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  Decision CRTC 2000-340
  Ottawa, 21 August 2000
  Jan Pachul
Toronto, Ontario – 199812524
  6 December 1999 Public Hearing
National Capital Region
  Summary
  The Commission, by majority vote, denies the application by Jan Pachul for a new low-power English-language television programming undertaking in Toronto. The proposed station would have provided a service designed for residents of an area of Toronto known as "The Beaches". The applicant’s proposal, however, even as modified at the hearing, is predicated on the station’s signal receiving mandatory cable carriage in portions of Metropolitan Toronto well beyond the applicant’s intended service area.
  For the reasons set out in greater detail below, including the apparent inconsistency between the intensely local focus of the proposed programming service and the applicant’s business plan, which is predicated on mandatory cable carriage well beyond the area for which the service is intended, the Commission has denied the application.
  The application

1.

The applicant, Mr. Jan Pachul, proposed to establish a low-power community-oriented television station on UHF channel 15 to serve four wards in the City of Toronto. These wards, which include about 129,000 households, primarily encompass an area of Toronto known as "The Beaches."

2.

Mr. Pachul described the proposed station as follows:
 

…a broadcasting service focused on the neighbourhood, totally accessible to all, yet still able to generate revenues in order to assure ongoing services…the neighbourhood will have a major stake in the operation – and the neighbourhood will also be the engine that makes it run.

3.

The applicant indicated that at least 75% of its programming would come from local sources. A high percentage of this programming would be directly related to the community, with emphasis placed on affording access to local independent producers and residents interested in producing television programs. Mr. Pachul further proposed high levels of Canadian content – at least 80% during the broadcast day, and 100% during the peak evening viewing period of 7:00 p.m. to 11:00 p.m. The proposed station would operate with a staff of nine people, supplemented by a pool of volunteers.

4.

Mr. Pachul indicated that he based his business plan on selling advertising time to local businesses at modest rates. He considered that these local businesses would also pay him to produce their commercial messages. The applicant projected total annual revenues and operating costs of $478,000 and $451,000, respectively, in year 1, rising to $1,223,000 and $1,086,000 in year 7. These projections assumed cable carriage on an unscrambled basis essentially throughout Metropolitan Toronto.
  Interventions
  Those in support

5.

Forty-three interveners expressed support for the application. Such interveners included parties interested in producing programming, prospective volunteers, representatives of community and social organizations, two city council members, as well as people interested in viewing the applicant’s proposed programming.
  Those in opposition

6.

Five parties intervened in opposition to Mr. Pachul's application. These parties were the Canadian Cable Television Association (CCTA), Rogers Cablesystems Limited (Rogers), the Canadian Association of Broadcasters (CAB), CHUM Television (CHUM), and CTV Inc. (CTV). Although these parties raised a number of issues, their concerns may be divided into two broad categories: implications of priority carriage for the proposed station by cable distribution undertakings as required by the Broadcasting Distribution Regulations (the regulations), and the appropriate policy framework under which the application should be considered.
  Cable carriage

7.

Although the applicant proposed to serve only a small sector of Toronto, he based his business plan on the premise that the station would be treated in the same manner as a regular "high-power" television station for the purposes of the regulations, and that its signal would thus benefit from cable carriage across a much wider area.

8.

Under the regulations, the applicant’s proposed service would qualify the undertaking as a local television station in relation to cable systems serving Metropolitan Toronto. Specifically, cable systems whose service areas include territory within 15 kilometres of the applicant’s transmitter would be required to distribute the station's programming on their basic service. The basic service is provided on channels that cable subscribers can receive without the aid of a decoder box, all for a single monthly fee; local television stations are generally accorded priority carriage on the basic analog band (channels 2 to 13) where this is possible. However, opposing interveners considered that, if the station proposed by the applicant were licensed, distribution undertakings should not be required to carry it.

9.

In reply to concerns about mandatory cable carriage, Mr. Pachul made an alternative proposal that included two parts. First, he indicated that he would waive his right to carriage on the basic band (channels 2-13) and would accept placement on any unencoded high cable channel, such as channel 67. Second, instead of required carriage by all cable systems whose service areas include territory within a 15 kilometre radius of his transmitter, he would accept carriage by all systems whose service areas include territory within a 12 kilometre radius of his transmitter. The Commission notes that such a scenario would still result in mandatory carriage of the signal well beyond The Beaches area.
  Policy framework considerations

10.

