Speech
Notes for an address
by Charles Dalfen
Chairman, Canadian Radio-television and Telecommunications Commission
to Canada's Cable Convention & cablexpo
Vancouver, British Columbia
April 15, 2002
(CHECK AGAINST DELIVERY)
Introduction
Thank you, Janet for your kind introduction. Before I start, on behalf of my
colleagues who are here from the CRTC, I'd like to thank our CCTA hosts for their
warm welcome.
I find it most appropriate that my first major speech as Chair of the Canadian
Radio-television and Telecommunications Commission be given to the annual
convention of the CCTA.
The CCTA plays a leading role in the broadcasting industry in Canada. Cable
industry's leadership in bringing new technology and services to customers in key
areas such as high-speed broadband connectivity and digital cable, is a driving
force in the evolution of the knowledge-based economy.
The CCTA is also instrumental in making the views of cable television heard at
the political and policy decision-making level. From intervening in CRTC
decision-making processes to placing the concerns of cable television before the
Commons Heritage Committee studying Canadian broadcasting, your association and
your members have been invaluable parties to the on-going discussion on
broadcasting and broadcasting distribution in Canada contributing to a healthy
and necessary debate. Your efforts have also enriched Canadian film and
television.
According to your own numbers, since 1995, the cable industry has contributed
some $308 million to Canadian production through the Canadian Television Fund and
its predecessors.
You also established the Cable Public Affairs Channel, which we licensed in
1992. In that ten years CPAC has grown into a staple of the Canadian broadcast
diet. Its varied public affairs and political programming is watched by over a
million and a half Canadians a week, enriching and informing their understanding
of our country. And you have done all this in both official languages.
In addition to CPAC, you are now as a group spending 80 million dollars a year
on the operation of the local community channel.
I would be remiss, if I did not also mention the Cable Television Standards
Council which has taken responsibility for establishing industry standards and
codes for customer service, advertising, privacy, and other important matters.
On my own behalf and on behalf of the Chairs that came before me, I want to
applaud you for these efforts. They demonstrate your responsibility as an
industry, your commitment to the Canadian broadcasting system and your
contribution to the social fabric of Canada.
I want to express my sincere hope that all major cable companies remain part
of the CCTA so that it continues to fulfil its vital role as the voice of
Canada's cable industry.
I also consider that membership in the CTSC has worked well for the industry
as we have moved down the road towards self-regulation. Your input, collectively,
as Canada's national association of cablecasters, and individually, as experts in
the field, is important to me and I will always listen carefully to your advice
and representations. I look forward to working with you in the future.
I will not pretend that we will see eye-to-eye on every issue nor can I
promise that all our decisions will delight you. But you can count on me to
maintain open channels of communication at all times.
Why am I here?
A number of the people I have met with over the past four months have asked me
why I came back to the CRTC after 20 years in private practice. The answer, after
all is said and done, is about belief.
Belief in public service; belief in the ability of public institutions like
the CRTC to make a difference; belief in the Commission's excellent people -
dedicated, competent, professional. And belief in it's mission - as set out in
the Broadcasting Act and the Telecommunications Act. So I
have returned to the CRTC with a sense of pride and anticipation.
I have also been asked whether I would bring major changes to the CRTC's
policies or to the way the Commission conducts its business. My answer has been
that I do not see the need for major changes. I believe the CRTC has done a
superb job both in carrying out its mandate and in maintaining the respect of
Canadians. This is due to the combined efforts of staff and Commissioners over
many years.
What I hope to bring to my new responsibilities are certain values that I have
long held very dear. These include integrity, quality and civility.
I believe that integrity should characterize both our processes and our
products, which are primarily our decisions. People participating in our
processes and reading our decisions should have a clear sense that they have been
given a fair hearing by the Commission.
A respect for quality means ensuring that our activities and decisions convey
thoughtfulness, knowledge and common sense.
And civility means being respectful of each other, even when we disagree.
Competition
I believe that the theme of this convention - "Thinking Beyond the Box"-
applies to regulators as well as to the industry.
As regulators, we are called upon daily to render decisions that have
far-reaching effects for the companies involved and for the Canadian viewing
public. We also have an obligation to look at the bigger picture of broadcasting,
broadcasting distribution and the growing convergence of communications
technologies, especially in light of our mandated responsibilities.
