AFTER A LONG CAREER in telecom in Canada, Len Katz calls his time at the CRTC the best years of his career.
The 61-year-old former vice-chairman, telecom (and former Bell Canada and Rogers executive) is spending some time now taking a deep breath, a bit of a break, after seven-plus extraordinarily busy years at the Commission. While he admits some boredom has already set in since leaving last month, he is happy to be able to spend extra time with family before deciding what to do next.
Despite some rumours in the summer, his health is good after recovering from a mild heart attack in June that happened in Calgary on his way to the Banff Media Fest. He had a stent put in, is losing a few pounds and hoping for new career challenges, too.
While former CRTC chairman Konrad von Finckenstein rightly faced the spotlight’s glare and felt its heat most from 2007-12, Katz – his lieutenant who took the acting chair role for some months in 2012 when von Finckenstein left in January – sat right alongside his boss at the most contentious public proceedings. The vice-chair would often getting into the technical nitty-gritty with applicants, helping the chair navigate down some of the roughest regulatory roads the Canadian telecom and broadcast industry has ever come across. It was never dull – and never easy – and will continue to present daunting challenges to the new chair, too.
Katz (right) recently sat down with Cartt.ca founder Greg O’Brien for a chat. What follows is an edited transcript.
Greg O’Brien: You haven’t been gone long, so what are you going to be up to now?
Len Katz: Well, I’m going to spend time reminiscing about the good times that I had at the Commission. I’ll be taking some time off over winter and traveling, spending time with the family. When I get back in the spring, I’ll look at trying to occupy myself with some not-for-profit initiatives, and perhaps somewhere in the future, getting on a couple of boards of directors as well.
GOB: So you were at Bell, you were at Rogers and you were at the Commission as the executive director for two years before you were vice-chair telecom.
LK: I was almost three years executive director of telecom and broadcasting towards the latter part. Somewhere in there, before I joined the CRTC, I also ran a small business on my own called Digimerge (a security business)l for two years.
GOB: I have a list of all that happened over your five year term, and a lot of it is acronyms. UBB, ITMP, DNCL, VFS, FFC, DOV, VI, Obligation to serve, foreign ownership, Shaw, and CanWest… Would you have taken the job if you knew it was going to be quite that busy?
LK: To be honest, I think those seven-and-a-half years that I had been at the Commission have been the most interesting of my entire career. I find public policy, being able to look at issues from a public perspective, fascinating. When I worked for industry, whether it was Bell or Rogers or my own company, you come up with a storyline that is in the best interest of the company you represent. You perfect that, and then you believe in it whole heartedly and you think it’s the only real logical position that one can take.
When you come to the government, and every single party before you has got an equally logical perspective, albeit self-serving as well, and the role that the Commission has to take is what’s best for Canada, what’s best for the consumers of Canada, what’s best for business in Canada as well. It really is a very challenging position to have and to be in. But it’s also a very rewarding one because you know at the end of the day you’re actually making change, and that’s exciting.
GOB: What was it like sitting in judgment of all these things and making these decisions? What’s the feeling like when you’re in there and you’ve got to deal with all of those hundreds of different competing points of view per issue?
LK: I worked in business, so I can put myself in the shoes of the people who appeared before me because I was in those shoes in the past as well. So, you can assess not just the credibility, because everybody’s credible when they come before you, but the intense-ness of the need as well. Quite often the Commission’s role is not just to create a win-lose or a lose-win proposition but a win-win proposition, and that’s the most difficult part of the position that the commissioners are put in – to try and figure out a way of enhancing benefits to consumers while at the same time respecting the fact that businesses need to innovate, to invest and to see an opportunity to get a return on that investment as well.
GOB: Well, that might boil down to what people often say: “If everybody’s angry, you must have gotten the decision right.”
LK: Well, if you take that approach, I’m not sure the Astral-Bell decision is necessarily a win-win there, because I don’t think everybody is equally angry there.
GOB: No, I guess not. What would you say is the best part of the job? And I’m talking as vice-chair, your most recent job.
LK: The best part of the job was working with the people. I really believe that the staff, the fellow commissioners that I worked with, were all passionate about trying to come up with the right solution for the right issue. And unlike business which is always self-serving – yes, there’s a social composition of every business, but for the most part it’s self-serving, trying to create value for shareholders or investors as well. In the CRTC, the commissioners and the staff don’t have any vested interest here at all. What they’re trying to do is find the right solution to meet the needs of Canadians. And they are, themselves, Canadians who will benefit or not benefit by the decisions that are made as well. I think the most fascinating part of it is being able to work with these people who are all dedicated employees, and working with them to decisions that we all will have to live with at the end of the day.
GOB: In your time there, can you characterize anything as the best decision or the one you’re most happy with?
