Canadian Heritage Committee on Feb. 25th, 2016

[Prof. Dwayne Winseck]

I'm sorry, of...?

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Media concentration and vertical integration.

[Prof. Dwayne Winseck]

I think I spent much of my presentation trying to lay that out, and so I'm not quite sure if I can do much more of a job.

What I'm trying to suggest is that the levels of concentration have become significantly higher in a number of sectors across the media as a whole, relative to historical standards. By commonly used standards and by international standards, we have an issue. We have those who are controlling the pipes and who are trying to exercise control over the content.

For example, Videotron's Unlimited Music service has not folded in commercial radio stations in general, or the CBC, so here we have a carrier acting as an editor, as opposed to doing what a common carrier is supposed to do. We have examples of direct editorial influence across the Bell TV stations on at least three occasions. We have editorial meddling at the Postmedia group and we have concerns that the Sun Media chain and the Le Journal de Montréal and TVA all have been used as a launchpad for a political career.

[Voices]

Oh, oh!

[Prof. Dwayne Winseck]

I'm not quite sure what more evidence you could want.

[Dan Vandal, Liberal, Saint Boniface—Saint Vital, MB]

Thank you very much.

Mr. Demers, I would like to ask you the same question. In your opinion, what is the biggest challenge our country's media are facing?

[Prof. François Demers]

By far our biggest challenge is to replace the heritage that the presence of a certain number of media represent. We are talking about concentration and a small number of players. These players are on a diet and to some extent they will have to be replaced while they are attempting to survive by reducing their scope and size.

To me, our challenge is the number of providers who are dealing with a system we have inherited, where a certain number of large players were protected, in a way. These large players are trying to survive in a universe which is now open to all sorts of other content and other producers. This content reaches us through telecommunications, cable broadcasting, satellites and the Internet.

[The Vice-Chair, Conservative, Larry Maguire]

Thank you, Mr. Demers.

We will move now to a three-minute question period from Mr. Nantel.

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

Thank you, Mr. Chair.

You are correct, Mr. Demers. Today, providers of broadband Internet like Videotron are beginning to find that Netflix is a drain on their network. In prime time, at 7:15, we are talking about a 32% use of the bandwidth. That is a lot. As you said, our big players are weakened or are facing new challenges.

Ms. Auer or Mr. MacKay, what is your reaction to Mr. Winseck's analysis? Has there been too much freedom in the appropriation of funds? What do you think of the way our system has been managed? I would like to hear your reaction because our country's market is characterized by one thing. As compared to what happens in France, Brazil, the United States or elsewhere, here we must protect cultural diversity. A telecommunications or communications enterprise in Canada does not function like a business that sells lawnmowers.

Could you name a country as an example in this regard? Mr. Winseck's analysis is based on a business point of view and is certainly focused on the needs of Canadians to obtain information and the kind they want, whether that be tabloid news or more serious information.

Ms. Auer, what do you think?

[Monica Auer]

I'm not aware at this time of any research that would establish that there's any other country doing a particularly better job than Canada. On the other hand, Canada has always been uniquely positioned because of its proximity to the United States. That was the genesis of the early acts. That still seems to be the current genesis of the 1968 act and the 1991 act.

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

I could also put the question to Mr. Winseck.

A lot of people who arrive in Canada and observe our market find it quite complex. As Mr. Demers said, our big players are protected. They are giants, but they are more fragile than before. The people who managed these businesses sometimes made mistakes or abused power; sometimes they were good players.

In your opinion, how can we find a balance? We know that there is no simple solution and that no one will leave here knowing exactly what to do. It is very complex, but in addition there is a layer of complexity that is linked to protecting our cultural diversity, wouldn't you say?

[Prof. Dwayne Winseck]

I think we have quite a few tools in the tool box right now, so we don't need to reinvent the wheel. We need to use what we have more effectively.

Look at the Telecommunications Act and the Broadcasting Act, for example. I think they're actually quite usable. There are sections of them that I would like to see used more. For example, two sections in the Telecommunications Act and Broadcasting Act respectively—section 4 in each, if I remember correctly—basically say that these two pieces of legislation shouldn't talk to one another. That doesn't make any sense, so get rid of section 4.

In the Telecommunications Act, sections 27 and 36 are basically the cornerstones of common carriage. One is an anti-discrimination principle in section 27 on the basis of price. Section 36 is on editorial control and influence over the meaning of contents that flow over networks. Section 36 hasn't been used except for one case since the 1990s, as far as I know. It was used in a small case in the 2000s. We ought to use it a lot more.

If we use this idea of separating the medium from the message, the carriage from the content, and we let the big players have their content, we can say that they have to buy access to the pipes on the same terms that everybody else does, instead of using them and saying to them, “Look, you own the pipes, but because we have this grand idea of what we want Canada to be, could you please gerrymander the use of your pipes to kind of fix the outcome in favour of Canada and Canadian content?”

This is a huge problem. We should open up the pipes for all Canadians to use on non-discriminatory terms.

[The Vice-Chair, Conservative, Larry Maguire]

Thank you, Mr. Winseck. We'll have to move on.

We've come to the end of that part, and I'm going to turn it over to Mr. O'Regan. Would you like to have a question as well?

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

What time do I have, Mr. Chair?

[The Vice-Chair, Conservative, Larry Maguire]

You have five minutes.

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

First of all, thank you all very much for your work and for your critical analysis.

In our last meeting, an official at Industry Canada told us of a thing called the Internet, which provides us with both competition and innovation. While I was comforted to hear that, I did not find it particularly helpful.

