canadian provinces. At their meetings, they develop positions to defend the majority of their members, who are anglophones for the most part. It is the first time in their history that they have a president originating from Quebec. She lives in Quebec, but she is English-speaking, originally.
Senator Roberge: If there are issues of a national nature or problems involving the federal level, should you not communicate with them to establish a common position to defend the interests of Quebeckers?
Mr. Ouellet: Over the past few years there have been periods where we have had fewer discussions. We are trying to develop a joint approach on various issues of national scope; I am thinking, among other things, of insurances in Canada. We are cooperating on that; we are going to work in partnership on various issues.
However, on the topic of communications, we did not take part in their discussions or their presentation.
Ms Drolet: The Association des consommateurs du Québec represents some 36,000 members in Quebec.
Senator Roberge: And how many do they represent?
Ms Drolet: The Quebec branch does not have that many members. We do not have any figures, but we know that there are not many. That is why we are beginning to look at the possibility of establishing joint positions. But for the time being, our position is strictly the position of our association.
[English]
The Deputy Chairman: I extend our warmest appreciation to you for having taken the time to be with us.
[Translation]
Ms Drolet: Ms Bertrand also expressed her concerns to you as a consumer, and I assure you that we share them.
[English]
The Chairman: Our next witnesses are from the Specialty and Premium Television Association.
[Translation]
Jane Logan, President, Association de la télévision spécialisée et payante: Allow me to introduce Mr. Gérald Janneteau, President of the Réseau des sports; Pierre Roy, President of the Réseau Premier Choix, which includes all the specialty services offered by Canal Famille and Canal D, as well as the Super Écran pay TV services; John Riley, President of Teletoon, a new service specialising in cartoons, and Michel Arpin, Vice-President of Planning at Radiomutuel, a company offering the MusiquePlus, MusiMax and Canal Vie specialty channels.
Allow me to introduce our association, since this is the first time we have the opportunity of appearing before the committee. The Association de la télévision spécialisée et payante was created last fall in order to group together pay TV and pay-per-view specialty channel licence holders, those who hold licences issued by the CRTC. These different methods of distributing television signals were launched in Canada in 1984. Today, there are approximately 30 such companies holding 54 licences, 31 of which are being used. Our association represents 80 per cent of the income of theses businesses, as will as the vast majority of new licence holders.
Although our association has some serious reservations with regard to the wording of the bill tabled by Mr. Roger Gallaway, we agree with him on the objective of protecting the consumer and ensure on necessity of providing a harmonious framework for the stakeholders involved, who are the consumers, the cable broadcasters and those who offer specialty services and pay TV.
Since our association was only created at the beginning of February 1997 and since the bill being studied by your committee has been coming on-stream for nearly a year, specialty French-language channel operators got together to make sure their point of view got a hearing. I will give them the floor so they can present the point of view of speciality channel operators on Bill C-216.
Mr. Gérald Janneteau, President, Association de la télévision spécialisée et payante: Mr. Chairman, the fundamental problem with Bill C-216 is that the wording of the bill -- which at times is vague and open to multiple interpretations, and at times too restrictive, and which denies the CRTC any flexibility in applying it bears no real relation to, and is out of all proportion to, its stated intentions and the objectives for which it was passed.
There are two main reasons that explain this discrepancy. Firstly, we note that the text is vague as to the nature of the service to which the express prior consent of the purchaser or potential purchaser applies.
The fundamental question raised by this wording is whether the consent of the consumer to which the subparagraph refers applies to the purchase of non-mandatory pay or specialty programming service per se, or applies to packages of programming services such as basic service or bundles of specialty services.
Legal interpretations differ on this point. While, in the case of basic service, some are inclined to think that the consent applies to the service as a whole and not to each programming service of which it is made up, others -- including the authors of the legal opinion appended to our brief -- think that any non-mandatory pay or specialty programming service added to the basic service without the expressed prior consent of the subscriber would be prohibited.
The presumption that the expressed prior consent of the purchaser or potential purchaser applies to non-mandatory programming services per se and not to the variable unit made up of the bundles of specialty services marketed by cable distributors is even stronger when applied to tiers of specialty services.
If this interpretation were adopted, the effect would be:
First, to gradually transform all existing specialty services into pay TV services that are entirely optional for the subscriber;
Second, to jeopardize the introduction of the four French language specialty services authorized in September 1996 which were to be introduced in September 1997;
Third, to multiply the consumers' monthly cost of subscribing to French language specialty services (probably five or ten times), which will rise to the level of the cost of pay TV services;
Fourth, to make individual subscribers bear a greater proportion of the cost of the service in comparison to advertisers, and thus to make these services unaffordable;
Fifth, to lead to a technological dead end, since its application would only be possible in an entirely digital universe in which each subscriber would have to be equipped with a digital decoder costing, according to recent estimates, as much as $700; all of these costs to be borne by the subscriber.
Sixth, to create operating conditions that are totally unsuited to the unavoidable economic realities of the small French-speaking market in Canada, and thus to force a number of French-language specialty services into bankruptcy.
We would note that even if with the interpretation adopted is that the consent of the purchaser applies solely to bundles of specialty services as they are marketed by cable distributors -- and no one can be sure of this before the courts have ruled -- it could have very serious negative effects on French-language services, since in the new context created by the bill, an optional bundle might reach only a medium penetration level, or worse, it might be split up into multiple, low-penetration bundles. In the opinion of the CRTC itself, this would amount to non-viable operating conditions for French-language specialty services in French-speaking markets, which can be viable and affordable only if they are distributed in the basic service or in a high-penetration package.
Mr. Michel Arpin, Vice-President of Planning, Association de la télévision spécialisée et payante: Secondly, we note that the bill contains no reference to the fact that French and English language broadcasters must deal with different operating conditions and have different needs.
And yet, section 3(1)(c) of the Broadcasting Act expressly recognizes that English and French-language broadcasting systems operate under different conditions and may have different requirements, and section 5(2)(a) of the Broadcasting Act expressly imposes an obligation on the CRTC to have regard to these unique characteristics.
By enacting a section which imposes one set of requirements on both markets, Parliament would be contradicting itself. While there are some who have argued that the failure to recognize the differences between French-speaking and English-speaking markets in the bill could be circumvented by the CRTC's discretionary power, the legal opinion appended here demonstrates, to the contrary, that the present wording of Bill C-216 will deprive the CRTC of any flexibility in this area.
This interpretation which is already most persuasive would only be strengthened if the Senate or Parliament of Canada expressly refused to adopt amendments to the bill that would provide for recognition of the distinct nature of English- and French-language broadcasting.
In closing, we note that these aspects of the wording establish beyond a reasonable doubt that the bill -- consciously or unconsciously -- goes well beyond its stated intentions, and that its concrete repercussions will be out of all proportion to the objective initially stated.
It proposes distribution mechanisms that go well beyond its initial objective of banning the practice of negative option billing; will have disastrous repercussions for French-language specially services which will be out of all proportion to the nature and extent of the problem it addresses; will have aberrant negative effects for the consumer that will be much more serious than the so-called benefits that it was theoretically supposed to bring them; ignore the provisions of the Broadcasting Act that require recognition of the unique characteristics of English and French-language broadcasting. And finally the proposed mechanism threatens the integrity of the French-language broadcasting system and the dynamism of French culture in America.
For all of these reasons, we ask that the Senate committee amend Bill C-216 as we have proposed in the amendment appended to our brief; you will find the wording of our proposal in French and in English on the last page of this presentation; that is, by excluding French-speaking markets from the application of the bill. My colleagues and myself are at your disposal for questions.
Senator Poulin: I thank the witnesses for their willingness to explain , in no uncertain terms, the concerns the current situation causes them.
My question is addressed to Mr. Janneteau. What struck me particularly in your presentation was the message delivered by Ms Bertrand. Can Bill C-216 in its present form give the user the impression that he or she could chose cable services not in bundles, but channel by channel?
Mr. Janneteau: That is indeed our opinion. As it is currently worded, the bill may give rise to confusion and lead consumers to believe that they could really chose the service they want to receive in their homes on a pay-per-view basis, à la carte, and thus pick and chose among all of the services being offered.
Not only is this impossible from the technological angle at the moment, but what also worries us greatly is that in the future, should these things come to pass, specialty channels aimed at the French-speaking market in Canada would be seriously jeopardized.
[English]
The Chairman: Is it correct that it is not that it is not technologically impossible but that it is not economically feasible?
Mr. Janneteau: It is not technologically possible at this time. The cable operators may be able to give you a better description than I, but at this point, the way we read the bill, it will not be possible for the consumer to make those kinds of choices.
Senator Roberge: Will DTH give that choice?
[Translation]
Mr. Janneteau: At the moment, technologically speaking, direct-to-home satellite services can offer this possibility. But generally speaking, all of these services will be offered in bundles.
The negotiations we have had up until now with those who supply these services indicate that they will be offered in bundles because this is a more practical and economically feasible way of marketing these services.
Mr. Arpin: I would add that even if it were technologically feasible you would need quite a sophisticated digital decoder, a piece of equipment which would cost the cable industry approximately $700 at the moment. For American services which have already begun to broadcast digital services to North America, we know that the decoder sells for more than $1000 U.S., including the antenna.
Senator Roberge: Will this possibility exist in five or ten years at a very low cost? That is highly probable.
Mr. Arpin: It is probable that this technology as all other information technologies will see costs drop rapidly after its introduction to a mass market. But in Canada we are still waiting, in spite of all the promises, for this technology to be introduced. In the United States, it is already present but it is developing at a normal rate.
Senator Roberge: The CRTC is not currently involved in the negotiations you are having with the DTH license holders?
Mr. Arpin: Absolutely not.
Senator Roberge: But if one looks at the future, in 10 years, when it will be possible to have pay-per-view at a reasonable cost, the French language network will have to have a certain protection, will it not?
Mr. Arpin: I am going to give the floor to Pierre Roy, who will complete my answer. We do not see this becoming a reality; the Americans have tested this on an enormous market and have come to the conclusion that this a marketing strategy that does not interest the consumer.
Mr. Pierre Roy, President, Réseau Premier Choix: I think that technological progress may in the course of the next 10 years make this more affordable. But that will not change the problem insofar as the French-language market is concerned. French-language specialty services will always need a high level of penetration in order to be viable and affordable to the consumer. These things are interconnected; if the penetration level is not sufficient we have to increase our cost to consumers in order to finance our programming. So, the cost would increase then and the service would no longer be affordable for consumers. So I think we have to separate the fundamental problem from the technological aspect. The technology may not be available yet, but it may be one day. But the problem will remain what it is where the francophone market is concerned.
Senator Roberge: I agree with you entirely. That is why I said that we will have to bring in a regulation at some point to get the CRTC involved to protect the francophone market.
Mr. Arpin: Everything in its own good time, including regulations. Five years from now is five years away. Some of us who are here at this table and other colleagues who are here in this room will have to start up businesses in the next few months, not in five years. We have obtained licenses from the CRTC that contain certain imperatives. We must start up operations in the 12 months following the issuance of the license. Now, these licenses were issued September 4, 1996. Thus, the CRTC expects us to be operational and accessible to subscribers on September 4, 1997 at the latest, and not in five years' time.
Senator Gigantès: Will we ever reach a point where with the help of some device I can ask to see Michael Jordan during the whole night? I suffer from insomnia and I want to watch him playing basketball all night.
Mr. Roy: Today, you already have pay-per-view TV, where you can choose programs à la carte; you have to make the difference between a program, a content, a film or some feature that you can access through subscription. In English Canada, Viewer's Choice offers these services. In French Canada, channel Indigo offers pay-per-view. So this technique already exists for programs chosen one-by-one. But matters are quite different when in order to provide a service on a continuous basis, you need a critical mass of revenue to ensure quality programming. If you wanted to watch Michael Jordan play all night to help you fight your insomnia...
Senator Gigantès: No, not to overcome insomnia; to fight insomnia, I read the Income Tax Act; two paragraphs and I am out like a light.
Senator Losier-Cool: The members of the committee always appreciate it when witnesses present their positions or propose amendments. I read your amendments and I want to ask you the same question I put earlier to the CRTC official. Would you accept an amendment to the bill that would be along the same lines as what you have suggested, but which would at the same time entrust the responsibility to the CRTC?
Mr. Arpin: The fist part of my answer would be to say that you did ask the CRTC that question; we understood that testimony later in the day might lead to a proposal, but unfortunately we do not know what it would contain. We have not had the opportunity of analyzing it and assessing its impact. Studying a bill and all of its repercussions is a long process.
If one looks at the history of Bill C-216, it was debated in the House of Commons in the spring of 1996 and our licenses were issued September 4, 1996. So when the debate was taking place in the House of Commons perhaps we should have been paying attention but our first concern was to go before the CRTC to try to obtain a license. During the summer, we were waiting for a decision. We began to understand the scope and the impact of Mr. Gallaway's amendment. That is when we intervened to let legislators know that there was a problem.
We proposed an amendment supported by a legal opinion. We are being urged to approve an amendment when we do not yet know its content. We would like to have the opportunity, once we do know what it contains, to ask our legal advisers whether this amendment would be similar in scope to ours, or perhaps be even better.
We do not claim to have the solution. We do claim that the solution we have proposed to you meets the objectives of the representatives who are here at this table. Perhaps the amendment which will be submitted later will be better, but we are not in a position to give you a blank cheque on the strength of speculation.
Senator Losier-Cool: I understand that very well. My question is quite general in nature; what if this amendment gave a role to the CRTC?
