[Recorded by Electronic Apparatus]
Thursday, May 30, 1996
.1113 
[English]
The Chairman: Before we start, I should mention we have a special caucus that has been called for Liberal members. I ask your indulgence to make your points concisely so there could be questions such that members may be free from the committee earlier to be able to attend the special caucus. I would really appreciate it. Otherwise it means we are missing a very important caucus for ourselves. So if by any chance you could speed up your remarks, just make them as brief as possible, and if the members could cooperate with shortened questioning, I would appreciate it.
The floor is yours, Mr. Darling.
Mr. Allan J. Darling (Secretary General, Canadian Radio-television and Telecommunications Commission): Thank you, Mr. Chairman.
We did circulate to the committee staff yesterday afternoon proposed speaking notes and implications of the bill before you if it were to proceed. I could dispense with my speaking notes completely if that would help the committee and if members have had a chance to look at it. Or, if you like, I could highlight them. I think everybody has the text.
The Chairman: You could highlight the points, sure.
Mr. Darling: Very quickly, if I understand it, the key concern the committee started to raise was whether the bill before you, if passed, would prevent the commission from imposing as a mandatory service the carrying of the Réseau de l'Information, RDI, as a must-carry service, and the short answer to your question is no. But the implications of doing that, in our view, are so horrendous to the operations of the cable system in Canada that I don't think you would want to have that public policy consequence.
.1115
Very briefly, under the terms of this bill every cable system not now carrying RDI would have to seek a positive statement from all its subscribers that they want to receive RDI because it's a new service. This bill is drafted... Even if they weren't charging more for the service, you would still have to have that positive affirmation. If a subscriber said no, we don't wish to have RDI, the cable operator would have no option except to cancel the full cable subscription of that particular customer, and I don't think you want that consequence.
We noted there are other problems with the bill as it's drafted in what I would call the ability to substitute services now being offered with alternative services on a tier or on the basic service even if the customer were not to be charged an additional amount on that. What your bill does is require for any programming service that is new - and we interpret that to mean new to the customer - that they would have to assent positively to receiving that new service. You would do with this bill whatMr. Stursberg said would happen: you would freeze the existing packages of services to the existing customers in the cable system and completely remove their flexibility to be able to offer alternative services or to offer new services that may not previously have been available but that would not be charged.
If I can take a specific example, if we were to license a new over-the-air service... And we have many applications before the commission at present for new over-the-air services. We have an application from CanWest Global to purchase the English-language station in Quebec City and to establish rebroadcast transmitters in Montreal and Sherbrooke. We have applications from CITY-TV and from CHCH-TV in Hamilton to send their signals into the Ottawa market. We have applications from CanWest Global to establish new over-the-air television stations in Calgary and Edmonton. We have a competing application from the Craig family in Manitoba to provide the same type of new television service in that market. We also have applications from CanWest Global to establish a new station in Victoria.
I don't think you intend that those over-the-air services should not be made available to existing subscribers. Yet in our reading of the bill as drafted you would effectively prevent those new stations from being offered to any existing subscriber unless they positively signal they want them; and if they signal they don't want them, then they would have no option but to be taken off the subscriber list of the cable service. If the cable service feels 90% of its customers want these services, it would lose 10% of their customers.
So we have tried, Mr. Chairman, to look at an option to prevent these problems. We've relied very much on Mr. Gallaway's statement before your committee that what you're concerned about here, if I may quote him from the May 16 meeting, is that ``The forty new applications are the people we're concerned with in this bill, not with those already existing''.
It seems to me it's clear the intent you want from this bill is to ensure new specialty and pay television services we will be licensing in the future, many of them in the next few months, will not be sold to customers using a negative option technique. As I stated previously, we understand your intent. We endorse that intent. We have developed a proposed alternative set of words, which I understand, Mr. Chairman, require being introduced by one of the members of your committee in order to be discussed. We would like to put forward for consideration a different formulation than the one in the bill before you, which in our view would avoid the negative consequences I've outlined but would meet the objective you've stated you wish to achieve in the principle of this bill. I'm in your hands.
.1120
The Chairman: Mr. Darling, before we start the questioning, I wanted to ask you one question, because I must say I'm a little confused today. This is the second time you have appeared. You appeared the last time with the chairman. It seems to me that if a huge organization like the CRTC, with all the support staff and infrastructure at its disposal, saw Bill C-216 as such a threat then, your chairman and yourselves would have highlighted it. It seemed a little strange to me that it took the cable operators to highlight things that you suddenly discovered.
I'm wondering if this means that the previous testimony by your chairman, when he appeared on behalf of the CRTC, is, for all intents, null and void, and bypassed by this appearance today. It's the same organization speaking with two voices. I wanted to see for sure whether the previous one was wrong. One of them has to be wrong, because the chairman said he saw nothing wrong with the bill. It was quite okay. He's the chairman of the organization that you represented then with him.
Mr. Darling: I must apologize for that, Mr. Chairman. We should have paid much more detailed attention to the text of the bill. All I can say is that when the chairman appeared, we had understood that the question was is this bill necessary. The chairman's position was that this bill is not necessary because this practice is dead.
You then went on to say that as a committee you feel you need this bill. The chairman was asked what would be the impact on RDI, for example. If this bill were passed, would RDI have to be excluded from being offered in systems in which it's not offered? the chairman said we would have to look carefully at the implications of that.
He reserved his position on the detailed application of the bill. His original position was that we do not feel any bill of this sort is necessary. The committee has said it wishes it, so we have looked carefully at the implications, and we're prepared now to discuss those implications.
[Translation]
The Chairman: Mr. Leroux.
Mr. Leroux (Richmond - Wolfe): I will speak later, Mr. Chairman.
[English]
Mr. Peric (Cambridge): I'm really surprised that the witness today admits that they didn't pay enough attention to that bill. As a public servant, you practise all the time. If you don't pay enough attention, how can we trust you? How can people and consumers trust you?
That's good proof that we need this bill to... We should bury it once and for all.
Mr. Darling: I can only say that we have looked at it. In our judgment, what we're proposing will meet your objectives.
