Perspective: Gail Scott: the CRTC at the crossroads

All things considered, it's not unlikely the 13 full-time commissioners charged with monitoring Canada's broadcasting and telecommunications industry are relieved to see the end of 1995, a year characterized by more than just the usual regulatory headaches....

All things considered, it’s not unlikely the 13 full-time commissioners charged with monitoring Canada’s broadcasting and telecommunications industry are relieved to see the end of 1995, a year characterized by more than just the usual regulatory headaches.

First, the government overturned the crtc’s direct-to-home satellite Exemption Order, dragging the regulator into a politically loaded controversy spanning eight months.

Then, attempting to enforce the eligible services policy and bump American specialty service Country Music Television from Canadian airwaves, the regulator felt the heat from threats of a u.s.-generated trade war which ended only when a piece of Canada’s New Country Network was sold to the owners of cmt.

In tandem, criticism came and continues to come from those who feel the crtc’s processes are too slow to keep pace with the industry and others who question whether the commission will have any power at all to regulate a multichannel, multidistributor universe.

The year ahead, with any luck free of disasters on the scale of dth and cmt, looks no less eventful, with the second round of specialty channels on the horizon, major regulatory hearings on access and Access, and the potentially explosive consolidation machinations of Baton/ctv and WIC Western International Communications/ CanWest Global Communications in the works.

In this Perspective, crtc commissioner Gail Scott fields industry criticism, worry about the impact of increased foreign investment, and talks about the changing role of the crtc. January marks her third year as the full-time commissioner for Ontario, appointed in 1993 after serving as a part-time member for five years.

Top of mind for the major broadcasters, production houses, beer companies, and would-be investors are the business plans for what is expected to be more than 40 applications for new specialty services, due Jan. 11.

Given the nightmare launch of the last round and that negative option is a thing of the past, industry speculation has it that the scales have tipped this round, towards marketability over level of Cancon.

Paying audience

According to Scott, whose favorite ‘holes’ in the broadcasting spectrum include specialized news like financial services, comedy, children’s programming, and ethnic services, there’s no question the next group will have to make the case they have a ready-and-willing paying audience. But she reacts against the idea that this batch will be subject to a more strident marketability test than the last.

‘I think the last group were damned attractive choices. They are doing better at 50% to 60% penetration than any group in the past and are meeting or exceeding their advertising expectations for the year. Not one of them has come in and asked for release from their condition of licence on Cancon. Not one.’

But having said that, she adds the reality is that a service’s ability to meet its Cancon requirements is directly related to penetration, and although the commission will be looking for the best packages of Canadian content possible, ‘it’s not impossible that at the end of the next round there will be some kind of sliding scale for Cancon applicable to all the specialties.

‘With licensing hearings like this, you go in with a set of clear things that you want and then the shape of it takes place a little later.’

As for talk that this is the last round of specialty licensing, Scott says it probably is and that any future applicants will likely be able to access a more streamlined, apply-at-will application system. ‘Two or three years down the road when capacity isn’t running things, licensing will be a whole lot simpler.’

By Scott’s own admission, what isn’t getting simpler is enforcing the protectionist policies that have built the Canadian broadcasting system over the past 30 years.

The controversy ensuing from the cmt decision, combined with the Ministry of Heritage’s veto of the exemption order which had effectively prevented a partially American-owned dth service from launching in Canada, left many questioning the crtc’s power to maintain an insulated environment.

Calling the dth situation ‘a very tense period,’ Scott says what is happening is the result of the government and the crtc trying to negotiate a new dynamic following the change to the 1991 Broadcasting Act that gave the government not only the power of review (which it held previously), but also the power of direction.

‘The commission argued strongly against giving the government the power of direction in 1991 because if you can direct and review, the concern becomes the independence of the commission. It was an argument we lost, and whatever the rights and wrongs, we’re now both genuinely looking for new roles under the Broadcasting Act.’

Scott would be ‘very surprised’ to see any applicant for a new specialty service requesting a foreign service be bumped again, ‘because I think everyone realizes how truly difficult it is to do.’ But the big picture d’esn’t add up to a weakening regulatory system, she says.

