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Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 9 - Evidence, May 29, 2001

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OTTAWA, Tuesday, May 29, 2001

The Standing Senate Committee on Transport and Communications, to which was referred Bill S-7, to amend the Broadcasting Act, met this day at 9:32 a.m. to give consideration to the bill.

Senator J. Michael Forrestall (Deputy Chairman) in the Chair.

[English]

The Deputy Chairman: We resume, this morning, hearings on Bill S-7, an act to amend the Broadcasting Act.

Welcome witnesses. I would indicate to you that the chair, Senator Bacon, is busy otherwise with Canada-France responsibilities. She regrets not being here with us this morning.

Nevertheless, I would welcome, on behalf of the committee, Mr. Tremblay, Vice-president, Strategy and Business Development, the Canadian Broadcasting Corporation, Mr. Guiton, Senior Director, Regulatory Affairs and Strategic Planning, and Edith Cody-Rice, Senior Legal Counsel. We must always have lawyers. That is a good thing. Someone has to know what we are doing.

I would invite you to proceed with your opening comments.

Mr. Michel Tremblay, Vice-President, Strategy and Business Development, Canadian Broadcasting Corporation: Thank you very much for the invitation to appear before this committee to speak on the CBC and about our views with regard to Bill S-7, an act to amend the Broadcasting Act.

With me today is Edith Cody-Rice who is not only our senior legal counsel but also a lead broadcasting expert within the corporation. This is Mr. Stephen Guiton, our senior director of planning and regulatory affairs, who has a long career on the telecommunications side. They will be quite helpful in our deliberations.

[Translation]

As you know, the CBC is a crown corporation that reports to Parliament through the Minister of Canadian Heritage. It is one of the most "arm's-length" government agencies, due to the need to protect its journalistic and programming independence. The CBC's governance and mandate are defined in the 1991 Broadcasting Act, section 3(1):

[English]

Section 3(1) requires that national public broadcasters provide radio and television services in English and French, incorporating a wide range of programming that informs, enlightens and entertains, that is predominantly and distinctly Canadian and that the CBC be responsive to the evolving demands of the public.

It is because of that commitment to serve Canadians that we appreciate this opportunity to express our views about Bill S-7 this morning. The bill could have a serious economic impact on the CBC.

The first slide is an outline of our presentation. First, in section 1, we will refer to our experience with public participation; second, we will deal with our understanding of the telecommunications experience and how it relates to the broadcast sector; third, we will deal with the possible impacts of Bill S-7 on the CBC. We will then deal with the possible options for funding and crystallize our position at the end of the presentation.

Slide one deals with the CBC and the public participation.

[Translation]

We firmly believe that Canadians should be heard before the CRTC. More than 4,000 interventions were received on CBC issues before the CRTC during the last licence renewal held in 1999. It is worth noting that a large number of these were filed using the Internet and that 600 people took the time to appear at the CRTC's public forums held in 11 cities across Canada.

Also 65 individuals and interest groups appeared as well before the CRTC during the public hearing held in Hull. CBC listens carefully to those views, and so does the CRTC.

[English]

Based on our experience, the absence of cost awards has not deterred Canadians from speaking out on CBC issues. If the committee concludes the bill is necessary, we believe one cannot address the principle of awarding costs without addressing the economic impact of that decision and the issue of who will pay those costs.

As are you well aware, the CRTC already has the ability to award costs to interveners at proceedings under the Telecommunications Act. We believe the telecommunications process is different from that of broadcasting and cannot accurately predict what the cost of awards under broadcasting would be. Telecom proceedings are much more complex in nature, with a cross-examination stage that requires significant expertise. Broadcasting proceedings are much more frequent with the potential for more interventions.

[Translation]

Since 1996, individual awards have ranged from $172 to $300,000. Total awards have averaged more than $500,000 a year. There is no ceiling on possible awards. Therefore we are talking about substantial amounts of money, in the context of the telecommunications proceedings where public hearings are less frequent than in the broadcasting sector.

[English]

Moving on, the next slide concerns the potential impact on the CBC.

[Translation]

We believe the telecommunications model for awarding costs to interveners could impact the high quality, distinctively Canadian programming we provide.

First, the CBC gets more public submissions before the CRTC than any other broadcaster.

Second, neither the CBC, nor other broadcasters have any control over where public hearings are held, how long they last and how many interveners will be asked to appear before the CRTC. For instance, when our licences were renewed in 1999, the CRTC held public consultations all across the country, before the public hearings in Ottawa, which lasted three weeks. We have no control over those decisions, and it must be noted that such extended hearings are, of course, costly, and that those costs would be transferred to the broadcaster in question. Awards against the CBC would come at the expense of CBC programming which benefits all Canadians.

