Source: https://crtc.gc.ca/eng/transcripts/2010/tb1118.html
Timestamp: 2019-04-21 20:55:18
Document Index: 101896943

Matched Legal Cases: ['art.\n2620', 'art.\n3188', 'art, 3', 'art.\n3202', 'art.\n3234', 'art.\n3237']

ARCHIVED - Transcript, Hearing 18 November 2010 - Volume 3 - Review of the direct-to-home satellite distribution policy as described in Broadcasting Notice of Consultation CRTC 2010-488 | CRTC
ARCHIVED - Transcript, Hearing 18 November 2010
Volume 3, 18 November 2010
FreeHD Canada Inc. 371 / 2395
Shaw Direct 390 / 2503
Bell TV 457 / 2955
2671, 2761, 2848, 2949, 3028 and 3276
--- Upon commencing on Thursday, November 18, 2010 at 0908
2385 THE CHAIRPERSON: Good morning. Commençons.
2386 This is rebuttal phase. As I mentioned before, we will hear the rebuttals and then we will engage in questioning with you and with other intervenants.
2387 Madame la Secrétaire, commençons.
2388 THE SECRETARY: Before we begin, for the record we wish to inform you that Bell Satellite TV and Shaw Direct provided a revised list of LPIF-eligible over-the-air television stations which will be added to the public records. Copies are available in the public examination room.
2389 As the Chairman just mentioned, we are now entering the reply phase in a rebuttal format.
2390 For technical reasons, in order to facilitate the task for the court reporter and the interpreter, I would ask that you mention your name every time you will be asked to make an intervention. It is also crucial that you shut off your microphone when you are not speaking in order to avoid interference on the audio system. We appreciate your cooperation in this regard.
2391 During this phase, in order to indicate to the Panel that you wish to intervene, we ask that you please use your name plate available on your table.
2392 Now we will start with FreeHD Canada Inc.
2393 Please reintroduce yourself for the record and you have 10 minutes for your presentation.
2394 Thank you.
2395 MR. LEWIS: Thank you, Ms Secretary.
2396 Good morning, Mr. Chairman, Vice-Chair, Commissioners and CRTC staff. My name is David Lewis and seated with me here again are Linda Rankin and Brian Olsen.
2397 FreeHD Canada has the following replies to comments in the intervenor phase of this hearing and to questions from the Chairman and Commissioners and two specific policy recommendations this morning.
2398 We want to start by clarifying our response to the Chairman's questions regarding the rationale for our launch delay we announced on Tuesday and our new capacity timing.
2399 The launch delay is a direct result of the solar array failure that crippled the Ka-band spot beam payload of our interim satellite we proposed to utilize. Since then we have been searching for the most suitable capacity and we now have several options which will be available for a March 2012 launch.
2400 Our permanent purpose-built spot beam satellite will be available early in 2014 and have capacity to deliver more than 250 superior quality HD channels.
2401 To address the first topic of this hearing, those stations that DTH BDUs should be required to carry, we believe the Commission should require DTH operators to carry all local stations that provide a meaningful amount of local content as a priority before carrying any other new services. Over-the-air stations cannot survive in markets where DTH penetration reaches more than one-third of their households with DTH carriage. Omnibus and partial channel solutions are nothing more than a temporary Band-Aid on a gaping wound.
2402 Furthermore, carriage of local Canadian stations is a clear policy objective of the Broadcasting Act where, in paragraph 2.1(t) of the Act states as follows:
"distribution undertakings ... should give priority to the carriage of Canadian programming services and, in particular, to the carriage of local Canadian stations."
2403 And further with respect to the CBC and Radio-Canada services, we note that the Broadcasting Act Policy Objectives gives further priority to the carriage of CBC/SRC services in paragraph 3.1(n).
2404 We fully appreciate that the Commission has a difficult balancing act to further the varied objectives of the Broadcasting Act, including maintaining diversity of voices, which is one of the key benefits provided by local over-the-air broadcasters to Canadian consumers.
2405 Our first policy recommendation is that the Commission should require DTH BTUs to carry all undistributed LPIF-conforming over-the-air services before they carry any other new services.
2406 To be abundantly clear on the eligibility criteria, DTH distributors should only be required to carry those LPIF-conforming over-the-air stations that originate a minimum of seven hours of English programming per week, or five hours of French programming per week, but not those stations that may have received LPIF funding from the Commission on an exception basis, or until they pass the seven or five hour per week bar.
2407 Regarding the second topic of this hearing, the manner in which DTH operators perform simultaneous substitutions, VCO-type substitutions are clearly the only acceptable way to perform substitutions and maintain local over-the-air station advertising revenues and signal integrity for distribution to other BDUs as an SRDU.
2408 Our second policy recommendation is that the Commission should require DTH BDUs to perform VCO-type simultaneous substitutions when requested by Canadian over-the-air stations. If a DTH BDU is unable to perform VCO-type substitutions, then they should be required to compensate the over-the-airs for their lost advertising revenues. As this is a technology issue, DTH BDUs should be urged to install VCO-type technology as soon as practicable.
2409 The Commission has heard considerable evidence from the incumbent DTH operators that they don't have satellite capacity to add more services. We refute what both incumbents say about their capacity shortages and their inability to distribute the 100 or so LPIF-conforming over-the-air broadcasters that provide a meaningful amount of local content and we would like to walk you quickly through our rationale.
2410 Let's start with Bell TV. Bell TV recently had Nimiq 5 at their disposal, an entire new satellite that could have distributed more than 150 HD services, yet they gave it away last year. A significant loss for Canada, as should Telesat have made the Nimiq 5 satellite available to us we wouldn't have had to delay our launch.
2411 Widespread migration to the more efficient MPEG-4 video compression would also alleviate any satellite capacity storages. Bell TV currently has an entire unused Ka-band payload on Nimiq 4 and they could easily utilize the five spot teams on Nimiq 4 to carry the missing local channels in MPEG-4 as they proposed in their earlier Freesat proposal.
2412 Alternately, if Nimiq 4 is too expensive to use, Bell TV could migrate one transponder of local TV channels to MPEG-4 and utilize that transponder to distribute all the remaining over-the-air services they are not currently carrying, or another 25 new over-the-airs in SD.
2413 Similarly, in Shaw Direct's case they could also migrate one transponder from MPEG-2 to MPEG-4 for locals and distribute some 25 new SD local over-the-airs in that transponder, thereby getting Shaw significantly closer to carrying all the eligible over-the-air stations.
2414 A simple medium-term solution for Shaw Direct would be for the Commission to require them to launch all the remaining uncarried eligible local over-the-airs on their new ANIK G1 capacity when launched in 2012.
2415 In the longer term, the wholesale migration to MPEG-4 should be a business imperative for all DTH operators or they will not have sufficient capacity to migrate their services to HD and remain competitive.
2416 While the satellite and MPEG-4 migration costs quoted by Bell TV and Shaw Direct seem way out of line with our quotes, we can think of several workable schemes that could be utilized to effect a migration.
2417 It seems to us that the incumbent DTH operators just don't want to support Canadian local over-the-air broadcasters for some reason. We remain perplexed as to why the incumbent DTH operators did not adopt spot beam technology on their latest satellite capacity selections. They would somehow like you to believe that the world's most successful DBS service providers were wrong in their technology selection and continued expansion of the number of local markets using spot beam technology.
2418 Spot beams are clearly more efficient and would provide more overall capacity to serve the Canadian market, with no cost penalty to achieving these goals. Unfortunately, however, that horse has already left the barn.
2419 And finally, as you heard from other interveners and from the Lemay-Yates report, both DTH operators are strong and financially healthy companies, at least on par with American DBS operators or better. Bell TV and Shaw Direct don't need special treatment as new entrants any longer and are an important and vital piece of the Canadian broadcasting system that should be doing their part to promote that system.
2420 Those are our reply comments and we thank the Commission once again for the opportunity to appear before you and consult on these important DTH policy matters.
2421 Thank you.
2422 THE CHAIRPERSON: Thank you.
2423 Your first policy recommendation, that is essentially what CBC said, isn't it? That's Rule No. 2 from CBC, you cannot put a new one on before you carry all LPIF-conforming stations??
2424 MR. LEWIS: I believe CBC offered a variety of alternatives, but ultimately I think that was one of the ones that they proposed on top of their wish list I would classify it as, yes.
2425 THE CHAIRPERSON: In paragraph 12 you say they had Nimiq 5 at their disposal but they gave it away.
2426 What exactly do you mean by that?
2427 MR. LEWIS: Well, Bell was contracted for Nimiq 5 all the way through the construction and launch -- or construction period of the satellite and on the day of the launch there was an announcement made between Bell and Telesat that Bell was no longer going to take the satellite and it was going to be resold to an American DBS operator, the DISH Network -- or EchoStar Technologies actually, their sister company, for use by the DISH Network.
2428 So on the day of the launch of the satellite there was an announcement made that Bell was no longer going to take that satellite.
2429 THE CHAIRPERSON: I see.
2430 Now, you suggested everybody should adopt VCO technology. As you know, Bell hasn't done that. What would it mean for Bell to switch horses now? What are the implications of that?
2431 If I understood from Bell correctly, having made that one -- exchanging to VCO at this point in time just doesn't make any economic sense.
2432 MR. LEWIS: We would refute those comments. I mean we don't have any insight into exactly what EchoStar, their technology provider, would have charged them to do the software required to do the VCOs. I presume they have gone down that path and investigated it.
2433 From our perspective, in all the discussions that we have had with over a half a dozen service providers and technology providers in this industry, as we mentioned in our comments and questioning on Tuesday, we don't -- we haven't found that it was difficult for anybody to do a VCO. Yes, there was some difficulty in understanding the unique Canadian requirements around it, but it shouldn't be a difficult thing to do given all the interactions between billing systems, conditional access.
2434 It's basically figuring out how to do a software to command the box to do a switch to another channel and that shouldn't be something that is impossible to do and it shouldn't be that expensive to do.
2435 But again, we don't have any insights into exactly how much or how difficult it was going to be given the EchoStar technology that they are using for their set-top boxes and conditional access.
2436 THE CHAIRPERSON: So according to you there is no technological inhibition here to do it and financial shouldn't break the bank because you say it is the reconfiguration of the software, as I understand you.
2437 MR. LEWIS: I think Shaw Direct has already mentioned in the past on the public record how much they spent to develop VCO technology. I can't imagine it's going to be anything different.
2438 Perhaps you could question them on what those costs were, but I don't think you are talking 10s of millions of dollars, I think you are talking perhaps at the most several million dollars in software development to do the implementation for VCOs. It's not a break the bank kind of thing.
2439 THE CHAIRPERSON: Bell, would you care to comment on that?
2440 MR. BIBIC: Mr. Chairman, we addressed this on Tuesday. I think you referred us to paragraph 77 of our September submission.
2441 THE SECRETARY: Sorry, can you please introduce yourself?
2442 MR. BIBIC: Mr. Bibic, Bell Canada.
2443 THE SECRETARY: Thank you.
2444 MR. BIBIC: Mr. Chairman, on Tuesday you actually pointed us to paragraph 77 of our September submission where we said we were in the process of investigating the possibility of implementing VCO and we indicated that since that time it didn't lead where we actually were expecting it to lead, but if -- there were a lot of details here and a lot of confidential details -- we would be happy to file an undertaking explaining in more detail for the Commission the nature of those examinations and where they led.
2445 THE CHAIRPERSON: But Mr. Lewis made a very generic statement, saying that this -- the two aspects that I picked up, maybe wrongly, was that in effect it's purely a software issue and, second, that it shouldn't be overly prohibitive given that you are buying your technology from somebody who is already practising it.
2446 MR. DINESEN: Tim Dinesen, Bell Canada.
2447 Our technology is purchased and licensed from EchoStar. They in fact do not and cannot implement VCO in their system. We have explored it.
2448 Mr. Lewis has made some fairly general statement, but with this kind of software change the devil is in the details. We would need to be implementing a software solution for which the technology does not allow that capability and we can't -- we are not confident we can do it without interrupting the viewing experience.
2449 THE CHAIRPERSON: So you are telling me it cannot be done or it hasn't been done?
2450 MR. DINESEN: I'm telling you both, it neither has been done by EchoStar nor we are not confident that we can do it in our case either.
2451 THE CHAIRPERSON: Okay.
2452 Mr. Lewis, in paragraph 15 you state -- you end up with a teaser, you say:
"While the satellite and MPEG-4 migration costs quoted by Bell TV and Shaw Direct seem way out of line with our quotes, we can think of several workable schemes that could be utilized to effect a migration."
2453 How about sharing some of those ideas with us?
2454 MR. LEWIS: Certainly, Mr. Chairman.
2455 By the way, do I have to introduce myself, Madam? Okay, as long as we are the front table, just to be clear.
2456 MR. LEWIS: I think the easiest way -- let's step back just for a second. I mean, it's not my place to tell a competitor exactly how they should be running their business or to give them business plans as to exactly how they should run their business.
2457 However, probably the easiest way to start a migration to MPEG-4 would be to do your HD subscribers. If you look at Bell TV's case, they admitted earlier in the week that 25 percent of their subscriber base has MPEG-4 boxes already. I presume that those are HD subscribers, or at least people with HD boxes.
2458 So if you look at their -- and, Brian, help me, do you remember how many HD subscribers was our estimate of what Bell had?
2459 MR. OLSEN: Up in somewhere just north of 800,000 from the last survey I had seen.
2460 MR. LEWIS: So if we assume that they have 800,000 subscribers and 500,000 of those already have an MPEG-4 box, you are really talking about migrating 300,000 subscribers. Depending on what scheme you do to entice them, whether they pay for the boxes or you pay for the boxes, it's simply a fact of swapping out the boxes.
2461 You wouldn't give those subscribers a PVR, so you would be basically giving them the basic box and an estimated cost in the marketplace today of under $70 for a basic HD-capable MPEG-4 box -- and we have lots of quotes around those kind of price ranges -- so do the math. It's certainly less than $200 a subscriber, if you assume they have two per household, and times 300,000 boxes. It's nowhere near the billion dollar swap out.
2462 Now, that's not all of their subscriber base, but certainly all of their subscriber base could certainly be done for less than half, probably far less than half, of the numbers that we just heard in the billion dollar range.
2463 THE CHAIRPERSON: Any comment from Bell or Shaw? Presumably the same rationale would apply to both of them.
2464 Mr. Bibic...?
2465 MR. BIBIC: Well, Mr. Chairman, again, there is no secret here, it's not like we didn't cover this on Tuesday. In our opening statement on Tuesday I clearly mentioned that to swap out all the boxes would be a cost approaching $1 billion and then in the very next paragraph I indicated, and I quote:
"We continue to consider how we might stage an investment in MPEG-4 which would provide for additional capacity in the future, but we need to be confident of reasonable business return." (As read)
2466 Now, staging an investment means something less than the full swap-out across the entire base. You probed us on that on Tuesday. It gets into some confidential issues and, as a result of your request, we filed this morning or last night a confidential undertaking which gives the Commission the different options for MPEG-4 swap-out and a rough estimate of the costs.
2467 So we covered this on Tuesday in a general way and we filed an undertaking to give you more detail on it this morning.
2468 THE CHAIRPERSON: Okay. But all of that to say we shouldn't be mesmerized by the billion dollar figure that you threw out, actually it's less and it can be phased in over time.
2469 MR. BIBIC: And the answer is, and that was -- we were pretty upfront about that, in a general way mind you, on Tuesday.
2470 THE CHAIRPERSON: I'm not suggesting you weren't upfront, don't get me wrong.
2471 MR. BIBIC: Yes.
2472 THE CHAIRPERSON: I just want to make sure I understood you.
2473 MR. BIBIC: Yes.
2474 THE CHAIRPERSON: Shaw, anything from you?
2475 MR. PIZANTE: I'm Gary Pizante, Shaw Direct.
2476 Yes, there has been no shortage of help from people in the industry on how to run our business in this proceeding, so we thank again.
