1. Introduction et Présentation
    1. Bonjour monsieur le Président ainsi que mesdames et messieurs les conseillers. Mon nom est Johanne Lemay et je suis co-présidente de LEMAY-YATES ASSOCIÉS INC. Il me fait plaisir d’être parmi vous aujourd’hui dans le cadre de l’audience publique ‘Parlons télé: une conversation avec les Canadiens’ pour vous présenter l’étude réalisée par LEMAY-YATES ASSOCIÉS INC. (LYA) laquelle a été soumise conjointement au CRTC par Google Inc. et Netflix Inc.
    2. Le titre de l’étude est ‘The Evolution of TV and New Media in Canada’. L’objectif de l’étude était de discuter de l’évolution de la télévision et des nouveaux médias sous quatre angles d’approche, soit 1) une discussion du rôle de la technologie dans l’industrie de la télévision; 2) comment les consommateurs et entreprises canadiens perçoivent ces nouvelles technologies; 3) comment le cadre règlementaire canadien qui chapeaute les nouveaux médias a évolué au cours des quinze dernières années et en dernier lieu; 4) une discussion de certaines des règles associées au financement de contenu télévisuel canadien. Notre étude est donc axée sur une discussion de l’innovation technologique ainsi que des bénéfices et opportunités qui découlent des nouveaux médias, que ce soit pour les consommateurs comme pour l’industrie de la télévision.
    3. Une brève comparaison des technologies et des services de télévision au Canada en 2014 comparativement à 1999 est incluse au tout début de l’étude.
    4. Mais en premier lieu, permettez-moi de brièvement présenter LYA
    5. LYA est une entreprise indépendante offrant des services-conseils et de recherche touchant les technologies et les marchés des télécommunications et de la radiodiffusion depuis plus de 20 ans. Notre expérience combinée à notre expertise sont les fondations sur lesquelles nos services sont offerts, complété par une surveillance continue de l’industrie sur une base mondiale. Nous sommes très actifs dans plusieurs types de mandats incluant le développement de stratégie et de plans d’affaires, les vérifications diligentes ainsi que divers mandats d’études lors de consultations publiques.
    6. LYA possède aussi une expérience de pointe dans toutes les questions reliées aux fréquences hertziennes incluant les enchères. Depuis 2012, LYA a d’ailleurs développée sa propre plate-forme d’enchères, laquelle comprend aussi l’usage de robots. Cette plate-forme a été utilisée à plusieurs reprises dans le cadre de préparation pour des enchères au Canada et ailleurs.
    7. LYA est active dans les marchés hors Canada depuis 1995 dans les secteurs de la mobilité, de la câblodistribution ainsi que des octrois de licences et des enchères pour les fréquences
    8. Je tiens à préciser que je parle ici au nom de LYA et non en tant que représentante de Google ou de Netflix.
    9. LYA n’est pas un intervenant dans le cadre de cette consultation. Il me fera donc plaisir de répondre à vos questions portant sur notre étude.
  2. Canadian Television: Then and Now
    1. The Canadian television industry including the distribution of television signals is a success story. In 1999, the first time that CRTC conducted a review of new media, it reported 48 Canadian television services in English and 21 in French and growing viewership for Canadian programming ( As per Public Notice 1999-97 ‘Building on Success – A Policy Framework for Canadian Television”).
    2. . Since 2001, the launch of digital specialty channels, video-on-demand services as well as over the top programming has significantly enriched the television industry. In 2013, CRTC indicated that there were 229 Pay, Pay-per-view, Video-On-Demand (VOD) and specialties entities providing financial reporting.
    3. From 1999 to 2012, total broadcasting revenues increased by 177% (Twice as fast the Consumer Price Index as reported at 1.31 by Statistic Canada for the same period), with divergent evolution paths between specialties and conventional broadcasting. Conventional TV, thus excluding Pay, Specialties and Pay-per-view, has generated little or no revenue growth from 2009 to 2012 while its profit margins have remained low, amid increased competition from specialties, video-on-demand and online video offerings as the industry is being transformed . Industry operating margin for Specialties, Pay, PPV and VOD is significantly higher than for conventional TV and has slightly increased to 28.6%, as per the CRTC financial reporting for year-end August 31, 2013.
