Evidence of meeting #43 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

Scott Hutton  Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission
Namir Anani  Executive Director, Policy Development and Research, Canadian Radio-television and Telecommunications Commission
John Keogh  Senior General Counsel, Canadian Radio-television and Telecommunications Commission

3:30 p.m.

Conservative

The Chair Conservative Michael Chong

Welcome to the 43rd meeting of the Standing Committee on Canadian Heritage. Today is Monday, February 28, 2011.

We're here pursuant to Standing Order 108(2) for a study of the implementation of Canada's transition to digital television.

In front of us today, from the Canadian Radio-television and Telecommunications Commission, we have Mr. Hutton, the executive director.

Welcome.

We have Mr. Anani, the executive director of policy development and research.

Welcome.

We also have with us Mr. Keogh, senior general counsel.

Welcome.

We'll begin with an opening statement.

3:30 p.m.

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

Thank you, Mr. Chairman.

I'll skip our introductions.

On August 31, 2011, Canada will join the growing list of countries around the world that have made the transition from analog to digital television. The commission established this deadline in 2007 after consulting widely with the broadcasting industry and the public.

At the time, the Federal Communications Commission had already announced a date for the transition south of the border. There was a consensus that Canada should take the opportunity to learn from our neighbour's experience and follow relatively quickly in its footsteps.

The industry also urged us to provide regulatory certainty by setting a firm date. This afternoon, we will review the progress we have made over the last four years to facilitate an orderly transition for Canadians. We will also provide an update on the industry's preparations.

Let me begin by addressing the following question: Why should broadcasters make the transition from analog to digital television?

First and foremost, spectrum is a scarce public resource that must be managed as effectively as possible for the benefit of Canadians. Since the 1950s, analog broadcasting was seen as the most effective way to provide televised information and culture to viewers. With digital technologies, however, the same number of television stations can operate using much less spectrum, and even broadcast multiple services on a single channel. Another important consideration is that we share spectrum with the United States, which went digital nearly two years ago. In order to harmonize spectrum uses, Canadian broadcasters will be required to vacate channels 52 to 69. Some of these channels have been reserved, on both sides of the border, for public safety services. The government has set aside another portion of the spectrum for advanced wireless services.

Canadians have been enthusiastic adopters of smartphones, tablets and other mobile devices. These devices are being used to run more bandwidth-intensive applications, whether it's to make a video phone call, stream a TV show from the Internet or keep in touch with the office while travelling abroad. As we move forward in the digital economy, innovative applications will place increasing demands on mobile broadband networks. A wireless spectrum auction is planned for next year, which will help ensure Canada stays at the forefront of this fast-moving environment.

Finally, the transition will provide Canadian producers and broadcasters with the infrastructure they need to reach viewers with crystal-clear programming in high-definition. This is a key competitive advantage for our broadcasting system, particularly in an age where content from around the globe can be watched on different platforms.

The digital transition poses an interesting challenge for a country the size of Canada. While the majority of our population is clustered along the U.S. border, many Canadians live in rural or remote areas.

The industry expressed concern that forcing every local station to convert to digital would not be a desirable or practical scenario. As I explained a moment ago, we have no choice regarding the spectrum that needs to be vacated for harmonization purposes; the transition is therefore mandatory for all television stations operating on channels 52 to 69.

The commission also identified 31 large markets where stations will be required to stop broadcasting in analog regardless of which channel they occupy. They include provincial and territorial capital cities, markets with a population over 300,000, and markets where there is more than one local television station.

That being said, we are not insensitive to the fact that it may be more difficult for broadcasters in smaller markets to upgrade their transmission equipment. Stations that are on channels 2 to 51 outside the mandatory markets will have the flexibility to continue broadcasting in analog. Likewise, stations operating on channels 52 to 69 in these markets will be able to hold off on converting their transmitters as long as they move their analog signal to one of the lower channels and there are no interference issues.

Through the establishment of mandatory and non-mandatory markets, the transition has become a manageable task. Rather than having to convert over 700 transmitters, broadcasters need only worry about the 193 transmitters operating on channels 52 to 69 and located in mandatory markets.

In the past few months, we have approved over 100 applications, making it possible for broadcasters to put up digital transmitters or move their signal down on the dial.

We are confident that broadcasters were given enough time to prepare and will be ready by August 31 at the latest. The operation of full-power analog transmitters in analog markets will not be authorized after that date.

I would like to make it clear that the transition will not cause any local television stations to close. These stations will continue to produce local programming for their home communities. However, transmitters that rebroadcast a station's signal into other communities may no longer be in operation after the transition.

Namir.

3:35 p.m.

Namir Anani Executive Director, Policy Development and Research, Canadian Radio-television and Telecommunications Commission

Thank you, Scott.

While the transition represents a milestone for the broadcasting system, the majority of Canadians won't even notice a change on the morning of September 1. That is because 93% of households currently subscribe to cable or satellite television services.

The only viewers who may be affected are those who rely on rabbit ears or an outdoor antenna to receive their television services. How many of these viewers are there? To be on the safe side, we have included every household in our calculations even though some of them may not have a television set.

In markets where the transition is mandatory, approximately 900,000 households may have to buy a converter box. Some models can be purchased for as little as $30. In non-mandatory markets, as many as 31,500 households could potentially lose access to free over-the-air television. Satellite television is often the only alternative to an over-the-air signal in these smaller markets. A receiver and dish would cost each household $300 plus an installation fee.