2477 Doing a conversion to MPEG-4, even in a small subset -- and that is not a small subset in my mind -- I don't think Jim would consider it a small subset either for Bell -- to take on the operational complexity of changing out, even if it is a half a million of their two million subscribers.
2478 That is a tremendous undertaking that is going to dislocate people, it's going to mean that that is the chief priority, a chief job for the organization for, I would guess, 18 months, if they are going to do it well and plan it well. People have to be contacted, people have to be reached, it has to be explained, boxes have to be sent back and forth. There is a tremendous amount of administrative work and explanation and marketing that has to be done.
2479 We say this with experience because we have done some small-scale efforts that cost us quite a bit of money and absorbed our operational resources when we moved to 8-PSK modulation, which was a very good thing for us and for the industry in that it increased our HD capacity by 50 percent.
2480 So to take on something like that, it is very easy to put these numbers on a piece of paper and to do the math.
2481 Now, in terms of the math itself and some of the costs that Dave, Mr. Lewis, was giving, I can't say -- you know, it would, in my mind, be quite a bit more. For us it's a very large-scale effort to switch out our base, as we put down on the public record, $600 million.
2482 And yes, there probably are ways to phase it in here and there and we are looking for that, but yes, to get it all done it's a $600 million job.
2483 THE CHAIRPERSON: Yes, but, I mean obviously it's in your own interest and you will do it over time, you are not going to do it in the next two months or something like that. I mean all of this hearing is really focusing on this, what can be done to make sure that you have enough capacity to get LPIF-conforming stations on the air and that obviously means that you have to use your capacity more efficiently and, unless I missed something, this is the obvious way of doing it, plus getting a new satellite next year. Or does the one preclude the other?
2484 MR. PIZANTE: No. In our view -- I mean there are a lot of different ways that we could have decided to do it. In our vision we thought we do need more RF capacity in the sky and we know we needed to move to MPEG-4 at the same time.
2485 We have made tremendous efforts on both sides of that, we were successful in the satellite, we have been successful in introducing new MPEG-4 receivers, at least to the market. It's a very small penetration of that, it's 1 percent right now, so we are starting pretty much from scratch.
2486 We did make an effort to try to upgrade infield boxes that we have deployed today to MPEG-4 through the provision of a hardware module and we took that one pretty seriously.
2487 This is all in line with what you said, sir, about -- we have incentives. The market is driving us to that already. The sooner we can get there, certainly the better, and the more flexibility we have as a company.
2488 So all of those incentives already exist, and we work under them.
2489 THE CHAIRPERSON: And I assume that the new satellite works both on MPEG-4 and MPEG-2.
2490 MR. PIZANTE: Yes, the bandwidth is agnostic to how you use it.
2491 When we do our planning, we are hoping that we would be sufficiently along with MPEG-4 that we would start with that.
2492 I should note, as well -- and I failed to do this on Tuesday -- that the use of the new satellite also does require us to do a customer upgrade at the house.
2493 THE CHAIRPERSON: You will have your rebuttal in a moment.
2494 MR. PIZANTE: Okay.
2495 THE CHAIRPERSON: Do any of my colleagues have questions?
2496 No.
2497 Does anybody in the audience want to pose a question to FreeHD?
2498 If not, then let's go on to the next one.
2499 Thank you very much for your intervention.
2500 THE SECRETARY: Thank you.
2501 We will now hear the presentation of Shaw.
2502 Please introduce yourselves, and you have ten minutes.
2503 MR. BRAZEAU: Mr. Chairman and Commissioners, good morning. My name is Jean Brazeau, and to my far right is Jim Cummins. Next to him is Gary Pizante. On my left is Cynthia Rathwell and Dean Shaikh.
2504 Thank you for the opportunity to appear in the reply phase. We have considered your questions and proposals and we have listened to the intervenors. In response, we have the following initial comments.
2505 First, it is very important to re-emphasize that DTH is a tremendous Canadian success story. Specifically, using a national satellite infrastructure, we ensure that Canadians anywhere in the country receive the same breadth of service and quality as Canadians in large urban centres. Our network also strengthens the offerings of small cable in non-urban centres.
2506 DTH will remain critically important to keeping the Canadian broadcasting system strong and compelling in the face of illegal satellite and over-the-top new media providers.
2507 Canadian DTH has added at least 1.7 million households to the broadcasting system, creating a digital distribution market that has been able to support strong Canadian programming services.
2508 Shaw Direct has also contributed hundreds of millions of dollars to Canadian program production.
2509 These significant achievements must not be jeopardized by inappropriate and unmanageable distribution requirements.
2510 We appreciate the Commission's desire to support local television broadcasting in a manner consistent with the objectives of the Broadcasting Act. Indeed, in markets where we cannot carry the local broadcaster, we are at a competitive disadvantage to other BDUs, particularly local cable.
2511 However, our capacity limitations are real. We have tried to be as direct and clear as possible in explaining our existing and future capacity constraints. As you know, it took over three years of negotiations to even secure the spectrum that allowed us to sign an agreement with Telesat to build and launch ANIK G1. There are no viable satellite alternatives and we needed to go to extraordinary lengths to get that deal done.
2512 It was not easy, as companies such as Rogers and Bell, who were making limited use of the same band for wireless, objected to our use of the slot.
2513 In addition to building a new $300 million satellite which will use MPEG-4 compression and 8PSK modulation when it begins operating in late 2012, Shaw Direct upgraded 18 current transponders to 8PSK modulation. We were the first BDU to introduce that technology.
2514 We have worked with Telesat to move traffic and free up capacity on three transponders on ANIK F1R, at significant cost.
2515 We have tried to work with the CBC to purchase their two transponders on ANIK F2, but they have not entertained our proposal.
2516 We have tried to develop an easy MPEG-4 upgrade for all legacy receivers. Unfortunately, we did not succeed, meaning that MPEG-4 rollout can occur only incrementally, through the rollout of our new receiver models.
2517 We have taken steps to ensure that all new receivers are MPEG-4 capable and affordable.
2518 We have not been complacent in securing additional capacity. Each of these efforts costs millions of dollars.
2519 Rogers and several other intervenors, with whom Shaw Direct competes, argue for far more extensive regulatory requirements regarding local television distribution. Rogers also seeks a rule preventing down-conversion of Canadian HD signals. Our competitors' proposals, if adopted, will challenge Shaw's viability, harm competition, undo our ongoing ability to contribute to the system, and disrupt service to almost a million households.
2520 Given our capacity limitations, carriage rules must be flexible and allow the provision of a balance of services that satisfy a range of competing objectives and demands.
2521 Most importantly, we need our service to be as attractive as possible to customers across Canada. Local signals clearly increase our appeal in the communities we serve. So does the provision of HD services. However, we are a national system with limited capacity, so we cannot carry them all in SD, let alone in HD.
2522 While many rural and remote subscribers -- 75 percent of our customer base -- would like to receive the station closest to their homes, they also want the same scope of programming choice and service features that urban cable customers enjoy. Without this, they will abandon the Canadian broadcasting system.
2523 Local broadcasters, who can also distribute their signals over-the-air, but have made limited commitments to DTV transmission, want to be carried on DTH. Canadian pay and specialty services, which lack their own networks, also want distribution.
2524 Local carriage rules are not the only mandated distribution requirements. DTH must also carry all 9(1)(h) services, one station per network, per province, including each of CBC and SRC, two stations of each independent broadcasters, provincial services, and English and French-language Category A services, as well as unaffiliated services to the extent necessary to satisfy the Commission's 3:1 rule.
2525 The latter rule poses new challenges to Shaw Direct, in view of Shaw's recent acquisition of Canwest.
2526 Given the increasing carriage demands and our scarce capacity, the CRTC's policy must achieve balance. When the requirements of 2008-100 come into effect, Shaw Direct will be allocating 20 percent of its total capacity to local Canadian stations. That compares to approximately 10 to 11 percent of total cable capacity devoted to local distribution.
2527 If we were required to carry all Canadian locals in HD, or prevented from down-converting Canadian HDs, local stations would occupy over 100 percent of the capacity available on ANIK G1 and 50 percent of our total capacity. This is clearly untenable. In the name of regulatory symmetry, we would be required to carry five times the number of locals as cable, while trying to compete against its bundles, two-way capability and local presence.
2528 Rules proposed by intervenors will undermine our competitiveness and viability. However, we have heard the Commission and other parties, and we are sensitive to the need to increase carriage of LPIF-eligible stations. We have met with Bell and discussed the Commission's proposal to divide up unserved markets. However, we both agree that it is impossible for two competitors to reach such an agreement, particularly as it would imply dropping stations and disrupting customers.
2529 To respond to the Commission's concerns, we propose to add six virtual stations in MPEG-4 by August 2011. This requires an MPEG-4 upgrade of an existing transponder, and the dropping of approximately eight other channels. To achieve this, we ask the CRTC to authorize virtual channels, which would pair local content seamlessly with network content from the closest group affiliate carried by Shaw Direct. These virtual channels would have a discrete and permanent presence in our programming guide and be identified as the local station.
2530 In November 2012, with the launch of ANIK G1, three virtual channels would be converted to full channels, thus freeing up space for three more virtual channels, including an additional Quebec-based SRC station. The new full channels would be Global Regina, Radio Nord Rouyn-Noranda, and an additional Quebec SRC.
2531 In the process leading up to 2008-100, the Commission considered the appropriate regulatory framework for BDUs and for discretionary programming services. In doing this, it recognized the need to balance a number of interests and objectives within the system. Shaw Direct relied on the resulting distribution policy as the basis upon which to make a $300 million investment. Now intervenors, including our competitors, want to recreate the entire DTH distribution framework.
2532 Regulatory certainty is critically important to the success of BDUs, and is even more important to DTH BDUs that must make long-term investments in sophisticated satellites that have a life of 15 to 20 years. Having just invested to round out our fleet, we cannot now face a complete rule change.
2533 For these reasons, Shaw Direct's proposal is the best possible way to balance our capacity limits, regulatory objectives, competitive concerns, and the demands of our customers.
2534 Thank you, Mr. Chairman. We are open to your questions.
2535 THE CHAIRPERSON: Thank you.
2536 You were here yesterday when the CBC made their presentation. If not, you listened to it on the internet. You are now telling me that you have tried to work with the CBC to purchase two transponders on ANIK F2, but they have not entertained your proposal.
2537 You also heard the CBC very much protesting that you under-serve Quebec, especially SRC.
2538 Is this part of a negotiating process?
2539 MR. BRAZEAU: I don't think it is part of a negotiation process, per se, I think we are just explaining that our capacity constraints are real, and are significant. We have tried every means possible to increase that capacity, including trying to negotiate those two transponders with the CBC.
2540 As for the under-carriage of CBC stations, I don't think that is necessarily the case, especially -- and, Gary, you may want to speak to this -- the French Radio-Canadas. We carry six Radio-Canadas.
2541 Now, maybe they are not all the ones that they would want, but they are the ones that we are required to carry by your regulations.
2542 THE CHAIRPERSON: You have tabled, together with Bell, this revised chart. Could you point out what are the revisions regarding Shaw that we should take note of?
2543 To me, it looks very much the same with Shaw that we had --
2544 MR. BRAZEAU: Mr. Chairman, we did not include the proposals that we made this morning. We had to file the chart yesterday, and we were still under discussion yesterday as to how we could best respond to the Commission's concerns.
2545 THE CHAIRPERSON: Okay, then maybe --
2546 MR. BRAZEAU: But we could update it.
2547 THE CHAIRPERSON: Is there anything updated on this chart as far as Shaw is concerned?
2548 MR. BRAZEAU: No.
2549 MR. PIZANTE: Well, yes, there is. We did add the channels that we are required to carry from 2008-100. Specifically, I believe, it's SRC Regina, Global Halifax, and Global Saint John.
2550 These are three stations, in addition to at least four others, that we have to put on the satellite, somehow, by August 31, 2011.
2551 THE CHAIRPERSON: You are going a bit too fast for me. Can you go through that again, so I can make a check mark on which ones you added or changed here?
2552 On the first page --
2553 MR. PIZANTE: On the first page, the first one would be CBC Regina, which would be --
2554 From the CBC block, it's about --
2555 THE CHAIRPERSON: Right, I see that.
2556 MR. PIZANTE: Okay. That's one.
2557 And, then, at the bottom of the page --
2558 THE CHAIRPERSON: Yes.
2559 MR. PIZANTE: -- the last two.
2560 THE CHAIRPERSON: Global Halifax and Global Saint John.
2561 MR. PIZANTE: Yes.
2562 THE CHAIRPERSON: Is there anything on the second page?
2563 MR. PIZANTE: No.
2564 THE CHAIRPERSON: Nor on the third.
2565 MR. PIZANTE: No.
2566 THE CHAIRPERSON: And you just mentioned that you are carrying six SRC stations?
2567 MR. PIZANTE: Yes.
2568 THE CHAIRPERSON: How many in Quebec?
2569 MR. PIZANTE: We are carrying one in Quebec, and the reason for that is, because we have to carry the six SRC -- the five SRC, at least one from each time zone --
2570 THE CHAIRPERSON: Yes.
2571 MR. PIZANTE: We did put up SRC Edmonton as a result of meeting that obligation.
2572 I want to explain. Was that a business decision that we would have made if we had our druthers and we just had to have more SRCs than any other French network? We definitely would have added another SRC service from Quebec.
2573 But because we are required to meet the time zone rule, for other good reasons -- public policy reasons -- it did absorb bandwidth that could have gone to other places.
2574 I think the point that we are trying to make, to some extent, as well, is that there are a lot of rules and obligations upon us, which Jean went through. When we think about it, it's the rules from 2008-100, and if I understood Bell on Tuesday, they quantified that as 55. We have the obligation to carry all Category A French and English stations, as a national provider.
2575 Anyway, when you finish the list, it gets close to 100 channels.
2576 THE CHAIRPERSON: You heard Rogers yesterday suggesting that we should use with DTH the same approach that we used with DTV, basically saying: Look, you are no longer an infant industry. You are grown up, you are there, et cetera. We should set a date and then, basically, hold you to it, and you use your own imagination, your own business sense to find out the best way of getting there.
2577 They suggested 2013, which is one year after you will be launching -- say that as of 2013 all --
2578 I don't know how Rogers stated it, but let me say it the way I understood it, at least; saying that by 2013 all LPIF-conforming stations should be up.
2579 And I am not making the distinction between SD and HD, as they do. One or the other, I don't care, that's your choice, but they have to be up by that date.
2580 Given that you are about to launch a new satellite, would that be something that could be achieved?
2581 MR. BRAZEAU: To start off with, I don't think there is any infant industry consideration when it comes to DTH. The reality, I think, is that the carriage policies recognize the differences in technologies, differences in the strength of these technologies, and also how best to maximize the contributions to the system.
2582 Again, we based our investment on the existing rules and on satisfying those rules. We think that the existing rules in 2008-100 are reasonable, are balanced, and we certainly can live and respond to those rules.
2583 Requiring us to add -- we talked about 50 percent of our total capacity to Canadian over-the-airs means that we could not compete. It means that all of the new specialities --
2584 THE CHAIRPERSON: No, that's not what I asked you. I didn't ask about SD, HD, et cetera. I said all comparable up --
2585 I was very specific, because our policy, also, does not talk about HD, it just says up on the satellite.
2586 All I asked you was whether, with the new bird up, by 2013, can you do it.
2587 Because it doesn't take 50 percent of your capacity. By your own words, it doesn't. You only get there if you are talking HD.
2588 MR. PIZANTE: You are right about the math. That's right, 50 percent on the HD.
2589 I guess our concern is -- and, you know what, for the rest of the answers, you can do the math on that, as well, sir, in terms of what it would take to do it in SD. That's straightforward.
2590 But I want you to hear what we have to say about this incrementalism that is happening to us, and the cumulative effective of that, and I just want you to consider it with respect to how we have to compete against cable.
