:
First of all, thank you for inviting me to come and speak before you.
Looking around the room, I don't think any of you know me, and I don't know you either, because I don't come from the cultural world, per se. I'm a Canadian but I'm an engineer, a techie--one of those digital guys--and I've spent most of my career working in the digital world.
The company I'm part of is located in Waterloo, but it's based in many other centres throughout Canada. It's Canada's largest software company. What's interesting about that is not that we're a software company, but I've spent most of my adult life outside of our country; we're a billion-dollar firm, but 95% of our revenues come from outside of Canada. So we're a so-called 5/95 company.
I've spent probably the last 25 years working in the Internet to enable a lot of other cultural industries and nation-states and what have you. We make software that probably about one in three people use every day on the Internet. We make it for companies like BMW or the BBC or FOX News or Canal 5, etc., so we do this throughout the world.
That led me to getting more engaged in Canada, because a few years ago I realized that when it came to digital technologies, Canada was not adopting them as rapidly as I was seeing them being adopted elsewhere in the world, or in the different ways that were occurring elsewhere. So I got involved with several initiatives, one being a federal centre of excellence that was created two years ago, called the Canadian Digital Media Network. It was a so-called CECR, a centre of excellence for commercialization and research. The idea was to bring together all the various types of organizations in the country--from universities to private sector to public sector and so on--to start talking about this and start sharing research and what have you.
Perhaps the most compelling thing that's occurred in the short time since this centre was created is that it has run two national conferences. I've just come from the second conference, called Canada 3.0, held in Stratford just in the last two days. What I found very interesting--and I hope this will give everyone on this committee encouragement--was that it was like going to Woodstock; not that I'm old enough to have gone to Woodstock, although I'm almost old enough. There were many passionate Canadians there. There were 2,000 people there. The first year we were expecting 500. This year we expected around 1,000. We had so many people come, and yet we had not really advertised this conference, not through all the normal means. It was certainly adopted virally. We had a lot of people come.
I thought I'd share with you some of the things I heard. The sharing is just to give you an idea. There will be more fundamental documentation available to you as well, but the conference occurred just 48 hours ago. However, in keeping with the digital media theme, the viral or virtual aspects of the conference were available to all Canadians. We had more than 2,000 people participate online. If you want to go through the tweets right now and the blogs and what have you, you're welcome to do that. All the videos are up on the various sites to do with the conference.
Formal documentation will be created in three waves. Neither I nor the Canadian Digital Media Network is advocating anything. We're just trying to have a conversation about the impact of digital. In terms of the three waves that you'll see, in the next few days the conference chairs are going to create a communiqué that will be published for everyone to see, which will basically summarize what I hope to summarize for you right now. In about a month's time, the group will provide a written summary that's more fulsome, about 40 pages, that summarizes all the debates.
Just to give you an idea, there were 2,000 people, and they were broken up into five session themes, and there were session chairs who ran each of the session themes. So it was a very collaborative conference. You'll see that if you have a chance to read all that stuff.
Finally, there is a virtual site to which there are more than 3,000 people blogging and collaborating in a social media context--sort of like a Facebook--about the impact of digital on the country from a whole variety of perspectives. Just to give you an idea, of the 2,000 people who were there, there were 500 youth from either the university or high school level. Of the remainder, about one-third was from the public sector, one-third from the private sector—that's from the creative community and the like, toolmakers and tool users—and then one-third from the public sector.
Among the things that were debated was the issue that people generally thought our country needs a goal that encapsulates digital as a means of delivery. We've--maybe clumsily--referred to it as a “moon shot”. Some of the people at the conference said that's an American reference, and maybe this should be “beyond the next spike” or something like that.
The point is that to captivate all Canadians in this and to really explain to maybe the non-digitally literate, it would be wise for us as a country to have a goal. What that goal might be is something open to debate, obviously, but we did talk about some of the things that might be in such a goal.
The other thing that was interesting about this conference was that there was a measure of frustration--these are people who obviously are already very engaged in the digital world, which is why they came--and there was a lot optimism about the opportunities for the future. So it was a mixed bag.
The other thing I found very interesting in the group was if you're under 25 years old now, you don't measure yourself perhaps the way the above-25 do. They have a very interesting split of being Canadian but also global. Again, I'm not a social scientist, etc., but it's a fascinating thing that you could easily notice in this conference that they have a different perspective perhaps from the over-25 crowd.
The other thing that became very clear is there are new and old business models that are completely in conflict with each other, the so-called long tail of how to recoup any kind of endeavour, whether it's cultural or any other. These business models are different and there is a transition, and it's a pretty brutal transition.