I would add that this is currently our biggest challenge, for example, trying to find as many resources as possible to invest in programming. We are making every effort o try and free any dollar we can find on the operations side to transfer it to programming.

[English]

I would now like to deal with the next slide concerning a tax on CBC. The CBC receives an annual appropriation from Parliament. The CBC's operating funding is now stable, after significant reduction during the 1990s. Our financial flexibility remains very limited. The recent decision of government to reinvest in the CBC was most welcome. All of this money will be spent on programming because there is a clear need to rebuild the CBC's capacity to do more high quality Canadian programming. For example, the history project reached 15 million Canadians in its first round of broadcasting.

Without new funds to cover the costs of awards, additional expense will only diminish our ability to reinvest in programming.

I would like now to move on to the next slide, section 5, options for funding.

[Translation]

As you know, the Canadian Cable Television Association is proposing that a portion of the licence fees paid by broadcasters be used to create a fund for CRTC cost awards.

The CRTC collected $103 million in broadcasting licence fees last year. About $70 million of that went into the Consolidated Revenue Fund. Whether the money to pay for public interventions comes from licence fees or the Consolidated Revenue Fund does not make any difference. There are therefore only two alternatives: either the broadcasters pay, or the payments come from the Consolidated Revenue Fund.

[English]

In conclusion, I would like to reiterate the elements of the position of the CBC.

There is no doubt that we support the effort to enhance public participation. That is what the bill is about. If the committee determines that Bill S-7 is necessary, the issue of who would pay the cost of awards must be resolved. In its current form, Bill S-7 could make broadcasters liable for costs. That could hinder the CBC's ability to deliver programming to Canadians. If legislation could ensure payments to interveners would come from funds or consolidated revenue, CBC could support the awarding of costs. The CBC recognizes the Senate cannot propose this specific measure. The CBC has no guarantee that the House of Commons would amend Bill S-7 to that effect. Therefore, the CBC could only support Bill S-7 if it did not apply to national public broadcasters as it would take resources away from Canadian programming. In essence, we would be taking money away from Canadians to give to other Canadians: a straight transfer of funds.

My colleagues and I welcome your questions.

Senator Finestone: I am a great supporter of the CBC and I am delighted that you received new money. It is not enough and not soon enough, but certainly enough to start to present Canadians with a history and a picture of themselves.

Notwithstanding that, as I understand, you support efforts to enhance public participation. You recognize that it is important that Canadians be participants, not only with the legislators and the executive of the country and the administrators of CBC, but also to be heard as the voices of people who pay the fees for subscriptions to cable so they can hear you, or for those who do not have cable, at least hear you through the spectrum that you are using. Is that right?

Mr. Tremblay: That is correct.

Senator Finestone: You still use that spectrum for your private sector services such as Newsworld and RDI. Am I right?

Mr. Tremblay: We use satellite transmission - satellite to cable links. We are not using over the air spectrum for these properties.

Senator Finestone: Nonetheless, you are using Canadian public property like the private sector broadcasters, are you not? You have revenues from Newsworld?

Mr. Tremblay: Yes, we do.

Senator Finestone: Are there revenues from Galaxy?

Mr. Tremblay: Yes.

Senator Finestone: Are there are revenues from RDI?

Mr. Tremblay: Of course.

Senator Finestone: From those revenues, do you have a profit?

Mr. Tremblay: We are not allowed to profit on these. I would like to stress the significant difference between us and the private sector. First, the CBC does not pay a licence fee on its core property. Second, whatever money flows to RDI or Newsworld is totally reinvested in programming. There is no profit-taking. We have a minimum need to break even through the money we get from advertising or subscriber fees and if there is a dollar surplus it is ploughed back immediately into programming. There is no notion of profit. Everything returns to Canadians.

Senator Finestone: That being the case, it is still important to be able to hear Canadians. Is that right?

Mr. Tremblay: Absolutely. We are totally supportive of that.

Senator Finestone: The CRTC ability to tax on presentations, if, of those people who have presented, the presentation has added to understanding and enlightened the CRTC in a broader spectrum of understanding, is still a vital concern. Why should you be in any position different from the other players on our television set?

Mr. Tremblay: First, the private sector can deliver valuable service to Canadians. Ultimately the benefit of its operations flows back to the shareholders. Whenever we generate any profit or surplus it is ploughed back immediately into programming for the benefit of Canadians. The justification for not paying a license fee is that we are an instrument of Canadian policy and all that we do is returned in benefits, value added, to Canadians.

Senator Finestone: You are aware of the fact that CRTC has the right to determine who shall pay licence fees, who shall pay fees, who shall pay costs and who shall be taxed. The CRTC also has the right to exempt.

