I'll call the meeting to order. I think we'll all be here very shortly.
This is meeting 30 of the Standing Committee on Canadian Heritage, pursuant to Standing Order 108(2), for a study on the request of the CRTC to obtain the power to impose administrative monetary penalties.
We have two issues to deal with here today. That's the first one. The second one, pursuant to Standing Order 108(2), is the study on the Internet content regulations.
We have, from the Canadian Radio-Television and Telecommunications Commission, Konrad W. von Finckenstein, chair; Scott Hutton, executive director, broadcasting; and Namir Anani, executive director, policy development and research.
I understand that Mr. von Finckenstein's presentation will be on both issues, but we can treat them individually as we question.
Mr. von Finckenstein, would you make your presentation, please, sir.
Thank you, Mr. Chairman, for inviting us to be here before you.
As you say, there are two points, Internet content and administrative monetary penalties. I will begin by addressing the topic of Internet content.
I am going to talk now about the regulatory background of the new media.
Unlike many other jurisdictions in the world, future technological developments were taken into consideration when drafting our Broadcasting Act. It does not refer to any specific technologies. As such, all types of broadcasting fall within the Commission’s mandate.
Ten years ago, we examined new media services that deliver broadcasting content over the Internet. After holding a public hearing, we concluded that these services were not having a discernible impact on conventional radio and television audiences and that regulation was not necessary to achieve the objectives of the Broadcasting Act.
Consequently, in 1999 we issued an exemption order for new media services, and in April 2006 we determined that broadcasting services received through cellphones, personal digital assistants and other mobile devices should also be exempted for similar reasons.
Naturally, the world has changed tremendously in the past decade. In particular, the broadcasting and telecommunication industries have converged and there have been significant advances in technologies.
In December 2006 we submitted a report to the government on the future technological environment facing the Canadian broadcasting industry. Our report found that new media services had yet to have an impact on conventional radio and television audiences. However, the report also advised that public policy action would have to be taken in the next three to seven years.
Given the rapid pace of change, we felt it was high time the commission take another look at the impact of new media services on traditional broadcasting systems. When I joined the commission in early 2007, I immediately launched a new media project initiative, the purpose of which was to investigate the social, economic, cultural, and technological issues associated with broadcasting in new media.
In two days we will be issuing a document called Perspectives on Canadian Broadcasting in New Media, which is a compilation of the research we have commissioned and views that we have obtained over the past year.
In parenthesis, I didn't know I was going to appear before you today. The document was always timed for Thursday, so it isn't ready. Otherwise I would have brought it with me today.
You will read in the document that recent studies show that Canadians are spending more and more time accessing all types of broadcasting content over the Internet and through mobile devices. The perspectives highlighted in the document also tell us that there are very different opinions on how to promote and support Canadian content in this environment.
Broadcasting in new media is becoming an increasingly important element of the Canadian broadcasting system. It is having an impact on traditional broadcasters. But is it a positive impact or a negative impact? Do the exemptions orders continue to be appropriate?
We have decided to ask the public to help us in answering these questions and in defining the issues related to broadcasting in new media. At the same time as we release Perspectives on Canadian Broadcasting in New Media, we will be launching a public consultation on the same day. We're seeking guidance from the public to verify that we have correctly identified the issues and are on the right track, and we want the public to help us structure a framework for public hearings that we plan to hold in early 2009.
I would like to be clear on one point. Our interest primarily lies in the distribution of professionally produced broadcasting content. That is, the same kind of high-quality Canadian content you would normally watch on television or hear on the radio. Our ultimate aim is to ensure that broadcasting in new media contributes to the achievement of the objectives of the Broadcasting Act.
Once Canadians have had a chance to weigh in with their views, we will issue a notice of the public hearing, probably towards the end of the summer, and we will outline the details of the hearing that we will hold on new media next year.
I would gladly return after our documents have been made public this Thursday to answer any further questions you may have as a result of the issue of those documents.
Now let me turn to the subject of AMPs. I was pleased to learn that your committee recently passed a motion to study our request for the power to impose AMPs or administrative monetary penalties. When I appeared before you in March, when you were studying Bill C-327, I raised the subject. I mentioned that the Telecommunications Act currently provides the commission with such powers, which it can use to enforce its policies in limited areas. In the case of the “do not call” list, we have the power to impose penalties on individuals and companies for each violation of the telemarketing rules. However, the commission does not have AMP powers under the Broadcasting Act. This creates a significant gap in our regulatory toolbox, as we can impose only penalties that are either relatively light or excessively heavy--or as one of your committee members said, we can either use a peashooter or a bomb, but nothing in between.
As you know, the commission grants licences and there are usually terms and conditions associated with them. If a licensee commits an infraction, we have at our disposal three options.
