---

Proceedings of the Standing Senate Committee on
Transport and Communications

Issue 7 - Evidence, May 9, 2001

---

OTTAWA, Wednesday, May 9, 2001

The Standing Senate Committee on Transport and Communications met today at 6 p.m. to examine Bill S-7, to amend the Broadcasting Act.

Senator Lise Bacon (Chairman) in the chair.

[Translation]

The Chairman: Today we have witness Mr. Jean Sébastien from Action-Réseau Québec. Mr. Sébastien, I believe you are used to this sort of thing. You will be making your presentation and then the senators may ask questions. You have the floor.

Mr. Jean Sébastien, Delegate, Action-Réseau Québec: Madam Chair, I represent two groups, Action-Réseau Consommateur and the Fédération des associations coopératives d'économie familiale du Québec. These are two coalitions of consumer groups that are in the process of merging, a process that began last June and that should come to fruition next October.

We believe that amending the Broadcasting Act will provide Canadians with the basic conditions needed to ensure that their concerns are heard. The awarding of costs to citizen groups appearing before the Canadian Radio-Television and Telecommunications Commission is intended to enable citizens to play a greater role in regulating broadcasting, by allowing groups such as ours - which represent a significant number of Canadians - to free up staff to prepare comprehensive arguments and, if appropriate, gather the necessary expertise to defend the interests of citizens within the regulatory machinery.

We would like to begin by describing our work and our commitment to defending the opinions of citizens and the conditions that make it possible to achieve a balance between the representations of groups like ours and those of major broadcasting corporations. We will then explain why it is important - more so today than before - to ensure that citizens and consumers are able to make themselves heard in the judicial process that regulates the broadcasting sector.

First, the balance between corporations and citizens must be re-established. An amendment such as the one under review would help to re-establish the balance of power between citizens and corporations. There is no comparison between the scope of the funds available to the corporations operating broadcasting undertakings and the financial means of consumers and the groups representing them. This imbalance between the opportunities available to the various parties seeking to be heard during a judicial process does not reflect the values inherent in our democratic system. Effective and informed participation by consumers is often hindered by the limited means available to groups.

We have had occasion to appear before the CRTC with respect to broadcasting matters. In the past year, we have defended our positions in the process that led to the licensing of Télévision des Arts and during the review of the pertinence of expanding the licence territories of cable companies to cover an entire province or several provinces, a situation for which there is a precedent in the distribution of television programming via satellite.

In any case, this type of intervention raises the question as to how much time our staff can devote to these matters. One must understand that almost all of our revenues are associated with our interventions in a particular sector.

Apart from members' dues, less than one third of the grants we receive, that is approximately $150,000, goes to cover general operating expenses. Given that our group intervenes with respect to a variety of policy issues, ranging from the quality of health care to the development of Canada's energy resources for the common good, it is easy to understand why it is difficult to find the funds needed to work on matters for which our efforts are not compensated.

Some of our groups' revenues comes from the awarding of costs by the regulatory bodies before which we appear, including the Régie de l'énergie du Québec and the CRTC. This money helps to pay the salaries of our employees, those who appear before the regulatory bodies and, to a lesser extent, those working in the shadows to provide the administrative support needed to follow up the various phases of the judicial process.

Our intervention is based on the day-to-day issues that are raised by our members and by the groups we work with; however, we must sometimes call on experts in order to demonstrate how administrative decisions and the introduction of technologies have a negative impact on consumers. The CRTC already has the ability to make such awards under the Telecommunications Act, thereby enabling us to effectively intervene on behalf of consumers with respect to telecommunications policies.

Changes in the television sector have meant that access to television services has gone from a model whereby anyone with a television receiver had free access, to a model dominated by usage-sensitive pricing. This change in supply introduces new barriers to access to television. Given the mandate to ensure the affordable distribution cited in the Broadcasting Act, the entire subscriber fee structure raises a number of important issues.

The establishment of a similar system with respect to broadcasting policy is all the more important today, given that the world of broadcasting has changed significantly since the adoption of the Broadcasting Act.

In the past, cable companies offered specialized channels in packages; consumers realized savings by subscribing to a package of channels over and above the basic service. With the analogue technology that cable companies were proposing, technical considerations meant that the complete range of channels had to be distributed; however, with the digital service offered by satellite companies and being developed by cable companies, pay-per-view television service is now possible.

Not long age, the CRTC announced that it would grant operating licences to 283 new specialized television channels in digital mode. Although we had planned to make an announcement only in the new year, the CRTC had to release the names of the licensees on November 27, 2000, after the National Post published a partial list of the licensed channels. With the switch to digital technology, the number of specialized channels is growing in leaps and bounds. Changes in the supply of these services raise two important questions. Conventional television, available at no cost, served the public interest. Is the public interest being better served today? The development of new services creates an upward pressure on consumer supply. The appearance of consumer groups at licensing hearings leads us to question their ability to assume costs.

Licensing is only one aspect of the change in Canada's television landscape. The CRTC is also asking questions regarding the technological changes that subscribers will have to implement in order to be able to receive the new channels. The very consideration of the challenges involved in switching from analogue technology to digital technology raises complicated questions that call for a discussion process that would involve consumer groups.

The policy changes announced following the structural public hearings of March 1993 will, among other things, result in an increase in subscriber fees. In fact, among the various public notices published following hearings, public notice CRTC 1994-7 (Amendments to the cable television regulations, 1986) stipulated that part of the expenditures associated with the implementation of digital technology must be assumed by subscribers. In particuolar, the decision states:

...a portion of the costs of an addressable, digital decoder installed in each cable household could be recovered through such fee increases.

The development of new technical capabilities permits pay-per-view television service. Licensees are not always interested in this type of "à la carte" distribution. The CRTC is sensitive to their interests. Furthermore, the CRTC is trying to encourage the distribution of Canadian channels in an environment in which the number of foreign channels - especially those from the United States - has increased significantly. Hence, when the CRTC approved the launching of four new channels in May 1999, namely Canal Z, Historia, Séries + and Canal Évasion, it stipulated that they were to be offered as a package.

