Canadian Broadcasting is a watchdog for Canadian programming supported by
100,000 Canadians. Citizenship involves much more than consuming.
Overwhelmingly, Canadians believe that government should work to reinforce
Canada's cultural sovereignty as a distinct society on the northern half of the
continent. Digital techniques are fungible and global, while culture is local
and specific. Ideas are not digital, but can be communicated better and faster
employing digital technology.
The Canadian Media
Fund, and other federally-sponsored funds can be augmented substantially by
tapping into the huge profits of the four big cable monopolies, whose profit
before interest and taxes in 2009 exceeded 25%. FRIENDS recommends a 10% levy
on revenues, and preventing these monopolies from recouping the contribution
from their subscribers. This recommendation would yield $461 million (2009).
The success of the
Canadian audio-visual system in ensuring shelf-space for Canadian programming
over five decades has been built upon a foundation of appropriate regulation. Appropriate
regulation facilitates markets. Canadians value local news more than any other
type of television programming, and local news is threatened by changes in the
ad market as well as the recession. Conventional broadcasters cannot rely on
market forces to negotiate with the much more powerful cable monopolies and
satellite television distributors.
ownership restrictions in telecommunications will lead to a domino effect in a
converged communications business environment where cable and then broadcasting
will come under foreign control, gravely threatening Canada's cultural
should demonstrate leadership in assisting three million Canadians who depend
upon analog over-the-air television reception to prepare for the conversion to
digital. Failure to do so will create a substantial political problem for the
government and an information access problem for 10% of the population.
senior leadership is failing to fulfill CBC's mandate in Canadian content.
Nonetheless, Canadians value public broadcasting and want it strengthened.
FRIENDS recommends that the government reform CBC's governance to increase its
competence and accountability. Once an accountable Board and executive are in
place, CBC's budget should be increased to at least $40 per capita and its
dependency on commercial revenues should be reduced, particularly in non-sports
should take care to defend the CRTC's independence by displaying caution in
overturning its expert decisions. The number of CRTC Commissioners should be
reduced from 12 to five and their compensation should be increased.
Friends of Canadian Broadcasting (FRIENDS) is a watchdog for
Canadian programming on radio, television and new media supported by 100,000
Canadians. FRIENDS is not affiliated with any broadcaster or political party. Our
comments include the following topics: an overview, content, market forces and
regulation, foreign ownership, analog/digital TV conversion, CBC/SRC and the
'Consumers' exist throughout the world, whereas 'citizens' can
function only in democratic environments which rely upon well informed
citizenry to contribute to the public good through self reliance, respect and
mutual help. Hence Canada's strategies for digital advantage relate to more
than the economy. They include citizen participation and the reinforcement of a
distinct society on the northern half of the North American continent.
A Pollara survey commissioned by FRIENDS in May 2009
identified that 88% of Canadians believe that, as Canada's economic ties with
the United States increase, it is becoming more important to strengthen
Canadian culture and identity.  Hence, the Government of Canada should
align its digital policies to encourage cultural sovereignty. Economic
forces will tend to push Canadians in the direction of a culturally homogeneous
global melting pot. Cultural policies should promote Canada's distinctiveness
The discussion paper poses the question of how best to
attract the most talented persons from around to world to enhance Canada's
digital advantage. We point to extensive evidence that quality of life issues
motivate internationally mobile high talent personnel, and that quality of life
is influenced directly by perceptions of the priority that a host country
devotes to cultural development.
Ideas are not digital. Creativity can be enhanced through
digital tools but it is important to recognize that these tools are only pipes
and techniques - not to be confused with content. Digital techniques are
fungible, travelling around the globe at electronic speeds while cultural ideas
and content are local and specific.
Technological developments have transformed the world for
millennia. As the late Northrop Frye observed, "the most technologically
efficient machine that man has ever devised is the book".
The digital economy consultation paper asks about ensuring a
strong Canadian presence of new digital media on the Internet and how to
generate the necessary funding.
The Canadian Media Fund (CMF) is a fundamental component of
the funding of Canadian television programming. On page 26, the consultation
paper refers to "our private sector funding partners". This statement is, at
best, a euphemism. The CMF and its antecedents dating back to the mid-1990s have
derived their non-government revenues from a government-imposed contribution on
the part of the broadcasting distribution undertakings (BDUs) - the cable and
more recently satellite television distributors. In other words, this is a
'tax' amounting to 5% of revenues, which those 'partners" have been permitted,
thus far, to recover from their customers, the people of Canada. 
