Proceedings of the Subcommittee on
Communications
Issue 6 - Evidence
OTTAWA, Wednesday, June 3, 1998
The Subcommittee on Communications of the Standing Senate Committee on Transport and Communications met this day at 3:35 p.m. to study Canada's international competitive position in communications generally, including a review of the economic, social and cultural importance of communications for Canada.
Senator Marie-P. Poulin (Chairman) in the Chair.
[Translation]
The Chairman: As you know, Ms Bertrand, the Standing Committee on Transportation and Communications struck a subcommittee to take an in-depth look at the impact that the expanding world of communications in recent years is having and in particular to consider how Canada can remain in the vanguard of international communications.
A preliminary report has already been tabled in the Senate and in it, we raised a number of issues that we would like to thoroughly examine, specifically Canadian culture and history and how these are shared with the world through the field of communications.
Several of the witnesses we have heard from have raised a thorny issue: what kind of regulations do we need in this open world of communications?
Ms Françoise Bertrand, Chairperson, Canadian Radio-Television and Telecommunications Commission: With me is Mr. David Colville, Vice-President of Telecommunications. I believe you know him well since he testified during the first phase of your proceedings. With him is Ms Caroline Pinsky, a lawyer specializing in convergence. She has extensive expertise in the field of telecommunications and broadcasting. Also here today is Ms Susan Baldwin, Director General of Broadcasting with the CRTC.
I want to thank you for the opportunity to appear before you today. I will try to read my brief fairly quickly because I know that under the circumstances, the question-and-answer session will be more interactive and more interesting.
I welcome the opportunity to outline what the CRTC is doing to meet the challenges of the rapidly changing communications environment, as we simultaneously facilitate competition in our broadcasting and telecommunications industries, and reinvent ourselves in the process.
It is competition that will serve the needs of consumers through the provision of expanded services and products which, in turn, will drive the evolution of the communications maket-place.
This increasingly competitive world also requires fresh approaches to regulation in order to serve the public interest of Canadian citizens, to ensure choice and reasonable cost for consumers, and to create an enabling environment for businesses.
[English]
Allow me to provide some context and background. As you know, the CRTC works under two separate legislative acts, the Broadcasting Act and the Telecommunications Act. Their goals are similar, but they are not the same. Convergence means ensuring that they work together in a regulatory sense. It does not mean subordinating one to the other.
We are in a period of transition, moving from a monopolistic environment to an evolving competitive maket-place. Our purpose in introducing competition to the broadcast distribution sector is the same one that guided us when we introduced competition in the telecom area. We want to provide Canadians with maximum choice and competitive prices, as well as ensure that the communications landscape truly reflects a Canadian perspective.
In addition to our decision to open the broadcast distribution centre to the telcos, we have encouraged the emergence of new players by licensing wireless distribution systems using technologies such as MMDS, LMCS and Direct-To-Home satellite.
This competition in distribution has not lessened the CRTC's responsibility to ensure that our broadcast system remains clearly and specifically Canadian. New entrants must adhere to the same access and carriage rules as pertain to incumbents. We want to ensure that the market supplies our fellow citizens with a wide variety of content and more choices.
As prescribed by the Broadcasting Act, all systems must carry a predominance of Canadian services, and we have used the arrival of new entrants into the broadcast distribution field to increase the resources available for the production of Canadian programming.
All players operating in the broadcast distribution business, including traditional cable operators, DTH satellite distributors, wireless cable, and telcos, must contribute a minimum of 5 per cent of the gross revenues earned from program distribution activities to assist in the creation of Canadian television programming. The majority of these contributions must be directed to the Canada Television and Cable Production Fund. In 1996 alone, this $200-million fund triggered $625 million of Canadian television production activity.
[Translation]
One of our major responsibilities is to make sure that as many resources as possible are made available to guarantee access for Canadian products in our domestic broadcasting system, in both English and French languages.
This access policy for the production of Canadian programming is only common sense, especially in an era where new technologies have made geographic borders transparent.
Canada is a world leader in broadcast distribution, and in our households, three out of every four Canadians are cable subscribers. The basic cable package they purchase provides a diverse array of Canadian conventional local television stations and national networks in both English and French, some specialty channels, and other specific cable services.
Subscribers can also access as many as 43 Canadian specialty, pay, and pay-per-view services that are currently available in a series of packages or tiers.
In addition, Canadian consumers have access to the five major U.S. networks, as well as to some 36 other American cable services and super-stations authorized for distribution in Canada. So we have an extremely rich menu of both domestic and foreign services from which to choose.
Given this diversity, we are indeed pleased to see that viewers in the country are increasingly making Canadian choices. Over the last ten years, the share of English Canadian viewing to Canadian programs has grown modestly, despite an increasing availability of U.S. programs and services. In Quebec, viewing has always been predominantly to domestic programs and services.
Our broadcast and distribution policies have certainly contributed to the development of a strong independent production industry here at home. Furthermore the ability to access both financial support and revenues in our market has served as a springboard for content providers to go to foreign markets. Development of co-production treaties has also supported Canadian access to a large number of countries.
Because Canadian broadcasters first bought their programs and made them popular on our TV screens, Canadian independent production companies such as CINAR, Nelvana, Salter Street, Alliance, Atlantis and Coscient were then able to look beyond our borders and enjoy significant success at the international level.
[English]
Canadian broadcasters and distributors use the expertise they have developed in their own market to extend their reach into other markets. CanWest Global has ownership positions in Australian, New Zealand, and Irish broadcast companies. CHUM has been selling its approach to MuchMusic in Latin America as Mucha Musica, and has obtained distribution in the United States. This company is also doing business around the world with its concept of fashion programs.
The CBC's Newsworld International and Trio services are part of the DirecTv package of services in the United States, and our weather channel has been developing business in a number of European countries.
We have created a public-private mix within the Canadian broadcasting system that serves Canadians well, and it is acknowledged around the world as an enviable model. We often meet delegations from foreign countries who want to benefit from the Canadian experience. They recognize what we have been able to build here, in the shadow of the world's largest producer of audio visual material, and within the reach of the some of the world's biggest telecommunications companies.