Mr. Arpin: We heard the testimony of a representative of the CRTC who said himself that it already had a role which was defined in the Act, a role which it exercised; it has that obligation and it discharges it. It seems the CRTC did not convince you, since you are insisting on obtaining our support. I understand your concern and I know that there has been a lot of debate around this.
The opinion of the advisers we consulted was that the concern we have is legitimate and the amendment we have submitted meets that concern. Give us the opportunity of acquainting ourselves with the amendment that will be submitted later and we will give you our response quickly thereafter.
Senator Gigantès: The representatives of the CRTC told us that they had the power but they used such cautious, timid terms that we were not reassured at all. We want a clear decision, quickly.
Mr. Janneteau: We believe that the CRTC does have those powers at the moment. The problem is that if the amendment is passed our legal advisers tell us that this will invalidate the powers of the CRTC. That is what worried us with regard to the future of French-language specialty channels.
Senator Gigantès: What amendment are you talking about?
Mr. Arpin: The Gallaway amendment, the bill that is before you.
Senator Gigantès: We were talking about an amendment put forward by this committee stating that the CRTC has the right to make decisions on these matters. It is up to the CRTC to make decisions and not to consumers.
Mr. Arpin: The CRTC representatives, if I understood their testimony today, even though you describe it as timid, stated that they had these powers, that they could deal with these issues. I also refer you to the testimony of Ms Bertrand's predecessor before the parliamentary committee; he also stated that the commission had all of the powers needed to settle this matter.
Senator Gigantès: But we have before us a bill which has been passed by the House of Commons and which has enjoyed a wave of -- in my opinion -- ill-considered support from the media.
Mr. Arpin: Indeed, there is a wave of support, I agree with you. I am entirely in agreement with what you have just said. I think that the wording of the Gallaway bill goes beyond its intention. The journalists have reported Mr. Gallaway's statements, but they have not reported on the legal bases of the bill. The reporters limited themselves to the public statements that have been made on the matter by various interveners, including the sponsor of the bill. But they did not themselves analyze the scope of the bill. I did not see any opinion in the newspapers, I did not hear any debate on radio or television on the scope of the bill. The only opinion I am aware of is the one that has been tabled before you in our brief.
[English]
Senator Adams: You say you will be five years behind if the bill is passed. You say the facilities are not in place for broadcasting in French. Will it be cheaper in five years?
Mr. Roy: Maybe in five years the equipment will be available and affordable, but it will be at least five years. Presently, the consumer must spend nearly $700 just to have this choice. I do not think that is the purpose of the bill. All the negative impacts it will have on francophone services will add to the price.
Senator Adams: So even if the bill is passed this week or next week, you will have to wait for five years.
Mr. Roy: The equipment is one matter and the problem with the francophone market is another. We do not need to mix the two. There is an additional problem with the cost of that equipment right now, but the size of the francophone market and the low penetration will be the same in five years as it is now. We have to separate the two issues.
Mr. Janneteau: To restate it a little differently, even if choice is the only issue, so that eventually the consumer will be able to choose any service that he wants, there will still be an economic problem which will come down hard on all of Canada but particularly hard on French services, and that is that the penetration of any one service will be a lot lower than if it were distributed with a group of other services. Therefore, in order to offer the same service and the same quality of programming, the price will have to be much higher. The impact on the consumer will be much greater than was contemplated when Bill C-216 was first introduced.
Senator Adams: Some people say there will be as many as 500 channels. We are up to about 200 channels. Will there be many more channels in French?
Mr. Janneteau: I am not a futurist. It is my personal belief that 500 channels is a exaggeration. Also, this 500 channels includes many things that will not be perceptible to the consumer. For instance, the ability to watch any of a large selection of movies at any time you choose uses up 80 to 100 channels, but that will not be perceived as being channels.
The second point that you make about channels is whether we have will have more French channels in this universe of hundreds of channels. I doubt it. There may be more, but not a lot more. There certainly will not be as many as there will be English channels in English Canada, nor as many as there are in the United States.
Senator Adams: Regarding Bill C-216, let us say that someone asked me how many channels I wanted to have and I said 10, but someone else wanted to receive 20 channels in French. Do you think that is possible?
Mr. Janneteau: In terms of numbers, I really do not know. I cannot forecast that.
The Deputy Chairman: Thank you very much. It was a pleasure to have you here today. You left us with no doubt about your position.
Our next witnesses are from the Association des câblodistributeurs du Québec. Please proceed.
[Translation]
Mr. Marcel Bujold, president, Association des câblodistributeurs du Québec, and president of Câblodistribution G. inc.: Mr. Chairman, I am accompanied by Lysline Parenteau, Director General of the association; and by Francine Côté, Legal Adviser with Côté et associés; Jacques Bégin, Vice-President and Director General of Cogéco Câble; Michel Bissonnette, Vice-President of Marketing with Vidéotron, and Mr. Édouard Trépanier, Director, Regulatory Affairs, Le Groupe Vidéotron.
The Association des câblodistributeurs du Québec (ACQ) is made up of about a hundred cable distribution companies that represent close to two million subscribers, which means a 65-per-cent level of penetration of households that receive our cable distribution service and have access to specialty channels.
As you already know, it is not possible, because of the size of the francophone market, to multiply the number of specialty francophone channels at the same rate as the anglophone channels. The lack of balance between the supply of French-language services and English-language services means that we must promote French-language services through different means. The Broadcasting Act expressly recognizes the difference between the French-language and English system and allows the regulator to provide operating conditions that take that situation into account.
In this particular environment it is necessary that we quickly introduce a varied range of French-language specialty services to a great number of subscribers in order to ensure their viability. The intention of Bill C-216 is commendable in that it aims to allow the consumer to pay for only the specialty services he or she expressly wishes to receive. However, the bill ignores the particular character of the francophone system by proposing a single approach, a single standard for the two broadcasting systems. The ACQ feels that such a measure will rapidly bring about the impoverishment of the French-language broadcasting system, and the consumer will be the first one to suffer from it. The choice of services being offered will necessarily be reduced and the services, struggling to survive, will of course be offered at a higher price. Bill C-216 threatens to bring us back to 1982, when pay TV services were introduced in Canada.
In Quebec, at the beginning of the 80s, you will remember that several services had at that time been authorized; one of these was a national, general interest French-language service, as well as an English one, and five services of regional interest, one of which was in the French language.
The introduction of all these services was a memorable disaster. It became quickly evident that a competitive pay TV model where services were offered on an optional basis was not viable, and this led to a hasty restructuring of authorized services. In July 1984, the regional French-language service was authorized to merge with the national service, in light of the lack of success and low level of penetration of these services.
The problem was so serious that governments had to intervene. In December 1984, the Ministers of Communications of Canada and Quebec struck a federal-provincial committee to study the future of French-language television. The committee, whose report was published in May 1985, recommended that the Canadian Radio-Television and Telecommunications Commission facilitate the creation of French-language specialty services in Eastern Canada. The funding of those services would come from publicity and a small increase in the cost of subscribing to the basic cable service.
In the meantime, in an effort to improve the level of penetration of their respective services, which remained stagnant, First Choice, Super Écran and Super channel decided in April 1986 to offer them in bundles with the English-language specialty services, with music, sport, and health channels, for a fee of $15.95. This new method of distribution was immediately successful and allowed these services to emerge.
After this, in November 1987, the Commission authorized several new specialty programming operations, five of which were French-language enterprises. The Commission indicated in its decisions that it was concerned by the absence of specialty services for francophone audiences and thought that there was a need to ensure the equal availability of these services in order to avoid a progressive movement of the francophone audience toward English-language services.
That is how the Commission came to develop an original scenario to introduce French-language specialty services, by applying the rule that "if you chose one, you chose them all". A cable distributor who chose to distribute one of the authorized French-language specialty services had to distribute the whole block of these services for a period of three years. If Bill C-216 had been in effect at that time, specialty French-language services such as TV-5, Canal famille, Musique Plus, Météo Média, the Réseau des sports, would never have been launched.
This original scenario was adapted to the characteristics of the television environment of the time, when there were no French-language specialty services. To ensure that their introduction would be viable, these services had to be introduced rapidly and accepted by a large number of subscribers.
This scenario, the result of the hard lessons learned during the 1980s, contributed to the development of the francophone broadcasting system by allowing speciality services to become known to subscribers and reducing the subscription cost, as compared to a pay-per-view service offer.
Two other French-language services were authorized in 1994. The Commission opened the door to the distribution of specialty French-language services on an optional basis by authorizing Canal D to be distributed on an optional basis rather than as part of the basic package, as had been the case for previous services. The regulator was beginning to loosen the regulation in order to allow cable distributors to offer specialty services on an optional basis.
For the first time in Quebec, some of our members introduced a high-penetration optional tier in 1995. It was very successful. Today, specialty services authorized for optional distribution in a high penetration tier represent a diversified, affordable service offer. Four other French-language specialty services were subsequently authorized pursuant to the same principle. This decision increased the choice of francophone services in the multi-channel universe, and makes the addition of other French-language services possible in the future.
The ACQ feels that the cruising speed reached after 15 years of progress will be threatened by the adoption of the bill in its present form. Indeed, Bill C-216 in no way takes into account the historic, economic and cultural realities of the francophone system which we have just explained. Neither does the bill taking into account the very provisions of the Broadcasting Act. The effect of the bill is to eliminate the discretion the Commission may exercise, in particular to take into account the need for special operating conditions and the particular requirements of the French-language broadcasting system through flexible regulations.
History has shown that the francophone market cannot sustain services that are offered individually, on an optional basis. To exercise real choice, the consumer must be able to choose from a range of attractive, available services. If services are offered individually, like TV services, their respective prices will necessarily be higher. The increase in the cost reduces demand. Because of this spiral effect, certain services will necessarily disappear. The other services will be reduced to survival mode with seriously impacted revenues. The decrease in revenue will have a negative impact on Canadian programming expenditures and, by the same token, on the Canadian content and quality of services. Bill C-216 will thus hinder the achievement of policy objectives in the Broadcasting Act concerning diversity and Canadian content, among others. The consumer will be the loser, because he or she will have a reduced number of services available, at a higher cost, with a less attractive content.
The introduction of the high-penetration optional tier allowed consumers to chose and receive a new range of services rather than including services forcibly in the basic package. Ironically, Bill C-216 would prevent us from giving consumers that choice.
Finally, the bill would have a retroactive effect on specialty service license holders. Such a situation is totally unfair since it is tantamount to changing the rules of the game during the term of the license. It goes without saying that the next introduction of authorized services which was to take place in the fall of 1997 will be postponed indefinitely if the bill is passed.
In conclusion, the objective of cable distributors is to offer consumers as much choice as possible at the best possible price while respecting -- and I emphasize this -- our clientele. The ACQ feels that Bill C-216 is diametrically opposed to that objective. For this reason, we ask you to amend the bill in order to provide an exception for the French-language system.
Thank you. We are at your disposal for questions.
[English]
The Chairman: If no other witness wishes to add a comment, we will turn to questions. Senator MacDonald, please.
Senator MacDonald: What do you mean by "modify"?
[Translation]
Mr. Bujold: That would be amending the bill in order to allow Quebec to introduce services in bundles rather than individually, and to do so in a way which respects our clientele. Certain cable distributors have experimented with tier specialty services and there was very little criticism from Quebeckers. It was done in a different way, and there were very few complaints. Personally, I was there one year after cable distributors had experimented with the specialty services and everything went smoothly. There were no complaints from the clientele. We cannot offer services individually in Quebec because we do not have the necessary critical mass. The bill has to be amended in order to allow for the survival of new services and existing services in Quebec.
[English]
Senator MacDonald: Have you thought of any suggestions by which we may modify, as you say, or amend this bill to assuage your concerns?
Ms Francine Côté, Association des câblodistributeurs du Québec: Senator MacDonald, the amendment we are suggesting is similar to the one suggested by the last witnesses from the Specialty and Premium Television Association. You will find a copy of it on page 8 of our submission.
[Translation]
Senator Gigantès: I agree with you entirely. We absolutely must protect Quebec consumers' access; there must be sufficient demand to justify production. But we must also think about francophones outside Quebec, and an amendment providing an exception solely for Quebec would not address their problem. In my opinion, if there is an amendment it should protect access to French-language services for French-speaking consumers outside Quebec, and there should be parallel protection for anglophone consumers in Quebec. Politically, that is what has to be done; we have to look at that option. There is not just one issue, there is also this other political reality we must address.
Mr. Bujold: Some aspects of Canadian reality are sometimes hard to work with. Protecting francophones in Quebec and outside Quebec at the same time is a very commendable objective. But you must understand that the critical mass of French speakers is within Quebec. If that critical mass is not protected, French-language services will not be available for francophones outside Quebec.
Senator Gigantès: I agree with you entirely. We must protect French-language services in Quebec, that is untouchable. I would like you to help us a little by suggesting an avenue that might be acceptable to the anglophone side. So that, for instance, Manitoba English speakers would not say that they do not want to purchase French-language TV services or to avoid a situation where cable distributors in Manitoba will not be presenting your French- language productions in Manitoba.
Mr. Bujold: Which Bill C-216 allows.
Senator Gigantès: Exactly. I am against this bill.
Mr. Édouard Trépanier, Regulatory Affairs Director, Groupe Vidéotron Ltée: What we are saying today is that by allowing French-language services to continue to develop and by allowing new French-language services to be introduced, francophone markets as defined in the CRTC regulations will be able to survive in the future.