CRTC data  demonstrate that the cable monopolies achieved an enormous profit before
interest and taxes (PBIT) of 25.1% or $2.3 billion in 2009  - all of this being revenue from rate-unregulated
fees charged to their customers. Big cable's PBIT has doubled in the past four
years and now exceeds the revenues of Canada's private conventional television
stations. Clearly these 'partners' can afford to make greater contributions to
the Canadian Media Fund. No contributions to the CMF or any other content funds
are made by the cable monopolies from revenues generated from their home phone
or Internet services, which piggy-back on the same cable infrastructure that
has been financed through customer levies sanctioned by the CRTC.
We invite Ministers to consider the $9 billion that Canadian
television viewers pay annually to their cable monopolies as an investment in
an audio-visual eco-system, where currently more than $2 billion leaks out each
year in order to be devoted to other purposes. If even a portion of that
investment by Canadians were to stay within that eco-system, the quality and
quantity of Canadian digital programming would improve immensely.
that these regulated monopolies be required to contribute 10% of their cable,
home phone and Internet revenues to the CMF and other government-sponsored
cultural funds, and that they not be permitted to raise their rates to recoup
This measure would raise $461 million annually from cable
This untapped revenue source does not apply to Canada's
satellite television distributors, whose PBIT was a modest 3.7% in 2009.
should be permitted to sell advertising in their locally-produced programming
and 50% of the net revenue should be devoted to federally-sponsored funds.
amounts of Canadian content should be required on Canadian digital media
platforms such as wireless PDAs.
FRIENDS supports removing "unnecessary, job-killing
regulation", "maximizing reliance on market forces" and "promoting modern rules
and regulations". In other words: 'not necessarily regulation, but regulation
However, we oppose ideologically-motivated attacks on
regulation, and observe that such ideological positions have suffered a huge
credibility setback from evidence of how such sentiments recently contributed
to the on-set of a global recession.
Appropriate regulation facilitates markets, just as traffic
lights facilitate the flow of traffic in an urban environment. In Canada's
broadcasting system, some players who benefit from regulation when it reduces
direct competition from American broadcasters, or augments revenues (such as
through simultaneous substitution or non-deductibility of advertising on
foreign stations, or the protection of territorial monopolies in the case of
cable) have a tendency to complain about concomitant obligations, such
as Canadian content quotas or signal compensation regimes.
Canada's success in ensuring shelf-space for English-language
Canadian programming in the face of the entire American audio-visual system
over many decades has been built upon appropriate and effective regulation. If
government advice or direction to the CRTC were to inhibit creative regulatory
responses to new developments, such as ensuring floors of Canadian content on
digital smart phones, Canada's cultural sovereignty would suffer.
Another important role of appropriate regulation is to level
the playing field between cable monopolies and the much less powerful broadcasters.
This becomes even more important in an environment where cable profits exceed
broadcasters' revenues. Reliance on 'market forces' in this environment will
lead only to the survival of the fittest, where 'fit' is deemed inappropriately
to equate to size - to the detriment of cultural sovereignty. The preponderance
of evidence in many CRTC hearings makes clear that reliance on market forces in
disputes between broadcasters and the big four cable monopolies consistently
leads to cable dominance.
The phrase 'legacy players' is an inappropriate description
of Canada's private, conventional television broadcasters. Their minus six
percent PBIT in the 2009 broadcasting year, reflecting an aggregate loss of $116
million,  reflects the combination of the effects of the recession and changes in the
advertising marketplace, leading to reduced attractiveness of mass audience
Because conventional television is the only provider of high
production value local programming in the Canadian television system, the
disappearance of profit from conventional TV is a serious development.
Canadians value local programming more highly than any other type of television.
In an April 2008 study commissioned by FRIENDS and other groups, Pollara found
that 96% of Canadians believe it is 'important' to have local news on TV, 76%
found this 'very important' - a far higher response than for any other program
In general, the Canadian audio-visual system is moving
towards increasing concentration of ownership where cable monopolies control
broadcasters: consider Rogers control of City-TV, Quebecor's control of TVA and
Shaw's projected control of Canwest/Global. CTV remains the only substantial
entity beyond the cable monopolies' control. In this environment, reliance on
'market forces' is delusional.
