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37th PARLIAMENT, 1st SESSION

Standing Committee on Canadian Heritage

EVIDENCE

CONTENTS

Thursday, May 30, 2002

0915

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

Ms. Janet Yale (President and Chief Executive Officer, Canadian Cable Television Association)

Mr. Gerald Kerr-Wilson (Senior Counsel, Canadian Cable Television Association)

Ms. Janet Yale

0920

The Chair

Mr. Glenn O'Farrell (President and Chief Executive Officer, Canadian Association of Broadcasters)

The Chair

Mr. Ben Ivins (Senior Associate General Counsel, National Association of Broadcasters (U.S.))

The Chair

Mr. Glenn O'Farrell

0925

Ms. Erica Redler (General Counsel and Senior Vice-President, Policy and Legal Affairs, Canadian Association of Broadcasters)

0930

Mr. Glenn O'Farrell

The Chair

Mr. Ben Ivins

0935

0940

The Chair

0945

Mr. Abbott

Mr. Ben Ivins

Mr. Abbott

Mr. Glenn O'Farrell

0950

Ms. Erica Redler

Mr. Gerald Kerr-Wilson

The Chair

Mr. Ben Ivins

0955

Mr. Abbott

Mr. Ben Ivins

Mr. Abbott

Mr. Ben Ivins

Mr. Abbott

Mr. Ben Ivins

Ms. Gagnon (Québec)

1000

Mr. Glenn O'Farrell

Ms. Janet Yale

Mr. Gerald Kerr-Wilson

1005

Ms. Erica Redler

Mr. Jim Abbott

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

1010

Ms. Janet Yale

Ms. Sarmite Bulte

Ms. Janet Yale

Ms. Sarmite Bulte

Mr. Gerald Kerr-Wilson

Mr. Glenn O'Farrell

Ms. Erica Redler

Ms. Sarmite Bulte

1015

Mr. Ben Ivins

1020

Mr. Glenn O'Farrell

Ms. Sarmite Bulte

Mr. Ben Ivins

Mr. Glenn O'Farrell

Ms. Sylvie Courtemanche (Executive Vice-President, Policy and Regulatory Affairs, Canadian Association of Broadcasters)

1025

Mr. Ben Ivins

The Chair

Ms. Sarmite Bulte

The Chair

Mr. David Goldstein (Vice-President, Government Relations, Canadian Association of Broadcasters)

The Chair

Ms. Wendy Lill (Dartmouth, NDP)

Mr. David Goldstein

1030

Ms. Erica Redler

Ms. Janet Yale

Ms. Wendy Lill

Mr. Glenn O'Farrell

The Chair

Ms. Janet Yale

1035

The Chair

Mr. Glenn O'Farrell

Mr. David Goldstein

Mr. Abbott

Mr. Glenn O'Farrell

1040

Mr. Abbott

Mr. Glenn O'Farrell

Ms. Janet Yale

Ms. Erica Redler

1045

The Chair

Mr. Ben Ivins

The Chair

Ms. Sarmite Bulte

Ms. Janet Yale

Ms. Sarmite Bulte

Mr. Glenn O'Farrell

1050

Ms. Sarmite Bulte

Mr. Glenn O'Farrell

Ms. Sarmite Bulte

The Chair

Mr. Strahl

Mr. Glenn O'Farrell

Ms. Erica Redler

Mr. Glenn O'Farrell

Ms. Janet Yale

Mr. Chuck Strahl

The Chair

Mr. Paul Spurgeon (Vice-President, Society of Composers, Authors and Music Publishers of Canada)

1105

The Chair

Mr. Jay Thomson (President, Canadian Association of Internet Providers)

1110

1115

The Chair

Mr. Jim Abbott

Mr. Paul Spurgeon

Mr. Jim Abbott

Mr. Paul Spurgeon

1120

Mr. Abbott

Mr. Jay Thomson

Mr. Abbott

Mr. Jay Thomson

Mr. Abbott

Mr. Jay Thomson

Mr. Abbott

1125

Mr. Jay Thomson

The Chair

Ms. Christiane Gagnon

Mr. Jay Thomson

Ms. Christiane Gagnon

Mr. Paul Spurgeon

1130

Mr. Jay Thomson

Ms. Christiane Gagnon

Mr. Paul Spurgeon

The Chair

Ms. Sarmite Bulte

Mr. Paul Spurgeon

Ms. Sarmite Bulte

Mr. Paul Spurgeon

1135

Ms. Sarmite Bulte

Mr. Paul Spurgeon

Ms. Sarmite Bulte

Mr. Paul Spurgeon

Ms. Sarmite Bulte

Mr. Paul Spurgeon

Ms. Sarmite Bulte

The Chair

1140

Mr. Paul Spurgeon

The Chair

Mr. Paul Spurgeon

The Chair

Mr. Jim Abbott

Mr. Jay Thomson

Mr. Jim Abbott

1145

Mr. Jay Thomson

Mr. Jim Abbott

The Chair

Mr. Jim Abbott

Mr. Jay Thomson

The Chair

Ms. Sarmite Bulte

1150

Mr. Jay Thomson

Ms. Sarmite Bulte

Mr. Jay Thomson

1155

1200

Ms. Sarmite Bulte

The Chair

CANADA

Standing Committee on Canadian Heritage

NUMBER 069

1st SESSION

37th PARLIAMENT

EVIDENCE

Thursday, May 30, 2002

[Recorded by Electronic Apparatus]

¿ (0915)

[English]

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

We're very pleased at this point to welcome the Canadian Cable Television Association in the person of Ms. Janet Yale, president and chief executive officer, and Mr. Gerald Kerr-Wilson, senior counsel.

Ms. Yale, the floor is yours.

Ms. Janet Yale (President and Chief Executive Officer, Canadian Cable Television Association): Thank you, Mr. Chairman, and good morning.

The CCTA is very pleased to be here today to speak to this issue. As you know, we represent over 800 cable systems in Canada, and collectively our members deliver entertainment, information, and telecommunication services to approximately 6.1 million Canadian households, including over 1.7 million subscribers to our high-speed Internet services. The majority of Canadian households receive all of their television programming, including local and distant-broadcast television signals, from their local cable operator.

In the early days of cable television in Canada, retransmitted Canadian and U.S. signals were the only signals offered to cable subscribers. Cable companies were able to improve signal quality and extend the reach of local television services and provide consumers with more choice in programming by offering distant Canadian and U.S. signals. This was a particularly vital function in remote areas of the country not served by local broadcasters.

[Translation]

Cable companies are still playing this essential role today, but they also provide a broad range of specialized Canadian services to their clients, pay TV services in both official languages as well as ethnic Canadian services and authorized foreign services from all over the world.

Besides this growing list of video program services, Canadian cable companies are also beginning to offer advanced interactive services, like access to high-speed Internet, improved interactive television services, access to the web through television and video-on-demand.

Most of these services depend on technology conceived for the Internet. Increasingly advanced cable services will reflect the convergence of broadcasting, telecommunications and information technology.

[English]

As the primary providers of distant and local television signals in Canada and significant providers of digital interactive and Internet services, cable operators have a direct, substantial interest in Bill C-48 and the proposed regulations under the act.

Mr. Gerald Kerr-Wilson (Senior Counsel, Canadian Cable Television Association): The CCTA recognizes that the emergence of web-based retransmitters such as iCraveTV and JumpTV raises important policy questions that impact on not only Canada's copyright regime but also the regulation of the broadcasting system pursuant to the Broadcasting Act. These questions require the government to strike a balance among rights holders, broadcasters, consumers, cable and DTH operators, and the potentially endless possible uses of new technology in the delivery of services to Canadians.

We recognize the concerns of rights holders and broadcasters and support the need to provide equitable legal protection for the programming contained in local and distant signals. However, we firmly believe that any measures adopted by the government to address the issues raised by web-based retransmission should in no way limit the ability of broadcasting distribution undertakings to take advantage of the benefits offered by technological developments. Canadian communications companies should not be hindered in the development and deployment of innovative new technologies, including the use of the Internet, in the delivery of integrated services to consumers.

The CCTA believes that Bill C-48 strikes an appropriate balance among the various interests. We support the decision to define “retransmitter” in section 31 of the Copyright Act with reference to the regulatory status of the retransmitter pursuant to the Broadcast Act. This will allow cable and DTH companies, which retransmit local and distant signals pursuant to the statutory licence, to continue to do so while the issues raised by web-based retransmission are resolved.

We also strongly agree with the decision to ask the CRTC to consider the question of whether the retransmission of television signals over the web should be covered by the new media exemption order.

Throughout the consultation process, the CCTA has been concerned that any attempt to prohibit the use of banner advertising would inadvertently impact on the ability of cable operators to offer new services that make legitimate use of interactive or Internet technology but do not impact on rights holders. In our written submission, we briefly describe two possible uses of interactive technology that could possibly run afoul of a broad prohibition against advertising.

[Translation]

Ms. Janet Yale: The concerns voiced by rights holders and broadcasters with regard to management models based on advertising banners directly concern the expertise of the CRTC as a regulatory organization for broadcasting. Only the commission can determine whether the impact of retransmission over the web on broadcasters justifies the regulatory supervision of this activity.

[English]

We thank you for the opportunity to appear before you today. We look forward to participating in this important process, both when the CRTC undertakes its examination of the scope of the exemption order and when this committee resumes its work to finalize the regulations under Bill C-48.

We'd be pleased to answer your questions now.

¿ (0920)

The Chair: Thank you very much, Ms. Yale.

I'm wondering if we could now invite the CAB and Mr. Ivins to join us.

Mr. O'Farrell.

Mr. Glenn O'Farrell (President and Chief Executive Officer, Canadian Association of Broadcasters): Thank you, Mr. Chair, and our apologies for being a little late this morning.

The Chair: Excuse me just a minute, Mr. O'Farrell.

Is Mr. Ivins here?

Mr. Ben Ivins (Senior Associate General Counsel, National Association of Broadcasters (U.S.)): Yes, sir.

The Chair: Welcome, Mr. Ivins.

Mr. Ben Ivins: Thank you very much, Mr. Chair.

The Chair: We're pleased to welcome, from the Canadian Association of Broadcasters, Mr. Glenn O'Farrell, president and chief executive officer; Madam Sylvie Courtemanche, executive vice-president of policy and regulatory affairs; Ms. Erica Redler, general counsel and senior vice-president, policy and legal affairs; and also from the National Association of Broadcasters in the U.S., Mr. Ben Ivins, senior associate general counsel.

Okay, Mr. O'Farrell, the floor is yours.

Mr. Glenn O'Farrell: Thank you. David Goldstein has also joined us this morning.

As the national voice of Canada's private broadcasters, the Canadian Association of Broadcasters is pleased to participate in your important review of Bill C-48, an act to amend the Copyright Act.

While there are several affected parties in this matter, Bill C-48 revolves around the use of over-the-air TV signals on the Internet, making our members, the CBC, and U.S. broadcasters the most directly affected parties.

¿ (0925)

So what's at stake in this? Our answer is that without legislative and regulatory clarity, we could destroy our over-the-air TV industry; it's as simple as that. That industry is one of the primary platforms for Canadian expression, and the foundation of the Canadian broadcasting system.

[Translation]

Simply put, if televised Canadian content is generally and freely rebroadcast on the Internet, Canadian and foreign producers of programs like Blue Murder, Histoires de fille, La soirée du hockey, West Wing or Friends will refuse to allow Canadian TV broadcasters any access to their products, which will be harmful to their financial performance.

The story began in December 1999 when IcraveTV.com was launched. This company came armed with a new CRTC media exemption order, that grants new media operators freedom from regulations, and, on the other hand, section 31 of the Copyright Act, which is vague as far as technology is concerned, as it was adopted before the Internet emerged. In short, it wanted to have the best of both worlds, namely subsidized content without any regulatory burdens.

Since the aborted launching of IcraveTV.com in 1999, our case has always been consistent and very simple. On the one hand, we did not oppose any of the new legitimate forms of distribution. To the contrary, new legitimate distribution projects are needed for the growth of our industry, but we are concerned with the broadening of the compulsory licence system to unauthorized and unregulated companies that do not contribute anything to the Canadian broadcasting system and whose activities are a threat to this system.

When Parliament adopted section 31 of the Copyright Act, it did not intend to set up a compulsory licence system for the rebroadcasting of TV programs over the Internet.

Content is the key to future innovation. Such content can only be fostered by implementing a system that allows a consensual relation between exclusive rights holders and distributors.

Canada is not in the race with the other large trading partners of the United States in this field. Australia, the European Community and the United States all have legislation to avoid the risk of the rebroadcasting of television signals over the Internet.

Initially, as we fought against the launching of renegade companies like IcraveTV.com, we proposed an amendment to section 31 of the Copyright Act that could have provided for exclusion from the Internet based on the Australian model. This means that the compulsory licensing system could not be applied to the rebroadcasting of TV signals over the Internet. There is an obvious motive for the exclusion: it is control. There is no longer any efficient way to control the use and rebroadcasting of broadcasted TV signals once they are available on the Internet.

[English]

Any viable solution must create a clear signal to the marketplace and the Copyright Board. The message must be that Canada, like its major trading partners, will unequivocally protect exclusive program rights acquired by conventional television programming services. There can be no other way, and this cannot be a debate about semantics.

We must create a specific carve-out, through either the statute or the supporting regulations, that will safeguard broadcasters from having their signals freely distributed by unregulated and unauthorized Internet retransmission services.

