Proceedings of the Standing Senate Committee on
Transport and Communications
Issue No. 40 - Evidence - October 17, 2018
OTTAWA, Wednesday, October 17, 2018
The Standing Senate Committee on Transport and Communications met this day at 6:45 p.m. for the election of a deputy chair; and 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: Before we go to our witnesses, Mr. Taylor and Mr. Raboy, we have another item of business. It’s the election.
We have a vacancy in the deputy chair of this committee. I’m ready to receive a motion to elect a new deputy chair from the ISG group. Are there any nominations?
[Translation]
Senator Gagné: I nominate Senator Julie Miville-Dechêne as deputy chair.
[English]
Senator Galvez: I second that.
The Chair: Are there any other nominations?
It is moved that the Honourable Senator Miville-Dechêne be the deputy chair of this committee. You’ll be joining Senator Dawson who is the other deputy chair. Now we have a multitude. We all have a title now in our steering committee. Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
The Chair: It’s unanimous. Congratulations.
Senator Miville-Dechêne: Thank you very much. You said we have a multitude and we don’t have parity. We don’t have gender parity, but we’re a bit better than you were.
The Chair: With three, it’s hard to have parity for males or females.
Senator Miville-Dechêne: We will get there.
The Chair: I’m not sure why that is important right now. Let’s go, honourable senators.
Last June, the Senate authorized the committee to examine and report on how the three federal communication statutes, the Telecommunications Act, Broadcasting Act and the Radiocommunication Act, can be modernized.
This evening we continue our special study. I would like to welcome our witnesses, Marc Raboy, Beaverbrook Professor Emeritus in Ethics, Media and Communications, McGill University. Welcome. And we have Gregory Taylor, Assistant Professor, Department of Communication, Media and Film, University of Calgary. Welcome to you, Mr. Taylor, and for coming all the way from Calgary. Thank you for attending our meeting.
The floor is yours, Mr. Raboy. Please proceed.
Marc Raboy, Beaverbrook Professor Emeritus in Ethics, Media and Communications, McGill University, as an individual: Good evening and thank you, chair and senators, for this invitation to appear.
By way of introduction, I have been a close observer of Canadian communication policy for the past 35 years, as a teacher, researcher, writer and occasionally an adviser to the policy process. From 2001-2003, I was one of two external expert advisers to the House of Commons Standing Committee on Canadian Heritage for its study on the state of Canadian broadcasting, which produced the report, Our Cultural Sovereignty: The Second Century of Canadian Broadcasting, also known as the Lincoln report.
Although your brief is to look at the three pieces of legislation that govern the Canadian communication system, my remarks will focus mainly on one of these, the Broadcasting Act, for reasons that should become clear in a few moments.
Early on in its report, the Lincoln committee stated this study can be viewed as a report card on the health of the Broadcasting Act. It went on to say:
The Committee has concluded that the Act itself needs few changes. It was finely and painstakingly crafted and reflects a consensus reached after a long and arduous consultation process . . . .
While the Act needs some modest retooling . . . it remains a viable instrument of public policy. The key issues revolve around how to carry out the intentions of the Act . . . .
I would say this statement remains largely true today. Even the key issues identified in 2003 still resonate: How to promote Canadian content, how to ensure the key role of public broadcasting and a fair balance between public and private sectors, how to reinvigorate local and community programming, and so on. In fact, these issues haven’t really changed substantially since the federal government first became involved with broadcasting policy in the 1920s.
What is new is that with each new wave of technological change, new issues or, more precisely, new versions of the old issues, appear, and these are what need to be addressed. The most important things we can learn from this long, historical engagement with broadcasting are, first, that to the extent Canadian broadcasting has met the expectations of Canadians, it is largely due to the framework that has been put in place and supported by legislation; and second, the legislation is not the end but only the beginning of a process. The legislation spells out intentions that must then be carried out by the institutions it creates.
There has been a lot said and more to say about the need for legislative change. Most of the detail revolves around updating, adding, subtracting and harmonizing existing legislation. As you think this through, I want to urge you to keep in mind and consider what ought to be preserved in the legislative framework that has been built up over the years. As you well know, opening up the architecture of a legal framework is fraught; the whole structure can come crumbling down.
You have a large and complex task, and I have little time with you. I will try to keep my remarks simple and focused on a few key points.
I’m going to focus on section 3 of the Broadcasting Act, which is entitled “Broadcasting Policy for Canada.” Section 3 begins with a declaration that “the Canadian broadcasting system shall be effectively owned and controlled by Canadians.” As the first of 20 subsections, many including numerous subparagraphs, this was clearly the overarching element in the intention of the legislator of the 1991 act. I do not believe anyone is questioning this basic premise.
In my view, it is the subsequent subsection that needs close attention. It is here that one finds the three little words of the title of my presentation: “a public service.” The Canadian broadcasting system, it is stated here, is “a public service.” There are other crucial attributes mentioned in this long paragraph: that the system operates in English and French; that it is comprised of public, private and community elements; that it makes use of radio frequencies that are public property; and that it is “essential to the maintenance and enhancement of national identity and cultural sovereignty.”
But the cement that holds this together is, and must continue to be, the public service character of Canadian broadcasting.
At the end of section 3, the act further reiterates that “the Canadian broadcasting system constitutes a single system” for purposes of “regulation and supervision” in order to meet the objectives outlined previously.
These two references that essentially bookend section 3 are absolutely crucial. Canadian broadcasting constitutes a single system, and that single system is a public service. All of the constituent elements of the system operate within that framework. All of the objectives specified in the policy have to be aimed at within that perspective.
The question then becomes what we mean by “a public service.” To keep it simple, I would suggest an analogy: Think about communication the way you think about health care or education. Those sectors are equally, or even more, complex and are made up of a wide range of specific services, some of them entirely publicly funded, some of them profit centres and some operated by non-profit organizations. They are fundamentally conceived, operated and overseen as public systems.
I would argue that in looking to update and harmonize the country’s legislative framework for communication, it is not only critical to preserve this characterization of Canadian broadcasting as a public service but to extend it explicitly to the rest of the communication sector as well. I don’t need to tell you the lines between broadcasting and telecommunications are increasingly blurred. The two sectors have been governed over the years by separate pieces of legislation, with distinct objectives, although regulated by a single agency since 1976, and that should tell us something.
Your committee, as well as the government, are now considering whether and to what extent the legislation should be harmonized. I am here to suggest the cautionary note: Take care to preserve the consensus that has been “finely and painstakingly crafted,” to refer back again to the Lincoln report. The centrepiece of that consensus is the public service character of the system.
I have some comments to make about other specific paragraphs of section 3 that we can address through your questions. Thank you for your attention.
Gregory Taylor, Assistant Professor, Department of Communication, Media and Film, University of Calgary, as an individual: I would like to extend my sincere thanks to the committee for the invitation to appear today. I believe it is time to strengthen what we see as working in our communication system, to use occasions like this to come clean on the shortcomings and look at some of the alternatives in what has been 100 years of Canadian broadcasting.
The first point is to ask the committee to be wary of any of the “end of broadcasting” rhetoric that can permeate debates such as this. The data simply do not support this position. In fact, I argue the exact opposite: it is the surprising resiliency of broadcasting that is one of the great media stories of the Netflix era. Plus, there are concerning ramifications for democracy if the end of broadcasting is made a self-fulfilling prophecy via legislation.
I also believe the government must stop expecting existing markets to deliver communication infrastructure in rural regions. This has not happened in the past, there is a strong chance that it never will happen and this is not a uniquely Canadian phenomena.
Also, I would like to say that for the two acts, there are fundamental changes I believe the government should consider, including broadening the scope of the CRTC to include spectrum oversight, and resurrecting the Department of Communications that was decommissioned in 1993.
