Speech
Notes for an address
by Keith Spicer
Chairman, Canadian Radio-television
and Telecommunications Commission
before the Standing Committee on Canadian Heritage and
before the Standing Senate Committee on Transport and Communications
Ottawa, Ontario
June 6, 1995
(CHECK AGAINST DELIVERY)
Mr. Chairman, Honourable members/Senators, I'm pleased to appear before you
today in order to discuss the government's proposed Orders respecting
Direct-to-Home Satellite distribution and DTH pay-per-view programming. I am
accompanied by our Vice-Chairman, Broadcasting, Mr. Fernand Bélisle, our Acting
Vice-Chairman, Telecommunications, Mr. David Colville, and our Secretary General,
Mr. Allan J. Darling.
As you are undoubtedly aware, many of the issues before us today are of a
legal nature and will require legal interpretation. As a result, the CRTC's
Senior General Counsel, Mr. Avrum Cohen, and one of our Legal Counsel, Ms. Sylvie
Courtemanche, are also with me.
Mr. Chairman, perhaps you would allow me to try to set the tone of our
intervention with a word about the context as we see it. We are not here to
engage in polemics with anyone -- certainly not with the government. Nor are we
here to speculate about motives, rumours or unproven suspicions.
The Government, the CRTC, this Committee and everyone of us involved in this
very important 40-day scrutiny are, I believe, feeling our way in good faith --
bearing in mind that the outcome and the way we all play our roles will set a
powerful precedent. In that light, the caution we advise is only the caution of
those who wrote the Broadcasting Act. Our insistence on transparency and
on respecting the law is the insistence of Parliament itself.
We are sure that this is also the Government's wish. And so, while defending
the law firmly and frankly as we think it plainly speaks, we are looking toward
cooperation not confrontation, decisions not delay.
And, of course, toward a healthy precedent: one that will protect both the
Government's statutory right to issue broad policy direction of general
application and the Commission's statutory right and duty to implement policy as
it sees fit in specific circumstances.
Under the new procedure, we wish to assist this Committee in two ways:
- by stating the facts concerning the Commission's DTH exemption order of
August 30, 1994, and thus to dispel any misapprehension that the Commission
conferred a so-called "monopoly" on any individual company through its
exemption order; and
- by analyzing the Orders' clear non-conformity with the Broadcasting Act.
In sum, we will stick to the facts and the law.
To flesh out both facts and law, allow me to draw your attention, Mr.
Chairman, to two separate handouts we have circulated: a detailed chronology on
the DTH dossier for the past few years, and a very specific legal brief filed
with you by our Legal Directorate.
I - Facts of DTH Chronology: CRTC Policies and Actions
To begin, I would like to take you back to our public hearing on the structure
of the cable industry in March 1993. At that time, industry representatives,
namely Tee-Comm and Telesat, indicated their intention to develop Canadian
direct-to-home distribution services using Canadian satellites. These proposals
received enthusiastic support from the Commission and the industry in general,
for a number of reasons. Consumers wanted competition to cable as soon as
possible, and many interested parties believed that U.S.-based satellite services
would spill over into Canada and create what is commonly known as a grey market.
We recognized a strong need for Canadian alternatives in distribution
technologies and we fully endorsed competition in providing those services. In
fact, in our public notice following that hearing, we stated that "the Commission
considers that the emergence of a strong Canadian DTH industry may provide a
degree of price competition to services delivered within Canada by other
distribution technologies..." We received a clear message to hasten competition,
not to slow it down, and hasten competition is exactly and publicly what we did.
In October of 1993, we received separate proposals from Telesat and Tee-Comm
requesting that the Commission exempt Canadian DTH distribution undertakings from
the requirement to hold licences. On March 2, 1994, the Commission published a
public notice requesting comments on its proposed DTH exemption order. As part of
this public process, we carefully reviewed the 60 submissions we received.
Under the Broadcasting Act, broadcasting undertakings must either be
licensed or exempted from the requirement to hold a licence. In fact, under
subsection 9(4) of the Broadcasting Act, broadcasting undertakings must be
exempted from the requirement to hold a broadcasting licence where the Commission
is satisfied that compliance with the requirements of Part II of the Act or
applicable regulations pursuant to that Part will not contribute in a material
manner to the implementation of the broadcasting policy set out in subsection
3(1).
Once we carefully reviewed the 60 submissions received, the Commission
exempted Canadian DTH companies from the requirement to hold a licence, provided
they met certain criteria: among other things, they must meet the technical
requirements of the Department of Industry, meet Canadian ownership requirements,
make use of Canadian satellite facilities for the distribution of programming,
and carry a predominance of Canadian services.
We did this fully in accordance with the Broadcasting Act. Our
exemption order did not create a monopoly -- it allows any number of companies
who meet all of the criteria to operate without a licence. Nor did we prevent
anyone from applying for a licence: exemption is not exclusion.