Ms. Erica Redler (General Counsel and Senior Vice-President, Policy and Legal Affairs, Canadian Association of Broadcasters): We feel strongly that Parliament should make public policy, not the courts or the Copyright Board. The basic principle is that compulsory licences are an abrogation of creators' rights, and should be used sparingly only to achieve major public policy objectives.

By the way, when we speak of creators, we are talking about the entire creative value chain, which includes broadcasters, producers, script writers, composers, performers, and others.

Canada's compulsory licence for retransmission of broadcast signals was originally enacted as part of the free trade agreement between Canada and the United States. The public policy objective then was to legalize the distribution of broadcast signals, primarily U.S. ones, in the face of U.S. allegations of copyright infringement.

The legislation allowed cable distributors continued access to content on a convenient and very inexpensive basis, allowing the cable industry to grow and flourish. It also allowed Canadian audiences to continue to receive the television signals they were accustomed to receiving.

It should be noted that much has changed since the early days of cable. The bulk of services now offered by cable and satellite distributors are no longer over-the-air conventional television services, but speciality and pay services that are not subject to compulsory licences. Licensing of these services follows the more normal commercial model of freely negotiated business contracts. This model is another and better model for distribution of content on the Internet.

JumpTV is currently in operation distributing content acquired on this normal licensing model. This demonstrates that the technology works as well with contacts acquired by contract as with content provided by a compulsory licence. We do not believe there is a solid public policy case to support expanding the compulsory licence to the Internet--quite the contrary; we believe doing so defeats public policy objectives.

It has been suggested that expanding the compulsory licence to the Internet will stimulate innovation. We disagree. The key to innovation in our business is content. It's often said that content is king. The key to the value of audiovisual content in television is market exclusivity. The Internet destroys market exclusivity to an absolute extent. By eroding market exclusivity, you erode the value of the content and devalue Canadian conventional television as a platform for content.

Canadian conventional television is a billion-dollar industry that directly and indirectly provides over 100,000 jobs. It's one of the fastest-growing areas of knowledge-based jobs. Allowing unregulated entrants, who make little or no contribution to the Canadian system, runs counter to public policy goals.

Canada's major trading partners, including the United States, the European Union, and Australia, have legislative regimes that do not allow Internet retransmission of broadcast signals under a compulsory licence. An expansion of the Canadian compulsory licence to cover the Internet can have international consequences.

The Canadian government should be moving to solve this problem. Time is not on our side. Without swift action, new players will emerge to take advantage of this grey area of the law. In fact, one new player, iCraveTV.biz, is expected to launch on June 1.

¿ (0930)

Mr. Glenn O'Farrell: Mr. Chairman and committee members, as stated earlier, in our view it is clear that the most effective and elegant solution to clarify the situation and bring the Canadian Copyright Act into line with practice in the rest of the developed world would be to amend section 31 of the act. Parliament would explicitly carve out Internet or new media retransmitters as ineligible retransmitters for the purposes of accessing the compulsorily licensing regime.

The second option, albeit a more awkward one in our view, would require the creation of regulatory language that provides clarity with an express carve-out. This option could be viable as long as the following three conditions are met.

First of all, the amendment, the coming-into-force clause in Bill C-48 to create a clear moratorium on new media retransmitters from launching, will be in effect until the bill comes into force.

Second, Parliament, through the House of Commons Standing Committee on Canadian Heritage, will be mandated to strike the regulatory language with the assurance that cabinet will uphold those recommendations.

Third, the government must request the CRTC, under section 15 of the Broadcasting Act, to revise its new media policy to create a new class of regulated broadcast distribution undertakings for new media retransmitters, who will be subject to the same regulatory obligations as existing licensed cable and satellite distributors.

In closing, I will say that no one should confuse piracy and theft with progress or innovation. Canada needs to defend its place in the world as a progressive jurisdiction, not an international policy haven. While the committee will be bombarded, we're sure, with pages of language on how to fix this issue, we think your first guiding principle should be clarity. We are therefore here today because section 31 indeed lacks clarity.

We thank you for this opportunity, and we'd be happy to answer any of your questions, Mr. Chairman.

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

Mr. Ivins.

Mr. Ben Ivins: Thank you, Chairman Lincoln, and members of the standing committee.

The NAB is an association of television and radio stations and broadcast networks that serves and represents the U.S. broadcasting industry. Included among NAB's members are over a thousand television stations.

Let me say at the outset that I consider it an honour and a privilege to be permitted to address this distinguished committee. As you probably know, the issue of Canada permitting compulsory licensing of works on television stations retransmitted over the Internet has been hotly debated and contested for several years. NAB has a vital interest in this issue, and I would like to state for the record that throughout, Canada has extended to us every courtesy in allowing NAB to participate in proceedings and to express our views.

Specifically, we were permitted to intervene in the JumpTV proceeding before the Copyright Board; to file comments with the joint industry-heritage fact-gathering process last fall; and now to testify before this distinguished committee. You and your countrymen are to be commended for generously and fairly opening up your participatory democratic processes in considering our interests and concerns.

Succinctly stated, the NAB is unalterably opposed to the non-consensual retransmission of television broadcast signals over the Internet by means of a statutory or compulsory licence. Internet retransmissions of U.S. broadcast signals by Canadian entities pursuant to section 31 of your Copyright Act could result in devastating consequences for the United States system of free, over-the-air broadcasting, and could violate Canada's obligations under the TRIPS agreement and the Berne convention.

In our view, currently there is no technological measure to assure that any territorial restrictions that Canada might choose to impose on paper could be enforced. Indeed, the essential nature of the Internet medium--that it is global, interconnected, and non-hierarchical--works directly against any attempts to implement geography-based restrictions. It is this marked difference between the Internet and other media that has led the United States and other countries to decline to extend statutory licences to cover Internet retransmissions.

Accordingly, NAB urges that Canadian law be clarified to expressly exclude from its retransmission licence the retransmission of television broadcast signals by Internet retransmitters.

The success and viability of the U.S. television broadcasting system exists as a result of the partnership between national networks, program syndicators, and local television stations. Under this system, local television stations in markets large and small provide a combination of national TV programming, syndicated programs, and local news, weather, and public affairs programming. The continued viability of this system depends on local stations having the ability to bargain for and enforce exclusivity in providing network and syndicated programming to local viewers.

Local stations make most of their revenues by selling advertising time during popular network and syndicated programs. During these same programs, local stations also run promotional spots designed to attract viewers to local news programs. These spots are a key way that stations build audiences for their news programs.

Protection of stations from importation of duplicate programming into their markets is thoroughly woven into the fabric of our legal system. Through legislation and regulations, cable and satellite providers are precluded from importing distant signals containing programming for which local stations have secured exclusive rights. Allowing third-party Internet services to retransmit U.S. television stations over the Internet could cause incalculable harm to those stations and put their basic economics in grave jeopardy.

The reason is simple. If viewers are able to watch network and syndicated programs on distant stations imported over the Internet, the value of local stations being the exclusive provider of that programming in their markets will be lost. Advertisers will pay much less to sponsor programming on a local station if that programming is also available day and night on other U.S. and foreign television stations being imported over the Internet from all over the world. Moreover, time zone differentiations will mean that viewers in western time zones could view programming being streamed from a station in Buffalo, New York, for instance, at an earlier time, and never even tune in to their local stations.

¿ (0935)

The inevitable reduction in advertising revenues resulting from the streaming of distant signal programming into local markets will have multiple negative consequences. Stations will be forced to cut back on their spending for both nationally syndicated programming and their local programming, including local news and informational programming. This in turn will have a negative effect on program suppliers, as they too adjust and reduce the amount and quality of programming they supply. Cuts could also be expected in discretionary local station spending on community service and outreach programs.

The ultimate real loser in this downward spiral, Mr. Chairman, will be the viewers, particularly those who can not or choose not to subscribe to pay multi-channel video services. The dimensions of this issue are huge. In the United States alone there are 110 million Americans with Internet access, and there are hundreds of millions of Internet users worldwide.

These figures are, of course, growing every day, as is access to broadband, which makes delivery of video over the Internet even more appealing to consumers.

Local stations would face Internet companies delivering broadcast programs--the same programming for which they have licensed local exclusive rights--to viewers in their local markets, including many of the most affluent households that are the most appealing to advertisers.

This is not just a domestic issue. Delivering television programming throughout the world under an uncontrolled compulsory licence on the Internet would sabotage the ability of Canadian and U.S. broadcasters and other copyright owners to sell their programming in foreign markets. That is, all owners of television programming would find themselves scooped, in selling their own programming, by third parties who could simply appropriate the entire output of television programming and deliver it instantaneously throughout the world.

In its deliberations on the regulations to accompany Bill C-48, the government appears--correctly and appropriately--to have opposed compulsory retransmitter licences that would permit unrestricted retransmissions of broadcast signals over the Internet, but appears enticed by the notion that such a licence might be acceptable if it were subject to an “appropriate territorial restriction”.

We respectfully but urgently submit that no such technology exists. The likely failure of technical measures attempting to restrict access by non-Canadian users stems both from the inherent deficiencies in geographic analysis tools that impede their accurate detection of user locations and from the ready availability of multiple ways to circumvent such access controls altogether.

In a way, the most essential characteristics of the Internet medium--its global connectivity and its use of a system of multi-path packetized transmissions--are fundamentally at odds with attempts to limit access to particular content within a single geographic area.

Neither the structure nor the technology of the Internet supports geographic access restrictions. The problem begins with the absence of any established location-based directory of the IP addresses attached to Internet devices. Access-control companies must seek to infer locations from their own databases, or from indirect information, such as the path by which the user arrives at the site, or the locations of network elements that appear to be associated with the user's IP address.

These methods of inferring location from other information are bound to be unreliable. Importantly, this unreliability will be at its greatest when attempting to distinguish between Canadian and American users, because of the special nature and extent of Canadian-U.S. operations by multinational companies and Internet service providers. Even if current available geographic analysis tools were not so flawed, access would still be available to those who could circumvent the geographic control system itself. Such means of circumvention, developed for other wholly legitimate purposes and readily available to many users today, are becoming even more widely available.

As the U.S. Register of Copyrights has testified before our Congress:

Some firms are working on software and hardware that would restrict the distribution of information, which could include broadcast retransmission, to specific Internet customers or to consumers located in a specific geographic area. But no one has yet rolled out a fail-proof system, and if experience has taught anything with technological controls to copyright, it is that it is not long before they are hacked or circumvented.

¿ (0940)

Given the enormity of what is at stake, Mr. Chairman, NAB respectfully submits that the U.S. and Canadian broadcasting industries should not be permitted to serve as experimental fodder for what are basically untested developmental geographic blocking mechanisms. It is likely that determined users will find ways to bypass border control authenticator systems at relatively minimal cost, and that access will rapidly become possible via any number of techniques.

Mr. Chairman, as you know, both the United States and Canada are signatories to the Berne Convention for the Protection of Literary and Artistic Works and to TRIPS, the WTO agreement on Trade-Related Aspects of International Property Rights. It is our view, and I believe the view of the United States government, that the adoption of Bill C-48, in the absence of any viable technology to limit the retransmission of broadcast signals to Canada, would raise serious questions about Canadian compliance with its Berne and TRIPS obligations.

Again, our Register of Copyrights testified before Congress that:

[A]s far as we have been able to ascertain through our discussions with the industry there is no technology at the present time that is one hundred percent effective at preventing reception of signals outside the boundaries of a particular country. Given the present state of technology, it appears unlikely that we could implement a Berne-compatible compulsory licensing regime that permits unencrypted retransmissions of television signals over the Internet.

I believe these concerns have been conveyed to your government by our government at the urging of U.S. broadcasters, their sports and other entertainment program suppliers, directors, actors, and writers guilds, music collectives, and others.

Mr. Chairman, I am prepared to submit written comments that expand on my remarks. I understand your rules provide that these comments should be submitted in English and French, but I apologize; since my appearance before you was confirmed less than 48 hours ago, I was not able to comply with this requirement.

You and the committee have been more than generous with your time. I very much appreciate this opportunity to express our views and concerns and would be happy to try to respond to any questions you might have.

Thank you, Mr. Chairman.

The Chair: Thank you very much, Mr. Ivins, for your very important testimony. We really appreciate your presence here.

I should mention that your material will be translated by the House of Commons and distributed to the members once it has been translated. If you would care to present additional material and send it to our clerk, you can send it in English and it will be translated and distributed as well. In fact, we'd welcome this additional material according to your convenience.

Mr. Ben Ivins: Thank you very much, Mr. Chairman.

The Chair: Thank you for being here.

So I will open the meeting to questions. Before I do so, I should mention to you that certainly there seems to be a lack of consensus as to whether we should use a carve-out or go the route of regulation. There's certainly a very large consensus that we should modify clause 31 of the act. In fact, we have received a request by the minister to proceed with Bill C-48 as soon as possible and the committee has been asked to have actual direct input into the final shape of the regulations.

We'll start with you, Mr. Abbott.

¿ (0945)

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): This has been a fascinating morning. As I heard the various presentations in their ascending order, that's exactly the way they struck me--they have been in ascending order. So I'm gong to start with Mr. Ivins.

Did I understand you correctly that Bill C-48 as presently written would be inadequate in the judgment of the NAB and would not comply with the various trade agreements we have between our two countries?

