Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 2 - Evidence - December 12, 2002
OTTAWA, Thursday, December 12, 2002
The Standing Senate Committee on Transport and Communications, to which was referred Bill S-8, to amend the Broadcasting Act, met this day at 10:53 a.m.
Senator Joan Fraser (Chairman) in the Chair.
[English]
The Chairman: Good morning, honourable senators. Let us begin our consideration of Bill S-8, an act to amend the Broadcasting Act.
[Translation]
The bill is identical to Bill S-7, which was presented during the last session. Bill S-7 was introduced by the Honourable Senator Sheila Finestone. Senator Noël Kinsella is the sponsor of Bill S-8.
[English]
This committee considered Bill S-8 on October 30. At that time, we heard from the current and former sponsors as well as a number of groups. At that meeting, we began clause-by-clause consideration. However, it became apparent that senators wanted more time to reflect on the bill; therefore, we suspended consideration of it. More recently, the committee agreed to suspend clause-by-clause consideration in order to hear from additional witnesses, which is the process that we are beginning today.
[Translation]
Today, we would like to welcome Mr. Michael Janigan, Executive Director of the Public Interest Advocacy Centre, and Mr. Andrew Reddick, Director of Research. They will be followed by Mr. Jean Sébastien from the Union des consommateurs. We will be hearing from other witnesses after the Christmas break.
[English]
I thank you for being here today, and we look forward to your remarks, which will be followed by discussion. Normally, we ask witnesses if they would keep their introductory remarks to about 20 minutes, to give us time for questions.
Mr. Michael Janigan, Executive Director, Public Interest Advocacy Centre: Thank you, Madam Chair and members of the committee for having us here today to address you on the bill. I will make some general remarks about the bill, following which my colleague, Mr. Reddick, will address some of its substantive aspects as well as the proposed amendments.
In discussing this internally, we want to make sure that we have not oversold the bill to the committee. This bill reflects minor housekeeping amendments that will allow the commission to get better informed public participation, in a similar fashion to the procedure that exists in telecommunications. It is not revolutionary. The practice has been followed by many commissions and tribunals in Canada and the United States.
In this age where we are dealing with issues that affect both broadcasting and telecommunication, there is a dearth of informed public participation, particularly when the commission is sitting on broadcasting issues. Therefore, it is useful to bring a tool that we have used in telecommunications into the broadcasting arena, to allow informed public communication.
If this bill is not that big a deal, why do we need it and need it now? I will use an example. The CRTC held a proceeding some years ago to look at the way in which broadcast distribution undertakings for cable companies were regulated. In particular, the CRTC wanted to look at when the commission should stop regulating basic cable rates. In the end, the commission came up with a test that said that protection for consumers on basic cable rates should end when the cable company lost 5 per cent of its market share to a competitor like a satellite company. This provoked a considerable amount of ridicule and questions of how the CRTC could arrive at a test determined by loss of market share. The only expert evidence before the CRTC at the time was that of the hired guns of the cable company, who provided evidence as to when it might be best to forebear from regulation. There was no other evidence before the commission. We did not have the $30,000 to commission specialized evidence that would have put before the commission a test more in line with conventional economic thinking. The commission had to decide on the evidence before it.
Basic cable rates now are effectively deregulated. As you can imagine, there was a rush to increase the rates following the removal of regulation. As a result of that, all cable users are stuck paying millions of dollars for extra charges in basic cable because no public interest or consumer group was financially able to stand up to the cable companies with appropriate evidence.
We were there. We submitted a brief that we put a lot of into. However, it is not the same. When a commission or tribunal weighs evidence on complex economic matters, they need the appropriate evidence. Unless a cost-award system is in place, consumer public interest or non-commercial groups will not be able to fund providing specialized evidence such as that which the cable companies will be able to provide. Cable companies cover those costs from the rates paid by cable customers. Any one who is a cable subscriber helped to pay for that evidence that removed the protection of basic cable rates. This bill would address that anomaly.
As my example illustrates, the size of these awards is insignificant, even for the most modest licensee. If there is abuse, the commission can remedy it by either denying the award, refusing it in its totality or some taking other measure that would ensure that there is no hardship on a licensee. The commission has that power, and it has been exercised for years in telecommunications.
This bill proposes a small measure. It will have modest financial impact, but it may have significant impact upon those groups or elements of public interest that may want to appear before the public commission and make the kind of presentation that will allow that group to affect the course of the decision.
The opposition to this is based for the most part on the fear that there may be an articulate, informed presence before the commission opposing the game plans of licensees. They would, in effect, like to keep the public interest and consumer interest in short pants, limited to expressions of concern and incapable of putting the time and resources into articulating the opposite view in an effective way.
When you are examining this bill, please do not let them confuse you into thinking that they are motivated by anything else but self-interest. In the event that I am wrong in any part, the commission always has the power to remedy any abuse that may be forthcoming by individuals or organizations that may choose to avail themselves of the power that is contained in this bill.
I should like to ask Mr. Reddick to address the bill substantively.
Mr. Andrew Reddick, Director of Research, Public Interest Advocacy Centre: I should like to begin by reiterating that the bill is about fair and effective participation by citizens in proceedings by the CRTC regarding broadcasting. The underlying principle is the basic democratic principle that all citizens should be able to fairly and effectively participate in policy and regulatory decisions that affect their lives.
At the moment, under the Broadcasting Act, we cannot do that. We can under the Telecommunications Act, but not the Broadcasting Act.
As Mr. Janigan pointed out, there have been many changes during the past several years in the industry — competition, deregulation, convergence and the complexity of proceedings. All of these things have changed broadcasting over the past 10 years. It is more difficult to be effective if you do not have the resources to do research.