You have raised a very important question for francophones who do not live in francophone markets as defined by the CRTC. It is very important that there be services but they must be able to have access to them. The chairperson of the CRTC did not come out in favour of Bill C-216. The CRTC has always worked hard to see to it that minorities are well served, be it francophones in anglophone markets or anglophones in French-language markets. The CCTA, which represents cable distributors throughout Canada, will be discussing with you the problem anglophone markets have with Bill C-216. In our opinion, there French-language services will cease to exist if Bill C-216 is passed in its current form.
Senator Gigantès: There is a political reality. Bill C-216 was passed by the House of Commons. The sponsor of the bill received a lot of media support. It was an amazing feat on his part, but he did it. He presented it as a means of protecting the consumer. Presently, all the consumer has to do is take his pen and write a letter to cable distributors, buy a 52-cent stamp and say that he does not want a given service that has been offered to him. This was presented as a way of protecting the consumer outside Quebec who was exploited by cable distributors -- is that not the case?
Mr. Trépanier: That is true.
Senator Gigantès: We have to find a way out of this, we are in a bad way. So I am asking you, as good citizens with the right to vote, to think as politicians and to provide us with a few suggestions.
Ms Côté: Senator Gigantès, the concern you have just expressed is a credit to you. I understand your problems. I must add to the comments made by my colleague Mr. Trépanier that our first concern must be to maintain French-language specialty services. The second concern, for francophones outside Quebec, which as I said, is entirely to your credit and which also worries the Association, is that francophones outside Quebec have access to French-language services. Under current regulations, when French-language services are distributed or offered in a non-francophone market they are offered at a much lesser cost than when they are offered in the francophone market.
Bill C-216 would no doubt not have the same aberrant effect it could have in a French-language market, since with the amendment we are submitting for the francophone system, francophones outside Quebec would continue to have access to francophone services. These services would be available on an individual basis, as optional services, at a cost that would be much lower than the services now offered in the francophone system.
Senator Gigantès: This is in your amendment?
Ms Côté: Yes, indeed it is. In reply to the concern you have raised on several occasions this afternoon, about the subscriber who does not want to receive optional services with his basic services and the fact that he or she has only to write or phone the cable distributor or to purchase a 59-cent stamp, Mr. Bujold said that in Quebec a different method was used to introduce the optional tier at a high penetration level. I can cite as an example Télé Max, or CF Cable TV, where the consumer, in regard to your concern -- once again, quite legitimate -- did not even have to buy a 59-cent stamp. He received a postage-paid card with his bill which he had only to return if he did not want to receive a given service. It is all in the method. And that is why in Quebec, in light of the unique environment we have, we did not have the same problems as in the rest of Canada.
Senator Roberge: Were you called as witnesses before the House standing committee?
Mr. Bujold: I did not go. Did someone else go?
Ms Côté: No.
Senator Roberge: According to what I have just heard, I conclude that no one from the francophone community appeared before the House committee.
Ms Parenteau: The association did not, in any case.
Senator Roberge: I am trying to understand why. It seems to me that if Quebec associations had gone to defend their position as they have just done in such an eloquent fashion we would not have reached this pass today. I am trying to understand why.
Mr. Bégin: Quebec cable distributors were considering one or perhaps two new francophone channels. The situation was probably different at the time. As Mr. Arpin said earlier we were perhaps a bit more concerned by CRTC hearings and the arrival of new products. It is only during the summer that we began to grasp the gist of the bill.
Senator Roberge: You only grasped it at that time.
Mr. Bégin: Yes, yes.
Senator Gigantès: I did not understand!
Mr. Bégin: We only realized later, during the summer, the impact the bill would have. Before, we were preoccupied with the CRTC hearings and the issuance of specialty service licenses.
We were under the impression that the CRTC was going to grant a license for one or two new French-language services, and the situation was different at the time. Were those services going to be distributed as part of the basic package or were they going to be a part of the current tier, and simply be added on. We did not understand the impact of the bill at that time. In July, when we had the opportunity of really seeing what was going on we realized that for Quebec the bill as it stands could create a major problem. In September, with the granting of licenses for four French-language services, we realized that we could not offer them individually in any way. We realized that a product offered through a positive option system, added to a second tier, would definitely have a much lower penetration level than the 80 per cent we have today. If penetration is around 40 per cent the price will double or triple and then we will nose-dive. It is absolutely certain that no French-language services would be offered in Quebec next September if the bill is passed as it stands.
Mr. Bissonnette: All of the market studies carried out by Vidéotron in its market confirm exactly the same data. If the bill is passed as is the four new licenses will not be able to survive in the Quebec market. If we do not have the critical mass in the Quebec market this product will not be available in English Canada for francophone clienteles.
Just as competition is about to become a factor, and with the arrival of the information highway especially, where contents will no longer be compartmentalized in any way, it is important that we have quality Canadian content and also quality French-language Canadian content.
We are very surprised to find ourselves here today discussing a bill that calls this into question. We have to find a solution in the form of an amendment for francophone markets. These new channels are the result of a process of hearings by the CRTC, of the will that exists to make this product for our markets and of the interest of the population. Because of a mistake made by a cable distributor we find ourselves in a situation where everyone may soon be treated the same way and the introduction of these new channels is jeopardized.
I hope that we can find a solution quickly. September is coming very fast. There are consumers who want to have choice at the best possible price and that is exactly what we want to offer them. Bill C-216 will prevent us from doing that if it is passed as it stands.
Senator Gigantès: I have a fairly personal question to put to you. For all the old geezers like myself who can not see the hockey puck -- because some people did not accept the Fox solution -- I used to be able to see the damn puck! Since you have some influence, could you convince the National Hockey League to put back the "aura" around the puck so that we can see it? Secondly, could you provide a little more soccer in the programming? Mediterraneans like me were raised with soccer and there isn't enough on the Sports Network.
Mr. Bégin: If I understand correctly, you are asking for choice?
Senator Gigantès: That is right, just the option.
Senator Maheu: When you showed us the reply card earlier, you said that it was postage-paid. After the system is installed, you ask consumers to cancel it if they do not want it. Why not do the opposite?
Ms Côté: Why not do the opposite? Because technology does not allow it. Now, studies are being carried out on that. I am a lawyer and not a cable distributor so perhaps my colleagues would like to add something to my reply. In light of existing technology, this is the best way to offer bundles of services. As we mentioned in our brief earlier this is an improvement compared to what was done a few years ago when we only had access to basic service, to which services were constantly being added that increased monthly bills; it was like a Christmas tree, and decorations kept being added on.
Now we have the possibility of offering a high-penetration tier. We ask the subscriber who has had the service during a few weeks for free to phone or to send the postage-paid reply card to the cable distributor if he no longer wants the service. This situation is quite different from what occurred a few years ago before the consumer protection office intervened in Quebec. You could receive an encyclopedia at your house and to get rid of it you had to put it in the box, take it to the post office or to a delivery service, and pay for the necessary postage to return it. If you did not do so in the time period indicated, you had to pay monthly instalments for something you had never asked for in the first place. In the case of cable distributors, you have a subscriber who has asked for a service, who has signed a contract with very clear provisions to the effect that the services can change and that prices may fluctuate depending on the services requested. There is a two-way relationship between the subscriber and the service provider. There is a very clear distinction there.
It is for that reason that in Quebec the government intervened through the Consumer Protection Act, but it allowed cable distributors to offer this option to consumers because it represented an advantage as compared to the situation that existed before specialty high-level penetration bundles.
Mr. Bégin: I would like to add one thing about the viewing period, and the billing which follows. The tiers are designed to operate at a high penetration level. That is how it worked in Quebec; 80 to 85 per cent of subscribers chose that tier.
Thus, it was preferable to target the 15 per cent who did not want the service, rather than receiving calls or cards from the 85 per cent of subscribers who would want to keep the service. It was just a practical approach. In the approach we chose in Quebec we did not send a single card to households. We sometimes sent the same card to the same household four times; in addition, there were promotion and publicity campaigns on TV and on radio, plus letters informing the clientele of developments.
We thus targeted 15 per cent of our clientele and we contacted them several times. We went even further; in the case of a client who, even after having been billed, realized that he did not want the product, a simple, free phone call would allow him to cancel the service and all of the cable distributors who offered the product would not bill a client in that case.
That is why we proceeded in this way in Quebec. We offered a product through marketing that we feel was excellent, if one considers the very small number of complaints we received from our clients. It is possible to do things in a proactive way with the Quebec clientele. In fact, the Association des consommateurs said exactly the same thing to you earlier.
Senator Roberge: From the marketing point of view that is not bad either, because there is a small annoyance, which one can understand.
Senator Maheu: Yes.
Mr. Bégin: There is a standards foundation and the proportion of clients from Quebec who complained to the standards foundation was less than one quarter of 1 per cent, so that is a very small number.
In Quebec, our experience with marketing these products was not negative at all.
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Senator MacDonald: You have proven that negative optioning works and has worked in Quebec under this.
Mr. Bégin: We prefer to call it choice for our subscribers, so we can offer new services in a positive way. However, I agree with you, we have proven that it can be done with the good thinking of our customers.
Senator Gigantès: Is it not done the same way in the rest of the country?
Mr. Bégin: It is in some cable systems. We are in five provinces and, yes, we did the same thing, and we have experienced fewer complaints from our customers than others have.
In fact, as Mr. Bissonnette said, one cable company has had many problems, and that is why the project is now in front of us today.
Mr. Bujold: There were not too many.
Senator Gigantès: Who was that particular culprit? Rogers Cable?
The Deputy Chairman: That is a debate for another time and perhaps for another place.
On behalf of the committee, I extend our appreciation for coming here and for being here so long. It has been a lengthy afternoon.
We will now hear representatives of the Canadian Cable Television Association.
Mr. Charles King, Director, Government Relations, Canadian Cable Television Association: Honourable senators, the CCTA represents over 700 Canadian cable television licencees, providing cable TV service to some 7 million subscribers across the country. We represent both the largest and some of the smallest cable systems in Canada, in all provinces and territories.
Mr. Chairman, honourable senators, the cable industry in Canada is united in its commitment to consumer choice. We want to provide our customers with more and better programming and give them the opportunity to access services that meet their interests and respond to their needs.
As I am sure you know, the communications business is now a competitive one. The CRTC has just issued its policy framework for cable competition. A number of DTH services have been licensed and one is now up and operating. There are competitive microwave distribution systems -- or MDS -- operators in Manitoba and Saskatchewan, and next month the CRTC will hold a hearing to consider applications from five different groups wanting to offer competitive MDS service throughout Southern Ontario.
We as an industry have embraced this new, competitive environment, and we look forward to meeting the challenges it will provide. We also know that to succeed in this new world of competition, we must be very consumer focused and consumer friendly. We do not want to do anything that will disrupt or ignore our consumers. We cannot afford to make our customers angry, because if we do, we will lose those customers to DTH, MDS or the telephone companies. A line-up of competitors is already forming, all of whom would take great delight to see us make a wrong step so they can take our customers away from us.
The cable television industry has learned from the past and fully recognizes the challenges of the future. On that basis there is no need to pass a law intended to ban negative optioning. If something is consumer unfriendly, the cable industry does not need a law to ensure we do not do it. Our objective is the same as Mr. Gallaway's. We want Canadian consumers to have choice and we want those consumers to believe and to know that their cable company provides them that choice. Where we differ from Mr. Gallaway is on how to ensure consumers get the choices we all want them to get.
In its current form, Bill C-216 unfortunately will not do that. The bill remains so broad in its language that we believe it will actually serve to limit choice in the programming services consumers receive, not expand or protect it.
You have heard of the bill's impact on French-language services in francophone markets. I do not intend to repeat the arguments others have already made. Nevertheless, we would add our voice to those who support amending the bill to ensure that French-speaking Canadians receive the same level of programming choices as English-speaking Canadians.
There is one other unfortunate consequence of the bill as currently worded. In its present form, the bill would place in perpetual freeze-frame the programming services that cable operators currently offer to Canadian cable subscribers. In doing so, it will dramatically limit the manner in which cable operators will be able to respond to the competition and to changes in the constantly evolving Canadian broadcasting system. Let me explain briefly.
The cable industry does not sell individual services. It sells packages of services. The consumer backlash in 1995 occurred when cable operators introduced a new package of services by way of negative option. This is the evil Bill C-216 is intended to address. Unfortunately, however, the bill refers to the provision or sale of a new programming service, rather than a package of services. As a result, cable, unlike any other provider of goods and services, whether it be toothpaste or laundry detergent or car wax, would not be able to offer its customers a new and improved product. If the bill is passed in its present form, we will not be able to change our current service packages by adding services to increase the choices available to our customers. We will not be able to do the kind of tinkering any other business can do to make our packages more attractive and more appealing to existing customers or in order to win new ones.
What is more, this limitation puts us at a severe disadvantage vis-à-vis new competitors. When they enter the market, they will have complete freedom, within the CRTC's rules and regulations, to build their service packages to entice customers away from us. We, however, will have no way to respond. We will be forced by Bill C-216 to continue to offer the same packages, containing the same services, as we are offering now.
Honourable senators, by limiting us in this way, Bill C-216 will do much more than ensure the events of 1995 are not repeated. It will keep us from improving our product in the way every other business can to respond to the competition. This is why we have suggested the bill must speak of packages, not individual services. Alternatively, as we have suggested in the past, the bill could provide for some form of regulatory discretion. In other words, the bill could be amended to allow the CRTC to fine tune the general rule proposed in the bill so that it fits harmoniously within the broadcasting policy framework outlined in the Broadcasting Act and does not cause competitive harm to a particular class of licencees.
