Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 38 - Evidence - September 25, 2018
OTTAWA, Tuesday, September 25, 2018
The Standing Senate Committee on Transport and Communications met this day at 9:33 a.m. to examine how the three federal communications statutes (the Telecommunications Act, the Broadcasting Act, and the Radiocommunication Act) can be modernized to account for the evolution of the broadcasting and telecommunications sectors in the last decades.
Senator David Tkachuk (Chair) in the chair.
[English]
The Chair: Honourable senators, I call to order this meeting of the Standing Senate Committee on Transport and Communications.
Last June, the Senate authorized the committee to examine and report on how the three federal communications statutes, the Telecommunications Act, the Broadcasting Act and the Radiocommunication Act, can be modernized.
Today, we continue this special study. I would like to welcome our witness, Mr. Konrad von Finckenstein, former chair of the Canadian Radio-television and Telecommunications Commission, CRTC, and the Commissioner of Competition.
Thank you for coming to our meeting, Mr. von Finckenstein. The floor is now yours.
Konrad von Finckenstein, former chair, Canadian Radio-television and Telecommunications Commission (CRTC), as an individual: Thank you for inviting me to comment on your work, the legislative review of the Telecommunications Act, the Broadcasting Act and the Radiocommunication Act.
When I was chair of the CRTC, I constantly advocated review of all legislation which stems from the 1980s. While it served us well, it needs to be updated in light of the phenomenal technological advancements we have seen in this field, foremost of all the emergence of the Internet. I therefore commend the government and this committee for aiming to modernize the three federal communications statutes to account for the evolution of the broadcasting and telecommunications sectors in the last few decades.
It is common in Canada to mention broadcasting and telecommunications in one breath. However, they are two very different systems, based on quite different concepts. Broadcasting is speech permitted by and only under the licence and authority of the state. In broadcasting, the regulator licenses broadcasters to achieve a desired result, i.e., broadcasting to reflect Canada and its values. To that end, it supports, promotes, subsidizes and to some extent shelters from competition the broadcasting activities of a select number of broadcasters.
Canadian broadcast regulation has always featured an understood bargain. In exchange for an economically valuable licence, a broadcaster would carry out the government policy respecting Canadian content.
Telecommunications are quite different. It is a vehicle by which individuals and businesses communicate with one another while enjoying the expression and freedom of speech protected by the Canadian Charter of Rights and Freedoms. Subject to laws of general application, such as hate speech or defamation, anyone can express any idea and communicate any image or sound that they wish. Telecommunication is regulated to protect the interests of consumers and competitors from the economic power that flows from the quasi-monopolistic nature of telecommunication carriers. It is based on the common carrier principle, i.e., telecommunication carriers may only transport the signal but they cannot alter it in any way.
In the Canadian context, broadcasting is the pre-eminent field and always dominates the conversation. I point to your own terms of reference. The first bullet says:
(a) how the three statutes may promote the creation, production and distribution of competitive, quality Canadian content in both French and English;
Notwithstanding that we always bring broadcasting first, the reality is quite different. The Internet has become the core of the communications world. It dominates every aspect of communications and acts as a great disruptor of both business models and regulatory models.
In broadcasting, for instance, as long as Canadian media consumers were obliged to receive their broadcasting signals directly from the air by over-the-air Canadian broadcasters and by cable undertakings, a profitable revenue stream for Canadian commercial broadcasters could all but be guaranteed. Policies such as simultaneous substitution must carry rules, et cetera, to ensure revenue streams that were essentially unresponsive to consumer demand.
However, the Internet now permits individual consumers to find the content they want, when they want it and where they want it. In short, the Internet has made the consumer an independent actor in the choice and pricing of program content, whether an over-the-top service, a streaming service by subscription or for free, free meaning supported by advertising. Internet services compete directly with traditional broadcasting services for both content and advertising dollars.
Internet usage is far more than streaming videos or listening to music. As Michael Geist told you last week in referencing the CRTC Communications Monitoring Report, “75 per cent of wireless Internet traffic is not audio or video.” While these are popular activities, numerous studies point to the fact that they are not nearly as popular as Internet messaging; social networks; electronic commerce; or searching for weather, news or other information.
From a telecommunications policy perspective, access to high-speed Internet is critical for the full participation of Canadians in the digital economy and for the ability of Canadians to both cooperate and compete domestically and internationally. This development has, if anything, made aspects of telecommunication regulation more important than any time since we established basic telephony. The challenge facing telecommunications regulators is how to balance the need for strong carrier revenues to sustain investments in telecommunications infrastructure, especially to serve rural and small communities, while ensuring consumer pricing that offers Canadian affordable access to the Internet.
I recommend six points to the committee. First, in the reform of our communications legislation, examine everything from an Internet-centric point of view. The key issues in telecommunications all relate to Internet, namely, access, security, privacy, net neutrality, competition and consumer protection. To borrow a phrase from Bill Clinton, “It’s the Internet, stupid.” The Internet is the centre of everything, and you have to look at it from that point of view.