In their interventions, opposing parties referred to the Commission’s policy for low-power television in remote communities set out in Section IV of Public Notice CRTC 1987-8 entitled Regulations respecting television broadcasting. This policy is designed to encourage the development of low-power television stations, referred to as "remote stations," in remote areas that do not have local television service. Opposing interveners took the position that this policy is not applicable to Mr. Pachul’s proposal, and noted the absence of a policy framework for the licensing of such a station.

11.

Some considered that, given the large number of potential viewers for the proposed service, Mr. Pachul’s application should be evaluated using the same criteria as would be used in considering an application for a new conventional television station in Toronto. They therefore argued that a call for competitive applications should have been issued, and that marketing and audience research demonstrating a demand for the service should have been filed with the application. They also argued that priority cable carriage throughout much of Metropolitan Toronto, as requested by the applicant, was inconsistent with Mr. Pachul’s programming commitments.
  The Commission’s determination

12.

The Commission agrees that low-power stations such as the one proposed by Mr. Pachul have the potential to fill an important programming niche by providing a community-oriented programming service that relates more directly to local neighbourhoods within large metropolitan areas.

13.

The Commission is concerned, however, about the implications of giving the station proposed by Mr. Pachul priority cable carriage on cable systems. Under the regulations, the proposed station would receive carriage in an area that extends far beyond the sector of Toronto that the applicant proposed to serve. Interveners indicated that, not only would the station reach close to a million households in Toronto, it would also, due to the interconnection of cable systems, be received in areas as far removed from The Beaches area as Mississauga and Brampton, a distance, in the latter case, of more than 35 kilometres.

14.

During the hearing, the applicant stressed that mandatory cable carriage on an unencoded channel throughout greater Toronto was essential to the fulfilment of his business plan. Asked at the hearing if he would object to an arrangement with Rogers and Shaw that would exempt them from the requirement that they distribute his signal, Mr. Pachul replied:
 

We [would] remove about two-thirds of our income if we did that, if we were just an on-the-air service.

15.

Asked if his business plan was based on being carried on cable, he stated:
 

How else would you do it…. Obviously if we are removing all this money out of the system, what are our programming values going to be like?

16.

At the reply stage of the hearing, Mr. Pachul was asked if he would accept a licence without a requirement for cable carriage. He stated:
 

I would accept the licence on-air only, but I don’t think that I could meet the various targets that I have because I think my targets were based on a high channel of some sort.

17.

Mr. Pachul’s application targeted a local neighbourhood in Toronto. He proposed an intensely local programming service of specific interest to that area, as opposed to the broader metropolitan area that he indicated would be necessary for him to reach through carriage on cable. In the circumstances, and given the current pressures on the availability of analog channels on most cable systems, the Commission does not consider that mandatory cable carriage of the proposed service would be appropriate.

18.

Moreover, the Commission is concerned by the apparent inconsistency between the intensely local focus of the proposed programming service and the applicant’s request for mandatory cable carriage well beyond the area for which the service is intended. This raises issues with respect to the potential that the orientation of the programming will shift away from the community that Mr. Pachul applied to serve, and away from the concept advanced in the application of "a low power transmitter rooted in a geographic location".

19.

The Commission notes that, even with cable carriage, Mr. Pachul has projected very modest revenue levels and programming expenses. Mr. Pachul stated that his revenues would decrease by two-thirds if he did not receive cable carriage. The Commission agrees that, without such carriage, it would not be possible for him to offer the service that he proposed in his application. If the Commission approved the application without cable carriage, by Mr. Pachul’s own admission, it is unlikely that he would be able to fulfil his commitments, and thus unlikely that members of the public would receive a service resembling that proposed in the application and discussed at the hearing. The Commission, therefore, by majority vote, has denied the application.

20.

