Canadian Heritage Committee on May 25th, 2009

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

I certainly don't doubt that at the end of the day they're probably a lot closer than we are in our various political parties. There's a lot of cash there, and they have to work with each other. The question is, who is there to protect the public interest? Nobody is going to feel sorry for the fact that these companies have over-leveraged themselves, that they've spent a whack of money on American programming, and the advertising has gone south. But people feel strongly about local television, and we don't see any commitment that local is going to be not just protected, but enhanced. We don't see commitments that Canadian content is going to be strengthened. That is the role of the CRTC.

So if we're going to go to this model of negotiation between the big boys in a room someplace, who is going to be there to protect the cable consumer, and who's going to be there to say “You have obligations for local content, for local news, and for Canadian content”? I don't see that happening under this system.

[Konrad W. von Finckenstein]

Did you read the last sentence in point five? That is, in exchange for harmonization obligations and negotiated funding, it will be necessary for broadcasters to provide firm commitments regarding local news, local programming, and programs of national interest. That means we are going to hold their feet to the fire. They're not going to get that stream of income unless they deliver.

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

I hope that's going to be the case, but I'm looking at what's happening in the U.S. with their retransmission battles between the cable giants and the television industry. There was an article just this past week saying that retransmission consent puts them at a competitive disadvantage--that's in the Multichannel News. It says that the meteoric rise in retransmission costs leaves small operations at a competitive disadvantage. The smaller players can't compete when these fees are being negotiated by the giant BDUs and the giant broadcasters. It's all well and good to say come back with a plan, but there are some very small players in this market that have to have their place as well. I don't see the backroom negotiations between the big players being able to ensure the small broadcasters and the small players are given a fair seat at the table.

[Konrad W. von Finckenstein]

I'll make two points. First of all, the U.S. system is totally different from ours. It works on a different principle. So I think trying to make an analogy between one and the other....

Secondly, they have very large networks that cover most of the country. We have small broadcasters, but we also put specifically in our last BDU decision, which was last year, an expedited arbitration mechanism to resolve disputes between BDUs and small broadcasters. We have just issued several decisions under it, because we realize, given the difference in economic might, etc., that if we are not there to protect them, the cable companies could abuse their power. The mere fact that we are there, that we have that mechanism and people have availed themselves, etc., works very much as a restraining influence. If necessary, we'll invoke it.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

We have two more questions, one from Mr. Simms, and then Mr. Del Mastro.

Mr. Simms, please.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

In this particular situation, if you tried to extract the answers that you wanted from the particular broadcasters over certain responsibilities that they may have under fee-for-carriage, how are you going to do that if you ask them to negotiate among themselves? It seems to me that you've created a model by which you cannot demand that. And correct me if I'm wrong, but you are relying on the local programming improvement fund to create certain measures by which people have to conduct themselves. With these big players, as my colleague pointed out, you have to put up these bars that they have to cross. That's one part of it. You're relying heavily on that.

The second part is this. Let's say I'm one of those big players and I fall under that barrier that you've set. What are you going to do about it?

[Konrad W. von Finckenstein]

I'm sorry, I'm not sure that I'm following you. What barrier are you talking about?

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

If you're going to set regulations by which people have to adhere to local programming rules--the standards that you set here under the LPIF, the local programming improvement fund--I just don't see where you have the clout or the mechanism by which you can ask these people to adhere to these principles.

[Konrad W. von Finckenstein]

You're starting at the wrong end. If you come and want a licence and we say that you can have it, we want you to provide--for argument's sake--as part of your licence ten hours of local news programming per week. You have access to the LPIF, so you know that you have that money and also access to advertising. You have the means.

