Debates of March 27th, 1996

Broadcasting Act

[Jim Abbott, Reform, Kootenay East, BC]

Mr. Speaker, I rise to speak on behalf of the Reform Party. Our position on this bill, subject to individual members' votes, is that we would be supporting the bill.

Part of the problem and one of the hesitations I had as heritage critic in recommending to my caucus that we look at supporting this bill is the fact that it does not really deal with the issue. It is a little band-aid on a great big problem.

Anybody who comes to my home will see some of the construction I have done. It is really quite laughable and identifiable. There is a fairly broad piece of trim which covers up the error I made when I was trying to put the corners together. On top of that broad piece of trim is a medium size piece of trim to cover up the errors I made when I was crafting the broad piece of trim. Then there is a very small piece of trim which actually covers up the problem that was created with the medium size piece of trim. In other words, I am not a particularly good carpenter and it requires a tremendous amount of work to cover up the fact that the whole thing is being held together by chicken wire and chewing gum.

It seems to me that is a word picture of what we have with the CRTC and the fact we are dealing with this issue. This bill is a band-aid, a small piece of trim on a far larger problem. This is the reason there was concern about supporting the bill.

The heritage minister has called for a review of the CRTC. I am not sure how serious she was. It seems to me that just about every time she wakes up in the morning she has some new ideas and then her department has to run around after her picking up the pieces. Whether or not she was really serious about a CRTC review, I do not know.

The problem is that there is a need for a CRTC review. The CRTC reflects what would be best classed as horse and carriage electronics. What I am saying is we have moved from the horse past the car to the jet, to the space age piece of equipment, while the CRTC mandate itself and the way it goes about doing its regulations is held back still feeding oats to the horse. An awful lot of the regulations show the results of feeding the oats to the horse by the road apples.

The problem is the CRTC comes forward with the kind of regulations that it does, particularly the kind of decisions it makes with respect to content. It ends up effectively forcing the cable companies to find creative ways to get around the problem, that somehow they are going to have to get dollars for some of these programs and some of the content that is going to be put on the air.

Clearly with the way the technology is right now in 1996 in the majority of homes in Canada, there cannot be true competition in the cable industry. In fact, we have to go outside the cable industry, speaking of technology, in order to create competition for the cable industry.

The marketplace probably would take care of this kind of negative option billing, this kind of high handed approach that was exercised by the cable companies in trying to come forward and get the revenue the CRTC said they had to get for these channels that nobody wanted. It would have worked out.

For example, there would have been competition if we had had a coherent policy from this government with respect to direct to home satellite service. Right now the DTH and the decision cabinet made to not interfere with the CRTC is driving a grey market of gigantic proportions.

Across the border from my constituency is a very small town in the northern area of Idaho. On a very busy day I do not think we would find 50 people in that town but amazingly there are 600 mailboxes. I wonder why there would be 600 mailboxes for 50 people. I bet it has something to do with the fact that if someone wants to get into the satellite grey market they have to have a post office box in their name in the United States. I will bet that is the answer.

That is the reality of what is going on, not only to people who are adjacent to the border as my constituency is but to people further north, in northern areas of British Columbia and in northern areas of Alberta. That is what is going on in western Canada. Quite frankly if it is not happening in Atlantic Canada, Ontario, the prairies and Quebec, I would be very surprised. That is going on because of the very bad, antiquated, out of touch, out of date policies this government is having the CRTC enact. We are driving people to become electronic Americans. That is the shame of it.

This is the same cabinet that made the decision not to interfere with, not to question the decisions that were made with respect to the direct to home satellite. This is the same cabinet which said: "No, we cannot do that". It is the same cabinet which on the same day decided it was going to interfere for the second time with digital audio services that had been proposed by Shaw Cable. It defies logic to have people believe that the same cabinet which would not overturn the boneheaded position of the CRTC with respect to direct to home satellite service, on the same day by some coincidence would interfere with a Canadian company trying to bring digital audio services to Canadians on a Canadian service. It defies logic for the cabinet to suggest that it could not do one but could just happen to do the other.