Second, avoid unnecessary duplication and differences. We have the Radiocommunication Act and the Telecommunications Act. They should be merged, and one minister and one regulator should be responsible for both wireline and wireless communications. Having the CRTC responsible for wireline and Innovation, Science and Economic Development for the other makes no sense.
Third, avoid any efforts to strengthen the present broadcasting regulatory system based on access control. Given the changed nature of broadcasting due to the arrival of the Internet and the increasing number of Canadians accessing broadcasting through the Internet, any measure based on access control is bound to fail. We still have some access control. It’s fading very fast, and don’t try to resurrect it. Rather, concentrate on streamlining and strengthening the funding of the system, the promotion and the discoverability, as well as establishing an effective system to combat piracy by way of Internet. That’s becoming a major issue which has been unaddressed.
Fourth, create separate agencies for the regulation of telecommunications and broadcasting. The very different nature of broadcasting and telecommunications regulation demands regulators with very different profiles of knowledge and competencies.
In broadcast regulation, the aim is to combine legislative goals with popular program demands. This is not made easier by the fact that everyone who has a TV or radio assumes he knows and understands broadcasting. Everyone has a well-formed view of what should be on TV, what the CBC should air or what should be produced or aired. In addition, the media love reporting on broadcasting issues in length and in depth.
In contrast, telecommunication is a technical field. Few people understand it. The economics are difficult to grasp. The technology being employed is complex. The implications of technological choices on competition and consumer choice are difficult to discern. Last of all, the jargon is very dense. However, telecommunication is by far the more critical to the health of the economy as a whole and actually impacts individual Canadians and businesses in greater measure than do any issues that face the broadcasting regulator. Hence, different skill sets are required, and having one regulator address both tasks inevitably results in telecommunications issues being seen through a broadcast lens. This does not make for good Internet regulation.
Fifth, recommend to the government that in light of the very different nature of broadcasting and telecommunications, a different minister should be solely responsible for each act. The current division between Heritage and ISED leads to unnecessary gridlock.
Sixth, provide for a means to exchange information between the various agencies involved in some aspect of communications. Current legislative restraints make meaningful cooperation between the CRTC, the Commissioner of Competition and the Privacy Commissioner difficult, if not impossible, yet they should be working in unison to confront the serious issues of the Internet.
That is my presentation. I will gladly answer your questions.
The Chair: Help me with this. You mentioned a number of points that we should consider. What was number two? I either misunderstood it or totally missed it.
Mr. von Finckenstein: There is no need for separate acts, the Radiocommunication Act and Telecommunications Act. The Radiocommunication Act deals with wireless; Telecommunications Act deal with wireline. They should be one act. Having the Radiocommunication Act basically regulated by the minister and the Telecommunications Act regulated by the CRTC leads to unnecessary differences and conflicts. They need to bring the two in cohesion. It is a signal that is being transported. It makes no difference whether it goes wireless or wireline. It may go both. So, why are we having different regulators and different rules?
[Translation]
Senator Cormier: Thank you for your presentation and your work at the CRTC. I’m trying to gain a better sense of the CRTC’s role. When Dwayne Winseck, a Carleton University professor, appeared before the committee, he said he was concerned about the CRTC seeing itself as a manager or systems administrator as opposed to a watchdog.
Where do you stand on that point of view? How should the CRTC’s role be modernized to reflect the industry today?
Mr. von Finckenstein: It has two roles. On the broadcasting side, the CRTC is a regulator with a single aim, and in order for the system to achieve that aim, all available means are used. On the telecommunications side, the CRTC is a facilitator. It doesn’t intervene except to address situations that are unacceptable or anti-competitive, for instance, if someone takes advantage of their quasi-monopoly status.
In that case, it’s optional. The point is for the system to work. The companies in the sector decide what they want to do, and the CRTC works only to protect consumers and competition.
When it comes to broadcasting, however, the system is also supposed to reflect Canada and its values. Those are two different roles, and that’s why, in point five of my presentation, I recommended that they be separated. Right now, the CRTC is being asked to do the impossible: To achieve one of those aims one day and an altogether different aim the next.
Senator Cormier: Thank you.
Senator Dawson: Thank you, Mr. von Finckenstein. Have you met with the group doing the study on behalf of Canadian Heritage and Innovation, Science and Economic Development Canada? Do you have any recommendations for its mandate? Our committee was considering studying the acts. At the same time, the government announced its dual study involving Canadian Heritage and Innovation, Science and Economic Development Canada, which goes against your recommendation of bringing it all under one umbrella. Do you think it would be a good idea to adopt a like-minded approach as far as the group goes, in terms of how to examine the issue going forward?
