Thank you and good afternoon everyone.
It is a great pleasure to be the fourth speaker in your Marshall McLuhan Seminar on
Canadian Information and Communications Policy. I hope I can help put the CRTC’s role
in these policy considerations into a context for you.
The title of my talk is "Convergence, Culture and Multimedia: Canada’s
Dynamic Regulatory Framework." My focus will be primarily on new media, which for all
intent and purposes, is the Internet.
Before I open the seminar to your questions and discussion, I would like to set the
stage by doing four things:
- First, give you a brief overview of the communications landscape in Canada from the
perspective of a regulatory policy maker;
- Second, discuss the reasons why the Canadian Radio-television and Telecommunications
Commission (CRTC) conducted public hearings on the new media;
- Third, outline the process we used to develop a policy with regard to the new media;
and,
- Fourth, review the public hearing process and some of the key points that were put
forward during the hearings, which ultimately will translate into policy.
Unfortunately, the Commission’s decision on new media won’t be issued for
another two weeks.
So, I won’t be able to tell you the final outcome of our hearings. However, I will
share some important points; the focus we place on the issue, the key issues parties
raised and some of the options we have to deal with these issues.
Let me start with a brief overview.
To most Americans, the issue of culture and the requirement to protect, it is a very
foreign concept.
To Canadians, our culture is a source of our pride. It is a tool that helps define our
institutions and define who we are to each other and ourselves.
And not least, it is a rich source of economic strength in an information-driven
marketplace. Aside from purely cultural concerns, we want to develop the
"business" of culture particularly as it relates to records and film and
television programming.
The issue is really one of ACCESS, economic access to infrastructure.
If an episode of ER costs $8 million dollars to produce and a Canadian broadcaster can
purchase the rights for this program for several hundred dollars and sell double that in
advertising, you can see that it makes little economic sense to spend even one or two
million producing a Canadian drama.
Our policies have been designed to provide access for Canadian productions to the
Canadian broadcasting system so we can develop a healthy Canadian recording and production
industry.
We therefore have our "Canadian Content" rules, which are really Canadian,
access rules – 35% in radio and 50% in television.
This is sometimes perceived as keeping out foreign, largely U.S., programs.
Let me put our policy in perspective. Fifty percent of Canadian television must be
Canadian programming (including news). That means the other 50% may be non-Canadian, again
largely U.S. In addition, all four U.S. commercial networks (ABC, CBS, NBC and FOX) are
available throughout Canada on cable. (Cable is in about 80% of Canadian homes).
Add to this, the fact that we have licensed 54 cable specialty, pay and pay-per-view
services, which you generally refer to as "cable" channels. For each of these
channels, a cable operator may link or package one foreign service. As a result, we have
virtually all of your most popular cable channels available in Canada (A&E, TLC,
Nashville, CNN, CNN Headline News, The Golf Channel, Black Entertainment, etc.).
As you can see, we hardly have an "electronic fence" at the border!
Before turning to new media, let me quickly provide an overview of our efforts to
establish an innovative, competitive telecommunications marketplace in Canada.
Pro-competition agenda since ’76.
In 1992, we opened our long distance market to competition. One of the key differences
between our approach and yours is that we did not force divestiture or separation between
local and long distance.
While taking this action, we recognized that we must develop a new regulatory framework
for the entire industry.
So, following a major public proceeding, we announced in 1994:
- a plan to open the local market to competition,
- a three year $7 local rate increase to bring local rates closer to costs and reduce the
contribution subsidy to local,
- price cap regulation to replace rate-of-return for the incumbent telecos’ local
service.
On May 1, 1997, we announced the details of our local competition and price cap plans.
We ordered co-location and unbundling of the local loop and established an all-party
industry/consumer working group – the Canadian Radio-television and
Telecommunications Commission Interconnection Steering Committee (CISC) to resolve the
technical and administrative issues, including number portability. (Essential fax, focus
on faculties competition, unbundled loop rate).
This process has been extremely successful and we now have local competition beginning
to take hold in Canada.
Late last year, we opened our international market to competition.