Countries which previously did not have to be concerned with an influx of foreign programming find themselves besieged by the non-domestic signals created by the sudden occurrence of DTH satellites and other distribution technologies. This has heightened awareness of the importance of domestic product. There are also issues of how it should be placed; making sure there is enough product and adequate shelf space for it within the distribution systems.
At the same time, we have the most open market in the world as measured by the amount of non-domestic programming available to Canadians. In fact, 60 per cent of the television programming available in Canada is U.S. programming, While this product competes with our own, however, it does not have the domestic programming services' obligations to serve the public interest, or to contribute to the development of Canadian programming. It is a situation which adds complexity for us as the regulator, because we encourage competition in the maket-place while also ensuring that the public interest is served.
As the communications environment evolves towards greater competition, we find ourselves obliged to re-examine the means by which we advance our public policy objectives. How do we strike a fair balance in the public interest? How do we maximize benefits to citizens, value to consumers, and profits to businesses?
[Translation]
Given the dramatic fundamental changes occurring in the industry sectors we regulate, it was obvious to us that we should reassess our role and how we were going to operate in this converging, interconnected world.
To equip ourselves for the new environment, we undertook what we call our Vision exercise. We believe the results of this process will allow us not just to adapt to the changing environment, but to transform the environment itself, to make it work better for citizens, consumers and business.
Copies of the CRTC's Vision Statement and Action Calendar were filed with the clerk a few weeks ago for your information, so I will take just a moment to share the general outline of our new vision statement with you, to provide a sense of where we see the regulatory process heading.
Our vision statement is: world-class quality communications, with a distinct Canadian presence, in the public interest.
How will we bring this vision statement to life? We believe Canadians are seeing the evolution of the new Commission. The new CRTC will say "regulate it if necessary," but where appropriate, we would prefer to let industry self-regulate under monitoring.
We see our new role as more of a referee on the competitive playing field, resolving disputes in the public interest, when required. Or stepping in to address broad policy framework issues in response to fundamental changes in the communications landscape.
The old commission was protectionist in its approach -- which fit the requirements of the time. The new CRTC will be much more focused on promoting opportunity, to let Canadians build on their successes, and demonstrate they can thrive in a new, more competitive environment.
With the World Trade Organization agreement on basic telecommunications, which was concluded on February 15, 1997, Canada has agreed to end its remaining monopolies and to liberalize the provision of international and satellite services. This means the Teleglobe monopoly on overseas traffic will end October 1, 1998, and the Telesat monopoly will end March 1, 2000.
This will increase competition in Canada for the provision of international services and will offer new opportunities for Canadian companies to compete in foreign markets. The federal government is amending the Telecommunications Act to give the CRTC the statutory authority to require international service providers to obtain a license, and to impose terms and conditions on such licenses.
The commission is currently conducting a proceeding in which it is examining regulatory issues relating to these changes.
[English]
The CRTC is also in the process of developing a new international approach. Some might ask why a regulator needs to take such action since, after all, we only have authority over what happens within our own borders. Such a perspective ignores the reality of the times, however. It ignores the fact that the industries we regulate now operate in a global economy. They carry out their functions within the context of an international communications maket-place. We believe that, in order to be an effective regulator of the Canadian market, we must look at the global environment shaping the economic, social and cultural pressures we experience in our domestic milieu. We cannot afford to operate in isolation.
In order to expand our international dialogue, the CRTC has initiated the establishment of the International Regulatory Forum -- a series of ongoing meetings with communications regulators from around the world. The purpose of this forum is to exchange ideas and information on a number of regulatory issues, including universality, access and self-regulation.
In addition to our working relationship with Australia and France, we have also agreed with the U.S. FCC to meet twice a year at staff and commissioner levels. This ongoing international dialogue, plus, of course, our contacts with Industry Canada, The Department of Foreign Affairs and International Trade, and The Department of Canadian Heritage, will ensure that we are effectively using all the tools available to help us best serve our economic, social and cultural goals in the public interest.
The development of our vision statement brought us to the conclusion that we had to review our entire policy landscape, and so it is in this context the CRTC has scheduled a public hearing for this September as part of a broad and fundamental review of its policies relating to Canadian television.
Copies of the Public Notice, titled "Canadian Television Policy Review -- Call for Comments" and dated May 6, 1998, were also filed with the clerk for your information. As the title indicates, we have called for comments from the broadest cross-section of the Canadian public, and from those involved in the television industry, in order to discuss the current challenges facing Canadian television, and those that it will face in the future.
In particular, we want to explore how all the participants in the system can work to maintain a strong and relevant Canadian presence on our screens, and a healthy broadcasting industry which is capable of competing successfully at home and abroad.
We will also hold public hearings in both official languages on new speciality services by the end of next fall. These processes will lead us to the licence renewals of two networks: CBC in April 1999, and CTV later on.
[Translation]
The commission is also focusing its attention on new media, and we intend to hold a public hearing on this issue, this coming November. We will solicit the input of all interested parties because we consider this proceeding to be essential in determining the potential role for the commission in new media, while also contributing to government efforts to establish broad policy frameworks for this important new sector of the communications industry.
And so, in a sense, my appearance before you today may be somewhat premature. I am confident that upon completion of the public processes we are engaged in -- widespread consultations and discussions with the Canadian public and communications industry players -- we will have many more ideas and information to share with you.
Nevertheless, as you will appreciate from my remarks, our watchwords are not "competition for the sake of competition" or "technology for the sake of technology." From a regulatory perspective, we see our responsibility as creating the right environment that will allow convergence and competition to become everyday facts of life, but where Canadian ideas and values are also reflected. We want to build on our successes.
We need to nurture the efforts of our creative artists and business people in such a way that they will be able to build a cultural industry with the necessary strength to be competitive and capable of featuring our products, here in Canada and throughout the world.
Thank you again for your invitation to appear before you. I would be pleased to respond to any questions you may have.
The Chairman: Your presentation was very interesting. During the upcoming question-and-answer session, please feel free to invite one of your colleagues to field some of the questions, if you like.
[English]
Senator Spivak: As a committee, we share Canadians' interests in the role of the CRTC, and I was interested to see your calendar of events. There are some interesting things there about violence. I am very interested in the things that you are doing.