    4. . We note comments from CRTC at Paragraphs 26 and 27 of Public Notice 2014-190 that :
      1.  “Over the past decade, each generation of technological innovation has made watching programming more individual and customizable. More programming is being made available on-demand to Canadians. Licensed BDUs and programmers are launching services that allow viewers to access on-demand content on exempt alternative platforms. These technological innovations have also allowed new types of content aggregators or curators [9] and new means of content distribution to emerge. Canadians have access to an increasing number of exempt Internet video service providers, both Canadian and non-Canadian, which may be affiliated or unaffiliated with licensed programming services and BDUs. These providers offer a significant amount of content, including Canadian programming. (Par. 26).
      2. While Canadians increasingly watch video programming online, they also continue to watch television in the traditional way. Currently, online viewing and traditional television viewing complement rather than replace each other. (par. 27)”.
  3. Technology is Central to the Business of Television
    1. I would like to highlight why I entitled a section of the Report “Technology is Central to the Business of Television”. Technology has always been integral to the business of television and has continually strived to enhance consumer benefits derived from watching video, starting with the first Over the Air (OTA) stations and broadcasting distribution networks in the 1950s.
    2. No doubt, if today’s technology had been available in the 1950’s or even in the 1990’s, the current broadcasting regulatory regime would be completely different from what we have today.
    3. Second, I view television as a business, implying that it operates in a competitive environment and that its key financial objective is to be profitable. A key to success is obviously meeting the needs of its customers.
    4. . Broadband access, fixed and mobile, coupled with storage technologies and the Internet have significantly enhanced the benefits consumers derive from not only television, but all types of entertainment and information services. The diversity and quality of content now available at one’s fingertips is phenomenal compared to what was the case 15 years ago.
    5. We note that, as per CRTC, at year-end 2012, fixed broadband access speeds with download speeds of 50 Mbps or higher were available to 76% of Canadian households. Long Term Evolution (LTE) mobile broadband technology providing peak speeds of up to 75-150 Mbps is also now available to 76% of Canada’s population. Broadband speeds will continue to increase, enhancing the quality of the user’s experience with online video.
    6. Technology does bring change and it is sometimes as a discontinuity as opposed to a linear evolution.
    7. 2014 marks the 50th anniversary of the publication of Marshall McLuhan’s “Understanding Media: The Extensions of Man”. The caption “The medium is the message” was viewed as controversial in 1964 but garnered significant recognition over the ensuing years.
    8. . I would argue that the same observation applies today to the online distribution of media content as online has clearly shaped and influenced the type of content as  evidenced by the social media explosion and by consumer usage of various over-the-top offerings.
    9. For the reasons stated above, our assessment is that the online medium is a discontinuity for the business of television.
  4. Canadian Consumers and Media Firms are Fully Engaged in New Technologies
    1. Our Report provides a number of examples of how Canadian consumers and firms are fully engaged in new media, both as users and content providers. Canadians are among world leaders in broadband penetration for access speeds at 5 Mbps or higher and household Internet usage (expressed in GB per month) has been increasing at double-digit rates for a number of years.
    2. The vast majority of Canadians also watch online video (At 64% of all Canadians 18+ based on Section 4.2 of CMR 2014, released Thursday September 4, 2014) and increasingly share their usage across multiple devices. The comments provided in response to the CRTC consultations and other research provided on the public record of this proceeding show that Canadian consumers like OTT services for their convenience to watch programming they want, when and where they want it.
    3. One of the major benefits of the Internet and of high quality broadband access is the window it provides on the entire world. Based on the record of this proceeding, and specifically to the answers provided to the CRTC’s Choicebook, a large proportion of Canadians want more…. more of international content as well as more content from the US (in a proportion of approximately 70% based on the CRTC Report on the results of Choicebook).
    4. We note that LYA primary market research published in 2011 had reported that penetration rates for various online services and apps offered by Canadian broadcasters (e.g. Tou.TV) and broadcasting distribution undertakings, in addition to other over the top services such as iTunes, Netflix and YouTube (YouTube was close to 35% penetration) were, for the most part, all in the double digits penetration range, e.g. from 10% to 16%, on a national basis, and that the average user made use of more than one service.
    5. Since then, Canadian broadcasters have developed extensive suites of on-the-go apps for both their conventional and specialty services as well as other content.
    6. . The suite of apps launched by Shaw Media for its Global network as well as its various specialties is very good example. Bell promotes extensively the availability of a large selection of TV channels on its mobile broadband platform. Videotron launched its online television service illico Club Unlimited in early 2013 and Rogers and Shaw have teamed up for the new streaming service Showmi to be launched in November of this year. Just last week, Rogers also announced that it would be streaming live NHL hockey games starting this upcoming hockey season.