You could pass the other bill. What I'm saying is that if you pass the other bill, you effectively freeze the existing packages of services being offered by cable systems to their subscribers. They will not, for example, be able to substitute.
If, for example, they choose to replace a CBS service with a Fox service because Fox won the contract to broadcast Monday night football games and most of their subscribers want to see that, then the bill you have would effectively preclude that substitution. There is no change in price. It's just the flexibility of offering a different service. I think your concern is with the price, not with the availability of different optional services.
Mr. Peric: A negative option is a concern.
Mr. Darling: We understand that. This is what we have tried to address in the package of proposed amendments we've looked at to deal with what we think are undesirable public policy consequences in the present draft.
.1125
The Chairman: Sorry, I'll defer to Mr. Hanrahan, and then come back to you, Mr. Gallaway.
Mr. Hanrahan (Edmonton - Strathcona): Thank you, gentlemen. I just need some clarification here, because I think this has kind of thrown all of us for a bit of a loop.
The negative option is what we're definitely concerned with, but if I'm reading you right, what you're telling us is that the flexibility of which you speak would still allow these new stations to be lumped together or substituted for some of the existing stations if the cable company required it.
Mr. Darling: That's only if they did not increase the rate currently being charged for that present service. In other words - I'll use some examples out of the present hearing - say we were to license the horse racing network. Say that network said - this is an excellent example of a network - they didn't want to charge subscribers; they just want to be available to them, because revenues will be earned from advertising. Under the terms of this bill, that service could only be offered on a brand new tier. It couldn't be added to an existing tier unless all the subscribers of that tier positively assented to having it added to their existing service. It would be isolated on a new tier.
Mr. Hanrahan: Even though they're not charging, they would have to offer that only with the agreement of the individual subscribers.
Mr. Darling: Whereas with our formulation they would not have to seek that agreement unless they were to increase the price for that tier.
Mr. Hanrahan: Again, what's wrong with that?
Mr. Darling: What's wrong with freezing the system is that the programming is constantly changing. The wishes and aspirations of consumers to view different types of programming, even as they change from a family with young children to one with teenagers and then young adults, there's no fixed consumer who wants to constantly watch a frozen package of services as they exist today for their entire time they subscribe to a cable service.
I don't think you want to do that to the cable industry. I think you want to preserve their flexibility to constantly be able to respond to emerging new services and emerging differences in the tastes and preferences of their subscribers.
Mr. Hanrahan: My concern is also with the consumer. As you suggested, people are changing their viewing habits and whatever as they go through various stages of life. Why can't I phone up the cable company at the particular time I want to change and have it changed individually, as a consumer? Why is it necessary for all subscribers to that particular station to do that?
Mr. Darling: The reason for this is that you are dealing with an existing analogue technology to deliver signals that simply cannot be isolated for each particular signal on the channel. I thinkMr. Stursberg tried to explain this in his appearance.
Mr. Hanrahan: Yes.
Mr. Darling: The industry can only package -
Mr. Hanrahan: Until about 2001, I believe.
Mr. Darling: It's until you have what we call digital video compression boxes that allow you to pick and choose the ones you want from a stream of signals constantly coming through that box. I think we are many years away from that.
Look at the so-called direct-to-home broadcast satellites. They offer you the right to pick and pay. You say you will pay for that program at this time, but they offer you a package of general over-the-air cable services, or specialty ones, for which you pay a price.
You can't bury that package; that's a fixed signal. It may be limited to six, twenty, or forty options, but within the basic packages, none of the direct-broadcast satellites offer the option of saying you only want three of those; you have to take all or none. That's my concern with the impact of this bill. You're saying to existing subscribers that they will have no choice if you decide to offer this to them and they don't want it.
To take the extreme of the case you raised, yes, the commission could, under subsection 9(4) of the Broadcasting Act, declare that RDI and Newsworld are mandatory services.
.1130
We have regulatory policies that say if a station is receivable over the air, it must be carried on the cable system in that community. It has no option and must carry it. These are what we call ``must carries''. But once you impose that condition and add the further condition, every subscriber currently receiving that present package must positively assent to receiving that package. Don't ask me why, but some people may not want to watch Global television or a religious television station of the type we've licensed in Lethbridge and for which we have many applications before us at the present time for other cities in Canada. For those who say they don't want it, under this bill the cable service, if it wishes to proceed to offer it, would have to say they can't subscribe to the basic service because it is part of the basic service.
The problem with your present bill is because you have captured the generic concept in the Broadcasting Act, which applies it to all new programming services, everything we license is a programming service. New does not mean something we newly license; new is something the subscriber isn't presently receiving, even if we had licensed it in the past. For the subscriber it is a new service. So that is the problem.
The Chairman: Mr. Hanrahan, a final brief question and then I'll pass to Mr. Leroux.
Mr. Hanrahan: I'm not sure if I heard you correctly and I don't have a copy of your notes. The statement you seem to be making is that your suggested changes can only be made by a member of the committee.
Mr. Darling: I was advised by the staff that was what was required.
The Chairman: That's correct.
[Translation]
Mr. Leroux.
Mr. Leroux: Since we began studying the bill, two issues have been clearly identified: first, the trade practice of negative billing - which you refer to quite clearly - and secondly, the CRTC's involvement in programming, in suggesting programming or accepting programming once a licence has been granted. We agree on those two issues, which are quite different.
This morning, you state that the bill as tabled would limit your powers to establish basic service packages or to ask a cable operator to include a given channel in his package. Did I understand you correctly?
[English]
Mr. Darling: The bill doesn't prohibit the cable company from changing. The bill requires that the cable company have positive consent from each of its subscribers to that change. If the subscriber doesn't wish to receive that new service, because the cable system can only offer a package and has decided to offer a modified package, that subscriber has no option and can't be given any package, because this system can't deliver both. It's either the old service or the new service, but not both.
[Translation]
Mr. Leroux: As you specified earlier, until we have the new technology, until we have interactive service and à la carte choice, we will agree. We know that cable companies can offer three service packages: the basic service and specialized, add-on services, for a cost.
