Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 8 - Evidence
OTTAWA, Tuesday, May 15, 2000
The Standing Senate Committee on Transport and Communications met this day at 9:32 a.m. to examine Bill S-7, An Act to amend the Broadcasting Act.
Senator Lise Bacon (Chairman) in the Chair.[Translation]
The Chairman: We are delighted to welcome this morning Ms Janet Yale and Ms Elizabeth Roscoe, as well as Mr. Nick Masciantonio from the Canadian Cable Television Association (CCTA).Ms Yale is President and Chief Executive Officer of the Association and Ms Roscoe is Vice President, ExternalRelations. Please proceed.
Ms Janet Yale, President and Chief Executive Officer, Canadien Cable Television Association: Thank you for the opportunity to appear before your Committee in its examination of Bill S-7.[English]
The CCTA is the national industry organization of the cable television industry. We represent 846 federally-licensed cable systems that collectively provide communication services to Canadians, serving more than 7.7 million residences and over 500,000 commercial customers from coast to coast.The cable television services that our members offer are governed by CRTC regulations. The licences they hold, the renewals they are granted and the service offerings they provide are all approved and authorized by the CRTC.
The process by which cable companies receive approval for any of these activities is administered by the CRTC. The hearing process, managed by the CRTC, allows for public input. In recent years, that public hearing process has been amended to encourage greater public participation. The commission has put an increased emphasis on regional hearings and public consultations,individual participation by means of teleconferencing and video conferencing and an expanded Internet and electronic document filing system for access by members of the public.[Translation]
The objective of the amendment provided for in this bill, if we understand correctly, is to favour greater public participation and provide funding to public interest groups. The amendment will create a mechanism whereby these groups would be provided with funding allowing them to participate more closely in the discussions on broadcasting issues examined by the CRTC and to back up their interventions with more detailed research.Let us say at the outset that we are in agreement with the underlying principle of that amendment. It is indeed important to ensure stable funding to public interest groups so that they can participate in broadcasting proceedings.
[English]While we support the principle of funding for public interest groups, we would like to comment on the proposed means by which intervener funding would be secured. We do not agree with the mechanism identified in the proposed amendment that would "make regulations establishing criteria to give the commission the power to award and tax costs between the parties that appear before it."
We believe there is a better alternative, which we will outline for you this morning. The benefits of our proposal are twofold: first, stable funding in advance for public interest groups and second, a reallocation from existing resources rather than the imposition of an additional charge, or tax, on our industry. If you will allow me, I will explain our proposal briefly.Under CRTC regulation, broadcasting distribution undertakings are required to pay fees for their licences. Thisauthorization comes from both the Broadcasting Act and the Telecommunications Act to cover the costs of the CRTC. Broadcasting license fees have two components. Part I of the licence fee covers the CRTC's regulatory or operational costs for the broadcasting directorate of the commission. Part II of the licence fees is allocated to the Consolidated Revenue Fund and represents a number of things: economic rent for use of a limited public resource, that is, the broadcasting spectrum and Industry Canada spectrum management costs and fees in recognition of the commercial benefit we receive for holding and operating a license in a given market.
For the year 2000, cable companies alone paid $2 million in Part I licence fees and $47 million in Part II licence fees. In total, the broadcasting industry contributed $22.2 million in 2000-2001 in Part I fees to cover the costs of the CRTC and $81.1 million of additional Part II fees to the Consolidated Revenue Fund. The Part I fees, as I said, more than cover the operating costs of the broadcasting directorate of the CRTC, which are reported to be $16.6 million.The two components together of the broadcasting licence fees more than cover the costs of the CRTC operations. We would propose that a small cost reallocation of those Part II licence fees would be appropriate to finance the intervener funding for broadcasting proceedings.
We believe this proposal has two advantages. An allocation of even one-half of 1 per cent of the Part II licence fees would generate a significant fund, approximately $400,000, forinterveners from existing resources.This fund could be established annually, allowing intervener groups to apply to seek prior approval for their research programs. We see the prior approval of the funding as a critical improvement to the mechanism outlined in the draft legislation, which contemplates reimbursing interveners after they have spent the money.
[Translation]We encourage you to discuss that reallocation of funds coming from Part II licence fees with other Government officials, particularly the Treasury Board and the CRTC, to see what would be the best way to proceed.
As I said, we are totally in agreement with a financial contribution given to public interest groups, but we are against the proposed amendment which would create a reimbursement mechanism and impose additional charges to the industry.[English]
We believe the cable industry already contracts significant resources to the Government of Canada. As we stated, our industry contributes close to $60 million annually in Part I and Part II licence fees and corporate taxes. In addition, cable companies contribute 5 per cent of gross revenues to support Canadian programming, of which $70 million annually is contributed to the Canadian Television Fund. We believe we do our part.Our companies believe the government should be able to accomplish its policy objective of including public groups in CRTC proceedings through the allocation of existing resources.