It is important to note that last year when Bill S-7 was considered by the Senate it was supported by the CRTC and the Department of Heritage. They endorsed the bill. They understand the problems we face.
The opponents to the bill do not object to the underlying democratic principles of the bill or idea of participation. For them, the issues that seem most important are that they do not want to pay cost awards, and they do not want us to be effective. They do not want consumers to be able to effectively challenge what they put forward.
The questions of who should pay cost awards and how they should be paid are valid questions. These should be addressed by the CRTC. The CRTC hears probably 1,500 applications or decisions on matters relating to broadcasting each year. The CRTC handles perhaps 2,500 matters, including license applications, licenses and decisions under telecommunications each year, with over 1,500 in broadcasting.
The CRTC needs a wide power of discretion to treat different parties and different types of evidence through these various proceedings. They have to do this on a case-by-case basis. Every case and claim is different. To try to micro- manage how the CRTC may deal with cost awards on each case, evidence and application is very difficult. It is almost impossible to guess how the CRTC could come up with the different rules and different variations on the themes over the years in various proceedings.
The CRTC has done this under the Telecommunications Act for years. They have rules and procedures in play. They have adjudicated cost-ward claims. They have had discretion when people have asked to be exempted from costs. They have a rigorous process for review of claims. There are challenges by the commission and different parties. There is a give and take. There is never a guarantee that a group will be awarded costs. Cost awards have been denied in the past. The commission has proven that it is apt and able to deal with this in a fair and balanced way.
I should like to make a few comments on evidence put forward by the CAB and the CBC. In some respects, you have been misled by their approach to cost awards and the claim that this will have a negative impact on the industry. We would argue that the opposite would be true. The CRTC would have better quality evidence from consumers, render better decision and, in turn, provide better services for all Canadians. It would meet the needs of Canadians.
There will be an impact by cost awards, but it will benefit the CRTC. They will have a better understanding of consumer needs and how programming is different across the country for different sets of Canadians. The improved evidence will help them make better decisions. The idea is not to hurt the industry. The idea is to improve the quality of programming for all Canadians.
Mr. Colville, the acting chair of the CRTC, confirmed this last year when he appeared before this committee. He supported this view and made it clear. That is included in the briefing book. We have included excerpts of his testimony at the back.
I should like to briefly address some nagging concerns that were expressed by the industry, the Minister of Heritage and some members of Parliament and senators. We proposed some amendments to the bill, and they can be found in our briefing book.
The amendments would ensure that the issue of exemptions, who pays, the impact of cost awards and the problem that industry has with Part II licence fees would be dealt with in ways that are fair to all. Another amendment that should be added is a ``bringing into force'' clause, which is a standard clause in bills. It would give everyone time to adjust to the bill.
We tried to propose amendments that would not gut the bill. The industry put forward some suggested amendments in the other place earlier this year that would basically mean that a good many Canadians would not be able to intervene in CRTC proceedings dealing with some broadcasters. This denies a fundamental right to deal with policy and regulatory issues.
If you exclude some broadcasters from the process, you are denying the rights of Canadians to participate. Our amendments address the problems.
This comes down to whether you trust the CRTC to do its job. The CRTC has proven that it can do it is job with cost awards under the Telecommunications Act for decades. If you trust the CRTC to do its job in broadcasting, as it has demonstrated in telecommunications, then pass the bill. If you do not trust it, kill the bill. We have three and a half years invested in this, but to us it is a simple matter.
Senator LaPierre: On the point of order, this briefing book is only in English.
The Chairman: It is being translated.
Senator LaPierre: Is it is customary in this committee that we accept documents in only one official language?
The Chairman: Yes, it is. Under the Constitution, citizens of Canada have the right to address the Parliament of Canada in the language of their choice.
Senator LaPierre: I understand that, but could the briefing books come earlier so that they can be translated.
The Chairman: We are having it translated as rapidly as possible. If you prefer to hand back the English-language version, we will get you a French version quickly.
Senator LaPierre: This is not the problem. The problem is that there may be senators who cannot read English well enough to grasp this. They would not be able to participate in the discussion as wisely as those considered to be marginally bilingual.
I make the point, Madam Chair, for consideration at a later date. Perhaps we could ask the interveners to present the briefs earlier so that they can be translated.
The Chairman: We could, indeed. In this case, they were given notice of only a few days to appear. They are a non- profit group, which limits how much we can demand of them.
Mr. Reddick: I do apologize for this, but we learned on Friday afternoon that we were to appear today. We do not have the resources for translation internally.
Senator LaPierre: That is fine.
Senator Gustafson: In Saskatchewan, opposition to this bill comes from small radio companies who suggest that they do not have the wherewithal to compete if the government is going to fund lawyers to handle every case. They also indicate that there are numbers of cases for the CRTC every year and that this will become a nightmare of cases. The small companies will not be able to compete.
What will this cost the taxpayer? You will be opening the door to all who want to have a say. We have just been through this with the gun registration issue — billions of dollars. It seems that the government is becoming more complicated and more expensive.
Mr. Reddick: It is important to understand that there are few CRTC proceedings that would warrant cost awards. Consumer groups or individual consumers intervene when it is a matter of high importance to them. There is an extremely rigorous process that the commission undertakes to adjudicate or decide whether to award costs; it is not automatic. In fact, in 1997-98, there were 2,124 telecommunications-related applications at the CRTC, out of which there were 15 cost awards. Hence, consumers do not intervene in every proceeding. However, when they do intervene, there are criteria that must be met and accepted. It is challenged by the CRTC and the industry. At the same time, the CRTC would entertain any broadcaster to apply for exemption as part of this. The CRTC will not bankrupt a company on a cost-award basis. They are not in business to do that. They may disallow cost awards completely under those circumstances. That is where the broadcasting licensee needs to make the case for that cost.