First, on the end of broadcasting, as I say, to the contrary, broadcasting is very much alive in Canada. It’s clearly not experiencing the growth of the mobile sector, but the CRTC’s own data show broadcasting revenues have flatlined but not diminished in the Netflix era.
The much-discussed cable-cutting or cord-cutting phenomenon is similarly overhyped. The CRTC’s data show that revenues for cable have dropped 0.5 per cent since 2012. That’s for total BDUs. This is an industry that had never experienced a loss until 2013. The CRTC data also show that cable cutters have generally just moved over to what are called IPTV services like Bell Fibe and have not abandoned the system altogether.
There are clear problems in broadcasting. Most of those are in the conventional sector, as advertising revenue continues to drop. But overall, this sector remains healthy, and reports of the death of broadcasting are decidedly premature. While this decline is slow, I recommend it would also be prudent for the government to decouple the Canada Media Fund from the slowly declining BDU revenues.
As far as how this plays out in the larger democratic process, I would say the case in point is to look at what happened in the 2015 leaders debate in the last federal election. It offers us a case study, because major broadcasters did not cover the leaders’ debates, and viewership of these debates plummeted to 1.5 million viewers when it was mostly carried on small broadcasters.
They thought the online audience might pick that up but YouTube audiences were around 440,000 people. To put this into perspective, in the previous election, when Global, CTV and CBC carried the full debates, viewership was around 10 million people. Simply put, the online world has not caught up to the mass viewership of traditional broadcasting.
There will be a continued decline, I think, in traditional broadcasting, but this is by no means the death knell of this part of our communication infrastructure. It will be years down the road. For the foreseeable future, broadcasting still matters.
On the matter of rural broadband, I think rural connectivity in Canada must be viewed as a largely wireless enterprise. It simply makes technological and economic sense, since running fibre to rural homes is not economically feasible.
The process of taking moving spectrum users from one frequency band to another is known as “refarming” the spectrum. However, refarming has not benefited the farmers. Despite the repeated announcements by the federal government about rural connectivity, there has been a digital divide that remains persistent in Canada. I think the time is right for reevaluation of this.
The government seems to be slowly recognizing that a market-based approach has its limitations. For more than a decade we have tried to auction spectrum through a market-based process. It has not brought the deployment in rural areas we had hoped. Broadband providers are experiencing enormous financial growth but this is not being felt in rural build outs. I believe there will have to be much more government involvement in this in the future. I also want to quote what Mark just said, this is a new version of an old issue. This was true of telephones, it was true of radio, and it will be true of broadband today. Getting that last bit of the infrastructure out to rural areas is something that Canada has had to grapple with in the past.
As far as legislative changes, first, I believe that spectrum oversight should be moved to the CRTC. There is a fundamental link between spectrum and Canadian connectivity and it should not be under the auspices of ISED who also look after things like the auto sector.
The ISED minister has an enormous impact and under the act “may do anything necessary for the administration of the act.” A former government official at a conference I organized said this was godlike powers over the spectrum. I think we need to be thinking more about an arm’s-length approach with much more of a forward-looking aspect to looking at the significant area of spectrum.
The other area of why I think it should come over to the CRTC is the CRTC has a tradition of public negotiation, public involvement and public engagement. I think that’s essential as we look at something that is increasingly central to the wireless connectivity of Canada. We need to have that public access to the government procedure.
When you take a look at what happens with ISED, it’s often behind closed doors. The CRTC does these things through public engagement much more out in the open.
I’m also proposing we consider re-establishing the Department of Communication, which ran in Canada from 1969 to 1993. Unfortunately, it was disbanded just as the most powerful communications tool in history, the Internet, started to appear on the public radar. I think the Department of Communication, which was self-described as “representing a fusion of administrative and research units to provide a more coherent view of the needs of the Canadian public,” is exactly what we need right now and something I think the government and this committee should consider.
My final recommendations are three quick ones. One is that the CBC remains key to any future of Canadian media. We may incessantly argue about the content, but the centrality of the CBC to the system has not diminished — in fact, it may have intensified in the digital era.
Secondly, I think Canada’s net neutrality laws must be upheld and reinforced. We have repeated cases where ISPs have tried to exert influence over data traffic to gain economic advantage. To counter that in the future, we must remain true and solid to net neutrality provisions.
Lastly, I believe the 1999 new media exemption order has given the new media sector more than adequate time to get established. However, these new media are not so new anymore. I support attacks on foreign and domestic-based over-the-top distributors that would go toward Canadian media production. If it were at an equal rate to Canadian broadcasting distributors, roughly 5 per cent, that would add roughly 50 cents a month to a Netflix bill. I do not see this as a major obstacle and it seems fair if legacy media-like cable are asked to contribute the same.
I thank you for the opportunity to speak today.
The Chair: Thank you very much. I’ll start off with a couple of questions. Mr. Raboy, I think you talked about Canadian ownership. Does it matter as much considering that we get U.S. cable and the BBC? Basically, with cable and the Internet, we get information from all over the world. Why is it important the station in Saskatoon be owned by a Canadian?
Mr. Raboy: First, I think we’re talking about the overall system and each of its components. A station in Saskatoon is one thing. Bell Canada is something else.
The important thing to consider is Canadian ownership in no way means excluding or limiting access to non-Canadian content. It means that Canadian institutions, especially the regulatory institution, the legislator, have some kind of connection to the companies that operate within our system.
The Netflix example keeps coming up. Not to focus unduly on that, but if Netflix were a Canadian company, we would be in a much better position to negotiate with that company about its proper place and contribution to the system.
That said, the fact it is a non-Canadian company does not mean that it is not subject to Canadian rules and regulations.
The Chair: Rules and regulations; everything else. What would be the difference if some guy from Boston owned the station rather than some guy from Saskatoon? What would the difference be?
Mr. Raboy: If some guy from Boston owned the station in Saskatoon, and the CRTC made some kind of ruling that guy from Boston didn’t like, he might shut down the station.
The Chair: Not if he is making money he’s not.
Mr. Raboy: He might find that his rate of return would be better to have another station in Indianapolis. This is not something essential to Canada, either. In my view, it’s a basic element of sovereignty.
The Chair: Okay. You mentioned public service. What do you mean that it’s important they provide a public service? What is that?
Mr. Raboy: That means that the raison d’être of the system is to serve the public interest. Obviously if you have privately owned components of the system, they have to make a reasonable profit. The reason the system allows those components to exist is because the entire system, on the whole, is serving the public interest.
There is some confusion about the distinction between when the act says the system is a public service, it’s actually important that in the same sentence it says “comprised of public, private and community elements.” There is no suggestion that the entire system be in the public sector or that it be publicly owned and financed. It’s just that the overall system be a public service.
I like making the perhaps somewhat stretched analogy with health care and education. For example, our hospitals have multi-million dollar machines built by private companies making a profit on those machines. Those companies are not determining the orientation of the health care system. The health care system is fundamentally operated as a public service in the public interest.
The Chair: They’re responding to the public. People are sick, they go to see a doctor or they go to a hospital. They have to respond to the public, right? Don’t they? The hospital has to respond to the public?
Mr. Raboy: I think I see where you’re going. The hospital has to respond to the public, but also the public institutions, Government of Canada and agencies responsible also have to pay some attention to what science says is in the public interest with regard to health care, for example.
The Chair: What’s the difference between CTV, Global and CBC as far as public service is concerned? Any one of you can answer. Mr. Taylor, you can jump in. This is my last question.
Mr. Taylor: As far as the difference between CTV, Global and CBC, if you look at things like the Canadian content obligations of the CBC licence as opposed to CTV and Global, they’re supposed to have something in the neighbourhood of 80 per cent Canadian content in evening schedules. That’s something CTV and Global wouldn’t do. The CBC tends to beat that on a regular basis in their evening schedule. CTV and Global are understandably concerned about getting the right number of eyeballs to watch a show. The CBC has a much larger public mandate and I think it’s reflected in the schedule and in the programming.