Our goal in appearing before you this evening, honourable senators, has been to contribute constructively to this process. I hope our comments have been helpful and we would welcome any questions.
Senator MacDonald: You want to involve the CRTC?
Mr. King: Yes.
Senator MacDonald: You want the CRTC to fine tune. You want a cable operator to go up the hill every time he wants an exemption from this particular bill and have the CRTC decide things on an individual basis.
Ms Roberge: On an individual basis?
Senator MacDonald: It has to be.
Mr. King: My expert is not here. You caught me at a loss.
The Deputy Chairman: But generally you would respond positively to Senator MacDonald's question?
Mr. King: Yes.
Senator Gigantès: Is there any reason why the CRTC could not act on an individual basis but, on the basis of one case brought to its attention, promulgate a finding that would apply to all cases?
Senator MacDonald: Are you speaking to the witness?
Senator Gigantès: I am speaking to Mr. Fox. You are a lawyer and an expert in the field. Since the gentleman came without his lawyer, we are more or less forced to talk to you, sir, which is always a pleasure. Could not the CRTC, on the basis of one case brought to its attention, promulgate a rule with general application?
The Deputy Chairman: We must get things organized here. We have a witness. If we want to hear from Mr. Fox, we will recall him. If it is a question of some advice, I certainly have sufficient respect for his capacity to answer these questions.
Senator MacDonald: Senator Gigantès asked an interesting question. We are here to learn. If the committee agrees, perhaps Mr. Fox could come to the table.
Mr. Fox: Can I bring my lawyer?
Senator MacDonald: Of course.
The Deputy Chairman: Mr. King, I am not sure of the position I have left you in, but perhaps Senator Gigantès might want to put his question to Mr. Fox.
Senator Gigantès: Mr. Fox, you interjected and said the CRTC will intervene in each specific case, which seemed to suggest that you thought, as you had said earlier, that the administrative burden on the CRTC would be hugely augmented. I then asked, could the CRTC, when apprised of only one case, not make a ruling with general application?
Mr. Fox: That is a very good question. It relates to your interpretation of section 6 of the act which gives the CRTC the power to make guidelines but is not bound by them. Whether the CRTC can issue a policy through a single decision or whether it must go through a guidelines process is a question that is still open.
If I understand Mr. King correctly, the preferred position is that the legislation should remain broad. For instance, if there were an amendment, it should be of a broad nature, something along the lines of whether it is conducive to the achievement of the objectives of a policy, let us say.
The CRTC already has, under section 5 of the act, the obligation to supervise and implement all of the obligations in section 3. It can decide then to do it the way it thinks best, whether by guidelines or on an ad hoc basis. I do not think Mr. King really meant to say that the CRTC should be charged with everyone coming forward one by one to seek some kind of permission or exemption. That would put a great regulatory burden on the CRTC and the applicants and would eventually put the decision in the hands of the government because there could be appeals from conditions of license allowed by the CRTC.
The negative optioning matter is a difficult thing for the government to deal with. I believe the best way to deal with it is to have a more general type of exemption which is then left in the hands of the CRTC to implement under its general powers of supervision and its obligation to implement the objectives of section 3, where Bill C-216 would end up.
Senator MacDonald: Mr. Fox, the only interpreter of section 3 of the Broadcasting Act is the CRTC.
Mr. Fox: That is correct. Parliament has given it that power.
Senator MacDonald: Going back to the question of Senator Gigantès, if such an amendment would involve the CRTC, it is either a case of you fellows running up the hill every time you want an exemption or getting something that handles the whole thing. I do not know the answer to that.
Ms Côté: We are saying that provisions in the act allow the CRTC to regulate in specific cases. In section 5, as well as in section 3(1)(c), there is special provision for the French system. There is also provision for regional needs. That does not mean the CRTC would use its power to do that. I would see that as a form of discrimination. It is also much better for the evolution of both systems, English and French, to have a general policy and guidelines to operate under.
I do not think Mr. King meant that we should go up the hill and get an exemption for each problem. That would be a catastrophe for both systems. I think all the necessary powers are in the Broadcasting Act to allow the commission to intervene if one licencee abuses the system. The commission has supervisory and monitoring control over the licencees and can call a licencee anytime it is under the impression that one is doing something wrong.
Senator Roberge: If there was abuse in the past, why did the CRTC not take action on it?
[Translation]
Ms Côté: In its wisdom, the Commission decided that this was not abuse, at first glance. It is difficult for me to speak on behalf of the Commission, but if I look at the history involved, I presume that the Commission exercises the powers the law confers upon it in a diligent way. There was a consumers' revolt because of one way of doing things, and after that.
Mr. Fox: Consumers reacted.
Senator Roberge: They corrected the situation themselves.
Ms Côté: This question was raised repeatedly with the license holder, in particular when the McLean-Hunter systems were acquired.
Senator Roberge: They reacted themselves, quickly. They did not wait for the CRTC to chastise them.
Ms Côté: We must not forget that distributors, be it cable distributors or those who will offer direct-to-home satellite television services, the LMCS or the LMDS, all have the same objective: to keep their subscribers and to recruit as many new ones as possible. If they realize that subscribers object to their method of marketing services, they will change very quickly. Those are market forces and we are heading for an increasingly competitive market. You can rest assured that cable distributors, like other distributors, will act to keep and expand their subscriber base.
Senator Roberge: Let us get back to the CRTC and section 3. All the laws governing Crown corporations, commissions or authorities always contain a section like that one that deals with public interest and is very broad. Those who hold positions of responsibility must determine whether the public interest is really at stake. This is where the difficulty in making decisions originates. This is the case for all commissions and state corporations that must issue licenses, et cetera, and the CRTC is no exception. So, the question this raises is the following: Does this hinder public interest? Is it destructive? It is a difficult judgment call. You find that all commissions, authorities, and Crown corporations are governed by a similar article, for instance the Liquor Board. That is what Ms Bertrand meant when she said: "We have the power, but we feel that we should let things develop and then intervene". So if public interest is not clearly threatened, I do not think that they intervene. That is my perspective. That is why the section is broad.
[English]
Senator Gigantès: We have a problem of political reality. One Liberal MP has latched on to this issue and managed to make it an important media preoccupation. We have this problem and we have to find a solution which will not cause Mr. Gallaway to lose face and will allow us to get out from under this very bad piece of legislation.
The Deputy Chairman: We do not have to do that.
Senator Gigantès: You do not have to do that, but we who hold the majority on this committee have to do that.
Senator MacDonald: That is absolutely right.
Senator Gigantès: We need your help for the well being of broadcasting in Canada.
Senator Adams: I see in your brief that you have over 700 licencees and you have 7 million subscribers.
Mr. King: Approximately 7.5 million.
Senator Adams: You say that if the bill is passed you will have difficulty because people will have more choice. Currently I have approximately 25 channels to watch. If Bill C-216 passes, I may refuse to pay for extra channels. Is that what you are concerned about?
Mr. King: We sell packages, not individual services. You get your basic package and then you have your discretionary tiers. You have to take the basic package, and then you have the option of getting the additional tiers if you like.
Senator Adams: How many channels are there now?
Mr. King: It varies. It could be 65 or 70 channels.
Senator Adams: I have heard the concern expressed that if Bill C-216 passes, people will have to pay for channels they do not want. How much does the basic package cost?
Mr. King: The basic package ranges anywhere from $20 to $25 across the country. All the discretionary tiers are additional. It is your choice if you want them, "yes" or "no".
The Deputy Chairman: I do not understand this. I pay $40 and I do not get anything. What is your basic markup? When you buy a service wholesale, for what do you sell it to me retail?
Mr. King: I cannot answer that question.
The Deputy Chairman: You cannot or you will not?
Mr. King: I cannot.
The Deputy Chairman: You do not know?
Mr. King: I am not sure. Mr. Thomson would have the answers to that, but unfortunately he is not here.
Senator Adams: To return to your previous testimony, if Bill C-216 passes, can you tell me what effect it will have? You tell me that you have no problem with the way the bill is currently worded.
Mr. King: No, we are concerned with the way the bill is currently worded because it refers to individual services. We do not sell services; we sell packages. We are not in a pick-and-pay environment where you can say, "I want these five channels and that is all I want." Unfortunately, the technology is not commercially available.
Senator Adams: In the meantime, you need equipment to do it.
Mr. King: We were talking earlier about the $700 set-top boxes. We need those. Unfortunately, we do not have them yet. They will be coming in the next couple of years.
Senator Adams: Does the company have the money right to purchase that type of equipment, or do you have to increase your rates for the TVs for the consumers?
Mr. King: In order to do what?
Senator Adams: In order to purchase the equipment. You said that you do not have that type of equipment right now and you are charging from a low of $17 up to a maximum of $25.
Mr. King: It varies from system to system.
Senator Adams: If you are selling the package to me and I want a better one, you have to produce it but you do not have it yet; is that correct?
Mr. King: Yes. The equipment is not commercially available yet.
Senator Adams: How will you do that, then?
Mr. King: We will get technology suppliers such as General Instrument or someone else to do it.
Senator Adams: Is that a $700 set-top box for every TV? How many sets are you talking about?
Mr. King: The estimate is per box, per television, and that varies depending on the type of box.
Senator Adams: Can you choose 60 channels on one box?
Mr. King: No. The digital video compression box allows you to go to a 500-channel universe.
Senator MacDonald: In other words, the technology is not there yet to allow you to cherry pick.
Senator Adams: My impression was that some of these companies give you a package of up to 60 channels, but I do not watch all of them. I pay $25 a month. My concern is that the price will come down to $17, but the other four or five channels will be taken away from my service.
Mr. King: That type of option does not exist. It is like buying the newspaper. You cannot buy one or two newspapers; you have to buy the whole paper.
Senator MacDonald: You have heard that the Quebec cable operators have enjoyed a very friendly negative optioning experience with their subscribers. Would you agree with that?
Mr. King: Yes.
Senator MacDonald: They have enjoyed the same cordial negative optioning arrangement with the anglo subscribers in Quebec, have they not?
Mr. King: Yes.
The Deputy Chairman: Thank you very much, Mr. King, for your testimony.
Joining Mr. Charles King is Mr. Jay Thomson, Vice-President, Legal and Regulatory Affairs.
Mr. Thomson, Mr. King has presented the brief and the committee is in the process of submitting questions to him. However, he stated that he would have been more comfortable if you had been available to assist him in the technical answers and replies. Therefore, I would invite members of the committee to resubmit their questions.
I was somewhat aghast to learn that you can get cable for $20 to $25 around this country. You sure cannot have it for that price where I come from.
When your membership buys the raw product, presumably you pay the same wholesale price right across the country. There would not be a great variation. There might be more variation in the cost of delivering that product from one region to another. Generally, what is the mark-up? Is there a rule of thumb between wholesale and billing?
Mr. Jay Thomson, Vice-President, Canadian Cable Television Association: Mr. Chairman, it depends on whether the service is offered as part of the basic package every subscriber receives as the entry level service. At that point, because that rate is regulated, the CRTC has limited the mark-up to 2 cents per service, regardless of the wholesale rate for the service.
Senator Gigantès: For what period of time is that?
Mr. Thomson: It is 2 cents per subscriber per month.
The Deputy Chairman: Is that for basic service?
Mr. Thomson: Yes. If the wholesale rate of the service, for example, was 50 cents, then when the service is on the regulated basic package, the cable operator is allowed to increase that by 2 cents so that, in effect, it would be 52 cents.
That would be different for what we call the discretionary tiers, which would include most of the specialty services nowadays. In those cases, the mark-up is typically 100 per cent.
Senator Gigantès: If they only allow you 2 cents for the basic service, naturally you will bump it up to 100 per cent for the next one. That is what I would do.
Senator MacDonald: It is obvious there is someone out there who does not believe you. There is no question that negative optioning is kaput; it is done; it is no longer; it is unnecessary. We are all here because we are not all there. Negative optioning is dead as a doornail. Is that not so?
Mr. Thomson: I think that is certainly fair to say about English language markets. As you have heard from representatives of the French language market, it may still be necessary in certain circumstances.
Senator MacDonald: That was not the question I put to you. You are guessing ahead. I am talking about the present situation. Your association told the standing committee of the other place that there would no longer be negative optioning anywhere in Canada.
Mr. Thomson: That is correct. What we said was that we would not negative option. We did at the same time highlight the special concerns in the Quebec market. We asked that the bill address those concerns so as to allow -- whether it is called negative optioning or not -- the French language services in the francophone market to have an opportunity to achieve high penetration.
Senator MacDonald: That leads me to this question: Do you feel the only way they can solve the problem is through a user-friendly negative option?
Mr. Thomson: Call it what you may, it is by providing it to the most subscribers possible at the lowest cost possible. That seems to be by adding it on to an existing package of services which is made available to all subscribers.
Senator Spivak: Could you explain in brief exactly what may occur with your competitors? When there are different methods of diffusing all these channels, even in Quebec, surely there will be other means of achieving penetration and everything else you are talking about without a negative option. Would you explain what the difference in technology might be? We have heard that is the only way we can do it because, technologically, it is not possible to do it any other way. Would you enlighten us in that respect? I am talking about satellite, wireless, cell and all the other things we are hearing about. I am particularly interested in the way in which you do it in a city. There are cells.
