Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue 8 - Evidence
OTTAWA, Thursday, December 5, 2002
The Standing Senate Committee on Social Affairs, Science and Technology, to which was referred Bill C-11, to amend the Copyright Act; and Bill C-8, to protect human health and safety and the environment by regulating products used for the control of pests met this day at 11:05 a.m. to give consideration to the bills.
Senator Michael Kirby (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, our first item is Bill C-11, an act to amend the Copyright Act. The time schedule you have before you is somewhat long. In view of the fact that this is the last meeting of the committee before Christmas, and in view of the fact that, with the exception of one witness, who is not even recommending an amendment but is simply recommending a delay in the actual implementation of Bill C-11, there are no objections to the bill, I would like witnesses to be as succinct as they can.
Having said that, I realize that I probably ask the impossible, as several of them are lawyers. Nevertheless, not being a lawyer myself — which is one of my more redeeming features — I am always allowed to make observations like that.
We will begin with officials from Industry Canada and Canadian Heritage.
Mr. Bruce Stockfish, Director General, Copyright Policy, Canadian Heritage: Allow me to introduce my colleagues. With me today is, Mr. Jeff Richstone, General Counsel with our legal services; Mr. Bruce Couchman, Senior Policy Analyst with Intellectual Property Policy Directorate at Industry Canada; and Ms. Christine Hudon, Legal Services, Industry Canada.
Bill C-11 is a short bill, but underlying it is a large issue. It has many implications for many stakeholders, as you can see by the numbers in this room.
The challenge of this bill, as with any copyright issue, is to find an appropriate balance among creators', rights holders' and users' interest as well. The particular challenge for this bill is the Internet. The issue of retransmission via the Internet is what prompted the government to act to clarify section 31 and the application of the compulsory licence under that section.
Retransmission of television and radio broadcast signals being a fundamental feature of Canadian broadcast policy. The nature of Canada is such that retransmission is essential to ensure that television and radio programming reach all parts of the country.
The key point underlying this issue is that retransmission operates in a copyright environment. Copyright involves a number of rights. Copyright owners have exclusive rights to prevent reproduction or — what is relevant in this case — communication of their content. In this case, it would be television and radio programming. The concern with copyright is that there is a need to clear copyright in television programming content. That is ordinarily done through authorization by the individual rights holder. On occasion, there is a need for exceptions to the requirement to clear those rights in the overall public interest. A compulsory licence is one of those limitations. That is the case here.
Retransmission has been an issue for some time in Canadian broadcasting and copyright policy. The issue first arose in the 1960s and 1970s with a focus on the legality of retransmission and the need to pay royalties for retransmission. As it is a communication, retransmission would be subject to the need to clear copyright. That was not the case, however, until the 1980s when it became an issue under the Free Trade Agreement, FTA, between the U.S. and Canada. It was a result of negotiation in the Free Trade Agreement that Canada implemented a remuneration right. A compulsory licence was the tool used in order to give rights holders their right to compensation.
Compulsory licence means there is no need to seek authorization from the rights holders, but there is a requirement to pay compensation. In fact, the Copyright Board sets a tariff for that purpose. On average, approximately $50 million per year is collected and paid for the retransmission right.
Everything was working fine with regard to cable retransmission and even satellite retransmission, but along came the Internet a few years ago, and the technology of the Internet led to Internet retransmission. This created unique challenges for the application of this compulsory licence under section 31. It was ICrave TV that started up in the year 2000, and shortly after, JumpTV. JumpTV sought a tariff from the copyright board and argued that it could operate on the same basis as cable and satellite.
Television programming and rights holders, and broadcasters, challenged that. They felt section 31 did not give them the benefit of this compulsory licence and there was the threat of legal action and protracted action in the courts. The government saw this as undesirable and decided to proceed as expeditiously as possible to amend section 31 to clarify the application of the compulsory licence to the Internet.
Why does the Internet pose a unique problem? It is because of the global reach of the Internet. Cable and, for the most part, satellite are restricted to Canada; the Internet is not. Because it is a communication that can be received worldwide, it had fundamental impact on rights holders' abilities to clear their rights and to negotiate compensation in distinct geographic markets. With an Internet retransmitter operating, there were serious implications for broadcasters and content owners alike.
The government decided to respond. We issued a consultation paper, moved quickly and introduced Bill C-48 a year ago. Essentially, two options were considered in the consultation paper and in our discussions with various stakeholders: either exclude the Internet from the application of this compulsory licence or allow the Internet and other new technologies, subject to appropriate conditions. It was the latter course the government chose to follow, in part because the Internet is so difficult to define and Internet technology is something that others, including existing retransmitters, may want to avail themselves in the future.
The approach that the government took in Bill C-48 was to establish a framework that would clarify that cable and satellite retransmitters continue to have benefit of the licence, but allow in regulation for new technology retransmitters such as the Internet to have the benefit of the licence subject to appropriate conditions.
As we developed these regulations, there was some concern that we were possibly dealing with matters that were more strictly within the purview of the Canadian Radio-television and Telecommunications Commission, CRTC, because they were more broadcast policy oriented. We felt that to have the appropriate package of copyright related conditions and broadcast related conditions that it would be appropriate to have the CRTC involved in the process. For that reason, this past June, the government requested the CRTC to itself engage in the process and reconsider the application of the new media exemption order — which had passed in 1999 — effectively exempting Internet operators from being subject to its regulation.