2591 And I want you also -- because I don't think that this has been heard enough, in terms of the percentage of our capacity that is going to support Canadian local relative to our terrestrial competitors. Because, after all, they are not being asked or directed to lift every Canadian local station on their terrestrial networks.
2592 I am not saying that there is a good public policy reason for it, but that is the position that we are being put in.
2593 So when you ask the direct question about whether that is something possible for us to do, you know, there is almost a feeling of -- of course, you know, you can work it out and see how many channels we can carry in MPEG-4 and how much capacity that would absorb. My only concern is that, as it eats away and eats away, we have less capacity and less flexibility to respond to the requirements of our customers, and that is ultimately what we are trying to get to.
2594 THE CHAIRPERSON: Of course, we realize that, and that is why we have not gone down the road of saying that everybody has to be up on SD, or HD, or both, et cetera. Our policy has never spoken about that and has never put that forward.
2595 All we have very clearly said is that the Act requires an emphasis on local broadcasting. We support local broadcasting through the LPIF and getting the local broadcasters to offer seven or five hours, depending on which language we are talking about.
2596 A lot of their customers are on satellite. This is sort of the missing link, so to speak, to make sure that that local policy of ours is met.
2597 And, obviously, we want to do it in such a way that we don't do it to the detriment of your business success, because we realize, as Mr. Brazeau said, that DTH is a brilliant success story. We don't want to ruin the success, we want to combine it.
2598 That's why I was talking -- when Rogers talks about a phase-in, and setting a date, et cetera, we have done that in other areas, most notably DTV, and it seems to be working.
2599 That is why I am asking here, you will have a new bird, you are switching to a new technology of MPEG-4, you will do it in your own time, et cetera. In light of all of that, is that something you could do -- is that the right date or not? That was my question.
2600 MR. BRAZEAU: We certainly hear you, Mr. Chairman, but coming back to what Gary was saying, we heard from the broadcasters yesterday, saying that somehow if they don't get carried on Shaw or Rogers, this is fatal.
2601 Again, we would like to re-emphasize that the national broadcasters don't rely on local advertising for much of their revenues, and most of our customer base is not -- we are not a local company, and our footprint is not local. Our footprint is national.
2602 So I am not sure how many more customers we are going to bring in as a result of carrying all of these extra channels.
2603 We find it very, very challenging, and because of the capacity constraint, we will have problems responding to future new services that you will license.
2604 The specialities are not here today to also raise their hand and say, "Well, what about us," down the road, because we have to carry them also, and our customers want those services.
2605 I guess the caution here is that adding more obligations on us will make it very, very challenging.
2606 THE CHAIRPERSON: Trust me, you have made that point, Bell has made that point, and we heard it loud and clear.
2607 Whatever you said sparked an intervention by the CBC.
2608 MR. GUITON: Thank you. Steve Guiton, CBC.
2609 I just want to go back to one point, which I think I have heard a couple of times from Shaw now, with respect to our ability to capture local advertising and whether or not there is local advertising going on on our channels. I would like to put some facts on the table, Mr. Chairman.
2610 In terms of a typical Radio-Canada local channel, half -- 47 percent -- of its commercial time is local. Seventy percent of that local commercial time is outside the local news programming. So a virtual channel, a partial channel, loses 70 percent of that 50 percent.
2611 In terms of a typical CBC channel, 40 percent of commercial time is local, and 90 percent of that is outside the local news programs. A virtual channel, a partial channel, loses all of that.
2612 THE CHAIRPERSON: Thank you.
2613 Rita, do you have questions for Shaw?
2614 COMMISSIONER CUGINI: Yes, thank you.
2615 I have just a few questions, and I do realize that it is something that was developed between Tuesday and today, but you are going to have to explain page 7 to me.
2616 What does this mean? What is the timeframe?
2617 I know you say by August 2011, but is this work that has already begun, will begin as of Monday? Is this something that you already had in your back pocket and thought you would bring out in rebuttal?
2618 Explain this to me, please.
2619 MR. PIZANTE: It should be clear by now that we are not that smart.
2620 MR. PIZANTE: No, actually, this was totally created as a result of the questioning we received on Tuesday, where I didn't answer the questions without checking.
2621 Could you do that? And we thought: Well, maybe we could.
2622 We would be using our virtual channel override technology to do this.
2623 MR. BRAZEAU: It was the Molnar model that we used.
2624 MR. PIZANTE: We thought that if we gave it a name, it would seem to -- something --
2625 MR. PIZANTE: -- so we didn't.
2626 But that's really how we thought about it, and the reason why we haven't spent a lot of time thinking about these things is because we had a sense that the broadcasters -- and I think you just heard it from Mr. Guiton -- really had very little interest in such a model, for their own reasons.
2627 Even though we are constrained, something is better than nothing, in my view. But they were not interested, and we need their consent. Part of our policy change would be that, if they are taking LPIF money, they wouldn't have the right to hold it back.
2628 To explain this, it is basically a channel on the guide, and it's full-time on the guide. It would be the closest network affiliate, in terms of the programming, except for the local news slots, where we would, by virtual channel override, by using that technology, put in the news.
2629 Actually, the news would be in two places on our platform. It would be on an omnibus channel and it would also be on that channel, which we created in the guide.
2630 We think that is an important advantage to them, that is, the broadcasters, because they would have an identity and a channel number that they could promote.
2631 THE CHAIRPERSON: Presumably the customer -- let's take the example that we worked with, which was Saskatoon and Regina -- Regina, you don't carry Saskatoon, so suddenly there is a Regina channel, and for the customer, he or she would get Regina local news?
2632 MR. PIZANTE: That is exactly it. That is exactly it.
2633 So they would see Saskatchewan programming during the rest of the day, and then they would see the local news from their community during the news portions.
2634 COMMISSIONER CUGINI: And would this be local content?
2635 I am not a satellite subscriber, so would this be local programming from all broadcasters based in Saskatchewan?
2636 MR. PIZANTE: No, we would do it for a particular number and for a specific type of network.
2637 Let's say, in Saskatchewan, that it would be a case of Global --
2638 Maybe that seems too self-serving.
2639 Let's say that we do one for Quebec, and we have SRC Montreal and we have SRC Quebec, which we don't carry right now, or Jonquière, which we heard a lot about. We could do a virtual channel where it would be, during the day, SRC Montreal, through most of the day, and then we would insert SRC Quebec or Jonquière -- pick the one that we decide to go with -- during their local news programming, and then it would go back to the network programming when it was done.
2640 As well, that local news would be elsewhere in our system, on an omnibus-type channel.
2641 But this is better than just an omnibus-type channel. We do that today with CBC Newfoundland. We provide it there.
2642 And our customers have learned where it is, and they like it and they know where to go.
2643 But when you introduce it this way, I think there is a much better chance of having higher visibility, by virtue of being right in the middle of all of the other SRC channels that we have.
2644 And, to some extent, it is good for business, as well, because we can show that we have more programming for Quebec. Believe me, it is not only here that we hear this kind of request.
2645 So that's why we are interested. It uses scarce bandwidth efficiently and effectively, but to date there has been little appetite for that from the broadcasters, because I think they are holding out for broader carriage, really.
2646 COMMISSIONER CUGINI: And we heard from the broadcasters that virtual and omnibus and partial channels just are not acceptable, and yet you have chosen to continue to go down this road.
2647 MR. PIZANTE: We heard an idea; we liked it.
2648 I guess what is different, as well, is that we are contributing 1.5 percent to the LPIF. The country is investing $150 million a year, I guess, in their programming. They are taking the money, and I think, as a result -- and I know they are producing content with that, and that's great.
2649 You know, we are short of capacity for sometime. This would be an effective way, a smart way, to kind of get that to the people a little faster.
2650 COMMISSIONER CUGINI: Is it a permanent solution to the problem?
2651 MR. PIZANTE: Well, you know, we had that discussion, I think, just a moment ago with the Chairman and I think -- I don't know what more I can add to what we already said.
2652 COMMISSIONER CUGINI: CBC?
2653 MR. GUITON: I just want to clarify one thing. Mr. Pizante has just said that in St. John's the partial channel solution is well liked by their customers. I would like to send them all the complaints that we get with respect to St. John's. It is not well liked by our customers.
2654 MR. PIZANTE: We will be happy to --
2655 COMMISSIONER CUGINI: And you continue to mention that local news would be -- that that is what you would insert or would be inserted in the virtual channels. But as we know, as important as news is, broadcasters also produce and air other local programming.
2656 Would you also include that other local programming?
2657 MR. PIZANTE: Well, if it works within the system and it is something that is done across the network, and since these stations operate really on a network basis mostly, so they do think -- in order to economize and reach efficiencies in their business.
2658 So I would say that if that is the case and it is consistent with what is going on, there is really no reason why we wouldn't.
2659 I mean it would take a little more bandwidth at different times of the day than just the local news programming but we wouldn't have an aversion if it were possible within it.
2660 The only time it wouldn't be possible is if there was nothing produced by the local station that we are inserting on a VCO basis while there was something going on from the one that we are using on a full-time basis.
2661 COMMISSIONER CUGINI: Any questions or comments from participants in the room? No. Those are all my questions.
2662 THE CHAIRPERSON: Louise?
2663 COMMISSIONER POIRIER: I do have a few questions.
2664 I asked you Tuesday how many French stations you carry for a person who lives in Havre-Saint-Pierre and for a person who lives in Gravelbourg. I didn't get the answer, so I would love to know how many stations they receive in French in Havre-Saint-Pierre and in Gravelbourg.
2665 MR. PIZANTE: Well, these are the LPIF stations that we have on the list and they are not all the stations that we carry in French. So I apologize for not coming here with that number for you.
2666 You know, it is in the hundreds probably in terms of all the French channels that we carry with regards to all the SRC, the TVA. If it doesn't reach 100, it is very -- it is approximate to that.
2667 The TVA stations, we carry at least five TVA. I believe we carry four or three V channels. We carry those in HD as well.
2668 We carry all the Category A French channels. We carry a number of Category 2 or B -- I am not sure what they are called right now -- French channels.
2669 We carry a good number of HD channels in French, nine. We know we are a little under in the market there but we manage to hold our own. We carry French pay-per-view channels as well.
2670 So it is a full offering. We have good representation out of Quebec in terms of percentage of our customers. It is roughly approximate to the general dispersion of the French population in Canada and we do that by trying to be first in customer service and so forth.
2671 COMMISSIONER POIRIER: Yes. And, Mr. Pizante, can I ask you to provide us that information later on by a certain date we will determine, please?
2672 MR. PIZANTE: Yes.
2673 COMMISSIONER POIRIER: I would really appreciate having the exact number for those two towns and where do the local news come from.
2674 This will bring me to a second question but I will ask in French, and the channel in French is Channel 2.
2675 Alors, justement, vous venez de me dire qu'ils reçoivent plusieurs stations de TVA et de V. Alors, je regarde le tableau que vous nous avez donné et je vois que les gens qui sont abonnés avec Shaw reçoivent quatre des cinq stations de TVA, ils reçoivent trois des quatre stations de V TV, et ils reçoivent une seule station de la SRC, qui serait Montréal, quand je parle de nouvelles d'intérêt québécois pour eux.
2676 Bien sûr, ils reçoivent d'autres stations comme Ottawa, à ce que je vois, mais les nouvelles locales les plus près qu'ils ont, quand ils habitent Jonquière, Rimouski, quand ils habitent Natashquan ou Havre-Saint-Pierre, proviennent de Montréal.
2677 Comment se fait-il que vous soyez capable de distribuer quatre canaux de TVA, mais seulement un seul canal de Radio-Canada?
2678 MR. PIZANTE: Well, we do distribute six SRC channels from across the country.
2679 COMMISSIONER POIRIER: Yes, but I am talking about local channels from Quebec, okay --
2680 MR. PIZANTE: Yes.
2681 COMMISSIONER POIRIER: -- and the relation I make to TVA, they are all Quebeckers' channels. So I am not relating to the other French channels from Canada.
2682 MR. PIZANTE: I understand, but I hope you can understand that we have a number of demands, requirements upon us, and one of them was that we have to carry an SRC channel from each time zone, right. So we carry a number. In fact, we exceed that requirement by virtue of carrying two out of the Eastern Time Zone, SRC Ottawa.
2683 So that means we have a lot of SRC programming, network programming on our system and some of it is time-shifted and there is a small benefit to that, but --
2684 CONSEILLÈRE POIRIER : Mais, Monsieur Pizante, permettez-moi de vous arrêter. Keep your headset on. Permettez-moi de vous interrompre parce que je connais cette réponse-là. Vous me l'avez déjà donnée.
2685 La réponse est que les gens du Québec... et vous dites que vous voulez bien servir et que vous connaissez bien votre clientèle du Québec. Or, hier, nous avons entendu plein de gens qui se plaignent, qui se plaignent du fait qu'ils ne reçoivent pas les nouvelles de chez eux.
2686 Qu'un chien soit mort à Edmonton quand on habite Natashquan ne semble pas les importer outre mesure, mais quand cela arrive plus près de chez eux, ça les intéresse davantage.
2687 Ce que je veux dire, c'est, et ma question réelle, connaissez-vous bien votre marché du Québec et avez-vous vraiment l'impression de bien servir ce marché-là, et sur quelle base nous donnez-vous cette affirmation qui, à mon avis, est gratuite selon l'information que nous avons obtenue, écrite dans cette audience, et les réponses que nous avons obtenues hier des intervenants?
2688 Vraiment, cette réponse-là ne me satisfait pas, celle que vous me donnez depuis deux jours.
2689 MR. BRAZEAU: Commissioner Poirier --
2690 CONSEILLÈRE POIRIER : Oui.
2691 MR. BRAZEAU: -- we have a number of customers in Quebec. We can provide you with the total number if you would so desire if that would help you.
2692 COMMISSIONER POIRIER: I would love to, yes.
2693 MR. BRAZEAU: So there are a lot of customers in Quebec who say, we like your programming, we like your services, we are happy with them. And if they are not, then they can always go to the cable company and they can have all of those news services that you are calling for and they can watch all those news services or they can have --
2694 THE CHAIRPERSON: That is not true. You well know that is not true. The beauty of DTH is that it kills where cable companies don't go and that is why you have a disproportionate number of customers in remote and rural areas. They don't have that option.
2695 MR. BRAZEAU: But those people do not have a local station.
2696 COMMISSIONER POIRIER: Well, let me tell you, Quebec is much closer to someone who lives in Havre-Saint-Pierre than Montreal is, and Rimouski, well, is closer to those who live in Natashquan than Montreal is.
2697 So the purpose of my question is to make sure that you understand your clients, that you serve them well. And please don't tell me that people who live in Quebec City don't want to get their local news from Quebec City, and with Shaw they get Montreal news from CBC.
2698 MR. BRAZEAU: And we have indicated that with more capacity we would increase the number of those channels that we offer to our Quebec customer base.
2699 COMMISSIONER POIRIER: Yes, and over-the-air is not the solution either because those who really live far in the rural areas, the signal they get is not a clear signal, is not really -- they cannot get their channel.
2700 So they cannot move to cable companies, they cannot get it over-the-air, plus when they get your pamphlet, they see CBC but they don't know it is Montreal. It is when they get the service that they get to understand the news they get is from Montreal. It is not from their local or closest local station.
2701 THE CHAIRPERSON: Bell, you had an intervention?
2702 MR. PIZANTE: Can I just -- I mean we do carry stations from Quebec City, right, let's make that clear, and I think they do provide news as well. TVA, in fact, is the most popular network in Quebec by far.
2703 But having said that, I understand your other concerns and, believe me, we would like to do more in order to serve the Quebec market better and win in that market, which is very competitive, very very competitive, because we compete against all places in Quebec and they have very powerful competitors there, and Bell has a very good offer as well.
2704 So it is an important market for us. We have a large percentage of customers. We do try to represent it regionally and I think we do.
2705 We were the first to offer service out of Rimouski, in fact. We were the first to offer that channel up. I know it is not SRC but we offer a channel out of Rimouski and that is important to recognize as well, that we do have a balance of channels from these areas, if they are not from SRC.
