Written Transcript:

Mr. Chair and Commissioners: thanks for offering Friends of Canadian Broadcasting an opportunity to appear at this important hearing. As you know, FRIENDS is an independent watchdog for Canadian programming in the English-language audiovisual system, and is supported by 100,000 Canadians.

In order to learn more about our supporters' use of new media, as well as their opinions, we recently invited a randomized sample to respond to a series of questions. As a result, we learned that:

• 93% use high-speed Internet.
• 47% regularly (and a further 21% occasionally) read newspapers on the Web.
• Among these Web newspaper readers, 37% read exclusively Canadian newspapers, 46% read mostly Canadian papers and 17% read mostly foreign newspapers.
• 3% regularly watch TV shows or movies on the Web, 19% do so occasionally, and 78% never do so.
• Among these Web viewers, 11% view only Canadian shows, 18% predominantly Canadian shows, 24% predominantly non-Canadian shows and 47% watch only non-Canadian shows.

We also received some articulate advice from our supporters, some of which I wish to convey to you today:

Catherine Ambrose, from Mississauga, Ontario told us that "a strong Canadian broadcasting presence on the Web is a necessity, to inform, educate and project positive attitudes that enhance life in Canada".

Arlington Mair, from Riverview, New Brunswick wrote: "Being so close to the U.S. influence, it is essential that we confirm our Canadian identity both on the Web and in the news media".

Brian Richards from Kelowna, British Columbia asked us to pass along the following comment: "The CRTC should be strong advocates of Canadian content. The arts industry in Canada is a vital employer and financial supporter to our country".

* * *

Just last week, Glenn Britt, CEO of Time Warner Cable said:

"The reality is we are starting to see the beginnings of core cutting, where people, typically young people, are saying, 'All I need is broadband. I don't need video.' And obviously they are already saying they don't need wire-line phone." ¹

As the Commission has made clear in the public notice, this hearing is not "concerned with user-generated broadcasting content" and FRIENDS suggests that the Commission should focus primarily on commercial content.

A Canadian presence should be an integral, positive and creative part of new media. Otherwise, we risk a more costly retroactive system re-fit, one that might more readily be opposed as a ‘tax' if Canadian content rules were to be imposed after the fact.

Ninety-six percent of our supporters believe that the principle of public ownership applies equally to the Internet and to the public airwaves. We consider it critical that commercial Internet broadcasters of audio and visual content maintain a level of Canadian programming consistent with the expectations of the Broadcasting Act.

During the Broadcasting Distribution Undertaking (BDU) regulatory policy review, FRIENDS made several submissions supporting the notion of eliminating obsolete regulations – those which are no longer fair, or needed. But we also continue to support strongly the value of regulation designed to ensure that the Canadian public interest is not subordinated to the interests of geographical monopoly BDUs or programming undertakings.

Through reasonable and responsive regulation over four decades, this Commission has crafted one of the best broadcasting systems in the world, especially with respect to the widespread availability of domestically produced content.

While the concept of market forces may seem seductive, fair commercial practices depend on a balance of strength between content providers and content distributors in order to ensure successful outcomes. One need only look at the result of deregulation in American financial markets to see the potential for unintended negative consequences.

As Betty Young, from Winnipeg, Manitoba wrote: "We need to ensure that the Canadian view and reporting on national and international issues is supported. The market has just proven to us all that it cannot function without regulation. Look at the banks in the U.S."

We contend that market forces alone will not ensure a predominant Canadian presence in new media programming emanating from Canadian websites, and the recent survey of our supporters indicated that 96% of them agree with us on this point.

Bruce Barrett, from Whitehorse, Yukon told us that the "CRTC should consider the Web to be as important to Canada's cultural sovereignty as any broadcast media, and to be prepared to regulate it in a similar fashion".

According to Dave Collacutt, from Innisfil, Ontario: "the market will be shaped. The question is, who will influence the shaping. Government regulation must be used to shape the development of the Internet market to benefit all, rather than only the powerful".

The public is becoming used to an inter-mingling of traditional and new media. Their choices to tune in, or to use on-line content, are driven largely by convenience or by economic factors, and also by the relevance of the content to their interests and passions.

Barb Massey, from Salmon Arm, British Columbia asked us to tell you that "the Web is gradually replacing many of the programs we watch on TV or listen to on the radio. As such, the same regulations ought to apply to the Web".

In light of the increasing presence of all forms of media on an equal footing in public consumption habits, we believe that it is reasonable to extend the same public policy and Broadcasting Act support for Canadian content to all media, including new media.