Where does the CRTC intervene insofar as the basic mandatory service is concerned? There is a basic mandatory service package to which cable operators may add other tiers. Does the CRTC make a specific recommendation with regard to that basic package? Might it require that all cable companies broadcast RDI?
You could add other types of programs in other tiers, but the CRTC would require that everyone include RDI in its basic service. Would the bill prevent that?
.1135
[English]
Mr. William Howard (Senior Legal Counsel, Canadian Radio-television and Telecommunications Commission): There are regulations in place with regard to the basic service. Those regulations state what must be carried by the cable company on that basic service. Essentially, it's what's available over the air locally - the CBC, Radio Canada, CTV, Global - whatever is available.
In addition to that, the cable television regulations, which deals with the basic service, says in section 9.(4) that where the commission has determined that ``a programming service is of national public interest and has licensed the service as a mandatory service, the licensee'' - a cable system - ``shall distribute the service as part of the basic service''.
If negotiations between RDI and the various cable operators break down and if there is pressure on the commission, such that it feels it appropriate, it could use that section to force the cable operators to carry RDI.
The problem, however, as Mr. Darling pointed out, is that gets RDI into the system, but if a subscriber doesn't want to receive RDI and pay the extra 5¢, 10¢, or whatever it may be, the only option the cable operator then has is to say ``I'm very sorry, Mr. Subscriber, but I have to cut you off entirely because it's the basic service. I have to give you that service. That's my obligation.''
So that's the problem. The commission can do it, but you then have people being cut off. You may even have people being cut off without knowing it because they're going to get a card in the mail saying ``Here's what's coming. Please indicate whether you want it.'' When most people get cards in the mail they don't read them all that carefully most of the time. I know I don't. All of a sudden, people are going to wake up one morning and find their service has been cut off.
[Translation]
Mr. Leroux: There are laws that govern these trade practices in some provinces, such as the Consumer Protection Act in Quebec. Do those provincial laws governing trade practices apply to federal organizations? Would those provincial laws have the impact you referred to this morning?
[English]
Mr. Howard: I apologize. I haven't had an opportunity to look at the various provincial laws to determine whether they would have exactly the same effect. I do know that the cable operation in the province of Quebec at the time the original tiers were put through - I am told, I'm sorry, I don't know - had conversations with the consumer protection people and was able to work out a system by which the new services could be put on. But I don't exactly know what happened, I'm sorry.
[Translation]
Mr. Leroux: According to the information we have been given, the problem raised by our colleague Mr. Gallaway exists mostly in English Canada. In Quebec, there has not been any negative option billing. There's a very strict law that prohibits negative billing. You say that you have not been able to assess the impact of that in other provinces. Can Mr. Gallaway tell me whether there are consumer protection laws in other provinces that forbid negative billing?
[English]
Mr. Gallaway (Sarnia - Lambton): No, there isn't. It's only with respect to the sale of goods, not services.
[Translation]
Mr. Leroux: I see. So, Quebec is the only province where negative billing is prohibited, and that includes cable systems.
[English]
Mr. Gallaway: Correct.
[Translation]
Mr. Leroux: So there is no real impact in that regard. I understood you correctly. Thank you, Mr. Chairman.
[English]
The Chairman: Mr. Gallaway.
Mr. Gallaway: Mr. Darling, you were here with Mr. Spicer. Perhaps I can read from the blues. Mr. O'Brien asked whether there was any serious harm, from your point of view, in Parliament proceeding with this bill. Mr. Spicer replied that he didn't see any harm in it. Now you've come here today and say that you haven't studied the bill. Is that correct?
Mr. Darling: I said we have not looked at the implications of this bill, in detail, on the system.
Mr. Gallaway: Okay, thank you.
You also said that Mr. Spicer raised the issue of RDI when he was here.
Mr. Darling: No. In response to a question from Mr. Bélanger, Mr. Spicer said he would want to look at the implications of making RDI mandatory in terms of whether it would be possible to do so.
.1140
Mr. Gallaway: Okay. So you hadn't thought of that part of it when you arrived here.
Mr. Darling: No, we had not.
Mr. Gallaway: All right. You've given us some points here on the impact of Bill C-216 as drafted on the carriage of programming services - it's page 4 of the print-out I've been provided with. I may mix up the networks, but you talked about substituting Fox, as an example, for CBS on some stations.
Mr. Darling: Yes.
Mr. Gallaway: I subscribe to The Globe and Mail five days a week. If I were to wake up one morning and find I had the The Toronto Star on my doorstep... It's a newspaper, it probably has 90% of the same content, but I don't subscribe to The Toronto Star, I subscribe to the The Globe and Mail. In the province of Ontario and in many provinces that's called bait and switch. It's highly illegal. Why do you think the cable industry should have the right to bait and switch?
Mr. Darling: I don't think this is baiting and switching, with respect, sir.
Mr. Gallaway: What do you think it is then?
Mr. Darling: This is constantly seeking to improve the calibre, range and choice of programming to the maximum number of subscribers. To stay with your analogy, if you don't want The Toronto Star and you still want your Globe and Mail, you can pick up the phone the next day and say please stop this, I want my Globe and Mail.
My concern with this bill is not that you shouldn't do that, but rather if you do it and the person you are providing the new service for, the Fox substitution for CBS, says hold it, they prefer to keep CBS on their basic or on their first tier, they don't want it on the second or third tier, the way this bill is drafted means that the cable operator has no choice but to say sorry, you're not a customer of ours any more because 90% of our customers want the other package.
Mr. Gallaway: Conversely, if I follow your logic, if 90% of the people didn't want the switch, you would do it anyway. So where is the consumer in all of this?
Mr. Darling: As I understood your concern -
Mr. Gallaway: Let me finish the question please. At this point you're using the example that 90% of the people want Fox as opposed to CBS - I'll use that as an example - and you make that change. What happens if 90% of the people want CBS but you're going to make the change to Fox anyway? Where is the consumer in all of this then?
Mr. Darling: CBS would be moved to a higher tier and the consumer would have to subscribe to the higher tier in order to continue to receive CBS. This is not a hypothetical. This actually happened two years ago.