The second issue was the question about taxation. This would not be paid for through taxes. Rather, this would be paid through the parties involved, such that the cable company would be taxed or charged a cost award if it were a cable-related hearing of the organization. It would not be paid for through taxes but through the revenue base of the companies.
Mr. Janigan: On the last point, this is the alternate stream from government funding. This is another complete theory about how things should be funded — it is ``user pay.'' Effectively, if you have application before a commission and you have the costs of the licensee, for example a cable company requesting an increase, those costs will be passed on to the ratepayers. When it is before the CRTC, the commission should have all the benefits of opposite views and informed presence to deal with the particular issues, similarly paid for by the ratepayers. The costs of the participation and the proceeding are borne as part of the regulatory process. It is different from government funding.
We have to stress that point. Cost awards were developed so that the costs of participation and the hearing would be borne by the industry, not for government to fund groups to participate.
Senator Gustafson: Hypothetically, I have a complaint or want to see something changed so I initiate that process. However, I do not have the money to pay for it. Who pays for it?
Mr. Janigan: At the outset, you would have to meet the required test from CRTC to begin the process. First, your action may fairly represent the views of a number of subscribers, not just you. Second, it will be of some use to the commission in determination of the issues, not just something that may interest you. Third, they need to know that the participation has been responsible. That test, in the past, has been hard to meet. As Mr. Reddick says, out of 2,000 proceedings, there were 15 cost awards in one year. It illustrates the fact that these proceedings involve public participation that demands more than simply an expression of views. They usually concern complex issues of regulations of telecommunications. Also, the groups themselves are representative of a larger constituency than themselves.
Mr. Reddick: We have been denied cost awards and other awards in the past. We bring a great deal of expertise to this whole process. In the past, we have been challenged by industry and the CRTC. Individuals submitting letters or minor briefs will not likely receive a cost award; it is not intended for that purpose. The idea is to reimburse costs if substantive evidence will actually represent and help the CRTC to make a decision. It is more substantive than an opinion.
What will this cost per year? It depends on the year. Sometimes, the CRTC has many proceedings. For example, they may review television policy, which is generally a massive proceeding, where everyone gets involved and there is lots of evidence. They may do broadcasting distribution undertaking proceedings, which means cable TV, and rewrite all the rules for regulation on that. Those, again, are massive proceedings. Other years it is quiet. There may be licence renewals or new media in here. There are busy years and there are light years. Generally, it is light years.
In terms of costs, the best examples we have come from the telecommunications side. If we look at the CRTC test and at the kind of interventions people are likely to make on the telecommunications side, it ranges from $130,000 to $500,000 across all cost awards and all proceedings. It may be higher or lower, depending on the year, but that is the range. This is a $20-billion industry, for which we are looking at cost awards spread across the country.
I would estimate that, in broadcasting, it would probably be in the same range. There is probably a lower end of $100,000 per year across all groups that intervene, with an average of $500,000 to $600,000. There may be exceptional years, where there are numerous hearings and where the CBC is involved, where it may go up to $1 million, spread across all groups.
If you look at this in terms of percentage of revenue for the industry, you will find that it is one tenth of 1 per cent. These are all billion-dollars companies. The annual average income of consumer groups who intervene ranges from, say, the National Anti-Poverty Organization at $400,000, BC PIAC, $700,00, us, at $500,000 in 1999. That is our total revenue for the year, for staff and everything else. The costs for these consumers groups spread across the telecommunications industry will not break the industry. It will not hurt them. Most important, it would help consumers to be more effective. When you compare the hundreds of thousands of dollars that they bring to the industry, there is no comparison to what we bring.
Senator Maheu: You talk about the lawyers intervening on behalf of the cable companies when they did their presentations. On the one side, Mr. Janigan spoke about lawyers intervening on behalf of the cable companies when they made their presentations; on the other side, Mr. Reddick spoke about better quality evidence. If lawyers are to intervene on behalf of complainants and give better quality evidence versus a company that cannot afford to compete at the same level as government and public subsidized groups, they will end up being the only rich ones around.
The other issue that I would like you to address is taxation. The bottom line is that the customer pay, the public again. We are already financing CRTC. We are financing all of these groups who will be paying lawyers to intervene. We are financing the legal industry, and then the taxation costs go back to the public again. Can you justify this for me, please?
Mr. Janigan: The first point was dealing with individual proceedings and whether the costs of the representation of individual consumer organizations or the public interest may be so substantial as to overwhelm the interest that is at stake. Is that a fair summation?
Senator Maheu: I am not using the word ``overwhelm.'' I am saying that I know the rate of lawyer's fees. If lawyers must intervene on behalf of the consumer group or groups, they will get rich. Consumer groups are not going to be helped that much. The end payer is the public.
Mr. Janigan: Generally, it would not be lawyers who would be putting together the specialized evidence about which I was speaking. Certainly they would assist with the presentation, in the event there were proceedings that require certain legal skills or the formation of argument. However, any billing done by a lawyer would have to be in accordance with the CRTC tariff rate and would be subject to scrutiny in the process of assessment of their bills.
In looking at proceedings where cost have been awarded by the CRTC and at the proceedings of other tribunals, such as the Energy Board, by and large the bills submitted by lawyers are taxed by the commission if excessive and reduced to an amount that represents a fair fee.
I turn to your point in relation to who pays for this. The cost-award process has been put forward in part to try to level the playing field. All of the lawyers representing the cable companies and the large undertakings have their fees paid for out of the rates of cable customers.
Senator Maheu: The consumer pays.
