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ARCHIVED -  Public Notice CRTC 1999-27

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Public Notice

See also: 1999-27-1

Ottawa, 12 February 1999

Public Notice CRTC 1999-27
Order respecting the distribution of the French-language television service of TVA Group Inc.
Summary
Attached to this Public Notice is the Commission's Order (1999-1) respecting national distribution of the French-language television network, TVA. Consistent with the objective of Decision CRTC 98-488 to increase the availability of French-language television services across Canada, all broadcasting distribution undertakings (BDUs) to which this Order applies must distribute TVA's signal as part of the basic service, effective 1 May 1999.
Background
1.  In Decision CRTC 98-488 dated 29 October 1998, the Commission approved the national distribution of the French-language television service of the TVA Group Inc. (TVA). The Commission stated that Class 1 and Class 2 distribution undertakings (including multipoint distribution system MDS undertakings) as well as direct-to-home (DTH) distribution undertakings would be required to distribute TVA's service. Class 3 distribution undertakings were strongly encouraged to do so.
2.  In that decision, the Commission stated that it was mindful of the importance of the TVA network's contribution to the Canadian broadcasting system, and particularly to the broadcast and promotion of high-quality Canadian programs in all categories. The Commission added that it was persuaded that national distribution of this television service will contribute to promoting Canada's linguistic duality and cultural diversity and will thus further the objectives set out in section 3 of the Broadcasting Act (the Act).
3.  In Public Notice CRTC 1998-115, published the same day, the Commission issued a call for comments on a proposed Order to implement Decision 98-488 pursuant to section 9(1)(h) of the Act. The Commission invited interested parties to submit comments regarding the terms and conditions of the proposed Order.
4.  The Commission received 32 submissions in response to its Public Notice. Some of those submissions did not discuss the terms and conditions of the proposed Order itself, but rather contained comments on Decision 98-488. The Commission did not take those comments into account because they are outside the scope of the process announced in Public Notice 1998-115.
5.  Most of the submissions containing comments on the terms and conditions of the proposed Order were favourable, while a minority were specifically opposed. TVA was granted a right to reply, which it filed on 15 January 1999. The Commission has considered all relevant comments. The main issues raised in the submissions are addressed below.
Commission's jurisdiction
6.  Rogers Cablesystems Limited (Rogers) and Shaw Communications Inc. (Shaw) disputed the proposed exercise of the Commission's powers under section 9(1)(h) of the Act. They relied on two main arguments. First, they stated that the Commission's proposed Order would unilaterally amend the conditions of licence of BDUs and that, pursuant to section 9(1)(c) of the Act, the Commission does not have the jurisdiction to do so during the first five years of a BDU's licence. Second, they submitted that the Commission's proposed Order would be contrary to various provisions of the Broadcasting Distribution Regulations (the regulations).
7.  With respect to the second argument, Rogers submitted that the proposed Order was contrary to sections 3, 17, 18 and 19 of the regulations. For its part, Shaw argued that the proposed Order would have the effect of indirectly amending sections 18 and 19 of the regulations. Shaw questioned the Commission's jurisdiction to proceed in this manner in this case, absent amending the regulations.
8.  In support of its argument, Rogers noted that section 3 of the regulations provides that a BDU:
 shall not distribute programming services except as required or authorized under its licence or these regulations.
9.  Rogers claimed that, given that the Commission's Order would require a BDU to distribute a programming service other than pursuant to its licence or to the regulations, the proposed Order is inconsistent with section 3 of the regulations.
10.  Rogers further argued that the introductory words to sections 17 and 19 "Except as otherwise provided pursuant to a condition of licence...", suggest that, without an amendment to the regulations, the only way the Commission could lawfully mandate the distribution of a signal such as that of TVA would be by a condition of licence, given that it is neither a priority signal referred to in section 17 or an optional signal contemplated by section 19.
11.  Shaw submitted that the Commission's prohibition of the removal of an optional programming service when making room for TVA effectively amends section 19 of the regulations as it transforms what is an optional service under section 19 into a programming service that must be distributed.
12.  Both Rogers and Shaw maintained that the proposed Order is also inconsistent with section 18 of the regulations as it would preclude dropping French-language services currently distributed in anglophone markets, despite such services not having mandatory access status pursuant to section 18.