Mr. Gallaway: All right. So you're talking about adding services then and requiring the consent at the higher tier. Is that what you're telling me?
Mr. Darling: As I understand this bill, because it is the provision - and your word is provision or sale of a new programming service - Fox is a new service on the basic, and you must have positive consent.
Mr. Gallaway: Yes, that is correct.
Mr. Darling: There is not even a question here of pricing. The price will stay the same. What's being changed is the package you can purchase. I'm sorry, but as a consumer you will then have to face that question. I don't want that particular channel. Am I going to throw out the other 30 because of that, or do I accede to it?
Mr. Gallaway: Let's follow your example one step further then. Let's bump CBS up to the higher tier. Now if I am a disgruntled consumer who is getting the Fox on the low tier but wants CBS - one of the 10% of the people you're referring to - in order to get CBS, if I follow the present format, I'm going to have to buy a whole series of other channels. Is that not correct?
Mr. Darling: That is correct. I would point out -
Mr. Gallaway: What you're endorsing then is the same old story. You're still talking about the consumer being the captive in all of this.
Mr. Darling: I'm saying the consumer is the customer. The customer exercises their choice to buy or not buy at the price being offered by the supplier. That is the marketplace, as I understand it. We cannot guarantee to every subscriber or every consumer... I can't guarantee when I walk into Loblaws today that I can pick up the brand I bought six months ago. They're constantly changing. That is the marketplace.
The question is are you by law, if you pass this bill as it's being proposed, going to freeze forever the ability of the cable system to offer packages, or are you going to build sufficient flexibility into this law to prevent the cable system from charging more if they want to substitute, which is what we understood was your objective -
Mr. Gallaway: That's correct.
Mr. Darling: - but not remove the flexibility of substitution whenever there's something new or different or more interesting or varied somebody may want to subscribe to.
.1145
Mr. Gallaway: All right, let's pass on to your examples. I'll look at bullet three. You're talking about substituting CITV Edmonton, to be seen in Nova Scotia, for CHCH Hamilton, to be seen in British Columbia. This may no longer be possible. Why would it not be possible?
Mr. Darling: It's basically the same explanation.
Mr. Gallaway: Let's go to bullet one, which says new TV stations licensed to serve a local market could not be added to the basic channel line-up of the cable distributor without the prior consent of...all subscribers or each subscriber? Which is it?
Mr. Darling: Each and every one, which is all.
Mr. Gallaway: Okay. So if you want to add to the basic package -
Mr. Darling: By our regulations, if we issue a new television licence in Calgary, whether it's to the Craig application or the Global application, because that will be an over-the-air service in Calgary, the Calgary cable system must offer that, under our regulations, as part of the basic service. No change in price, but it must offer it.
Your bill says they can't provide a new programming service without the express prior consent of the purchaser, or potential purchaser, of the service. I interpret that to mean Rogers Cable in Calgary would have to canvass each of its subscribers and ask, do you agree we should add the new licensed over-the-air service to your cable system? If 3% of them say no, Rogers has no choice but to inform them then it can't offer the basic cable service. Because you said no to the addition, you're saying no to the whole package.
You are really handcuffing the flexibility of the entire Canadian broadcasting system with this bill.
Mr. Gallaway: Conversely, you're also handcuffing the consumer in all of this.
Mr. Darling: I think the consumer has choice, and we are in the process of licensing new systems and new alternative distribution systems which will enhance that choice.
Mr. Gallaway: One final question, then. Having regard to the fact that you were here a couple of weeks ago, and having regard to the fact that you have had a conversion since that time, is there any possibility you will undergo another conversion after your presence here? Do you think you have really sufficiently studied it?
I'm not being flippant. I want to be fair about this.
Mr. Darling: I can never be certain, and any law passed by Parliament is always subject to review and challenge in any court. So no, I can't be certain.
Mr. Gallaway: Any regulation of the CRTC you're interpreting is also open to the same type of interpretation.
Mr. Darling: Absolutely.
The Chairman: Mr. Arseneault.
Mr. Arseneault (Restigouche - Chaleur): I just want to focus on the bill itself. The intent is to get rid of negative option billing. You've come to committee today and there seems to be a consensus that we'd like to get rid of negative option billing. You have suggested in the brief that an amendment could be put. If this were amended, if this amendment were put, would it get rid of negative option billing?
Mr. Darling: Let me explain the structure of the cable industry to you, to explain how it will and will not. First of all, we are proposing you exempt under this law all cable systems that have fewer than 2,000 subscribers. Those happen to total 1,752 systems across the country. They are mostly in very small, isolated communities where the technological capacity of the system is fewer than 20 channels, and in some cases only 13 channels. Under our regulations we do not require that they do tiering and linkage. We do have the must-carry requirement explained by Mr. Howard. But those systems would continue to be exempt under our proposal.
I would point out that currently we don't regulate their rates. They are exempt from rate regulation. They have to judge the market in their community, and because they're small communities, they know if they charge too much they're going to hear from all their neighbours, because they are neighbours.
So as for how many people we're talking about, we're talking about approximately 7% of cable subscribers, and those 7% are scattered across the entire country. It would apply to any system with more than 2,000 subscribers. There are 280 of those systems and they represent approximately 93% of total subscribers.
.1150
The reason we're proposing that you exempt the ones under 2,000 is that they simply don't have the capacity to add an additional service. They must always substitute because they are using their full capacity now. Could you do negative billing here? Quite frankly, in these systems there's only one price. There's only one tier. There are not two tiers in these systems because technologically they don't have the capacity.
Mr. Arseneault: But with your amendment, could you negatively bill the 93% of subscribers? Does it eliminate negative option billing for the 93%?
Mr. Darling: For any new service not presently licensed by the commission, it eliminates the ability of the cable operator to offer that service and say you've seen it for three months so unless you tell me you don't want to keep seeing it, I'm going to start charging you for it. Our proposed amendments prevent that practice.
Mr. Arseneault: So in your estimation it would prevent what we call negative option billing for at least 93%?
Mr. Darling: Yes.
Mr. Arseneault: The bill as it is now presented also gets rid of negative option billing, does it not?
