Mr. Scott Hutton (Acting Associate Executive Director, Broadcasting, Canadian Radio-television and Telecommunications Commission):
Thank you and good morning, Mr. Chairman and members of the committee.
My name is Scott Hutton. I'm the associate executive director of broadcasting at the Canadian Radio-television and Telecommunications Commission. With me today are Peter Foster, manager of conventional television, and Doug Wilson, our director of strategic research and economic analysis.
Prior to making our presentation, on behalf of our chairman, Konrad von Finckenstein, I would like to table some information as a follow-up to the last appearance of the commission at the Standing Committee on Canadian Heritage on March 1, 2007. At that time, Mr. Angus requested some additional information with respect to both our process for handling ownership transactions and details of particular ownership transactions that we had dealt with without public process.
We're tabling this report. I believe copies are being handed out to you right now par le greffier. Briefly, I would just outline that essentially our process for share transfers is conducted subsequent to the issuing of a public notice announcing that we would handle certain share transfers, transfers of control, without public process. That public notice is in your package. It outlines the criteria on which we judge whether or not to issue a public process. There is also an explanation of the internal workings that the CRTC goes through in the process of considering such issues. There is an outline of the transactions that have occurred pursuant to this process over the last two years, and in particular, on pages 4 and 5, the specific transactions raised by Mr. Angus in respect to 18 radio stations in the province of British Columbia. Regarding that particular case, I would just note that although 18 appears to be a large number of transactions, the overall audience figures and revenue figures, as compared to the level for the province, are rather small. You'll see from the details of that transaction that it was, in a way, an introduction of new players to the market, so we considered at the time that it did not raise significant policy considerations that would require a public process.
Thank you for your patience.
We'll now move on to our business of the day. We are pleased to contribute to your study on the Canadian Broadcasting Corporation and to provide our insight on how new technologies have been transforming the broadcasting industry. We have provided you with a deck on our recent report on the future of broadcasting. I won't go through it, but you may want to refer to it in questioning.
In the last few years we have seen the appearance of new technologies to distribute content to consumers, from personal music devices, such as MP3 players and iPods, to Internet-based radio stations. On the television side, the digital universe offers a multitude of pay and specialty channels, many of which are attracting a larger share of viewers. The Internet is also playing a more prominent role. You only have to look at websites such as YouTube for evidence that people enjoy being able to watch and upload short video clips. Meanwhile, conventional broadcasters are contemplating different strategies to manage the transition from analog to digital and high-definition signals.
These innovations, along with many others, are creating a competitive environment that is constantly evolving, one that presents new opportunities and new challenges. It is also an environment that places more power and choice in the hands of consumers.
What effect will it have on Canadian broadcasters, and in particular our national public broadcaster? Before I address this question in more detail, I would like to outline certain elements of the Broadcasting Act that are relevant to your study.
As you know, the CRTC's mandate is to regulate and supervise broadcasting in Canada, as set out in the act, which also describes, under section 3, the Canadian broadcasting policy. Among other things, this section reveals the role of the national public broadcaster. For instance, it states that the CBC should provide radio and television services incorporating a wide range of programming that informs, enlightens, and entertains.
As part of its mandate, the commission is responsible for issuing, amending or renewing broadcasting licences, and the CBC must submit applications like any other broadcaster. It is this activity that brings us to work most closely with the CBC.
Every seven years, the Corporation must file applications to renew the licences of its radio, television and specialty services. This provides us with an opportunity to review the CBC's overall plans and strategies for the next seven years. It tells us in specific terms what programs and services it will offer to Canadians and how it will go about meeting its objectives.
The importance of this exchange cannot be understated. Given our knowledge of the overall broadcasting system, we can draw attention to the aspects of the CBC's proposal that we feel hold the most merit. As well, our proceeding is open to the public. The last time we held a hearing to examine the CBC's licence renewal applications, we received some 4,000 submissions from citizens from one end of the country to the other--a clear indication that Canadians are very interested in the public broadcaster's future.
From time to time, the commission may propose conditions of licence in order to better meet the objectives of the act. The CBC has the option of requesting a consultation over such proposals. It is always possible that despite engaging in a consultation, the CBC will remain convinced the condition we are proposing would unreasonably impede it in the provision of programming services contemplated by the act. In this instance, subsection 23(2) states that the CBC can refer the condition to the minister for consideration within 30 days.