At the light end of the spectrum, we can wait until the end of the licence term and then impose more stringent conditions of licence during the renewal process. Given that licence terms can extend up to seven years, there can be a significant wait before we are able to act, especially if the infraction occurred early in the term.
At the more severe end of the spectrum, section 12 of the Broadcasting Act allows us to issue mandatory orders that effectively require licensees to abide by the rules, and we can file these in court. If the licensee refuses to abide by the order, we can launch contempt of court proceedings. Of course, contempt of court proceedings are criminal proceedings, and the standard of proof is beyond all reasonable doubt. It's a very difficult thing to pursue, and it's really not appropriate when we're talking about the violation of the term of a licence.
Finally, if we find that the licensee is still not in compliance we can call a hearing to determine whether we should suspend or revoke the licence--in effect, put the person out of business. That's at the very extreme end of the spectrum.
This is simply not an efficient way to make the system work. We need intermediary civil penalties to induce licensees to abide by the rules, without having to elevate their non-compliance to criminal behaviour. We should only have to resort to the courts in the most extreme of cases. Following my last appearance before you, we submitted a draft of an amended Broadcasting Act. I would encourage you to refer to it as you carry out your study.
A modern regulator needs AMP powers in all areas under its mandate. If we are to regulate with a lighter hand and provide broadcasters and BDUs with more latitude, then we must have the tools to ensure that licensees live up to their responsibilities.
It is my hope that at the conclusion of your study you will support our request for the power to impose AMPs. I would now be happy to answer any of your questions.
Thank you very much for presenting to us.
I think you make a good and clear case for looking at giving you other powers under AMPs.
I want to focus a little bit on the consultation on broadcasting in new media. It's interesting that you say your report found that “new media services had yet to have an impact on conventional radio and television audiences”. I don't think there is a single television station today that doesn't have Internet access to their news, to chat lines, to comments and questions and answers on whatever their topics are. It seems to almost be an extension now of the particular broadcast they did. I think it's important that this behaviour or this method of communicating with people also have some very clear guidelines for how they work.
So when you say you're not going to hold any public hearings until early 2009, that concerns me a little bit, because I think we are way behind all of the other countries in terms of looking at the issue of the digital platforms--all of them.
I want to ask you if you think your decision to wait until 2009 is a good one. Do you not believe you should be holding public hearings sooner, given that, as I said, all the television stations that I know of have various forms of talking to them, on the Internet and on various other platforms, and are reaching out to those platforms?
You raised several points. Let me try to address them in order.
You mentioned that in 2006 we said it had yet to have an impact. Those were the views that were imparted to us, and that's what the CRTC reported.
Frankly, like you, I feel that was understating the issue. And therefore, when I became chairman, I immediately said we had to address this issue, this was coming at us, etc.
However, the issue is very complex and has lots of dimensions. There are as many views as there are people who you consult. And we, over the last year, commissioned a whole bunch of studies. We held seminars. We held colloques. We have participated in them in order to try to somehow figure out the total dimension of this new media.
Secondly, you asked what our aspect is. We are responsible for broadcasting, so I was very careful throughout my remarks to always say the “broadcasting in new media”. I'm looking only at broadcasting. I am not looking at Facebook. I am not looking at how it shapes it. I am looking only at broadcasting in new media.
Hon. Hedy Fry: No, no, I understand that.
Mr. Konrad W. von Finckenstein: We have now produced this document, which you will see on Thursday, which unfortunately, frankly, is not terribly structured, because the new media isn't structured. It is very complex. We've tried to put it in as systematic a frame as we can. We say, “Here it is. Now, really, what are the questions we should be asking in order to hold a meaningful hearing so we come to the root of it?” The root of it is obviously to what extent the media is another means of distribution of the broadcasting system, and to what extent we can use it to obtain the objectives of the Broadcasting Act. That's clear. That's the key question. But how do you get it, and what are the subjects? Do you look at incentives? Do you look at subsidies? Do you look at regulatory restraints or regulating attempts? All of that is what we are doing.
That's why we did it in two steps. We will get it out first of all to get a verification of whether or not we have it more or less right--our snapshot, you know--and then secondly to help us guide it.
Would I have loved to do it last year? Undoubtedly I would have. I wasn't here, unfortunately, and we had to do the preparatory work first of all to try to delineate the subject.
Mr. Chair, I'm thrilled to be back. I want to thank my honourable colleague, Bill Siksay, for inviting me so that we can continue with the fascinating discussions we've had with Mr. von Finckenstein.
I'm really interested in the situation with new media in terms of the tool boxes the CRTC has for dealing with the Internet, because certainly the impacts, the pressures on the bandwidth, have changed dramatically in the last few years. I would say that I think--contrary to one of my earlier colleagues--we're not very far behind the times. Western Europe is dealing with this; the FCC is dealing with this. We're dealing with pressures that really didn't exist even three and four years ago. We now have VoIP, video-on-demand, VPN traffic, peer-to-peer. I mean, when CBC is using BitTorrent to transmit television shows, we're in a brand new universe.
