Canadian Heritage Committee on Oct. 26th, 2010

[Dean Del Mastro, Conservative, Peterborough, ON]

It sounds like you're onto a little bit of my personal quest for a full review of the Broadcasting Act so we could modernize it and take a look at how we could make the most of these opportunities. At least that's my perspective on it, that we should be seriously looking at how we can leverage the opportunities and the support.

I don't know what your view might be on this. Independent producers mentioned to me last week that part of the challenge they have—and you mentioned—is that broadcasters make the decision on what to produce and they would like to have that ability themselves. In other words, with the Canadian Media Fund, which was created last year and which I think has been very successful, right now the funding is actually provided to the broadcasters, who can then license to the producers to produce a show. What they're saying is that if you actually extended that to the producers, they could go and then cut a deal with the broadcasters; that might change some of the producers' rights. What would you think of that proposal?

[Michael Hennessy]

I was involved with the predecessor to that, the Canadian Television Fund. There will always be a battle between producers and broadcasters over licensing fees.

The more critical issue for the producers--because I don't think anybody has the appetite to turn the Canada Media Fund on its head yet again, good sport though it is--is that they need what are called terms of trade. They need some kind of guarantee of access, as British producers have. They need to hold onto their rights to the Internet and other platforms or they will never really be able to grow and exploit their content.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Hennessy.

We'll go to Madam Crombie.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Thank you, Mr. Chairman.

Welcome to our guests, and thank you for presenting here today.

I'll start with Mr. Coates. I was very interested in your comments with respect to Taiwan and Singapore as leaders in the creation of digital media. I had the opportunity to visit Taiwan last year, in fact, and I was very impressed with the vast industrial parks. I also visited a digital arts institute. What I found was that the government picks winning sectors and incentivizes them, whether through grants or favourable tax structures. And certainly it has an intense focus on the education levels of its population and on developing certain skill sets.

They were very interested in the work we do in digital media in Canada and would be interested in linking up with Canadian providers. I was trying to provide an introduction for them to Sheridan College and even to Electronic Arts, out in B.C. They say that we have a specialty in something called anime, which was new to me, but yes, we do.

I was just wondering about your perspective on a national strategy. Do you recommend that we also pick a sector--digital media, for instance--as a sector to nurture and invest in and incentivize?

[Dr. Kenneth Coates]

Obviously I'm a big fan of that. I think we need to take some real national risks. We basically dance around looking for a perfectly guaranteed solution, and we're not going to find one. This is a very fast-moving area.

Just to use Taiwan as an example, they decided about 15 years ago that the government would put emphasis basically on the guts of technology. So if you pick up almost any device you have--computer, cellphone, and all these kinds of things--you'll discover all sorts of what are called Taiwanese insides. They make all sorts of semiconductors and processors and all these different kinds of bits. Probably the only Taiwanese company you've heard of is Acer, which does actually produce the whole thing. But many of the things you'll buy, such as something that has “Toshiba” on it, will in fact, a lot of the time, have Taiwanese product inside.

They just made a shift within the last year and a half to basically say that digital content is the next wave, which is why you're seeing digital arts centres. They're putting all sorts of money into new institutes. They're basically designed to train designers, artists, creative personnel, and people of that sort. But here is the trick with Taiwan. They look across a very narrow strait and see more than a billion and a half people who speak Chinese, and their digital content is not aimed at Canada. They basically have an opportunity to use this remarkable access they now have to China, which they didn't have ten years ago.

What's also interesting about their particular model, and it's really hard to sort of imagine this working quite so well in Canada, is that they actually take people back and forth between the universities, the government, and the private sector. If you go in to talk to a government agency, half the people there used to be in universities and half used to be in industry. What really stands out about Taiwan is their commitment to loyalty. They basically are telling the Taiwanese that they have to come back home, that they have to work to make the Taiwanese economy strong, and that they're going to invest in people.

They've actually come over to people in North America, more in the United States than in Canada, and have said, “Pick up your company and bring it here. We'll give you a factory and we'll give you three years with no income tax.”