Perhaps I could ask you some general questions. First of all, I do not know exactly what you mean by the "new media," but you did not make reference to the Internet. The Internet is certainly here to stay, however, and I would like to know whether you feel that the CRTC is able to regulate in this new atmosphere. That is, can it regulate in our interest? Can it ensure that that Canadian content is there; that Canadian stories are told, and that Canadians can export their products as Canadians, not as Americans?
In answering that, I wonder if you could also talk about what some view as a failure of CRTC regulation: the grey market in satellite TV, which now has some 300,000 Canadian subscribers. Perhaps us you could tell us some of the lessons that you have learned, and also what we can expect in the future as things such as video on demand evolve.
Ms Bertrand: I will pass those questions to my colleague Mr. Colville, who will be chairing the public hearing on new media.
Mr. David Colville, Vice-Chairman Telecommunications CRTC: You have asked an interesting question, and it raises a lot of issues that we will want to pursue when we have the new media presentation. As you noted, we did not mention the Internet in the context of new media. We do consider that the Internet is included in this whole spectrum of distribution, technologies and content delivery mechanisms, however -- whether they be CD ROMs or the Internet as a distribution vehicle.
We believe that the Internet will manifest itself in many ways. We know, for example, that several companies are looking at using the Internet as a means of providing local voice telephony in Canada. That is one way that the Internet will be used.
We have said that we do not intend to regulate the new entrants in that local telephone business. They will have to conform to certain rules, however, by providing privacy of customer information, access to 911, and certain other things. Whether they are using the Internet or some other technology, they will have to conform to those rules.
The distribution of cultural content remains an open question. That is, we have to determine how this fits within our regulatory regime. We also want to look at how it will impact on our existing regulations for the broadcasting system, and at how these new ways of delivering services will affect the existing broadcasting system, and our ability to regulate it.
Beyond that, we must also consider how we can continue to ensure that Canadian producers -- regardless of the form and style -- continue to have the kind of access that we have been striving for with television and radio. It comes down to ensuring that our producers of content have access to the various distribution systems, which will provide them with a window to Canadian audiences.
It is not clear whether or not our existing style of regulation will be the most appropriate one to deal with these issues. It may be another form of regulation is more appropriate. Depending upon the nature of the service, it may even be that something might not fit within the CRTC. We hope to discuss these issues in our new media proceedings this fall.
Senator Spivak: Could you comment on the grey area?
Mr. Colville: That raises an interesting issue. In our view, it is difficult to deny individual citizens the opportunity to buy a dish or to receive programming. In that particular case, of course, the question of program rights was another big issue, and those American program services did not have the program rights to sell those programs in Canada.
There is also the question of the right of individual citizens to purchase the equipment. For the most part, the government and the regulator took the view that we were not going to deny that right. Our view was that we should be trying to provide Canadian alternatives to these foreign services.
You asked if we learned anything from what happened there. My own view would be that we probably should have acted quickly in order to provide a Canadian alternative. In part, our ability to do so was constrained by the technology that we had available; the satellite distribution system was not able to provide the particular small dishes.
Over all, we should have tried to provide a truly Canadian alternative more quickly. We have found that, when presented with Canadians alternatives, Canadians will choose them.
Senator Spivak: Our neighbours to the South have significant resources. Further, people can buy American programs at a discount -- for less than it would cost to create them. Given these fact, are we supporting our Canadian producers enough? Given the enormous amounts of money at play, give me your view of the situation. I know that Canadians are competing, but what do you see for the future in terms of money?
Ms Bertrand: In going to the public hearing on Canadian content, our approach is to review the policy landscape. Certainly we cannot compare ourselves to the Americans; the market does not compare, the means do not compare.
Given who we are and what we can provide, however, we have to consider if there is something that could be changed or adjusted. The situation has changed, and perhaps we could invent new supports or promote new thinking. Our space will never be like the Americans' space, but we need to consider new ways to occupy it -- to be more present and more profitable. We need to ensure that we are capable of competing -- not just within Canada, but also in the international market.
That is exactly what we will be discussing in the public process that we have started.
Senator Spivak: I am most interested in your intention to look at violence. I think many of you must have seen a recent article in The Globe and Mail which directly links violent behaviour with television. Again, I think that our neighbours to the South have not been entirely successful in their efforts. What is your view on that? Can you give us some idea of how you are going to attack this?
Ms Bertrand: As you know, the CRTC has been very active on that. In comparison with the Americans, we are probably ahead of the game. A lot of work has been done for many years. The CRTC has retained the approach of self-regulation, coupled with a more collaborative effort from the industry itself. We are getting together and establishing classifications, so as to flag the different categories for parents. The approach is one whereby the choice is exerted by the viewed; it is not a censorship approach.
Having the classification icon on the screen is a relatively new experience for viewers. If I recall correctly, the initiative began in September, so we have not yet made all of the progress. Apparently there has also been some effect on the broadcasters and the programming industry. The icons have a restraining impact, so a broadcaster may think twice when choosing a program, because the icon will also have to be shown.
After one year of programming, we cannot yet expect to reap all of the benefits. We are monitoring the group made up of broadcasters, speciality channels and distributors, however. It is called AGVOT. It reports to us on a biannual basis, and we really monitor it closely.
There was a study in Quebec. The private broadcasters have the most violent programs, and we have to say that it is not the Canadian programs that are violent -- often it is the American movies. We have to keep the issue of violence high on our agenda. At this point in time we are still concerned, and we still work hard, but we still have the same approach.
[Translation]
Senator Bacon: This fall, 26 U.S. television stations will begin digitally broadcasting their programming, and by next spring, some 40 stations could be providing this service.
It seems that digital television will be available in Canada in approximately 18 months. To speed up the development of this technology, Canadian industry representatives established on May 12 Canadian Digital Television, a non-profit organization. Have you been contacted by this organization? Do you have some idea of what the Canadian digital broadcasting industry expects of the CRTC? As you know, digital television will spark a small revolution in the world of television. Among other things, it will be possible to marry television with the Internet. Given this anticipated marriage, is there much point in wanting to regulate television content?
