ARCHIVED -  Decision CRTC 97-576

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Decision

Ottawa, 8 October 1997
Decision CRTC 97-576
ExpressVu Inc., AlphaStar Canada Inc., and Star Choice Television Network Incorporated
Across Canada - 199703609 - 199703749 - 199704937
Proposed licence amendments affecting the program deletion and substitution requirements of DTH satellite distribution undertakings - Approved or Approved in part
1.  In Public Notice CRTC 1997-60 dated 16 May 1997, the Commission announced applications by ExpressVu Inc. (ExpressVu), AlphaStar Canada Inc. (AlphaStar) and Star Choice Television Network Incorporated (Star Choice) requesting amendments to the licences for their respective direct-to-home (DTH) satellite distribution undertakings. ExpressVu, AlphaStar and Star Choice asked the Commission to relieve them of their conditions of licence requiring them to carry out the simultaneous and non-simultaneous deletion of identical programs. In addition, Star Choice requested an amendment to its condition of licence requiring it to perform simultaneous substitution of identical programs.
2.  The Commission approves in part the requests by ExpressVu, AlphaStar and Star Choice to be relieved of their respective conditions of licence requiring them to carry out simultaneous and non-simultaneous deletion of identical programs, by suspending the application of these conditions for the time periods specified below.
ExpressVu
3.  The Commission hereby amends ExpressVu's licence by adding the following paragraphs to its condition of licence 4:
e)  The application of the condition of licence specified in 4b) will be suspended from the date of this decision until 8 April 1998;
f)  The application of the condition of licence specified in 4c) will be suspended from the date of this decision until 31 December 1998.
AlphaStar
4.  The Commission hereby amends AlphaStar's licence by adding the following paragraph to its condition of licence 4:
d)  The application of the condition of licence specified in 4b)ii) will be suspended from the date of this decision until 8 April 1998;
5.  The Commission amends AlphaStar's licence by adding the following paragraph to its condition of licence 5:
d)  The application of the condition of licence specified in 5b) will be suspended from the date of this decision until 31 December 1998.
Star  Choice
6.  The Commission approves Star Choice's request to amend its condition of licence 4b)i) regarding simultaneous substitution of identical programs so that, henceforth, this requirement shall only apply when both the non-Canadian television programming service and the Canadian television programming service originate from the same up-link centre. Star Choice's amended condition 4 reads as follows:
4.  a) For the purpose of this condition, the term "identical" shall have the same meaning as that set out in section 2 of the cable regulations.
b)  Where the licensee receives, at least seven days before the date on which the programming service is broadcast, a written request for substitution or deletion from the operator of a licensed Canadian television programming under-taking, the licensee shall
i)  delete a non-Canadian television programming service and sub-stitute the identical programming service of the Canadian television programming undertaking whose signal is also distributed by the licensee, provided that both the non-Canadian television programming service and the Canadian television programming service originate from the same up-link centre; and
ii)  delete a programming service that is identical to that of the Canadian television programming undertaking and that is receivable by subcribers located within the grade B contour of the Canadian television programming undertaking.
c)  The licensee may discontinue a deletion and/or substitution made pursuant to paragraph b) where the licensee verifies that the programming service in respect of which the deletion or substitution is made is not, or is no longer, identical.
7.  The Commission hereby amends Star Choice's licence by adding the following paragraph to its condition of licence 4:
d)  The application of the condition of licence specified in 4b)ii) will be suspended from the date of this decision until 8 April 1998.
8.  The Commission amends Star Choice's licence by adding the following paragraph to its condition of licence 5:
d)  The application of the condition of licence specified in 5b) will be suspended from the date of this decision until 31 December 1998.
Background
9.  In Public Notice CRTC 1995-217 introducing the decisions authorizing new DTH satellite distribution undertakings, the Commission explained its reasons for imposing conditions of licence requiring program deletion and substitution by the licensees. Specifically, the Commission stated:
 ... the protection of program rights purchased by Canadian television programming undertakings is fundamental to maintaining the integrity of the Canadian rights market, and to protecting the advertising base of local and regional television stations so that they may meet their commitments to Canadian programming.
