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37th PARLIAMENT, 1st SESSION

Standing Committee on Canadian Heritage

EVIDENCE

CONTENTS

Tuesday, June 11, 2002

0905

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.))

0910

Mr. Bruce Stockfish (Director General, Department of Canadian Heritage)

0915

0920

Ms. Michèle Gervais (Director, Intellectual Property Policy, Department of Industry)

0925

0930

The Chair

Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.)

The Chair

Mr. Larry Korba (Group Leader, Network Computing, National Research Council of Canada)

0935

0940

0945

The Chair

Mr. Chris Herringshaw (Founder and Chief Technology Officer, Quova Inc.)

0950

The Chair

Mr. Dan O'Hara (Senior Technical Architect, Danara Software Systems)

0955

The Chair

Mr. Abbott

1000

Ms. Michèle Gervais

Mr. Abbott

Ms. Michèle Gervais

Mr. Dan O'Hara

Mr. Abbott

Mr. Dan O'Hara

Mr. Abbott

Mr. Dan O'Hara

Mr. Bruce Stockfish

1005

Mr. Abbott

Mr. Larry Korba

The Chair

Mr. Chris Herringshaw

The Chair

Mr. Dan O'Hara

The Chair

Mrs. Michèle Gervais

1010

Ms. Christiane Gagnon

Mr. Bruce Stockfish

Mr. Jeff Richstone (Legal Counsel, Department of Canadian Heritage)

1015

Mr. Bruce Stockfish

Ms. Christiane Gagnon

1020

Mr. Bruce Stockfish

Mr. Jeff Richstone

The Chair

Mr. Dennis Mills (Toronto—Danforth, Lib.)

Mr. Bruce Stockfish

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Mills (Toronto—Danforth)

Mr. Bruce Stockfish

Mr. Mills (Toronto—Danforth)

Mr. Bruce Stockfish

Mr. Mills (Toronto—Danforth)

1025

Mr. Bruce Stockfish

Mr. Mills (Toronto—Danforth)

Mr. Jeff Richstone

Mr. Mills (Toronto—Danforth)

Mr. Bruce Stockfish

Mr. Dennis Mills

1030

Mr. Bruce Stockfish

Ms. Sarmite Bulte (Parkdale—High Park, Lib.)

Ms. Michèle Gervais

Ms. Sarmite Bulte

Ms. Michèle Gervais

Ms. Sarmite Bulte

1035

Ms. Michèle Gervais

Ms. Sarmite Bulte

Mr. Bruce Stockfish

Ms. Sarmite Bulte

Mr. Bruce Stockfish

1040

The Chair

Mr. Jeff Richstone

The Chair

Mr. Jeff Richstone

The Chair

Mr. Harvard

Mr. Dan O'Hara

The Chair

Mr. Dan O'Hara

1045

Mr. John Harvard

Mr. Dan O'Hara

Mr. John Harvard

Mr. Dan O'Hara

Mr. John Harvard

Mr. Bruce Stockfish

Mr. John Harvard

The Chair

Ms. Betty Hinton (Kamloops, Thompson and Highland Valleys, Canadian Alliance)

The Chair

Mr. Mills (Toronto—Danforth)

The Chair

Mr. Mills

The Chair

Ms. Betty Hinton

Mr. Chris Herringshaw

Ms. Betty Hinton

Mr. Chris Herringshaw

Ms. Betty Hinton

Mr. Chris Herringshaw

Ms. Betty Hinton

Mr. Chris Herringshaw

Ms. Betty Hinton

The Chair

Mr. Jim Abbott

1050

Mr. Larry Korba

Mr. Jim Abbott

Mr. Larry Korba

Mr. Chris Herringshaw

The Chair

Ms. Sarmite Bulte

1055

Mr. Dan O'Hara

The Chair

Mr. Dan O'Hara

The Chair

Mr. Dan O'Hara

Ms. Sarmite Bulte

Mr. Dan O'Hara

The Chair

Mr. John Harvard

Mr. Dan O'Hara

Mr. John Harvard

1100

Mr. Dan O'Hara

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Dennis Mills

Mr. Bruce Stockfish

1105

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Dennis Mills

Mr. Bruce Stockfish

Mr. Dennis Mills

The Chair

Mr. Jim Abbott

The Chair

Mr. Jim Abbott

The Chair

Mr. John Harvard

The Chair

1110

Mr. Mills (Toronto—Danforth)

The Chair

Mr. John Harvard

The Chair

CANADA

Standing Committee on Canadian Heritage

NUMBER 073

1st SESSION

37th PARLIAMENT

EVIDENCE

Tuesday, June 11, 2002

[Recorded by Electronic Apparatus]

¿ (0905)

[Translation]

The Chair (Mr. Clifford Lincoln (Lac-Saint-Louis, Lib.)): The Standing Committee on Canadian Heritage is meeting today to consider Bill C-48, an Act to amend the Copyright Act.

[English]

I would like to call as witnesses the officials from the Department of Canadian Heritage and the Department of Industry: Mr. Dan O'Hara, from Danara Software Systems; Mr. Chris Herringshaw, from Quova Inc.; and Mr. Larry Korba, from the National Research Council of Canada.

I suggest we open with a very brief statement from the officials of the departments, after which we will turn it over to the technical experts who have agreed to come before us to explain the technological alternatives presented by Bill C-48.

I'll turn it over to you, Mr. Stockfish.

¿ (0910)

Mr. Bruce Stockfish (Director General, Department of Canadian Heritage): Thank you, Mr. Chairman.

I'll briefly introduce my colleagues. With me I have Michael Himsl, senior policy analyst with the copyright policy branch of the Department of Canadian Heritage; Jeff Richstone, general counsel with legal services at the Department of Canadian Heritage; Michèle Gervais, director of the intellectual property policy branch of Industry Canada; Bruce Couchman, senior legal analyst with Industry Canada in the intellectual property policy branch; and Anna Marie Labelle, with Industry Canada legal services.

I will not presume to introduce the experts. We have Larry Korba with us at the table from the National Research Council. I'm not aware of the other experts the committee requested to attend this morning.

I will be very brief, and then my colleague, Mr. Gervais, will make a very brief statement as well. I know a number of questions have come up in recent days. You will undoubtedly have some questions for us. I know you're anxious to get on with clause-by-clause.

We've heard the testimony of the various witnesses before you over the last few days and the questions you had for them. We understand the concerns that have been raised. Basically, the question you must be asking yourselves at this point and want to put to us is why not an Internet carve-out? Certainly that's a question we have considered all along, and it's not a new question. We have heard this in the consultations.

In the June 22 consultation document, which we shared with you at our session on May 29, we examined the question of an Internet carve-out as one of the options. Certainly we have heard from stakeholders as well. We have heard from the rights holders on the concerns they have addressed. We've attempted to address those concerns in the policy option we developed.

We did not choose an absolute Internet carve-out, in the interest of addressing balance and overall public policy. We attempted to deal with the concerns of stakeholders, nevertheless, through the approach we took, which was to develop regulations that would set out conditions new Internet retransmitters would have to follow, in order to deal with the legitimate concerns that have been raised by stakeholders.

I propose to simply share with you three policy considerations we have taken into account in dealing with these issues. Then I'll let Ms Gervais conclude.

First, some of the objections we have heard before the committee have been not so much about an Internet compulsory licence as the nature of the compulsory licence in general. I just want to put the nature of the compulsory licence in the context of copyright, generally.

Copyright, of course, is a matter of exclusive rights for creators of works. The nature of copyright is such that there is exclusivity; there is control over works. In order for users to have access to creators' works, there needs to be clearance of those works.

There are exceptions, however, in the Copyright Act that are not so much in the interest of users, but in the interest of public policy, the overall interest of the public. We have recognized exceptions with regard to fair dealing and educational use, and these exceptions have been accepted by rights holders, as a general rule. Of course they don't like them, and we understand that. Nevertheless, copyright is about balancing interests between rights holders and users.

The compulsory licence that section 31 addresses in the Copyright Act is a sort of exception. It allows for remuneration of rights holders, but it takes away the control. The fact is that the nature of this particular exception, this compulsory licence, is to deal again with public policy, with overall public interest.

¿ (0915)

The reason we have a compulsory licence in the Copyright Act—as objectionable as it may be to some rights holders—is to deal with the broader interests of broadcast policy. It would be too difficult for cable and other retransmitters to clear all the rights that are inherent in television and radio programming—the many levels of rights that start out with the creator of the programming and the producer, right through to the broadcaster.

In order to ensure that the Canadian public has access to retransmission, to signals being transmitted across the country, it was felt desirable to have a compulsory licence to ensure that this broadcast policy was respected. In fact, it has been accepted. It was accepted with regard to cable and in fact has been extended to other forms of retransmission—satellite retransmission, for example.

The question before us is not so much whether a compulsory licence is a desirable thing—we have heard from various witnesses before you that it is not desirable in principle. But as a matter of policy, the compulsory licence exists now, and the real question is whether it should be extended to the Internet. With appropriate conditions in place, we think it is possible to allow for the Internet to be used as a vehicle for retransmission with the same protections inherent with regard to cable and satellite.

My second point is that some of the objections you've heard to Bill C-48 are, to some extent at least, based on a misconception as to its basis. Many witnesses objected to Bill C-48 on the basis that it would allow for unrestricted retransmission. Of course, the concern we all have with regard to the Internet is its global reach; it is different from cable, and to some extent, even though there is spillover with regard to satellite, it is different from satellite.

But Bill C-48 attempts to deal with these concerns. It deals with them in the regulations we contemplate. It deals with them in conditions we would attach to Internet retransmission. The objections you heard with regard to spillover, with regard to potential trade challenges, and with regard to violations of TRIPS are really dealing with unrestricted retransmission. That's not what Bill C-48 is about.

So when you hear objections to the bill, they should be in the context of what the bill does, and not what an unrestricted regime will do. Bill C-48 is about restricted, qualified retransmission, and the restrictions, of course, are geographic in nature and they would be technical restrictions.

Many have argued as well that the technology just doesn't exist, that it can't be done. We'll hear from our technical experts this morning as to their views. But with respect, that is somewhat beside the point. If in fact the technology does not exist, then of course the conditions in the regulations that would be necessary to comply with in order to have the benefit of the licence would not be complied with. As a result, there would be no compulsory licence. There would be no Internet retransmission.