We started in 1992, probably 10 years behind the U.S., in addressing these issues and I
might modestly say, I think we are now ahead of you. Our long distance rates are generally
lower than yours and local competition is happening.
I think these achievements are largely due to three things:
- a single national policy and regulatory jurisdiction,
- legislation that provides the CRTC with broad powers and is not too prescriptive, and
- an industry attitude that is more inclined to co-operate and not run to the courts.
I will now turn to New Media.
With this background in mind, let me turn my second major point of this seminar –
The rationale behind the Commission’s decision to hold public hearings on the new
media.
For about halfway through this decade, the new media – or basically, what is
collectively known as the Internet phenomena – have dramatically raised the tempo of
change in the communications industry.
In response to this swiftly evolving communications landscape, the CRTC launched a
strategic planning process in 1996. The purpose of this process was to refocus the
Commission to keep abreast of, and respond quickly to the changes taking place in the
communications environment.
To take us into the information age, we developed a strategic vision and a three-year
action plan. Due to their potential effect on the communications industry, and the goals
of the Broadcasting and Telecommunications Acts – the two Acts
that give the Commission its regulatory mandate – our plan called for, among other
things, a detailed examination of the new media and their implications for Canada. We were
interested in knowing how the existing Acts and regulations promote or inhibit the
development of new media.
In spite of what many people suspected, we approached this issue in a completely open
and flexible minded way. We could not look to apply old models to new media, nor did we
have any regulatory model in mind when we started out.
Our objective was to simply address three basic themes:
- First, in what ways and to what extent does or will new media affect our regulation of
traditional broadcasting undertakings of radio, television and cable?
- Second, to what extent do some or any of the new media services constitute broadcasting
or telecommunications services, as defined in our two governing Acts. And, if they
do, how should we treat them consistent with achieving the objectives of those Acts
while at the same time, providing an environment, which will stimulate the development of
these new services?
- Third, to the extent there are issues that fall outside of our legislative jurisdiction,
can we also use the public forum to provide information and recommendations to the
government on broader policy issues?
Our mandate for examining the new media is defined by the Broadcasting and Telecommunications
Act.
Ensuring the availability of reliable and affordable telephone and other
telecommunications services to Canadians is fundamental to the Telecommunications Act.
Ensuring the delivery of a wide choice of high-quality Canadian programming to
Canadians is a fundamental objective of the Broadcasting Act.
Let me give you some of the wording of the Broadcasting Act so you can see for
yourselves that the Act in fact, obligates us to examine the new media.
Here is what the opening "definition" section of the Act says about
programming:
"[B]roadcasting" means any transmission of programs, whether or not
encrypted, by radio waves or other means of telecommunication for reception by the public
by means of broadcasting receiving apparatus, but does not include any such transmission
of programs that is made solely for performance or display in a public place [.]
Here is what the opening "definition" section of the Act says about
programming:
"[P]rogram" means sounds or visual images, or a combination of sounds and
visual images, that are intended to inform, enlighten or entertain, but does not combine
with sounds, that consist predominantly of alphanumeric text.
These definitions which were adopted in 1991 were deliberately broad and as you may
notice, could capture some of what is now or soon will be delivered by the Internet.
This raises the question, could we regulate it and/or should we? (Do we need to?) If
not, how do we get out of it?
While the Broadcasting Act specifically mandates the Commission’s right to
regulate broadcasting and programming, it also leaves the Commission with the exemption
provision. This states:
"The Commission shall, by order, on such terms and conditions as it deems
appropriate, exempt persons who carry on broadcasting undertakings of any class specified
in the order from any or all of the requirements of this Part or of a regulation made
under this Part where the Commission is satisfied that compliance with those requirements
will not contribute in a material manner to the implementation of the broadcasting policy
set out in subsection 3(1)".
In short, we can choose to not regulate if we deem it in the public interest.
Now that you have some idea of the impetuous for examining the new media and our
mandate, let me move onto my third major point – the process of examining an issue
like the new media.