Mr. Tremblay: Yes. But the first step must be amendment to the act so that it can be empowered to do this on the broadcasting side.

Senator Finestone: I do not know that there must be an amendment to the act. There must be an understanding, on the part of CRTC, that your arguments are worthy of inclusion. Under its rules of procedure, it can certainly exempt you or give you partial clearance. You are a partner with private companies in a number of new specialty channels which will start in the near future, are you not?

Mr. Tremblay: Yes, we are. I would like to add to that. Given our tight financial situation, we are choosing to expand our service along the lines of our core competencies - news services, rural Canadian services - in partnership with the private sector. We cannot afford to do it on our own and this is a way of mitigating our risk. The same value that we bring to Newsworld and RDI will be present in our new specialty services. These are intrinsic elements of our agreement with the private sector. We do not wish to compromise on how we will service Canadians.

Senator Finestone: I do not wish you to compromise for one second. I would like you to enlarge and increase your presentations. They are valuable and important. Notwithstanding that, it is very important to ensure that the few non-profit organizations which can present a coherent, carefully documented and well-researched presentation through their staff and their lawyers can come before the CRTC, before a $1.4-billion corporation like yours. Your company has profits in certain parts of your undertaking and you are able to withstand the kind of awards that are made.

According to my awards information, your hearings are held every five years, at which point you have cost awards of no more than $125,000 per year at the very outside. Most of the awards, as you know, are around $5,000.

Mr. Tremblay: First, I would stress that, although we face a far greater volume of interventions in renewal years - in fact, all our networks were renewed in 1999 - we have a substantial amount of business before the CRTC every year. We have dozens of applications before the commission at any one time. There are ongoing processes. We have been involved in two or three hearings this year alone. There is no real down time. There are peaks in the years of renewal, but there is considerable volume other than that.

Senator Finestone: I understand all that. In the meantime, what type of cost awards do you expect that will impact you so negatively? You have considered this at the CBC, I am sure, Mr. Tremblay. You are well prepared for this hearing. Having considered at all the facts, what do you expect as the average cost per year based on history?

Mr. Tremblay: The honest response is that no one can tell.

Senator Finestone: You can tell from history, Mr. Tremblay.

Mr. Tremblay: Considering the numbers now, we could be facing major interventions from groups of public interests which might decide that they are willing to undertake specific national surveys to deal with the CBC. That could easily run into hundreds of thousands of dollars in terms of costs.

Senator Finestone: Would that be every five years? Every year?

Mr. Tremblay: Who knows with what frequency they will come forward to the CRTC. All I am saying is that those key groups, the ones that are most vocal and articulate in their views on the CBC, will obviously be seeking sophisticated tools to make their comments. There is a possibility that they would undertake to do such research. It would be very useful to the public process. There is no doubt about that.

Should we be the ones who ultimately will pay this amount? At the end of the day, it is very simple. A tax on the CBC is a tax on government. What we do not get here, we will get somewhere else. Short of additional funds from government, programming will suffer.

To go back to your key question, no, we do not have a clear sense of how much this will cost, given the historical volume of interventions we receive. We are delighted that we generate so much interest from Canadians, nevertheless, the price tag could be significant.

Senator Finestone: You know the history and the volume over the past five years. That period has seen major changes and upheaval in the whole management by the CRTC. Incredible changes are taking place with the Internet and other dynamic changes on our screens. Those major changes are already undertaken.

I understand your claim that you are a public broadcaster. So is TV Ontario. So is Radio-Québec. So are some of the municipalities. Are you asking us to exempt the public voice from a very important process that governs the television programming that comes into our living rooms? I do not think that is particularly fair. If an understanding is reached on exemption, the details can be negotiated with the CRTC and included in the rules of procedure.

The purpose of the bill is to synchronize the telecommunication process with that of the broadcasting process. Your recommendation on how to finance this synchronization is important. The CRTC can examine that recommendation and give guidance. The CRTC can also give guidance to the Minister of Heritage who may want to look at the issue in another light when the bill goes through. The principle and the philosophy are being presented here, Mr. Tremblay, and I understand that there is strong support for the principle and the philosophy.

We hear your concerns and we understand them. The CRTC also must listen to those concerns through its internal processes and rules of procedure. Is that an unreasonable suggestion?

Mr. Tremblay: First, I would respond that it is certainly hard to defend against the arguments favouring fairness between proceedings and under both acts. Second, whether public broadcasters in general should be exempt is an open question. At the end of the day, whatever surplus money they generate is totally dedicated toward providing better service. I suggest that fundamental question remains to be examined, should the committee decide to proceed with the bill.