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Yes, exactly. Even in these industrial parks, they had dormitories for people to live in and they incentivize people to stay in place.

Thank you very much.

I want to ask Mr. Hennessy a couple of quick questions as well, and I too want to congratulate you on Telus being awarded the best global company for philanthropy by the Association of Fundraising Professionals. I sent your CEO, Mr. Entwistle, a note of congratulations, as well.

From your remarks I noted that Telus is one of the only digital media companies that I didn't think was vertically integrated into broadcasting, but you were speaking about a new network with Telus and IPTV. What differentiates IPTV, and what impact will you and your new wireless network have on developing digital media? And what economic benefits will accrue for Canadians?

[Michael Hennessy]

Let me try to strip down the technical language and keep my eye on Mr. Chong at the same time, for time.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

Let me sneak in one more question, because he's going to cut me off, I just know it, and you get to answer longer than I get to ask.

Quickly, how will the Bell-CTV deal impact you? And what effect will it have on Canadians and on the content that's available in the marketplace?

Finally, what threat will Globalive bring to the Canadian marketplace? How will it impact your business? Some of the naysayers or devil's advocates say that their entrance will provide consumers with greater choice and will perhaps drive down prices.

There you go, three questions.

[Michael Hennessy]

Quickly, Optik TV is really like a cable TV service. So it's not a content service; it's a distribution service. But it uses Internet technology, and it's licensed by the CRTC, so it has to meet all the Canadian content obligations. We now actually have 300,000 subscribers using this technology in Alberta and B.C., so it's very neat.

The second question was on Bell-CTV. This goes back to my point that it's not of material impact on us if the access to the programming that's protected under the Canadian broadcasting system is available to our customers, just as the Shaw-Global, the TVA-Quebecor, or the Rogers-City programming is. If we're excluded from accessing that programming, then we're unable to compete with the cable companies. That likely, if anything, apart from damage to us, keeps cable rates high.

[Bonnie Crombie, Liberal, Mississauga—Streetsville, ON]

And choice in prices....

[Michael Hennessy]

Clearly, we continue to see prices going down. The primary reason for prices going down today has more to do with the fact that Bell and Telus have changed their networks into a global standard. So we're now able to bring in handsets from all over the world and introduce that technology. So we're really becoming much more of a smartphone-driven company.

[The Chair, Conservative, Michael Chong]

Thank you very much, Madam Crombie and Mr. Hennessy.

Monsieur Pomerleau.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you, Mr. Chair.

Mr. Coates, you mentioned three things that struck me. First, you said that a series of factors gave Canadian production a competitive advantage: our sizeable cultural production, a large number of fairly well-educated people and bilingualism, which you referred to as an asset. First, thank you for that. People rarely point that out, but I know it to be true.

You talked about two other things, and those are what I want to ask you about. You said that we were not moving quickly enough when it came to digital media. I would like you to elaborate on that a bit and explain what we can do to speed things up.

Second, you mentioned our connections with Asia or emerging Asian countries. According to you, those connections are not strong enough or do not respond to the existing opportunities we should be seizing. I would like you to explain how we can strengthen those connections and what we can do to improve the situation.

[Dr. Kenneth Coates]

My apologies for not being able to speak French effectively.

We do have some very real strengths. It's interesting. As a cultural producer, as a content producer, Canada is actually extremely good. We produce way above our weight. We have wonderful filmmakers and novelists and musicians and what have you. We do very, very well. We don't see that as an economic sector as much as we should. If you look at something like Cirque du Soleil, a really brilliant organization, they produce hundreds of millions of dollars of benefits to Canada every year, yet for some reason they don't get seen as an economic power in the same way that Research In Motion does. We should start seeing it that way. The advantages of bilingualism and multiculturalism are very real; we have the opportunity to reach out way beyond our borders in a way that many other countries do not.

You asked about fast enough. First off, the question is, what is fast enough? Fast enough is a very good idea coming from a corporation getting funded within a month. Not fast enough is that same idea taking 18 months to go through regulatory procedures, or going through vetting processes. I feel sorry for governments right now. The accountability expectations on you are crippling, quite frankly, and everybody is very nervous, so decisions take way too long.