When our Bill C-48 appeared before the House of Commons, the Heritage Committee, there were some concerns expressed about the application of the bill and about the extent of the use of regulations. An amendment was made at the time to allow for a clearer application of the licence to the Internet, a clearer limitation of the application of the licence.
In fact, an absolute exemption was considered. However, because of the problems with regard to the definition of the Internet, the technique that was used in Bill C-11 in clause 2 is to define ``retransmitter'' by excluding those retransmitters that are subject to the new media exemption order of the CRTC. In effect, that creates an exemption for Internet retransmitters as it presently stands, because all Internet operators are subject to the new media exemption order.
What this ultimately means for us as regulators is that if the bill is passed, much will depend on how the CRTC approaches the issue. They will be reporting back, pursuant to the government's request, on January 17. They have many choices open to them. One is to leave alone the new media exemption order, in which case the provisions of our bill would have the effect of excluding from the application of the licence all Internet retransmitters as they currently stand. The CRTC may decide to license or otherwise have a new order that would apply to Internet retransmitters — in all likelihood with the appropriate conditions. They may do it sooner or later; it is within their purview to decide. If they decide to open up the new media exemption order so there would be an application of the licence pursuant to section 31, then the government has maintained its ability to introduce conditions through its own regulations that would be appropriate for Internet retransmission. This appears under the proposed revision to section 31(2)(e) of the act as set out in clause 2(3) of the bill.
We developed these regulations for purposes of consultation last spring. They remain in abeyance. We are awaiting the decision of the CRTC in order to decide ourselves what conditions would be appropriate for us. As I say, if the CRTC chooses not to act for the time being, then clearly there is no pressure for us to have regulations in place. We will be monitoring the situation.
To summarize, the amendments to section 31 that are set out in Bill C-11 represent a compromise that clarifies section 31 in a manner that protects the rights holders and broadcasters from the adverse impact of the compulsory licence in the Internet environment. However, it leaves the door open for the Internet or other new technologies, as may be determined by the CRTC and then subject to regulation by the government to take advantage of the licence.
We believe it is a result that is fair to all interests concerned and in the interests of overall public policy.
I will be happy to take questions.
Senator Callbeck: Mr. Stockfish, you raised the issue of iCraveTV. It never got off the ground. JumpTV sought a licence. Did they ever get a licence? Did they get up and going?
Mr. Stockfish: iCraveTV did operate for a short time. They were subject to legal action in both Canada the United States. As a result of that legal action, they subsequently shut down.
JumpTV did not attempt to obtain a licence because they felt they had the benefit of the compulsory licence under section 31 in the same manner as cable and satellite and other retransmitters had the benefit of that licence.
What JumpTV attempted to do was to seek a tariff from the copyright board in the same way that cable and others would. In the meantime, it did not take advantage of the compulsory licence. The compulsory licence only applies to over-the-air signals, such as CTV or Radio-Canada or CBS. In order for them to retransmit, they would have needed to get a tariff and pay the appropriate royalties to the content owners.
In this case, JumpTV was operating, and as I understand, it continues to operate, but only with respect to specialty channels. They have clear copyright in the ordinary course. They never did get a licence. They never did take advantage of the compulsory licence with regard to over-the-air signals.
Senator Callbeck: They never sought compulsory licence?
Mr. Stockfish: They sought confirmation that the compulsory licence under section 31 applied to them.
Their view is that section 31 as it is drafted applies to them. That is not a view shared by others, and that is why the government stepped in to attempt to clarify section 31 with these amendments.
Senator Callbeck: Do they charge JumpTV or do they get their money from the advertisers? How does work?
Mr. Stockfish: Until recently, their business model was to use banner advertising on their site. They were considering a subscription model in order to raise funds in that way. My understanding is that they abandoned that model, however.
The Chairman: Thank you all for coming.
Senators, our next panel consists of representatives of the Canadian Association of Broadcasters, the Canadian Film and Television Production Association, and the Canadian Motion Picture Distributors.
Ms. Erica Redler, General Counsel and Senior Vice-President, Policy and Legal Affairs, Canadian Association of Broadcasters: Members of the committee, I will ask Mr. Stohn to introduce the panel. We are appearing as a panel.
Mr. Stephen Stohn, Chair, Copyright and International Policy Committee, Canadian Film and Television Production Association: We are here as members of the Media Content Coalition to offer our submissions in your review of Bill C- 11. Our coalition includes the Canadian Association of Broadcasters, CAB, the Canadian Film and Television Production Association, CFTPA, and the Canadian Motion Picture Distributors Association, CMPDA. Joining me is Ms. Susan Peacock, a vice-president of the CMPDA, and Ms. Redler, who is General Counsel and Senior Vice- President, Policy and Legal Affairs of the CAB.
Bill C-11 is about the distribution of over-the-air TV signals on the Internet without the consent of the owners of either the signals or the programs. Therefore, while there are a number of interested parties, the members of our associations, as owners of signals and programs, have the most at stake.
Your colleagues on the Heritage Standing Committee unanimously supported this bill, then called Bill C-48, and, at third reading, the bill received an almost unprecedented five-party unanimous support.
We are here today to ask you to report Bill C-11 without further amendment or delay and to ask your colleagues in the Senate to pass the bill expeditiously.
