Thank you, Mr. Chair and members, for allowing Telus to present on issues around the future of digital media in Canada.
I don't have a presentation today, per se. It was short notice, but I really appreciate being asked. We will have our notes translated and sent to the committee tomorrow.
Let me thank you again for presenting on issues around the future of digital media in Canada and what we see as the public policy challenges that massive change driven by the Internet now poses in respect of the achievement of cultural objectives.
The Internet, as we all know, is an open system and it's a system that has irrevocably changed the world of information and entertainment for good. What was once only available through the broadcasting system or in video stores is now easily accessible, not only to Canadians, but to people all over the world. That could be a huge opportunity for our cultural industries.
Companies like Apple, Google, and Netflix are reinventing the world of entertainment and using the Internet as their delivery vehicle, and they're not alone. Companies like Sony and Panasonic are introducing TV sets that connect directly to the Internet, and in response big U.S. broadcasters are pushing programming through Hulu directly to consumers.
Telus, for its part, is responding in turn by investing billions of dollars in world-leading wireless broadband and our new Internet-based Optik TV service to ensure Canadians and Canadian businesses, including digital entrepreneurs, can take advantage of these opportunities that access to global markets through broadband presents.
This brings me to the issue of foreign ownership. Government is currently considering removing restrictions for carriers regulated under the Telecommunications Act, but not for carriers regulated under the Broadcasting Act. This distinction put forward by government simply does not reflect digital realities, and in our view a telecom-only liberalization will lead to legal advantages made available for large foreign enterprises that will not be similarly available for Canadian enterprises. That cannot be considered fair.
Why? Today virtually all communications carriers carry or distribute video over the same physical network used to deliver traditional telecommunications. Digital networks just carry bits and are agnostic when it comes to traffic carried, and in fact they should be agnostic to ensure principles like open access to the Internet. While all networks today carry voice, video, and data traffic, you can't segregate that traffic. However, it's still relatively easy to protect and separate the business of content production and exhibition from digital carriage, even if you liberalize broadcast distribution.
We believe that when it comes to broadcast distribution or carriage you can achieve broadcasting objectives irrespective of ownership. Today, broadcast distributors have little or no discretion regarding the application of broadcast rules. Cultural priorities and fees are set by the CRTC and distributors have to comply. That would still be the same if foreigners ran the physical distribution networks tomorrow.
On the other hand, broadcasters like CTV, Global, or TVA make decisions on what programs to produce, license to independent producers, and exhibit on their channels. These activities are of obvious cultural significance and should remain protected. But for today let me make the suggestion that foreign ownership should not be your primary concern in terms of meeting the objectives of the Broadcasting Act. To Telus, the biggest threat to access, diversity, and choice arises from the unprecedented vertical integration we see in the broadcasting industry, not whether foreign or Canadian carriers actually distribute video under the same rules. After the Bell-CTV deal is approved next year—and it will be—the four largest broadcast distributors in this country will also control virtually all the broadcasters in the country. That is a massive consolidation that has occurred in just less than five years. This vertical integration creates a huge risk for abuses of market power in terms of access.
We are therefore pleased that the CRTC is planning to have a proceeding next spring to deal with the issues related to vertical integration, and we're equally pleased that last week your committee voted to make this a focus of an upcoming study. Foreign ownership is clearly a concern, but the carriage and distribution of content can be easily regulated to ensure that carriage priorities are met, irrespective of who owns the pipe.
A consolidation of control over that content into the hands of only four large players, however, should be a much greater concern. If government cannot ensure that all content producers, independent distributors, and, most important, all Canadians have open access to the system, then we all lose.
In our view, if we lose diversity and choice in the system in order to create larger Canadian enterprises, then debate about the impact of foreign ownership on the achievement of the objectives of the act becomes almost irrelevant.
Mr. Chair, committee members, that finishes my opening comments. I would be happy to answer your questions.