13.  In its reply, TVA submitted that the proposed Order does not have the effect of amending a condition of licence, and that, in exercising its power under section 9(1)(h) of the Act, the Commission is not required to proceed by condition of licence.
14.  Furthermore, TVA took issue with the relevance of the case law cited by Rogers, noting that section 9(1)(h) was added to the Act in 1991. TVA maintained that section 9(1)(h) confers on the Commission additional powers to those already granted to it with respect to licensing.
15.  TVA submitted that Rogers and Shaw's argument would effectively render section 9(1)(h) meaningless, and would be inconsistent with the clearly expressed intention of Parliament, as evidenced by the wording of the statute and the legislative history. Moreover, TVA submitted that the interpretation proposed by Rogers and Shaw would be inconsistent with the views expressed by various legal authors.
16.  With respect to Rogers and Shaw's second argument, TVA submitted that none of the provisions of the regulations prevents the Commission from making an Order under the Act. If that were the case, TVA maintained that the regulations would be ultra vires, because the Commission cannot, in advance, by regulation, preclude itself from exercising a general power conferred on it by the Act. In TVA's view, that would amount, among other things, to making section 9(1)(h) inoperative.
17.  TVA submitted that the only question that arises is to determine whether the Commission's proposed Order is made consistent with section 9 "in the furtherance of its objects" and permits the achievement of the objectives of the Act. Relying on a number of excerpts from Decision 98-488, TVA submitted that it is clear that the proposed Order is completely in accordance with the Commission's objects and with the achievement of the Act's objectives.
18.  Notwithstanding the arguments presented by Rogers and Shaw, the Commission is satisfied that it has jurisdiction to rely on section 9(1)(h) with respect to the distribution of TVA's programming service on the basic service.
19.  With respect to the argument that section 9(1)(h) should be interpreted subject to section 9(1)(c), the Commission notes that nowhere in the wording of either provision is there support for such an interpretation. Moreover, the Commission agrees with TVA that, if the argument of Rogers and Shaw were to be accepted, it would render the Commission's powers under section 9(1)(h) meaningless. The Commission does not consider that this can reasonably be interpreted as the legislator's purposive intention. The Commission notes that there was no equivalent provision to section 9(1)(h) in the 1968 Broadcasting Act. The interpretation urged by Rogers and Shaw would mean that, in enacting section 9(1)(h), Parliament intended to legislate for essentially no useful purpose. In the Commission's view, this would lead to an absurd result which Parliament cannot be presumed to have intended.
20.  The Commission also notes that the interpretation advocated by Rogers and Shaw would be at variance with various principles of statutory interpretation. In this regard, the Commission notes that section 9(1)(h) specifically addresses the issue of the carriage of programming services by distribution undertakings, in contradistinction to section 9(1)(c) which is of more general application.
21.  Rogers and Shaw also submitted that the Commission does not have jurisdiction to issue the proposed Order because it would be contrary to various sections of the regulations. The Commission considers that it has the jurisdiction to issue such an Order. In this regard, it notes that none of the provisions identified by Rogers and Shaw expressly precludes the exercise of the Commission's powers under section 9(1)(h). Moreover, the Commission agrees with TVA's submission that the interpretation advocated by Rogers and Shaw might result in a regulation operating as an unlawful fettering of the Commission's discretion to exercise its powers pursuant to section 9(1)(h) of the Act.
22.  The Commission also notes that the wording of section 9(1)(h) is very broad. It clearly states that the Commission may, in furtherance of its objects, require a distribution undertaking to carry programming services specified by the Commission on terms and conditions that the Commission deems appropriate. The Commission finds that requiring distribution undertakings to carry TVA's programming service on the basic service furthers the objects of the Act. As noted in Decision 98-488, the Commission finds that such distribution is consistent with section 3(1)(c) of the Act which provides that:
 English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements.
23.  As well, the Commission finds that the exercise of its powers under section 9(1)(h) furthers the various objectives set out in section 3(1)(d) of the Act, including the promotion of Canada's linguistic and cultural diversity. In addition, the Commission finds that the exercise of its powers under section 9(1)(h) with respect to the distribution of TVA's programming service is consistent with section 5(2) of the Act. That section stipulates that the regulation and supervision of the Canadian broadcasting system must be flexible and, in particular:
·  be adaptable to the different characteristics of English and French language broadcasting and the different conditions under which broadcasting undertakings that provide English or French language programming operate; and
·  facilitate the provision of Canadian programs to Canadians.
