45-1
45th Parliament,
1st Session
(May 26, 2025 - Present)
Select a different session
Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 9 - Evidence, May 30, 2001
OTTAWA, Wednesday, May 30, 2001 The Standing Senate Committee on Transport and Communications, to which was referred Bill S-7, to amend the Broadcasting Act, met this day at 5:35 p.m. to give consideration to the bill. Senator Lise Bacon (Chairman) in the Chair. [English] The Chairman: Honourable senators, we are meeting today on Bill S-7, to amend the Broadcasting Act. Our witnesses today are from the CRTC. We have Mr. Colville, the chairman of the CRTC. Welcome, and please introduce the people who are with you. We will let you present first and then senators will ask questions. Mr. David Colville, Chairman, CRTC: Honourable senators, it is a pleasure to be here today. Let me introduce Jean Pierre Blais, Executive Director, Broadcasting, and Allan Rosensveig, General Counsel, Telecommunications, from our legal branch. I would like to thank you all for the invitation to appear before you today to discuss Bill S-7. This bill, as you know, is a proposed amendment to the Broadcasting Act that would allow the CRTC to award costs to parties appearing before it, as is already done under the Telecommunications Act. [Translation] Let me begin with stating that the Commission considers that public participation in our proceedings is an important tool to help us support informed participation in its processes. Such involvement would enrich our decisions and help us better determine what would be in the public interest. [English] As I have mentioned, our experience in the awarding of costs is limited to cases falling on the telecommunications side of our mandate. Under the Telecommunications Act, sections 56 and 57, the CRTC is able to both award costs and establish the criteria under which costs can be awarded. This experience has been positive and has helped us to facilitate informed participation. Our data shows that over a five-year period, from January 1996 to December 2000, costs were sought and awarded in roughly 1 per cent of the commission's telecom proceedings. This reflects the fact that many proceedings are routine and not of interest to public interest groups or require little effort for participation. Conversely, some proceedings are very important to consumer groups and informed participation, such as by filing research results, requires an award of costs. Of the applications for costs made to the commission over this period, almost 90 per cent were approved. The sums awarded ranged from $170 to over $300,000. During this time the average total costs awarded per year was roughly $500,000. Over the same time, the value of costs denied decreased from $35,000 to about $1,000. Costs were mainly awarded to public interest groups as opposed to individuals. Honourable senators might be interested to note that under the Telecommunications Act the commission also has general power to make any decision on an interim basis. This means that we can decide to award interim costs to qualified interveners before the completion of a hearing. However, currently the commission does not have a similar interim power under the Broadcasting Act. Consequently, without a change being made, were Bill S-7 to be approved as currently worded, we would only be able to award final costs. Other than this small concern, we have no further comments on the wording of Bill S-7 as proposed. If passed, it would give us the flexibility to award costs, to determine the criteria upon which the costs are awarded and to decide whether to fix or to tax costs as appropriate. If Bill S-7 were to pass, the commission would then hold a public proceeding to help it determine what was appropriate on the broadcasting side pertaining to the awarding of costs. For example, should the criteria be different from those we use currently for telecommunications cost awards? To maintain credibility in the process, I assume that, as on the telecom side, the cost criteria would specify that the intervener provide value to the proceeding. After that process, the commission would issue specific guidelines to establish levels of fees for disbursements for items such as research and other expert fees. As is the case for telecommunications, it would be very important that the commission has the discretion to determine the appropriate criteria for the awarding of costs. The bill as proposed would allow this. The notion of convergence, which comes up time and again in the communications industry, is one of the key factors in this debate. More and more, the regulatory issues and concerns we must grapple with are falling under both acts and affecting a wider spectrum of Canadian society. Providing costs for interveners on broadcasting issues would be one way to help the commission wrestle with these matters and inform our decisions in keeping with the public interest. [Translation] In closing, I would like to emphasize that the commission is willing to do whatever is necessary to enrich our public process and help us reflect more accurately the public interest. [English] I would now be pleased to answer any questions that you might have. Senator Finestone: Welcome, commissioner and your two assistants, who have had a long history of involvement in the CRTC, whose responsibility and role is not an easy one in a society where you are dealing with big business and the community interest. I appreciate the difficult place that you are in and the concerns with which you have to deal. We have heard a number of interveners on this matter. I would say that, for the most part, there seems to be great support for the public to have a voice. Not only should the governed be allowed to be heard but, in a democratic society, it would be only right that the consumer who uses the system reflects and responds to what is being decided by commissions such as yours and corporations that appear before you as well as responding to what might be government policy. I thank you for coming and for being open and transparent with society in general through us here. There would not necessarily be exactly the same rules and regulations in your rules of procedure as you have under the Telecommunications Act. You said that you would hold a public hearing in that regard, did you not? Mr. Colville: Our intention is to hold a public proceeding with respect to this. It is conceivable that the criteria could be the same. However, there may be some reasons that the criteria would be somewhat different and unique to the broadcasting situation. I do not know what those could be, but we would certainly want the public and the industry to be involved in a process to determine what the criteria would be. Senator Finestone: Could those who are exempt from the licence fee in your hearings - and we presume in the public interest that this would include public broadcasters, which would include TV Ontario, Télé-Québec and some of the small municipal broadcasters and radio broadcasters - be dealt with under the rules which pertain to the allocation of costs? Mr. Colville: It certainly could be handled. We could develop the criteria that would either include or exclude them. We have already dealt with a