‘The whole communications system mixture is changing, but the bottom line is that a ‘Canada first’ policy is still key to the Broadcasting Act. The mechanisms have to be reviewed, we have to have practices in place and they have to work. It’s more difficult to do now, but you can’t interpret that as it can’t be done or that there isn’t the will to do it.’

Too complex

Industry pundits theorize that having the will to do it is beside the point, that a multichannel, digitized broadcasting sector manned by multiple distributors will be too complex to be regulated the same way as a 20-channel cable monopoly. Although Scott agrees the system is moving towards less regulation, she disagrees with the argument that technology takes the crtc’s mandate and turns it into a romantic anachronism in history.

‘You can have 500 channels, but the technology d’esn’t make a whole lot of difference to the spirit of partnership between the government that sets policy, the crtc that implements it, and the people in the production houses, in the private sector, and the viewers and listeners we serve.’

What it d’es change, however, is the commission’s ability to regulate the minutiae of the broadcasting and telecommunications industry, and structural changes are already taking place to simplify and focus what it oversees, says Scott.

Gone are the days of cross-country hearings, and broadcast licensees regulated by their contribution in all areas of programming, from news and local programs to variety and drama. News production d’esn’t need to be regulated, but what is needed is more drama and entertainment programming, says Scott. Thus, last year’s clause allowing broadcasters making more than $10 million to choose between a condition of licence on expenditures or a condition of licence on programming, the latter chosen by CanWest Global last year.

‘It’s streamlining, concentrating on what matters and on what you can measure, using regulation to provide incentive and getting out of the things the market will take care of.’

What isn’t adjustable, says Scott, is the amount of time involved in going through the necessarily public licensing process, which usually takes two to three months. Although the crtc is making the effort to fast-track non-contentious situations that don’t require hearings and use non-appearing items whenever possible, ‘it is a public responsibility and there are some things that can’t be dealt with in a non-judicious way, so for major policy decisions like dth, I don’t think you can really shorten the process.’

Five years from now, the crtc’s priorities will include policing Cancon, ‘something that will matter no matter how many distributors there are.’

Shelf space for Canadian content will also be key, with the access hearing coming up in February, which will likely result in a set of regulations dictating access versus the voluntary system in place now, says Scott.

Also being closely monitored is consolidation now that the major broadcasting and cable companies are attempting to buy and sell in sweeps.

The commission, too, will play a role in monitoring the fallout from the increase in allowable foreign investment levels for broadcasters passed by Heritage in November. According to Scott, speculation that the increase will give the Americans a greater foothold in the Canadian market, and concern on the independent producers’ side that broadcasters with deeper pockets will be predisposed to in-house production, is too early.

Stressing the fact that the crtc continues and will continue to act as watchdog, Scott says she’s ‘as rabid a Canadian nationalist as they come,’ but that she’s not afraid of 33.3% more money.

‘We’ve got a very healthy independent sector and without seeing very clearly yet how foreign investment is going to play out, I’m sure people share my view that with more investment in the broadcasting sector, we’ll be better able to do what we do well ­ produce Canadian product. Let’s get the money first and then see if there’s a problem.’

Given all on the agenda in the years ahead, the much-speculated extinction of the crtc (fueled by the fact that no commissioner currently on staff has a contract extending beyond 1998) seems somewhat non-sensical, says Scott.

‘If you take the commission out of the equation as the agent through which this legislation is implemented, then who d’es it? It pushes it into the political arena, and try as you will, you lose the arm’s-length, quasi-judicial element of it and you wind up with every dissatisfied customer on your doorstep. I can’t imagine any government wishing that on themselves.’

As for the 1998 group expiry date, ‘I don’t know what it means. It d’es give the government the flexibility to reappoint or not to reappoint during the next election.’

In the meantime, the commission will soldier on, slicing 37 full-time positions over the next two years to help meet its $2.86 million budget cut.

Chairman Keith Spicer will leave this summer, and although many have come forward to express interest in the three positions currently vacant on the commission, Scott says there’s no indication that the government will move quickly to fill the voids. ‘If anyone were to ask me if I wanted to serve, I think I’d want to know first who the chairman is going to be.’

Joan Pennefather is the latest name churning through the rumor mill to replace Spicer. Pennefather, who stepped down from her position as executive director of the National Arts Centre on Dec. 18 after a year on the job, is a former chair of the National Film Board.