Bill C-32 (40th Parliament, 3rd Session) Committee on March 22nd, 2011

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good morning, everyone. We'll call this 19th meeting of the special Legislative Committee on Bill C-32 to order.

I'd like to thank members of the committee who sent notes of condolence on the passing of my mother. I'm sorry I wasn't able to be here for the last couple of meetings, but we're back in action now.

Today, in the first hour, we have with us from TELUS Communications, Craig McTaggart; from Rogers Communications, Pam Dinsmore; and from Bell Canada, Suzanne Morin.

We will start with Mr. McTaggart for five minutes. You have the floor.

[Craig McTaggart, Director, Broadband policy, Regulatory and Government Affairs, TELUS Communications]

Thank you, Mr. Chairman.

Good morning, committee members. My name is Craig McTaggart and I am director of broadband policy at TELUS Communications Company.

Thank you for the opportunity to present TELUS’ views on BillC-32. TELUS considers Bill C-32 to be a strong and balanced attempt to update Canada’s copyright legislation for the digital age.

In my brief prepared remarks, I want to focus on the Supreme Court of Canada’s 2004 decision in the case of SOCAN v. CAIP, or the Tariff 22 case, because it established the legal principles for intermediary liability that Bill C-32 would at long last codify into statute. I do so because the decision and the principles it embodies highlight a crucial distinction between neutral, passive intermediaries, which are not legally responsible for what their users do online, and what have come to be known as the wealth destroyers, those who actively enable mass copyright infringement online.

Let me be clear right off the bat. TELUS recognizes that online piracy is a problem and encourages Parliament to arm rights holders with effective tools to directly pursue those who actively enable it. I emphasize “directly” to distinguish that approach from proposals by some rights holders to offload that responsibility onto third parties, such as ISPs. BillC-32 wisely limits the role of ISPs to assisting rights holders in the enforcement of their rights by putting Internet users on notice that a rights holder alleges that they have infringed copyright online and to retaining evidence to support subsequent legal action.

To understand why this regime is the wise choice, one has to go back at least to 2004 to see how the Supreme Court defined the scope of ISP liability for what happens on the Internet. The Tariff 22 decision established the principle that ISPs neither communicate nor authorize their customers to communicate copyright works on the Internet. The court interpreted paragraph 2.4(1)(b) of the Copyright Act, which says that persons who only provide the means of telecommunication necessary for another person to so communicate a work do not themselves communicate the work, nor are they parties to a communication. Rather, it is those who actually post copyright materials to the Internet who do the communicating.

The court described this regime in the following terms: “So long as an Internet intermediary does not itself engage in acts that relate to the content of the communication,”--that is, whose participation is content neutral--“but confines itself to providing 'a conduit' for information communicated by others, then it will fall within s. 2.4(1)(b)”, the general safe harbour for communications carriers.

The Supreme Court held that in the normal course, Internet access and hosting providers are not users of copyright rights, nor are they liable for the uses made by their customers. Like telephone companies, the court said, ISPs neither know what our customers do on the Internet, nor are we in a position to control it, nor, incidentally, does anyone want us to.

The Supreme Court went on to say that the attributes of mere conduits such as ISPs “include a lack of actual knowledge of the infringing contents, and the impracticality (both technical and economic) of monitoring the vast amount of material moving through the Internet, which is prodigious”. That was in 2004.

Internet traffic continues to grow at a compounded annual growth rate of about 45%. The court recognized the public policy rationale for immunizing content-neutral intermediaries from copyright liability as follows:

Nevertheless, by enacting s. 2.4(1)(b) of the Copyright Act, Parliament made a policy distinction between those who abuse the Internet to obtain “cheap music” and those who are part of the infrastructure of the Internet itself. It is clear that Parliament did not want copyright disputes between creators and users to be visited on the heads of the Internet intermediaries, whose continued expansion and development is considered vital to national economic growth.

These are the principles that underlie the ISP-specific provisions in Bill C-32, like its predecessors, and they remain the right principles today.