One of the principal observations made following the launch of these new channels was that they reached far fewer viewers than had originally been estimated by their promoters. In fact, the licensees of the new channels had established their fee structure based on the revenues generated by a subscriber penetration rate of 50 per cent. The cable operators initially gave viewers the opportunity to preview the channels, accompanying the launch with a marketing campaign. Among Vidéotron subscribers, the penetration rate was 20 per cent. The penetration rate was slightly higher among Look subscribers; that is, slightly higher than 25 per cent. The inelasticity of consumers' ability to pay is certainly one factor.

Will the recent granting of a licence to a consortium for the development of Télé des Arts have the same fate? The results of a survey commissioned by Vidéotron prior to the hearings revealed that nearly two thirds of subscribers were not interested in subscribing to Télé des Arts, even at a cost of 75 cents a month. Although the survey did not measure the effect of cost increases in the ability to pay, one question on the possibility that those surveyed would cancel their cable services revealed that not everyone could continue bearing increased subscriber fees. Sixteen per cent of those surveyed stated that it was fairly likely or very likely that they would cancel their cable service if Télé des Arts was added to the basic service at a cost of 50 cents a month. Even though some of these people may have been motivated by an anti-establishment beef - one that was, in fact, fed by the survey - some individuals may have felt that it was one expense too many.

Pursuant to the Broadcasting Act, the CRTC has jurisdiction over broadcasting companies and requires them to offer certain channels in their basic service or in another package. For example, in the recent case of Télé des Arts, the CRTC ruled that cable companies in francophone markets had to offer the new channel as part of the option package having the greatest market penetration. With respect to the multipoint distribution companies (satellite television), the CRTC ruled that Télé des Arts must be offered to all francophone subscribers who choose at least three specialized French-language services.

Here is one last example. In May 2001, the CRTC will consider submissions on its community programming policy. Since January 1998, cable companies are no longer required to offer televised community programming. However, some of them have maintained this service, viewing it as a business advantage over their competitors, especially companies broadcasting via satellite. In Quebec, a model had emerged which effectively permitted the achievement of the CRTC objectives as regards community programming, namely citizen participation. In fact, in several areas, community programming was produced by independent not-for-profit organizations that were given access by the cable operators. However, the situation has changed since 1998, particularly in Vidéotron territory, where the company has limited the contributions of independent community television stations, forced several of them to shut down, and increased its own programming hours. The spring hearings will make it possible to establish how the CRTC envisages community participation in the new business environment of television. Once again, the involvement of consumer groups and citizen groups will enlighten the debate.

Madam Chair, honourable senators, we hope that, as the television industry completely reinvents itself, you will agree with us that mechanisms allowing consumers to voice their concerns must be developed. There is absolutely no doubt in our minds that ongoing intervention by consumer groups is becoming a democratic issue, with a view to ensuring expression of opinions and the development of expertise that is independent from the industry.

The Chairman: Mr. Sébastien, on page 2 of your document, third paragraph, you say that part of the revenue comes from the awarding of costs by the CRTC and the Régie de l'énergie du Québec. Does the Régie de l'énergie du Québec do things the same way in awarding costs when you come before it?

Mr. Sébastien: The mechanism is pretty well the same. I would say that if there is a difference it is in the fact that the Régie de l'énergie asks for a budget estimate which the CRTC does not require. At the Régie de l'énergie, we submit a budget estimate and, after that, we ask the official involved in the matter to award costs. If costs are awarded, we present an affidavit indicating the hours we worked or asked third parties to work for us, as well as copies of the other costs involved in managing the case: photocopies, phone bills, in fact all it costs to manage a case. It is pretty well the same mechanism except, maybe, for asking for a budget estimate at the outset.

The Chairman: Do you consider that the awarding of costs under the Telecommunications Act is adequate? Would a pure and simple copy of that model be desirable for the purposes of the Broadcasting Act?

Mr. Sébastien: We are satisfied with the award mechanism for costs provided for under the Telecommunications Act.

The Chairman: So you would want to see the same thing?

Mr. Sébastien: Quite, Madam Chair.

[English]

Senator Forrestall: It is rather interesting to be reminded of the woes that advocacies groups such as yours continue to have to go through.

The work we are doing is a little narrower in nature than the broad brush that you have painted for us, so perhaps if I could go back to some fundamental questions.

A colleague who has brought this matter to our attention is concerned about proper representation and about compensation to those who appear. As you know, under the one act, there is room for costing; and under the other one, of course, as senators know, there is no way. I want to ask a couple of questions in this regard.

Looking back over the recent history of your segment of the industry, what do think it might cost to more adequately represent the views of the groups that you are representing? What do you think it might cost on an annualized basis? Are you talking about engaging full or nearly full or part-time personnel, or do you already have those personnel? Just what are we looking at?

At the same time, perhaps, can you give us the benefit of your views on how it should be paid for. Should it be a government payment? Should it be paid by the industry, which of course is the big earner, or out of funds that are made available to the commission? Can you give us your insight into that?

Mr. Sebastien: Well, perhaps in terms of amounts that would be necessary, the best way is to give examples of the amounts that we receive in terms of cost orders, through the Telecommunications Act, when we go to the CRTC.

For the year that just ended, the amount was $7,500. In 2000, the amount was $8,500. The last time for which there was a large amount was during the price cap regime, when the telephone industry was deregulated. The amount for that year was $31,800.

Of course, during that year, the industry was directing a lot of money into its experts and lawyers. If you were to look at what we spent during that year, I think our expenditures against our cost orders are probably proportional to what happened the other years.

I guess the example is adequate. We do not plan to hire somebody to do work specifically on that issue. I already do some of that work. We did appear before the CRTC on two issues last year, so as an analyst on telecom matters and broadcasting I would be continuing to do the same work.

Your last question related to who should pay. As I have said to Senator Bacon, I feel that the way it is designed in the Telecommunications Act is adequate, that that is a sensible way to get money to consumer groups, money that is paid by other actors, on matters of broadcasting.