To date, and in spite of earlier interest by several companies, only one such
company has come forward: Expressvu. That can hardly be called creating a
monopoly. What we created was a competitive regime with two doors to entry: by
exemption, if you met all of the pro-Canadian criteria; by licence, through our
usual open process if you didn't.
But we can't force companies to compete. If we are guilty of anything, we are
guilty of standing up for Canada, by encouraging early competition by Canadian
entrepreneurs, as both the Broadcasting and Telecommunications Acts tell us we
must. The Broadcasting Act says we must make "maximum use of Canadian
creative and other resources"; the Telecommunications Act tells us "to
promote the use of Canadian transmission facilities".
The door has always been wide open -- even before we issued our exemption
criteria last August 30 -- for companies to apply for a licence through an open
licensing hearing. We made that absolutely clear in the Public Notice
accompanying our proposed exemption order in March of 1994. We have yet to
receive such an application.
We have been accused of having effectively prevented certain companies from
applying for a licence by requiring the use of Canadian satellite facilities for
the transmission of programming. This accusation is demonstrably false since any
applicant not meeting the exemption criteria could still apply for a licence
under our normal open procedures.
Let me explain, at this point, why the CRTC decided to require the use of
Canadian satellites as a condition of eligibility for exemption. Among the
factors influencing us were:
- it was consistent with two fundamental objectives of the
Telecommunications Act:
- to render telecommunications services of high quality to all regions of
Canada; and,
- to promote the use of Canadian transmission facilities.
- technically, Canadian satellites are known to cover all parts of Canada,
ensuring that all Canadians are able to receive DTH services.
- it ensures that Canadian broadcasting undertakings have effective control
over their service.
It has been the Commission's understanding, since the exchanges of letters
between Canada and the United States in 1972 and 1982 with respect to the
delivery of transborder satellite signals, that Canadian services should use
Canadian satellites for delivery of signals within Canada.
Furthermore, in the press release issued on the 26th of April, 1995 by the
Ministers of Industry and Heritage announcing the tabling of the proposed
directions, it was noted that the two Ministers, in announcing a public review of
policy respecting DTH on September 12, 1994, confirmed that the "CRTC's exemption
order was consistent with existing government policy". Based on our understanding
of government policy with respect to the use of Canadian satellites, we too
believed that our exemption order was consistent with government policy in this
area.
We wholeheartedly agree that the issue of when it is appropriate to use
Canadian and non-Canadian satellites must now be resolved. This is why we asked
the government to clarify its policy regarding the use of Canadian satellites in
our written response to the proposed orders on the 24th of April.
II - Legal Concerns With the Proposed Orders
Let me first state clearly that the Commission supports the right,
responsibility and authority of the Governor in Council (as section 7 of the
Broadcasting Act defines these powers) to "issue policy directions of general
application on broad policy matters" with respect to the objectives set out in
subsections 3(1) and 5(2) of the Act. We recognize and fully endorse the
government's exercise of these powers as prescribed under the Broadcasting
Act.
However, we also consider it vital to emphasize that, while these powers are
conferred by Parliament, they have also been circumscribed by Parliament in a
number of strong and clear procedural safeguards incorporated into the Act. We
believe that these precautionary measures are fundamental in order to protect not
only the Commission's independence as an arms-length, transparent regulatory
body; they also protect the rights of the Canadian public and regulated
industries to a regulatory system that is demonstrably fair and open.
The power to issue policy directions has long been debated by various
governments, reports and even a Royal Commission. In order to put this into
context, I'd like briefly to take you back through some of the legislative
history surrounding this matter.
Before Bill C40 came into force as the new Broadcasting Act on June
4th, 1991, the Minister of Communications at that time, the Honourable Marcel
Masse, made a compelling statement to the House Committee studying the Bill. He
argued that "the power to issue directions, which would give the government the
authority to develop broad policy guidelines, only applies to the objectives of
the Canadian broadcasting system as set out in the Act." He further stated that
"this power does not extend to individual decisions regarding licensees, or to
matters being studied by the Commission, nor can it be exercised retroactively."
Ironically, at least two of these points are at the core of today's debate. It
is clear that the Governor in Council's power of direction was never meant to
direct the Commission on its implementation of policies, or to create a licensing
decision. The protection of the Commission's independence and integrity was at
the forefront of the consultations on Bill C-136 (the predecessor to Bill C-40)
and Bill C-40. We believe that this principle is essential to these proceedings
and should be emphasized once again.
The main concerns of those who made submissions at committee stage are perhaps
best summarized by the Canadian Association of Broadcasters' statement before the
House Committee. Among other things, the CAB expressed concerns that these powers
would severely dilute the independence of the Commission and would provide the
opportunity for political interference in the management of the Canadian
broadcasting system.
The CAB also perceived these powers as the creation of yet another regulator,
a non-transparent one, which could exercise its powers at any time, and could
lead to a destabilization of the broadcasting system. It also strongly feared
that individuals who made plans based on current Commission policy could see
their projects and investments affected by political intervention. We believe
that these arguments are just as compelling today as they were then.