Last, the third point I wanted to address was really to follow up on the process point Mr. Wernick made in his statement to you on May 29 with regard to the so-called moratorium, the approach this bill takes. The point I wanted to emphasize this morning is that in many respects Bill C-48 is an Internet carve-out, at least in terms of the overall approach.

As Mr. Wernick had explained, in fact Bill C-48 will do nothing more than clarify section 31 to make clear that existing retransmitters, cable and satellite, will continue to have the benefit of the licence. It does allow for other retransmitters, however, by way of regulation. There was some question as to whether this was clear enough in the statute. Many supported the government view that in fact until the regulations were made, the Internet retransmitters would not have the benefit of the licence.

There was some doubt planted on the part of others, and we can undertake to provide language that would be the basis of a motion to clarify this, if the committee wishes. This was in fact one of the proposals offered by the Canadian Association of Broadcasters. Clearly, it would prefer the Internet carve-out—and I'm sure you'll be hearing its preference in that respect as well. But the amendment to clarify the fact that this moratorium will be in existence until the regulations are made can be done, and we would offer language to make it very clear.

To conclude, Mr. Chair, I would simply indicate that copyright is about a balance of interests. This bill is like any other copyright issue; it's about balance. In this case, it's about the balance of interests between the legitimate interests of rights holders and the need for flexibility when it comes to making regulations that would allow for new retransmitters pursuant to new technologies.

¿ (0920)

To discuss the basis for that new technology and the need for flexibility, I turn to my colleague, Ms. Gervais, from Industry Canada.

Thank you, Mr. Chairman.

Ms. Michèle Gervais (Director, Intellectual Property Policy, Department of Industry): Mr. Chairman, in our view, the positive impacts of retransmission on the Internet can be broken down into three subheadings. We believe that it can contribute to the creation of content, the development of new technologies, and the development of new business models. First I'll deal with how it can contribute to the creation of content.

As you heard earlier from CHUM TV, they're more than prepared to be subject to the CRTC rules imposed under the Broadcasting Act. One of the elements of broadcasting regulation is contribution to the production of Canadian content through the Canadian Television Production Fund. This is an issue that will be left with the CRTC to address in the context of the work it will be doing further to the section 15 referral mentioned by the ministers in their letter to you, Mr. Lincoln.

Contributions to the new media retransmitters will also take place through payment to copyright holders by way of the tariffs set by the Copyright Board. The tariff can be substantial, depending on the number of subscribers that would eventually receive Internet retransmission. In the case of cable, as you probably know, nearly $50 million in tariffs are collected annually, which are then redistributed to copyright owners.

With regard to the contribution to the development of new technologies and business models, as you may already know, key principles have been identified to help the governments in Canada put in place a framework to take Canada from fourteenth to fifth in research intensity among industrialized countries. One of those principles is to create a competitive business climate conducive to industrial innovation. In our view, Internet retransmission could contribute in a meaningful way to such a competitive climate, with minimal risks for the industry because of the safeguards that would be imposed through the regulations once developed. We think this would be consistent with the federal government's plan to make Canada the most connected country in the world. Broadband access is a key part of the connecting agenda.

We believe that in an increasingly competitive knowledge-based economy, Canada can benefit by becoming a world leader in the development and use of advanced information and communication technology. Retransmission of programs over the Internet is one area where Canada could play a leadership role in encouraging technological developments, the creation of new partnerships and business models, and eventually new content.

In fact, broadcasting policy also attaches importance to the promotion of information technology. You may recall that paragraph 5(2)(f) of the Broadcasting Act regulations, the so-called regulatory policies of the CRTC, provides specifically that the Canadian broadcasting system should be regulated and supervised in a flexible manner that does not inhibit the development of information technologies and their applications or the delivery of resulting services to Canadians. Therefore, even Broadcasting Act policy recognizes the importance of not inhibiting the development of new technologies, such as the Internet.

Here's a key message that I would like to leave with you today. Let's not wait for the Internet to be perfectly developed to open the door to new technologies and to create an even more competitive business climate. In the research we have done over the last months, we have learned that there is leakage even with existing retransmission technologies. Satellite retransmission, for example, is not limited to Canada. Piracy and unauthorized access are already taking place with existing technologies. So it would not be a precedent, if you will, with the Internet.

¿ (0925)

Experts have told us that it is as easy to do proxying—a retransmitted signal from one's home computer—whether the signal is first received from a cable retransmitter or a satellite retransmitter, as it would if the signal were received from an Internet retransmitter. In other words, the risk of proxying does not vary significantly because the initial retransmission took place over the Internet. If anything, the faster the Internet retransmission develops, the faster accessible technologies to prevent unauthorized access, accessible encryption, or streaming technologies will develop.

Another key message I would like to leave you with today is that it will be in the interest of new media retransmitters to develop technologies related to security as soon as possible. Internet retransmitters will have a benefit in seeing such technologies develop, because it will not be in their interest to let unauthorized access take place on their site.

It will not be in their interest from two points of view. First of all, for them it would represent a loss of income, in that someone would be accessing their service without paying, under the subscription model; and secondly, they would also be required to incur the costs for the additional bandwidth used for such unauthorized uses. Therefore, new media transmitters will want their security mechanisms to be effective.

It's our understanding that, at least initially, Internet retransmission would overlap significantly with cable or satellite. A large part of the population today already has access to retransmitted programs through cable or satellite and would access Internet retransmission perhaps from the office or home computer in addition to their regular television cable or satellite service.

Quality of image, sound, and speed of Internet retransmission are not comparable to quality programs that Canadians have been used to receiving through existing BDUs. Yet if Internet retransmissions were allowed to benefit from the compulsory licence, such an initiative would open the door to a number of R and D projects for the development of technologies related to the use of video on the Internet that could have application both in Canada and worldwide. So we believe that video streaming has the potential of being an important stimulus for the development of technologies related to broadband, new security mechanisms such as encryption, scrambling, encoding, and real time, that are effective and accessible from a cost point of view.

We believe Internet retransmission is one area where Canada can make a difference and open the door to innovation of all kinds, whether technological, new business models, new products, or new partnerships between the related industry members.

If Canadian businesses are given the opportunity to be more innovative, it will mean for them greater competitiveness. When we talk about information technologies and the Internet and greater competitiveness in global markets, our most innovative industries are outward oriented and compete more successfully in world markets.

Internet retransmission will not destroy market exclusivity, as some have argued before you. Retransmission will be required to be contained within Canada, and if effective technological measures are not maintained, reception will be terminated.

Retransmission through the Internet would not only benefit Internet retransmitters as such. The cable industry has its own plans to use the Internet for its own development—for interactive television, for example, which would allow a viewer to access additional material during a retransmission, whether it be more information about the program they're watching, e-commerce applications, and so on.

It is impossible to predict what relationships may develop between producers, broadcasters, retransmitters, and providers of technology, or what business models technology may offer, whether it's watching a program, reading e-mails, or accessing a web page about a program, all on the same screen. It's fairly clear, however, that convergence of broadcasting, telecom, and information technologies is most likely to happen with the technological developments this will require as a prerequisite.

To conclude, again we believe this is a unique opportunity for Canada to show leadership and to allow its creators and businesses to be innovative and creative, subject to appropriate regulatory safeguards.

Thank you.

¿ (0930)

The Chair: We expressed the desire the other day to hear from technical experts as to the impact of technology on Bill C-48, so we have three advisers here, Mr. Larry Korba, group leader of network computing from the National Research Council of Canada; Mr. Dan O'Hara, senior technical architect of Danara Software Systems; and Mr. Chris Herringshaw, founder and chief technology officer of Quova Inc.

Before we do that, I'd like to call the attention of members to a very brief item we have to deal with before the House closes, and I would like your agreement. You have a sheet there with a budget formula that should be corrected. It shows a period at the start, and it should be April 1 to December 31.

I would like to mention to members that all the individual items have already been discussed and accepted by the committee. It's just that we have to present a summarized budget for the rest of our study to the budget committee for approval. The budget committee is meeting on Thursday, and we have to have the agreement of the committee to present this as it is. I'd like unanimous consent that we do this and that this budget be approved as presented.

Mr. John Harvard (Charleswood St. James—Assiniboia, Lib.): I so move.

(Motion agreed to)

The Chair: We'll now go on to Mr. Korba.

Mr. Larry Korba (Group Leader, Network Computing, National Research Council of Canada): I'm here to talk about some of the technologies that would be required to make Internet redistribution a reality in terms of what's stated in this proposed legislation. The key issues here are really subscriber-based authentication, encrypted multimedia streams, and restrictions based upon detected Internet geolocation. If I could address each one of those separately, perhaps you'll get a glimpse of where technology is today and where I see it going in the future.

First, the encrypted multimedia stream is really to limit interception of reuse of broadcasts, I would imagine. It has some overhead costs, but I'm sure much of that has been mitigated through the development of Internet technologies themselves. It really does not prevent streaming, however, to a file on a person's computer. We have already heard of the whole notion that someone who has received an Internet transmission in the clear can then store it to a file and distribute it using other techniques, such as posting to a news group or sharing a file in a peer-to-peer network. This happens every day. The Internet is rampant with this situation. However, the bill doesn't really address the issues of security on the personal computer itself.

In terms of geolocation, there are a number of different technologies available today on the Internet that attempt to provide geolocation. One of them, for instance, is VisualRoute, which is an application that one can run on a local PC or actually access over the Internet to determine the location of an Internet protocol address. It works reasonably well for some users. Another one is called Geobytes. It was interesting; when I tried to use it just the other day, it showed my home as being in London, Ontario, and my work computer in Saint Augustine, Florida. It was convinced that was the location.

In terms of Quova, they use a more thorough approach to ascertaining the location of users on the Internet. If it's an improvement over VisualRoute, it could indeed be an excellent technology. It does, however, use techniques that have been criticized by Internet experts. They use an approach that actually scans to discover the geographic location of the many billions of Internet addresses. This creates Internet traffic and it has to be done on a regular basis because of the nature of the Internet. There are also issues around the actual locations, which are stored, in some cases, in routers on the Internet. So these are switch points on the Internet. There's a location that actually stores the geographic location and longitude and latitude of the router itself. Those are often in error.