Nevertheless, the Commission considers that low-power community stations operating alongside existing over-the-air television stations in urban areas or in smaller communities have the potential to make a contribution to the goals set out in the Broadcasting Act, especially with respect to the provision of local community-based programming. It further considers that the deployment of digital distribution technology by cable distributors in the near future may well make it possible for such services to be distributed by cable systems in a more targeted manner.

21.

The Commission will issue shortly a public notice initiating a policy review with respect to low-power community television in urban areas and in smaller communities not covered by the policy framework established in PN 1987-8. The public will be invited to provide comments on a variety of issues, including distribution requirements for such stations.
  Secretary General
  This decision is available in alternate format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca

 

Dissenting Opinion of Commissioner David McKendry
I would grant Mr Jan Pachul a licence for a low power television (LPTV) station to serve the community of East Toronto, including the Beaches and Riverdale neighbourhoods, in Toronto, Ontario.1 I would relieve broadcasting distribution undertakings (BDUs) from the obligation under the Broadcasting Distribution Regulations to distribute Mr Pachul’s programming service.2
Mr Pachul has demonstrated in an experimental phase his ability to operate a community based LPTV station in East Toronto. His proposed station complies with the broadcasting policy set out in the Broadcasting Act. The policy states that the broadcasting system includes a community element and that programming should include community programs.3 Mr Pachul’s proposed station brings more local programming, particularly community voices, to Canadian airwaves in an era of declining non-news local programming and consolidation of cable television community channels into regional services.
I would relieve BDUs from the obligation to distribute Mr Pachul’s station because the concept of an LPTV station that serves a discrete geographical community in a large urban area is fundamentally changed when a station is distributed throughout the urban area. For example, a strong incentive would be created to tailor the LPTV station’s programs to the large urban community in order to increase advertising rates and revenues. I would allow BDUs to distribute Mr Pachul’s service on a basis negotiated between him and a BDU.
No urban LPTV stations in Canada
LPTV was established in the United States by the U.S. Federal Communications Commission (FCC) in 1982. According to the FCC:


LPTV represents a less expensive and very flexible means of delivering programming tailored to the interests of viewers in small localized areas, providing a means of local self-expression. In addition, LPTV has created abundant opportunities for new entry into television broadcasting, and it has permitted fuller use of the broadcast spectrum.4

Although urban LPTV stations are common in the United States5, none exist in Canada. An urban LPTV station, CHOY-TV (Télévision Communautaire de Saint-Jérome Inc.), operated in Saint-Jérome, Québec, from the mid-1970s until the late 1980s.
LPTV stations exist in rural Canada. The role of many Canadian rural LPTV stations is to rebroadcast the signals of conventional stations in areas where people cannot directly receive the signals of conventional stations. Some rural LPTV stations broadcast original programming.6
LPTV policy
CHUM Television (CHUM), Rogers Cablesystems Limited (Rogers), the Canadian Association of Broadcasters (CAB), the Canadian Cable Television Association (CCTA), and CTV Inc. (CTV) oppose Mr Pachul’s application. Their concerns include an allegation that Mr Pachul’s application does not conform to the Commission’s published policies governing the licensing of LPTV stations.7
In 1987 the Commission set out an LPTV policy for remote communities.8 Although the Commission does not have an explicit LPTV policy for urban communities, the policy for remote communities is clear that LPTV stations in urban areas are not impacted nor precluded by the remote communities LPTV policy:

The policy outlined herein is applicable to low power television operations in remote or underserved communities, rather than "community television" as per Public Notice CRTC 1986-176. The policy is not therefore intended to apply to an off-air community television service adjacent to a major urban area, such as that of CHOY-TV (Télevision Communautaire de Saint-Jérome Inc.) operating in Saint-Jérome, Québec.9

An interesting concept
The notion that the Commission did not intend the absence of an explicit LPTV policy for urban areas to stand in the way of urban LPTV stations was reinforced in 1997. The Commission responded to a request by Mr Pachul for a trial exemption order for an LPTV station to serve the Beaches community in Toronto. The Commission denied the request, but stated :


The Commission has discussed your proposal at great length and finds it an interesting concept for serving the needs of neighbourhoods and small communities.