As you know, the CRTC has completed comprehensive reviews of most major
policies - radio, television, distribution and ethnic programming - in reply to
changing market realities. In revising existing policies and devising new ones,
the Commission charted a transition from what was a largely protected environment
to one that fosters more open competition and diversity in the delivery and
creation of programming to and for Canadians.
I am sure that you will allow me, in my maiden speech as Chairman of the CRTC,
to offer my heartfelt congratulations and thanks to my two predecessors,
Françoise Bertrand and David Colville, who have guided this transition in a wise
and dynamic manner. Thanks to them, and generations of dedicated CRTC
commissioners and staff, our broadcasting system and our approach to regulation
continues to be a model for the world. And it is a world of new challenges.
Since I last participated directly in the Commission's work, as its
Vice-Chair, from 1976 to 1980, the broadcasting environment has perhaps changed
more than at any comparable period of time in its history. Consumers are
inundated with more choices. Established industry players confront more
competition. Existing interests must face more threats to their businesses. And
we can expect the insecurity created by these forces to continue. It appears
clear to me that from your standpoint there is little choice but to try and
compete as creatively and as effectively as possible.
While cable companies are facing competition from DTH and telephone systems
offering broadcast services, cable is showing that it can turn the tables and
compete with the telephone companies.
We already see cable challenging on a number of fronts. You are already
strongly represented in the realm of high speed Internet access. In fact, thanks
to the efforts of the cable industry and to the competition between the cable and
telecommunications industries, Canada is a world leader in the penetration of
high speed Internet access. And in the Maritimes, Eastlink offers consumers a
bundle of services including Internet access, television services and telephone
over the same coaxial cable.
For our part at the Commission, we want to encourage more competition in even
more areas. In our view, this keeps industry healthy, drives technological
innovation and creates more choice and better service for the consumer.
To further competition we have removed and will continue to remove regulatory
obstacles wherever possible. Our aim, however, is to try and ensure fair
competition, not unrestricted competition. Fair on the street; fair under and
above the street; fair in multiple-unit dwelling buildings.
So there is a balance that the regulator and the industry must develop
together to create a world that allows for fair competition, adapts to
technological change, takes into account economic realities and at the same time
always serves the public interest.
My colleagues and I will not intervene in the management of your businesses.
Our job is to be there when necessary, to set clear and practical rules in place,
so that you will be in a position to make the right business decisions. We will
regulate only when necessary, and as far as necessary, to meet the objectives of
the Broadcasting Act.
Rate deregulation
One area where we have demonstrated our intention to de-regulate whenever
possible is in the area of basic cable rates. The Broadcasting Distribution
Regulations permit cable systems to apply for rate deregulation when there is
competition in the market and the licensee meets certain regulatory criteria,
which include losing 5% or more of their basic service subscribers by a given
date.
A substantial number of cable companies have taken advantage of this
regulatory relief since Rogers Cable first applied for basic cable rate
deregulation in March 2001 for their Woodstock and St. Thomas systems.
In fact, by the end of May, if we add the soon-to-be rate deregulated Class 1
systems, with those already rate deregulated, some 42% of all basic cable
subscribers in Canada will be in rate deregulated systems.
Exemption for Class 3s
At last year's CCTA conference, my predecessor announced that the Commission
was updating its approach to licensing and regulating cable systems. The new
initiatives were designed to reduce the administrative burden for both cable
operators and the Commission. The first was directed at cable systems serving
small and rural communities with fewer than 2,000 subscribers. It exempted them
from licensing and other regulations, including the Broadcasting Distribution
Regulations, provided they meet certain criteria.
Since this initiative was introduced, the Commission has exempted
approximately 1,300 former Class 3 systems. Put another way, about 72% of the
Class 3 cable systems, or 64% of all cable systems, are now exempt from the
licensing process. As I said yesterday, we would also be open to exempting former
Part III systems that now happened to have over 2,000 subscribers.
The second initiative dealt with a new system of regional licensing for cable
operators. In each region, licensees will be issued a maximum of three licenses
to cover each of the three classes of cable licenses. We are now in the process
of drafting the new regulations for this new process. And again this approcah
should reduce the regulatory burden without adding further cost.
We aim to have them out in the fall of 2002 for comment.