Thank you for the opportunity to appear before your committee. We would be pleased to answer any questions you may have.The Chairman: You mentioned that this proposal has two advantages: an allocation of half of 1 per cent and approximate ly $400,000. How much money do you think would be requested?
Ms Yale: That is a very good question. It is hard to say. I think that the CRTC would have to set up criteria, under any mechanism that is put in place, to decide on what basis groups could get money and for what purposes.If you will permit me to take a moment at the outset, it is very important to draw a big distinction between what happens in telecom and broadcasting proceedings. As you know, telecom proceedings are quasi judicial in nature. There is formal evidence. Historically, with the telecom proceedings, the intervener funding that flows from that is really to cover the costs of preparing formal evidence and the lawyers who participate doing cross- examination and so on in those proceedings.
The broadcasting proceedings are, by their nature, very different. People just write briefs. I do not think anyone is seriously suggesting that people should be compensated for writing a two-page letter or appearing in a broadcasting policy proceeding. My understanding is the intervener groups are looking for the ability to do research studies - which are expensive, by their nature, to do - particularly for those that do not have large resources.If you think of the number of broadcasting proceedings on an annual basis and a few groups wanting to do studies that may cost $25,000 to $50,000 apiece, depending on how sophisticated the research study is, you can imagine that a pot of $300,000 or $400,000 to fund those groups would be sufficient on an annual basis. That is why we proposed a number in that order of that magnitude.
The Chairman: I feel the CRTC would have some criteria before it allowed any money for people appearing before them in the broadcasting sector.Ms Yale: The mechanism we are suggesting would allow the CRTC to have a pool of money in advance. Therefore, interest groups would not have to find or borrow the money and then hope that, after the fact, the CRTC would repay them or that others would reimburse the CRTC to repay them. Instead, they would apply and indicate that they propose to do such and such a form of research for a proceeding. The CRTC would have criteria to assess whether or not the request was reasonable. If it was, the applicants would be granted the money they wanted to do the research they proposed and they would have the certainty of having the money before doing the research, rather than the uncertainty of not knowing whether they would be reimbursed after the fact.
Senator Forrestall: I tend to agree with you that we should not be paying people significant amounts of money to prepare a two-page or three-page brief and pop it in the mail or bring it to a hearing and present it. Frequently the cost of preparation of a brief is virtually nothing. On the other hand, the cost of presentation can be quite difficult to overcome. Having said that, I generally agree with that thrust.Am I right in assuming that you are suggesting in your brief that there is enough money in that difference, in that balance, to accommodate the costs as, historically, they seem to be awarded? Is that correct?
Ms Yale: Currently, the CRTC does not award any costs on the broadcasting side of the house. We are all guessing a little as to what kind of demand there might be for funding of public interest groups. As I said, that is very hard to predict. We propose that the CRTC establish criteria that would try to target money to the preparation or the commissioning of quantitative research that would not otherwise be before the commission to assist it in its deliberations.Let me give you an example. When we have licensing proceedings for a new AM or FM radio licence, a new television licence or a new specialty channel licence, the applicant always does consumer research to demonstrate unequivocally that there is incredible demand for the service they propose to provide. Everybody tries to demonstrate what they are doing is in the interest of consumers, that there is great consumer interest and demand. The public interest groups would like to undertake their own consumer research to say, on behalf of consumers, "Here is what consumers think. Do not put words in our mouths."
You can see that having a public interest group funded to do that sort of quantitative consumer research would be helpful. That is the sort of thing that would be appropriate to fund, not, as you say, people writing a letter saying what they think and then appearing. I do not say people should not do that. There is no problem with that sort of participation. Today, the commission routinely in large proceedings gets hundreds, if not thousands, of letters from ordinary citizens who express their views on whatever matter is before them.Senator Forrestall: The point is that you are suggesting there be pre-funding awarded on the basis of criteria to be developed for pre-study, for the development of the argument that perhaps should come forward in the public interest. That is fine, but that seems to be almost a bureaucratic function. Perhaps the watchdog should be a quasi public service group of people, the Competition Bureau not being excluded but perhaps moving to include that type of research capacity and breadth.
Would this not tend to concentrate the research and hence, the expression of views, in fewer and fewer hands? Although not adequate, as the amendment from our colleague suggests, would this not tend to impose the views of a few upon those from the diverse Canadian structures of the North, the East, the West and the centre?Ms Yale: Maybe I have not made myself clear because I do not consider either of the alternatives - the proposed amendment you have before you, or our alternative - as limiting public interest participation. This is trying to deal with a gap, with something that would not otherwise happen.