Accordingly, FRIENDS recommends that the existing exemption rules be terminated and replaced with rules which ensure a predominant use of Canadian programming in new media.

In many instances, as the Commission's own research confirms,² a strong Canadian programming presence already exists. These rules should ensure that new media, in common with existing radio and television stations, continue to make a valuable contribution to Canadian programming going forward.

The ability to listen or view programming on-line provides enormous flexibility. Aware that Internet-based delivery of television services to both television sets and computers will eventually become the norm, BDUs are already trying to replicate this flexibility and convenience. The Commission should envision a distribution policy for the Internet which shares the goals and objectives of the recently concluded BDU review.

The ability to listen or view programming on-line provides enormous flexibility. Aware that Internet-based delivery of television services to both television sets and computers will eventually become the norm, BDUs are already trying to replicate this flexibility and convenience. The Commission should envision a distribution policy for the Internet which shares the goals and objectives of the recently concluded BDU review.

Internet Service Providers (ISPs), many of which are also BDUs, clearly understand future trends and have introduced additional bandwidth fees to take advantage of increased downloading of high-bandwidth content, such as video. As the quality of Internet video improves, ISPs will generate increasing profits from these additional bandwidth charges.

Barb Goertzen, from Brooks, Alberta expressed it well: "There needs to be more regulation which will actually protect the public interest. When there are so few ISPs in the game, we cannot depend on ISPs to better anything other than the bottom line".

FRIENDS also supports Peter Grant's recommendation that ISPs pay a percentage of their Internet revenues into a Canadian new media fund to help finance Canadian new media projects. Such a new revenue stream would increase the supply of resources for Canadian programming in new media.

When we asked our supporters whether they supported or opposed a required 3% contribution by ISPs to a Canadian new media fund to help finance new media projects, 78% expressed support, 4% were opposed and 17% had no opinion.

Blair Neufeld from Victoria, British Columbia writes: "Put great Canadian content online. People will come…. A contribution from ISPs makes sense since they will profit from increased Internet usage".

And Patrick Cherneski, from Regina, Saskatchewan suggests: "Offer annual competitions with prize money and/or broadcasting contracts to encourage Canadian stories and Web/new media innovation. Market the best ones internationally to increase visibility, brand and potentially revenues that can be turned back into more development".

Commission and securities data demonstrate that BDUs are enormously profitable. Some have suggested that they would pass on any contribution to their customers, which seems inappropriate in view of the fact that the backbone of their existing Internet and home telephone businesses was financed by funds which the Commission allowed them over many years to collect from Canadian subscribers in order to cover the necessary capital expenditures.

Regarding the hearing's focus on measurement, impact, contribution, support, visibility & promotion, as well as exemption orders – a few comments:

Measurement is not central to FRIENDS' submission.

We have referenced evidence and anecdotes that younger viewers are moving to the Web. One implication is that the value of programming rights to top U.S. shows will diminish in Canada as a result of multiple viewing options, which will have an impact on Canadian broadcasters.
We have seen no business models to monetize visibility and promotion internationally.

In summary: the 1999 New Media Exemption Order was appropriate to both the technology of the time and the fact that geo-filtering providing any level of addressability did not then exist. Ten years later, the Web competes for audience with over-the-air and BDU-delivered radio and television broadcasters.

Online programming content that meets the definition of broadcasting should be subject to the same Canadian content requirements as today's conventional and specialty broadcasters. FRIENDS supports fully the Commission's view that Canada's broadcasting policy should be technology-neutral.

With respect to the mobile exemption, FRIENDS did not support the Commission's decision, primarily because we believe that Canadian programming should be an inherent part of any programming content offered, and not be imposed after the fact.

For these reasons, we ask the Commission to ensure that commercial broadcasting by Canadians on the Internet contain an appropriate level of Canadian content, consistent with the existing rules for both radio and television stations.

Thank you, Mr. Chair and Commissioners for the opportunity to share our comments with you today. I would be pleased to respond to any questions you might care to pose.

- 30 -

For information: Jim Thompson 613 567 9592

¹ Ad Age, February 18, 2009, "Cable Companies See Subscription Growth Slow" by Andrew Hampp (AdAge.com)

² Changing Channels: Alternative Distribution of Television Content, Alan Sawyer, Two Solitudes Consulting, January 2008 www.crtc.gc.ca/eng/media/media3.htm.

Related Documents:

December 5, 2008 - Policy Brief - Notice of Consultation and hearing Canadian broadcasting in new media
FRIENDS recommends that the CRTC extend the same public policy and Broadcasting Act support for Canadian content to all media, including new media.