Ms. Redler: I had intended to provide a brief history, but Mr. Stockfish set out the context for the committee, essentially, the problem that the bill addresses.
The problem was initially recognized by Minister Copps who, in October 2001, in her address to the broadcast industry on the occasion of the CAB convention, stated:
The Copyright Act will soon be updated to reflect new technological realities and section 31, which provides a loophole for Internet providers to steal your products, must be closed.
Canadians must understand that, when we're talking about intellectual property, it is important — as important in the broadcasting industry as in any other area and we cannot allow a loophole to permit pirates to steal your product.
We applaud the minister for her commitment to this issue.
When Bill C-48 was introduced by Minister Copps, it provided for the possibility — but not the certainty — of regulations that would contain additional conditions for eligibility to the compulsory licence. Minister Copps and Industry Minister Allan Rock together provided the solution. Their officials told the Standing Committee on Canadian Heritage that the CRTC would be directed to conduct a review of the new media exemption order. This direction was issued before the committee had concluded its process and passed a radically amended bill.
By the end of the committee's process, and following very extensive debate and testimony by dozens of witness, Bill C-48 had been amended to exclude Internet retransmitters from the benefit of the compulsory licence if their activities were lawful, only because they fell within the CRTC's new media exemption order.
A somewhat unique demonstration of bipartisan collaboration, spearheaded by Heritage Committee Vice-Chair, Jim Abbott, set the stage for all-party passage of the amended bill. Parliament was prorogued, but an identical Bill C- 11 was introduced, passed by the House and is now before this committee.
For the past three years, the Media Content Coalition's case has been consistent and simple. We do not object to new, consensual forms of distribution. They are important to our growth. Our concern is with non-consensual Internet retransmission.
A compulsory licence for Internet retransmission was not intended or foreseen when Parliament enacted the current section 31 of the Copyright Act in 1999.
Content is crucial to the government's innovation agenda. However, content must be provided voluntarily and not expropriated for the benefit of business models that do not offer significant social benefits.
The passage of Bill C-11 will send a clear message that Canada — like the rest of the developed world — will protect copyright, including the exclusive program rights that over-the-air broadcasters acquire through negotiated agreements.
We would like to discuss the public policy implications and the consequences of inaction or delay. I will ask Mr. Stohn, again, who is representing the interests of the producers of Canadian programs, to address this matter.
Mr. Stohn: We start from the principle that creators and other rights holders have the right to decide who can use their copyrighted works and on what terms. The compulsory licence derogates from this right by expropriating works to the benefit of retransmitters. In consequence, a compulsory licence should not be conferred without adequate compensation for rights owners plus significant benefits to society that are at least equivalent and which could not be otherwise achieved.
Internet retransmission is different from cable and satellite retransmission. The harm it can cause is greater; and the compensation it would pay is inadequate in light of the potential harm and the absence of significant societal benefits.
First, with respect to potential harm, no technology has been proven to be either accurate in identifying the location of recipients of Internet retransmission or effective in controlling reception to a defined geographical area.
The global reach of the Internet would put the Canadian broadcasting system at risk. Without the amendments in Bill C-11, Internet retransmission would send over-the-air TV signals to markets they would not otherwise reach. Broadcasters in those markets would lose the value of licensed programming because their revenue would decrease as they lose viewing share. They would be less willing to license programs because they would no longer be the exclusive source of the retransmitted programs in market.
This would encourage owners of Canadian and international programs such as Blue Murder, Histoire de filles, Hockey Night in Canada, The West Wing, ER and Friends to prefer outlets like specialty and pay TV channels instead of over-the-air broadcasters. Only over-the-air broadcasters are subject to this compulsory licence.
The potential harm to broadcasters and to Canadians who rely on them for information and entertainment should be clear.
Ms. Susan Peacock, Senior Vice-President, Policy and Legal Affairs, Canadian Motion Picture Distributors: The U.S. Register of Copyright acknowledged the potential harm of Internet retransmission and advised the U.S. government that it could not authorize non-consensual Internet retransmission without violating international treaties — treaties to which Canada is also a party. Australia, the EU and the U.S. all explicitly prohibit non-consensual Internet transmission. No developed country that we are aware of permits it.
As to compensation, although retransmitters must pay royalties set by the Copyright Board, the board would not set royalties for Internet retransmitters at a rate that would even approximate a fair rate for a worldwide licence. The board considers value to the retransmitters and their ability to pay, but does not consider harm to copyright holders or market value.
As to potential benefit, Internet retransmitters would not advance public policy objectives. Internet retransmitters would not make substantial investments in infrastructure and technology development. They would use infrastructure and technology developed by others for other applications. They would not increase access to over-the-air TV signals, as all Canadians have access to such signals now. Access is even available already on a computer screen through the use of readily available software.
They would not be able to provide for the range of specialty pay and pay-per-view services delivered by conventional distribution systems, as these services do not fall within the compulsory licence.
There are the consequences for inaction or delay. Until Bill C-11 comes into force, the combination of the new media exemption order and uncertain language of section 31 is an invitation for Internet retransmitters to launch their service to the detriment of copyright owners.
Some submissions to the CRTC have asked it to reach different conclusions in its review of the new media exemption order, depending on whether Bill C-11 is in force or not. It is essential that Bill C-11 come into force before January 17 — the date the commission's report is due — so that their decision can be made in a stable and certain copyright environment.
