CHPC Committee Report

Introduction

The ubiquity of digital media has forever changed the Canadian broadcast environment. Over the past decade, digital technology has significantly expanded the number of platforms from which audio and video programming can be accessed and received. The new services are characterised by their personalisation and on-demand accessibility from the Internet and mobile screens. Demand for these services is driven by the estimated 16.8 million adult Canadians who made personal non-business use of the Internet in 2005. That year, nearly 64% of Canadians 18 and older used the Internet at least once a day, a figure that jumps to nearly 73% in the 18-34 demographic.[78]

Because of digital media's influence, traditional broadcasting is now about content delivery across as many platforms as can be made available, and the development of a global brand to attract audiences to that content. It is in the global milieu that Canada's public broadcaster must act, competing for audiences, advertising dollars, and the public's finite attention span for news, information and entertainment.

Audiences too have changed, now expecting the content they want, when, where and how they want it. Traditional broadcast television's former stranglehold on audiences has been weakened by competition from the Internet, specialty channels, iPods, video-on-demand, and audio and video streaming, to name just a few. As audiences fragment across multiple platforms, advertisers follow, seeking to take advantage of increasingly targeted niche programming and Web sites to deliver their messages. Advertisers spent in excess of $1 billion on the Internet last year in Canada. This has significantly impacted the traditional business model of conventional broadcasters for which advertising revenues are the foundation.

Private broadcasters are responding to these changes by attempting to reassemble audience and advertiser fragments through consolidation and mergers. In Canada, 2007 saw some of the largest mergers in the history of the broadcasting industry. A number of private media conglomerates now control the means of production and distribution of content, taking advantage of the efficiencies of distributing their own content through the cable, satellite, and Internet distribution systems that they also own. However, for CBC/Radio-Canada, competing through size, mergers and acquisitions on the necessary scale is not an option, making its position unique among the Canadian broadcasters that operate on a national scale.

Some of the key themes and challenges that emerged from this study include: the potential for renewed public relevance of our national public broadcaster afforded by digital media, particularly the Internet; the changing role and business of conventional broadcasters from traditional broadcasting activities to the delivery of content on multiple platforms; the associated changing audience expectations and behaviours; questions about whether the existing regulatory approaches are still applicable or effective; and whether the Broadcasting Act and CBC/Radio-Canada adequately provide for these changes in the broadcasting environment. CBC/Radio-Canada must evolve to meet these challenges in the context of the changing media environment.

The definition of new media has also evolved with the accelerated changes in technology. "New media", "digital media" and "emerging technologies" are used interchangeably for the purposes of this report, since they were all employed by witnesses to describe the range of communication and broadcast products and services that involve the digital delivery of audio, video, graphics and alphanumeric text, whether through wireless, the Internet, or more traditional digital broadcast distribution methods.

For policy purposes, the CRTC has defined "new media" as the delivery of digital products and services via the Internet, such as Internet broadcasting.[79] As such, the discussion of the New Media Exemption Order in this chapter employs the term "new media" using this more narrow definition.

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CBC/Radio-Canada and Digital Media

In this era of converged media, broadcasters must have a presence across as many platforms and in as many forms as they are able. Digital and broadband properties are now part of developing a global brand and remaining relevant to audiences, particularly younger audiences. The need for CBC/Radio-Canada to meet the new standard for content delivery was repeated by witnesses throughout the study.

The CBC/SRC already has a new media presence, offering radio podcasts, mobile content, online news, and an extensive video archive on the Internet. These offerings should be maintained and developed. It is essential for all broadcasters to have a multi-platform presence in today's media environment.[80]

People are going to the Internet for their news, for their content, whether it is for streaming radio or video or for static news pages or updated news pages. I think that's at the heart of the problem today; new media and traditional media are getting blurred together. And you can't really compartmentalize them in certain blocks. You can't say that this is television, this is radio, this is the Web. The lines have totally blurred in terms of consumer preference and consumer behaviour.[81]

Witnesses pointed to new media, particularly the Internet, as a means for CBC/Radio-Canada to renew its commitment to Canadians and better reflect both the regions and individual voices. Reference was made to the potential of the second wave of Internet use, known as "Web 2.0". Its characteristic interactivity and reciprocity between user and provider has manifested online as user-generated content (UGC), social networking sites, blogs, podcasts, wikis, RSS feeds, and Web services that exemplify and encourage this type of activity, in contrast to the first wave of one-way, read-only Web sites. It is in this sense that digital media are seen to enable a redefinition of the "public" in public broadcasting. Witnesses invoked Graham Murdoch's conception of the digital commons:

. [I]n an age of increasing individualisation and commercialism we need more than ever to reinvent the public domain. Because broadcasting is central to contemporary cultural life, and is likely to remain so for the foreseeable future, rethinking public service is the key to this project. Pursuing it requires us to jettison our familiar analogue maps and draw up a new digital chart. We have to stop thinking of public broadcasting as a stand-alone organisation and see it as the principal node in an emerging network of public and civil initiatives that taken together, provide the basis for new shared cultural space, a digital commons, that can help forge new communal connections and stand against the continual pressure for enclosure coming from commercial interests on the one hand and the new moral essentialism on the other.[82]

Michael Geist, Canada Research Chair in Internet and e-commerce law at the University of Ottawa, builds on this point. His submission to the Committee proposed a rethinking of the "public" in public broadcasting in the age of information abundance. Dr. Geist recommended that CBC/Radio-Canada embrace the opportunities afforded by the Internet's social media tools - citizen journalism, blogging, digital photo-sharing, and user-generated content - to transform itself "from Canada's public broadcaster to the broadcaster of the Canadian public."[83]

The National Film Board submission noted a qualitative difference of the commercial values and conditions that exist in the context of MySpace or YouTube, which precludes their doing what a public space can and must do. "We have a duty to Canadians to provide a space for public discourse, for a social networking [based] on public values."[84]

CBC/Radio-Canada President Robert Rabinovitch touched upon this sentiment with his comments on programming:

We want to constantly re-examine what we do. We need to take risks, which means we will not always succeed. Like any other broadcaster today, the pace of change forces us to experiment with new platforms, new genres, and new programming concepts, not all of which will work, but they all must be tried. Serving Canadians demands no less than continuous renewal.[85]

The CBC/Radio-Canada is seen to have made inroads in its use of new media to connect with Canadians and fulfil its mandate. CBC.ca and SRC.ca are two of Canada's most visited and most trusted sources for news and information. Local radio, news and currents affairs can be streamed over the Internet, along with video clips of television shows. Digitisation has also enabled unprecedented access to CBC/Radio-Canada's historical audiovisual archives. The CBC/Radio-Canada digital archives have made available thousands of clips from news and current affairs programmes.

Notwithstanding its new media accomplishments to date, the Committee heard from a number of witnesses that CBC/Radio-Canada should be doing more to exploit the opportunities presented by digital media, particularly to engage Canadians and enable a truly interactive online public space where their views can be heard. Dr. Catherine Murray, co-author of the 1996 Juneau Report,[86] noted that:

Certainly few foresaw that the CBC could embrace new media, but it needs to do far more to be the pivot of the digital commons. I believe, too, that our committee, and especially the Lincoln report, saw the CBC as absolutely basic to the idea of preserving a public space on the digital commons. I believe the Lincoln report went further than we did, that the CBC must work together on the public Internet with the not-for-profit and community broadcast sectors of the new environment, something that the CBC has not yet done at all.

One of the most important calls the Standing Committee can make is upon the Minister of Canadian Heritage to coordinate a strategy to protect community, independent and alternative media, with the CBC as its hub, on Canada's emerging digital commons. In my vision, CBC TV 3 would link campus TV, community TV, and a number of other not-for-profit programme providers, as the hub across Canada.[87]

As we shall see later in this chapter, funding was consistently identified as an impediment to the cultivation of a Canadian online public space overseen by CBC/Radio-Canada. Witnesses also raised concerns about the need to regulate certain aspects of the Internet to ensure a Canadian cultural presence in the future. Nonetheless, the Committee heard support for the Corporation's new media endeavours to date, including staking out a Canadian Internet presence and enabling access to Canadian content online.

Content Is Still King

Digital media have changed the traditional way of thinking about broadcasting. It is now conceived of as content delivery. This implies that, for all the new means of accessing and receiving audiovisual products, content is still the imperative that will determine relevance to audiences. This being so, the need for our national public broadcaster to make qualitatively different Canadian cultural content is more important than ever, since it is through this lens that it may offer something to set it apart from purely commercial programming. Witnesses noted the new media content of the BBC, as an organisation to emulate. " . I love the example of the BBC. If you have good stuff, people are going to go to it in the new media."[88]

The need for high-quality Canadian content across all distribution platforms was a recurrent theme throughout the study. Dr. Pierre Bélanger of the University of Ottawa summed it up this way:

This phenomenon of trying to catch up with what the competition is doing is obviously forcing us to constantly think of novel ways to repackage our content. There's a dogma in the new technology world that says produce once, distribute many. I think one of the greatest producers of content in Canada has to be the CBC/Société Radio-Canada. I think we have to give this public organization the means to not only continue to produce as wide a variety of content as possible, but also to multiply and to disseminate its content on as many different platforms as possible.[89]

RECOMMENDATION 2.1

Recognising the need for Canadian public spaces in the online environment, the Committee recommends that CBC/Radio-Canada continue to develop its Internet presence and to make its content accessible online for Canadians.

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CBC/Radio-Canada Online

CBC/Radio-Canada established its web presence at CBC.ca and Radio-Canada.ca in 1995. The Corporation's online endeavours were commended by many witnesses, particularly, they pointed out, given the limited resources at its disposal.

The national public broadcaster is seen to be providing a reliable Canadian presence for news, information and Canadian content in a global media environment dominated by foreign content and market influence. Traffic has more than doubled to its two main Web sites, cbc.ca and radio-canada.ca, in the past five years, and they are among the most visited Canadian news and information Web sites.

Source: Media Metrix Canada - Total Canada

The tables below show that each month more than 10% of Canadians visit cbc.ca. It is consistently in the top three news and information Web sites. Radio-Canada.ca ranks second among Francophone users, with nearly 1.5 million monthly visitors to the Web site.

Source: comScore Media Metrix (English Canada)

Source: comScore Media Metrix (French Canada)

CBC/Radio-Canada Video

In the past decade, digital technology has expanded the number of platforms over which video programming can be accessed and received. These new services are characterised by their personalisation and many are available on-demand from the Internet and mobile screens.

