Canadian Heritage Committee on Oct. 30th, 2006

[Charles Dalfen]

The legislation was passed in 1991 -- in other words, 15 years ago. Of course, in an area so subject to the influence of technological change, I believe it is a good idea to question the fundamental principles of an act when reviewing it, from time to time. The fact remains that in principle, we are able to work with this legislation.

However, it would be a good idea -- and this was recommended by a number of committees, including Mr. Lincoln's -- to give us the power to impose fines with respect to broadcasting. I believe that would be useful, in the sense that in some cases, it would be possible to discipline people fairly early after an incident has occurred and prevent more serious problems.

[Maka Kotto, Bloc, Saint-Lambert, QC]

Do I have any time left?

[The Chair, Conservative, Gary Schellenberger]

Thank you. Your time is up.

Mr. Angus.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you, Mr. Chair.

I'm reading the CRTC mandate as it's laid out in the Telecommunications Act, and it clearly states that the object first is to maintain Canadian sovereignty and to promote the ownership and control of Canadian carriers by Canadians. That's a clear mandate within the Broadcasting Act for the CRTC.

We know that Canada--

[Charles Dalfen]

You said Telecommunications Act first and then you said Broadcasting Act. Which is it?

[Charlie Angus, NDP, Timmins—James Bay, ON]

Under the Telecommunications Act, sorry.

Right now Canada is at the GATS as the lead country on further stripping telecommunications deregulation, and I just want to say, as a parenthesis, that we already are a fairly deregulated market within Canada. But the push that's coming on from this government and Mr. Bernier very clearly, the stripping of foreign ownership restrictions on telecom--that's our position internationally and it's something I suppose we would be having to meet domestically. So how does the CRTC see its role in terms of maintaining its obligations to an act that was laid out by Parliament about ensuring that we're promoting ownership and control of Canadian carriers by Canadians, when the mandate you're getting from the government is the exact opposite?

[Charles Dalfen]

On foreign ownership, as I've said to this committee before, it's one of those areas in which the CRTC is directed by the government. It's in both our acts that the government has the ultimate regulation-making power and we give effect to our mandate within that. As you know, in the Telecommunications Act, those directives are binding on us.

So we have operated historically well within that context, and I expect that in the future we'll continue to do so. But most of the areas you touched upon, the GATS and telecom directives and so on, are not within our purview, so it's a bit difficult for us to comment other than to say that we will operate within those directives, as we have since the inception of the commission.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I guess, though, my question would be, have you looked at scenarios? This has been discussed. This is coming down the pike, possibly. In a deregulated telecom environment, where telecom is the delivery of choice for a lot of Canadian content, have you looked at scenarios about how you would maintain the Canadian content obligations and language obligations in a further deregulated context?

[Charles Dalfen]

We haven't in regard to foreign ownership, and that is because while we have read various reports, official and unofficial, it isn't clear what scenarios to run, in effect. There hasn't been much precise--and certainly not official--discussion on it, and so in effect, given our workload, it's just not a luxury that we've been able to afford, to run the scenarios.

If you speculated on all of the things that could come down, you would spend a lot of time running scenarios rather than doing what you have to do.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Do you maintain someone in Geneva watching? Canada is negotiating these, and they will have a dramatic impact on CRTC regulations in telecom and in broadcast. Do you have someone watching that or are you just waiting for it to come down?

[Charles Dalfen]

We would not have somebody at Geneva. The industry department, along with the foreign affairs department, has carriage of foreign policies. We're certainly kept informed and we participate in various discussions of what's being negotiated in the international forums, ITU and otherwise, but the nature of those discussions is generally quite confidential and probably not that appropriate to discuss here.

On your question of scenarios, what we try to do is do our work in the public eye as much as possible, and so when we have to make a decision, that decision is most of the time based on public comments that we've received rather than, say, internal discussions where we've been asked, as the industry department is, to lend our expertise to a committee that may be going off to one negotiation or another.

[Charlie Angus, NDP, Timmins—James Bay, ON]

In a recent CRTC decision, you were directed by the minister to allow market forces to simply run their course. Have you received any other comments from the minister about where the CRTC should be going in terms of regulation?

[Charles Dalfen]

We have received a copy of a draft direction on policy that we commented on back to the minister, and now the directive that he then wished to produce, I understand, is tabled before the House and has been studied by the industry committee. What you see is what you get. There are no other directives that have come our way.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I want to go to another issue that I think certainly will have an impact on the CRTC. The Bell Globemedia merger with CHUM is going to give one company in most markets across Canada the number one and two stations. It runs contrary to CRTC policy even if it's a one in three share in some markets.

Will this concentration be challenged? Have you looked at scenarios about how you would deal with such a convergence?

[Charles Dalfen]

Again, it wouldn't be by scenarios. They will file an application and that application will be examined for approval. It involves a change of control and it will be dealt with in the normal way, including intervenors and the like, and a decision will be taken on that basis.