In conclusion, proceedings of the House of Commons Standing Committee on Canadian Heritage demonstrate that this bill has been studied and debated thoroughly. The amendments to Bill C-48 received unanimous all-party support at the House committee. The amended bill was passed unanimously in the House at third reading.
Bill C-11 is the proper response to Internet retransmission. It denies the privileges of compulsory licence to Internet retransmitters whose activities are lawful under the Broadcasting Act only because they fall within the new media exemption order.
Bill C-11 does not prohibit consensual Internet retransmission. Most of the signals delivered by cable and DTH are not subject to the compulsory licence. Signal distributors enter into agreements with the owners of the signals who, in turn, negotiate for rights with the owners of the programming.
Bill C-11 does not exclude regulated Internet retransmission from the benefits of compulsory licence. Instead, it leaves this issue to the CRTC. The CRTC has a number of choices, as you have already heard, some of which would provide regulated Internet retransmitters with the benefits of section 31, subject to any regulations that could be made under the Copyright Act, but those regulations can only be made once Bill C-11 comes into force.
We urge the members of this committee to report the bill without further amendment or delay and ask for your colleagues in the Senate to pass it expeditiously. We look forward to your questions.
The Chairman: Ms. Redler, I understand your surprise at getting a unanimous agreement out of the House of Commons committee. However, things are somewhat different in this committee. We actually have had a unanimous agreement on our health report, which is a subject substantially more controversial than this. Things are a little different over here.
Having read the briefing material and having listened to you, I understand there is no one here at this committee who is objecting to this bill. However, as a matter of curiosity, was there any objection to it of any notable amount at the House of Commons committee? This is obviously a technologically inadvertent loophole that needed to be closed. Who were the people who opposed this?
Ms. Redler: The record at the house committee would show that there were submissions from Jump TV, the Internet player to which Mr. Stockfish referred earlier. They made a submission and Aliant may also have made a submission. These are players who have an interest in developing the business model that would stand to take advantage of the compulsory licence.
The Chairman: As you said, even over there it was obviously not a controversial question. Do any of my colleagues have questions?
Senator Léger: Would you mind clarifying why this must go through before January 17 because the CRTC's report is coming in then? I thought we were with them, right?
Ms. Peacock: The difficulty is that in the Copyright Act there are already conditions for eligible Internet retransmitters. One of those conditions is that what they do must be lawful under the Broadcasting Act. By including that reference, we inextricably link the two processes. Jump TV and iCraveTV believed that what they were doing or wanted to do was lawful because they are lawful under the Broadcasting Act because of the exemption order. Once they are lawful under the Broadcasting Act, they are lawful under the compulsory licence in the Copyright Act and, therefore, they do not need consent.
The urgency relative to the CRTC's review exercise is that the commission will be deciding what is lawful under the Broadcasting Act and whether is lawful because it is under the exemption order or for some other reason. We think that it is important for the commission to know what the Copyright Act is going to say before they make their decision. Some have said to them, ``If Bill C-11 is in effect, then we want you to do nothing. Leave the exemption order alone. If Bill C-11 is not in effect, we want you to amend the exemption order to say that it does not apply to Internet retransmission.'' Two different results are asked for, depending on what happens with Bill C-11.
Senator Léger: Is not the CRTC on our side?
Ms. Peacock: We do not know whose side they are on, senator.
Senator Léger: Let us put two sides that cannot be on the same side, then: iCraveTV and the CRTC.
Ms. Peacock: I was not being facetious when I said that, but it is important to remember that the CRTC is concerned only with broadcasting policy. The CRTC is not concerned with rights holders and with copyright owners' interests. They are concerned with regulating broadcasting system and they leave copyright issues for the Copyright Act.
Senator Léger: Bill C-11 is copyright, right?
Ms. Peacock: Yes, it is.
Senator Léger: We will have to go fast, then.
The Chairman: Any further questions? There being none, thank you all for coming here today.
The other issue we needed to deal with today was Bill C-8, the so-called ``Pesticide Act.'' I have talked to senators LeBreton and Morin, who were in the chair for part of this discussion because I was out of town. My understanding is that the intention of the committee is to pass Bill C-8, subject to some observations. Is that correct? As I understand it, the observations were being drafted but the original draft needed some work.
If it is acceptable to the committee, we would pass Bill C-8, subject to myself and Senator Cook, who is one of the primary movers of the issue of observations, agreeing on the final text of the observations. Is that agreed?
Senator Callbeck: What will be covered in the observations?
The Chairman: I am happy to include Senator Callbeck in that.
What happened was the officials took a first crack at the observations. I did not like them much. I thought they were not very clear. We are in the process of redrafting it. I am asking to delegate to two or three of us the authority to finalize the observations. We would not table the bill until Monday. We would finalize the observations in the meantime.
Senator Callbeck: I have two or three things that I can give you.
The Chairman: In written form? Senator Cook and I can finalize it. Is that acceptable to everyone?
Senator Morin: I would not mind having a look at the observations, if there are going to be any major modifications to what we agreed upon last night. We drafted some observations.
The Chairman: I know that. They needed further work.
I would then take the motion to be that we will report the bill back on Monday. When a set of draft observations is available — that will be by the end of today — we will circulate them to honourable senators.
If you get the information and your comments back to the committee clerk, then we will have a final set ready for Monday. Can I take that then as a motion? Okay.