Mr. Darling: The bill as it's now presented gets rid of negative option billing.
Mr. Arseneault: But it has another problem; it limits some of the choices for a subscriber. The example you gave was that of a subscriber who did not want a change on their package. The company was going to change one item of that basic package, RDI, for example. They want to add that and if I as a subscriber want to say no, the choice for me is either yes or I get no cable. That's the choice. If I come from an area where there is only one cable company, then my choice is yes. I don't have a choice. I will take it.
So actually the bill may be doing the opposite of what the intention is. Although the cable companies may not realize it, it could be an addition to their tools of selling a channel. Actually, it's a way of negative option billing. I just sit there at home and I'm going to be offered a certain channel that's going to cost me 5¢ more. If I say no, I have no cable whatsoever, but if I say yes, it's worth 5¢. So I'm removing my option. I have no option at all then. It would be silly not to have any cable whatsoever, especially with two children in the household.
Mr. Darling: I agree with where you're going with your comments. My only point is that every subscriber of that system must positively say they want the change. What if they say no, I don't want that, I want to stay with what I have?
Let me give you a concrete example. The cable system in Whistler, B.C., carries RDI. It does not carry Newsworld. Under this bill, if the cable system wanted to add Newsworld to its offering at a price of 4¢ or 5¢ per subscriber, they would have to get the positive assent of each person. If they don't have on record the positive assent, they would have to cut them off.
When they wake up, as Mr. Howard said, and suddenly realize they should have read that piece of paper, they start phoning up the cable system and complaining that they were cut off. You're creating for the cable system additional operational antagonisms from their customers because they're simply trying to comply with the law you would have passed.
Mr. Arseneault: They're going to reply, and they'll probably say it's the politicians in Ottawa who passed the law and you'd better contact them.
To get back to your amendment, it will eliminate the so-called problem we've been discussing about adding a channel, except for the 7%.
Mr. Darling: Let me be clear. What we understood from what Mr. Gallaway said in the committee was that you're concerned about new licences for specialty services. This bill, the way we're proposing it, does not interfere with the issue of substitution. It leaves that flexibility completely to the operator in terms of what they offer, as long as by substituting they don't increase the price.
.1155
It is focused, according to our understanding, on the question of if you're going to charge people more, they must know they're being charged more. It does not address the question I think I'm hearing Mr. Gallaway say, but the subscriber is still subject to whatever the cable system wishes to offer them: I'm sorry, but until you have a more advanced technology the cable system can only offer you packages, it cannot offer you a choice of specifics within a package. We may get there.
The Chairman: I think we have to get on. I think you've made your point.
I have one question before you leave, because if you look at your proposed amendment 3(1)(t)(ii.1)(a), ``that service is substituted for another service and the same or a lower rate is charged, or'', isn't it the fact today that cable companies - say you have 20 channels on one service - won't charge you more but they substitute a quality program for a completely innocuous program that nobody wants to watch or that very few people want to watch, and they still have 20 so they substitute and then the other one goes on a tier that is a paying tier? Isn't it the fact today that this is happening? I know it's happening to me.
Today, what one sees in Quebec is one cable company delivering services to all homes, regardless. There's no competition any more. There's only one left. That's what they've been doing consistently. You still get the same number of channels, but you have a channel there where they show goods for sale all day and nobody wants to buy any of these goods, nor do they want to watch it. So in your item (a), you don't put any qualification as to ``substituted for another service of equal quality, equal value, or equal content''.
Mr. Darling: My difficulty is how do I evaluate quality?
The Chairman: I know. This is my difficulty too, as a customer. I find that very difficult to evaluate; but this is what's happening if you have it that way, and they can substitute gladly and then eventually on the basic channel you'll have RDI, you'll have Newsworld, and then you'll have all kinds of folderol, and then all of the other ones will be extra-pay, according to this.
Mr. Darling: No. I think this is reflecting what is the practice and has been the practice consistently. The cable industry is constantly modifying its offering of packages to the customers and it's in response to customer demand and customer preferences.
All I'm saying is that if you pass the bill you have before you, you are going to freeze forever that existing package without any substitution flexibility except through constantly seeking positive assent from their customer, and if the customer says sorry, I'd rather keep this than the one you're proposing to substitute, the only option then for the cable system is to say they've lost you as a customer.
The Chairman: One comment I might make is that I don't once recall a cable company asking me what my view was about a certain substitution or a certain package or asking my community what its view was. In other words, the package is decided according to what it views as the public good.
Mr. Darling: What it views will be the largest number of subscribers to its service. It's a market-driven packaging.
The Chairman: That's a good point.
Thank you very much, Mr. Darling. Thank you for appearing. We appreciate it.
I now call on the Consumers' Association of Canada and the Public Interest Advocacy Centre to appear together, please.
Excuse me, could we break for five minutes? You can stay there. We have a real problem. There's a special caucus of Liberal members right now, which is to be between noon and one. I have to consult with my colleagues as to whether they wish to attend the caucus or stay here. I can't force them to stay here as members of the committee. I'd like to talk to my colleagues for a minute to see what their wish is.
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The Chairman: I would like to ask a question of the opposition members. They don't have to necessarily agree, which is their right. We have a problem. We have a special caucus call between twelve and one from our party, which my colleagues want to attend. It's of significant importance to us that we should be there.
Could I ask for your indulgence, and also the witnesses who have taken the trouble to come here in good faith, that we will go to our caucus and perhaps if you could take your lunch break earlier and we could come back here between one and two?
[Translation]
Mr. Leroux: I must go to caucus at 1:00 p.m. I absolutely must be there. That is a problem, all the more so since I wanted to discuss these things with you. I'm leaving this afternoon for Edmonton and I will miss the next two meetings of the committee. That is why I would have liked to settle these things this morning.
[English]
The Chairman: Yes.
Mr. Andrew Reddick (Research Director, Public Interest Advocacy Centre): If I may add, we both have very short statements to make and very little to add to what we've already said to the committee, so we could be out of here quickly. Unless you have lots of questions we won't take very much time at all. That's for both organizations. We also have other commitments down the road.