As I said in my opening comments, when the CRTC conducts regional hearings in advance of a proceeding and goes across the country to solicitor input, as they do from time to time, there are hundreds of individuals who appear and thousands of letters written. I do not think, generally speaking, that there is a gap in terms of the ability of the ordinary person to make his or her views known. My understanding is that this amendment is designed to fill a different void, if you will, which is to get at the lack of resources of public interest groups to do certain kinds of research.I can draw on my own experience. I was general counsel for the Consumers' Association of Canada for four years. Our funding, at that time, consisted of two parts. We received a base allocation from the government to cover certain parts of our costs and we received certain other money that was project specific. For the projects we anticipated in advance, we applied for funding. Sometimes, however, the CRTC would just call a hearing on something we had not predicted. We could draw on base funding to do research or fund our participation in proceedings that we could not anticipate a year in advance when we made our funding request. That base funding has disappeared for all public interest groups. It no longer exists.
Therefore, organizations such as the Public Interest Advocacy Centre and other consumer groups only receive project-specific funding today. That means that if they have not anticipated that CRTC proceeding, because it had not been announced when they made their request for funding, they do not have any funding to participate. My understanding is that this provision is to allow these groups to get funding for their participation in CRTC proceedings where they have not budgeted and received funding to cover the participation they would otherwise have. There is no other source of government funding for these groups to do that. It used to exist.Senator Forrestall: You are doing by one means that which the government did not think was a particularly useful way to do it before. We are not really doing anything. We are moving the chairs around.
Having said that, I agree that the funding perhaps could come out of surplus fees, thus keeping the government out of it and bringing other factors to bear. How do we know that once you start contributing to such a fund that you will not want to have some kind of control over that fund?Ms Yale: This is not new money.
Senator Forrestall: You are paying out fees and you are saying, "What the heck, it will go to the government. Give it to them, that is what they want." However, when we start using part of those fees for a specific case, as you suggest, then perhaps my fear is of the industry exercising control over how its money is spent. After all, I do not believe that you want to contribute to pre-study programs that might be developed which would develop confrontation and prolonged difficulties in your industry. Is there an assurance that is acceptable to those consumers who might want to use this, where that would not be the case?Ms Yale: It is interesting you mention that, because if you look at the amendment to Bill S-7 that you have before you, in fact, that is worse for public interest groups because the way that model works today in telecom is that interest groups apply to the CRTC for reimbursement after the fact. The money that covers that reimbursement is a bill that is then sent to all the applicants.
For example, in telecom, if Bell Canada applies for a rate increase and a public interest group provides evidence and participates in a CRTC proceeding, after the fact, they apply to get their costs back. They apply to the CRTC saying they made a useful contribution to the outcome of the proceeding and therefore their costs should be recovered. Bell Canada gets to comment on the reasonableness of that bill because they must pay it. It is not the CRTC that repays that interest group. It is the company that applied that is required to reimburse the public interest group for the costs of its participation.I believe our proposal actually creates a better distance between the applicants and the public interest group. It is a fund that is administrated by the CRTC and it is there for groups to draw from, as opposed to the model that requires people, on a case by case basis, to pay the bill after the fact and have to actually comment on the reasonableness of the bill they are being asked to pay.
Senator Forrestall: We can always cope with hindsight, as opposed to foresight, because the control then might be exercised. I appreciate what you are saying. I did not realize there was actually a process of cost recovery.Ms Yale: I have participated in many of them.
Senator Forrestall: We are here to keep the legal profession busy.Ms Yale: We appreciate that.
Senator Forrestall: I know you appreciate it, but you have not done much to alleviate my concern about the desire of people to exercise that kind of control when they have control before the fact, if all they have is an overview or hindsight.Ms Yale: I am not trying to be flippant. The bottom line is very simple. In any proceeding there is a tension between the various parties that appear before the CRTC. That tension does not disappear no matter what the issue, whether it be cost or the public policy that is before the commission. The job of the commission is to weigh competing views on any file, whether it be cost recovery or a public policy matter that they are deciding on. At the end of the day the commission must be the arbiter in terms of the reasonableness of the request they have before them. There may be those who have views that differ.
Senator Forrestall: I am not about to throw out the baby with the bath water and I wish to express appreciation for the concrete proposal. It makes our lives much easier. I still have some concerns, but I will pass for now.I was delighted to note that you think this is a good idea. With the experience that you have all had, you are in a good position to assess the importance of finally opening up and ensuring that the public, the consumer, has a voice, particularly after all the things we have been watching on the international scene. We do not want any demonstrations, do we?