I would have loved to have this conversation tomorrow, in the wake of the CAIP relief decision, but I will make do without being able to comment on that. I won't ask you to comment on what's happening with the CAIP-versus-Bell issue. But it's significant, because every time—if you look here or anywhere internationally—there's been a case of Net throttling, the argument about bandwidth management is always countered with issues of content interference.
I want to question you in terms of the tool box you have to make sure that content isn't being unfairly interfered with. Virgin CEO Neil Berkett called Net neutrality “a load of bollocks”. Excuse the term, but that was the term he used. He said they were already in discussions with content providers that if they were going to access Virgin pipes, they were going to pay more.
Section 36 gives you the right to ensure that no carrier shall “control the content or influence the meaning or purpose” of content, but it doesn't say anything about interfering with the speed of that content, interfering with accessibility of that content. Would you see a situation if a telecom starts telling customers that if they pay more money, they will get access to the Internet customers, and if they don't pay any fees, then they'll be in the slow lane? Is that an area where section 36 would come into play?
As you said in the introductory portion, this is a difficult subject for me to address because I have a real complaint before us, the CAIP complaint. As you seem to be very well informed on indeed, we're issuing the interim decision tomorrow. Then we will have the hearing on the merit in the fall. I apologize if I seem to be avoiding your question, but I'm trying to be very careful not to in any way jeopardize the due process of that proceeding.
Clearly, Net neutrality is a big issue. What does it mean? How do you address it? Everybody is struggling with it. When Internet service providers throttle, as you called it, traffic by some function or other, the justification normally is that the Internet is used for various purposes--your voice over Internet, the telephone Rogers provides you comes over the Internet, as does your e-mail, as does downloading, as does the uploading.
If you don't manage the traffic, it could be that your telephone conversation will be s.u.d.d.e.n.l.y t.h.i.s s.l.o.w, just because there's too much traffic. The Internet service provider is trying to make sure that the VoIP is uninterrupted and that e-mails go at a regular pace. To the extent that something can be slowed down without affecting the user, they try to do it.
Obviously they have to do this on an non-discriminatory basis. They obviously can't do it by favouring some users over others, etc. What do they actually do? What is the complaint? In the one case you mentioned, the Canadian Association of Internet Providers versus Bell, there's a specific complaint. I will be hearing the issues and we will be pronouncing on this. Other than enunciating the principles, really, I can't do more in answer to your question.
I was going to answer you, before you made that last comment, on the Net neutrality.
Both acts, the Broadcasting Act and the Telecommunications Act, do not by and large provide AMPs. The only portion where it is in the Telecommunications Act is when Parliament enacted the “do not call” list, they also provided AMP. It is something we need in our tool box.
As you know, in telecom we went from an ex ante regulation to an ex post regulation. Take your hands off, let the market operate, and only step in when there's market failure. It also means, if there's market failure, you want to repair, and you should also have meaningful.... We don't have that. I would love to have AMPs on both the broadcasting side and the telecom side.
One way to do it is rather than amending the Broadcasting Act, you would put it in the CRTC Act. The CRTC, with respect to all the acts where there are ministers, which are only two, may have the power to administer monetary penalties. That will indeed enhance our tool box and could be used both on the telecom side and on the broadcasting side.
I want to ask the commissioner about the upcoming study entitled Perspectives on Canadian Broadcasting in New Media. I have a few questions, but not specifically about what's in the report. I want to make some comments and then seek his views on my comments.
I think in some ways the train has left the station concerning new media, and we're beyond the point where studies and actions that may flow from those studies are going to make any difference. The technologies exist today, are in use today in Canada allowing people to completely bypass—legally bypass—CRTC rules with respect to Canadian content, with respect to the regulation of Canadian radio stations and the like.
For example, I have friends who have gone out and bought Internet radio devices. They just plug them into the wall and they get automatically on their receiver thousands and thousands of stations that aren't Canadian, that aren't Canadian-regulated, that aren't CRTC-regulated. There are products such as Philips Streamium, or there's a product by a company called Roku. You can go into any Future Shop and buy these products. You simply plug them into the wall, plug them into an Ethernet connection, and boom, you have 2,000 stations for free.
It's just like a radio: you have a remote control; you can surf through about a thousand stations, pick any station you want, and play it on your system. That's coming to television. It's coming to a whole range of devices that, if not there already, are coming onto the market in the next couple of years.
I know that, for example, when you buy a Denon or Yamaha receiver now, you actually can buy this Internet-streaming radio built into the product. If you go to a high-end shop in Ottawa to purchase a Denon receiver, you have the option of buying a Denon product that, in addition to being a receiver and receiving conventional FM and AM signals, actually will receive Internet radio too. You just plug in the Ethernet connection and suddenly you have a whole third spectrum of a couple of thousand Internet radio stations that fall outside the purview of the CRTC.