[Translation]
Mr. Leroux: The problem is due to the fact that this special caucus is being held. We have not finished hearing witnesses; others were to appear and we were then to study the bill. The problem we are having is with the work of the committee as a whole.
[English]
The Chairman: Excuse me. Mr. Gallaway, in terms of the first available date there are two possible choices, if we can organize with the Museum of Science and Technology to transfer to June 13.
[Translation]
Mr. Leroux: I would like to make a proposal. I don't think the witnesses would be very pleased if we sent them home and asked them to appear again at a later date.
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May I suggest that we finish our work between 1:20 and 2:10 p.m.?
The Chairman: Yes, I think we could do that.
Mr. Leroux: I don't want us to try and do that, I want us to do it, to have that as our objective and to finish studying the bill when we leave at 2:10 p.m.
[English]
The Chairman: Is it possible for you to come between say 1:15 p.m. and 2:10 p.m.?
Mr. Harper (Simcoe Centre): I don't have a problem with that, Mr. Chairman, provided our -
The Chairman: What about you?
Mr. Reddick: No, I think we're going to lose all the witnesses at that time. They all have five minutes.
Mr. Hanrahan: We've debated this for five minutes already. Let's go.
The Chairman: Yes, okay. You go.
Mr. Reddick: I am Andrew Reddick with the Public Interest Advocacy Centre. Quite simply, we support the proposed amendment as it stands. We feel that paragraph 3(1)(t) clearly addresses and applies to distribution undertakings and their behaviour.
The intent of the bill was to address marketing activities of companies offering services, and we don't think it abrogates the regulatory policy activities of the CRTC. We're happy with it as it is.
Ms Irene Seiferling (Past President, Consumers' Association of Canada): My name is Irene Seiferling and I'm with the Consumers' Association of Canada. With me is Gail Lacombe of CAC and also CAC Quebec.
We wish to reassert our support of Bill C-216, in that we feel it provides the protection necessary for consumers. I understand that our executive director was here last week and gave our position. I would invite you to revisit that document. We stand fully in support of the bill as it stands today.
The Chairman: You have heard the CRTC. One of our members produced a motion the other day to say if this bill passes as it is now, it would be impossible in the future for the CRTC to mandate a service like RDI, for instance, in places where it is not now available. Have you looked at this? Have you addressed it? Are you still satisfied that with the present bill the other can happen?
Mr. Reddick: I am, yes. There was mention earlier of the possibility of off-air services. If they were included in the basic service at no extra cost, I don't see that being a problem with the bill as written. But the amendment deals with payment and payment of new services. If it were offered free, I don't know of very many consumers who would turn that down.
I think it's also a question here of differentiating between the CRTC's policy-making, decision-making authority and the cable companies' control over decision-making on what consumers watch. I think those are the two issues we've heard about this morning. Personally, I don't see a problem with the bill as written.
[Translation]
Mr. Leroux: Are you sure that there is no risk of francophone communities in certain areas suddenly being deprived of RDI because a majority of the residents in that area would not want it.
[English]
Mr. Reddick: If it's offered at a cost, do you mean as a payment or as a free service?
[Translation]
Mr. Leroux: It has to be in the basic service.
[English]
Mr. Reddick: In my reading of the amendment it talks about payment for new services. If they were offered free as part of a new package, I don't think it's an issue. I think the issue does arise if you're talking about changing the price of a new service. I think consumers need to have some choice about that.
[Translation]
Ms Gail Lacombe (Chair of the Board of Directors, Consumers' Association of Canada): What I can say, in reply, is that RDI is included in the basic service offered in Quebec at this time.
Mr. Leroux: If all consumers had to accept the basic service package and if the majority did not want RDI and preferred something else, the francophone community, which is dispersed, could no longer have access to it.
Ms Lacombe: It is up to the consumer to make that choice. We are opposed to having things imposed on us that we do not want. The choice has to be left up to the consumer; that is one of his fundamental rights.
Mr. Leroux: That law exists in Quebec.
Ms Lacombe: Yes, but we were talking about Canada as a whole.
[English]
Mr. Harper: Just briefly, I think we're mixing apples and oranges here. I thought this bill was dealing with negative billing where it's going to cost people money. I wholeheartedly support that, but I think an alarm has been raised here that we should heed. What we're getting into when it doesn't affect dollars out of the pockets is whether it's quality programming or not. I don't think that should be this committee's concern. That's going to be market-driven.
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The language in here is ``provision or sale''. Sale is one thing and provision is another. The amendment makes a lot of sense to me. If they want to be able to substitute at no cost to our customers then I don't have a problem with that. But if we are talking about an additional fee, I wholeheartedly support not allowing that to happen. We should take a good look at this amendment.
The Chairman: Mr. Arseneault.
Mr. Arseneault: You heard the example I gave to the CRTC. You're sitting here, whereas I am a subscriber somewhere in rural Canada. There's one cable company and it wants to change my package. The CRTC claims that if the bill passes as is and I don't want a change in my package - it would be an increase of 5¢ or something in that order - my choice is to either pay it or lose all my cable and not be a subscriber any more. Do you agree with that interpretation?
Mr. Reddick: No, I don't agree. I don't think people should have to lose their cable over that. I think they should have the choice.
Mr. Arseneault: I don't agree either that they should lose their cable. But according to the new law, if it were passed, that's what would govern the cable company. It would have no flexibility. That would be the choice. The choice would be to no longer be a cable subscriber. You could subscribe to another cable company. That's your choice. But there's no other cable company. That's what the CRTC said today, and it agreed with that example.
Who is a lawyer here?
Mr. Reddick: None of us are lawyers.
Ms Seiferling: Our executive director is our legal counsel and she was unable to attend. We too are concerned about that issue. It was just brought to our attention last night. I don't know if there's an opportunity for Rosalie and legal counsel at PIAC to study that a little closer. It is of concern to us, but I don't want it to jeopardize the entire intent of the bill.
Mr. Arseneault: But the amendment does get rid of negative option billing.
Mr. Reddick: Yes.
The Chairman: As agreed, we're going to suspend the meeting for now. We'll resume at1:20 p.m.