From what I read about Quova, the interesting issue here is that I don't know exactly how well the Quova technology performs, because I was not able to find.... Perhaps the expert witnesses from Quova will provide some access to actual test data regarding its performance overall.

Accuracy and completeness are questionable in terms of technology today because of some issues around the proxies that are provided by some major ISPs--Internet service providers--such as AOL, which has several major proxies. In this case, especially in the U.S., this is a major issue because you just have a few proxies that are located only in a few cities across North America.

¿ (0935)

There's also the issue of private networks with limited Internet gateways, so people who are accessing, for instance, something like JumpTV from Toronto could be actually located in Toronto, accessing TV on their work computers. But that same company may have a subsidiary office in Singapore or somewhere in the U.S., with only a single access to the Internet located in Toronto and a virtual private network connecting that access point to Toronto. In that case, it would be impossible to determine where the actual location of the user is. To get that information, we'd require release of information from the company as to the configuration of networks, and generally companies aren't willing to release that readily.

There's also the issue of what will happen with 2.5 G and 3 G wireless Internet access. In this case, there's yet another network layer, as opposed to the wired network, wherein users may want to access redistributed television over their cell phones or over their portable digital assistant devices. Technology today does not address that directly, and there needs to be a hybrid solution among other geolocation techniques that are used in the wireless sphere.

There is certainly a particular issue of privacy associated with the whole notion of one being able to ascertain the location of another user on the Internet. This has not been addressed in any terrific sense in terms of what I've read in the overview of the proceedings. It's probably not germane, but I would imagine that in terms of acceptance of this service it could become a major issue. And with the changes in privacy laws that are happening worldwide, there could be an important requirement as to how that information is held and released to third parties.

There's certainly the issue of constant scanning as would be required by Quova networks or other corporations or companies that would like to be able to maintain geographic location of all users on the Internet.

Another issue that I mentioned briefly was the whole notion of a custom viewer. I think this is an interesting side that hasn't been discussed at all in terms of the protection required to really assure that copyrighted material is used only for the purpose of being seen once, or for whatever the licence is given to the viewer for.

A viewer who is not a standard viewer but a customized viewer for let's say JumpTV or other retransmitters is an important first step. It helps hide the Internet transmission protocol that's used to relay the message to the user. It can also provide an extra layer, in this case the encryption layer, for protecting the stream, and also protect that data once it's in the clear on the user's computer from being saved as a file and then redistributed in other forms.

Unfortunately, throughout the Internet there are many custom viewers, and quite a number of them, especially the major ones, have been circumvented with these software packages that are freely available on the Internet that allow one to take a video stream, store it on a local computer, and then send it over and over again. So for instance if you wish to find all the episodes of The Simpsons, you can, or any other major television program. They tend to be stored either in news groups or on peer-to-peer clients, such as KaZaA and Morpheus.

In terms of the future, I agree that allowing regulations such as this to go ahead stimulates the improvement of technologies. Quova is a case in point of a technology that I would imagine would be an improvement over the technologies that are extant today but are used more for the point of view of Internet testing.

¿ (0940)

The wide-band infrastructure itself, plus the better compression algorithms we've seen so far that have enabled some of these earlier multimedia streaming applications, are getting better every day. One can, for instance, take all the data that might be in a DVD for a movie and compress it to something that is smaller than a regular CD and have quality that is extraordinary, both in terms of sound and video quality. In fact, high-speed Internet access as well is supporting applications such as computer-supported collaborative work, allowing artists to train their students over the Internet, providing very low latencies and high-quality images, and terrific synchronization with the audio--and very good audio quality.

I'm really mentioning this because a lot of the Internet technologies that have been developed today are driving these front-end applications. For instance, in NRC we are collaborating with the National Arts Centre, allowing Pinchas Zukerman to conduct master classes over the C4 Internet.

As well as that, major companies worldwide are developing better authentication approaches to assure that only subscribers, for instance, would be able to access the information that may be streamed to them. This means things like--this may sound a little bit esoteric--secure device drivers. I mentioned earlier the problem of having personal computers as an open architecture. This means information is readily available on how to access the details of how audio is sent to the loudspeakers or how video is sent to the computer display screen. But companies are developing secure device drivers that would provide much better protection, and a linkage with things like smart cards to assure that one cannot easily take those video streams or audio streams and divert them to files for non-copyrighted use of the material. This is, again, driven because of the demand for technology for distribution of copyrighted material.

Tools for cheating, however, will abound, and people will always try to circumvent the challenges placed there by redistributors or people who are trying to distribute copyrighted material itself. The whole area of digital rights establishment is quite a large one, and one that is actually somewhat touched upon by some of the legislation proposed here--the notion of being able to control the distribution of coyprighted material on a geographical basis, and to provide some sort of means of protecting the streams from being intercepted. That's one side of it.

There are other issues around those technologies which could be further developed to provide new models of distribution of copyrighted material that would not only meet geographical requirements, but the requirements of the copyright holder himself or herself.

The other issue is around the presence of dynamic proxies. These are proxies that might redistribute redistributed material. Currently, I understand that Quova maintains its database and has experts looking for situations that might indicate the presence of proxies. This can be done both on a software basis and in combination with an expert.

Currently, I would imagine the technology would be fairly good at detecting proxies. Yet there is the whole notion of having a proxy that is actually attached to peer-to-peer networking clients, which would mean that a proxy could be totally dynamic, appearing and reappearing anywhere on the Internet or in any particular geographic location. These are not available right now, but they're fairly simple to develop and could be in place if the desire were there in some talented hacker to do so.

That is the end of my discussion on the technologies. Thank you.

¿ (0945)

The Chair: Thank you very much, Mr. Korba.

Mr. Herringshaw.

Mr. Chris Herringshaw (Founder and Chief Technology Officer, Quova Inc.): Thank you.

I'd like to expand on some of the points Mr. Korba made, specifically about Quova and geolocation technology.

Quova is a small California software company based in San Francisco, and we develop technologies around geolocation. Geolocation is the science of determining where an Internet user is located.

The company's services are built on top of what we call the precision mapping technology, which is a series of patent-pending technologies we use to determine the location of an Internet user. These technologies range from things that are very simple and tools like VisualRoute, employed today, to very advanced proprietary things we do. Now, put all this together and we have a service called GeoPoint, which a company such as JumpTV can use to determine the location of an Internet user to a 99.9% accuracy or greater. These numbers come from our current client base and are not internal testing numbers. These are the numbers people who have paid to use our service have found through testing and have come back and given us.

We have deployed a worldwide network of servers who go out.... I'll just make one clarification. They don't actually scan networks, as Mr. Korba said. We actually generate our own traffic. So we don't actually take a look at any of the end computers. If you're sitting at home at your PC, we never take a look at that individual machine. Our solution is very privacy-compliant. We've actually taken this to the European Union, which has some of the strictest privacy laws we have heard about. We had them look at it, and they agreed that this was in compliance with almost all their standards.

Quova GeoPoint is a very highly accurate—as I said, to 99.9% at the country level or greater—privacy-compliant geolocation service a company such as JumpTV or others in many other industries could use and make part of their service and control to make intelligent decisions based on geography. The GeoPoint service maps IP addresses down to increasingly granular geographic resolutions, meaning we can do things as broad as the continent or things as specific as the actual city you're located in.

Mr. Korba mentioned earlier that he said his computer was in London, Ontario. That's the level of detail Quova can provide with a very high level of accuracy today.

One thing that's also very interesting about GeoPoint is that we provide a level of metadata on top of the geographic information, and this metadata includes things Mr. Korba alluded to, such as the identification of proxies, the identification of satellite-based networks, and the identification of private large virtual networks, those of companies such as General Electric or Boeing. We actually identify those.

So as you're looking at this data, if you want to make a decision about the location of the user, you can use this metadata and say: “Quova says they're coming from a proxy; I may or may not trust the geographic location I'm getting, so I'm going to fall back to another level of technology to make a decision and not base it solely on the geographic location.”

In most instances, though, with most of our client base you're going to see very highly accurate geolocation information for almost every IP address.

That's about all of the written presentation I have put together. I wanted to open it up to specific questions people may have. I didn't want to get too far into the technical details because that's not what you were looking for.

¿ (0950)

The Chair: Mr. O'Hara.

Mr. Dan O'Hara (Senior Technical Architect, Danara Software Systems): I presume this will be followed by questions for the three of us.

The Chair: Right. The briefer you are, the more questions there will be.

Mr. Dan O'Hara: Good enough. I'll try to keep it short.

My name is Dan O'Hara. I've been a computer consultant for nearly 24 years now. I was the principal architect of the system being used by JumpTV, so I'm very familiar with that system, how it works, and certainly what it's capable of.

One thing I wanted to point out is that in the previous two discussions we have focused very much on the geographic screening software. Even though the Quova software is 99.9%—or more—accurate at the country level, this really is only one of the three things we do to screen out people. So in fact our actual success rate is quite a bit higher than 99.9%. In fact, I believe that it is higher than the other retransmitters who are currently retransmitting enjoy.

The first of the three things that we do is to have a subscriber agreement, which is a legal agreement that our subscribers must adhere to. It specifically prevents them from engaging in the kinds of activities Mr. Korba alluded to—saving and retransmitting, for example, and so forth.

These same types of technologies are certainly readily available to other retransmitters now. In fact, it is far, far easier to take programming from cable TV, or over the air, and retransmit it over the Internet than it would be to try to get hold of our signals. As Mr. Korba said, hackers are out there doing these things. A 10-year-old can go out and figure out how to hook up the off-the-shelf equipment to be able to capture signals off cable, and transmit them over the Internet. You don't need any programming capability at all. From that point of view, it seems unlikely that someone is going to be wanting to take a JumpTV signal and retransmit it, because it would require horrific amounts of effort and a substantial investment in order to beat the security that we have put in place.

The second part of our security is credit-card verification. Our payment from subscribers is by credit card. That credit card must be a Canadian credit card, and it must be issued by a Canadian bank with a Canadian address. People in Singapore, the U.S., and elsewhere are really not likely to have a Canadian credit card with a Canadian address unless they're potentially doing credit card fraud, or something like that. But we consider this to be very unlikely. So we figure that anybody trying to get into our service from outside of Canada has, at most, no more than a one-in-1,000 chance of having a credit card that will pass the screening.

