Thank you, Tara.
We have five recommendations for this committee. First, provide local programming support. The local programming improvement fund's, or LPIF's, structure and amount is still being discussed at the CRTC. Some parties have recommended an increase to the amount, in recognition of the decline in revenues and unsustainable business model for local over-the-air television. Based on the current CRTC proposal--1% of BDUs' revenues--the LPIF would not alone solve the pressures on local television. It would contribute needed funds, particularly for stations serving less than one million population, to bolster local programming, particularly news. Therefore, the CAB endorses a fund that will assist these stations.
The second recommendation deals with signal carriage. Private broadcasters need all local signals carried by VTH and compensation for these signals when carried outside of their local market. Broadcasters, large and small, see this as a pillar of the policy framework. Broadcasters and MPs have asked that all local television stations be broadcast in their local market. The government and the CRTC should require the carriage fix for all local stations, such as in Medicine Hat, Rouyn, or Rivière-du-Loup.
The second issue relates to the monetary harm caused to local stations by the distribution of distant signals. CAB estimates that the economic impact of the distribution of Canadian distant signals through the OTA sector was $70 million in lost advertising revenue for the year 2005-06 alone, of which BDUs compensated broadcasters $10 million to offset the loss--clearly not an acceptable level. Therefore, broadcasters have asked for the right to exercise control over the carriage of their signals out of market.
The third recommendation deals with DTV transition. The committee is aware of the government-mandated August 31, 2011, transition date to convert analog to digital television signals. Broadcasters are requesting industry collaboration to implement a hybrid model. A hybrid approach would significantly lower the cost of conversion. The request to fund the digital transmitter conversion for broadcasters would be appropriate, given the government-mandated conversion. Depending on the model chosen, financial support will be quantified. Equally important, the consumer information campaign required to inform viewers of the change should be led and supported by government.
The fourth recommendation deals with part II licence fees. Broadcasters, distributors, and the CRTC have all recommended the elimination of the part II licence fee regime. On an annual basis, this $100 million fee, which broadcasters challenge as an illegal tax, takes away from broadcasters' bottom line, while the fees are directed to the Consolidated Revenue Fund with no connection back to the broadcasting system. This committee should recommend the immediate end of the part II regime.
Finally, a recalibration of the CBC/Radio-Canada funding. CBC members fully support CBC/Radio-Canada as a key component of the Canadian broadcasting system. It is critical to ensure a clear mandate and funding structure for CBC/Radio-Canada. Our members believe the time is right to examine a change to CBC/Radio-Canada's undue reliance on commercial advertising and government appropriations. This quasi-commercial approach puts the public broadcaster in direct competition with the private sector, as programming decisions are driven by the need to maximize viewing audiences in order to generate advertising revenues. Changing the corporation's ability to access commercial advertising would obviously need to be offset by increased parliamentary appropriations.
Mr. Chairman, members of the committee, overall, private broadcasters are of the view that we must take action, in the area of policy and regulations to address the challenges faced by local television.
In closing, the CAB has taken no position on the issue of distribution rates or fee-for-carriage. Member companies within the organization or the association have addressed this issue individually with you. We would be pleased to answer any questions you may have.