During committee review of Bill C-136, the Commission stated its support for
the Governor in Council's authority to issue broad policy directions of general
orientation, albeit with the inclusion of appropriate safeguards. We reiterate
our support for this again today, and we're pleased to have those safeguards,
notably the 40-day scrutiny by this Parliamentary Committee.
We are before you today to voice our deep concerns -- not about the principle
of the power of direction, but about the astonishingly detailed nature of the
government's two proposed Orders in Council, the unprecedented retroactivity of
one of the directions, and the imminent potential for the government to overstep
its legitimate authority under the Act.
I respectfully submit to you that we were created by you, Parliament, as an
independent agency established for the purpose of regulating and supervising all
aspects of the Canadian broadcasting system, free from political interference.
This is our raison-d'être -- it is our mandate under the Act. The Commission's
independence and integrity are gravely at stake today.
The government's power of direction was never meant to usurp the Commission's
exclusive role in implementing broadcasting policy for Canada, and I underline
the word implementing. It was plainly and unmistakably meant only as an
instrument to guide broadcasting policy in a general orientation.
We are also deeply concerned that the government's proposed direction could
effectively terminate the Commission's presently valid exemption order. We
believe that this would constitute retroactive regulation which was certainly not
contemplated under the Act when the government was given the power to issue
directions. We strongly oppose retroactive regulation as intrinsically unfair and
destabilizing. We firmly believe that any such action would constitute the
government overstepping its legitimate authority, and would result inevitably in
a legal challenge.
We urge you to consider all these ramifications, and we remind you that the
consortium presently proceeding under the Commission's exemption order has taken
steps, including incurring significant financial investments, in order to launch
a Canadian DTH satellite service in September 1995. We also wish to point out
that Expressvu has advised the Commission, in a letter dated May 19, 1995 that
the proposed orders, particularly the direction which would require the
Commission to revoke its exemption order, are illegal, and that it will defend or
take all legal proceedings it deems advisable to protect its ability to use the
exemption order until it receives a licence.
This is a no-win situation for: consumers who are expecting an alternative to
cable in September; the companies involved who have been proceeding legitimately;
Canadian artists and producers looking for new opportunities; and indeed, I would
think, for the government itself.
We also question the need for the proposed order concerning the requirement to
create a special class of licence for DTH pay-per-view undertakings. The
Commission has already licensed pay-per-view undertakings and their contributions
to Canadian programming are considerably in excess of the 5% benchmark proposed.
It sees no point in creating a separate class of licence for these
undertakings in order to provide for the competitive delivery of DTH pay-per-view
services. Any person proposing to offer DTH pay-per-view services can apply
presently under the existing licensing framework. Furthermore, the CRTC currently
allows pay-per-view to be distributed either directly or indirectly to the DTH
market, and the Commission believes that these licensees should be permitted to
compete in the DTH market.
III - Moving Forward to Competition
Finally, let me repeat this incontrovertible fact: the Commission has a clear
record of hastening competition. We have been doing this for years, notably in
the long-distance telephone market, and very recently in our report to the
government on the information highway. And we have done so very specifically with
DTH.
We also believe that our public hearing process provides a transparent, open
forum that remains vital for the integrity of the Canadian broadcasting system in
general, the regulated industries, and the Canadian public.
This being said, I assure you that we fully intend to cooperate with the
government -- but will do so within the law. We believe any orders would conform
with the Broadcasting Act if they focused exclusively on principles such
as the following.
- Clarify government policy on use of Canadian satellites.
- State that government policy favours competition among alternative DTH
distribution undertakings.
- State that government policy favours that all DTH distribution undertakings
be licensed rather than exempted and request that the CRTC exemption order be
revoked as soon as a licensed DTH distribution undertaking becomes available.
- State that DTH distribution undertakings should make equitable and
appropriate contributions to the production and distribution of, and access to,
Canadian cultural-content products and services while providing Canadian
alternatives to non-Canadian services.
This whole sad episode of misunderstanding and misinformation has already
seriously damaged Canada's regulatory process. It now threatens to delay
competition, not hasten it. The CRTC only wishes to move forward quickly with all
potential competitors, and will do all it can to accelerate its procedures, once
the Parliamentary process is completed.
We deeply hope that the government, with the additional time and advice now
offered by this Committee's valuable process, will review the facts, the law, the
value of independent, transparent regulation, and substantially modify its draft
orders. When all is said and done, the government and the CRTC agree on the
fundamentals of Canadian broadcasting. Everyone should now move forward to serve
Canadians and Canada as the Broadcasting Act prescribes.
I know you have many questions for us today, so I'll end my comments here.
- 30 -
Contact: CRTC Public Affairs, Ottawa, Ontario K1A 0N2
Tel.: (819) 997-0313, TDD: (819) 994-0423, Fax: (819) 994-0218
Date Modified: 1995-06-06 |