Senator Forrestall: I understand and I appreciate that. What we are struggling with is that you used the word "reinvent" with respect to convergence, et cetera. You suggested that we also have to find other ways and other methods.

Do you believe that - for example, you would be representing largely interests in Quebec; correct?

Mr. Sebastien: Yes.

Senator Forrestall: With respect to interests in the Atlantic provinces or the Prairies or British Columbia - you must know the players - how do they generally feel? I am not asking you to speak for them, but rather to give us some sense of how they feel about the impact of this. Would the amendment that is being proposed be a welcome amendment?

In other words, are they having difficulty in this age of reinvention of the telecommunications wheel, the wireless wheel? Are they having difficulties, as well?

Mr. Sebastien: Well, consumer groups across Canada are certainly having difficulty, in terms of having enough money to look after the defence of consumers.

An example of that is the Canadian Association of Consumers. They were experiencing large financial difficulties two or three years ago and, as you know, there has been a last-ditch attempt to keep the CAC afloat that has been successful. We are very thankful for that because we work on a regular basis with them and with their members across Canada. It would have been a loss vis-à-vis our work in Quebec not to be able to have respondents across Canada.

Nonetheless, the financial situation remains a difficult one for groups when we want to intervene on a large variety of matters that affect consumers. We need to have a large span, which calls for a lot of resources.

[Translation]

Senator Finestone: You mentioned the CTA. Did the $10,000 allocated by the cable company help them?

Mr. Sébastien: Yes.

Senator Finestone: Do you think that will be enough or will they need to find more funds to ensure that that group, as well as yours, will be able to function properly?

Mr. Sébastien: I will not speak for the CTA because I know their financial situation is not as catastrophic as it once was.

As for ourselves, as I was indicating, a major part of the funds we receive, especially as subsidies, come from amounts allocated to specific questions.

A major part of the money we get from the Quebec government or the Canadian government is allocated for specific questions. That leads us to intervening on certain specific questions. And that is very good. These are questions that all Canadians find important. So the State finds it equitable and reasonable to allocate funds to us to do research on that. However, you can understand that there might be times when, in our situation as consumer group representatives, we do not see the same priorities as the government officials. At that point, the officials do not give us any subsidies to do any work on those matters.

Our financial situation is always a bit borderline. For example, last year we decided to intervene in the area of arts television and regional licences. In one case, it is something that affected everybody because everybody was going to be getting that station. In the other, it was a more technical question that we thought might have an impact because it changes the conditions of the licence. Before, the conditions of the licence were for small territories. Someone living in Trois-Rivières, with a licence for the Trois-Rivières region, could profit from aspects of the licence condition at the time the condition was generalized.

As concerns regional licence conditions, there was that kind of thing at stake. It is a technical matter that we found important enough for an intervention. We assumed the costs.

Senator Finestone: Do you do any work in cooperation with the Consumers Council?

Mr. Sébastien: Yes.

Senator Finestone: So you can give the CRTC a pan-Canadian view?

Mr. Sébastien: Very often we present our view to many groups - we share the work out amongst different people - and we work in coalition with the PIAC, with the Consumer's Association of Canada and with the National Anti-Poverty Organization. These are groups with which we work very frequently even on matters which, at first glance, have nothing to do with Quebec. For example, there are negotiations concerning a new system for capping phone prices for the old companies and there is also one for two companies operating in Quebec: Telus Québec and Québec Téléphone. The Canadian groups, in view of the stakes of the capping of the prices, are working with us on this question for those two companies operating in Quebec. We very often work in co-operation with groups from all across the country even when the matter only concerns companies in Quebec. If the stakes are pan-Canadian, the groups frequently work as a coalition.

Senator Finestone: Could you explain what information you get? Let us say that you went to see what is happening in Trois-Rivières, Trois-Pistoles, Sherbrooke or the northern latitudes, what are you looking for? How do you proceed? How do you make sure that you voice the real concerns, the real questions affecting the community sector, an area I am particularly interested in?

Mr. Sébastien: As I said, we are two federations. We have members everywhere in Quebec. These are groups that have general meetings of neighbourhood citizens when we are talking about neighbourhoods or cities. One of our member associations is specialized in a given area and that is the Insurance Consumers Group. Otherwise, the nine other members of our federation are associations rooted either in a given city or one of Montreal's neighbourhoods. In Montreal, there are several consumer associations.

We have democratic mechanisms that allow us to meet regularly during the year. First, we have a group discussing all kinds of subjects, but we also have a committee on telecommunications, broadcasting and the information network made up of members of many community associations. We also work regularly with people from the regions of the Bois-Francs, Sherbrooke and Rouyn who are those who, during the last two years joined the paid staff of the federation to work on telecommunications matters. In other years, it could be people from other regions. Over the last two years, it's been people from the Estrie, the Bois-Francs and Rouyn who have been working with us on telecommunications matters.

Senator Finestone: When the CRTC gives public notice about a hearing on whatever subject, how do the groups or individuals who want to appear find out exactly what the criteria are for them to be able to work with the lawyers who are working according to the established criteria? Are there any rules of the game that need to be followed to be aware of what you are allowed to do?

Mr. Sébastien: Yes.

Senator Finestone: It is clear, you have no reason to say that you were not aware of what was going on when you appeared?

Mr. Sébastien: Absolutely. The CRTC allows groups representing citizens to intervene and specifies that for there to be costs awarded, the group must be representative of a group of telephone service users. It must have made a presentation to the board that allowed the commissioner to better understand the subject. So, in the rules of procedure, those standards are clearly established.

Senator Finestone: You always expect the same kind of information for appearances?

Mr. Sébastien: It is normal, if costs are awarded, that they not be given.

[English]

Senator Finestone: The same rules and procedure or similar to that which you are accustomed to under telecommunications?

Mr. Sebastien: Yes.

[Translation]

Senator Finestone: You referred to the fact that some changes introduced new barriers to access to television. Given the will to ensure the accessibility of distribution as set out in the Broadcasting Act, you feel that the complete overhaul of the fee structure for consumers raises important issues.