Mr. Ben Ivins: That is correct. Just to elaborate on that for a minute, the problem we have had, quite frankly, is that the actual legislative language of Bill C-48 is totally dependent, it strikes us, on the regulations that ultimately will be adopted. So while I guess I would say there is nothing on the face of Bill C-48 itself, it would leave open the question of whether it would violate those obligations.

We have seen various iterations of draft regulations, but all of the ones we have seen presuppose that there is in fact technology, as I said, that could limit the retransmission of these signals to Canada. Absent that assurance, you can put on paper anything that says, “You absolutely shall limit it to Canada”, but if I may say, it seems almost irresponsible to put that on paper, to basically invite multiple parties to say, “Oh, yes, we think our system effectively will limit signals to Canada”, and then create, for copyright owners and broadcasters, and U.S. broadcasters, the dilemma of how to seek a remedy when those systems fail.

Hypothetically, suppose you're a broadcaster in Keokuk, Iowa--and there is a Keokuk, Iowa, believe it or not--or Waco, Texas, and some aspiring college student connects with somebody at McGill or U of T or Queen's and creates a mirror site. So the site in Canada, completely legitimately, starts sending it down to those markets.

Now, what is the broadcaster in Waco, Texas, supposed to do about this situation? And suppose those come and go....

I'm sorry, go ahead.

Mr. Jim Abbott: I understand, and I think you're quite clear on this aspect of it.

To be more precise, in their testimony yesterday, our officials told us that our passing Bill C-48, minus the regulations, basically gave a de facto moratorium on new media services. It basically gave a temporary protection for the issues that have been raised by the NAB.

I would open this up to all three representing parties. In your opinion, do you agree with that representation?

Mr. Glenn O'Farrell: From our perspective, Mr. Abbott, there is no such protection that we feel is available to broadcasters. There is no moratorium specific, clearly stated moratorium that would require an amendment to Bill C-48 as it currently stands. We do not feel any comfort whatsoever that the current language of Bill C-48 provides that kind of protection.

¿ (0950)

Ms. Erica Redler: We totally agree.

The concept of a moratorium is one that gives us a great deal of comfort, but it has to be clearly stated in the act itself, not inferred indirectly. One would like to believe that all parties would make that interpretation, but there are other interpretations.

This whole exercise has been about giving certainty. We need to have certainty on the moratorium.

Mr. Gerald Kerr-Wilson: From the point of view of the CCTA, we agree with the department's assessment yesterday that as drafted, Bill C-48, absent regulations, doesn't provide a door for new media retransmitters; therefore, it is in effect a moratorium. What it says is that you may retransmit if you are a licensed BDU, such as a cable company or a satellite company, or if you are operating under a broadcast regulation exemption order for small cable systems, so you're governed by the CRTC. These are the people who today, under the current legislation, are eligible to use a compulsory licence.

That continues for a year, uninterrupted. The new media retransmitters can only operate if they comply with the conditions, and the conditions don't exist yet, so they can't meet that fundamental condition to access the licence. Whether or not they may operate anyway in infringement, well, they can do that. No matter what act Parliament passes, there may be people who infringe.

So we agree with the department that Bill C-48 as drafted, absent the regulations, creates a moratorium on new media retransmitters and is in full compliance with Berne obligations.

I'd also like to add a response to whether or not the regulations that have been proposed create a problem under Berne. The Berne convention clearly allows a national country to operate a compulsory licensing regime. Canada's current Copyright Act is.... We're Berne signatories, and there's no arguing that what we do now in section 31 is compliant with Berne. The question that arises, as I understand it, is whether you run into trouble with Berne if you try to create a system that allows retransmission outside your country. I guess the departments would say the regulations they have proposed explicitly preclude retransmission outside the country, therefore it must be in compliance with Berne.

As I take Mr. Ivins' point, he's saying that if there's no technology to back up that prohibition, in effect are we inviting people to infringe copyright and therefore are we breaking our Berne obligations. Well, I would say that Canada is responsible under Berne for having a Copyright Act that respects national rights and the rights of other nationals. Bill C-48 and the proposed regulations would do that. We can't be running afoul of Berne because people are infringing; otherwise every nation would be running afoul of their international obligations every time there was infringement.

So the question is whether you have set up a law that, if followed, respects your international obligations. I think there's a fairly strong argument that Bill C-48 and the regulations you've seen before you meet those obligations.

The Chair: Mr. Ivins.

Mr. Ben Ivins: Again, I would submit that it is fine to put on paper that thou shalt not retransmit outside of Canada, but you can't blink at reality. You could pass a law that says the sun sets in the east and the Canadian government will promulgate regulations to enforce this a year from now. But if it's totally unrealistic, if there is no current technology or necessarily the prospect that in fact you could promulgate regulations that would make that possible when you look at the technology, I think that raises serious concerns. Just because you have put something on paper that complies with it.... Again, we would beseech you to look at the practical implications.

Let's assume we're still in this situation a year from now, where there just is no technology out there and you have 20 or 30 basically judgment-proof Internet start-up companies that say, “Oh, yes, we have the technology. We can comply with these regs. We'll keep it in Canada, we assure you.” Suppose they don't, as a practical matter. And it is that practical matter....

If that results in our stations being bombarded by companies that we have to kind of continually chase.... I don't know where we'd chase them. You have conflicts of law problems. It is the reality of the technology to be able to enforce those regulations and that law that we question and that also brings in the implications that Berne and TRIPS would be violated.

¿ (0955)

Mr. Jim Abbott: I would not take...and I'm going to ask you a question. If somebody were malicious toward you, they would take your probable response to be a threat. I want to put that on the table right up front. In other words, I'm not asking that question, nor do I think we should take it that way.

What I would like to know is this: what are the implications? What are the implications, from the NAB perspective, if Canada proceeds with Bill C-48, if indeed we don't have the Internet carve-out and we don't offer the protection? What are the real-life implications to what Canadians would be able to access on their television sets in Canada, from an NAB perspective?

Mr. Ben Ivins: Well, I am here because I'm hoping that this can be resolved here and now and at this level. Beyond that, I would say that we would have to wait and see what happens.

Mr. Jim Abbott: What I'm asking is, in practical terms, would CTV lose The West Wing, would we lose Friends? That's really the question I'm asking...in your judgment.

Mr. Ben Ivins: You mean, if there were this massive...?

Mr. Jim Abbott: If I understand the NAB position, you're basically saying that Bill C-48 is inadequate, that it does not comply with what is required. So if we go ahead and pass Bill C-48, what then from an NAB perspective?

The reason I gave the preamble I did was that I am asking the question of you. You are not sitting there.... If you give us an answer, “Well, this would be withdrawn or that would be withdrawn” should not be taken as a threat by you because I've asked that question.

Mr. Ben Ivins: Well, it's difficult to say how the market would try to adjust to that situation. I'd say that certainly one option the producers of The West Wing would consider would be to remove it from the offerings of free over-the-air television, because it was not protected, because it was suddenly available all over the world. They might choose to put it on Mr. Kerr-Wilson's services, or subscription services, or pay services, which I think would be unfortunate for those who can't or don't want to subscribe to those subscription services.

Ultimately, in the long-term, I think the effect would be that you would not have The West Wing and other quality programming. For the whole economic cycle I described, if the home marketing and the exclusivity on which these programs are based starts to crack and crumble, then the whole financial underpinning that creates The West Wing and that allows for wonderful coverage of the Olympics, the Word Cup, the World Series, or what have you all starts to crack.

Those in favour of this type of legislation would say, well, that's fine, you have to adjust; you're Neanderthals; get with the program; figure out another way. Well, that's easy for them to say, since they have invested nothing in the program, nothing in any hardware, and just a little bit in the broadband capacity. I think that is a rather irresponsible response to what are the substantial and multi-billion dollar investments of the copyright owners, the suppliers, and the distributors.

Mr. Jim Abbott: Thank you.

The Chair: Madame Gagnon.

[Translation]

Ms. Christiane Gagnon (Quebec, BQ): Thank you, Mr. Chairman.

We have been given some work to do. Yesterday, the officials explained to us the scope of our mandate.

Yesterday I asked the officials from Heritage Canada about other countries that have adopted such legislation. Mr. O'Farrell, you alluded to the Australian model that excludes the Internet. You said that this would be one of your choices for clearing up the situation. Yesterday I asked the official from Heritage Canada why he was not taking into account what was going on in other countries. I was told that there were negative points and that we would take the best of foreign practices and see how we could adopt a solution better adapted to our reality.

Could you explain to me what he meant, for instance, by the negative points in the Australian solution? He did not specifically mention Australia, but he said that other countries had adopted legislation, that there were negative points and that we wanted to find a solution more in keeping with our own conditions.

À (1000)

Mr. Glenn O'Farrell: Thank you, Ms. Gagnon.

I think that I can clarify this for you by saying that there is no doubt about the fact that we would prefer a prohibition of the rebroadcasting of signals on the Internet.

Mr. Ivins mentioned technology, and we also spoke about it. We are talking about the current situation abroad. In the United States, there is a de facto ban, if you wish, whereas in Australia, a legislative ban was adopted.

For us, there is no doubt that this is the ideal solution. As for the positions of the representatives who spoke to you yesterday, we frankly have great difficulty in shedding more light on the negative points of a ban. What you were told this morning—and perhaps we can come back to this for a moment— is that the current lack of clarity in section 31 does in fact allow an interpretation of the section that would permit this kind of activity.

With all due respect for Mr. Wilson, without a clearly set moratorium, why should this be open to interpretation as far as the moratorium is concerned? So, let us speak clearly. Let us find clear, legitimate and unequivocal solutions. A carve-out would necessarily be the best option, as far as we are concerned.

Government representatives proposed another possibility to you. First, as there is no moratorium, and secondly, no referral to the CRTC under section 15, and third, due to the fact that the regulations will really give an Internet rebroadcaster the same obligations as those of a rebroadcaster with a licence from the CRTC, we see some merit to that solution. But, without any doubt, we would prefer a carve-out.

Ms. Janet Yale: Perhaps I could add something else about a carve-out because the negative impact of a carve-out would be felt by us, the cable broadcasters. Let me give the floor to Jay so he can explain the negative aspects to you.

[English]

Mr. Gerald Kerr-Wilson: Part of the problem in dealing with this issue is a fundamental language problem--namely, what do we mean by Internet? Is everything Internet the World Wide Web? Our position has been that the Internet is simply a communications system. It's an interconnected network of computers. One of the services delivered over the Internet is the World Wide Web that we're all familiar with through web pages. E-mail is another one. Peer-to-peer file transfer is another one.

When you talk about the Internet carve-out, most of the complaints about Internet retransmission actually concern web-based retransmission--a web page where someone anywhere in the world can access a retransmitted signal. And we're not championing web-based retransmission. We understand the severe problems with signal containment and with business models. We think the concerns expressed by the rights holders and the broadcasters with that particular model are absolutely legitimate and need to be addressed. But when you frame your attack as needing an Internet carve-out, you are in effect throwing out a whole bunch of extremely legitimate, useful technology that has absolutely no impact on rights holders at all.

I'm going to give you a couple of examples. Cable companies right now use Internet technology. We have various devices built into our networks, and each device is assigned an IP address, and we have routers that stream data and video to the different devices, using the IP address. It has nothing to do with the web. You cannot get on a browser and access this system. This is an internal mechanism. We're taking the best, most efficient communication system known, which is the Internet, and employing it in our own networks. There are a couple of practical applications for this.

I'm sure this committee is well aware that one of the issues facing the cable industry is capacity--how many channels we can carry, how many we have for services in both official languages, local, over the air. One of the ways we can help address the capacity problem is, if instead of sending 60 channels all the time to every household, we could actually have 500 channels at what's called the head end, which is like the central office. The subscriber at home has a set-top box and it requests channel 32. We only have to send that subscriber channel 32. They don't have to get all of the channels all at once. That means we can have almost unlimited channels available, only sending out those little pieces that subscribers want. That is using the Internet. It's not web-based. Nobody at home is ever going to access this on their computer. We only distribute to our subscribers over our closed network.

We get a little nervous when we hear people saying you cannot use the Internet in the course of a retransmission, because we are potentially going to use the Internet in the course of a retransmission. But when we do it, it's 100% secure. We have zero leakage outside of Canada or outside of our local areas. The process is completely invisible to the subscriber. It's completely invisible to the rights holder. We continue to pay, as an industry, $50 million a year for the rights to use the retransmitted signal, so we're not free-riding on anybody.

The second way that this technology could directly impact on consumers is what's called the interactive television system. This is where, again, you have the advance set-top box and you're watching a show on TV and you decide that there's a web page associated with that show. You press a button and your screen splits and a web page comes up. You're reading information about the show, and you think, this is really great, my cousin should see this. At the same time, you pull up an e-mail window and you send an e-mail. You can't do this today. You will be able to do this in the near future. This technology is coming--it's rolling out. We're trying to figure out the business models.

This is using the Internet. Now, if you happen to be watching a program on a retransmitted signal, suddenly it's copyright infringement because you want to look at a web page. It doesn't seem to us to be a desirable result. These are things that ultimately consumers are going to want, and some applications are going to help the broadcasters if they have interactive developments.

We just want to be careful and say, if you want to target problems associated with the web, please frame the language in that way. I think the officials said yesterday that clause 4 was basically supposed to be a web carve-out. But do not throw out the entire realm of Internet technologies because one small portion is a problem.