Mr. Thomson: Are you referring to LCMS, senator?
Senator Spivak: Yes.
Mr. Thomson: The starting point must be that regardless of what kind of distribution undertaking you are talking about, they must have the services available to them in the first place to then make them available to subscribers. In this country, the only way those services can be up and running and successful, and therefore available to the competitive distribution undertakings, is if they first have a solid base of cable subscribers. They must have that wide base of penetration in order to get off the ground, buy the programming and be able to continue to buy the programming and offer their service. Therefore, right or not, they have to rely on cable in order to get that penetration.
If you are talking about a French language service distributed by DTH, by a microwave distribution system, or by LMCS if it ever does distribute broadcasting services, they will already have services available that cable has made successful. They do not have to worry necessarily about getting those services to the broadest audience possible in order to continue to have those services. They can do whatever they wish in terms of providing those services to their subscribers. They can make them purely pick and pay because if the subscriber says, "No, I do not want that particular service," that is fine. That service will still exist and can be offered to another subscriber. The same cannot be said of cable television and how it distributes its services.
Senator Spivak: Yes, but we are looking at a competitive market five years down the road. You would not be able to do that if your competitors, who are leapfrogging on what you have already done, are offering a different kind of option. Why would people do that? It is a question of cost. Why would I pay $35 or $40 a month and get channels I never watch just to get the channels I want to watch when I can do it the other way? This is imminent. It will not be in the distant future.
Mr. Thomson: I agree with you. We have argued that perhaps this bill is unnecessary because of those very reasons. Assuming that the services will have had their foundation and are up and running and are available, then as new distributors provide them or as we provide them, it will be done in the most consumer-friendly way possible. That would appear to be in order to give subscribers maximum choice through this pick-and-pay environment. If they want the service, they will ask for it and pay for it. If they do not want the service, they will not ask for it and they will not get it. Everyone will do it that way.
Senator Spivak: Are you still saying this bill is not necessary?
Mr. Thomson: Yes.
Senator MacDonald: Mr. Thomson, before you arrived, Mr. King, all by himself and without his keeper or his lawyer, gave us an interesting presentation in which he said these things should all be conducive to the objectives of section 3 of the Broadcasting Act and that the CRTC was the logical body to interpret these objectives. Therefore, he said, everyone should rush up the hill to seek any kind of exemption or any kind of ruling from the CRTC with respect to anything which would affect the survival of the French language service. In other words, he made the CRTC the deciding body.
The CRTC was here before us. The idea was not really put to them, I do not think, but they concealed their enthusiasm for the idea very well, as did some of the other witnesses. How do you respond to that?
Mr. Thomson: I would not disagree with my colleague. I might put a different spin on it, if you will.
The commission, as the regulator of the broadcasting industry, must exercise its mandate which ultimately is to make decisions in the public interest and, in so doing, to balance the interests of the broadcasting system and the interests of Canadian programming with the interests of consumers. The commission has the tools, through its regulations or its policy-making power, to ensure that programming is provided in a way which is consumer friendly but still meets the goals of making it available to the most people possible.
It will not necessarily require individual cable operators or individual services to go to the commission on a case-by-case basis, overwhelming the commission with applications to be exempted from the provisions of the bill. The commission is in a position to issue a general policy statement that would indicate to the industry under what circumstances services could be provided and under what circumstances they could not be provided. It could do that through policy or by regulation. Then it would have general application, which would not lead to the inundation of applications and the overburdening of the commission.
Senator MacDonald: Even though we are all agreed that this negative optioning thing is not necessary and even though that is the paramount thrust of the bill -- it is very admirable and has widespread public acceptance -- the fact is that we are in a spot. Would we vote against it and try to explain in every little nook and cranny in this country that these rotten, unelected senators killed the negative optioning bill? You see our problem.
Supposing that Mr. Gallaway, who is an evil genius, says, "Aha! Now they have given exemptions to the CRTC, and they have allowed negative optioning in Quebec and, furthermore, there is no protection for the consumers." He will have us. Do you see the reaction?
Mr. Thomson: It is very possible for anyone to comment negatively on any CRTC policy that is put into place.
Senator MacDonald: But at least it is their policy. It is not Senate policy.
Mr. Thomson: If you were to amend the bill so as to give the commission discretion to indicate under what circumstances negative optioning would be inappropriate, then it would still end up being commission policy. You would only be giving them the opportunity to do their job. In exercising their job, their policy would be the one that would govern. Ultimately, in the end, if there is a problem with whatever the commission does in its policies, the government also has the opportunity to issue directions to it that would bind the commission to change its policy if necessary.
Senator MacDonald: To quote what Mr. Robert Fowler said in his report on broadcasting years ago, if you have a dog -- meaning the CRTC -- why do your own barking?
Mr. Thomson: I believe he also said something to the effect that all is programming and everything else is housekeeping. All of the presentations before you have been concentrating on the importance of programming and providing it across the nation of Canada.
Senator De Bané: From what I understand, up until now there was a monopolistic distributor of TV programs, being the cable companies. We are entering an era where there will be alternative ways and competitive ways of delivering TV programs. If up until now it was technologically driven, maybe with competition it will be consumer-driven from now on.
In view of that, what is your prediction about how things will be offered to the consumer in the future? Will it be like when I go to the supermarket and I buy my groceries? I pick each item that I want and I pay only for those? Will technology allow that so the consumer will really pick and choose what he wants? Is this the era that we are entering, or will it not be that simple?
Mr. Thomson: The technology will certainly allow that supermarket approach to take place. Presumably, all distributors will make that option available to their subscribers. At the same time, as we have learned over the history of the cable industry, people prefer to have packages made available to them as well. Often when a group of services is provided in a package, they can be offered so much more cheaply than if they were provided on a stand-alone basis. Therefore, I think it is fair to say that, at least in our industry, we will continue to offer packages as well.
For example, we will put together services that are of interest to sports fans. They will be able to buy a package of sports services. The same goes for music-related services or news-related services. There will be a combination of individual services and packages of services.
Senator De Bané: Do you think that by allowing several competitors to offer TV programs, TV channels, et cetera, they will necessarily offer their different services in a way that would respond to the needs of the consumer who ultimately will decide what is good for him or her?
Mr. Thomson: Yes, because ultimately they will be motivated by the desire to make as much money as possible. The only way they can do so is by gaining as many subscribers as possible, either gaining new ones who are not presently subscribing to cable television or by taking subscribers away from existing cable television operators. Hence, they will be providing the services in the most consumer friendly way in order to win over those subscribers. At the same time, we will be doing the same thing to ensure that we do not lose those subscribers.
Senator De Bané: I assume, then, that you would agree with the comments of the chairwoman of the CRTC, Madam Bertrand, who said:
...we are concerned that the Bill, if enacted, while intended to deal with one issue, will create difficulties in a wide range of other areas that are not now problematic.
Mr. Thomson: We completely agree with that statement.
Senator Gigantès: Is it possible that you might in the future allow customer-designed packages? In other words, you will say to the customer, if you are prepared to pick 30 channels, we will let you choose your 30 and we will charge you a package rate, rather than 30 times the individual rate?
Mr. Thomson: That is very possible. There will always be what we now call the basic service; that is, the entry level service which all subscribers would have to get in order to have the opportunity to pick and pay. Once they have taken that basic service, then I foresee the opportunity to provide them with that degree of choice within, of course, the commission's rules relating to what Canadian services can be packaged with what foreign services.
There may be a list of 100 Canadian services and a list of 100 American services, and for each American service, you can take one Canadian service and vice versa so that you make your own package.
If I could take this opportunity, Senator Gigantès, you asked some questions earlier about the impact of the bill on services in minority language markets, for example, French services in English-speaking Canada and vice versa.
It occurred to me that, historically, minority language services, if I can call them that, have been provided within existing packages of majority language services. They can then be provided at the lowest cost possible to those minority language individuals. Therefore, an RDI would be packaged in English Canada with a group of English language services, and a YTV might be packaged with a group of French language services in Quebec.
If the bill is passed, that would not happen. It will continue to happen to the extent it is already in place, but to the extent there are any new services, French for English, cable operators would not be able to add them to existing packages and increase the rate because that would trigger the bill. That would be to the detriment of minority language services across the country.
The Deputy Chairman: Thank you very much for your testimony. We appreciate you appearing here this evening and we look forward to doing it again.
I wonder if I might now call on the Federation of Francophone and Acadian Communities, Mr. Jacques Michaud.
Would you please introduce your colleagues.
[Translation]
Mr. Jacques Michaud, President, Fédération des communautés francophones et acadiennes du Canada: I am the President of the Fédération des communautés francophones et acadiennes du Canada. The Director-General of the federation is Yvon Samson, and we are also accompanied by the federation's Communications Agent, Sophie Galarneau. The Fédération des communautés francophones et acadiennes du Canada (FCFA) thanks the Standing Senate Committee on Transport and Communications for giving it this opportunity of expressing its point of view on Bill C-216 concerning negative option billing.
For those who do not know us, the FCFA of Canada groups associations from nine provinces and two territories as well as four national organizations with sectoral missions. Its objective is to defend and promote the rights and interests of millions of francophones and Acadian men and women who live outside Quebec.
I want, right at the outset, to say that we reject the bill in its current form completely. The FCFA of Canada is deeply concerned about the effects of this bill on access to specialty French-language services for the communities we represent. It is important to fully understand the scope of such a bill and its effect on our communities. Francophone and Acadian communities living in minority situations will never again be able to have access to new specialty channels in their language.
Let me cite two examples which clearly demonstrate the limits of the bill and the disastrous effect it would have on francophone and Acadian communities.
To begin, I will take as an example the French-language specialty service Réseau de l'Information, commonly known as RDI. If the bill were adopted, cable distributors would have to obtain the consent of each subscriber before adding RDI to the basic service and increasing its cost as a consequence. It is easy to foresee that where francophones are in the minority the majority of the population will not accept an increase in their rates in return for a French-language service. Thus, the communities that do not already have RDI in their basic service will not be able to obtain it later.
Secondly, let us take a few moments to examine the situation of the tiers or bundles of specialty services that are currently offered on an optional basis by cable distributors. The spirit of the Act will allow subscribers to choose the specific services they want to receive within a bundle and to reject those they do not. It is easy to imagine that anglophones will not want to pay for specialty French-language services and that consequently they will not request them. It will no longer be profitable for cable distributors to offer them and they will quickly disappear from the list of available services of the various cable distributors who provide services in markets where francophones are in the minority.
The consequence is very serious: if the bill is passed it will become impossible for a distributor in a majority anglophone community to carry any new French-language specialty channels.
The debate on negative option billing should not make us lose sight of the fact that the future of Canada is only assured "if it can translate linguistic duality into in its laws and institutions", as Judge Michel Bastarache said so clearly.
The francophone and Acadian communities want to preserve the principle according to which they should have access to cultural or information products in their language, just as the other official language community does.
The Fédération des communautés francophones et acadiennes du Canada believes that communications mediums are one of the ways of strengthening our national and cultural identity. The objective is not to infringe upon the rights of consumers but to ensure that French-Canadian programming will continue to develop and expand.
However, if the francophone television audience has access to very few or no French-language programs, what message does that convey to them on the value of his or their language and the status of their cultural identity?
The government of Canada must include in its policies elements that ensure that francophone and Acadian communities will have access to French-language content.
Indeed, the Official Languages Act gives government the responsibility of promoting the development of minority francophone and anglophone communities, as well as of promoting the full recognition and use of French and English in Canadian society. This commitment aims not only to see to it that minority communities have access to services in their language, but also that federal institutions actively participate in the full development of those communities.
French-language services already have trouble penetrating anglophone markets. Further, under the terms of the Broadcasting Act, francophone communities are included within anglophone markets, with two exceptions. In this way, they are already at a disadvantage. It is impossible for us to believe that politicians could pass a bill that would make the situation worse, to the point of making it impossible to broadcast French-language specialty services in francophone and Acadian communities.
This bill as it is worded does not take the reality of Canada into account. Our country is not monolithic. It has different cultures and our legislation should reflect those differences. By trying to level out these differences, this bill resembles nothing so much as Reform's electoral platform. To ensure that the legislative environment is more in compliance with Canadian reality and to respect other Canadian laws, the Official Languages Act among others, the FCFA of Canada proposes two solutions. The first is the following: We propose that the Senate return the bill to the Department of Canadian Heritage in order that the team of legislative specialists in the broadcasting and cable distribution section examine the matter of negative option billing. They will be able to propose a new bill which will not cause prejudice to francophone and Acadian communities.
The FCFA of Canada is not opposed to efforts to counter negative option billing. The intent of the bill is commendable. However, all of the consequences of its implementation have obviously not been thought out. Cable distribution is certainly a very complex sector where many interests are at stake. We believe that the team of experts at Heritage Canada is in the best position to devise a bill that will meet the requirements of Canadian cultural diversity in full.
Secondly, we propose that if passage of the bill is inevitable and if it must be amended, that it be modified to grant exceptions to anglophone markets containing francophone and Acadian communities.
All Canadian men and women are equal before the law. But this Bill would grant advantages to some of them. It is incumbent upon the Canadian government and all of the parties represented in the House to behave equitably toward the Canadian population. Francophone and Acadian communities are not asking for any privileges. They simply want their basic rights -- among these the right to information -- to be respected, wherever they live.
It is now up to you, ladies and gentlemen of the Senate, to ensure that our country's laws will preserve a communications space where francophone and Acadian communities will be able to see themselves and where their culture can develop fully and freely.