number of issues. For example, we do not typically award costs to municipalities that get involved in proceedings because we assume they are funded through the tax base. The fundamental principle that we have adopted is largely to fund consumer groups that would not otherwise be funded to enable their research to help support us in analysing complex issues. We have decided through the kind of process that we could undertake to include certain organizations or exclude them, depending on the nature of the organization, how they are funded and so on. Senator Finestone: Someone from CBC used an expression to the effect that this would be a tax on a tax. We have heard that Canadians pay their taxes into the General Revenue Fund and the budgets that are allocated to the different ministries are community-based funds or are collected from society in general. Therefore, if we were to come to a decision concerning the CBC that would tax them in the course of a hearing, then it would be like a double taxation. It would be unfair. Furthermore, it would cause great harm to the CBC in terms of cost of programming. As you and I know, it suffered great reverses at the time of the budget cuts. I was terrifically sympathetic to the CBC's dilemma at that time, although I did not like where it made some of its cuts. Notwithstanding that it has some additional monies now, I do not know if it has made up for what it had before, given dollars and years. Notwithstanding the additional monies, this would be a punishment on their programming, in a sense. Not only would this be a double tax, it would also be hard on CBC's programming. How do you respond to that? Could you see exempting the public interest of the CBC, as a public broadcaster? Mr. Colville: I cannot really comment on the tax on a tax part, but let me say this in respect to a few aspects of that issue: First, the CBC is one of the largest broadcasters in the country. It is a broadcaster for which there is a lot of public concern. Apart from adequate funding, the public has many concerns about the nature of the programming, whether it is serving regional needs or whatever. Whenever we have a proceeding to deal with the CBC there is, obviously, a lot of public interest in that. As with any major issue like this, the more that public consumer groups can come forward to provide us with well-researched information to ultimately be able to render a decision, the better informed we are and hopefully, the better will be the decision we arrive at. I would certainly want to include the CBC. I would not want to exclude the CBC from the process of having a well-informed public appear before us to participate in that process. I do not expect that the CBC typically will appear before us for major licence renewals, whether you agree with the decision we rendered in a more efficient way by dealing with the CBC English and French and with Newsworld as one big package of services. As you know, licence renewals are for up to seven years. A major proceeding involving the CBC would not be one that would happen regularly. It would be perhaps every five or seven years, depending on the circumstances. I do not expect, even when this does happen, that a huge amount of money would be involved. As I have indicated, the maximum that we had on the telecom side - and we have had some pretty significant issues involving some pretty big corporations over the years - was about $300,000. If you think about the relative amount of money and the relative frequency that you would be dealing with these issues, I do not expect that it would be a big burden on the CBC. Furthermore, I think it is one of those institutions where you likely would have people who would want to do the research helping us to make better informed decisions. From my perspective, I would be reluctant to exclude the CBC from this process. Senator Finestone: An observation has been made, by several presenters, to the effect that you cannot compare telecommunications hearings with broadcast hearings, that telecommunications is far more complex, requires much more diligence in the research that is done and the kind of information could not be brought by just anyone. In a broadcasting hearing this would not be the case. It is much less complex, there are many more people and, therefore, it is much more complicated and difficult to render decisions on the broadcast side. That puts the CRTC into a dilemma situation. It seemed to me when I heard this from one of the presenters that today, with convergence, there is little demarcation between telecommunications and broadcasting and Internet and the web and all the digital stuff that is coming on. It would seem unfair not to include both the broadcast and telecom side so that you can make determinations as to the quality of the intervention, the quality of the information and usefulness of that information and then divide and assess as need be. Would that be fair, or is telecom that much different and that much more complicated? Mr. Colville: Senator Finestone, as you know, I came to the CRTC over ten years ago with a telecommunications-telephone industry background. Thirty years ago I worked for Bell Canada and then Maritime Tel & Tel in Nova Scotia. If you come to this job having dealt with broadcasting and telecommunications, with a telecommunications background, broadcasting seems complicated. If you come to it from a broadcasting background, telecommunications seems complicated. It does not surprise me that the broadcasters would argue that telecommunications seems complicated, so perhaps we need to fund more research for that. Frankly, depending on the knowledge of a particular business, it can seem complicated or not. Whether you are dealing with issues of production funding, financing or advertising issues, much of this is fairly complicated and complex. Issues about regional production and economic impact on regions and the film industry, production industry and so on can be quite complex, as you know. Given my background, it is difficult for me to argue that telecommunications is more complex than broadcasting. Telecom has changed a fair bit over the years since I worked in it, but I would argue that, depending on your perspective and the issue, they can both be fairly complex. Senator Finestone: It always strikes me that one is the container and the other is the contents. It would also seem to be based on a telephone communication mechanism. The whole thing is one big mishmash of multiple interests and each interplays with the other. I was not very sympathetic to the thought that one was much more complicated than the other and, therefore, you could not do them at the same time. Mr. Colville: That is true. There are many technical aspects to the broadcasting side. I take your point about the content and the carriage separation. Certainly cable is under the Broadcasting Act and there are many complexities to cable distribution and the issues surrounding that which are very similar to telecommunications. It is under the Broadcasting Act, so you get people coming forward wanting to deal with cable issues. This is where we run up against this convergence issue. They want to deal with those, yet it is under the Broadcasting Act. It is