It is for that reason, if the heritage minister is serious and if she is calling for a real CRTC review from top to bottom particularly with respect to its mandate, we would be fully supportive of that. However, I do have a caveat on that as well. The difficulty is that these little mental droppings she gave to us about her thinking of having a CRTC review, which I happened to see in ink in the newspapers, indicated that she was going to have the CRTC review itself.

Heaven forbid that we should get into another $2.5 million Juneau boondoggle as we did with the CBC review. That was pretty ridiculous when the budget for the CBC review I believe was struck at around $900,000 and the Canadian taxpayer ended up paying out over $2.5 million for it. I am not recommending that.

On the other side of the coin I also think it is very short sighted, narrow minded and myopic on the part of the minister for her to say: "Why don't we have a review of the CRTC by the CRTC for the CRTC so that it can tell me about the CRTC and what it should be doing". The minister does not seem to have a tremendous amount of control over a lot of things, quite frankly.

Let me get back to the issue of Bill C-216. The reason I support it and in spite of the fact that I see it as being a necessary little band-aid on the larger issue of whether the CRTC should be doing these things is that I do believe there has to be protection in our society for tactics that can be used by people in a broadly based commercial marketplace.

Let me make my position really clear on that. I do not believe in overregulation in a narrow marketplace. The reason I do not believe in overregulation in a narrow marketplace is that I do believe in the basic assumption in business of caveat emptor, let the buyer beware. Far too often we try to mandate with government action things that could be better handled by the free market.

In this instance, there is a very broadly based marketplace and there are seniors and people who require some protection. Therefore, I would support and I am recommending to my colleagues in the Reform Party to support Bill C-216 to afford that protection to a broadly based marketplace.

[Alex Shepherd, Liberal, Durham, ON]

Mr. Speaker, it is a great pleasure to enter into the debate on Bill C-216 introduced by my colleague from the riding of Sarnia-Lambton. I applaud his initiative in this matter.

Generally I recognize the importance of maintaining the cultural industries within our country. I believe it is part of the mandate of the CRTC to ensure that there is a cultural identity that goes from sea to sea to sea. I also believe this is part of its mandate that the CRTC attempts to do reasonably well.

Having said that, I also realize that the concept of dividing up our country into areas where cable providers can function is a method of granting monopolies. From someone who believes in free competitive forces in the marketplace, I have initial reservations about that process.

I have also realized that there is a significant advantage to Canadians rationalizing their marketplace to provide enough revenue for some of these businesses to do research and development. We are talking about convergence in the communications businesses throughout Canada. Canada has been able to compete internationally and allow the penetration in telecommunications because we have taken these initiatives.

When creating a monopoly it must be done with a certain degree of caution. We do not want people to use their market areas in such a way that they disadvantage their customers. This is the essence of the bill. It attempts to address a practice which for some reason has become acceptable to the cablevision industry but clearly is not acceptable to everyday Canadians. Why do I say that?

Most of my riding is serviced by the Rogers cablevision network system, on which I do a program once every two weeks. When this process of negative option billing was introduced, there was an immediate outrage among my constituents. It would appear that governments had allowed the monopolistic part of the CRTC regulatory environment to gouge them. It was not really any different from a neighbourhood theatre sending a bill to someone for a movie they have never seen or ever desire to see. This is what we did to average Canadians.

It was not that Canadians were upset about the concept of Canadian content. Maybe if somebody took the time to explain to them the need for Canadian content, they would pay more themselves directly or they would agree to support it through their governmental system, as we do with the CBC, or possibly through public broadcasting arrangements. The bottom line is that they were not given the choice and that is what upset them.

I talked to my local cablevision company to see what was the fallout to this, what actually happened after the smoke cleared. Rogers said it was sorry and so on but the bottom line is that most people, after having been given the option to send in a little card to say they want out of the system, did not do that. In reality, the negative option billing system was successful for Rogers and that industry.

Why do we need negative option billing in the first place? It is interesting to note a comment from Mr. Watson who was a director at the time. He said: "Outlawing the negative option sales tactic"-I underline the word tactic-"would decrease subscribers' acceptance rates, cut cablevision services expected revenue and choke new channel source of cable fees and advertising". What he is saying is that this tactic was designed for the express purpose of making people pay for things they would not normally have. He is saying that if they were given this choice, they probably would not do it.