We thank you for your attention and we are at your disposal to answer questions.
Senator Gigantès: We have a problem. All of us around this table agree with you, to such an extent that we do not really have questions for you, because we agree with what you have said. We had interesting questions to put to others with whom we were not necessarily in agreement. I think it is unthinkable to undermine the production of French language programs by limiting their distribution; if this bill is passed as it stands, this is what will happen. That is a comment. I apologize for not asking questions, but I do not have any because I agree with you.
Mr. Michaud: We thank you for your support.
Senator Poulin: I would like to thank the representatives of the Fédération des communautés francophones et acadiennes du Canada for their presentation. You took the time to remind us of some fundamental principles that make our country the envy of the entire world. We have in the past few weeks been able to see in all of the national press to what extent we are the envy of the entire world. As senators, we have the responsibility of ensuring that all possible means are taken to maintain those principles and apply them in the various sectors of activity in Canada. The bill was read for the first time in the House of Commons at the beginning of March and went to committee in the House of Commons. Did the Federation express its concerns to our colleagues in the Other Place at that time?
Ms Sophie Galarneau, Communications Agent, Fédération des communautés francophones et acadiennes du Canada: No. We were informed of the existence of the bill at the end of June and it was impossible for us to react fast enough at that time. We sent letters to members to emphasize our position on the bill but it went through its last reading at the end of June.
Senator Poulin: No, the last reading will be at the end of September.
Mr. Yvon Samson, Director General, Fédération des communautés francophones et acadiennes du Canada: Yes, we did intervene but it was too late to appear before the committee. We sent our opinion along to all parliamentarians before the bill got to third reading. Unfortunately, it was passed on third reading with all of its consequences. You know that even members from outside Quebec voted against the bill as worded.
Senator Poulin: You were not there earlier, but all of our colleagues expressed the fact that we share Mr. Gallaway's consumer protection objective; on this point, we are in full agreement. But in the context of today's reality, as senators we do not want to convey a message to Canadian men and women that we are not in agreement with legislation which aims to protect consumers. So we are forced to adopt the position that the bill that is before us must be improved. Would you have suggestions to make to us?
Mr. Michaud: We represent more than a million Canadian men and women and we would certainly not adopt a position that would not encourage consumer protection; we encourage that option. That is why our main recommendation is to send the bill back to the Canadian Heritage Department so that specialists there can eliminate with a fine tooth comb the elements that will attack Canada's fundamental values. We do not recommend that the bill be scrapped but rather that it be fine-tuned in order to add or delete elements that could undermine the Canadian framework consisting of our Charter, our Constitution and the advantage of linguistic duality.
[English]
Senator MacDonald: That is an interesting suggestion. Officials from the Department of Heritage will be our last witness tonight.
It was only after the second reading of the bill, the reading in principle, that the government awakened to the fact that this bill had a glitch in it. It was a private member's bill, as you know. The government withdrew its support. Ms Copps has had it ever since then. She could not convince the Liberal members who supported the Gallaway bill, so the bill went through and here we are.
Why should we send it back to them? The Department of Heritage has had it since September. They have 27,000 ADMs and broadcast experts. Did they wait to say finally, "We will give it to the Senate, and the Senate will fix it up for us?"
Senator Gigantès: That is our role.
[Translation]
Mr. Michaud: I am sorry to have to answer in the same way. If I understand Canada's democratic system, that is why you are here. It is an enormous responsibility, and that is why our system is admired throughout the world. When there are problems such as the one you have just encountered, you are there to ensure that no damage is done to the framework that defines Canada through the Charter of Rights and Freedoms and the Constitution. You have an enormous responsibility and I do not envy you. It is true that you are the target of criticism, but the complaints you might hear today have nothing in common with the criticism you would come in for 10 years from now if the Canadian structure collapsed.
[English]
Senator MacDonald: Sometimes you have to die before someone says something nice about you.
[Translation]
Senator Losier-Cool: Congratulations; you have put us back in touch with Canadian reality. I am against Bill C-216 in its current form and I have spoken about it in the Senate. As Senator MacDonald has just said we must debate this, and you mentioned that it was our responsibility. Senator Poulin asked you for suggestions. Would you accept an amendment to the bill which would add and define the responsibilities of the CRTC? The representatives of the CRTC practically told us that the bill had no raison d'être and that the CRTC was already doing this. We want to improve the bill; would you accept an amendment where the role of the CRTC would be stipulated?
Mr. Michaud: I am going to ask Ms Galarneau to answer you as this is a technical point. I would be afraid to send you off in a direction which would not be the right one for Canada.
Ms Galarneau: This is what I would reply: "A bird in the hand is worth two in the bush". At this point, if we are told that the CRTC may possibly come back through the back door to help us, that is not sufficient. At this time, the CRTC defines markets; it decides which language is prevalent in those markets. So there are francophone markets within Quebec and outside Quebec; elsewhere there are English-speaking markets. The majority of our 110 communities live within an anglophone market. Is the CRTC ready to reconsider its methods to provide specific titles to francophone and Acadian communities that are often served by a cable distributor who also provides service to a larger community which is for the most part English-speaking? This system offers no security. We have no guarantee with such an amendment that our rights will be respected and that we will have access to the greatest possible number of French-language specialty services. If the Senate absolutely wants to amend the bill and does not want to return it to Heritage Canada we propose that an exception be made for anglophone markets that contain francophone and Acadian communities. This would apply to many anglophone markets. We see this bill from the perspective of francophone communities. We do not have a team of 15 legislators with us to redraft the bill to ensure that it respects consumers; that it respects the right of consumers to not have services they do not want imposed upon them, while also protecting linguistic duality.
Senator Losier-Cool: I would agree with that. But are you not afraid that we will be told that there is a "double standard"?
Mr. Michaud: That is why we prefer the first option. There is an element of favouritism in the second. But how can we make sure that there are French-language services offered by cable distributors, by television and radio broadcasting services, if we do not ensure that we will preserve French-language communications from one end of Canada to the other, that we will preserve this Canadian framework. With this bill, that will not be possible. Bill C-216 as it is worded will rapidly lead to an absence of French-language services, be it in Vancouver, Northern Ontario or Newfoundland. That is why we cannot define Canada along territorial linguistic lines, as this bill does: English Canada outside Quebec and French Canada in Quebec. I think that the nature of Canada is ill-served by this bill and that we are encouraging the Americanization of our broadcasting.
Senator Losier-Cool: You say that to strike an equitable balance for francophone consumers outside Quebec and outside the two districts we almost need to resort to favouritism -- if one can call it that -- or perhaps we could call it catching up?
Mr. Michaud: Yes, or to specific measures that take the existence of small communities of francophones throughout Canada into consideration, communities that live within a larger majority anglophone group that drives the decisions of cable distributors.
Senator Losier-Cool: You are preaching to the converted.
Mr. Michaud: Yes, I know.
Senator Gigantès: We questioned the CRTC along the same lines by asking them if they could guarantee that with the current Act French-language services would be offered to francophone communities in English Canada and English language services to anglophone communities within Quebec, and they answered yes. We asked them if they were going to do that. We got an answer from their lawyer that I am not too sure about. It was neither fish nor fowl, neither here nor there. We asked again and they said: "Absolutely, we can do that. There is no need to say anything to us, we do not want this bill. We can protect the consumer without this bill."
But we have a real political problem. We cannot send this back to the Heritage Department. The House of Commons has passed this bill. When a bill has been passed by the House of Commons, automatically, it is sent to the Senate and we must examine it. We can either let it die on the Order Paper or send it back to the House of Commons with recommended amendments or simply kill it by voting against it. But the political reality remains. The sponsor of this bill presented it as being a measure to protect the consumer. This is not the case, that is a fact. He managed to present it this way and the media saw things his way. I am ashamed that I was once a member of the media because they are not doing their homework these days; they do not examine the issues. They grab headlines. Mostly, they want to make the front page. So they say anything in order to grab the headlines. They are deplorable.
So, this is a crusade to protect the poor little consumer who is being harassed by the big bad cable distributors. It is true that they are bad, since they do not give me, for instance, the Fox electronic puck so that I can know where the puck is during a hockey game. I asked the gentleman there who represents the Sports Network and he told me he would do what he can. In any case, we have this political problem. The political problem is very simple. We must amend the bill in order to allow the law to work and protect francophone communities outside Quebec and anglophone communities within Quebec, without making the sponsor of the bill lose face, as well as all those who followed suit and voted for the bill when they should not have. That is our problem. The sponsor is present here. What would you like us to do?
Mr. Michaud: Once again, let me repeat that it is unfortunate. But I am grateful for the decision-making process in Canada which allows us to have access to another government level that will prevent us from committing serious mistakes that could ruin all of the advantages we can promote on the world market at this time. Linguistic duality is an extremely important element and this bill could ruin this substantive advantage we have as Canadians.
Senator Gigantès: This is not law yet, it is a bill, and it will not be passed by this committee without amendments. I guarantee it!
Mr. Michaud: I hope that the Heritage Department, which you will soon hear, will have solutions to propose to you and that you will make decisions jointly. Without being familiar with the details of your decision-making process I do hope that all of this will take concrete form.
Senator De Bané: What I understood Mr. Michaud to say, Senator Gigantès, is that he is against the abolition of the Senate, for his part!
Senator Gigantès: It would be too complicated. Prince Edward Island would impose its veto!
[English]
The Deputy Chairman: Thank you very much, gentlemen, for appearing here this evening.
I will now call upon the Canadian Association of Broadcasters.
Please proceed.
Mr. Michael McCabe, President and Chief Executive Officer, Canadian Association of Broadcasters: Good evening. With me this evening is Cynthia Rathwell, our legal counsel.
[Translation]
The Canadian Association of Broadcasters is the national professional association of private radio and television stations and their networks. Recently, we have also begun representing a large number of specialty services. It is in this new capacity as representatives of specialty services that we appear before you today, because Bill C-216 affects them particularly.
[English]
Thank you for giving us the opportunity to participate in your deliberations examining this bill. Given your very busy schedule, we plan to take only a few moments of your time to outline our general support for the objectives of the bill while at the same time cautioning you about some potential negative consequences that could result from the bill with respect to the availability of French language specialty services and the changing of service lineups in cable packages.
First, we would like to commend Member of Parliament Roger Gallaway for taking on the negative option marketing issue and championing a bill that responds so directly to concerns raised by Canadians. Whatever the Senate decides, the bill has already helped ensure that all players in the broadcasting industry demonstrate a greater sensitivity toward their customers, particularly in their marketing practices.
That Mr. Gallaway's bill and consumer opinion have accomplished much has been evidenced by the cable industry's testimony before the House of Commons Standing Committee on Canadian Heritage that it will no longer employ consumer-unfriendly marketing techniques. I refer to the comments of Richard Stursberg, president of the CCTA, in his presentation before the committee where he said:
The Canadian cable industry is united in its resolve that Canadian consumers should be free to choose for themselves which packages of entertainment and information services they receive in their homes... the Canadian cable industry is committed to respect consumers' freedom to choose and is committed to --
-- ensuring --
-- that new programming services are offered to cable subscribers exclusively on a "positive option" basis.
The amendments to the Broadcasting Act proposed by Bill C-216 are one means of holding distributors, like cable, to their word to ensure that Canadian consumers are treated fairly with respect to the launch of new specialty services. However, as with any piece of law making, even one with broad popular support, care must be taken that a new law does not have unintended consequences. As such, legislative amendments must be broad and flexible enough to serve the needs of all Canadians and to stand the test of time.
While we agree in principle with Bill C-216, we have two specific concerns flowing from what we believe are potentially unintended consequences of the bill. The first is a negative effect on new French language specialty services and the second is an inability of cable companies to change lineups in existing packages.
As you have heard from others here, French language cable companies require greater flexibility in the marketing of new francophone specialty services. Indeed, without the ability to package new francophone services with existing services, the viability of the new French language specialty services scheduled for launch in September 1997 could well be compromised with consumers deprived of even the opportunity to receive the new services.
The business plans of these services are largely based on the assumption that cable companies in Quebec will have to package a new French language service in an existing tier of services in order to garner a critical mass of subscribers in Quebec. Only if successful in the province of Quebec can these services be rolled out in other markets in Canada where the francophone population is not as significant but should still be served.
[Translation]
In order to respond to the concerns about the effect Bill C-216 would have on francophone services, it has been proposed that the CRTC obviate possible problems by requiring the obligatory distribution of certain French-language services. We think that this way of doing things would unfortunately be unrealistic in practice.
[English]
It is true that the CRTC has the power to direct a distribution undertaking to carry a specific service by making it mandatory. It is, however, only to be used in extreme cases where the service is of national public interest. It would be hard to argue that niche-oriented specialty services are sufficiently in the national public interest that they should be mandatory.
Furthermore, to declare a service mandatory would require that the service be offered on basic. If the consumer did not want the new mandatory service, he or she would have to either cancel their subscription to basic cable or continue to receive basic with the new, unwanted service. These are the only two options available to the consumer when mandatory carriage is exercised. Given the inflexibility of the mandatory carriage option, we would not be comfortable relying on it as a guarantee that French language services would be adequately distributed to Canadian viewers.
Our second concern is that the bill, as currently drafted, could limit the ability of cable companies to change their service lineups in existing packages. Such a limitation could freeze the cable company's ability to make new additions to existing packages, for example, even if that new service was added at a very nominal fee.