We proposed to discuss these issues publicly, with a great deal of openness and
flexibility. We used this consultation process to explore the implications and
significance that the new media hold for broadcasting and programming undertakings,
producers, telecommunications carriers, access providers and Canadians.
We viewed the hearings as an opportunity to investigate the current state of the
Canadian new media industry and its domestic and global potential.
The process we went through is similar to the steps we take with major policy
initiatives in telecommunications and broadcasting.
The Commission established the questions it wanted to address, the ground rules for
submissions, and a schedule.
We then announced the dates for the new media hearings in July of last year.
We held formal hearings in Hull, Quebec in November and December during which we heard
more than eighty presentations.
We also held an oral final argument phase of these hearings in February 1999 to give
stakeholders the opportunity to emphasize key concerns, and present the Commission with
specific recommendations.
In addition, the new media hearing marked the first time the Commission used an on-line
forum to allow interested parties to comment. This forum was hosted on the
Commission’s behalf by the McLuhan Program E-Lab Unit. Liss Jeffrey, the director of
the lab, at the University of Toronto will be talking about this process at your next
seminar.
In all, we heard about 100 hours of testimony and received roughly 1,000 written
submissions by mail and electronically.
From February until now, the Commissioners and CRTC staff have been examining the
information gathered, and have developed our policy position on new media, which as I said
earlier, will be announced in two weeks time.
What I can share with you right now though are five broad stroke observations about the
new media and the process we have just gone through.
One, the new media is a highly controversial subject…some might even say,
inflammatory.
As soon as we announced the hearings, we were accused of everything from trying to
regulate the unregulatable to trying to make-work for ourselves. One editorial referred to
the release on the Public Notice of a new media hearing as a "Sin of
Commission". My reply was that I did not want to be accused of a "Sin of
Omission" should we fail to address important regulatory issues when we had the
chance, and instead ignored them.
Let me also say that the CRTC did not have a hidden agenda. We were and are not out to
expand regulation because we are losing business in other areas. We are not looking for a
new lease on life.
I have spent my entire eight years at the Commission increasing competition and
reducing regulation. I am not about to turn around now. Nor are my fellow Commissioners.
Increasing competition and reducing regulation are shared values among all of us.
Nevertheless, we had to work in a highly charged and fluid environment.
The second thing we learned over the course of the hearings is that a very broad range
of opinions exists over just what the regulatory regime should look like.
For example, some of the hearing participants recommended that there be no regulatory
involvement in new media, as its global nature makes domestic regulation impractical.
Others believed that funds, tax credits or other financial incentives should be
established either through the government or through the imposition of a contribution
towards Canadian content on Internet Service Providers (ISPs), or other distributors.
Another recommendation was for more "self-space" for Canadian content and
methods to draw viewers to this content. Some of the proponents of this idea suggested
that Canada establish a super-Canadian website.
Some argued that we need to address offensive content. And others, on the same topic,
maintained that existing laws, self-regulatory measures by Internet Service Providers
(ISPs), and existing content control tools provide sufficient protections for users.
We had to referee many diverse and complex opinions.
The third thing we learned both from the hearings and from other observations over the
past year, is that the new media is a very different species than the ones that have come
before.
The new media is not just a new broadcasting media, or a new commercial media. It is a
breed unto itself.
It continues to produce results that hardly anyone can predict.
Telecommunications access became a bigger issue (1 Meg modem, Cable access).
A fourth thing we learned is that the new media is not necessarily a killer media. We
have seen new media before. Books, live theatre, newspapers, movies, and radio all
survived television.
We should expect older media to change but nevertheless many will survive. So whatever
policies evolve, they will have to mesh with other media policies as well. And we may well
have to adapt our "old media" regulation as this new media evolves.
A fifth thing we learned is that the new media is a work in progress. Whatever policies
we put forward, they must be able to handle a great deal of rapid change while at the same
time providing ways to balance the interests of all the various stakeholders.
That wraps up the formal part of my presentation. Thank you for being such a great
audience.
Now I’d like to hear from you.
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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)
This document is available in alternative format upon request.