Let us move along. When Ms. Yale comes in, can she just come to the table? I do want to hear from Aliant, because they are the one witness this morning with a request, not that we make a change to the bill, but that we ask that the coming into force clause not be activated until the beginning of June.
Ms. Susan Harley, Director, Market Integration, Aliant Telecom Inc.: I am pleased to be here today. I thank you for this formal opportunity to comment on the implications of Bill C-11 for Aliant Telecom.
Aliant Telecom is the major telecommunications company serving New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. Aliant and its predecessor companies, NBTel, MTT, NewTel and Island Tel have been offering telephone service to Atlantic Canadians for over a century. The company is currently at the forefront of innovative communications services, including telephone, cellular, the Internet and remote communications.
I have led the business development of a range of broadband services, including a new service currently in the marketplace on a limited basis with customers, which will be affected by Bill C-11. Three years ago, we started development in Saint John, New Brunswick, where I am based, on an Internet-delivered service that we now call ``TV on my PC.''
With the participation and advice of broadcasters, we created a computer-based service that offers 10 channels of television — six over-the-air broadcast signals that are retransmitted, and four specialty services with which we have negotiated carriage. These 10 channels are available only to Aliant's high-speed Internet subscribers to pay for and view on their computers while they are working online, or doing word processing or other applications.
Three years ago, the CRTC issued its new media decision and decided not to regulate the Internet. We discussed our proposed ``TV on my PC'' service with the CRTC and received written confirmation that it could operate pursuant to the commission's exemption order for new media undertakings. We then set about developing the service with employees over the next two years, and investing in the technology to deliver this unique service in Atlantic Canada. Since the introductory launch of ``TV on my PC'' last August, Aliant Telecom has been paying the retransmission tariff that compensates rights holders for use of the over-the-air broadcast signals and programming.
To our knowledge, our Atlantic-based company is the first in North America — possibly the world — to develop and launch a secure, subscriber-based, Internet-delivered service of TV channels streamed over a closed user system. It is important to note and to distinguish that this service is not the World Wide Web. We do not provide signals that can be accessed beyond our serving area. We have achieved this while addressing rights holders' concerns about border control and while operating legally under the Canadian broadcasting and copyright laws. This is a new, niche service, a complement to existing cable and satellite-delivered TV services, not a substitute for them. We learned this from our customers.
``TV on my PC'' is a geographically constrained service, since it can only be offered where Aliant offers high-speed Internet access in Atlantic Canada and Aliant controls the use of this service on a per-subscriber basis. The service is not publicly available over the World Wide Web, an application that resides on the Internet, unlike other proposed Internet retransmission services that rights holders targeted.
We want to make you aware of this service because of the changes to Bill C-11 that occurred in the House of Commons last June and are now before you. As a result of the amended definition of a new media retransmitter, once the bill comes into force, our new service will no longer be eligible to benefit from the compulsory retransmission regime under the Copyright Act that allows retransmitters to pay the retransmission tariff that compensates the rights holders. Aliant will now be at risk of having to withdraw this new service from the marketplace and stop its investment in this innovation, unless we can find a regulatory solution with the CRTC. As I sit before you, honourable senators, Aliant is faced with an unfortunate situation that will affect the viability of our service.
Admittedly, we are looking for your assistance in this situation, even at this late date in the legislative process. Let me be clear. Aliant is not seeking any amendment to Bill C-11. However, the other stakeholders seem to understand the unique circumstances affecting Aliant's service. Based on our discussions, we believe that the stakeholders and the broadcasting and production communities are interested in Aliant's approach. In terms of the legislation, the clock is working against us.
We simply need some time for our service to stay onside under the amended copyright legislation while we seek a regulatory solution before the CRTC that addresses the issues raised by the rights owner community.
I ask honourable senators to consider voicing your support for a coming into force date of June 1, 2003 for the following reasons:
First, supporting the fixing of June 1, 2003 for the coming into force of Bill C-11 would provide certainty for all stakeholders that the legislation will take effect on a specific date, clearly precluding unconditional Internet retransmission of over-the-air broadcast signals.
Second, this would allow Aliant Telecom the opportunity to seek a regulatory approach with the CRTC that is aimed at addressing the concerns of rights holders, while at the same time providing these same rights owners a check against the CRTC process.
Finally, support for a June 1, 2003 coming-into-force date will go a long way to ensuring that Aliant will be able to keep the ``TV on my PC'' service in the Atlantic Canadian marketplace.
I welcome your questions.
The Chairman: Senators, because Aliant has somewhat different views than anyone else, does anyone have any questions they would like to ask Aliant?
Senator Léger: Being from the Atlantic, I have one question.
[Translation]
Senator Léger: Do you also provide the service in French?
[English]
Ms. Harley: Can I answer that in English?
Senator Léger: Yes, of course you can.
Ms. Harley: Yes, it does have some French services. It has SRC in the channel line-up.
A very important point that I think honourable senators need to understand is that the customers in Atlantic Canada developed this service. When we first designed the service, we had an idea in our minds that they would not even want over-the-air broadcast signals; all they would want would be new, specialty services that you could only get if you were a cable subscriber and had to get a box.
However, we took our entire TV line-up out to them and said here is everything that is available for distribution in Canada on the TV service. What would you like to watch? They selected the line-up that we have, which includes some French.
Senator Léger: You have fulfilled all of the copyright obligations, right?