There was a great concern at the conference that if we didn't act soon on some things we would become a digital colony, and a colony not unlike the country experienced maybe 40, 50 years ago prior to the formation of the tri-councils and all the efforts that were made during the 1960s and 1970s. So there's a great angst about that, because one of the great data points we had presented to us is that depending on how you measure it, between 1% to 4% of all the content in Canada is digital, and that means either 99% or 96% is not. That's something I've noticed as I've travelled the world. Other nation-states have pretty substantial digitization efforts under way and we do not. We are not going to pass on our culture if we do not have it digital. If you're under 25 and it's in a book, you don't read it. You go online.
We have some great debates about connectivity in the country, but if we're just simply connecting to content outside our country, maybe we have to think about our goals a little bit more.
Digital literacy had no debate at all. It was clear: we need a program of digital literacy, very much in the same way that we would have thought of literacy 100 years ago as we moved from the farms to the cities and started to require people to become knowledge workers and to be able to read.
There was a big debate on the goal, about whether the goal's aspirations should be about economy or about our country as a nation. Again, it was a debate, and I think it was a fascinating one.
Something that I think you might find interesting, because I know you have a cultural focus, is that unlike other efforts...and this perhaps is the most important thing to remember, if anything, from anything I've told you. In the past, when we had radio signals or TV signals, you could discriminate what was cultural against what was business, etc. Take phones; you could maybe torture it and say they were both cultural and business. In the data world, with digital bits and bytes, if I'm sending an accounts payable invoice, or if I'm sending a song, it's on the same conveyance.
This goes to the heart of productivity and our country itself. How do we organize ourselves digitally? It's not an easily defined thing. Perhaps that's the greatest challenge with digital: it impacts everything. There is just not one part of our socio-economic structure that is not being impacted by this. So it is very much a centre-led type of thing, and I think that perhaps is one of the great challenges.
Along with productivity as a benefit, at the conference everyone talked about health care, and how health care in general in our country could benefit greatly by the adoption of digital.
The last thing to leave with you is this. There did seem to be a consensus among people that there were three themes that needed to be dealt with in the digital world and how it impacts culture. It came down to connectivity, content, and collaboration. They were cute to use three Cs, but what they meant by it was that, first, connectivity refers to speed and the fact that it's available; content refers to digitizing something or else it just does not exist in this world; and collaboration refers to the ability of people to have access and to have the digital literacy to be able to make use of those tools.
I'll stop there. I'd be happy to take any questions about these activities and my experiences.
Just to start out, I'm not a techie, I'm a sports guy. What's interesting is that Tom and I just found out that we live in the same neighbourhood. Tom works out of Waterloo--and lives there as well, I presume--and I'm from the city without a hockey team, being Hamilton. We did have some connections there, because one of the other guys in his neighbourhood almost brought a hockey team to Hamilton, which we probably all remember.
So it's nice to see sports shirts in this room.
An hon. member: Especially the red ones.
An hon. member: Hey, easy.
Mr. John Levy: Listen, I'm from Hamilton, so I don't really care about the blue ones either.
Voices: Oh, oh!
Mr. John Levy: So good morning, members of Parliament and committee staff. My name is John Levy, and I am the chairman and CEO of Score Media Inc.
I'm here to talk about developments in emerging and digital media, how they are affecting Canadian cultural industries, and what federal institutions can do to assist Canadians and Canadian cultural industries to benefit from these developments.
Before I do so, I'd like to tell you a little bit about my background and about Score Media, because it's entirely relevant to why I'm here today.
I'm one of the few people in the Canadian communications industry who has had the privilege of being both a small cable system operator and a small broadcaster, thus bringing a unique perspective to this hearing. Before founding Score Media in the late nineties, I was the controlling shareholder of a company called Cableworks Communications, which was one of Canada's first cable TV systems. Cableworks was in fact founded by my father in 1959, and it grew to serve over 65,000 subscribers in the Hamilton area. I literally grew up in the Canadian cable and broadcast industries, and experienced first-hand the growth and transformation that was spurred by the introduction of specialty and pay-TV services and new technologies, including microwave transmission, fibre optics, and satellite communications.
At Cableworks, we were also one of the first Internet service providers. We launched a dial-up ISP business to prepare for the rollout of high-speed Internet over cable, which has become ubiquitous in less than a decade. As I will discuss later in my remarks, the proliferation of Internet access and the resulting ability of individuals to connect and share content instantaneously is, in my view, the most fundamental technological shift we will ever experience in our lifetime.
At Score Media we have invested heavily to make sure we are present and relevant at every important media platform, because that's largely where our 18- to 34-year-old fan community lives. Our core assets include The Score Television Network, which is a national sports, news, and information specialty service available in 6.7 million homes across Canada; Hardcore Sports Radio, which is a sports talk radio channel distributed across North America on Sirius satellite radio; and Score Media Ventures, our digital media division that operates our website, thescore.com, our mobile applications, which we're going to talk a lot about, and our interactive TV applications.