The rationale for loosening or removing restrictions on
foreign ownership and control of telecommunications companies is that, as the
discussion paper asserts, "sufficient competition" will "drive innovative
service delivery at reasonable prices". Of course, 'sufficient' and
'reasonable' are words susceptible to various interpretations. In contrast with
European and American telecoms, Canada's telecom industry must bear the
infrastructure costs of vast geography and sparse population - which the
discussion paper describes as "geographically challenging". Unless public
policy were to follow the perverse goal of lowering prices in major urban
centres at the expense of Canada's substantial rural and smaller urban
population, our providers must continue to cross-subsidize rural costs with
Hence cross-jurisdiction price comparisons, for example in
wireless, can be inappropriate and misleading. Furthermore, the recent
appreciation of the Canadian dollar against the Euro, Pound Sterling and United
States dollar renders published comparisons obsolete - a lower Canadian dollar
skewing comparisons to Canada's disadvantage. As the discussion paper states on
page 16, "international comparisons should be treated with caution".
Also, where government decides to encourage additional
competition, the law of unintended consequences may come into play, provoking, for
example, a Bell/Telus amalgamation, or some other competition-reducing
concentration of ownership, or perhaps an acquisition of a struggling new
competitor by an incumbent at fire-sale prices. To head off the amalgamation
threat to competition the government
should consider instituting a policy to prevent any player from growing beyond,
say 40% of the wireless market place.
Among FRIENDS' concerns regarding a possible loss of
Canadian ownership and control of Canadian carriers are the export of high-end
jobs, reduced protection of the personal privacy of Canadians through the
intrusion of such instruments as the United States Patriot Act, loss of
sovereignty through dependence on United States routes for data flow, reduced
resilience in emergencies and a threat to service access on the part of
Canadians living in rural and remote areas.
FRIENDS' principal concern, however, relates to Canada's
Canada's media and communication industries have converged
in recent decades, and the pace of this convergence has recently increased.
CRTC's web site displays data on the corporate structure of Canada's biggest
media and communications companies: BCE, CanWest, Cogeco, CTVglobemedia,
Québecor, Rogers, Shaw and Telus. 
Taking Rogers as an example, beneath a holding company known
as Rogers Communications - of which the Rogers family holds 82% of the voting
shares - Rogers' business lines include cable television, local and long
distance telephone, Internet access, wireless, broadcasting, baseball and
publishing. Last year its revenues approached $12 billion:
Although Rogers may be Canada's most converged media and
communications company, it is by no means unique:
- Shaw operates in the cable and Internet businesses,
and is entering wireless. Through the Shaw family's common ownership and
control, Shaw is related to Corus, a radio and specialty television company.
- Québecor controls Vidéotron, TVA and Sun Media,
offers Internet access and plans to enter the wireless business.
- BCE controls Bell Canada, Bell Aliant, Bell TV
and holds a 15% stake in CTVglobemedia - which in turn controls Canada's
largest television broadcaster and the Globe and Mail.
In this integrated communications business, changing the
foreign ownership requirement for one sector - telecom - can be expected to
cause a domino effect on the other sectors. If BCE were foreign owned, it would
become ineligible to control Bell TV. Rogers would have to dispose of Rogers
Media and Rogers Cable, and so on.
Disposing of these broadcasting assets would destabilize the
Canadian broadcasting system by reducing the investor pool, as well as ending
synergies between the component parts. It is likely that the affected players
would instead call for changes to ownership requirements under the Broadcasting
Act, just as they did successfully when telecom ownership requirements were
changed in the 1990s. The Montreal
Gazette reported on November 23, 1995 that "the federal government is relaxing
limits on foreign ownership of Canadian cable and broadcasting companies....
(Heritage Minister Michel) Dupuy said the rule changes put the broadcasting and
cable industries on the same footing as telecommunications companies."
CanWest's former CEO, Leonard Asper, testified before the
House of Commons Industry Committee in 2003 that "any changes in the rules that
apply only to telecom companies would soon be of competitive significance to
broadcasters as telecom companies move increasingly into the BDU (broadcasting
distribution undertaking) and broadcasting businesses". And Cogeco's Louis
Audet told the Committee that "we are suggesting that competitive equity will
require that cable companies and telephone companies be treated the same way
under liberalized foreign ownership rules".
