Canadian Heritage Committee on March 1st, 2007

[Konrad W. von Finckenstein]

Mr. Angus, you caught me by surprise. I don't know what dates you're quoting, what cases are involved, etc. If you want me to, I can gladly give you, in writing, chapter and verse on each one of these cases. As you know, this is my first week in the job, and you are quoting from a report for the last year when I wasn't there. You're suggesting—and I don't know whether it's right or wrong, I don't know what the report said—that we had transfers of ownership in secret, without hearings. I just don't know anything about it, so I cannot answer that question.

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

I will give you an example and get you to comment on how you might move forward on these.

In 2005 the CRTC let one station pick up assets from four other companies in B.C. That involved a transfer of about 18 stations. Then four months later they allowed another company to pick up 11 stations. So within a four-month period, one-third of the stations in British Columbia changed ownership. That also really increased the media concentration in the British Columbia market.

You were not there at the time, but--

[Konrad W. von Finckenstein]

No, but you're making the suggestion that we didn't follow due process.

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

No, I have not made my suggestion.

[Konrad W. von Finckenstein]

I'm sorry; my apologies.

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

My suggestion is that.... We're seeing major amounts of media concentration. As I said, these have taken place without much public comment. So I'm asking you now, as chair: what is your position on the clear growth of media concentration that's happening, and what is the CRTC's role in dealing with these kinds of major mergers that are taking place?

[Konrad W. von Finckenstein]

Media concentration is obviously a concern. Diversity of voices is one of the things we have to encourage as part of our mandate under the Competition Act.

You are looking at the one side, which is the concentration of media. We also, at the same time, have an explosion of fora in which you can express your views. When you look at whether major radio stations combine or not, and at whether this restricts the diversity of voices, you have to take into account at the same time that there are new avenues—I don't have to say the Internet, but blogs, and all of those—whereby people can express their views and communicate, and they do. We also look at the economics; we look at the market, etc.

In the decision we make on whether to approve, clearly one of the ingredients is diversity of voices. It's not the only consideration, but it's a very key and important one.

If we were still in the yesteryear, where we had very few outlets of communication for our voices, this would be a great concern. In our multi-platform world, this concern has to be looked at in that context. Therefore, what may at first blush sometimes appear to be a dangerous concentration does not on closer examination so appear, when you consider all the alternatives.

I'm just speaking generically. I'm not speaking about your specific case.

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

But respectfully, my children can go onto YouTube, but I don't think that's in the same realm as the kinds of mega-mergers we're seeing in television. The fact that my kids can post something on YouTube doesn't provide diversity of voices.

What I'd like to put to you is that what we're seeing in the CRTC, in a lot of these decisions that have been made, is families transferring assets among themselves. We have a few dynastic families who are basically controlling media in this country.

If Parliament had decided that it was good news just to have two or three families controlling all the media in this country, they wouldn't have created the CRTC; there wouldn't be a need. The CRTC has a mandate to ensure that the best people and the best projects are picked for controlling licences; yet that doesn't seem to be happening.

In light of the massive media mergers that are taking place, the dynastic control of a few families—and YouTube and MySpace aside—what role do you see for ensuring diversity of voices within the broadcast industry today?

[Konrad W. von Finckenstein]

Any merger goes to a dual examination. First of all, you have to get it past the Competition Act: that it doesn't lead to a lessening of competition. The Competition Bureau basically looks at the market. For the market, they look at it as advertising: does it really restrict the ability to advertise? Or does it let people control the market?

We then look at the other part. We look at it from the broadcasting viewpoint and the objectives of the Broadcasting Act. Are the objectives of the Broadcasting Act, which are numerous—it's a long list—going to be imperilled by this merger, or put in danger?

One of the objectives, clearly, is diversity of voices. Another one is the offering of Canadian content. Another one is vitality of the industry, etc. It's not just diversity as the only one and the overriding objective. There's a whole bunch of them, and we have to strike the appropriate balance.

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

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Mr. Abbott.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you for coming, Mr. von Finckenstein.