Tab. 3: IIlustration of Multi-Platform Growth - Video
1995	2000	2005
TV Distribution Over-the-air TV Analog Cable	TV Distribution Over-the-air TV Analog Cable Digital Cable DTH Satellite	TV Distribution Over-the-air TV Analog Cable Digital Cable DTH Satellite Wireless cable IPTV
Personalization VCR Specialty TV Pay TV	Personalization VCR Specialty TV Pay TV DVD Player PPV	Personalization VCR Specialty TV Pay TV DVD Player Video downloads	Personal video recorder Video streaming Video-on-demand
	Portable DVD Player	Portable DVD Player Digital video player Mobile phone Laptop computer

Source: CBC. Broadcasting Public Notice CRTC 2006-72 Comments of the CBC/Radio Canada, September 1 2006

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CBC/Radio-Canada noted in its submission that while the use of some of these services is still in the early stages, their acceptance is much higher among younger users.

Tab. 4: NEW WAYS OF ACCESSING VIDEO CONTENT
	Anglophones 18+				Francophones 18+
	18-34	35-49	50-64	65+	18-34	35-49	50-64	65+
Past month VOD usage	6%	7%	3%	2%	7%	5%	3%	1%
PVR penetration	5%	5%	3%	1%	2%	3%	2%	1%
Past month video streaming	26%	19%	13%	5%	26%	15%	8%	3%
Past Month video downloading	22%	11%	5%%	2%	16%	5%	3%	0%

Source: CBC/Radio-Canada's MTM, 2005

CBC/Radio-Canada has made progress in taking advantage of new formats and making its content available in new formats. For example, streaming video of news and current affairs and clips of CBC/Radio-Canada programming are made available on-demand from its Web sites.

Where its online programming for video content has been critically acclaimed, however, is through initiatives such as the now defunct Zed TV. The show was part of the CBC late-night broadcast and featured new music, documentaries, and short films from emerging Canadian and international artists. Zed was mentioned by a number of witnesses, who praised it for its innovation. When it was cancelled in 2006, the Canadian Media Guild argued that it was the job of the public broadcaster to "take risks, chart new courses for TV and other media, and reach audiences who are not well served on the rest of the 500-channel dial," as opposed to pursuing ratings.[90] Its Web site, no longer active, still provides access to some of the show's archives and the 50,000 "creative uploads from people across the country and around the world."[91].

[The] independent media art sector applauds initiatives such as CBC's Zed TV which began in 2002 and unfortunately went "off the air" in 2006. Zed TV, billed as "open source television", applied a series of new ideas revolving around user interactivity and niche programming. For the independent media arts sector, Zed TV offered a platform to showcase a vital section of Canadian culture almost entirely left out by the traditional television and radio programming. Other CBC programmes maintain podcasts; streaming audio Web sites that must continue to be developed and be available online. Not only do these initiatives reach new audiences within Canada, they bring Canadian Content to the world.[92]

Zed TV represents exactly the type of content referred to by witnesses, experts, and academics who spoke of Web 2.0 and digital technologies as the means of bringing the Canadian public back to its broadcaster. Zed was ultimately criticized for not exploiting this potential fully enough.

CBC/Radio-Canada Audio

The trends in the delivery of audio content are much the same as for video. New audio platforms mean that listeners have access to a greater diversity of content, and more control over where, when and how content is accessed and listened to.

Source: CBC. Broadcasting Public Notice CRTC 2006-72 Comments of CBC/Radio Canada, September 1, 2006

Listening to conventional radio has decreased over the past decade among all age groups, but especially so among teenagers and young adults.[93] Research shows that about one in five Canadians listens to audio streamed over the Internet. All of the new ways of accessing audio content are higher among younger demographics.

Tab. 6: NEWS WAYS OF ACCESSING AUDIO CONTENT
	Anglophones 18+				Francophones 18+
	18-34	35-49	50-64	65+	18-34	35-49	50-64	65+
iPod/MP3 Player penetration	42%	24%	13%	3%	23%	16%	7%	2%
Past month Download podcast	12%	9%	4%	1%	5%	5%	2%	0%
Past month audio streaming	38%	25%	14%	6%	28%	17%	10%	3%
Past month music downloading	41%	18%	3%	3%	26%	11%	4%	2%

Source: CBC/Radio-Canada's MTM, 2005

The achievements of CBC/Radio-Canada's digital and online audio initiatives have made its radio programming widely available through Internet audio streaming, satellite radio and podcasts. CBC/Radio-Canada streams all of its local radio stations online, so they can now be heard from anywhere across Canada. Three new audio stations are also available through Sirius satellite radio and on the Internet. CBC Radio 3 and its French language counterpart, Bandeàpart, target younger audiences than the mainstream radio stations. They offer content and culture from emerging artists from Canada and around the world. Radio Canada International offers a Web service, RCI Viva, that is promoted as providing information about Canada to new immigrants. Particular attention was paid by witnesses to Radio 3 and Bandeàpart for their innovation and appeal to newer, younger audiences.

I really think CBC Radio 3 speaks to an innovative component of the CBC by promoting local Canadian independent music that you can't get anywhere else. It's reaching beyond older, upper-crust generations. It's a living, vibrant organisation that is connecting with many Canadians.[94]

Speaking of the ways in which the CBC/Radio-Canada could take better advantage of new media, Ian Morrison, President of Friends of Canadian Broadcasting, said:

[T]o give some praise [.] for a change, [.] the management on the English side of CBC Radio [.] have developed Radio 3, which is not broadcast over the air, it's broadcast on the Internet. It is targeting the young demographic with a style of music.

They are one of the leaders in podcasting. Millions of downloads are available on your iPod, or something like that, where you're listening, when you like, to a CBC-generated programme that you get the same way as you get any other type of podcast. Half of those podcasts, Ms. Chalmers, the Vice-President of English Radio, tells me, are from non-Canadians. So it's becoming part of the Canadian outreach to the world.[95]

CBC/Radio-Canada reported to the Committee about its successes, particularly the popularity of its podcasts. It delivers more than one million downloads every month, making it one of the leaders in podcasting in Canada. As CEO Robert Rabinovitch told the Committee, some of the Corporation's most successful podcasts are some of its most serious shows, like Ideas, and Quirks and Quarks. These types of shows were described by other witnesses as some of the Corporation's most effective nation builders. Mr. Rabinovitch reported that it is mainly 18-34 year olds who listen to podcasts, whereas typical radio audiences, for example, tend to skew older. "The fact is that new technology opens new audiences for existing content. CBC/Radio-Canada is doing well across the board despite an unpredictable playing field."[96]

Notwithstanding broad support for the online endeavours of our national public broadcaster, concerns were raised that new media initiatives should not be reduced to merely new means of increasing revenues. Witnesses argued that their use should serve to improve performance relative to the objectives of the mandate.

For example, establishing more local Web sites for smaller communities across Canada would be a useful way of reaching into and reporting back to a community from the national level. New technologies may present the national broadcaster with new means of reaching Canadians in more effective ways. In assessing the value of the uses of these new technologies though, the broadcaster must keep, as its priority, the fulfilment of its mandate.[97]

Digital media platforms thus enable the CBC/Radio-Canada to leverage and multiply content both horizontally across Canada and the globe, and vertically across generations. In this sense, the Corporation's new media initiatives provide gains both in economic efficiencies as well as social coherence.

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New audiences for the new media

[B]roadcasting is an industry that is going through dramatic and dynamic changes, literally changing almost by the day. If we're going to continue to reach Canadians, we have to reach them when and where they choose, whether it's on the Internet, on cellphones like we did with the Olympics this year, on satellite radio, or on new platforms that are just being developed and being discovered as we speak.[98]

Converged media bring with them a dramatic increase in programming choice and a fragmentation of audiences across multiple platforms. In an effort to reassemble the fragments, broadcasters must maintain a presence and deliver content across as many platforms and in as many forms as they are able. This serves, in part, to develop a strong, recognisable brand. Witnesses widely acknowledged the need for CBC/Radio-Canada to develop digital and broadband properties as a means of establishing a global brand and remaining relevant to audiences, particularly younger audiences.

CBC/Radio-Canada's existing brand recognition among Canadians provides the Corporation with "credibility as a provider of general information and information about public affairs, international politics and arts and culture, and its programming for young people, to name just a few areas for which it is known.."[99] CBC/Radio-Canada is seen to be closely associated with what defines us as a nation.

The Committee heard from some witnesses, however, that CBC/Radio-Canada needs to go further to develop a stronger national and global brand if it is to compete in the fragmented, global media environment.

To this end, one element of the Corporation's new action plan includes the integration of its radio, television, and Web services under a single management group. CBC/Radio-Canada believes that "the best way to confront the technological changes and all of the new platforms is to create a very strong brand, which is that of the public broadcaster, that showcases the very strong values and that we will now be able to broadcast over all of the new distribution technologies."[100]

Digitisation has facilitated the convergence of technologies across platforms, thereby challenging traditional linear delivery of programmes and services with the growing audience expectation for on-demand services with time-shifting capabilities. The new mantra for content delivery has therefore become, "what they want, when they want, and how they want". Thus, while digital technologies make possible the cross-platform delivery of content, the demand is now audience-driven.

One of the paradoxes of digital media is that at the same time as they enable communication with and between Canadians on an unprecedented level, they simultaneously fragment audiences with their infinite digital offerings. For our public broadcaster, this fact poses additional challenges to its mandated role. Its ability to "reflect Canada and its regions to national and regional audiences" and to "contribute to shared national consciousness and identity" is impeded by the effects of audience fragmentation. The CBC's English television services, for example, come under particularly heavy criticism because of their relatively small share of Canadian viewers.

Dwindling audience share is not unique to public broadcasting, and audience measurement will need to adapt alongside the transition to digital media. Internet broadcasting, downloading and streaming content, PVRs and on-demand and pay services mean that the same film, television episode or news broadcast will be seen by many more viewers than those who tune in for "appointment television". As Sylvain Lafrance told the Committee, "I should note, to start with, that the drop from 13% to 6.5% is now approximately 7%. If I look at my... I shouldn't even call them competitors, because we are different, but we are conventional broadcasters. If you look at Global, they're at about 9%; if you look at CTV, which is by far the leader, they're at about 14%. If you compare them back to the 1990s, we were all in the 30% or 40% range. The world has changed dramatically with fragmentation. Even on the French side, it's amazing how well Radio-Canada has done, given the amount of fragmentation, the number of channels."