While we've enjoyed significant growth from all of our new platforms and from our TV network, we are particularly proud of our mobile application. In June 2009 we launched ScoreMobile for BlackBerry smartphones, a product that has significantly propelled our brand both at home and internationally. A huge success in North America, with over 70% of our ScoreMobile users now coming from the U.S., our BlackBerry edition of ScoreMobile now has over two million downloads, which is a significant milestone for a Canadian corporation playing in this highly competitive industry. In fact, ScoreMobile on BlackBerry is currently the number one free sports application on BlackBerry anywhere in the world--and we're obviously very proud of that.
We have also had great success with our iPhone application, which has generated over a million and a half downloads since we launched it in July 2008, with over a third of these downloads coming from the States.
Combined, the applications generate--this is how we're measured, and this is how we sell advertising, which we'll talk about in a second--more than 1.3 monthly unique visitors, and we have over 50 million monthly page views.
Our new media platforms are an integral part of our operations and of our growth strategy. We very much consider them as independent platforms for growth in their own right, both inside and outside of Canada.
In addition, from a financial perspective, our revenue growth is reflective of our focus on these platforms as meaningful businesses. Nearly 10% of our advertising revenue is currently generated through our new media platforms, and we expect to grow and accelerate these exponentially in the years ahead. Our new media platforms are also meaningful, positive contributors currently to our operating profit.
We're an innovative company that is constantly moving and changing to stay ahead of the curve. In order to compete both internationally and globally, we have chosen to focus on digital and emerging technologies as the touchstone for our growth strategy.
I've taken the liberty of looking at a couple of the questions that were asked, and in advance of questions, I'll try to respond to some of them.
First, how are developments in emerging and in digital media affecting the Canadian cultural industries? Of course there are countless ways in which new media affects all industries, but we believe that the most important of these, with respect to Canadian cultural industries, is that technology has democratized the distribution of knowledge and of authority.
It is axiomatic that the barriers to entry for content producers have been eliminated. Anyone who has a desire to become an expert online and develop an audience can do so without a need to convince a traditional middleman--i.e., the broadcaster. That person can directly access his or her own audience and build trust and authority independent of mainstream media. This is unprecedented in modern history.
The key is for cultural businesses and industries to find ways to take advantage of these opportunities that afford this opportunity, rather than remaining mired in old models. For example, The Score has leveraged this phenomenon by using the Internet as a discovery mechanism for new and emerging talent. Some of these examples are The Basketball Jones, which is a group of four comedic basketball experts who have developed a substantial online following for their clever, cutting-edge video and podcasts; Paul Brothers, an individual who won a contest we ran called “Drafted”, which was an innovative cross-platform search for Canada's next top sportscaster, and we did this in partnership with Procter and Gamble; and lastly, the bloggers in The Score Sports Federation, which is an aggregation of the best sports blogs all across this country.
These individuals, whose offerings now form the core of our web content, were brought to The Score because they used the Internet to grow their own brand and their own profiles. The reality is that we, as the broadcaster, need them more than they need us; I hope they aren't listening to this. But this represents a fundamental shift in the balance of power and this is why we say that knowledge and authority have become democratized in a totally whole new way. This shift must be recognized and in fact embraced by all cultural institutions. Any institution that does not embrace the web as a wide-open democratic playing field will, we believe, quickly become irrelevant, and those who have learned to how to maximize the opportunities afforded by this new openness will take their place.
New technology has transformed media into a utility. Specifically, technology now allows media to be manipulated and shared. Traditional media that, via passive consumption, cannot be manipulated is quickly losing its appeal to today's audiences. For example, the Internet is a perfect environment for reward and response. At our company, we can track who “fans” us, who shares the content the most, and which Score talent has the most engaged followers. Technology turns media into a two-way conversation. It's a current. Our fans can become talent, and our talent become our fans. This, again, is a phenomenon that needs to be embraced by cultural institutions if they want to remain relevant.
Finally, we would like to comment on the policies that the federal government might adopt to help Canadians and Canadian cultural industries benefit from developments in emerging and digital media, and we've talked about this in front of our regulator, the CRTC.
Specifically, we believe that net neutrality must be a cornerstone of the Canadian communications and regulatory policy so that a level playing field exists for all content producers, whether they're vertically integrated with Internet service providers, ISPs, or not.
As a small, independent Canadian sports player, we have learned how to be nimble in a business where our competitors are huge sports media giants and vertically integrated distributors, and with businesses where sports leagues often hold most of the bargaining power to operate their own platforms.