If we look back to 1995, the consumer backlash occurred primarily in cable systems where services were taken out of existing tiers and placed in new ones, not when new services were added to existing tiers.
Smaller cable companies with 2,000 to 6,000 subscribers which do not have the capacity to offer packages would be particularly affected. These companies would be unable to introduce new services if the vast majority of subscribers had agreed to receive them first. This would inhibit their ability to meet the needs of their communities as efficiently and effectively as possible.
We do not believe it is the intent of the bill to freeze the flexibility of cable companies to offer new services in existing packages, nor do we believe the intent of the bill is to undermine the launch of new French language specialty services. We bring these concerns to your attention because we believe they are unintended. We look to you to ensure that Canadians are protected from consumer unfriendly marketing techniques while at the same time preserving flexibility within the Broadcasting Act to foster a broadcasting industry which provides the consumer with choice and high-quality news services.
Perhaps you will be ultimately satisfied with the verbal guarantees offered by the cable industry that it will never again practise negative optioning. Perhaps you will decide that negative optioning is no longer a real threat to consumers due to imminent expansion of channel capacity through digital video compression and new competition in the distribution marketplace through DTH services and new wireless distribution technologies, or perhaps you will decide that legislative change through Bill C-216 is the only way to ensure consumer rights are protected.
If you support the latter approach, we would like to reiterate the need to look at consumer rights in the broad sense and to ensure that any legislative amendments do not accidentally reduce consumer choice by depriving the broadcasting system of flexibility.
Senator Maheu: I was told by someone who is in close contact with the writers of the bill that all we are dealing with here are specialty channels and that nothing else will be affected. Do you feel that way, or could you elaborate a little on your feelings?
Mr. McCabe: Broadly speaking, I think that is correct. When you are dealing with the over-the-air channels -- that is, the conventional broadcasters -- essentially you are dealing with services that are required on the cable systems or any other distribution system as a priority carriage, which means it goes to everyone. What we are talking about here is specialty channels and, in particular, new channels that are added to the system.
Senator Maheu: Do you mean the new channels that are coming?
Mr. McCabe: All those good things, yes.
Senator Spivak: You say on the last page of your brief that if we support the legislative change approach, then you need to look at consumer rights in a broad sense. By that do you mean that you should not deprive the broadcasting system of flexibility?
Mr. McCabe: Yes.
Senator Spivak: You do not mean that we do not want to discourage all kinds of innovations through the talent that we have.
Mr. McCabe: I was not touching on that. I was getting at your first point.
Clearly, what we see in this bill and in Parliament generally is some will to ensure that this point is made legislatively -- that is, we cannot abuse consumers. However, we should ensure that we do not create a straitjacket which abuses consumers in a different way by not preventing them from having services that they might otherwise want or that might not come on the market.
Senator Spivak: What is your solution?
Mr. McCabe: We have not put a specific amendment before you, but we have heard about two possible approaches. One specifically provides that this amendment would not apply in the case of French language services. That is a way of proceeding. The other approach -- and I do not know if it is before you formally -- is to provide that the CRTC may have the general power to abrogate this provision if the broader interests of consumers or the broadcasting system are at risk. That is probably what the CRTC is there for. You can say, "Well, they presided over the previous debacle in 1995." However, you must remember that they are an institution coming out of a long period of government policy under several governments which said, "The cable industry is the chosen instrument, and it is a monopoly." It was a monopoly service and it probably still is today. Their heads are still in that space.
First, the policy of the current government which says "We will have competition in distribution" is finally understood at the CRTC. Second, broadly speaking, when that competition comes, it will help ensure that events such as those of the fall of 1995 do not happen again.
Senator Spivak: Are you saying that the way to amend this bill -- if that is the route we take -- should be to say, "Let the CRTC handle it"?
Mr. McCabe: Of the two concerns we put forward, the primary one, in terms of its immediate seriousness to both distributors and consumers, is the concern in French Canada because the economics there are very difficult. I do not think that takes into account the broader concern about whether cable companies, in the consumer interest, will be able to make changes that are desirable. It may well be that a broader amendment makes more sense.
Senator Spivak: Why is that necessary? What power would that give the CRTC which it does not already have?
Mr. McCabe: Laws are sometimes exemplary. What we have here is a perception of serious abuse, and there is a broad sense that it would be a good thing to make this clear.
While I understand the argument that the power rests with the powers there, Parliament seems to want to say -- and I think the public would feel more comforted -- that in order to provide assurance, it will legislate in this area, but it will provide the necessary flexibility. This step might reasonably be taken. As long as you amend the bill, I do not think it will in any way interfere with the CRTC's abilities.
Senator Spivak: There is a logical problem here, from my point of view. If the CRTC had the power, then why would you want someone to legislate by saying, "Do not do this"? If you are supposed to have an independent, arm's-length body with this power and then all of a sudden you come in with this piece of legislation, then tomorrow someone else will say, "Let us do this and this." That negates the whole concept of an independent, arm's-length agency. If the CRTC made a mistake in that case, perhaps there should be some other form of reprimand, either legal or whatever. An avenue through the courts would have been much better.
It is illogical to have someone bring in a law, and then we say, "No, put it back where it should have been in the first place." It is a very inelegant way of making policy.
Mr. McCabe: I think we are in an inelegant situation. We know that law making does not always follow the cleanest patterns.
Senator Spivak: But we want to make good laws. We do not want to make bad laws or compound bad laws.
Mr. McCabe: I thought we were talking about this bill, not another one.
Senator Spivak: We are talking about this bill.
Mr. McCabe: You are right that they do have the power, but it also rests with the legislature to set policy direction. I think this is a sufficiently broad area of policy that you can do this.
What do I really think? I think that, in time, the competitive world of broadcasting that will emerge will take care of this problem. I do think, however, that there seems to be a will among legislators, as we have seen with the progress of the bill so far, to say something to consumers about their concerns. I think it is reasonable to do that, but we must also ensure we do not cause problems in the process.
Senator Spivak: Therefore, if that particular amendment is made legally, you are not concerned that there will be any kind of unintended effect so as to prevent Canadian-content specialty channels from coming forward.
When Mr. Gallaway was here, that did not seem to be part of his thinking at all. He was only thinking of a remedy to this particular situation, which is indeed something that should have been remedied. He was not concerned about the general effect it might have. He did not have the benefit of those 27,000 people at Heritage Canada, I guess, or at least the people you spoke of.
Mr. McCabe: Nor do we.
If you proceed with the amendment to the bill as it has been proposed, then I think, yes, you do risk what you suggest -- that you may limit the access of legitimate Canadian services to the system.
Senator Spivak: Really?
Mr. McCabe: That is the point ourselves and others are putting forward. We suggested that there be either an amendment dealing specifically with French language services or a broader amendment in order to ensure that we do not have that consequence.
Senator MacDonald: On the last page of your brief, in the third last paragraph, you state:
Or perhaps you will decide that legislative change through Bill C-216 is the only way to ensure consumer rights are protected.
I do not quite understand that.
Mr. McCabe: This is an alternative that we put forward. Perhaps you will decide that it is not good enough to look forward and accept informal guarantees or accept that greater competition will solve the problem. You may feel that you need legislation to do this. If you do, we suggest the bill be further amended in the ways we have proposed. I am suggesting that if neither of these other alternatives -- that is, the guarantees you have received so far and the prospect of competition -- solves the problem and you want to proceed with the legislation, it needs some amending.
Senator MacDonald:I took it the wrong way because the only way to ensure consumer rights is to pass Bill C-216 without amendment. That will do it.
Senator Spivak: No, it will not. My consumer rights might be threatened by the fact that I might not have access to new programs. Similarly, the same is true in Quebec. That is the broader part of it.
Mr. McCabe: That is our concern. There is a broader way of looking at that. I do not think a consumer in Quebec will feel that his or her rights are enhanced if we create a regime ensuring that a particular service will never be available because it is economically impossible. I do not think that makes sense. I do not think consumer rights are protected that way with Bill C-216 as it exists.
The Deputy Chairman: Thank you for appearing so late in the day.
We now call on Mr. Rabinovitch and Mr. Durr from Heritage Canada. Please proceed.
Mr. Victor Rabinovitch, Assistant Deputy Minister, Cultural Development and Heritage, Department of Canadian Heritage: Mr. Chairman, my name is Victor Rabinovitch. I am the Assistant Deputy Minister for Cultural Development and Heritage in the Department of Canadian Heritage. To my left is Mr. Larry Durr, Director of Regulatory Policy in the Broadcasting Policy Branch of the Department of Canadian Heritage.
[Translation]
Mr. Chairman, it is a pleasure to be here to respond to the invitation extended to us a few weeks ago to appear before the committee to speak to you briefly about Bill C-216, which deals with negative option billing.
[English]
This evening, if I may, I wish to address some of the concerns that have emerged since this private member's bill was tabled in the House of Commons about a year ago.
The first point I wish to make is that the Minister of Canadian Heritage and of course the Department of Canadian Heritage do not support the practice of negative-option marketing. A number of groups have already highlighted to you why this is an undesirable business practice. Negative-option marketing potentially disguises information on price and on choice. In this way, it can reduce the effectiveness of the buyer-seller relationship. As a general principle, a fair market relationship must operate on the basis of an informed decision by a willing buyer and a reputable seller.
My second observation deals with the overall needs of the Canadian broadcasting system. The Broadcasting Act is primarily or at least initially a cultural document. Some people would say that it is the strongest pillar in Canadian cultural policy. The act states explicitly in subsection 3(k) that:
... broadcasting services in English and in French shall be extended to all Canadians as resources become available;
We are concerned that, as presently drafted, Bill C-216's consumer-related thrust may, in effect, take precedence over the cultural objectives of the Broadcasting Act. For example, we believe that the bill would seem to override the act's ability to take into account specific considerations that underpin the different markets in Canada. In addition, the bill may not take into account the economic challenges of French language programming in an overwhelmingly English language television market.
It would seem, Mr. Chairman, that the challenge for members of this committee is to judge if Bill C-216 properly balances consumer objectives with cultural objectives. If the members of your committee conclude that the bill is not adequately balanced, then you may well wish to consider how best to establish such a balance in the bill.
In Canada, as you know, Mr. Chairman, Parliament and ministers have relied on the CRTC to apply a balance in the actual operation of the broadcasting system. This takes into account the competing objectives set out in section 3 of the Broadcasting Act. To do this, the CRTC has been expected to use its licensing powers and the public hearing process in order to collect information and to impose licensing requirements, as well as to develop regulatory requirements.
A process of judgment is involved in this which requires both flexibility and regulatory firmness. Section 3 of the Broadcasting Act was carefully crafted by Parliament to ensure that the various elements in it would be balanced through practical, pragmatic decisions.
[Translation]
The immediate consequences the bill would have on the French language market have raised a great deal of concern among those who direct French-language specialty services. It does not fall to me to explain on their behalf the effects the bill might have on those markets. You have already heard many people who have provided information. The concerns expressed by the coalition of French-language specialty services seem noteworthy. We hope that the members of the committee will ensure that the implementation of the objectives underlying the Broadcasting Act, which recognizes explicitly that there are different operating conditions for French-language and English-language markets, will not be put on the back burner by the adoption of Bill C-216.
[English]
Mr. Chairman, this is a critical transition period for the broadcasting sector. The sector faces the simultaneous challenges of technology convergence, market globalization and industry restructuring. From a public administration point of view, a prudent course of action would maintain flexibility and latitude in the CRTC's decision-making process. I believe that you, sir, and the members of your committee will want to decide if Bill C-216 will, in fact, permit this flexibility to continue.
In concluding, Mr. Chairman, I want to thank you and members of your committee for providing us with the opportunity to be here this evening. We are available to answer any questions.
Senator Maheu: I would like to thank Mr. Rabinovitch for stating that the Broadcasting Act is a cultural document and a pillar. I do not think I have heard those words from anyone else today. That is something all of us should remember. In spite of what we are facing with the political impact and the consumer interest that this bill has awakened, we must remember the fundamental reasons for this act being written in the first place.
Should we come up with an amendment to make the bill just a little more palatable? I assume that in proposing an amendment we would be asking the CRTC to designate some sort of special regulations or services that they are not doing right now. The reason I say they are not doing it right now is, rightly or wrongly, I was given the impression earlier today that there is a certain amount of hesitancy to the point where they could or, in my opinion, should force an issue under section 3 or section 5. That was not being done because they were being very careful with regard to market values and other matters that were being taken into consideration.
Many of us are looking forward to someone who will put their foot down and say: "We are Canadian. That is not the way we do it. Let us do it the right way." I have not seen that. I would like your thoughts or comments on something of that nature.
I understand the CRTC thinks that I am wrong, that I was given the wrong impression or that I came away with the wrong impression earlier today. I still feel the same in spite of their objections.
Mr. Rabinovitch: Mr. Chairman, I hope I am understanding the question fully because I was not present when the CRTC appeared earlier today.
Section 3 of the Broadcasting Act contains a number of policy objectives that are set out as a declaration. Following this number of broad policy objectives, there comes subsection 3(2), which declares specifically that the broadcasting system is a single system and that the objectives set out in section 3 should be best achieved through the regulation and supervision of a single, independent public authority. That public authority is the CRTC.
In looking at the balancing act, which is a pragmatic, practical thing, in terms of applying a broadcasting system, Parliament has created the CRTC and turns to the CRTC to find the practical balance between a multiplicity of objectives. Bill C-216 would set out an additional objective, a consumer-protection objective.