The data that we use for that screening is provided by the Canadian Credit Bureau. It is deemed to be very, very accurate, because credit card companies tend to really want to know where their subscribers are. So we believe that the database is also very accurate. We do this before we use the geolocation service by Quova. Just on the basis of this alone, I believe we have gone beyond 99%, before we multiply that by the screening that we do for Quova.

Of course the third thing we do is the geographic screening that we're doing with Quova. I really believe this gives us more like a real or true leakage of something like 1 in 100,000. So we're talking very, very small numbers of people. To be quite honest, I'm going to be very surprised if we even see one of them come through in our first year of operation.

Because this is so central to the retransmission issue in Canada, to make further improvements we have actually made other decisions on how we're going to implement this technology. The first is that we're not going to allow any dial-up users. The system will actually proactively test the connection to the end-user. If it doesn't meet a certain requirement for speed and capacity, then we won't start the streams to that user. This prevents people in border areas, like Detroit-Windsor, for example, from dialing an ISP in Windsor and then being able to hear our signals. So they can't use the long-distance phone system to get around the boundary. We believe that most of our users are going to be high-band-width users. But this will really make sure that at least one area is also cut off.

¿ (0955)

Proxy connections are also not going to be supported. You need to keep in mind that streaming media is not the web. Web proxy servers that we use for your web browser are not the same as the way we transmit data to our users. So the vast majority of proxy servers on the Internet are web proxy services designed for web browsers. Those are not going to work with JumpTV.

Other proxy servers are certainly possible. There are none that are actually commercial products or designed to work with streaming media. If someone does actually manage to create one, then we have a system in place to proactively check our logs and activities to look for a potential proxying. If we do see it and detect it, then those machines, obviously, will also be blocked in the future.

Further, the subscription in Quova security is not part of the website; it's part of the streaming servers. That level of security is actually implemented on every single request made from the customer to our streaming servers. In other words, it's not just something that happens when they're signing up and providing their credit card. We actually verify their connection every time they start a stream. In essence, every time they click the remote to change the channel to go to a different stream, we verify that same data again. So beating it once doesn't mean it's beaten for good; it means that the very next time it will be detected.

In addition, according to our subscriber agreement, people detected who are intentionally attempting to beat us will have their accounts locked, of course, and they won't be able to access the system any more at all.

So we feel that the fact that we're doing multiple things together, and the effect is going to be one of multiplying those ratios together in combination, means we have very, very high success rates. As I say, so far even in testing we have yet to actually show anybody being able to get through with a U.S. address, or one from anywhere else in the world, from that point of view.

The Chair: Thank you very much, Mr. O'Hara.

Are there questions from the members? Mr. Abbott.

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): Let's start from a statement of principle: JumpTV is a totally honourable, above-board business, and everything we have heard in terms of commitments from it with respect to adhering to or complying with the Broadcast Act it is going to do. Let's accept that totally, completely, and at face value without any question.

This bill isn't about JumpTV. This bill is about whether people using the Internet as a provider of the signal are going to be able to gain access to copyrighted material through Canada's Copyright Act. To that extent, although we have had an excellent and I think fulsome representation by JumpTV, we have to look beyond it to what the real issue is.

I would therefore ask, why would a cable company stay in the business of being a cable company, having to comply with the Broadcast Act, Canadian content rules, and all of the regulatory fees that come under the Broadcast Act? Why would a cable company presently hardwired to however many millions of Canadian homes not collapse its business and get into the Internet method of providing the signal?

Perhaps Madam Gervais might be able to answer that question for me.

À (1000)

Ms. Michèle Gervais: Well, I suspect cable companies have invested a significant amount of funds in their business and will continue their operations. I know, however, for a fact.... I was going to say we know for a fact, because this has been explained to us a number of times by the cable industry, that they definitely have plans with respect to convergence technologies to use the Internet in combination with their existing technologies.

Mr. Jim Abbott: But then, because of the CRTC exemption for new media, why would they not simply alter their technology, which would not be a massive alteration, and provide the other kind of equipment that would be required in order to be able to comply with being an Internet video service provider? Why would they not do that and get out from under the Broadcast Act?

Ms. Michèle Gervais: Dan O'Hara will help us with your question.

Mr. Dan O'Hara: Although I'm not familiar with the Broadcasting Act in terms of that part of your question, I believe that the cable companies already are moving in that direction. Digital cable in fact is already a very big move in that direction. Certainly the same infrastructure is capable of carrying either one in terms of traditional analog signals. However, with digital cable, they have the ability, as an Internet broadcaster would, to be able to transmit substantially larger amounts of programming in a very much more niche manner than you can in the broadcast mode.

The old technology is very squanderous of band width and the new digital technology is not. I think they already see that they've gone as far with that old technology as they can, which is why we don't see cable channels up around a couple of hundred unless it's done digitally. They've already used the existing analog band width and now they want to move into digital. I think digital cable is the start of it.

However, that is where of course a large part of their market is right now. For them it's more of a strategy of moving in such a way that they don't alienate their current customer base.

Mr. Jim Abbott: Then perhaps I need to have a clearer understanding of the difference between what people like JumpTV are proposing to provide, by comparison with the evolution and the direction in which cable companies are going to go.

Mr. Dan O'Hara: Well, I can only surmise the direction cable companies want to move in. But in terms of where I think JumpTV wants to go, it is really to provide a much wider, broader range of programming content for Canadians than is currently available in the public broadcast system.

Mr. Jim Abbott: But you see, that's exactly my argument. Whether I agree with or disagree with the Broadcasting Act, I'm not making a statement about that. I'm just saying that it exists. Internet, new media providers, by exemption do not have to comply with the Broadcasting Act.

Mr. Dan O'Hara: Yes, I really can't speak to the legal issues on that. Very much is focused on the technology issues involved in the regulations here for Bill C-48.

Mr. Bruce Stockfish: I might add, Mr. Abbott, that this indeed is one of the concerns the cable association has raised with us, and that an absolute Internet carve-out would be prejudicial to their interests as well. The whole purpose of the bill is to leave open the possibility for technological innovation--new technologies--which could be available to existing retransmitters as well.

These are really broadcast policy issues that we rather late in the process have come to understand are appropriately dealt with by the CRTC. The reason the government is intending to proceed with a section 15 process is to give the CRTC an opportunity to consider the nature of Internet retransmission in the context of the broadcast system generally and how it compares to existing retransmitters. And in fact one of the issues that would be looked at would be the nature of investment by cable and DTH satellite and how Internet retransmitters would propose to enter the market on that basis as well. It may be that it's appropriate for broadcast-oriented conditions to be applied to JumpTV and other Internet retransmitters, so that they compete on the same basis as existing retransmitters, such as cable.

À (1005)

Mr. Jim Abbott: New media retransmitter would be one phrase, I suppose. Not being a lawyer, I'm at a disadvantage in this respect, but I would suspect that if we were to refer to it as a new media retransmitter, as opposed to an Internet retransmitter, that might be helpful.

But I'd like to ask one last question of the witnesses. Notwithstanding the excellent testimony we've heard this morning about what JumpTV is doing technically, looking into the future to another Internet provider, because that's what the bill is about, would the expert witnesses be able to answer this question? Madam Gervais has said--I believe I'm quoting her correctly--“Internet retransmission will not destroy market exclusivity”. The question I have of the experts is that if you let your expert minds go, is it not possible that Internet retransmission may destroy market exclusivity? That's the question.

The Chair: You're asking this of the experts.

Mr. Korba.

Mr. Larry Korba: I would say the systems that have been put in place sound reasonable in terms of having market exclusivity for one or the other that is either Internet redistribution or cable TV. It sounds quite reasonable in terms of the approach. They would be subject to the act, so any sort of failure in terms of meeting the requirements would be dealt with and the company would be out of business. So it's very important for them to put into place systems that would protect them.

In terms of the future, the future of the Internet, certainly anyone who knows anything about the Internet knows that Internet Protocol version 6 is around the corner, in which case geolocation is another issue altogether. It's not easily accomplished because of the large number of Internet addresses that are available, many millions upon millions of addresses, rather than only four billion with the current situation. But I would hope systems and approaches would advance to meet those requirements.

Does that help?

The Chair: Mr. Herringshaw.

Mr. Chris Herringshaw: I would just like to add that the technology we have will absolutely grow to meet the challenge of the next generation of Internet. It's something we have designed the system for. We knew what we put in place today would have a shelf life that corresponded to the current shelf life of the Internet addressing scheme of today. So the technology we have will absolutely grow to handle the kind of volume we're talking about.

The next generation Internet, IPv6, as the addressing scheme is called, was designed to increase exponentially the number of devices that can connect to the Internet. The reality is that it's already five to seven years behind schedule, as far as massive deployment of that is concerned.

There are a few select universities and institutions that have today connected to this next generation Internet. Everything you can do as a consumer or as a company today to access the next generation Internet happens through a current Internet proxy. So from the standpoint of JumpTV or any other company, people coming off of the next generation Internet look as if they're just regular users on today's Internet.

The Chair: Would you like to add anything, Mr. O'Hara?

Mr. Dan O'Hara: No, I think we've handled it fairly well, on the technical issue.

The Chair: Madame Gagnon.

[Translation]

Ms. Christiane Gagnon (Québec, BQ): I believe Ms. Gervais had something further to add.

Mrs. Michèle Gervais: Yes, I would appreciate an opportunity to elaborate further.

À (1010)

[English]

On the comment I made, you quoted me correctly. I said “Internet retransmission will not destroy market exclusivity”. However, I think you omitted the last sentence of that reference, which was that “if effective technological measures are not maintained, reception will be terminated”. Therefore the policy intention is to provide regulation that will provide for the termination of a retransmission if the technology to ensure that retransmission does not go outside of Canada is not effective, is not maintained.

[Translation]

Ms. Christiane Gagnon: Thank you, Mr. Chairman.

Judging from your comments and clarifications about Bill C-48 and its ramifications, I take it that Heritage Canada and Industry officials are satisfied with Bill C-48 as tabled, and that the regulations will follow. However, as far as transmission issues are concerned, sound leading edge technology could address the problem of territorial restrictions. You don't seem to be concerned about the use of a signal by Internet providers.

