Evidence of meeting #30 for Canadian Heritage in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was broadcasters.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Konrad W. von Finckenstein  Chairman, Canadian Radio-television and Telecommunications Commission
Rita Cugini  Acting Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission
Scott Hutton  Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
Suzanne Gouin  President and Chief Executive Officer, TV5 Québec Canada, Independent Broadcasters Group
Martha Fusca  President, Stornoway Communications
Bill Roberts  President and Chief Executive Officer, ZoomerMedia Limited, Television Division, Independent Broadcasters Group
Mike Keller  Vice-President, Industry Affairs, Newcap Broadcasting (Jim Pattison Group), Newcap Inc.
Monique Lafontaine  Vice-President, Regulatory Affairs, ZoomerMedia Limited, Independent Broadcasters Group
Joel Fortune  Barrister and Solicitor, Joel R Fortune Professional Corporation, Independent Broadcasters Group

3:55 p.m.

Conservative

The Chair Conservative Michael Chong

Okay. Mr. Angus--

3:55 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

You are trying to bring a balance between having healthy innovation in the industry and at the same time protecting the public and trying to make sure the industry players do not abuse their economic position. But both of those are okay--not just one but both.

Here, you've mentioned the vertical integration, and what you're talking about is contract exclusivity. Is that a likely threat? Is it really...? That's a big gamble to take.

For example, let's take what you're saying. You mentioned hockey, I believe, and then you said you can only watch hockey if you have a Bell phone. That means (a) Bell has to pay for the hockey rights, and (b) it does not resell them to anybody else but keeps them to itself for a guaranteed income in the hope that people will leave their carrier in order to come to them to watch hockey. That's a big gamble. If their case is wrong, they lose a lot of money, so it's a strategy that few people pursue.

Secondly, one of the reasons we called the hearing is exactly for that reason: to look at these issues to see if they are real. Are they likely to occur? Are the tools we have sufficient to deal with them or do we need to establish different rules? That's precisely why we have called the hearing.

3:55 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you very much, Mr. Angus and Mr. von Finckenstein.

Mr. Del Mastro.

3:55 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Thank you very much, Mr. Chair.

Welcome to the committee, Chair von Finckenstein, Mr. Hutton, and Ms. Cugini.

I'm actually very encouraged by your comments, Mr. Chairman. I think there's a recognition on your part that Canada is not an island and that we can't simply pretend that the global change that's occurring with respect to broadcasting.... You've correctly identified that this device I have here might pull up Canadian content, but it could also pull up content from anywhere in the world. That's the world we live in now. Broadcast is not limited to how far we can push an FM or AM signal, or indeed a television signal, from a tower. It's global.

I actually look at vertical integration as an opportunity. I think what's happening is very interesting. It's obviously happening very quickly. We've seen the purchase of Canwest by Shaw. Obviously, some time ago, Rogers bought the assets of Citytv. We see that Bell is purchasing the CTV assets. But this isn't just a Canadian phenomenon; this is occurring around the globe.

I actually see an opportunity here, because if we have these large, very powerful stages that will allow Canadian content to extend beyond simply our borders, then rather than broadcasting something five miles past Buffalo, we're actually broadcasting to the world.

Can you indicate to the committee the Canadian content rules we currently have in place? It is your intention that these Canadian content rules, regardless of vertical integration, will be steadfastly supported by the CRTC. Is that correct?

4 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

Yes, of course, but they do apply to broadcasting. You have to remember that. What you're talking about--that little phone you have in your hand--is not broadcasting. We actually went to court with a reference and said, “Please tell us to what extent we can apply those rules to the Internet.” It's not that we intend to and so on; it's just so we know whether we have the capacity to do it or not. The court quite specifically said, “Under the present Broadcasting Act, no, you cannot deal with those issues”, etc.

Now, most of the content that's seen nowadays on those phones and so on is still produced for broadcasting in the first place, and then repurposed for it. To that extent, if it's the main source of production, that being broadcasting, then yes, we apply those Canadian content rules, and we'll continue to apply them.

4 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Thank you.

The new Canada media fund, which was established just over a year ago, has been well received. The government is making a significant contribution toward that, as are the BDUs. I believe the total fund was about $340 million this year, give or take, for the creation of Canadian content.