I think there is clearly a public obligation under the CBC that’s a little different from the privates.
The Chair: Eyeballs aren’t important?
Mr. Taylor: They’re important. They’re not everything. For example, on the CBC —
The Chair: Really?
Mr. Taylor: Yes, really. I do believe that.
The Chair: If no one is watching, that’s good?
Mr. Taylor: Allow me to finish my point. For example, if the CBC, under a public service mandate, is showing “The Nature of Things” on a Sunday night, yes, that’s going to be beaten in the ratings by a dating show on Global and CTV. But it is not necessarily in the public interest that our public funds go towards making sure we see that dating show on CTV and Global.
Yes, I fundamentally think there’s more at stake than just eyeballs that are watching the show at any given time. I think there are public obligations — in particular with the CBC.
Senator Cormier: I will continue on the public service —
Mr. Raboy: May I add something on the last question? I was ready to reply.
The Chair: Sure.
Mr. Raboy: I would take a different tack to your question. What makes them all part of a public service — it has been well documented that the legacy private broadcasters in this country, both in English and French, would possibly not exist were it not for the regulatory framework put in place initially by the act in 1968 and subsequently by the CRTC.
Without getting too technical, if I say simultaneous substitution, does that mean anything to people around the table? That’s a CRTC regulation by which cable distributors and satellites are required to substitute the signal of CTV and Global for the American signal when both networks are showing the same program at the same time. That is several hundred million dollars a year in ad revenue for private broadcasters in this country that they simply would never have had were it not for the regulatory framework, for this one regulation.
The trade-off is they are then asked to make a contribution to aspects of the system that are perhaps not so easy to sustain in the market. That’s the basic idea. It’s not really how many people are watching each station but what each player is putting in and getting out of the system.
Senator Cormier: I want to continue on the public service issue. I think it’s crucial to our study, crucial for Canada and crucial to this system. I’ll ask my question in French.
[Translation]
Mr. Raboy, in some of your recent publications, you evoke the notion of global media and communications policies. What do you mean by that concept? Should Canada adopt such a policy? How would this policy align with the idea of public services? What would be its nuances and intents?
Mr. Raboy: Congratulations, you have clearly done your research.
When I spoke of global policies and media and telecommunications, I was speaking really of the international aspects, such as their evolution within international organizations, be it UNESCO or the World Trade Organization, for instance at the World Summit on the Information Society.
I would characterize the issues in exactly the same terms, both at the global and national levels. At the global level, the landscape is different, the actors are different. This requires another type of engagement. Canada is in fact quite active internationally in promoting these notions.
Between the national and international levels, there are also the bilateral or trilateral levels. If you think of NAFTA, for example, Canada managed to build what is called the “cultural exemption” using these self-same arguments, using the same logic, although it does not use the expression “public service”; it is in a way interchangeable at some levels with other concepts such as cultural sovereignty. When the country is acting at the international level, it indicates that it wants to determine its own policies within its own borders. It is public services that should —
Senator Cormier: We are up against two distinct fundamental visions, which are public services and the free market, where private enterprise runs the show. We let citizens access the content they wish to access. How should this align with modernizing these laws? How can we reconcile these two rather opposed visions?
[English]
Mr. Taylor: This is something that has defined the Canadian system since the beginning. Canada has been unique this way in supporting both a public and private system. I think it is possible to do both. Canada is the walking example of a system that does both.
When you take a look around the world right now, we’re starting to see more of these hybrid public-private systems. In some ways, Canada has been a pioneer. Yes, I understand they’re coming from two very different perspectives, but this is why I said in the future it is so important we have the CBC and public broadcasting in a prominent place in this country. I think it’s very possible for both to exist.
[Translation]
Mr. Raboy: The example I gave about private Canadian broadcasting is the key. The notion of the free market in this sector is a bit of an illusion. The free market does not really exist in broadcasting, or even in communications. It may exist in the United States, but in a country like Canada, which has a relatively small market and must deal with a large number of non-Canadian actors, where is the free market?
The free market needs to be hyper-regulated. Otherwise, we simply become a branch of foreign services.
Senator Gagné: Welcome to the committee, Mr. Raboy, and thanks for your presentation. I believe you appeared before the committee during the study on CBC/Radio-Canada in 2014. At that time, you mentioned that CBC/Radio-Canada should benefit from stable and predictable funding to allow it to reach its objectives. What do you mean by “predictable and stable funding”? Should that concept be spelled out more clearly in the policy?
Mr. Raboy: By “stable and predictable,” I mean that you need to know how much you can invest on a longer period rather than year after year in every federal budget.
There are several models in various countries where public television subsidies are based on a five or 10-year model, for instance at the BBC. I should add that that is also another type of funding, different from funding that is directly allocated by the Treasury; they have licence fees, essentially similar to what we pay when we renew our vehicle licence every year. It’s a fee that is set by the government and that every user must pay. That is how the BBC is funded. The rate is set for several years, and so the broadcaster knows several years in advance what its budget is going to be.
Senator Gagné: Should we make any adjustments?
Mr. Raboy: I think that at the time — and I always come back to the Lincoln report, which I strongly recommend — we had proposed that this be set out in the part of the act that discusses CBC/Radio-Canada’s mandate. It was an extremely important recommendation made by the committee.
Senator Boisvenu: I want to welcome our two guests. I have a question for both of you. First of all, Mr. Raboy, when you talk about Canadian broadcasting, are you referring to the CBC?
Mr. Raboy: No. In my opening statement? No, I was talking about Canadian broadcasting in general.
Senator Boisvenu: In general. You say that it has a unique character. What is your statement based on? How does it have a unique character as compared to American television?
Mr. Raboy: I don’t know, I didn’t listen to the interpretation. It isn’t so much a unique character as a unique system. That comes directly from subsection 3(2) of the Broadcasting Act.
Senator Boisvenu: So, it’s not a conclusion you came to.
Mr. Raboy: No, the act states that the Canadian broadcasting system is a “système unique.”
Senator Boisvenu: I’m trying to understand in what way it is unique as compared to others.
Mr. Raboy: It may be a bad translation. In English, it says “single system.”
Senator Boisvenu: So, unique in the sense of unity. So, the term “unique” is wrong.
That said, Mr. Taylor, the current government has committed to bringing wireless internet to the rural regions. We know that in Quebec particularly, the most remote regions are behind by 30 years. Has the federal government failed in meeting that challenge as it should? What do you think?
[English]
Mr. Taylor: Yes, I believe it is a failure of the federal government. It’s one that has not been the fault of any one government. It has happened over a succession of governments. For example, I do a lot of work on spectrum policy. When we moved over-the-air television north of 700 megahertz spectrum, that was particularly useful for rural areas because one signal goes far. It was great for broadband in rural Canada.
When the licensing came out, basically it said those that won a licence through the auction would have to cover the same territory they had already covered, within about five to seven years. It did not make the effort necessary in the licence to say, “No, you must cover everything in that area.” I think in some ways it capitulated to the interests of the wireless providers at a time when the moment was ripe to provide this service into rural areas.
There have been initiatives and studies — I could list them for you — where the government said it would do this. I spoke to the reporter who covered the announcement of the 700 megahertz auction. She said the government took everyone out to a cabin in the wilderness to announce the auction to show that this would be a rural-based auction. It never happened. I don’t blame any one government. This is something that’s been going on for some time. I think at the root it’s expected that markets will deliver in areas where there is simply not the economic return that’s going to merit that sort of free market enterprise for developing communication infrastructure.
[Translation]
Senator Boisvenu: If I understand correctly, that type of service will never be a public service, in that the people who don’t have access to it currently won’t have access to it in the future either, as this will be addressed by private broadcasting interests rather than governmental ones?