I was pleased with that. You have given us a very creative idea, but the idea of how to reimburse, in my view, is a decision of the CRTC. Your presentation today gives an excellent idea of how to go about it.I also feel, in light of the cost recovery that Revenue Canada insists upon, that is a subject that I take issue with. If you are in cost recovery, it is not supposed to be revenue building and revenue making.
I gather that there is a differential of somewhere near$70 million that the Consolidated Revenue Fund gets from the cost recovery, supposedly, under Part I and Part II. I would hope the CRTC could negotiate with the government and recover some of those funds.My concern, when I listened to your presentation, was not with the thought or the concept, but with the practicality of it, on two bases. First, you must be in a position to assess whether the presentation and the roles played by the interveners are reasonable and have added measurably to the decision-making potential of the CRTC and have given the companies that are appealing something to think about so that they can negotiate. Second, there is the whole question of encouraging greater participation. There must have the right for the CRTC to make a decision as to whether the presentation was valuable, whether it added to the discussion and whether it had an impact that was worthy of consideration. I think that the senator's interventions just prior to mine indicate a concern in that regard.
I do not particularly believe that there is a great difference in what you do on the telecom side. It is only in the details.The concept that the consumer who pays the cable fee has either rights or no rights to a decision is important. It is also important that we do regional interventions or regional hearings.
However, if you look at the kind of money involved and the cost awards, as I understand it, in 1998, in total, for all telecommunications proceedings before the CRTC, there were only 16 cost awards, but the amount was $552,683. In 1999, there were four cost awards for all telecommunications proceedings that amounted to $155,000. Uneven amounts are required, depending on the hearings.Some years the discussions will be very complex, as is the hearing that is going on right now involving CTV and Global. We are talking about what will impact on consumers. A whole new thing is happening because they are now complex companies doing media of all forms and types, not just broadcast.
There is a problem in having any kind of predetermined intervention in the award mechanism, I think. I would hope that the CRTC would give this consideration and discuss with the Government of Canada how to fund this.My concern in your presentation, Ms Yale, frankly, follows your experience with the consumers' association, now noting that it no longer has that base funding - nor does Public Interest Advocacy Centre, PIAC, Rural Dignity, nor National Association of Professional Organizers, NAPO. Those are real problems.
I would sincerely hope that the rules of procedure would be different, similarly designed but different, depending on what is the broadcast side and what is the telecom side. That is not up to me either.You have been a CRTC commissioner, legal counsel and you have been at the Consumers' Association of Canada. Would you be advising the CRTC in drawing up the rules of procedure which this bill intends so that there is proper payment to appropriate interveners? It is not for all interveners, but those that are appropriate. Do you think that adopting your route would answer the needs of these associations?
Ms Yale: There is a lot in there. Let me say at the outset that there is one critical difference between telecom and broadcasting. On the telecom side, there are only Part I fees. The only licence fees paid by telecommunications carriers are to cover the direct operating costs of the CRTC. No surplus is generated. The licence fees are designed to exactly cover the costs of operating the telecom branch of the CRTC and no more. It is a cost recovery scheme.Broadcasting is different. The Part I fees cover the direct costs of operating the CRTC on the broadcasting side. The Part II fees generate a significant surplus. All broadcasting undertakings, radio and television as well as cable companies, generate a significant surplus that goes into the Consolidated Revenue Fund. That does not exist on the telecom side. There is no other pot of money other than cost awards.
As I pointed out in my presentation, for the year 2000-2001, the Part I fees in total were $22.2 million and that is the direct cost of operating the CRTC on the broadcasting side. Part II fees were $81 million, which is $81 million over and above the direct costs of operating the CRTC. If the numbers that we are talking about are right, somewhere in the $150,000 to $500,000 range on an annual basis, it seems to me that it is not fair to go back to the same parties that are generating $81 million of additional revenue for the Government of Canada to say, "That is not enough. We must tax you again to cover the costs of public interest participation in these proceedings."On that issue, we feel very strongly that the broadcasting industry is not the same as the telecom industry because we pay a significant additional amount over and above what the telecom companies pay. That is the first point, about which we obviously feel very strongly.
In terms of the issue of practicality, the fact is that whatever mechanism is put in place, the CRTC will have to screen who gets the money, how much money they get and on what basis. That exists no matter what mechanism you put in place. It will have to make that assessment.Senator Finestone: How would you know in advance?