I thought that some of the testimony related to the CRTC last week was really quite instructive and quite helpful, particularly for this hearing. If we could move some of your comments from that, in another forum, to this one....

Mr. Angus and I have had a respectful dialogue, sometimes a difference of opinion, over the role of the CRTC, the CRTC commissioner, the government, and the minister. At the meeting last week, you very clearly enunciated that. It might be helpful to bring your testimony from that meeting into this meeting, as it is part of your having....

I'm trying to give you an opportunity to establish your own standard, so to speak, so that we as parliamentarians will be able to measure your performance against your own stated standard.

[Konrad W. von Finckenstein]

At the CRTC we regulate according to the mandate given us by statute. That mandate requires an awful lot of discretion and judgment, because it is really stated in principles rather than in specific tasks what to do or what not to do. We're basically told to do whatever is necessary to achieve the objectives. We have various tools. One of them is licensing, if you're talking about broadcasting, but it's not the only tool.

Secondly, we are a collective. As you know, there are eleven commissioners right now. We make the decisions through due process, by which we ask people to make applications. They make some public notices. There are interventions. We then decide whether to hear them. If there are sufficient interventions and controversy, that requires a public hearing. When it's a relatively straightforward one, we have a paper hearing to deal with it. Then we publish our decisions and explain them. We're trying to follow that.

I had the opportunity last week to speak before the Canadian Film and Television Production Association, where I was basically asked the same thing. I said to them that as a regulator I really have four principles under which I operate. I did that as the competition commissioner, I will do that here, and my staff will follow those principles.

The first one is transparency. Everybody should know what we are doing, what our process is, how we come to decisions, and how they can interact with us.

The second one is fairness. What we are really being asked to do is choose between competing interests, and to do it in such a way as to attain the objectives of the Telecommunications Act or the Broadcasting Act, whichever it may be.

The third one is predictability. You can't have a regulator that goes all over the place. There have to be clear principles that you follow and apply from case to case. If you depart from them, you owe it to the people you are regulating to explain what it was in the economy or in this particular situation that caused you to depart from your stated principles; to what extent it was an isolated case; or whether you have, in effect, switched direction.

Finally is timeliness. In a bureaucracy, time is an ever-expanding quality and you can take as much time as you need to get it right. But of course in industry it's just the opposite: time means money and opportunity cost. Therefore as administrators it behoves us to make our decisions as quickly as possible, while still acting in a responsible manner.

That's how I intend to run the CRTC. Hopefully we'll make it clear to the industry what we do, how we do it, and why we do it.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

How do you see your relationship, as the chair of the CRTC, with the government and the minister of the day? I'm not speaking about the current minister.

[Konrad W. von Finckenstein]

As you know, the CRTC is an independent body that makes judgments on the basis of what we see as best.

Both ministers of heritage and industry have the power under the respective acts to give us directions. But the directions have to be public, they have to be debated, and they have to be tabled for the most part. But clearly, when they do that we will abide by them, as was the question from Mr. Crête.

Over and above that, an independent regulator administers in the forum set out in the legislation, and obviously there has to be contact with the minister. I do an annual report for the minister. She presents it to the House of Commons and tables it, because I have no means of tabling it.

I think it's necessary that I understand her goals and aspirations and where they're going, just as she understands mine. I don't try to influence her and she doesn't influence me. But given the different mandates and policies, it makes sense that the two of us go in the same direction. I don't see any benefit in us going in opposite directions.

We both have the same idea in mind here. We talked about broadcasting of Canadian content, telecom, and trying to make sure we have an efficient, modern, competitive system, to the extent that's possible.

That's how I intend to administer this organization.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

Ms. Keeper.

[Tina Keeper, Liberal, Churchill, MB]

Thank you.

Thank you, Mr. von Finckenstein.

I would like to ask you about the new world of new media. I know that this was a concern that was raised as we moved through the past weeks in terms of the concerns of Vidéotron. One of the things I personally feel concerned about is that it is a new world. I feel like we're on a frontier in terms of government role in terms of this new frontier, and I know you've mentioned it a number of times, talking about new media, multi-platform.