The Broadcasting Act also contains other provisions that explain the powers of the CBC, its financial arrangements and the constitution, mandate and responsibilities of its board of directors.
As I mentioned at the outset, the CBC is operating in an environment that is developing rapidly and that is forcing broadcasters to re-evaluate their business models. In June 2006, the Governor in Council, pursuant to section 15 of the Broadcasting Act, requested that the commission provide a factual report on the future environment facing the Canadian broadcasting system. The areas we were asked to examine are noted on page 4 of the deck.
In response to our public notice, we received 52 submissions from individuals, consumer groups, broadcasters, distributors and industry associations, and we commissioned three independent research studies.
What did we find? While the consumption of new technologies is growing, we observed that it is having minimal impact on the regulated system. Canadians still consume the vast majority of programming through regulated broadcasting undertakings and new technologies. New technologies have played a complementary role up until now.
However, given the emergence of new platforms and technologies over the last five to ten years, the only thing that will remain constant is change, and the speed at which change is occurring. Every day, we are seeing that the expectations and demands of consumers are changing. Consumers want more audio and video programming, and greater choice in how they access that programming, when they access it and where they access it.
In time, new digital technologies could potentially replace regulated undertakings. This is why it is crucial for broadcasters to explore new opportunities to bring content to consumers.
Canadians, and particularly teenagers and young adults, are increasingly accessing programming through unregulated platforms such as the Internet. In the next decade, these younger Canadians will begin to exert their full influence on the marketplace, although it is too early to predict their future behaviour.
So when can broadcasters expect to feel the impacts of new technologies and the financial ramifications that might be associated with them? We found widespread uncertainty over this question. There was also a lack of consensus over the question of what regulations may be needed or not needed for broadcasters and new media.
Section 5 of the act instructs us that the broadcasting system should be regulated and supervised in a flexible manner so that it may adapt to technological change. This explicitly recognizes that different platforms and technologies contribute to the objectives of the act in different ways. As we move forward, one of the basic considerations will be to ensure that the broadcasting system continues to achieve these same objectives.
At the present time, there is a healthy Canadian presence in new user-generated content as well as in new media programming in short format such as news and sports clips. For the expensive, long-form programming, such as drama and nation-building events, we found that the same challenges exist for Canadian content in new media as in broadcasting.
Given the evidence provided with respect to the speed and acceptance of technological change, the commission concluded that it would prudent for policy-makers to assume that broadcasting undertakings may experience a material impact within the foreseeable future.
Participants in the study raised a very important question: should new media make an explicit contribution to our social and cultural goals? If you find that the answer is yes, then the next question you must ask is whether or not public policy intervention is necessary. And finally, if public policy intervention is indeed required, what are the most effective tools to ensure that new media does its part in the attainment of our goals?
Participants were also in agreement that the detailed and ongoing monitoring of developments is essential for an informed public policy response.
The commission has already placed a greater emphasis on monitoring the impact of new technologies so that it may contribute to the formulation of the best policy and regulatory response possible. Notably, we have created a new media policy and research group.
As well, we are now in the process of reviewing our principal policies and regulations. We started by publishing, in February 2006, a framework to guide the migration of analog pay and specialty services to a digital environment. Then, this past December, we issued a revised policy on radio and we are now reviewing our policy on over-the-air television. Once we complete this review later this spring, we will be taking a closer look at our policies on discretionary services and broadcasting distribution.
After reviewing the rules for over-the-air television, we will proceed with the renewal of licences of these services, and of course those of the CBC.
Before closing, I wish to underscore the high quality of the submission that the CBC provided to our study. These submissions are available on our website under “Broadcasting, Public Notice CRTC 2006-72”.
We look forward to the results of your study and now welcome any questions you may have.
Thank you. Je vous remercie.
Mr. Scott Hutton:
Not to downplay changes that are before us, but if one looks at our situation right now--forget about new media--you have newspapers, you have magazines, you have arts, you have broadcasting. There are probably a number of different ways for Canadians to see themselves or to see stories about themselves and/or to express themselves. I think that's the foundation of the Broadcasting Act and a lot of our public policy interventions in all of the fields.