Ms Yale: It seems to me that the criteria the commission would put in place, which could be either before the fact or after the fact, could be to focus on research. As I said, I think it should be to fund participation that would not otherwise exist. In other words, it is quantitative research or material that, by its nature, would help the commission to understand the issues.We proposed that because we thought it would be better for public interest groups to get the money before the fact rather than after the fact. Our mechanism, or proposal to set aside a pot of money, could just as easily be administered after the fact as before the fact. There is nothing inherent in the mechanism that we proposing.
The key element of our proposal is to set aside a pot of money from the surplus of the Part II licence fees, which is where the money is to come from. If there is a desire to make the assessment after the fact, so be it. That is not material from our perspective. We thought that because you have the a pot of money in advance, you have the liberty of awarding it before the fact whereas when you do a taxation proceeding, you have to apply after the fact and show you contributed materially to the commission and, by definition, you only get that money after the fact.Our proposal has the advantage that you could, if you wanted, give the money before the fact. You do not have to do that. It is really the funding of the interveners that is critical. The way in which you fund it is critical.
I think it is much simpler. In the telecom proceedings, as you said, there were only four proceedings in 1999 that lead to cost awards. On the broadcasting side, if you look at the difference in the number of decisions, on an annual basis, between telecom and broadcasting, it is probably ten or twenty to one. There are many more proceedings because it is radio, television, cable, pay, specialty and satellite. There are many more proceedings.In a CRTC policy proceeding on broadcasting, how do you decide against whom you will assess the costs? If a public interest group participates and does a piece of research, it is not an application. It is a public policy proceeding.
In theory, every cable company, broadcaster, pay and specialty service should be required to help fund public interest groups. There could be 50 or 60 parties against which costs are to be assessed - and with a multiplicity of proceedings, the CRTC could end up in the billing and collection business. I am not sure that is the business it wants to be in. In terms of practicality, drawing a pot of money out of money we already paid in licence fees is much simpler and more practical.Senator Forrestall: Keep in mind where that pot of money came from originally.
Senator Finestone: It comes from the consumer on all sides of the issue.Bill S-7 does not ensure certain financing. Bill S-7 allows the reimbursement of intervener costs, which is not currently allowed under the drafting of the broadcasting legislation. All the bill does is say "Pay the interveners because it is right, in today's society, that the voice of the consumer, the voice of the person who pays monthly for his or her cable fee, has a right to be heard." We have an obligation to do that and balance it out against large corporations. We must have competent, well researcheddocuments to present.
I would say that the two concepts are inimical to each other and it is important that this change to the broadcast bill be made in order that the CRTC can then negotiate.Senator Rompkey: I am always interested in models and in what we can learn from similar situations either in this country or elsewhere. Do you know how other people handle this same issue? Can we learn anything from the U.S. or some other country? Is there any model? This issue surely must have been faced elsewhere. What can we learn from other places?
I have a second question. Do we know on what the CRTC spends the $81 million.Senator Spivak: It goes to the Consolidated Revenue Fund.
Senator Rompkey: I understand. It is owned by Paul Martin and Paul Martin is elected by the taxpayers who are interveners before the CRTC and the cable companies. It is six of one and a half dozen of the other.Ms Yale: The fundamental principle is no new taxes. We are already taxed fairly heavily through the Part II fees. We are saying there is more than enough money in the pot.
Senator Rompkey: Before Mr. Martin takes it in, he siphons off a little.Ms Yale: A tiny piece is all we are saying.
Senator Rompkey: My other question was with regard to models.Ms Yale: The best people to ask would be the public interest groups that examined this why they proposed this particular mechanism rather than some other.
Senator Spivak: Madam Chairman, as I view this issue, it a sleeper. I had no idea how important this particular issue is for two reasons. First, a democracy cannot function if there is an unequal balance of power in the area of decision making. Second, the issue of information and how and why that information is disseminated is also fundamental to the functioning of a democracy. I had no idea how important this was.What have the public interest groups been able to accomplish? Could you give me a couple of examples in terms of change of policy? It strikes me that the cable industry has had things much the way it wants to have them.
Ms Yale: My members would not agree with that at all. I do not agree with that assessment at all.Senator Spivak: Do you read Matthew Fraser once in a while?
Ms Yale: For whatever reasons - and I do not know why this is - public interest groups in Canada have focused on telecommunications because those procedures are more designed for lawyers through fact-finding and information. It is much more quasi-judicial in nature.The consumer groups had a huge impact all through the 1980s and the 1990s in terms of minimizing rate increases for consumers, in local telephone service and in the fight about long distance competition. They were responsible for the failure of CNCP, now Unitel, then AT&T Canada to get into the long distance area because of concerns about local rate increases. They have been extraordinarily affective. Having spent four years of my life doing that, I can tell you that, on those sorts of issues, there has been an incredible contribution from those groups.