The 2003 Industry Committee's report underscored Mr. Audet's
comment in the following passage:
"Technological advances and convergence of
technologies, especially over the last decade, have blurred the lines that
previously separated the services offered by telecommunications common carriers
and broadcasting distribution undertakings.... Telecommunications carriers and
BDUs are now competing for the same customers in some markets (e.g., high-speed
Internet service). The telecommunications and broadcasting landscape is further
complicated by vertical integration and by cross-media ownership. Clearly, defining an enterprise as a
pure "telco" or "BDU" on the basis of their underlying distribution networks or
the services they provide is becoming more and more difficult (see Figure
Canadian broadcasting is a public good which is essential to
the communications infrastructure of local economies across the land. It
facilitates the participation of citizens in the democratic process, and it
contributes to building a distinct identity on the northern half of the North
American continent. Allowing such an important instrument of Canada's national
development to fall into foreign hands would signal the demise of our cultural
While no patriotic Canadian would deliberately counsel such
an outcome, tinkering with foreign ownership rules in one part of the media and
communications industry will inevitably place other parts at risk.
Speaking on behalf of Industry Canada, Marta Morgan told the
Commons Industry Committee in March 2010 that relaxing foreign ownership rules
in telecom would serve to bring Canada in line with other OECD countries. None
of those countries is immediately adjacent to the huge cultural and economic
influence of the United States of America.  In view of Canada's unique position, we
urge the Government of Canada to heed the advice of the 2003 Lincoln report
("Our Cultural Sovereignty: The Second Century of Canadian Broadcasting") "that
the existing foreign ownership limits for broadcasting and telecommunications
be maintained at current levels." 
This recommendation enjoys widespread public support. An
April 2010 public opinion poll by HarrisDecima commissioned by FRIENDS in
collaboration with ACTRA and the CEP, found that a strong majority of Canadians
oppose foreign ownership of telephone, cable and media companies: 
Digital Television Conversion
On April 7, 2010, Industry Minister Tony Clement told
Canadian Press, "I'm really going to try and avoid postponing.... I would really
like to stick to the deadline.... That requires us to engage with the industry
sooner rather than later. If we stick to the deadline and actually have quite a
detailed plan, it should not create any misery for Canadians." 
Michael Janigan of the Public Interest Advocacy Centre has
described this approach as "leadership by amnesia". Canadian Press reported
that "there has been no large-scale move to inform Canadians about what's on
the horizon. A link to Frequently Asked Questions on Industry Canada's web site
is dead (April 7, 2010), and the TV industry has no co-ordinated approach to
letting viewers know what to expect."
A number of well-informed observers have noted that the
government has a financial interest in maintaining the deadline, as it cannot
auction the liberated spectrum until the analog television signals fade to
FRIENDS speaks on behalf of almost three million Canadians who rely on
over-the-air analog reception via their own antennas. Canadian Media Research
Inc. has found that "given the slowing trend in the past 4‐5 years, it seems
unlikely that the OTA segment will decline by much in coming years" and the CMRI study also
indicates that 26% of OTA viewers cannot afford cable and satellite charges. In
other words, OTA viewing by millions of Canadians will continue to be a feature
of our audio‐visual system well into the future, unless a government oblivious
to the interests and political clout of millions of predominantly older
Canadians were to decide to deprive them of their access to the audio-visual
Cities with OTA viewing exceeding the Canadian average include: Windsor
(27%), Saskatoon (15%), Montreal (14%), Quebec and Sherbrooke (13%). Even in
cities with a lower proportion of OTA viewing, the number of viewers is
substantial, for example: Toronto (477,000), Vancouver (138,000), Edmonton
(113,000), and Ottawa (111,000). CMRI also reports that, even in households
subscribing to a BDU service, not all television sets are hooked up to the
cable/satellite service. OTA viewing accounted for 25% of TVO's audience in
2006, 16% for CBC‐TV, 14% for CTV and 8% for Global. 
Perhaps more sensitive to public opinion, the American Congress mandated
a program to subsidize digital conversion for the equivalent group in the
United States. FRIENDS has raised this matter repeatedly in submissions to the
Commons Heritage Committee and the CRTC. It constitutes a sleeping political
giant, which may be deferred only if the broadcasters' precarious financial
positions lead to a delay in the August 2011 conversion deadline.
recommends that the Government of Canada introduce a digital conversion
consumer subsidy program modelled on the U.S. program and financed from a
modest levy on the anticipated proceeds from the subsequent frequency auction.