Mr. Janigan: The companies the lawyers represent are generally asking the commission for something that is contrary to the financial interests of most of the customers, namely, rate increases. In order to effectively oppose that, therefore, an effective intervention must be made. It is true that that costs money and that in the end that amount is borne by the customers of that industry. That is true.
However, until that day where the interests of the company and the regulatory costs associated with defending the interests of the shareholder are eliminated from the equation, in terms of what we pay in rates, the fair thing to do is to ensure that there is an informed public presence that speaks to what that company and the company lawyers want.
Overall, the CRTC has had a pretty good record of ensuring that this process of cost awards has not been abused or oppressive to small companies. In the example of Saskatchewan, I have difficulty envisioning a lengthy proceeding that might be oppressive to interests in a particular province. However, I am sure that the CRTC, in its wisdom, would ensure that the solicited participation in a proceeding is keeping with that which is at stake.
Mr. Reddick: It is important to remember that the monies that are used in cost awards do come from the consumer. It is the same pot of money that the companies are using to argue their case at CRTC. They take the money from consumers of cable television and spend hundreds of thousands of dollars at proceedings to argue their view. We are saying that it is fair and reasonable that consumer groups that represent those ratepayers are able to access some of the same money, to put the other point of view forward.
In terms of lawyer fees, the actual costs for cost awards involve many different types of expenses. It could be economic analysis, engineering analysis, experts providing opinion, surveys of members, transportation or other kinds of analysis. Different types of evidence are put together. Not all these costs are internal to the organization. Many are outside costs that are incurred by the groups.
It is important to remember that the groups are not financed by other means. We do not get grants to appear before the CRTC on these matters. Government core funding disappeared for groups 10 years ago. We do not get funded to come here for committee meetings. We once did, but those days are gone.
As an example, in Winnipeg, there have been a number of proceedings in telecommunications during the past several years. It is not only experts and lawyers that appear. The Social Planning Council of Winnipeg, the Council of Women of Winnipeg, the Consumers' Association of Canada, the Manitoba Society of Seniors, the Disabled Women's Networking Winnipeg Group and the Canadian Cancer Society are some of the organizations that have appeared. These organizations could benefit from the cost-award process. They have staff. They could develop evidence. If it met the test, some of these groups could get cost awards. It means that they could prepare better submissions, and they would be encouraged to do that.
They should be given the opportunity to make submissions, if it meets the interests of the individuals they represent. It is not only lawyers and experts, but groups across the country at the national, provincial and local that can benefit from this, because the needs of groups across the country are diverse. The cost award may be $500 or $100,000. It is the hard to micro-manage that from this level. It should be left to the discretion of the CRTC.
Senator LaPierre: You are an association?
Mr. Janigan: Yes, we are.
Senator LaPierre: How many members do you have?
Mr. Janigan: We have two classes of memberships — individual and group. Our group members include associations that represent about 1.5 million Canadians.
The Acting Chairman: Can you send us information on that?
Mr. Janigan: Yes. Because we are a centre that specializes in representation and research, we end up representing other groups before the proceedings. We may be in front of CRTC representing the Consumers' Association of Canada, the National Anti-Poverty Organization or the Ontario Council of Senior Citizens.
Senator LaPierre: These are your clients?
Mr. Janigan: Yes.
Senator LaPierre: You charge them.
Mr. Janigan: The clients are not charged. We are a non-profit organization. It is our job to do research and advocacy. When we can recover costs, we attempt to do so.
Senator LaPierre: Who are the other people in your organization?
Mr. Janigan: They are the individual members. We have between 20 to 50 individual members. They are the members of the board of directors and former members.
Senator LaPierre: Could we have a list of the members of your board?
Mr. Janigan: Certainly.
Senator LaPierre: You have a budget of $500,000?
Mr. Janigan: Yes.
Senator LaPierre: That comes from where?
Mr. Janigan: It comes from a number of different sources. We do policy reports for various departments of the federal government. Monies obtained through cost awards are put into the general hopper. We appear in front of the CRTC as well as in front of other tribunals, such as the Ontario Energy Board.
Senator LaPierre: Suppose I were the Cancer Society and wanted you to intervene in a proceeding. I am talking only about broadcasting; I am not interested in the telecommunications people. My group wants to make an intervention. I hire you?
Mr. Janigan: We would consider whether we would accept to represent you.
Senator LaPierre: If you accepted us, what would you charge?
Mr. Janigan: We do not assess the individual organizations any particular amount, unless we think we can recover from a cost award. In that case, we would make an agreement with the Cancer Society, say, to apply for a cost award on their behalf. If we were not successful, they would not pay us any money.
Senator LaPierre: What you are talking about would not apply to individuals; correct?
Mr. Janigan: No, only to organizations.
Senator LaPierre: I lived in Britannia Beach, British Columbia, for 15 years. It is a little town on the magnificent Howe Sound. The population is 900. There is a cable company in Britannia Beach. We were interested in getting better service. We raised the money, because nobody was prepared to defend us. In those days, the CRTC travelled, and we were able to make our point with the renewal of the licence.
It seems to me that my little group of men, women and children whose daily lives were being affected had as much right as the Cancer Society or the other people you represent. Why, therefore, could not someone from Saskatchewan who is more affected by television have the right to receive a cost award?
Mr. Janigan: I agree with you. In the circumstance that you site, the Cancer Society would not get a cost award and you would, because you were representing a certain number of subscribers, provided that the intervention was in keeping with the problem.
Senator LaPierre: I understand the rules. The point I am trying to make is that, if this bill passes into law, it will have to apply to everyone whether they are an association or individual, otherwise it is useless.
Mr. Janigan: It does.