You did not allude to the problem of the treaties that have been signed with the United States or to the Berne Convention. If this signal were to be retransmitted beyond Canada's borders, what would happen to the safeguards provided for under these treaties that have been concluded? What would be the ramifications of retransmission? As far as the technology is concerned, we can't yet guarantee completely that these safeguards will be maintained. There is always the chance that one person in 100,000 may be affected, for some reason or another, but there are no absolute guarantees. The impact will likely be greater in the case of retransmission outside Canada. You haven't mentioned this possibility. What impact could we possibly see?

[English]

Mr. Bruce Stockfish: Madam Gagnon, I'll answer your question generally and then I'll ask legal counsel to address the trade issue that you've raised.

Yes, of course we have concerns with regard to Internet retransmission. We have heard stakeholders and we have responded to those concerns. Obviously the consultation document on the proposed regulations is an effort to put in the appropriate conditions to provide for Internet retransmission.

We've also heard concerns with regard to the other side of the equation in trying to arrive at an appropriate policy for retransmission, and an absolute Internet carve-out raised additional questions in terms of who would be kept out.

When we talk about technology we are striving to ensure that the appropriate safeguards are in the conditions with regard to the technology as it is now. If we don't reach those conditions, we will have an opportunity to return to this committee with the regulations, to listen to the CRTC, as is the government's intention with regard to additional conditions that may be appropriate for Internet-based retransmitters. The whole approach of the government is to allow for technology to develop in a manner that allows us to impose conditions on Internet retransmitters that would provide the appropriate safeguards.

It may be, despite the 99.9% assurance we've heard this morning, that those conditions cannot be met. But if they can be met in the future, if JumpTV or other Internet retransmitters can meet them in the future, then where's the objection in terms of allowing another form of retransmission to take place? At least that is the government position.

We have heard concerns of the various stakeholders. They've raised a number, and we've tried to respond to them. One of those concerns has been the TRIPS issue, as you've mentioned. We've listened to those concerns. We don't agree with the assertion that there is a violation of Berne and therefore TRIPS. Nevertheless, it is an issue we take into account. Certainly the United States trade representative has indicated that it is an issue to us, and we acknowledge that it's an issue, but we do not agree that it is a violation of Berne.

I will ask legal counsel, Mr. Richstone, to elaborate on that.

[Translation]

Mr. Jeff Richstone (Legal Counsel, Department of Canadian Heritage): Thank you.

As far as legal ramifications are concerned, it should be noted that section 31 of the Copyright Act was incorporated into the legislation further to the 1988 Free Trade Agreement. When the FTA was implemented, it was clear in everyone's mind that this particular provision was fully consistent with our international obligations.

As you know, Canada subsequently ratified the NAFTA, the WTO Accord, or TRIPS. The government's position was clearly that section 31, as worded, was in keeping with our international obligations.

Bill C-48 merely clarifies the scope of section 31 and the scope of future regulations. It serves as framework legislation and as such—and this is the government's position—it meets the requirements of the Berne Convention which stipulates that states wishing to create a compulsory licensing system must restrict licensing conditions to that particular country. No one is claiming that the conditions set out in section 31 or in section 31 as amended by Bill C-48 would apply beyond Canada's borders.

The State has an obligation to ensure that licensing conditions apply within the country's borders. Everyone acknowledges that our licence is territorial in nature. The institutions that you have seen and that could be covered under the regulations have merely clarified that fact. Therefore, we belive the bill and the legislative guidelines reflect the government's intention of fully complying with the Berne Convention and accordingly with TRIPS.

À (1015)

Mr. Bruce Stockfish: I should also add, Ms. Gagnon, that we consulted with our colleagues at DFAIT and they fully support this position.

Ms. Christiane Gagnon: I have another question. When representatives of the Société des auteurs et compositeurs dramatiques or SADC and the Société civile des auteurs multimédia appeared before the committee, they pointed out to us the differences in the copyright systems in English Canada and in Quebec. Under the copyright system in Quebec, the creator maintains ties with his or her work, whereas in English Canada, as soon as the creators signs a copyright agreement, this tie is severed.

Is the effect of compulsory licensing different in Quebec, given this difference in terms of the link between the creator and his work and given that under the copyright regime, the use an author can make of his work differs after the work is sold?

À (1020)

[English]

Mr. Bruce Stockfish: Madame Gagnon, the copyright system in Quebec is as it is in the rest of Canada, in the sense that the Copyright Act applies throughout the country, of course. It is true that associations in Quebec typically respect copyright in a sense that allows for rights to be cleared in a way that does not allow for exceptions or compulsory licences. However, the compulsory licence is an exception to copyright, which again applies throughout the country. It is meant to support the broadcast system in Quebec and the rest of Canada. So I don't see that it detracts from the way copyright is administered in Quebec. There is a series of collectives, which in fact collect royalties that have been set by the Copyright Board for distribution to all rights holders pursuant to the compulsory licence, and those include rights holders in Quebec .

[Translation]

Mr. Jeff Richstone: If I could just make a comment, I was unaware that the witnesses said this, Ms. Gagnon, but I don't believe it holds true as far as Canada is concerned, since the Copyright Act is national legislation and copyright provisions are the same across the country. As you well know, moral rights exist and authors have moral rights to their works. An author maintains that moral right to his work, regardless of the province in which he resides.

Perhaps the comment is a valid one in so far as other countries are concerned, but I can only speculate about this. As far as Canada goes, I don't think it's a valid concern.

[English]

The Chair: Mr. Mills.

Mr. Dennis Mills (Toronto—Danforth, Lib.): Thank you, Mr. Chairman.

Mr. Stockfish, in your remarks you talked about a balance of interests. I stand to be corrected if I interpreted you incorrectly. You said that if we had a carve-out, there would be denial of educational benefits through Internet retransmission. Could you give me a specific example of where educational benefits would be harmed if we had a carve-out?

Mr. Bruce Stockfish: Allow me to clarify, Mr. Mills. What I think I indicated was that the compulsory licence is a form of exception to the ordinary rules of copyright, which do allow for rights holders to control their work. This of course is what the sports leagues and film and television rights holders would like to be able to do. We understand that concern.

On the other hand, there are broader policy concerns that dictate the need for an exception in certain circumstances. I indicated that currently exceptions exist for educational use, for example, on the part of schools and educational institutions. There are other kinds of exceptions.

Mr. Dennis Mills: Could you give a specific example of where an educational benefit would be harmed?

Mr. Bruce Stockfish: I was speaking by way of analogy to other forms of exception. There is no form of exception with regard to educational use for Internet for the compulsory licence. All I was trying to indicate was that the compulsory licence is yet another form of exception that the government recognizes is necessary for broader policy interests. In this case, it's not educational interests so much as broadcast policy.

Mr. Dennis Mills: So there really isn't an educational harm done if we proceed on that?

Mr. Bruce Stockfish: No, I would say not. It's a policy.

Mr. Dennis Mills: Okay, fair enough. That had me concerned. I appreciate your balance of interest, but if we're part of making a law here that's going to harm educational benefits, then I become very anxious.

If I have a property, a product, that has value and I've negotiated that value with the direct network, can you see that subcontracting the evaluation of that product, the value of that product, to the Copyright Board is essentially diminishing the value of my product?

Mr. Bruce Stockfish: Again, Mr. Mills, I think your objection is to the nature of the compulsory licence itself. I can certainly speak to that, but keep in mind that the compulsory licence is currently availed of by cable, by DTH satellite, by other forms of retransmitters, whom the various rights holders accept. It is part of the nature of the copyright and broadcast system in Canada. A compulsory licence does exist, pursuant to section 31. The issue before us is whether we should extend it to the Internet. I do appreciate that the compulsory licence being a form of exception is objectionable to rights holders. They would prefer to clear the rights on a case-by-case basis on their own.

Mr. Dennis Mills: Excuse me, Mr. Stockfish. I understand the history of the precedents we've had, but in my view we've had compelling testimony here that made the case that the value of their product is diminished when all of a sudden it's handed over to a copyright board for analysis and what value they're going to receive. Can you see that?

À (1025)

Mr. Bruce Stockfish: Royalties are set by the Copyright Board, it is true. If rights holders were to clear on a case-by-case basis, the argument goes that they would be able to sell their rights for a higher value. On the other hand, it's the nature of the compulsory licence that this form of exception is valuable to the broadcast system as a whole, and the government has tried to recognize that in a balance of interest.

Mr. Dennis Mills: I know my time is short, Mr. Chairman, but I want to make sure there are a couple of things on the record here, because I'm very concerned about this.

Mr. Richstone, were you aware of the letter that was given to us this morning from the House of Representatives to our Canadian ambassador? Did you have a copy of that letter?

Mr. Jeff Richstone: I don't have a copy of the letter, but if it's in the paper--

Mr. Dennis Mills: If you didn't, I'll certainly leave it with you. It was sent to our ambassador in Washington. I just want to read one paragraph. I think it's very important, out of respect, that we have this paragraph on the record, because it might be a heads-up, seeing as you're one of our nation's trade advisers and lawyers. It's paragraph 3. This is from the House of Representatives, Congress of the United States, Committee on the Judiciary:

Moreover, Bill C-48 would eliminate the fundamental ability of many U.S. copyright holders to control the distribution of product licensed to conventional broadcasters. This will dramatically reduce the value of the related copyright licenses and drive product to other means of distribution. It also would compel Canadian and U.S. broadcasters to contend with the unlimited importation of television programs into markets for which they have acquired the exclusive local rights. It is possibly for this reason that no country in the world permits Internet-based retransmission of copyrighted television broadcasts under a compulsory license.

I realize, Mr. Richstone, that you have a different view and you are advising our ministers, but I simply wanted to give you a heads-up that if we don't go down the right pathway, this could end up being a very serious problem for us.

Mr. Bruce Stockfish: Allow me to address that, Mr. Mills, and Mr. Richstone can elaborate.

First of all, we are aware of this letter. We're aware of other concerns that have been raised by United States government officials, and we take them into account. As Mr. Richstone indicated earlier, we do not share the view that this is a violation of TRIPS or the Berne Convention.