In this environment, our success has come from respecting our audience, tapping into communities, and providing honest, authentic content. But we would have had no opportunity to succeed if we didn't have access.
When life began for The Score over 10 years ago as a speciality service, it was the CRTC's access and must-carry rules that ensured that this upstart sports network had a chance to find its voice. If our right to carriage 10 years ago had been left to the discretion of the BDUs, the distributors, this independent voice would not be participating at this hearing today.
In the new media world, the organic and explosive growth of the Internet has created an environment where small companies like Score Media can, with a little creativity, create a global business. Anyone anywhere with access to the Internet is a potential fan. However, as they say, the more things change, the more things stay the same. Today, again, access is critical to survival. In recent years, the power to grant access to the Internet has become increasingly consolidated in the hands of a select few. These ISPs have the power of life or death over every content creator who relies on the Internet to access the users. Many of these ISPs are integrated with content providers, and they have every incentive to use the power they have.
In conclusion, our goal through this presentation was to give some insight into our experiences with emerging and digital media and how we might help foster innovation within Canada.
In summary, our recommendation to the federal government is simple: embrace the democratization of information and authority that the media engenders, and please help keep the Internet open. We are very concerned about the ability of Internet and wireless service providers to act as gatekeepers, either because they are vertically integrated and have an incentive to prioritize their own content, or because they are partnering with major media players and providing preferred access. If we seek diversity of Canadian voices in new media, the Internet cannot become a pay-to-play zone.
Thank you very much. I'd be delighted to answer any questions.
:
Thanks for those comments.
I'm an entrepreneur, so I'm generally an optimist, and I take the optimistic view of this. But there are those who take the dire straits view and the digital colony and what have you.
We are a country that has only 2.5% of world GDP. We are a country that has an even smaller percentage of world population. So I believe we have to take that perspective, first and foremost, to realize our throw weight, our capacity, our critical mass.
Having said that, we have some tremendous attributes as a country. One, we have a multiculturalism.... I travel the world, and we have a wonderfully well-working country. Although, when I come back to Canada, I know we all talk about how terribly it works, we have a wonderfully well-working country. We really do. Many of you who are familiar with other parts of the world know what I mean.
That gives us an opportunity. When you consider some of the comments you've already heard, and the comment about the importance of relationships, we have an opportunity to capitalize on the reverse diaspora of this country in a tremendous way. We have capacity that countries of our size wouldn't normally have.
Think of it: we have Open Text; we have Research in Motion; we have Cirque du Soleil. And I could go on. For a country of our size to have so many world players at different things...? We're a small country, and yet we have an ability to leverage a lot of the infrastructure assets, along with the academic community, and our cultural community. But when you add in that reverse diaspora, then you have an ability for us to punch way above our weight in this regard.
That's where leadership comes in, where we create something--a set of goals, or a methodology--that creates an environment for us to capitalize on those advantages that we have. We have some tremendous advantages.
Thank you to both witnesses.
I've got to tell you that I listened intently to your presentations, and I thought it was the most interesting testimony I've heard on this since we had Jacob Glick here from Google. I think it's really important that we put this into the proper context. This is all about looking toward the future. It's not about where we are right now.
We really have to as a committee, I think, and certainly as a government, look to where things are going, not where things are. And where things are is in flux. Old models are looking for walls to be put up. They're looking for old systems to come to bear to maintain them. Frankly, new models are reaching well beyond Canada's borders, and that is really what's driving this enormous....
You talked about the long tail, which is something that Jacob Glick talks about. I've read the book on it, and I think there's no question that models need to be redesigned to look at where things are going. I think that ultimately if this committee is going to put something forward that will really benefit artists, really benefit Canada's cultural scene, and allow us to build more strength, then we're going to look to the kinds of suggestions that you're making here today.
Mr. Jenkins, you talked a little bit about the under-25 crowd. I don't know if you're finding this; with conventional formats, over-the-air television is still very strong, but the way that people are actually consuming over-the-air television is changing. People still read what reporters write in newspapers, but the way that they're reading it is changing.
Are you seeing any evidence that it's actually spreading beyond? It started with the under-25s, but I'm getting a little closer to 40 than I care for, and what I'm starting to find is that I'm using all these models now. They started with it, but it's actually spreading the other way. It's not top down, it's actually bottom up. The kids are using....
Yes, I'm under 40, Mr. Chair, thanks.
So I'm actually seeing evidence that people older are actually picking up on all this new stuff, and what we may see, quite differently from what we used to see, is this stuff spreading upward as it becomes easier to use and more accessible.
:
Thank you, Mr. Chairman.
