Concerns expressed about potential negative effects of Bill S-7 on small industry players

Bill S-7 could have potentially crippling effects on small broadcasters and cable companies, some politicians suggested during an April 17 meeting of the Standing Committee on Canadian Heritage. Committee vice-chair Dennis Mills stated he was reluctant to move forward on Senator Sheila Finestone’s bill before an impact analysis was completed. Bill S-7, passed in the Senate in June 2001 and sponsored in the House of Commons by Liberal MP John Harvard, proposes an amendment to the Broadcasting Act that would allow public and consumer groups to recoup part of the costs associated with intervening in CRTC broadcasting proceedings (CCR, June 21/01). The cost of third-party participation by non-profit associations, such as the Public Interest Advocacy Centre, would be borne by industry players – including possibly small players – involved in a particular CRTC process. Michael Wernick, assistant deputy minister of cultural affairs at Canadian Heritage, contended during an appearance at the meeting that an impact study "wouldn’t be worth anything" because the criteria for who would be eligible to recoup the costs of participating in a CRTC process, and for exactly which proceedings had not yet been spelled out. Moreover, he noted that it would be impossible to predict how many broadcast proceedings the CRTC would undertake each year. Wernick suggested those small broadcasters and cablecos that do not pay Part II licence fees because their revenues are below a set amount could be exempted from financially contributing to a fund to be used to finance third-party interventions. Committee members expressed concerns over the fact that there are far more CRTC proceedings on the broadcast side than on the telecom side. They noted that the financial impact of the bill could escalate out of control over the years as the costs of subsidizing these groups could rapidly rise. Despite the concerns, the committee voted down a motion by Bloc Québécois MP Christiane Gagnon to require more witnesses, including the Canadian Broadcasting Corp., to appear before it on the matter. But committee members made it clear that while the majority had rejected a potential stall tactic, they were not necessarily indicating their support of the bill. The standing committee will likely now begin a clause-by-clause study of the bill. The committee must respond to the House of Commons with recommended changes to Bill S-7 by June 4, or it will proceed as is. If the bill is passed, it would bring the CRTC’s powers under the Broadcasting Act more in line with those it has under the Telecommunications Act. The awarding of costs to public and consumer groups is currently only possible under the Telecommunications Act (CCR, Aug. 30/01). Finestone’s bill has been around for some time. It was first introduced in an earlier session of the Senate as Bill S-24 but later died when an election was called (CCR, July 19/00). She later re-introduced it as Bill S-7. It’s worth noting that private Senate bills generally receive fairly good support in the Senate, but once passing in the Senate, most fail to make it through the House of Commons. CCTA, CAB express concerns about Bill S-7 On April 10, representatives of the Canadian Cable Television Association (CCTA), the Canadian Association of Broadcasters (CAB), and the CRTC appeared before the committee to express their views on Bill S-7. The groups and the regulator expanded on comments made last year when they appeared before the Senate Committee on Transportation and Communications. Both the CCTA and CAB support the principle behind Bill S-7, but say broadcast licensees should not have to bear an additional tax to pay for intervener costs. The CCTA has proposed that funding for public interest groups to participate in broadcasting proceedings come from excess Part II licence fees paid by broadcasters and distributors. Part I licence fees go to cover the CRTC’s operational costs for the broadcasting directorate. Part II fees are allocated to the Consolidated Revenue Fund – general government coffers – and are considered payments for the use of broadcasting spectrum, Industry Canada spectrum costs, and for the commercial benefit of holding and operating a licence in a given market. In 2000-2001, the entire broadcasting industry paid $22.2 million in Part I fees to the CRTC and $81.1 million in Part II fees to the Consolidated Revenue Fund. Since the two fees more than cover the costs of CRTC broadcasting operations, the CCTA proposes a re-allocation from existing resources rather than the imposition of an additional charge to the industry. It notes that an allocation of even half of one per cent of the Part II licence fees would generate a fund of approximately $400,000 for interveners from existing resources. "Such a fund could be established annually, allowing intervener groups to apply and to seek prior approval for their research program," the CCTA told the standing committee. "We see the prior approval of funding as a critical improvement to the mechanism outlined in the draft legislation, which contemplates reimbursing interveners after they have spent the money. "We urge this committee to discuss re-allocation of Part II licence fees with other competent government authorities, particularly with the Consolidated Revenue Fund and the CRTC, in order to elect the best approach." Canadian Heritage minister Sheila Copps has pledged to lobby her government to lower Part II licence fees (CCR, Nov. 9/01). She wrote to the Treasury Board minister in November asking for a review of the current fee system, but to date no changes have been made. Broadcasters say the standing committee should complete its review of the broadcasting system and Broadcasting Act before ad hoc changes are made, such as those proposed in Bill S-7. The CAB argues that if the bill is passed as drafted it will result in unintended negative consequences, namely that broadcasting proceedings could turn into "legalistic and adversarial affairs" – as they have on the telecom side – and could ultimately end up excluding Canadians from public processes. "We are not here to impede public participation in the process – rather – we are here to defend it," David Goldstein, the CAB’s VP of government relations, told the committee. "Unfortunately, S-7 will create a robust cottage industry for lawyers and high-priced consultants. This should not be confused with increased public participation – or good public policy." Harvard disagrees with the CAB’s suggestion that the bill will impede, not increase public participation. "…he intent of the bill is to increase, to improve, the representations before the CRTC," he said in response to Goldstein’s remarks. "…We’re talking about having the resources to provide the knowledge and the expertise to provide a very strong representation." If the bill is adopted as currently drafted, the CRTC would hold a public process to determine the regulations to govern the awarding of costs for broadcasting proceedings. Jean-Pierre Blais, the commission’s executive director of broadcasting, told the committee that the regulator "supports any measure that would encourage public participation or proceedings, as this bill does." Asked by Harvard if the cost award provision under the Telecommunications Act raises the level of debate or discourse, Blais replied: "The simple answer is yes, it does contribute to better decisions and better processes." Said Harvard: "I think what we’re trying to do here is to strengthen democracy and that’s the intent of S-7."

Concerns expressed about potential negative effects of Bill S-7 on small industry players

Broadcast | April 25, 2002

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