[English]
Mr. Taylor: I don’t think it has to be that way. I think there are a lot of opportunities for the government to get engaged. My main point is to wait for markets to deliver in rural parts of Canada simply won’t happen. This is not new. It didn’t happen with the telephone; it didn’t happen with radio. The government had to intervene. That’s my point: there are areas where the market can deliver. Cities seem to be doing quite well. Our infrastructure is pretty good. You could argue our prices are too high, competition could be better, but you can get service. I think to get quality service out to these areas, we have to stop relying on market-based approaches. They’ve had decades. They haven’t delivered. I think we need to now look at other more publicly based approaches. I think it’s necessary and, again, not unusual in the history of Canadian communication.
Senator Wetston: Mr. Taylor, it’s not unusual in many aspects of other policies, in energy, transportation, airlines, electricity distribution, generation. We have the same issues with respect to rural Canada. It’s not unusual. That’s just a follow-up comment, which I fully appreciate.
Mr. Raboy, what I hear you saying is you kind of like what we have. You think it works fine, more or less. You want to take the best of what we have and you just want to make it better. I’m going to put a bit of a comment on that.
How do you want technology to serve us in Canada? There has been some comment about the regulator. I think regulators worldwide are struggling to function in the digital world. I don’t see our regulator as any different than many other regulators. Change cannot be piecemeal. It must be systematic. And regulators must develop an approach to support and not suppress innovation. I’m asking it this way only to get your view, since you’ve mentioned regulatory landscape in some way or another. Mr. Taylor, you’re welcome to respond to this as well. How do you think the existing regulatory landscape affects facilities-based providers to maintain and upgrade their networks, whether in cities or rural Canada? Do you have any comments on that?
Mr. Raboy: You’re asking both of us?
Senator Wetston: Sure.
Mr. Raboy: First of all, I’m not saying I think what we have is fine, let’s keep it that way and move on. I’m saying there’s a lot in what we’ve got that should be kept and there’s a lot in what we’ve got that should be thought of as a blueprint for how to deal with the problems of the future.
I can’t go through the history of the system we’re talking about, because I give courses on this. We have gone through this before. We went through it with television. When television came in, it upset everything. The legacy radio companies were concerned. Then, with time, we’ve had the same companies owning the radio and the television companies, so on and so forth.
There are things we can preserve in terms of the way we think about the system. When we have a new technology that arrives, you say, “Okay, we want the Canadian broadcasting system to look a certain way. What do we need to do to tweak the technology to get there?” You say, “How can we make the technology serve us?” That’s obviously the key question. I know you have heard experts on this here, but net neutrality — that’s a way of getting technology to serve us, or making sure that it doesn’t do a disservice to us.
Obviously, there needs to be regulatory measures and maybe a little bit put into law about this. If you do a close reading of the existing legislation, that’s not where the problem is. This is what I tried to say in my exposé: To the extent there are problems, it’s not really in the wording of the act; it’s in how the act is carried out and implemented.
Senator Wetston: Mr. Taylor?
Mr. Taylor: I’d follow that up with a couple points. One, the current government initiative with the CRTC about bringing technology, particularly broadband, into rural areas is a very welcome initiative. It’s also a patch. I don’t think this is really a long-term strategy. By bringing things like wireless and spectrum under the CRTC mandate and thinking longer term about these things, that can develop into a real strategy. What we have got right now is much more of a patch.
I would say we’re not getting the full use out of things like spectrum because we’re locking it down into exclusive licences that go off to major providers. We could leave large portions of the spectrum open for what is called unlicensed development, which allows for new providers that do not have the capital to invest in auctions — it allows them access to the frequencies that can be used to develop new wireless technologies. This is a way that regulation can be used to encourage and develop new technologies in Canadian communication.
Senator Wetston: May I have a second question, chair?
The Chair: Sure.
Senator Wetston: Since I’m new to the committee, this might be the only free pass I get.
I want to ask you a question about the tech giant that everybody is watching, you mentioned it: Netflix. Netflix is a content maker. I’ll use that language; you might use another word.
Mr. Raboy: They make some, but they mainly distribute content that others make.
Senator Wetston: Over the Internet.
Mr. Raboy: Yes.
Senator Wetston: We have the government contributing $500 million to Netflix, as you know, with respect to Canadian production over the next five years. I think that’s the deal.
Mr. Taylor: Netflix has said they are going to produce $500 million worth —
Senator Wetston: Yes, that’s how they’re going to do it. You’re right. Thank you very much.
But my question, then, is really this: What are Netflix’s lessons for other firms? I’m thinking about it from the point of view of competition respecting content makers, in the Canadian context in particular. Do you have any thoughts about that?
Netflix is one of those companies that has been euphemistically referred to as part of the FAANG group. Have you heard of the FAANG group? For the benefit of my colleagues here, FAANG is Facebook, Amazon, Apple, Netflix and Alphabet — and the “G” is because Alphabet is owned by Google. As part of that group, there are a lot of issues about market power and competition.
In a Canadian context, can you share with me your thoughts about what Netflix is able to provide in terms of — I’m using the word lessons — for other firms in Canada? Any thoughts about that?
Mr. Taylor: A few things about Netflix in Canada. First, Canada is the first country outside of the U.S. to get Netflix. We were a guinea pig. Once it went over well here, then Netflix started expanding elsewhere. The second part gets back to what Marc was saying about the importance of things like Canadian ownership. Just this fall, it was an important time for Netflix. They just hired their first Canadian employee. They have approximately 10 million — well, we don’t know, because they are not in our system, so they won’t give us the data. We guess at how many subscribers they have in Canada. We do know how many employees they have in Canada: one. This has to do with what happens when you have some company from outside the system that then starts to be actively engaged within our system.
They are not really part of Canada. In fact, they were called before the CRTC a few years ago and asked directly, “How many subscribers do you have in Canada?” They refused to tell the CRTC. The CRTC struck them from the record and asked them to leave.
My point is the lessons from Netflix: one, be first to market and you’ll make a bundle; and second, when you’re not really part of the system, there is only so much our regulator can do.
Senator Wetston: According to The Economist, Mr. Chairman, 125 million households worldwide are served by Netflix, twice as many as in 2014. They watch Netflix for more than two hours a day, on average, eating up a fifth of the world’s downstream Internet bandwidth.
What do you think it is for Canada? Can you guess? I’m told it’s 60 per cent.
Mr. Taylor: As far as how many households have it?
Senator Wetston: Yes.
Mr. Taylor: I would be guessing as well. They won’t tell us. We shouldn’t be guessing. This committee should not be guessing.
The Chair: Why do we care? I have Netflix, why would you care?
Mr. Taylor: It matters to know about how the overall system operates. If they are as major a player in the system as we think —
The Chair: They just show old movies and TV shows. They don’t —
Mr. Taylor: No, that’s not true anymore. They are now a major producer. As far as why this matters, if they are taking away from Canadian producers, then perhaps they should be paying into Canadian production just as other Canadian providers have to do.
Senator Wetston: That’s what matters.
The Chair: Wasn’t there a Canadian provider that tried to get into the market as well?
Mr. Taylor: There were two.
The Chair: And one didn’t make it.
Mr. Taylor: One makes it: CraveTV is still going. Shomi fell by the wayside.
The Chair: We’ve got competition. We have a Canadian provider Why do we care?
Mr. Taylor: I have just finished saying why I think we should care.
The Chair: Okay.
Senator Mercer: One of the reasons we should care is, as a whole cultural industry that is an outlet for Canadian talent and creativity, we don’t have to look any further than our music industry. When we put in some rules about the amount of Canadian content there has to be on radio and music stations, suddenly our industry took off. It took off not just in Canada; it took off worldwide, because Canadians are talented. That’s why we need to care. We need to care.
The Chair: I think it would have happened anyway. There is evidence for that. I’m not going to get into an argument.