On the broadcasting side, the proceedings are quite different in nature. For example, if the CRTC is examining licensing, as it did this past year, new television or new specialty programming services and there are 100 applicants for, ultimately, 16 licences, how does a consumer group decide which ones to back or not? It depends on individual consumer tastes as to which services a group might or might not think are of interest.Consumer groups traditionally do not purport to speak on behalf of particular applications. They tend to speak on the general framework. In other words, consumer choice should be maximized. People should have the right to pick and choose the services they want and in what packages they get them. On those issues, the consumer groups are heard loud and clear. In fact, the CRTC licensing framework, for the launch that will take place this fall, has focused on a consumer-driven approach to the way in which these services will be launched and offered.
The public interest view is well represented. We should not assume there is a big problem here that we are trying to solve. I do not think there has been a big gap. I think the commission goes out of its way to solicit input from the ordinary person in its main and regional proceedings. I do not think there is a big gap.Senator Spivak: Thank you for that. I am glad to hear that. However, on broad issues such as concentration and ownership of different kinds of media, are consumer groups able to intervene on those issues and how? The CRTC is wrestling with those problems. Could you respond to that?
Ms Yale: They tend to focus, for whatever reasons, on energy issues and rate issues. They tend to focus on things where they try to keep prices low for consumers. The impact of that focus is something one can easily measure if one is trying to make an application for government funding for participation. Many of these groups have government funding for most of their participation.The policy issues in broadcasting, which are coming to the forefront this year, may well be the things these groups want to be able to research and to hire experts to help them do an assessment of the implications of concentration with respect to consumers and not rate issues per se, where they have been extraordinarily effective and well financed to do those things.
That is why I say I can agree with the principle of having funding for certain kinds of research, but I do not agree with the overall conclusion that there is a failure of consumers to participate in the CRTC proceedings. I think the evidence shows quite the contrary.Senator Spivak: I am asking in regard to the broad policy decisions though.
Ms Yale: As I stated, the digital licensing proceeding and the framework proceeding are the most pro-consumer frameworks ever. Frankly, it was in our interests to propose that because we are the meat in the sandwich, on a regular basis. The CRTC, in the name of public policy, requires us to sometimes do things that consumers hate, whether it be the carriage of certain services or packaging limitations, in the name of public policy and we willingly do our part. At times, however, consumers question why they must take certain services in order to get others and why they must have something on their basic package that they do not want. The CRTC regulations have much to do with those limitations. In the digital world the commission has said it will be market driven, based on consumer demand, in terms of which services succeed and which services fail. I believe that is a big win for consumers.Senator Spivak: Are you saying that no matter which way this is funded there is not a great problem for interest groups to make their views heard?
Ms Yale: Overall, that is a fair assessment. The evidence on the telecom side shows that even with the ability to award costs there have not been huge financial pressures over the last number of years. I do not think this involves a big amount of money.Senator Finestone: I want to point out, based on what Senator Spivak was asking, that you have millions of dollars and competent legal staff on the CCTA side and on the Canadian Association of Broadcasters, CAB, side. There are situations where an individual may intervene and not receive a decision in his or her favour. I am thinking of my ex-seatmate, Senator Jean-Robert Gauthier, who intervened on behalf of TVO and did not have the decision taken in his interest. That cost him hundreds of thousands of dollars and he does not get one cent back. It is an important issue that the intervener who does something of substance gets recognized even if he does not win.
Ms Yale: We agree with the principle. We disagree with the idea of an additional tax.Senator Callbeck: There are a couple of things I want to clarify. Under telecommunications there can be intervener funding on a case-by-case basis. If the CRTC decides that Bell Canada should pay $1 million in intervener funding and Bell Canada thinks that is exorbitant, then can it appeal?
Ms Yale: It works slightly differently. For example, in the old days Bell would apply for a rate increase. The consumer groups would prepare evidence, taking issue with particular elements of the case before them. They would often have financial experts, for example, who would speak to the rate of return or rate of profit that Bell was requesting.It would cost money to have those financial experts prepare evidence and appear before the CRTC. The lawyers would also cost money. The public interest groups have a staff of experts and lawyers. Their in-house lawyers would appear at the proceeding and they would keep track of the time they spent on that case, just as when I did that kind of work for the consumers' association and participated on the other side in asking for the recovery of costs.