similar, even with pure broadcasting, when we are dealing with the move from analogue to digital radio and many of the issues around that which are complex from a technical point of view. We are about to issue a public notice dealing with the move from analogue to digital-over-the-air television and there are many complex technical issues. Even in traditional analogue television we get involved in issues about whether we allocate or give a licence to a certain party to use a certain piece of the radio spectrum in a given city and whether it will interfere with others. Industry Canada manages some of that aspect and is actually issuing the spectrum licence, but much of that spills over into our licensing process as well. There can be and there are many technical issues with respect to broadcasting as well. Senator Finestone: You mentioned digital. I remember having the honour - and I think one of you was there - of pulling the digital switch for Canada. That was very exciting, Madam Chairman. Other questions were raised by senators in the house at the second reading of the bill. Senator Gauthier asked about the placement of the amendment in the Broadcasting Act. He said that the numbering of the proposed amendment 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 Senator Gauthier's opinion, near those that set out the powers of the commission having to do specifically with the commission's power over hearings. A question was raised by Senator Nolin at the second reading. He asked why you used the term "scale" in clause 9.1(2) of the proposed legislation. Why is this term "scale" used as opposed to the terms "rate" or "tariff"? Is this to allow the commission to determine the amount of costs that it would be prepared to pay back? I want to clear up the two questions that were asked in the Senate. First, I should like to get your opinion on the question of the term "scale." Mr. Colville: If I can deal with those in order, we think the positioning of the clause is quite appropriate and satisfactory in terms of our ability to deal with this. We tend to use the term "proceeding" more than "hearing" in the sense that we normally think of a hearing to be as we are here today where witnesses appear in an oral, public hearing. We also can run proceedings - which we often do - which are purely a paper process. We can and do award costs for those as well, even where there is not an oral, public hearing where witnesses appear before us live. If it is purely a paper process, but they still do research to participate effectively and to contribute, we have the flexibility to do that - where it is not a hearing. It could be simply a paper proceeding. We think the positioning is appropriate. That would give us whatever flexibility we would need to build the framework around that and the criteria that we talked about earlier. That deals with your first two points. In terms of the scale, I think the conclusion is correct. It does give us the flexibility to decide on the magnitude of the award. I should note that where we assign a panel of commissioners, it is the panel that decides the award. Senator Callbeck: Mr. Colville, you mentioned that over a five-year period costs were sought and awarded in roughly 1 per cent of the commission's telecom proceedings. How many hearings do you have, roughly, in a year, or a five-year period? Mr. Colville: I mentioned earlier, internally, that I thought this statistic might be misleading. This figure probably relates more to what is often referred to as the 80-20 rule where 20 per cent of the work involves 80 per cent of the time. In this case, we have applications daily from the phone companies to approve individual, specific tariffs. There are literally hundreds of them. We deal with those on a weekly basis with meetings. There are issues for which people would have little interest in terms of doing much detailed research. We have a few big proceedings. We have one coming up where we will review the price cap regulation that is imposed upon the incumbent telephone companies. That is a major proceeding which will have a significant amount of consumer interest. There are a few major proceedings where the public and consumers would want to be involved. The 1 per cent figure is probably misleading. It is difficult for us to break it down into small, medium and large kinds of proceedings. If we consider the proceedings which are relatively large, where consumers and the public would want to get involved, it would probably be 5 per cent of the total number of proceedings, or less. It is 100 per cent of the ones the public is interested in and where we would want to provide a cost award, where they typically apply for them. Senator Callbeck: What is 100 per cent of the ones they are interested in? This is a ballpark figure. Mr. Colville: Typically, application is about two dozen times a year. Senator Callbeck: What would you say is typical? Mr. Colville: A typical year might be 20 to 24 proceedings in the year where cost awards would be requested. Senator Callbeck: There would be 20 to 24 proceedings a year where costs might be sought. Is that correct? Mr. Colville: That is correct. Senator Callbeck: Of the 24, roughly how many intervenors would you have? Mr. Colville: Typically, for each of those proceedings, the intervenors who would request cost awards probably would be one to four. It tends to be quite a narrow group. That is not to say the public is not involved in these proceedings. Recently we had a fairly significant proceeding in Manitoba dealing with Manitoba Telephone System, MTS. That is now, as a private corporation, being taxed. We had to deal with the proceeding to deal with raising MTS's telephone rates to cover its tax bill. Many members of the public were involved in that proceeding, either writing letters or in a public, oral proceeding in Winnipeg where we opened up the telephone lines so people could call in. We do not award costs if a citizen chooses to pick up the phone and call us to say, "I have a concern and this is why." On the other hand, the Consumers' Association of Manitoba and Manitoba Society of Seniors banded together, got a lawyer to represent them and they did a significant amount of research on the issue. They then applied as one group to get a cost award to pay for the research for the effort that they made. I do not know how many individual citizens might have been involved in that proceeding. It was perhaps 50. We had one party apply for a cost award and that was granted. Senator Callbeck: How much impact does the public have in triggering a CRTC hearing? Does it have any impact? Do you receive complaints from the public and consumer groups and then decide? Do you decide there should be a hearing? Mr. Colville: Typically, we can judge, given the nature of the issue, whether it warrants a public hearing. There have been a few instances though, where we either made the decision or thought that a public hearing might not be required and that we could simply employ a paper process where we did have calls from consumers to request an oral, public hearing. In the case of the situation with Manitoba Telephone System, in Winnipeg, a number of the consumer groups and people in the area suggested that the