Motion No. 3

That Bill C-19, in Clause 20, be amended a ) by replacing line 1, on page 6, with the following:

"20. (1) Subject to subsection (2), this Act or any provision thereof, or"; and b ) by adding after line 4, on page 6, the following:

"(2) Any order made this section respecting the coming into force of section 19 is subject to an obligation on the part of the federal government to commence negotiations and to enter into an agreement with the government of Quebec to eliminate inconsistencies between the provisions of the Internal Trade Agreement and Quebec's laws and regulations respecting bulk trucking."

Mr. Speaker, I will be brief so we can finish at 5.30 p.m. First of all, the reason we introduced this motion-

Agreement 20 On Internal Trade Implementation ActGovernment Orders

5:25 p.m.

The Deputy Speaker

My colleagues, I am sorry to interrupt the hon. member, but it is 5.30 p.m.

The House resumed consideration of the motion that Bill C-9, an act respecting the Law Commission of Canada, be read the third time and passed.

Law Commission Of Canada ActGovernment Orders

5:25 p.m.

The Deputy Speaker

The House will now proceed to the taking of the deferred division on the motion at the third reading stage of Bill C-9, an act respecting the Law Commission of Canada.

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Law Commission Of Canada ActGovernment Orders

5:55 p.m.

The Deputy Speaker

I declare the motion carried.

(Bill read the third time and passed)

Law Commission Of Canada ActGovernment Orders

5:55 p.m.

The Deputy Speaker

It being 5.30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

Broadcasting ActPrivate Members' Business

March 27th, 1996 / 5:55 p.m.

Liberal

Roger Gallaway Liberal Sarnia—Lambton, ON

moved that Bill C-216, an act to amend the Broadcasting Act (broadcasting policy) be read the second time and referred to a committee.

Mr. Speaker, it is my pleasure to begin second reading debate on Bill C-216, an act to amend the Broadcasting Act (broadcasting policy). The act has one objective and that is to control the relationship more completely between the Canadian Radio-television and Telecommunications Commission, which Canadians love to call the CRTC, and the public. For the purposes of this discussion I refer to the public as those people who presently receive television services by way of cable transmission, but this bill will also cover those Canadians who will soon receive television services by way of telephone lines or direct to home satellite services.

Controlling a relationship is never easy, we all know that. Yet this is a relationship, the connection between the CRTC and its public, which the Government of Canada through the Broadcasting Act brought into existence and which we by Bill C-216 can once again bring back under control.

There are three components or factors to this argument which I refer to for discussion purposes as the three c s. These are: cost, choice and culture.

Last year when the CRTC authorized the grouping or bundling of new programs on to cable carriers and at the same time allowed cable companies across this country to charge more for them, that commission, those people who are supposedly protecting us and nurturing Canadian culture, forgot, ignored, or what I would suggest, turned their collective backs on Canadian cable subscribers. The consumers had two choices: they either paid more or they received less.

Who in this place could forget the anger, the vitriol and the simple disgust of those who were being held for ransom? We, the representatives of the people in this place, were besieged, harangued and generally deluged with hundreds of calls from angry consumers who from their perspective generally knew that their pockets were being picked with the express consent of the CRTC, the very government agency which was put there to protect them.

Canadian consumers quite simply were held ransom by an industry with an astounding 52 per cent return on its capital investment. Who can forget at the same time the reaction of the CRTC, which referred to this practice of negative option billing as a necessary evil?

From my perspective as a representative of a certain group of people, it was a necessary evil to tell my constituents that they would receive, wrapped in the bundle of new channels, Canadian culture.

As to the issues of cost and choice, the CRTC chose not to do anything. Who can forget that Keith Spicer, the architect of this policy, was out of the country on vacation when this storm struck?

Keith Spicer, the so-called czar of Canadian culture, was on a foreign holiday as Canadians received a post Christmas gift they did not want.

While Keith was out exploring foreign cultures, members of the House were publicly stating, to use one quote, that the CRTC was in bed with the cable companies. Newspapers across the country gave anecdotal reports of what individual consumers felt and planned to do. All ridings across the country are certainly aware of that.

Let us in the House not forget that it was not the cable companies that decided Canadians would receive seven new channels they did not ask for. It was the CRTC that licensed the new services after deciding which, in its collective wisdom, were best for the whole country.

At the same time, it was the CRTC that permitted the packaging of new channels, totally unsolicited by Canadians, with popular

programs such as "CNN", an American network, to give its favourite seven infant channels a chance of survival.

The Globe and Mail noted in its editorial of January 7, 1995: ``Effectively the commission was levying a tax on television viewers to support quality broadcasting''.