Have you already expressed this opinion? Has the CRTC already examined this?

Mr. Sébastien: We have not yet presented this to the CRTC. However, the CRTC will be holding hearings soon, when these questions may be addressed. Subject to confirmation, this is public notice 2113. I will have to check the number.

In this document, the CRTC has in fact stated that there are real issues for the consumer concerning free access to broadcasting. The issue of moving from relatively free access to a user-pay model concerns the Commission.

Senator Finestone: Democracy is being served by the measures you have already undertaken and I hope that further allocations of funds will help you to continue your excellent work.

[English]

Senator Spivak: It is difficult to grasp all of the emerging issues in this new world of television. I just have a couple of questions, and I will ask them all together, because unfortunately I have to leave. First, I want to ask you about community programming. What you are saying is obviously going to go by the by. I think that is very important. However, I do not understand your point about the transference between analog and digital. Are you suggesting that when digital is in force everywhere we are going to be able to pick and choose by pay TV? Or will it still be the same cabled bundle? How will that affordable? I am sure that affordability is one of your major issues - affordability, access to community programming.

Senator Finestone: It is something we should be looking at anyway.

Senator Spivak: You are right, senator. My compliments, because this is a very good piece of legislation.

Mr. Sebastien: First, on community programming, the council is currently studying the question and evaluating the possibility of putting in place a system for community television that would be similar to what exists for community radios. Community programming per se as it has existed since the inception of cable television is not something that is licensed for the group that prepares the programming. There used to be a condition of license to the distributor who was obligated in the past to have community programming. However, amidst that, not-for-profit organizations prepared their own programming and it came to air through the good services of distributors. We feel that groups that do that should have licenses the same way as radios do.

Senator Spivak: Can you address the issue of affordability with respect to the new packages and how is that going to work?

Mr. Sebastien: This is really a policy issue; it is not technical in nature. There is the feasibility to have pick and choose TV.

The CRTC is afraid of that because of the large availability of American television. In order to protect Canadian culture, the CRTC believes that the solution involves having packages of Canadian TV available.

Senator Finestone: It is the law.

Mr. Sebastien: You are right. When the gates are opened to a lot of the availability of American TV, the CRTC, in order to keep a percentage of Canadian programming available, has to get more Canadian programming. Of course, that costs money, and the money comes from consumers.

So then you get specialized TV. Of course, there will not be 283 new TV stations because some corporations will not be able to get the projects started. Some of them will go to the bank but will not be successful in getting the financing, even if they have a license. However, of course, having a license does help when you go to the bank in the hope of getting a project started.

So there will be a lot of new Canadian specialty TV in the next few years, which is a response of the CRTC to the opening up and availability of TV from the U.S. However, there are costs associated with those new Canadian projects - which makes it more of a policy issue than a technical one.

Senator Spivak: The issue of Canadian content is something that we were very concerned with in our previous studies. It seems to me that it is not just an issue of Canadian product for export - I think we are doing very well there. It is an issue of mass culture. If you only expose the population to Survivor and stuff like that, then that is what they will be interested in. It becomes self-perpetuating. It is essential that there be a broad and interesting variety of Canadian culture available for viewing. At least viewers will then have a choice.

Thank you for your attention to this matter. The work you are doing is very important.

Senator Finestone: Just pass the bill. That is all.

Senator Spivak: We will pass the bill.

[Translation]

The Chairman: Mr. Sébastien, thank you for your testimony, and we do apologize for having kept you waiting.

[English]

Our next witness is Mr. Michael Janigan, who is with the Public Interest Advocacy Centre. Welcome to our committee.

Please proceed with your presentation, following which senators will have questions for you.

Mr. Michael Janigan, Executive Director and General Counsel, Public Interest Advocacy Centre: Madam Chairman, we appreciate the opportunity to attend today to give our support to what we think is a very important piece of legislation. My representations today will be on behalf of the Public Interest Advocacy Centre, the National Anti-Poverty Organization, Rural Dignity, and British Columbia PIAC.

Bill S-7 addresses a long-standing oversight in the Broadcasting Act that increasingly over the last several years has become a major barrier to fair and effective participation and representation by and from the public at regulatory proceedings involving broadcasting, cable television, and new media such as the Internet.

Before addressing some of these issues in detail, I would like to deal with some of the important questions that were raised by some senators during the debate on second reading.

Senator Gauthier raised two questions about the bill. The first dealt with the placement of the amendment in the Broadcasting Act. Senator Gauthier said, in part, the following:

Numbering the proposed amendment clause 9.1 places it among the commission's "general powers." Since the proposed power is to grant the commission the authority to grant costs specifically in the context of the hearing, the clause would be better placed, in my opinion, near those that set out the powers of the commission having to do specifically with the commission's power over hearings.

This is an issue that we have analyzed and have spent some time on, including consultation with the CRTC and the Senate lawyer as well as internally in PIAC. We considered the placement of the amendment around sections 16, 18 and 21 of the Broadcasting Act but felt that it would be most appropriate to place the amendment in a new section, 9.1 and 10(1)(j).

The intent is to amend the Broadcasting Act such that the commission has the power to award costs, and to do so with wording that creates symmetry between this and the Telecommunications Act. We believe it is important that the amendment neither conveys more nor less powers than that which exists in the Telecommunications Act.

The establishment of the criteria for awarding of costs in the Telecommunications Act is found under the power to make regulations in section 67. The section in the Broadcasting Act most comparable to this is section 10. In the sections of the Broadcasting Act dealing with hearings, the language is clearly different. For example, with section 18, the act discusses the commission's ability to make rules. However, to create the desired symmetry and to avoid possible future confusion and challenge to these powers, it was felt more appropriate to establish cost-award criteria as part of regulations instead of rules. The power to be able to make cost awards in the Telecommunications Act is found in section 56 and is identical to the wording proposed for the new section 9.1 in this proposed amendment. The ability to make regulations establishing the criteria for the awarding of costs was therefore recommended as a subsection in section 10, and again uses the same exact wording for both acts.