I want to see ten hours of programming, and we may specify whether that's original programming or whether you can use the pre-program set-up. So you are under that obligation to do that. If you then don't live up to it and I get a complaint, we will investigate it. If we find that you're offside, we'll ask you to get onside. If you don't, then we can make an order saying that you have to do it. If you don't do it, we can take you to court, as I expected to do--

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

But sir, this happens all the time. Channels break the rules all the time. It seems to me that you're only dealing in absolution. I don't mean to be too hasty about this, because I think you should have a mechanism, like financial sanctions, that you could use.

I just don't see how you can say to them that you will yank their licence. I think they're looking at you and saying, “So what.” Give me an example where you've done it before.

I'm sorry, I don't mean to be--

[Konrad W. von Finckenstein]

Listen, I don't dispute your view and others' views that it would be nice to have fining powers. We don't have it. But I very much dispute that channels do this all the time. We are the regulators. They need our cooperation and our consent on a host of issues. We do not have wholesale violation of terms of licence. Do we have the occasional one? Of course we do, and we may not deal with it as adequately and effectively as you would like us to. But I don't know where you get the idea that broadcasters are in constant violation of the terms of licence. On the contrary, they respect them. We have, on the whole, a very obedient system where people realize that violating the rules and picking fights with the regulator doesn't do you any good.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

I'm not speaking about broadcasters. I can pick on the BDUs too about this.

[Konrad W. von Finckenstein]

It's the same. It doesn't make a difference. Talk about either one.

If the bottom of your question is if I would like to have fining powers, the answer is definitely yes.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

So it's yes. If this committee were to recommend, in that particular manner, that there should be something like that in place for all players, would you agree with that?

[Konrad W. von Finckenstein]

As a matter of fact, if you want to recommend it, you should recommend an amendment to the CRTC act, so that it applies to everything for which we have jurisdiction, whether it's broadcasting or telecom. Now we have very limited powers in telecom for the do-not-call list. That's the only place where we have fining powers.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

One of the things the witnesses said was that over the years, the Standing Committee on Canadian Heritage has come up with great recommendations and great reports, but he insisted that you never enacted any of them. Do you dispute that?

[Konrad W. von Finckenstein]

I don't know what you're talking about. I mean, I've only been in this job--

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

What has the heritage committee done that you--

[Konrad W. von Finckenstein]

I don't know what former reports you're talking about, what recommendations, and whether they were addressed to the CRTC, whether CRTC could do it, whether it was in their constitutional power, or their set-up, or whether they chose not to do it.

If you give me specifics, I'll gladly give you a view, but I can't do it on an open-ended question like that.

[The Chair, Conservative, Gary Schellenberger]

Time's up.

Mr. Del Mastro, please, for the last question.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair.

Mr. von Finckenstein, part 4(c) tells me something that's a fundamental truth. I think you'd have to acknowledge that what you're doing is setting up a system where some Canadians that receive their signal over the air will pay nothing and they'll continue to receive the signal for nothing, while Canadians who are receiving the signal via a BDU will pay a fee. That's what you're proposing in part 4(c). Do you fundamentally agree that some people get the signal for free and some people, under the model you're proposing, will pay more money?

[Konrad W. von Finckenstein]

Are you talking about 4(c)? You can always receive the signal for free. You don't have to use your BDU. If that's what you want to do, you're free to do so.

[Dean Del Mastro, Conservative, Peterborough, ON]

But you're looking to put in a system by which some people get it for free, and some people have to pay more for it. That's the system you're putting in place right now.

[Konrad W. von Finckenstein]

If you live in Peterborough, right now you pay the cable company to receive the whole package, which includes the basic, which includes the conventional broadcaster. You receive much better quality—

[Dean Del Mastro, Conservative, Peterborough, ON]

But you acknowledge yourself, sir, that through my cable bill I am not paying anything toward the over-the-air broadcasters other than the 5% that they're paying out of their total revenues, plus the 1% local program improvement plan.

I'm just saying you're setting in place a two-tiered system, whereby some people can get it for nothing. Nine percent of the Canadian population will continue to get it for nothing, and 91% will have to dig into their pocket for the CRTC proposed solution.