What has changed since 2004, of course, is an awareness of the need to equip rights holders with additional tools to make it easier for them to enforce their rights against, in the Supreme Court’s words, “those who abuse the Internet.”

TELUS would support amendments that would give rights holders more powerful tools to go after those who actively enable infringement, and also amendments that would prevent the bad guys from taking advantage of the legal safe harbours intended to protect only the good guys.

Like Canada's other major ISPs, TELUS has voluntarily performed notice and notice service for approximately nine years. The decision to formalize the notice and notice regime recognizes the legal reality that ISPs cannot be put in the position of having to decide whether content should be taken down, in the case of hosted content, or whether to discipline their customers based only on an allegation from a rights holder in the case of file sharing. Under Canadian legal values, only a court can determine whether a law has been broken.

I'll end it there.

[The Chair, Conservative, Gord Brown]

Thank you.

We'll move to Pam Dinsmore from Rogers Communications.

[Pam Dinsmore, Vice-President, Regulatory, Cable, Rogers Communications Inc.]

Thank you, Mr. Chairman and members of the committee. My name is Pam Dinsmore and I am vice-president, regulatory, at Rogers Communications Inc. I appreciate the opportunity to present our views on Bill C-32.

Rogers is a diversified Canadian communications and media company. We are in a variety of businesses, including wireless, cable TV, high-speed Internet access, radio and television broadcasting, and program production. We also publish some of the most recognized magazines in the country, such as Chatelaine and Châteleine, L'actualité, and Maclean's, and we have extended these traditional brands online using digital media. As such, we support a copyright act that takes a balanced approach to the interests of rights holders and users, thereby optimizing the growth of digital services and investment in innovation.

We believe that Bill C-32 goes a long way towards striking this balance, and we support its passage in a timely manner. However, we think the bill would benefit from some changes to provide greater clarity and certainty for both users and rights holders, particularly with respect to the provisions regarding the time-shifting and hosting exceptions and the notice and notice regime.

First, we are pleased that the bill legalizes the time shifting of television programs and legitimizes the use of personal video recorders. A PVR is a set-top box that our customers rent or own. It is connected by wiring to one of their television sets. PVRs allow our customers to time shift programming from that television set and watch it at a time of their choice. It is a service that has proven to be popular with customers who watch a lot of television programs but want to watch them at the time of their choosing.

We are also pleased that the bill removes obstacles to the implementation of innovative technologies such as network personal video recorder service, or network PVRs. This service will operate in the same way as a PVR but allow for the remote storage of our customers' time-shifted content in servers located in our headends rather than storage within the set-top box. Given that a network PVR service can store programs from any television in a customer's house, it removes the need for them to rent or own a PVR for any of their television sets. It will also allow us to make seamless upgrades to our customers' network PVR service without their having to rent or purchase new equipment. It goes without saying that moving from PVR set-top boxes to a network PVR service will allow our customers to enjoy the benefits of time-shifted programming in a greener and more technically efficient way.

Network PVR is not just a concept. It was launched by Cablevision in the U.S. at the end of last year, following the ruling of a U.S. appeals court that the concept was lawful under U.S. copyright law. This means that Cablevision's customers are already able to time shift programs on any one of their home televisions sets without the need to purchase or rent a PVR. As a result of rolling out its network PVR service, Cablevision has announced that it will stop purchasing PVR set-top boxes to rent to its customers.

Rogers is eager to provide our customers with the same benefits of a network PVR service that are being experienced by Cablevision's customers. We therefore fully support the technology-neutral approach to the time-shifting and hosting exceptions in the bill. The government made this approach clear when it introduced the bill, as did Industry Minister Tony Clement when he appeared before this committee. There are, however, technical improvements that could be made to the drafting to ensure that the government's policy intent to remove barriers to the development of cloud computing and other remote storage services like network PVR are removed. In this regard, we support the BCBC's proposed amendments to the time-shifting and hosting exceptions.