The CRTC did release a report in December 2006 about this issue, “The Future Environment Facing the Canadian Broadcasting System”, around new media. The past CRTC chairmen had indicated that they didn't feel that there were regulations needed yet—quite yet. I would like to ask your position about new media and the role of the CRTC.

[Konrad W. von Finckenstein]

This is clearly the challenge of the day, I think you're absolutely right. There are very much divided ideas as to how quickly this new media will come on, and to what extent it will displace or undermine or bypass the existing structure. So we really have the chance of, number one, administering our existing system, which has been a great success and we have a vibrant industry, on the one hand, but at the same time keeping in mind that technology is creating this new media, these alternate platforms, which have the possibility, the potential, of completely technologically bypassing the regulatory system that we have. Is it going to be a reality, and when will it be?

Secondly, so far we have taken a hands-off position and said we are not going to try to regulate new media, and, new media is essentially just an alternate platform. As it develops, as it becomes more and more powerful, there will be a question whether we have to re-examine that position or not, and, if so, can you actually impose some sort of regulation? What kind of regulation would it be? Would it be what we do right now, or do you have to do it quite differently? And most importantly, can you actually enforce it? There's no sense in setting up a regulatory scheme if you can't enforce it.

I don't know the answers to that. I'm acutely aware of it. The report we made for the minister, and which was tabled last December, which you referred to, was basically a snapshot of the situation as it is right now, but as we know, it's not stable; it's evolving. It's evolving very fast, etc.

One of the other things that I have said publicly, and will repeat here, is we have to get our head around the new media, we have to understand, we have to make educated guesses as to where we think it's going, what form it will take, and also how we use that media in order to live up to our central mandate, which is to make sure that there's Canadian content in the broadcasting world, in the new media, so that Canadians have the opportunity to see it, and so that we don't get lost in this new media world, so that Canada has its appropriate place.

This is talking at 10,000 feet, I know that. I'm doing it because I don't know any better. But we are studying it, we are working on it, and I think this is going to be the key challenge.

[Tina Keeper, Liberal, Churchill, MB]

Thank you.

I thought that it wold be clearly one of the most significant challenges of a new CRTC chair.

[Konrad W. von Finckenstein]

It's a daunting challenge.

[Tina Keeper, Liberal, Churchill, MB]

Yes, it is. I agree.

I would just ask one more quick question, and that would be about foreign ownership, in terms of the competitive world of broadcasters. Could you just give me some reflection, in terms of foreign ownership and the CRTC's role in terms of ensuring Canadian ownership of broadcasters?

[Konrad W. von Finckenstein]

The last word was “broadcasters”?

[Tina Keeper, Liberal, Churchill, MB]

Yes.

[Konrad W. von Finckenstein]

Yes, okay.

Canadian ownership is clearly a very important key to Canadian culture, communications, etc. I was before this committee at one point in time as Commissioner of Competition and I talked about Canadian ownership. At that point in time, I talked about the transportation of signal, and I suggested if we wanted to loosen the Canadian ownership rules you could do it where you talk purely transportation of signal. Whether the signal is a broadcasting signal or a telecom signal, to the carrier it makes no difference, he just wants to carry as many signals as possible.

Therefore, in terms of ownership, I think the considerations are quite different when you talk about telecom from when you talk about broadcasting. It is our mandate at the CRTC, which is clearly on the broadcasting side, to ensure Canadian content. I don't see how you can foster Canadian content and have it part of your DNA if you're not Canadian. I just don't see that. I think the broadcasting industry and the Canadian ownership is absolute. But if you did separate totally telecom from broadcasting and just talked about carriage of signal, I don't see why you couldn't loosen the rules and ensure a greater access to foreign capital.

That's not part of my mandate, I understand, but the researchers have done some research. I made those statements previously, and I have not departed from those. They are very much restricted to the carriage of signal.