Section 10 will allow the commission to make regulations respecting criteria for the awarding of costs based on its general powers. As part of the way the logic works, therefore, the power to be able to make cost awards needs to be established in section 9.1 before section 10. This placement and flow, the power to award costs and the ability to make regulations to this effect will bring symmetry to the two acts. This was the rationale used in preparing the amendment. We think it best to defer to the commission with respect to this issue as it has the most expertise in the application of both acts and bears the ultimate responsibility for the workable implementation of the amendment. If the commission were of the view that the amendment should be placed in another location in the Broadcasting Act, we would be prepared to follow that recommendation.

Senator Gauthier also raised a question about panels. Senator Gauthier stated:

Bill S-7 gives the right to the commission to grant costs, but not to panels established by the commission. Under the Telecommunications Act panels are not established. Under the Broadcasting Act they are. Why not extend the same right to those panels that we do to the commission?

Again, we must defer to the commission to provide a definitive answer to this question. However, it is our understanding that under its discretionary powers the commission may conduct proceedings with or without a panel and that it may also award costs for any type of proceeding, whether this be paper-based, a public hearing or conducted with or without a panel, and so forth. In other words, there is no direct linkage between whether or not a panel is used or not used for the public process in order to enable cost awards.

Senator Nolin also raised a question in the debate during second reading. The question involved the wording in the proposed new section 9.1(2) whereby the commission "may establish a scale for the taxation of costs." As we mentioned in regard to Senator Gauthier's question, in order to create symmetry between the acts the exact same wording has been used for the amendment as in subsections 56(1) and (2) of the Telecommunications Act. Subsection 56(2) states:

The Commission may order by whom and to whom any costs are to be paid and by whom they are to be taxed, and may establish a scale for the taxation of costs.

The same wording has been used for the proposed new section of the Broadcasting Act, 9.1(2). What the commission means by "scale" for costs are those reasonable expenses and professional fees that the commission prescribes in a scale. They are based on prevailing market rates. This is stipulated in the Rules of Procedure under the Telecommunications Act established by the commission under section 44(6). The word "scale" is already established in the Telecommunications Act and the Rules of Procedure for the implementation of this, and has been established in common usage and meaning by the commission. We would suggest that the commission can provide more detail for senators if so desired on this issue. If the amendment is passed, the commission will be creating similar rules of procedure for the Broadcasting Act, and we expect these will be comparable.

In speaking to the amendment directly, in exercising its responsibilities under the Broadcasting Act the CRTC is given important decision-making powers associated with the promotion of Canadian culture, the setting of rates, the introduction of competition, the management of convergence and the resolution of stakeholder disputes.

All of those activities, in one way or the other, have significant implications for Canadians. In recent years, we have witnessed a burgeoning competitive marketplace, coupled with convergence between the traditionally separated areas of telecommunications, broadcasting, and now new media and the Internet. This has resulted in a commensurate increase in the complexity of decisions by the CRTC that in turn requires informed submissions and participation by public interests in proceedings.

While it is true that CRTC broadcasting proceedings have always allowed for public input, the reality is that there are significant financial impediments to meaningful intervention by consumer and other public interests. This amendment will not change access to the CRTC proceedings by the public. What it will do is address a major gap by adding another level of participation. Public interest will be able to generate substantive and credible evidence and research for submissions that will better represent the interests of Canadians, offer a balance to the evidence presented by the industry, and permit the CRTC to effectively render good decisions.

For many proceedings over the past several years, consumer groups have requested the CRTC to award costs for broadcasting-related proceedings. To its credit, in response to a detailed request for consideration for costs by the Public Interest Advocacy Centre in the television policy review proceedings, the commission made considerable effort to assess whether there were aspects of the Broadcasting Act that would permit it to award costs. In its findings, the commission determined this would only be possible if "Parliament chooses to proceed by legislative amendment to grant the Commission an express power to award costs to interveners in broadcast proceedings."

In follow-up discussions with the Department of Heritage, it became apparent that there was not a keen desire for the government to open up the Broadcasting Act to deal only with this change. As such, a private member's bill approach was the only alternative available, and Senator Finestone is to be commended for so doing.

Industry has shown little interest in helping to defray costs to assist in the development of quality evidence representing consumer views and interests. It is also arguable that the industry has much to gain by not having substantive participation by consumers. This past winter, there was an opportunity for industry to assist consumer groups in a CRTC-initiated undertaking, Public Notice 2000-113, the establishment of an industry working group to study the shift of channels from analog to digital distribution.

As part of the public notice, the CRTC clearly indicated to the industry the importance of it ensuring consumer involvement and participation, and that this involvement includes the gathering of evidence relevant to the consumer interests. As an exercise involving costs, consumer groups specifically requested of the commission and the industry working group that costs be made available in order that they could participate in a substantive way. The commission was unable to provide for costs, however did encourage industry participants to assist the consumer groups with costs. The industry working group members refused to pay any consumer costs, even though this meant that some consumer groups would not be able to participate and that the one that did was only able to participate in a minimal way. Costs incurred were absorbed both by the individual consumer representative who sat on the working group and PIAC. Honourable senators, it is clear that voluntary contributions by industry to offset consumer costs are not a realistic option.

Under convergence, the lines between telecommunications, broadcasting and new media such as the Internet have become blurred. Convergence occurs at all levels - corporate structure, technology, content, and even policy and regulation. However, legislation written 10 years ago did not account for these changes. Increasingly, there are regulatory proceedings that straddle both the Telecommunications and Broadcasting Acts. Where companies have sufficient resources to be able to substantively participate in these, consumers are limited in providing substantive and credible evidence to telecommunication issues due to the anomaly in the cost-award regime.

In 1998-99, the Public Interest Advocacy Centre and Action-Réseau Consommateur participated in a joint CRTC Broadcasting Act and Telecommunications Act proceeding involving the new media. Together, the organization incurred several thousands of dollars in expenses. The groups applied to the CRTC for costs.