2706 THE CHAIRPERSON: Bell?
2707 MR. BIBIC: Thank you, Mr. Chairman. Mr. Bibic from Bell.
2708 At the risk of sticking my head out of the foxhole here to defend my colleague Mr. Brazeau just a bit here, I can't speak completely for -- I am not speaking for Shaw, but in Bell's case, if you look at this chart that we handed in, there are a number of channels which clearly we do not carry. They are listed there.
2709 We checked yesterday. For each of one of those communities, there is a cable competitor in our case. So that is one point.
2710 Et, Madame Poirier, je voulais juste encore, en ce qui concerne Bell, Bell TV, j'ai le guide de programmation de Bell TV ici avec moi. Je peux vous laisser une copie plus tard. Et dans notre cas, on indique très clairement dans notre guide de programmation les stations locales qu'on offre.
2711 Donc, dans le cas de Radio-Canada, on indique clairement que c'est Edmonton, Moncton, Montréal, Ottawa, Québec, Sherbrooke, Vancouver et Winnipeg. Donc, c'est bien évident qu'on n'offre pas un service, on va dire à Trois-Rivières, par exemple. Dans notre cas, on l'indique.
2712 CONSEILLÈRE POIRIER : Parfait. Je comprends. Juste une sous-question avant de donner la parole à Radio-Canada.
2713 Cependant, quelqu'un qui est devenu membre... qui est devenu client chez vous, il y a quelques années, n'avait pas autant de nouvelles locales à Radio-Canada Trois-Rivières, par exemple.
2714 Avec le LPIF, avec le Fonds de programmation d'amélioration locale, les nouvelles locales ont augmenté et se sont développées, comme à Rimouski, par exemple, où on n'offrait vraiment pas de service d'information locale avant.
2715 Alors, c'est certain que maintenant, il se retrouve avec vous comme satellite, mais les conditions ont changé, et à ce moment-ci, ce client-là pourrait vouloir avoir des nouvelles locales et pourrait vouloir être intéressé à l'obtenir.
2716 Alors, c'est certain qu'il a peut-être le choix à Trois-Rivières, mais je donnais des exemples aussi du rural, à Natashquan et ailleurs, eux n'ont pas le choix du câble souvent, ces petites localités-là, et c'est là que le satellite joue son rôle le plus important pour certains citoyens et où la compétition n'existe pas.
2717 M. BIBIC : Je comprends très bien la problématique, sauf que je voulais juste indiquer qu'on l'indique à nos clients.
2718 CONSEILLÈRE POIRIER : Parfait! Merci.
2719 La réponse de Radio-Canada?
2720 M. GUITON : Merci.
2721 Mr. Chairman, being a little unfamiliar with the procedures here, I have had a couple of points to make and I don't know if you would like me to wait till the end of the Shaw presentation to make them or you want them all now.
2722 THE CHAIRPERSON: Are they germane to Shaw or are they general, covering both Bell and Shaw?
2723 MR. GUITON: They are germane to the comments that Shaw has given us in their oral remarks this morning.
2724 THE CHAIRPERSON: Okay, then go ahead.
2725 MR. GUITON: So let me -- and I apologize if this is a long list but I feel this is the way to do it.
2726 First of all, Mr. Pizante has just finished saying that TVA is the most popular television service in local markets in Quebec. Well, that is easy to understand. They are the only one that is available.
2727 It is hard for us to compete in a local market where we are not being distributed and up to 30 to 40 percent of people in the local market can't get the local signal.
2728 The second thing I would like to go to, Mr. Chairman, is we have been talking quite a lot about partials again and we have just been hearing how St. John's is an interesting partial channel for Shaw.
2729 Last night we went to the partial channel in St. John's and we took some pictures what was happening outside the local news hour. There was programming on that channel. It was from Edmonton. It was advertised -- if you go on the program guide it's advertised as Shaw Direct outside the CBC local channel time zone.
2730 So if a CBC customer is looking for CBC news in St. John's and if they arrive before the local news is being distributed, what they see is something called Shaw Direct and they clicked on it and it's a program from Edmonton. I believe the programming varies. I think sometimes it might be from other places, just to show you once again it's not very friendly.
2731 Secondly, on the notion of partial channels, there are lots of programming -- local programming going on throughout the day. Apart from the commercial revenue point that I made just earlier, in the case of a typical Radio-Canada signal, there are local promos, 36 a day, from 15 to 30 seconds a day outside of the local news.
2732 Finally -- not finally -- in their remarks Shaw has mentioned that they have tried to work with CBC -- I'm moving off of partial channels. They have tried to work with CBC to purchase two transponders on Anik F2 and that we have just not been willing to entertain their proposal.
2733 We are going to address this in a better way in our written remarks because I'm sure a technical person would address it better. But let me just give you the highlights.
2734 I believe that the Anik F2 on Ku -- there are two Ku-bands. Ku-band operates with smaller dishes. We need that for fixed and mobile collection of our news. We cannot collect our news on C-band. So when we have -- going out collecting news across the country we need the small dishes. If we were to sell that transponder space it would compromise our ability to collect news.
2735 Again, not being a technical person, we are going to expand on that in our written comments.
2736 Finally, in their written comments at page 8 they have promoted themselves as being willing to add station Radio Nord Rouyn-Noranda. That's a triple stick, Mr. Chairman. That's V, TVA and ourselves. I have no idea which station they are going to add.
2737 THE CHAIRPERSON: Presumably we can get an answer from that.
2738 MR. PIZANTE: I thought we had it on the list here as -- no, we don't have it on this list, but we are talking CFEM-TV.
2739 MR. GUITON: That is a TVA station.
2740 MR. PIZANTE: It is an RNC. I'm sorry. Do you mind just --
2741 MR. GUITON: It's an affiliate of TVA.
2742 THE CHAIRPERSON: What is the name of the CBC station in Rouyn-Noranda?
2743 MR. PIZANTE: The station we were going to carry was CFEM-TV. When you say it's a TVA affiliate, I think what Mr. Guiton means is that it carries TVA programming but it's not owned and operated by TVA.
2744 MR. GUITON: It is TVA programming.
2745 THE CHAIRPERSON: Can I have an answer to my question? What's the signal of CBC or SRC in Rouyn-Noranda?
2746 First, let's hear that, please, and then you can tell me whether you are going to carry it or not.
2747 MR. GUITON: Our station in Rouyn-Noranda is CKRN.
2748 THE CHAIRPERSON: Shaw, you are going to carry that one or not?
2749 MR. PIZANTE: Well, we would rather carry the other one, to be honest with you in terms of knowing our market.
2750 THE CHAIRPERSON: I take it as a "no".
2751 MR. PIZANTE: Yeah, that is a no.
2752 THE CHAIRPERSON: Okay.
2753 MR. PIZANTE: Mr. Chairman, can I just respond to at least a couple of points from Mr. Guiton?
2754 THE CHAIRPERSON: Absolutely.
2755 MR. PIZANTE: Particularly to what he -- and by the way I apologize, sir. We talked about two transponders that CBC owns on Anik F2. These are on Anik F1R.
2756 We apologize for the dyslexic moment there, but it's Anik F1R that they hold two transponders, not Anik F2. And we have made many offers to them.
2757 I just want to say that from a newsgathering perspective we know that they use it. That's not the only satellite in town. There is lots of Ku-band capacity that we could help them. Honest to goodness, we would help them spend money. We would give them money to do that.
2758 What just intrigues me is that when it's their capacity they have higher priorities. You know when it's on our nickel all of a sudden it's a must do.
2759 And we have been very -- we have been as open as possible to try to get this capacity. We have done this with anybody who had capacity. We have moved other people off of Anik F2 in order to create space. These are people involved in the oil business and we had Telesat's help and we spent millions to do it.
2760 THE CHAIRPERSON: I don't want to go into this dispute in great detail, Mr. Guiton, so be quick.
2761 MR. GUITON: My only mention of it, Mr. Chairman, was to say that we are going to get someone who has more technical capability than me to respond in our written remarks and I would be happy to say that we will definitely give you the full picture on this story.
2762 THE CHAIRPERSON: Look, I am not interested in finger-pointing here, but the fact is that you seem to have a mutual problem and should be able to resolve that if there seems to be a solution here.
2763 But more to the point, yesterday we heard at great length from CBC about -- they call it parity which took me some time to understand what they had it in mind, et cetera. It means basically an equal distribution of local channels, is how I interpret it.
2764 But whatever it be we also heard from the deputies from Quebec and we heard from the union that in effect you are a representation of Quebec and local channels is underrepresented and it doesn't mean any test or balance or parity, et cetera. They suggested a very complicated rule which I think goes very much counter to what our policy is that we want you to do the thing to satisfy your customers.
2765 You, Mr. Brazeau, Jim Shaw when he was before me, it has been repeated over and over. It's still ringing in my ear, "The customer is king. We are doing things in order to" -- it seems to me you have to re-examine Quebec. You are not doing that -- your distribution of SRC in Quebec just doesn't meet any kind of test of reasonableness.
2766 MR. BRAZEAU: And that is why we tried to respond to that concern in the additions that we suggested this morning. I guess we will take back your concerns, Mr. Chairman, and re-look at this.
2767 Thank you.
2768 THE CHAIRPERSON: Are there any other questions?
2769 Yes, Candice.
2770 COMMISSIONER MOLNAR: Thank you.
2771 I want to start on your comments on page 4 regarding the downconversion of HD to SD or the inability to downgrade. Can you tell me today if you are carrying a signal -- and this is a follow-up to the discussion with Rogers yesterday, where what I understood is if you carry a signal in SD and there is an HD signal available from that market, if you carry it in SD you are not doing the substitution on the HD U.S. 4+1. Is that correct?
2772 MS RATHWELL: Yes, that's correct. I think it's consistent with Commission policy. The Commission looked at this last January.
2773 COMMISSIONER MOLNAR: So if the Commission policy were to change to allow substitution, you know, to support the local rights of the broadcaster, would that be a significant issue for you?
2774 MR. PIZANTE: Can I ask you just to say how you would change it, just so we are clear.
2775 COMMISSIONER MOLNAR: Right.
2776 MR. PIZANTE: I want to make sure I am responding to the right question.
2777 COMMISSIONER MOLNAR: I mean this is hypothetical at this point but as we do in non-mandatory markets that aren't required to convert to digital by the deadline date, I think the rule there is you can continue to have analog or, in this case, I guess, you know, an SD version of the channel, but you maintain your substitution rights within your market. So you substitute over an HD U.S. 4+1.
2778 MR. PIZANTE: Yes, that would be very difficult on customers and that's because they would be losing the HD content that they have come to see and use and expect from us as their provider.
2779 So if that were the rule and there was no other way to compensate the local station we would be in a position where all of a sudden we would have to consider launching a tremendous number of Canadian locals in HD. We have trouble doing it in SD, as we have gone through.
2780 That's because if we didn't launch them in HD under this rule when we substituted the programming, if I understand it correctly, instead of seeing an HD program they would be seeing an SD program. And the only way for them to see the HD program, if I understand it correctly, would be if we had the Canadian channel up in HD.
2781 Is that correct?
2782 COMMISSIONER MOLNAR: No, that is right. But where these stations have an HD signal available and you choose to carry it in SD, you are not substituting, if I understand, over the U.S. 4+1 HD channel.
2783 Even though they have the program rights and they have an HD version to provide you, you choose not to take it and then you don't substitute. Is that the situation today?
2784 MR. PIZANTE: That is the situation today.
2785 COMMISSIONER MOLNAR: Could you defend why that would occur?
2786 MR. PIZANTE: Well, the answer of "That is the policy" isn't a full one and I can see that you are looking to get a resolution that, in your view, is broader.
2787 All I can say from our standpoint is that if it implies carriage of Canadian locals on a broad basis in HD then it's going to put us in a severe situation in the marketplace where -- because we simply can't do it. We simply can't lift -- we can't lift them all in HD, right? I hope that's clear.
2788 So there would have to be some other way. If you think that there is a right here that's not being addressed in the situation, there would have to be some other way to compensate.
2789 THE CHAIRPERSON: Can't you substitute just the commercials so that I'm watching Spokane HD, the Canadian version you have down -- the local station at the same time you have downgraded to SD, but if it goes on in Spokane when it comes time for a commercial you show the commercial in SD and then you go back to HD because after all it's the commercial. That's all we are talking about.
2790 MR. PIZANTE: That is not the way we do virtual channel over-ride, okay. We do virtual channel over-ride --
2791 THE CHAIRPERSON: Can you not do it that way?
2792 MR. PIZANTE: No, no. That would be -- that would be a totally different system. The way our system works is by taking the whole program out.
2793 For us to go down to, like, two-minute levels and so forth requires information that is not available. So we couldn't just insert.
2794 So I see what you are saying now, is that we would be HD, HD, SD commercial. That's not something that our system can handle because we do it typically in the programming wheel that we get.
2795 MR. BRAZEAU: But for compensation if that's an issue, we would certainly consider negotiating some compensation for the loss of that. It's just that technically for us it would be very, very challenging to do that.
2796 COMMISSIONER MOLNAR: I am going to ask if Rogers has a comment on this before I move to my next issue.
2797 MR. ENGELHART: Thank you. It is Ken Engelhart for Rogers.
2798 Yeah, I have a couple of questions and comments.
2799 I guess my first comment or my first question is, can Shaw confirm that their intention in September of 2011 when Rogers is only broadcasting and Canadian broadcasters in major markets are only broadcasting in HD, could they confirm that it is their intention to, in some cases or many cases, downconvert those signals to SD and not carry the HD?
2800 MR. PIZANTE: Could I ask Mr. Engelhart a question? I mean, I would --
2801 THE CHAIRPERSON: A question --
2802 MR. PIZANTE: -- I will answer his question. I don't think we have much option. I don't know in fact any distributor that does.
2803 So if Rogers is going to broadcast City Toronto in HD only, is Rogers Cable going to only carry Rogers City in HD?
2804 MR. ENGELHART: No. The rule for cable is that we can downconvert but we carry both the HD and the SD. In fact, if we downconvert the American signals we must downconvert the Canadian and carry both the HD and the SD.
2805 I have no problem with Shaw downconverting our signal to SD if they also carry the HD. My question is whether they will be downconverting to SD and not carrying the HD.
2806 MR. PIZANTE: The answer is "no". We don't have enough capacity to carry the channel in HD. We couldn't. The only way to carry the channel at that point would be to downconvert it.
2807 MR. ENGELHART: Thank you for that.
2808 My question or comment is with respect to this problem that Commissioner Molnar has asked you about, it really arises particularly acutely for the Canadian stations that are in the same time zone as the American stations. So the Seattle stations are in the same time zone as the Vancouver stations and so that's where the substitution problem primarily exists. There is a substitution problem in Alberta for live programming but it's not nearly as acute.
2809 So would Shaw consider where there are Canadian stations in the same time zone as their American 4+1s carrying those stations in HD where they broadcast in HD?
2810 MR. PIZANTE: A cheeky answer is to say we will consider everything. But if that's the point, Ken, I think we can only take it back as opposed to giving you any confirmation at one point or another.
2811 It's a big decision that we would have to consider and it has network implications that we can't answer on the fly.
2812 THE CHAIRPERSON: You have until November 25 to make additional submissions or answer the questions that come up as part of the rebuttal.
2813 MR. BRAZEAU: But also just to add, you know, we are suggesting that perhaps there are other ways to compensate for the loss of simultaneous substitution. I mean carriage -- for us it is an extremely expensive way to deal with this issue. There are other means through negotiations, discussions that that would be a much more preferable solution for us.
2814 COMMISSIONER MOLNAR: And let me just be clear ensuring I am understanding; no discussions, no negotiations have occurred and unless we change the policy that would require you to do that substitution, no negotiations or discussions will occur?