Ms Bertrand: There are several answers to your question. We are certainly mindful of the changes taking place. However, I would be lying if I said that this was high on our agenda and that we were devoting all of our waking hours to this issue. Frankly, we are waiting to see what happens in United States and we recognize that we are not going to be the pioneers of digital broadcasting. When this technology does become widely available, will this mean a change in the rules of the game and in consumer habits? Of course it will. Our reading on developments in both the United States and here at home tells us that we still have plenty of time to react. That is why we are working so hard to adopt a system-wide approach to strengthen Canadian content so that when the day comes when we can no longer do things quite the same way, we will have a stronger industry capable of succeeding here at home and internationally.
From a more practical perspective, Susan Baldwin, who has worked elsewhere than at the CRTC and who has dealt with a variety of digital broadcasting issues, could perhaps give you some additional explanations.
[English]
Ms Susan Baldwin, Executive Director, Broadcasting, CRTC: For the introduction of high definition or even advanced television, a task force was set up by Canadian Heritage. The CRTC had the chair of that task force talk to us about its results; that individual also chairs Canadian DTV.
The general approach for the introduction of new television technologies is to allow many of the advances being made in the United States to go forward. As such, the high costs of both the equipment and the technology -- for distribution as well as for production -- are undertaken there. It is then somewhat cheaper -- both to introduce the technology here, and for Canadian users to buy the receivers.
Production is one of the real issues. This is an opportunity for Canadian producers to develop products for new distribution technologies. That technology could include both the Internet and the airways; the product could be available in both.
With respect to how broadcasters will use the spectrum and the timing of the introduction, there are a number of issues for the CRTC. We have said that we will look at those issues in a discussion paper by the end of 1998.
[Translation]
Senator Bacon: Last week, we discussed with representatives of the Canadian Motion Picture Distributors Association ways of promoting Canadian films. To encourage domestic film production, broadcasters in some countries are required to show a certain percentage of domestic films on the airwaves. For instance, Channel 4 in England and Canal Plus in France must even help finance these films. I refer you to page 2 of your submission where you discuss the development of Canadian television programming. Could similar initiatives be considered to stimulate the Canadian film industry?
Ms Bertrand: That certainly has not been discounted. We are guided first and foremost by the Broadcasting Act, but we do take into account broad government policies and directions.
Regarding Canadian content, we are awaiting comments from stakeholders and various parties. We are not saying that we must do this or that, only that we must comply with Canadian content rules set out in the Broadcasting Act. Clearly, there are a number of objectives to consider and we will have to strike a balance.
As far as this issue is concerned, we have not made any proposals. In any case, the public process concerning Canadian content is first and foremost an exercise in setting policy. When the time comes to consider renewing the licenses of each player, then we will weigh all of the information available to us. I admit that at first glance, there is nothing that says we have to do things any differently from the way the CBC or other groups have done things.
The Commission already requires license holders to broadcast Canadian film productions to viewers. This is a licensing condition.
[English]
Ms Baldwin: There are couple of other issues related to film on television, two in particular. One is the level of violence that is usually found in film, and that is of direct importance in determining how television relates to that genre, and how much of those films should be put on Canadian television, given the restrictions that are in place.
The second issue relates to the broadcaster. It concerns a film's suitability for the broadcaster in terms of branding, and the differentiation between broadcasters in order to attract audiences. Some film genres are not suitable for the type of programming that a particular broadcaster wants to display. A variety of issues can obviously be brought into play there.
Mr. Colville: Another issue is related to this -- the whole question of how fast the cable industry will go digital in Canada. As Ms Bertrand has indicated, we have licensed pay television, pay-per-view, and now, in the form of a digital direct-to-home service, we have a form of video on demand. Up to 50 per cent of subscribers are buying these kind of services. In an analogue cable world, however, the problem is that those pay services only have a penetration of approximately 12 to 15 per cent. This is due to costs such as the price of the se top box.
If we were to have digital cable services from one end of this country to the other, we would probably see a much higher penetration for these services, which are largely based on movies. This could be used as a big boost to the Canadian cinema industry, because these services commit to buy all of the Canadian product that is made in any given year. Therefore, we could really help to stimulate that industry.
The cable industry's slowness in moving to digital is part of the problem. It has been compounded by the slowness of the development of the digital set-top box in the U.S.
Senator Johnson: I am interested in the regional public forums that you are starting. I am curious about several things. When are they starting? Who is coming? What do you hope to learn? In particular, how will you address the issue of privatization if it comes up in your consultation process?
Ms Bertrand: We are currently conducting two regional forums, and I am not sure which one you are referring to. One deals with high cost areas in the provision of telecommunication services in the remote and rural regions. The other is a series of town hall meetings in different regions. The meetings are to discuss Canadian content.
Senator Johnson: I was referring to the latter one, but they are kind of intertwined.
Ms Bertrand: No, they are not. Well, they are in the sense that there we offer people the opportunity to comment on Canadian content at the hearings on the high cost issue. I am not sure that I understand the link that you are making between Canadian content and privatization.
Senator Johnson: There has been some talk about this in the public. The privatization aspect comes up at you citizens' forums.
Ms Bertrand: While we have issued the Public Notice to go forward with the public process, and we will hold public hearings at the end of September, we have asked for a round of comments from all the parties, and they have to file their comments by the end of this month.
Parallel to that, we felt that it was of great importance to Canadians that we find new ways of talking to the public. In the public process -- especially in public hearings -- we have often observed that the public is intimidated to come forward and meet with us.
We have organized town hall meetings across Canada in the next six weeks so that people can meet with us informally. Those who wish to speak do not have to have a written brief; they only have to give us 24 hours notice that they will come to the meeting. It will not be as intimidating a process. We will not have the staff, the lawyers, and the consultants who are present in the usual formal process. It is a way for us to hear points of view and opinions, and this reaching out will be part of the general public process.
We held hearings in Whitehorse and Prince George last week. There was no comment on Canadian content -- no citizens showed up to talk about this. This week we will be in Grande Prairie and Prince Albert, and I have not heard that there has been any indication that anyone will address the issue there. We will be in Calgary on Friday, however, and apparently a lot of people have shown interest in attending that meeting.
Senator Johnson: You will be going across Canada?
Ms Bertrand: Yes.
Senator Johnson: You will be very interested in hearing about the Canadian content issue?
Ms Bertrand: Yes.
Senator Johnson: What other things do you ask about when you talk to people? Or is that you just listen to them?