Ms Edith Cody-Rice, Senior Legal Counsel, Canadian Broadcasting Corporation: With respect to the exempting of public broadcasters, unless the legislatures of Canada give a clear indication that they are exempting public broadcasters on public policy grounds, whether CBC or all public broadcasters, the CRTC would have difficulty making the differentiation between private and public.

Senator Finestone: Do you not think it knows what the difference is?

Ms Cody-Rice: I think it knows what the difference is, but, without direction from the legislatures, it would be very difficult to implement. That is not something appropriate for rules and procedures. It is a very broad exemption that one would be requesting.

With respect to the manner of funding costs, it would require an amendment to the legislation in order to do anything other than tax the broadcasters if this amendment alone goes through.

Senator Spivak: There are two conflicting or competing principles here. One is the ability of intervenors to intervene and the other is the financial stability of the CBC. To stray a bit from the point, I understand the situation of the CBC. It costs a great deal of money to produce the kinds of productions that you want to produce. Your competitors though, can buy American productions at a much lower cost.

You say this will affect your bottom line, but what do you predict, generally, for the future? Now that you have stability of funding, what do you foresee in the next five years? You did not answer Senator Finestone's question on the cost of interventions, but how are you doing in the competitive arena, in terms of maintaining the CBC? I am sure all members agree that the last thing we would want to do is damage the CBC, one of the bulwarks of Canadian nationalism and cultural life.

Mr. Tremblay: Thank you for recognizing we are struggling with that reality. We are examining two goods on each side of the balance and trying to deal with this issue.

With respect to our own competitive position vis-à-vis other players in the system, clearly, the CBC is emerging as the player with total dedication to bringing high quality Canadian programming to the screen. Whatever happens in the world of convergence, we will still be there in five years doing the same thing and trying to do it better.

A key element in our strategy is to attempt to generate as many resources as possible that can be ploughed back into programming. We are examining the possibility of selling our transmitters across the country because the CBC is not in the core business of operating transmitters. We are hoping to generate a positive cash flow that could help the CBC to reinvest in programming.

We have taken a similar approach with respect to our real estate in this country by tightly operating that to minimize costs and enable reinvestment of money in programming. We are making an effort.

At the end the day, with a series like the history project, which costs in the range of $25 million to $27 million, very few players in the system would take that risk. It is incumbent upon public broadcasters to take those risks. However, to take risks with projects of such magnitude, we need resources. There is no limit to how far we are willing to go to improve the service, provided we have the resources.

Senator Spivak: In order to achieve the goals you have set for yourselves and with which public policy makers agree, where are you in terms of having enough resources to do that? I am trying to assess what this really means for you.

Mr. Tremblay: If you want a very pointed answer, $300 million to $400 million was taken from the CBC appropriation during the 1990s. We are gradually making our way back, but we are not there. The programming has suffered and our president has not been shy about saying publicly that the programming has suffered. There is no doubt that we have to introduce more repeats in parts of our programming. In terms of budgets, the size of the creative team we can assign to projects has been reduced. Programming has suffered. We are in a period where we are rebuilding. The $60 million we just obtained from government is fantastic, but more has to be done.

Senator Spivak: What would the CBC revenue versus its global budget be? How would the CBC global budget, revenue and profit - although it is not really profit in CBC's case - compare to those of CTV? You are a national broadcaster, as are CTV and Global.

Mr. Tremblay: The slight difference is that we are the only national broadcaster providing service in two languages and service to the North.

Senator Spivak: That is taken for granted. I am not asking for a profit picture. I am asking for the gross revenues.

Mr. Tremblay: I am afraid I cannot answer that because there have been so many changes in terms of ownership with continuing acquisition of new properties. It is hard to pin down. We still remain a major force in terms of programming budget. We certainly have programming budgets which are greater than those of Global - certainly in terms of how much we spend on Canadian programming. We would be pleased to provide you with the comparison as a follow-up to the meeting.

Senator Spivak: Yes, thank you.

Are you nervous about the ability of CRTC to exempt you? Is this a shaky proposition? Do you think it is a viable proposition?

Mr. Tremblay: The direct answer is yes, we are. We are adverse to risk in terms of anything that might have an impact on our expenditure side and take money away from programming. We are uncomfortable with that. It is hard for us to rely on a possible amendment in the House or a possible exemption from the CRTC. That may or may not happen. Our view is that the Senate committee certainly has the power to amend the amendment itself with a view to proposing an exemption for public broadcasters.

Senator Spivak: It could be just the CBC.

Mr. Tremblay: We are in your hands.

Senator Callbeck: The first statement you made is that the CBC strongly believes Canadians should have an opportunity to be heard before the CRTC. I take it you would agree with this legislation provided that the money came from the Consolidated Revenue Fund or from another pot of money?

Mr. Tremblay: This is absolutely correct.