commission hold a public hearing in Winnipeg. We decided to do so and went there and did it. Senator Spivak: I wish to return to the issue of the CBC and the exemption or non-exemption. When you talk about scale, there are organizations that would like to see the CBC go out of business as well as there are many public supporters. I can imagine a situation where large corporations might be able to get many people to participate and then they would be assigned costs. This might up the ante for the CBC. Because it is a public corporation, I wonder if you are considering setting a level. You might be inclined to tax the CBC less, if you are not inclined to exempt it. Is that what you are talking about or am I wrong? Mr. Colville: The issue is not a question of considering the organization and its ability to pay, if you will. That certainly has not been our practice. It is more a question of setting the scale in terms of paying for the work that has been done by the intervener. I should emphasize here that one of the criterion that we use on the telecom side is whether the work of the intervener has led to a better understanding of the issues that are before us. That is largely to ensure that we do not receive trivial, off-the-point issues before of us, that the work to be funded has led to a better understanding of the issue and is focused on the issue. There have been a few cases where an amount of money has been spent by the intervener that, in our view, has been totally irrelevant to the issue and we did not award a cost. Senator Spivak: In a sense, it is somewhat of a value judgment. Mr. Colville: It is a considerable value judgment. In some instances, we have awarded 100 per cent, in some instances 50 per cent, in some instances 80 per cent, and in some instances, none of the costs. Senator Spivak: In principle, I have difficulty with the fact that you are treating the CBC as if it were just another corporation. I do not think that is the case. For example, Manitoba Telephone System, when it was a Crown corporation, did not pay tax. It was not treated like any other organization. I do have some difficulty with that because, it seems to me, the Canadian Broadcasting Corporation is using every effort to maintain public broadcasting in a context where that is becoming increasingly difficult to maintain and where the value, in terms of the nature of public relations, of the public broadcasting can be denigrated. When you talk about representations and interveners, we are dealing basically, as much as with the actual content and the value of the presentation, in a public arena. I can understand why CBC is concerned. Unless you have a good concept - and I do not know that anyone has - of how much money the CBC actually ought to have to expend on the value that we call public broadcasting, how can you say that a specific tax will not affect the CBC? I do not find that a credible approach. You are saying that it can only be a certain amount, which you do not know because you cannot predict. Then you say that it will not really affect the CBC. I do not understand how you justify that. Mr. Colville: If I said it would not affect the CBC then I misspoke and I apologize. I do not expect it to have a major impact on the CBC, from an expense point of view. Senator Spivak: Even that. Mr. Colville: I take your point. Starting at the top, in consideration of our telecomm side the mere fact that it is a Crown corporation is not a major factor. For example, we now regulate SaskTel, which is a Crown corporation. We would award costs against SaskTel to support consumer groups who would raise issues in that respect. The fact that it is a Crown corporation has not drawn a distinction on the telecomm side. I understand the concerns about the CBC in terms of its funding, its ability to continue to operate and provide good quality programming across the country. On balance, the benefit to be gained by more informed consumer participation in the process, in my view, is a benefit that outweighs what would be a relatively small cost to the CBC. Senator Spivak: Absolutely. I agree with you that the benefit is valid. That is why I support the bill. However, you have a choice. You could choose to exempt the CBC. It is not as if you have no choice. At least we are told that you could choose to do that. Mr. Colville: We could choose to exempt the CBC from paying the cost. Then the question becomes: Who would pay that cost? We have a mechanism that we levy the charge against the company that is regulating it. Senator Finestone: Many people, or even the CBC, recommended - and we cannot deal with that in the Senate - that while the licence fees are $142,000 or however much is paid, that is in terms of using the spectrum under Part II. There is about a $70 million profit that goes into the Consolidated Revenue Fund. I believe that it was Janet Yale from the Canadian Cable Television Association who suggested that. Senator Spivak: I was going to raise that. Senator Finestone: I thought that was what you were alluding to. Can we suggest to you, Mr. Colville, that when you consider how you might want to award costs you may want to speak with the government about using the $70 million profit. Senator Spivak: I will make one more comment. What perturbs me is that in the absence of good predictability, or "visibility," you do not have that. You also do not have a figure that would allow the CBC to comfortably pursue its goals and objectives. As you know, during the last few years, there was a great gap between what the Broadcasting Act expected of the CBC and the funds that were provided to the CBC. Given that situation, I am greatly disturbed by your suggesting that these costs may not have a major impact on the CBC. I reject the concept that there are not other sources of money, because indeed there are. If you have a comment in response, I would like to hear it. Mr. Colville: Senator Spivak, it was not my attention to create a considerable amount of discomfort with you in respect of funding for the CBC. We all have concern about that. As I said earlier, at the end of the day, the amount of money involved in this would likely be significant to the point of creating significant harm to the CBC. You asked for my opinion and that is it. If the government were to decide to take money from a source, whether it be from licence fees or another source, to provide up-front funding for consumer groups, then that would be the government's choice. It is not proper for the CRTC to make a particular recommendation with respect to that sort of thing. We have a mechanism on the telecommunication side which seems to work extremely well and with which, it is my understanding, the consumer groups that get involved are quite happy. We believe the spirit of this proposal that has been put forward could do the same thing on the broadcasting side. We support that. As I indicated at the outset, we could run a proceeding. If there were a ground swell of support to exempt the CBC or other public broadcasters from this mechanism, we could do that. However, it begs the question of where the funding will come from. Whether TVO or Radio Québec would fall into that category is another question, but clearly the CBC is an issue