Ms Bertrand: It is the latter.
Senator Johnson: You are just listening?
Ms Bertrand: Strictly listening, yes.
Senator Johnson: We have been studying a lot of the same things that you will be hearing in your meetings for the next while. We can compare our findings with yours, because people will talk to you across the country, and people come here to talk to us.
It has been said that many of the current functions of the CRTC will atrophy, and be taken out by the Competition Bureau. Do you agree with this view, and what will the CRTC's future role be, vis-à-vis the Competition Bureau?
Mr. Colville: This is a déjà-vu of the last time that I was here. It is true that we have opened up the markets to competition. In the particular case of the long-distance market, we have chosen to deregulate most of it. We have hung on to a couple of provisions relating to the privacy of customer information and to a few other issues, but we are no longer regulating a number of those issues.
Now that we have reached this stage, there is probably some confusion in the minds of some industry players and the public. That is, if an issue comes up, where does one turn? Does one turn to the CRTC or to the competition bureau? The two of us have agreed to take a look at that question, and to try to come up with some parameters or guidelines.
The point at which we would totally deregulate a given market, thereby handing it over to the Competition Bureau, is not yet clear. Given the evolution of competition in Canada, particularly in a given market, I expect that it will be some time before we see a degree of competition in the telecommunications maket-place that would allow for total deregulation and handing over.
The issue of our regional consultations was raised. Amongst other things, these consultations are focusing on the high cost of providing telecommunication services in remote and rural areas. I would expect that a requirement for regulatory scrutiny will be continued indefinitely in this area. The goal is to ensure that telecommunications services remain affordable in areas where competition will not likely be a factor.
The Chairman: We will start a second round in a few minutes. Before we do, I would like to ask you a question.
[Translation]
During the course of hearing from various witnesses, we have observed that Canada enjoys an excellent reputation when it comes to its communications infrastructure, whether it be in the field of telecommunications or broadcasting.
Canada also enjoys an excellent reputation when it comes to programming. Americans have told us that they would like to see more Canadian programming. Even though things can get somewhat complex as far as content is concerned, in the multimedia field, two things are critically important: the quality of the product we have to offer and how we promote that product.
I would like to discuss with you product quality and what we have in mind for the year 2020. In order to have first-rate products in the year 2020, we need to create a climate conducive to the development of our writers, singers, technicians and producers across the country, not only in Toronto, Montreal or Vancouver.
Consider these two examples: This Hour Has 22 Minutes and Daniel Lavoie. In 1975, Daniel Lavoie was picking his guitar in Winnipeg, and the local CBC station in Winnipeg, Manitoba was broadcasting his music to a regional audience. For many years, Lavoie and his team of musicians, writers and producers had an opportunity to develop, but without being subject to criticism from national or international exposure. This superior talent developed quietly.
Today, Daniel Lavoie may be 53 or 54 years old, but he still has many years ahead of him. He has achieved national and international fame, all because of the regional exposure he first received.
The program This Hour Has 22 Minutes was first broadcast in 1985 -- it is unfortunate that our colleague, Senator Rompkey, has left -- by a CBC affiliate in Newfoundland. The program was produced by a small team and tested with a regional audience for several years. Program development takes several years. It is not something that is accomplished overnight.
One of the Maritimes' greatest success stories is Anne Murray. In 1970, she was performing for a regional audience in the Maritime provinces.
This is 1998. Several days ago, it was announced that Baton Broadcasting was once again cutting its regional programming staff in Ottawa because of financial considerations. In 1990, the CBC made cut-backs in each region of the country. I would not want to be the one to judge the organization that had to make these difficult decisions in 1990.
We have the infrastructure in place. What is the CRTC going to do to ensure that in the year 2020, when Canada will be in a much better financial position, talented Canadians will be able to work on multimedia product development across Canada, whether in the field of writing, music or production?
Ms Bertrand: Unfortunately, I do not have a crystal ball and I can only reassure you about the solutions we have planned. Your concerns go to the very heart of the work that the commission has laid out in its strategic plan. As part of our three-year work plan launched last year, we consulted with people across the country to share with them our concerns.
We may not be able to put in place a perfect regulatory regime, but we can bring in regulations. We must strengthen our position so that by the year 2025, we are even stronger and have even more people like Anne Murray, Céline Dion and Daniel Lavoie on the scene. This can only benefit everyone here at home and abroad.
This means that each component of the system must be strengthened, at the regional as well as national level, if we want to gain ground internationally. We are committed to this approach. I am not saying that this is the perfect solution, but it is one approach that we are taking to address the Canadian content issue.
The Chairman: You stated that you intend to call in the CBC and CTV for license renewal hearings in the spring of 1999.
Can we reasonably expect that the questions that will be put to them prior to their appearance before the Commission will focus on these issues?
Ms Bertrand: Certainly they will. Moreover, that is why we are proceeding in reverse order. We are starting out with policy questions before tackling license renewals. When the time comes for us to consider the CBC's application, we will not be talking only to the vice-president of strategic planning at head office. Of course we will be asking him to outline his overall approach. But we also will want to speak with Ms Fortin, as well as with French-language radio officials and English-language television people. We want to assess their level of commitment when the time comes to renew licenses so as to truly initiate a dialogue which will be the culmination of our overall policy.
[English]
Mr. Colville: You have raised a huge issue -- the whole role of regional operations.
You mentioned This Hour Has 22 Minutes. I am from Nova Scotia, and I was involved in the establishment of the Nova Scotia Film Development Corporation. We put some of the seed funding into Salter Street Productions, the company which started This Hour Has 22 Minutes and Codco. If it had not been for vigorous promotion of them by Bill Donovan, the CBC's regional director at the time, these programs would never have reached the CBC. It never would have happened.
Film producers could tell you about the $1000 cup of coffee, which is when they cool their heels in Toronto, trying to convince somebody to carry their program on a network. Without strong regional operations -- in either the CBC or the private broadcasters -- these kinds of programs do not come out of the regions. This would include programs such as This Hour Has 22 Minutes, Codco, Theodore Tugboat, Street Cents, or those that feature the work of musicians such as Rita McNeil, Ashley MacIsaac, Rawlins Cross, or the Rankin Family.
The Chairman: Mr. Colville, I am so happy to hear you say that.