2815 MR. BRAZEAU: Right now we are compliant with all your carriage rules.
2816 COMMISSIONER MOLNAR: Right, okay.
2817 So Mr. Engelhart...?
2818 MR. ENGELHART: Thank you, Commissioner.
2819 Just staying on with the same topic, when the Americans launched HD most of the Canadians were not doing much, if anything, in HD so satellite and cable naturally carried the American services in HD because that's where the programming was. So today, Shaw Direct carries 10 American channels in HD.
2820 However, the Canadian services such as Rogers have now spent a lot of money and are now carrying a full complement of HD services and are now broadcasting in HD.
2821 Given the capacity constraints that Shaw faces and given the requirements to favour Canadian broadcasting, wouldn't it be more appropriate to carry the 10 channels of HD for Canadian services first and then to add American as space becomes available, rather than vice-versa?
2822 MR. BRAZEAU: Well, that would be a very good way for us to become less competitive of cable, that's for sure. And that's the challenge. Our customers certainly find the U.S. HD channels attractive and with those channels we are able to achieve a lot of the benefits to the system that we have enumerated in our statement here.
2823 Again, I think we would be significantly disadvantaged in the marketplace if that were the conditions -- the carriage conditions for us.
2824 MR. PIZANTE: I just want to add there was a history. I think that was implied by Mr. Engelhart's question, where the American networks did have HD programming, had it again, and so to some extent it is what it is. We launched with who had HD programming.
2825 As well, we have launched a number of Canadian pay and specialty channels, a number of them belonging to Rogers.
2826 THE CHAIRPERSON: FreeHD, I see you have a flag up.
2827 MR. LEWIS: Yes. David Lewis from FreeHD Canada.
2828 I point Shaw to paragraph 8. Unfortunately they are not numbered but the middle of the paragraph in that page.
2829 I wanted, if possible, for Shaw to clarify or confirm that first off that MPEG-4 is roughly twice as efficient and getting even better than that in the long run, over what currently is MPEG-2 efficiency.
2830 So on the Anik G1 satellite where they mentioned in the last sentence or second-last sentence of that paragraph that they have made a significant investment, some $20 million a year in new capacity, that on using MPEG-4 on Anik G1 16 transponders, that they could deliver well over 100 HDs or over 400 SDs on that new satellite capacity. So that would be the first clarification that we would like from Shaw.
2831 And then, secondly, moving --
2832 THE CHAIRPERSON: Let us hear from Shaw.
2833 MR. LEWIS: Sure.
2834 MR. PIZANTE: Well, we could say some of this is confidential but I think we have been all over the record here as saying it's about 100 HD channels and that there is 16 transponders.
2835 So you know you are led to about 6 to 7 HD channels per transponder. You know, how many can you actually do when you go up? Well, that we don't know yet, really. We have to test. We hope we can do more than that.
2836 Shaw Direct wants to work its HD to the extent possible, consistent with the systems used by our wholesale cable customers so that when we put it up it's comfortable for them at a modulation that they can enjoy with a minimum of extra equipment. Better for everybody if that's the way it goes.
2837 So some of the engineers that we talked to are very hesitant when I say we will get 100 HD channels out of Anik G1. They are like, "Gary, the compression may only be suitable for 5" because there was always the tradeoff between quality and stuffing the transponder. That's something we are very cognizant of. But we felt comfortable enough to say that we could likely get 100 HD channels on an MPEG-4 basis with 16 transponders.
2838 THE CHAIRPERSON: Go on.
2839 MR. LEWIS: Thank you, Mr. Chairman.
2840 I think that's quite a conservative estimate but definitely confirms what we were saying earlier just a second ago, then.
2841 If you go back, then, to the page before, page 7 then, I'm really struggling to understand what is going on in that last paragraph. Perhaps Shaw can enlighten me.
2842 So at first there, suggesting that there are eight channels that they are going to drop. That would, I guess, presumably be off their current MPEG-2 line-up. So in other words, that could be replaced by 16 (sic) channels of new services on a fulltime basis on that transponder.
2843 So what I am really struggling with is why is there six virtual channels replaced by eight fulltime services that they have dropped? And what happened to the other services and/or what is that capacity going to be used for?
2844 This whole paragraph just doesn't make any sense to me. I apologize.
2845 MR. PIZANTE: We like it when we confuse potential competitors.
2846 THE CHAIRPERSON: Don't confuse the Commission.
2847 MR. PIZANTE: Don't confuse the Commission. No, that's not good.
2848 So what we would like to do is clarify for the Commission, in confidence, if we could. We can show you what the plans are. Actually, this is part of what we are already required to do in terms of an undertaking on our MPEG-4 plan, which we have not done yet.
2849 THE CHAIRPERSON: Okay, any other questions?
2850 COMMISSIONER POIRIER: Yeah, talking about the --
2851 COMMISSIONER CUGINI: Candice is not finished.
2852 THE CHAIRPERSON: Oh, sorry.
2853 COMMISSIONER POIRIER: Okay.
2854 THE CHAIRPERSON: My apologies, Candice. Go back to you.
2855 COMMISSIONER MOLNAR: That is okay.
2856 And Mr. Lewis actually has addressed some of the questions I had, because I too struggled as to why you would need to drop eight channels to add six virtual channels. It's not clear and I don't exactly know why that's a confidential undertaking to tell us how adding six virtual causes you to drop eight existing channels.
2857 MR. PIZANTE: Well, we are in a very competitive marketplace and what we will show you is what some of our network plans are in the very near future in terms of things that we are going to drop, things that we are going to add and how we are going to add them.
2858 COMMISSIONER MOLNAR: That is fair in your plans.
2859 MR. PIZANTE: Yeah.
2860 COMMISSIONER MOLNAR: But suggesting that adding the six virtual causes you to drop eight regular is -- I mean that doesn't make a lot of sense in my limited knowledge here.
2861 MR. PIZANTE: Well --
2862 COMMISSIONER MOLNAR: If you are planning to drop eight, you are planning to drop eight.
2863 MR. PIZANTE: I understand.
2864 COMMISSIONER MOLNAR: But adding six virtual is not causing that to occur, is it?
2865 MR. PIZANTE: That is a fair point. That is a fair point. That is a fair point.
2866 The ones -- we have to drop signals and I think we said this earlier, even to meet the obligations from 2008-100.
2867 Okay, so to wrap this up shortly, some of this bandwidth that we were going to use for 2008-100 requirements, channels that we have to launch, it's about seven or eight channels that we have to launch, some of that bandwidth we are also going to use for this purpose if we get your authorization.
2868 So you are right. It's not worded as well as it should be. But we are going to -- but the actions that we are going to be doing, just so you leave comfortable, already we are going to drop eight channels, which is a big deal for us. And then we are going to create a new transponder with that, okay, which is not that easy, get new uplink equipment.
2869 Part of that bandwidth will be used to launch the 2008-100 requirements and part of that bandwidth will also now be used for these additional promises that we have made to you, if you approve.
2870 COMMISSIONER MOLNAR: Okay, a couple --
2871 THE CHAIRPERSON: Did you understand that? I didn't understand that at all.
2872 THE CHAIRPERSON: I will have another run. What is in 2008 that is -- after all, the decision that is a public decision. You have to comply with the requirements that are on the public record. That causes you to drop eight channels?
2873 MR. PIZANTE: Right.
2874 THE CHAIRPERSON: Why?
2875 MR. PIZANTE: Because we don't have enough capacity to launch those other channels we have to launch unless we drop channels we are carrying today.
2876 THE CHAIRPERSON: So you are not in compliance with that decision right now, is what you are telling me.
2877 MR. PIZANTE: No, we are not. We plan to be in compliance by August 31st, 2011. So we have to add SRC, Saskatchewan. We have to add two channels for the Atlantic provinces. We have to add some independent channels. We have to add some provincial broadcasters.
2878 These are channels we don't carry today and we are filled up. So we are going to drop channels in order to make that policy happen. When we do that there is a potential for us to have additional capacity that we can't also launch these virtual channels.
2879 So I accept that this isn't worded as well as it should be, and I apologize for that. I should have caught that.
2880 But it is part of the plan that we have to do, but we had to do that plan anyway.
2881 THE CHAIRPERSON: Okay.
2882 Candice...?
2883 COMMISSIONER MOLNAR: I just want to understand then, on page 8 in November 2012 with the launch of Anik G1, which I think I understand has the capacity of about 100 HD, so 400 SD; you are going to add three more channels.
2884 That's what your offer is to us, of the capacity --
2885 MR. BRAZEAU: Yes.
2886 COMMISSIONER MOLNAR: -- of 400, three would be meeting our LPIF issue?
2887 MR. BRAZEAU: What we are assuming -- I mean we have added channels. How many channels have we added?
2888 MR. PIZANTE: Sixty channels over the last three years. 87 percent of them are Canadian.
2889 MR. BRAZEAU: So we see that going forward also.
2890 I mean, yes, for this specific purpose that we are proposing but, going forward, of course we will be adding more specialities or even more locals also. I mean it's just natural.
2891 COMMISSIONER MOLNAR: Okay. As you noted -- I believe it was Mr. Pizante who correctly noted that, you know, one of our objectives is there is local programming that we have noted to be a priority that we support through funds of the system and we want the subscribers and citizens of the system to be able to see that programming.
2892 We also want to support the financial availability of local stations joined but not entirely the same objective. To hear that three of a potential capacity of 400 would be targeted to meeting that objective is a little bit disappointing, to be honest.
2893 MR. PIZANTE: I'm having no luck today but I will take a shot.
2894 COMMISSIONER MOLNAR: Okay.
2895 MR. PIZANTE: Okay. Firstly, it's not quite 400. If I didn't correct that people, when I get back, are going to hurt me. So it's not. In terms of SD it's probably closer to just over 300, okay? Okay, but still, big deal, 1 percent, right.
2896 And I think it's a little bit of what we tried go through with the Chairman in terms of all the obligations that are already upon us. And I get it, three doesn't sound like a lot, but when you add it on top of 2008-100 already, and you add it on top of the Category "As" that we have to do, the SRC requirement that we went through, which is part of that as well, the fact that we have these requirements to do, under Canwest, the 3-to-1 rule --
2897 So, Commissioner Molnar, it's not that we just do three -- and the 9(1)(h) services, I think when we add those all up we are getting close to 100 channels. And we want to have flexibility to respond to the marketplace in terms of HD and 3-D services and things like that.
2898 So when we look at the regulatory requirement -- and I don't know if you want to look at a percentage and say, you know, if we start getting to --
2899 COMMISSIONER MOLNAR: Mr. Pizante, we certainly know and have heard you speak of your requirement.
2900 As you know, part of our reason for doing this is we were interested to see these stations that were not carried that were producing LPIF, producing local programming using LPIF, could also somehow meet it, you know, make its way to the subscribers of your systems, despite the other obligations that are there.
2901 I just have one more question.
2902 You said it isn't reasonable for you and Bell to get together and sort out how some of these systems could be carried, but I noted that you came forward saying that there would be three post-2012 that you would carry on a long-term basis. When I looked at the list, one of those you proposed is already carried by Bell and there are all kinds on this list who aren't carried by anyone.
2903 So what's the rationale for picking that instead of picking a system that would be a first step onto -- available through DTH, or can there be some priority to those that aren't carried by anyone, or potentially some priority to those that have a large penetration in that market by DTH?
2904 MR. BRAZEAU: I think certainly one of the conditions we used in making those selections was what we thought our customers would appreciate the most and would respond to the most. So that was a priority and I think that's how we got to the list that we got to.
2905 You know, I know that you have an objective to ensure that all of the LPIF over-the-airs that are doing their programming are carried and viewers have the opportunity to view the local content in those channels, but hopefully you also understand our constraints here and to make us financial unviable won't help the system. I mean that's not the solution either.
2906 So hopefully we are going to try to achieve a balance where everybody -- you know, the system is made better off as a result of these requirements.
2907 MR. PIZANTE: The specific channel you are talking about is Global Halifax I think. If it is, that one we have to add as a result of 2008-100.
2908 COMMISSIONER MOLNAR: It was Radio-Nord, but that's fine. Thank you.
2909 Those are my questions.
2910 THE CHAIRPERSON: Louise... ?
2911 COMMISSIONER POIRIER: Yes. One last question, because in your presentation today you mentioned -- I'm coming back to the virtual stations -- you asked the CRTC to authorize virtual channels, okay.
2912 I wonder, are you going to employ this solution to some of your Global channels?
2913 MR. BRAZEAU: Yes.
2914 COMMISSIONER POIRIER: Yes?
2915 MR. BRAZEAU: Yes.
2916 I mean, again, our capacity constraints are real and that's what's really driving a lot of these decisions. So absolutely it would apply also to Shaw Media.
2917 COMMISSIONER POIRIER: Okay. So it's not already in place, but you will apply it.
2918 MR. BRAZEAU: No. No, it's not. It's not already in place.
2919 COMMISSIONER POIRIER: Where? Where are you going to apply that solution?
2920 MR. PIZANTE: Well, it's Thursday and we thought about this on Tuesday, but I think the first one we thought about was probably -- and it could change, you know -- was potentially Global Regina or something like that, which we would then move to a full basis channel in 2012.
2921 Yes, potentially as well Kelowna that we would consider if there was sufficient bandwidth and cooperation.
2922 COMMISSIONER POIRIER: Yes, okay.
2923 Like my fellow Commissioner, Mrs. Molnar, I'm surprised to see that in today's LPIF-eligible stations both of you have added CBC French Regina and Canwest Saint John -- both of you.
2924 MR. PIZANTE: That's a requirement from --
2925 COMMISSIONER POIRIER: Okay. It's because it's a requirement.
2926 MR. PIZANTE: Yes.
2927 COMMISSIONER POIRIER: Okay. Thank you very much.
2928 THE CHAIRPERSON: Mr. Engelhart, you had your flag up?
2929 MR. ENGELHART: Thank you, Mr. Chair.
2930 On the list that was handed out this morning it indicates that Shaw will not be carrying Rogers City Winnipeg even though it is required by decision 2008-100.
2931 Can Shaw confirm that they are not intending to comply with that decision?
2932 MR. BRAZEAU: Shaw can confirm that it is or will be carrying it.
2933 MR. ENGELHART: Because it says no under Shaw for Rogers Broadcasting Portage La Prairie.
2934 MR. BRAZEAU: It was my engineer's mistake here.
2935 MR. ENGELHART: Thank you for that, Mr. Brazeau.
2936 THE CHAIRPERSON: I'm sorry.
2937 THE CHAIRPERSON: Okay. Are there any other questions?
2938 MR. ENGELHART: I have one more, I'm sorry, Mr. Chair.
2939 Shaw spoke in their initial remarks about the enormous expenses of converting to MPEG-4 and rolling out the boxes, but given that they have now stated that they do intend to have 16 transponders of MPEG-4, and given that Mr. Pizante said this morning that a re-tune would be necessary for some or all customer equipment, can Shaw confirm that they are going to have to incur those expenses in any event, commencing 2012?
2940 MR. PIZANTE: I'm not sure of what you mean by "What Mr. Pizante said", Ken. Can you --
2941 MR. ENGELHART: I think I heard you say you were going to do a re-tune because the satellite is in a different place, the new satellite.
2942 MR. PIZANTE: Well, I'm not sure what a re-tune is, but when we launch that new satellite for any customer who wants to have access to that satellite we will also have to provide them with new outdoor equipment, an LNB particularly.
2943 So putting in that LNB will be an incremental cost to us of about $100 per customer. Do we plan on going through our entire, you know, approximately million customer base and spending $100 on each one of them to do that, no, but we will put that in place and we hope to have the LNB out in a short period of time, well before the satellite is there, and that will be another kind of operational cost and issue for us to consider as we use ANIK G1.
2944 THE CHAIRPERSON: Okay. I asked you a question, you didn't answer it, and I'm asking it again. You may want an answer it in writing.
2945 Our concern is clear, I hope to everybody, LPIF-conforming stations, when are they going to be on the bird? What's the target date?
2946 Rogers said in light of MPEG-4, which is where you are going anyway, and in light of your new satellite, 2013 would be a logical date. You this morning have said that some of the partials will become permanent. You have not promised that they will put all of them up and you have not answered my question on the date.