for the very reason you raised, that the public, across the country, has significant concerns and would want to participate in our proceeding with well-informed research. It begs the question if we exclude it, how do you ensure that that is funded? Senator Adams: My question may not relate to Bill S-7. In my region, some locals are getting into the cable business. Dishes are being sold across Canada that cost, at one time, $400 to $500 and now sell for about $200. The small cable businesses in the community are losing business as a result. How is that agreement working now that companies like Star Choice and Radio Shack and other small stores seem to be selling small satellite dishes so that monies are going outside the community while the companies in the community are losing business? Mr. Colville: Several years ago we attempted to create a competitive environment in the distribution of program services throughout this country by licensing two national direct-to-home, or DTH, satellite services to provide an alternative to cable for subscribers throughout the country. We are now seeing the fruits of that competition to the point where Rogers Cable, in a couple of its communities, has lost enough subscribers that it is applying to us to deregulate the tariff for its basic cable service. We are running a proceeding with respect to that issue. The marketplace is unfolding as it should in a competitive environment. We are not unsympathetic to the concerns of the smaller cable operators and their ability to compete with the satellites. Yesterday we announced that we are exempting from the requirement to hold a broadcasting licence the small Class 3 cable undertakings. That will reduce their licence fees and give them more flexibility to respond in the marketplace and to compete with the DTH operators. Senator Callbeck: In regard to the Telecommunication Act, is there no cap on the possible award or on the total for the year? Mr. Colville: No. Senator Callbeck: Obviously, you do not think there should be. Mr. Colville: No. This process has gone on for a long time on the telecommunication side. In our experience, people have acted responsibly in their research work. Again, we have set a precedent for relevance to the proceeding at hand. In our experience, requests have been quite reasonable. Senator Forrestall: I often wonder about the role of commissions such as yours, which generally serve the public and the industrial sides. When you compensate for research work and legal counsel and coordination, how do you guard against massive overpayment for the same research? It would seem to me that once you research a problem in Canada, it is done. You do not have to do it every day or every year. If seven applicants come forward with identical material and the same lawyers show up repeatedly, how do we know that we are paying for original work? Mr. Colville: To a large extent that question relates to our rulings on the relevance of the particular work to the proceeding at hand. Again, in our experience on the telecommunication side, that can happen in theory but it has not happened in practice. From time to time, we receive a one-page letter stating an agreement with a submission by an intervener and then the writer applies for a cost award. In our judgment, the correspondent did not do a lot of research and will not get much, if any, cost award. Senator Forrestall: I do not mean to impart the wrong impression, but I am pleased to hear you say that because it is a matter of interest. In such a case, it would be natural, with all your experience in taxing costs and granting awards, to be alert to chicanery or perhaps just to the overlapping of research and legal counsel. Mr. Colville: The taxation process itself allows for scrutiny of the costs and the work involved. We also ask the parties who will ultimately be paying to comment on the relevance and value of the work covered by the requested cost award. After the paying party comments, we make a decision based on all the submissions that we have. There is ample opportunity for scrutiny of the relevance of the costs involved. Senator Forrestall: Talking about duplicate costs, I must let you in on a little secret. The chair, who is associated with at least two alumni associations, is now duplicating the efforts of five different universities. The Chairman: Thank you, witnesses. Mr. Colville: I hope we have contributed to a better understanding of the issues. We will not be requesting a cost award. The Chairman: Our next witnesses are from Heritage Canada. We have Mr. Marc O'Sullivan, Director General, Broadcasting and Innovation and Mr. Larry Durr, Director, Broadcasting Distribution Services. Welcome and please proceed. [Translation] To help us in our questioning, we shall listen to you first and then ask our questions. Mr. Marc O'Sullivan, Director General, Broadcasting Policy and Innovation: Madam Chair, I just would like to provide you with a quick overview. Our brief have been sent to you, but I understand that you already have some documents from previous appearances. Let me simply tell you that the Department of Canadian Heritage supports the principle of Bill S-7. It is obvious that this Bill meets a need resulting from convergence, the increased complexity of broadcasting issues and the desirability of equitable financial support for interveners in both telecommunication and broadcasting proceedings. This bill would provide greater access to CRTC public hearings and lead to improvements in the quality of interventions. I understand that the Committee has heard from private and public broadcasters as well as from CRTC on the financial implications of interveners' funding and the differences between telecommunications and broadcasting. [English] Those differences have been explained to you in detail by past witnesses. The key is that the CRTC develops criteria for assessing the need to compensate interveners based on their interests and on their participation in a responsible way that helps and informs the CRTC in its decision-making process. The CRTC has the necessary discretion to determine who is paid what amount and by whom, even in the case where more than one company is involved. You have heard from other witnesses about the difference between telecom and broadcasting, notably with respect to the volume of public hearings and the volume of interveners. That matter is an important one to consider. The point that has been made in the past by other witnesses is there is a difference in the volume. That must be taken into account. One of the key criteria for the CRTC, under such a regime, if it is adopted, would be to ensure that the system is not too onerous and does not lead to many frivolous interventions. It would allow the CRTC to be better informed by responsible interventions that provide new research and new material from different points of view. In terms of the cost consequences, I understand that you have already been told about how the costs vary. I believe we indicated from $700 - and even smaller amounts have been identified - up to $300,000. The total costs on the telecom side have averaged around $700,000. The purpose of Bill S-7 is demonstrated by who receives the costs and by the fact that