Canadians some 15 months later understand what the Consumers Association of Canada observed in January 1995, that the equality for the practice was backward.

The CRTC and the cable industry justified the negative option tactic in the name of culture, but in reality it was driven by business imperatives. It is very interesting.

It was reported on January 7, 1995 that the president of Rogers Cablesystems, Colin Watson, in an interview which was reported widely across the country stated that this sleight of hand called bundling or negative option billing was the only way that Rogers Cablesystems could sign up enough new customers.

I do not have to suggest to anyone in the House or anyone watching the proceedings today that every business in the country would love to be the beneficiary of this kind of largesse which the CRTC was doling out but for which the Canadian consumer was being told they would pay.

Canadian viewers were being told what they could watch and what they would pay in the name of Canadian culture. Is it not interesting that one of the conduits of Canadian culture has today as its most popular program, according to the rating agencies, reruns of the "Mary Tyler Show", a great Canadian show, and that another has that hybrid of Cosmopolitan and Vogue magazines called the ``Fashion File'' as its most popular program.

In return for this, seven new networks were guaranteed cash for life-that is my term-by the CRTC. Cable companies, as we now know, reluctantly bent to public pressure. They bent in the sense that they apologized for the behaviour and most gave a window of opportunity to opt out of the new channels, but never did they allow Canadians to decide up front that they could decline the channels.

The onus, the burden, the obligation was decidedly on the individual within a certain timeframe to either cancel the channels or pay for them. This is a unique and tragically Canadian way of selling Canadian culture.

More important, did Canadians receive any assurances from the CRTC that this would not happen again? Apologize? The cable companies did. The CRTC? Certainly not. Mr. Spicer and his commission, in my opinion, are much too busy regulating to acknowledge any errors.

Last week my office received from the CRTC a recent bulletin which stated: "The CRTC regulates the rates but expects each cable operator to inform subscribers in advance what subscribers must do to have optional packages removed". I have to emphasize "removed", not "added".

The Canadian public today, 15 months later, does not have real choice on what services are to be added but only, in the words of the CRTC, what can be removed. Quite simply, negative option billing still survives. It is very much alive and well.

Canadians would also be upset to learn the CRTC is about to consider 40 new applications for specialty channels. Members of the House and Canadians will be pleased to know that the potential exists to receive, if the CRTC will bless them, such great Canadian programming as the "Horse Network", the "Home and Garden Network" and the "Mystery Network".

Forty corporations, most of them individuals who have recently incorporated shell companies, are poised to sell a concept which they hope will be richly rewarded by these guardians of Canadian television.

Soon telephone companies and direct to home satellite services will be channelling TV programming into homes across the country. What can those people expect? If we follow Mr. Spicer, the chair of the CRTC, in a speech delivered to the Canadian Cable Television Association, he noted that Canadian consumers want, deserve and will increasingly settle for nothing less than the maximum control possible over which services they select and pay for. As a consumer, Mr. Spicer agrees 100 per cent with that goal. He went on to say that full pick and pay, beyond a few rock bottom, common national interest services, can come only after this decade, meaning sometime in the year 2000 or thereafter.

With 40 applicants lining up, with new carriers pressing to enter the marketplace, we in the House have a choice, a choice we must make for consumers. That choice is clear. Bill C-216 would amend the Broadcasting Act, specifically section 3, so that consumers from this time forward will be given control over what they receive and the cost of what they receive.

Section 5 of the act imposes an obligation on the CRTC to regulate and supervise all aspects of the Canadian broadcasting system with a view to implementing the broadcasting policy which is set out in the act.

This bill would amend the broadcasting policy section, section 3, so that a cable distributor or other distribution undertaking, which could be a telephone company or a direct to home satellite company, could not demand money from a person for the provision or sale of a new programming service when the person has not agreed to receive the new service. In the vernacular, consumers will not pay for what they do not want. Certainly this is what consumers want.

The Consumers Association of Canada liked this bill. It issued a press release yesterday which called on members of the House to support it. At the same time the Public Interest Advocacy Centre has endorsed it. That group noted there are generations of laws protecting consumers against unsolicited goods and yet still today

cable companies, as merchandisers of goods, do not have to await the consumer's choice.

Section 3 of the Broadcasting Act imposes a statutory duty on the CRTC to be "responsive to the evolving demands of the public". Since the CRTC has been silent for 15 months, we as members of the House can now move to respond to the demands of the public. There are those who would suggest that as members of the House we have a statutory duty to uphold the laws of the country.

As is often the case there is always the question of powers between the federal government and the provinces. Certainly in the House we have the authority to regulate in this domain throughout Canada and we, the members of the House of all parties, have the opportunity to take in hand the rights and the interests of consumers.