À (1005)

Ms. Erica Redler: Perhaps I can make a brief reply to Mr. Kerr-Wilson's intervention.

Broadcasters recognize that cable companies and likely satellite companies use the Internet in many ways to deliver the signal. That's not what we are trying to catch here. The problem for broadcasters is when the ultimate consumer accesses the signal on the World Wide Web delivered via the open World Wide Web. If cable chooses this as part of its delivery mechanism before it reaches the cable consumer in their home, who's watching it on television, we don't have a problem. That's one that would have to be addressed in terms of defining Internet, and it could get messy, but that could be done, because we don't have a fundamental disagreement in terms of precluding the types of activities that Mr. Kerr-Wilson just outlined.

Mr. Jim Abbott: Ms. Bulte.

Ms. Sarmite Bulte (Parkdale—High Park, Lib.): Thank you, Mr. Chair.

Mr. Kerr-Wilson, I would like to follow up on what we were just speaking about. I don't understand in that second example how sending an e-mail to my sister to watch this show would somehow be an infringement of copyright. Explain it to me if I'm wrong here, but I understood that the compulsory retransmission licence applied to the retransmission of already aired segments.

Mr. Gerald Kerr-Wilson: Yes, that's correct.

Ms. Sarmite Bulte: So how is what you describe in your introduction, what you're doing with the Internet, a retransmission of an over-the-air signal? Isn't that just transmitting it? It's no different from theNew York Times putting the New York Timeson their website. It's something they're transmitting. They're not retransmitting.

À (1010)

Ms. Janet Yale: The problem is the simultaneous viewing of retransmitted television signals while using the web, and the problem is the way in which an Internet carve-out is defined. It comes down to the point that Erica just made. You have to be careful when you define an Internet carve-out that you don't inadvertently catch activities that no one claims involve copyright infringement. Because it's the way in which our technology is going to evolve and allow you to do things simultaneously that could involve the web while you're also watching a retransmitted television signal. The concern is that the simultaneous use of those activities should not all of a sudden trigger a violation of section 31 of the Copyright Act.

Ms. Sarmite Bulte: And I think no one wants that to happen.

Ms. Janet Yale: Fair enough. The question is, how do we draft the language? The only point we're making is that just saying “carve out the Internet” creates a huge problem.

So if we want to deal with the problem of retransmitted signals over the World Wide Web, fine, we don't have a quarrel with that. It's just that the language has to be done in a way that doesn't inadvertently catch the kinds of scenarios that are very possible, using a combination of watching television while using the cable high-speed Internet service.

Ms. Sarmite Bulte: Are you familiar with the Australian exemption? I know I'm not. Maybe we need to get our researchers on that.

I don't think we can use the American example, with all due respect, because their FCC regulatory system is quite different from our regulatory system. I think, again, you don't want to compare apples with oranges, so let's move closer to the Australian or to the EU exemption. How is that done?

Mr. Gerald Kerr-Wilson: Well, on the issue of the Australian exemption--and it's true, it's a fairly simple Internet exclusion--the difference is that they have a very different cable industry. Their cable industry is extremely new. It didn't develop as primarily a source of retransmitted signals. It's only really developed within the last 10 years and it delivers pay-TV signals primarily.

They don't run across the same issues because they don't have the type of retransmission regime we have. So there isn't that impact.

Mr. Glenn O'Farrell: Excuse me, may I add a comment? I know Erica has views as well.

Again, with due respect to Mr. Kerr-Wilson, those are copyrighted works that are being retransmitted in Australia, and that's what we're talking about here, the copyrighted works and the retransmission of copyrighted works by a distribution system.

I think to suggest that the Australian model isn't appropriate is really wrong-headed. It's altogether appropriate because it's all about copyrighted works.

If Canada wants to distinguish itself as the only country in the developed world that does not see the necessity to find a solution to retransmission over the Internet by way of a carve-out that is related to the over-the-air signals, we have to find clarity in that other solution, if we're not going to go the carve-out route. We concur with the concerns that Janet Yale was raising earlier, and Erica spoke to that.

We're saying, and we'll continue to say, that section 31 currently leaves itself open to so much interpretation. Bill C-48 in its current language with no clear moratorium leaves itself open, again, to interpretation. That's not a solution. And the reality is that in two days from now, iCraveTV.biz is going to launch. The copyrighted works that our members acquire in a competitive marketplace, where they pay dollars for exclusive rights, are going to be infringed, and we need to address that.

Erica.

Ms. Erica Redler: Just going back to Australia, you will find in the materials we submitted to the committee some detail on the Australian regime. We focused on it because it is a jurisdiction that has a technologically neutral retransmission licence in the first instance. As you most likely have heard, our legislation is technologically neutral, and to the extent possible, we want to keep it that way.

So we have shown a jurisdiction that has a compulsory licence in technologically neutral terms, very similar to ours, that did carve-out without interrupting the technological neutrality aspect.

Ms. Sarmite Bulte: I have a quick question to Mr. Ivins. During your presentation you talked about how Internet retransmission may possibly lead to being able to see the news earlier rather than later. There's a time shift. Well, I can do that right now on my satellite. I don't have to look at the Internet; there is a time delay. If I want to watch the news from Atlantic Canada earlier...it's happening now. So I don't see how that is relevant. It's happening with satellite. In regard to time delay or what you're saying, then, I don't see the relevance in that.

But it did perk my interest when you talked about hacking and hackers. I have a real problem with hackers as well. But I'm going to follow up on what Mr. Abbott asked you, about what the consequences of the American position would be. He wanted assurance that you weren't threatening or your government isn't going to threaten.

Mr. Abbott's concern was that we wouldn't get programs like The West Wing. I have a bigger concern. If we truly are--and I think I'd like to hear that--in breach of the TRIPS agreement, as you are alleging that we may be, then that would result in a WTO challenge, which would then result into retaliatory action.

As I recall, when we were looking at Bill C-55, your government actually threatened to take our steel industry out, our plastics industry and softwood lumber. We seem to have these trade irritants. Then there's potatoes or maple syrup. So what you're really saying is, if there is a TRIPS issue, the consequences to our industries could be enormous. Am I correct?

À (1015)

Mr. Ben Ivins: I'm really hoping, beseeching, pleading with you that we not go down that road. I guess I would ask that you just look at the basic equity and fairness of this situation, or put yourself in our shoes, if you will.

What is being proposed here is that an Internet service provider in your country is going to take our signals and our product and retransmit it back into our country to do harm to our broadcast industry. I would submit to you, just consider that set of consequences. People can say, well, your regulatory regime is different from ours. But the point is, you are having a profound impact on our regulatory scheme when you take our....

I mean, we have our system--good, bad, or indifferent. And the most profound impact of this is going to be on our small and rural areas, and I know there are lots of those in Canada. It is a small-market broadcaster. The New York stations maybe can absorb this, but the small stations in the smaller markets that operate on small profit margins cannot afford to have L.A. and New York imported into their markets.

I would say, on the time-shifting point, what I'm talking about is that there is not a situation where a Los Angeles viewer can watch a New York station version of The West Wingand then go to bed. That has nothing to do with time shifting or being able to tape something and watch it later. It's the simultaneous retransmissions that we are talking about here that basically can be viewed by somebody in a later time zone, and then they don't have to watch the local station.

I'd also just like to say it is true that the FCC is different from the CRTC, but I think the question under the proposal on the whole issue of, for instance, banner advertising, which was in the previous draft regulations but is not in the last set that I saw, presumably would now be dealt with by the CRTC. To that I would respectfully submit that having uncertainty about banner advertising is absolutely and very much a copyright and intellectual property issue.

The notion that you're going to take my product and circle it with other banner advertising, let's say with a Chrysler commercial, while there's a Ford commercial going on in my local station's programming raises all kinds of copyright questions. I think that arguably is a derivative work. You are altering the whole work of that. Suppose you put banner advertising that is derogatory of the product that is being advertised. I think there are moral rights issues there. I think there's confusion as to the source or origin of the product. At some point the viewer says, well, who's sponsoring this program?

À (1020)

Mr. Glenn O'Farrell: Could I jump in, Ms. Bulte, with a very quick comment, or...?

Ms. Sarmite Bulte: I just want to go back to the conditions.

First, Mr. Ivins, you won't find a bigger protector of copyrights or creators than me, so let me just make that clear for the record.

Second, do you not feel that the legislation actually addresses those concerns? Our officials who were here yesterday said to look at it as a way of going over hurdles to be licensed, that you must go over so many hurdles until you can get that compulsory licence. So if indeed, as you say, there is no technology that can limit the territorial, then that's a hurdle the Internet retransmitters are not going to be able to get over. Therefore, no compulsory licence.

Mr. Ben Ivins: If what you are suggesting--and I quite frankly don't see that in these regulations--is that right now what is being committed to is a process where the CRTC would say to a retransmitter that before you flip the switch, before you go on, you have to demonstrate to us, definitively, that this system works...and I can bring the best and brightest from McGill and U of T to see if they can crack it. Before you flip the switch and screw up stuff all over the world....

That's what we are talking about, and that's not what I'm seeing here. If that kind of guarantee and that specific pre-certification before you flip the switch is in the interstices of these regs, I have not seen it.

The Chair: Mr. O'Farrell.

Mr. Glenn O'Farrell: Thank you.

I'm going to ask my colleague, Sylvie Courtemanche, to speak to time-shifting, because she has developed significant expertise in the area as it relates to direct-to-home satellite distribution. We've done a lot of research and I think we can bring a little bit of light to that subject.

But before sending it off to Sylvie, I think ultimately what we're suggesting--and we see it in very simple, clear terms--is that in an ideal world we would say, give us, please, a carve-out so that it would be absolutely clear that retransmission by Internet of over-the-air signals is not lawful. In the absence of that, again, if Canada wants to distinguish itself with another model--and that might be a good thing--it has to be clear. We're suggesting to you, we're pleading with you, that it be absolutely clear there be no room for interpretation. Say it. If there's a moratorium, let's say it. Let's stipulate. Let's lay it down clearly. Let's make sure the exemption order with regard to new media is revised by its clear direction that's unequivocal. So if we're going down this path, and that is the intent of you, the legislators, let's be clear. Let's leave no room for interpretation.

On distant signals, Sylvie.

Ms. Sylvie Courtemanche (Executive Vice-President, Policy and Regulatory Affairs, Canadian Association of Broadcasters): I just want to clarify that the regime with respect to allowing the importation of distant signals into markets, whether on a time-shifted basis or not, has been done subject to a regulatory regime that is meant to absolutely protect copyright. That has been the fact that within the regulations for satellite importation of signals is subject to program deletion, which means that if a local broadcaster in that area has an exclusive right for that program, they have a right to ask that program be deleted, in which case the satellite viewer would see a black hole.

The government wanted to create a competitive distribution system and at that point encouraged both the DTH industry and broadcasters to come to a commercial agreement whereby for the infringement of copyright there would be compensation to them for that infringement. We're in the throes of renegotiating that agreement, but I can tell you there has been substantial impact, as Mr. Ivins has pointed out, more particularly in the small markets. They have particularly felt this infringement...not having the burden of having all these other signals brought into their market, and the penetration rates in their market, as well.

That said, I want it to be on the record that program copyright protection exists at the satellite level, too. It has to. If you don't, you'll lose your local broadcast market.

Thank you.

À (1025)

Mr. Ben Ivins: I'd like to make one additional response to your analogizing this to the potatoes and the steel.

In that regard, I would point out that it would be one situation if all of these folks here were there and I was sitting over here. But I would respectfully submit, what we are talking about here is we are all here. This isn't an “us versus you guys” situation. The entire Canadian content community, the entire Canadian broadcast community, is on side on this issue. You're goring your own oxes as well as ours.

So I really don't think this is that kind of a situation. They are as concerned as we are.

The Chair: Ms. Bulte.

Ms. Sarmite Bulte: Mr. Ivins, you did indeed raise the thought about trade agreements during your presentation. With all due respect, our history with trade disputes--and, yes, we are closest neighbours and I know it's the cost of doing business--is that we have a very irritating one that's been going on for 20 years. So when somebody comes and claims trade disputes, to me it triggers the question, what does that really mean? I was only asking the question based on your presentation.

Thank you.

The Chair: Mr. Goldstein.

Mr. David Goldstein (Vice-President, Government Relations, Canadian Association of Broadcasters): I have just a quick comment.

On the issue of trade disputes, if you think they have a pretty good softwood lumber lobby in the U.S., you haven't seen their entertainment industry yet.

You will recall what we went through on Bill C-55. I don't think it's at the point that necessarily we have to be talking about the withholding of programming. And it's not just about our services not being able to buy The West Wing or ER. It's about destabilizing the platform for conventional television as an appropriate place for copyrighted works. And if Canadian copyright holders don't have that security, they will move their programming to other platforms, as well, which brings the real possibility--and I'm sure you're going to hear sports leagues--where we're going to have to decide whether this is worth moving Hockey Night in Canada to a pay-per-view services because conventional over-the-air CBC is not a copyright-appropriate place to put that type of material. That radically changes the economics of the system.

So it's not just about us not being able to access their program. I think all the rights holders have a significant problem with the issue.

The Chair: Ms. Lill.

Ms. Wendy Lill (Dartmouth, NDP): Thank you.