Members of the committee, my name is Alain Pineau. I am National Director of the Canadian Conference of the Arts, the oldest and biggest umbrella organization in the culture, arts and heritage sector in Canada.
The CCA's mandate is to foster informed debate on all federal policy and regulatory issues that concern this broad sector in one way or another. We are pleased to see that the debate on the need to develop a national digital strategy is at last being conducted in the public arena. We are concerned that it is focusing on not only economic, but also social and cultural issues as well.
The current debate too often focuses on infrastructure and its financing, and not enough on what is being conveyed by the new platforms, or on the interests of those who develop cultural and other content. We are therefore delighted that you, first, and the government, this week, have expanded the conversation and that you are looking into these fundamental aspects of the debate.
The advent of digital technologies has changed the way in which artists produce and the relationship that institutions have with their public. Interactivity is overturning business models and changing the ways in which cultural products are consumed.
[English]
The arts and culture sector wholeheartedly embraces the new possibilities created by digital technologies. Many individual artists have adopted them to produce performance arts and to otherwise meld technology with traditional artistic tools.
Beyond the use of digital technology in arts creation lies the impact of broadband, Internet, and wireless on its promotion and distribution. Individual artists, as well as galleries and museums, are able to digitally demonstrate the artists' creations. Some of the more innovative artists and institutions are reaching a far greater audience faster and more efficiently than before. The Internet offers new ways to engage the audience and to promote and process orders.
By the way, the democratization of production tools also raises interesting and fundamental questions about the professional status of artists and journalists. It is now relatively easier to produce a work of art and to make it accessible. Media outlets rely more and more on images and material provided by ordinary citizens, who report with mobile multi-tasking devices.
The upside of these new developments is that they encourage creation and participation. The downside is that they can debase the value of trained professionals' work, lead to the acceptance of lower standards, and, not to mention, threaten the livelihood of creators.
[Translation]
As many before us have said, the development of a Canadian digital strategy must be based on a new Copyright Act. There is an urgent need to acknowledge the importance of the intellectual property of those who develop content and to create a digital environment that encourages creation, distribution and protection of works. Our artists want to share their creations on the broadest possible platforms, but they must be able to do so in the assurance that they will receive fair compensation for their work, whether it be for online distribution or for transfer to other media instruments.
In this matter, we are in favour of extending the current private copy system. This isn't a tax, but rather a way as effective as possible to enable all Canadians to acquire the right to adopt the device of their choice to access legitimately acquired cultural products, while ensuring that the artist is compensated for his or her work. This is an important complementary measure to support the creation of content that, however, cannot replace the fundamental need for protection for the rights of creators through an update of the act.
Another aspect of the new reality is the fact that a number of users can take an artist's work and recreate new works. Once the work has entered the digital universe, it is possible to take it and make what's called a mash-up. It's important that, in developing a national digital strategy, the government include an innovative policy protecting copyright without discouraging the creativity that their works can in turn generate.
[English]
Let's now talk about training.
National Film Board commissioner Tom Perlmutter raised this issue very eloquently with you the other day, as part of his excellent call to action with regard to a national digital strategy. Artists and art administrators are more obligated to learn a diverse set of skills in order to compete on an open market. Those who have digital marketing skills and social media savvy will be able to promote, present, and professionalize their artistic practice. More attention must therefore be given to training young artists and creators, not only in digital skills but also in the basics of entrepreneurship.
A knowledge economy is a resource that will never run dry. Given the retiring cadre of professionals, we must invest in knowledge transfer programs, mentorships, and apprenticeships in cultural industries and in the arts.
Expanding digital literacy within the Canadian population is also an important part of a national digital strategy. This is why the CCA supports the creation of multimedia community centres, as proposed by the Canadian Association of Community Television Users and Stations.
I welcome the happenstance that we're together. It was not planned--on our side, anyway.
We view this as one of the pillars on which to build a truly democratic national digital strategy, and we urge you to include it in your report.
Canadians have a right to their culture, a fact recognized by years of public policy through government support of international agreements under the United Nations and UNESCO. Over the past 50 years, our governments have developed various support mechanisms to ensure Canadian cultural products and services are made available to Canadians and to the world at large.
In the new digital environment, such policies are more important than ever. The government must use all the tools at its disposal, whether through direct financial support, regulation, or tax incentives.
As mentioned by ACTRA and CFTPA in their presentations, it's important to expand and adapt previous policies to new realities. This is why we at the CCA continue to support increasing public investments in the creation of Canadian works, whether through existing institutions like the CBC, Telefilm, the National Film Board, the Canada Council, or through new instruments like the Canadian media fund. This is also why, for several years now, we've advocated extending the contribution regime in place for over-the-air broadcasters, cable and satellite operators, to the new distribution platforms like the Internet and wireless.