However, as noted in the Commission’s policy on Exemption Orders, Public Notice 1996-59, the Commission’s general approach is to licence, rather than exempt, Programming Undertakings. In the Commission’s view, your proposal has the potential to make a contribution to the broadcasting system. However, under certain circumstances, it may have an impact on the ability of existing licensees to fulfil their regulatory requirements.

Accordingly the Commission will not proceed with your request for a trial exemption. However, the Commission will be pleased to consider a licence application for a community service that is clearly Canadian in content and contributes to the objectives of the Broadcasting Act.

To assist you in this regard, we have enclosed blank copies of application forms for a new Programming Undertaking. The completed forms may be returned to my attention.10

In light of the foregoing circumstances, I reject the objections to Mr Pachul’s application by CHUM, Rogers, CAB, CCTA, and CTV alleging that his application does not conform to the Commission’s published policies governing the licensing of LPTV stations.
LPTV stations may have to change channels or terminate operations
Industry Canada manages the radio frequency spectrum. The department has established a hierarchy of four television broadcasting undertakings – each one with different priority with respect to interference protection.11 Priority 1 stations have the greatest protection and those with Priority 4 have the least. Conventional stations are Priority 1; LPTV stations are Priority 2. According to Industry Canada:

Should the operation of a broadcast transmitting system established in accordance with these guidelines interfere with the reception within the protected coverage area of existing broadcasting stations with higher priorities or with the same priority but an earlier authorization date, remedial measures would have to be taken by the licensee even to the extent of terminating operations if another suitable channel could not be found. These remedial measures would also apply to the protection of future broadcasting stations with higher priorities established in this area if no other suitable channel(s) can be found.12

Uncertain future impacts business plans
The Priority 2 status of LPTV stations creates an uncertain future for an LPTV station but, at the same time, creates certainty for existing and new conventional broadcasters who are protected from interference by LPTV stations.13 The weight given to an LPTV station’s business plan, particularly in urban areas with conventional broadcasters, must take into account the possibility that the LPTV station may have to find another channel or terminate operations. Due to the uncertainty created by an LPTV station’s Priority 2 status, the owner of an LPTV station may experience difficulty in raising capital. In addition, the Commission may find that the uncertainty does not allow it to give as much weight to the business plan and program schedule of an applicant for an urban LPTV station as it would to the business plan and program schedule of an applicant for a conventional station.
Role for urban LPTV stations
Mr Pachul’s proposed urban LPTV station would play a vital role in Canadian broadcasting policy with respect to East Toronto. Section 3 of the Broadcasting Act sets out the broadcasting policy for Canada. Paragraph 3(1)(b) states that the Canadian broadcasting system comprises public, private and community elements; paragraph (i) states that programming should include community programs. This is precisely what Mr Pachul proposes to do:


Our station provides a significant step for a defined community (East Toronto) to actualize itself as a civil society. … Our station in its needs assessment, planning, and experimental phase conducted a major outreach campaign and now has explicit support from individuals and voluntary sector organizations representing immigrant, faith, sport and culture, senior, ecological and many other organizations. … Our station will give access to groups and individuals who are active locally, not on a "one-off" basis, not simply as a vignette as part of the magazine section of a newscast, but consistently, with coverage from the beginnings of organizing to the resolution of issues, over months and years. … the proposed station will be unique in that its ear will be close to the ground of the housing co-ops, community centres, places of worship, theatres, public housing, and local neighbourhoods. … Most of our programming has been developed as a result of our community outreach activities already underway for 2 years.14

The Ashbridge Bay Watershed Council appeared at the Commission’s hearing to support Mr Pachul’s application. According to the Council:


So what do I mean by "easy access to television"? Just this, that the person operating the endeavour lives, works and plays in the local community, that there is an openness to programming, and that the entire operation is what we call, in the environmental movement, place-based. … In the end I think that it’s all about inclusion in media. That is of independent producers, of the needs of handicapped viewers, of non-cable subscribers like myself.15