The issue of provincial versus federal jurisdiction is as old as the country. The question of whether a law is intra vires or ultra vires has always been a healthy industry for the legal profession and certainly has kept the judiciary busy.

When the storm erupted over this issue last year the then minister of Canadian heritage stated, as was reported by the press, that this was a matter of provincial jurisdiction. He then a few days later acknowledged that broadcasting was four square within federal jurisdiction.

We must remember that cable companies as federally regulated undertakings can claim immunity from provincial laws, especially consumer protection laws. Quebec has a consumer protection act which would appear to forbid the practice. In section 5 of that act the following are exempt from the application of the title on contract regarding goods and services: contracts regarding any telecommunication service supplied by an operating company within the meaning of section 2.

Professor Hudson Janisch in an interview with the Ottawa Citizen January 7, 1995 noted that provinces are free to control commerce but they lose that control. Quebec acknowledged that in section 5 when it comes to federally regulated industries such as cable.

Professor Janisch, an expert and professor in regulatory law at the University of Toronto, pointed out that the Broadcasting Act instructs the CRTC to protect consumers as set out section 3 of that act.

There are a number of underlying factors we must realize. Consumer protection is not clearly federal, it is not clearly provincial. The federal government has jurisdiction over cable television pursuant to its powers. Consumer protection legislation, whether enacted by the federal or provincial governments, usually provides a remedy. This bill does not provide a remedy. Proposed Bill C-216 does not provide this remedy to consumers because clearly it is not consumer protection legislation.

The CRTC does not prohibit cable companies from using negative option billing, we all know that, to sell new discretionary services because it does not regulate discretionary services. It could regulate discretionary services but it has decided not to do so.

Instead it informs cable operators that it expects them to notify subscribers when they will be given new services and how to opt out if they wish. The CRTC is required by section 5 to regulate and supervise all aspects of the Canadian broadcasting system with a view to implementing the broadcasting policy set out in section 3(1).

We know that cable companies have used negative option billing. There are 40 applicants which now want to get on the system and enter the homes of Canadians. There is a new method by which cable providers could still slide those services in without using negative option billing. If we assume there are four new channels, they will provide these services free for six or eight or twelve months and then will apply for a rate increase. We have the opportunity by this bill to stop these hybrid variations on negative option billing.

There will be those who say this bill is not necessary. I have heard representations from public servants who maintain this legislation is not necessary; it can be done by regulation, it can be done by ministerial directive, it can be done by all sorts of methods. We know that regulation changes. Regulation is not law. It is not in a statute. All of us know that ministers come and go and that ministerial directives can easily be changed.

The only assurance anyone could possibly give would be that there is no assurance at the moment unless Bill C-216 is passed. We must embody in statute, in the Broadcasting Act, that this practice is policy in this country. On behalf of Canadian consumers we must be willing to build a firewall between the CRTC and the consuming public to ensure that this does not happen again, either directly as it did last year or in some other hybrid variation.

Broadcasting ActPrivate Members' Business

6:15 p.m.

Bloc

Gaston Leroux Bloc Richmond—Wolfe, QC

Mr. Speaker, I am happy to speak to Bill C-216, an act to amend the Broadcasting Act, which was introduced by my colleague from Sarnia-Lambton. I am happy to participate in this debate both as the member for Richmond-Wolfe and as the official opposition's critic on heritage and cultural industries.

I would like to tell my colleague from Sarnia-Lambton that I applaud his initiative because it clearly shows his concern for consumers, who are too often left to fend for themselves when dealing with organizations such as the CRTC. Also organizations like the CRTC and others often let things slide without taking a stand.

The purpose of the bill introduced by the hon. member for Sarnia-Lambton is to protect consumers against a questionable business practice called negative option billing that forces people to pay for a cable service they did not request. They receive this service and, if they do not ask for it to be stopped, they are considered to have bought it.

For the benefit of our listeners and my colleagues, I would like to put the situation in context. I would remind you that, by amending section 3 of the Broadcasting Act, this bill provides that a cable distributor should not demand money from a person for the provision or sale of a new programming service where the person has not agreed to receive the new service. It seems to me that, in our society, people should not have to pay for a product or service they did not ask for.

This business practice of selling programming services to consumers who have not asked for them, which is called negative option billing, started in 1994 when the Canadian Radio-Television and Telecommunications Commission or CRTC granted eight new special cable service licences.

Why were eight new licences issued? The CRTC had one main goal, namely to strengthen the Canadian presence in the Canadian broadcasting system in anticipation of this system being inundated by American services, thus preventing an American invasion of Canadian distribution systems.