Singapore is a very small country, a very nimble country, but the person who makes the digital content decisions down there basically works with a staff of about two or three people and makes decisions within a week. Try running the same kind of thing through our regulatory procedures and our decision-making; it's a nightmare. Guess what happens. People go looking overseas to find the money to do the things they want to do, and sometimes they move with it. We lose too many people outside the country that way.

So faster basically is putting more faith in the hands of the civil servants who manage these processes, and having a sort of different kind of oversight in which you don't have long and incredibly complicated application procedures. Our university is very, very successful at filling in grant applications. You have one of the most innovative universities in the country, one of the best in the world, basically choked by the process of applying for grants. Is that what you want your key researchers doing, applying for grants, or actually doing the work? For the creative personnel, it's the same thing: do you want to turn our nation into a nation of grant writers? That doesn't actually propel the economy very far, success in filling out forms. So I would challenge... It is not about the federal government, provincial government, municipal government. The mindset in Canada is not fast enough. We need to really turn that around and turn it around aggressively.

I will speak more aggressively even about the Asian connection. Canada is amazingly disconnected from Asia. We do not know what's going on. I don't mean individuals here; I'm sure many of you have travelled over there. The scale is astonishing. Outside of Hanoi they are in the process of producing a science and technology city that will have 1.2 million people living in it. They have a little sign on the map saying they're going to put in a university, so I asked how big the university would be. They said 13. Well, 13,000, that's not so big. No, no, no, 13 universities will go on that one site. The scale in Asia is simply mind-boggling.

Take a look at Sangam's Digital Media City in Korea, outside of Seoul. It will have a digital media concentration of 25,000 researchers based in one location. Take a look at Z-Park in Beijing: it has over 400,000 employees. How do we compete? You compete by getting in the middle of it and understanding what's going on and what's happening on the cultural side. How do we do it? Take at look at what we're studying. We don't study Asia enough in universities. We don't study Asia enough in elementary and secondary schools. We need to know where our competitors are, and we need to know that right now. I'm very concerned about this, largely because of the lost opportunity. I would simply draw your attention to Australia. Australia made a decision about three prime ministers ago that they would become an Asian nation. Canada can do so. We have, through British Columbia, an outlet on the Pacific. We have a multicultural population, millions of Canadians who have access to Asia. We don't use them.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Coates.

Merci, Mr. Pomerleau.

Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

First, thank you all for being here and making your presentations to us today.

Mr. Wilson, I hear what you're saying, and I agree that we can't focus on stopping the information flow from coming to Canada from an international source. It would be kind of like stopping the ocean from coming in; we just couldn't do it. So we have to focus on the increase in the digitization of our Canadian content, and I agree with that.

The numbers you presented today, 4% written and 1% video, concern me. I was unaware of those. If we were to set a goal for the date you mention, the 150th anniversary of Canada in 2017, where are our competitors now, where are other nations now who are doing this well, and what percentages are they at? What would be an achievable goal we could set for Canada, do you think, for digitization of our history?

[Ian Wilson]

Thank you for that.

As it's an ambitious goal, the other countries have not published their figures concerning where they are, but given the investments they're putting in, it's obvious that they're going to move ahead very quickly, and we will benefit. If the United Kingdom is digitizing massive amounts of their material, and France is doing theirs, we will all benefit, because that's of interest to us.

I would think as a national goal we should be ambitious. We should challenge all of our governments.

First and foremost, let's deal with crown copyright. Why are we still defending crown copyright? Who is defending crown copyright? Why don't we take everything that governments have published in Canada and have it online--federal, provincial, municipal? It's simple: take everything, of every government. It's already published, it's out there. Take all the consultants' studies. We've already paid for those consultants' studies; they're sitting on shelves and in filing cabinets of many governments.

Why don't we challenge every government in the country to get involved, almost like ParticipACTION: “Get involved”. Let's have a national digitization campaign, train our young people in doing this, develop skills. It's going to be marvellous for future skills. Let's do it in governments.