I'm interested in what you just said, Mr. Goldstein. The idea of destabilizing the platform for Canadian creators is a very important one to me. I am a member of a copyright collective myself. From a personal level, I have a tiny understanding of that. I spend a lot of my time in this committee trying to figure out what impact cultural policies are going to have on our authors and musicians, etc.

You're certainly here on behalf of the broadcasters, and the rights of the broadcasters. I'd like your comments on whether you feel the rights of.... Maybe you have the same attitude to Canadian musicians and playwrights conveyed by, “What's good for General Motors is good for America”; I'm not sure. I'd like to know what you're thinking about this.

I'm interested in knowing what wording the CAB would use to get an Internet carve-out. I would also like to know whether you think that carve-out would be equally beneficial for the original creators of material and the broadcasters.

Mr. David Goldstein: Perhaps I'll start, and I'll let Erica pick up on the actual carve-out notion.

We are in a very unique situation. Pretty much the entire value chain of Canadian programming is standing on the same side of this issue. My comments may be prejudicial...but what we refer to the “legitimate” stakeholders in this process.

If that primary platform doesn't exist, then it erodes the entire value chain, and makes us incapable of delivering shows like The Associates, Traders, Due South, Fashion Television, or any of the other shows Canadians come to expect from their conventional television stations.

Perhaps you can address the carve-out and the language.

À (1030)

Ms. Erica Redler: We have worked with language, but we don't have language here today. It's something we would continue to do if we receive a signal that the committee wishes to go that way.

With respect to David's comment, I'm not speaking for producers, but I have some concern this not be regarded just as an issue about the importation of U.S. programming. Canadian producers have tried very hard to exploit their programming around the world as well. If they are effectively scooped, they're going to find it more difficult to raise money from other markets, because these other markets will see their programming for free on the Internet.

That's just explaining the interrelationship--how everybody gets harmed. If broadcasters are poor, they can pay less money for production. Producers can pay less to the scriptwriters, performers, and others. So it really does go down the food chain.

Ms. Janet Yale: I just want to add one thing.

It sounds very simple to do an Internet carve-out, because we all know what we're trying to target. In principle, we have no objection to the idea of doing an Internet carve-out. However, in practice, we have never seen language that doesn't, inadvertently, catch the legitimate uses of the Internet and Internet-protocol technology. These are legitimately used by the cable industry in the delivery of our services, which everybody agrees, in principle, shouldn't be harmed.

I just would really caution you that it really is incumbent on those who say it is possible to design such a thing, to make sure it doesn't inadvertently catch the legitimate uses of the Internet, which everybody says shouldn't be caught.

Ms. Wendy Lill: I have just one other question.

What, if any, are the implications for media ownership of this issue of retransmission on the Internet?

Mr. Glenn O'Farrell: If you're thinking about media ownership in terms of the ownership of broadcasters, clearly, given that the implications are primarily economic and go to the core of the profitability of media undertakings, the ownership--be it within publicly traded or privately traded companies--will be affected by virtue of the fact that their investments will not yield the kind of returns we would hope would be reasonably returned.

If I may, however, I'd like to go back to the idea of the carve-out and the language. As an industry, we took a path to address the issue of a carve-out last year, but at one point in time, we were asked by government to stop going down that path. Erica can speak to the issue, because she was at the CAB at the time, and I wasn't. I think a considerable amount of progress had been accomplished in getting to a space and a place that satisfied most. Perhaps it wasn't a final product yet.

But unlike Janet, I think there is room to find that language, and to find it effectively. It's a matter of working at it. It may not be there just yet. But I'm optimistic we would be able to satisfy the requirements and the concerns of the “legitimate” uses of the Internet.

The Chair: Perhaps I can ask a clarification from one of you, Ms. Yale or Ms. Redler.

You mentioned, Ms. Yale, that a carve-out is problematic because nobody has found the right language yet.

You mentioned in your brief, Mr. O'Farrell, that the U.S. and Australia use a carve-out method.

What is the oldest experience of a carve-out and of the wording of a carve-out, and how is it worked out?

I suppose, Ms. Yale, you are basing yourself on what's happened elsewhere with carve-outs.

Ms. Janet Yale: As Jay explained, the problem with the Australian language is that it catches the very activity we're saying shouldn't be caught because it is a very simple sort of carve-out. The Internet, as Jay explained, isn't the problem because of the way they deliver services over their infrastructure in Australia.

There's not a disagreement in principle. It's not a philosophical issue. It's really, practically speaking, about trying to do it in a way that doesn't inadvertently prohibit the legitimate uses of Internet technology in the delivery of our high-speed Internet services or in fact, increasingly, the use of IP protocols--Internet-based protocols--in the delivery of television services themselves. As we get more and more advanced in our own infrastructure and use more and more IP protocols to compress our signals and efficiently deliver signals to customers, what happens is that the use of a carve-out that talks about Internet or IP technology would absolutely inhibit the very kinds of innovative uses of technology that would allow us to deliver more services to customers.

At the end of the day, what we want to do is increase our ability to deliver more and more services, whether they're English, French, third language, or whatever. It's really critical to make sure that the way it's drafted.... We have not yet seen a draft that doesn't catch the concerns we're talking about.

It's not a philosophical issue. It's not an objection in principle. It's just that if you're going to do it, you have to be very careful.

À (1035)

The Chair: Are you suggesting, Mr. O'Farrell and Ms. Redler, that if the carve-out wording in various countries that are using a carve-out were satisfactory, then you would not have been seeking a new approach, new wording, bona fide wording, or improved wording?

Mr. Glenn O'Farrell: David had a great analogy when he was talking about a better mousetrap, so I'll let him speak to this in a second.

I think what we're saying, frankly--and we're not in disagreement with the CCTA's position--is that there are legitimate uses of the Internet--and there are--that do not offend copyright. What we're suggesting is that we can come up with language that addresses those concerns, and we're optimistic that we can satisfy those concerns.

In the absence of that alternative, for this other alternative of another mousetrap, the language has to be absolutely clear that, one, there's a moratorium; two, the direction to the CRTC is unequivocal in its revision of the new media exemption order; and three, this committee has the opportunity to develop the regulatory support that in fact addresses the copyright concerns.

David, do you want to add something?

Mr. David Goldstein: Yes. We were joking this morning that yesterday you had some of the greatest copyright experts in the country before you, and we've been working with them for the last year and a half to try to find out how to build this better mousetrap. As we're banging away with saws and hammers, now they've come and asked you guys to engage in that building process as we all try to build a better mousetrap together. Meanwhile, the rat is watching us, eating the cheese while he's watching us, and watching our blueprints as we build away.

I just think that at a certain point, with all the expertise, perhaps we have to step back and look at a simpler solution.

The Chair: Mr. Abbott.

Mr. Jim Abbott: On the idea of an explicit moratorium, while it is very appealing on the surface, it seems to me that the second you go beneath that surface you run into exactly what we've been talking about. If you're going to have an explicit moratorium, how are you going to define the moratorium? What is the moratorium on?

For example, we've heard the representation from the CCTA. I want to arrive at a resolution as much as anyone in this room. Now, let's say you go to an explicit moratorium, which is the equivalent of an Internet carve-out--it is--for a 12-month period. I'm just pointing out that if you do and if the CCTA and other users say, oops, now we can't do any more because we're going to be in infringement of this 12-month Internet carve-out, does it really solve the problem?

Mr. Glenn O'Farrell: Thank you for raising that, because it's a valid concern.

I think the most efficient and straightforward manner of dealing with it would be to specifically identify, (a), the timeframe for which the moratorium would be in effect, and (b), the scope and scale of the moratorium in terms of the activity it faces.

Again, I think we can have very specific, clear, transparent language there that makes it abundantly clear that the moratorium is directed at activities that equate to retransmission of over-the-air signals by Internet retransmitters to the general public in a manner that has not had the consent of the rights holders. Without trying to put the language in front of you this morning, conceptually that's where we think the activity could be very clearly identified and very clearly boxed.

À (1040)

Mr. Jim Abbott: Okay, but the point Mr. Goldstein was making still remains, that indeed experts like yourselves and others have been working with the experts in the two departments for the last year or year and a half.

So we're saying we're going to have this moratorium for a further year. In that period of time, you have taken the time and the money that it costs for you to come and make this representation to the committee today. The CRTC is going to be going through a process where you will be taking the time, energy, and money to go and make a representation to it. The CRTC will then be giving it due consideration, sending it to the justice department. The regulations will then be coming back to the committee, when once again you will be coming and making the representations to us.

It's called job security, right? It just strikes me that--

Mr. Glenn O'Farrell: If that's job security, we're all in trouble.

Mr. Jim Abbott: Are we really resolving anything? In my humble opinion, the one excellent comment coming out of this was the idea of saying that if we are going to be having some kind of a carve-out, a pre-certification process should be a part of it. That's an excellent comment, and I would hope the departments would take a look at this.

But are we going to be sitting here 12 months from now, in June 2003, where someone has made an arbitrary decision in any event because we've been going on now...instead of a year and half, now we'll be two and a half years into the process? How do we break out of this maze?

Mr. Glenn O'Farrell: I think the way to break out of the maze is to take the first step, absent the carve-out, to amend Bill C-48 to create the clearly defined moratorium and the scale and scope of the activities covered by that moratorium.

But you're absolutely right; we would much prefer not to come back here 12 months from now, or whatever the case may be, to make representations. We would much prefer to have this situation resolved with a clear-cut solution--called a carve-out, in our minds.

And again--I just want to bring this back to reality from our perspective--in two days from now, iCraveTV.biz is going to launch. And signals of members of the CAB will be retransmitted on that service, if its pre-launch hype is accurate. Those copyrighted works will be distributed--unlawfully, in our view--and we have to do something about it.

If we step back from this and ask what it really means, what it really means is that the conventional broadcast system is going to be threatened at its core. Broadcasters buy exclusive rights for a territory and for a number of plays in an open and competitive market process. That exclusivity and those privileges are going to be directly undermined, and the margins they make in terms of profits on that programming will no longer be available to them because the programming will have less value. That's what we're facing.

Ms. Janet Yale: On your point, I just wanted to ask how you will define the moratorium. In our view, you have the same definitional issue defining what the moratorium applies to as you do in defining a carve-out. If you can agree on the language for the one, you would have solved the other.

So from our perspective, it's not just a question of how long it applies; it goes back to what you are putting a moratorium on and whether you inadvertently catch the very activities we're saying you shouldn't catch.

But again, you can't just say there's a moratorium on the use of the Internet for the retransmission of television signals, because we do that. It's not a copyright infringement for us to do this today and it shouldn't be tomorrow.

Ms. Erica Redler: Yesterday Mr. Wernick set out what he saw would be the moratorium, and I think he set it out very clearly. He said we wish to have a moratorium that makes it clear that the existing retransmitters, the cable satellite retransmitters, can continue to operate as they do today and that new entrants' Internet retransmitters cannot access the compulsory licence during the period of the moratorium. We agree with that. He was inferring it from the language of the bill, and it's one possible interpretation of the bill, but we're saying there is another argument. If we all agree, which I think we do, that what we want to achieve for the period of the moratorium is that new entrants do not come in, just say it directly and expressly in the bill.

À (1045)

The Chair: I would remind members and the witnesses that we have two other groups that are waiting to be heard. We close at 12 o'clock, so we'll have to move on.

Mr. Ivins, we'll let you make your comment, then I'll recognize Ms. Bulte for a short intervention, and we'll close with Mr. Strahl.

Mr. Ben Ivins: Thank you, Mr. Chairman.

Just briefly following up on what Ms. Redler said, to the extent that we have been peripherally involved in the deliberation process on these regs.... There really are two distinct issues, I think. It seems to me that the greater controversy has arisen with respect to what conditions, restrictions, etc. you would place on publicly accessible webcasting Internet retransmission of signals. I think that is where most of the controversy has arisen. I'm not sure that I have seen that much....

So there is that kettle of fish, which is huge, and then there is Ms. Yale's and Mr. Wilson's issue, which I think is a much more discrete and probably solvable one, quite frankly. But those two issues have been combined in this process, and I think it is that first issue that is much more profound.

The whole question of “technology neutral” is interesting. Mr. Wilson gave a wonderfully eloquent description of why technological neutralities shouldn't apply here. He described with great sophistication their uses of the Internet for subscription, closed paths, not accessible to the public, the public can't get to it, backhaul kinds of feeds, which is a completely different situation from the kinds of concerns I'm expressing. Those are different issues that I think require different technological solutions.

Thank you, Chairman.

The Chair: Thank you.

Ms. Bulte, please.

Ms. Sarmite Bulte: I understand that time is of the essence on this bill. I understand also that the CAB has been in negotiations for two years. I believe it was Ms. Lill who asked you if you have the wording for a carve-out. You said you don't have it, and I'm concerned.

I want to also ask the CCTA something. With the proposed amendments to subsection 31(1), would that not allow you to...? I mean, you're defined as a retransmitter. Would the fact that you're defined as a retransmitter give you that compulsory licence so you don't have to worry about whether or not--

Ms. Janet Yale: That's correct. We're fine with what's there.

Ms. Sarmite Bulte: Okay.

Ms. Janet Yale: What we're dealing with is their preferred solution, which is a carve-out. So we're absolutely fine with what's there.

Ms. Sarmite Bulte: I guess my concern is that we can argue about carve-out or about these hurdles Mr. Wernick was talking about. You know, unless you can meet all these hurdles, you won't have a licence.