2947 I would strongly ask you to do so because a message such as those suggested by others of incentivizing or setting targets is not the way we regulate, we want to regulate because we don't want to interfere with the most profitable way for you to run your business. At the same time, this is clearly a stated goal under the Act and under the Commission policies, so how do we get there in the shortest period of time. That's what I want to happen.
2948 I appreciate that in two days you don't want to form that answer. As I said, we have until November 25th, but I would very much appreciate a specific answer and plan how to get there. Okay?
2949 MR. BRAZEAU: We will address the issue in writing.
2950 THE CHAIRPERSON: Thank you.
2951 We will take a break now for 10 minutes before we deal with Bell.
--- Upon resuming at 1109
2952 THE SECRETARY: We will now hear the reply of Bell TV.
2953 Please introduce yourself and you have 10 minutes.
2954 Thank you.
2955 MR. BIBIC: Thank you, Madam Secretary.
2956 Good morning, Mr. Chairman, Commissioners.
2957 I am Mirko Bibic from the Bell Satellite TV panel. To my right is Heather Tulk; to her right Chris Frank; and to Chris' right Tim Dinesen.
2958 Bell Satellite TV respects the priority of local OTA television stations' carriage under the Broadcasting Act. Indeed, it is our single largest programming genre. By 2011 we will have over 130 OTAs on our satellites in either SD and HD.
2959 And of course we continue to add OTAs as capacity becomes available. You saw from our opening statement on Tuesday, 24 more next year.
2960 We recognize the Commission's concern regarding the availability of all OTA stations to our DTH subscribers. In pursuing that objective, the biggest hurdle is limited satellite capacity. We have no plans to acquire additional satellites or frequencies to expand our physical capacity. We are investing in upgrades to our MPEG-2 infrastructure to maximize our throughput potential and we are considering how we might stage an investment in MPEG-4 technology which would provide for additional capacity in the future.
2961 As we mentioned on Tuesday, before such investments are made we must be confident of a reasonable business return.
2962 Before I go on, we will turn first to our proposal. We have developed a proposal in the last two days and, first, we continue to believe that the one-per-province rule should not be changed, but in the interest of advancing constructive solutions to our present capacity constraints, we are prepared to add LPIF-eligible OTA stations that are not currently carried if they consent to partial or omnibus distribution in the near term until we have the capacity to permit their full-time carriage.
2963 So, Commissioner Cugini, you asked a relevant question to this of the Shaw panel. For us this would be a near-term fix until we develop more capacity and then the conversion would be to full-time.
2964 We already have the agreement of the broadcasters to distribute four OTA stations on this basis, CBC Fredericton, CBC Charlottetown, TVA Rimouski and SRC Toronto.
2965 Partial channels devote a unique channel number on our electronic programming guide to the broadcast of unique local programming of each station offered on this basis. The customer viewing experience is as simple and straightforward for this programming as for any full-time channel.
2966 Subscribers can read the source and description of such local programming on the EPG, or electronic programming guide. To view local programming carried on partial channels, subscribers tune to the unique channel number associated with that station. For example, Channel 101 for TVA Rimouski or Channel 196 for CBC Fredericton.
2967 Local programming, which primarily includes local news or can occasionally include such things as local election and telethon coverage, is carried at a set time during the day as indicated on-screen at that channel.
2968 We will also be providing on-screen guidance so that subscribers know where to view all other regularly scheduled network programming for that station group.
2969 Omnibus channels, for their part, are compilations of local programming from several different channels. Each omnibus channel has a specific channel number. A station group could program on such a channel all of its local content not currently carried and according to a schedule of its own design. The local content, which is almost exclusively news, is delivered either live or on a taped basis, depending upon the number of stations in the same time zone.
2970 In order to see local programming carried on omnibus channels, customers tune to the omnibus channel number and view according to the schedule published by the broadcaster.
2971 Now, we appreciate the differences between full carriage and partial or omnibus carriage that concern OTA broadcasters. While not a perfect solution, we feel this is a positive interim step towards full carriage and would deliver all unique local programming from all LPIF-eligible stations to our customers in those communities. We encourage OTA broadcasters to move forward with us on this matter.
2972 I would like to move forward now, Commissioners, and discuss or respond to a few of the proposals we have heard over the week.
2973 One proposal, which was suggested on Tuesday by the Commission panel, was that Bell Satellite TV consider splitting the carriage of remaining LPIF-eligible OTA stations with Shaw Direct in order to facilitate the availability of all such signals on DTH.
2974 However, there are practical reasons why Bell Satellite TV does not consider such an arrangement to be appropriate. The reasons are best explained using the examples of Regina and Yorkton.
2975 Neither Bell Satellite TV nor Shaw Direct carry Canwest Regina or CTV Yorkton. Hypothetically, Bell Satellite TV could agree to carry Canwest Regina while Shaw Direct could agree to carry CTV Yorkton. However, neither distributor has the capacity to add those stations.
2976 On the other hand, perhaps Bell Satellite TV could agree to drop Canwest Saskatoon and instead agreed to carry Canwest Regina. However, the dropping of Canwest Saskatoon would not be palatable to Bell Satellite TV from a business perspective.
2977 Given these challenging realities and uncertainties peace, we do not agree with the proposal.
2978 I move now to the CBC's proposals.
2979 The CBC has proposed a number of rules applicable to Québec and to the rest of Canada. For English Canada taken as a whole, the rules constitute overkill and for the reasons discussed on Tuesday should be completely rejected.
2980 Mr. Chair, in your comments to the CBC on Wednesday, yesterday, you suggested that their rule number one might be sufficient to satisfy their concerns.
2981 Rule number one would preclude DTH distributors from adding an HD service unless and until all required OTAs are distributed in either SD or HD format. This would stop our HD growth in its tracks until we find the capacity to carry all SD OTAs.
2982 As we have explained in great detail, we need time and the resources to create that capacity. We cannot remain static while cable adds HD services; we have to provide a competitive product. For us, rule number one is unworkable.
2983 As for the CBC's Québec rule number two, it would obligate each DTH distributor to carry, for each major ownership group, at least three-quarters of that group's French-language stations located in Québec and which meet the local programming requirement.
2984 The French language services of each ownership group are well served by Bell Satellite TV. We carry 10 of 13 SRC stations; 6 of 8 TVA stations; and 4 of 5 V Interaction stations.
2985 I turn now to Roger's proposals.
2986 As a point of clarification, Rogers complained about the lack of carriage of its services in HD. Rogers, unfortunately, overlooked Appendix "B" of our opening statement, at least as it concerns Bell Satellite TV, which clearly shows that we plan to carry Citytv Calgary, Vancouver and Winnipeg, all in HD, by September 1, 2011.
2987 Roger's ultimate request is that DTH convert sufficient capacity to carry all local TV stations in HD by September 1, 2013. Assuming that all 107 OTAs currently licensed to broadcast in HD actually do so by that date, Bell Satellite TV would have to devote a large majority of its HD capacity to OTAs.
2988 To accommodate this we would have to take down dozens of HD services we currently carry and would have no ability to add any other HD services of any kind. That would be most damaging to our business and explains why Rogers made the proposal.
2989 I now turn it over to Heather.
2990 MS TULK: Thanks, Mirko.
2991 With respect to LPIF-eligible OTA stations, we have reviewed the Commission's table provided to us on Tuesday which showed that Bell Satellite TV would not be carrying 26 LPIF-eligible stations by September 2011.
2992 We have revised the table -- and in the table that was passed out this morning you see where the revisions are made. We put a strike through the original answer -- and in fact the total number of uncarried stations we will have, according to your LPIF count, is 24. I will give you a walk down of how we get to that number.
2993 First, and as a point of clarification to my error, I made a mistake on Tuesday and said we carried V Interaction Trois-Rivières -- I was using your list which in fact was incorrect, we don't carry that station -- and we therefore amend the uncarried station count from 26 to 27. I apologize for having made that mistake.
2994 Second, CBC Fredericton is listed as not being carried, however we do carry that station on a partial basis, as Mirko mentioned, and this reduces the total uncarried count to 26.
2995 Third, as we stated on Tuesday, we will be launching SRC Regina and Canwest Saint John by September 2011. This will bring the uncarried count to 24 local stations.
2996 As for Bell Satellite TV's method of carrying out simsub, we have explained the technologies benefits and limitations in detail. Any requirement for us to perform full local simsub will be untenable. It simply cannot be done, as I explained on Tuesday.
2997 While we acknowledge that local stations, other than Vancouver and Toronto, do not benefit from local ad revenues during simsub, they do monetize both national and regional ads in such situations, especially in prime time, and this should not be overlooked.
2998 With respect to something that was brought up my Rogers, in cases where we have east and west HD feeds, simsub is conducted in exactly the same way as we explained on Tuesday, we do it in SD.
2999 Rogers was right about what happens in the west, but I draw your attention to the fact that we will be launching, as we said in our submission, CTV Vancouver in HD next year and as soon as we launch that we will in fact substitute the Vancouver signal over the Seattle network's the same way we do for SDT. So HD and SD in Canada will have de facto the same simsub experience for our customers.
3000 The Commission also inquired as for our ability to use spot beam technology as employed by U.S. satellite distributors and as planned for by FreeHD Canada.
3001 Bell Satellite TV's three satellites, which range in age from 2 to 11 years, were not designed for frequency reuse or spot teams as are a small number of U.S. satellites. This is also the case for our replacement satellite Nimiq 6.
3002 These four satellites, and most especially their associated ground stations, are a legacy reality of our business and do not permit us a greenfields approach as FreeHD Canada has proposed -- I believe they used the words this morning that that horse has left the barn -- wherein spot beams might make sense for them or for other U.S. distributors.
3003 Certainly with respect to the U.S. distributors, their scale of operations is in order of magnitude greater than ours and allows them to accommodate the expense of many, many more satellites on a purpose-built basis, including the very small number that they employ for spot beams.
3004 Our respective market situations are simply not comparable.
3005 With respect to MPEG-4 conversion, which has been discussed many times, our plan to increase capacity at this point is to continue to invest in head-end technology to maximize capacity throughput in MPEG-2. These investments will allow us to satisfy our capacity requirement into 2011.
3006 Our MPEG-2 investment plans notwithstanding, the conversion to MPEG-4 has been discussed as a means to expand DTH capacity, but this is an expensive and complicated undertaking.
3007 Our customers have millions of set-top boxes that can decode only in MPEG-2. As long as such set-top boxes remain in the market we will have to distribute signals in MPEG-2 and cannot take full advantage of MPEG-4 efficiencies. To replace all MPEG-2 set-top boxes, as we told you earlier in the week, would cost close to $1 billion and this investment will not be made.
3008 That being said, there are a number, as I mentioned as well, of potential ways to stage an MPEG-4 investment to add capacity, but again none of these are funded in our company at this time.
3009 We would urge you to review the confidential undertaking response which we filed this morning, which discusses the alternatives and gives you a view of the positive and negative impacts on Bell Satellite TV and our subscribers at each of these options.
3010 Thank you.
3011 THE CHAIRPERSON: Thank you for your submission.
3012 Let me start with you where I ended off with Shaw; a target date.
3013 Rogers yesterday suggested that we set a target date. They said basically these LPIF-conforming stations are so important to you, why don't you set a date and they suggested 2013. I think it was done largely in light of possible conversion to MPEG and also Shaw's acquisition.
3014 You don't comment on that at all in your submission.
3015 MS TULK: Well, as we mentioned in our submission, at this point the capacity that we do have funded is fully allocated, a significant portion of it actually going to OTAs, and until such time as we have a plan to do an MPEG-4 conversion it would be impossible for us to give you a date at which we could launch more.
3016 THE CHAIRPERSON: We talked a lot yesterday about MPEG conversion and how to do it and you got free advice from your competitors where you can do it on a channel basis, you can do it on a geographical area basis, and obviously other people have done it, et cetera.
3017 MS TULK: Yes.
3018 THE CHAIRPERSON: Combining any one of these methods with the need to bring these LPIF-conforming stations on, surely you can envision a date. If you want to file it in confidence, that's fine, but I mean you want to file your -- MPEG conversion for you is a necessity, it's not something that we impose on you, you are going to do it anyway, all we are asking is for you to do it in such a way as to keep in mind our stated goal which reflects the Act that those local stations are up and are really receivable by people.
3019 MS TULK: Certainly. We definitely take that goal very seriously and it's why we currently carry more than the regulation and are launching more again next year.
3020 In the submission that we did file, Mr. Chairman, we gave you an idea of the implementation times of the various options, so certainly how long it would take once we do make a decision to have the various options implemented.
3021 I don't know if there's more we can do there.
3022 MR. BIBIC: The gating item is funding for one of the staged approaches to MPEG-4. If funding were secured, then that would unlock or take down that barrier and then there would be an implementation time which we outline in the confidential undertaking.
3023 The difficulty in answering the question is it hasn't been funded and until such time as there is an approved funding plan it's very difficult to answer that question.
3024 We will go back and think about it some more.
3025 THE CHAIRPERSON: Surely you would prefer that we set a date that reflects the reality as you see it rather than it is based either on arbitrary or that we take such measures as CBC said, which you call it the HD penalty box where they call it an incentive, be it whatever you call it, but basically which drives you to get there faster.
3026 MR. BIBIC: I definitely agree with you that if you felt a need to impose a date, which we hope you don't feel a need to, we would rather it be a date that's manageable for us rather than a made up date by one of our competitors.
3027 Where I'm going to -- so we will reflect on your question some more, I'm going to -- when we answer the question, hopefully we can, we are going to assume it's not all HD because that, frankly, will he an impossibility.
3028 But I think the concern is there are 24 --
3029 THE CHAIRPERSON: I think I made that clear this morning, our policy has always said -- the same with the DTV conversion, it is to digital, getting the people up, I have not specified SD or HD.
3030 MR. BIBIC: Understood. Thank you.
3031 THE CHAIRPERSON: Now, the rule one of CBC, you say it's unworkable.
3032 If you change that and said until all required OTA's are distributed in -- it says "either SD or HD format". If you just said "in SD format", would that make the rule more compatible?
3033 MR. BIBIC: No. The paragraph 10 in our reply statement here doesn't -- it's the same unworkability whether it's SD or HD and the reason is this, there are 24 LPIF-eligible stations we don't currently carry and there is no capacity.
3034 So this is integrally related to your first question. Until such time as we have funding to grow that capacity -- and it could be a while -- we would not be able to add any HD station. So that could be a couple of years, three years, four years. We will come back to you with an answer on timing, but for that entire period of time we would not be able to lift these 24 stations and therefore we would not be able to add any new HD services.
3035 THE CHAIRPERSON: And now, the submission we heard yesterday regarding Québec.
3036 I gather you are in the same boat as Shaw, in terms of SRC distribution?
3037 MR. BIBIC: Not quite. It depends.
3038 There are two rules that CBC proposed, one was a three-quarters rule and it depends how you measure the market.
3039 Now, we carry 10 of 13 SSA's across the country, however, if you look at it from the perspective of the Québec market only we carry three of six.
3040 THE CHAIRPERSON: The three being?
3041 MR. BIBIC: The three being Montréal, Québec, Sherbrooke.
3042 THE CHAIRPERSON: Sherbrooke, yes.
3043 So the very emotional testimony we heard yesterday from the journalist working for CBC would apply in your case, too. I remember the man from the North Shore saying, you know, I work but nobody can see me because people on the North Shore get their television by satellite.
3044 I don't know whether that's true or not, but that's why he said, and, in effect, I'm not being carried.
3045 MS TULK: Yes. So certainly we have tried to have a representation of channels from across Québec within what we are able to carry, so Montréal, Québec city and Sherbrooke, with respect to SRC and of course other areas through TVA or other carriers.