What about universities, what about all of their publications? Why aren't they fully available online?

Why don't we then take everything that's old enough to be out of copyright—all the nineteenth century and early twentieth century material? Why don't we have all of that online?

Why don't we then work with our film producers, our educational broadcasters in Quebec, Alberta, and Ontario? Why don't we get that material up online, if they hold the rights?

I think all of us in this world, archivists and librarians, respect the rights of creators. But how do we perhaps develop some new business models? We have the public lending right, which recognizes the use of books in public libraries. Well, how do we change it to recognize the use online? You can measure use online—that's straightforward enough—so why don't we add something to the public lending right to compensate our authors for making their material available? Or there are other models of publication. I think we can be very ambitious.

In web terms and digital terms, 2017 is an awfully long way away. I think if we had, as Canada 3.0 emphasized, a national visionary, compelling strategy that we could all buy into and by which we could drive this thing, and if we all agreed we're going to do it once and do it well, so that you digitize it once—that's straightforward—and preserve it properly, it's going to outlast any building or any highway we've built this past year, if we do it as a capital project.

We get the cities, we get the municipalities, the universities, get the non-governmental organizations.... Get them all. Help them in some way, but help them get this digitization done. Let's become a digital nation. That's our birthday present to ourselves for 2017, our 150th birthday. It's an ambitious one. If we don't build a building, why don't we build a capital structure that every Canadian can get into—not a building in one place or one city, but something that.... Well, when Library and Archives Canada put the 1911 census online, there were 17 downloads per second. That is accessibility. We can put up other material—prime ministers' papers, and.... It's phenomenal take-up.

Canadians are searching for authentic information about our experience, our cultural expression, and this is, as I've argued in many places, finally the basis of creativity. Innovation and creativity don't come out of nothing; they're inspired by where we've been, by reading other people's works. Everybody I know who writes great novels has probably used the library and archives, because they're building on it.

Anyway, there are solutions to allow us to work within copyright and respect it, absolutely. But let's deal with all the other material outside of copyright. And finally, let's deal with crown copyright. Why are we still maintaining it? There's a huge amount of material that is valuable to us and valuable to other nations. There's research there that really needs to be available and accessible online.

Thank you.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Armstrong and Mr. Wilson.

Mr. Simms.

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

Thank you.

I particularly liked your example, Mr. Coates, about the situation in Southeast Asia and the market opportunities it presents, especially the comment about you get in the middle of everything. Currently on the east coast, on a much smaller scale, particularly on the island I come from--not P.E.I., but Newfoundland--we have a situation where we're trying to plug into geo-tourism with Europeans. We're presenting it in a way that they didn't realize, which is to say that we're showing them part of their heritage, because they went through periods and periods of heavy immigration whereas we didn't. So we're presenting them with what Ireland used to look like in some places. The process started, though, when the National Film Board did films years ago illustrating these communities. It was called the Fogo Island experiment. It seemed like it was only made for our consumption, and lo and behold several years later we brought this, through the advent of digital technology, through Europe and found ourselves in a pretty good situation where it's like a renaissance of tourism. You've seen the advertisements.

That being said, how do we take advantage of that situation? Do we invest more into the content of what we produce? Or do we invest more into the distribution system? Do we put it out there?

[Dr. Kenneth Coates]

Well, it's interesting. I guess I'm more of a fan of the content side. The distribution system is a very complicated one, and Mr. Hennessy can say more about that.

We've had some really good success stories. You've probably heard about Corus Entertainment. Corus Entertainment I think sells to something like 75 countries. They produce it in dozens and dozens of languages and they figured out how to do it. We actually have some other companies like Scotiabank, which is an interesting example of this, not the only one, that have figured out localization, how to take the services they provide in a Canadian context and change it and transform it into other places.

Canada is actually a saleable commodity in the stories we have, the experiences we've had, and what have you, but also in the cultural content we create. I don't think we're going to have too much difficulty selling what we produce in other parts of the world as long as we actually know what the markets are like, as long as we actually know how to get into them, how they work in those different kinds of environments.