Finally, we insist that the government maintain in all trade negotiations its official position that cultural goods and services are not like other goods and services and must be kept off the table, lest our federal and provincial governments lose their capacity to adopt or modify the cultural policies that have led to the development of our arts and culture sector.
This leads me to my last point, which is foreign ownership.
For the past several decades, the operating principle in Canadian cultural policy has been that Canadian ownership and effective control of our cultural industries will ensure that more Canadian content is made available to Canadians. It's been deemed easier to regulate Canadian-owned companies than foreign-owned ones. Moreover, Canadians are more likely than non-Canadians to tell our own stories and to present our own views to the world based on our own values.
The absence of appropriate regulation in the movie industry is the best illustration of the negative impacts of foreign ownership and control of a cultural industry. Film distribution policy does not distinguish the distribution rights for the Canadian market from North American rights, for most of the largest distributors. As a consequence, foreign film distributors maintain a lock on the majority of the film screen distribution activity in Canada. Foreign films, namely U.S. movies, occupy over 98% of screen time in English Canada, while the situation is somewhat better in Quebec cinemas.
There is debate about the wisdom of opening up foreign investment and having eventual foreign control in telecommunications. The justification is that by bringing in more competition, we will achieve lower prices for consumers. It's difficult to be against this objective, but there are serious reasons to fear the consequences of the current backdoor approach to changing long-standing cultural policies.
The 2008 competition panel report recommended a liberalization of telecommunications and broadcasting investment restrictions “following a review of broadcasting and cultural policies including foreign investment”.
With due respect, we do not think that a handful of committee hearings here and at the Standing Committee on Industry, Science and Technology, where witnesses are limited to 10-minute presentations and questioning to five minutes, constitute an adequate review of broadcasting and cultural policies.
The chair of the CRTC recently stated before the Standing Committee on Industry, Science and Technology that:
any liberalized foreign ownership rules for telecom should give due consideration to the social and cultural objectives of the Broadcasting Act.... it is widely agreed that, given its economic importance
—and here I would add, its strategic and cultural importance—
control of the communications sector should remain in Canadian hands.
Foreign trade agreements may contribute to restricting Canada's capacity to adopt cultural policies. NAFTA's chapter 11 provides foreign investors with a right to sue the Canadian government and to seek compensation for foreign actions, including those of regulatory agencies like the CRTC, if they believe the decisions violate their rights under NAFTA. The CCA is very concerned with the fact that the Canadian government has tabled such a dispute resolution mechanism in the current comprehensive negotiations with the European Union.
Why are we concerned? First, in relation to NAFTA, the CCA would point out that the cultural exemption is limited in scope to the cultural industries that existed at the time NAFTA was created. Importantly, this does not include the new media sector, such as interactive television, computer games, etc.
Second, chapter 11 rights could potentially come into play in two ways in this matter. If the rules in telecommunications are changed, a foreign company investing in a Canadian cable company or broadcaster could structure a deal in a way that mirrors the new telecom's rules. If the CRTC were to prevent them from proceeding, they could launch a chapter 11 challenge on the basis that they have been treated unfairly in relation to a direct competitor operating in the same marketplace
Finally, if foreign companies are permitted entry, or force entry, into Canada's broadcasting system, existing rules and regulations relating to the production and distribution of Canadian content productions may be sustainable, since the foreign company will be entering a market where those rules exist. However, if the CRTC or the government were to try to update the rules to reflect a new environment, the foreign company might have a cause for action under chapter 11.
These are the reasons we're concerned about the link with foreign trade negotiations.
[Translation]
Thank you for your attention, and I'll now answer any questions you have.
:
Before I start, I sincerely apologize that our presentation is not available in French. We've been in intense consultations with the CRTC for the past three weeks. We are a small volunteer citizens organization, and it simply wasn't possible. However, I would be absolutely delighted to entertain your questions at the end in French, if you prefer, and to answer them in that same language.
[English]
I thank the Standing Committee on Canadian Heritage for inviting CACTUS today. I will address questions four through six in your terms of reference, which deal with accessibility to emerging and digital media.
Our proposal is the same--but shorter--as the one we made before the CRTC in its review of community TV two weeks ago. We appreciate the value you attributed to independent community TV in the motion that you passed on April 30. As that motion dealt with Quebec only, I welcome the opportunity to present our vision of independent community TV for all Canadians, and access to emerging and digital media via those organizations.
For those of you whom I haven't met before in person, the Canadian Association of Community Television Users and Stations represents community-owned and -operated television channels that distribute over the air, on cable, and on the Internet; the Canadians who use and watch them; and also the majority of Canadians who currently don’t have access to such a channel.