We have now an additional field coming on stream. It is a field that is probably closer to the areas that we've traditionally been dealing with, because a lot of the companies involved in this new field are either telecommunications companies, which we regulate under the Telecommunications Act, or broadcasting enterprises, which we regulate under the Broadcasting Act.
So you do have an existing role, and now you have something new. I think as policy-makers, we need to look forward. It will have to be a mix, into the future, of a variety of interventions. What are our responsibilities right now, or what is the CRTC's tool kit as it looks at broadcasters? Well, we have exhibition requirements, a percentage of Cancon, whether you agree with that or not. In the on-demand world, you'll be looking at shelf space instead of percentage of viewing. So those are tools that we can evolve into that domain.
We have expenditure requirements. We require broadcasters to reinvest or cable companies to reinvest into Canadian content. Money is something that would likely be able to survive into the future, so that's something you can probably count on there. What you may not count on is the source of that money. As you have more and more competition in this domain, as you have more and more players, as the market gets larger and larger, you may not be able to depend on the current players to be providing those funds.
Does that mean we look at different players to be providing them to those funds? Maybe. Do we look at more direct government intervention, again, to promote that, to provide those funds? Those are options into the future.
In terms of government intervention, certainly we don't have those funds, or that mandate hasn't been provided to us at this point in time, but our current means certainly will be challenged. What we are doing right now and over the next number of months is really finding out where the CRTC will find itself. What will the CRTC look like in five years? We have a new chairman, and he's asked us that question. Certainly we are going to be embarking on that domain.
Really, we have to go back to asking what's the main role of the broadcasting system. I think, or I would be a proponent of saying, there is a role for somebody to defend that in the broadcasting world, going forward. What exactly will that look like? It will be an evolution of our current tool kit, that's for sure, but I think something can be done certainly in the next five years, since the full impact, as we indicated in our deck, is probably a half-generation away.
Mr. Ed Fast:
Thank you, Mr. Chair.
Again going to new media, we have so many new technologies available to us, especially in the wireless world, where people want to receive a lot of this content on their iPods or their PDAs. In fact, just recently there was the announcement of the Slingbox, which will allow people to view what they could normally watch on television on any portable device that has the capabilities.
The challenge, of course, for not only the CBC but the broadcasting industry in general in Canada is how you capture that content. How do you “monetize” it, as Mr. Angus referred to it?
That brings me to the question that relates to the new media exemption. At present, almost all new media is exempted from regulation by the CRTC. I refer you to sections 392 through to 398 of the report.
There appear to be two minds within the industry. Some of the players, of course, believe very strongly that the new media exemption should stay in place, that it contributes to allowing this technology to develop within Canada. Other players, such as the CBC, the official languages commissioner, some of the cultural and production stakeholders, have questioned the value of the new media exemption.
What I'd like to do is quote some of the comments made in the report, first of all from section 396:
||The Commission notes the comments from many parties that the new media exemption order has helped foster innovation and entrepreneurship by Canadian companies on the Internet.
Then we move to section 397:
||It is certainly the case that the presence of the new media exemption order does not in any way preclude Canadian entities from undertaking self-initiated activities consistent with the objectives of the Act. Nor does the presence of the new media exemption order prevent government or the Commission from creating incentives to encourage broadcasting undertakings to launch Canadian content-rich Internet or mobile based services....
And then finally, section 398 says:
||Traditional regulatory approaches are not the only means by which public policy can enhance a Canadian presence on new media platforms. Incentive-based regulatory measures may ultimately be more likely to succeed in the emerging “open” broadcasting system.
Now, those comments, which I believe may reflect the Commission's bias—maybe I'm using the wrong term—certainly reflect an indicator that an incentive-based approach to regulating new media may be more desirable than the traditional model.
My question to you is, first, have you already taken a position on that? The other question is, is there any intention of lifting the new media exemption in the near future?
Mr. Graham Fraser (Commissioner of Official Languages, Office of the Commissioner of Official Languages):
Thank you very much, Mr. Chairman. I'm here with assistant commissioners Gérard Finn and Renald Dussault, who will be able to answer some of the more detailed questions that I'm sure you will have.
I am grateful to the committee for allowing me this opportunity to appear before you today, which by a happy coincidence is the International Day of La Francophonie.