Senator LaPierre: You will agree to that.
Mr. Janigan: It does, but you have to meet the CRTC rules for cost awards.
Senator Callbeck: This legislation will provide funding for intervenor, but the intervenor does not know until the end of the proceedings whether they will get an award. You said that under the Telecommunications Act some awards have been denied. I think that you said that under this legislation you felt that there would be very few consumer awards. You mentioned the award might go as low as $500. You must anticipate that very small groups will be intervening.
If I were the president of a group that wanted to intervene, and I knew that it would cost $30,000 but was not sure we would get intervenor funding, I certainly would have great concerns about letting my group go ahead.
Mr. Janigan: You are talking about an area called intervenor funding. We call what we are doing now cost-award funding. Intervenor funding has been available through certain provincial statutes. For example, a group would go before the commission and make a case that they should be funded and are granted, say, $50,000 to do so, and at the end of the day their costs are scrutinized. That has worked to some extent reasonably well in some jurisdictions; in others, it has not.
It is not this system. In this situation, you do not know till the end of the day whether you will get any funding. You are right, to some extent it acts as a chill on the willingness of individual groups or organizations to go forward to make their particular case because they are not certain that they will be able to cover the costs.
I do not have an answer as to how to fix that, apart from looking at the system of intervenor funding, but frankly we have so much on our plate at the moment with this bill that I would prefer to not go down that road.
It is something that must be looked at in tandem with the Telecommunications Act. This is a bill to make the Broadcasting Act equal with the Telecommunications Act. In the event that intervenor funding is necessary at some point in time, the commission may want to study it.
Mr. Reddick: It is important to remember that the CRTC is very open with groups and organizations on this issue. We have gone to them, as have others, and have said that we are thinking about developing evidence for a particular proceeding and as such ask whether they will pay costs for these kinds of activities. The CRTC will give an indication whether we are in the ballpark, or not, and the degree of risk in gaining a cost award. They will not definitely guarantee a cost award, but they will say whether something is likely to meet the test. However, it is still a risk.
In terms of whether an organization will think it is justified to go ahead, we were in that situation ourselves on the new media proceedings about two years ago now. That was a joint proceeding between telecom and broadcasting. Both acts applied. We represented the National Anti-Poverty Organization, a Quebec consumer group and our organization, fully recognizing that it would cost us probably around $3,000 in staff time. We applied for a cost award because the telecom act was involved and we thought we could get back some of those costs. However, we only recovered about $500 of the total cost.
Nevertheless, the policy issue was important enough for us to take a loss on the other part of it because it was important to our members and clients. Sometimes you have to accept the costs.
We did that with television policy. We prepared evidence and appeared. We did that with the broadcasting regulations for cable television. We spent much time in evidence on that, and we basically ate those costs.
Most groups cannot do that. Individuals cannot do that. We did not get that money back. We take that money from the other resources we have. However, we only do that on a selective basis. Quite frankly, we have spent so much time on this bill that I have not appeared or submitted anything to the CRTC in broadcasting for three years. We must decide where our time and effort goes. We cannot afford to do both.
Senator Callbeck: Do you feel that this type of funding has been a deterrent for small groups from intervening under the Telecommunications Act, or is telecommunications so complicated and complex that it is a whole different ballgame from broadcasting?
Mr. Janigan: Small groups have generally been able to align their interests with larger groups and be represented under one banner. There are a number of different coalitions that go forward in a telecommunications proceeding under one banner because they have similarity of interest in terms of the issues that are at stake.
Mr. Reddick: Sometimes the CRTC encourages individuals and groups to work together in coalitions when they have like arguments. It makes it easier for the commission to deal with the numbers. There are individuals who show up to both telecom and broadcasting proceedings. It is not only groups. There are individuals ranging across the spectrum. It depends on the proceedings and the issue.
Senator Eyton: Thank you for your presentation today. I should like to better understand the precedent you referred to with telecommunications — that it has been reassuring, that it has been around for a long time, that the kind of costs awarded run between $500,000 and $1 million, spread across the board, and that it is a small minority that receive anything. I would like to better understand how it works before the CRTC with the telecommunications. The points I had outlined here have been partly answered. How soon does an intervenor know? What kind of quantum might you expect? This and the other questions relate to the different people who are present — applicants, consumers, competitors, public advocacy people, et cetera. I have appeared before CRTC on a number of occasions but always on the broadcasting side. It meant that whomever I was working for paid my bills. I never worried about these things.
Take that to the telecommunications side. How has the CRTC dealt with that range of people and still kept the overall annual costs to a mere $500,000 to $1 million? There is a great deal happening in that area, recognizing that broadcasting is more emotional and therefore a more participatory enterprise. Could you tell us how the CRTC handled that range of people in order to establish the kind of funding that you are talking about on an annual basis.
Mr. Janigan: While the cost award is available to the individual group or corporation, it is to pay for specialized assistance that may be necessary to mount that intervention. The cost, for example, of holding an organizational meeting to discuss what you will present to the CRTC is not reimbursed. The participation of individual members to talk about these issues and what they would like the lawyer to do and to give instructions to the individual experts or analysts is not considered for reimbursement.
Generally, the cost award will include the fees for an expert consultant that has been responsible for case management and for essentially putting together the elements of the case, fees for counsel, when counsel have been represented, and all of them are pursuant to a tariff.
Senator Eyton: The number you are talking about is so small that only a few will receive those kinds of awards. Who are they?