Senator Mercer: You and I are old enough, senator, to know that it wasn’t happening before this happened.
The Chair: There weren’t that many people in the business.
Senator Mercer: However, I want to go back to something. Mr. Taylor, you sort of discounted rural Canada in your presentation — at least I thought you did. I live outside of Halifax. I used to say that I lived in a rural community. I’m 40 kilometres outside of Halifax; it’s a suburban community these days. When I was a kid in the north end Halifax, where I live now was rural. It was a distance away. It was still the same distance, but it was more rural.
Delivery of service in rural Canada is fundamental to keeping the Canadian dream alive: That you can live anywhere in this country and be a Canadian. That you can live anywhere in this country and be plugged into what is going on in the country.
That’s why we created the CBC and continue to pour money into it. The disenfranchising of rural Canadians continues to lead to the creation of two Canadas — a rural and an urban. It’s not the French-English Canada we used to worry about; it’s now the urban and rural Canada.
How do we not care about this anymore? There aren’t very many good examples. When we did a study on cellphone service a number of years ago, we found Saskatchewan had an interesting system of getting good service to northern Saskatchewan because they imposed it and said you have got to do it. I thought when we were auctioning spectrum off that we were saying, yes, you’re going to get this, but you have to provide some service to rural Canada. Is that not working?
Mr. Taylor: No, I’m sorry to say, it’s not working. The system to which you’re referring, things like the spectrum auction, I don’t think was aggressive enough in asking for providers to make sure they got out into those rural areas with high-quality service. My argument is we need to do far more for rural parts of Canada than have been done thus far. It can be done. We are starting to see examples. For example, I’m from Calgary. An hour north of Calgary is the town of Olds, Alberta. Olds has the fastest Internet in Canada. It has a municipally built network that received funding locally and from the provincial government. They built a fantastic municipal network.
I think there are more small towns across Canada that would do that, especially from a wireless perspective, if, to begin with, they could access the spectrum. Putting out fibre in the ground is expensive, especially to the home, what they call “the last mile.” The most expensive part is from the road to the front door. That’s why I’m such an advocate for wireless broadband, especially in rural areas.
To get to your question, Senator Mercer, we have not been putting enough stipulations on wireless service providers in Canada. They have been reaping enormous financial rewards and have been very hesitant to provide in areas of — I was speaking to a friend of mine last night who lives just outside of Perth. That’s not 45 minutes from here. He has bad service. That shouldn’t be happening.
Senator Mercer: I have to admit, before I pose the next question, that I have Netflix in both my home in Nova Scotia and condo here in Ottawa. I’m going to admit to sinning before I ask the next question about Canadian content.
I get very frustrated with Canadian television, in particular CBC and Global. The presentation is no longer what they claim it to be. For example, in Atlantic Canada, Senator Cormier, Senator MacDonald and I would watch CTV in English in both provinces. The news starts off at 6 o’clock, and it says “Live and local.” Well, it may be live, but it’s not local.
I live in Nova Scotia. Senator MacDonald lives in Nova Scotia. I don’t know about Senator MacDonald, but I am not that interested in the traffic tie-up in downtown Saint John, New Brunswick, unless I’m going to Saint John. I counted one day it was five stories into the news before there was one about Nova Scotia. It’s not live and local to me.
I understand why that has happened. I understand it doesn’t pay to have an active station in New Brunswick as well as one in Nova Scotia. It’s cheaper to have one to do the regional service. But government provides the opportunity for these people to have that business. Shouldn’t there be regulations that say if you’re going to say “Live and local” — and I’m not suggesting we monitor what people say on television — but if you’re going to provide the opportunity for people to make money on the system, shouldn’t they be servicing the system in the manner in which it was prescribed in the first place?
Mr. Raboy: First of all, the problem is different with the CBC and the private broadcasters. I’m going to say something now that is not going to make me friends at the CBC — I’m a great booster of the CBC — but I can tell you that if I were sitting on your side of the table, I would recommend writing into the act an obligation for the CBC to do local programming. It’s not there.
It was some years ago, I don’t recall if it was a Senate or House committee, but there was a president of the CBC who came before the committee, and a member raised the same objection as you did, and that president said, “It’s not in my mandate, and I already don’t have money to do what I’m supposed to do. I’m not going to do something I’m not expected to do.” Put that expectation into the act. Then give them more money. But at least put the expectation into the act.
The Chair: Just so you know, Senator Mercer, Paul Anka, Bobby Curtola, Kenny Shields, the Diamonds, the Crew-Cuts, all previous to Juno. A world existed previous to Juno.
Senator MacDonald: I’m going to go back, Mr. Taylor, to your remarks. The chair touched upon them. I want you to convince me. You haven’t convinced me yet. The CBC remains key and must be centre to the future of the Canadian media. Most of us my age grew up with the CBC — one channel in Canada. The two breakthroughs were CTV when I was 10 years old, we had two channels on television, and we had colour programming. It was a brave new world; it was great. We were all captives of the CBC; it was our portal to the world.
I hardly watch CBC anymore. I used to watch hockey. I’ll watch hockey, the odd sporting events, there may be something in particular I will watch. They threw that away. Most of the television I watch is stuff I choose to watch. It’s the programming I choose to watch, not necessarily the station. You say the CBC is central to the Canadian communication system — in fact, it may have intensified — I’m not convinced of that. Maybe you’re right, but I want you to convince me. It’s increasingly irrelevant to me, and my children don’t watch it. As the chair says — and I have to agree — what does Canadian content mean if no one is watching it?
Mr. Taylor: First off, as far as the role the CBC plays, or proof it still matters. Among other things, there is a study that has been done a couple of times out of UBC where they take a look at the most trusted brands in the country. The top media brand, by a long shot, is the CBC. The CBC is still something that Canadians go to and have some trust with.
You’re right. It does not compete as far as ratings go as much as the private networks. The private networks win in the ratings all the time. If you take a look at what those shows are that win in the ratings — for example, for CTV, it’s “Big Bang Theory” followed by “Young Sheldon.” I looked at the top 50 shows of last year, and they were all American imports on CTV. There was no contribution to the Canadian system except that it’s a moneymaker for CTV. It’s a business and they have done well with it.
When we’re talking about things like, well, who cares who owns what, and we look at how you might provide Canadian content, there was a study that came out from the C.D. Howe Institute about 10 years ago — I think it was called Scrambled Signals. Don’t quote me on that, but it was the C.D. Howe Institute. They said as we’re looking forward in the digital world, the only way to guarantee we’re going to have Canadian content at our disposal is to fund the CBC. That’s really the future. Because it’s going to be so hard. We may not even have a CTV or Global within five to 10 years. Why do we need those channels to deliver us shows if we can stream them directly from a source somewhere? Their entire raison d’etre may be gone within 10 years.
We still need something that will connect us as a country.
If we were to let the CBC go, I suspect we would likely be trying to rebuild it in five or 10 years. I think it is something that, overall, still works well. Its podcasts are doing extremely well on Apple, on iTunes. They are trying to do more in the digital realm. We ask an almost impossible amount from the CBC. They’re now in radio and television, they’re podcasting and streaming. Their website is doing really well. I think there are a lot of ways in which it still matters in the system.
Senator MacDonald: I’m not convinced yet. I have another question.
Mr. Taylor: Sure.
Senator MacDonald: You talked about the importance of public service in terms of these corporations and broadcasters. What does it say about their public obligations when they can’t be bothered bringing national debates on a federal election? I would like both of you to answer this. We’re in a federal election and they can’t be bothered bringing the debates for people who want to be the Prime Minister of the country. They subjectively decide not to. Where is their public obligation there?