Then, at the end of the case you put in a bill for taxation and your bill would itemize all of the costs that you incurred in participating in that proceeding: the cost of your outside experts, your in-house time that you spent on the file, any travel costs if the hearing was in different city and so on. You would add it all up, put the claim in and the applicant - Bell and others, if there were any, who had an interest in the case - would have an opportunity to review it and the CRTC would put its stamp on what they thought was a reasonable amount. There were guidelines, as in other courts where costs are awarded, as to how much you can charge per day for a lawyer's time and so forth. There is a detailed set of guidelines that exist.At the end of the day the bill might be $100,000 or $75,000. If you think about what is involved in the preparation of evidence, $1 million is not in the realm of the kinds of costs that could be incurred in a two-week proceeding. As Senator Finestone pointed out, in 1998, with 16 cost awards there was a total of $552,000. The costs involved will be in the order of $50,000 or $100,000, or something like that.
Senator Callbeck: Once the decision is made, is that final then?Ms Yale: Any decision of the CRTC can be appealed and there are mechanisms of appeal. The CRTC would rule. As they do on anything, they would issue an order. The order is a decision of the CRTC that must be complied with. In this case, compliance means that the party against whom the costs are assessed pays the bill directly to the person who requested the funding.
[Translation]Senator Gill: Will Bill S-7 give the people living in remote areas, the Aboriginal peoples for example, the possibility of being better represented at the CRTC than is the case now?
Ms Yale: The CRTC establishes the criteria that determine in which circumstances interveners are compensated to appear before the commission. If it holds a public audience in a region, some individuals will be able to appear before the CRTC.However, if the public audience is only held in Hull, of course, it's more difficult for the people living in remote areas to come to Hull. In such circumstances, public interest groups would appear before the CRTC to present their views concerning the public policy in question.
In that sense, that could be useful for the groups in remote areas, if it is one of the criteria established by the CRTC. Our organization has the same criteria.Senator Gill: From your experience, does that ensure a good representation?
Ms Yale: Yes, in the sense that the CRTC believes it to be very important to hold public audiences, from time to time, in all regions of Canada. That gives people living in remote areas the opportunity to appear before the commission. It is a very good experience.Senator Gill: You represent all cable undertakings in Canada, included those in remote areas?
Ms Yale: Yes, from all the country.[English]
Senator Callbeck: I wish to clarify something in your brief. You talk about allowing intervener groups to apply and to seek prior approval. In answer to a question, I understood you to say that you would concede on that point, that it could be done after and that you were not firm on that.Ms Yale: Yes, we are focused on where the money comes from, not on how it is disbursed.
We are suggesting, though, that an advantage of our mechanism for public interest groups is that the pot of money be there at the start of the year because it is allocated from the Consolidated Revenue Fund. Representations could still be made by groups that feel they need the money in advance because they do not have the resources to fund first and get reimbursed later. Under the mechanism in Bill S-7 that cannot happen.Senator Callbeck: If you had prior approval, would you provide any appeal mechanism?
Ms Yale: There would have to be mechanisms to ensure that the money was well spent. The criteria to determine who could get the money and under what circumstances would be quite strict. However, the commission would have to establish those criterion whether it be a before-the-fact or an after-the-fact assessment.The Chairman: If people who meet the criteria and have the money to present their brief are turned down, can they appeal? If the decision is negative, even after they have the money, they made their presentation and the arguments are made before the CRTC, if they want to appeal a negative decision would they be allowed if the amount were prepaid?
Ms Yale: I think rights of appeal exist under the law and those would not be affected by how they were funded to appear in the first place. I do not see an impact.Senator Finestone: You are a women of experience. I am curious about applying the rules of procedure. Were you involved in some of those decisions? Were the rules of procedure, as set out by the CRTC in the regulations, effective? Should they be fixed or changed? Whether the CRTC negotiates with the government to pay this out of the Consolidated Revenue Fund or however it is done, my view is it has to be done. Are there certain things, from your experience, that they should do or should not do that you might like to put into the pot for consideration?
Ms Yale: Is that in terms of the process by which interveners would get their money?Senator Finestone: Yes, in terms of that process.
Ms Yale: I have to say from personal experience - and it is my own personal experience that I bring to bear - that the single biggest barrier was having to wait until after the fact to get the money. We never knew whether we were going to be reimbursed. If you are hiring an expert witness, what do you do if you do not get the money? The money does not exists if you are a public interest group.Frankly, I am surprised that the public interest groups have not thought of this. The idea of having the money in advance, having the certainty and not having to worry about reimbursement is huge. The single biggest barrier to public interest groups participating in some cases is the uncertainty about whether or not they would get the money. Groups cannot afford to participate without that.
