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Speech
Notes for an address
by Françoise Bertrand
Chairperson, Canadian Radio-television
and Telecommunications Commission
to the Rideau Club
Ottawa, Ontario
February 26, 1998
(CHECK AGAINST
DELIVERY)
Good day ladies and gentlemen.
I am very pleased to meet all of you in such pleasant and relaxed surroundings.
And thank you for asking me here to speak with you about the CRTC and the
current issues affecting broadcasting and telecommunications in this country.
This is a golden opportunity for me to not only hear what you have to say
about these subjects, but also to get your advice ...on how things
really work in Ottawa! You can't blame me if I take advantage of the
wealth of knowledge and savoir-faire in this room.
With your agreement, Chair, I hope we can have lots of time for discussion.
Arthur asked me to talk about what is happening today in the broadcasting
and telecommunications world and in particular to address the role of the
regulator as we face and adapt to new and changing realities in the
communications landscape. Information technologies, the knowledge economy
that these technologies support, and the pervasive reality of globalization,
are but a few of these forces of change.
What does this all this mean for broadcasting, telecommunications and cultural
policies in Canada? What does it mean for the CRTC? Allow me to explore these
issues with you today.
New Realities
There can be little argument that the world of communications is changing
dramatically. This is no accident, nor is this surprising. Communications,
in an industrial sense, is a sector that was borne from technology. As digital
technology has emerged and lead to new innovations, communication services
that are supported by that technology are changing, are evolving, are converging,
or are being newly created. I' m quite sure that this is evident to everyone.
I would be remiss not to also comment that the changing communications
environment that we are living through is also being driven other forces
and momentums. For instance, government policy agendas for broadcasting and
telecommunications have clearly articulated a shift to competition as the
operating principle to achieve government and public policy objectives.
Globalization and new trade agreements are also contributing to redefining
the communications landscape, not just in terms of markets but in terms of
rules governing State support and domestic content. Finally, this new
communications environment has influenced the expectations and consumption
patterns of subscribers and consumers, who have and demand access to greater
choice, quality, and diversity of information and entertainment services
and sources.
So where are we today? As we are all aware, we now live in the information
society, where knowledge is the key resource to wealth. The knowledge society
is changing the roles of our institutions, our working environments, our
education system, our social patterns, our contact with the world. Whatever
the theories and realities about the information society, the fact is that
there are fundamental structural issues at play that will bring about a profound
change for communication companies, both regulated and non-regulated, for
the individual and, collectively, for society. The stakes are high for everybody,
including distributors, packagers, carriers, creators, governments, consumers,
and last but not least, regulators.
What I would like to do today is to talk to you about what the CRTC has done
as the regulator, in the face of new and changing realities in the
telecommunications sector. Clearly the worlds of broadcasting and
telecommuncations have changed. We have responded in two ways. Firstly, by
transforming the regulatory and policy environment through key decisions
taken over the past six years and indeed the last few months. Secondly and
more recently, by transforming the CRTC itself, in terms of our culture,
attitudes and our processes. Together these initiatives are redefining the
future policy directions for the Canadian telecommunications landscape as
we head toward the next millennium.
Tracing Key Decisions and Policies
First, let me talk to you about the key policy and licensing decisions that
have been integral to achieving the goals and objectives for the communications
system, both in broadcasting and telecommunications. I believe it is important
and useful to trace through some of our decisions as it provides a historical
road map that we have pursued in supporting and creating a new climate for
stimulating: Competition, Convergence, and the Emergence
of new technology platforms.
In terms of Competition, the question is: How do we open up the
telecommunications and broadcasting markets to new players within each industry
segment?
In terms of Convergence, the question is: How do we permit established players
to expand into markets once restricted to them to create fair competition
between industries?
In terms of Emergence of new technology platforms, the question is: How do
we stimulate the establishment and growth of new distribution channels and
technologies to ensure that they evolve as competitive and complementary
forces in the Canadian communications landscape, particularly given the
entrenched market power of monopoly incumbents?
We can say that, to simplify, we began to answer those questions in the early
1990s. In terms of COMPETITION issues, on the telecommunication side of our
house, the CRTC introduced long distance competition in mid-1992. This was
Canada's first major step going beyond the concept of the monopoly or duopoly
in telecommunications services.
In September 1994, competition in long distance services got a further boost
when a broad framework for regulatory review was initiated. This crucial
decision assisted us in moving from rate of return regulation to price
regulation. As an incentive to attract competition to the local telephony
marketplace, the decision also endorsed local competition and established
a transitional regime of rate rebalancing to address the issue of subsidies
paid by long distance competitive revenues to local services. To make all
of this operational, several additional decisions were made. Of note were:
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Splitting of the rate base and adaptation of rate rebalancing in 1995;
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Introduction of local competition in 1997;
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Continuation of rate rebalancing; and
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Price capping of local rates.
I think it is important to say that the terms "competition" and "deregulation"
are often used synonymously. But they are not the same. You cannot deregulate
a monopoly market and automatically produce a competitive one. We must also
take decisions that will create such a competitive marketplace. However,
we are now satisfied that the long distance market is competitive enough
that we can deregulate the telephone companies.