Mr. von Finckenstein: I haven’t been in contact with them at all. I’m supposed to meet Ms. Yates to discuss it. She’d like to know my personal view and asked to meet with me. I wasn’t formally asked for my opinion. As I currently understand the situation, the committee will hold public meetings and ask members of the public questions to obtain feedback on a variety of issues. Why are two initiatives dealing with the same thing happening at the same time? I have no idea. I’m not sure why you weren’t consulted or why the two initiatives weren’t combined.
Senator Dawson: On our end, all the committee members were consulted on potential topics of study, and we all agreed that we should study the modernization of these acts. Then the government announced the same study.
We are doing our study publicly. We don’t invite people over for dinner; we invite them to appear as witnesses. We want our study to be transparent and to reflect the public’s views. At the end of it, we will write a report.
In addition, our goal is to put out our report before the government’s mandate comes to an end. In other words, we want our report and recommendations to come out before the election. The government’s report, however, is slated to be released in January 2020. There is certainly a convergence, but there is also some competition time frame-wise. If you’re having dinner with her, extend her an invitation to appear before the committee. We haven’t had the privilege, but we consider the situation to be urgent.
[English]
I think the difference between us and them is that we’re going to be doing it in a very public environment, for better or for worse. I was hoping that we have some insight on what they are doing and how they intend on doing it. We saw the terms of reference in the communiqué, but apart from that we haven’t had that much more detail.
Mr. von Finckenstein: The document is coming out this morning, I understand. They wanted to do it yesterday, but they couldn’t because of the power failure at Industry Canada. This morning they are issuing a document, a public consultation, as far as I know.
Maybe, since your report will come out first, you will be so convincing that they will adopt your report. I don’t know. You have to ask the government.
Senator Dawson: The CRTC was created by a decision of this committee many years ago. This committee has had very strong influence in the past.
Senator Bovey: I am sorry I was a few moments late due to another meeting.
You mentioned privacy issues. I wonder if you could insert your thoughts on privacy concerns as we’re looking at Internet and broadcasting, fusing some of the issues and separating some of the issues. I need a better roadmap of which is which and what is what from the privacy perspective.
Mr. von Finckenstein: Privacy is obviously becoming one of the key issues on Internet. Everything about you can be found somewhere in the Internet. You know that. The question is who searches, how they search and what comes up.
Other nations are very concerned about it. As you know, the Europeans have issued a general data protection regulation, which basically says what can be done and what can’t be done. I have to disclose that I am collecting yours so that you can see it, et cetera. They have addressed it comprehensively.
We haven’t done anything of the sort. We have a couple of privacy protection laws, primarily PIPEDA, but we have not really addressed it in the context of the Internet. What does that mean?
I don’t know how much you know about the Internet, but essentially right now everything is held by what are called CDN, content distribution networks. There are basically five players in there. They hold all the data. If you search, regardless of what search engine you use, you wind up in one of those networks.
What is the information about using it? What control do you have there? Probably with any apps that you ever used you signed off, “Yes, I agree to three pages of conditions,” never having read them and having no idea what you agreed to. Every consumer does the same.
With general data protection, ISP’s have to handle it quite differently. It has to be explicit. It has to be in simple language. It also gives you certain rights. An example is the right to be forgotten. You know there was a big case in Europe about somebody having a 10-year-old bankruptcy and it was held against him. He said, “I have been discharged. This is my past that shouldn’t be there.”
As a result of this, you can now make an application. What actually happens is not that it gets erased from the Internet. They will set the search engine so it doesn’t come up. The information is still there, but if I type in your name, et cetera, your bankruptcy does not come up. Notwithstanding that it is in the database, the search engine has been so profiled that it doesn’t bring that up. That’s at least part protection.
There are others. It’s a whole field. I don’t pretend to be an expert on it, but it’s one that needs to be addressed and it has to be addressed both from the point of view of the Privacy Commissioner and the CRTC, the regulator. How can we use our combined powers to ensure that privacy rights are protected, and, of course, in what instance can it be breached with court issued consent, et cetera?
The best and most advanced approach on it right now is the general data protection regulation that the EU just issued three months ago or something like that.
Senator Bovey: Do you feel that your first recommendation in reforming communications legislation and looking at it from the Internet-centric point of view will be addressed by enacting your second recommendation that the Radiocommunication Act and the Telecommunications Act be merged, have one minister and be one organization?
Mr. von Finckenstein: In an ideal world we would have a new electronic communications act which deals with, in effect, the issues I have pointed out, such as access, embed net neutrality in legislation, which we’ve never done. We’ve done it only by decision which deals with consumer issues and competition issues.
But consumer rights in privacy is a huge one. We have to do an awful lot of thinking on what we do. Where is the boundary? What is legitimate and what is not? What does disclosure mean?
With the general data protection regulation, the Europeans say explicit consent given in a concise and legitimate manner, or something like that. How do you actually translate that in practice? What do I have to do so that you don’t just click and you are actually aware that you are giving me permission to do this and what it is.