Experts commented that the days of 30% audience share are gone. As noted in the Dunbar-Leblanc Report, even the French television and radio services, which have maintained audience share much better than English services, may not be impervious to the effects of audience fragmentation. In the "borderless", multi-platform, digital universe, CBC/Radio-Canada must make its content available to audiences on their own terms if it is to reassemble the fragments and remain relevant to Canadians.

CBC/Radio-Canada has taken steps in this direction. Its research shows that, overall, 90% of Canadian adults make regular use of their services.

Notwithstanding these achievements, the consumption practices of Canadians continue to change. Traditional television and radio audiences have stagnated while online and mobile access to audio and video news and information are growing. Audience expectations are changing. People are communicating more than ever and their patterns of association have been widened by technology. People may not be spending more time with media but they want to use media for more than one purpose at the same time.[101] They are looking for a more interactive and on-demand experience with media. CBC/Radio-Canada will remain relevant in the future to the extent that it is able to respond to these expectations.

Youth Audiences

Nowhere is this more apparent than among youth audiences. Known as "digital natives" or "millennials", young people between the ages of about nine and 28 have a relationship with media that is different from previous generations. If Baby Boomers were the TV generation, Generation Y are the Internet generation, and they understand and use the new media tools in a different way. This group was born into the digital era, where previous concepts of bundling and scheduling have been replaced by downloading, streaming, peer-to-peer networks and on-demand programming.[102] Their interactions with media are characterized by multi-tasking: they commonly use several media and platforms at the same time. "This skill enables users in this group to consumer the daily equivalent of 20 hours of media products, spread over a real-time period of seven hours."[103]

As Dr. Pierre Bélanger of the University of Ottawa told the Committee, this generation also forms the base of social networking sites, such as Facebook, MySpace, and YouTube, and user-generated content (UGC). More that 60% of young people have visited a social networking site, and nearly all of these have registered and created a profile.[104] They have an expectation of interactivity and participation in media. When speaking of putting the public back into public broadcasting, younger Canadians will therefore be an important group of participants. Their willingness has been demonstrated in other CBC/Radio-Canada initiatives such as Bande à part, Radio 3, and Zed TV.

CBC/Radio-Canada's online presence will be fundamental to its relevance to Canadian audiences in the future. According to the Canadian Internet Use Survey (CIUS), an estimated 16.8 million adult Canadians made personal non-business use of the Internet in 2005, and nearly 64% of Canadians 18 and older used the Internet at least once a day, a figure that jumped to nearly 73% in the 18-34 demographic.[105] More recently, a July 2007 Angus-Reid poll on Canadian technology habits reported that more than half of Canadians said that their lives are better because of the Internet (52%) and that they visit news Web sites at least once a day (55%).[106] Among 18-34 year olds, 40% said that the Internet strengthens their sense of community with others, as did nearly one in three adult Canadians overall.[107]

The effects of changing consumer practices are only beginning to be felt. As more and more Canadians turn to the Internet, advertisers are following. Advertisers spent in excess of $1 billion on the Internet last year in Canada. For CBC/Radio-Canada, the fragmenting effects have an additional impact on their ability to reflect Canada and its regions to Canadians through programmes with mass appeal, as "mass" audiences are increasingly rare. What is clear is that all broadcasters are being compelled to modernize their offerings to suit changing consumer media habits.

The Committee agrees that CBC/Radio-Canada requires a new media presence in order to remain relevant to Canadian audiences now and in the future. Innovative new media content and services are an essential part of renewing the Corporation's role as our national public broadcaster.

RECOMMENDATION 2.2

The Committee recommends that CBC/Radio-Canada build on its new media foundations and continue to pursue new and innovative ways of connecting Canadians of all ages to each other and to their national public broadcaster.

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Digital Media and the CBC/Radio-Canada Mandate

The Committee heard broad support for CBC/Radio-Canada's exploitation of digital media platforms in fulfilling its mandate. Questions were raised, however, about the clarity of the Broadcasting Act in this context, since it makes no specific reference to new media as a means of fulfilling the Corporation's public policy goals. To date, there has been no formal government recognition of digital media platforms as a legitimate place for the public broadcaster to fulfil its public service goals.

Current Situation

The current CBC/Radio-Canada mandate may be regarded as technologically neutral. Section 3(d)(iv) states that "the Canadian broadcasting system should be readily adaptable to scientific and technological change." Additionally, section 3(m)(vii) reads, "the programming provided by the Corporation should be made available throughout Canada by the most appropriate and efficient means and as resources become available for the purpose." [108] These sections of the mandate are sometimes seen to be made contentious by section 3(l), which reads, "the Canadian Broadcasting Corporation, as the national public broadcaster, should provide radio and television services incorporating a wide range of programming that informs, enlightens, and entertains"[109] [emphasis added]. The point was raised as to whether the intended interpretation of the CBC/Radio-Canada mandate included radio and television to the exclusion of other content delivery platforms.

CBC/Radio-Canada has interpreted its mandate as technologically neutral, or "platform agnostic", and has expanded its operations to include new media endeavours, most notably its online presence. Nearly all of the submissions and witness testimony supported the CBC's new media activities and its interpretation of the mandate. The Association québécoise de l'industrie du disque, du spectacle, et de la vidéo stated, "A broadcaster whose programming is eminently distinctive and predominantly Canadian must be widely available in every region of Canada, in both official languages, and on both radio and television, as well as via the new media."[110] The Writers Guild of Canada also supported the CBC/Radio-Canada ambitions "to fulfil its mandate via an increased Canadian presence on newer digital platforms."[111] Several witnesses and interventions supported an amendment to the Act to specifically include a provision for the use of new media platforms to achieve our nation's public broadcasting goals. Speaking of the platform-specific reference in section 3(l), Dr. Pierre Bélanger of the University of Ottawa told the Committee, "In the current digital context that provision requires that the CBC operate under outmoded rules. That era is past."[112] Tony Manera, former President and CEO of CBC/Radio-Canada, and Bill Neville, a former CBC/Radio-Canada Board member, concluded, "The Broadcasting Act should be amended to acknowledge the role of new media technologies as important platforms to extend and complement the CBC's radio and television services."[113]

In some cases, it was felt that an amendment to the Act was not necessary because of the mandate's neutrality. "The mandate itself is neutral on the distribution means. [.] According to this mandate, CBC/Radio-Canada is able to engage whatever means to get the message out in the most efficient and effective way. So we don't see that the mandate itself needs any overhaul at all."[114] Where the existing mandate was deemed sufficient, it was often qualified with the need for clarity in its interpretation.

Catherine Murray pointed out to the Committee that, although the 1996 Juneau Report could not have foreseen the impact that digitisation and online media content would have, it "made a recommendation to amend the Broadcasting Act of 1991 to ensure that CBC/Radio-Canada could make its services available on the Internet and make the most innovative possible new uses of new media."[115]

More recently, the Lincoln Report recommended that the mandate be amended to include new media "as a complementary element of CBC/Radio-Canada's overall programming strategy." In its response to the Lincoln Report, the government recognized "the power of new media as a means of reaching audiences, particularly youth, and regards CBC/Radio-Canada's innovations in this field as a positive and legitimate means of delivering its mandate."[116] To date, however, neither this view nor the recommendation has been formally entrenched, and no mandate review has been undertaken since that time.

Issues and Challenges Heard by the Committee

Witnesses expressed a great deal of optimism about the potential of digital media as an enabler of the Corporation's ability to "reflect Canada and its regions to national and regional audiences" and to "contribute to shared national consciousness and identity."[117] The Committee heard that new media platforms provide greater opportunities for Canadians to tell their stories.

The issue is not whether the new platforms are a threat to the CBC. Rather, it is to what extent the CBC is in a position to take advantage of these new opportunities. [.]In such a large, diverse country, these new platforms will facilitate reaching those audiences and help fulfil the CBC's mandate to reflect and serve the needs of the regions. Audiences will be able to listen to, or watch, their regionally specific programme at any time.[118]

One witness commented that, irrespective of the means of content delivery, there continues to be a qualitative difference in the Canadian stories made available by the public broadcaster, which are not served by the market because of they lack of commercial value. The Internet is seen to provide an opportunity to have those stories heard within Canada as well as internationally. Rather than act as a protector of Canadian culture, the Internet enables it to compete in a global media environment.

Some reservations were heard to the effect that the Corporation's expansion onto new media platforms, particularly its online activities, should not affect its core businesses, and thereby its ability to fulfil its already broad mandate. Ian Morrison of Friends of Canadian Broadcasting noted the cost of cbc.ca and the possibility of its draining funding away from programming commitments such as prime-time Canadian programming on English television.[119]

In moving onto new digital platforms such as the Internet, CBC/Radio-Canada must ensure that its focus and resources remain on its core broadcasting services as the primary vehicles for the achievement of its mandate.[120]

The Canadian Association of Broadcasters (CAB), representing the interests of private broadcasters in Canada, also raised questions about CBC/Radio-Canada's online activities in relation to competitive practices.

An additional concern relates to CBC/Radio-Canada's business practices with respect to digital media platforms, the resulting impact of such practices on the private sector, and the level of disclosure of information that CBC/Radio-Canada should be expected to undertake relative to its digital media operations.[121]

Both the CAB and Friends of Canadian Broadcasting argued that the Corporation should be more transparent about the cost of its digital media undertakings. The CAB believes this should be made part of more enhanced financial reporting requirements by the Corporation. This matter reflects, in part, concerns about CBC/Radio-Canada's online advertising activities and the extent to which they may disadvantage private broadcasters' Web sites and news services.

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International Perspectives

The Committee heard that CBC/Radio-Canada's neutral approach to the delivery of its content is in keeping with that of most countries supporting mature public broadcasters. Most have "implicitly (slightly fewer, explicitly) recognised that the important public service goals of PSBs are not only platform agnostic, but in fact require leadership by the public broadcaster in experimenting with new delivery platforms and modes."[122]

Dr. Phillip Savage of McMaster University told the Committee that the Council of Europe reaffirmed the central role of public broadcasting in 2004, calling for "a clear political commitment of European governments to maintain strong and vibrant independent public service broadcasting, whilst adapting it to the requirements of the digital age."[123] Dr. Savage reported that the Council restated four principles that would continue to apply to public broadcasting content in the digital age:

• "universality of content in terms of generalist channels and if necessary some specialized or tailored for specific audiences";
• "universality of access" on "all significant media and platforms (i.e., those with significant penetration)" but also be prepared to "deliver a 'personalized public service' in the online and on-demand environment";
• "editorial freedom, and independence from both political ties and commercial bias"; and
• high-quality programming "in each type of content or service, to constitute a benchmark of quality and professionalism." [124]

The Committee heard that the UK government's explicit recognition of public service goals in the digital media environment provides a useful example. Many witnesses referred to the British Broadcasting Corporation (BBC) and its leadership in using digital media to extend its reach, connect with the public and fulfil its public broadcasting mandate. Witnesses also speculated about its resources for such extensive new media initiatives.[125]

There is also the matter of budget. The BBC has begun posting online over a million hours of archival material from both the radio and the television divisions of the public broadcaster. I think that in itself speaks volumes about the potential that digital technologies offer to public broadcasting, and I hope this Committee will recognize the imperative pressure that should be put on the government to modify and actually modernize the mandate of the CBC, so that it's totally in tune with the current technological currents that are affecting it.[126].