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The Chairman: We decided to reconvene this afternoon on the basis that we had satisfied ourselves and would go to the clause-by-clause study.
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A request has been made to me by Mr. Stursburg, who wishes to appear before the committee on behalf of the cable association. I'm not going to make the decision. I'll leave it to you to decide. We have until 2:10.
Mr. Gallaway: Why don't I just make a motion that the Canadian Cable Television Association not be allowed to appear, as agreed? We've had our witnesses. I'll make that motion.
[Translation]
Mr. Leroux: Mr. Chairman...
[English]
The Chairman: Just a minute, please, is there a seconder? Don't we need a seconder?
[Translation]
Mr. Leroux: Has that request to appear just been made now?
The Chairman: Yes, we've just received it.
Mr. Leroux: In order to be able to finish our work at 2:10 p.m... In assessing the remaining time, have we considered whether that witness could appear without upsetting our schedule.
The Chairman: We've agreed that we have until 2:10 p.m. An amendment was proposed. The witness is supposed to speak for two minutes, but I know what happens. If there are questions, it will take more than 2 minutes. We will have to listen to what he has to say and ask questions. I can give you no guarantee that in the time we have... Can he make a statement, without subsequent questions by committee members? That is the issue.
Mr. Leroux: In that case, if our colleague Mr. Gallaway is in agreement, we could hear a two to three minute statement without subsequent questions and proceed to our study of the bill immediately after. We would have to decide.
[English]
The Chairman: So you'll leave your motion on the floor? I'll ask for a vote then.
Those who want Mr. Stursburg to be heard for two minutes will vote against the motion. Those who don't want to have more witnesses will just vote with the motion, that's all.
I'll call for the vote. Obviously, Mr. Gallaway, you'll vote for your motion.
Motion agreed to
The Chairman: The motion is carried, so we'll just carry on with clause-by-clause.
On clause 1
Mr. Arseneault: I'm moving an amendment to clause 1, Mr. Chairman.
The Chairman: Yes, Mr. Arsenault.
Mr. Arseneault: Mr. Chairman, the suggested language as presented this morning... I would move that amendment, the language that was presented in the CRTC advice.
The Chairman: Mr. Arseneault, could you read the amendment you want to present, please ?
Mr. Arseneault: I move that Bill C-216 in clause 1 be amended by replacing lines 7 to 19, on page 1, by the following subparagraph:
- (ii.1) serving 2,000 or more subscribers should not demand or receive payment for the
provision or sale of a non-mandatory pay or specialty programming service offered by an
undertaking licenced after (date) without the express prior consent of the purchaser or potential
purchaser of the service, unless:
(A) that service is substituted for another service and the same or a lower rate is charged, or
(B) no distinct separate charge is levied for that service,
[English]
The Chairman: Have all the members got a copy of the amendment in English and in French?
[Translation]
Is there a debate on the amendment?
[English]
Mr. Gallaway: What date is inserted?
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Mr. Arseneault: I would suspect it would be the date it receives royal sanction, would it not?
Mr. Gallaway: Would it be, for example, today's date?
Mr. Arseneault: No, it couldn't be. It wouldn't be a law.
Mr. Gallaway: No, we can't make it retroactive, you're right. I should know that.
The Chairman: Could we say date of the sanction of the bill?
Mr. Gallaway: Yes, all right.
Mr. Arseneault: Date of royal assent.
The Chairman: Yes, date of royal assent.
Mr. Arseneault: That's the normal procedure.
The Chairman: Est-ce que tout le monde est d'accord that we modify this to say date of royal assent in order to leave no confusion?
Some hon. members: Agreed.
The Clerk of the Committee: Where exactly would that be placed?
The Chairman: It would be ``(date of royal assent)''.
Mr. Arseneault, without making an amendment to your amendment, are you agreeable to the text being changed so it would read ``(date of royal assent)''?
Mr. Arseneault: Yes.
[Translation]
Mr. Leroux: Mr. Chairman, the Official Opposition is going to vote against the amendment and against the bill. I have nothing to propose to clarify the amendment. I have no objection to the amendment being clarified. Later, I will give you a summary of my opinions and of the positions of the Official Opposition on the bill.
[English]
The Chairman: Mr. Arseneault, Mr. Gallaway and other members, I am advised by the experts that we don't need to qualify the date because it automatically means the date of royal assent. If that is the case, Mr. Arseneault, then we'll carry on with the motion just the way it reads.
Mr. Arseneault: So ``licensed without the express''; take out ``after (date)''.
Amendment agreed to
The Chairman: I will now call for clause 1 as amended.
[Translation]
Mr. Leroux: The Official Opposition votes against the bill and against the amendments.
The Chairman: Yes, yes.
Mr. Leroux: I would like to summarize the position of the Official Opposition on this bill.
I remind the members that we do agree on the substance of the bill, on the one hand. We agree quite clearly on the fact that this trade practice is unacceptable. I think that our colleagueMr. Gallaway has exposed a practice that is totally unacceptable.
However, the Official Opposition has clearly established that there is a consumer protection act in Quebec and that this trade practice falls under provincial jurisdiction. To establish that fact, I referred to a case that was before the Supreme Court and which involved trade practices that fell under federal jurisdiction according to the applicant, the organization involved, and the law.
However, judge Martland's ruling clearly established that publicity, billing and trade practices were of provincial jurisdiction, which was in fact confirmed by the opinion of Senator Beaudoin that provincial law, which concerns not television but the consumer, trade, and publicity, applied to what is known as the theory of qualification of the law. The British North America Act states that trade practices fall under provincial jurisdiction, and his opinion concurred with that; he felt that that trade practice was indeed a matter of provincial jurisdiction.
There is already a very strong law in Quebec in this regard and that practice has not been used in that province, as you know. Mr. Gallaway exposed this practice in English Canada, especially in those provinces that did not apply a similar law. British Columbia has one, as well as Nova Scotia.
Our position is simply that each province must assume its responsibility for trade practices and pass its own consumer protection laws.
Our submission is that by passing a federal law in this area, we would be throwing the door wide open to challenges of both federal and provincial laws and that, as is often the case, this would be to the advantage of federal claims.
