Blais’ differences with government come into focus

CRTC Chairman Jean-Pierre Blais' differences with his government bosses came to the fore during two recent hearings on key telecommunications policy matters. In the two hearings, one on the future of the TV industry and another on the wholesale wireless market, Blais has had to chart a challenging course between incumbent companies and upstart challengers while asserting his agency’s independence in the face of what some labeled government interference. On Sept 8., the first day of the CRTC’s two-week Let’s Talk TV hearing, Heritage Minister Shelly Glover said the government would not allow for the imposition of a “Netflix and YouTube tax,” and followed up with a statement on the last day of the hearing that said the government “will not impose new regulations on Internet video.” Blais was forced to address this at one point in the TV hearing, telling a delegation from Friends of Canadian Broadcasting: "I can't prevent that noise from occurring outside this hearing room, but what I can assure you is that, figuratively at least, you'll have your day in court." On Sept. 15 Prime Minister Stephen Harper reiterated Glover’s position in a speech in which he said his government was determined not to impose new taxes on online services. He also reaffirmed the government’s previously stated support of the unbundling of TV services. In the wholesale wireless hearing, which began Sept. 29, Blais was asked by multiple companies to take more power over arbitration in the wireless industry, a role currently held by Industry Canada. In his response, Blais said the CRTC wouldn’t necessarily act any differently than the department, as the commission is still guided by government policy despite its status as an independent tribunal. "Being out at arm's length doesn't mean you can't touch," he said. "In fact, the whole legislative framework provides for the commission to receive certain policy directions from the government." In an article that appeared last winter in the magazine Power & Influence, Blais said the government's focus on consumer advocacy and minimal regulation was "not far from my own philosophy." CRTC spokesman Denis Carmel said Blais used the recent hearings to emphasize the importance of process in the CRTC’s decisions, which take into account only the facts entered into the record for each undertaking. "What was important for the commission is to indicate to the people appearing in front of it was that we had an open mind and we would only look at the public record in our determination of the issue," Carmel said in a phone interview. "It's a very important principle in law to have an open mind, ensuring that only what is on the public record is used in terms of a determination." Tim Powers, vice-chairman of consulting firm Summa Strategies and someone with ties to the Conservative party, said the pushback from Blais against the government is a natural result of the CRTC’s role as a third-party regulator. “There has to be a little bit of turbulence and there always will be a bit of turbulence between government and the CRTC,” he said in phone interview. “And it's good for both parties that there is.” He suggested statements against the “Netflix tax” may be part of the Harper government’s attempt to “make a virtue of being the government of the pocketbook” and noted that the next federal election is due October 2015. “There's always a tension between where the regulator wants to go and where the government wants to go, and that tension probably gets most intense during the periods closer to elections,” he said. “A lot of the pocketbook items are things that fall into the suite of Mr. Blais' purview.” In February, Industry Canada took credit on its website for measures in the CRTC's wireless code, though later corrected it when contacted by The Wire Report, saying it was done in error. Powers said the government will take credit for the most popular of the regulator’s policies when it suits and distance itself from the commission when its decisions are less popular. “It's hardly surprising that a politician, when a regulator acts in a manner or when an agency acts in a manner that produces a benefit that has electoral value, will take credit for it,” he said. “The government does appoint these people to the CRTC, so taking some credit for it is hardly a surprise.” Powers said that Blais certainly has “an understanding of the consumer-focused agenda of the government,” and that any dissent between Blais and the prime minister is ultimately negligible in the face of the CRTC’s regulatory mandate. “I think that successful regulators are also not puppets of government, and government doesn't want them to be puppets either,” he said. “There has to be a bit of a public display of disagreement from time to time to often legitimize actions that are taken.” Powers said there may be some deeper philosophical differences at play, aside from the petty political point-scoring, and both Blais and Harper understand that it is the executive that retains ultimate power over the telecom sector, even though its rarely uses veto power over the CRTC. “Like any relationship, it will have lots of twists and turns,” Powers said. “The government has a hammer, though it rarely takes it, and it does have the ability to call for cabinet review and cabinet direction. But they don't tend to do that often because it neuters the regulator.” Chris Tacit, a telecom lawyer who represented independent ISP group the Canadian Network Operators Consortium at both hearings, said Blais was doing his best to keep the regulator free from interference by the government. “The CRTC is an independent body at arms-length from the government and I think that Chair Blais is doing a very good job maintaining the independence of the panel and carrying on with the hearings,” he said in a phone interview. The biggest difference in the past two hearings, Tacit said, was the inclusion of Twitter, with the CRTC monitoring the live feed of relevant tweets. “The commission was getting instant feedback on public perception of its proceedings and how they were unfolding in a way that just hadn't occurred before,” Tacit said, adding that the tweets led Blais to occasionally address his comments to the wider audience outside the hearing room. “If as a result of that, the chair needed to educate the public about the role of the commission and how the process works, that was quite appropriate. For the first time, they were able to react to that in real time.” Blais’ comments to that wider audience were not necessarily aimed at pushing back against government policy but rather educating those tuning into the hearings and illuminating the purpose of the CRTC, he said. “It's when people don't understand what's happening and feel disconnected from the process that they feel alienated, it's something foreign and arcane,” he said. “The more it's explained, the better it is for the public and for the relationship with ordinary Canadians and the credibility of the organization.” Both the CRTC and the government, Tacit said, have been helpful in “advancing competition in different ways” over the past few years and the CRTC’s goals and decisions have been both clear and consistent with overall government policy. “Fundamentally, the commissioners are there to operate under the statutes that are there,” he said. “If there's something about that that people don't like, they can lobby the government to change the statutes. I haven't seen the commission stray from its statutory mandates in any particular way.” Jean-Francois Mezei, Montreal-area telecom consultant with Vaxination Informatique, took a different view of Blais’ statements during the two hearings. “He certainly mentioned the government interference, and that's something that hasn't been done before,” Mezei said. It was the tone, Mezei said, of Blais’ description of the government’s recent legislation on wholesale wireless caps and his dispute with Netflix Inc. over the confidentiality of the company’s filings, which were ultimately not submitted, that showed the tension between the commission and the Harper government. “The transcription doesn't do justice to the whole scene,” he said. “A lot of it is gut feeling, because everything happens behind tribunal doors.” When Blais assumed the top job at the commission in 2012, Mezei said, it was expected that he would be friendly towards the government. “Now I think Blais is saying. 'I'm the last word on this,’ ” Mezei said. "There's definitely some friction between the two and I think a lot of people sense that." The statements from Glover and Harper rejecting a “Netflix tax” were “it was a clear mingling into the CRTC's affairs,” Mezei said, and Blais was “not too happy about it.” Mezei said the government had similar friction with former chairman Konrad von Finckenstein, although those disagreements were less public. "We've seen it a lot in recent weeks," he said. "It's more frequent and more obvious that it has been before." Directing the CRTC to reverse a 2011 decision on usage-based billing decision, Mezei said, showed the government that the CRTC could be a convenient target, and that consumer-friendly policies that ignore the commission's directives can score points with voters. Yet Mezei emphasized that Blais wants only to reaffirm his independence, not enter into any sort of political conflict. “The CRTC certainly doesn't want to get involved in politics,” Mezei said. “He has to tread very carefully on this.” — With reporting by Peter Henderson at phenderson@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Blais’ differences with government come into focus

News | October 10, 2014

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