What this letter and other representations before you raise by way of a concern is the impact of Internet retransmission that is unqualified, that is unrestricted. We recognize that concern. It's for that reason that we consulted. We had a consultation document that raised these issues in a very public way. We received submissions from over 40 associations and groups. We had a number of hearings. We talked at great length in a consultation document dealing with conditions that could be put into the regulations.

In fact we are talking about “restricted” Internet retransmission in a manner that does deal with these concerns. What this letter and others have put before you and raised by way of a concern has to do with unrestricted Internet retransmission, and we respect that the global reach of the Internet would allow for rights holders' interests to be harmed, Canadian and foreign. It is for that reason that we are proposing to put in place conditions that will in fact limit the--

Mr. Dennis Mills: On a final point, Mr. Stockfish--and I appreciate your answer--a number of us here who are sitting in the House of Commons are increasingly disturbed and concerned about subcontracting our political responsibility through the regulatory regime that exists when you're governing a country. Once it goes into the regulatory black hole, so to speak, we are out of touch. The gap begins.

Is there any particular reason why you couldn't have given us, upfront, early and fast, before we voted on this legislation, a much more specific regulatory guideline, so that we would know exactly what we're voting for in Bill C-48?

À (1030)

Mr. Bruce Stockfish: In fact, what Bill C-48 does is confirm the existence or the availability of existing retransmitters to have benefit of the compulsory licence. It makes that very clear.

In that sense it stops short of granting to new retransmitters the benefit of the licence. That deals with the lack of clarity in existing section 31. All this bill's attempting to do is to allow, at some future point—and the government has indicated that we hope to do this by next spring now—for regulations that would allow for new forms of retransmitter to have the benefit of the licence.

Originally we intended the regulations to be developed at the same time as the bill. We have struggled, quite candidly, with getting the conditions right. It's for that reason we are not moving hastily. We've indicated we want to hear further concerning some of the other conditions that are more broadcast-oriented. We want to hear from the CRTC and will take into account what conditions they may see fit to propose. We will take into account further consideration. And as Mr. Warnock indicated when we last appeared, we undertake to come back before you to discuss those regulations again—to ensure that there's a comfort level before we go ahead and make these regulations. But the bill does have effect now. It will confirm the existence of the availability of the licence to existing retransmitters, and not the Internet—not until we make those regulations, which we will continue to work on.

Mr. Dennis Mills: Thank you. And thank you, Mr. Chair.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): I guess the question for me, Mr. Stockfish, is the question you asked. What this is really about is not impeding innovation under the Internet; it's whether a compulsory licence should be extended to the Internet. I think that's the key here.

Correct me if I'm wrong, Mr. Stockfish, but JumpTV does operate currently and it has negotiated those rights directly with the rights holders--is that correct? So in fact what we're talking about really is not impeding innovation; we're talking about whether JumpTV should have the benefit of the compulsory licence, as opposed to going directly with the rights holders. That's really the key to all of this. Am I correct?

Ms. Michèle Gervais: I think it's important to realize that before the free trade agreement the creators had no rights in the retransmission of television signals, television programs. What the--

Ms. Sarmite Bulte: Okay, Ms. Gervais, stop. I don't understand what you're talking about. You're saying “before the free trade agreement”. Which free trade agreement--FTA, NAFTA...

Ms. Michèle Gervais: The FTA. Before the FTA--

Ms. Sarmite Bulte: Okay, let's be specific, because I really don't understand. You're making these statements that I'm assuming are correct, without knowing...these truisms that I have no way of verifying.

Ms. Michèle Gervais: Okay, I apologize. What I'm saying is that before the free trade agreement was signed with the United States, creators in Canada had no rights in the retransmission of signals of television programs.

One of the reasons the section 31 compulsory licence was introduced was to make it possible, because at that point creators were recognized as having some rights from the signature of the FTA. In order to ensure that retransmission could in fact take place the compulsory licence was introduced, because otherwise it would have been almost impossible for a retransmitter to clear all the rights in all the individual programs that are retransmitted. That is why the licence was introduced, to make it possible for cable and for satellite industries to retransmit signals.

All we're trying to do with Bill C-48 is to ensure that new types of retransmitters will have the same benefit. It's simply to treat them on a level playing field with existing technology.

Ms. Sarmite Bulte: A number of the rights holders who came before us don't want JumpTV to not broadcast their music or their works; they just want to have the right to negotiate themselves, as opposed to going to a third party, to a copyright board, to some non-governmental board.

So whether the technology exists or not really is irrelevant. I hope we continue to have newer technologies and new media that allow all of our artists, but why should our artists and our creators be at a disadvantage to the Australians, the Americans, or to the Europeans?

We talk about driving our talent away. We're already talking about our film producers going to the United States. So why are we driving it away, Ms. Gervais?

I want JumpTV. I want ten million companies like JumpTV to continue what they're doing, but with all due respect, you're not making a case as to why this exception should be extended there. That's what this is about, extending that extension and nothing more.

À (1035)

Ms. Michèle Gervais: We believe creators will not--

Ms. Sarmite Bulte: Who is “we”?

Ms. Michèle Gervais: The government.

Ms. Sarmite Bulte: Industry Canada?

Ms. Michèle Gervais: Both departments have been working on this bill together. Therefore, when I say “the government”, I mean both departments.

Based on the work of both departments, we believe creators will not be in a different situation if the act is extended to new media retransmitters. Also, they will have access to the tariff that the Copyright Board will be able to grant to them.

Lastly--

Ms. Sarmite Bulte: With all due respect to you--

Ms. Michèle Gervais: May I please continue?

Ms. Sarmite Bulte: --they've come here and said they don't want the Copyright Board to do that. You're telling me one thing when we've had the creators here time and time again saying they want to have the right to negotiate directly.

Mr. Dennis Mills: They're unanimous.

Ms. Sarmite Bulte: You're saying one thing, but at the same time, they're not against JumpTV. We want more of those people doing that, but they want the right. That's what it's about.

Mr. Bruce Stockfish: Ms. Bulte, I might just add that the same question arose certainly when DTH satellitetechnology came onto the scene. Cable was essentially the only form of retransmission, and the question was asked, a legitimate question, should this be extended to DTH satellite? In fact, of course, rights holders live under a regime where there are different forms of retransmission, satellite as well.

All we're considering now, and we think it's a legitimate question, is should this licence now be extended to another form of retransmission--in this case, the Internet? As long as the appropriate conditions are in place, we ask ourselves, why not, keeping in mind that the section 31 compulsory licence was conceived to be technology-neutral in its inception.

In fact, the original 1985 subcommittee of the communications committee, which looked at the Copyright Act as a whole, recommended a retransmission licence that would be essentially as technology-neutral as possible. Of course no one conceived of the Internet in 1985, but the original approach was to allow for new technologies to be technology-neutral, and this bill attempts to preserve that, to preserve flexibility for technological innovation. An Internet carve-out per se in the statute would stop that potential for flexibility. If it's not appropriate now, of course, then the regulations will not allow for Internet retransmitters, but it may be appropriate at some point in the future.

Ms. Sarmite Bulte: I just have a very quick question, Mr. Stockfish.

There was one thing when the rights holders came before us at the initial meeting, which you were also at, and I'm sure you're aware of it. Mr. Wernick, I believe, talked about how in this legislation as it is right now there would be a moratorium until such time as the draft regulations came before the committee. I would like that on the record, that they will come to this committee and that we will look at them before...and until they actually come into play, there is a moratorium.

Many of the witnesses who appeared before us felt that indeed the legislation as drafted was uncertain, and I believe I heard you say this morning that you would address this issue. Do you have something in writing you can propose to us as to how to address those concerns about certainty until such time as we've had the ability to look at those regulations and reconsult with the stakeholders?

Mr. Bruce Stockfish: As we interpret the provisions of Bill C-48 now, it seems to us and to the drafters in the Department of Justice that the application of Bill C-48 is such that only existing retransmitters, those that are licensed and subject to a mandatory carriage exemption order, would have benefit of the compulsory licence. In order for other retransmitters to have benefit of the licence, they would have to comply with qualifying conditions in the regulations, and until those regulations are in place, there will be no additional retransmitters.

There did seem to be some doubt as to that outcome. Accordingly, we have drafted language that would make that very clear with express language through an amendment to the definition of “retransmitter”. It would make it very clear that there will be no additional retransmitters available that have the availability of the compulsory licence until those regulations are made, and we can provide that language.

À (1040)

The Chair: Where is that amendment, Mr. Stockfish? Is it drafted, is it with the clerk already, or...?

Mr. Jeff Richstone: Mr. Lincoln, there is a draft motion that has been prepared, and I can certainly pass it to the clerk if you wish.

The Chair: I think it would be important for us to know that it's there and to know what it is, even in draft form. If you want to polish it up after, that's another thing, but we should at least know the gist of it.

Mr. Jeff Richstone: If the clerk wishes, I can certainly pass it along at the appropriate moment.

The Chair: Okay.

Mr. Harvard.

Mr. John Harvard (Charleswood —St. James—Assiniboia, Lib.): I just want to raise one or two questions, and perhaps I can put the question to someone like Mr. O'Hara. He's outside Industry Canada and Canadian Heritage, and he might be able to bring some independent reflection on this.

It seems to me as I listen to the exchange between Mr. Stockfish and Mr. Mills or Mr. Stockfish and Ms. Bulte that a lot of this seems to turn on this question about restricted and unrestricted Internet transmission. When I listen to Mr. Stockfish, he seems to be saying--if I understand him correctly--that if certain conditions are met, the rights holders, the creators, really shouldn't have anything to worry about. Can you add something to that, Mr. O'Hara, in your best Irish heritage?

Mr. Dan O'Hara: I'll certainly do my best.

I think the real concern from my point of view is that the rights holders have concerns about the compulsory licence in general. It doesn't matter if it's JumpTV or some other Internet broadcaster or ExpressVu or Rogers. They have problems with the entire concept.

From my understanding, that's not what we're trying to do here. The fact that there is a compulsory licence is not under debate. Rogers will continue to use a compulsory licence, as will Shaw and Star Choice. I think the concern here is that what we're creating is a very uneven playing field--

Mr. John Harvard: For whom?