I don't know how much more clear you can make it. It's quite clear to me that it is not an infringement of copyright for a retransmitter if he or she complies with the conditions. Until those conditions are set by regulation, be it a full carve-out or be it those hurdles Mr. Wernick was talking about, there is going to be an infringement. We can argue later on about what exactly would be the right carve-out. You're telling me that in two days there's going to be a new launch, and that concerns me too. Should we not, in your opinion, just move on, pass the bill right now, and then argue about how extensive the carve-out should be?

Mr. Glenn O'Farrell: Erica as well can speak to this issue.

We wouldn't be here if the heritage and industry departments hadn't deterred us from our ideal solution, some 12 or 14 months ago, to continue developing the language for a carve-out. In all likelihood we would have resolved the language on the carve-out, and it would have been before you for discussion and probably adopted by now.

That said, we have language for a carve-out, and we'd be happy to file that with you ASAP. It's imperfect and needs some work, but we have language. We don't want to leave you with the impression we have not worked this through, but we stopped working on that solution as a result of the direction we were given by those two departments to go down another path--the path Mr. Wernick articulated yesterday.

But if all of these tests are created to make it a hurdle-ridden adventure to become an Internet retransmitter, with the view that all these hurdles will prohibit Internet retransmission, why don't we do that in the first place? That's my question to you.

À (1050)

Ms. Sarmite Bulte: Why don't you file your carve-out with us, Mr. O'Farrell?

Mr. Glenn O'Farrell: We will happily.

Ms. Sarmite Bulte: Thank you.

The Chair: Mr. Strahl, we'll close with you and move on.

Mr. Chuck Strahl (Fraser Valley, Canadian Alliance): Thank you.

To your last comments, “Hear, hear”, because we should be finishing this project right now rather than embarking on it.

That said, the draft regulations were tabled yesterday. Did you folks have a chance to see them? Do you like what you saw?

Mr. Glenn O'Farrell: We saw some issues. We saw the issue of the moratorium being subject to interpretation. We have not seen a direction to the CRTC under section 15 of the Broadcasting Act requesting a review of the exemption order. We understand that one is there, but in the absence of seeing it and understanding how specific it is, we can't really comment on what we have not seen.

Lastly, our concern is whether this committee, which will be enacting the regulations, will have the full support to do what has to be done to give the protection to the copyright holders. That said, if those issues are addressed, we see this as a valuable....

Frankly, we appreciate and recognize the endless number of hours that have been invested in bringing this project here by the industry and heritage officials, and we commend them for their work. But to comment on what we see as somewhat of a jump--perhaps with a net, perhaps without a net--we're still a little skeptical.

Ms. Erica Redler: Aside from the comments Glenn has made, we are not happy with the actual regulations that were put forward yesterday. We've worked with the government department, as I think Michael Wernick...and couldn't tell you how many versions there have been of those regulations. There was an earlier version of those regulations that we preferred. A number of the key provisions we wanted in the regulations, such as encryption of signals, are no longer there. We wanted a prohibition against banner advertising.

Those are just two examples of things we want to see in the regulations that are not in the version you have before you.

Mr. Glenn O'Farrell: But we understand that those would be a starting point for you to work from and that you would be open to.

Ms. Janet Yale: If I may, we have reviewed the regulations that were tabled yesterday, and they do give us a kind of certainty that we've been talking about. So we are totally supportive of them

Mr. Chuck Strahl: Thank you. You'll get a chance at the CRTC to go around and around on them again, I guess.

A voice: And again a year from now.

The Chair: Thank you very much to the three groups for appearing here today. We really appreciate your presence. It's been extremely useful to us in trying to find out what kind of path we'll be using as we go along.

Thank you very much.

A voice: Thank you for your time.

À (1054)

Á (1100)

The Chair: I now would like to welcome the Society of Composers, Authors and Music Publishers of Canada in the person of Mr. Paul Spurgeon, the vice-president of legal services and legal counsel; and the Canadian Association of Internet Providers, represented by Mr. Jay Thomson, its president.

Mr. Spurgeon, we're ready to listen to you.

Mr. Paul Spurgeon (Vice-President, Society of Composers, Authors and Music Publishers of Canada): Thank you, Mr. Chairman, and good morning to you and the committee members.

As the chairman has indicated, I'm vice-president, legal services and general counsel of the Society of Composers, Authors and Music Publishers of Canada, or SOCAM.

Some of you here may recall that I was before your committee just last week with our president, Gilles Valiquette, and another SOCAM member, Alexina Louie, a classical composer, to discuss your broadcasting study. Today I'm here to discuss SOCAM's views regarding Bill C-48, of course.

Before discussing the bill, I'd like to give you some brief background information on our organization, just to put it into the context of this discussion. SOCAM is a not-for-profit Canadian organization that represents composers, lyricists, song writers, and music publishers--publishers of musical works from across Canada and around the world.

On behalf of our more than 20,000 active Canadian members, creators, and members of affiliated societies around the world, we administer performing rights in music and in lyrics. The performing right is one part of copyright that gives owners of musical works the sole right to perform in public, or broadcast their works, or authorize others to do so, in return for royalties.

SOCAM's primary objective is to ensure that our members are fully compensated when their music is communicated to the public by telecommunication--for example, broadcast, or sent along a cable, or an Internet wire--or performed in public, such as at a concert.

On behalf of our members, we grant blanket licences to users of music who pay us copyright royalties in accordance with tariffs that are set by the Copyright Board of Canada, and we've been doing this for over 60 years. SOCAM's proposed tariffs are published in the Canada Gazette, and prospective users have the right to file objections with the Copyright Board. The Copyright Board may then hold public hearings, which allow the users to express their views before the board renders its royalty decision.

The bottom line, Mr. Chairman, is that SOCAM has been subject to compulsory licensing for over 60 years. We do not believe that compulsory licensing should be further extended to retransmissions over the Internet, because to do so would violate the exclusive property rights of the copyright owners and discourage the creation of Canadian content.

The copyright owners who will be affected by Bill C-48 should continue to have the right to decide with whom they wish to do business and to agree on the terms of their business relationship.

I'd like to conclude my remarks with a couple of points regarding this bill and the discussion of this bill, Bill C-48.

When Bill C-48 received second reading in the House of Commons over three months ago--I believe it was February 22--members of Parliament expressed concern that they were being asked to pass vague enabling legislation that amounted to a blank cheque. At that time members of Parliament stated that this would remove the decision-making process from Parliament, and therefore they made it clear that they wanted to see the final regulations before signing off on the bill.

Three months later this committee is being asked to approve Bill C-48 without seeing the final regulations because the interested parties have not been able to reach consensus on these regulations. Today all you have is the latest draft consultation document on the regulations, and this draft, again, is subject to change. You're being asked to pass the bill without seeing the final regulations and to move expeditiously this week on the understanding that the government is undertaking to bring regulations into force one year from now.

Before giving you the draft regulations, the CRTC will hold a hearing on this matter to discuss the application. The Department of Justice will draft regulations that may take into account the findings of the CRTC. After the CRTC and the Department of Justice have finished their work, your committee will then conduct another set of hearings on what will still merely be draft regulations for the implementation of Bill C-48, and you will be asked to provide your advice on these draft regulations.

Mr. Chairman, what will happen to Bill C-48 if the government does not bring regulations into force one year from now? We believe your committee should know what it is passing before you move this legislation back to the House of Commons.

We also believe that, as you are the elected representatives of the people of Canada, your role is to carefully consider legislation before it is passed rather than provide ex post facto advice on draft regulations a year after the legislation is passed. Instead of ex post facto regulations, all details of Bill C-48 should be in the statute so we all know what we are getting ourselves into. A carve-out is the pith and substance of this law. If it's not clearly set out, the pith and substance is vague and unclear.

Mr. Chairman, let's not put the cart before the horse. There is no reason this legislation must be passed in an end-of-session panic before Parliament sees the regulations. To do so would, in my view, be tantamount to buying something sight unseen.

To conclude, I would like to repeat what we stated last week when we were before your committee on the state of Canadian broadcasting. We believe the CRTC should regulate the Internet. The CRTC should apply the same conditions to Internet retransmitters and transmitters that apply to cable and satellite companies; broadcasters, including priority carriage; access; simultaneous substitution; production fund contribution requirements; geographical limitations; and Canadian content, which we consider very important. In other words, everyone should be playing by the same rules.

However, SOCAN does not believe the CRTC has the jurisdiction under the Broadcasting Act to deal with copyright issues that fall within the exclusive domain of the Copyright Act or the Copyright Board in terms of royalties in some cases.

Mr. Chairman, SOCAN has faith in the ability of the members of this parliamentary committee to pass legislation. That's your job, and that's what the people of Canada elected you to do. If we have to wait a few more weeks to get a real bill, one that is clear and unequivocal, then we'll have to wait. But let's get it right the first time rather than rush off and, in our view, pass a blank cheque that may come back to haunt us later.

Thank you very much.

I'd like to add that we have made two separate submissions on this issue. I'd be prepared to next week make available to the committee the submissions in French and English.

Á (1105)

The Chair: Thank you very much.

Mr. Thomson.

Mr. Jay Thomson (President, Canadian Association of Internet Providers): Thank you, Mr. Chairman. Good morning, members of the committee.

The Canadian Association of Internet Providers, or CAIP, is a trade association, based here in Ottawa, whose primary constituency is Internet service providers, or ISPs, which includes those companies that connect consumers to the Internet as well as companies that provide other Internet services such as website design and hosting and e-commerce solutions.

CAIP has participated throughout this process, both leading up to the tabling of Bill C-48 and in the meetings and discussions that have followed since that time to review the associated proposed regulations.

As an important starting point, I wish to be clear on this: We at CAIP understand and appreciate the importance of fair copyright protection for creators. We seek neither seek to steal nor expropriate other people's copyrighted works. ISPs are law-abiding citizens and good corporate citizens, and they respect property rights.

Despite the CAB's rhetoric on this subject, this is not an issue about Internet theft or piracy but about putting in place a regime that strikes a necessary balance between the rights of creators and users and that allows and encourages Canadians to keep innovating to maintain our lead in the global Internet economy.

We take interest in this issue for at least two important reasons. First of all, as an industry, we are interested in seeing the full, positive potential of the Internet realize so that more Canadians use this wonderful medium for more activities and therefore reap all the benefits both known and not yet known that the Internet can offer. Second, we believe in fair but widespread competition in the delivery of communication services, including with respect to access to high-speed Internet services, where such competition unfortunately is not happening, and the delivery of all forms of information and entertainment services, where such competition may very well be completely stifled if some entrenched interests whom you've heard from this morning have their way.

Now, it's fair to say that few, if any, ISPs currently contemplate acting as retransmitters of broadcasting signals, but if the rules are right, and a business case can be made, there may very well come a time when they will indeed wish to enter into this business and thus offer Canadians even more choices in the delivery of entertainment services.

The Internet could be called the great innovator, and ISPs and their colleagues in the Internet arena have in a very short period introduced innovations in communications unlike anything seen during generations past. The primary reason for this is that the industry has had the flexibility to innovate and experiment with new business plans and ideas unburdened by unnecessary rules and regulations designed solely to protect the status quo.

There is now, however, real fear within the broadly based Internet community that this wonderful and rapid era of innovation may come to a screeching halt if the big content controllers such as the broadcasters and the record companies have their way and increase their control even more. Already Canada's role as a leader in the Internet economy is threatened, as SOCAN's recent success before the Federal Court of Appeal in the tariff 22 case may force ISPs to cease their caching activities, thus undermining the speed and efficiency of the Canadian network.

Those same content controllers seek to stymie innovation in broadcast distribution by preventing Internet retransmissions. Why? Well, the CAB is primarily motivated by the fact that they want a U.S.-style retransmission consent regime. They want to assert a signal right, which they don't possess, and they absolutely hate the concept of a compulsory licence and are loath to see it extended to anyone beyond the cable companies. This despite the fact--or, more accurately, because of the fact--that retransmission of any sort, Internet or otherwise, simply could not be accomplished absent a compulsory licence regime.

The departments have circulated proposed text for the Bill C-48 regulations, which have resulted from a number of consultations they had previously held with interested parties. These regulations were based on assurances from the interested parties, including the CAB, that they were all anxious to move forward with an enabling amendment in the act and the regulations to follow.

While we at CAIP still have some concerns about the limitations these proposed regulations would place on the ability of Internet retransmitters to innovate and experiment with new business models, we are nevertheless prepared to support the text as a reasonable and workable compromise. Had others been prepared to accept that reasonable compromise too, we'd all be in a position to move forward now--pass Bill C-48 and see what new Canadian businesses would emerge.

Á (1110)

Instead, when we just about have it, we now have the CAB reversing its position, seeking a carve-out, and we're looking at the CRTC being asked to initiate a whole new public process that will only delay the bill for many more months.

Mr. Chair and members of the committee, we agree that the CRTC is the proper body to examine the broadcasting policy issues that have arisen during the discussions on Bill C-48. We had concerns from the start, which we voiced, regarding the attempts to deal with these broadcasting policy issues in copyright regulations. And for these reasons, we supported the proposal to put the broadcasting policy issues before the CRTC for its consideration.

That said, we're concerned about the implications of this committee relying on the CRTC's schedule and policy determinations in order to make the copyright determinations that are before you with Bill C-48. The only copyright issue that needs to be addressed is protecting the integrity of a geographic licence. All the parties agree on the importance of this copyright issue.