I am concerned, however, that it could be eaten away at over time. Specifically, there are two significant changes that have occurred recently in Canada: the recent introductions into Canada of Netflix and Apple TV. Did the CRTC consider those introductions into Canada and whether they, along with BDUs, should be contributing in kind toward the creation of Canadian content?

4 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

No, we did not. They do not amount to broadcasting, as I've just said.

What is Netflix? In effect, Netflix is a way of renting videos over the wire rather than from a store. That's all it is. It's a Blockbuster in the sky, if you want. Apple TV is a means of buying a product from Apple on your computer and then sending it to the TV screen in front of you. That's totally out of the realm of the things we regulate. Nobody asked us to consider it and we didn't consider it because it just doesn't fall within our jurisdiction.

4 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Okay. But I would suggest, though, that over time.... For example, I've been to a local company, Ericsson, which is working on incredible technology to broadcast wirelessly over the Internet. They can actually broadcast video images, which I had no idea would even be possible at this point.

It's quite likely that in the future people won't need to be hard-wired through cable to get programming. They certainly won't need to be hard-wired to watch movies or do otherwise. My concern is that when you have a system in which BDUs are contributing to the creation of Canadian content, but Internet broadcasters aren't, that system isn't sustainable over time.

4 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

Yes. You know, if you want to do something about it, undoubtedly you can, but it has to be done through legislation. It can't be done through the CRTC.

4 p.m.

Conservative

Dean Del Mastro Conservative Peterborough, ON

Okay.

Thank you very much.

4 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you very much, Mr. Del Mastro.

Madam Dhalla.

4 p.m.

Liberal

Ruby Dhalla Liberal Brampton—Springdale, ON

Thank you very much. It's a pleasure to be here, filling in for my colleague Ms. Bonnie Crombie, and it's a pleasure to see you again, Mr. Chair.

As you know, I come from the riding of Brampton--Springdale, which has probably one of the largest multicultural and multilingual communities in the country. From working with many of these constituencies and community organizations, we've had a chance to see that many of these community groups, and ethnic communities in particular, are not necessarily watching the mainstream channels. They are watching their own television programs in the evenings and on weekends, listening to their own radio programs, and reading newspapers in their own languages, to find out what's happening both within Canada and in their particular homelands.

When you talk about diversity of voices and ensuring that the CRTC is there to reflect that changing media landscape, what types of opportunities, outreach strategies, or initiatives has the CRTC undertaken to reach out to some of these groups? Do you have a lot of these media outlets approaching you to get licensed?

4:05 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

First I'll say that the diversity of voices is meant to make sure there are no restrictions...you're looking at the other end now, in terms of fostering, and that doesn't really fall under diversity of voices. But we do have a multilingual policy to foster broadcasting in certain languages, which is what you're talking about, primarily.

Maybe my colleague Ms. Cugini can walk you through it.

4:05 p.m.

Acting Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission

Rita Cugini

As you know, especially in the Toronto area, we have two over-the-air multilingual, multicultural broadcasters that are available to everyone, under the name of OMNI. As well, on the specialty side, we created 10 years ago the category B licence, which is free market entry with a maximum of 35% Canadian content. That particularly addresses the needs of the multicultural, multi-ethnic community, because a lot of the programming can come from places outside of Canada. With the 35% Canadian content, they can produce programming, in a language or in English, that is relevant to that community.

I don't know what the exact number is, but we have an incredible number of them, and not only category B licences, but category Bs that have launched and are carried by the major cable companies.

4:05 p.m.

Liberal

Ruby Dhalla Liberal Brampton—Springdale, ON

Are there a number of people who apply for category B licences who are also refused by the CRTC for various reasons?

4:05 p.m.

Acting Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission

Rita Cugini

If they are refused, it's because it's an incomplete application, or because it is deemed to be competitive with something that currently exists under what we call category 1, which is a higher benchmark or something that is currently available on analog. But we could receive as many applications as come in, for example, in a third language, and all of those under category B could be licensed if they don't compete with anything that currently exists.

I would also like to say that not only is diversity well reflected in what the commission does with the licensing of third-language programming, but we also have regulations and policies in place that ensure the mainstream broadcasters also reflect the multicultural reality of the markets they serve through their mainstream programming.