Senator Finestone: In your experience, where you were involved in a case where research was done and lawyers' costs were requested and expert witnesses were refused?Ms Yale: Yes. The Public Interest Advocacy Centre hired Dr. Booth and Dr. Berkowitz in many CRTC proceedings to present rate of return evidence on a Bell Canada case. Those witness had been reimbursed in past proceedings so there was no basis to expect that they would not be reimbursed. In one particular proceeding the CRTC made a determination that those witnesses had not contributed materially to an understanding of the issues and turned them down. The PIAC was not reimbursed for the costs of its experts in that case. I know that because I was involved. I did telecom for many years. Perhaps the CRTC did not like the evidence or did not find it helpful, but the fact is that the evidence was retained. The group involved had been reimbursed for those witnesses in past cases. In such instances, what do you do? My personal view - and I speak from experience on this - is that it is a big problem.
Senator Finestone: I am glad that you have highlighted this. The CRTC should be forewarned. I do not think that would be considered acceptable. If that happens again the Senate should take it up.Ms Yale: But when you are reimbursed after the fact, that is what you get. The commission has to make that assessment.
Senator Finestone: Maybe they will listen to this and do it prior. I do not know. It is up to them.Senator Milne: Ms Yale, I am new to the committee and I am not up to speed on this. This may be a dumb question. However, on the time of paying out whether it is before or after, or pre-establishing who can make interventions before the CRTC, it seems to me that this is the sort of thing that is covered under regulations rather than the act itself. Is that so?
Ms Yale: Yes. Absolutely.Senator Milne: Really, the act has nothing to do with the time of payment.
Ms Yale: No, except that it is much harder, when the method is to reimburse, to force groups to pay in advance. How do you actually do that? The mechanism that is in Bill S-7 is the telecom mechanism. By definition, it contemplates reimbursement after the fact because there is no pot of money that can be drawn from before the fact. As I said, you present a bill of costs. The CRTC approves that bill and then goes to the applicants or the parties against whom the bill is assessed for payment. How can you ask those parties to pay before the fact?Our mechanism could be before or after. The mechanism in Bill S-7 is only an after-the-fact mechanism. That is one of the reasons - not the key reason - we do not think it is as good as the mechanism we propose.
Senator Milne: Could the regulations be changed so that interveners could at least know in advance that they are likely to be reimbursed if their intervention comes up to the standard?Ms Yale: As I said, I think the best people to ask whether that would address their issues are the public interest groups. My personal experience with the consumers' association tells me that our mechanism would work better. Could it be done? I suppose anything is possible.
Senator Forrestall: I want to use the word "ingenious," but I will not. It is very interesting. This will not absorb very much of the difference that is paid in and that might have to be paid out. Do you, in your flawless imaginations, have any other thoughts as to how we might spend that money?Ms Yale: I am not answering.
Senator Rompkey: With regard to the $81 million and whether there should be a draw on that, if it goes into the Consolidated Revenue Fund, presumably, it adds to the surplus. Thegovernment is now in the process of trying to decide how to allocate whatever surplus it has. The whole question, with regard to money, is whether you increase taxes or cut programs. The question with the $81 million applies. If you are not going to have new money and will instead draw on the $81 million, you will draw from money that is part of government revenues. Govern ment decides how it disburses revenues.With regard to an Aboriginal group in the Arctic, for example, would a witness want to have transportation paid to Yellowknife to appear before the CRTC or would he or she rather have more beds in area hospitals? It may not be as simple as that but, in another sense, it is because we are talking about choices that the government makes concerning revenues that it collects.
It happens to get $81 million from the CRTC. You are saying to Mr. Martin, "Do you want to give it to the Aboriginal group in Hay River to come to Yellowknife or do you want to put more beds in the hospital or hire an extra nurse?" That $81 million does not exist in isolation. It is not a special pot from which to draw revenues. It goes to the Consolidated Revenue Fund. Everyone is now in the process of debating how the government surplus is to be spent.The Chairman: We can send a copy of this to the Minister of Finance.
Senator Spivak: That is the question: Is it a dedicated fund? Look at the employment insurance fund. It goes to reduce the debt.Senator Rompkey: It goes to reduce the debt on paper only. It is a bookkeeping reduction.
Senator Spivak: This question does involve Bill S-7 because, as you say, if that money is just a part of the Consolidated Revenue Fund, we cannot really talk about using that $81 million. Is that $81 million, which is a tax, given on the assumption that it is a dedicated fund?Senator Rompkey: That is a good question.
The Chairman: I think it is a question for another day.[Translation]
Thank you for your participation. We really appreciated some of the advice that were given this morning.[English]
It was greatly appreciated. Thank you for your presence here.Senators, the next meeting will be held on May 29 or May 30.
The committee adjourned.