LK: It’s going to be one that’ll surprise a lot of people, but (former CRTC chairman) Konrad (von Finckenstein) asked me to chair the accessibility hearing back in 2008. And it was a hearing that actually brought broadcasting and telecom together under one roof with the social obligation of trying to make sure that all Canadians, disabled or not, have got access to technology, to services, to content, on as equivalent a basis as possible. And we had a very enlightened hearing. It went on for almost two weeks. We had people who were disabled from a sight perspective, from a hearing perspective, from a cognitive perspective.
We had simultaneous signing as well. We had people coming in with seeing eye dogs. We had remote process from the regional offices as well. And it was an art to put it all together, but I think at the end of the day, the decision was the most rewarding part of it. It actually created an environment where all Canadians, particularly those with disabilities, will have access and already have received access to services that they were not able to get in those days.
So it was more of a social hearing, as opposed to a merger or acquisition that are always the exciting ones that people look at and say these are big multi-billion dollar hearings. I think the ones that are more human play an equal, if not a more important role sometimes in the role of the commissioners as well, that people just don’t realize.
GOB: Was there a worst part of the job?
LK: There’s never a worst part of the job. There are certainly some decisions that were very trying decisions. The UBB one comes to mind as a difficult and challenging decision, which I think opened the door up to more competition in broadband services, and was a very unique solution to the ultimate decision that the Commission came up with. UBB was the initial decision and then ultimately, after the government intervened, we came up with the capacity building model as well where we actually created a virtual competitor and simply replicating, not a wholesale regime, but a virtual competitor who actually has access to the full pipe, 7/24, 365 days – and it’s their job now to maximize the return on that pipe that they now have access to, even though they may not own it themselves.
GOB: Although there is still some of the process before the commission in terms of rates and…
LK: And I will watch that eagerly from the sidelines.
GOB: Is there any decision that you made or that the Commission made over those years – where you say, “man I wish I had a chance to do that one again?”
LK: I don’t think it’s the decisions, I think it’s the timelines. One of the big issues that the Commission has always faced is time, and it’s important for the public and the commissioners to realize that time is of the utmost of importance as technology evolves as quickly as it does. The longer we wait to make a ruling, more technology has evolved, the roles of the players have changed as well. And ultimately the decision that you think you’re making is based on stale, dated information.
When we first came out and said that user based billing was a concept that we thought made sense, it was before broadband was used for video provision. In those days, we were looking at data and provision of data over the internet. But there was no full motion, there was no content being downloaded
GOB: The majority were still surfing and emailing and that was basically it.
LK: Yes, and so in those days when we looked at this regime, it was in that microcosm. Then it took us probably two years – and we’re still looking at the byproduct of all the review and varies and everything else as well – but in that time, technology has changed the application of these services so dramatically to a point now where the speed, the throughput, the technology is so vastly different that one almost has to go back and ask what was the intent of the Commission when they first looked at user based billing as a concept, and is it still applicable today in this environment with these technologies that are before us? So I think it’s important that we recognize that time is a major, major obstacle.
GOB: Looking back at the way the industry has developed and the way it is now, it almost seems impossible to apply regulations to a telecom and media industry that changes by the hour.
LK: Well, I think the difference is what you regulate and what you legislate, and I think you can regulate an awful lot. When it comes to legislation, by the time you actually enact new legislation – process and government doesn’t happen overnight – much of what you were contemplating seeing changes to legislation, it may already be time sensitive and be obsolete. And that’s why I think it’s more important to work through the regulatory process than it is the legislative process on a lot of these issues.
GOB: Changing legislation is much harder than a policy change.
LK: Absolutely.
GOB: What was it like working with Konrad?
LK: It was an experience. But working with Charles Dalfen was an equal experience and I have no doubt that working with the current chairman, Jean-Pierre Blais, will be equally challenging as well. I mean, these are all people who have got an idea of what they’d like to see happen. Obviously during the hiring process, they shared with the powers that be what their vision is and obviously it’s been accepted early on. Like everything else, the new chairman comes in with a vision that has got some degree of government support behind it as well, or else they wouldn’t have appointed him. And then the actions of the new chairman and the Commission in total will be measured, not just by government, but by the general public as well. Then he or she are on their own after that. They live and die by the decisions that they make.
GOB: How would you characterize the differences between Mr. Dalfen and Mr. von Finckenstein and working for the both of them?
LK: I think there was a radical difference. Charles Dalfen was a lawyer, as is Konrad, though Charles was a perfectionist and sought unanimity to the extent he could. Konrad, coming from more of a judicial perspective where he had to deal with an awful lot of appeals as a judge, was looking more for getting consensus to the extent he could, but he wasn’t looking for unanimity. If he felt that the commissioners, by and large, agreed with a certain direction, then he was prepared to pursue that direction without compromising, necessarily, in order to get everybody on board. And so there was a big difference there from that perspective with them.
