Bill C-11 Committee on March 1st, 2012

[Geoff Regan, Liberal, Halifax West, NS]

Ms. Woods, let me turn to you. I'm going to talk about this issue of compensation for notice. On the one hand, you don't control what goes on online, and no one would suggest that you do. You should be neutral, and that's important. On the other hand, one could argue that an ISP is a beneficiary of what goes on online. In other words, if the demand for online services has grown exponentially, primarily because of downloading illegal material, then surely the ISPs are getting more revenue and artists are getting less.

Is it reasonable to say that the songwriter should be paying you? How do they afford to pay you to try to enforce their rights?

[Tanya Woods]

I want to correct one assumption there. We didn't increase bandwidth to accommodate piracy; we increased bandwidth to accommodate user demand. User demand includes having faster speeds, having more access. Nobody wants to wait three hours to watch the movie they have downloaded from Netflix. That's why—

[Geoff Regan, Liberal, Halifax West, NS]

That's whether it's illegal or not, right?

[Tanya Woods]

Netflix, I would have to assume, would be legal.

[Geoff Regan, Liberal, Halifax West, NS]

In that case, yes. We'll accept that.

[Tanya Woods]

Thank you.

Here's the thing. Notice-and-notice is a service. It's nothing more and nothing less than a notice service, much like a courier, much like the mailman. We're passing along messages, and to preserve our neutrality we're happy to do so. That is something we agreed to do with copyright owners a long time ago. We had a conversation and we said we thought this was going to help, and let's educate our subscribers.

There is a part of the bill that's quite helpful in handling concerns about costs and what fees should be and what would be appropriate—it's that the minister has the ability to set a reasonable maximum fee. We welcome the minister to do so.

[Geoff Regan, Liberal, Halifax West, NS]

Tell me about the problem you have with preparing for notice-and-notice, because that's the thing you raised that seems like a—

[Tanya Woods]

Yes, there are immense challenges. Bell has not yet fully automated its process and we are receiving at least a million notices a year. On top of that, we have to handle wireless. If we think about what takes place on an open Wi-Fi network, your smartphone, or your tablet, and about what goes on when you're sitting wherever you're sitting, there is no way right now. There is no one— [Technical difficulty—Editor]

[Geoff Regan, Liberal, Halifax West, NS]

Your mike was cut off for some reason. Were you finished?

[The Chair, NDP, Glenn Thibeault]

It's the glitch, unfortunately.

It's the glitch, so you can finish your statement. Please wait for your microphone to turn on.

[Tanya Woods]

Basically, what happens for us as a company is that we need to figure out how we can identify who is doing what on our network. That's a process, and then we have to figure out how we're going to build systems that are going to effectively pass notices along. It's a large project, and it will cost millions and millions of dollars, we expect.

[The Chair, NDP, Glenn Thibeault]

Mr. Regan, you had ten seconds when the mike went off.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chair. I appreciate that. It's all right.

[The Chair, NDP, Glenn Thibeault]

That was the end of the first round of questioning.

We'll move now to the second round of questioning for five minutes to Mr. McColeman.

[Phil McColeman, Conservative, Brant, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

My first question is to Mr. McCarty. We heard testimony from the owner of a small radio station just east of Toronto—I think it was in the Peterborough area—saying that his operations would require a full-time staff person. It's a fairly small radio broadcaster, but it would need a full-time person because of the 30 days. He has the material available for 30 days, and then he has to delete it. Now he has to go again and reload it all onto his systems. He said it would take him—and he's done the calculations—a full-time person to do that repeatedly on an ongoing basis. What is your reaction to that?

[Michael McCarty]

That process and resource would be required to avoid paying the royalty. My advice would be to pay the royalty.

[Phil McColeman, Conservative, Brant, ON]

I see. You said in your testimony that it's simple. Where I was heading was that this is a simple click or switch and download it. It's just something that's easily done without the requirement of that full-time person. In your testimony, I believe you said that they simply would—

[Michael McCarty]

No. They could just take it to the hard drive and copy it.

[Phil McColeman, Conservative, Brant, ON]

In other words, you're disagreeing with his testimony that it would take that full-time person.

[Michael McCarty]

I don't know the details of his testimony, but it's not that hard to copy a hard drive. The point is that in discussions with the broadcasters, I'm well aware that most of them are intending to do whatever it takes to avoid playing the royalty.

[Phil McColeman, Conservative, Brant, ON]

Secondly, you said that through the value chain, the distribution channel, there are all of these different things coming together. You made the comparison to a person's employment and getting a bonus. Do you think there is a better way in terms of setting the value of the product and paying once?

[Michael McCarty]

No, I don't, because, as I said, there are different rights. You know, I have a cable connection that I get from one of the big brand-name Canadian cable companies. If I want to add the Leafs to that, I have to pay separately. It's a new bundle, a new bundle of rights or elements of the product. A recording is made up of many sub-elements, and one of the elements is the underlying copyright. The underlying copyright has different rights.

If they want to use one right, they pay for one stream. If they want to use the second right, they pay for an additional stream.

[Phil McColeman, Conservative, Brant, ON]

Can you explain the testimony that was given here, that the one payment has tripled? Can you explain why it has tripled? Has the cost of doing business tripled?

[Michael McCarty]

I believe that, first of all, it's not the rate that has tripled, or doubled, or whatever it has done; it's the increasing amount of repertoire that qualifies. They didn't used to pay on all the repertoire, and now they're paying on more of the repertoire that they use.

[Phil McColeman, Conservative, Brant, ON]

I'd like the reaction of Mr. Gray or Ms. Woods on that response. Why has the cost tripled? Typically, as a businessman with the products I used to deliver, my costs sometimes went up, and I put that into the final cost of the product. What would have caused, in your opinion, those prices to triple?