As a result, just before Christmas, we announced deregulation of discount
toll and 800/888 services of the major telcos. With respect to competition,
we placed telcos on the same footing as alternate long distance service providers
such as AT&T Canada LDS, Sprint, fONOROLA, and others. And we also put
in place a ceiling on the telcos' basic toll rates for the next 3 years
to ensure reasonable rates for consumers.
With respect to CONVERGENCE, that is to say the entry of traditional players
from one market segment into another, a number of significant steps have
been taken. Most importantly, in 1994 and 1995, a new regulatory framework
for the telecommunications and cable industries evolved based on competition.
Specifically, cable and telephone companies were allowed to compete in the
provision of a wide range of information services, including the development
and delivery of interactive and content-based services, conditional on finalizing
rules for local telcos competition.
In May of last year, the Commission decided that regulatory preconditions
had been sufficiently met to allow telephone companies as I January of this
year to be licensed to deliver broadcast programming to the home where real
competition is established. Conversely, cable companies can enter the local
phone market by becoming a Competitive Local Exchange Carrier of CLEC.
Taken together, these initiatives to support and create sustainable competition
and convergence have simultaneously achieved our third business objective
of EMERGENCE: that is, the establishment and growth of new technologies as
a competitive force in the marketplace.
That is very short and abridged map of the competitive course we have charted
on the telecom side of the Commission. On the broadcasting side, our Vision
for competition, for convergence and choices of alternative distribution
technologies has also been secured by key decisions.
In 1993, the Commission held extensive public hearings that examined the
entire structure of the broadcasting system as it was being transformed by
digital technology, greater choice, the threat of U.S direct broadcast satellites
(DBS), and the potential for competition from Canadian satellite and telephone
companies. From this, the Commission implemented policies to support universal
addressability and a multi-million production fund from cable revenues to
support Canadian program production.
In response to demand for greater diversity and choice of services, the
Commission has licensed dozens of new Canadian specialty, of pay-TV and
pay-per-view services. More recently, the Commission has licensed new
video-on-demand services (VOD) that will be true point-to-point services.
In terms of distribution, the Commission has licensed several national DTH
services, and wireless multipoint distribution systems (MMDS) in Manitoba,
Saskatchewan and southern Ontario. In March, the Commission will consider
an application by NBTel for cable licenses throughout New Brunswick. Moreover,
we expect to receive applications for broadcasting licences from LMCS operators
later this year. Clearly, the broadcast distribution landscape is more
competitive than ever.
Finally, in January of this year, the Commission introduced new broadcasting
distribution regulations that are consistent with the approach to competition.
We amended the rules to create a level playing field for all players in the
broadcast distribution business. First, they promote fair and equitable
competition in the distribution market, and thereby give consumers a wider
choice. Secondly, they require equal commitments to the support of Canadian
programming, including a 5% contribution of gross revenues to Canadian
programming, to sustain and increase the amount of quality Canadian programming.
Also, we mapped out a plan to deregulate rates for cable operators as competition
takes hold.
A New Vision
Now that I have touched on the regulatory changes, let me address the second
set of changes and how these, too, are reshaping Canada's regulatory landscape
in telecommunications.
That is the changes taking place inside the CRTC. Over the past year, we
have begun to refocus ourselves internally to ensure that we, as a Commission,
not only can assimilate all the many changes taking place in the information
marketplace but that we can respond quickly, flexibly, and intelligently
to these changes. Indeed, as we and others debate the myths and realities
of the information society, it is critical that the Commission be re-tooled
with a Vision and a plan of action, and that this Vision and Action Plan
be backed by clear objectives and strategies, which are in turn based on,
and include, on-going dialogue and room for flexibility.
Accordingly, after an extensive and exhaustive internal and environmental
review, the Commission announced in September a new Vision and Action Plan
that lays out quite deliberately and publicly its proposed policy agenda
for the next three years. Despite the changing environment that informed
and underpinned our review, it is important to say that we came full circle
in reaffirming and supporting the objectives of the Broadcasting Act
and the Telecommunications Act. But while these objectives remain
valid, it is obviously necessary to invent new strategies and approaches
to achieving these objectives in the context of the emerging communications
environment.
To keep all of the components of our mandate in the sharpest focus, we have
created a new mission statement for the Commission.
The CRTC's mission is to ensure that Canadian communications contributes
fairly and equitably to Canada's economic, social and cultural prosperity
through regulation, supervision and public dialogue.
The CRTC Vision is supported by four thrusts.
The first is the Commission's commitment to promote an environment in which
existing and new communications services are available to Canadians. We have
an obligation, for example, to make sure that our educational institutions
and industries have the tools to make them the best and most competitive
in the world. We have an obligation to ensure that our rich communications
offerings continue to contribute to our high standard of living.
The second thrust is our commitment to ensure, with respect to content, a
strong Canadian presence that fosters creative talent and reflects Canadian
society, including Canada's linguistic duality and cultural diversity. We
must, for example, ensure that Canadian producers of content have access
to markets so they can develop product for export and create new jobs.