Senator Callbeck: Your revenues come from three sources: Parliament, advertising, program sales and other revenue. Do you anticipate your advertising and program sales will grow tremendously in the next few years?

Mr. Tremblay: No, I do not - quite the contrary - for two key reasons. First, market forces, the impact of fragmentation and the onslaught of new services will put ongoing pressure on our revenue. This fall, dozens of new services will become available through cable. Second, we have undertaken to selectively decommercialize our programming to offer a more distinct service. English television has taken immediate steps by decommercializing the first half hour of Canada Now and the National, by offering an advertising-free environment for children in the morning and by providing Opening Night without commercials. We recognize the value of selectively using advertising. Nevertheless, the combined impact of those decisions and the reduction of the pool of dollars available to us means it will not grow. It will go down.

Senator Callbeck: You are saying you will have less advertising time?

Mr. Tremblay: Yes, absolutely, our advertising revenues will be eroded.

Senator Callbeck: Will the amount of money that you charge for a spot come down?

Mr. Tremblay: I do not know if the equation will be the spot price will go down or whatever volume we sell will go down. However, our projection is that our key television networks will take a hit year after year because of fragmentation. Even if we do not make any decision whatsoever in terms of decommercializing the schedule, we will definitely be in a loss position three years down the road.

Senator Callbeck: What about the other revenue that you have here, your specialty services, Newsworld and Galaxy? What about the revenue from digital television?

Mr. Tremblay: These revenues are fundamental and essential to ensuring the operation of the services. Not a penny is left in surplus. I would like to underline that when we went before the CRTC in 1999, we made extensive commitments to improving the level of service to Canadians by setting up regional news bases and increasing the number of satellite mobiles across the country to provide better service. We were granted a rate increase to enable us to fund these improvements. If we meet all of these new requirements and commitments with the money we are given, it will be a break-even situation. Again, if there is any surplus, it is ploughed back into improving service. There is no loose money there.

Senator Callbeck: Do you anticipate your revenue will grow 10 per cent, 20 per cent or how much in the next five years?

Mr. Tremblay: Is that in advertising?

Senator Callbeck: No, in revenue from the other speciality services that you are getting into.

Mr. Tremblay: The same approach would apply. We are delighted that, in this past year, we have been granted three new licenses by the CRTC, télévision des arts and the Canadian Documentary Channel, in partnership with other groups such as CORUS Entertainment and the National Film Board, NFB, and Land and Sea, which is targeted at rural Canada. These services are very low budget. At best, I think that we will be hard pressed to break even in the foreseeable future, even with subscriber fees and advertising.

Keep in mind the impact of fragmentation on all players. We did not get into these services for the purposes of generating revenue. We did so because we believe in finding new ways of extending our service and serving Canadians in a more focused way.

Senator Callbeck: However, your revenues will increase. It is just that your expenses will increase to offset them. Is that right?

Mr. Tremblay: To which revenue do you refer?

Senator Callbeck: The revenue from these specialty services - you will have tremendous revenue growth. Are you telling me that your expenses will go up so one will balance the other?

Mr. Tremblay: There was an article just this morning by Ms Yale who was before this committee not so long ago when she was predicting that there would be difficulties for all the new digital specialty services. I think it is a very risky proposal for all of them. I do not think anyone would anticipate that there would be fantastic growth. Yes, there are opportunities to expand the range of services to Canadians. Ultimately, they will be operated in a profitable way in the private sector.

With Télévision des arts, there is a strict commitment vis-à-vis the CRTC that for the first seven years of license we will not take any money out of the organization. All the money is to be reinvested. We have had to convince our private partner that it was in the public interest to do so.

The Deputy Chairman: Could I interject before we go with the second round? A few short years ago this committee had the privilege, together with you and others in the industry, of having an in-depth examination of Radio Canada International. I was rather excited about the conclusions, the thoughts and the general direction of those talks. Could you tell us, reasonably briefly, the status of RCI now that four or five years have gone by? It has been a while. Could you touch on that for a moment?

Mr. Tremblay: In the current situation, the CBC is still operating the service and, a month ago, the funding level was renewed for this year. There is now discussion about how we proceed with the service in terms of whether it needs to be adjusted for the future, given how the environment is changing. I think we will be having discussions with the government about how we may want to perhaps improve the service down the road, given the other tools that we have available to deliver a service abroad.

The Deputy Chairman: I am wondering more in the very specific sense of, to put it very broadly, how many continents we are serving now and how many countries receive Canadian news.

Mr. Tremblay: I would simply respond that I think we are available around the world in terms of coverage. Whatever we do to Radio Canada International is now complemented by a wide range of activities on the Internet.

The Deputy Chairman: That is true. I can hear CBC Halifax in Barbados.