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Anyone could then challenge laws that are already in effect in provinces. We cannot accept this threat to laws that are already on the books in British Columbia, Nova Scotia and Quebec from organizations that would claim that these trade practices now fall under federal jurisdiction and which might launch court actions that would go all the way to the Supreme Court.
Our colleague, Mr. Gallaway, mentioned in his argument that the law is clearly a federal matter. I wanted to explain clearly that the issue is not communications, or television, as has been said. We are talking here about the practice of negative option billing. Negative option billing is first and foremost a trade practice, an agreement between a client and a service provider.
For those reasons, Mr. Chairman, the Official Opposition rejects the bill, but our position is based on the reasons I have set out and is not a rejection of the member's worthwhile idea, which is to protect the consumer.
The Chairman: Mr. Leroux, you have explained the context of the Official Opposition's position very clearly. I think that we understand the nuance very well, and your position.
[English]
Are there other members who would like to address any of the questions relating to clause 1 before I call for the adoption or otherwise of amended clause 1?
[Translation]
Mr. Leroux: May we please have a vote?
[English]
Clause 1 as amended agreed to on division
The Chairman: Shall the title of the bill carry?
Some hon. members: Agreed.
An hon. member: No.
[Translation]
The Chairman: Do you want a recorded vote?
Mr. Leroux: No. The same vote.
[English]
The Chairman: Shall I report the bill to the House?
[Translation]
Mr. Leroux: Certainly not.
[English]
Some hon. members: Agreed.
The Chairman: The bill will now be reported to the House as adopted.
I have just one very brief item of business before we close. I received a letter fromMr. Andrew McDermott, policy adviser, cultural development and heritage, dated May 29, addressed to me as chair, in regard to this week's hearing on the National Film Board.
- Dear Mr. Lincoln:
First, Mr. Hoedeman, president of the Syndicat général du cinéma et de la télévision, alleges that he wrote to the former Minister on three occasions when, in fact, my records indicate that he wrote only once, that being February 5, 1996.
Second, Mr. Hoedeman refers to a letter he received from Danielle May, Executive Assistant to the Minister, dated April 30, 1996, which directed him to contact myself.Mr. Hoedeman noted that he contacted me several times. Again, my records indicate that the one and only message received in our office from Mr. Hoedeman was to another person, who then referred the matter to my assistant. My assistant attempted to contact Mr. Hoedeman, including at his residence, but no call was returned.
It is the policy of our office to meet with individuals and members of both public and private organizations when the Minister is unavailable. This is not only a duty which we must perform but it is one that contributes toward understanding the varying points of view which, in turn, contribute to sound public policy.
Yours sincerely,
Andrew McDermott
Policy Advisor, Cultural Development and Heritage
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Mr. McDermott called me and I said I would put his letter on record. So from this point on I've done what I feel is my duty. Then it is for Mr. Hoedeman and Mr. McDermott to sort it out between themselves.
Mr. Arseneault: Will that be circulated to members?
The Chairman: Yes, we can do that.
Mr. Arseneault: I would appreciate that, because there are some members who are not here.
[Translation]
Mr. Leroux: Mr. Chairman, the interpreters had trouble following because the letter was read very quickly. I would like to have a copy of the letter, please.
The Chairman: I think I will ask the clerk to have it translated before sending it to you.
Mr. Leroux: Mr. Chairman, since we are concluding our work, I would like us to discuss the motion I tabled the other day. We were discussing whether or not it was in order.
The Chairman: Yes. I think that if we inserted the word "recommending", if we talked about a "report to the House recommending that the Government", the motion would be in order.
Mr. Leroux: We fully agree with the redrafted, reformulated motion, with the new working of the motion. I would like the committee to accept it.
Are we checking to see whether we have a quorum?
Mr. Arseneault: I don't think we can examine that document today. I don't believe we can.
Mr. Leroux: No. According to the procedure, the motion is tabled and a certain period of time must elapse...
The Chairman: Mr. Leroux, will you attend the next meeting of the committee?
Mr. Leroux: I won't be here next week, but I will attend the meeting the following week. I will be in Edmonton for...
The Chairman: The members of the committee have not had much time to study the motion. Would it be possible, especially since the Vice-Chairman of the committee, from our party, is not here today...
Mr. Leroux: There is a problem with the quorum, isn't there, Mr. Chairman?
The Chairman: Yes, there is also a problem with the quorum, but if we could decide on ...
Mr. Arseneault: Do you want the vote to be held today?
The Chairman: No, no.
Mr. Arseneault: Well, it doesn't matter then.
Mr. Leroux: I would like the committee to accept the tabling of my motion.
The Chairman: Yes, the committee accepts the tabling of the motion.
Mr. Leroux: Very well. We can discuss it when I return.
The Chairman: When you return, with pleasure.
Mr. Leroux: No problem.
Mr. Arseneault: Quite frankly, I don't think the motion is in order. However, if you think so, it is not up to me to make that decision. But I am going to seek advice, because I don't think the motion as presented is in order.
The Chairman: Mr. Arseneault, the committee's experts have checked and tell us that the motion is in order.
Mr. Arseneault: It is up to you to make the decision, but in my opinion, it is not in order.
The Chairman: If you want to table a motion challenging it when we return, you can do so.
Mr. Arseneault: It doesn't matter.
Mr. Leroux: Lastly, Mr. Chairman, I would like to thank those who sent one of the reports we had asked for. We have received, in our offices, one of the reports we had asked the witnesses to send, the first one.
The last time we met, I asked whether we had taken note of each request for reports by the committee to witnesses who appeared before us. Do we have such a list? Since we have been hearing deputy ministers or other officials from departments, we asked for a whole series of documents and the only one we have received so far is the one we just got.
Mr. Arseneault: We have received documents.
Mr. Leroux: If you have received them, I have not.
The Chairman: When the regular clerk of the committee returns, I will make sure that he draws up a list of all the requests we have made so that we can follow up on the matter.
Mr. Leroux: Very well, Mr. Chairman.
The Chairman: Thank you very much.
The meeting is adjourned.