24.  In light of the above, the Commission is convinced that the legal arguments raised in the BDUs' submissions in this proceeding are not justified. It therefore concludes that it has jurisdiction to exercise its powers under section 9(1)(h) to require the distribution of TVA's programming service on the basic service of BDUs.
 Implementation date
25.  Several interveners, including Rogers, Shaw, Cogeco Câble inc. (Cogeco), Monarch Cablesystems Ltd., Mountain Cablevision Ltd. (Mountain) and Southmount Cable Limited (Southmount) requested that the implementation date for TVA's distribution be delayed from 1 April 1999, as proposed by the Commission, to 1 September 1999. They argued that this would mean lower costs for their undertakings and less inconvenience to their subscribers, because the addition of TVA would coincide with that of the specialty/pay television services authorized in 1996, which are to be introduced by 1 September 1999.
26.  In Decision 98-488, the Commission stated that it was persuaded that the national distribution of TVA would further the objectives set out in the Act and would respond to a long-standing desire on the part of French-speaking communities outside Quebec. The Commission also stated its intention to proceed without delay in order to implement its decision. In its reply, TVA requested that the 1 April implementation date be maintained. TVA pointed out, in particular, that many major social and cultural activities take place in the summer in Francophone communities outside Quebec, and that it planned to broadcast a number of them as part of its commitments to those communities.
27.  The Commission appreciates the concerns raised by the parties, especially with regard to the potential inconvenience for the suscribers. However, after careful consideration, the Commission is satisfied that an early launch would be more appropriate in the circumstances and that the public interest would best be served by proceeding with a launch schedule which will see to the prompt availability of this service across Canada. An early launch date is also consistent with the intention of Decision 98-488 and with TVA's programming planning, which remains an important component of the Commission's decision.
28.  Nevertheless, given that the record of this proceeding was complete only on 15 January 1999 and given the time required to study in detail the comments in the submissions, the Commission considers that the proposed date of 1 April 1999 is no longer feasible. The Commission notes that section 26 of the regulations stipulates that distribution undertakings must give 60 days notice before implementing a realignment of channels on which Canadian programming services are distributed. To enable distribution undertakings to comply with such notice if realignments are necessary, the Commission has determined that the requirement to distribute TVA's service is to be implemented by 1 May 1999.
Financial impact on Cancom
29.  Canadian Satellite Communications Inc. (Cancom) stated that, as a licensed satellite relay distribution undertaking, it is already distributing nationally the signal of CFTM-TV Montréal, the flagship station of the TVA network. Cancom stated that it had incurred significant capital costs to distribute CFTM-TV, and had made long-term commitments concerning the availability of this signal. Cancom maintained that the fact that the proposed Order requires TVA to pay for the satellite uplink and transponder costs with respect to the transmission of its service will mean that the service will be available free of charge at the head end of the distribution undertakings. This will inevitably result in a significant loss of revenues for Cancom.
30.  In the circumstances, Cancom asked the Commission to relieve it from the condition of licence requiring it to carry a conventional French-language national television service like CFTM-TV, and asked that its revenue losses be considered eligible expenses in relation to the required 5% contribution for Canadian programs.
31.  The Commission considers that it would not be appropriate in the context of this proceeding to dispose of Cancom's request, given that interested persons have not had an opportunity to comment on Cancom's requests. If Cancom wishes, it may submit an application, including documented evidence of the claimed revenue losses, which will be considered in a separate public proceeding.
Retransmission royalties
32.  Several interveners, including Rogers, Cogeco, Mountain, Southmount and Western Co-Axial Limited, submitted that the proposed Order would trigger distant signal retransmission royalties for some of their distribution undertakings pursuant to the Copyright Act. They maintained that those royalties could represent an annual cost ranging from $882,000 for Rogers to $135,000 for Southmount. For that reason, a number of them asked to be exempted from the obligation to distribute TVA's signal. Others proposed that TVA compensate distribution undertakings that will have to pay these retransmission royalties.