In a letter dated February 4, 1999, the CRTC informed the groups that they could not proceed with an application for costs because the commission did not have jurisdiction under the Broadcasting Act to award these. A request for costs was refiled under the Telecommunications Act and only for those parts of the submissions by the groups that dealt with telecommunications matters.

As evidenced in Appendix E, the CRTC awarded partial costs and clearly identified the conundrum for consumers whereby the Broadcasting Act, as written, does not permit fair and equitable participation in proceedings. The CRTC cost order decision stated:

By contrast, one of the questions involved in the new media proceeding was which Act to apply to the issues, and how. In this context, the Commission considers that it is very difficult to extricate and itemize the issues raised by PIAC/ARC to be determined pursuant to the Telecommuni cations Act. In the view of the Commission, it is more appropriate in these circumstances to award partial costs on the basis of the percentage of PIAC/ARC's submissions which can be seen to deal with issues which fall within the scope of the Telecommunications Act.

Honourable senators, the groups involved received 25 per cent of their costs. While the industry is in the 21st century, consumers are working with a regulatory framework from the distant past. No one can live on 25-cent dollars. These circumstances will be more aggravated in the future with the continuing merging of broadcastings, cable, the Internet, and telecommunications, to the further detriment of Canadians. The inability to recover costs has become a major disincentive for consumer participation in broadcasting-related matters.

There are other examples. In 1997, the Public Interest Law Centre in Manitoba represented consumers in a cable television rate hearing. In the decision, the rate increase applications were not approved by the commission, which saved consumers and the constituents represented by the Public Interest Law Centre - the PILC - millions of dollars. Several thousands of dollars were spent on expert assistance representing consumers on this case. However, in the absence of cost awards, the PILC had to absorb this financial loss.

An excerpt from a letter dated February 25, 1999 sent by the PILC to Minister Copps of the Department of Canadian Heritage supporting the need for a cost-award amendment in the Broadcasting Act usefully sums up the impact of this problem:

While our office is not for profit, we cannot justify continued participation in time consuming and expensive broadcast proceedings unless we are able to recover our costs. As a consequence, Manitoba consumers have been denied the right to fully participate in regulatory proceedings under the Broadcasting Act.

It is to be remembered that in all of these proceedings every penny spent by the regulated companies to defend the interests of their shareholders was indemnified by customers.

In closing, we think that the issue of the need for intervener cost awards under the Broadcasting Act is something that there is, if not complete, then near consensus on by parliamentarians, relevant government departments, the CRTC, public interest organizations, and though, perhaps grudgingly, even by a number of those in the industry.

Bill S-7 will amend the act to the benefit of the public interest, of individual Canadians, not only in the near term but for years to come, by ensuring opportunities for full and effective democratic participation and inclusion in regulatory decision making.

I welcome any questions that you may have.

The Chairman: Mr. Janigan, in the conversion context that we are now in, do you think that S-7 will be sufficient to protect the public's interests?

Mr. Janigan: It is a start. At a minimum, I think it allows some kind of level playing field to exist in the context of the broadcasting proceedings themselves. Hence, when the issues are put before the relevant policy makers, consumer groups will have the ability to marshal the kind of evidence that will be helpful to the commission in making the decisions that will impact on the public interest. Presumably, that kind of evidence will attempt to show the kinds of needs and the perspective of ordinary Canadians and ordinary Canadian consumers.

The Chairman: In your written presentation, on page 3, paragraph 3, you say, in part:

We would suggest that the commission can provide more detail for senators on this issue. If the amendment is passed, the commission will be creating similar rules of procedure for the Broadcasting Act, and we expect these will be comparable.

Would you care to further elaborate on that.

Mr. Janigan: This responds directly to the question involving the intent to establish a scale for the taxation of costs. In essence, what will happen is that once this amendment is passed the commission will adopt rules of procedure that will parallel that in telecommunications. It will establish, for example, with respect to any particular proceeding how the commission will order costs and how those costs will be paid - for example, X-number dollars per hour, depending on whether it was expert evidence, whether it was consultants, whether it was for legal fees.

In essence, and although there has been grumbling from time to time probably on both sides, this scale represents something that is probably below market but I think is recognized to adequately compensate for costs.

The Chairman: In your opinion, it is fair for the groups that appear before CRTC?

Mr. Janigan: We do.

Senator Forrestall: I would like to have another 48 hours to reread the bill. I also have a question for the witness, but first I have a question for the mover of the bill.

Is this bill in order? Are we allowed to amend an act that would require an expenditure that we have not determined?

Senator Finestone: Do not ask that question. Go ahead with Mr. Janigan.

Senator Forrestall: Now that I have been chastised by the authorities, let me turn to the witness.

Do you have an operating grant?

Mr. Janigan: No, not specifically. What has happened by and large to most consumer and public interest organizations over the last 10 or 15 years is that nobody is paid anymore simply to exist. There may be some organizations that are, but by and large we are not paid to exist anymore, we are paid to do specific functions. To some extent, in terms of the bottom line for organizations, they really have to kill what they eat. That means that an organization has to go out and find the projects in order to do the kind of work that it wants to do in the area that it wants to do it in.

Cost awards are a remarkably cost-effective way for enabling a group to do this. You do not have to reinvent an organization or spread money around to reinvent public participation. The organizations and groups that are engaged in this or the experts that are engaged in this really only need their costs picked up in order to deliver a product to the proceeding itself.

Senator Forrestall: You are suggesting to me that notwithstanding the inadequacy of that - and I have no question about that whatsoever: whoever deals with it, it should be dealt with. I had not realized until a month or so ago that this was not fully covered under the act.

You are suggesting to me that no cause has really gone unanswered because of this, that there have been areas in which you have pitched in, done research, sought counsel, organized consultations, and moved forward to the preparation of a brief that was learned and thus moved the issue forward. It would be a comfort to you, however, I suspect, were you to know that you could seek taxation on both sides of this activity. Is that a fair statement?

Mr. Janigan: I would say that under the Telecommunications Act that would be a fair statement of what we have done.