Are we targeting areas that are undergoing, and have been for most of our mature lives, extraordinary difficulties in the democratic process, in freeing themselves, in trying to obtain peace? Are we talking specifically to those people about the Canadian experience? Has that grown?

Mr. Steven Guiton, Senior Director, Regulatory Affairs and Strategic Planning, Canadian Broadcasting Corporation: I will confirm the numbers, but I think Radio Canada International is available in 65 countries and in 8 different languages.

The Deputy Chairman: We have a long way to go.

Senator Finestone: In what languages is it available, please?

Mr. Guiton: That may be slightly more than I can help you with.

Senator Finestone: We did broadcast to countries in the language of those countries, which was cut very severely and which I think is regrettable. Those are the evolving nations and languages that were important. We have in Canada, due to our multicultural nature and multilingual capacity, people who are competent to broadcast in the languages of those countries under duress particularly. We cut significantly in that field.

Since my colleague asked a very interesting question, totally outside the purview of this bill but on something that is of interest to us all, are you planning to use new funds to reinstate that in those countries that need our information in their language? Are you broadening the language base to what it was before? If you cannot give us the answer now, could you send us the answer, please?

Mr. Tremblay: I would share your concern about the fact that our ability to reach out is not the same as it once was. There were severe cuts, no doubt. We have been urging government to come to the table so we can really look at the future of the service with a view to determining how best to use the funds that we have to optimize our output using RCI or other means. I was referring to our significant Internet operation, which is now a major tool to reach the population of the world and to convey Canadian values and to play a role in democracy abroad. These questions are, in fact, being examined. I would be pleased to follow up with a brief to this committee on RCI.

The Deputy Chairman: Would you then convey to the people who are concerned that at a time when the world is concerned about the disappearance of languages, when we loose a particular means of communication seldom do we ever bring it back. We need cast our eyes back only to the difficulty we have keeping Gaelic in Canada. I would ask you to keep that in mind. Someone once told me that the worst form of pollution is the discarding of good ideas before they are completely used. In the terms that I am speaking, the language of communication, the means of communication are precious and vulnerable.

This was prompted by something that the witness said about considering downgrading funds to this service in order to maintain for me, as a Nova Scotian, that great Canadian image spelled T-O-R-O-N-T-O. The other world is a real world too. If there is anything you can do to convey at least my own personal views about downgrading, please do so. If you said 80 languages I would have said you are still lagging. We should be approaching 200 dialects. We do not have to do it every day, but we have to demonstrate to the world that the preservation of this is important.

Senator Finestone: We all love CBC and would like to see more languages. I understand we are talking to you about more money and you are not happy about that. I presume we are taking money from Peter to pay Paul. Notwithstanding that, the principle behind the bill is to allow for public input. I also understand your concerns. The CRTC collects license fees on behalf of the Government of Canada in the amount of - my figure is different than yours - $142 million per year. The net profit after covering management of the spectrum and CRTC costs is about $70 million, which goes to the Consolidated Revenue Fund.

It is not the role of this committee to tell the government what to do or what to collect. I personally think that amount is outrageous and they do not need to collect that kind of money. I would send a message back to Heritage Canada and to the Government of Canada and to the Consolidated Revenue Fund to stop collecting so much money and to reduce the cost of license fees, but that is not my job. My job is to see that the public has the right to a hearing.

I have appreciated your presentations and your observations. That does not change my belief that, in a modern, open and democratic society, the authorities have a responsibility to hear the voices of the people. If it costs us some money to hear the voices of the people, then so be it. The government must, through the mechanism of the CRTC in this case, ensure that the appropriate materials and information is presented. This is not a frivolous undertaking where any person can pick up the phone or send an e-mail or appear at a hearing at no real cost to them. That is not the purpose of the bill.

If I understand, you want the legislation to insure that payments to intervenors would come from the Consolidated Revenue Fund or some other fund and then the CBC could support the awarding of costs. We cannot propose that. It is not within our mandate. I appreciate your foresight in recognizing in your presentation that the Senate cannot propose this measure. You are right, we cannot propose money measures. Because the CRTC has no guarantee that the House of Commons would amend Bill S-7 to that effect, the CBC therefore cannot support the bill if it applied to the national broadcaster.

You put yourself in the same position as other national broadcasters who are concerned. That is the responsibility of the government. The bill will go back to the House of Commons. If the government sees the importance of the public voice being heard and responsible and constructive presentations being made and costs being covered for that, it can review how those costs should be covered. The CRTC and the government can address the question. However, the principle and philosophy behind this bill are obviously not being taken into account. I understand the government's reluctance to open up the whole process just to make one simple amendment to the Broadcasting Act to make it accord with the telecom act. Do you understand that philosophy? Do you accept that?