I am deeply interested in the subject you are discussing. Being a federal institution fully subject to the Official Languages Act, the CBC has obligations to take positive measures to promote Canada’s linguistic duality and enhance the vitality of English and French linguistic minority communities. Our national broadcaster must also protect our common heritage, strengthen our identity, and reaffirm our values. This is particularly true in an era of globalization marked by increasing diversity and developing tensions that sometimes threaten our linguistic partnership.
Today, I'd like to discuss the universality of access to the CBC’s radio and television stations and the important role the CBC has to undertake to create cross-cultural bridges. The CBC is at the heart of Canada’s broadcasting system. I believe it is vital to reaffirm its importance as an essential instrument for promoting, preserving, and sustaining Canadian culture. We need a CBC that's not only on the technology frontier, but also has a vision about Canada and its future.
The CBC has demonstrated success at providing radio and television programming that tells the story of linguistic realities across the solitudes. It should be celebrated and further encouraged for its distinctive contribution to Canadian programming, especially on new media platforms. The CBC should continue to play a leadership role within the Canadian broadcasting system, especially in an increasingly fragmented media environment. New media services, for example, can and do complement the CBC’s overall programming strategy.
In order to ensure CBC's services to all Canadians in both official languages, it's important not to diminish the full range of obligations that the CBC already carries under the Broadcasting Act to develop regional programming.
The CBC has long been a lifeline for information and cultural connection within regions and across the country. In several regions of the country, the CBC remains the only relevant media channel in the official minority language. This is particularly true for minority francophone communities but also for the English minority in Quebec.
I strongly support the efforts of the CBC to serve these threatened communities, and in particular, the CBC's Quebec Community Network for English radio, the maintenance of a strong French TV and radio journalistic and cultural presence in communities outside Quebec, and French-language TV projects based outside Quebec.
However, there are still significant shortcomings in regional programming as, over the year, production has been centralized in Montreal and Toronto. The CBC itself has expressed serious concerns about this. The plans it developed in 2005 proposed a series of measures to re-establish a strong regional and local CBC presence in the regions. One of those measures was to substantially increase cultural programming for the main networks from new and existing production centres outside Quebec.
The government should support an increased role for the CBC in regional programming. This is already reflected in the Broadcasting Act, but funding has not respected this obligation. If the act is amended, these regional obligations should be maintained and if need be, strengthened.
Over the years, the CBC has developed and produced what one could call cross-linguistic programming. Canada: A People's History and Breaking Point, a program on the Quebec referendum of 1995, are memorable examples. However, paradoxically, at a time when more and more Canadians are becoming bilingual, truly bilingual journalistic and artistic dialogues on television and radio have become more rare. This is regrettable. As Canadians, we need to talk to one another more often and to work together more closely. Fortunately, a few programs, like CBC Radio One's C'est la vie and Newsworld's Au Courant use talented and insightful hosts to provide a glimpse into the current lives of Canadians who speak French.
Nevertheless, cross-linguistic programming has never become a normal part of operations for the CBC and Radio-Canada. I believe this should change. The CBC should have as a priority the development of more cross-linguistic programs, especially on new media platforms, which are more flexible and adaptable. We're not proposing cod liver oil programming, but programs that show us how the lives of people who speak the other official language can inherently be interesting and engaging.
It's also important that the CBC create actual and virtual spaces for media professionals from both language groups within the corporation to exchange and develop ideas and common projects. One example of this cross-linguistic collaboration is the way producers and staff working for Radio Two or for Espace musique frequently collaborate on live music recording and other programming activities.
What's been lacking is not the will and imagination to work creatively together but the absence of a common space for bilingual and bicultural collaboration. It's difficult to understand how the CBC can hope to foster understanding between English- and French-speaking Canadians if it cannot create internally, from the bottom up, the conditions that allow anglophone and francophone artists and artisans to work creatively together.
Subsection 46(4) of the Broadcasting Act sets out:
||(4) In planning extensions of broadcasting services, the Corporation shall have regard to the principles and purposes of the Official Languages Act.
There are particular challenges in this regard related to the current transition to digital services. Currently the CBC's hybrid digital HD strategy involves the replacement in major markets of analog transmitters with digital, high-definition, over-the-air transmitters. These transmitters would reach 80% of the Canadian population.