Second, we support the notice and notice provisions in the bill. These provisions will make it mandatory for all ISPs to implement a notice and notice regime. This is a practice that has existed at Rogers on a voluntary basis for over a decade to combat Internet piracy. With the increase in our customer base and increased awareness of the regime on the part of rights holders, the number of notices we process has risen year over year. In fact, in 2010, we processed over 207,000 notices. In our view, notice and notice is the best and fairest way to make individuals aware that they are accused of illegal peer-to-peer file sharing while recognizing that ISPs should not unduly interfere with our customers' online activities. While we recognize that the regime is not perfect, we believe it does result in discouraging repeat offenders. The fact that some European countries are beginning to consider notice and notice as a valid response to illegal file sharing and that some ISPs in the U.S. have notice and notice agreements with rights owners serves to underscore that Canadian ISPs have been ahead of the curve for years in our approach to combatting Internet piracy.

The BCBC has proposed amendments to ensure that the obligations to deliver notices and retain data, and the possibility of cost recovery for doing so, come into effect at the same time. This is to ensure that ISPs have adequate time to design and implement the systems required to comply with these requirements—

[The Chair, Conservative, Gord Brown]

I'm sorry to interrupt, but I'm going to have to cut you off at that point. You'll get an opportunity to continue during the questioning.

Thank you.

We'll move to Suzanne Morin from Bell Canada for five minutes.

[Suzanne Morin, Assistant General Counsel, Legal and Regulatory, Bell Canada]

Thank you.

My name is Suzanne Morin, and I am assistant general counsel, legal and regulatory, with Bell Canada. Thank you for the invitation to appear this morning.

Bell Canada is a member of the BCBC, the Business Coalition for Balanced Copyright, so we support the submissions, both written and oral, that have been made before this committee.

I've listened to the comments and heard the comments from my colleagues this morning, and I support them. In order to save time, I won't add anything else. I think this will allow us to jump right into it.

We are now ready to answer your questions and we hope that our discussion on Bill C-32 will be productive.

[The Chair, Conservative, Gord Brown]

Thank you.

We'll go to the Liberal Party, Mr. Garneau, for seven minutes.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chair.

I'm really glad you're here this morning, because I've been asking questions about ISP liability for a long time, but you're clearly the people who I need to be asking the questions to. I listened very carefully to what you had to say. The question that has been...and you mentioned past judgments concerning the issue. Of course, we are here to craft legislation on copyright, so we have to look at this from perhaps a new perspective.

I do want to ask questions about notice and notice, because as I understood it, you all three support that approach and you're quite ready to go for mandatory notice and notice. But you already, I believe.... Madame Morin, have you been providing notice and notice on a voluntary basis without saying it?

[Suzanne Morin]

Bell Canada has also been doing notice and notice.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

The question that comes up—because I hear from a lot of groups—is whether notice and notice is effective. There are consumer groups and others that say, yes, it is effective, it's working, and we don't need to ramp up to notice and takedown, or some other hybrid version of a more proactive approach, if you like. What's missing for me as an engineer is the data. I believe you have that data, because you have been providing notice on a voluntary basis to people who are stepping over the line. I'm really interested in it, because some people say that notice and notice is not discouraging those who know it has no teeth, while other people are saying, yes, as soon as you get a notice and notice in your home from your ISP provider, it sends a chill through you and you realize you'd better not do it again.

You have the data to tell us whether repeat offenders are in large numbers or whether 95% of people who have received their first notice cease and desist. I would like to hear from each of you if you have that data. If not, I'm going to ask you to present it to this committee, because we really do need that data. If you have it, it would be great to hear from each of you, perhaps starting in the way you spoke, about whether it is actually effectively working, and I'd like to see some statistics to support that.

[Craig McTaggart]

For TELUS' part, my answer is a very short one. We don't actually have that data. We only forward the notices. We don't retain any further data about how many messages were sent to a certain customer in a certain period, because we have no business reason to retain that data. We only have the anecdotal stories, as you referred to, that often a household receives a notice, the parent reads it, doesn't know anything about what it's about, talks to a child, and gives the strong message not to do it anymore.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

I've been in that position myself.