Mr. Tremblay: I agree with the general thrust of your statement, Senator Finestone. We are in a dilemma. We are asking the committee for assurance. We know measures can be taken at other levels, but, given our situation, we prefer to have the recognition now that, at the end of the day, we would be taking money from Canadians to give to other Canadians.

Senator Finestone: There are good reasons for taking money from Canadians to give to other Canadians. We have equalization payments. We have the principle and philosophy of social insurance and unemployment insurance. That is, in part, the philosophy and the main political underpinning of the Canadian polity. I do not think that is a good argument. Forgive me for making that observation.

Once the principle of cost awards has been approved, the practice can be figured out elsewhere. We have done our best with the practice within the guidelines of Senate responsibility. There were 18 cost awards just in the year 2000 under the Telecommunications Act. Of those, 13 orders totalled $34,354. The average award was $2,642. The range of the awards was from $152 to $5,923. Five awards were for unfixed costs.

I suggest that the situation is really not dramatic. Considering the past five years, even if the most outrageous and unbelievably high costs had been awarded, your cost would have been maybe $100,000 per year maximum. I do not think it will be anywhere near that since the average award is about $5,000.

Mr. Tremblay: I hope you are right about the numbers, but we are concerned with the unpredictability going forward. If we have another major hearing with thousands of intervenors presenting under this principle, then the ultimate price tag is an open issue. That gives us some difficulty.

Senator Callbeck: You state in your brief that the absence of cost awards has so far not deterred Canadians from speaking out on issues surrounding the CBC. Do you honestly believe that? If so, how do you back it up? Certainly that is not my thinking from listening to people.

Mr. Tremblay: I was intimately involved with the whole renewal process. I was present during the regional consultations held by the CRTC across the country. Hundreds of Canadians came to the fora to express themselves. Some of it was a love story and other expressions were very critical. That is part of allowing the public to speak up on the CBC.

Deciding to go across the country as a commission was an excellent idea, optimizing the ability of Canadians to be heard. We took many notes at those meetings. Several of the commitments that we put forward to the CRTC have been impacted by those hearings. There is no doubt in our view that the fora served a purpose. We are listening.

In the public hearing process, several interest groups appeared, as well as individuals. These are well-funded organizations that came forward with original research and considerable expertise in support of their positions.

In our experience at the CBC, the voices of Canadians are being heard loud and clear.

Granted, the volume could have been different. There may have been people who ultimately decided not to use a particular tactic in building their case, but I understand that, on the telecommunication side, there is no pre-awarding of awards. Costs are awarded after the fact. The element of risk would probably still be there if cost awards are allowed. People will not know in advance whether their costs will be reimbursed, so it will be up to the group to decide if they feel strongly enough about a given issue to undertake the specific research required.

At any process where we have been involved, Canadians are extremely vocal about the CBC. We go out of our way to hear their views. Of our own volition, we regularly hold town hall meetings across the country to hear Canadians' opinions on our services. That is not a CRTC process. We are in a constant mode of reaching out to ensure that we are delivering a service that is valued and that is meeting requirements.

Senator Callbeck: Every time your license is renewed, does the CRTC go across Canada and hold public meetings?

Mr. Tremblay: After the fact?

Senator Callbeck: No, while it is examining whether to renew your license, is there travel?

Mr. Tremblay: Yes, the consultations were done over a two-month period leading into the hearings in different cities. The process concluded with the formal public hearing part in Ottawa. All the transcripts from the discussions form part of the public file. There was considerable discussion about the impact of the hearings on our renewal and on our commitments going forward.

Senator Callbeck: Is this process done every time your licence is renewed, or was this an exemption?

Mr. Tremblay: To my recollection, this was the biggest ever renewal where all our network was renewed at once. Historically, the CRTC would deal with either the television license, the specialty license or the radio license. We had eight different panels before the CRTC: radio networks, French TV, English TV, Newsworld. Everything was on the table. The hearing lasted three weeks.

I would suggest that this is the way of doing things in the future. The commission is now on the private side. It has introduced group licencing whereby it will no longer hear the global stations from Saskatchewan alone. It is convening all the network heads and all the stations at the same time to assess wherever conditions may apply to the whole group. The trend now is to group all the licences in the same hearing. We can expect that the next round will likely happen in the same way and given the positive experience at the regional consultations, I do not see why the commission would not take this tact again. They will be present tomorrow so the committee can probe that idea with them.

Senator Callbeck: You say here that 600 people took the time to appear.

Mr. Guiton: Senator, perhaps I could clarify that point. It is not actually people, it is interveners representing possibly hundreds or thousands of other people. That is why I was going to interrupt earlier. The statement that based on our experience there is broad representation by Canadians does not counting those representations as individuals. An intervener might represent an organization of thousands of people. That is a very large number of people.