Under the Broadcasting Act, yes, we have kept an oar in the water. However, there is a great deal of difference in the quality of our presentation under the Broadcasting Act and under the Telecommunications Act.

In many of the proceedings we have been involved in, we have attempted to draw to the commission's attention those areas in which we think the consumer interest lies and some aspects of the evidence that we feel are defective in addressing this consumer interest. We have done the best we can, but we can certainly do a lot better than we have done.

Senator Forrestall: Who do you think should pay for the development of your advocacy positions? Should it be the government, the agency, or the private sector?

Mr. Janigan: It should be hearing-specific, and it should relate to the issues under discussion in that proceeding: who are the proponents and whose interests will be benefited or decided via the public proceedings?

Senator Forrestall: So reasonable flexibility in the taxation process?

Mr. Janigan: Yes. In some respects, it is almost looking at it as a user-pays principle. The proponent, in effect, is going through a process of decision making and public participation, which will enable a better decision to be made. They have to pay for that in the end. At the end of the day, they are left with a decision that they can take, go forward and use in the context of their business.

Senator Forrestall: Do we have a level playing field in Canada? Are the interests of the Inuit, for example, as well represented? Do Atlantic Canadians get the same kind of a break as Quebecers, as Ontarians, as Northern Ontarians? Is there a level playing field across the country?

Mr. Janigan: That is a difficult question to answer without some empirical evidence. In general terms, for example, in Atlantic Canada, there is frequently the lack of a critical mass to enable a consumer or public interest group to come forward in an effective way. We have taken on the task from time to time, particularly when there were oral rate proceedings in the Maritimes, of representing small groups, both consumer and public interest groups, in the Maritimes in CRTC rate proceedings.

In terms of whether existing organizations are doing this thing on a day-to-day basis in individual Maritime provinces, I would probably suggest that there is not and that it is very difficult to try to invigorate the consumer interest.

Senator Forrestall: That is because the dollar is not there.

Mr. Janigan: Exactly.

Senator Forrestall: If the advocacy industry could count on reasonable returns on its investment of time and skills, would it be more apt to address a problem, say, in southwestern Saskatchewan or southeastern Alberta? Would a different regime for taxation help in the development of a more level playing field for all Canadian consumers?

I am somewhat afraid that we are setting in cement, not concrete, salt water cement, a system that we might not want, that might not properly and adequately serve all Canadians. That is the reason for my questions. Would broader access to expenditure recovery assist, or should we really look at a whole new system?

Senator Finestone: Senator Fitzpatrick was asking the same kind of question. He was worried about his constituency.

I think that is a good question, about how you get to the outlying groups and the isolated communities, to hear their voices.

Mr. Janigan: You are not going to find the silver bullet that is going to cure all of the problems associated with consumer and public interest participation. This amendment addresses a problem that is specific to ongoing proceedings of the CRTC under the Broadcasting Act. There are other issues, even under broadcasting and some of the other areas, that will not be covered by this amendment because they will not exist in the form of a proceeding. That has to be addressed in other ways by other sources, including government and industry, to enable public participation and to enable the work to be done that develops the public interest in these issues.

This is only a small component of it and I do not think it is intended to be a cure-all for all of the ills associated with the lack of effective consumer representation from coast to coast.

Senator Forrestall: Thank you for the work that you are doing, because sometimes we get a little angry in the east because we do not feel that you really pay as much attention to us as we would wish you could.

Mr. Janigan: I appreciate that.

Senator Finestone: Thank you, Mr. Janigan, for your help and for the assistance from your staff in some of the areas. I could not have put this through without your help.

I sense a tremendous reluctance on the part of industry to participate, certainly from a financial perspective, in this area, and they certainly demonstrated it in CRTC 2000-113. It was obvious that the CRTC needed the input from consumers, but they did not really want to have it heard.

From that perspective, what do you think the CAB or the CCTA are about to say about this amendment?

Mr. Janigan: It is difficult to say. All industry players dislike risk and will attempt to minimize risk in any way they can, and particularly minimize risk of the unknown. The implementation of an amendment like this means the invigorating of consumer participation in broadcast proceedings, so you are introducing an unknown element in a sphere in which they felt confident in operating. So I would assume their initial response to be somewhat reluctant to go forward with this amendment.

However, I would suggest, having dealt with industry players, that over a period of time they will come to develop the same measure of analysis and sophistication that the telecommunications side of the house uses in looking at this. Therefore, while they probably do not particularly relish our participation they understand its purpose and at the end of the day realize that the decision that the commission comes up with is much less assailable when it has been done in proceedings that take place with full public participation.

Senator Finestone: It was my sense that they would have more cooperation from the consumer in times of a rate increase or a change of place on the dial. You may remember times of ruckus associated with change of place on the dial. So I would hope that this would help the industry. The goal is not to hurt or injure; the goal is to ensure proper collaboration between the consumer and the businessperson. I am hopeful that this will do that.

You feel that the mechanism of assessing the worth of the intervention under the three or four criteria is sufficient to allow enough latitude for groups that really should be heard and who have something to say to be able to cover their costs effectively?

Mr. Janigan: It is been my experience that the CRTC has applied the criteria in an appropriate way to ensure that resources have been directed to those representations that were both responsible and of assistance in assisting the commission in coming to the decision.

That by no means will curtail the ability of other groups and organizations that simply want to come and say, "We do not know what the solution to this problem is, but we are upset about what's going on now and we'd like to ask you to fix it." This kind of representation will continue before the commission. It may not be one that is subject to a cost award, but, realistically, there is no expectation that that kind of representation would have been funded to begin with.

However, those groups and organizations that want to look at alternatives in particular to what is being proposed by the industry or by the commission in the way in which broadcasting is carried out in Canada will have the resources to come forward and say, "Maybe we should do it this way. Maybe there should be some industry contributions on this side. Maybe the commission should order a trial period for this, that or the other thing." In that way, there will be a number of alternatives before the commission from which to choose. In the end, it will make for better decisions.