Moreover, it's an issue that is addressed specifically in the proposed regulations before you. You have all you need by way of copyright regulations to pass this copyright bill.

Thus, we recommend that you go ahead, pass Bill C-48, approve the regulations as presented to you, and let's get on with other matters.

Meanwhile, the CRTC can go ahead and examine the broadcasting policy issues without holding up this copyright process. Why do you have to wait for the CRTC? For example, why should a company that is prepared to meet the geographic limitation provisions, and that has no intention of offering banner advertising, be forced to hold off their business for a year or more while the CRTC considers whether or not banner advertising should be permitted?

Lastly, if you're going to ask the CRTC to reopen its new media order, we urge you to be very specific and very narrow in what you're asking the commission to do. The commission's new media proceeding took many months to complete. They heard from over 1,000 interested parties, and they made the right decision.

Canada was and continues to be recognized around the world for its vision in not trying to impose broadcasting-style regulations on the Internet. Don't put that vision at risk by forcing the commission to take on too broad a review so soon after it made that ground-breaking decision in its new media order.

Thank you. I welcome your questions.

Á (1115)

The Chair: Thank you very much, Mr. Thomson. That was interesting.

Mr. Abbott.

Mr. Jim Abbott: I'm normally a little bit slow here, but it seems to me we might have two witnesses who have diverging points of view.

Some hon. members: Oh, oh!

A voice: We've squared off before.

Mr. Jim Abbott: Well, where do we go...?

With respect to the SOCAN representation, I think it would be good if we could get the transcript and make sure that the members who unfortunately aren't here today are able to see it or hear it. I agree with you completely about the process that we're involved in of basically signing a blank cheque, notwithstanding the representations from the minister.

My one question for SOCAN is this. I'm a little surprised; do you not receive revenue from compulsory licensing?

Mr. Paul Spurgeon: Indeed, there are different regimes under the Copyright Act. The Copyright Act is a very complex document; it's probably surpassing the Income Tax Act now in terms of complexity. Yes, we do receive what we call licence fees from cable retransmitters and satellite retransmitters along with other copyright owners, a very small amount, I might add, as far as we're concerned. That is a compulsory licence under what we call the retransmission regime of the Copyright Act.

We also receive royalties for other uses, as I explained. And you can call that a compulsory licence, in a sense, as well, because we have to go to the Copyright Board, file tariffs and have them approved before we can collect the money and sue in a court for that royalty.

So, yes, SOCAN is subject to a form of compulsory licensing.

Mr. Jim Abbott: So what's the problem?

Mr. Paul Spurgeon: First of all, the compulsory licensing system in Canada goes back to 1936, which established the Copyright Board, essentially. It is a drastic interference with the private property rights of individual entrepreneurs; property owners; 20,000 small business men, if you will; and hundreds of thousands of individuals who write and publish music, and that has been recognized by the courts.

Our view is that we don't want to see any further extension of that drastic interference along the lines of the Internet. In light of the fact that the Internet reduces everything to ones and zeros, you have no idea what's going to happen to your creative work. It's just out there, and it can be manipulated along the lines that were discussed earlier by some other representatives. So that's our problem.

We're living with a compulsory licensing regime, and it has worked generally well. There are certain decisions we're not too happy with, but we live with them. Sometimes we appeal them. We just finished one, which Mr. Thomson referred to, regarding his group, the Association of Internet Providers.

Generally, it works well from that point of view, but we're saying let's be very careful about extending it. That's why we're suggesting that a clear, unequivocal legislative provision that carves out this use be provided in a law.

Á (1120)

Mr. Jim Abbott: Thank you.

Mr. Thomson, you said that the ISPs respect property rights. Yet from what I've been able to discern, not only from the witnesses this morning but in doing a very modest amount of study on this issue, it strikes me that by definition the Internet is without geographic boundaries. You talk about protecting the integrity of geographic licence. There isn't any technology that exists today that would permit you to do that, is there?

Mr. Jay Thomson: There's a lot of experimentation going on in this area for a number of reasons. Some countries are interested in closing down their borders. Some industries are interested in finding ways to better target advertising that exists on the Internet so that they can control where their advertising goes to. You'll be hearing, I believe next week, from the folks at JumpTV; they tell us that they have a technology that will work to accomplish geographic limitation.

Mr. Jim Abbott: Let me start at the beginning. If the Internet provider was going to be retransmitting as defined by the act and was subject to all of the hoops, ladders, and barriers there are for the conventional redistribution, whether it's cable, satellite, or whatever other method I might not be aware of, in your judgment would the Internet providers be prepared to jump through all of those identical hoops without exception?

Mr. Jay Thomson: Obviously, the starting point is whether or not they're going to become Internet retransmitters--

Mr. Jim Abbott: If they became retransmitters, would the Internet service providers be prepared to jump through all of the hoops? In your judgment, would that be a fair criterion they would have to live up to?

Mr. Jay Thomson: No, it would not. I don't think there's a necessity for them to abide by all of the rules and regulations that are currently applied to license broadcasting undertakings. That's as a result of the CRTC's extensive review of this area, where the commission determined that regulation as it applies to other broadcasters is not necessary with regard to the Internet to accomplish the Broadcasting Act objectives. If there's no need to regulate to ensure those Broadcasting Act objectives are met, then one shouldn't regulate, and in fact the Broadcasting Act provides for that.

So my suggestion is that there's no need to regulate in order to meet those objectives. Therefore, if they meet the geographic limitation obligations, that should be sufficient.

Mr. Jim Abbott: Which ones would be removed? I'm not that familiar with the various hoops and limitations. Perhaps you could enlighten us.

Á (1125)

Mr. Jay Thomson: The regulation of the cable industry is designed to ensure that Canadians have access to Canadian signals and Canadian content, based on a system that has limited spectrum. The Internet has no limited spectrum, and there is more access to Canadian content on the Internet than on any other medium. So there's no need to impose those kinds of obligations on the Internet to ensure that Canadians have access to Canadian content or are able to get hold of Canadian content at a very affordable price, which they can do now.

The Chair: We will get back to you, Mr. Abbott.

Madame Gagnon.

[Translation]

Ms. Christiane Gagnon: As we can see with Mr. Spurgeon, these are two entirely opposite visions with regard to process, as well as to further consequences.

Mr. Thomson, I would like to come back to one of your statements. You say that you want fair protection, that the Internet is not stealing creative content and that the Internet's potential must be used to its maximum. You said that the CAB wants a consensual system. You seem to be saying that they also want to have a right to the signals and that with regard to compulsory licences they do not seem to be going in your direction.

However, all that being said, what would you say if one of your members would capture or rebroadcast the signal of a broadcast that is not protected or excluded? Such a case would contradict all your fine statements. Now without any protection, if the Internet can do it, if the members of your association can use broadcasts at will to broadcast them outside or within Canada, what kind of protection is there for creators and rights holders? You say that this is not theft, that there must be fair protection. As far as I'm concerned, I do not see any fair protection for rights holders or for authors who want adequate consideration for their products.

This means that with the process we are currently asked to follow, Internet providers could do whatever they like with the products and the rights holders.

[English]

Mr. Jay Thomson: What we are actually proposing is that the government pass the bill and pass the regulations as proposed, which create the geographic limitation on Internet retransmitters, and thus allow them to benefit and participate in a compulsory licence regime. We're not saying, open it up and allow Internet retransmitters to do anything. We're saying, allow them to take part in the compulsory licence regime, pay royalties to creators as others do, and abide by the geographic limitations as others do. So it's not intended to be a free-for-all; it's intended to be a system, in terms of copyright, that's exactly like that which the cable companies and the DTH companies follow.

[Translation]

Ms. Christiane Gagnon: I would like to hear what Mr. Spurgeon has to say about that. You do not seem to be... Do you think that this would be a fair offer from the Internet providers? It seems that compulsory licensing would settle the matter because they would have to pay royalties. This seems very easy to them, but it is not our way of looking at it.

Mr. Paul Spurgeon: To me, there just seems to be so much uncertainty about this. I don't have anything to look at that I can.... I know there is some language, and I think some other groups will be coming next week to discuss the issue and there may be some suggestions, but I have, I guess, an uneasy feeling about this--I don't know how else to put it--because of the wild west nature of the Internet, as described by Mr. Thomson.

Even the word “moratorium” kind of gives me the willies. Moratorium doesn't mean you're dead; it means you're in a coma. That's probably a better way of describing it. So you could be revived at some point, but how will you be revived? Will it be in the form of some Dracula or some monster? I don't know.

So that's my concern. It's like being half-pregnant, I guess; you're either pregnant or you're not.

If we had some clear wording, or we knew it was carved out and there were clear exceptions, so that no Internet retransmission of copyright works could take place, that would do the trick for us.

Mr. Jay Thomson: Just to be clear on this point, we're talking about companies that want to pay creators. They want to pay creators through the compulsory licence. And we have vested interests that are saying, no, we will not allow you to pay creators.

[English]

So that's my concern. It's like being half-pregnant, I guess; you're either pregnant or you're not.

If we had some clear wording, or we knew it was carved out and there were clear exceptions, so that no Internet retransmission of copyright works could take place, that would do the trick for us.

Á (1130)

[Translation]

Ms. Christiane Gagnon: I have one final question, Mr. Chairman.

The Chair: This is the last one.

Ms. Christiane Gagnon: For instance, there is currently no legislation and no regulation of Internet use, and this is prejudicial to rights holders and stakeholders. If we wait too long, we also risk creating even more difficult situations than the current one.

Doesn't the moratorium leave enough time to impose a freeze on everything that is going on now?

[English]

Mr. Paul Spurgeon: You're right about the dangers, and that's why, I think, I know of no international precedent that allows this. The only international precedent we've been talking about so far is a carve-out. It's the only one I've seen to date. So, yes, there is some urgency.

We obviously don't want to just do something; we want to make sure this gets done right. That's why we need to see some certainty.

Coming back to my submission, I don't know that the way we're doing it is going to create that certainty in the timeframe we need to look at. I have an uneasy feeling about this.

If we could somehow do that, create the certainty that the carve-out...so that we know that there's going to be no jeopardy of the rights owners--because they will be in jeopardy--then I think that would satisfy a lot of the parties here, including the CAB.

It's strange we're in the same boat with them on this issue, in part, because they obviously carry the content that is so important to them. It's important to us as well, because our members earn their living from that content.

The Chair: Madam Bulte.

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

Mr. Spurgeon, I understand you've asked for a carve-out. I know that SOCAN was certainly instrumental, when we were looking at the Multilateral Agreement on Investment, in redefining what culture was at that time. That was a definition we were looking at.

Does SOCAN have proposed wording for a carve-out?

Mr. Paul Spurgeon: Again, it's one of those things where we're not in this boat by ourselves. As I said, there is some language; I don't want to be the one to put it forward, but I understand there will be some suggestions made by other parties next week. It may not be perfect, but it'll be wording we can work with.

I leave it at that. Certainly we'll be looking at it, and we would be pleased to make submissions on that wording. If it does the trick for us, we'd endorse it.

Ms. Sarmite Bulte: I also understand, from your presentation, you thought we should wait until we come up with the regulations, as opposed to passing the act now and looking at the regulations later.

You made an analogy with the Income Tax Act. Actually, when you look at Bill C-48 and the proposed amendments to subsection 31(2)--that it is not an infringement of copyright for a retransmitter--it sort of reminds you of section 116 of the Income Tax Act, which says it will not be a non-resident. Notwithstanding what it says in section 116 of the Income Tax Act, we understand what that means.

I actually find this quite clear. If you actually sit down and read it, it says it is not an infringement if you fall under the retransmitter category under subsection 31(1), and you meet the conditions, or the hurdles, as Mr. Wernick spoke about. So until these hurdles are met, there can't be compulsory licence...and you're still not comfortable with it?

Mr. Paul Spurgeon: It certainly isn't certain for me.

I mean, what are they? I don't know what they are yet. And we're still concerned about the whole notion of the....

It's not just SOCAN speaking; there are other rights owners, other copyright holders, owners, creators of other rights, who would say, “We're not subject to compulsory licensing, as SOCAN has been for 60 years, and we don't want our works to be on the Internet. Or if they are, we're going to be the ones to decide if and how and how much, and we don't want to be subject to some kind of regime that compulsorily says you have to submit your work, and this is how much you're going to get.” I can't speak for them, but that's generally what they're saying, I think.

As I say, it would appear to be an international precedent that the carve-out exists, and I think we should follow that approach.

Á (1135)

Ms. Sarmite Bulte: There are those who say, under the current legislation--under subsection 31(1)--that the definition of retransmitter is by exclusion, so that, really, JumpTV can actually, as they did in December, go to the Copyright Board to have the rate set. What is your opinion on that?

Mr. Paul Spurgeon: That's correct. My understanding is they withdrew their application. Things can be argued in court, but whether in fact in law they would be successful in the end in being able to support the notion that they are entitled to compulsory licence, I don't know. I think obviously the copyright owners might take action--because of the uncertainty of the section, perhaps--and argue that they don't have the right to do that. The only right they have is if it's absolutely clear that this new media was intended by Parliament, when Parliament passed Bill C-2 back in 1989 as a result of the free trade agreement, which forced cable companies to pay a royalty for their retransmission of all the copyrights that they retransmit to subscribers.

