Speech
Notes for an address
by Konrad von Finckenstein, Q.C.
Chairman, Canadian Radio-television
and Telecommunications Commission
at the annual Convention of the Canadian Association of Broadcasters
Ottawa, Ontario
November 5, 2007
(CHECK AGAINST DELIVERY)
Thank you very much, Charlotte [Bell, Chair, CAB Board of Directors]. It's a pleasure for me to speak at this Convention for the first time. I'm sure we have a very interesting few years ahead of us.
The private broadcasters of Canada have been an essential part of our system right from the beginning. You have been pioneers, visionaries and great entrepreneurs. It's obvious that you're bringing millions of Canadians the kind of information and entertainment they want, because you've been very successful at it year after year.
Our objectives
At the Canadian Radio-television and Telecommunications Commission (CRTC), we have a mandate set out for us in the Broadcasting Act. A central requirement of that mandate is that our broadcasting system shall be distinctly Canadian. It shall have a predominance of Canadian content. And it shall be accessible to all Canadians – both as audience and as participants in the industry.
These are social and cultural objectives, and it is clear that they can't be magically realized through the free flow of market forces and economic self-interest. Some kind of public regulation will always be necessary if broadcasting is to play its role in fostering a Canadian identity. The challenge is to find the right balance between regulation and the creative forces of a free economy.
We all know that a free competitive market creates wealth and stimulates innovation. Accordingly, finding the optimum balance between market forces and regulation remains the main challenge for the Commission.
Our priorities
I thought I would share with you today our three key priorities and also inform you of some of the decisions we have taken in light of listening to our stakeholders.
1) Ensuring the continued success of the Canadian broadcasting system
Local radio
Canadian content and access to the system are provided in the most direct and immediate way by local broadcasters. Those of you who are in radio know especially well that your survival and prosperity depend on the strength of your connection to the people in the communities you serve. It is the key to your success.
A few weeks ago we concluded our public hearing on diversity of voices. That hearing demonstrated just how important it is for radio to remain relevant to local listeners and to address their interests and concerns.
It was also pointed out that attracting and holding those listeners can be an expensive proposition. It costs money to cover the local scene in all its diversity.
We're aware of these challenges, and I've heard that some of you are concerned that we may be granting too many licences.
To that I can only reply that it is our responsibility to act in the public interest, while at the same time providing a regulatory environment in which the industry can flourish. Healthy competition brings in new ideas and offers more choice to the listening public. But we must evaluate every licence application to make sure the market can reasonably be expected to support existing and new stations so that all broadcasters continue to be in a position to provide the full range of local service that is the key to their success.
We know the realities of local radio, and we take very seriously our duty to strike the right balance. That will continue to be our aim.
An example of innovation
With increased competition, broadcasters must seek innovative and creative ways to keep their listeners and attract new ones. I know this represents a big challenge, but I'm convinced that Canadian broadcasters will respond to it.
In fact, I already know of one such example, Golden West Radio, run by the very forward-looking Elmer Hildebrand. He has launched Golden West Online and has been rolling out community Web portals across the Prairies. All the information resources from Golden West radio stations are made available to Internet users. The result is a new service and a new source of revenues. This kind of innovative approach will have to be followed by all of you in the face of new and multiplying platforms.
Broadcasting and Canadian music
Radio has always played a central role in the culture of our country. Airplay requirements for Canadian music have created a solid launching pad for our performers, composers and producers, who have been able to build an industry that is hugely successful not only in Canada, but internationally as well.
In our new commercial radio policy, we announced that we would ask broadcasters to make commitments so that new and emerging Canadian artists have their fair share of radio airtime. But it is not always clear how to define an “emerging artist.”
Your Association, and representatives of the music industry, have told us they would like to have some standardization in defining the term.
A number of definitions were proposed during the 2006 radio review process. We expect to publish by February a study of some of them. The study will analyze the playlists of over a hundred stations in more than a dozen musical formats and in markets of all sizes.
After that, we will hold informal consultations with broadcasters and the music industry, followed by a public proceeding. This will hopefully result in a useful definition for everyone.
OTA television
I would now like to turn to television, starting with over-the-air television. When private television came to Canada, it took the form of local OTA stations operated by local entrepreneurs.
Even today, it is the OTA stations that provide most of the locally oriented service, in the same spirit as local radio. In our new OTA policy, we endorsed the continuation of the Small Market Programming Fund, which helps independent broadcasters to provide local programming to communities outside the major markets.
However, there is another key role that OTA television plays in fulfilling the objectives of the Broadcasting Act. Most of the OTA stations are now part of networks or ownership groups. It is these networks or ownership groups that have the economic power to develop, acquire and broadcast the relatively expensive types of original Canadian programming that can really reflect this country. These are national news, sports, major documentaries, prime-time dramas and other high-end arts programming.
We continue to see OTA television as the cornerstone of the Canadian television system and as the main vehicle for showcasing high-value Canadian content. And we see no evidence that Canadian audiences are abandoning their OTA viewing in any significant way, regardless of whether they receive the stations over the air or through BDUs. One of our challenges will be to ensure that OTA television is properly funded.