3046 That being said, you know, this is I think really an unintended consequence of the fact that -- and probably two very good policy objectives, one to have quite extensive French-language coverage throughout the Province of Québec --
3047 THE CHAIRPERSON: Yes.
3048 MS TULK: -- but also be ability to supply French-language coverage across the country. So those two policy objectives, you know, we certainly have room to carry I guess is in the simplest form, as Mirko talked about, 10 of 13 SRC stations.
3049 THE CHAIRPERSON: Yes.
3050 MS TULK: However, you know, as example next year we will be adding Regina instead of perhaps Trois-Rivières or Jonquière because we have to meet the one-per-province rule.
3051 So these two rules together become very onerous with respect to the coverage of multiple French-language services in Québec.
3052 That being said, we are very committed to Québec, it's obviously a huge part of our customer base, and that's why have we certainly gone well and above the requirements with respect to French-language programming and continue to seek out ways to do so.
3053 Mr. Chairman, in a capacity constrained world if there were a way to sit down with a broadcaster and say, you know, let's negotiate our way -- let's contract out, so to speak, of the regulatory rule in order to provide a mix that is more palatable to the broadcaster, and still meets the customer viewing objectives, that is something that we would be prepared to entertain. But it would require flexibility from the broadcaster's part, as well as from the Commission's part, because right now we are locked into the one per province rule, and we have a finite capacity issue.
3054 I don't know if that was clear, but...
3055 THE CHAIRPERSON: No, but...
3056 Are you asking me to release you from the one per province rule?
3057 MR. BIBIC: Not a blanket release, but let's say that we got together with SRC and said: Okay, we have a one per province rule somewhere in western Canada, let's not carry that one for now, but instead let's carry SRC Rimouski. SRC, would you be prepared to do that?
3058 I am just throwing that out.
3059 And if they said yes, would you be okay with it? We would need an exemption from that rule, in that limited circumstance, not a blanket exemption.
3060 THE CHAIRPERSON: I hear you, but I obviously can't answer that.
3061 Your interim solution, which is partial channels -- and you explained them, and I am glad to see that you are not only talking about news, but you are also talking about, basically, local programming, to whatever extent there is local programming, and whatever nature it may be.
3062 Did I understand that correctly?
3063 MS TULK: Yes, whatever local programming could be accommodated.
3064 Certainly the omnibus solution --
3065 THE CHAIRPERSON: No, no, let's stay with -- I am not talking about omnibus, I am talking about partial right now.
3066 MS TULK: Okay, so I will break it in two.
3067 The omnibus -- the only reason I bring it up is that I do think that would allow us to be able to get more local programming on the air than the partial channel.
3068 The partial channels, with the space that we are able to allocate, basically that space is available to local broadcasters to program in any local programming that they create.
3069 As an example, mostly, today, I believe, they send us the local news. They certainly could send election results, election coverage.
3070 The issue, clearly, for them, as Commissioner Molnar brought up on Tuesday, is the loss of advertising revenue, as the gentleman from SRC talked about, and other windows, as well as contention.
3071 And, quite honestly, the problem we have with it is, we would have to be able to navigate contention across broadcasting groups for a very limited number of partial channel space that we have. That's why we believe that the omnibus solution is somewhat better, from our perspective.
3072 THE CHAIRPERSON: I have asked you twice now, don't talk omnibus. I am trying to understand partial. Okay?
3073 MS TULK: Yes.
3074 THE CHAIRPERSON: On partial, you would carry local elections, local telethons. Presumably, any program that is produced locally would be shown there.
3075 MS TULK: Up to our capacity -- the ability that we have -- the channel capacity that we have that we can allocate to partial channels.
3076 But, yes, we wouldn't be governing which things local broadcasters could send us.
3077 THE CHAIRPERSON: Now, you have this local channel -- let's take the example that you cited, Regina. Regina is right now not carried. You create a Regina channel. It is actually the Saskatoon channel, except that it has Regina news, it has the Regina telethons, it has the Regina local election, if there happens to be one.
3078 Is there anything else produced locally in Regina -- whatever kind of programming -- that would be seen on that Regina channel?
3079 MS TULK: If the broadcaster sends it to us, yes.
3080 THE CHAIRPERSON: And it obviously would be identified as the Regina channel. As you say, they could brand it and they could identify with it. They have a channel that doesn't do much for advertising, but it certainly does in terms of local visibility.
3081 Now, coming to omnibus -- what would you call it, first of all? What would the channel be called?
3082 Because the very advantage that you have on the partial is that you have an identification, and then you would lose it.
3083 MS TULK: Yes. And I guess that would be up to the broadcasters, to some extent, but we would propose, as an example, to say to the CBC: Instead of some partial programming that you are already using, you have the ability to have a CBC -- I don't know what they would call it -- CBC 6, CBC Local, CBC National -- whatever.
3084 Obviously they use the National for other purposes as a brand.
3085 And then they would program that the same way they program any of their stations.
3086 So they would choose which local programming -- from across the uncarried stations that they pick out, which ones they program in and what the schedule is. They would feed that information into TV Guide, so that when people are on the electronic programming guide -- just like you can see when Mad Men is coming on two days from now, you would be able to see when -- in that example, when the Regina local election results are scheduled to come on in the next 14 days.
3087 It would be a local content channel for that station group, and they could put as much --
3088 THE CHAIRPERSON: For that station group.
3089 MS TULK: Yes.
3090 THE CHAIRPERSON: You wouldn't mix more than one station group?
3091 MS TULK: We would prefer not to, because if we are mixing more than one station group, now we are in the business of deciding whether the Canwest coverage of the Regina news or the CBC coverage of the Regina news goes on live.
3092 So we would prefer, for the major station groups, to have them each have an omnibus channel, which they can program as they see fit.
3093 And they can decide, if they have contention across local programming happening concurrently, which goes taped and which goes live, based on what they believe their own market demands are, and advertising revenues, presumably.
3094 THE CHAIRPERSON: Presumably you have considered how many partial channels you would have to create to do this. Would you be able to pick up all of the LPIF-conforming channels that you are not carrying right now?
3095 MS TULK: It would certainly depend on the amount of local programming. So it is basically the number of hours of local programming, divided by 24.
3096 Or, divided by the number of hours a week, I guess. We do it on a weekly basis --
3097 THE CHAIRPERSON: No, you are on omnibus, I was on --
3098 MS TULK: No, no, it's the same with partial, because we have to have enough capacity --
3099 And, really, it is a bit of a bottleneck theory, Mr. Chairman. You hit contention around six o'clock in the eastern time zone. That's probably where we have the most demand for simultaneous programming.
3100 It would take work with the broadcasters, to figure out how much they were looking to program and where it is.
3101 Tim -- I don't know if you want more detail. We think that we are probably in the range of needing five channels, which we would have to find some way to free up somewhere else in order to accommodate that, but that would be subject to discussions.
3102 THE CHAIRPERSON: But because of the different time zones, it's not the number of channels that you are not carrying right now, it's much less, isn't it?
3103 MS TULK: I think the biggest contention we would have would be in the eastern time zone. If you refer to your list, there are certainly a number in both Quebec and Ontario that aren't being carried, and presumably, from what I understand of the broadcasting regime in Canada, they tend to all have their local programming around the same time.
3104 So, certainly, if we wanted to carry all of the local news live, we would need to have a slot available for each of those channels. I don't think we could do that, but certainly we could, you know, have five available.
3105 And that's where it gets tricky, quite honestly, practically. Now we are doing multipartite negotiations for access to that channel at six o'clock.
3106 That's why we believe that the omnibus one is much cleaner, because it is up to CTV to make that choice for itself, up to Canwest to make that choice for itself, up to Rogers to make that choice for itself -- what gets played at six o'clock eastern time, rather than us trying to navigate which one of these eight contenders gets the five spaces that we might have available.
3107 THE CHAIRPERSON: It also means less channel usage for you.
3108 MS TULK: Yes, and also less -- quite honestly, I would think -- and I am not an expert, but I used to be an advertising buyer -- certainly more opportunity for those station groups to monetize, because they can now sell through all of their local markets advertising on that one channel.
3109 THE CHAIRPERSON: This interim solution, until you have the space, as I understand it, the only thing that prevents you from doing it right now is your inability to sit down with broadcasters to work this out.
3110 MS TULK: Yes. And I think, in fairness to the broadcasters, Mr. Chairman, as we have all heard over the last couple of days -- I mean, they have legitimate concerns with this solution. I don't want to underestimate that. We certainly recognize that it's imperfect. Unfortunately, it's the only one we have, until such time as we are able to invest in further capacity.
3111 THE CHAIRPERSON: Yes, but, remember, I asked you for a date. Let's assume, for argument's sake, that we set a date, and this is the interim.
3112 I want to make sure that I understand you correctly. You are basically saying: Broadcasters, I can offer you half a loaf, or a quarter of a loaf -- whatever -- until such time as -- and here is my timetable, and in this slot you could --
3113 MS TULK: That's correct.
3114 THE CHAIRPERSON: I must say that I still have, very much, a problem with your MPEG-4 conversion. You say that, very clearly, funding is needed, but surely the market will drive you there. There is an expanding universe of channels, people want to see it, et cetera, and you are in a competitive situation, at least in part of the territories that you serve.
3115 Isn't there something that -- if you want more capacity, it's either MPEG-4 or another satellite. I don't think there is anything else, is there?
3116 MR. BIBIC: Not really, Mr. Chairman. We are selling MPEG-4 in enabled set-top boxes now. You know that, and you have the numbers. Yet, when it came time to invest in more capacity to allow us to meet our 2011 obligations -- you heard us on Tuesday, we are investing in MPEG-2 infrastructure upgrades to give us that capacity, because, for now, it is a cheaper option for us than an MPEG-4 conversion, even a staged conversion rather than a full conversion.
3117 And those MPEG-2 investments being made next year are going to free up the capacity that allows us to deliver 24 more OTAs, including 22 in HD.
3118 So, so long as we can manage with the capacity we have, and further incremental investments in MPEG-2, which are cheaper than MPEG-4, that is what is going on.
3119 THE CHAIRPERSON: I guess I am missing something. I thought that those MPEG-2 conversions that you were talking about were to make the MPEG-2 MPEG-4 compatible.
3120 That's not what it is?
3121 MS TULK: Certainly -- and I can't remember if I explained it on Tuesday or not -- what we are doing right now is an investment in MPEG-2, and we will continue to broadcast in MPEG-2.
3122 If we didn't make that investment, at such time that we did look at an MPEG-4 investment, this one would have to be done first.
3123 So they are sequential, and it does help us on the way, but it brings us near-term capacity benefits in MPEG-2, and that's why we are doing it right now.
3124 So it's kind of, I guess --
3125 THE CHAIRPERSON: Why are you doing that? Can you explain to me what you are doing in terms of MPEG-2?
3126 MS TULK: We will file that for you, and tell you specifically what we are doing this year.
3127 THE CHAIRPERSON: Is this really confidential? I mean, I am asking generically, I am not asking for numbers here, or staging. I mean, I just want to get my head around what you are talking about.
3128 MS TULK: In broad strokes, generically, it is upgrading our MPEG-2 uplink facilities. Giving any more detail than that, I would really be uncomfortable, because it would be easy for the people behind me to get a full grasp of total capacity in our business. That's why I would like to file it in confidence.
3129 THE CHAIRPERSON: Your uploading capacity -- it will allow you to upload more, and therefore, also --
3130 How does that give you more capacity? That is where, I guess, I am getting --
3131 MR. DINESEN: Mr. Chairman, it is the path that we have taken since almost the beginning of the availability of video compression. We have always been broadcasting in MPEG-2. We are proposing to continue to do so until such time as we have all of the MPEG-2 set-top boxes out of market.
3132 Essentially, what we are doing is investing in head end technology, upgrading the encoder environment with more computational power that is still MPEG-2 technology.
3133 THE CHAIRPERSON: You are trying to milk out the last bit of compression --
3134 MR. DINESEN: That is precisely it.
3135 MS TULK: That is exactly it.
3136 MR. DINESEN: MPEG-2 is sort of reaching the law of diminishing returns, and we are trying to squeeze the last bit out of it.
3137 THE CHAIRPERSON: And in order to make them convertible at some point into MPEG-4, at some future date, if I understand you correctly, Ms Tulk, you would have to do this anyway.
3138 MS TULK: Yes. It would be, I think, a logical --
3139 I can't say that we have to, but I can't imagine where you wouldn't.
3140 So it's a logical part of that evolution.
3141 THE CHAIRPERSON: Okay, CBC?
3142 MR. GUITON: It's Steve Guiton, from CBC.
3143 I just have a couple of points on partial channels, Mr. Chairman. First of all, I would like to thank Bell TV for being upfront about the limitations of partial channels in their remarks. I think it is moving the discussion forward if we all realize that they are just not an effective solution.
3144 But I have a question, and it is something that you raised, Mr. Chairman, with respect to how partial channels, according to the Bell proposal, could carry all unique local programming if we sent it to them.
3145 The reason I am asking that is, we have channels during the day -- besides the hour and a half of local news, we have news updates and local promos occurring 50 times during the day. Those are not repeated, they are unique. I just want to know how that would work exactly, please.
3146 MS TULK: I think, Mr. Chairman, that I said in my remarks that it would take a lot of discussion with the broadcasters.
3147 To be really open on the solution, I don't think we would be able to accommodate all of the interstitial advertising of every local broadcaster advertising when their news is upcoming today, which certainly is -- you know, anybody who watches TV knows that the interstitial advertising happens over and over and over again.
3148 We were really talking about locally created content, such as news, weather, elections -- we don't know what they are.
3149 And I also, I think, said in my remarks that we would have to establish -- and I think that even you restated it, as you usually do, more eloquently than me -- you know, an allocation out to the network: Here is how many hours you have, based on our capacity, to use as you see fit.
3150 If one of the broadcasters -- I can't imagine -- would rather have interstitial advertising when their news is, versus other local programming that they produce, I guess they could use that in their allocation. That would be up to them.
3151 THE CHAIRPERSON: Does that answer your question, CBC?
3152 MR. GUITON: It does, but just to confirm; therefore, as I was saying earlier with respect to the Shaw panel, we went on a partial channel last night for Bell TV. We went on 197, which is Charlottetown, and just for the record, if you are outside the local news, this is what you are going to see.
3153 Okay?
3154 THE CHAIRPERSON: For the record, he is showing a black page.
3155 MR. GUITON: I am showing a black page.
3156 So outside this unique, local programming, that is what the viewer is going to see. It is very difficult -- I just want to come back --
3157 I am coming back to the viewer connection point, and I am also coming back to the advertising point.
3158 It is hard to sell advertising if this is what people are getting most of the time. It is hard to get --
3159 THE CHAIRPERSON: Let me stop you right there.
3160 Ms Tulk, I understood you to say that it would switch back to the other channel. So, in this case, with Charlottetown, presumably it switches over to Moncton, or whatever the next one is.
3161 MS TULK: It doesn't switch over. I think I may have misstated that. What it currently is supposed to do -- and I can't see that slide from here -- it is supposed to have a slide up that tells you when the next appearance of local programming will be.
3162 THE CHAIRPERSON: Madam Secretary, do you want to bring that over to Ms Tulk, so that she knows what she is commenting on?
3163 MS TULK: Thank you very much.
3164 This slide, which would have been -- it says 9:59 a.m. on November 17th, which, I guess, is in the Charlottetown time zone -- would have said: CBC/SRC News - Press Info - date - for Wednesday, the 17th of November. The news will start at 8 a.m. and end at 12 p.m. Channel News to 197. News - tune to Channel 197 for New Brunswick First News weekdays at 6 a.m. AT and at 5 p.m. AT for CBC. Charlottetown News - also see SRC-Le Téléjournal from 6 to 7 p.m. eastern time.
3165 Again, I haven't had any specific discussions with the CBC on this issue. I would certainly be happy to. I, personally, could see ways that this could be improved. We could refer you -- if you wish to watch CBC Now, tune into Channel X, which is the Halifax station or the nearest market station.
3166 There are lots of things that could be done.
3167 TV Guide information could be programmed in, so that on this channel, as I mentioned, people could see 14 days in advance what the local programming to appear will be.