Ms. Sarmite Bulte: Since you brought up the question of trade agreements, and you heard Mr. Ivins from the National Association of Broadcasters express some concern during his presentation that this legislation as currently drafted may be in violation of our TRIPS obligations, do you have an opinion on that?

Mr. Paul Spurgeon: That's possible, and obviously the Berne convention as well; 11bis(2) of the Berne convention deals with this particular aspect of compulsory licensing--and TRIPS, about which I guess there's always the potential that the USTR could complain and go to the WTO, as I think you indicated regarding the split-run magazines issue. There could be an order of the WTO, which we'd have to comply with. And if we didn't, then there could be retaliation, as someone indicated, in such other areas as steel or maple syrup or whatever.

So yes, I think that is a possibility. I know it's on their Special 301 list, along with a number of other issues like private copying and neighbouring rights and a number of other things.

Ms. Sarmite Bulte: Could you just tell the committee what the Special 301 list is?

Mr. Paul Spurgeon: It's just, I guess, a gripe list--I don't know how to put it--that the United States trade representative compiles. It's not just concerning Canada, but nations throughout the world where they say there are things they don't particularly care for in terms of what the countries are doing, in their trade and in particular laws of theirs that deal with rights that the United States considers to be contrary to its interests, if I'm accurately summarizing it.

Ms. Sarmite Bulte: Thank you. I'll wait for the second round, thanks.

The Chair: Yes, okay.

I'll come back to you, Mr. Abbott.

It seems to me there's a really interesting reversal of roles, almost, which you alluded to yourself, in how you and the CAB see eye to eye, and I was listening to Mr. Thomson. The Internet providers say, “The draft regulations as seen are good; the bill is good; go ahead with it”, and you say the opposite. Normally, you would have thought, with copyright legislation you would have been backing it and Mr. Thomson would have been opposing it. So it makes us wonder: from your perspective are the regulations too soft, when Mr. Thomson backs them so readily?

Now, admittedly these are draft regulations that haven't been put into legal phraseology by the Ministry of Justice, but assuming these were the regulations we had to base adoption of the law on, would you be satisfied with them?

Mr. Paul Spurgeon: No.

The Chair: Where do you find the flaws in these draft regulations, and what would you do about them? Would you cast them out altogether, saying that they're no good and that you want a carve-out?

Á (1140)

Mr. Paul Spurgeon: Yes, a carve-out is obviously what we're saying, but there's a debate as to whether it should be fixed in the statute or fixed in the regulation. That's a debate in itself, whether section 31 should in fact say that new media retransmitters aren't allowed to avail themselves of a compulsory licensing regime as cable and satellite are and as was Parliament's intent back in 1989. That's a potential clear carve-out in the statute or a clear carve-out perhaps in the regulation. Again, that would be consistent with international precedent.

Right now I don't know whether you could say it's clear. Maybe it's clear to some that the regulations provide that, but I don't think they do, and I'm not the only one who's been speaking. Other parties here have said that the regulations as currently drafted don't give them comfort in that regard.

The Chair: I heard other parties say before--and you were there too--that even the carve-out is not something that is so watertight and so well expressed in various countries that it doesn't present problems in itself.

We even had testimony from the CAB saying that we had to research better ways of doing it because a mousetrap still needs to be improved. The carve-out is not an end in itself. Australia has problems, from what we heard, so what do you say to that?

Mr. Paul Spurgeon: I think that's the nub of the problem. This committee is going to be busy, I think, over the next millennium on these issues.

Some hon. members: Oh, oh!

Mr. Paul Spurgeon: As you know, you are charged under section 92 to review the Copyright Act. It's not a question of you having to, and it's not just because you've been asked to do it; it's also because it needs to be done. I consider the Copyright Act to be very--subject to your comment--complex. It grows and changes, and sometimes it has to be tweaked, refined, or whatever you want to say, and that's going to be a problem.

I agree with you, it could very well be that in another year and a half we'll be here looking at this issue and maybe some other issue we had never even considered at this time.

The Chair: Thanks very much. That makes us feel very good.

Voices: Oh, oh!

The Chair: Mr. Abbott.

Mr. Jim Abbott: Mr. Thomson, there are two issues. The first one is this whole issue of respecting property rights and protecting the integrity of the geographic licence. If I heard you correctly--and I want to be absolutely clear--the only comfort you were able to give us with respect to that was where you said there is a lot of experimentation going on. I don't recall, and I'm not trying to come down on you. I just want to be crystal clear here.

It strikes me that what you're saying is that you're agreeing that to this point there is no way on the Internet presently in place--there is no technology presently available--where you or an ISP could possibly protect the integrity of a geographic licence. Now, I don't want to put words in your mouth, so maybe you could expand on that.

Mr. Jay Thomson: I am not aware of any such technology that is currently publicly available. However, the folks from JumpTV have advised all of us, including the officials at the department, that they do have such technology. Now, my understanding is that it's proprietary, and they're not willing to share it with the wider population. They'll be here next week, and they'll hopefully be able to explain it a little more.

Mr. Jim Abbott: In your judgment, then, taking that totally at face value, would you agree that any possible inclusion of an ISP as a rebroadcaster, to follow through on the issue of protecting the integrity of geographic licence, would include a pre-certification by some regulatory board prior to them being able to actually go on air or that there be some kind of trial period, that there be a pre-certification during which they could prove that they were not going to have any spillage, that they were not going to be subject to hacking? Would you agree that this would be a pretty good part of the regulation to do away with the concern about the protection of geographic licence?

Á (1145)

Mr. Jay Thomson: I don't think a pre-certification process is necessary. It wasn't imposed upon the DTH satellite providers when they sought to take advantage of the compulsory licence.

You get into the kind of situation where you'll end up with, effectively, a lengthy quasi-legal process of experts arguing against experts as to the possibilities of or the limitations of a particular technology. I would suggest that the better approach is to allow companies to go out on the basis that they're obeying the law, with the intention to obey the law. If anyone determines that they're not obeying the law, it takes them outside of the compulsory licence regime, and they will take steps to correct the problem.

Mr. Jim Abbott: And if they don't?

Mr. Jay Thomson: If they don't, they're infringing copyright. They're subject to injunctions, lawsuits, and whatever other legal action the copyright holders can take.

Mr. Jim Abbott: Well, okay, you and I respectfully have a difference of opinion on that.

The Chair: One last question, Mr. Abbott.

Mr. Jim Abbott: Talking about the licensing for DTH or cable, we canvassed the idea a couple of minutes ago of, should an ISP be subject to the same rules? If they are fundamentally performing the same service of delivering entertainment, in whatever form, to a television set in a person's home, why would they not be subjected to the same thing?

In other words, it is the mandate of this committee, as I understand it, to be concerned about issues like Canadian content, and so on and so forth. These are all hoops that DTH and cable have to jump through. If the ISPs want to have the same access to potentially the same televisions in homes of Canadians, why would they not jump through those same hoops?

Mr. Jay Thomson: Those hoops, which are established by way of regulation, are there for a purpose. They're there to ensure that the cable companies and the DTH operators abide by the Broadcasting Act and contribute to broadcasting policy. They're not there simply for the sake of being there; they're there to achieve an objective. If you can achieve that objective without imposing those kinds of rules, then that should be sufficient.

Even within the broadcasting distribution industry, the rules aren't all the same for all the players. The rules for cable are somewhat different than they are for DTH. Even within the cable industry, the rules for the larger companies are different from the rules for the smaller companies. The rules for the smaller companies are much more flexible, given the size of their market and their impact on the broadcasting system.

That's ultimately the same type of consideration that should be examined with respect to Internet retransmitters. Is there a change from the commission's original standpoint that there's no need to regulate? That would be up to the commission with respect to this referral back to them, but they could very well determine that the impact of Internet retransmitters is at or less than that of small cable systems and choose to apply different rules.

So the bottom line is, you don't necessarily or shouldn't impose the same rules on all the players simply to impose rules.

The Chair: Ms. Bulte.

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

I want to ask Mr. Thomson some questions.

During your presentation you said you're not like licensed broadcasters, especially with respect to Canadian content, because there was so much Canadian content on the Internet that there wasn't a need to regulate it.

Mr. Thomson, with all due respect, the Broadcasting Act's objectives are much wider than having access to content. Part of the objective is to build our identity, to showcase our regional and national perspectives. We've had debates at this committee on whether the act should be reflected or amended to look at local, as opposed to national.

The objectives of the act are to foster Canadian creation, Canadian content, and Canadian programming. It's about seeing ourselves reflected. One of the ways we see ourselves reflected is when the CRTC conducts quasi-legal proceedings, which would probably not be dissimilar to what Mr. Abbott was speaking about with respect to certification processes. Indeed, do not the broadcasters go through a quasi-judicial proceeding, not just when they get their licence but also at the time of the renewal of their licence? They're subject to that. They contribute to the Canadian Television Fund, one of the greatest Canadian success stories there is. We're always after the private broadcasters because they're not showcasing enough Canadian content, we sometimes feel.

Aside from the Canadian Television Fund, they pay huge licensing fees. Some of them say there's too much. Mr. Abbott brought that up, that there's all this excess of licensing fees there, but they do it. We had a bill before us, Bill S-7, which talked about giving intervenor status, which again would go to the broadcasters. That's part of the regime.

So please explain to me, Mr. Thomson, why members of your association should be exempt from licensing, like the broadcasters are, and why they should not be part and parcel of contributing to all the objectives of the Broadcasting Act. My understanding of retransmission, from what our officials told us, is that you are in fact retransmitting over-the-air signals, which are subject to broadcasting rules.

Á (1150)

Mr. Jay Thomson: Thank you for the question. It's a matter we've also discussed before this committee with respect to the study of the Broadcasting Act that you're undertaking right now.

If I had the Broadcasting Act before me--unfortunately, I didn't bring it along with me--I could pretty well go through all of subsection 3(1) and find a way in which the Internet is contributing to almost each and every objective that is set out in that section.

The Internet operates differently and provides a different service from the traditional broadcast service. Nevertheless, it provides a service that allows Canadians to communicate with each other, allows Canadians to present their creative works to other Canadians and to the world. It allows Canadians access to content from all around the world. It allows for the affordable and efficient transmission of programming. It allows for an opportunity for the individual--not the big corporate interests, but the individual--to create something and make it available and find access for it and allow people to see it and enjoy it. That's different from the traditional broadcasting system, but it's just as valuable and contributes just as much to the policy objectives set out in the Broadcasting Act.

Ms. Sarmite Bulte: But, Mr. Thomson, we're not talking about you transmitting; we're talking about retransmitting. There is a big difference between transmitting and retransmitting.

You heard Mr. Ivins here, from the National Association of Broadcasters, raise potential trade challenges. As Mr. Goldstein from the CAB said, if you think the softwood lobby in the United States is a tough one, wait until you see the entertainment one. How do you respond to that? The implications are not just whether we get The West Wing or not, or whether we get the rights to that. We're talking about potentially steel and plastics, our big industries, our automotive, not just....

The potential there is huge. We're not talking about whether we get a program or not. In the grand scheme of things, everybody loves The West Wing, but I think as officials we have to be a little bit more concerned about that. You say that you have to leave it to the individual, that they're going to be good corporate citizens and they're going to do the right things and everything like that, and we can just go about getting injunctions. It's not so easy to get an injunction. It's very expensive to get an injunction. To get a mandatory injunction to cease to do something is terrible, and the bar on that is incredibly high.

So how do you reply to the National Association of Broadcasters?

Mr. Jay Thomson: I'll start with the first part of your question and then I'll get to the NAB, if that's all right.

The first part of your question asked why shouldn't Internet retransmitters be subject to traditional broadcasting-style obligations. Our going-in position is that they need not be; however, the recommendation from the ministers, or the letter from the ministers to you, suggests that kind of issue should be placed before the commission and reviewed by the commission.

As I said, we don't have a problem with the commission dealing with those broadcasting policy issues. If that's an issue that needs to be dealt with in broadcasting policy, so be it. The other side of the coin is that we're arguing that this examination shouldn't impact on your ability to move forward with the copyright issue that we're dealing with here, which is the geographic limitations issue.

Á (1155)

This brings me to the NAB presentation. All of their arguments focus on what would happen if there's leakage into the United States. Well, we're not talking about that. We're talking about a system where there is a geographic limitation placed upon it. If that works--and I suggest we need to leave it up to the industry and the technology to develop to make sure that works--the NAB should have no problems. There should be no trade issues. The only trade issues that will arise will be if there's a breach of the law. If we were always worried about passing a law because someone might break it, we'd be in big trouble. We wouldn't want to adopt that process for the Criminal Code.

The NAB was never asked what the impact on them would be if the geographic limitation provisions actually work. They were never asked that question.

Â (1200)

Ms. Sarmite Bulte: Yes, they were. Mr. Abbott actually asked about the certification process, and going over all those hurdles.

I don't know; I'm confused. You're talking about geographic limitations right now. You admitted in a response to a question from Mr. Abbott that there are no geographic limitations. Mr. Ivins said they don't know if the technology....

In fact, when Mr. Abbott did ask Mr. Ivins about whether he would have a comfort level with the certification process that would establish it, I thought he was quite positive about that.

Was he not, Mr. Abbott?

At any rate, thank you very much.

The Chair: Well, this has been a very interesting exercise. All of us today, I think, have learned a lot. We've certainly learned a lot about dichotomies and about agreeing to disagree.

We're extremely grateful to you for being here today. Thank you very much for appearing.

Meeting is adjourned.