Elsewhere, satellite, cable, or even Internet protocol television would be used. This means that in remote and rural communities, citizens will have little choice but to subscribe to services like ExpressVu and Star Choice. However, there is a problem. These services do not transmit to all local stations. In fact, I met someone in Saskatchewan recently who had switched to a satellite service and had discovered that he could no longer get local programming from Regina. As a result, many members of minority language communities may not have access to the local Radio-Canada services that are fundamental to their development.
Universality of access must remain CBC's fundamental principle. During the transition period, the CBC signal must continue to be available over the air, especially to smaller communities.
As over-the-air transmission becomes less sustainable, obligations will have to be placed on satellite providers to carry the full complement of the CBC's programming. To that end, I want to reiterate the recommendation made by this committee in 2003: the government, by order in council, should direct the CRTC to require Canada's direct-to-home satellite providers to carry the signals of all local television stations of the CBC and Radio-Canada.
That said, I believe that the federal government should ensure that the CBC has the tools and the funding necessary to provide a distinctive and independent national voice in both official languages.
Chronic underfunding has made it more and more difficult for the CBC to continue to reflect the aspirations and achievements of Canadians on a regional and local basis. It is simply not possible for the CBC to continue much longer to strive for excellence on a shoestring budget. Appropriations granted to the CBC by Parliament should be increased at a minimum to their level prior to 1996 and should increase, at a minimum, relative to the overall growth in government expenditures and overall federal cultural spending, based in part on comparisons with spending on other public broadcasters with similar mandate obligations around the world. For example, Switzerland, a nation with more than one official language, funds public broadcasting at 2.5 times the Canadian level. The BBC is funded at the level of $122 per Briton versus about $33 per Canadian for the CBC. Out of 18 countries with public broadcasting systems, Canada ranks 15th in terms of capital funding.
The government must support the CBC's ability to carry out the full range of its obligations through the proper level of financing. I repeat the recommendation made by this committee in 2003: Parliament should provide the CBC/Radio-Canada with increased and stable multi-year funding.
In the past, the CBC has shown that it was willing to rise to the challenge of being an instrument for promoting and sustaining Canadian culture in both English and French and for enhancing the vitality of our minority language communities. I am confident that with the help and guidance of this committee, the CBC can adapt and renew itself as a truly national public broadcaster in this new century.
Thank you very much.
I shall be happy to answer any questions.
Hon. Hedy Fry (Vancouver Centre, Lib.):
Thank you for coming, because I think your presentation is vital. There are huge minority communities of francophones around this country. In British Columbia, for instance, there are about 65,000 francophones, but they're not all in one place; they are scattered all over the place. Only Vancouver really gets any CBC French language programming; with the Fédération des francophones de la Colombie-Britannique, they get some media covering what they do. But in Campbell River and in other areas of B.C. up north where there are huge francophone communities, nothing is said, nothing is done. I think the problem most people underline is that from the CBC, people in Quebec and across Canada have no idea of the minority communities of francophones in British Columbia. And CBC's mandate is not only to reflect Canada to others, but also to reflect regions to Canada.
That brings me to what we were talking about earlier, which has to do with the digital medium. With new digital media, CBC has an opportunity to do this, to be able to reach and link digitally the small communities across Canada, especially francophone minorities, and to make sure this is nationally available, so that Quebeckers know what the regional diversity of Canada is about in terms of the francophone minority. Francophones get Quebec media very easily, but there is no other flow.
I would like to ask your opinion on this. Do you think that if the CRTC, instead of waiting 10 years, became proactive and decided to look at Internet licences, so that the CBC could develop not just radio but also TV on the Internet to move across this country, this would be one way of bringing a linguistic reality in terms of bilingualism and the francophone reality across the country? Do you see an Internet licence from the CRTC as an integral part of this, so that the CBC could move into the digital media? As we heard earlier on, it's not merely francophone communities but also rural communities who cannot have access any more because cable companies now have all the infrastructure for digital, and people can't afford to buy a lot of that digital access through cable and the box they have to buy, at about $400 each.
So moving into the Internet would be a great way of introducing a whole new group of young Canadians to the francophone minority, which could also be done through iPods. Do you see that development of an Internet licence as the crucial thing? How do you think we can get the CRTC to understand that that should be done now and not in 10 years' time?