Good afternoon, Mr. Chair and members of the committee.
When I presented to you a few weeks ago on the topic of the future of the digital media, I made the point that without clear and effective safeguards, unprecedented vertical integration could constitute the biggest threat to access, diversity, and choice in broadcasting. This is true not only for the public but for independent producers, broadcasters, and even distributors like Telus, which has itself invested over $2 billion in our new Optik IPTV service to compete with the cable industry. So I'm pleased that this committee and the CRTC are taking a closer look at this.
In our view, the Canadian broadcasting system has been successful in providing a diversity of programming because it has provided both foreign and domestic content. In large part, that's due to measures that ensure that foreign programming helps to contribute to fund Canadian content. That's an important point when we talk about exclusivity. The system has also been successful in providing choices of platforms, like cable and satellite, now Optik TV, and in the future Internet and mobile platforms. We think this competition has created unprecedented choice and has helped to keep prices lower than they would otherwise be.
We believe it's of fundamental importance that consumers continue to have access to the content they want on whatever platform they choose, without restriction. While the media concentration and vertical integration of content and its distribution may bring some benefits to the system, it also has the potential, absent of safeguards, to cause significant harm if measures aren't taken to guard against abuses of market power, to counter the decisions of vertically integrated companies to promote their carriage business through exclusive content, or unduly preferential arrangements at the expense of their content operations, thereby reducing revenues flowing to the Canadian broadcasting system.
So we're calling on clear rules upfront to prohibit such discriminatory practices. First, as we suggested last time, exclusive content arrangements must continue to be prohibited on all distribution platforms. We think the easiest way to do that is to begin by categorically stating that exclusive carriage of foreign or Canadian broadcast content is prohibited over the Internet and wireless delivery, just as it is today over broadcast and video-on-demand.
We think the prohibition on content exclusivity must apply to both foreign and Canadian content, because revenues from the most popular content, both foreign and domestic, create the resources to support the system overall. If revenues for high-value content are reduced by exclusive arrangements to help sell more cellphones, then the pool of moneys used to support Canadian content is equally reduced.
Second, we believe that broadcast content now held by a vertically integrated company must be made available to other distributors and carriers on fair and reasonable terms. Undue discrimination, we believe, on pricing, quality, access, and other terms has to be clearly prohibited to promote competition and to lower prices. What constitutes such undue discrimination and how complaints will be resolved must be made clear in advance of such complaints.
For example, on pricing, we suggest a vertically integrated provider might agree to make content available on a non-exclusive basis, but only at prohibitively expensive and thus anti-competitive prices. So we suggest the CRTC should set out in advance how it will determine pricing issues in such a way as to discourage attempts to overprice competitors. The commission should establish that disputes would be resolved through timely and binding arbitration, where the arbitrator would refer to data concerning historical prices to see if things have changed in a vertically integrated environment.
Third, we think timely compliance with the rules is essential. Neither of the first two rules makes much practical sense if enforcement is delayed to the point at which access or content loses its relevance. For example, getting access to streaming hockey games on mobile phones once the baseball season has started is not going to help consumers on another cellphone plan, or competition in general.
Accordingly, the CRTC must have the ability to act quickly to resolve disputes, and some form of interim relief must be ensured. We think that if binding commercial arbitration with clear timelines is used, there needn't be a delay in getting access on an interim basis to that content.
Fourth and finally, vertical integration requires special firewall measures to ensure the confidentiality of information between the content and distribution sides. This is required because negotiations for content acquisition require significant sharing of competitively sensitive information. For example, when Telus's television distribution service, Optik, negotiates for the carriage of a specialty television service, it is often required to provide details of its plans to distribute the service—in what package, with what marketing incentives, etc.
Prior to vertical integration, all this competitively sensitive information was guarded by non-disclosure agreements. Now, with vertical integration, the CRTC must step in to enforce some form of structural separation that will ensure that the information we provide to Global or CTV, or to TVA, is not immediately shared with our carriage competitors, Shaw, Bell, or Vidéotron.
Mr. Chair, committee members, let me conclude by suggesting that what we are proposing is not radical; it builds on the rules that already exist. Many of these rules are already explicit or implicit in the CRTC regulations. But what non-integrated players and consumers need in terms of access is greater clarity and timeliness to limit disputes. We think that's a very small price for the vertically integrated carriers to pay for such unprecedented consolidation.
That finishes my comments, and I would be happy to answer any of your questions. Thank you.