3168 THE CHAIRPERSON: Why wouldn't it automatically switch? In this example, the moment the news is over, why wouldn't it automatically switch over to Halifax?
3169 MS TULK: Tim could explain it in technical detail as much as he wants, but, basically, that would be a virtual channel override, which is the same reason we can't do simsub. Technically, we don't have the ability to do that.
3170 But, certainly, I think we could do, admittedly, a better job of referring people to the right channel.
3171 THE CHAIRPERSON: I'm sorry, you are losing me technologically.
3172 I understood -- and you were very helpful yesterday when you explained to me the difference between the channel and what appears on the screen for the customer. For the customer it appears on a separate channel, but, in effect, it is the Halifax channel, and you just override it when you have the news from Charlottetown.
3173 MS TULK: Yes. I think I made a mistake on that. They would have to switch back between Halifax and Charlottetown.
3174 THE CHAIRPERSON: You can't automatically do that for them?
3175 MS TULK: No. It would be, effectively, the same reason we can't do simsub in all of these local markets. It's a virtual channel override.
3176 I believe, from what Shaw was talking about, theirs was more in that regard.
3177 The other option, as I mentioned, is that this channel specifically -- 197 -- could have CBC content running all the time, if it were an amalgamation of CBC programming from all of the stations that we don't carry.
3178 THE CHAIRPERSON: Okay, CBC?
3179 MR. GUITON: Again, with respect to the omnibus approach, you have a couple of problems. One, it is difficult to sell advertising.
3180 As I mentioned earlier when Shaw was appearing, local advertising is a significant portion of the day. It is quite significant revenue for the local station. Putting it on an omnibus channel means that, at some point in time -- you can't have the news appearing at the same time for each local market. Somebody has to get chosen.
3181 That's the first thing.
3182 If I could, I would like to correct one thing, also, Mr. Chairman, with respect to the remarks today from Bell TV. They say that they carry 10 of 13 SRC. Two of those are partial channels, so the total is actually 8 of 13.
3183 With respect to TVA stations, I believe it is 5 of 6.
3184 MR. BIBIC: I think it is 9 of 13 full-time, 1 partial.
3185 MS TULK: I think that chart --
3186 MR. BIBIC: No, that's right. It is 8 full-time and 1 partial.
3187 MS TULK: That's right. Well, the partial -- the Fredericton/Charlottetown, I think they are on that chart. It's a different chart.
3188 On your chart it's 8 of 10 that are shown. There is an additional one in Montreal that we do carry that isn't shown, because there are more than a million people in that market, so it's not LPIF-eligible.
3189 And for the SRC, with respect to --
3190 Was your question TVA or V?
3191 MR. GUITON: TVA.
3192 MS TULK: With respect to TVA, we carry, as you see on the second page of the chart, 3 full-time and 1 partial, and I believe that we also carry a Montreal station for them, as well. So that would have us at 5 of 6.
3193 MR. BIBIC: And Vancouver.
3194 MS TULK: Oh, sorry, and a Vancouver station. But this is specifically to the French language in Quebec.
3195 This list is correct.
3196 The difference between some of the numbers that Mr. Bibic was giving is that some of those regional groups that are partial we were calling one channel in our count, versus four here.
3197 THE CHAIRPERSON: Okay, Rogers?
3198 MR. ENGELHART: Thank you, Mr. Chair.
3199 In your opening remarks, in paragraph 4, Bell stated: "...but in the interest of advancing constructive solutions to our present capacity constraints, we are prepared to add LPIF-eligible OTA stations that are not currently carried."
3200 Given that we all seem to have a different definition of what LPIF-eligible means, I wonder if Bell could clarify whether that commitment would include the OMNI stations in Alberta, Calgary and Edmonton.
3201 MR. BIBIC: It includes the stations on this chart.
3202 MR. ENGELHART: So, then, because OMNI is not an English or a French station, and given that you will be, pursuant to this commitment, carrying a bunch of additional stations, would it be a reasonable inference that OMNI Calgary and OMNI Edmonton might have to wait quite a long time for carriage?
3203 MR. BIBIC: I don't think that is a necessary implication of our proposal. We had understood the core of the debate to be around the channels on this chart, and we came up with a proposal, on an interim basis, to address that.
3204 I would be quite happy, as Mr. Engelhart knows, to have further discussions with the Rogers Media Group to see how, over time, more of their channels could be added, recognizing that, I think, we are doing a very good job in terms of carrying Rogers stations today, including what is in our plan for the City stations. As of September 2011, they will be the most well-represented ownership group on Bell TV, on a percentage basis.
3205 And OMNI will be 3 of 5.
3206 THE CHAIRPERSON: Candice, go ahead.
3207 COMMISSIONER MOLNAR: Thank you.
3208 I just want to ensure that I am understanding your response to Rogers' proposal, paragraphs 12 and 13 in your opening statement.
3209 When you carry Vancouver and Toronto in HD, that ensures that in every market that you carry a local broadcaster, whether you carry it in SD or HD, there will be simsub.
3210 Is that correct?
3211 MS TULK: Yes. I guess it gets back to our very confusing discussion of the other day. Currently we carry Rogers Toronto in HD. So, in all of the eastern territories -- so for all of the Boston HD stations -- we simsub Rogers Toronto over the Boston feed.
3212 What is not happening today, as Rogers correctly pointed out, I believe, yesterday, is that because we don't currently carry a Rogers station in HD in the west, the signals out of the U.S. broadcasters in the west are not being simsubbed.
3213 But, as we said here, we are planning to launch Rogers in Vancouver in HD before September of next year, and at the time that we turn that station live, we will begin broadcasting that over the Seattle station in HD.
3214 So we will have HD-over-HD simsub and SD-over-SD simsub.
3215 COMMISSIONER MOLNAR: My question wasn't particularly about Rogers. I am not exactly sure if there are any other groups or persons with programming rights in Canada where the substitution wouldn't occur.
3216 I guess, to make it simple, if we removed the requirement that HD be substituted over HD signals, would that be a problem for you?
3217 MS TULK: I guess, philosophically, it would be, because it would be denying Canadians access to HD programming that they are paying for, because the --
3218 COMMISSIONER MOLNAR: But if you are carrying the HD --
3219 MS TULK: But wherever we carry, we certainly have that ability.
3220 And I believe that there is only one ownership group that we don't have a full solution in our plan for, and we would have to engage in discussions with them on how we might do that.
3221 But, certainly, for Global, Rogers, Canwest, TVA and CBC, we will, by next September, have a Vancouver and a Toronto feed in HD from each of the major ownership groups.
3222 COMMISSIONER MOLNAR: Okay, thank you.
3223 I want to turn very briefly to the partial channels. Shaw offered us, as you said, using virtual channel override, a full channel for these -- absent the local advertising on it, but the local programming would be available. There would be channel placement and, as a consumer, if that was your home channel, you would always have viewing on it.
3224 And I think I heard you folks say that that's just not possible for you.
3225 I realize that you only had a couple of days to talk about this, so could I ask that you re-look it before you file your written -- if there are things you can do -- I mean, electronic program guides, and so on, have great capabilities.
3226 Is there some way to make programming available in that placement for the consumer, or subscriber, full-time, instead of redirecting them somewhere else?
3227 MS TULK: I am told by my technical group that that's not possible using our method, but you can be assured that we will go hard at that before we file our final submission, because I think that it, quite honestly, is a better solution, it's just not one that we are technically able to do. But we will certainly make it clear in our final submission what the best practical solution is that we can deliver, because we understand the importance of the issue.
3228 COMMISSIONER MOLNAR: And, possibly, not just what technical solution you can come up with, but what it would cost you to get to the other solution.
3229 MS TULK: Sure. Yes, we can certainly provide you that information.
3230 COMMISSIONER MOLNAR: Thank you. Those are my questions.
3231 THE CHAIRPERSON: Louise...
3232 COMMISSIONER POIRIER: Thank you, Mr. Chair.
3233 First, I have a clarification question. I am comparing the LPIF-eligible stations on your sheet and the ones presented by CBC, and there is one station that CBC has added. It is the CJBR station in Rimouski, and it's not on your chart.
3234 So I wonder, Mr. Guiton, when is this station going to be effective?
3235 MR. GUITON: We have the licence already, and the station is up.
3236 COMMISSIONER POIRIER: Okay. So maybe we should add it to the chart.
3237 MS TULK: Yes. The easiest way to do that is probably by Commission Staff. So if there are others to be added, we could populate that.
3238 COMMISSIONER POIRIER: I would appreciate it if we could all add that station to our list.
3239 My second question -- I will ask it in French.
3240 C'est une question un peu hypothétique et très générale dans le sens qu'on vit la consolidation actuellement.
3241 Alors, on sait que, pour Canwest et Shaw, il y a une consolidation qui a été acceptée, de sorte que toutes les stations de Canwest LPIF, we leave it to you to decide, on va vous laisser décider lesquelles économiquement sont les plus intéressantes pour vous à mettre sur le satellite.
3242 Et, en supposant qu'il y a une consolidation qui est acceptée pour Bell et CTV, on peut aussi décider de vous laisser décider lesquelles des stations du LPIF sont économiquement intéressantes pour vous.
3243 Une fois qu'on retranche toutes ces stations-là, pour lesquelles on suppose que vous allez faire un choix économiquement viable pour vos compagnies, il reste très peu de stations du LPIF qui ne sont transportées par ni une ni l'autre des satellites.
3244 Et si on regarde le tableau présenté devant vous, en procédant dans l'ordre, il reste Oshawa qui n'a plus rien. Il reste plusieurs stations de Radio-Canada, et je ne vais pas passer au travers des radios canadiennes, mais il y en a quand même quelques-unes, mais pour simplifier, disons qu'il y en a -- une, deux, trois, quatre -- quatre ou cinq à peu près de Radio-Canada.
3245 Je passe pardessus celles de Canwest. Je m'en vais donc à Rivière-du-Loup, où il y en a une. Je passe pardessus celles de CTV, où je suppose que vous allez faire un choix commercial.
3246 Il reste, du Groupe TVA, Trois-Rivières, et il reste, tant qu'à moi, du Groupe RNC, Val-d'Or, Rouyn. Et finalement, du Groupe V, il reste Trois-Rivières.
3247 En tout, c'est à peine une douzaine de stations du LPIF, dans lesquelles personne ne va prendre la défense si nous, on n'est pas là pour susciter l'intérêt.
3248 Alors, je me demande, est-ce que le fait d'éliminer toutes ces stations-là du LPIF qui vont faire partie des groupes consolidés et vous laisser faire la décision, mais de regarder l'ensemble des autres pour lesquelles il y a des difficultés peut-être à s'asseoir et à négocier, il n'y aurait pas une solution et des priorités à accorder à ces stations-là?
3249 J'espère que vous comprenez bien le sens de ma question.
3250 M. BIBIC : On comprend bien le sens de la question. La problématique demeure la même : C'est que, en ce moment, il n'y a aucune capacité pour ajouter plus de stations. C'est que même si on réduit le nombre de stations où ni Bell ni Shaw distribue le service -- je n'ai pas fait le compte là, mais ça serait moins de 24 selon vos...
3251 CONSEILLÈRE POIRIER : Une douzaine à peu près, au maximum.
3252 M. BIBIC : Ce serait une douzaine, et si on les partage entre nous deux, c'est six et six. On n'a pas de place aujourd'hui pour distribuer ces six-là.
3253 Deuxième point, c'est qu'il faut réaliser -- et je crois que personne ne le réalise, mais c'est dans notre Appendix 1 de mardi -- que le groupe de stations CTV est le moins représenté sur Bell Satellite TV. Le pourcentage de stations de CTV qu'on distribue est le plus bas de toutes les stations... de tous les groupes de radiodiffuseurs.
3254 Donc, moi, je ne vois pas pourquoi on désavantagerait CTV simplement parce qu'ils seront... ils feront partie du Groupe Bell à 100 pour cent, on espère, l'année prochaine.
3255 Donc, voilà mes deux réponses. On n'a pas la capacité aujourd'hui, et je ne vois par pourquoi on désavantagerait CTV. Et du côté Shaw, bien, ils peuvent répondre, Global. Mais voilà mes deux réponses.
3256 CONSEILLÈRE POIRIER : M'hmm.
3257 LE PRÉSIDENT : Monsieur Brazeau?
3258 MR. BRAZEAU: Jean Brazeau.
3259 Similarly, capacity, as we indicated and as Mirko indicated, certainly remains an issue with us. Although the number of stations is less, removing any station is very challenging. So these are net adds, and again, it becomes extremely challenging.
3260 So that is -- you know, we are more or less in the same boat as Bell TV and I think we are also underrepresented when it comes to the carriage of Canwest services.
3261 CONSEILLÈRE POIRIER : Et vous garantissez que vous allez traiter équitablement les autres stations dans les priorisations que vous allez faire pour les mettre sur le satellite?
3262 M. BIBIC : Oui. Et, en effet, ce qu'on a indiqué, we added -- if I may turn to English -- we added an incentive program of our own in our proposal, which is if a broadcaster stepped forward with accepting partial or omnibus, they would go to the front of the queue in capacity group.
3263 CONSEILLÈRE POIRIER : Et ma dernière question.
3264 Je ne comprends pas quand même le problème de capacité de Bell quand je reviens au document que vous avez présenté mardi et dans lequel, à la page 5, vous dites que vous allez ajouter deux stations standards d'ici le 11 septembre et 22 HD.
3265 Vingt-deux HD, c'est l'équivalant... est-ce que je me trompe, on multiplie par quatre, et ça ferait 88 canaux SD?
3266 MS TULK: I guess Tim could take you through the rough math but we have been using a 4:1 ratio.
3267 The issue is -- I guess the reason that we put that in there is, as we have mentioned and I think Shaw also has mentioned and maybe even FreeHD, HD programming is one of the leading indicators of why people purchase service, and so we have to have a compelling HD line-up in order to make sure we can sustain our customer base.
3268 CONSEILLÈRE POIRIER : Oui.
3269 MS TULK: The reason we put it in there -- and I will try not to get on a personal soapbox -- I think is to let the record show that we are very committed to over-the-airs in Canada and we are picking up a lot of HD, using a lot, in fact -- I obviously can't go into exact details here, but talking about the upgrade that we are about to do that we talked about previously, more than half of that capacity is going to Canadian over-the-airs, not Canadian programming, Canadian over-the-airs.
3270 So we are very committed to making sure that Canadians have access to their local programming and obviously these consumers want local programming in HD as the HD stations come online.
3271 CONSEILLÈRE POIRIER : Oui. Mon point, c'est simplement de montrer que, sans amélioration technique majeure, avec ce que vous allez augmenter, moi, je vois 90 stations SD au total d'ici septembre.
3272 Si on enlève les quatre standards... les 24 standards du LPIF, il en resterait quand même pas mal, et ça permettrait d'avoir 15 HD, malgré tout.
3273 Est-ce que mon calcul est si négatif que ça? Est-ce que ce n'est pas faisable en le faisant uniquement à partir de vos plans qui sont prévus et sans amélioration technique?
3274 MS TULK: I believe your math is generally correct, but as we have talked about quite a bit, we have to have a competitive service and we certainly can't afford to have our customers in Vancouver leave us because we are not carrying HD programming in Vancouver.
3275 You know, these are major market stations that we have to carry or we are going to lose major blocks of our customers and be even less able to make the future investments that the Chair is talking about, such as MPEG-4 down the road.
3276 COMMISSIONER POIRIER: Yes. But with no investment I think you could make it. This is what I believe. But you could answer in your final report.
3277 MS TULK: Sure.
3278 COMMISSIONER POIRIER: Thank you.
3279 MS TULK: Thank you.
3280 THE CHAIRPERSON: Thank you very much. Those are all our questions. I thank everybody for participating. I think it has been very useful.
3281 I remind you that you have until November 25th to make additional submissions but only on what came up during the rebuttal.
3282 Thank you very much.