We have set up a governmental process that is unacceptable to the average Canadian. It is clear that the essence of this bill is to address that wrong. For that reason, it is highly appropriate.

A number of other things were going on in the cablevision industry at that time. There was a concept of consolidation. In my area it used to be Maclean's. Maclean's became Rogers and Rogers became a huge organization. Part of that consolidation cost a lot of money. People got some money out of this. They were paid off and so forth. How will that be financed for rationalization? It will be done through a fee structure. That is exactly what this is all about. The CRTC acquiesced in that situation. Possibly it saw the rationalization of the cablevision market to be a long term goal for Canada. Maybe it is. I have not really taken the time to study all that.

However, the bottom line was that Rogers, in particular, gave a new definition to the word over-extended. Indeed, by subsequently reducing its rates, I suspect it is having financial problems.

Nobody took the average Canadian into consideration. Some of my colleagues have noted that at least two provinces already have legislation in place that prohibits negative option billing. In addition, the industry is attempting to develop the technology to give recipients of cablevision the choice.

At the time, a Regina company had the facilities to give certain numbers, approximately 9,000 of its 50,000 subscribers the option to say no. If they did not want certain channels coming into their houses they did not have to pay for it.

The industry realizes the importance of individual choice. As I understand it, the industry is now working on the technology to provide that very service. In four or five years from now people will have the choice of channels. They recognize the importance of consumer choice. It appears that the menace of negative option billing is still within the system today. The purpose of this bill is to eliminate it.

In conclusion, I believe this has told us that we must have another way to sell Canadian content. Maybe we need to allow free access to home environments for a period of time so that people can become adjusted to new programming and learn to accept or reject it. People cannot be charged for services they did not ask for. It is just not fair within the existing marketing system.

[Svend Robinson, NDP, Burnaby—Kingsway, BC]

Mr. Speaker, I will be very brief.

I want to take this opportunity on behalf of my colleagues in the New Democratic Party to indicate our support for the bill that has been proposed by the member for Sarnia-Lambton.

As the member of Parliament for Burnaby-Kingsway, I recall the tremendous sense of outrage and the anger of my constituents at the time that Rogers Cable proposed the negative option billing. There were many calls and letters. I spoke out at the time against that option and urged the government to move forward with strong and effective legislation. Therefore, I am pleased to see that this bill is now before the House.

I also want to note that the New Democratic government of British Columbia has also shown national leadership on the issue. I know that members of the House and those watching would want to know that the B.C. New Democratic government has shown leadership and has moved on this front at the provincial level under consumer legislation to ban negative option billing in the province of British Columbia.

However, this is a matter that falls within federal jurisdiction under broadcast regulations. I welcome the opportunity to support the legislation and I hope members of the House will pass this bill.

[John English, Liberal, Kitchener, ON]

Mr. Speaker, like the other speakers in the debate on Bill C-216, I too received hundreds of calls over a period of one week in my constituency office. This issue is perhaps the one on which I have received the most calls during my period as a member of Parliament. One resident of Kitchener continues to call me every two or three days on this topic.

The importance of this issue to my constituents is clear. I do not intend to talk today about the questions which have been raised by the member for Kootenay East or the member for Durham, which were on technology and the CRTC regulations in general.

The questions of negative option billing and consumer choice are important to me and to my constituents. Negative option billing is not something new to the cable industry in Canada. It is a practice which has been sanctioned and condoned by the CRTC. With the rapid change in telecommunications and the way in which television is delivered with black box decoders and satellite dishes, the cable industry faces major difficulties in adjusting to market changes.

We know fairly clearly what is in the cable companies' interests in this regard, but we must ask ourselves what is in the interests of the consumers.

When this issue first arose and when I heard about the intention of the hon. member for Sarnia-Lambton to introduce this bill, I immediately decided that I would second it when he asked me to do so. I did so because of the interests of my consumers and also because this practice raises other problems in the area of consumer choice.