Mr. Raboy: That’s the type of thing that should be brought to the CRTC. You’re not going to put into law that broadcasters should cover election debates. The CRTC can take the initiative to intervene, or they can respond to complaints. Typically, they respond to complaints. This is a content question. It’s a particular type of content question. I would say if that were brought to the CRTC, the CRTC would have a strong case to make on the basis of the public service obligation that is in the act. That’s one of the reasons why it is important for that to remain at the highest level of the whole super structure, if you will. That is, broadcasting is a public service. Then you can say to a broadcaster, “Why aren’t you doing this? We want you to do this. Next time, we want you to be sure to do this or maybe your licence will be on shaky ground.” There is a whole range of things.
This is really the CRTC. The CRTC has to be given the tools to do this kind of thing by the legislation.
May I reply to the question about the CBC?
Senator MacDonald: Yes.
Mr. Raboy: Hearing you, I have a sense you’re probably talking about English-language dramatic television. Is that correct?
Senator MacDonald: I don’t watch a lot of dramatic television.
Senator Manning: “Coronation Street”?
Senator MacDonald: I hardly watch the news anymore in Canada.
Mr. Raboy: Okay. Never mind. It’s not a question of what you watch. The point is the CBC does many things. It’s hard to put a figure on it, but the public opinion polls I have seen over the years show that a very large percentage of Canadians do use one or more CBC services. Television is one thing. Radio is another thing. National radio, local radio, CBC.ca, which is one of the most visited websites for news —
The Chair: It’s a free newspaper. Right? You go to the website, it’s a free newspaper. Why wouldn’t people use it?
Mr. Raboy: What’s wrong with that?
The Chair: I don’t know. I’m just saying, the taxpayers pay for it. Somebody pays for it. Why wouldn’t the citizens go to it? If it’s free, you don’t have to buy a subscription like you do for The Globe and Mail or National Post or StarPhoenix.
Mr. Raboy: That’s one of the definitions of public service. It’s free.
The Chair: Well, come on.
Mr. Raboy: I haven’t seen the figures on this, but the CBC website has advertising. If you go to listen to —
The Chair: Is that fair? Is that fair to The Globe and Mail, National Post, StarPhoenix?
Mr. Raboy: Yes it’s fair because they are getting simultaneous substitutions and a whole raft of other benefits. Let me put it this way: If I were the deity here, there would be no advertising and the CBC would be funded at an appropriate level, like a broadcaster like the BBC. The BBC doesn’t sell advertising. Everybody agrees they are the world’s leading broadcaster.
CBC Radio, when you listen to it over the air, has no advertising because the CRTC doesn’t allow them. However, if you listen to the same program on the Web, you’ve got to watch advertising. This is an anomaly in my view.
We’re jumbling a lot of things together here. Is it fair, is it not fair? That’s one type of question. Fundamentally, a national public broadcaster like the CBC should not have to be reliant on commercial revenues of the advertising type. That’s what creates the jumbled system. Of course, when you turn on CBC television, you often don’t know for quite a while whether you’re watching CTV, or Global, or the CBC. When you turn on CBC Radio over the air, you know right away, whether you like it or not. It’s not a commercial station.
The Chair: I know for sure. It’s easy.
Mr. Raboy: Anyway, the point I would like to make is many Canadians get something from the CBC — maybe not everything. Maybe they are watching something or listening to something. They are getting something they wouldn’t otherwise be able to get.
[Translation]
Senator Miville-Dechêne: After listening to the debate carefully since I got here, I feel the need to clarify something. I worked at Radio-Canada for 30 years. This obviously puts me in a very different position than my other colleagues here. I’ll admit my conflict of interest immediately, and it is that I believe in CBC/Radio-Canada. I think that CBC/Radio-Canada has in part molded the history of Quebec. I believe in public services. I think that the existence of Radio-Canada means that private television in Quebec is better. Because CBC/Radio-Canada exists, TVA must broadcast election campaign debates, and TVA broadcasts international news. Other broadcasters emulate CBC/Radio-Canada in Quebec because it is there, and that is undeniable.
I will be brief. Given the time given over to demolishing CBC/Radio-Canada, I wanted to give you another opinion.
Aside from my opinions, I do have a question on what you said, Mr. Taylor, more specifically on the future of broadcasting.
[English]
You were quite optimistic about the survival of broadcasting. I was a bit taken aback by your optimism. The way I see it, and what I read about it, is it’s a slow death, and advertising is part of it. Advertising revenues in television are going down. Radio-Canada is migrating to the Internet. Yes, it’s great, because they have the same principles and journalism is still strong at Radio-Canada.
I would like to know why you’re so optimistic considering the ratings, the revenues going down and competition from other sources?
Mr. Taylor: Thank you very much. I think that when we’re talking about broadcasting, it’s important to remember we’re not just talking about local TV. In fact, since the recent act — well, I guess, since the previous act as well — cable is now part of the broadcasting system. Legally, cable, satellite, IPTV providers are broadcasters. That is a very healthy part of our system. It’s very profitable, even though some of their numbers have been dropping — as I said, cable about 5 per cent — somehow they have managed to keep their revenues stable, which means they are putting up their prices every month.
Radio has been relatively stable. Conventional local television that is advertising-based has been suffering. There is no doubt about that. I should add specialty channels continue to do well online. When we talk about broadcasting in Canada, we tend to come back to stories about local television and the CBC. When we are looking at the larger system, it’s actually doing fairly well. Yes, there are problems for conventional television. You could perhaps argue if the conventional broadcasters were not owned by cable and satellite providers, perhaps they would put more effort into their over-the-air local channels that get must-carry status on cable.
They get a number of advantages. I think it absolutely could be improved.
My optimism only goes so far. My optimism is tempered by recognizing it is a slow decline. What I’m not seeing right now is a cliff. When you talk about, say, the music industry, it went off a cliff. The broadcasting industry has not. It has had a slow decline and, even in the Netflix era, has dropped by maybe 5 per cent. That’s cable subscribers. With television viewing, we’ve dropped one hour a week. We used to watch 27 hours a week and now we watch about 26 hours a week since Netflix came on, and that’s of traditional television. There has not been a collapse. The sky has not fallen. My optimism is because of the data.
If it goes off the cliff, I’ll come back and tell you I was wrong. From what I’ve seen so far, I don’t see it.
Senator Miville-Dechêne: Mr. Raboy, what would you recommend to the committee? How can we keep the system being a public service? I know it’s a difficult and open question. I was seeing more the public service of Radio-Canada/CBC but you’re right, it’s larger than that. What should we do with those three laws? It’s usually technical to keep, save or improve this quality.
Mr. Raboy: First of all, I was only thinking about the text of the law in coming here, because that’s my understanding of your mandate. If I understand correctly, your committee is going to prepare a report with regard to these laws. Simply take some version of what I said to you in my opening remarks and say that needs to be kept in the law. I wouldn’t take it for granted that it’s going to necessarily be there, not for any malign purpose but just because it might just fall away, by the wayside, because that’s not where the debate is.
Then some years from now, someone will come along and say, “Why isn’t CTV covering the leaders debates?” And they will say, “We don’t have to.” That could be a good example to use. Again, if my understanding is correct, you are to suggest approaches here. How to keep the system a public service? That you need to really drill down. It’s not something we can answer in this type of exchange. You need industry research. You need widespread consultation.
One of the things I like about the 1991 act, such as it is, is it was the result of a large consensus. There was a huge amount of debate, including before this committee in the final stage, if I’m not mistaken, where you had industry players, non-governmental organizations, a whole range of people. I could point you to single words in the legislation which are there because of this consensus-building process.
I would think that is the type of thing you need to be saying. The wider range of input the government ultimately gets on the process, if it is going to rewrite the act or acts, is important and it’s not necessarily taken for granted. It’s not to be taken for granted there will be public hearings at which dozens of groups will be invited to come forward. It’s an onerous process, but that’s democracy.
Senator Miville-Dechêne: The consensus may not exist as it was in 1991. Do you think?