As you know, digital media are not really new. Computers have been common in Canadian homes since the 1980s, storing first text digitally, and then graphics and still pictures. The Internet as a means to share information developed in the 1990s, and digital formats to store audio and video became available at about the same time.
Perhaps what is new is the degree of convergence between computers and audiovisual technologies. It is this desire to share more bandwidth-intensive audiovisual information that is driving the demand for broadband access. The other big change on the horizon, of course, is the official switchover to digital television, which is driving production of HD content, purchases of digital television sets and set-top boxes, and the possible loss of free over-the-air TV for Canadian communities having fewer than 300,000 people.
With this switchover, the last distinction between previously analog and digital services will disappear. It is speculated that more and more television will be watched on the Internet, but no one really knows whether such demand can be accommodated, even with broadband.
With all the talk of bandwidth and distribution platforms, it's easy to lose sight of content. Media is still created in the same basic formats as in the 20th century: text, audio, still pictures, and moving pictures. New media platforms, such as the Internet, increase the possibilities to combine and interact with these media, but the basic media—and Canadians’ need for training to produce these media—remains the same.
“Media literacy” refers to the ability to interpret media and to create media for oneself. For example, we teach children not only to read, but also to write. Forward-thinking public policy-makers have always been concerned that the general public benefit from new media technologies, both as creators and as consumers of content. It’s widely acknowledged that the invention of the Gutenberg press drove the rise in written literacy in western culture. Public libraries became common, starting in the 19th century.
With the invention of audio and moving picture recording devices in the 20th century, forward-thinking governments and citizens sought access to radio and television. The first community radio channels began in the 1930s. The first community television channels opened in the 1970s, right here in Canada. Perhaps because the early video cameras broke down a lot, their maintenance and management of these channels were left in the hands of cable companies, who were building an infrastructure at the time for local TV distribution.
In all countries that followed our lead in the eighties and nineties, however, when television equipment had begun to drop in price and complexity, communities themselves own community channels. In Canada, there are only pockets of community-owned TV, including in Quebec, as referenced in your motion. There are also seven over-the-air community TV broadcasters scattered across the country and two cable co-ops on the prairies that offer local services--only a handful.
But radio and television are traditional media. What do they have to do with public access to new and digital media? Canadians need both the know-how to create media messages and the technology to reach their target audience, and there is a hierarchy of both skills and cost to obtain these forms of access.
Reading and writing are considered so essential that they’re taught in school. To create a radio program or audio message, you need to know not only how to write the script, but also how to interview guests, how to record sound, and how to edit. To create a television program or video message, you also need to understand such things as camera angles, lighting, and framing. And just as the skill level rises to produce text, audio, and video, so does the cost. Although digital cameras have fallen in cost, microphones, lighting, studio space, and transmission equipment have not.
So while anyone, it's true, can shoot raw footage with a camcorder and post it on YouTube, there are still multiple barriers for the average person in the new media environment. There are literacy barriers to produce effective messages. There are technological production barriers to capture civic or cultural events that require studios, lighting, multiple cameras, and crews. There are also technological distribution barriers to access audiences, especially local audiences, if the video is only available among the millions on YouTube. There may also be distribution or cost barriers if your target audience can't access or afford high-speed Internet.
Finally, as discussed by other presenters, there are legal barriers if you don't want to yield copyright to YouTube or other for-profit content aggregators.
There has been recognition by Canadian educators for almost 20 years that the definition of literacy must be expanded to include all media, including audio, video, and the Internet platform itself. Thanks to the Canadian Association of Media Education Organizations, or CAMEO, media literacy, including the rudiments of multimedia production, have been taught in the language arts curriculum across Canada since 2002.
Since the new media and digital tools will continue to evolve, however, there needs to be a resource in communities where Canadians of all ages--even if you're as old as 40--can both learn and use new media to distribute messages; a 21st century multimedia library and distribution hub, if you like.
In most parts of the country, the cable-managed model of community television still dominates and is unfortunately problematic. CRTC data revealed that more than 70% of the money cable subscribers pay for community expression is spent on cable-produced programs that promote their brand. More than two-thirds of the roughly 300 community channels that once existed have been closed. Consolidation in the cable industry has led to centralization of resources rather than the decentralization that is needed for an inclusive digital strategy. Rural Canadians are once more being excluded.
Finally, cable as a distribution platform has fallen from a penetration rate of over 80% a decade ago to just 60% today. So it's no longer universally accessible, especially in those same rural areas that have poor access to high-speed Internet and may soon lose free over-the-air TV.
Like libraries, the new multimedia training centres need to be publicly managed and accountable, freely accessible to the community, and to distribute content on all platforms.
