Lift foreign ownership and control rules for broadcasting, Katz says

Leonard Katz, the CRTC's former vice-chair of telecom, says the federal government should step back from legislating Canadian control of the country's telecom and broadcasting systems. Katz, 61, whose last day with the commission was Oct. 12 following a five-year term as the vice-chair, said in a phone interview with The Wire Report that it's no longer necessary to be concerned about Canadian ownership and control requirements of broadcasting and telecom systems. In broadcasting, the Cancon regulatory details can be sorted out by regulators, he said, adding that there are plenty of opportunities for Canadian productions in the unregulated online world. Removing the broadcasting foreign ownership restrictions would draw American or international players, he said, creating more exposure for Canadian content and, in turn, foreign investment in high-quality Canadian programming for viewing around the world. Prior to his appointment as vice-chair, Katz worked at the CRTC as executive director of broadcasting and telecommunications, and before that, for 30 years in the private sector, which included senior positions with Digimerge Technologies and Rogers Communications Inc. In January 2012, Katz was named interim chair of the CRTC while the government searched for a replacement for former chair Konrad von Finckenstein. New Chair Jean-Pierre Blais took the chair's position in June. Katz said he intends to spend the winter somewhere warm, such as Palm Springs, Calif., or Florida's Gulf Coast, before finalizing his next steps, which will probably involve some volunteer board positions. The following interview has been edited for length and style. What are your plans, for now? At this point in time I have no plans to pursue any job opportunities. I'm going to take the winter off to do some travelling and spend time with the family. Probably in the spring, when I'm back, I'll slowly get back into things, doing some non-profit work and get on a couple of boards. So you're not quite planning to retire? I'm not sure that I want to get back into full-time work at this point. As you're probably aware, I had a health scare back in June. I'm fine now, and the term ended at a fairly appropriate time for me, the commission and my family. Did you foresee the kind of reaction received by the CRTC in its denial of the Bell-Astral acquisition? The reaction appears to be ... that this commission is taking a different approach to regulation and to the industry. Notwithstanding the decision, I don't think the commission at this stage has made any pronouncement in a change in direction. The commission has always been consumer-oriented. That's what its mandate was. Whether it was the Northwestel decision that looked at creating more competition and Internet services in the Far North, or whether it was accessibility issues for those who have physical or other types of disabilities, the commission always looked out for consumers. The big controversy with regard to what was then the UBB decision, now the capacity based billing decision, was always in the interest of consumers. With the decision rendered back in 2009, the commission made a finding that there wasn't enough competition to protect consumers with just two facility based carriers—a cable company and a telephone company—in each market. There needed to be more competition, so we created the wholesale regime for the Internet in order to protect consumers. It wasn't done for any other reason than to provide consumers with more choice. What do you think of Bell's strategy to ask cabinet for a policy direction to the CRTC ? With this decision or any decision, parties that come on the losing end of an application will look for any scenario that might allow them to rekindle the flame that appears to have gone out. They've obviously hired some very knowledgeable legal counsel and they've been given some alternatives. Bell could also come back to the CRTC with another application with changes to the deal … and they could propose divesting some assets. I'm sure the commission would accept any application and process it like they would fresh . But again, they've established what the rules of the game are, and if Bell adheres to them, then I'm sure they would get a favourable response. What do you think of the suggestion that the government may be planning to reduce the size of the commission? Michel Morin's national commissioner position wasn't advertised . That's up to the government. The Government of Canada has taken a clear position with regard to the public service and the need to thin out the ranks in government in general. I would think that agencies of government would be no different, whether it's at the commission level or staff level. What was one of your most difficult decisions while at the CRTC? The ones that are always difficult are the ones where you stop service providers from providing service. An obvious one, notwithstanding that I was the vice-chair of telecom, was the representation that was made to continue to the Ryerson radio licence in Toronto. I chaired that, and we actually pulled the licence from them. Those are difficult decisions because you're actually pulling someone off the air or not allowing them to go back on the air. Were you ready to leave the CRTC or in some way do you wish you stayed on for another term? My term was over, and I had actually spent two and a half years, prior to my appointment as vice-chair, working as chief of staff in the CRTC reporting to the chairman, so I spent the better part of eight years working for the CRTC, and commuting from Toronto. Toronto's my home. So after seven and a half, eight years, you start to look back and say, “Maybe it's time to move on.” So, that's how things worked their way to where I am today. In your seven or eight years with the CRTC, how did you see its function change? The function changed in two regards. One is there is less of a need to regulate at the retail level, particularly in telecom, and the commission was also mandated to take on new responsibilities with regards to the do-not-call registry and the spam legislation. There's less of a need to regulate at the consumer end and more to promote competition at the input side as opposed to the output side. The output side is what the consumer sees. The other is a move from an ex ante regime, where parties cannot set prices without the commission's approval, to an ex post regime, where the commission rules based on discrimination or undue preference, which you're seeing more of on the broadcasting side right now. What do you see as the top issues facing the CRTC over the next five years? On the telecom side, it's probably the review of the essential services decision , which will be coming up, and the final resolution of the capacity based billing matter. During the debate last year surrounding over-the-top, online TV services, and whether they should be somehow regulated, can you tell me what your position was? I'll tell you what my position is now. It doesn't matter what it was back then. The reality is that OTT should be seen as an opportunity, not as a threat or a risk. We say that Canadians have a small market for which to create programming and content, so the cost of that product is much higher than it would be if you had an audience in the U.S. or internationally. OTT should be seen as an opportunity to promote Canadian content internationally. Things can be done through regulation. I believe that if we changed the regulatory environment and continued to promote Canadian content, but removed the foreign ownership obligations, you will get foreigners, whether Americans or international players, investing in Canadian content and the Canadian broadcasting system. see how good the quality of our programming is and the number of good Canadian programs out there in the marketplace, like Flashpoint and Rookie Blue, Saving Hope. The more exposure international broadcasting systems and international entrepreneurs have to the Canadian system, the more likely that Canadian content will get exposed to those markets … That's what we need, more exposure. There's an opportunity there. If we continue to regulate without having this legislative burden over the system I think Canadians will be much better off and I think our Canadian content will prove itself internationally. As long as we leave the regulations in place to protect the creation of Canadian content and the mandatory need for 40 per cent or 30 per cent Canadian content, the ownership doesn't really matter. Is there any last word you'd like to put out there for all our readers in industry and government? The issue is less protectionism as we move toward a more open Internet philosophy, and more control at the regulation end without legislating ownership and control matters. I think the government is probably doing a very good job handling the digital economy. Some people are saying there is no strategy out there, but I think there actually is a strategy, and it's to promote more players in the marketplace and let the marketplace answer consumers rather than trying to micromanage the marketplace. The government is doing the right thing. It's creating the environment. allowing more spectrum to be auctioned off, allowing for more players to come in with changing the foreign ownership rules on the telecom side, and giving Canadians more choice and a competitive environment. sdoyle@thewirereport.ca

Lift foreign ownership and control rules for broadcasting, Katz says

Broadcast | November 7, 2012

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Lift foreign ownership and control rules for broadcasting, Katz says

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