it has been geared toward the consumer or other public interest groups, in keeping with the purpose of Bill S-7. The CRTC has the necessary flexibility and discretion, notably in determining who is eligible to receive costs and that is demonstrated by not awarding costs to municipalities or commercial entities. Moreover, on the telecom side, very few individuals per se request compensation for their interventions. The nature of telecommunications proceedings is more technical and legalistic, and the procedure is more formal than it is for broadcasting. It involves more lawyers. Because of the nature of the telecommunications hearings, the system that has been developed has lent itself well to those types of proceedings. The challenge will be to import that system and apply it to broadcasting, which has a different context. [Translation] The cost awards system for broadcasting proceedings is different as it is more informal and sometimes deal with social issues. It involves more participants such as radio and television stations, pay and specialty services, cable operators among others. Broadcasting proceedings deal with new licences, licence renewals or amendments. These many issues result in a larger number of public hearings. In 2000, there have been 13 public hearings on the broadcasting side compared to only two on the telecommunication side. So there are more interveners for broadcasting than for telecommunication proceedings. One of the main challenges will be to take this increased participation into account. Members of the public, not just experts participate in those hearings. [English] Senator Forrestall: I have heard on a number of occasions, as we go through the process of examining items before us, about a $300,000 award. We have heard about $96 awards and no awards. Are you familiar with the $300,000 award or cost? Mr. O'Sullivan: In going through the statistics, we saw one case where it was up to $300,000. That is the maximum. Senator Finestone: That was that convergence case. Senator Forrestall: That is what I have been hearing. Who is involved in the case? Who applied for that kind of award against cost? Was it Bell Telephone? Was it a private citizen? Mr. O'Sullivan: I am sorry, senator. I do not have that information handy, but I could provide it to the committee. It is one case in the convergence matter. It is the uppermost amount that we found in the statistics. I can provide the information on exactly what case that was. Senator Forrestall: It is somewhat late, so I am not asking for it on an emergency basis. We hope to deal with this matter clause-by-clause very shortly. I would like to know who sought that award and whether it did any of the following things that are requirements of awarding costs. What did that award cover? What was the physical result of it? The Chairman: Senator Forrestall, I think we have the answer here. The clerk has just asked the witnesses from the CRTC officials. Mr. Michel Patrice, Clerk of the Committee: I spoke with the CRTC officials. It was a consumer group and it dealt with price caps and telecommunications. They can find out about the group and give us the information. Senator Forrestall: With all due respect, Madam Chairman, I am just as far ahead as I am with the information from the clerk. If it is not difficult, I would just as soon have it from Heritage Canada asking one of the consumer groups - Mr. Patrice: The CRTC would provide us the information. Senator Forrestall: I can see them over there. The Chairman: We just asked them, Senator Forrestall. That was the answer we were given. Senator Forrestall: Was it considered a good investment? Did those who sought the award or compensation or help use the information properly? Did it provide better access for the Canadian public and did it benefit Canadians generally, by way of the quality of the input to the hearing? We are gaining glimpses of this. If someone could give us the information, I would appreciate it. Mr. O'Sullivan: I wish that I could help you. Senator Forrestall: That was just a shot in the dark. I thought perhaps you might know. I did not dare to ask Mr. Colville. I did not think he would know that detail. Perhaps he would have known. Could I invite him to answer that question? The Chairman: We could invite Mr. Colville back to the table to answer that question. Mr. Colville: Does this make me still arm's length from the department? I do not have the exact answer. It was the price cap ceiling that probably took place in 1996, if I recall correctly. We will check the facts for you. It would have been the Public Interest Advocacy Centre, PIAC, representing the National Anti-Poverty Organization, NAPO, and perhaps a consumers' organization. They did a significant amount of research on the issue of price cap regulation that we were going to impose upon all the incumbent telephone companies across the country. Those groups researched thoroughly and hired expert witnesses who appeared at the hearing and were cross-examined by lawyers from the other side. Concerning your point about whether it was valuable and did it contribute, I think the fact that we gave the award is a testament to that. Not only we, but the companies themselves would have agreed. We think that contributed to a better understanding of the issues and that we received full value from their participation. That is an indication where they would have done extensive research, got economic experts to come appear before us and subjected themselves to cross-examination by the witnesses. A significant amount of preparation time goes into that, not just for the research but for the cross-examination and participation in the hearing every day while paying counsel and so on. That would be the nature of a fairly big proceeding with a significant amount of research done, expert witnesses at the hearing and so on. We could confirm this, but that is my best guess as to what it is. That would be the nature of one of the larger kinds of awards, and typically the kind of work involved. Senator Forrestall: Could I ask whether that is archival in the sense of its capacity to be drawn upon by subsequent advocacies that might parallel or find use for it? Does that contribution become a proprietary thing that is the property of the groups who sought the award? Would they obtain a right because we make a contribution? Mr. Colville: The submission and the testimony would have been part of our public proceeding. Therefore, all of that information would be in the public domain. The Chairman: The library researcher is trying to get the information for you, senator. Senator Forrestall: It is not a matter of life and death. It is just that we continue to hear about this figure. It is not that much money, relatively speaking. However, if I were certain that it really paid its way, that the money was well invested in producing significant results for the beneficiaries, then I would be much more inclined to go along with Senator Finestone's view that we should do more on the other side. Everyone should have an opportunity to make a meritorious contribution. Senator Finestone: You will not get an argument from me. Senator Forrestall: If you wish, I will speak to Senator Spivak. Thank you, I appreciate