This goal in itself is certainly commendable. However, after this decision was made by the CRTC, in many cases, new channels were added to cable subscribers' discretionary service package. This means that those who already paid for a cable package now had this service added, and that made them angry. Why? Protests were sparked by this marketing strategy used by cable operators, which consists in imposing new and unrequested services on consumers and charging them extra for it.

No one in this House has to pay nor wants to pay for services they never asked for, that appear out of nowhere.

The CRTC decision resulting from the public hearings on the industry's structure released in 1993 kicked off a number of regulatory reforms that were implemented when the eight dedicated cable broadcasting licences were issued. Marketing strategies based on negative optioning were debated and tacitly agreed to, since the CRTC did not take a stand.

The CRTC never regulated or attempted to regulate the negative optioning marketing practices of cable operators.

It seems obvious that a deliberate choice was made not to make public statements on the appropriateness of such practices. The CRTC did not react. It gave tacit approval by letting cable distributors set the rules themselves. It seems that, in the past, such practices helped new specialty services succeed on the market, while also promoting the cultural development goals set out in the Broadcasting Act.

So, the CRTC said: "Since this has worked before, we will leave them alone". Monopolizing consumers' ability to buy at their own expense is definitely a curious way to protect the culture of Quebec and Canada. Consumers are the ones who should decide on the content and the services they want.

During the 1993 public hearings on the industry's structure, however, some witnesses expressed their concern regarding the negative option billing for new services. Later, consumer protection groups expressly asked that the Broadcasting Act be amended to force the CRTC to protect the interests of consumers, not just cultural interests, when regulating the monopoly that the cable television industry is.

We agree that the content should be Canadian and should protected from neighbouring countries, but not at the expense of consumers, not by leaving them at the mercy of cable distributors. This does not make sense.

Cable television subscribers had already started rebelling. The CRTC's way of looking after their interests was to merely urge cable distributors to pay greater attention to consumers' requests. It said to those who provide the service and make money in the process: "Set your own rules, but please act properly".

In reality, the marketing component in the Canadian cable distribution industry is left to the association itself. In the end, the association is the one that sets the marketing standards advocated by the national Cable Television Standards Council. As regards this issue, it is clear that not only the CRTC but also the Liberal Party dragged their feet and did not take their responsibilities on time, since consumers had to send a wake up call.

On January 5, one year after consumer associations protested against negative option billing, Rogers Broadcasting Ltd., the largest cable distributor in Canada and the initiator of that practice, gave up the idea and apologized for its mistake. The company called itself to order, which is a good sign. But it was the result of pressure from consumers and not the government acting responsibly and declaring that, in this field, the commercial practice was unacceptable. From now on, says the Canadian Cable Television Association, in an attempt to reassure us, the practice of negative

option billing is a thing of the past and the cable distribution industry will listen to consumers.

Thus, the bill introduced by the hon. member for Sarnia-Lambton merely confirms a single practice. This brings me to the question of duplication. A single practice. The bill confirms an intrusion into the jurisdiction of provinces that have already taken responsibility in this area. This is not the case in all the provinces, I admit, but for Quebec particularly, where the Consumer Protection Act is strong and has been around for a long time, the proposal of similar legislation in the House of Commons represents a direct intrusion into one of Quebec's areas of jurisdiction.

I am pleased to see this initiative by the hon. member, because he is, to all intents and purposes, reminding his own government of its responsibilities. He has just told it: "You have neglected the situation". And unlike in Quebec and in another province that has a consumer protection act, in all the other provinces, no action is taken and cable distributors are asked to regulate themselves and decide on their own what the rules should be.

The Government of Quebec has already established its jurisdiction by way of its Consumer Protection Act through a general prohibition on the sale of any service through negative option billing. Paragraph 230 (a) of this act is very clear. By regulating the commercialization of cable distribution services through an amendment to its Broadcasting Act, Ottawa reveals once again its determination to interfere in an area of provincial responsibility.

In Quebec, however, any contractual agreement between a consumer and a cable distributor has been subject, since the introduction of these services, to the Consumer Protection Act.

I must therefore reiterate that any such bill tabled in this House is very clearly a duplication of regulations and an intrusion of the federal government into the jurisdiction of the State of Quebec. It is not ill will on the part of the member. It is because his own government has not taken its responsibilities and he is calling it to order. He is also reminding the government that many provinces have no consumer protection legislation and that the present government, with the CRTC, is sending a very clear signal to cable distributors to take whatever action they see fit.

In terms of the content of the bill and the concerns of the hon. member for Sarnia-Lambton, I would say to him that we think alike. But as for the principle of tabling a bill in this House that represents a direct intrusion into the province's area of jurisdiction, we have no choice, as the official opposition, but to vote against Bill C-216.