The UK continues to set the benchmark in its digital and online undertakings. The BBC spent in excess of CAD$749 million on its digital services in 2005-2006, including nearly CAD$154 million on bbc.co.uk,[127] or more than half of the total appropriation received by the CBC's English television services. OfCom, the independent regulator and competition authority for the UK communications industries, reported that the actual resources behind the BBC's online activities are likely much higher, given its access to joint services such as news gathering. Additionally, it is estimated that the BBC generates about CAD$198 million in advertising revenues from international versions of its Web sites.[128]

On the other hand, I've heard that the amount the BBC spends on new digital operations is equal to the CBC's entire television budget. That's just to give you an example. As for new media, the BBC will allocate an amount equivalent [to] the entire amount that the CBC receives for its mainstream network.^[129]

OfCom is currently investigating the role of a Public Service Publisher (PSP), "an entity rooted in and reflecting the ideas, creativity and ethos of the new digital era."[130] This is a progressive look at the delivery of public service content that regards television and radio as part of the new digital media landscape, and clearly includes digital media as an essential component in achieving public service goals.

In this changing landscape, we believe that the means of public service delivery need to change as linear television gradually diminishes in importance. Ofcom defined the purposes and characteristics of public service broadcasting in the PSB Review. These endure into the digital media age, but are no longer solely the domain of traditional television - they can (and should) now be delivered through a wider range of digital media. [131]

This belief is reflected in the review of the BBC's Charter. The expansion onto digital media platforms is regarded as merely an extension of the BBC's role as a leader and public educator in the benefits of new technologies that it has played since its inception. It is viewed "as a 'trusted guide' to new technology and the new experiences that come with it."[132] Thus the attitude of the BBC, Ofcom and the UK government embraces digital technologies as a means of extending the public service remit, and engaging citizens across all available platforms. Its policies, including the BBC Charter and Agreement, are a clear extension of this mind frame.

The majority of witnesses, experts, academics and public and private organisations, supported an amendment to the CBC/Radio-Canada mandate commensurate with the view that the power of new media should be harnessed to fulfil Canada's public broadcasting objectives.

RECOMMENDATION 2.3

The Committee recommends that the Government of Canada should amend the Broadcasting Act to include digital media and emerging technologies as an integral aspect of achieving
CBC/Radio-Canada mandate and reaching out to Canadians.

RECOMMENDATION 2.4

The Committee recommends that the Government of Canada include a clear role for digital media and emerging technologies in achieving the CBC/Radio-Canada mandate as part of the proposed seven-year memorandum of understanding.

Funding

Offline challenges continue to make their way online, and affect the CBC/Radio-Canada's new media endeavours. A lack of adequate resources was seen to be the greatest inhibitor to exploiting the potential of digital media - the creation of an online public space for citizens, expansion of Web 2.0 properties, and connecting Canadian audiences. The link between funding and content was a recurring theme in discussions of both traditional and new media platforms.

The Writers Guild of Canada and the Directors Guild of Canada both supported increased government funding to pursue innovative programming strategies to draw audiences back to the CBC./Radio-Canada[133] The Independent Media Arts Alliance recommended "[t]hat the federal government invest in new media public broadcasting to advance its mandate in reflecting diverse cultural and indigenous communities and to ensure accessibility to each of these."[134]

Dr. Phillip Savage observed that current levels of financial support for both traditional and new media broadcasting endeavours have fallen well behind international levels of funding for public broadcasters. He noted that there is increased value in an investment in public broadcasting in the digital age, and recommended that funding be increased.

RECOMMENDATION 2.5

The Committee agrees that innovative use of new media is fundamental to the future relevance of CBC/Radio-Canada. We therefore recommend that CBC/Radio-Canada develop a digital media strategy to be submitted to the Department of Canadian Heritage. The plan should include cost estimates for the development and expansion of the Corporation's new media endeavours relative to the goals of its mandate.

RECOMMENDATION 2.6

The Committee recommends that, in consideration of CBC/Radio-Canada's global funding needs, the Government of Canada recognise the need for increased funding toward the development of new media initiatives to pursue the objectives of its mandate.

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Regulation in the Digital Era

Canadians are increasingly accessing audio-visual content through unregulated digital platforms, such as the Internet and mobile devices. While the majority of content continues to be consumed from regulated undertakings, mainstream television and radio experiences are steadily moving onto the "third screen" and mobile screens. Increasingly, "Canadians can, in theory, bypass the regulated Canadian broadcasting system altogether and still obtain much of the same kind of programming that licensed broadcasting undertakings were once uniquely positioned to provide."[135]

As digital media use continues to develop organically, regulation of these media and their means of distribution have remained separate and relatively unchanged. Currently, broadcasting regulations are distinct from telecommunications, but the separation is increasingly specious given the blurring line between broadcasting and telecommunication activities. As CRTC Chairperson Konrad von Finckenstein recently commented at the 2007 Broadcasting Invitational Summit:

[A]s technologies converge, these two sectors are competing in each other's traditional lines of business. Old boundaries are being erased. The old business and economic models are being questioned. The old relationships between those who create and deliver content and those who consume it are evolving into more of a two-way street.[136]

Although questions about the regulation of new media broadcasting fall outside the scope of this study, it is nonetheless important to highlight the impact of regulatory change on the accessibility and availability of Canadian public broadcasting content. The Committee heard from a number of witnesses about the need to pay attention to the possible effects of digital media policy vacuums on the availability of Canadian content on new media platforms in the future, including the accessibility of content from our national public broadcaster.

New Media Exemption Order (NMEO)

The CRTC issued its New Media Exemption Order in 1999. At the time, the Commission decided to exempt from licensing new media services delivered and accessed over the internet. It found that the regulation of new media would not contribute materially to the objectives of the Broadcasting Act, and that new media did not pose a competitive threat to the activities of traditional broadcasters. Canadian content was found to be well represented online.

During this study, many witnesses nonetheless called for a review of the CRTC's 1999 New Media Exemption Order, and a number of cultural organisations argued that it should be revoked. The CRTC announced in June 2007 that it would conduct an extensive review of the impact of new media on broadcasting, telecommunications and the regulatory environment as part of its New Media Project Initiative. Although the review does not include an official review of the NMEO, it will be looking at the impact of Internet broadcasting (i.e., the delivery of audio and visual content over the Internet) on the traditional broadcasting system.

In October, Mr. von Finckenstein spoke about the New Media Initiative and the rapid change in the new media environment since 1999. He recognised the growth of broadband, real-time streaming of audio and video content, and the increase in user-generated content. He also noted the arrival of content aggregators, such as Joost and Babelgum, which have global ambitions for online content distribution. All of this is occurring in a context where advertisers are also migrating to new media platforms, and new business models are emerging.[137]

Witness testimony and submissions dealt primarily with the need to ensure a place for Canadian cultural content on the Internet, as well as the predominant use of Canadian talent to create and produce any new content. Concerns were also raised that the NMEO was focused more on the market impact of new media than on their cultural impact.

The Directors Guild of Canada held that a review of the NMEO is overdue "and needs to be re-examined in light of the current state of broadcasting technology, the growth of unregulated broadcasting platforms, and the evolution of such regulation in other jurisdictions." ACTRA similarly recognised the need for CBC/Radio-Canada to be competitive in technology, and called for Canadian content regulations to be extended to the Internet.

Dr. Phillip Savage of McMaster University submitted to the Committee that the NMEO presented an essentially economic argument that ignored the broader social and cultural objectives of broadcasting policy outlined in the Act. He noted that this distinction was made by the Industry Canada-appointed Telecommunications Policy Review Panel which "specifically pondered the importance of balancing the benefits of economic development in the Canadian new media sector with telecommunication providers' social obligations to the public."[138] The panel found, "In general, economic regulation should not be invoked to promote social objectives. Rather, these social objectives should be the subject of separate and specific obligations applying to all service providers."[139] Dr. Savage recommended that this same distinction be made by the government and the CRTC in the broadcasting sector.

Witnesses generally recognised the challenges of regulating the Internet and mobile content, particularly in a way that will not stifle creativity. However, given the convergence of the telecommunications and broadcasting business lines, the Committee heard calls for contributions to the Canadian broadcasting system from all players involved in the delivery of cultural content. As CBC/Radio-Canada submitted to the CRTC Section 15 Report, "While it is undoubtedly impractical to attempt to regulate all types of broadcasting over the Internet, it is worth examining whether managed and subscription-based Internet broadcasting should also continue to be exempt."[140]

Alain Pineau of the Canadian Conference of the Arts likewise told the Committee that Internet service providers should also be required to contribute:

All people who provide cultural content on your cell phone, on the instrument on which you receive podcasts, on the Internet should be called upon to contribute the same way that broadcasters and cable operators currently contribute a portion of their revenue to talent development and to the television fund, among others.[141]

The need to re-examine regulation was also raised in the context of ensuring a place for Francophone culture on the internet. The Sociéte des auteurs de rdio, télévision et cinéma (SARTEC) suggested "transposing the objectives of section 3(d) of the Broadcasting Act [142] to the digital environment so that a regulatory and funding framework similar to that for the Francophone television market can ensure our cultural presence across the new media."[143]

The call by witnesses to extend Canadian content regulations to new media stands in contrast to the conclusions of the Dunbar-Leblanc Report, which found that traditional forms of regulation may not be effective in the Canadian new media environment. The authors note that the influx of foreign content is likely to increase, as users continue to access worldwide content "anytime, anywhere".

Canadian broadcasters have operated in a protective regulatory environment, and technology such as "geo-gating" or "geo-blocking", have extended some protections for Canadian distribution rights to the Internet. The report notes, however, that Canadian broadcasters could find themselves in competition with the very US programmes they purchase from US distributors if the latter should decide to sell Internet distribution rights separately. Market forces may thus continue to drive a Canadian presence on new media platforms.