ISP’s don’t use such jargon as the Telecommunications Act, whatever that means. Avoid, “Fine, I agree with it.” I don’t know what it means; this is what happens right now.
[Translation]
Senator Gagné: Thank you for your work at the CRTC. I will echo the comments of my colleague Senator Cormier.
In a memo you sent to the Minister of Canadian Heritage and the Minister of Innovation, Science and Economic Development on May 5, 2017, you recommended that regulation of communications carriage and content be split into two pieces of legislation. You repeated that here this morning.
Differences between content consumers, be they francophone or anglophone, have been observed. I’ve wondered whether we shouldn’t adopt an approach to content regulation that takes those differences into account and whether that would be appropriate.
Mr. von Finckenstein: What are you suggesting exactly?
Senator Gagné: Should we adopt a differentiated approach given the difference between francophone and anglophone consumers?
Mr. von Finckenstein: Clearly, there is a difference. The French-speaking and English-speaking markets are quite different. We always wonder why the same level of content production and passion for national programs that exists in the Quebec market for francophone content is absent on the anglophone side. How do we make that happen? I have no idea. We’ve never formally made that differentiation before. We’ve always taken an approach that was bilingual, national and so forth. You’re asking a policy question. The broadcasting issues on the French and English sides are the same. The regulation is different, and so is the market. I don’t see how two separate regulatory regimes are warranted.
Senator Gagné: From a content standpoint?
Mr. von Finckenstein: Content isn’t regulated. Ad substitution is done. Naturally, different measures are used for the French-speaking and English-speaking markets. From a core standpoint, they have to be substituted.
I don’t see the activities and resources as being all that different. The specific measures and their application are different, but I don’t think it’s necessary to create two separate bodies.
Senator Gagné: Thank you.
Senator Miville-Dechêne: Thank you very much for being here.
[English]
My question is about a very specific case. I was living in Paris as a diplomat for a year and there was a lot of talk about privacy laws. One of the projects involved an ombudsman who was in charge of all the issues that Internet consumers would have. It could need a third party to be resolved. The big Internet providers are so huge that you need a third party.
Have you thought about that? Is this a role in Canada for the Privacy Commissioner, or do we need somebody who has more leeway? The ombudsmen have no powers as such, but they have influence. What do you think?
Mr. von Finckenstein: One the problems with privacy is it has so many various aspects. We have a Privacy Commissioner. He does not have very strong enforcement powers.
Should he have them? Should you make privacy one of the objectives of the CRTC or have a combination of the two? It is clear that we have to do something about privacy. Privacy on the Internet is becoming a huge issue.
You mentioned an ombudsman, which is basically a way to avoid confrontation. It’s a form of mediation, in a sense, to resolve disputes by involving a third party with goodwill to look at the issue from both points of view and working something out.
It may very well be one part of the solution. It won’t be the whole solution. As privacy issues become more and more prevalent and people are searching for resolutions, et cetera, it may very well be that part of the reform of the legislation is that you create a privacy ombudsman, either as part of the Privacy Commissioner’s office, as part of the CRTC or as an independent. You have to make sure that the relationship between the organizations are clearly set out, that they can talk to each other and that we don’t have sort of artificial restraints as we have right now.
As you know, I was both Commissioner of Competition and Chairman of the CRTC. I’ve seen the same problem from both sides. When there is a merger, as Competition Commissioner I got all sorts of information but I couldn’t talk to the CRTC. Even so, we’re talking about a merger of two television stations or two television networks.
When I was at the CRTC it was the same when I had a television merger. I asked my competition successor, “What are you doing here?” He said, “You know I can’t talk about that.” We could talk about general principles, but we couldn’t exchange our data and details. Of course, as always, the devil is in the details.
How do you do it? How do you want to protect confidentiality? Presumably you have to build in some discussion of what can be exchanged or not. It has to be addressed because right now we basically put them in separate silos.
Coming back to your point, if you create an ombudsman then let’s make sure it’s clear what he or she can do or not do, whom he or she can talk to, and what information can be exchanged.
Senator MacDonald: I am going to take a different tack here and talk about the cost of broadcasting, how it relates to the Internet, and how the Internet relates to broadcasting.
You mentioned the Internet and how disruptive it is. It is also relatively inexpensive for a consumer. Yet, broadcasting is still relatively expensive in terms of receiving broadcasting channels.
Another thing that distinguishes the two is that we have choice with the Internet, but really in broadcasting we don’t have a lot of choice. You’re forced by the big three or big four to choose packages, often carrying channels that probably would not survive if they were individually subscribed to by people.
I am curious if you think that there should be more choice in terms of what consumers have when receiving broadcasting signals. I am always paying for channels I don’t watch and don’t want. I would say average consumers in Canada, if they have a lot of television packages, the Internet, a cellphone, as they all do, and home phone, they are looking at $4,000 to $5,000, probably. For most people it’s a very expensive signal.