Ms Bertrand, you said that the CRTC would invite Ms Fortin, who is the Vice-President, French television, or Mr. Byrd, who is the Vice-President, English Television, to speak. What about regional directors such as Bill Donovan, however?
The headquarters for corporate planning may be in Ottawa, but all the decisions on programming are done in Toronto and in Montreal. How are you going to stimulate regional production from coast to coast?
Ms Bertrand: I mentioned Ms Fortin and Mr. Byrd because those are names that I know. I cannot name the others, but the regional directors will be invited, because we be reviewing the television station regionally. Also, we will be inviting the input of Canadian viewers during the regional forums.
The Chairman: Has the CRTC ever asked that certain budgets be targeted for certain objectives? Have you ever been that specific in your recommendations?
Ms Bertrand: I am not sure that I understand what you mean.
The Chairman: The CBC has a global budget, as we know. Let us say that it is $800 million, plus the revenues from publicity. Of course, the budgets are broken down. In the annual report, we see how much money goes to French television, and how much goes to English television. On top of that, we see how much per region is dedicated to French television, for example.
In the past, has the CRTC, in renewing the licence of either a private or public broadcaster, ever specifically asked that certain parts of the budget be targeted to regional development?
Mr. Colville: Not that I recall, no. We would have to check the facts on this. In terms of certain genres of programming, we have done this with the private broadcasters. In cases where we felt that a category, such as drama, was under-represented, we have put a condition on the licence, requiring that certain expenditure amounts be dedicated to that type of programming. I do not recall having done that on a regional basis, however.
Ms Baldwin: In decisions on licences, and conditions on them, we have sometimes required that a number of hours of local programming be produced. While the requirement does not necessarily stipulate the amount of money to be spent, obviously money must be spent in order to reach the required level of local programming.
The Chairman: I was referring to Mr. Colville's comment. He referred to the seed funding for programs. No matter how many hours of local programming we ask a region to air, the quality is always related to the amount of money that the decision makers -- the vice-presidents of Programming -- are willing to give to a specific program in a specific region.
Ms Baldwin: The guidelines that are set for the Canada Television and Cable Production Fund provide bonuses for production in the region. It is therefore more lucrative for the independent producer or the broadcaster to support regional programming.
Ms Bertrand: When we issue a licence, the conditions imposed on it are not designed so as to allow us to take over a private or public broadcaster's management duties. That does not mean that we cannot be specific, however, as you pointed out, in areas such as regional programming. The use of conditions is designed to ensure that the principle has some gesture and concrete action, and that is how the process has operated. It has never been used to manage in place of the programmers, either private or public.
The Chairman: Obviously you have great respect for the broadcasters. The committee does see you as a major catalyst in the development of talent from coast to coast, however, and that is why we are looking forward to meeting with you.
Ms Bertrand: You have probably seen the decision that we made about radio. That policy decision cannot be replicated in television, but you can certainly conclude from it that the intent and the objectives of the Broadcasting Act are the same, and that we are very committed to serving them.
Senator Spivak: Returning to cable distributor's slowness to go digital -- Rogers has said that it will not do so. It is the largest cable presence, and it has more than 2.2 million subscribers. You said that you will license new channels. How will these new channels access television screens?
Mr. Colville: The simple answer is that they will not get on until we get expanded channel capacity, enough to justify some of these new channels actually launching their services.
Senator Spivak: You are saying that you are not in a rush for that.
Mr. Colville: Some of the applicants are saying that they are prepared to go ahead and then wait until the capacity comes, because they know that it is coming. Shaw Cable, for example, has been spending money, and installing digital set-top boxes in many places.
We know that the two DTH service providers are operating in a digital mode and have available space. When the MMDS systems get operating in Ontario and in Quebec, they will also have expanded capacity. As some of this competition grows, it will hopefully have a stimulating effect on the cable operators themselves, perhaps speeding up the process a little bit.
Senator Spivak: What is the time-frame? How soon will this happen? We have been hearing about it for a long time.
Mr. Colville: We are also asking those questions. This is an issue that has been kicking around since 1993. At that time, the cable industry was promising that we would be seeing the digital set-top boxes within a couple of years.
Part of the problem, as I indicated earlier, has been the development of the technology, and to some extent that is still part of the problem. The situation now is almost like the development of computers. Just as one generation of set-top boxes gets developed, somebody comes up with a better one that promises digital television and high speed interned access all combined in the same box. The inclination of some operators is to wait for the next generation of boxes, as opposed to spending millions of dollars on the current technology. It is a difficult question to answer.
Senator Spivak: In your CRTC Vision Report Card, under the category "Support the distinctive role of public broadcasting," one of your accomplishments is "Support for TVNC (Third Network Policy)." What is that, and how does it support the distinctive role of public broadcasting?
Ms Bertrand: As you well know, last year we were asked to examine the possibility of allowing a third network. We went through the public process, and considered the information that was on the public record. Having balanced all the elements, we concluded that it was not really in the public interest to go along with that. There have been some representations for expansion on a national basis for TVA, however, and they will be heard in a public hearing in July.
TVNC has the ability to reach the South, and also to reach out to the native populations wherever they are across the country. The application has not been received yet, but we hear that they are preparing themselves. It will be coming in soon, and we will be then be able to hold a public process such as the one we are holding on TVA.
We feel that TVNC is a voice that helps the diversity objectives of the Broadcasting Act.
Senator Spivak: According to your "Vision Action Calendar," you will examine CBC television's contribution in the spring of 1999. Again, this is under the title of "Support the distinctive role of public broadcasting." Does this mean that the CBC will have stable multi-year funding? Is that what you are looking at?
Ms Bertrand: At the end of April we will invite every regional television director to appear in front of us. We will also invite representatives from radio, so that we can have the possibility of discussing the licence of every station.
It is not the responsibility of the CRTC to discuss funding.
Senator Spivak: How do you support the distinctive role of public broadcasting? You are obviously evaluating it; what you say and do will make a contribution, and your funding does contribute to what a public network can do. In many sense, they have destroyed public broadcasting in the United States. I am just curious as to the general philosophical context of this.