The Dunbar-Leblanc Report argued against restrictive forms of regulation and in favour of incentives encouraging Canadian companies to carve out a space for themselves on the Internet, and facilitating the production of Canadian content for the Internet.

The CRTC Section 15 Report drew similar conclusions, noting that the NMEO does not preclude Canadian entities from undertaking online activities consistent with the objectives of the Act, and suggesting that "Incentive-based regulatory measures may ultimately be more likely to succeed in the emerging 'open' broadcasting system."[144]

The CRTC stated its openness to "incentive proposals designed to expand the scope or nature of such activities."[145]

Scott Hutton of the CRTC spoke to the Committee about the exemption situation, and the Commission's recently renewed attention to new media. He noted the challenges to transposing the existing regulatory toolkit onto a world of on-demand type services, and the need to give consideration to "some form of incentive to produce Canadian content." On the question of public policy intervention, he maintained that "Canadian stories are getting out, and Canadians can see themselves on these new media." He remarked that where user-generated and short content are concerned, there is no need to regulate. The Commission found, however, that the same challenges exist for expensive, long-form Canadian programming in new media as are found in traditional broadcasting.

In the absence of regulation, the Committee heard that CBC/Radio-Canada online is seen as an effective safety net and policy instrument carving out a strong Canadian cultural presence in new media platforms.

[A]lthough it's a difficult nut to crack, this Committee will probably have to begin to think about ways to re-examine the blanket CRTC new media exemption. But [.] in the failure of a regulatory solution, we have at our disposal a way to fund Canadian presence in the new media environment through the CBC.[146]

RECOMMENDATION 2.7

The Committee notes the ongoing New Media Initiative undertaken by the CRTC. We recommend that, in its review, the Commission give consideration to the social and cultural, as well as the economic impact of internet broadcasting on the objectives of the Broadcasting Act.

RECOMMENDATION 2.8

The Committee recommends that, in its New Media Project Initiative, the CRTC give consideration to the role of public broadcasting and of CBC/Radio-Canada in particular, in the delivery of Canadian content across all platforms, and the extent to which public broadcasting should contribute to the development of a vibrant, sustainable Canadian programming environment.

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Network Neutrality

The possible implications of the NMEO come to light in the context of the network neutrality debate. The convergence of broadcasting and telecommunications, where broadcast content is now delivered across telecommunications platforms, has resulted in debates about how traditional broadcasting policies and regulations should respond to the changing market structures and definitions.[147] One of the prominent regulatory debates arising from these changes is about network neutrality, broadly speaking the idea that all content delivered via broadband Internet networks should be treated equally by Internet service providers (ISPs).

While there is no single accepted definition, there is consensus among proponents that the concept of net neutrality includes the ideas that the owners of broadband networks should not control how consumers lawfully use their networks, and that Internet service providers (ISPs) should "treat all content and applications equally with no privileges, degrading of service or prioritization based on the content's source, ownership or destination."[148] The principle holds that the smallest independent blogs should be viewed as quickly and easily as the largest corporate Web sites.

Net neutrality regulations have taken on new urgency as media industries have witnessed a wave of large-scale mergers that have left an increasingly small number of large corporations in control of the broadband networks reaching consumers' homes. Many of these same businesses have diversified into the ownership and delivery of video content. This, it is argued, has created an unprecedented threat to online competition and makes vulnerable the principles of openness and innovation upon which the Internet has thrived.[149]

Network non-neutrality could have significant consequences for CBC/Radio-Canada since it is not in a position to respond to market changes through convergence on a sufficiently large scale. It depends on the owners of digital infrastructure for the delivery of its content over broadband and wireless networks in its bid to remain relevant to Canadians. In this sense, there can be no doubt that ISPs play a growing role in the delivery of Canadian content to all Canadians, and to the world.

As more and more Canadians use the Internet to access news, information and video content, non-discriminatory access to the Internet becomes an important element of Canadians' access to the services of their national public broadcaster. If the Internet evolves into a multi-tiered network, where content providers pay for different levels of service, the possible degradation of its content and services, or the requirement to pay additional fees for their online delivery, would put the Corporation at a significant competitive disadvantage and undermine its ability to meet its mandated goals.

The issue of access is therefore no longer restricted to the creation of programming, but also includes the means of delivery. Given the changes to the media environment in which CBC/Radio-Canada is operating, CRTC decisions with respect to both telecommunications and broadcasting policy will therefore have direct consequences on the future accessibility of CBC/Radio-Canada services.

The Committee heard from witnesses who discussed the need to ensure that all content is treated equally by Canadian ISPs, many of which also act as broadcast distribution undertakings (BDUs), whose broadcast activities are regulated.

Phillip Djwa, President of Agentic New Media, of BC, told the Committee that he believes "it would be a mistake to allow the telecommunication providers in Canada to charge a levy and then use that to essentially eliminate net neutrality." He suggested that ISPs could generate a fund to provide grants to content providers, as is done in broadcasting.[150]

CBC/Radio-Canada raised this issue with the CRTC in its submission to the CRTC report on Section 15 of the Broadcasting Act. In discussing the business case for Internet video, it commented on incentives for suppliers of broadband connections to control the bandwidth available for video.

Canadian cable companies engage in "bandwidth shaping", which allocates different levels of transmission capacity to different services according to the operational preferences of the company. This type of bandwidth shaping can ensure efficient use of transmission capacity. It can also ensure that Internet video by third parties does not become a threat to the business of the cable company, whether it be the delivery of traditional television programming to cable subscribers, VOD or the distribution of cable company-owned Internet video services.[151]

As one telling example, the British Broadcasting Corporation was threatened with bandwidth shaping in August 2007 because of the launch of its iPlayer. The iPlayer allows viewers to download BBC programming on a seven-day catch-up basis and watch it within 30 days. British television channels Channel 4 and ITV have also launched internet players, as have Joost and other internet only broadcasters. The BBC was targeted, however, because it was expected to be the most popular and therefore the most costly to ISPs. British ISPs called for the BBC to share the costs or they would limit the amount of bandwidth available to the public broadcaster.[152]

Canadian ISPs have admitted to practices such as traffic prioritization, network management and bandwidth shaping, according to their operational needs.[153] This amounts to prioritizing certain types of low bandwidth uses of the network, such as e­mail and surfing, over high bandwidth usage, such as video streaming and downloading. It is becoming more common as more Canadians use the Internet for activities that require large amounts of bandwidth - video streaming and downloading, and peer-to-peer file sharing, for example. Proponents of net neutrality argue that such practices will give too much unchecked power to ISPs over the operation of and access to the Internet and its content, as evidenced by the experience of the BBC.

The corporatisation of the Internet was seen by some witnesses as a force that could disadvantage public interests. Thom Tapley told the Committee that it is a mistake to think that the Internet cannot be locked down:

I fear that at some point in the future, the system - the model that's in place right now - will try to replicate itself, meaning a very few interests control the pipe into your home, and it's a one-way dialogue: you receive content, not the two-way dialogue that is currently available through the Internet. [.] You can lock it down. It's a form of distribution. It's not [being done] yet, but it may be in the future, and my fear is that it will be.^[154]

Section 3(1)(t)(i) of the Broadcasting Act states that distribution undertakings "should give priority to the carriage of Canadian programming services and, in particular, to the carriage of local Canadian stations".[155] This protection does not extend to new media activities. Assuming consensus about the modern realities of the public broadcaster, the delivery of CBC/Radio-Canada online content and services must not be less than that of other broadcasters. CBC/Radio-Canada cannot acquire the means of distribution, nor does it therefore benefit from the scale of private Canadian media companies that own both content and broadband distribution networks.

It is interesting to note that the March 2006 report of the Telecommunications Policy Review Panel called for net neutrality regulations, although the final report largely called for deregulation and a reliance on market forces.

The Committee agrees that non-discriminatory access by Canadians to CBC/Radio-Canada online content and services is necessary to the fulfilment of the role of our national public broadcaster in the digital age.

RECOMMENDATION 2.9

The Standing Committee on Canadian Heritage recommends that the CRTC, as part of its New Media Project Initiative, consider the need to protect the neutrality of carriage of Canadian public broadcasting content, and of CBC/Radio-Canada content specifically, over new media platforms.

RECOMMENDATION 2.10

The Committee recommends that Canadian Internet services Providers be encouraged to voluntarily embrace the spirit of Section 3(1)(t)(i) of the Broadcasting Act in their approach to Canadian public broadcasting content delivered over the Internet.

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CBC/Radio-Canada and Digital Transition

Digital transition involves the conversion of the production, broadcasting and transmission of television programming from analogue to digital form. The transition from analogue to digital television (DTV) transmission and high-definition television (HDTV) will provide Canadian audiences with more choice and an enhanced viewing and listening experience. For broadcasters, BDUs and the increasing number of players involved in content delivery, analogue shut-off (ASO) means the end of spectrum scarcity and new opportunities for creative, non-linear and interactive programming.

Digital broadcasting is up to six times more efficient than analogue, creating what has been termed the "digital dividend". The superior spectrum efficiency clears the way for new wireless services, HD channels, minority interest channels, and other innovations.[156] Thus, industry experts argue that the transition to digital has the potential to pay social, cultural, and economic dividends.

That said, private and public broadcasters in Canada have cited the absence of a strong business case for conversion to HDTV programming. The significant expense of upgrading production facilities and transmission infrastructure and the absence of foreseeable new revenue streams have driven support for a market-based approach to digital transition in Canada. The CRTC, with support from industry stakeholders, determined that a "voluntary, market-driven transition model, without mandated deadlines, is the most appropriate approach in Canada."[157] The OECD Communications Outlook 2007 reports that only two countries, Luxembourg and Canada, have explicitly mentioned the market as the defining parameter for the date of the switch-off. [158] Canada's approach therefore stands in contrast to the majority of countries that are more advanced in the transition to DTV.

The CRTC-commissioned report, Digital Transition Strategies in a Number of Different Countries, reviewed the development of government policy aimed at moving from analogue over-the-air (OTA) service to digital television transmission (DTT). The study found a number of common indicators among the most successful plans: [159]

• a dedicated organisational body to oversee and coordinate the transition, made up of a balance of relevant government departments and private and public industry representatives;
• a well-defined and well-financed legislative/regulatory framework, with input from all shareholders, including the government, broadcasters, regulators and transmission companies;
• firm or obligatory ASO dates;[160]
• milestones for the roll-out of digital services and obligatory switch-off dates.