that, Mr. O'Sullivan. I will stop now before we get bogged down with inside conversations. Senator Finestone: I thank Senator Forrestall for the question. I did not question whether the CRTC awarded fairly because I know that there would be a serious right to rebuttal by the companies that were taxed. I know that they would do that if they thought it was unfair. I think the CRTC must have given wise consideration. In some of the material at which I was looking, in one instance the telephone users of Manitoba were saved millions of dollars through the decision. Senator Spivak would know about that. It saved paying an increased rate by the Manitoba Telephone Company. A significant monthly fee was being imposed. They fought it very well. I think NAPO did that, probably with PIAC. Did I have a question for you gentlemen? First of all, are you speaking for Heritage Canada? Mr. O'Sullivan: For the Department of Canadian Heritage, yes. Senator Finestone: Perhaps you could help us out. All of us are very concerned about the CBC and $1.4 billion. That is a great deal of money. I do not know how many zeros that is, but it is a lot of money. In the field of broadcast, in English, French and Aboriginal languages and in radio, television and in Newsworld, there is much to be done. I do not think that does as much as broadcasters would like to do. Services were cut that many of us found painful to lose. Canadian Heritage was good enough to give a significant increase in the last budget to the CBC. As Senator Spivak pointed out, we are not interested in eroding the CBC's capacity to produce the kind of programs that we have been privileged to watch. There is a huge galaxy of buttons that you can push to access all kinds of stuff. I wonder if you could go back to Heritage Canada and indicate our concern. There must be a fairness principle when you allocate costs. As you pointed out - and we appreciate your support - this is a fair process. This allows for transparency. This allows for input and interveners that do not put forward frivolous or extraordinary costs. They are bringing new information. That may well turn out to be a difficulty, though I cannot understand how it would. It is only 1 per cent of the millions and millions of dollars that are spent. Could you discuss with your minister the problem that seems to be presenting itself and whether there is a way to address the issue but not stop the process? The process is a fair and a right process. The genuine concern that was expressed by the CBC should be taken into consideration. This could occur at some point after this bill is passed and after the CRTC is able to establish its rules of procedure. There should be a dialogue between the CRTC and you. Could you discuss that with your minister? Mr. O'Sullivan: Yes, senator. The government indicated, in the last Speech from the Throne, its intention to support the CBC and the work the CBC is doing in terms of the re-engineering exercise that was launched by the current president. That support was expressed through the $60 million that was announced just recently. The government's commitment to the CBC goes beyond that in terms of working with the CBC in its re-engineering exercise and to re-evaluate further needs down the road. In some cases support could be in the form of money, but support could also take other forms depending on how the CBC wants to restructure itself for the future. The issue of intervener funding could certainly be on the table as one of the issues to be discussed. Senator Finestone: That would be much appreciated by Canadian citizens who are watch CBC. I hope more and more of them will start tuning in all the time. My second question concerns finding funds. I have difficulty in understanding how, under Phase 2 licence fees, that we collect, supposedly, for the right to use the spectrum, which belongs to the Canadian people. They are using public spectrum space and they also must look at what the costs of the CRTC are so that they can properly manage, something which I think they do very well under difficult circumstances. I will ask if what I am about to put to you seems fair. Let us say that we tax, through licence fees, the big broadcasters and telecom people and we bring in a revenue of $141 million. Let us say we turn over what was supposed to be for management and use, which is $70 million, to the general revenues. Perhaps we should be reducing the amount of money that we charge for the licence fee or perhaps we should be dedicating that money to handling public hearings. I do not know. However, I hope you will take that back and look at it as well. Mr. O'Sullivan: The Department of Canadian Heritage would be delighted if we had control over the CRF ourselves. Unfortunately, we do not. I am aware of the comments made by Janet Yale and Michel Tremblay. We started looking into it. I can assure you that in dealing with Treasury Board on this matter it will be an uphill battle. However, I take your point. It is one of the options that we will examine when we have our discussions with the CBC. That would be a major government-wide initiative in the sense that it is not within the ambit of the Department of Canadian Heritage to decide on its own. It is something we would have to broach with our colleagues. It would take a lot of convincing. It is not an easy matter to undertake. I can start the dialogue and start to discuss it with our colleagues and see what the options are and, if need be, report back in some way. Senator Finestone: Just pass the bill. Get it through the House of Commons and make it a reality so that we can have the transparency and the open dialogue that we think Canadians deserve. Senator Spivak: If you could convince those who control the Consolidated Revenue Fund, would there be no legal impediment to using those funds through the CRTC? Mr. O'Sullivan: That is correct. Senator Spivak: Perhaps we have to study the sources of revenue of the Consolidated Revenue Fund and how they are being used. That would be a very interesting question. The Chairman: Mr. O'Sullivan and Mr. Durr, thank you very much. Honourable senators, I have received two letters that will be distributed to you. One is from the CBC and one is from the Canadian Association of Broadcasters. Both letters are in English only. Neither CBC nor CAB sent us a translation. Except for the CBC, the suggested amendments were sent in both languages. Senator Finestone: At least the amendments are in both languages. Could we deal with that, Madam Chairman? The Chairman: Yes, go ahead. Senator Finestone: Thank you, Madam Chairman. I think that amongst all of us here this evening, we have addressed the issues of the CBC and the financing implications for CBC in a clear way with the CRTC. This is not within its ambit. [Translation] The Commission shall have not authority to make an award pursuant to paragraph 9.1 (1) or (2) pursuant to which the Canadian Broadcasting Corporation shall become liable for payment of such award. [English] The English wording really needs to be improved. Madam Chair, that is outside the ambit of the Senate. I suggest that we cannot deal with it, although we did in our general questioning. Senator Spivak: We could send observations with the