Some have spoken about Canadian content and have seen that issue to be of particular difficulty. I do not share that concern. In fact I talked to many of my constituents about their reaction to the action by the Rogers cable system. It led some of them to be concerned about Canadian content. Indeed, they even suggested imposing higher Canadian content rules because of negative option billing. In short, there were unintended consequences of the action which impaired the support that Canadian cultural content has had in Canadian broadcasting.

There is a danger. Canadian content is very important. The CRTC, through its regulations, has accomplished some fairly important things. It has promoted the Canadian music industry.

We have heard a great deal about Alanis Morissette recently. At the Grammy awards Canadian entertainers did extremely well. CRTC practices may have in fact created this very strong and vibrant Canadian music industry.

Canadians, in general, support the cultural practices of previous governments in supporting the CRTC and its regulations. However, they do not support a policy which misleads consumers. As the hon. member for Durham said a few moments ago, this is a tactic which has developed. People take these channels without realizing the additional cost. Even after the controversy ended, it turned out that most did not opt out.

This approach undermines moral principles. The CRTC received a lot of criticism. Rogers cable system admitted that this practice would not be accepted. There was negative publicity about the entire industry. The fact that negative option billing still exists is unacceptable to all Canadians.

The government should listen to the statements which were made by consumer groups. The Consumers' Association of Canada was mentioned earlier. I would like to read into the record a statement which was made by the executive director of the Consumers' Association of Canada. She stated:

The new telecommunications environment is about competition and choice-this Bill will help to make sure that Canadians are informed and willing consumers of cable services.

Of course the bill she was talking about is Bill C-216.

The executive director of the Public Interest Advocacy Centre stated:

Bill C-216 drags the regulation of the Canadian cable industry into the twentieth century. Governments have long recognized that consumers should not pay for unsolicited goods. No matter what the motive is behind negative option marketing, it is an abuse that must be corrected.

Further, Michael Janigan of the Public Interest Advocacy Centre stated:

This Bill is an important precedent for the future, when multi-media program services will be fighting for a niche on the Information Highway. Consumers have every right to know what they are receiving and to obtain only what they request.

The consumers of Canada have spoken. The member for Sarnia-Lambton has listened and I stand with him supporting the interests of the consumers of Canada.

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, I am pleased to speak on private member's Bill C-216, an act to amend the Broadcasting Act with respect to broadcasting policy, put forward by my colleague from Sarnia-Lambton.

In the week between Christmas and New Years in 1994, my office, like those of my colleagues, received a deluge of calls from Erie constituents who were concerned with their cable package and the billing option that was to take effect on January 1, 1995. They were angry and they had had enough. I certainly did not fault them. They were right. Negative option billing is unacceptable.

I am in favour of Bill C-216 because it would ban negative option billing. It would apply not only to cable companies but to any other company that provided a distribution undertaking which is defined under the Broadcasting Act as "an undertaking for the reception of broadcasting and the retransmission thereof by radio waves or other means of telecommunications to more than one permanent or temporary residence or dwelling unit or to another such undertaking".

Today we are looking at more players entering the market for broadcasting services such as telephone and satellite companies which will soon provide competition to cable companies. By passing Bill C-216 we can ban negative option billing for new programming services no matter who provides them.

My constituents were calling me because the cable companies are federally regulated by the Canadian Radio-television and Telecommunications Commission, commonly referred to as the CRTC.

In 1994 the CRTC licensed six new English language and two new French language specialty services. The commission's two primary objectives in doing this were to strengthen the Canadian presence in the Canadian broadcasting system, especially in anticipation of an invasion by American direct to home satellite services and to ensure that the widest possible selection of new Canadian services would be available at a reasonable cost.

I support these objectives. I support strong Canadian content and a strong Canadian presence in the entertainment industry. However, this cannot be achieved by taking advantage of the Canadian consumer. My constituents were not upset there were eight new channels on January 1, 1995. They were angry because they would automatically be billed for a service they did not request. They felt manipulated through higher fees and the repackaging and repositioning of channels-

[The Deputy Speaker]

I am very sorry to interrupt. Unfortunately the time has expired.