Now that we have a better understanding of broadcasters' plans, it appears that our initial estimate of the affected households in non-mandatory markets was overstated. The majority of stations on channels 52 to 69 will stay on the air by moving to a lower channel. As a result, fewer households than previously thought will be at risk of losing access to their local television stations. We are reviewing the applications that we have received in order to provide a more accurate estimate.

The Commission has taken additional steps to ensure viewers maintain access to the local and regional television stations that are currently available over the air. Last summer, we changed our regulations to exempt cable and satellite companies from having to distribute the full basic television package. This change was made so that they can offer affected households a package of local and regional stations at no charge. Certain cable and satellite companies have expressed interest in this option.

For example, we permitted Shaw Communications to direct some of the tangible benefits resulting from the Canwest Global transaction to assist with the digital transition. Shaw will spend $15 million to provide and install satellite receivers and dishes to viewers whose local stations decide to drop their over-the-air signals. Shaw will also have to offer these viewers—which include those living in official-language minority communities—a free local package.

For the transition to be successful, affected Canadians must not be caught by surprise on the morning of September 1. We believe they can best be informed through a national education campaign led by the industry.

Broadcasters in particular have a vested interest in ensuring that consumers understand the impending changes to their television services, such as the date and time a station will stop broadcasting in analog. They also need to know where they can obtain converter boxes and satellite dishes, as well as about the existence of free local packages.

Although many broadcasters are currently developing public service announcements, we will soon issue new rules making this a formal requirement. The new rules will also include our final determination on the information broadcasters should make available on their websites.

Public service announcements should start airing as soon as possible, since some stations will be switching to digital before the August 31 deadline.

In closing, I want to underline the fact that the vast majority of Canadians will see no change to their television services as a result of the digital transition. The Commission has therefore been collaborating with broadcasters, distributors and government officials with one objective in mind: to find solutions so that viewers maintain access to the television stations they currently watch over the air.

Everyone has made significant progress toward this goal, especially in the last year. We have every assurance that the industry will be ready on time and over-the-air viewers will be well informed. We would now be happy to answer your questions. Thank you.

3:40 p.m.

Conservative

The Chair Conservative Michael Chong

Thank you, Mr. Anani.

We have 50 minutes for questions and comments.

Mr. Rodriguez, you have the floor.

3:40 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Thank you, Mr. Chair.

Good afternoon and welcome, Mr. Hutton.

Why did you chose August 31?

3:40 p.m.

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

Scott Hutton

In broadcasting mode, the year begins on September 1, when stations launch their new program schedules. So, August 31 represents the end of the year.

3:40 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

What percentage of people still use antennas?

3:40 p.m.

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

Scott Hutton

Basically, 93% of Canadians subscribe to a television service, be it cable or satellite. We estimate that about 7% of Canadians use...

3:40 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

So, 7% of the population use antennas?

3:40 p.m.

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

Scott Hutton

Yes, and that even includes people who may not have a television.

3:40 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

I often hear conflicting opinions about this 7%. Sometimes, people tell me this figure is made up of folks living in remote, hard-to-reach regions, but I have also heard that it is made up of young people who, even in the cities, refuse to even consider cable television service. Tell me a little bit about this group's demographic profile. Do you know much about it?

3:40 p.m.

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

Scott Hutton

There is no particular demographic profile. It's more general than that. There are people living in rural areas and others living in urban areas. There are also people who can afford a television set, but choose not to have one. We have not come up with a specific demographic profile corresponding to those who do not subscribe to cable or satellite services.

3:40 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

So it's normal that I am unable to really put my finger on it.

3:40 p.m.

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

Scott Hutton

Exactly. This group consists of Canadians from all walks of life.

3:40 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

It includes a small number of people in remote regions as well as in the cities. I have also been told that young people, who are much younger than myself, are not at all interested in this service, since they can use the Internet to access content. With the arrival of Netflix, many people, especially young people, say that they are no longer interested in cable TV. Have you also noticed this shift?

3:45 p.m.

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

Scott Hutton

Yes. That's the information that has been given to us, but so far, the figure of 7% is not in relation to any specific population groups.

3:45 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

I don't know if you will be able to answer me, but I would like to know whether the Internet's impact on the broadcasting and consumption of content is noticeable.

3:45 p.m.

Executive Director, Policy Development and Research, Canadian Radio-television and Telecommunications Commission

Namir Anani

Clearly, we are closely monitoring the rapid evolution currently taking place in the new media environment. We mustn't forget that we exempted new media following a meeting we held some two years ago. However, we have established a working group in order to be able to closely monitor this environment. We are keeping a close watch on this situation.

3:45 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Okay.

Shouldn't private network broadcasters begin launching awareness-raising and educational campaigns as of March 1?

3:45 p.m.

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

Scott Hutton

We have announced that industry people should work together to inform Canadians of the changes. We are working closely with them.

3:45 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

We were told that the ad campaigns would begin airing in March 2011, but this has still not happened.

3:45 p.m.

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

Scott Hutton

March begins tomorrow. We are currently implementing regulations to ensure that broadcasters launch their campaigns as soon as possible.

3:45 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

You are telling us that you have time, since the initiative is only supposed to begin tomorrow. Is that right?

3:45 p.m.

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

3:45 p.m.

Liberal

Pablo Rodriguez Liberal Honoré-Mercier, QC

Do you think broadcasters will be ready the day after tomorrow or next week?