In terms of choice in broadcasting, do you think we should update that to a certain extent?
Mr. von Finckenstein: The CRTC has done something. You have now the skinny basics, your basic package where your phone doesn’t have anything anymore that you don’t want. It’s just what’s over the air in your area, plus a few mandatory channels like The Weather Channel.
You can buy à la carte, if you want to, or you can buy packages. As you suggest, most people buy packages and get channels that they don’t want.
I think the Internet will cure this by and large because sooner or later you will be able to get individual channels over the Internet. You will just put together your own programming. If these are the five channels you want to watch, you will click on them; put them as bookmarks in your computer, on your Smart TV or whatever you’re using; and watch them.
We have not done it in the past because cable has been very lucrative. Cable has also paid 5 per cent of its gross revenue into the Canada Media Fund, and we use that for Canadian production.
This is all part of the scheme I mentioned before of access control. If the consumer only had access to broadcasting in a regulated way, be it by the broadcaster or the cable company, we could impose those conditions and limit consumer choice in using the additional rent to pay for production. That’s gone. As we speak, it’s going more and more.
Your concern will be largely solved through the evolution of the market being completely delivered over the Internet. Some people will stay on cable, et cetera, because they are old and do not want to adapt to modern technology. For others it will be out of convenience or lethargy. But it is dying on the line over time, no question about it.
We should eliminate some of the discrimination we have these days which, for the life of me, I don’t understand. If you subscribe to Netflix, you don’t pay HST. If you subscribe to CraveTV, which is the Canadian version, you pay. What on earth are we doing? We have a cultural policy to favour Canadian production, but we discrimination against Canadian distributors in favour of American ones.
I have never quite understood the rationale. I have written about it. It makes no sense. Our trade policy is based on protecting cultural industry, and we have a cultural exemption under NAFTA, et cetera. However, when it comes to this, we suddenly flip around and discriminate against our own. To me, it doesn’t make any sense.
The Chair: Do you think cable channels should have to go back to the CRTC on a regular basis? They get their licence by making certain promises about development, culture and all the usual stuff they talk about.
I like history so I thought the history channel was a great idea, but, come on, I get more history of Netflix than I get off the history channel. A lot of the channels are like that. If you want to watch Hollywood movies, you tune into the Aboriginal channel, for example. They have lots of them.
It seems odd that we have these cable companies, all originating out of Toronto. There’s none in Calgary. There’s none in Edmonton. There’s none in Vancouver.
Mr. von Finckenstein: Shaw is actually in Calgary.
The Chair: But they don’t broadcast. It’s just local broadcasting which you could get anywhere. Saskatoon is different from Calgary.
One good thing is that we have French cable channels coming out of Montreal, but the rest of the country has nothing. I remember a group out of Edmonton tried to start a news channel. They were turned down.
All we have is CTV and CBC operating out of Toronto. The whole country subsidizes the Toronto film industry. I have a real bias against that. I think that’s a terrible way to develop culture and it’s a terrible way to develop a country.
I would like your comments on that since you served on both the CRTC and the Competition Bureau. You might have a different view than I have but I would like to discuss it.
Mr. von Finckenstein: What is the aim? We are trying to make sure we have Canadian production and broadcasting systems that reflect Canada and its values.
Why do we do that? It is because we live next door to the U.S. and the biggest media market. Otherwise we would get swamped.
As the old saying goes, what has formed you as a Canadian? First, your parents; second, your teachers; and third, probably media and television. It’s very important that our media reflects the country.
We have done that relatively successfully over the last 30 years by trying to make sure the Canadian system is properly funded, rich, diverse and basically serves everything. Now it has distortions. There’s no question about it. You’re seeing a lot concentrated in Toronto.
People in Vancouver might take some issue with you because they claim to have a very healthy production industry too. I am not getting into that.
To what extent do you want to steer it? To what extent do you want to let the market and popular demands steer it? After all, you want to produce something Canadians want to watch, absorb and consume. That’s a very delicate balance.
Most of the time we aim at trying to make sure there is enough funding for it and that it gets exposed. Then Canadians decide whether or not they like it. Those are basically the underlying principles. I agree with you that it’s not exact and it doesn’t work perfectly in certain parts of the country. Of course, broadcasters also play the numbers game and produce something that appeals to the largest number of people.
Then you have the specialty channels where you try to get somebody who has a special interest and you produce for them; but you make them pay by making it a specialty channel or a website that you have to subscribe to.
The Chair: I am with you that Canadians should decide, but Canadians don’t decide. I have no way to prevent my tax dollars paying for CBC. I have no way of choosing the programs I want to watch on television. I am forced to buy packages.
If I wanted to buy sports on the CTV station, the CBC station and the Global station in my own city, I can’t do that. I have to buy all these other channels that all operate out of Toronto and all make movies that no one watches.