FRIENDS believes that the discussion paper takes a rose-tinted view of
the digital achievements of the Canadian Broadcasting Corporation under its
current senior management. For example, the paper refers to CBC/SRC as "leading
the way to attracting users at home and abroad to cutting-edge Canadian content
and applications" and suggests that CBC is "redefined by changes in
FRIENDS' research indicates that CBC English Television has walked away
from its mandate to present Canadian programming during prime time hours. In a
three-week survey period during the BBM Sweeps in February/March 2010, CBC-TV
reached an all-time low of Canadian content during prime time: this year
broadcasting foreign programming during 25% of its prime time schedule - one in
four hours of non-Canadian programming. This is in stark contrast to 2000, when
98% of CBC-TV's prime time schedule consisted of Canadian shows:
We note that this poor performance flies in the face of Parliament's
advice that 100% of CBC's prime time shows should be Canadian. Our research
also indicates that CBC English Television presented 227 foreign movies during
the 2009-10 TV season, sixteen of them in prime time. 
CBC's current senior management has also allowed CBC Radio News to
languish in recent years, imposing a television-driven 'hub' system for
commissioning news stories. Recently leaked research, commissioned by CBC, constitutes
a 'cry for help' from CBC's National Radio News reporters, including such
comments as the following, paraphrasing CBC's Executive Vice President of
English services: "TV makes money and radio costs money. The concept of public
broadcasting is lost." 
Canadians strongly support public broadcasting as well as the thousands
of dedicated CBC creative personnel who actually make the programming that
people listen to and watch. A Pollara public opinion survey commissioned by
FRIENDS in May 2009 makes this fact abundantly clear: 
The House of Commons Heritage Committee has recommended that
the governance of CBC be reformed to reflect practice in other industrial
democracies, affirming the arms-length independence of the Corporation from
political direction, and also affirm that the Corporation's Board of Directors,
rather than the Prime Minister, should have the job of hiring and firing the
CBC President - in order to introduce accountability to the position. The
Committee has also recommended that CBC's Parliamentary allocation be increased
from $33 to $40 per capita over a multi-year period, and that CBC's dependence
on advertising revenues decrease. 
FRIENDS notes that the current President and CEO, as well as
one of his two immediate subordinates with programming responsibilities, lack
previous experience in radio and television production, scheduling and
marketing, a situation that would be unheard of at the top of a private
broadcasting organization or, indeed, in the leadership of public broadcasters
in other industrial democracies.
FRIENDS supports the Heritage Committee's advice and therefore
offers four inter-related recommendations to improve CBC/SRC's capacity to
serve Canadians in the 21st century:
Reform the appointment process for the CEO and Board of Directors to
end Prime Ministerial patronage appointments so that the best qualified
Canadians are appointed to govern CBC through an arms-length selection process sanctioned
by Order-in-Council appointments.
Delegate to the Corporation's Board of Directors the power to select
and dismiss the CEO.
Raise the Corporation's Parliamentary allocation to at least $40 per
capita over a multi-year period.
Direct the Corporation to reduce is dependence on advertising revenues
in non-sports programming.
Canadians support the concept of an arms-length expert body to
oversee Canada's communications systems in the public interest, and invest a
high degree of trust in the Commission:
FRIENDS therefore recommends
that the federal government display care and caution in exercising its
statutory powers to challenge or overturn the Commission's expert recommendations,
in order to preserve the Commission's independence as an agent to protect Canadian
listeners' and viewers' interests.
FRIENDS notes that the United States Federal Communications
Commission manages to operate effectively with only five Commissioners, whereas
the CRTC has twelve.
We recommend that the
government consider reducing the number of CRTC Commissioners to five from the
current 12 and also increase substantially their compensation to attract
persons with the necessary qualifications.
-- 30 --
For information: Jim
 In the case of the cable
monopolies, the CRTC has permitted them to divert 40% of this 5% to fund their
community programming endeavours, leaving only 3% for the CMF.
 The CRTC's broadcasting
year-end is August 31.
 http://www.friends.ca/poll/6925 (page 32)
 "Improving Canada's Digital
Advantage" recognizes Canada's unique situation when it describes "Canadian
commercial spectrum (being) aligned with the U.S.".
 CMRI Inc., Trends in TV Audiences and Public Opinion,
 http://www.friends.ca/blog-post/9471 and http://friends.ca/Stursbergaudio
 The Prime Minister
advocated a reform along these lines in a speech as Leader of the Opposition to
the Canadian Association of Broadcasters on November 29, 2004.