33.  Under the current Canadian distant signal retransmission royalty regime, the tariffs of which are established by the Copyright Board, liability for royalties is triggered by the first distant signal that is retransmitted. The copyright liability amounts to $0.70 per premise per month for the retransmission of one or more distant signals by a Class 1 system. The Commission understands that national distribution of TVA would trigger retransmission royalties for a number of distribution undertakings, in particular certain undertakings in southern Ontario serving the Toronto, Hamilton and Niagara Peninsula regions.
34.  TVA stated in its reply that the distribution undertakings in question could apply to the Copyright Board with a view to reducing the financial impact on distribution undertakings stemming from the distribution of its service. In addition, TVA expressed its desire to participate in the search for a solution in this respect.
35.  The Commission is not persuaded that the Order should be amended because of the financial impact that could ensue from the triggering of retransmission royalties for distant signals. It notes that the Copyright Board is the appropriate authority to examine the financial impact on distribution undertakings of distributing TVA's service. The Commission further notes that the Copyright Board has extensive expertise in determining the value of distant signals in special circumstances. Insofar as affected distribution undertakings judge it appropriate, the Commission considers that they should address questions regarding retransmission royalties triggered by the retransmission of TVA's signal to the Copyright Board. The Commission notes that if an application is made, the Copyright Board would be required, pursuant to the Retransmission Royalties Criteria Regulations, to have regard to, among other things, the application of the Act, including the objectives set out in section 3.
Use of pay-per-view and pay multiplex channels
36.  TMN Networks Inc. (TMN) holds the licences for the pay television networks "The Movie Network" and "Moviepix" and a 50.1% interest in Viewer's Choice Canada Inc., an English-language pay-per-view television service. In its submission, TMN stated that it was concerned that the words "available channel" used in the proposed Order could be interpreted to include pay multiplex channels and pay-per-view channels. With respect to pay-per-view services, TMN noted that the Commission could, in certain circumstances, declare, pursuant to section 18(6) of the regulations, one or more channels to be available channels. TMN requested that the Order state explicitly that pay multiplex channels and pay-per-view channels are not available channels for the purposes of the distribution of the TVA signal.
37.  The Commission notes that the definition of "available channel" in section 1 of the regulations effectively means a channel used for the distribution of non-programming services, exempt programming services as well as foreign services first distributed on or after 6 May 1996. Given that TMN's services are none of these services, the Commission notes that a channel or channels on which TMN's services are distributed would not be available channels as contemplated by section 1.
38.  With respect to TMN's submission concerning the possible impact of section 18(6) on its services, the Commission notes that section 18(6) provides as follows:
 If a licensee is distributing a per-per-view service on more than 10 analog channels, the Commission may declare one or more channels to be available channels for the purposes of subsection (5).
39.  The Commission notes that section 18(6) contemplates that a declaration may be made for the purpose of access requirements for the services referred to in section 18(5), i.e., specialty, pay television, pay-per-view or, in certain circumstances, ethnic programming services. Given that TVA is none of these services, the Commission notes that the addition of TVA, in and of itself, would not give rise to a situation where section 18(6) would be applicable. Moreover, to the extent that the addition of TVA pursuant to this order may reduce the number of otherwise available channels for the distribution of pay, specialty, pay-per-view or ethnic programming services, the Commission considers it very unlikely that there would be circumstances at this time in which it would be requested to declare those channels to be available channels under section 18(6), given that, at present, it appears that most pay-per-view television undertakings have available four to six channels for the distribution of their services. Furthermore, the Commission expects that there will be enough available channels to distribute the TVA signal without considering the use of pay multiplex channels.
Displacement of an exempted Canadian programming service
40.  Torstar Corporation (Torstar) operates, through a subsidiary, an exempt programming service known as "Toronto Star Television" (TSTV). In its submission, Torstar proposed that, if a programming service now being offered on basic service must be displaced to make room for TVA, the Commission should require the cable distributor to displace a non-Canadian service rather than a Canadian service. In cases where the cable distributor would like to displace a Canadian exempt programming service from the basic service, Torstar proposed that the Commission require that the service be relocated to a tier which has greater than 70% penetration in order to minimize the potential impact.
