Canadian Heritage Committee on Oct. 20th, 2016

[Scott Hutton]

When you say “talk”, you're comparing radio to television?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

No, we're talking television. You have these talk TV shows, some of them in Quebec, that fill in the necessary CanCon, and they're pretty cheap to produce.

[Scott Hutton]

The two markets are significantly different, and that is reflected in the act going forward. Francophone Canadians are very close to their stars. They're very close to their TV system. They're very close to stories about them, as we all are, and I think the question of language has helped with that.

Quite frankly, even though it's a smaller market, Canadians actually pay attention and watch. There is a great popularity to all of these shows. They're not being filled with reruns of American programming. They're being filled by programming that is of interest and is actually watched by francophone Quebeckers.

You were mentioning one of the big talk shows. It competes weekly with any program in the nation in terms of numbers of Canadians who tune in to those shows. They compete with the best available in the world. It's always a question of trying to serve Canadians and what's important to them.

Great drama coming out of those networks is also producing numbers that are on the same scale as some of the talk shows.

[The Chair, Liberal, Hedy Fry]

You have one and a half minutes.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Okay, then it's Mr. Maguire.

[The Chair, Liberal, Hedy Fry]

Are you sharing with Mr. Maguire?

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Yes, I am.

[The Chair, Liberal, Hedy Fry]

Go ahead, Mr. Maguire.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thanks, Madam Chair.

I just wanted to ask, as I was asking Mr. Blais, about the digital regulations and that sort of thing. I asked him how they would regulate the digital industry, because in many cases it doesn't pay its way and that sort of thing. It doesn't have the same research that most communications mechanisms have. You don't regulate newspapers, although some of the newspapers have complained that the CBC is their biggest competitor.

One of the areas of concern that I see.... I'm not really in favour of looking at a tax or that sort of thing on some of the media out there today, but if there was a way to regulate, say, Netflix, YouTube and those sorts of things, how would you go about it? Have you thought about mechanisms to do that?

[Scott Hutton]

We have been working on our regulatory frameworks for the last number of years. I know we keep coming back to Let's Talk TV. We're very proud of that exercise, but because of all the changes with respect to digital media, the technology has meant that Canadians consume the product that the industry has traditionally produced in a different manner. They have different expectations. We can't turn the clock back on those expectations, and those changes and those evolutions are all good things for our industries. Our industries are currently being challenged to deliver the best potential content they can, and the successes that we are hearing about occur because our industries are showing up and trying to do their darndest and provide the best that is available out there.

However, the old tools don't work in this environment, so when we've been looking at applying content quotas, that simply won't work. What have we been concentrating on through all of our own findings? We've been looking at what is key in this environment. We've learned that having the best of the best story is key in this environment, so we've made changes to some of our regulations and some of our funding mechanisms to recognize development dollars. We're saying that companies should invest in R and D ahead of production.

For production companies, we're highlighting that they may need to become better capitalized. “Better capitalized” doesn't mean one or two giant corporations that control everything; it is being able to invest in R and D from project to project. An example would be when developing that story, working the story and figuring out what the right platform is for it going forward.

Those are things that we're looking at. Do we know exactly how that's done? Not yet, but we're cluing in to that as being a potential way forward.

[The Chair, Liberal, Hedy Fry]

Thank you. I'm afraid we have to move on now.

Next is Mr. Nantel, for the New Democrats.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you, Madam Chair.

Mr. Hutton, Ms. Laizner, thank you for being with us.

One thing concerns me greatly as I listen to you, just as it concerned me when I listened to Mr. Blais a little earlier. I get the sense that the digital universe is surrounded by a legal void. We're talking about the Internet, more or less. We aren't accusing Netflix or anyone else, but we are talking about a new environment, a new apparatus. In the past, we listened to music on the radio and we watched programs or movies on television. All of a sudden, there is a new instrument, with a new code.

In light of that, I don't understand that there are so many initiatives. I am waiting for the government to ring the bell to put an end to recess and stop the initiatives that are being launched in every direction.

As Mr. Blais said earlier, everything in this system is interconnected. Everyone is connected to everyone else from one end of the chain to the other. Suddenly, one brick decides to leave the wall, then another. At a certain point, the whole building is going to collapse.

I know Mr. Blais sees me as an old crone who is afraid of the future, but that isn't so. The truth is that at this time the whole milieu is shaken. I would say there are victims on all sides.

Moreover, I do not understand that in Broadcasting Regulatory Policy CRTC 2016-224, on the issue of improving coverage, the decision was made that community television stations were more or less optional. In other words, they are left to find funding wherever they can, and young people have only to take their iPhone and go and make videos at CEGEP and put them on YouTube. That is more or less the message they were given.

The fact remains, however, that paragraph 3(1)(b) of the Broadcasting Act refers to “the Canadian broadcasting system [...] comprising public, private and community elements”. It says that the system “makes use of radio frequencies that are public property”. I understand that things have changed a lot, but you were still rather cavalier in your treatment of the community media. It seems to me you crossed the line.