People don’t watch CBC, I am afraid to say. They come in here and they tell us that more people watch Canadian content on CBC than anywhere else, and that’s about it. There are more people watching American content on other channels than they are watching CBC.
Mr. von Finckenstein: Those are two very different subtopics. Let’s put CBC aside for a moment. I’ll come back to it.
You like sports channels. You can go on the Net and watch TSN. You can watch a whole program if you want to. At the present time they will ask you if you’re a cable customer. If you are, you put in your cable address and you won’t pay anything. If you’re not, you pay for it. You can make the choice as a Canadian: “I want to watch sports and nothing else. To hell with CBC and to hell with newspapers, I just watch that.” You can make that choice. It’s a bit complicated still, but I think over time it will get easier and easier as people do it.
The Chair: It isn’t there yet. It’s a long way from that yet.
Mr. von Finckenstein: It’s halfway there.
The Chair: You need a brand new TV. You have to access through Apple. There are a lot of issues with that.
Mr. von Finckenstein: Absolutely. You have to buy a Smart TV or go through Apple TV, Roku or one of those services, but you can do it. If you decide you’re tired of paying cable companies for something, you don’t watch and you only want to watch sports, you can do it. I admit it is a bit complicated right now, but it will become progressively easier.
CBC is totally different. That is a decision by the legislature. Do we need a national broadcaster? What should a national broadcaster do? How should it be funded, et cetera? The CRTC has taken the decision from day one that because it’s a national broadcaster paid for by the government, Canadians should have access to it whether or not they use it. Obviously it’s government policy that it is important to the country to have a national broadcaster.
If you accept the argument that you need one, then you come to the next step, which is even more difficult: What is the mandate of the CBC? What should it do? What is its role? I personally always thought that it should be the voice of objective news like the BBC. If you really want to know what is happening in the world, go to BBC. The CBC should also reflect Canada and should not compete for things that are already produced by the private sector. Its programming should try to differentiate, pick up and produce that which the commercial market does not produce.
We can argue about different views. That’s my personal view. Other people may differ. There’s a whole debate. In the U.K., for instance, they created something called the BBC Trust, which is basically an organization that looks at the programming of the BBC and decides, “Yes, you can do this,” or “No, you can’t do that.” Maybe we should do that too, or maybe we don’t need a national policy.
You can argue it any which way. If Parliament decides that you need a national broadcaster, then the next questions are: What should it do and how do we get there?
[Translation]
Senator Cormier: On the net neutrality front, I’m especially concerned about intellectual property and copyright. In one of our previous meetings on the issue, Michael Geist told the committee that the European Parliament’s initiative to bring in new copyright guidelines was a lesson for Canada in what not to do. As we all know, it’s a very hot topic in Europe right now. Conversely, further to a study on cultural diplomacy by the Standing Senate Committee on Foreign Affairs and International Trade, John Ralston Saul said it was a good way to protect copyright.
I’d like to hear your views, first, on the European Parliament’s new rules and, second, on the way to protect copyright in the broader context of net neutrality.
Mr. von Finckenstein: They are two different things. Net neutrality is really based on the common carrier principle. As I explained earlier, the person carrying the signal cannot alter it, period, except in rare cases. That rule is already in place, with companies already required to follow network neutrality and traffic management practices.
Mr. Geist said it would be preferable for the CRTC’s decision to appear in the act. I completely agree. Signal carriers should not be allowed to alter the signal, and it should be set out in a rule. That’s the principle behind net neutrality. That ensures everyone has access, perhaps not the same level of access depending on what they pay, but everyone has access to the same content.
Copyright is something else altogether. What rights do we have to the content produced on the Internet, especially in the case of a mash-up where only part of a song is used? Should users always have to pay composers for the copyright? The flip side is piracy, where movies or music are distributed illegally, literally stolen or pirated. In that case, is it possible to call Rogers and say that the activity is prohibited? What’s the right approach?
We currently have a notice and notice regime in place. For instance, if I own the copyright for a song and it’s played on a channel that doesn’t pay me for it, I can send a notice. Rogers, on its end, sends a notice to the website distributing the song because it is infringing the Copyright Act, but that’s it. Rogers has no obligation to do anything other than send notification of the copyright infringement. It is simply hoped that the issue will resolve itself after that.
The U.S. has a notice and takedown scheme. If, for instance, an organization is notified that a website is infringing on my copyright, the website is required to block the content because it’s a copyright violation. Now is that a good thing or not? Like everything else, it becomes a whole lot more complicated when things like the evidence, the decision-maker and all the rest come into play.
As I mentioned, piracy is a huge problem on the Internet, and we need a mechanism to stop it. Which institution should be responsible? That’s an open question right now, but everyone agrees that the problem needs fixing.
[English]
The Chair: When you talk about piracy, if you go to YouTube, you can watch CNBC, Fox and programs that we don’t get in HD. Those are stolen properties. I don’t know how people do it, but it’s not Fox or CNBC that is authorizing it.