In considering Bill C-216, you may wish to come to some conclusion as to how it should fit in best with all the other objectives set out in the act. Do you want it to take priority, implied or otherwise, over all the other objectives? Do you want it to be one of a set of objectives which the CRTC must then judge and balance? This is something on which only senators in their wisdom can come to a conclusion.
In our remarks, we are simply trying to bring out for your consideration some of the thoughts on how Bill C-216 could fit into a range of objectives that are there within the act. I hope I am coming to the answer you are looking for, senators.
Senator Spivak: I do not know how to phrase this properly, but if you had known in advance about this abuse by a particular undertaking, would you have wanted to remedy it? You talk about consumer protection. Consumer protection is in another section of our law.
The CRTC, as I mentioned earlier, already has powers as an independent, arm's-length commission. Now you have a law which is like a bull in a china shop. Then you are telling us to balance it. Is the best way to balance it to say that it should never have been born at all? The bill could die. That has happened before in the Senate. Many better bills have died in the Senate, day care being one of them.
Senator Gigantès: That was because you called an election.
Senator Spivak: It was not me. I did not call it.
How can you balance something which is intruding, in a sense, into other areas of law? Are there other areas of law which could handle this, such as within the consumer protection range? Surely there must be something which deals with the inequity or the disguise of price and the relationship between the consumer and the seller or the buyer and the seller?
You gave a very nice philosophical answer, but how specifically can you balance this? Is it better not to balance it than simply abandon it?
Mr. Rabinovitch: Mr. Chairman, the bill, of course, is a private member's bill. As such, it carries with it the moral authority provided by the person who has proposed it and the authority which comes from having passed through three readings in the House of Commons.
In bringing information to you, I am doing so in order to help achieve what would appear to be the important consumer objectives of the bill and, at the same time, to do so within the context of the Broadcasting Act and the way the Broadcasting Act is constructed.
If it is the conclusion of senators that the bill is fine as it stands, then the bill is fine. If it is the conclusion of senators that the bill has to be worked into the act and made part of the act, then one way of doing that would be to find such wording as to make certain that the objectives set out in the bill explicitly contribute to achieving the objectives of section 3 of the act.
Senator Gigantès: Do you refer only to section 3 or to all of the act?
Mr. Rabinovitch: It depends on the advice you get from legal draftspeople. If this is worked into section 3 of the act, normally it would be made subject to or clearly and explicitly contributing to the objectives of that subsection. As I understand, that would be the normal way of drafting it. I am not a drafting expert.
The Deputy Chairman: That is not there.
Mr. Rabinovitch: No, it is not there.
Senator Spivak: You could make it be there. That amendment does not contradict the principle.
The Deputy Chairman: It is an amendment that this group could move.
Mr. Rabinovitch: Please do not mistake my words as being a proposed amendment. I am only a philosopher, senator.
Senator Spivak: That is fine. People do not want to see abuses of the seller-buyer relationship. Have you looked at what other areas of law might be possible as a remedy? Is there no other area of law? Why do you need to make a specific bill, even though it is a private member's bill, if this is covered elsewhere?
Mr. Rabinovitch: We did ask ourselves similar questions as the bill was wending its way through the House of Commons. Pieces of provincial legislation deal with the area of consumer protection, several of which specifically refer to consumer protection for purchases made under the provisions or services provided by the Broadcasting Act.
You get into very difficult questions of federal and provincial jurisdiction. One subject that did come up in discussions was whether provincial consumer law should prevail in an area which is, in fact, under federal jurisdiction? It is a very complex question. In looking at other pieces of legislation, in the end, as officials, we were guided by the fact that this is a private member's bill. It really was not for us or for someone else to come in and say that this bill is inappropriate or this is not the right type of bill. We have tried to simply consider it as the bill as adopted by the House of Commons. That being so, I hope the type of advice that I have provided here is helpful.
Senator MacDonald: I do not know at whom Mr. Gallaway would be more angry, this committee or the executive branch of the government of which he is a member.
Senator Spivak: So what?
Senator MacDonald: Even though it was a private member's bill supported by 10 members of the cabinet on second reading, they were absent and they withdrew their support of the bill. Today we have heard from a number of witnesses referring to the problems of the French language services. I therefore cannot understand why it is you say that this was a private member's bill and we therefore did not probably pay as much attention to it or consider it.
Senator Gigantès: That is not what he said. He said we did not touch it because it was a private member's bill. That is what I think he meant.
Senator MacDonald: That is fine.
Mr. Rabinovitch: Let me be clear. We have followed the bill since first reading. We have certainly talked about it and responded to questions when people have asked us about it, but it is a private member's bill and we have kept our arm's-length relationship with it.
Senator MacDonald: Even though you knew, as an assistant deputy minister of the Department of Heritage, that, without your guidance, without your suggestions, and without some policy contribution on the part of your department, this bill could have passed with the problems that have been described to us today. I do not understand what appears to be almost an indifference because it is a private member's bill. I do not mean to be offensive. I simply do not understand why, since last September, nothing has been done.
Mr. Rabinovitch: Mr. Chairman, the senator is putting his finger on an interesting problem. The bill clearly deals with one matter of consumer protection where there have been very strong feelings. As a cable subscriber, I personally was quite upset when I received letters that were virtually incomprehensible from my service supplier that September when the new services were brought in.
At the same time, the complex provision of service to other language communities, not only the French language community but minority language communities around the country, balanced with the principle that is involved in Bill C-216, is not a simple matter. Perhaps the ramifications were not sufficiently clear to many people initially.
At this point, it is really only parliamentarians who can best judge how to handle the bill. Even now as I come before you to bring information to your attention, it is not to be able to say to you "Do this" or "I suggest you do that". I am not in a position to do that.
The Deputy Chairman: It begs the other question: Where is the minister? Where is the parliamentary secretary so the political question can be asked? I am a little disappointed they are not here, but they have not been here since last September.
Senator Gigantès: He is not his master's keeper.
The Deputy Chairman: I spent 24 years in the other place and I know how it works.
Senator De Bané: Mr. Rabinovitch, I have listened to you carefully. While you took great care in not telling us how to vote on this bill, you have raised the important issues that this bill will create if it is passed.
The chairman of the CRTC also said that this bill, while intending to deal with one issue, will create difficulties in a wide range of other areas that are not now problematic. She reminded us that this bill wants to deal with a certain issue, the question of negative-option marketing. I would remind members of the committee that the industry took immediate action to rectify the problem. It did so in response to consumer demands, not because it was compelled by legislation. She said the problem has been dealt with. The cable industry has already committed itself not to use negative-option marketing again. As well, we will have a new alternative technology, so instead of being driven by the supplier, the consumer will decide.
Is it unfair to say that in view of all the different issues you have emphasized and what the chairperson of the CRTC told us, this bill is an ill-advised bill? I know you are a senior official, but both the department and the regulatory tribunal seemed to say that the bill would create a lot of problems if it were passed.
Mr. Rabinovitch: Mr. Chairman, I had the pleasure of serving under the Honourable Senator De Bané when he was minister at some point. He would know that, as an official, I would never judge the elected representatives of the people to adopt things which are ill-advised.
Clearly much information has been brought forward to this committee. The people bringing that information forward are expressing sympathy with the objectives of the bill while expressing sensitivity to unintended consequences that are apparently likely to flow from the bill. With that additional information, it might be possible to find some way of incorporating the broad objective of the bill but not making that superior to or unique to the objectives of the Broadcasting Act. That might be the Solomon-like decision committee members wish to come to, or they might find some other way of cutting the Gordian knot and that way cross the multiplicities of culture as well.
Senator De Bané: Mr. Chairman, if I may, just to take advantage of the presence of senior officials of the department, we have here many people from Montreal.
Mr. Rabinovitch, being a Quebecer and living in Ottawa, as this is the location of the Parliament of Canada, I resent the lack of sensitivity of the cable distributor in this town, which recently found a way to add other channels. We now have channels from Hamilton and Toronto, and our cable distributor is adding more. However, our cable distributor has never been able to give us Montreal stations, either TVA or Radio-Canada. We all know that the two main French stations of this country are in Montreal, but we cannot get them because we are in Ottawa. We were told, "If you want Montreal, you move and live on the Hull side of the river." I do not know if it is your problem or the CRTC's problem. I have been living in this city for almost 30 years, and this lack of sensitivity -- I say that in front of the people of Montreal -- is unacceptable.
This is the capital of the country. The two main French TV stations of this country are in Montreal, and those are the stations we need.
[Translation]
Senator Poulin: After the important message Senator De Bané has just given us, I feel that my comment will be rather trivial. Mr. Rabinovitch, I understand the situation you find yourself in. I especially appreciate the respect you have for the responsibilities we exercise as members of the Standing Committee on Transport and Communications. Bill C-216 was referred to committee in the beginning of December. Mr. Gallaway was our first witness and he presented the objective of the bill very clearly, which was the protection of the consumer. But to everyone's surprise, after hearing several witnesses we discovered that broadcasters, cable distributors and the Association des consommateurs du Québec did not have the opportunity of making representations on Bill C-216 to the House of Commons committee, and that responsibility then fell to the Senate. This bill attracted a great deal of positive media reaction in that its objective was to protect the consumer; that is a motherhood virtue we all subscribe to. But as the hearings unfold, we realize that the mechanism to be used to reach that objective, which we all support, presents certain dangers.
Are you telling us that the basic document that can really protect our history, and the country's broadcasting system, which is made up of the private, complementary system, the public, anglophone, francophone, general channels, specialty channels, is really the Broadcasting Act? That is the fundamental document? Are you telling us that if we refer to that basic document to amend Bill C-216 we will respect everything that has been done in the broadcasting field over the past 50 years in Canada?
Mr. Rabinovitch: This is a complex question. We think -- and I am using the plural because I represent the Crown -- we think that if the objectives of Bill C-216 fall under section 3 of the Act, they will be a part of section 3; in that case, the objectives will become a part of the multiple objectives of the Act and it will be the responsibility of the CRTC to interpret and balance all these objectives at the same time. That is our best interpretation.
[English]
Senator Gigantès: Mr. Rabinovitch, I am very impressed by you. I think we should send you to try to bring together Mr. Netanyahu and Mr. Arafat and even the most orthodox members of the Israeli cabinet. You are really very impressive. Thank you.
Senator Poulin: What do you think he is trying to do here?
Mr. Rabinovitch: Mr. Chairman, Senator MacDonald said that sometimes it is necessary to die before someone praises you. I sincerely hope this is not an indication of my future.
Senator Maheu: Mr. Rabinovitch, would you repeat the three provinces that have a consumer protection act or a broadcast act?
Senator Gigantès: Consumer protection.
Mr. Rabinovitch: Mr. Durr and I are recalling from memory. Quebec has a consumer protection act that specifically mentions negative-option marketing in general. British Columbia has specific legislation. We believe Nova Scotia has that as well. However, when we examined whether the provisions of the Broadcasting Act would take precedence over the provincial consumer protection legislation, the overall conclusion was that the Broadcasting Act, because it is a federal jurisdiction, would take precedence. Consequently, while the provincial legislation exists, it probably is not applicable if there is something federal there.
Senator Maheu: Even though Quebec has that consumer protection, negative option works there.
Mr. Rabinovitch: Yes, through administrative interpretation.
Senator Maheu: It really does not forbid negative option.
The Deputy Chairman: Thank you both for attending and helping us round out a lengthy five-and-one-half hour hearing.
Mr. Rabinovitch: Mr. Chairman, while the comments Senator De Bané made at the end were not directly related to the bill, I will undertake personally to pass those on to the president of the CRTC and also to our minister. They were important comments.
Senator De Bané: I thank you.
The Deputy Chairman: We will now proceed to our clause-by-clause study. I will call the bill and put the question. There is only one clause. If there is an amendment, the amendment is made to this one clause. Shall the bill be reported without amendment?
Some Hon. Senators: No.
The Deputy Chairman: The floor is now open for amendments.
Senator MacDonald: Was that "no" unanimous?
The Deputy Chairman: Yes.
[Translation]
Senator Losier-Cool: Thank you, Mr. Chairman. I would like to move the following amendment:
That Bill C-216, in clause 1, be amended by replacing lines 16 to 18 with the following:
Rate is charged,
(b) no distinct separate charge is levied for that service, or
(c) it is conducive to the achievement of the objectives of this Act.
I have the text in English and in French.
Senator Gigantès: Could you read it in English for these good people?
[English]
I have been asked to repeat it in English. I have a copy for everyone. I move:
That Bill C-216 in clause 1 be amended by replacing lines 16 to 18 on page 1 with the following:
Rate is charged,
(b) no distinct separate charge is levied for that service, or
(c) it is conducive to the achievement of the objectives of this Act.
Senator Gigantès: Meaning, of course, the Broadcasting Act.
Senator Losier-Cool: Correct.
The Deputy Chairman: The question is open to debate. Is there any debate?
Senator MacDonald: Is it implicit that the "conducive to the achievement of the objectives of this act" is to be determined by the CRTC?
Senator Losier-Cool: Yes. That is the Broadcasting Act.
Senator Gigantès: The CRTC is the keeper of the Broadcasting Act.
Senator MacDonald: The interpreter.
The Deputy Chairman: All those in favour, please raise your hand. Those opposed, please raise your hand. I declare the motion carried.
Shall I report the bill as amended?
Some Hon. Senators: Agreed.
The Deputy Chairman: Ladies and gentlemen, thank you very much. It has been a long day. The meeting is now adjourned.
The committee adjourned.