There was a bit more sense of urgency when Konrad came in. Even before Konrad came in, Charles Dalfen recognized there was a need as we move towards a deregulated environment in telecom to get deregulation going a lot faster as well, so the ball started in the latter part of Charles’s term, but when Konrad came in, I mean it took on another speed.
GOB: It sure did. There was a such a stretch of policy hearings and other hearings. It just seemed to be non-stop. It seemed to be a lot of work.
LK: Well, I think this is another indication of the style of the chairperson. Konrad came in from the bench and was used to holding an awful lot of hearings. He spent probably the better part of a week on the bench in front of participants pleading their cases, so he believed in that model. Charles was never a judge, so he came at it from a different perspective completely and there were fewer public hearings in those days than there were under Konrad.
GOB: I’m curious what commissioners really think when a broadcasting or telecom executive slams the Commission. And I’m thinking right now about the way Moses Znaimer decried the Toronto radio decision, which was your last hearing. When you hear someone who’s bid wasn’t accepted really take a hard swing at the Commission, how do commissioners really react when you’re inside the Gatineau HQ?
LK: Entrepreneurs, and Moses is one of many, are very passionate in what they do. These people are also artists and creators, and one may say that technology companies and telecom companies are more bricks and mortar and content broadcasting is more content oriented, but the reality is all these senior leaders are very passionate in what they do and they have a vision as well.
So, they’re just responding at the time to the decision that was taken and as I said earlier, every party before the Commission thinks they’ve got a winning proposal, so when suddenly they don’t win, they feel hard done by and they react as they do. We don’t take it personally at all. People’s public statements are done for a number of reasons, they’re not personal at all, they’re business oriented, and we tend to separate the business component from the personal component.
GOB: But there’s always been the prevailing opinion that “you don’t want to say anything to piss off the Commission.” So you’ve got to play it straight, play it on an even keel and don’t get too angry because you’ll be back in front of them another day.
LK: I can remember hearings where Jim Shaw and Konrad had a tête-à-tête about bringing the A team or the B team to some of these proceedings. Again, a lot of that was not only tongue in cheek, it was also very respectful, but at the same time professional. If there are going to be hearings, then the parties want to have the most appropriate people to either hear it or to represent the companies, if it’s to be taken seriously. Jim may have gone a bit too far but Konrad took it for what it was and carried it the rest of the way.
And I’m still not sure whether Michael Hennessy, when he said “bite me” was referring to me or to someone behind him. He claims to this day that it was someone behind him, but I’m still not quite sure.
GOB: He’s never going to live that one down… I’m curious of what your take is on the future of this industry in Canada. Can our industry, the way it’s structured, survive the changes being heaped upon us by the global shifts in communications?
LK: This goes back to what I said earlier about legislation and regulation. I believe that notwithstanding certain people’s views that there may be benefits to updating our legislation, I think an awful lot of what Canada can do going forward can be accomplished through regulation. I still wonder whether the broadcasting system needs to have such a control on the ownership of our broadcasting assets in order to protect our culture and our content.
If, in fact, what we’d like to see is more Canadian content broadcast outside of Canada in order to make it much more valuable as well, one would think that if we create regulations where culture is paramount regardless of who owns the asset, that product will be put on with Canadian content, Canadian personalities, Canadian equipment, Canadian manpower and womanpower. If it’s owned by a third party outside of Canada, that may only accelerate the ability to showcase those products on other broadcasting systems, because once they’re made and owned by, for example, an American company, why wouldn’t that company find space for it on a U.S. broadcasting system if it’s as good as we think it is.
GOB: So if Comcast were to own Shaw, for example, there’d be a more direct line for shows being made for and aired on Global to move to NBC. Is that what you’re getting at?
LK: That’s right. And at the same time, the requirements and the obligations that are imposed upon Shaw would be transferred to Comcast… so there would still be the same level of Canadian content required, it just may be owned by a non-Canadian. So I think there’s ways of dealing with those issues that would actually help and benefit the Canadian content side and cultural side without necessarily even changing the legislation too dramatically.
GOB: Do you think that would open up – for example, Comcast has an ownership in Hulu and has been pretty innovative on the Xfinity side – or would it more easily bring some of the new media developments north of the border more quickly?
LK: One would hope it would work both ways. You’d also get an awful lot of Canadian innovators being able to bring their technology and their innovations to the U.S. because that ownership structure would allow for a lot more opportunities for Canadian companies and Canadian personalities to showcase their innovation as well, so then the artists can actually stay in Canada.