10.  The Commission considered that such conditions would "act to support the distribution by DTH undertakings of more Canadian programming services".
11.  In Public Notice CRTC 1995-217, the Commission noted the discussions between some DTH distribution applicants and the Canadian Association of Broadcasters (CAB) concerning alternative measures that could be used to compensate or protect local and regional program rights and advertising revenues. The Commission stated that it would accept alternatives to program deletion and substitution requirements that have been mutually agreed upon by all parties.
12.  In response to requests by the CAB and individual broadcasters, the Commission, in Public Notice CRTC 1997-7, announced a public process to consider advanced substitution measures, including non-simultaneous substitution, and to assess the merits and feasibility of program deletion. The CAB subsequently asked the Commission to defer the advanced substitution proceeding, claiming that each of the options proposed in Public Notice CRTC 1997-7 was subject to "severe limitations" and that this issue should be considered in the context of a broader proceeding on Canadian programming. The Commission, thereafter, deferred indefinitely the advanced substitution proceeding (Public Notice CRTC 1997-7-2).
The applicants' arguments
13.  The applicants argued that advanced substitution measures, namely non-simultaneous deletion, were imposed on DTH undertakings in 1995 in anticipation that similar requirements would later be applied to cable and other terrestrial distribution undertakings following the advanced substitution proceeding. They pointed out that, in view of the indefinite postponement of this proceeding, DTH licensees are the only distribution undertakings subject to the programming deletion requirements. The applicants argued that this is contrary to the Commission's policy to provide fair and equitable treatment to all distributors.
14.  In explaining their position, the applicants contended that the program deletion required by their respective conditions of licence would cause extensive blackouts in most markets across Canada and could result in the removal of up to 100% of the programming from any one channel during the prime time broadcast hours. They argued that this would render their services unattractive to consumers and uncompetitive with the services offered by other distributors. In particular, the applicants expressed concern that they would be unable to compete with the well-established Canadian cable industry and with U.S. direct broadcast satellite services operating in the "grey market". The applicants further claimed that the overall effect of these program deletion requirements would hinder the launch of Canadian DTH services.
Interventions
15.  The Commission received 23 interventions to these applications: eight in support from equipment distributors and Telesat Canada, 14 expressing opposition by broadcasters and representatives of the cable industry, and one from the Specialty and Premium Television Association (SPTV) offering comments on the proposals.
16.  In its comments, the SPTV stated that all broadcast distribution undertakings should be subject to the same requirements and that the Commission should continue to require the applicants to perform simultaneous substitution of programming.
17.  The opposing interveners asked the Commission to maintain the requirement that DTH licensees carry out simultaneous substitution and program deletion. While the broadcasters acknowledged that there may be a need to limit program deletion, they claimed that the parties involved have not made any serious attempts to negotiate. They asked the Commission to encourage the parties to negotiate an effective agreement within a prescribed time. Alternatively, they suggested that, rather than requiring program deletion, the Commission may wish to impose a mandatory compensation fee on DTH licensees. Representatives of the cable industry argued that DTH licensees should be obliged to protect and promote viewership to Canadian signals, particularly local signals, to the same extent required of cable distributors. In this context, they stated that DTH licensees should develop concrete proposals explaining how they would ensure local Canadian stations would be protected by measures other than DTH program deletion.
18.  In response to the interventions, the applicants stated, among other things, that they had held negotiations with the CAB on these issues and that they are willing to pursue further negotiations. The applicants also asked the Commission to suspend the applicability of these conditions until it has decided, following a public process, upon appropriate advanced substitution measures.
The Commission's findings
19.  Having considered all of the arguments presented by the applicants and the interveners, the Commission considers that it is appropriate to relieve ExpressVu, AlphaStar and Star Choice from the requirements of their respective conditions of licence requiring simultaneous deletion of identical programs for a period of six months, and from those requiring the non-simultaneous deletion of identical programs until 31 December 1998. The Commission expects all parties involved in this issue to use this time to negotiate and reach an agreement on appropriate mechanisms that could be employed by DTH distribution undertakings to protect the program rights and advertising base of Canadian television stations.
This decision is to be appended to each licence.
Laura M. Talbot-Allan
Secretary General
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