There are all kinds of movies that people put on there simply by watching it at a theatre, filming it in some way and rebroadcasting it on YouTube.
How do you stop stuff like that? How do you prevent that from happening? YouTube has a lot of stolen intellectual property on it, which is what we’re trying to prevent.
Mr. von Finckenstein: That’s your allegation. YouTube will maintain that they police it very carefully.
The Chair: They don’t.
Mr. von Finckenstein: Be that as it may, all I was trying to say is that it is an issue that needs to be addressed.
As you know, there’s an application before the CRTC called FairPlay, where all the major broadcasters and producers get together and say to the CRTC, “You have to step in and do something.”
The problem there is whether the CRTC has the authority. If you look at the CRTC Act or the acts it administers, copyright is not mentioned anywhere. Since it is the regulator and responsible for the system, can you say that by implication it is obviously part of it? Or do you say, “No, this needs separate special legislation either in the Copyright Act or an anti-piracy act”? That’s a first step: Who is responsible?
Second, what do you do? As I say, you could establish a system where the owner of the copyright can complain to the person who is sending out the piracy. In your example, you mentioned YouTube. What does YouTube have to do? They have to immediately take it down and say, “If you disagree with the allegation, sue the affected party who posted it or work it out with each other.”
Is there a process? What are the time limits and levels of proof required? Unless it is outright theft, you will have a dispute between the alleged perpetrator and the copyright holder.
I don’t know the answer. It’s very complicated. All I am saying is that it’s something that needs to be addressed and should be addressed. If you are reviewing of the three acts, may I suggest that you take an Internet-centric point of view? You also have to include the issue of privacy.
Senator Galvez: Mr. von Finckenstein. I am so sorry I arrived late. I was in another committee. I read your statement, and I cannot agree more with what you said.
We are in the process of finding recommendations because we want to write a report and put out recommendations. I am in favour and in agreement with your second and fourth recommendations. I would like to explore them with you a bit further.
Yes, it is very surprising that radiocommunication and telecommunications are separate. We should move toward trying to merge them or trying to harmonize them better. Why are wireline and wireless dependent on different ministers? That doesn’t make sense.
In the fourth recommendation you talked about separating the regulations for telecommunications and broadcasting. Please elaborate further, if you can, but I see telecommunications as the container or the tool that transports and serves as a vehicle for broadcasting. Broadcasting, for me, is the content or the substance. The CBC is important for local, cultural and regional news. We need these at the national level.
More and more we will have environmental alerts, news alerts and many other types of alerts. So we need to have national broadcasting.
How do you think we should go about implementing these two recommendations?
Mr. von Finckenstein: As I mentioned, they require different skill sets and they deal with different issues.
On Internet, you want to concentrate on such things as we talked about: access, affordability and net neutrality. In broadcasting, as you say, it’s content. You want to make sure the content is there and the right content gets diffused. In the past we mixed the two because we could. We tweaked the whole system so it works in favour of Canadian broadcasters, and we were incredibly successful.
The whole Canadian music industry was largely created through the way we manipulated our radio policy and insisted that you have to finance Canadian songs and replay them so that they find air time. By now, they are a great success worldwide. The music industry will gladly admit it was largely done through the talent of the Canadians and through the way we tweaked our radio policy.
We have done the same in broadcasting as much as we could. We don’t have the means anymore. There is no way that you do it anymore. I spoke with the chairman. He complained about cable and having no choice today. In five years, that will be gone and you will have all the choice.
When you’re talking about broadcasting, what are you really focusing on? You are focusing on issues such as funding, which is a big issue. You are also focusing on promotion and on what goes under the horrible name of discoverability. Discoverability is there on the Net, but the Net is this huge thing, so how do I find it? Should we help that? Should we set up a way that we can find Canadian programming, or will the market do it by itself? Can we influence search engines?
There are also issues that are completely different from telecommunications where you want to make sure the signal gets through.
Senator Mercer: Mr. von Finckenstein, I have two questions. The first one is one my colleagues referred to before. The opening line for the 6 p.m. CTV News in Halifax is live and local. That’s what the broadcaster says every night when he starts the broadcast.
CTV gets a licence for that. As residents of Nova Scotia, my wife and I sit to watch live and local news. We find out what are the traffic problems in Saint John, New Brunswick, a school issue in Moncton and something going on in Bathurst. Last time I checked, that’s not local for all of us, the almost million people who live in Nova Scotia.
They came in and applied for a licence to be the broadcaster in Nova Scotia. They have a licence to broadcast in New Brunswick as well. How do we police that? They continue to say it’s live and local, and if I want to get any local or national news, I have to sit through traffic tie-ups in downtown Moncton and school issues in Saint John, New Brunswick?