Pay and specialty services
In recent years, pay and specialty services have grown from a handful of services to over 170 at last count. It is a healthy industry that offers Canadian viewers a wide range of genres to choose from, some of which are geared toward specific groups such as women, children or third-language communities.
Pay and specialty services are also key supporters of Canadian programming. To bring original content to audiences, they make significant investments in independent productions and these represent an important part of this sector's production cycle. Through my discussions with members of the production sector, I know that this helps to provide a measure of stability that is very much appreciated by everyone who works on independent productions.
The good news is that there are now more avenues for the airing of Canadian content than ever before. However, some of these platforms are not part of what is considered our broadcasting system.
2) Assessing the challenge of New Media
We have all seen that new digital media are putting are putting directly into the hands of consumers a set of entertainment and information tools that bypass the present business models and regulatory structures.
When the CRTC first looked at New Media in 1999, it offered little competition to traditional broadcasters, and there seemed no need to stimulate its carriage of Canadian content. So it was made exempt from regulation.
Obviously a lot has changed since then.
1. Real-time streaming is here.
2. Large numbers of Canadians have access to broadband.
3. Content aggregators like Joost and Babelgum are offering video services with global ambitions.
4. User-generated content is spreading – a concept previously unknown.
5. Different business models are up and running – pay-per-view, subscription, free-with-advertising.
6. More and more advertising is migrating to New Media.
7. All kinds of devices can connect – phones, computers, PVRs, iPods, cameras, and more.
8. The industry can interact with its audience as individuals.
What will this mean for the arrangements we have developed over the years?
Two weeks ago, I was in London to speak at the annual conference of the International Institute of Communications. The theme was “Trends in Global Communications: Navigating Uncharted Waters.” One thing became clear very rapidly: everyone around the world, whether regulator, broadcaster or industry participant, is concerned about New Media.
Many of my regulatory colleagues from around the world were very interested in what we are doing with our New Media Project Initiative. As you all know, the CRTC, through this initiative, is looking at regulatory issues of content and access that have been raised by the arrival of new technologies.
Since we are the regulators of broadcasting, our main focus is on commercial television delivered over the Internet and through mobile devices. We are only interested in content that is professionally produced. We are not concerned with all the other aspects of New Media, such as the way it may alter consumer behaviour, facilitate the production of user-generated content or establish new forms of social networking
This initiative is broadly based. Different government agencies and departments are working on it with us, and we have created an interdepartmental steering group.
We have completed the initial research phase, involving consumer analysis and consultations with academic experts and industry stakeholders, both in Canada and internationally.
We are now in the validation phase, which will be followed by a report. Finally, we will hold public hearings and hopefully come up with a new approach.
Obviously, there are a number of key questions that have arisen. Will the new platforms replace some of our existing ones? Will they undermine them? Will they complement them? Will they merge with them? Can the existing regulatory arrangements remain sustainable in a world of multiple platforms? How will we have to change them to keep pace with the new realities?
As I told my international colleagues in London, it all comes down to three questions:
- Is it necessary to regulate commercial broadcasting delivered over the Internet and mobile devices?
- Then, if it is necessary, can it be done?
- Finally, if it can be done, how should it be done?
3) Application of our four guiding principles
In times of rapid change, it's crucial to have an open and responsive relationship between the regulator and the industry. So I want you to know that in every aspect of our mandate we will continue to be guided by the four key principles that I defined when I first took on this job:
- transparency – we want everyone to see exactly what we are doing and why;
- fairness – every issue will be handled with well-established and even-handed procedures;
- •predictability – we'll be consistent and our direction will be clear. If we depart from our direction, we will give the reasons; and
- timeliness – we know that time is money in the industry, so we will provide as quick a turnaround with our decisions as we can, while giving them the thorough consideration they deserve.
Outside experts
I have spent a lot of time this year travelling across the country to meet informally with stakeholders in the industry, and listen to their concerns. But there is another kind of input that we also need: expert research, analysis and advice from people who are not stakeholders. Outside experts can provide us with observations and ideas that are an essential complement to the views of those who have interests in play.
Our approach with outside experts is simple: we neither tell them what to say, nor promise to follow their advice. We simply ask them to conduct a study on a specific subject that is of concern to us. We make their report public, and it serves as unbiased input to the public debate.
Earlier this year, we commissioned an independent report by Michael Osborne on our policies for wholesale telecommunications services.
We have also made good use of outside experts in the carrying out of our New Media Project Initiative, which you will see on our website shortly.
And we called on Laurence Dunbar and Christian Leblanc for an objective and critical look at our broadcasting regulations.
They examined every single broadcasting regulation for its purpose and effectiveness, and recommended whether, in their view as experts in communications matters, each one should be kept, improved, streamlined or eliminated in order to serve the purposes of the Broadcasting Act most efficiently and economically.
Their report represents a careful analysis with many thoughtful recommendations that clearly put on the table issues that ought to be discussed.
I know that your Association has strong objections to some of their proposals. I expected that not everything they said would be greeted with cries of joy by everyone.