Ms. Harley: We think so.
Senator Léger: If the bill is enacted before January 17, can Aliant adjust after that according to the new rules? It should be in your favour too.
Ms. Harley: If the bill goes through before January 17, 2003, we would be offside with existing legislation. We have taken the approach up front that we would not do anything that was against regulation or law.
Therefore, we would have to withdraw service. That is a tough thing to do. It would affect the credibility of our company. Our customers would question whether we can deliver the services we say we will deliver.
Senator Léger: That will have to be examined.
Senator Callbeck: You received written confirmation from CRTC that you could go ahead with this. How much money have you invested in this?
Ms. Harley: I do not have the exact figure, but it is in the millions. It would be in the millions of dollars in terms of development time, testing, working with customers and technology.
Senator Callbeck: A few million?
Ms. Harley: Yes.
The Chairman: Could you tell me how many customers you have?
Ms. Harley: We currently have about 100 customers. We decided to keep this in the marketplace but not to aggressively promote it at this time. We are promoting it low key, if you will.
We have several reasons for that. We want to make sure that we test the technology fully as we load customers on to this. We do not want a service that does not work properly. It has tested very well and is working well. When we load thousands of customers, we want to grow with that service.
Senator Callbeck: How much do you charge?
Ms. Harley: We charge $9.95 a month on top of the high speed Internet subscription.
Senator Callbeck: You do not have any idea whether it is a few million or many million?
Ms. Harley: It is a few million. It is in the low millions, not in the hundreds of millions. It is a significant investment, is the point for Aliant Telecom.
Senator Losier-Cool: Are those customers in the rural areas or urban? Where are those customers?
Ms. Harley: There is a mix. The only requirement is to be a high speed Internet customer. We currently provide high speed to approximately 60 per cent of our marketplace in Atlantic Canada. When you look at the makeup of our provinces, there is a large rural population.
Senator Losier-Cool: I come from New Brunswick.
Ms. Harley: They are not all in Saint John or Fredericton. They are spread throughout the province.
Senator Callbeck: You want a delay in time while you seek a regulatory solution. If this goes through, you cannot get that regulatory solution. What type of regulatory solution are you seeking?
Ms. Harley: We are looking for an experimental licence that will allow us to continue this until we can find a permanent solution with the CRTC. We think this is the most expeditious route to go. It is one that we can do within a six-month period.
We are looking for time, to be honest. We were caught offside. This thing really caught us by surprise. It went through the house very quickly. We had been working with the rights holders, the broadcasters and a number of interested parties throughout this. We were caught offside, so we are now looking for time to work this through the CRTC.
The Chairman: I fully understand the desirability of getting a compromise. It is sort of the classic Canadian strategy, but it does seem to me that a compromise in an issue like this is probably impossible. Either there is a right or there is not a right. There cannot be half a right.
I have been puzzled as to what sort of potential regulatory compromise the CRTC could possibly make. Your second recommendation indicates that you want to seek a regulatory approach that is aimed at addressing the concerns of rights holders. I take by ``rights holders'' you mean the owners of the original broadcast. Is that correct?
Ms. Harley: Yes, the people from whom they would get the programming.
The Chairman: At the same, you would provide these same rights holders with a check against the CRTC process. What does that mean?
Ms. Harley: It allows them to comment and input in this process as we go through it. It is buying time.
The Chairman: They have certainly inputted into this process and the house process.
Ms. Harley: There are two separate issues, and it is important it keep them separate. One is a copyright issue. We are paying the copyright today because we are taking advantage of the new media exemption. If we are not allowed to do that because of a new media exemption, we need a way to be recognized and pay those rights holders for carrying the signal. We are looking for recognition from the CRTC that they will licence us and legitimize us.
The Chairman: Why is that not a solvable problem? You were prepared to pay the rights. Why is that not a solvable problem even if the act is proclaimed? If the act is proclaimed, there is no reason why you cannot negotiate with the individual players. If you can cut a business deal, you can proceed.
Ms. Harley: In our opinion, you cannot really do that because there are so many rights holders behind the broadcasters that you would have to have a cast of hundreds doing that.
The Chairman: Then to work backwards, if that argument is correct, there is no solution that the regulator can give you to solve your problem. If you want to cut a deal, with whom will you cut it?
You say that you want time to make an agreement. Then I say that you can make an agreement whether the act is in force. Your response is that you cannot do that because there are too many players. If you cannot do it after the fact, you cannot do it before the fact either.
Ms. Harley: We need time to be onside with legislation to allow us to continue to take advantage of section 31 of the Copyright Act until such time as the CRTC, which does regulate broadcasting, makes this legal.
The Chairman: If they decide to make you legal.
Ms. Harley: That is right. That is a risk.
The Chairman: Thank you very much. Ms Yale, you may proceed.
Ms. Janet Yale, President and CEO, Canadian Cable Television Association: Thank you. Mr. Chairman. As many of you know, the CCTA represents over 800 cable systems across Canada. Collectively, our members deliver entertainment, information and telecommunications services to approximately 6.1 million Canadian households, including over 1.7 million subscribers for our cable high-speed Internet services.
[Translation]
Most Canadian households receive their TV programs through their local cable company, including local and far away stations. But increasingly, developments in cable distribution will reflect the convergence between broadcasting, telecommunications and information technology.