In Canada, no official organisational body has so far been mandated to oversee the transition to digital television services. The CRTC has set August 31, 2011, as the planning date for the shutdown of over-the-air (OTA) analogue television transmission, or analogue shut-off (ASO), but no firm or obligatory dates have been set.

Under the Commission's 2003 framework for the distribution of over-the-air digital signals, priority will continue to be given to the carriage of over-the-air Canadian digital television signals. BDUs will be required to carry both the analogue and digital versions of priority services until at least 85% of their subscribers are capable of receiving digital services. At the time of writing, no industry deadline for the transition to HD programming and no mandatory quotas of HD programming have been set.

The CRTC study notes that the Canadian industry decided a two-year lag would yield savings in early adoption costs for broadcast, production and consumer equipment, and that Canada has in fact profited from that decision. However, it is now estimated that Canada is at least two to four years behind the US, and possibly more.[161] The mounting pressure on Canada to move to digital derives in part from Canadian broadcasters' need to compete with their counterparts in the US, where February 17, 2009, is the mandated DTV transition deadline.

As the Committee heard from Scott Hutton of the CRTC:

I would have to agree with the proposition of the CAB that if Canada does not provide high-quality television services, in this case HD, Canadians will watch HD from other countries. So it's very important that we remain at the forefront and offer Canadians those choices.

[.] Canada chose to have a market-based approach to the transition to digital and the transition to HD. This market-based approach has left us behind. We are, at the very least, two years behind, and some interveners have suggested [.] that we're four years behind.[162]

Industry experts have identified this imbalance as a further threat to maintaining viable Canadian programming for Canadian audiences. As Canadians adopt HD technology, it is expected that they will increasingly turn to foreign HD programming.[163] HDTV household set adoption in Canada appears to be happening faster than predicted. The Consumer Electronics Marketers of Canada (CEMC) reported 33% of Canadian households had an HD set in 2006, which earlier analysts predicted would be about 22%.[164] Going forward, the CEMC estimates penetration of 48% of households by the end of 2007, whereas earlier CBC forecasts predicted 39% by 2008 and 52% by 2010.[165]

The increased take-up rate is expected to continue with price erosion of digital technologies and closer proximity to the August 2011 planning date, and is on par with Americans' adoption of HDTV. This contrasts, however, with the rate at which Canadians are subscribing to HD services.[166] The CRTC, the Canadian Association of Broadcasters (CAB) and High Fidelity HDTV Inc. have all reported a stall in HD penetration caused by a disjunction between HD television ownership (17%) and HD distribution (3%). The CRTC reported approximately 385,000 subscribers to discretionary HD services via cable and satellite as of spring 2007, with virtually no OTA viewing. Analysts predict this will shift as Canadians become more familiar with HD, and more Canadian services become available. [167]

The slow take-up of HD services suggests there is still a window in which Canadian broadcasters can act. In the interim, the comparatively small amount of original Canadian HD priority programming available in prime time is giving new life to concerns over the influence of US programming on Canadian viewing habits.

Current Situation

CBC/Radio-Canada is currently working toward HD/DTV conversion using a phase-in plan and existing funding. It has submitted that, given current funding levels, its phase-in plan will not enable it to make a full transition to HD/DTV by August 31, 2011. Mr. Rabinovitch indicated to the Committee that a more aggressive re-allocation of its resources toward the HD initiative would compromise other assets and programming priorities.

CBC/Radio-Canada operates a network of more than 600 analogue TV transmitters. To maintain services, both the analogue and a new digital transmission infrastructure will need to be supported at a significant cost to the Corporation for a number of years.[168]

Over the past two years, CBC/Radio-Canada has made $27.5 millions in initial HD/DTV investments in both production standards and transmission of programming. At the time of writing, the CBC has reported the following accomplishments in advancing its plans:

• SRC, Montreal: The sixth HD studio was to be completed in September 2007. It is anticipated that seven of eight non-news production spaces at Radio-Canada will be HD-compatible in the next three years
• CBC, Toronto: One production and one news studio are HD capable, leaving five control rooms to be converted. It is anticipated that one additional studio will be converted to HD in the next three years; however, this does not include the network production studios in Vancouver and Halifax;
• French television: 36% of overall schedule in HD; 49% in prime time;
• English television: 36% of overall schedule in HD; up to 75% in prime time;
• eight DTV transmitters in place and operational.[169]

No further investments in additional DTV transmitters or in the conversion of their distribution system to HDTV are planned in the next four years with existing funding. The emphasis for investment going forward is in production facilities.[170]

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Meeting the Digital Challenge: CBC/Radio-Canada's HDTV Acceleration Plan

According to CBC/Radio-Canada, "As of April 1, 2008 the full cost of converting/upgrading [the] remaining production facilities at the regional and network level, in a manner that supports HD production, is $550 million."[171] An additional $50 million is required to achieve the proposed hybrid DTV transmission/distribution model (discussed in detail below). The Corporation's current plans to the end of fiscal 2011-2012, based on existing funding levels, will achieve $128 million of the remaining $600 million ($550M + $50M) HD/DTV investment required.

Recognising that the total conversion of its facilities will not be achieved by 2011, CBC/Radio-Canada put forward an accelerated five-year plan in 2005 at the invitation of the Department of Canadian Heritage (PCH). To date, the Corporation has not received any response from PCH. [172]

 Meeting the Digital Challenge: CBC/Radio-Canada's HDTV Acceleration Plan provides for complete prime-time delivery of HD programming over five years. In summary, the Acceleration Plan proposes:[173]

HD Programming

• 100% prime-time viewing for 80% of Canadians by 2011;[174]
• English television (ETV) airing 1,460 hours in prime-time;
• French television (FTV) airing 1,460 hours in prime-time;

Transmission and distribution

• Over-the-air service to 80% of Canadians

Required investment:

• Total of $193 million in capital costs, averaging $39 million per year for five years;
• Total of $195 million in operational costs over five years, starting with an annual increase of $19 million and ramping up to $52 million annually.

The Acceleration Plan is predicated upon three key points:

1. CBC/Radio-Canada believes that transition to HDTV is an important issue for the future of Canadian programming and a sound public policy investment. "The short term challenge is to provide quality HD programming to keep pace with Canadians' adoption of new technologies and the availability of competing foreign HD signals." Their research shows that the adoption of HDTV will replace, not complement, analogue and low-definition digital television. The urgency for Canadian HD programming is therefore exacerbated by the February 2009 US analogue switch-off date, and the fact that "nearly every US broadcaster has converted to HDTV."[175]

2. CBC/Radio-Canada research shows that fewer than 14% of Canadians receive television signals off-air.[176] The penetration rate for Off-air television viewing is continuing to decline. In light of this reality and given current funding, it is neither feasible nor fiscally responsible to replace all of the Corporation's current analogue transmitters with digital ones. A hybrid plan is therefore proposed to the transition to digital television broadcasting.

3. The core challenge for CBC/Radio-Canada in the transition to HD/DTV is funding. Existing resources will not support the full cost of converting the remaining production facilities in a manner that supports HD. The CBC/Radio-Canada capital budget base is about $100M annually. Over-committing resources to accelerate the transition to HD/DTV would put other corporate assets at risk.[177] Approximately $40M per year is available to address English and French television production and presentation demands, of which HD is but one component.[178]

In keeping with the first point, the table below shows the limited availability of original HD programming. CBC/Radio-Canada has argued that "English-language private broadcasters will rely on US programming to fill their HDTV schedules,"^[179] given that the vast majority of their prime-time schedules are already available from US broadcasters in HD. Indeed, the recently published Dunbar-Leblanc Report emphasised the market's failure to generate original Canadian priority content, and the need for more "effective measures to incent the exhibition of Canadian content during peak viewing periods where market forces will not achieve this goal."[180]

With the transition to HD/DTV, this imperative of the Broadcasting Act becomes more pronounced given the premium attached to producing HD content, and the stated reluctance of broadcasters to invest where no new revenue streams will be generated. It is worth remembering that these extra costs occur in tandem with fragmented audiences and the concomitant higher risk of investment in high-quality Canadian dramas that are less likely to draw large audiences.[181] "CBC/Radio-Canada faces the largest financial challenge due to volume of Canadian programming."[182] As can be seen in the table below, in 2006 CBC/Radio-Canada was the only conventional broadcaster that offered 100% original HD programming.

Source: Table 3.13 from the 2006 Broadcasting Policy Monitoring Report

The Dunbar-Leblanc Report found that the "economic incentives associated with simultaneous substitution appear to dictate, to a very large extent, the peak period programme schedules of the English language commercial OTA television broadcasters, ensuring that foreign content is prominently displayed during peak viewing periods."[183]

The CBC/Radio-Canada HDTV Acceleration Plan provides evidence that this trend is likely to continue in HD/DTV. The United States ASO date of February 11, 2009, means that their broadcasters are much further advanced in the switch to digital. All the major broadcasters, public and private, have switched to digital signals and offer HD programming. As the CBC chart below demonstrates, based on the fall 2005 offerings, nearly the entire prime-time schedule of private Canadian broadcasters is already available in HD.

Figure 9

* Available in HD, but HD rights may not yet have been bought by Canadian private broadcasters.

Source: CBC. HDTV Acceleration Plan, 2005

As time goes on, US HD content is likely to be more available, not less. This creates a particular challenge for the CBC. "Since the vast majority of our programming is Canadian we do not benefit from the relatively inexpensive purchase and simulcasting of US programming that is already in HD."[184] As mentioned, a more aggressive reallocation of resources toward the HD initiative would adversely affect the Corporation's other assets and programming priorities.

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CBC/Radio-Canada Hybrid Plan for Over-the-Air Digital Transmission

Regarding the replacement and/or upgrading of CBC's current system of 600 OTA transmitters, a hybrid DTV transmission/distribution plan has been proposed as part of the Acceleration Plan. It is based on research that indicates a decreasing number of Canadians who rely on OTA transmission to receive their television signals. The key points of the plan are:

• installing 44 digital OTA transmitters in key markets to reach 80% of Canadians;[185]
• reaching approximately 30 markets in major and non-major centres with high OTA reception levels.

The hybrid plan has been the source of some concern to Canadians because it effectively eliminates the principle of universal access to CBC/Radio-Canada. Many Canadians still rely on over-the-air transmission to receive their television signals. A number of witnesses argued that Canadians should not be required to pay to receive the signals from their public broadcaster. Notwithstanding the downward trend in OTA services, one of the biggest social challenges from digital transition is the possibility of a widening digital divide, whereby access to information and communications technologies is divided along, for example, socio-economic or urban-rural lines. The question of access is discussed further in the next section.