Cable ownership of analog pay and specialty services
Last June, following the CCTA conference, the Commission issued a new policy
decision that allowed you, as broadcast distributors, to own analog pay and
specialty services. The Commission removed the previous restrictions in
recognition of the fact that licensed analog pay and specialty services had found
distribution on virtually all cable systems across Canada, in accordance with the
access rules.
New digital pay and specialty systems
When the Commission licensed the new category 1 and 2 digital pay and
specialty services, we hoped that these services would drive the penetration of
digital technology in Canada, provide new windows for Canadian talent, and offer
Canadian viewers new programming choices. In order to help these services
succeed, the Commission introduced a new approach to licensing, involving more
open-entry and greater risk-taking.
The new approach also meant that the success of the new services would be
determined by how attractive they were to consumers. The Commission also loosened
other regulations and allowed distributors to own the new digital Category 1 and
2 services.
To maintain fairness in the system, the Commission established specific
carriage terms for the new services, which include measures to ensure equal
treatment for services not affiliated with distributors.
Before the new digital pay and specialty services were launched last
September, most people in the business projected that approximately 2 million
households would go digital in year one, with the number rising to roughly 2.5
million in year two. While it is far too early to be sure of our numbers, it
seems that digital penetration is exceeding expectations. According to the
Commission's estimates, 2.7 million households have already gone digital. About 1
million of these are cable subscribers.
We believe that digital is succeeding in part because the new approach gives
the industry more flexibility to respond and compete fairly in the marketplace,
and because we have put Canadian consumers in the drivers seat.
Black market
On the subject of fair competition, I would like to assure you, as I said
yesterday, that we share your concerns regarding black market satellite systems.
The Commission takes very seriously the complaint lodged by the CCTA on behalf of
a coalition of various interested parties.
We have received and are investigating the complaint outlined in your letter.
CTY has been asked to reply to the complaint by April 19th. In turn,
the CCTA will be able to respond to CTY's reply by April 26th.
We are also continuing to monitor closely the profusion of black market
satellite systems as well as the cases that are before the courts. To the extent
that new legislation may be required to limit the black market, we will lend our
full support to such legislation and it may be, as we discussed yesterday, that
we will have to be proactive on that front.
The black market is hurting us all and threatens to draw away money from the
Canadian broadcasting system as a whole, for example, through the depletion of
the Canadian Television Fund, which is dependent on licensed distributors for
half of its revenues.
Action plan
Before I finish, I would like to take a quick glance at the future.
As you know, the CRTC adopted a three-year action plan in 2000 to encourage a
variety of choices and a Canadian presence in broadcasting. It is my intention to
build on past success with new regulatory policies in 2002 and 2003.
We expect to issue shortly the new over-the-air digital television licensing
policy which will deal with issues including the transition to digital, licensing
timeframes and on-going issues concerning transition from analog to digital. This
year approximately 12 public hearings and several written interventions
associated with public proceedings, are scheduled.
We also intend to examine many pay and specialty renewals as well as various
on-going rate filings. As well, the Commission will address cable access issues
including establishing just and reasonable rates for inside wire for multiple
unit dwellings.
We will soon issue the new policy framework for community-based media designed
to promote local programming, citizen access and diversity of voices, by
facilitating new entrants at the local level. The proposed policy was issued last
December for comment and generated roughly 200 interventions from interested
parties ranging from community groups to major industry associations. I thank you
for your excellent input on this file.
Obviously, there is much work to be done. So, I expect we will be seeing a lot
of each other in the near future.
Together, we are embarking on a journey, which will bring us much further into
the digital world. As I said earlier, we will not always be following the same
path; but our ultimate goal is the same, following the lead of the
Broadcasting Act: to give Canadians access to the best possible broadcasting
system, one that respects our fundamental values as a society and as a country.
Thank you.
- 30 -
Contact: Denis Carmel, Ottawa, Ontario K1A 0N2
Tel.: (819)
997-9403, TDD: (819) 994-0423, Fax: (819) 997-4245
e-Mail:
denis.carmel@crtc.gc.ca
Toll-free # 1-877-249-CRTC (2782)
TDD -
Toll-free # 1-877-909-2782
This document is available in alternative format upon request.
Date Modified: 2002-04-15 |