In our view, Dunbar and Leblanc have performed a very valuable service by putting issues on the public agenda. However, that is all they did. Let me repeat: we commissioned the study but we did not dictate the results. And any determination of the issues will be dealt with through open and transparent public hearings.
Need for more resources
As federal agencies go, the CRTC is a relatively small operation. To meet our challenges, we need more resources. Specifically:
1. In order to keep pace with the rapid evolution of the industry, we are going to need the help of the very best outside experts we can find. This costs money.
2. We need to update our informatics system to meet the requirements of today's interactive world.
3. The move to smarter and lighter regulation will require a re-engineering of the way the CRTC works. For that, we require outside help and important investments in time and talent.
4. It is also true of our commitment to timeliness in delivering our decisions. A number of mega-mergers have recently come before us. In the past, it would typically take up to seven months after the end of the public hearing for the CRTC to issue its decision.
- On the CTV-CHUM acquisition, a modified procedure helped us get it done in 39 days;
- Astral's acquisition of Standard was dealt with in 32 days; and
- the acquisition of Citytv by Rogers was approved 29 days after the close of the hearing.
For some time we have been stretched thin. If we are to fulfill our responsibilities under the Broadcasting Act – and our responsibilities to the industry and to the people of Canada – we simply cannot fall behind.
These are just some of the reasons why we are seeking Treasury Board approval to increase our operating budget.
Fee payer consultations
This summer we held consultations with our fee payers on this proposed increase. A regulator cannot successfully carry out its responsibilities without the understanding and support of those who are regulated.
And those who are regulated will have a very tough time doing business if they can't rely on the understanding and support of the regulator.
Some of the fee payers expressed understanding of our need for additional funds at this time. Some offered qualified support; others said they could support a short-term increase.
Your Association, however, failed to arrive at a position and stated it could not reach a consensus. This was a disappointment to us.
We understand it may be difficult for an organization as diverse as yours to reach a unified position. But we hope that in the future you will be able to have an open and constructive dialogue with us. We hope you will feel free to say just where you stand. We can't get anywhere when there are confusing or conflicting messages coming from your organization, particularly with the CAB expressing different views to Ministers than to the CRTC.
The Commission is committed to full transparency and open dialogue with its stakeholders. We expect the same from the industry. I trust the incident of the fee payer consultation was an isolated instance that will not be repeated.
Walk the talk
In this spirit of open dialogue, I want to tell you that we are listening and we intend to apply our guiding principles. In the past few weeks, we have heard OTA licensees' concerns about the short timeframe between the review of our policies for broadcasting distribution and discretionary services, and their licence renewal hearings.
We've done an initial reading of the submissions filed in preparation for the BDU and discretionary services review. One of the things we've noted is a repeated call for the introduction of a subscriber fee for the carriage of local conventional TV stations. The OTA sector has been a mainstay of the Canadian broadcasting system, but there is no mistaking the fact that it now faces significant challenges. Consequently, we have adjusted our approach to the upcoming review.
In addition, there is a direct link between the fee-for-carriage issue that was discussed at the OTA review, the BDU and discretionary services review, and the licence renewals of the major television groups. We feel that all the issues that have an impact on these sectors should be considered in the proper sequence given their interdependence.
We are therefore taking the following steps:
- The scope of the BDU and discretionary services review will be expanded to address the fee-for-carriage issue.
- The public hearing will take place in April 2008 instead of February as previously planned, and you will now have until January 25, 2008, to provide your comments.
- The renewal hearings for the major television groups will be moved from April 2008 to late 2008 or early 2009, and the current licences will be extended by one year, to August 31, 2009.
CTF hearing
In the same spirit of listening, let me say a few words about the Canadian Television Fund. As you know, the Task Force held in-camera hearings and delivered a report on June 29. At that time, the Commission expressed its preliminary support for the Task Force's recommendations. We have since held a public process, which ended on July 27.
The responses have been numerous and far from unanimous. It is clear that there is a wide disparity in the various views expressed. The Commission, having studied the responses, finds that an oral public hearing is needed to consider the recommendations. Such a hearing would also serve to validate our preliminary conclusions or to point out their possible shortcomings.
As part of our commitment to transparency, we believe that these differences cannot and should not be resolved without all interested parties having an opportunity to address them publicly.
The rescheduling of the BDU and discretionary services hearing has a useful benefit. It opens up an opportunity to give the issues concerning the CTF the proper consideration they deserve.
We have therefore scheduled a public hearing on the CTF beginning on February 4, 2008. No further comments will be necessary. However, parties will have until December 14 to indicate if they wish to appear and to identify the issues they wish to address.
A news release and two notices of public hearing will be issued later today, which will provide you with more information on these changes.
Conclusion
I hope I've made it clear today where the priorities of the Commission lie in the next few years. We want to foster the growth of a broadcasting industry that is strong, prosperous and distinctly Canadian. We want an open and efficient relationship with our stakeholders.
We at the CRTC are doing our part to support the industry and to respond to your requirements. To be successful, this approach must be reciprocal. It can only be based on open and honest dialogue. Together, we can ensure that the Canadian broadcasting system remains the sterling success it is today.
Thank you very much for your attention.
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Date Modified: 2007-11-05
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