So our vision of access by all Canadians to new and digital media is to build on and modernize the existing community television policy. The money Canadians already pay for community access could be directed to community-operated multimedia centres that would provide access to all media technologies as they become available.
By leveraging community manpower, they could generate the local content that has become so challenging to finance in the public and private sectors. They would distribute the content free over the air to cable and to the net and once communities have their own transmission infrastructures, and a couple of our members already do, they can offer retransmission of free OTA TV after the digital transmission if they choose, and other new media, including wireless Internet and mobile TV, as it becomes available.
The money collected from cable subscribers last year, which was more than $130 million, is enough to fund 250 such centres. That's at least one for every community over 10,000 people, additional neighbourhood offices in cities over 500,000, and about 50 centres in rural areas. They would be within reach of more than 90% of Canadians.
An important part of our strategy is to build on existing infrastructure. For example, you may have heard that there are already more than 3,000 free Internet portals countrywide--they're called “CAP” sites--that have been funded by Industry Canada since the 1990s. Many are located in libraries and community centres just as we envision, and they already teach some Internet skills, including multimedia. So our vision brings together many such organizations that have been heading in the same direction anyway as technologies have converged.
To conclude and respond to your question six, we specifically recommend, first, that the CRTC redirect the use of cable funds collected for local expression to community-owned and -operated multimedia centres by an arm's-length, fully transparent, and accountable fund.
Second, we recommend that one over-the-air frequency be reserved for community use in every market so that communities can benefit from new technologies for distribution as they become available. At present, it's not clear whether the CRTC, Industry Canada, or Heritage Canada could make this happen, and we request your assistance in obtaining clarification.
Third, over-the-air public and private broadcasters that elect to discontinue transmission in communities under 300,000 after August next year should be asked either to donate or give free access in perpetuity to their transmission towers and equipment so that communities that wish can step in to offer free over-the-air television, including a community TV service.
Again, I'd like to mention that two of our members currently already do this. They rebroadcast remote signals from the public and private sectors in addition to offering community service. So it's financially manageable for small communities. One of those communities has only 1,000 people.
I'd welcome your questions on behalf of CACTUS.
:
First of all, we're not in any way against the channels that cable offer if they want to continue to offer them and people value the service offered by them. We just feel that maybe it would be more transparent for them to go back to the CRTC and apply for the kind of licence they want, which is more similar to a local private broadcaster, to be honest.
In the example you just gave, when you said your local cable provider reflects the community with the news program and that they changed format and there was an outcry, what you're talking about is a top-down model of programming where it's the cable company that's deciding what to produce. Again, there's nothing wrong with that; that's what private broadcasters do. They try to produce programming that people want to watch.
But that wasn't the original purpose of those channels. The Broadcasting Act is quite clear that there are supposed to be public, private, and community sectors. The money--the 2% of cable revenues that are currently collected--was meant to enable communities to make their own productions. That was the only window in the broadcasting system that was supposed to be open to the ordinary person.
So there's no reason that a completely open access channel, which is what those funds were originally for, couldn't coexist with a cable channel. We have no issue with that. If people in your community like that service, there's no reason they couldn't continue to enjoy it.
Most people in Canada now don't know that they have that right, because it's been about a dozen years since we've seen really active and robust community access television in Canada. For most of them it wouldn't even occur to them to go down to the cable operator and say, “Hey, I'd like to do a program”, because they just haven't seen that on the airwaves for so long, except in little pockets in Canada, as I mentioned. So we think there's enough space in the system for all these models.
The other problem with the cable model, though, is this. As the person who's currently spending dollars collected from cable subscribers to give them local reflection, as you say..., As I mentioned, because they've gone to an all-professional model, they've tended to pay for that. They've consolidated their resources in big centres, where all their staff do the production, which as we know is much more expensive than doing it with volunteers, and then they pipe that programming back out to the regions.
I don't know what the percentage is in your community particularly, but there used to be 30 independent different services in New Brunswick alone. Because of zone-based licensing--that is, the CRTC has allowed cable companies to consolidate what used to be quite small licence areas where there used to be one studio in each small area--they've allowed them to consolidate. So there now are only six studios in all of New Brunswick instead of thirty, and those studios contribute to one province-wide service.
Aside from the issue of whether it's professionally produced or really volunteer produced, it's just been consolidated. So we're seeing the same kind of loss of real local reflection in the cable community channel sector as we have in the public and private sectors, where studios have been shut in small communities.
Aside from addressing people's needs for access and skills training in digital and new media, our proposal also addresses the huge reduction in local programming we've had across the country.
You know, when I used to work, I was the volunteer coordinator at Shaw Cable in Calgary—