Mr. Dan O'Hara: --for the retransmitters. Canadians who wish to receive signals where those other retransmitters cannot currently deliver have no other option. Certainly companies such as JumpTV have to have the ability to compete in that market on a level playing field. It's only reasonable that there be fairness in the law so that everybody has an equal chance.

We're already coming in this as a late player. We're already severely disadvantaged in terms of capital and market share and all the rest of it. You've seen what has happened in the long distance industries--speaking of another CRTC thing--in terms of all those late players trying to make successful businesses. We're at the same kinds of disadvantage in our case. Yet even though we're meeting a substantially higher standard in terms of retaining our signals within Canada than the other retransmitters, we're still looking at delays and so forth, in being able to carry forward those plans.

You could just pass Bill C-48 with a very simple inclusion that says all retransmitters must keep their signals within Canada and be done with it, rather than making very complicated regulations regarding all the conditions that are required to make that happen. It would seem to satisfy everybody's requirements in that regard that you make it very simple and you keep it in Canada. All the concerns are addressed. Of course, if ExpressVu has problems with people with dishes in Florida--with snowbirds--then that is their issue to take up.

We're saying we're going to meet the same criteria that they do and then some, so I don't see why there should be the existence of this uneven playing field when it comes to the retransmission market.

The Chair: Mr. O'Hara, when you keep saying “we”, are you talking as you--JumpTV--or as a technical adviser to this committee, or are you one in the same? Because that confuses the picture pretty much.

Mr. Dan O'Hara: Yes. Sorry, it's very difficult to keep doing things in the third person all the time. Basically, I'm the person who created much of the technology--the stuff we didn't buy from Quova--for the JumpTV website, so I'm very familiar with that technology. I'm not a JumpTV employee and I don't have shares in the company and so forth, but I'm very concerned about how these regulations are passed and what goes forward with this legislation.

À (1045)

Mr. John Harvard: My final question is this then. Do you support Bill C-48?

Mr. Dan O'Hara: I would have preferred to see Bill C-48 with a very simple inclusion saying keep the signals within Canada and not having complicated regulations. But given the fact that--

Mr. John Harvard: But do you see that being the intent of the regulation, then?

Mr. Dan O'Hara: If the regulations can be drafted where it makes it a fair playing field, then I certainly wouldn't have a problem with that. Certainly no one wants to see problems as we saw with Napster and things like that, ending up causing a severe problem for the broadcasting industry.

Mr. John Harvard: So does Mr. Stockfish agree that this will be the intent of the regulation? Because he's basically saying that if we do it right under regulation, Bill C-48 should be okay.

Mr. Bruce Stockfish: If the conditions in the regulations are appropriate and they are complied with, then we think the rights holders' concerns have been met. If in fact JumpTV or any other Internet retransmitter cannot comply with the conditions in the regulations, then the rights holders will have the opportunity to stop them from availing themselves of the compulsory licence. They will not have the compulsory licence.

Mr. John Harvard: Thank you.

The Chair: Ms. Hinton.

Ms. Betty Hinton (Kamloops, Thompson and Highland Valleys, Canadian Alliance): Thank you. This is going back a bit—

The Chair: Excuse me, but if members agree, I think we should close this at eleven o'clock at the latest, if that's okay.

Mr. Dennis Mills: Mr. Chairman, on a point or order.

An hon. member: We need a break.

The Chair: We are going to talk about a break then.

Mr. Mills.

Mr. Dennis Mills: Unless I really understand how this possible consideration of a carve-out denies flexibility, I can't let this rest. Eleven o'clock may not be enough time, because I see there are questions--

The Chair: Let's just proceed now, and then we'll see.

Ms. Hinton.

Ms. Betty Hinton: I have a very quick question, actually.

There was a comment made by Mr. Korba during his presentation. He discussed the ability to scan to determine a physical address, a geographic address. Then there was a response to the effect that they never take a look at a personal computer. What prevents you from taking a look at the content of a personal computer?

Mr. Chris Herringshaw: Today there's nothing that prevents us, other than our knowledge of the law and where we may get into trouble with activities that may be perceived as invading privacy. It's a voluntary system. We choose to stay completely away from the personal computer. As a point of technology, it actually doesn't help us very much in determining geographic location.

For us to sit on the Internet and to look at your PC at home, there's not much I can tell about it, unless I had a program or something running on your computer, which then requires you to download and install something. This circumvents one of the fundamentals of our technology, which is that JumpTV or any other customer can have an impartial third-party determination of geographic location about you as a user.

Ms. Betty Hinton: Well, we're in complete agreement that you don't have a right to do that. I agree with that completely. But I want to confirm that what you said is accurate. Could you do it if you wanted to do it?

Mr. Chris Herringshaw: As a geolocation provider, or as a general Internet...?

Ms. Betty Hinton: As a general Internet or a location--

Mr. Chris Herringshaw: Anybody on the Internet, unless you take precautions such as a firewall or some other device in front of your personal computer, can look at your computer in the same way a company like Quova could. From that perspective, we're no different from any other user on the Internet.

Ms. Betty Hinton: That's a pretty scary thought, though, isn't it?

Mr. Chris Herringshaw: Yes. Personal software like firewalls is becoming more popular to address that.

Ms. Betty Hinton: Thank you.

The Chair: Mr. Abbott.

Mr. Jim Abbott: Mr. Mills referred to the letter from the House of Representatives in the United States. And I must say, I value their intervention. I think that because this law, Bill C-48, has international implications, they have every right to have made this representation. I want to make that clear.

I'd like to ask a question particularly to Mr. Korba. In their letter, further to what Mr. Mills read--I'm reading one sentence I think stands alone very clearly--they say:

“Given that no effective technology for imposing geographic restrictions on access to material available over the Internet has been developed, the effects of this compulsory license would not be limited to Canada.”

In your expert opinion, do you agree or disagree with that statement?

À (1050)

Mr. Larry Korba: I must say that effectiveness needs to be defined. So 100% effective...because I have never seen Quova in operation, I would have to say no. The technologies I know about will produce errors.

But the point is, I think, that in the case of a retransmitter, it has to fail on the side of uncertainty. If it gets information that does not correlate with things like the address of the user, the general location of where the user is, that sort of thing, then it would have to not transmit just to try to be in compliance with the regulations we're talking about here. Probably I would say effectiveness is in the high 90% range.

This gets into issues related to the business model and how to deal with unsatisfied customers. But for the purpose of geolocation, this is not an exact science. In Quova's technology and approach to it, it's trying to make the best estimate as to where the person is. It could be really quite exact, depending on the accuracy of the information it picks up and how well it scans through that information to verify it.

Mr. Jim Abbott: I appreciate that you're a technician, and therefore...you didn't put me to sleep, but I had some difficulty.

Their statement again was: “Given that no effective technology for imposing geographic restrictions on access to material available over the Internet has been developed, the effects of this compulsory licence would not be limited to Canada.” You're fundamentally disagreeing with that statement.

Mr. Larry Korba: It may be that one person receives a retransmission. Is that a big problem? I don't think so, as long as they are able to determine that has happened. From what they have described in terms of technology, they can track that to a reasonable degree both in terms of what Quova is doing with regard to updating the information and refreshing their database regarding location and what JumpTV is putting in place. I think that those in combination would make it very difficult for a broad mass of people to receive the information. There may be one or two who do.

Mr. Chris Herringshaw: Mr. Abbott, I would just like to go on the record as the discoverer and developer of such technology. I absolutely disagree with the statement that no effective technology exists to control this. We've demonstrated that with JumpTV in their testing. Some of the largest software companies, credit card companies, and online resellers in the world use our technology today for a variety of things, including controlling access to contact. I'm familiar with this document. I understand the concerns of my government, but I have to disagree with some of their fundamental assumptions, including that one.

The Chair: Ms. Bulte.

Ms. Sarmite Bulte: Thank you, Mr. Chairman.

Mr. O'Hara, you talked about a level playing field. I too believe in a level playing field. I also believe our Canadian broadcasting industry goes through a licensing process. This is one thing that Madame Gervais and I spoke about on the first day the officials appeared before us. Our cable companies have certain requirements with regard to Canadian content, licence fees, renewal, concerns of violence, and media awareness, which this committee has talked about. All those things are monitored. Our broadcasting and cable industry makes incredible contributions to our creators.

I just want to be on the record as saying I don't see that the Internet transmitters have any of those obligations. [Editor's Note: Technical difficulty]...to get a broadcast licence they have to apply for it, and they have to go through a series of hoops. Until such time as the CRTC should change its mind on new media regulation, I would submit.... I believe it was Mr. Abbott who talked about the cable companies and their investments and what they've done with regard to infrastructure and everything, plus their continuing contribution to success stories such as the Canadian Television Fund. What do we do with those industries?

I don't think you're on a level playing field. I don't believe you can compare your industry to the cable industry.

À (1055)

Mr. Dan O'Hara: If I could respond to those comments, I understand that there are no Internet retransmitters that fall under the Broadcasting Act. From what I understand, that isn't even possible.

The Chair: There's a lot of static. Don't touch your microphone, please. They switch it on automatically. As a technological expert....

Some hon. members: Oh, oh!

Mr. Dan O'Hara: Point well taken.

The Chair: We shouldn't use manual systems. It's all computerized here. It's very sophisticated.

Mr. Dan O'Hara: I know some of the people at JumpTV, although I've not discussed this with them. But my personal opinion is that I would like to see JumpTV meet the same bar as the DTH and cable companies do. I think a huge benefit will accrue to Canadians by having access to the kinds of material the major broadcasters cannot broadcast because there's too small a market share. Programming that might be of interest to only 10,000 people will never, ever make it on to the cable or DTH system, because the economics aren't there.

I think that broadcasters such as JumpTV and others that are transmitting over the Internet have the ability to make available a wide variety of programming content of interest to Canadians, who are living in an ethnically diverse country, that would never, ever be able to be done in the standard broadcast model. I think it would be a shame if the regulations and so forth were set up in such a way that companies such as JumpTV didn't have a chance to exist and to grow in those kinds of markets and meet those needs of Canadians.

When the cable companies were first started, from the 1950s up until 1991, I think it was, I don't believe they paid a cent in licence fees to copyright holders. So there's some balance already in terms of how those large infrastructures were built. Some of it I believe was at the expense of the copyright holders. For many decades no licence fees were paid at all.