Mr. von Finckenstein: I struggled with the issue of local news, et cetera, throughout my tenure at CRTC. People very much want to know what is happening in their communities. It is expensive to produce and it doesn’t pay for itself. Unfortunately that’s the reality.
There are various ways of doing it. For instance, in Hamilton, you have CHCH, where they basically report anything that happens on the Niagara Peninsula, nothing else, because the area is big enough.
Now take a small area, like the senator mentioned, and there may not be enough revenue there from advertisers. Obviously they are making less from advertising because there are very few national advertisers. You only have local advertisers who will advertise on something like that.
You have other models where a lot of radio and TV stations have websites that reports the local news. For instance, there is a radio station in Steinbach, Manitoba, a relatively small place, called Golden West Broadcasting Ltd. Anything you want to know that happens in Steinbach, you find it on the radio station’s website.
I spoke to the owner. How do you do it? He says, “I make more money on the website than on my radio station. The radio station drives people to the website. If something happens in Steinbach, I report it, whether it is a death or a school closing, et cetera. If there’s a flood in Winnipeg, I won’t report on it though it’s 50 kilometres away. If one of my residents gets stuck in the flood, I report it.”
Everybody is coping and trying to find ways to report local news. It is there, but to monetize it is very difficult.
Senator Mercer: CTV in Halifax is not being imaginative enough. I hope they are listening today.
I want to go the second recommendation in your presentation. You recommend that there should be responsibility and that one minister and one organization should be responsible for both wireline and wireless communications.
Then you go on in the fourth recommendation to say, “create separate agencies for the regulation of telecommunications and broadcasting.” I am confused. You want there to be one minister, but then you go on to talk about separate agencies.
Are you suggesting that those two agencies, if there were two, would report to the one minister?
Mr. von Finckenstein: I didn’t say that at all. I said in the fifth recommendation that anything to do with broadcasting should go to Heritage and anything to do with communication should go to Industry. If the committee takes my recommendation and creates a separate agency for broadcasting, it would report to Heritage.
Right now in the Radiocommunication Act, which predates cellphones, the Internet, et cetera, wireless is seen as a way of communicating traffic safety for police or firemen. Therefore it’s Industry. It made perfect sense then, but wireless has taken over huge portions of the spectrum. It is being used for communications and cellphones, et cetera. Yet it is regulated by the minister. He decides how. I have no problem if the minister makes a decision saying that these bands are for safety, these bands are for cellphones, and these bands you can use for broadcasting on radio. Then the administration, the mechanisms, the regulation and all of that should not be in the ministry anymore. That should be with the regulator, and right now it is not.
For instance, what happens every time you issue new wireless licences is that small companies get a certain amount of customers and then they get bought out by the larger ones. The conditions on when you can buy out, sell out or not, and how long are set by the minister. It doesn’t make sense.
The minister can change. Essentially it is a relatively unregulated discretion of the minister for wireless, while for wireline you have very detailed and very clear-cut rules laid down by regulation administered by the CRTC.
Senator Bovey: Thank you for what you’ve said, but just as a caution, we should remind ourselves as we’re talking about an equal footing on digital competition and about the Internet and broadcasting, there are vast regions of the country that do not have accessibility to the Internet.
I don’t believe we will be able to solve some of this until those parts of the country have equal access to the technology that will be conveying the news, the programming and even the safety issues that come across.
We need to remember that there are vast areas of the North and even parts of the Prairies, British Columbia and northwestern Ontario that do not have access.
Mr. von Finckenstein: You realize, of course, that through satellite access you can have access practically anywhere in Canada now. It’s more expensive. It’s not as fast. There are limitations, but the number of people who cannot reach Internet is constantly shrinking.
Senator Bovey: I agree with you, but, with due respect, I was in the Arctic a couple of weeks ago and there were vast areas where we were travelling where it was impossible to get it. The citizens were telling us they didn’t have access to it. It is very expensive and there is a need to improve satellite so that in fact it works. That is just a caution as we go forward.
The Chair: What about radio and TV?
Senator Bovey: Even that was pretty raw, let me tell you.
The Chair: I m sure they didn’t have a local TV station.
Senator Bovey: There were places where the TV was in the hotel room, but there was nothing on the TV.
The Chair: If there are no further questions, thank you very much for coming here today. That was a very interesting meeting.
Before I adjourn, steering, did you want to meet today or tomorrow at 6:30? We could meet at 6:30 in my office. We would probably take maybe 20 minutes or half an hour and we would be done. How about 6:30 tomorrow?
Senator Dawson: I might say that I don’t want to have dinner with the chair of that special committee, but I think she should be invited to appear.
The Chair: Absolutely. We’re going to discuss that.
Senator Dawson: But I would like to have lunch with her.
The Chair: We have a bunch of witnesses we have to approve, so we have to do that tomorrow. We don’t have witnesses for tomorrow but next week we start with a pretty full slate.
Thanks very much.
(The committee adjourned.)