China is not an easy commercial environment. It's not surprising we don't do very well there. Lots of countries don't do very well in China. Just because the Chinese market is there doesn't mean you snap your fingers and you're inside it. There are lots of questions we have to get at around the technology but also around the licensing regulations, copyright arrangements, in those nations.

The number one thing is we have to understand them and we have to actually be part of that world, as you say, in the middle of it, actually getting a better sense of what goes on. We do reasonably well in Europe, but you have a good example of our taking a long time to figure that particular one out. I just continue to draw your attention to the fact that we don't really know what's going on in Asia. We aren't connected up to the digital media realities over there, and we need to work much harder at it.

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

There are two concepts I struggle with. Do you invest in the content up front? I guess what I'm saying is it's seeking the new business model that is out there.

Mr. Hennessy, I'd like to get your comments on that, because when it comes to what new business model is out there, the current debate or discourse is do you prefer the rights of pay per use, or do we go through the collective process, or a hybrid of the two, that sort of thing?

[Michael Hennessy]

I would take it back a step. We did a couple of papers over the last few years for the Banff World Television Festival on this kind of subject.

In answer to your first question, I would say you put the money into the content, not the distribution. We're building the networks; the market's allowing us to build the networks. In a digital world you can't just put it into the creation of content like we do today with things like the Canada Media Fund. You have to go back to understanding that digital media is something different. It's the marriage of Internet technology. It's about application and software development as much as it is about the content itself, because it's the actual interactive packaging around the content. You need to develop skills in that area. You really need content people to start to think about technology, and vice versa, and that starts at universities. So then where do you get the money to do all this and then to promote, through the Internet, that content to world markets so, as I say, you don't have to subsidize it?

I would say the best opportunity you have to get that money in the near future is the next time the federal government holds spectrum auctions, which should be probably early sometime in 2012. You will see anywhere from $1 billion to $2 billion plus, if past is prologue. Surely some of that money that's coming from the communication sphere can go back to actually create things that will ride on the networks that people are bidding on to build.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Simms and Mr. Hennessy.

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

Mr. Wilson, I've listened a couple of times to your comments, and Mr. Galipeau wants to jump out of his seat, but I'll take the questions instead.

I'm kind of perplexed by a couple of your comments, to be perfectly blunt. I find it hard to understand how, when you need to build transit systems, you're suggesting the government shouldn't invest in building transit systems, even though, clearly, large municipalities need these things. We've invested more in passenger rail, and both commuter and passenger rail in the country than any government in recent history. We've invested more in public transit than any federal government in history.

I don't know how you take the homeless off the street or provide homes for families that can't afford them if you're not going to build affordable housing. I don't know how you provide a health care system that responds to the needs of Canadians if you're not going to invest in it. I don't know how you support international trade if you're not going to develop the Pacific gateway. I don't how you support research and innovation if you're not prepared to put stimulus money into science and research. I don't know how you're going to connect people to the Internet if you're not going to invest in rural broadband. I don't how you're going to put blue collar workers in this country to work if you're not going to build things.

So I take some offence to what you're saying when you're suggesting that the government stimulus program is directed in the wrong directions. I completely disagree with that. I also think that you're looking beyond the fact that officials from National Archives, for example, who have already appeared before this committee, said that they have digitized their entire archives. The Canadian Museums Association has come in and said most of their members have virtually digitized all of their displays.

I don't think Canada is a laggard in this as you're suggesting we are. Could we do more? Absolutely, there's an opportunity to do more. I also would not suggest that this in any way reflects or is as significant to this country as the completion of the Canadian Pacific Railway, which was the completion of the impossible dream and which led to Confederation and allowed British Columbia to join this country.

I take some offence at some of the things you're saying. I agree with you that there is significant opportunity here, but I think we should be specific when we're talking about what the opportunity is and we should also acknowledge where Canada is on this, not where we could be but not as far behind as you're suggesting either.

[The Chair, Conservative, Michael Chong]

Mr. Wilson, go ahead.