[The Chair, Conservative, Gary Schellenberger]

Thank you for your answer.

Mr. Fast.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

Thank you to the three of you for appearing before us today, and thank you also for a written copy of your remarks, because it's significantly easier for us to go back and check right here as to what you've said.

In reviewing your comments, I notice that you're undertaking at least five significant reviews and/or studies, everything from commercial radio policy, conventional commercial television, the general review that you're doing as to the broadcasting environment in Canada, and you're also dealing with the pay and specialty TV services and also broadcast distribution undertakings. These are all issues you're going to be grappling with. You've bitten off quite a chunk there. Once you receive the results of those and you've been able to distill the challenges facing the industry, how will you go about making policy in these various areas?

My concern is this. The CRTC, to a degree, is at arm's length from the minister and is expected by some in our country to take a significant role in developing policy and implementing it. There are others who see the role of the CRTC as being more of an implementer of policy and that ultimately the final direction would be delivered by the minister or the minister's office.

What do you see CRTC's role being, as you start to complete these studies and reviews?

[Charles Dalfen]

It's a very good question. I think the word “policy” is an interesting one, because when you look at the law, the broadcasting policy for Canada is set out by Parliament in the act. The Broadcasting Act, section 7, gives the government the authority to provide directions to the CRTC on broad matters of policy. Both of those are legitimate levels of policy-making, and then within that we do regulatory policy-making every day of the week. You could look at our decisions and say, that implies a policy, that doesn't imply a policy. If you said a Canadian content level of 60%, it implies a policy of wanting a predominant amount of Canadian creative and other resources.

So the word “policy” has to apply at every level and does apply at every level. The important thing is for each level of government to calibrate it right, and for Parliament to have the ultimate say on what the policy is, and then for the government to issue whatever policy directions it wishes.

[Ed Fast, Conservative, Abbotsford, BC]

Do you accept that the minister would have a significant hand in crafting policy, especially broader policy--not just specific regulatory policy, but the broad paintbrushes of policy relating to broadcasting, telecommunications, etc.?

[Charles Dalfen]

Precisely. On matters of broad policy concern, the wording is wording like that. Absolutely.

[Ed Fast, Conservative, Abbotsford, BC]

You'll be drawing the minister into those discussions.

[Charles Dalfen]

It's interesting that the section 15 report that you mentioned, and that I mentioned in my speech, is a report for the minister, presumably for the minister to advise the government and for the government to make policy. That's as it should be. At the same time, we're having our review, which deals with specific regulatory issues that go to licence renewals of the major broadcasters. Does that involve some level of regulatory policy? Of course, but it shouldn't cut across, or shouldn't compromise the minister's ability to take the higher-altitude, broader view of policy the act provides.

[Ed Fast, Conservative, Abbotsford, BC]

I have one last question, and that relates to what Mr. Simms mentioned earlier, the whole issue of regulating the Internet. Your response to his question was that at this point you have taken a position that the timing wasn't right to intervene in that particular technology. Is it even possible to regulate the Internet? And is that one of the struggles you face in deciding whether to step in to that breach?

[Charles Dalfen]

The Internet is a new world. You're right, if the Internet was merely a new distribution mechanism, it would probably be regulated in the sense that it was what we call broadcast distribution undertakings that include cable television, satellite, and microwave broadcasting. Look TV is a company that does that. Parliament set up the act, and again I'd underline this. When I go to international conferences, people are envious of our Canadian legislation because it's technologically neutral. It doesn't say regulate analog television, regulate cable television; it says regulate services the public receives, whatever method is used for their delivery. If the Internet was merely another distribution mechanism, it would probably be swept under, but it's a whole new world, a whole new marketplace, a whole new cultural and business environment.

As you say, it's extremely difficult to put boundaries around, but not necessarily impossible. If you want examples of that, you can see movie studios and broadcasting companies distributing episodes of television shows the day after--in some cases the day before--they appear on television. If you try to access an American-distributed show, you won't be able to do that because they have in effect erected a border around American residents, who are within the territory of the United States. How do they do that? They use servers and other techniques. If I try to explain them, I'm going to get way out of my depth.

It's not that it's impossible to impose these borders, it's that it's very difficult. More fundamentally, do Canadians really want those borders erected? The CRTC is saying, this is a new world and Canadians are playing a role in this world; let them play. Let's not give them the wrong signals; let's not cramp their style; let's see where it goes. If it does start to have an appreciable impact on conventional broadcasting, obviously we'll have to take a look at it and start asking ourselves if we can do this properly. Is it technologically doable and do Canadians want it done? We'll address it at that time.

You're absolutely right, the Internet poses a whole new series of challenges and questions. I believe we're only at the start of the Internet age, that we haven't even begun to see what it's capable of doing. Why regulate it and try to crimp it in any way unless it has adverse impacts on the broadcasting system we haven't yet seen?

It's a long-winded answer, but I hope it's a responsive one.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you.