Bell, Rogers, reveal differences over copyright, retrans fees, when it comes to NAFTA

[Len]

Bell Canada and Rogers Communications showed off some different philosophies when it came to the federal government’s NAFTA negotiations when they appeared recently in front of a recent meeting of the Standing Committee on International Trade.

Rogers Cable vice-president, regulatory, Pam Dinsmore said in her opening remarks on September 20th that her company is concerned the trade talks will wander too far from its prior mandate and into copyright, which includes such issues as retransmitting U.S. over-the-air TV signals, Canada’s notice-and-notice regime for pirated online content, and our Copyright Modernization Act’s provisions for personal use and its protections for intermediaries such as ISPs.

“We are concerned that a trade renegotiation, where copyright issues are used as bargaining chips, could endanger this delicate balance. In our view, any changes to our domestic copyright laws should be made through the upcoming five-year review of the Copyright Modernization Act, not through the NAFTA renegotiation,” Dinsmore told the committee.

She also noted that any NAFTA agreement that might allow American telecom providers free access to move north by being allowed to perhaps purchase Rogers, Bell or Telus (the current regime only allows outsiders to purchase companies with 10% or less of the domestic market) would not benefit Canadians. “This would not promote a more competitive supply of telecommunication services, but instead would simply replace one large provider with another,” she explained.

There was some common ground in the next presentation made by Bell Canada’s senior vice-president of regulatory affairs, Rob Malcolmson, where he noted that “we should not jeopardize what’s been achieved by agreeing to trade outcomes that grant subsidized access to our networks to foreign players,” but there were key points of difference between the two companies’ positions.

Malcolmson did urged committee members to come up with, in these negotiations, tax and regulatory fairness for online services (such as noting the unfairness of having CraveTV collect sales tax while foreign streamers don’t). As well, Bell believes that the NAFTA negotiations is a great opportunity to deal with copyright enforcement because Canada “continues to have a significant copyright infringement problem,” and said Canadians made 1.88 billion visits to piracy sites last year, he said.

(Ed note: We checked with Bell and they said that figure comes from the MUSO Global Film & TV Piracy Market Insight Report. The London, England-based software company says it analyzes global traffic from 23,000 of the largest global piracy websites, comprising of over 191 billion visits to these sites, and across 200 million measured devices. However, we can not see the report on Canada without paying for it. MUSO does identify a handful of the piracy sites in their publicly available global report and note they track traffic from “web streaming, web downloads, public torrent, private torrent, and for music industry reports, stream rippers e.g. YouTube ripper sites.”)

Malcolmson told the MPs Canada should consider beefing up the copyright enforcement provisions in order to protect copyright owners. Specifically each NAFTA party should “maintain an administrative enforcement agency or coordinating office dedicated to protecting intellectual property rights; and direct its national police force to prioritize the investigation of and enforcement against digital piracy,” he said.

That agency could be the CRTC or one overseen by the Commission, he said later in his appearance.

“So you would mandate all ISPs across the country to essentially block access to a black list of egregious piracy sites. That would be job number one.” Rob Malcolmson, BCE

Under questioning from MPs, Malcolmson said Bell wants to see specific measures put in place “whereby all Internet service providers are required to block consumer access to pirated websites. In our view, that's the only way to stop it. So you would mandate all ISPs across the country to essentially block access to a black list of egregious piracy sites. That would be job number one,” he said.

When asked by the MPs if she agreed, Dinsmore stuck with Rogers’ belief that NAFTA is not the realm for this. (When appearing before such a committee, the only back-and-forth is between the MPs and their visitors.)

“Rather than look into NAFTA to have this imposed on us by a trade agreement where this could be a bargaining chip that we agree to in exchange for something else, we think it has to be done holistically given the careful balance that was arrived at in our Copyright Act between users and rights' holders. Rather than dealing with it as a one-off in this exchange while this negotiation is moving very quickly and even the negotiators will tell you that they don't really have a lot of time to think between rounds, there'll be lots of time to consider these sorts of options in our own domestic forum and we think that's where this discussion belongs,” she said.

Another point of difference between the two executives came when Malcolmson raised the issue of a fee for carriage for broadcast signals, although that was not the language used. He reminded MPs that specialty services can earn revenue in two ways (subscriptions and advertising) while OTA broadcasters are still limited to just advertising.

He noted that American border broadcasters are using NAFTA renegotiation to once again push for rules to be changed so that they would be paid by Canadian TV distributors who carry the local broadcast affiliates of ABC, NBC, CBS and FOX and said “this is actually an issue where I think Canadian interests and U.S. interests can be somewhat aligned.

“…We operate over-the-air stations in Canada and cable companies can pick them up and distribute them and we're not paid for that content… The reason that oddity exists is section 31 of our Copyright Act gives cable systems the right to retransmit over-the-air signals for free. We would say that we could solve the U.S. problem and we could solve the Canadian problem if eliminated section 31 of the Copyright Act and simply allowed over-the-air stations to negotiate with cable companies the fair value of their signal. That regime exists in the U.S. It's called a retransmission consent regime,” explained Malcolmson.

“NBC Buffalo goes and negotiates with the local Buffalo cable company, they come to an agreement. If they don't come to an agreement, then the signal isn't carried. We would like that opportunity for our stations in Canada. That will give us access to the same revenue stream that our competitor channels have and it would give us fair remuneration for what's a very valuable product to Canadians, and allow us to continue to fund local news and employ Canadians in local markets.”

When asked about her thoughts on that, Dinsmore had a different point of view on the matter. “We are very concerned about a retransmission consent regime. Certainly it is what the NAB asked for in this process and it would mean a major outflow, in that context, of moneys down south of the border… We do have a retransmission regime, but that compensates the underlying program suppliers when their signals are carried out of market. That was the underpinning of us having a copyright board,” she explained.

“(It) wouldn't result necessarily in these costs being passed on to consumers, which is what you're going to have in any retransmission consent regime.” – Pam Dinsmore, Rogers Communications

Rogers believes there might be a better way to fund local news (and Dinsmore said at the time she was hoping to see something from Heritage Minister Mélanie Joly’s Creative Canada, which had not yet been unveiled when the two spoke to the committee) that “wouldn't result necessarily in these costs being passed on to consumers, which is what you're going to have in any retransmission consent regime. It's simply going to increase the cost of cable.”

Both Malcolmson and Dinsmore did agree on one key thing – NAFTA’s cultural exemption must be maintained in order to keep our own homegrown, Canadian, industry, with its own rules and content.

“If we didn't have the cultural exemption, it would be very hard for our indigenous Canadian broadcasters to survive,” said Dinsmore. “It would be very hard to maintain our Canadian rights market, and the whole underpinning of what we know as our broadcasting system would probably fall apart, so it's extremely important.”