[Guy Arseneault, Liberal, Restigouche—Chaleur, NB]

Mr. Speaker, I rise on a point of order. The hon. member is in the middle of his speech. We are wondering if he could have the unanimous consent of the House to finish. Perhaps the Speaker would not see the clock for the remainder of this member's speech.

[The Deputy Speaker]

Is there unanimous consent to let the member have three more minutes to finish his speech, if that is sufficient?

[Some hon. members]

Agreed.

[John Maloney, Liberal, Erie, ON]

Mr. Speaker, I appreciate your indulgence and that of my hon. colleagues.

In recent years Canadian producers have proved themselves to be formidable broadcasters, able to compete at home and around the world in the fields of drama and entertainment. Many of these new specialty channels licensed by the CRTC offer excellent programming and would have survived without having to be forced on anyone. However, I am afraid that the consumer backlash did little to enhance the popularity of the new specialty channels.

On January 5, 1995 a major cable company had partially capitulated, apologizing for its mistake in not presenting the new services as a separate discretionary package. It offered consumers the choice of keeping only their current package of specialty services at additional fees. However, the much disputed negative option marketing scheme used to launch the new line-up remained firmly in place, leaving the onus on the consumer to refuse the new package.

This brings me to my role as a parliamentarian and a representative of my constituents in this House. Some would argue this is a consumer rights issue under the jurisdiction of the provinces but provincial consumer laws do not apply to cable companies which are clearly under federal authority.

I do not understand how the protection of the choice of Canadian cable consumers is a matter outside of federal broadcasting jurisdiction, as some have suggested. Section 5 of the federal Broadcasting Act creates an obligation for the CRTC to regulate and supervise all aspects of the Canadian broadcasting system with a view to implementing the broadcasting policy set out in the act. Proposed changes to section 3 of the Broadcasting Act would ban the practice of negative option billing for new programming services.

There is no doubt that over the next decade the cable industry will change drastically. More and more consumers are beginning to demand that they pay only for those channels they want. However, I understand the technology to allow this is not to be realized until the turn of the century. Thus television and the cable industry are currently in a period of transition. Program selection is increasing but the technology to give viewers real choice has not yet arrived.

In May 1994 the CRTC chairman acknowledged that television consumers want more control: "Consumers want, deserve and will increasingly settle for nothing less than the maximum control possible over which services they select and pay for. As a consumer and the CRTC chairman, I agree 100 per cent with this goal".

Cable television services in Canada are distributed either as part of a basic service or on an discretionary basis. Basic cable service is a standard package of services provided to all subscribers within a cable company's service area. It consists of a number of mandatory or priority Canadian programming services, including the CBC English and French network services, local and regional stations, provincial educational services, a community channel as well as various optional services.

The proposed changes in my colleague's bill are timely because commencing May 6 of this year the CRTC will consider licensing more TV channels and all these new channels will be scrambling for an audience. My constituents must be allowed to make a positive choice to obtain these services. Some may not realize a response is necessary or even possible. Some may inadvertently forget. They do not want to have to call their cable company to say stop these extra channels.

I criticize the negative option billing approach used to introduce the new services on the grounds of fairness and consumers' right to choose. Consumers should have the right to select the brand of programming they want rather than having it imposed on them by a paternalistic regulator and monopolistic industry.

Negative option marketing favours corporations and disempowers consumers. The Broadcasting Act is too one sided in requiring the CRTC to protect only Canadian cultural interest, not consumer interest.

As MPs we have a golden opportunity to respond to Canadian consumers who demanded that we put an end to negative option billing for new programming services. Government have long recognized that consumers should not pay for unsolicited goods. No matter what the motive behind negative option marketing, it is an abuse that must be corrected.

I urge my colleagues to support this legislation.

[The Deputy Speaker]

The item is dropped to the bottom of the order of precedence on the Order Paper, the time having expired.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Svend Robinson, NDP, Burnaby—Kingsway, BC]

Mr. Speaker, March 31, a profoundly important deadline for Canada's medicare system, is approaching.

Earlier this month I asked a question of the Minister of Health concerning the impact of NAFTA on Canada's medicare system. I asked the minister to show some leadership with respect to some very serious differences in interpretation of NAFTA and its impact on the medicare system in Canada.