    7. But, these are not the only players in town anymore. Many new entities, including individuals, newspapers and corporations as examples, can and do now participate in the creation of video content that is widely distributed. Thus, innovation and opportunities in video content are no longer driven solely by broadcasters and television or film producers.
    8. In our Report, we discussed as one example the success of La Presse+ (La Presse reportedly invested $40M over a multi-year period to develop its new platform) , as well as the new Ottawa Citizen, which dazzle with their tablet apps and extensive over-the-top video content providing news to anyone, Canadian or not, everywhere they may be, at home, on a bus, travelling anywhere in the world, as long as one has a reasonable broadband connection, mobile or fixed.
    9. . Our Report also provides a number of examples of online distribution of Canadian content by various content aggregators or providers both domestically (for example, Excentris and the National Film Board) as well as internationally, including Netflix, Hulu, Apple and Studio 4.0 in France. I add herein a few additional examples:
      1. The March 2014 announcement of two new seasons of the Trailer Park Boys, exclusively for Netflix, as part of an international distribution deal with Entertainment One.
      2. Just a few days ago, iTunes sent out its online promotion of 2014 TIFF movie releases featuring Canadian movies and documentary (TIFF 2014 Selection movies available for pre-order including feature film Mommy of Xavier Dolan, Maps to the Stars of David Cronenberg and the documentary Trick or Treaty by Alanis Obomsawin), in addition to a number of others.
    10. The online medium is a major benefit to the distribution of Canadian content in Canada and everywhere else, especially as international distribution has become an increasingly critical element in the mix to financial success for many content providers and producers.
  5. The Development of Canadian Television Content
    1. We have reviewed the financing of Canadian television content focusing on priority programming or programming categories of national interest. We highlight the different sources of television programming financing, such as the Broadcasting Distribution Undertakings (or BDUs), the Canadian Media Fund (or CMF), tax credits and other private parties.
    2. . We discuss how the current financing system is a “closed-circuit” system limiting or even excluding participation by foreign firms, such as the fact that foreign firms cannot participate in the Canadian Media Fund (CMF) or that there is no coproduction treaty between the US and Canada.
    3. Our analysis also includes a discussion of the success of the current financing framework using as a criteria the evolution of audience share for Canadian programming in the programming categories of national interest. Our analysis of Canadian programming audience share results since 2000 indicates a declining trend for the various categories that are identified as being of national interest. This is not necessarily a reflection on the quality of the programming developed. Rather, it suggests that this decline may have arisen from deficiencies in the financing framework itself and of its ability to adapt to the evolution in viewing habits and preferences of consumers.
    4. The solution is unlikely to reside in increasing regulatory funding obligations for Canadian Broadcasting Distribution Undertakings (BDUs) and broadcasters or in imposing legacy regulations on new media. Indeed, “force-fitting” participation in a “closed circuit” funding mechanism designed for a completely different technology and consumer behaviour paradigm, and where, due to foreign ownership, some cannot be full participants, would be ill-advised.
  6. The Regulatory Framework for New Media
    1. Finally, our report reviews the numerous consultations undertaken in Canada since 1999 on the subject of the impact of new media and if it should be regulated. The regulatory framework governing media services in Canada has consistently strived to favor an evolution toward a more market driven approach.
    2. We highlight that, in 2011, CRTC noted that “New technologies, service providers and consumer behavior underpin a transformation that is characterized by greater choice, a global marketplace and new opportunities for Canadian creators.” (CRTC Convergence Policy, “Results of the fact-finding exercise on the over-the-top programming services”, October 2011).
    3. Without going over each of the CRTC’s prior reviews of new media, but based on our analysis of the evolution of television and of new media, we believe that CRTC “got it right” in not regulating new media activities over the years and that this approach has fulfilled the objectives of the Canadian Broadcasting Act.
    4. Technology has created a discontinuity in the business of television worldwide. Extending a regulatory framework developed specifically for linear TV many years ago would, in our view, contravene the objectives of the Broadcasting Act, and thwart the objectives of fostering innovation and maximizing consumer benefits.
  7. Le mot de la fin
    1. En terminant, je vous remercie de votre invitation à participer à cette audience publique. Il me fera maintenant plaisir de répondre à vos questions portant sur notre étude.