Mr. Raboy: In 1991, there were conflicts as well. The consensus was built around the broad principles, certainly. I wrote a book about the 1991 process, which concluded that there was one player that came out above everybody else. The book was called Accès inégal because it was about the cable industry at the time. It had a powerful, permanent lobby in Ottawa; it was the only organization. They wiped the board of the conventional broadcasters because they had the ear of the people who were drafting the law. This can be pretty arcane sometimes. But on things like what the system should be producing in terms of diversity, for example, there are sections in the act which were not there before and have had a real impact on the diversity of the system.
There are some things I don’t like about the wording of the act. For example, when it says Aboriginal broadcasting should be made available to the extent that resources become available. What kind of wording is that? There are many things you can do, but you’d have to really go through it with a fine-tooth comb.
[Translation]
Senator Galvez: Thank you for being here and for the very interesting information you have shared with us.
[English]
I want to start by saying I am an independent senator. I’ve never been with any political party. But after two years of being here —
The Chair: It doesn’t disqualify you.
Senator Galvez: Thank you.
It’s interesting to analyze and compare situations and opinions. You said the broadcasting and problem we are studying now could be compared to education and health. My colleague said that it could compare with energy. I completely, 100 per cent agree with him. In this committee, we were studying a pipeline that goes from one end to another end and that is of national importance: how it has to be Canadian content and how Canada needs this. Oil fires our homes and heats our houses. Radio-Canada fires our brains. We need that too. That’s Canadian content and should also be considered of national interest.
I think the problem is — and I think that’s the discussion — that there are three elements in the system. You said it’s a unique system. I think it’s composed of three parts. You have the developer of content, then the distributor that could be Wi-Fi or satellite or cable or whatever, and then the broadcaster that is —
The Chair: Is there a question?
Senator Galvez: Yes. You have taken so many minutes.
The Chair: I ask lots of questions.
Senator Galvez: My question is this: Wouldn’t it be more efficient if we had a part of our legislation that takes care of the content — which is what we are saying, 80 per cent Canadian content — and regulates the content? This is important, because I know countries where the content is garbage coming from the privates. In Quebec, we have some garbage radio. If there are no good options, what are we teaching our children?
Another part that could take care of the medium by which the content is distributed, because that is technological, Wi-Fi, satellite, cable. That’s technology. That evolves at a very high speed. Why do we have to have one thing that governs everything? I think there are two very different viewpoints. Thank you very much in advance for your answer.
Mr. Taylor: I’ll start with the second part. You talked about the technology and how quickly it’s evolving. I think this gets down to something that Professor Raboy said earlier. One of the positives of the current legislation is it’s written in a very technologically neutral way. You do not see reference to specific forms of technology in the act. It simply says “distribution.” I think it’s important that be maintained, for the reason you said, given how rapidly these things evolve.
As far as why is this a part of the whole system, when you bring the distribution in — for example, we fund the content through distribution, because they’re all part of the same system right now. When cable started — this is something I teach in my classes — it was a pirate or outlaw industry, much like a lot of Internet streaming is today. What happened? We brought them in, we made them part of the industry and the pirates joined the country club. That’s not my line, but it’s something that has happened.
The Chair: It’s a good line.
Mr. Taylor: Lawrence Lessig. I didn’t write it.
Why do we have it all under one roof? Because they aren’t easily separated and they feed into each other. They are part of a system.
To get to your earlier point about the content, it’s very hard to put quality into an act. You can put funding models in; the government can do that. It’s tough to legislate quality. It’s important to recognize that Canadians, because we keep coming back to the CBC, we pay $29 each a year for the CBC. Even by Netflix standards, that’s a bargain. That’s something to consider when we take a look at what we’re seeing on the screen — what do we pay?
These things all have a price. Generally speaking, the Netflix shows now cost more than Hollywood blockbuster movies, and we’re simply not in that zone and we never were, even against American programming.
Mr. Raboy: You raised an absolutely crucial question. To reiterate and expand a bit on one of the things that Greg said: At one time, carriage and content — that’s what you’re really talking about, content and distribution. The buzzwords used to be carriage and content. These were separated. It was really in the 1970s that even though there were two acts, the government created the CRTC to deal with both of them. At that time already, there were areas of overlap. There are more and more and more.
Whereas today, you have certain things that are strictly to do with content that can be covered by the Broadcasting Act, and you have things that are strictly to do with, let’s say, the infrastructure, the spectrum or some of the personal uses like cellphone telephoning or whatever, which are telecommunications, but then you have this huge zone in the middle.
On top of that, you have the added problem that they’re the same companies. You have the same companies that are operating in all of these different areas. How can you regulate them separately? You can regulate certain activities separately. There has to be some kind of overall oversight. This is the conundrum. Canada was possibly the first of the industrial countries to recognize this in the 1970s when it gave the dual mandate to the CRTC. At that level, we’re not doing too badly in the sense that there is one agency; you don’t have to go to two places if you’re dealing with two sides of the same coin.
There are also aspects that continue to be problematic. Broadcasting and telecommunications operate under different logic, if you will. One is providing content, as you say, and the other is the infrastructure.
Senator Manning: I thank our witnesses this evening. To start off with full disclosure: I do watch the CBC every now and again.
Senator Mercer: You’re the one.
Senator Manning: I grew up in a rural community in Newfoundland and Labrador. For most of my life, I only knew one station: the CBC. As Senator MacDonald touched on earlier, it showed us an outside world that we wouldn’t have seen at that time.
I’m a very big promoter of local programming. Again, coming from Newfoundland and Labrador, I look at shows such as “Land and Sea,” as an example. Very few Newfoundlanders have not seen that; we all have at times.
I’m not so concerned about the past; I’m concerned about the future. In today’s world, like anything, there’s a hell of a lot of competition. It’s no different in the broadcasting world. We talked about it here this evening — and young people. As I say, when I grew up, I had one station to watch. My children and grandchildren have such a variety now. Competing with those, from a CBC point of view, does the CRTC — and Mr. Raboy touched earlier on the tools. The tools for the CRTC to be able to ensure local programming, over and above the CBC — is there anything in place there that the CRTC can use to ensure that local programming is in place over and above what the CBC provides?
Mr. Raboy: Regarding local programming, the CRTC has more tools to oblige the private sector than it does with the public sector. When it’s not talking about the CBC, the act says that programming should be drawn from local, regional, national and international sources.
The CRTC has at times over the years imposed local broadcasting requirements on radio and television stations. Usually, they get into a back and forth where the private stations will say, “We’re going to lose money or we may even go out of business,” et cetera. It becomes a negotiation.
With regard to something like that question, the CRTC is very susceptible to public pressure. If a community in Newfoundland and Labrador were to get organized and send a petition to the CRTC detailing their situation and what their needs were, the CRTC would probably respond in some way. The tools are there for that.
Then you get into the whole thing of who is friends with whom and to what extent does the CRTC want to take this on. Once again, it becomes very problematic when the local station is owned by a huge company that has tentacles all throughout the system. The CRTC will have a lot more leverage with a truly local station owner to get them to comply or be more pliable to what the public in that community needs.
There was a second part of your question.
Senator Manning: I was concerned that the competition is out there now. How does the national broadcaster appeal? What does it do to appeal? We all know the number of dollars that go into the public broadcaster. How does it appeal? I know CBC.ca. How do you appeal to the young people to draw them in? They’re not watching; let’s be fair here, they’re not watching.
The Chair: No one is watching it, young or old.
Mr. Raboy: There’s a buzzword afloat now, and I don’t know if it’s come up in other testimony: discoverability.
Senator Manning: If you can’t find the answer to a question, just come up with a new word, right?