The third thrust is the Commission's commitment to promote choice and diversity
of high quality communications services. This is not about simply having
another supplier from whom to buy another telephone for the kitchen wall.
Competition is not an end in itself! Canadian businesses must provide leadership
in turning our society into one which can lead the world in applications
of the new interactive mediums. In my opinion, the real value in adding new
technologies to the mix isn't about simply adding a new competitor from whom
Canadians can buy a plain old telephone service or a plain old cable service.
The real value in supporting emerging technologies comes from stimulating
all aspects of the new interactive, multimedia world in order to deliver
maximum new benefits to Canadian businesses, homes, and institutions.
The fourth thrust is the Commission's commitment to foster strong, competitive
and socially-responsive communications industries. These industries represent
one of the key components for economic growth and job creation in the future.
To deliver on these commitments, the CRTC has had to evolve into a new type
of organization. The four key ways we have changed are:
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from an industry protectionist to a promoter of Canadian culture;
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from a force of constraint to an advocate and facilitator of vigorous
competition;
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from a bureaucracy focused on detailed regulation to a more management-oriented
organization geared toward identifying and pursuing larger strategic objectives;
and
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from an inwardly-looking organization directed to pass judgement to a more
outwardly looking institution with a mandate to develop a more collaborative,
consensus-building process between government, industry and consumers.
The collaborative process is something at which Canadians have excelled,
and which we have exploited. For example, the consultative process has been
greatly enhanced by the establishment of the CRTC Interconnection Steering
Committee (CISC) in 1997. CISC is a government and industry working group
mandated to identify requirements and develop systems required to facilitate
local competition. This process has worked extremely well in getting all
of the industry players and consumers together to resolve the technical and
administrative issues related to the implementation of local competition.
All the players are praising that process and its efficiencies at resolving
complex issues. It is an approach that we intend to apply to look at broadcasting
issues.
We have changed the structure and regulation of the industry and are continuing
to change the culture of the CRTC to ensure that Canadian communications
delivers a balance of economic, social and cultural benefits to Canadians.
The fact that we are the single national regulatory commission has allowed
us to act more quickly than, for example, certain regulatory bodies in the
U.S.
This, of course, should not suggest that the job of bringing competition,
convergence, and emergence to the Canadian landscape is complete. It is in
fact only the very beginning of a long process of change, including future
proceedings which will look at sensitive key policy areas including:
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Funding the provision of services to high-cost areas;
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Reviewing our concept of contribution payments;
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Television network roundtables concerning the concept of "group licensing";
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Reviewing the approach to the production, promotion and exhibition of Canadian
programming; and
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Ongoing industry consultation and public discussion on New Media, in seeking
to understand how new media, including the Internet, will impact on existing
forms of communication and on our ability to continue to provide a voice
for Canadian expression.
We cannot, obviously, guarantee that every decision we make will be the best
one. No one can do this in a rapidly changing environment where new technologies,
new industries, and new benefits and challenges are evolving every day. We
must continue to adapt. But certainly some of our efforts and decisions will
be controversial as they represent significant change.
Conclusion
We cannot effect change alone, in ignorance, or in isolation. If we are to
find viable solutions and a balanced approach to the demands of both competition
and the public interest, we must work together , to collaborate with our
clients and stake holders, in defining and developing strategies for the
public interest. And we are making serious efforts to encourage, to facilitate,
and to respect this more collaborative approach. The value of organizations
like the CRTC can only be enhanced by understanding our interdependence with
the industries and publics we serve. The best way to achieve this, as far
as we are concerned, is through our public processes.
But you know, it all comes down in the end to programming, or more precisely
in the context of evolving and converging multimedia, to content. This is
where we must focus our attention. The notion of Canadian content is about
more than the forces of technology, regulation and globalization. It incorporates
the work of our creators who must be served and supported by these forces,
not silenced or disadvantaged by them.
The CRTC must do everything in its power to assure that Canadian creative
voices, in all their diversity and colour, can continue to be heard in Canada
and in all corners of the globe. The Canadian creative presence in the new
information world adds diversity and presents a worldview through the unique
experiences of this country and its peoples. High quality Canadian content
stands with the best the world has to offer.
To achieve this, we are going to need to explore all the alternatives if
we are to stay the course here and on the international scene. We are going
to need renewed collaboration across the industry, between carriers and
producers, and with government and the regulator. And we are going to have
consider far more seriously than perhaps we have before the needs, interests
and demands of the consumer...the audience for Canadian programming and services.
There are no easy solutions; but with the power of our imaginations, we can
overcome existing obstacles and pursue new dreams. But above all, the first
step must be a passionate, and even stubborn commitment to our objectives,
and unwavering faith in our ability to succeed.
Thank you and I look forward to our discussion.
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Contact: CRTC Communications Branch, Ottawa, Ontario K1A 0N2
Tel.: (819) 997-0313, TDD:
(819) 994-0423, Fax: (819) 994-0218
This document is available in alternative format upon request.
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