[Scott Hutton]

As you said, the community aspect is an integral part of the the country's broadcasting system. Our decisions were made in the context of a rebalancing at the local level, a sector that was, may I add, experiencing tremendous difficulty. In our consultations, Canadians told us that they were very worried about the disappearance of these local stations, that are also very important for democracy, since they produce news for cities, counties and provinces. We had to find a way to take care of that aspect of things and our decisions were in line with that objective.

So we looked at the big picture. A lot of funds were going to the community level. Our responsibility also includes ensuring that these funds, that are public funds managed by the CRTC and subject to legal requirements, are used in an effective way. We revised our policies to ensure that we got back to basics and to see what was important to the community environment.

The issue of citizen access is what is important. We tightened up our decisions and we will be doing a very careful follow-up to make sure that citizens have access and can produce and express themselves through community stations.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

I understand. But I find that you are not using your courage in the right place.

Earlier I said to Mr. Blais that I get the sense that you are jerking the tiller around rather than holding the steering wheel steadily, following the GPS and heading progressively toward a common vision. There is no common vision, because you are not openly consulting all of the stakeholders involved.

You have to say that you want to apply the regulations properly, but past a certain point, that doesn't work anymore. So you take a somewhat bold decision and you say that perhaps the community environment has gotten enough money.

You had the courage to make a decision. I say courage, but I don't think that's the right word. You have the nerve to make decisions that are at the very edge of legality.

However, there were no interventions regarding the fund. I'm sorry, but you don't have to be a chartered accountant to know that the 5% for television distribution on a Shaw or Vidéotron invoice represents less and less money, since consumers are making more and more use of the Internet.

Why do you not show the same courage when it comes to community television? They are certainly the weakest link in the chain.

[Scott Hutton]

We also had the courage to help community radio with funds generated by the radio industry. This proves that the community aspect is important to us.

You spoke about courage, and consultation. We did a very broad-based consultation. Some decisions are difficult and do not please everybody. But the fact remains that we did do consultations. These decisions were announced in advance. We held several discussions, and discussion forums, before coming to that difficult decision.

The revenue from cable distributors that is channelled to community stations grew enormously over time. The last time we reviewed the funding for the community sector, we set a ceiling. Funds continued to increase in that sector. In the context of the review we concluded this year, we mentioned that we had already determined that there were sufficient funds for the community sector to accomplish its important mission. So we decided to put an end to that and to redirect that growth toward another important area.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

I am well aware of that.

[The Chair, Liberal, Hedy Fry]

You have one minute.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you, Madam Chair.

Of course, these are complex decisions. You had to manage issues in a context where the previous government did not understand the delicate nature and fragility of the cultural edifice. You were alone to manage it. But the current government seems more interested in these issues.

I'd like to direct your attention to an aspect I find troubling.

This morning I was listening to Salut Bonjour and I was pleased to note that they gave an overview of the various rebroadcasting stations, in several areas of Quebec. The Montreal listeners are given an overview. This indicates that there is a news team in these places and that things are going very well.

However, we heard here from a media representative who was, if I remember correctly, from the Toronto Indian community, saying that IP TV was eating into advertising sales, because that service has found a way to insert ads into programs that originate elsewhere.

Is this a worrisome situation? Do you have any control over that?

[Scott Hutton]

Well, that's news to me. Cable distributors, whether for IP TV or others, have to abide by certain rules. One of the first ones is that they cannot interfere with others' signals. I suggest that you contact this person and advise him to get in touch with the CRTC so that we can examine this situation, which is a breach of basic regulations.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

Now we go to Mr. O'Regan, for the Liberals, for seven minutes.

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

Thank you, Madam Chair.

Monsieur Hutton may have inadvertently provided us with a title for our study: “Flat is the New Up”.

[The Chair, Liberal, Hedy Fry]

I like that.

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

It's quite catchy, in a sombre way.

We all know that in every element of the Canadian broadcasting system, whether it's television and specialty channels, radio, or satellite distribution, everybody contributes to the creation and the distribution of Canadian programming.

The CRTC, in 1999 and in 2009, exempted from regulation undertakings that provide broadcasting services over the Internet and operate in whole or in part in Canada. In other words, digital media are not subject to that obligation.

Through the course of this study, we have heard from Friends of Canadian Broadcasting, Rogers, the Canadian Wireless Telecommunications Association, and Cogeco. They are all are very unhappy that foreign over-the-top service providers are not required to collect the same taxes as Canadian services are or to contribute to Canadian programming. Obviously, I'm talking about Netflix. That's what everybody talks about: Netflix, Netflix, Netflix.

I was quite interested to hear your boss, the CRTC's chairperson and CEO, Monsieur Blais, say that it concerns him that Netflix does not contribute. It concerns him as a private citizen. I think he said, “as a private individual”, so as a private individual he's deeply immersed in this issue. What are your thoughts on Netflix being exempt, unlike everybody else?

[Scott Hutton]

Perhaps I will address it in two ways.

One is that I'll go to the “flat is the new up” idea.