Ms Bertrand: Drawing from the Broadcasting Act, there is a strong belief at the CRTC that there are really strong assets in Canada and in the broadcasting system. This is due to the fact that the public and the private sectors complement each other. The public sector has been the cradle of the broadcasting system in Canada, and there is strong recognition of that.
We are saying that there is a need to question whether, at the turn of the century, it is sufficient to say that a broadcaster is public. How can the public and private broadcasters better play their roles? How can they work hand-in-hand to provide Canadians with the best possible services? These are the questions which we are asking ourselves.
Let us consider their role in terms of local and regional support. We were talking about developing and supporting talent -- giving it exposure in order to achieve the kind of laboratory necessary to create the expansion. The support of drama has certainly been very important over the years. Is that still the role that we expect from the CBC? How different should it be? Are there enough documentaries? Do we have enough children's programming?
If children's programming is strong in this country today, we must recognize that TVO has been a great contributor, as has Radio-Quebec. It all started with the public broadcaster, however.
As we head into 1999, we must consider the role of public broacasters. Should they still be there; should they add dimensions?
Senator Spivak: I am somewhat reassured by what you are saying. After all, public broadcasting in the United States has been undercut by the reality of huge corporate participation. This has meant that some controversial programs never get on the air, no matter how valuable and how wonderful they are.
I think that we have a different system in Canada. We have a system where controversial documentaries and dramas are aired. They could never be aired under the private system. I am looking for some assurance that we still have that strong commitment, and that we will not allow it to be destroyed. This requires money. The CRTC does not fund, but is certainly has a role in this whole process, so you have sort of reassured me.
Senator Perrault: I believe that a healthy, prosperous and vigorous broadcasting industry is important, whether it is public or private. I wonder if you would comment about the fragmentation -- indeed the atomization -- of broadcast markets in this country. I refuse to believe that they can all be making money.
In my home area of British Columbia, I suspect that there are only one or two profitable operations. Do you have any statistics to indicate the health of the industry, by region, in this country?
Ms Bertrand: Yes, of course we do. The television statistics are not fresh in my memory, but I well recall those from radio, because we just finished a lengthy process dealing with that at the end of April.
There have been problems in radio for almost ten years, especially in AM radio. For the last two years, however, we have seen the situation really pick up.
Senator Perrault: Take Vancouver, for example. Are all the stations making money there?
Ms Bertrand: I do not have that information,
Senator Perrault: That would be of interest to me. In some cases, it must be a real challenge for them to live up to the commitments that they made to the CRTC when they were granted licences. Over the years, I have seen this process. I used to be associated with the industry, and I have seen some of the commitments made to regulators. Some of the stations have not lived up to the mandate that they were given, and that is unfortunate.
Ms Bertrand: Most of them have.
Senator Perrault: They are living up to their commitments?
Ms Bertrand: Yes, they are.
Senator Perrault: I am not at all antagonistic towards the radio stations, but the radio does seem to be a 24-hour juke box. They have automatic record playing machines. In some cases the staff is fired, leaving only three people to look after the broadcast operation. This goes on, does it not?
Ms Bertrand: Yes.
Senator Perrault: Is that quite the image you want to create, or is that quite the type of program that you would like to see on Canadian stations?
Ms Bertrand: We have to make a distinction between the AM stations and the FM stations, and the digital stations are coming. There are differences from market to market, and there are differences between broadcasters.
Senator Perrault: How closely are the stations monitored by the CRTC? Do you go to the stations to find out what they have been playing, and how many hours are involved in playing automatic record players?
Ms Bertrand: The FCC has a permanent staff for monitoring, but we do not. Lately we have been closely monitoring radio, because we did have a public review of the radio policy.
Senator Perrault: That is encouraging. Is Vancouver an important market?
Ms Bertrand: Yes, it is.
Senator Perrault: I look at the full-time commissioners, and the only province left off the list is British Columbia.
Ms Bertrand: We have a commissioner, Cindy Grauer, from Vancouver. She is very active, and she talks about people from B.C. and Yukon as her people.
Senator Perrault: She is a person of real talent, but I would like to see her name appear on this list.
Ms Bertrand: The update has not yet been done, but it will be. She came to the commission in the fall. The document that you have was done in September, which is before she came.
Senator Perrault: I appreciate that clarification. I witnessed a technological revolution last week during the course of the referendum in Northern Ireland. I obtained that vote via computer and in full colour. When they opened the last box and made the announcement I thought, "What is this going to do? We are going to have full screen." I am sure that it is just a matter of time, although the quality must be improved. I think that it is a great thing to have the BBC World Service on CBC. It covers events that are not ordinarily covered by North American television. I watched the referendum for five hours, because I was interested in what was going on.
This technology may present you with a regulatory nightmare, however. Which way will you be going? Have you done any work in that area, or have you any thoughts on what impact it will have on communications?
Mr. Colville: It is going to have a huge impact on the whole communications business. As we indicated earlier, we will look at the whole are of new media, including the Internet. We will consider how our ability to regulate it will be impacted, and how we can ensure that Canadian artists and producers get access to media.
Senator Perrault: You are obviously aware of the problem.
Mr. Colville: We have scheduled a proceeding to take a look at it in the fall.
Senator Perrault: We are told there will be a very dangerous meteorite shower in a few weeks. Does that present a technical problem for you? You cannot very well go up and deflect the meteors, but what kind of backup do our broadcasters have?
Mr. Colville: Telesat has a couple of satellites up there now which have run into problems in the past, as you may know, and they are sort of running along.
Senator Perrault: Is there any way to fix them?
Mr. Colville: There is no way to regenerate the capacity that was lost. They have done a remarkable job in using computer technology from the ground to stabilize the satellites, however. The fact remains that they have lost a considerable amount of capacity on those satellites.
Should there be a failure in the Telesat satellite, there is an arrangement with U.S. satellite distributors to access to their capacity for backup purposes. I do not know whether this shower will have an impact on them or not.
Senator Perrault: No one knows. The successful distribution of video tapes of Canadian film productions is fundamental to the success of the industry. You talk about the burgeoning foreign sales of Canadian product, but are we getting fair access to other countries with some of our television productions? A substantial distribution network is the only real way to make profit. Are we running into a problem with any particular country or combination of countries?