bill. Senator Finestone: That is what I said. We cannot deal with the amendment per se because it is outside of the ambit of the bill. Senator Spivak: I think we should strongly recommend that the government look at the appropriate instrument for exempting the CBC. It seems to me that it is a case of Peter and Paul. Out of the Consolidated Revenue Fund comes the money to fund the CBC and into the same fund goes the licensing fees. I asked earlier about the amount of money the CBC needs to operate in order to fulfil the objectives of the Broadcasting Act. Those are formidable objectives. If it does not know that, the least it can do is have a light footprint on the taxing costs. The Chairman: Your recommendation is to make some observations with the bill. Senator Spivak: You will recall the outcry when the CBC was suggesting cutting off its local programs everywhere, because what could it do? It could not meet the objectives on the funding it had. It was just impossible. We must make that point. The objectives that the CBC is supposed to have are based on the Broadcasting Act. Nonetheless, it is great that it has more funding. We do not know how this should really go. In principle, we think the CBC should be exempted, but through an instrument that it proposes, not through an instrument proposed by us. Senator Finestone: I have no objection to examination of mechanisms to ensure that the hearings that touch the life and times of the CBC be allowed to take place. History cannot tell us yet what the cost awards will be, nor the numbers of people that will appear, nor the degree of complexity as the CBC undertakes digital services and all the partnership undertakings and the growth of its profit on Newsworld, RDI and Galaxy which currently is at approximately $4.5 million. It may well be that there is a mechanism. Madam Chairman, I did not deal with the details of the mechanism, although I was concerned. We do not have that right. The CBC cried poor, that is true. One of my colleagues here said it cried poor, but it still sent ten people to cover a news release. It is up to the CBC, the CRTC and the government to examine how this could be done. Senator Spivak: I am not suggesting that we not pass the bill. I am not suggesting an amendment. What I am suggesting is that there is no way of knowing what those costs are. This is a bill that will go into law. Therefore, I would like very much that they consider a mechanism, even if it means putting a cap. The Chairman: Who are "they?" Do you mean the government? Senator Spivak: Yes. Because of the licence fees there is a pot of money. The Chairman: It is not only CBC, you have other public broadcasters, too. Senator Spivak: The hearings that the CBC had will create a variety of intervenors, others less so. You do not know. That is not up to us to decide. Senator Finestone: I want to ask a question of the chair. She knows more than I do about this process. If we were to put in a sunset clause because the hearings for the CBC are seven years or over seven years for the renewals and all that stuff. If we were to put a five or seven-year review clause into this kind of thing - I do not know how you do this - that there could be some evaluation at the end of that time as to whether there are costs, or is that silly? The Chairman: I would rather have observations made. Perhaps we can make observations. Senator Spivak: I am just saying that a sunset clause is different from a review. What you are saying is a review. You do not want a sunset clause. Senator Finestone: That is what I do not want, definitely. Senator Spivak: You want a review. I would say that might be within the period of three years. Three to five years would be better than five to seven years. The Chairman: I think we can have observations. Senator Finestone: I think that might be a good idea. The Chairman: Senator Forrestall, would you agree to that? Senator Forrestall: I certainly would agree with it. The only observation I would make, the only certainty in all of this is that there will be continued need for interventions. Senator Spivak: Absolutely. Senator Forrestall: There will be a need to ensure those people who want to make interventions have the means to do so. Concerning a review in seven years, I would think perhaps, at the rate of convergence today in the wireless world, that five years is almost too much and that it should be by way of a reference. Senator Spivak: To both Houses. Senator Forrestall: Perhaps to the appropriate committee of both houses. This is a recommendation. It does not affect the bill. I think that would be good. Senator Finestone: Thank you. I thought that wise heads would find a way. The Chairman: We will review the observations and the comments tonight and try to prepare some observations for when we table the bill. We also have the Canadian Association of Broadcasters, CAB, that did not want to appear before us, but sent us the document that you have with you now. Senator Finestone: Madam Chairman, may I bring to your attention the fact that I read this letter, which I did not receive until late this afternoon. The Chairman: We received it late, too. Senator Finestone: I am not complaining, but I am just saying that I got it late, in English only, which is fine for me, but is not right. I read it carefully and I asked many of my questions based on exactly what is said in its letter. I think if it reads the hearing with the CRTC and Heritage Canada, it will find the answers to its concerns clearly identified. The letter says that about 1 per cent of the intervenors have been paid, and the average over five years is as low as it is. I do not think there is cause for serious concern. This is a very costly business it is in. It is using the airwaves and must be making a profit somewhere otherwise it would not stay in the business. Senator Forrestall: On page 5 of that submission to us, under the heading: Difficulties associated with administration of intervener funding for broadcast proceedings, it was extreme in the language. It says in the second line of that particular paragraph: Intervenor funding would be widely sought and would likely become an administrative nightmare for the CRTC. The Chairman: That is a little bit far. Senator Finestone: That is why I asked that. Senator Forrestall: That is rather extreme language. The Chairman: Now that we have dealt with both documents, do you agree, senators, that we move to clause-by-clause consideration of Bill S-7? Hon. Senators: Agreed. The Chairman: Is it agreed to stand the title? Hon. Senators: Agreed. The Chairman: Shall clause 1 carry? Hon. Senators: Agreed. The Chairman: Shall clause 2 carry? Hon. Senators: Agreed. The Chairman: Shall the title carry? Hon. Senators: Agreed. The Chairman: Shall the bill carry? Hon. Senators: Agreed. The Chairman: Is it agreed that I report the bill as adopted to the Senate with observations? Hon. Senators: Agreed. The Chairman: Thank you very much. Senator Spivak: Congratulations, Senator Finestone. The Chairman: Congratulations, Senator Finestone, a job well done. Senator Finestone: Thank you all very much. The Chairman: I think we had the cooperation of all the members. I thank you all for a job well done here. The committee adjourned.