‘Will of Parliament,’ intent of Conservative government, raised in value for signal court hearings

TORONTO—Oral arguments over the CRTC’s power to implement a value for signal regime wrapped up at the Federal Court of Appeal Tuesday as broadcasters and cable and satellite distributors argued about the “will of Parliament” on the issue. Kent Thomsom, counsel with Davies Ward Phillips & Vineberg LLP representing distributor Shaw Communications Inc., told the court Tuesday the CRTC overstepped its bounds and defied the will of the government when it issued its value for signal decision in March of this year. Thomson said that when the Conservative government asked the CRTC to study the issue of value for signal in a cabinet direction in September 2009, it did not ask the commission to make a regulatory decision. The government had only asked the CRTC to study the issue and its potential impact on consumers, and report its findings to cabinet. “The government itself was looking into it, a study in this respect,” Thomson said. “It cannot have intended to confer jurisdiction upon the CRTC .” Thomson added that although the commission issued its report to cabinet, it came a day after the CRTC regulatory decision on value for signal. The commission “somehow transformed an invitation to report” from the government into “an invitation to legislate,” Thomson said. In Federal Court of Appeal hearings on Monday and Tuesday, broadcasters and distributors argued whether the CRTC has the jurisdiction to implement the value for signal regime decision it issued in March. The CRTC referred the question of its jurisdictional authority to the court for a ruling. The proposed regime would give over-the-air broadcasters the right to negotiate value for the carriage of their signals with cable and satellite providers. In the event that negotiations failed, broadcasters would have the power to pull or “delete” their programming from distributors. Distributors are arguing before the court that this is not within the CRTC’s jurisdiction under the Broadcasting Act because it effectively creates a new entitlement to copyright under the Copyright Act. But they are also arguing that Parliament, nor the government, ever intended to give broadcasters a retransmission right for free, over-the-air signals. Relying on reports from Parliament, the government or the communications policy community dating back to the early 1970s, Thomson argued the government and Parliament has viewed the issue as one of copyright policy, not broadcasting, and that they have repeatedly taken the position that distributors should not pay for the retransmission of free, over-the-air signals. “Parliament has steadfastly refused to implement the very form of retransmission regime that the CRTC now seeks to implement,” he said. Lawyers for the distributors were sifting through the historical record, trying to put their finger on the “will of Parliament”—despite the federal government’s silence in the proceeding. On two occasions Tuesday Justice Karen Sharlow asked lawyers presenting arguments why the government, or the attorney general, is silent in the proceeding. The attorney general was invited to add its comments, but did not submit anything or volunteer representation at the hearing. Lawyers did not have full answers to the question, but Gerald Kerr-Wilson, a partner with Fasken Martineau, representing broadcasting distributors Rogers Communications and Telus Corp., said it’s not inappropriate for the government to stay out of the proceeding and let the court come to its decision. The government can wait out the decision and has powers under the Broadcasting Act to direct the CRTC not to implement the regime, he added. Kerr-Wilson also presented evidence to the court showing that, over the past eight years, Canada’s position at the World Intellectual Property Organization’s (WIPO) Standing Committee on Copyright and Related Rights has not supported a new right for free, over-the-air broadcasting signals—particularly during talks at WIPO about the creation of a new broadcasting treaty. “It has not wavered from that position since these deliberations began about a decade ago,” Kerr-Wilson said of the government. It’s not clear what weight the court will give to arguments about the will of Parliament and the federal government, but statutes and jurisprudence are generally given more weight than legislative histories or evidence about the intent of Parliament. The broadcasters argue the will of Parliament should be given limited weight because it is not the primary source for determining the issue before the court—which is the CRTC’s jurisdiction. They add that the government’s silence on the issue does not limit the powers of the CRTC, which they say are clear and broad under the Broadcasting Act. “You should ignore, for the purpose of legal determinations, all the sound and fury you’ve got about, ‘this isn’t Canada’s position,’ and ‘Canada would be shocked’ and ‘Canada would be embarrassed to find that the CRTC thought they had jurisdiction,’” Benjamin Zarnett, a partner with Goodmans LLP representing broadcasters CTV Inc., V Interactions Inc. and the Newfoundland Broadcasting Co., told the court Tuesday. “In my submission, all that just falls flat.” Thomson also told the court Tuesday the CRTC’s proposed value for signal regime is “not tinkering by the CRTC. This is rewriting the landscape.” He said that by his calculations the collective fees that would flow from distributors to broadcasters as a result of the regime is “in the range of hundreds of millions if not billions of dollars.” But Zarnett said Thomson incorrectly suggested that “the sky will fall” and “all sorts of bad things” will happen. “He wasn’t talking about bad things for everyone,” Zarnett said. “He wrapped himself in the flag of the Canadian public when he said that, rather than the narrow interests of the board of directors of his client.” Justice Sharlow, who asked the bulk of the questions from the bench Monday and Tuesday, at one point suggested that it is within the CRTC’s mandate to move wealth from one element in the broadcasting system to another. But Sharlow questioned how distributors would respond if the CRTC instead told them to comply with a fee for carriage regime under threat of losing their licences as opposed to the threat of blacked out signals from broadcasters. “There’re two elements here. There’s the fee, or money going from the BDU to the broadcaster. That’s one element. The other element is the right to turn off the signal. Those are the two things your clients find offensive?” she asked Kerr-Wilson. “They both sound offensive, yes,” Kerr-Wilson said to laughs in the courtroom. Kerr-Wilson added that simply moving wealth around is different from moving wealth in a way that impacts the retransmission regime under the Copyright Act. The CRTC requested an expedited proceeding and a decision could be issued as early as this fall. sdoyle@thewirereport.ca

‘Will of Parliament,’ intent of Conservative government, raised in value for signal court hearings

Broadcast | September 15, 2010

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