The CCTA is well aware of the emergence of Web casters such as iCrave TV and Jump TV and the fact that they raise important policy considerations which affect not only Canada's copyright law, but also our broadcasting regulations, which fall under the Broadcasting Act.
To solve the issue, the government will have to balance the rights of broadcasters, rights holders, consumers, DBS providers and cable companies versus the potentially infinite number of new applications the new technology may provide in the form of services to Canadians.
[English]
We recognize the concerns of rights holders and broadcasters and support the need to provide equitable legal protection for the programming contained in local and distant signals.
However, we firmly believe that any measures adopted by the government to address the issues raised by Web-based retransmission should in no way limit the ability of broadcasting distribution undertakings to take advantage of the benefits offered by technological developments. Canadian communications companies should not be hindered in the deployment and development of innovative new technologies, including the use of the Internet, in the delivery of integrated services to our customers.
The CCTA believe that Bill C-11 strikes an appropriate balance among the various interests. We support the decision to define ``retransmitter'' in section 31 of the Copyright Act with reference to the regulatory status of that ``retransmitter'' pursuant to the Broadcasting Act. This will allow cable and DTH companies that retransmit local and distant signals pursuant to our statutory licences to continue to do so while the issues raised by Web-based retransmission are resolved either by the CRTC or in direct negotiations with rights holders.
We also strongly agree with the decision to ask the CRTC to consider the question of whether the retransmission of television signals over the World Wide Web should be covered by the new media exemption order. In our submission to the CRTC, we recommended that Internet retransmiters should be licensed on a case-by-case basis — just as we are — to ensure that appropriate terms and conditions are imposed that fully respond to the concerns of rights holders and other interested parties.
[Translation]
Under Bill C-11, Web casts are possible, but if an Internet rebroadcaster operates outside of the regulatory framework under a new media exemption order, it can only do so with the authorization of the rights holder. Web casters which are regulated by the conditions imposed by the CRTC will receive a legal licence as provided for in Section 31.
[English]
This approach, in our view, maintains the status quo for rights holders while leaving room for technological development and making sure that cable companies and other players in the communications industry will continue to access the most advanced technologies to be able to provide a wide range of innovative services to Canadians.
Thank you for giving us the opportunity to appear before the committee today.
Mr. Paul Spurgeon, Vice-President, Society of Composers, Authors and Music Publishers of Canada: I would like to do three things today: first, I want you to understand who we are and what we do; second, I will describe the position of the Society of Composers, Authors and Music Publishers of Canada, SOCAN, with respect to the substance of Bill C-11; and third, I will describe our concerns in respect of the whole process that surrounds this proposed legislation.
SOCAN is a not-for-profit Canadian-owned and operated organization that represents composers, lyricists, songwriters and their publishers of musical works from across Canada around the world. On behalf of our more than 20,000 active Canadian members and members of the affiliated, similar societies from around the world, SOCAN collectively administers performing rights in music and lyrics — musical works. The performing right is that part of copyright that gives owners of musical works the sole right to perform in public, or to broadcast their works, or to authorize others to do so, in return for the royalty payments. On behalf of our members, SOCAN grants blanket licences to users of music who pay SOCAN copyright royalties in accordance with tariffs set by the Copyright Board of Canada. We, in turn, distribute that money to our members, creators and publishers. The bottom line is that SOCAN, as a copyright collective, has been subject to a form of compulsory licensing for more than 60 years.
SOCAN does not believe that compulsory licensing should be further extended to retransmissions over the Internet because, in our view, to do so would violate the exclusive property rights of the copyright owners and would discourage the creation of Canadian content. Instead, we believe that the copyright owners that will be affected by Bill C-11 should continue to have the sole right to decide with whom they wish to do business and to agree on the terms of their business relationship. In this respect, I agree with my colleagues at CFPTA and CMPDA and the CAB. I must say that it is rare that we agree with the CAB, but in this case, we do.
I would like to conclude with a couple of points regarding process. This is our one problem with the bill. Bill C-11 proposes to amend the compulsory licensing provisions of section 31 of the Copyright Act by creating five conditions that all must be met if an Internet retransmitter wishes to use the copyrights of others without first receiving their authorization.
These five proposed revisions to section 31(2) appear in clause 2(3) of Bill C-11. Three of these five conditions are clear. However, we are concerned with condition (b) and condition (e).
As is the case under the current section 31(2)(b) of the Copyright Act, condition (b) requires that ``the retransmission be lawful under the Broadcasting Act.'' However, clause 2(2) of Bill C-11, the proposed revision to section 31(1) of the current act effectively disqualifies Internet retransmitters who are now ``lawful under the Broadcasting Act only by reason of the Exemption Order for New Media Broadcasting Undertakings issued by the CRTC'' three years ago, on December 19, 1999. My colleagues spoke that to earlier from the other content industries.
If Bill C-11 passes and is enacted, condition (b) under proposed section 31(2) will effectively block Internet retransmitters from getting a compulsory licence. We agree with that. However, the future of condition (b) is not clear because cabinet has requested that the CRTC review the exemption order, and the CRTC is not required to report for another six weeks, as you know, until January 17, 2003. It was spoken to earlier that we still do not know which way the CRTC will go in this respect. We would like to think we know, but nothing is for certain.
There is no guarantee that the status of condition (b) will not be changed in six weeks or in a couple of years when the CRTC is scheduled to conduct a five-year review of the exemption order. As Senator Day observed in the Senate on October 22: ``Indeed, as the Internet evolves, it may be appropriate for the CRTC to revisit its 1999 decision to not regulate the Internet. ...''