Mr. Raboy: We’re told there is a lot of Canadian content on the Internet now — you just can’t find it. This is an area where, if we control the system, we do have some leeway to publicize the Canadian content that is out there, even obliging broadcasters to carry certain things or rig the system in a way so these things come up and have the equivalent of the old TV Guides. That’s one approach. It’s a global problem; Canada is not the only country dealing with this.
The world is so inundated with mass circulation products that people aren’t thinking about this all the time. They see an ad or trailer and they say, “That looks interesting.” They never see the trailer for the Canadian product because it’s not put in their face the way the other one is.
I think the CRTC is thinking about this and trying to figure out ways and so forth but that’s one way of addressing the issue you’ve raised.
I used to do an exercise with my students where I would ask them: How many of you have a TV? Zero, nobody. How many of you watch TV programs on the Internet? Everybody. But obviously, on the Internet, there’s so much more content available and it’s so hard to find. You don’t even know if you’re being exposed to what you’re really interested in. You’re being exposed to what you’re inundated with.
Senator Manning: Either one of you can answer this question. If you were to make a suggestion or to give an example of one amendment you could make to the Broadcasting Act to improve the local programming in its entirety, what would it be?
Mr. Taylor: I would say supper hour newscasts need to be a condition of licence. They are a notorious money loser. They’re expensive and the broadcasters would much rather take an episode of an American program, preferably an old one that’s in reruns, and plunk it in at 6:00 because that’s where they make a lot more money. I would say, as a condition of licence, if you’re showing the American programs at 7:00 and 8:00 anyway, I don’t think it’s too much to ask you provide a supper-hour newscast at 6:00. I think that should be a condition of licence.
This has come up so many times about the CBC. The point we’re making is almost entirely an English CBC argument. French CBC is not having this problem that we’re discussing right now. Their ratings are quite good, thank you very much.
Senator Miville-Dechêne: People watch.
Mr. Taylor: They do. I just want to make that clear.
The Chair: Louisiana isn’t producing French programs, which could be part of the problem.
Senator Miville-Dechêne: You said nobody listens to Radio-Canada. This is not true. This is untrue. We have ratings of over 1 million and 2 million on shows on Radio-Canada regularly.
Mr. Taylor: It’s an English Canadian issue.
The Chair: Yes, it is.
Mr. Taylor: That’s my only point on that. The CBC still has those moments and it’s relative for today. Today is the anniversary of the death of Gord Downie of The Tragically Hip. One of the last great successes of the CBC was showing that concert. One third of Canadians watched that together on the CBC, fulfilling its mandate. Perhaps I’m reflecting my generation in looking at this, but it was a moment that brought the country together. The CBC did it. It was fulfilling its mandate under the Broadcasting Act in doing so. I just thought I’d mention that.
Mr. Raboy: I mentioned it earlier in response to another question, but I’ll reiterate it. I would write an obligation to do local programming into the CBC’s mandate in the act so they know. They do read their mandate, they take it seriously and they’re accountable for it. Put it in the act and then the next time they come up before you, they will have to account for how they’ve done. Right now, they don’t.
Senator Wetston: Thank you for the opportunity to ask a follow-up question, Mr. Chair.
I tried to explore this with you a bit earlier. I’m interested in the competition and the regulatory framework and the extensive market power that is now clearly the case among firms nationally and internationally. The Internet is getting more concentrated and less decentralized. It is very clear where control of the Internet exists today, and it’s increasing. Control of data is excessive today, and it’s increasing.
I’m leading to this question about net neutrality. I’m sure you both have views about it; you mentioned it before. The U.S. is moving away from it. The FCC seems to be scrapping some of the rules around net neutrality. That’s going to favour carriers, I think, and give them more control over the Internet and extract more economic rent as a result of their content.
What’s your view about that with respect to Canada and net neutrality? Do you have any comments about that?
Mr. Taylor: I’m just coming from a conference last week in Montreal for the Association of Internet Researchers. One of the feelings I left that conference with was that Canada is completely on the right track this way and that a lot of the buzz around that conference — this is from international scholars — was there are a lot of positive things happening in Canada. Canada may, in the long run, be drawing in some really good people with things like the commitment to net neutrality.
If you’re a start-up in the U.S., it’s going to be getting harder and harder to get your data out there if you’re in competition with more favoured companies, whereas Canada looks very appealing that way. I think Canada’s net neutrality law has both industrial and social benefits.
Senator Wetston: In attracting individuals who have technological expertise to the country?
Mr. Taylor: Yes. I fully believe that, yes.
Mr. Raboy: I would echo that sentiment. I think, as a principle, net neutrality is extremely important. In a practical sense, I think it’s working in Canada. The U.S. context is completely different. The five companies you mentioned in the U.S. are colossal. We have big companies — we like to think we do — but they’re not colossal in that sense. It’s not as big an issue for them. The pressure on the FCC to get rid of net neutrality is absolutely enormous, and in the current political climate, the FCC is receptive to those arguments.
In Canada, I don’t think we have the same political issues with regard to net neutrality. As Greg says, we have only benefits to it as far as we’re able to see right now.
Senator Wetston: I’d like to see that we might be a beneficiary as a result of these policy changes in the U.S. and that would be a wonderful thing if we were to be. I think Mr. Taylor, Mr. Raboy, you’re suggesting that.
The Chair: I’m sure the market will decide that.
[Translation]
Senator Cormier: I think it was you, Mr. Raboy, who said in the beginning of your statement that the basic problem is not the act or acts, but rather their implementation. Who is responsible, or should be responsible, for the enforcement of these statutes?
Mr. Taylor, you spoke about the creation of, or the return of, the Department of Communications. I’d like to have a better understanding of who the partners of that department would be. How do we make sure that a system as complex as the communications system can function? There is the CRTC, and there would also be a Department of Communications. In short, could you give us a few ideas that could help us with this?
[English]
Mr. Taylor: I don’t know that I can necessarily write the full breakdown of how the new-old department would work. My point on that is the current division, I think, is proving a hindrance.
I would like to see that, instead of ISED, which was Industry Canada, and the Department of Canadian Heritage, I think it could be one department, largely because I think the communication question is so vital right now for Canada that it should not just be part of one of several different pieces. I think you need a dedicated minister who is on this file and who will be very knowledgeable of a lot of the intricate details involved. I don’t see that happening.
As I say, I have sympathy for those who get the file either for ISED or Canadian Heritage and have to move on; by the time they learn that area they’re ready to leave again.
As far as how it would all play out, I’m afraid I don’t have that in front of me right now. However, as far as the rationale for why we should, I think there is clearly something we could gain by having one dedicated department in this field.
[Translation]
Mr. Raboy: First, with regard to applying the laws, the CRTC is the main actor. In some situations, the CRTC must however apply government directives. Ultimately, the government is responsible. So, there has to be a political will to put certain things in place. Regarding Canadian property, Prime Minister Pierre Trudeau in 1969 ordered the CRTC to see to it that foreign companies divest themselves of assets in that sector. That is how the environment was “Canadianized”.
The idea of creating a new Department of Communications is an interesting proposition. Before coming here, I reflected on the broad issue of whether the two acts should be amalgamated. The matter is very complex. There are pros and cons. One of the ways of continuing to live with dual or bicephalous legislation such as we have currently would indeed be to have everything under one department. At this time, we have laws that fall under two different departments. Those departments have different objectives. Often, they don’t talk to each other. I am not suggesting that there is ill will on anyone’s part, but that proposition would be preferable. When it was abolished in 1993, part of the department was transferred to Canadian Heritage and the other to Industry Canada. There have been problems since that time, and today, things are even more sensitive. So, the suggestion is interesting.
Senator Cormier: Thank you very much, Mr. Raboy.
[English]
The Chair: Any further questions? Gentlemen, this has been a really good session. I think all senators would agree. The questions were pointed. There was a bit of CBC stuff as usual. I think it was to draw information out more than anything else. We had a nice little debate.
(The committee adjourned.)