Senator Finestone: I think there is a legitimate concern for the Canadian content part of the obligation that the CRTC has and the Canadian Broadcasting Corporation has, and of course the other members of the cable and broadcasting side. That was a very interesting question that was raised by a prior witness with respect to what you do with the Canadian content rules and regulations if you are going to have the right to choose and select your own menu - similar to looking through the menu of a restaurant. So there are some implications for Canadians having an ability to see themselves, to know themselves and to know their own stories.

It reminds me of people who watch Law and Order and West Wing. They all think that that is how the Canadian legal system works, which of course it does not. That is a real concern. At some point, could we see PIAC posing a question with respect to this issue - for example, "Look, I have this library. I can press certain buttons and get whatever I want. I do not necessarily ever have to watch Radio-Canada, TVA, TFO, let alone CBC"?

Mr. Janigan: I think that will be a question that will be continuous in terms of its relevance for the commission, both in terms of the choice of programming service and what constitutes basic service - and certainly the definition we had 10 years ago is not what it is today. In 10 years time, basic service may consist of access to broadband services that may be a necessity for citizens to consider themselves truly plugged in to society.

That is something that the CRTC will have to continue to address, both from the standpoint of ensuring that there is a Canadian presence in the broadcasting media and also of ensuring that Canadian consumers have an ability to access affordable basic service which consists of all these components that are necessary to receive.

Senator Finestone: I would like to ask you about cost-award financing. Do you think the reluctance displayed in a response by the CRTC in 2000-113 for consumer input or representation from people like yourself was because they did not want to set a precedent and they did not want to be involved in the cost-awards financing? Can you see some mechanism by which there can be fair financing?

We are talking about public interest here and we are talking about Canadian citizens and consumers. Do you have any guidance in that regard?

Mr. Janigan: I think the question of inertia is immense in something like this. No one is prepared to be the leader when it comes to advancing new methods of consumer participation. However, given the experience in the telecommunications industry I think that when something is put in place such as the amendment they are going to live with it and live with in a responsible fashion.

Senator Finestone: Just about the last question, because I think you have answered everything in a very fulsome brief, for which I thank you. There is a lot of rumour and concern out there about the CRTC no longer being relevant, that because of the degree of change and the volume of mergers - the fact that the media is coalesced into one collapsed pocket and package - the CRTC is no longer needed and that business should just call the shots.

The other suggestion is to leave it and let the Competition Board handle it.

Can you see the dilemma of moving into this field without some kind of regulation to hear the consumer by experts who are commissioners under the CRTC?

Mr. Janigan: I think it is very difficult to even envision moving to a fully competitive world of broadcasting and telecommunications without at least an intervening period where there is intensive involvement on the part of the regulator to ensure that you are actually moving in that direction. Once you arrive where you want to arrive, there will remain the necessity to ensure that this perfect end state that you have envisioned and have helped to create will continue.

The industry world is not a static world. Nobody out there in the industry wants to compete. They want to win the competition. Winning the competition means in many respects the end of competition and the end of delivery of the perfect system of regulation that you have devised by that competition.

Hence, there will always be a requirement for the CRTC to actively monitor whether the goals of the Broadcasting and the Telecommunications Acts are being met by whatever framework we arrive at, and certainly competition has a role to play.

If you want an example of a fair amount of confusion in an important industry that has moved to deregulation without an agency overlooking the elements of whether or not competition exists look at the airline industry. We are still attempting to unravel the notion of whether the first deregulation worked and whether or not we will ever get to a state of workable competition.

The way in which the CRTC has conducted themselves with respect to the implementation and the new technologies and in terms of moving towards a restructured world I think is one to be envied and copied.

Senator Finestone: I read your brief before coming in here and I thought I had looked at all the questions that were of concern to me.

We need this bill because in this very complicated world we need this kind of input.

Perhaps for the benefit of the committee, Mr. Janigan, can you tell us what goes into and makes up a presentation. How do you get the information and what are you required to do to present it?

Mr. Janigan: Well, the work to a large extent depends on the parameters of the individual proceedings. However, in many proceedings, after reading the public notice we will look to the issues that will be specifically examined by the commission. For example, in a price caps proceeding we will look to issues associated with productivity and the measurement of productivity by the individual telephone companies. We will then be furnished with the evidence of the industry proponent, in which case we have been an opportunity to review that evidence. If necessary, we will submit interrogatories, for further information and/or clarification of information that may appear therein and for information that may advance the testimony of our experts. For example, in the price caps proceeding, we will likely engage the services of a productivity expert who will wish to make lengthy interrogatories of the industry evidence on how the specific numbers were derived, what techniques were used, et cetera.

Senator Finestone: The information comes to you first, and you are given a certain time period in which to respond and to do your research.

Mr. Janigan: That is correct. It will usually be furnished with the application of the proponent. The CRTC will have had an opportunity to review it first. There will usually be staff interrogatories in place that will advance some of the issues, and we will attempt to digest that. We will then look to the areas in which we perceive that a consumer interest has to be advanced and then develop our own evidence and strategy associated with the proceeding and attempt to advance those interests in the context of this proceeding.

In the last several years, proceedings have tended to be primarily written in nature rather than oral. To some extent, that has cut down on the amount of time within the individual proceeding but has not cut down on the amount of work required to pull together the different elements of the case and the argument that will be submitted at the end of the proceeding.

Senator Forrestall: How long are these proceedings, in general?

Mr. Janigan: Some of these proceedings will last six to eight months, from the timing of the issuance of the public notice to the filing of the final argument. There may be another period of time after that until the commission reaches the decision itself.

Senator Finestone: I have tried reading those interrogatories. They are very complicated. Did you ever try reading them?

Senator Forrestall: Yes, and I could not master them.

Senator Finestone: Thank you very much, Mr. Janigan.

Mr. Janigan: Thank you.

I also wish to extend my thanks to my colleague Andrew Reddick, who was instrumental in preparing much of this material today. I could not do without his assistance.

Senator Finestone: We agree with that.

The Chairman: Thank you for your attendance here Mr. Janigan.

The committee adjourned.

---