Mr. Janigan: The cost awards that have been made in telecommunication proceedings generally follow the pattern in the individual province. For example, in Manitoba, the Public Interest Law Centre usually represents the interests of the Manitoba branch of the Consumers' Association, the Manitoba old age pension groups and a variety of different coalitions. Anything involving Manitoba Tel will generally have the Manitoba branch of the Consumers' Association of Canada involved, and they obtain a cost. In B.C., the organizations coalesce around a group headed up by the B.C. Old Age Pensioners Organization, represented by groups from the British Columbia Public Interest Advocacy Centre, BC PIAC.
Senator Eyton: Lawyers would always represent these groups. The numbers have to be around $10,000 to $15,000 at most. They cannot be any larger than that.
Mr. Janigan: The numbers are not that high. I am certainly happy to entertain a recommendation for increases, but they are limited to looking at the number of days of the proceeding and the preparation that is associated with it. CRTC staff knows how much has to be done to meet a particular kind of test.
Senator Eyton: They must be very discriminating about the requests for awards, and, of course, that is your case here.
That, for example, would be miniscule compared to ordinary court costs awarded in a legal proceeding. This may be take only one week.
Mr. Reddick: We are talking costs, not profit.
Mr. Janigan: It is pretty small, but it makes a difference. If we had had the $25,000 or $30,000 to hire an economics professor to do prepare evidence for us on compensation issues, it would have made a difference in that proceeding. Frankly, we are not the kind of organization that can dig into our pockets for $25,000.
Mr. Reddick: When we file a cost award, as an example, we name who we think in the company should pay the cost award. We have to submit a list of costs. The companies can challenge whether they should actually be named to pay, and they make a case back to the CRTC. They challenge the cost of every item that we list; the CRTC does the same thing; and then, we have a chance to respond. It is very rigorous but it is challengeable. The payors are the companies or the associations that were named, for example, through the cost award.
For example, all the phone companies may be named; on the other hand, perhaps only one telephone company is appearing, if only one is involved.
Senator Eyton: Is there any penalty for being successful? Would a successful applicant be apt to pay more?
Mr. Janigan: No. It is based upon responsibility and participation. If you have raised issues but are not successful, you may still get your costs, if the CRTC thinks that those interests should have been raised in the context of the determination.
We have actually done a survey because we are faced with complaints from the companies from time to time. The Ontario Energy Board has a liberal method of dispensing costs; they give them to commercial intervenors as well as to non-commercial intervenors. We looked at the awards for the gas distribution companies for a period of five or six years and noted that the total amount of cost awards, including commercial intervenors, was less than 5 per cent of the amount that was paired off the revenue requirement of the companies at the commencement of the proceedings. Even if we were only responsible for 10 per cent of those reductions, the cost-award system is a great boom for ratepayers. Particularly, in rate proceedings they are effective in saving money for ratepayers.
Senator Eyton: Would you be in favour of some kind of limit on the amounts that could be awarded? It is lovely to hear the precedent of telecommunications. At the same time, I am nervous about open-ended practice.
Mr. Janigan: I think that is the purpose of a tariff — to ensure that it is done on the basis of a particular amount, with maximums. Presumably, the taxing officer of the CRTC knows how many days the proceeding took and as such would award costs accordingly. I do not think we have had too much difficulty in terms of excessive awards.
Mr. Reddick: I do not know if you could set a cap because it is so hard to predict what will happen in the future. Where do you draw the line on evidence? Then, would you turn around and need a rule to put a cap on companies? For example, saying that companies cannot spend more than $100,000 per proceeding, is that artificial? I think it gets into a micro-management nightmare.
[Translation]
Senator Biron: Mr. Reddick, you said that the costs could be in the order of $500,000 per year. During its hearing, the CRTC visited 11 municipalities and heard from over 2,000 people. You said that for this year costs could reach $1 million. This clearly means that the CRTC could end up paying $500,000, since your organization and others may also want to make representations.
[English]
Mr. Reddick: As an educated guess, we would generally say between $150,000 to $500,000 in an average year. When the CBC was up for licence renewal, it was possible that there would be more but it may be accommodated within that $500,000. To be generous to the CBC, I am assuming that. In a worst case scenario, there may be as much as $500,000 in cost awards. I would be very surprised if it went that high.
The case of the CBC is a great example of where cost awards to improve citizen participation is probably the most important argument. It is so important to Canadians. It is a very good expense if Canadians can put better evidence forward to improve the broadcasting of the CBC to meet needs in all parts of the country.
The CBC derives much of its revenues from commercial services, commercial advertising and fees through the cable system. They earn almost $100 million a year through cable charges; they realize a surplus through that. It is a billion- dollar corporation. This will not hurt programming. It will improve programming, because they can get better evidence and input from Canadians on programming. This will not hurt them. They can well afford it, and it should help overall programming.
[Translation]
Senator Biron: Mr. Janigan, with regard to cable distribution, you said that the costs would be paid by subscribers. The CRTC mandate is to represent consumers, to defend their interests and those of the public in general. Should the CRTC lack the necessary staff to conduct a fair assessment, would it not be appropriate to increase its budget to enable it to hire competent people charged with evaluating which costs should be passed on to consumers?
[English]
Mr. Janigan: Senator, you raise an interesting point, and one that is subject to much debate in terms of the way in which tribunals operate, not only in Canada but also across the United States. It is a question of whether the tribunal itself has an overweening consumer or public interest mandate that it should provide the counterweight to the industry presence before the tribunal, and through its own staff, in one fashion or another, ensure that the evidence is tested, or opposed when appropriate, of the industry applicant.
That is not precisely how we have set up the CRTC in terms of its mandate here. It has more of an adjudicative role. It must adjudicate in the public interest, but its role is not necessarily to provide the counterweight to the interests of the industry stakeholders before it. It does not necessarily have to ensure that there is a fair fight by providing one through their staff or by providing an advocate.