GOB: But you don’t worry about the hollowing out, as the cliché goes, of the industry here where all of the decisions are then taken elsewhere?
LK: Again, to the extent that there are regulations in place, those would protect against hollowing out. It’s almost analogous to whatever’s in the ground in Canada at the end of the day stays in Canada. We can always protect what we have in this country because it sits within our borders. It’s how you regulate it and how you oversee it as well. Now, we don’t have much in the way of penalties or punitive measures in order to protect ourselves, and maybe that’s an area that needs to be looked at prior to opening it up. That would protect the ability for Canadians to continue to have Canadian culture, Canadian content, showcased in Canada.
GOB: That speaks to the regulated side of it. But how does the Regulator deal with Amazon, Apple, Facebook and Netflix? Do they need to be regulated or is there a way to get them to contribute to the Canada Media Fund or do you just still keep leaving those guys alone?
LK: It’s almost like satellite piracy. At what point in time does it become invasive to the extent that it actually affects the quality of what you’re trying to protect. The Commission last year said at that point in time that the Netflixes of the world have not eroded or made any major gains at the expense of the current broadcasting system.
GOB: Yes, the 11 million hours Canadians are watching Netflix is lots, but still not very big in terms of the total number of hours.
LK: And it hasn’t eroded what they’re watching on the classical linear broadcasting system as well. They’re over and above, so while that’s going on, there’s no need, necessarily, to disrupt what you already have. If, in fact, an awful lot of what Netflix is garnering is actually at the expense of the broadcasting system, then there needs to be more of a view to how do you protect the system that you have or can you continue to protect the system that you have. But at this point in time, the Commission has yet to believe that there is an erosion that is going to impact the system as we know it today.
GOB: What do you think of the consumer focus of our new CRTC chairman?
LK: Well, the Commission has always had a consumer focus. I think the issue here is this one decision that the chairman and the Commission has come down with is clearly focused on protecting the consumer. I think the role of the CRTC has been paramount to represent the needs of the consumer in the absence of a free market, a competitive market, but at the same time there needs to be recognition of the need to innovate and the need to invest as well. I think the government historically has always said that the only way Canada is going to continue to progress, productivity-wise, is through investment and innovation.
But if one continues to scuttle the ability for businesses to get a return on their investment, there’s a high risk consumers will pay the price for that as well. If all we want to do is reduce prices in Canada, it’s simple to do. You turn the investment into a cash cow. You stop investing. Prices can come down and if that’s all we want, you’ve accomplished something. The reality is I don’t believe this country is looking towards just lowering prices. I believe this country wants to see increased productivity, they want to see investment, they want to see innovation – and businesses aren’t going to invest or innovate without seeing an opportunity to get a return on that investment. It’s risk capital and risk capital requires a return as well, so there’s got to be that balancing as well.
GOB: So does (the Bell-Astral) decision scare anybody away from investing in this business?
LK: Well, that decision was based on the information and the evidence of that hearing. I think as we see more decisions coming down with this new chairman, one would be able to decide whether there is more of an imbalance continuing, or whether this was just the facts of this case that drove this decision.
GOB: As I’ve already written, going through all the material, seeing the interveners, at the hearing, seeing the back and forth of the replies and everything, I had in my head, this could be denied. But I never brought myself to fully believe it. I never actually said, “yeah it’s going to be denied.”
LK: I think if there’s one message for the industry it’s you don’t want to be the first major proceeding of a new chairperson, because the way things are done may simply change under your feet. That could be what’s happened here as well, I don’t know since I wasn’t part of this proceeding at all. But clearly from what I read, this chairman and this Commission believes that the evidence that you come in with is what they evaluate you on. The opportunity to negotiate from the stand, which was one of the things that we have done in the past under chairman von Finckenstein is no longer something that this chairman wants to necessarily buy into, and so the game will change depending on who the chairperson is and who the commissioners are on the panel as well.
GOB: There were two main questions that were asked all week long by Mr. Blais. One was where do you see this industry in five years, which is the end of his term. And the other was to ask how is this acquisition good for Canadian consumers, Canadian citizens? And those kept coming up. That said to me he wasn’t getting a good enough answer for how it’s good for Canadian consumers – and also that he didn’t want to have his first decision hamstring him or potentially wreck things for the whole rest of his term.
LK: I don’t think you’re wrong in what you’re saying. I believe that this chairman’s views will become more clear as time goes on and to the extent that they’re winning views will be dictated by the public and by government policy… These are not easy decisions by any stretch: for cabinet, for the Commission, even for the general public, because what one may think is good in the short term, may not necessarily be the right answer in the long term. And, you can only look at these things as a Monday morning quarterback after the fact and decide what you should have done had you had full knowledge – and you never make decisions with full knowledge.