I did find your analysis and your thinking quite helpful. While the industry itself has gone through a massive amount of disruption, I find that there has been very little disruption in public policy to foster that, to reflect it, and to regulate it properly, as it should be, in the interests of Canadians and in the interests of our country.

Having said that, I want to provide all of you with an opportunity to continue with some of your disruptive thinking.

Let me begin with you, Professor Winseck. I would love to hear more about your thought of merging the CBC with Canada Post. Is there anything else you'd like to add to that notion, or do you have any other disruptive thinking? I am starving for it, to be honest.

[Voices]

Oh, oh!

[Prof. Dwayne Winseck]

I haven't fleshed it out yet, but the idea of a Canadian Communication Corporation has a nice ring to it. It's this idea of using the postal system as a general purpose delivery network.

That was the case with the United States post office from its inception in 1792 all the way through into the 20th century. Some people have done analyses and suggest that the level of subsidies in current dollars was in the billions of dollars per year. One telling sign was that 95% of the weight of the postal delivery system was occupied by newspapers, but they accounted for just 5% of the revenues. It was a huge subsidy given by the United States government under the guise of the free press because it wanted to cultivate a vibrant press. What it did was give these enormous subsidies to the press by way of a general delivery platform.

What I'm thinking is that somehow we try to update that through the century that has passed and see if there's anything we can think about with respect to that today. We have post offices throughout this country, so let's put wireless masts on top of all the post offices. The post office could be a kiosk for getting your cellphones. The post office has a culture of being a common carrier. The idea is that you would have structural separation between the CBC, with the content side of it, and the delivery side of it. It would be similar to what I described with the structural separation in the vertically integrated private companies. It could be something like that.

One thing I've heard a couple of times here is that Winseck is against subsidies. I don't want to say I'm against subsidies. I want to make it very clear that I'm squarely behind subsidies for the CBC and for the general purpose content fund. This is because news is a public good.

I tried to make that point clearly. This is not Dwayne Winseck believing in some fantasy land that news is a public good because I think people should eat their kale. From an economic point of view, news is a public good and has never been solved with a market solution, except for a small slice, as I said, of financial traders and merchants who want to trade on the advantages of time, secrecy, and exclusive access. For everybody else it has been subsidized.

You can pick your subsidiser. Do you want a rich patron to do it? What's the cost? Do you want government to do it? What's the cost? Do you want advertisers to do it? What's the cost? There's no free lunch.

You have to recognize that news is not a normal economic good. The whole institution of copyright is predicated on this. We created a whole body of law to deal with one specific kind of property—information and news—because it doesn't conform to the other kinds of property that we have. It's all about balancing. All of those balances are just social settlements that are subject to change over time. That's what we need to do today. We need to bite the bullet, realize that we need to have subsidies, and who's going to get them and who's not.

I'm trying to say that we should not give subsidies to those who have blown up the system. We should not channel subsidies through an opaque labyrinth, as we've done throughout the last half-century. We should not allow the existing commercial players to be both the suppliers of the subsidies, the administrators of the subsidies, and the beneficiaries of those subsidies. It's riven with conflict of interest that is self-evident to anybody who asks or who looks at the evidence honestly.

[The Vice-Chair, Conservative, Larry Maguire]

Thank you very much, Mr. Winseck. That used the five minutes, Mr. O'Regan.

Thank you very much to the panellists who are here with us today as well. Thank you very much for your information. We want to thank you.

That will be the end of our question round.

We have a few areas of business to clean up. It may not take quite 20 minutes, so would anyone still like a few minutes?

Mr. Waugh, you have a short time for a question.

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

Thank you, Al, and thank you, Monica.

One thing we haven't talked about is technology and cost. The cost of running a television station has gone down dramatically, Al. You've been in the business as long as I have, and we haven't seen that reported. We have high definition now, we can use a smart phone, as you said, and we don't need a satellite truck to go on location. The cost of producing media has come down substantially.

[Al MacKay]

That's from the technological side.

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

Absolutely.

[Al MacKay]

Then there's the human side. You need the boots on the ground.

It continues to amaze me that the first thing you do when economic times are tough is to take those people who are producing the product you're trying to sell and hustling them out the door.

[Monica Auer]

In fact, one of the great promises of concentrated ownership or consolidated ownership was precisely to save resources so that you could spend more on programming. That's the conundrum we're at. When concentration began in the early 1990s, it was always with the commitment to do more because you could spend less on your operations. The reverse has happened, and it happened under the watch of the regulatory authority, which presumably thought this was acceptable.

The issue now is that news gathering capacity seems to be down. We don't know what the news gathering capacity is in Canada. We don't know what it is in broadcasting. Should we? If we want to ensure that small communities are properly served by journalists, should we know that there are broadcast journalists in Canada? That's one thing.

Again, technology is wonderful. Why shouldn't we benefit from technology? Are Canadians deriving the same benefit from technological savings in broadcasting and telecoms as the companies that are actually using the spectrum for their benefit?

They should use it. I'm a business person and I believe in that benefit. It's whether there is a quid pro quo for the public interest, and where those savings are going.

[Al MacKay]

All I can tell you, Mr. Chairman, is that when I was running the news desk in the 1980s, I could put 10 to 11 reporters on the street on any given day to cover this community. That was when it was smaller and the issues were a lot simpler.

Trying to do that today with three, four, or five reporters for a market of this size—the fourth-largest in the country—just doesn't work.