Issues and Challenges : Universal Access

Universality of access must remain the CBC's fundamental principle. During the transition period, the CBC signal must continue to be available over the air, especially to smaller communities. As over-the-air transmission becomes less sustainable, obligations will have to be placed on satellite providers to carry the full complement of the CBC's programming. To that end, I want to reiterate the recommendation made by this Committee in 2003: the government, by Order in Council, should direct the CRTC to require Canada's direct-to-home satellite providers to carry the signals of all local television stations of the CBC and Radio-Canada.

Graham Fraser, Commissioner of Official Languages,
March 20, 2007.

The strongest objection to the proposed CBC/Radio-Canada hybrid plan came from citizens and organisations concerned about maintaining the principle of universal access upon which public service broadcasting is founded. Notwithstanding the downward trend in reliance on off-air signals, more than three million Canadians continue to rely on free over-the-air signals to receive television services. That is to say that they do not subscribe to satellite or cable services of any kind. Given that analogue cable still accounts for approximately 50% of OTA household penetration, about half of Canadians will be affected as the CBC/Radio-Canada phases out its analogue transmitters and Canada switches over to digital television. This includes large portions of CBC/Radio-Canada's audiences and viewers of Canadian programming.

• off-air[186] tuning represents approximately 16.5% of CBC/Radio-Canada's total audience, including as much as a fifth of their audience in some major markets[187]
• off-air penetration rates in large centres in Francophone Quebec still account for nearly one quarter of viewers. Over-the-air viewers spend 40% of their time watching Canadian programmes, as compared with 29% of digital cable subscribers
• analogue cable subscribers spend 31% of their time watching Canadian programmes
• an increase in the total amount of television programming available to Canadians from digital offerings has not netted an increase in the viewing of English-language television (ETV) in Canada.

Source: BBM Fall 05 / Spring 06, Nielsen 05-06

(CRTC, The Future Environment Facing the Canadian Broadcasting System, December 2006)

As the CBC/Radio-Canada research shows, more Canadians are switching to cable and satellite services, which will allow them to receive its digital signals. Once analogue signals stop transmitting, households with analogue television sets will be required either to: (1) buy a digital-to-analogue set-top-box (STB) to convert the signals; (2) purchase a digital television or an analogue television equipped with a digital tuner; or (3) subscribe to cable, DTH satellite or telephone company television services, which will likely provide for the conversion of digital signals to their analogue customers.[188]

Research shows that certain vulnerable populations - seniors, fixed- and low-income households and small and rural communities - are likely to be hardest hit by the reduction in service. The CRTC pointed to some of these challenges in its review of OTA television, finding that citizens "will be forced to upgrade their television sets at some cost in order to continue to receive the services they currently enjoy," and noting the US subsidy programme in place "for households that rely on OTA television reception and that have not upgraded their analogue equipment to digital or have not purchased an integrated digital set."[189]

In both the US and the UK, the problem of access has been partly addressed through a public subsidy of digital-to-analogue converter boxes. The UK subsidy (more than CAD$1.2 billion) is limited to particular disadvantaged, low- and fixed-income groups, whereas the US subsidy (more than CAD$1.5 billion) is available to "any and all requesting US households".[190] These programmes are seen to reaffirm the social and cultural importance of broadcasting, both public and private. The Committee heard from witnesses who recommended that the Government of Canada also give consideration to a subsidy programme so that all Canadians will continue to have free access to their publicly-funded national broadcaster.

The CRTC likewise noted the burden of digital transition for some groups of Canadians, "particularly where they do not have access to replacement digital OTA services and the only alternative is a user-pay cable or DTH subscription."[191] The Commission suggested the possibility of maintaining analogue services to some northern and remote communities. This would run counter, however, to international findings on digital transition, including concerns over a growing digital divide and the benefits of the digital dividend. The economic benefits in particular are dependent upon a complete transition to digital transmission.[192] Moreover, requiring CBC/Radio-Canada to continue transmitting both analogue and digital signals in some areas for an indefinite period following ASO would impose an additional financial burden on the Corporation and tie up resources that could be used elsewhere, such as making programmes.

A Canary in the Coal Mine

The first community to lose free access to CBC/Radio-Canada television may serve as a "canary in the coal mine" for the public's reaction to the possible loss of public broadcasting services from digital transition.

In February 2006, as Canadians recovered from the excitement of the Turin Olympic, Kamloops transmitters stopped broadcasting CBC television service over-the-air. The day after the Olympic flame was extinguished, so was access to CBC television for thousands of residents of Kamloops (pop 82,000) who had relied on rabbit-ears for their viewing. It was a surreal experience realizing that something we'd all taken for granted - free access to the CBC - was no longer a possibility.

It has been suggested to the Committee that CBC/Radio-Canada's actions in Kamloops amount to tacit approval by the CRTC for the Corporation to discard the public policy goals served by the principle of universal access.

As it turns out, the CBC is already beginning to implement a hybrid plan with a nod from the CRTC. Earlier this year, the CBC affiliate in Kamloops [.] ended its relationship with the public broadcaster to take up with CanWest global [sic].Arguing that it did not have the money to put up its own transmitter in Kamloops, and that only a small minority rely on over-the-air reception anyway, the CBC was allowed to stay off the air in Kamloops.[193]

If Kamloops is any indication, Canadians are not likely to accept the coming loss of Canadian content and perspective:

In answer to that question about what would happen if the CBC was gone tomorrow, it is gone in our community. What we have now, if we drift past the television and we turn it on, is a constant barrage of Botox, liposuction, gunfights, things that aren't part of my community or most communities. [.] The news [.] doesn't have the depth and the research that we're accustomed to with the CBC. In essence, you start to slide into the American umbrella. We don't like to point a finger, but that's the reality of not having that Canadian content. All we get are Entertainment Tonight and American dramas all night long. There is very little Canadian content. The Canadian content is Entertainment Tonight Canada. Great. That's it, in our town of 82,000 people.[194]

The Committee heard that Canadians are very concerned that the proposed hybrid plan will do more than circumvent the requirement for CBC/Radio-Canada "to go back to the model that was put in the Seventies of having transmitters in all communities of 500 or more."[195] Rather, it has been suggested that the plan may extend to eliminating television service to any community of any size that is deemed too expensive.

The Canadian Media Guild, as one example, also raised the fact that free-to-air digital signals of public service broadcasters have been maintained in other countries throughout the world as a matter of public policy.

While the CRTC agreed with CBC/Radio-Canada's conclusion that there "may be no business case for providing digital OTA service" to rural and remote areas, they also noted the benefits of maintaining OTA transmission facilities for Canadians rather than relying solely on BDUs for the distribution of digital/HD programming:

• There is no cost to viewers, so accessibility is provided to low income households and households with low levels of television viewing
• It can offer Canadian alternatives to viewers who continue to rely on OTA television reception and have access to US OTA border stations
• The quality of digital signals delivered by OTA transmitters is excellent.[196]

Access to local CBC/Radio-Canada stations was also identified as a problem for individuals who subscribe to DTH (satellite) services. Those services "do not transmit to all local stations," which means that even Canadians who subscribe to satellite services may no longer receive their local CBC/Radio-Canada stations. This may be a particular problem for "members of minority language communities [that] may not have access to the local Radio-Canada services that are fundamental to their development."[197]

Given its mandate and public funding, the issues raised present a challenge for the implementation of the CBC/Radio-Canada hybrid plan. That said, CBC/Radio-Canada claims that only 1% of Canadians who currently receive its OTA television services will need to find an alternative distribution method. Currently 99% of Canadian households can receive CBC/Radio-Canada television services through its OTA national transmitter network, at no cost.[198]

Overall, witness testimony and submissions to the Committee supported maintaining existing levels of service as CBC/Radio-Canada makes the transition to HD/DTV.

As a national public broadcaster, CBC/Radio-Canada should exercise leadership in over-the-air HD broadcasting, setting the example for the country's private broadcasters. CBC/Radio-Canada should provide high-definition conventional television, free of charge, to all Canadians without exception.[199]

RECOMMENDATION 2.11

The Committee recommends that CBC/Radio-Canada submit a revised plan for the conversion of its current system of OTA transmitters that includes options for possible partnerships and costing to extend its digital transmission signals free-to-air to all Canadians who currently receive its analogue transmission signals.

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Priority Programming

Canadian drama and entertainment programming is a strategic priority in the CBC/Radio-Canada Corporate Plan for 2006/2007-2010/2011. This priority is echoed in objectives of the CBC/Radio-Canada HDTV Acceleration Plan, which emphasises the dearth of original Canadian HD programming available in prime time, and the dominance of American programming in Canadian television schedules. The near total conversion of US broadcasters to HD shows, the advanced state of digital transition, and the number of US HD channels already available, make the challenge for CBC/Radio-Canada greater in English television (ETV) markets than in French television (FTV) markets.

The audience share for FTV continues to be relatively strong and is on a par with most national PSBs in developed countries. That said, the Dunbar-Leblanc Report commented that in the current digital media broadcasting environment, FTV may not escape the temptation of inexpensive broadcast rights to US shows. The Acceleration Plan, as well as the ongoing phase-in plan, is configured to build on FTV's successes by making Canadian HDTV available to those audiences. However, the urgency described in the HDTV Acceleration Plan is driven in large part by the continued erosion of audiences for Canadian programming, which in turn is caused by a lack of English language priority HD programming to compete with foreign content.[200] As such, the Corporation's plan seems to have some inconsistencies.

At present, CBC/ Radio-Canada FTV production facilities are being upgraded at a much faster pace than those of ETV. As mentioned, six non-news FTV production facilities will be HD capable by the end of 2007, as compared with only one ETV production studio. CBC/Radio-Canada anticipates that one additional ETV studio will be converted to HD in the next three years, however, this will not include the network production studios in Vancouver and Halifax.

The HDTV Acceleration Plan does not appear to improve matters. The total planned capital investment for ETV production and presentation is just under $23M less than that for FTV HD programming.

Both French- and English-language television have planned about the same number of hours of HD programming, 9,512 and 9,423 respectively. However, when the categories are vetted, it reveals more than two and a half times the hours of planned FTV priority programming.[201]

Significantly, of the 9,423 total hours planned for ETV, 2,027 are foreign procured. The number of FTV foreign-procured hours is not discernable, as it is not included as a separate category, though it is unlikely to account for more than two and half times the hours of planned HD priority programming. This strategy seems incompatible with CBC/Radio-Canada's stated objectives for original English language HD programming, and the expressed concern over the influx of US HDTV.