4:05 p.m.

Liberal

Ruby Dhalla Liberal Brampton—Springdale, ON

You have requirements for Canadian content regardless of the category of licence and you also have requirements, as you said, for some of the mainstream channels to highlight some of the diversity of the country. What types of penalties are in place for any type of infringements?Also, what types of safeguards do you have in place?

4:05 p.m.

Acting Vice-Chair, Broadcasting, Canadian Radio-television and Telecommunications Commission

Rita Cugini

All the broadcasters, by condition of licence, are obligated to comply with the Canadian Association of Broadcasters code of ethics, which deals not only with issues of stereotyping but sex role stereotyping as well. As I said, these are enshrined in their conditions of licence.

It also raises the issue of what I talked about earlier, and that is administrative monetary penalties. Currently when a broadcaster is in violation of one of those codes they are investigated by the Canadian Broadcast Standards Council. If they're found to be in violation, they have to say so on the air...I think it's four times.

The CRTC, at the time of licence renewal, may give them a shorter licence renewal period. If it's particularly egregious, we could also choose not to renew, but that could take up to seven years. If they violate any one of these codes in their first year of operation, it will take us seven years to be able to do something, because we can only do something during the time of renewal.

4:10 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Madam Cugini.

Monsieur Pomerleau.

November 18th, 2010 / 4:10 p.m.

Bloc

Roger Pomerleau Bloc Drummond, QC

Thank you, Mr. Chairman.

I would like to thank all three of you for being with us again today.

Mr. von Finckenstein, you alluded to vertical integration. In your brief, you say, and I quote:

There is also the possibility that the distribution arm of an integrated company may give undue preference to services offered by its programming service arm, to the disadvantage of outside providers. [...] In the event that a preference has been demonstrated, a reverse onus is placed on the distributor to show that it is not an undue preference.

I am a neophyte in this area: I have never even attended a CRTC hearing. How can a distributor demonstrate that it wasn't undue?

4:10 p.m.

Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission

Scott Hutton

We ask that question of a distributor because the distributor is the one who deals with all the other services. He has the information that can help us. He can let us know whether he has given a preference to someone in that context. For example, if people working for one service say the rate is clearly prohibitive, we can ask them and they will tell us what rate is being paid by everyone and whether it's similar for this type of service. That is a simple example.

4:10 p.m.

Bloc

Roger Pomerleau Bloc Drummond, QC

Thank you.

You are planning to hold hearings on May 9. I have another neophyte question. Can you tell me what form these hearings take? Is it a little like what happens here, where industry representatives and the public appear and present briefs?

4:10 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

Hearings are public. We had a hearing in Gatineau yesterday, and your colleague, Ms. Lavallée, was in attendance. There was a theme. A notice was published indicating that we would be talking about vertical integration and its potential effects, with a view to determining whether the CRTC's current tools for resolving issues are adequate. We invite everyone to attend. People send in written briefs and let us know whether they wish to make an oral presentation. We listen to what they have to say, we ask questions, and so on. At the end, based on the information received, we decide whether or not there is a problem. It is possible that some tools need to be clarified or changed. If it's something that we have no control over, we will then ask the government to give us the legislative powers we need to tackle the issues.

4:10 p.m.

Bloc

Roger Pomerleau Bloc Drummond, QC

You want to arrive at a much better defined policy which will really tackle the issues.

4:10 p.m.

Chairman, Canadian Radio-television and Telecommunications Commission

Konrad W. von Finckenstein

We did the same thing four years ago, when CTV bought Shaw and, after that, when Canwest bought Alliance Atlantis. We saw that there were broadcaster mergers occurring. What were the implications of that for the diversity of voices? Did we have rules in place? Were they adequate? Was there something we should do? Our fear was that everyone would be controlled by two or three persons. After holding consultations, we devised the rules I referred to at the beginning of my presentation. The mechanisms were new. For example, we considered the idea that a key broadcaster does not control everything; one company should not own all the daily newspapers, the radio station and the television station at the same time, in a single market. We said no. At least we have the right to two types of opinion media. That also applies to the small cities and towns.