In the United States, sometimes the tribunals themselves have individual advocates. Sometimes, the state attorney general has a particular advocate that appears for the people before the individual utility tribunals. Sometimes, they have tribunals with separate staffs — one that represents the public interest and one that advises the commission.
This is always talked about in utility circles. The current organization is that the CRTC adjudicates in the public interest, but it is not responsible, particularly in broadcasting, to ensure that the consumer interest has adequate representation.
The Chairman: Thank you very much. This has been extremely interesting. Indeed, we could probably keep you for another hour or two, but you will no doubt be glad to know that we do have another witness, who has been waiting very patiently.
Mr. Reddick: Thank you very much. We will send the information that you requested.
[Translation]
The Chairman: I would now invite Mr. Jean Sébastien from the Union des consommateurs to please take a seat at the table.
Mr. Jean Sébastien, Delegate, Union des consommateurs: Madam Chair, my name is Jean Sébastien. I am a telecommunications analyst for the Union des consommateurs. We are a federation of consumer groups based in various regions of Quebec, including Rouyn and Rivière-du-Loup. We have individual members in each of our associations in smaller and larger areas of the province, such as Montreal and Quebec City.
We are active in many areas, including regulatory issues affecting service to the public, which we are deeply concerned with, especially with regard to broadcasting and telephony. These areas have important democratic implications for the public and for our members.
Access to the justice system is an important principle which we are all aware of. Access to regulatory authorities is similar to access to the justice system. Decisive issues are played out before regulatory authorities. Large corporations appear before regulatory authorities on a regular basis and they have a lot of resources. I will not repeat what my colleagues from the Public Interest Advocacy Centre said, but I would like to address certain points.
To begin, with regard to CRTC hearings, a hotly debated issue today is who pays. Of course, part of the money involved in the CRTC hearings comes from taxpayers. The CRTC and its advisors are publicly funded. But some of the money involved does not come from taxpayers. It comes from individual consumers through their cable, satellite television and telephone fees. Corporations appearing before the CRTC pay for their expenses exclusively through consumer fees.
To ensure fair access to regulatory authorities, we think it is reasonable that consumer groups be awarded costs from the fees subscribers pay for their services, which is also the way corporations pay for their dealings before these authorities.
I would like to use my time before the committee to reassure you. With the money we receive to intervene before telecommunications hearings, we sometimes can afford to prepare specific cases and also call on outside expertise, if need be. What does this cost consumers? So little that it basically has no impact on the telephony business. With our $18,000 for fiscal 2001-2002, we are a drop in the bucket compared to the billions of dollars involved in the industry.
Further, each dollar we are awarded in costs was calculated according to CRTC rates for the analysts, experts or lawyers we have had to hire and only upon presentation of receipts for specific expenses.
Awarding these types of costs will not lead to an increase in the expenses of broadcasting companies, just as it was not the case with regard to telecommunications corporations.
The commission carefully awards costs to organizations appearing before it. It awards costs to groups representing certain subscribers which could otherwise not intervene and whose interventions were useful to the hearings. The commission has a lot of discretionary power in that area.
At a hearing where business and consumer groups were present, the CRTC established the criteria which are used to award costs.
If a bill amending the Broadcasting Act were at issue, the committee would apply the relevant criteria for awarding costs. It would decide which business or consumer groups should be reimbursed and what type of presentation they would be expected to make if they are to be awarded costs.
I would like to tell you about the different types of hearings we have been involved in with regard to telecommunications and broadcasting. At issue is the structure of the industry and that is why we have to call upon various experts, such as economists and engineers. For instance, the Canadian Radio-television and Telecommunications Commission was recently asked to evaluate consumer fees over five years in the area of telecommunications. In order to establish long-term fees, the CRTC asked business groups what kind of shareholder value would be expected at the beginning of the new regime. The companies hired economists to prepare their case. In the past, we also hired people to prepare counter- arguments, but our expenses were not reimbursed by the commission.
After that happened, we asked experts to be present at the hearing where the telephone company was making its case to immediately present counter-arguments to the commission. So, it is a good idea to play by the rules set by the commission, because that way it can hear from two economic experts presenting different views.
Today, the commission is doing the same thing, that is, in this first year, it is opening the cable business up to other companies offering high-speed modem access, which is an engineering issue. If a new competitor offers to install a modem on to a person's cable system, do other cable subscribers risk losing their television service because their neighbour has hooked up his modem to his cable service? This involves important engineering issues.
The commission has received information from the cable industry which was prepared by engineers, of course, but do not forget who paid them.
Can the commission make decisions on issues affecting the way the industry is structured, as well as competition — not to mention the crucial role played by the Internet — if it only bases its decisions on information prepared by engineers hired by the telcs? We doubt it.
We also intervene on issues affecting public policy. Last year, for instance, the commission reviewed its cable and local television policy. We appeared at the hearings to argue in favour of funding for community TV, since for the last few years, the cable companies have not been required to support local cable stations anymore.
In our view, it is more important than ever to develop mechanisms to help citizen groups appear before the CRTC's hearings on broadcasting. On the one hand, the emergence of cross-ownership has enabled companies to develop strategic presentation before the CRTC where the interests of one subsidiary served those of another. Its seems that some organization owned by either Bell, Rogers or Québécor is always before the commission. On the one hand, digital technology has enabled players to spread out costs at any point in the television or radio production chain for national broadcasts. If the cost structure at the production or distribution levels is changed, someone is eventually going to have to pay, and it will be either satellite TV or cable TV subscribers, or people who buy receivers.
Given this major change in the industry, we feel that those who pay for access, for products and for services should be able to make their case before the CRTC.