It was on March 13, the day I asked the question, that a legal opinion was made public by Dr. Brian Schwartz, a respected lawyer. He indicated that there are serious ambiguities in annex II of the NAFTA agreement. He went on to note in his legal opinion that there are a number of grey areas that exist in the health care sector, and that U.S. providers and their federal government will be exerting political and economic pressure on Canada and the provinces to open up markets.

He went on to point out that United States trade representative Mickey Kantor has issued an interpretation of annex II of the NAFTA agreement that is very alarming because it opens wide a tax on Canada's medicare system. Mickey Kantor said that if social services are supplied by a private firm on a profit or not for profit basis, chapter 11 and chapter 12 apply.

In other words, what he is saying is that the United States considers Canadian not for profit health providers subject to the full force of NAFTA's investment and services rule. That means they are wide open to big American for profit corporations to move in on those sectors.

Much of Canada's health care system is delivered through the non-profit sector. A large majority of our health delivery takes place in the private sector through non-profit agencies such as hospitals, labs, nursing homes, community clinics, regional health boards and so on.

If our government and if the Minister of Health do not stand up for Canadian medicare and do not reject this interpretation by the United States trade representative vigorously, it is clear we will open up the Canadian medicare system to U.S. corporate health care giants. We know the power of these giants. They have taken on Bill Clinton on health care reform.

I support the B.C. minister of health, Andrew Petter, who has shown leadership on this issue. I urge the Government of Canada to show the same kind of leadership and to stand up and say we will protect the Canadian medicare system against this kind of narrow interpretation of the United States trade representative.

[Joe Volpe, Liberal, Parliamentary Secretary to Minister of Health]

Mr. Speaker, it goes without saying that we are better than prepared on this and we will not shirk any of our commitments and that medicare is one of the highest priorities of the government. It will not be unprotected in NAFTA or open to competition by the NAFTA signatories.

The federal government has been working for over a year with the provinces to ensure the broadest possible protection for our health system within the existing provisions of NAFTA.

In recent weeks the Minister of Health has been working very closely with his colleagues, the Minister of Foreign Affairs and the Minister for International Trade, to clarify and resolve the issue.

Within NAFTA, Canada, the U.S. and Mexico each has its own social service reservations entitled annex II which exempts health and other social services from key NAFTA requirements such as the most favoured nation or national treatment. This exemption protects our health system. It means Canada and provincial governments maintain the flexibility and control they need to operate and decide what is best for the health system.

The exemption for health and other services applies to the extent that these sectors exist for "a public purpose". Each of the NAFTA partners must interpret the meaning of public purpose to the situation in its own country. NAFTA does not make that definition.

The scope and coverage of annex II are being interpreted as broadly as possible to provide maximum protection for Canada's health system. The great majority of health services exist for public service and are considered to fall within the exemption of annex II reservation.

I know you are trying to get me to close, Mr. Speaker, but perhaps you will allow me to make the point the hon. member opposite so clearly wants to have made. Do I have the unanimous consent of the House?

[Svend Robinson, NDP, Burnaby—Kingsway, BC]

Mr. Speaker, on a point of order, I welcome the opportunity to give unanimous consent to the member to clarify the government's position with respect to Mickey Kantor's very narrow interpretation.

[The Deputy Speaker]

My reading of the clock is that the member's time has expired. Is there unanimous consent to let the member have another 30 seconds to finish his answer?

[Some hon. members]

Agreed.

[Joe Volpe, Liberal, Eglinton—Lawrence, ON]

Mr. Speaker, I will try to address the government's policy, which is what the member wants to hear. Canada's interpretation of annex II includes the fact that the test of a public purpose under NAFTA is not restricted to whether a health service is wholly funded or insured by a provincial health insurance plan.

Annex II is the main protection for our health system. For health services wholly funded by provincial health plans there is no question of exemption under NAFTA. Under annex I, with its March 31, 1996 deadline, there is also provision-

[The Deputy Speaker]

The time has now expired. The House stands adjourned until tomorrow at 10 a.m.

(The House adjourned at 7.09 p.m.)