Ms. Sarmite Bulte: So you have no objection to being regulated, just as the other broadcasting industries are, by the CRTC?

Mr. Dan O'Hara: I don't have a problem with it, but I don't work for JumpTV.

Ms. Sarmite Bulte: But you have a vested interest in JumpTV.

Mr. Dan O'Hara: I have no vested interest in JumpTV.

Ms. Sarmite Bulte: Thank you.

The Chair: Mr. Harvard, then Mr. Mills--and are there any others? Then we'll close. Mr. Harvard.

Mr. John Harvard: I have just one question, maybe again for Mr. O'Hara or Mr. Herringshaw. I'm just wondering where Internet technology and other kinds of technology will be taking us in the next five or ten years. If we were to offer an Internet retransmission carve-out that would enable those entities to avoid the compulsory licensing system, is it possible that five or ten years from now technology will be such that it will have destroyed, really, the compulsory licensing system--that everybody, somehow or another, will be able to get around compulsory licensing?

Mr. Dan O'Hara: Do you mean in terms of its effect on the existing broadcasters in the country?

Mr. John Harvard: Yes.

Mr. Dan O'Hara: I really have a hard time believing that's going to happen.

Mr. John Harvard: Well, for example, if there were no more cable and no more satellite, but just Internet....

Á (1100)

Mr. Dan O'Hara: Right, but certainly we didn't see that happening when the satellite operators came into being. That really didn't have, or I didn't see, as some people predicted, a substantial reduction in the success of the cable operators--which a lot of people believed at the time.

I think there's lots of room for three retransmission schemes in our market, and certainly we may find that the Internet retransmitters have a different focus and a slightly different market from the broadcasters. The broadcasters have a very efficient technological model for delivering 100 or 200 or 300 programs to millions of people. The Internet transmitters have the ability to reach hundreds or thousands of people--much smaller markets--which the other ones can't do.

In terms of the economics of it and the business models of it, I think they could end up panning out very differently. But I don't see Internet retransmitters, even in the next several years, being able to provide a serious threat to the existing broadcasting infrastructure. There is just not enough bandwidth on the Internet now to replace what's going over cable and satellite.

Mr. John Harvard: Thank you.

The Chair: Mr. Mills.

Mr. Dennis Mills: Thank you, Mr. Chairman.

Well, Mr. O'Hara just confirmed my feeling even more that an absolute carve-out would not be a huge problem for the cable operators.

Mr. Stockfish, you made the statement that a carve-out denies flexibility. Help me with that. Explain how that flexibility is denied when, if I have a property.... As Susan Peacock, who made an intervention here last week, said, carve-out takes away the grey, takes away the possibility of litigation, until regulations are brought in. We don't know what the regulations are. You've used the word yourself, the “contemplated” regulations. You've admitted yourself today that you're having great difficulty in putting them together. I presume that's part of the reason why we don't have them in front of us.

If we voted to amend this bill to have a carve-out, which is where my head is, why would that deny flexibility?

Mr. Bruce Stockfish: First of all, the consultation document we used as the basis for discussing proposed regulations was sent to the committee chair, so I would hope you would have an opportunity to look at the present state of our thinking.

Mr. Dennis Mills: Carry on.

Mr. Bruce Stockfish: Second, your question gives me the opportunity to refer to the standing committee report from 1985 that I referred to earlier, A Charter of Rights for Creators. The exact quote was that “The right of retransmission should be defined in general terms and should not dependt on current technology.”

It was in that vein that we approached section 31. In fact, section 31 was developed to be as technologically neutral as possible. We recognized the problems of the Internet, but it was with that approach that we sought flexibility, and the approach taken was to do that by way of the regulations. The problem with a statutory absolute carve-out is that there is no flexibility.

Mr. Dennis Mills: Flexibility for whom?

Mr. Bruce Stockfish: To respond to developing technology.

Mr. Dennis Mills: How is it denied?

Mr. Bruce Stockfish: I can give you two examples.

The cable association has already spoken with regard to their concerns over future development.

Mr. Dennis Mills: Excuse me, Mr. Stockfish. I apologize for interrupting you, but we had people here last week from the motion picture industry, the people who represented, from my community, Degrassi Street, saying that they would, in parallel, continue to research and work on streaming techniques, etc., to make sure the quality of their product was so perfect that before it went through an Internet retransmission they would have the personal satisfaction that the packaging of their product would meet their standard. Those people who are the creators, who are the manufacturers of that product in the motion picture industry, told us specifically that their technological development would not stop, it would go on in parallel with a carve-out.

Mr. Bruce Stockfish: Of course. The problem, though, with an Internet carve-out is that technology is off limits to any retransmitter who may want to avail themselves of it. Cable has expressed their concern with their ability to accommodate Internet protocol technology for their purposes.

There's one other example, which is already being developed. There's a firm called Aliant in New Brunswick. They are an ISP provider and telephone company. They have developed a service they call “TV on my PC”. It will use Internet technology, and they're proposing to launch it in the near future.

It is not like JumpTV in the sense that it would make use of the Internet with a need for its kinds of restrictions. It does provide the secure technology, which the Motion Picture Distributors Association, the film and television producers, and the broadcasters have indicated they do not object to. Nevertheless, it uses Internet technology. An absolute carve-out set out in statute would prevent them from being able to carry on business.

That's today. That's 2002.

Á (1105)

Mr. Dennis Mills: Who would it deny the opportunity of doing business? Do you mean the telephone operator?

Mr. Bruce Stockfish: It would deny them the ability to avail themselves of the compulsory licence in the same way cable and satellite do now. In fact, their proposed system would have the same security.

Mr. Dennis Mills: But that would further diminish the rights holder and his property. We're not just talking about diminishing the value of their property because of Internet retransmission; we're now moving to telephones, which is a further dilution, possibly, of their product.

Mr. Bruce Stockfish: I wouldn't categorize it as a further dilution. I would categorize it as a means of using an alternative vehicle for carrying on retransmission--cable, satellite, and now Internet.

Mr. Dennis Mills: Who negotiates your rights?

Mr. Bruce Stockfish: Who knows what technologies may be available in the future? All we're trying to do is leave the door open for those technologies. Who knows how many Aliants there may be in the future that may not be objectionable, in terms of the kinds of operations they carry on, to broadcasters and rights holders?

The conditions we're attempting to put in place, which Aliant, for example, would easily be able to comply with, and perhaps JumpTV may be able to comply with, are merely an attempt to ensure that the door is open so that technology, if it can in fact develop, will be in a position to permit retransmitters to carry on business in a manner that's secure and provides a sufficient level of comfort to rights holders.

Mr. Dennis Mills: Okay. Thank you, Mr. Stockfish.

Thank you, Mr. Chair.

The Chair: Mr. Abbott, you have a brief comment to make. Then we'll break.

Mr. Jim Abbott: Mr. Chairman, everyone at this table wants to make good law. This is a very serious issue, and we have to do it correctly. I think we are approaching this in a totally non-partisan manner, and I commend my colleagues on that.

The Chair: I was going to suggest, Mr. Abbott, I think we should finish with our witnesses now, and that part of it we'll decide on our own.

I'd like to thank you very much for appearing today. I think it's been a very useful debate for us. I think it's put a lot of questions into the proper perspective. It will really help us with the future of our work. Thank you very much.

What I would like to suggest at this point is that we have a business meeting of the committee in camera to decide where we go from here.

I know there is a sentiment that we shouldn't rush into this thing, and I think it's shared by people on both sides. We should try to find out now, given the circumstances of the House, the sittings and everything, when we could do it and when we could have a chance to look at the amendments.

I would suggest that we sit in camera from this point on, until we decide where we go from here.

Mr. Jim Abbott: Mr. Chairman, just a second. Mr. Harvard may have agreed, but I think I'd like to have a little mini debate about whether there's a necessity of us sitting in camera. We are talking about a bill here that has very broad implications. I believe the creators, the broadcasters, the Internet providers, the cable companies, the satellite people....

This is a public policy issue, and I'm wondering if there's a necessity.... If someone could give me a reason for us to go in camera, then let's do it. Otherwise, I don't think it should be an automatic.

The Chair: Mr. Harvard.

Mr. John Harvard: I don't think we're going to be dealing with public policy issues in camera. We're going to be talking about how the committee--and not any kind of public policy--proceeds from here. I think the chairman is absolutely right that we should move into an in camera session.

The Chair: Excuse me.

Witnesses, you're finished for today with us. If you want to stay here or go about your business, you're most welcome to do this.

Mr. Abbott, I suggested going in camera because all of our business dealings are done in camera. What we want to discuss is when we're going to do clause-by-clause and study the amendments. We're not going to discuss the substance of the issues at all. That is not the issue. The issue is where do we go from here? Do we go in camera? What time do we have to study the amendments? These are the subjects we want to discuss.

Á (1110)

Mr. Dennis Mills: Mr. Chairman, I think that what Canadians are witnessing here is Parliament at work. Over the last few weeks the media has been trying to create in the minds of Canadians a different type of image about what goes on in this place. I think that what we've been doing on this committee has been quite creative and constructive. I don't think that it's a bad thing for Canadians to see us working like this on such an important issue. It doesn't bother me.

The Chair: Mr. Harvard.

Mr. John Harvard: I don't think we should be boring Canadians with internal matters having to do with the committee. I think this would be pretty boring. I'm sure Mr. Mills, who is always providing excitement, would understand this. Let's not dither; let's just have this in camera, and move on.

The Chair: I want to propose that members discuss, from this point onward, how much time we will allow ourselves to look at amendments; what amendments are being brought forward by the parties involved, and the departments; and when are we going to be able to organize a future sitting to go clause by clause? I have sensed a general feeling among committee members that we're not ready for clause-by-clause, which we had proposed to do this morning.

That's all we're going to discuss--not the substance of where we are going, and whether it involves a carve-out or no carve-out. I don't think this is the issue right now. The issue is how much time we're going to give to amendments, and when we can find time for all of us to sit together with a quorum to go clause by clause. This is all. To me, this is something we should do by ourselves. I don't think we should discuss these things forever.

So there's a motion that we sit in camera to discuss the future business of the committee.

(Motion agreed to)

The Chair: We will now close the meeting to only the members and staff. We'll suspend for five minutes.

[Proceedings continue in camera]