Honourables senators, we hope that you will see the importance of developing mechanisms to give voice to consumer concerns at a time when the entire broadcasting industry is undergoing massive change.
There is not a shadow of a doubt in our mind that giving voice to consumers' rights groups is a staple of democracy, ensuring a diversity of voices and the development of independent points of view on the industry.
The Chairman: Before moving on to questions, I just want to say that I had the impression you were reading a text or notes. Could you give us a copy of your paper to help with our documentation?
Mr. Sébastien: I will send it to you.
Senator LaPierre: Thank you for appearing. Where are your offices located?
Mr. Sébastien: The headquarters of the Union des consommateurs are in Montreal. The federation has its offices in the city.
Senator LaPierre: Where does your budget come from?
Mr. Sébastien: We have three sources of funding. First, part of our basic funding come from three government of Quebec departments for a total of $150,000, which goes to all our activities.
Second, we also get money from our contracts with federal and provincial departments and organizations. It is about the same amount. As well, we are awarded costs when we appear before the Régie de l'énergie in Quebec and the CRTC.
Senator LaPierre: You realize that Bell telecommunications operations and television broadcasting are two completely different things.
Mr. Sébastien: Yes, of course.
Senator LaPierre: The approach and instruments are very different. There are many interested parties and it is a completely different ball game for television broadcasting. There are 600 TV broadcasting licence holders, of which perhaps 100 — when I was president of Telefilm, I was told it was between 150 and 200 — are basically small businesses.
These businesses usually do not have a lot of money. I am referring to community or ethnic organizations. These organizations cannot afford to appear before the CRTC. Unless I am mistaken, these people would not qualify under this bill. Ottawa's community television organization will have to pay its own way if it wants to appear before the CRTC.
Mr. Sébastien: In our view, the issues which involve consumer groups have more to do with the structure of the industry and not the awarding of licences to a community broadcasting enterprise. It is irrelevant to us whether such and such company has been awarded a licence; we do not intervene for or against a company or community organization which wants a licence for a given territory.
Sometimes small and large businesses appear at the same time before the CRTC. The same thing happens in the telephone business, even though there are fewer small companies involved in that sector as compared to the broadcasting area. The commission has deemed that it is not only the big corporations who must pay the fees. For instance, Sogetel, which serves the Trois-Rivières region, is not asked to contribute to the awarding of costs with regard to issues affecting the structure of the industry, even though it may be affected by a decision. Other corporations, such as Bell and Telus, will pay for interveners' costs.
Senator LaPierre: There are always disagreements, especially in rural communities, as to whether a specific company should represent someone else to get a licence. You are not involved in those cases because they are too small, is that not so?
Mr. Sébastien: No. The reorganization of the industry does not affect licence owners. What is at stake is whether people have access to service in their community from a variety of sources and not whether the licence should be awarded.
Senator LaPierre: Are you only interested in the structure of the industry?
Mr. Sébastien: That is not what I have said.
Senator LaPierre: I understood the opposite, but let us move on. Why should the CRTC, which receives funding, have the right to develop rules on broadcasting? Why should the CRTC have this power?
Mr. Sébastien: There is nothing in the law that says that individuals cannot be represented or represent a group of subscribers. That is the case for the Telecommunications Act and the same principle could apply to the Broadcasting Act.
Senator LaPierre: You are not distinguishing between the two.
Senator Fraser: Under the telecommunications rules, I have the impression that costs are awarded for expert advice or transportation costs. The type of party which appears does not determine whether it is reimbursed or not. The intervening party must provide useful information to the commission.
Senator LaPierre: In the area of broadcasting, it is up to the commission to determine whether a party has contributed to its deliberations. Why should I give that power to the CRTC, which I greatly admire but do not trust?
Mr. Sébastien: It seems reasonable to me that the CRTC assess the relevance of presentations. That is how it works in the area of telecommunications.
Senator LaPierre: I do not want to hear anything else about telecommunications; I have had enough. The CRTC is not made up of idiots. The CRTC has several budgets. When Bell sends a brief prepared by experts to the CRTC, the CRTC's experts study what Bell experts think. The CRTC is a public service paid for out of public funds. It also defends the rights of consumers. It also has the expertise in that area to determine whether proposed changes are valid or not.
Mr. Sébastien: There are objectives in the act which are or may seem contradictory when assessed from the points of view presented by various briefs to the CRTC. The commission must both protect the industry and competition, as well as protect access to the network. It is not always easy to make a decision in light of certain briefs presented by the private sector. Such a brief may argue that a decision will be detrimental to the public or, in the opposite case, may be useful to business, but detrimental to the public. Sometimes, a proposed change may have a mixed effect and in such a case, the commission must try to balance, to the best of its abilities, the dual objectives contained in the act. It is in situations like these that the CRTC benefits from hearing opposing points of view.
[English]
Senator LaPierre: I know decisions of the CRTC can be appealed to the cabinet under certain conditions. Can the Competition Bureau review CRTC decisions? Can someone find this out for us?
The Chairman: Indeed, and you bring me to my point for the end of the meeting: On the list of future witnesses, we should include the CRTC. That would be a good question for them.
Senator LaPierre: The Competition Tribunal, as well.
[Translation]
I would ask our witnesses to provide us with a one-page description of who they are, how many members from their organization are present, what their sources of funding are and a description of their mandate. Senator Lapierre has just asked these questions and they are very relevant. If we had the information in advance, the witnesses would not lose any time providing that information during the hearing. So, if you could send us that information, we would be greatly appreciative. Mr. Sébastien, thank you for your highly interesting testimony.
[English]
Senators, we will hear from other witnesses at future meetings, including the CRTC. We will likely hear from officials from the department, as well as the Telecommunications Workers Union.
The committee adjourned.