SCOTT HUTTON TO THE STANDING COMMITTEE ON CANADIAN HERITAGE Notes for an address by Scott Hutton, Acting Associate Executive Director of Broadcasting, Canadian Radio-television and Telecommunications Commission to the Standing Committee on Canadian Heritage CRTC Release Thank you and good morning, Mr. Chairman and members of the Committee.
My name is Scott Hutton and I am the Associate Executive Director of Broadcasting at the Canadian Radio-television and Telecommunications Commission (CRTC). With me today from the CRTC are Peter Foster, Manager, Conventional Television, and Doug Wilson, Director, Strategic Research and Economic Analysis.
We are pleased to contribute to your study on the Canadian Broadcasting Corporation (CBC) and to provide our insight on how new technologies have been transforming the broadcasting industry. We have provided you with a deck on our recent report on the future of broadcasting. I won’t go through it, but you may want to refer to it.
In the last few years, we have seen the appearance of new technologies to distribute content to consumers, from personal music devices, such as MP3 players and iPods, to Internet-based radio stations. On the television side, the digital universe offers a multitude of pay and specialty channels, many of which are attracting a larger share of viewers. The Internet is also playing a more prominent role. You only have to look at Web sites such as YouTube for evidence that people enjoy being able to watch and upload short video clips. Meanwhile, conventional broadcasters are contemplating different strategies to manage the transition from analog to digital and high-definition signals.
These innovations, along with many others, are creating a competitive environment that is constantly evolving, one that presents new opportunities and new challenges. It is also an environment that places more power and choice in the hands of consumers.
What effect will it have on Canadian broadcasters and, in particular, our national public broadcaster?
Before I address this question in more detail, I would like to start by outlining certain elements of the Broadcasting Act (the Act) that are relevant to your study. As you know, the CRTC’s mandate to regulate and supervise broadcasting in Canada is set out in the Act, which also describes, under Section 3, the Canadian broadcasting policy.
Among other things, this Section reveals what role the national public broadcaster should fulfill. For instance, it states that the CBC “should provide radio and television services incorporating a wide range of programming that informs, enlightens and entertains.”
As part of its mandate, the Commission is responsible for issuing, amending or renewing broadcasting licences, and the CBC must submit applications like any other broadcaster. It is this activity that brings us to work most closely with the CBC. Every seven years, the Corporation must file applications to renew the licences of its radio, television and specialty services. This provides us with an opportunity to review the CBC’s overall plans and strategies for the next seven years. It tells us in specific terms what programs and services it will offer to Canadians and how it will go about meeting its objectives.
The importance of this exchange can not be understated. Given our knowledge of the overall broadcasting system, we can draw attention to the aspects of the CBC’s proposals that we feel hold the most merit. As well, our proceeding is open to the public. The last time we held a hearing to examine the CBC’s licence renewal applications, we received some 4,000 submissions from citizens from one end of the country to the other – a clear indication that Canadians are very interested in the public broadcaster’s future.
From time to time, the Commission may propose conditions of licence in order to better meet the objectives of the Act, and the CBC has the option of requesting a consultation over any such proposal. It is always possible that, despite engaging in a consultation, the CBC remains convinced the condition we are proposing would unreasonably impede it in the provision of the programming services contemplated by the Canadian broadcasting policy. In this instance, Section 23(2) states that the CBC can refer the condition to the Minister for consideration within 30 days of our decision.
The Broadcasting Act also contains other provisions that explain the powers of the CBC, its financial arrangements and the constitution, mandate and responsibilities of its Board of Directors.
As I mentioned at the outset, the CBC is operating in an environment that is developing rapidly and that is forcing broadcasting companies to re-evaluate their business models.
In June 2006, the Governor in Council, pursuant to Section 15 of the Broadcasting Act, requested that the Commission provide a factual report on the future environment facing the Canadian broadcasting system. The areas we were asked to examine are noted on Page 4 of the deck.
In response to our Public Notice, we received 52 submissions from individuals, consumer groups, broadcasters, distributors and industry associations, and we commissioned three independent research studies.
What did we find?
While the consumption of new technologies is growing, we observed that it is having a minimal impact on the regulated system. Canadians still consume the vast majority of programming through regulated broadcasting undertakings and new technologies have played a complimentary role up to now.
However, given the emergence of new platforms and technologies over the last five to ten years, the only thing that will remain constant is change, and the speed at which change is occurring. Every day, we are seeing that the expectations and demands of consumers are changing. Consumers want more audio and video programming, and greater choice in how they access that programming, when they access it and where they access it. In time, new digital technologies could potentially replace regulated undertakings.
This is why it is crucial for broadcasters to explore new opportunities to bring content to consumers.
Canadians, and particularly teenagers and young adults, are increasingly accessing programming through unregulated electronic platforms, such as the Internet. In the next decade, these younger Canadians will begin to exert their full influence on the marketplace, although it is too early to predict their future behaviour.
So when can broadcasters expect to feel the impacts of new technologies and the financial ramifications that might be associated with them? We found widespread uncertainty over this question.
There was also a lack of consensus over the question of what regulations may be needed – or not needed – for broadcasting and new media.
Section 5 of the Act instructs us that the broadcasting system should be regulated and supervised in a flexible manner so that it may adapt to technological change. This explicitly recognizes that different platforms and technologies contribute to the objectives of the Act in different ways. As we move forward, one of the basic considerations will be to ensure that the broadcasting system continues to achieve those same objectives.
At the present time, there is a healthy Canadian presence in new user-generated content as well as in new media programming in short format, such as news and sports clips. For the expensive, long-form programming, such as drama and nation-building events, we found that the same challenges exist for Canadian content in new media as in broadcasting.
Given the evidence provided with respect to the speed and acceptance of technological change, the Commission concluded that it would be prudent for policy-makers to assume that broadcasting undertakings may experience a material impact within the foreseeable future.
Participants in the study raised a very important question: should new media make an explicit contribution to our social and cultural goals?
If you find that the answer is “yes,” then the next question you must ask is whether or not public policy intervention is necessary. And, finally, if public policy intervention is indeed required, what are the most effective tools to ensure that new media does its part in the attainment of our goals?
Participants were also in agreement that the detailed and ongoing monitoring of developments is essential for an informed public policy response.
The Commission has already placed a greater emphasis on monitoring the impact of new technologies so that it may contribute to the formulation of the best policy and regulatory response possible. Notably, we have created a New Media Policy and Research group.
As well, we are now in the process of reviewing our principal policies and regulations. We started by publishing, in February 2006, a framework to guide the migration of analog pay and specialty services to a digital environment. Then, this past December, we issued a revised policy on radio and we are now reviewing our policy on over-the-air television. Once we complete this review later this spring, we will be taking a closer look at our policies on discretionary services and broadcasting distribution.
After reviewing the rules for over-the-air television, we will proceed with the renewal of the licences of these services, and of course, those of the CBC.
Before closing, I wish to underscore the high quality of the submission that the CBC provided to our study. These are available on our Web site under Broadcasting Public Notice CRTC 2006-72.
We look forward to the results of your study and now welcome any questions you may have.
Thank you. |