[Craig McTaggart]

That's the only evidence I have.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

So if John Smith gets a notice from you today, or in the past, we and you don't know whether in fact you've sent John Smith 25 notices over the course of time because John Smith is clearly ignoring the notice and notice.

[Craig McTaggart]

At TELUS we don't know that.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Okay.

Ms. Dinsmore.

[Pam Dinsmore]

I would like to tell you what happens at Rogers. We can actually track the number of notices that go to an individual household. What we can't track is how many Sony notices went to a particular household. In terms of the actual processing and sending on of a notice, we do have, at a very high level, those numbers.

Let me put it in perspective for you. On a Rogers customer base of, for argument's sake, 1.5 million Internet customers, about 5% of that customer base will receive a notice. As I said, in 2010 we processed 207,000 notices.

If I go down the pipe to the next level, of that group, of that 5% of our customer base getting a notice, which is in the area of about 70,000 customers, the next number of households to get a second notice will be somewhere in the area of, I don't know, 20,000 notices. So about a third of those who got the first notice will actually get a second notice.

As I get to the third level, I'm down a third again.

So as I go down the list, the number of notices drops in accordance with the times the notices are received.

In our view, the notice and notice routine is effective at discouraging those people who are alleged to have infringed--only alleged to have infringed--from infringing again. We think it does put the fear of God into them and it is effective in doing that.

That's based on the information that we are able to track.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

To summarize--just to make sure I've understood--about 5% of your customers may receive a notice and notice. About a third of them may get a second notice, and a third of those may get a third notice.

[Pam Dinsmore]

That is correct.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you.

Madam Morin.

[Suzanne Morin]

At Bell we're somewhere in between the two, or maybe I should say we're at the other side of TELUS.

When we started the voluntary notice and notice regime about a decade ago, we were receiving a handful of notices a month from content owners. We had a manual process. We continue to have a manual process. Last year we received over a million notices. I can tell you that we are not able to process them all. We would have to fill a whole floor with individuals in order to process them all. We haven't automated that system as we wait to see what copyright legislation will bring our way.

Anecdotally, similar to TELUS, when we began this a decade ago, it wasn't file sharing; it was content posted on a bulletin board somewhere or on a personal web page, and we saw the content come down voluntarily. That, to us, right from the beginning was a sign that, anecdotally, customers were actually responding, or their parents or spouse were responding, to notices that were sent to their household. So while I don't have the same kind of more specific information that Rogers was able to provide, anecdotally we've seen the same trend.

One thing we've noticed is that the number of notices has been increasing. It's been increasing, we think, for several different reasons. One, bandwidth is faster and more available. We are now receiving notices from Japan, from Europe. More people are sending them. The book publishers are sending them. Canada has kind of become the place to send copyright notices.

Again, we think it's effective. We think it has educational impact. But at the end of the day, it still needs something. We're waiting for legislation to be passed so that users know specifically that downloading illegally is not to be tolerated in Canada.

[The Chair, Conservative, Gord Brown]

Thank you very much.

Madame Lavallée, sept minutes.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Instead of talking about the individuals who use peer-to-peer file sharing, I would like to talk about the owners or administrators of those Internet sites where peer-to-peer file sharing is common practice.

First of all, would you say that Bill C-32 includes the measures and provisions required to say that Internet sites that enable peer-to-peer downloading are illegal?

[Suzanne Morin]

I can go first.

At Bell—I imagine the same goes for my colleagues—we support the clauses in Bill C-32 that will make things easier. That's what we call “enablers”. We are in support of those clauses.

But some people say that the measures should be a bit stricter so that it is a little easier to prove that. Perhaps our words are not explicit, but we support those changes.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

I am going to read you paragraph 18(2.3) of Bill C-32. This is what it says:

(2.3) It is an infringement of copyright for a person to provide, by means of the Internet or another digital network, a service that the person knows or should have known is designed primarily to enable acts of copyright infringement...

Do you think the wording “should have known is designed primarily” is sufficient?