Ms Baldwin: The hardest country to crack as a market is the United States. There may not be any specific barriers, but they have much tighter rules than we do with respect to ownership. As we have always said, ownership is one of the principles by which the nature of the product will be determined.
If a station has a Canadian owner, there will generally be a preference for a Canadian product. If the owner is American, he or she may say that the station's customers want a U.S. product, but the owner makes the decision. It would be very interesting to see more Canadian product put into that market, and to have real choice provided to American consumers.
Senator Perrault: Is there a course of action that the Government of Canada could take to improve that position in the U.S. market? After all, free trade was supposed to offer all sorts of benefits, but it has not benefited the film producers as much as it has some of the other sectors.
Ms Baldwin: With respect to both film producers and independent producers of television programming, promotion is one of the major elements, and that is something that the industry can do itself. Programming is often sold at festivals, such as the Banff festival next week, where visibility is provided to top quality Canadian products. Those kinds of initiatives would help enormously.
Ms Bertrand: Although it is true that the American market is the most difficult one to crack, there have been some success stories.
Senator Perrault: That is good to hear.
Ms Bertrand: Well, Nelvana was sold to the Americans this spring. I was in California when it was advertised, and the Americans were quite upset by that sale. They felt that it was really taking a market share that they would prefer to keep for themselves.
It is not a well known fact, but we are the second largest distributor of children's programming and documentaries internationally. Of course, the percentage figure is not 25 per cent -- it is more like 4 per cent or 5 per cent of the international market -- but it is still worth mentioning.
Senator Perrault: Are they xenophobic about French film production in France? It seems to me that it would be a wonderful marketing opportunity to have French language films from Canada sold in France.
Ms Bertrand: Productions from Quebec are almost as successful in France as products from English Canada are in the United States. It is as difficult, but there are some success stories. We sold Emilie, and we sold Omniscience. It has been easiest to sell documentaries and children's programming. If you do not have the American appearance, fiction and drama are most difficult to sell. Even when we have sold them in France, we have had to translate them with the French accent.
Senator Perrault: That is rather unfair. British movies come pouring in, and they do not change the accent on them.
Senator Spivak: Sometimes they have.
Senator Perrault: I did not know that.
I have been receiving letters from people who say that we should allow the Mother Angelica Live program from Ironside, Alabama to be carried on one of our many channels in Canada. They say that we allow country music, semi-pornographic movies, sports, you name it, but we have only one faith channel. Has the time arrived to have channels which appeal to our Jewish Canadians, Muslim Canadians and Catholic Canadians, et cetera? Why is faith broadcasting restricted to one channel?
Ms Baldwin: We are simply waiting for the applications to come in. We would certainly welcome applications from Canadian companies for a faith channel that would meet the criteria of our policy on religious broadcasting, which requires that a balance of religions be demonstrated in the programming.
Senator Perrault: Faith channels must carry a great diversity of religious belief?
Ms Baldwin: That is correct.
Senator Perrault: In the United States they have a different philosophy, do they not?
Ms Bertrand: Yes.
Senator Perrault: You have a fundamental opposition to the idea. I find that tough to understand.
Ms Bertrand: Our policy goes along with the Broadcasting Act, and the need for diversity and balanced points of view. This is really what makes the strength of Canadian values. On the other hand, of course, it makes it difficult for a religious channel to represent a single faith.
Senator Perrault: Let us say that Pentecostals bring a signal down from a satellite, and broadcast it to followers of the Pentecostal church. They are not trying to proselytize the rest of the country, because one has to be a subscriber to the channel in order to receive it; it is not on the open selection, and therefore must be paid for. It seems to me that there would be no danger of offending any other faith if it were done on that basis. If people of different faiths were to pay to watch channels dedicated to them, why would it pose a problem of imbalance?
The Chairman: We will move on to Senator Bacon, because I think that they would like to think about this question, and maybe even return later to answer it.
[Translation]
Senator Bacon: I had the pleasure last week of meeting with representatives of the Association culturelle franco-canadienne de la Saskatchewan. They complained of course about the dearth of French language television programs in Western Canada. Does the CRTC have the authority to act to ensure that French-speaking minorities enjoy a range of French language television programming?
Ms Bertrand: In terms of basic services, we must promote the French CBC. We are also considering making TVA part of the basic service package across the country. A hearing will be held into this subject, but right now, we do not know what the outcome will be.
However, when it comes to distribution rules, cable companies could, back when monopolies existed, offer services based on who the majority of their clients were.
Digital technology means changes, but we are not quite there yet. DTH and MDS communication systems are already ushering in a new era. Star Choice and ExpressVu offer in Eastern Canada -- but not yet across the country because of satellite capability -- a range of French-language programming far more interesting than past offerings.
We appeared before the official languages committee and we are giving active consideration to the whole concept of bilingual markets and how we can increase services with an expanded technological capability. There is no denying that for francophones in a predominantly English market, there are few analogue French-language services available.
Senator Bacon: Last September, when the CRTC published its Vision Statement, your organization stressed the importance of devising a global international approach to ensure that many different people have a voice in the world of telecommunications. You also mentioned your desire to work with other national regulatory agencies. What kind of cooperation do you envisage? Has this process already begun?
Ms Bertrand: Yes. Our efforts are supported by the International Institute of Communications, by the Department of Heritage, by Industry Canada and by private sector companies. A proposal was made to establish a forum for regulatory agencies and a first meeting was held last September in Sydney. Canada chairs this forum. A meeting was held in London in March to drum up interest from European countries and we are going to Rome in October for our annual meeting.
We want to be certain that there are no plans to bring in international regulations. Forum participants discuss the best practices in place and new media and new approaches. We try to build on our successes internationally for the benefit of each agency and country. We discuss the status of world affairs in the Internet era and how this has become a new platform for convergence.
We work very closely with Susan Baldwin and Mr. Foster. Some 20 countries participate in the forum, the objective of which is to strengthen contacts and alliances.
The Chairman: Unfortunately, our time is up. We greatly appreciate your taking the time to answer our questions.
As you may have noted, our objective, which is to review Canada's competitive position internationally in the field of communications in general, particularly the importance of communications in Canada from an economic, social and cultural perspective, concerns you a great deal. Thank you for your participation.
Ms Bertrand: We will be very happy to continue working with you.
The meeting is adjourned.