I think it's only a matter of a couple of years before you're going to see that shift to Internet TV and IPTV. In some ways, I think we're entering a new era here, in which it's going to be almost a moot point to discuss whether or in what context new media fits into the old construct, before the age of the Internet.
I put this on the table because I think it's coming fast and furious, and I already see out there right now that people are using this stuff.
It starts, first of all, with the definition. We are in charge of broadcasting, and by broadcasting I'm talking about professionally produced content. I'm not talking about user-generated content, which is YouTube, etc. I couldn't care less; do what you want. It's not broadcasting. It's not part of our mandate. Our mandate is broadcasting.
I look at that Broadcasting Act and see the objectives and the purposes, but everything basically comes down to two things. Number one, there has to be Canadian content. Number two, there has to be access to that content by Canadians, be it as watchers or be it as participants, producers, or players in the broadcasting system. Those are the twin goals that we have to promote and achieve. We'll do it by whatever means, whether they are regulatory, whether they are incentives, or whatever. That's our task.
Clearly the environment is changing. It may be changing much faster, as you suggest. Part of the reason why we undertook this new media initiative is, first of all, to try to scope a little bit what the universe is, and now we are saying, what are the questions we should ask? What are the answers? You are asking me, and I will tell you this next year at this time. I can't--
I just want to go back to our earlier discussion on new media. I think your fundamental challenge or problem is that, when the 1999 exemption order went into place, basically it was an acknowledgement at the time--and I still think it is valid today--that the government wasn't going to regulate IP-based packet-switched networks. The only countries that do that presently are not as free and open and transparent and democratic as ours. We don't regulate those big OC-3 lines or other big cables coming across the border. Those packets come flying across those borders on those big cables and the Government of Canada, directly or indirectly through regulation, doesn't monitor those packets. There are countries that do that. They are far more authoritarian and less open than we are. So I think that it's going to be incredibly difficult, if not impossible, for governments to ever regulate packet-switched, IP-based networks.
I put that out there as a point, because I think you were right in your earlier testimony when you said the challenge here was not to regulate more but to ensure that Canadian voices are heard on broadcast media.
I note today that Research In Motion released its next generation of BlackBerry. It's going to work on the 3G networks. It's going to have a camera. It's going to have a video recorder. It's going to have enhanced web access. Apple has announced that this summer it's coming out with a new platform for the iPhone that will have enhanced multimedia capabilities. These are all on packet-switched, IP-based networks.
I put the point out there, just as a comment, that maybe we need to look at it from the other end, as you suggested. Maybe the solution isn't more regulation, but rather for governments at some future date to say, “Look, we're entering into an era now where foreign media will be ubiquitous within our country because of these IP-based networks, and as a result, we're going to take a look at putting more resources into the public broadcaster to allow and ensure that Canadian voices continue to be heard within our own country.”
I followed your presentation and I noted something that perhaps you will not agree with. Artists’ groups are complaining that the CRTC is heading towards deregulation. There is talk of a voluntary code. In the community, there is talk of deregulation.
Mr. Abbott raised a point I would like to discuss with you, that is, lighter regulation, which would offer greater freedom, take market forces into account and streamline the bureaucracy. When I hear all that, I am afraid of giving you more tools.
If there is a range of penalties, clearly there will be a tendency most often towards infractions entailing small penalties. Seldom if ever will extreme penalties going so far as suspension of a licence be imposed. It is well known that, where there is a range of penalties, people will always opt for a sort of halfway penalty that consists charging a series of small fines. At present, it is true that you do not have much choice: you can opt either for the minimum, or for the maximum.
Talk of deregulation, market forces and voluntary codes worries me. Perhaps it is better to keep the status quo. That way, there is not much choice. If someone repeatedly fails to abide by the regulations, at some point their licence must taken away. When people no long understand and just do whatever they feel like, maybe they should lose their licence.
I must again thank you for your candid answers today, for your forthrightness with the committee. I appreciate your taking the time to come to this committee.
I'm going to ask my committee to hang around for a very short time.
Even as our witnesses are leaving, I'd like to mention a short bit of committee business: I was unsuccessful today at the liaison committee. I'm batting one for five.
An hon. member: Are we going to Banff?
The Chair: No, we're not we're going to Banff. I'm not a very good salesman at the liaison committee.
The hearings will be held here. Our clerk has just sent out the list of witnesses to everyone. If there are people on the list you don't think should be there, please let my clerk know by tomorrow at noon. The hearings will begin on the 27th, the Tuesday after we're back from break. We have to get witnesses lined up. We will then determine how many days we need.
We're looking at video conference too. We're trying to get that up, because there are quite a few witnesses from Vancouver. Our clerk is looking after that.