Senator Callbeck: That clears it up. I could not figure out whether you based your sentence that cost awards had not deterred Canadians from speaking out on CBC issues because of those 600 people. I know that last year in Prince Edward Island when CBC wanted to cut out the supper hour program we certainly had 600 people at one meeting. Did these 600 people or interveners all come to the meetings with a brief?

Mr. Tremblay: Not necessarily. I remember very vividly a gentleman who was a farmer who said he had driven two hours to come to Winnipeg to speak to the commission. He was still in his work clothes when he took the microphone and gave us his views on how much the CBC was doing to tie him, in his isolation, to the country. There were numerous examples of people speaking with their emotions, expressing views about the quality of our service, whatever coverage problem they were facing in their area. Most individuals who appeared had not necessarily prepared a brief.People who represented an organization might have been a bit more structured in terms of presenting their remarks, but in general it was just an emotional pitch about the CBC and what it ought to be in their opinions.

Senator Spivak: While we cannot make an amendment, we can certainly have observations or comments which could very strongly recommend to the House of Commons what it might do. That is one way we might look at it.

I wish to ask a question in terms of revenue. The CBC does polling in an attempt to gauge public opinion and that takes money away from programming.

Mr. Tremblay: It is also a fundamental tool to understand public opinion. We are relying on quantitative data such as the BBMs and Nielsen to understand if our share and reach is the same or getting better or worse because of the competition. We also spend considerable resources and time probing Canadians on their values, whether they think the CBC is still the top organization for news and, if so, does that apply to local, national and international. We want to hear if we are holding onto our position. We see this as a fundamental element to reinvest and to make proper programming decisions.

Senator Spivak: But it is also a fundamental principle to enable as many people to present their points of view as opposed to those with means, the multinationals and corporations.

One would think that a country that developed the Canada arm could figure out how to reconcile these two principles. I do not think this is an impossible situation. I am sure there must be a solution. I am a strong supporter of the CBC, as are we all, and I wish it to have all the money that is needed. It is getting increasingly difficult to have the right sorts of emissions.

I have one more question which is not related to the bill. In your strategy to reach out to cooperation with the private sector, how will you prevent this kind of strategy from impinging on your basic core philosophy and your goals? That would be a worry. In the attempt to be financially viable, what do you have to give up?

Mr. Tremblay: This is absolutely correct. In fact, any of our private partners will tell you that we are a very difficult partner with which to deal because we do not want in any way to have exclusive arrangements. We are a Crown corporation and we do not see ourselves necessarily partnering exclusively with some player. We are open for business across the board. We insist that our editorial independence be maintained in all the agreements that we reach. We will be the core provider of news to the new Land and Sea channel which will be on the air this coming fall. There is no doubt in our mind that we have the first and final word on what will go into the news. We agree that we will do it but we are definitely the maître d`oeuvre. We will also go the extra length at whatever we are crafting and share those agreements. We are insisting that there is wording to the effect that we want to ensure as well that whatever programming may be found on the channel outside of our own programming does not do anything to damage our image. We are very concerned about even the remote possibility of any programming damaging the CBC brand because it is essentially all we have. All of this is to say that we are taking considerable care and I would say that, in fact - I am involved on several of these deals - that many of them do not go forward because we are not willing to compromise on these aspects.

Senator Spivak: Your news gathering operation is probably the finest in the world. It is very good.

This is an irrelevant question, but are you considering the type of advertising that PBS does? In other words, there are sponsors for programs and they come at the beginning and then you do not hear from them.

The Deputy Chairman: God forbid.

Senator Spivak: What else?

Mr. Tremblay: For example, in the history project we determined at the outset that we did not want this high quality program to carry conventional advertising, however given the high cost, we would be open to corporate sponsorship. At the end of the day, Sun Life being was willing to underwrite the project in part. I wish there had been more sponsors such as Sun Life around to help us. But definitely, as we are trying to walk away from conventional advertising and given the high cost of producing these huge ventures, we may be looking more toward underwriting and sponsorship.

Senator Spivak: Do corporations here view that as a good vehicle for their public relations, as they do in the United States?

Mr. Tremblay: I would say that there is considerable difference in terms of the business approach to funding of the arts and between philanthropy in the U.S. and Canada. We are making progress but there is not the same tradition on that point. We are receiving positive response from several organizations on this front.

The Deputy Chairman: Thank you very much for being here this morning and for your candour. We have heard your plea. You know our position and how little we can really do to help you. On the other hand, we are equally determined to find a resolution to the problem that Senator Finestone has brought to our attention.

I thank you very much for coming and wish you a good season.

The committee adjourned.

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