If the CRTC decides to enable Internet retransmitters to satisfy condition (b) by amending its exemption order and licensing Internet retransmitters under the Broadcasting Act, the regulations envisaged in condition (e) will become critical.
This is where we have a fundamental problem with the process, getting back to the process that surrounds Bill C-11. We do not that Bill C-11 should pass until senators know the pith and substance of the proposed legislation. I would like to emphasize the point and wrap up my remarks by repeating what Senator Oliver said in the Senate on October 22:
Regulations are the method by which governments can avoid parliamentary scrutiny of their legislative schemes. We have before us a very important bill that deals with the protection of copyright when broadcast signals are retransmitted through new types of distribution centres, including the Internet. However, as is often the case now, the real conditions, under which copyright will be protected, will be spelled out in the regulations.
I urge senators to consider how important it will be for the communications industry and Canadian consumers to have the regulations made under this bill placed before the Senate or the House of Commons for review before the regulations have the force of law. We, as parliamentarians, must reassert our place in the legislative process. We should not allow government to bypass scrutiny through the use of regulation-making power. We in the Senate should adopt a regular practice of putting forward amendments to all framework bills that come before us, which would include a meaningful role for the Senate in the regulation-making process.
Mr. Chairman, as your recent work on health care has once again demonstrated, this committee has a well-deserved reputation for taking the time to get things right. Bill C-11 is too important to be hurried through the Senate at this Christmas rush.
SOCAN submits that you should perhaps not pass the legislation without seeing its pith and substance spelled out in the bill itself. Instead of ex post facto regulations, we believe that all the key conditions of Bill C-11 should be in the statute to ensure that there is certainty and transparency in the process.
SOCAN hopes that you do get this right because we want to see this practice of Internet retransmission stopped. However, we want to ensure that the bill is not rushed in such a way as to come back to haunt us in the future.
The Chairman: Thank you.
Senator Léger: With respect to the last point, you were suggesting that proposed subsection 31(2)(e) is unclear and that we should be very careful. Would you have a specific recommendation?
Mr. Spurgeon: The first part is the fact that it is dependent upon the decision of the CRTC, which will we see in six weeks. We can only presume that they will maintain the status quo.
The second part is the fact that the regulations are not before this committee now; they could be changed. We want to see stringent conditions on this regime so as to prevent Internet retransmissions. As you are all aware, copyright reform has much on its agenda in the future. There will be a great deal of consideration about the whole issue of Internet service provider liability and liability for Internet retransmissions and transmissions. There is an issue before the Supreme Court of Canada on this very matter.
We want to ensure it is done properly and we want to ensure what the wording and conditions are appropriate to prevent this.
Senator Léger: A topic such as the Internet changes every half hour. They say that when you buy a computer, it is already old. I certainly want a solid law, but it seems that it has to be readjusted almost with the speed of the technology.
Mr. Spurgeon: That is probably true, but the principles are the things that are important for copyright owners. In this case, we are saying that Internet retransmission should not be allowed on any other base other than consensual. It must be made absolutely clear with no doubt and no possibility for change within six weeks or six months. We would rather have it in the legislation so we know that is being prevented.
The Chairman: I have a couple of observations regarding your position. First, vast amounts of legislation are passed in advance of knowing the regulations. This is not a novel event.
Second, it is hard to imagine a process that is more time-consuming and unwieldy and unpredictable than the legislative process. One of the dangers of putting anything in the law as opposed to regulation is the difficulty of changing it when we get it wrong. Far be it for me to suggest that we do not ever get it wrong.
I understand your concern, which is that we ought to know what is in the regulations, and you ought to have a chance to comment on it. I will suggest a solution to that.
It seems to me that the vast majority of your concerns can be dealt with by proceeding with the bill but simultaneously having the committee ensure that the regulations, when in draft form, will be tabled before the committee with some 30 or 60 days for people to make comments, which can be submitted by letter. It is a useful function. We certainly used to do that when I chaired the Banking Committee. We did it on all financial institution regulations, and it was amazing how many changes we recommended that ultimately got adopted.
That approach really addresses your fundamental concern, which is passing a bill that has wide latitude and then having a set of regulations that, in your view, is counter to what you think you are trying to get done. Is that reasonable?
Mr. Spurgeon: That is a proper assessment. It provides transparency and allows the parties to discuss it. There is openness. I think that really would assist considerably.
The Chairman: I am happy, if the committee agrees, to write a letter to the minister saying that we would like a chance to look at the regulations in draft form and that we would be glad to call witnesses, including Mr. Spurgeon, when that occurs.
Thank you all for coming.
Honourable senators, as I read it, from having talked to you and also from the nature of the witnesses, we are prepared to do several things. The first is to recommend that the bill be passed without amendment. The second is that I will write the minister about the regulatory question, which is an issue. I always worry about giving governments a blank hand on regulation. Third, in terms of Aliant's point, I will make a point of ensuring that the minister is aware of the concern which Aliant has, but given the body of the weight of the testimony, it does not make sense to delay things at this point.
Does anyone disagree with any of that? I take it I would report the bill back to the house without amendment? Okay? Thank you.
We have one last item today, and we will proceed to discuss it in camera.
The committee continued in camera.