Industry Committee on April 1st, 2010

[Stephen Waddell]

The CRTC has certain regulations--

[Mike Wallace, Conservative, Burlington, ON]

Right. Would you like to see those expanded? That's what I'm asking.

[Stephen Waddell]

Absolutely, Mr. Wallace; of course. That's been our effort since 1999--

[Mike Wallace, Conservative, Burlington, ON]

Have you been making those arguments to the CRTC?

[Stephen Waddell]

--in fact since the CRTC brought in its disastrous 1999 television policy.

[Mike Wallace, Conservative, Burlington, ON]

Okay.

Now I'm coming to you, Ms. Drouin.

One of your six points was the huge profit margins. Doesn't it make sense that if we were able to bring in more competition, those profit margins would be under threat, and consumers would benefit because prices would go down and the profit margins would go down?

So are you not supporting, through one of your six, that by increasing competition, by selling more spectrum, by bringing more people into the wireless business, that we're going to help consumers and bring those profit margins down?

[Solange Drouin]

Yes....

I'll say this in French, because--

[Mike Wallace, Conservative, Burlington, ON]

In Canada, we get to translate.

[Solange Drouin]

Yes, I know.

Although this question was not addressed to me, I want to answer it anyway. You have to recognize that telecommunications can also be considered broadcasting undertakings, because they are. That's the point. Sometimes you have a real telecommunications system but they also allow a hybrid.

So you would have to recognize, first, that it's in front of the Federal Court now. As our friend from the syndicat said, we think telecommunications could also deliver a broadcasting system.

I'll go to your second point.

It is obvious that the entry of new players into the system may result in declining profit margins. At the same time, I admit that, in my view, profit margins of 46% show that there may be a lack of competition and that lower profit margins may be entirely fine and viable even for a listed business. I am quite aware that shareholders want maximum performance from a business, but, if Canada wants to have more players, these companies, which have previously made a lot of money and are still doing so, may be forced to share the market a little.

And I would say, so what? It would be for the benefit of the consumers.

[The Chair, Conservative, Michael Chong]

Thank you, Mrs. Drouin.

I have just two points of information.

The motion adopted by the committee to study this issue did include a review of the Broadcasting Act, Mr. Wallace.

The other point of information--I've heard a number of people raise this--is that there are actually no foreign ownership restrictions whatsoever in the banking industry in Canada. Those were eliminated some time ago. There's a widely held rule, but there are no restrictions on foreign ownership in Canada's banking sector.

We'll give the last word to Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I always enjoy following my free-market fanatic friends on the side over there.

It's interesting, because the discussion of this is important. We actually have to look at reality here instead of voodoo attempts of claiming that there is a system out there that we can actually devolve from that has no intervention. In fact, the Canadian and U.S. governments have agreements. I live on the Canada-U.S. border, and the FCC, with the agreement with this government, restricts a university radio station, local broadcasting, from actually penetrating into the Detroit area. So we have that as a reality.

Second to that, I'm a Blue Jay fan. I'm a big supporter of Detroit, but I can only get the Blue Jays on a very low signal because major league baseball has an agreement. When I ran my sports teams for youth programming in Windsor, I tried to get the Raptors involved, but because we were in the geography footprint of the Detroit Pistons, they couldn't get involved.

So we already have these agreements going on in business that restrict the availability of Canadian content that I can get. When we go to our ceremonies for veterans and so forth, we actually have the Star-Spangled Banner played. We are very proud of having the American connection, but we're also fiercely proud as Canadians. So we're not afraid to show that cultural connection, but we certainly have restrictions in terms of the current agreements we have right now about what I can get even as a consumer.

So what I'd like to have explained is this. If we go to a further devolution of regulations, do you think we will then lose more opportunity for Canadian content, in places like our border communities, that we experience right now?

[Stephen Waddell]

Forget the border communities, Mr. Masse. Everyone's going to be impacted. The far north, east, west, and central will all be impacted by lack of regulation.

Just look at the schedules--I need my prop here--of the private broadcasters right now. Has everybody seen this before? These are the schedules of Canada's private broadcasters. The blue indicates American product in prime time; the red is Canadian. That's the reality of private broadcasting in this country at this time.

Canadian production, Canadian voices, are shut out of Canada's prime time on Canada's private networks, and that's just going to continue. It's going to get worse. We're going to be completely inundated with American product.

[Brian Masse, NDP, Windsor West, ON]

That also goes with the amount of volume of American TV that's actually purchased, that doesn't even hit the airwaves because the broadcasters are purchasing it to block their own competition. That doesn't go back into the system whatsoever, and it's just basically an expense passed on to consumers.

One of the things that has been raised to me is that we couldn't have more short-term competition with opening up the industry, but instead of having three major competitors right now, at the end of the day we'll probably have two competitors after a year or two.

What do you think about that situation? And do you think that will actually benefit consumers at the end of the day, having two competitors versus three, and no regulation?

[Solange Drouin]

It would be a nightmare--for us.

[Stephen Waddell]

How could that possibly be an improvement? I mean, more competition is better, and we say, of course, that competition should come from Canadian companies. There's enough capital in this country to do that.

So more competition is better, not less.

[Brian Masse, NDP, Windsor West, ON]

Yes, and that's the interesting thing about this. Opening up the spectrum was supposed to actually provide for more competition. But I suspect one of the scenarios might be that you have new entrants in the market that build their stock for the short term but are later gobbled up. When you look at it from an international perspective, our sectors are very minor players in the overall business.

[Solange Drouin]

Sure. But on this issue, I would like to raise one point and remind you that Canada was one of the first countries to fight for the new convention at UNESCO on the promotion of cultural diversity. It was a big fight over a number of years. I want to remind you that the U.S.A. and Israel didn't sign that agreement, because they don't want any country to be able to exercise their power over their cultural policies. I think you should read something out of this.

If we welcome them and invite them to take a bigger piece of our market, that's what the Americans want. I don't want to demonize them, but that's a fact. That's how it works. They want all the market and they will take it. Once they have all the market, they will rule our world. That's what they want.

What I hear from you, from this side, is that we will be able to control it. I don't want to be rude--blame it on my bad English--but I think it's a little bit naive. You say, “Oh yes, we will put the guy out and he will stay out”. But he won't stay out. The big guy will come into the market. And when he has 80% of the market he will want 90%. After that he will set the rules and we won't be able to, because we will have given him our market.

[Brian Masse, NDP, Windsor West, ON]

You hit a key point, which is that it's not so dissimilar in other sectors. The United States has the Jones Act that protects their shipping industry. They have a series of measures to protect their busing industry, as far as content, manufacturing, and assembly. They have a series of farm subsidies that are very unique; a series of border protection elements that are critical for food safety; and a series of other types of measures for their manufacturing society.

So I think it's important that when we look at the cultural element here, we don't forget that this is not only just a major industry, as well, and that we may claim, on this side, to go to this free market economy that seems to be exposed out there, but the reality is that our neighbour doesn't prescribe to that itself.

[Stephen Waddell]

Mr. Masse, I'll show you the face of foreign ownership in this country: the face of a striking worker at Vale Inco. who's been on strike for nine months. That's the face of foreign ownership in this country. That's the result of foreign ownership.

[Brian Masse, NDP, Windsor West, ON]

Yes. I was in Sudbury, and talked to the workers. Absolutely, it's all about driving down the Canadian element.

Thank you, Mr. Chair.

[The Chair, Conservative, Michael Chong]

Thank you very much, Mr. Masse.

Merci, nos témoins. Merci beaucoup.

This meeting is adjourned.