What this reveals is that the challenges to and criticisms of Canadian English-language drama and entertainment on CBC/Radio-Canada are not addressed in the CBC's production plans for the future. The emphasis in ETV programming continues to be on sports (1,816 hours - ETV; 388 hours - FTV) and news and current affairs (2,993 hours - ETV; 2,140 hours - FTV), at the expense of priority programming. While news and current affairs are extremely important to the public service role of CBC/Radio-Canada, they are not identified as Tier 1 programme priorities in the HDTV Acceleration Plan for either FTV or ETV, yet account for more that one half of the total planned hours for ETV HD.

The plans supporting FTV are in keeping with the CBC/Radio-Canada strategic priority for high-quality, distinctive Canadian programming. It is not clear, however, that the ETV HD plans will help cope with the ongoing challenges to Canadian priority programming on CBC/Radio-Canada television.

RECOMMENDATION 2.12

The Committee recommends that CBC/Radio-Canada prepare a detailed programming plan for the roll-out of its French- and English-language television HDTV. The plan should include the rationale and an explanation of how its plans connect with corporate objectives with respect to Canadian priority programming.

Funding HD/DTV

Given the limited resources in its existing funding base, CBC/Radio-Canada has made considerable progress is its transition to HD/DTV. Mr. Rabinovitch, the President and CEO, has made it clear that, assuming current funding levels, CBC/Radio-Canada will not meet the 2011 ASO date. Further, he has stated that it is not possible to move additional resources to the HD initiative without jeopardizing other assets and programming priorities.

The HD/DTV Acceleration Plan, if funded, would achieve 100% HD programming in prime time to 80% of Canadians. Only a portion of the 44 transmitters proposed in the hybrid model will be operational by August 31, 2011, due to the costs of the transmitters and the satellite transponders necessary for distribution to the transmitters and the BDUs. At this time, eight transmitters are operational and there are no further planned investments in DTV transmitters from CBC/Radio-Canada current funding.

Witnesses overwhelmingly acknowledged the large financial burden of digital transition. The Committee heard from witnesses supporting the CBC/Radio-Canada transition to HD/DTV as a necessary step to maintaining its role within Canada's broadcast environment. Many called for the federal government to ensure that the tools and funding necessary are provided to make this transition effectively. As representatives of ACTRA stated:

We urge this Committee to ensure that the CBC is adequately funded to carry out its current mandate and to make the transition to digital and high definition programming, above all without compromises to Canadian programming, and particularly drama production.[202]

The CBC must be funded to make the transition to digital signals and high-definition television.[203]

The Corporation asserts that the major expenditures necessary to convert over-the-air transmitters from analogue to digital coupled with the "shrinking size of over-the-air audiences makes operating over-the-air transmitters less effective and less economical."[204] It argues that this is especially true outside major urban centres, where smaller populations make the per capita costs of updating and replacing transmitters close to prohibitive.

In spite of the concerns raised about lost signals, CBC/Radio-Canada told us that "Transmission is only one aspect of the overall transition to digital/HD. In fact, the increased cost of production, including studio and equipment, is also a major element that arises in this transition."[205] The higher costs associated with producing HD were also noted by some witnesses, along with the need for original Canadian HDTV programming.

The Committee noted the need to seek expert advice on the costs of completing a transition to digital terrestrial television (DTT).

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International Perspectives on HD/DTV

Many OECD countries are engaged in the transition to digital television transmission.[206] The roles assigned to public service broadcasters (PSBs) in enabling the transition have varied. This section will look primarily at the example of the BBC in the UK, as well as the Australian Broadcasting Corporation (ABC), New Zealand's TVNZ, and PBS in the United States. It is important to recognise that there is no perfect comparison, due to different types and levels of funding, populations, governance structures and so on; however, the experiences and roles of other PSBs offer insight for the study.

All have played an active role in promoting their nation's transition to digital television. Public awareness of ASO has proven one of the greatest challenges to take-up of DTV. The BBC, the ABC, TVNZ and PBS have been required to maintain analogue services simultaneously until they have reached a set penetration rate for digital take up. Currently all are offering DTV services, with HD featuring prominently in some countries.

• The ABC is mandated to produce at least 1,040 hours of HD programming in addition to their analogue and DTV transmission.[207] It has been allowed restricted use of digital multi-channels, which has not been extended to commercial broadcasters except in very limited circumstances[208]
• PBS HD launched in 2004 and many PBS stations are planning to multi-cast up to four channels during the day and offer HD services in prime time[209]
• TVNZ will launch HD services on TV One (50% prime time) and TV2 (80% prime time) by 2008 on the Freeview platform

The BBC has played the largest role among PSBs and is also one of the strongest voices for "Digital Switchover" in the UK. In its White Paper on the new BBC Charter, the British government noted that, "A key outcome of digital switchover will be to ensure that all licence fee payers can receive the BBC's digital services. It is therefore right that the BBC should take a leading role in making digital switchover happen."[210] The new Charter includes formal recognition of the BBC's leadership role in helping the British public negotiate the new digital media and make the transition to digital television. In pursuing its public purposes, the BBC should be:

[.] helping to deliver to the public the benefit of emerging communications technologies and services, and taking a leading role in the switchover to digital television[211]

The BBC licence fee was increased by the British government to facilitate its role in the promotion, take-up, and subsidisation of digital transition. Their duties include:[212]

• helping to establish and manage the organisation that will co-ordinate the technical process of switchover;
• playing a leading role in the public information campaign that will tell consumers when and how the switch will happen, what choices of equipment they have and how they can install it;
• helping to establish and fund schemes to help the most vulnerable consumers make the switch.

To this end the BBC helped to found "Digital UK" and "Freeview" and "Freesat", and is responsible for the delivery of the "Digital Switchover Help Scheme", which provides targeted help for certain disadvantaged groups.[213]

Digital UK was set up at the request of the British government, and is owned by the UK's public broadcasters and multiplex operators. It is responsible for the upgrading of the UK's 1,154 television transmitters. The company provides public information about what to do and when to prepare for the move to digital. It also works with digital TV platform operators, equipment manufacturers, installers, retailers, rental companies and consumer groups to coordinate the technical rollout of digital television across the UK. The BBC is also on the council of the Digital TV Group, the industry association for digital television in the UK, which has over 100 members worldwide.

The BBC launched Freeview in 2002 with the dual purpose of driving the digital take-up rate and ensuring that British citizens did not lose access to audio-visual content because of ASO.[214] According to Freeview, the one-off payment for DTV services has been a major contributing factor to its take-up in the UK. More than 70% of its viewers cited the absence of subscription fees as a reason for choosing the service. The free digital terrestrial transmission (DTT) service is seen to be a driving force in the take-up of digital television and "a core enabler of universal access."[215]

• Freeview is managed by DTV Services Ltd, a company made up of five shareholders - BBC, British Sky Broadcasting (BskyB), Channel 4, ITV and National Grid Wireless.
• Freeview is available without subscription and provides more than 40 free-to-air digital TV channels, as well as radio stations and interactive services.
• All of the BBC digital radio and television channels are available.
• The BBC has launched six digital-only channels in addition to BBC1 and BBC2, which are simulcast in analogue and digital.
• Freeview currently reaches 73% of the UK population, though this may increase to more than 99% after switchover as digital signals become stronger.[216]
• Freesat was recently approved by the BBC Trust and will provide free-to-view satellite service that will reach between 96-99% of the UK population. It is expected to launch in 2008.

Freeview's limited DTT reach means that the BBC's digital services are not immediately available to 1 in 4 UK citizens. The Trust has said that Freesat will ensure that the public controls how they access the BBC's networks and "is guaranteed to remain subscription free, ensuring that the benefits of digital television do not equal "pay television."[217] Notably, BskyB is already offering a Freesat service, which is also available without subscription for a one-time purchase of a STB, mini-dish and viewing card.

Free DTT service is said to be driving the take-up of DTV in New Zealand as well. In New Zealand, the Freeview brand has been adopted and is run by a consortium of public and private television and radio broadcasters, including TVNZ and CanWest TVWorks.

• A 2006 cost-benefit study concluded there was likely to be a national economic benefit from the launch of FTA digital television in NZ, but only if analogue switch off is eventually completed.
• Launched in May 2007, Freeview NZ includes both a DTT and a satellite service that reaches nearly 100% of the population, and is likewise offered without a subscription.
• Three months into its launch, Freeview NZ was already tracking well ahead of its one-year targets for both take-up and television services.

The New Zealand government has recognised that the "transition from analogue to digital free-to-air television is .] a vital first step to ensure public broadcasting and local content will feature in the multi-platform, converged media environment."[218] It seeks to "enable public broadcasters to take a leading role in providing digital services and to set standards of digital programming in accordance with their public broadcasting mandates."[219]

The Government of New Zealand has likewise formally acknowledged that the relevance of universal access is not diminished in the digital environment.

In Australia, there are five free-to-air broadcasters available in digital, though they have not formed as a consortium. The ABC has fulfilled its legislative obligations to begin digital broadcasting from 2001 in metropolitan areas and in regional areas from 2004.

• The ABC is required to simulcast existing analogue broadcasts for at least eight years following the start date of digital services.
• Restrictions on use of multi-channels were removed to give the national public broadcasters greater scope to experiment with new digital programming and services and make greater use of their programme archives.
• A new digital television channel, ABC2, was launched in early 2005.[220]
• The Australian government has formed an independent national body to oversee the transition to DTV, the Digital Action Plan (DAP).[221]
• The DAP was proposed by the ABC, which is an active member of it.
• The ABC has received both recurrent and capital funding to aid in its transition to digital and HD programming. The Australian government has committed more than AUS$1billion to the public broadcasters' transition to digital television.[222]

As of June 30, 2004, the ABC had commissioned 97 digital transmitters broadcasting to 94.3% of Australia's population. ABC predicted that more than 97% of the Australian population would have access to their services by June 2007.[223] All broadcasters are required to "achieve the same level of reception coverage for digital broadcasting as they do with their analogue transmissions as soon as practicable at the start of the simulcast period."[224]

RECOMMENDATION 2.13

The Committee recommends that CBC/Radio-Canada submit an updated financial plan to the Department of Canadian Heritage for the transition to HD/DTV.

RECOMMENDATION 2.14

The Committee recommends that the Department of Canadian Heritage prioritize its response to the CBC/Radio-Canada plan and provide one time funding for the capital costs associated with the transition to HD/DTV and recurrent funding to cover the increased operational costs of transmission and distribution of HD signals.

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