Canadian Heritage Committee on Dec. 2nd, 2010

[Peter Bissonnette]

No. They're actually available to our customers. We have perhaps 1.7 million Internet customers who can get right to Netflix. Netflix has a website. If you subscribe, you will receive access to thousands of movies for $8.99 a month, which is a low price. They are starting to get a lot of attention in Canada.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

So they are on the Internet; they do not go through what we refer to as BDUs, broadcasting distribution undertakings? They do not go through Shaw, Bell or Vidéotron.

[Peter Bissonnette]

No.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

It is not on the Internet.

[Peter Bissonnette]

Bell and Telus....

Go ahead.

[Ken Stein]

What happens is you subscribe to Netflix for $9 a month, and then they have shows that you can watch on the Internet.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

That is right, I did recognize some things that I was aware of when he gave me a brief explanation of what he did. Basically, it is however on the Internet.

[Ken Stein]

Yes, essentially.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

All right.

[Ken Stein]

They're using the Internet to provide that service, but it is essentially a broadcasting service. They're broadcasting video content. It's not....

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

So you would like to see the CRTC regulate the Internet?

[Ken Stein]

Yes. And the example we have is that we've faced this situation twice before. We faced this situation with U.S. specialty services like ESPN, Arts and Entertainment, and TLC. The commission at that time said, “We're going to come to a solution here. We can't license these things, but you're only allowed to carry them to the extent that you can also develop Canadian services.” We've accomplished a huge amount with the development of Canadian specialty services.

We were at the reunion of the tenth anniversary of the Food Network. We've done a phenomenal job of building successful Canadian services by being able to combine them with the U.S. services.

One American network--I forget the name at the moment--was refusing to give us broadband rights to actual television shows. So we think this is a way in which the system could become undermined. As we did with the specialty services, we want to make sure that our customers have access to these programs, that they have access to them on Canadian platforms, and that there are opportunities for Canadians as well. We want to be able to achieve those objectives.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Stein.

Thank you, Mrs. Lavallée.

Mr. Angus.

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

Thank you.

It's a pleasure to have you here again. We are in such a different environment from the last time we were all talking on various components of your new industry.

You know the line of questioning we've been looking at. In terms of vertical integration, the question for the New Democrats is about access and competition. We certainly see the power that a reorganized Shaw-Canwest has and that Rogers has in terms of being able to create content and get content out there.

The independent broadcasters are now very small—significant, but a small piece of Canada's broadcast puzzle. They'll be looking for places on your dial—to use a 20th century term—with your own competing content. You have parts of your operation that are directly competing with them for eyeballs, but then they have to rely on you to get access to the same eyeballs.

You say that under CRTC there's a comprehensive framework to protect unaffiliated broadcasters. They didn't give us that impression when they were here. What steps do you take to ensure there's guaranteed access for your competitors?

[Peter Bissonnette]

We just launched two services in the last two weeks—ox.tv, which is an independent specialty service, and Pet TV, which is a small independent service.

By virtue of the regulations now in front of us, we have to launch 21 more unaffiliated programming services by August of this year. We've made a commitment to the commission that it will, in fact, happen. We are currently building the capacity within our satellite and cable systems so that we can carry those. We're obliged to do that by virtue of the regulations, and we are quite happy to do it.

The impression you were left with was that there isn't a sufficient framework of regulations to ensure they get exposure, but there is, in fact.

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

The CRTC, when we met with them, also left the impression that they didn't necessarily have all the tools in their toolbox to ensure compliance. They've raised the need for administrative monetary penalties for companies--not necessarily yours, but it could be somebody else's--who are not in compliance, whether it's on anti-competitive practices or on a whole host of non-compliance issues.

Do you feel the CRTC would be better equipped to do their job if they were given the ability to bring forward administrative monetary penalties?

[Ken Stein]

I think the commission has all the powers now that it needs, and it has exercised those powers over the last number of years. We were quite surprised to hear their comments about the need for those kinds of things.

The latest example we had we felt could be resolved, and was resolved, very quickly by a phone call from the commissioner.

The fact is, with either a five- or seven-year licence renewal, the commission can at any time have a show-cause hearing. Nobody wants to come to a hearing in front of the CRTC on a show-cause basis. We think the commission now has tools to ensure the compliance of the conditions it sets. They are there. They are admittedly regulatory. They are admittedly administrative. But we think proceeding to any basis that would include fines would lock us all up in court processes and bureaucratic processes that would just not be necessary.

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

Well, if they were not using administrative monetary penalties, they'd still want to be in a position to make sure that everybody is in compliance.

I'm not singling you out, but you happen to be here, so I get to ask you the questions.

You're suggesting that you'd prefer to have your financial and regulatory burden lessened, and from your point of view that makes perfect sense. From our point of view, in terms of the public interest I'd like to know how it serves us. If the CRTC doesn't have access to information concerning compliance, how much Canadian content there is, how much local production is happening, how are we going to know that you're fulfilling your part of the bargain?

[Peter Bissonnette]

We think there are always, as there are in life, reasonable positions, and we've learned to live in a structure in which we report, and we're quite happy to do that. But as an example, I think Ken mentioned that as a part of the new media broadcast distribution, we face a requirement now to fill out forms that frankly don't really provide any benefit to the system. What they're trying to get to is what I'll call the exempt group; it would be of much more interest to know what's happening with them as opposed to what we're doing.

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

I'm interested in this suggestion about the new competition that's coming out from Hulu, Netflix, Google TV, because I'm not sure I see exactly how you bring them into the system or how you shut them out of access to your cable viewers. What concrete steps would you take to address these new broadcast opportunities?

[Ken Stein]

First of all, we're just starting to look at this. We think what we would need to do is work with the government and with others who are interested, perhaps the parties themselves, to see how we could make sure that this was done in a way that is consistent with the development of the Canadian system.

We're not trying to say they shouldn't be here. We're basically trying to say that they should come in on the same terms as any other company operating in this country, accepting the terms and conditions and the legislation that exists in Canada, whether it's a mining company, a transportation company, or a company that's offering video content.

That's what we're interested in pursuing. We're not trying to be draconian about it; we're just saying that reasonable-minded people can sit around and try to figure out a way to do this, as we've done in the past with speciality services and as we've done in the past with satellite services.

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

Thank you very much.

[The Chair, Conservative, Michael Chong]

Thank you, Mr. Stein and Mr. Angus.

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chairman.

And thank you to our witnesses for appearing today. I appreciated hearing your brief.

First of all, I want to congratulate Shaw on the successful purchase of the Canwest assets and I want to commend you for keeping it an entirely Canadian company. There was a time when it looked as though there might be some partners who would not be Canadian.

The chair of the CRTC has accurately described this as a “stable ownership” group emerging from “a period of uncertainty”. It's an entirely Canadian company with significant Canadian commitments, and I commend you for that.

I want to go back to Mr. Simms' question first. The CRTC talked about a period of uncertainty. One of the things that was pitched during this period of uncertainty was a television tax on Canadian consumers called “fee for carriage”. That is currently before the courts. You have articulated—I think all members who have come forward have, in fact, articulated—a position against it, with the one exception of Mr. Sparkes, who was still beating the drum for it.

Despite the fact that this is something that the former Canwest, now Shaw Communications, would stand to benefit from, you're standing on the side of Canadian consumers and saying no fee for carriage. Is that correct?

[Peter Bissonnette]

That's correct.