Ian Scott to the Standing Committee on Canadian Heritage

Speech

May 18, 2022

Ian Scott, Chairperson and Chief Executive Officer
Canadian Radio-television and Telecommunications Commission (CRTC)

Check against delivery

Thank you, Madam Chair, for inviting us to appear before this committee.

I am joined today by:

  • Claude Doucet, Secretary General and Chief Financial Officer
  • Valérie Huot, Director General, Finance and Administrative Services, and
  • Scott Hutton, Chief of Consumer, Research and Communications.

We welcome the chance to appear as part of your study of the Main Estimates for 2022-23 as they relate to the CRTC and Bill C-11.

Before we address this specific element of the Main Estimates, it would be helpful to provide context for my remarks. I first want to offer an overview of how the CRTC is funded and how the monies assigned to implement our new responsibilities under Bill C-11 would be used.

The CRTC has access to two sources of funding: appropriation and revenues. On top of that, statutory funding is allocated to the CRTC to cover employee benefit plans.

The first, appropriation, is earmarked for expenses related to Canada’s anti-spam legislation and Voter Contact Registry activities. In addition, the CRTC was granted temporary appropriation funding for expenses related to Bill C-11’s implementation. Appropriations represent about 13% of the CRTC’s overall funding.

The bulk of the CRTC’s funding – 87% – comes from fees paid directly by the companies it regulates. The Commission collects fees under the authority of the Telecommunications Act, as set out in the Telecommunications Fee Regulations and the Unsolicited Telecommunications Fees Regulations, and the Broadcasting Act, as set out under the Broadcasting Fee Regulations. The Treasury Board of Canada authorizes the CRTC to use revenues from these fees to offset operating expenses incurred in the same fiscal year.

I should clarify that Broadcasting Part I licence fees, Telecommunications fees and Unsolicited Telecommunications Fees are used to cover expenses related to our regulatory activities. However, Broadcasting Part II licence fees accrue to the government’s Consolidated Revenue Fund. Part II licence fees do not fund the CRTC’s regulatory costs for broadcasting-related activities or support the Commission’s activities in any other way.

Your Committee will have an opportunity to conduct a study of Bill C-11 in the near future, and I look forward to appearing before you again to speak at greater lengths about this legislation. For now, I will simply say that we welcomed the tabling of this Bill given the pressing need to modernize the Broadcasting Act and the CRTC’s powers, and to clarify the CRTC’s jurisdiction regarding online broadcasters.

As you may also be aware, Budget 2022 proposed to provide the CRTC with $8.5 million over two years to establish a new regime to ensure that Canadian news outlets are fairly compensated by digital platforms.

Madam Chair, Bill C-18 proposes a mechanism to ensure that Canadian news outlets receive fair compensation from the digital platforms that share and distribute their work. The legislation would require platforms that generate revenues from the publication of news content on their sites to negotiate with news businesses and reach fair commercial deals.

Bill C-18 proposes to entrust the CRTC with five main functions in overseeing this activity. It would:

  • Play an administrative role, registering news businesses that meet the legislation’s eligibility criteria and assessing whether digital platforms meet the Act’s exemption criteria.
  • Oversee negotiation and mediation and maintain a public list of external arbitrators agreed upon by both the platforms and publishers.
  • Deal with complaints of undue preference or unjust discrimination filed by news businesses against platforms.
  • Contract an independent auditor to publish an annual report on the total value of commercial agreements and other key information.
  • Establish regulations to collect fees, similar to those paid by broadcasters and telecommunications service providers.

The Commission requires additional funds to prepare for these new responsibilities, so that we are ready to implement the legislation in an expedient manner should Bills C-11 and C-18 receive Royal Assent.

Furthermore, should either Bill receive Royal Assent, we will move quickly to launch public consultations in order to gather views and evidence. CRTC staff will need to develop consultation documents and tools, analyze the public record, and develop a regulatory framework. This work will be in addition to our proceedings currently planned for 2022-23.

With the benefit of the allocation identified in the Main Estimates and Budget 2022, the CRTC will be well positioned to achieve Bill C-11’s goal of developing a new regulatory framework for online broadcasters as well as Bill C-18’s goal of a fair and sustainable Canadian digital news marketplace.

I trust this broad overview has been useful to your committee members. My colleagues and I would now be pleased to answer any questions you may have.

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