41.  The access rules for exempt programming undertakings are governed by section 21(3) of the regulations, which provides as follow:
  If a licensee distributes on one or more analog channels the programming services of an exempt programming undertaking of which the licensee or an affiliate, or both, controls 15% or more of the total shares issued and outstanding, the licensee shall make available an equal number of analog channels for the distribution of programming services of third party exempt programming undertakings.
42.  The above expression "third party exempt programming undertakings" is defined in section 21(2) of the regulations as an undertaking of which the licensee or an affiliate, or both, controls less than 15% of the total shares issued and outstanding. The Commission notes that this provision precludes a distributor with the specified interest from removing a third party programming service prior to one in which it has the interest.
43.  With respect to Torstar's second submission, the Commission notes that in Public Notice CRTC 1996-60 entitled Access Rules for Broadcasting Distribution Undertakings,it considered that channel placement issues "should properly be the subject of negotiation between the parties concerned" and that, generally, it would not be prepared to apply its dispute resolution powers in matters that are essentially commercial in nature. The Commission is not persuaded that it should depart from its policy in this case and accordingly, will not intervene in this matter as requested by Torstar. Nevertheless, the Commission expects that any negociations that may transpire because of this Order that involve exempt programming undertakings will take into account the Commission's policy as set out in Public Notices CRTC 1996-132 and 1997-35.
Stations affiliated with the TVA network
44.  TVA and two of its affiliates, Radio Nord inc. and Télé Inter-Rives limitée, requested, among other things, that the wording of the Order be amended such that the Order would not result in CFTM-TV's signal being substituted for TVA affiliates' signal, or leading to the duplication of TVA's signal with the addition of CFTM-TV in markets where an affiliate is already distributed. The Commission agrees that the intent was not to affect the current distribution of TVA affiliates' signals or to require the duplication of the TVA signal. The draft Order has been amended accordingly.
Secretary General
This document is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca
 Appendix to Public Notice CRTC 1999-27
 Distribution Order 1999-1
 Distribution of the programming service of TVA Group Inc. (TVA) by persons licensed to carry on certain types of broadcasting distribution undertakings
 Section I
 The Commission hereby orders, pursuant to section 9(1)(h) of the Broadcasting Act, persons licensed to carry on broadcasting distribution undertakings of the types identified in paragraph a. below to distribute TVA's programming service (CFTM-TV Montréal or the programming service of one of its affiliates) as part of the basic service, effective 1 May 1999, on the following terms and conditions :
a.  Section I of this order applies to Class 1 and Class 2 licensees and DTH distribution undertaking licensees, except licensees that are: (1) not otherwise required to distribute TVA's programming service pursuant to the Broadcasting Distribution Regulations;or (2) currently distributing the programming service of a TVA affiliate by condition of licence and continue to do so. These licensees are collectively referred to in this order as distribution licensees.
b.  Distribution licensees offering more than one basic service shall distribute TVA's programming service on each basic service.
c.  Class 1 and Class 2 licensees shall not distribute TVA's programming service on a restricted channel unless TVA, or the TVA affiliate, as appropriate, consents in writing to its distribution on such a channel.
d.  Distribution licensees shall not increase the fees to be paid by their subscribers to recover, either directly or indirectly, the costs incurred by such licensees with respect to the distribution of TVA's programming service pursuant to this order.
e.  Distribution licensees who remove a service in order to comply with this order may only remove a service carried on an available channel.
f.  Notwithstanding the foregoing, distribution licensees shall not be required to distribute TVA's programming service pursuant to this order, unless TVA pays for the satellite uplink and transponder costs with respect to the transmission of its programming service.
Section II
Pursuant to section 9(1)(h) of the Broadcasting Act, the Commission hereby orders Class 3 licensees who distribute TVA's programming service in response to the Commission's encouragement expressed in Decision CRTC 98-488, but who are not otherwise required to distribute this service pursuant to the Broadcasting Distribution Regulations, also to distribute the programming service of at least one licensed, French-language television station of the Canadian Broadcasting Corporation.
Section III
For the purposes of this order, available channel, basic service, Class 1 licensee, Class 2 licensee, Class 3 licensee, DTH distribution undertaking, licensed, programming service and restricted channel carry the meanings as defined in the Broadcasting Distribution Regulations, as amended from time to time.