Duplication of community programs
CHUM, Rogers, CAB, CCTA and CTV object to Mr Pachul’s application on the grounds that his proposed LPTV station does not offer programs that are materially different from those already available in the Toronto market. Assuming for the purpose of discussion that CHUM and the others are correct, it is hard to grasp why viewers in East Toronto, particularly viewers who do not subscribe to cable television, would be disadvantaged by more over-the-air community programs. I also note that CHUM, CTV and CAB’s other members do not need to worry about interference now or in the future from Mr Pachul’s proposed station since, as discussed earlier, LPTV stations have less priority in the use of the radio frequency spectrum than Priority 1 stations.
Is cable’s community channel the answer?
Rogers provides a community channel to its subscribers as part of the company’s basic cable television service.16 Rogers’ community channel primarily reflects the metro Toronto region rather than East Toronto. Some of Rogers’ Toronto community programming – for example Car Guys and Milkbone’s Dogs We Love – transcends the metro Toronto market. These programs and others are also broadcast on the company’s English language community channel in Ottawa.
According to an intervenor in support of Mr Pachul’s application:


Whereas 20 years ago eight to ten cable companies within recognizable [Toronto] communities offered local access, today due to cable company amalgamation and facility consolidation, no more than two or three community access studios exist. That’s one outlet per million persons.17

Different roots
Rogers’ community programming is rooted in the large region of metro Toronto and other regions; Mr Pachul’s proposed community programming is rooted in East Toronto’s neighbourhoods. This is an important difference, a difference that East Toronto viewers would be able to enjoy if Mr Pachul was granted a licence for an LPTV station in Toronto.
I do not question that Rogers’ community channel provides interesting and relevant programs for metro Toronto cable subscribers. However, to use the words of the Ashbridge Bay Watershed Council that I quoted earlier, the programs generally do not appear to be "place-based" in East Toronto – and they are only available to cable subscribers.
Community programs only for cable subscribers?
Some of Mr Pachul’s proposed programs may not be materially different from Rogers’ programs, particularly coverage of municipal council meetings.18 However, one must pay for cable to receive the benefit of Rogers’ community channel. Mr Pachul’s over-the-air service would be available without charge to television owners in East Toronto. The three individuals who appeared to support Mr Pachul’s application at the Commission’s hearing in Hull, Quebec, do not subscribe to cable. They are not alone. Twenty per cent of residences in metro Toronto do not subscribe to cable television.
BDUs not required to provide community channels
Although Rogers and other cable companies provide community channels, BDUs are not required to provide this service.19 Cable’s BDU competitors, direct-to-home satellite distributors and digital multipoint distribution systems, do not provide community channels to their subscribers. Assuming that the existence of a community channel is a factor in deciding to select cable rather than another BDU service, one can argue that cable companies will continue to voluntarily provide community channels to distinguish themselves from their competitors. However, they are under no regulatory obligation to do so.
Some cable companies appear to be experiencing difficulty in devoting sufficient funds to their community channels. Several cable television companies have applied to the Commission to reallocate some or all of their required contributions to the Canadian Television Fund from the fund to their community channels. For example, Cable Atlantic told the Commission that reallocation would allow the company to improve the quality and variety of its community programming.20 Cable Atlantic’s request was denied last year by the Commission as have the requests of most other cable companies who sought similar relief.21
Competition name of the local news game
I turn now to the issue of whether or not Mr Pachul’s proposed LPTV station offers programs that are materially different from those already available from conventional over-the-air broadcasters. With respect to local news programming, the Commission’s television policy framework states:

The Commission believes that, in the new television environment, there are sufficient market incentives to ensure that audiences will continue to receive a variety of local news without regulatory requirements.22
CHUM, Rogers, and CTV do not have conditions of licence with respect to local news. In my view, it is not reasonable in a non-regulated environment for CHUM, Rogers, CAB, CCTA, and CTV to seek a regulatory barrier to Mr Pachul’s LPTV station on the grounds that he will also provide local news to East Toronto. For example, Rogers cites CITY Pulse at 4:00 as "a local news, information and public affairs program that is available on City TV and CP24."23 An intervenor in support of Mr Pachul’s application said at the Commission’s hearing of Mr Pachul’s application:


Only so much program time is allocated to local news and being a very big city, only big headline news items are covered and all stations cover essentially the same items. A possible rare exception, CHUM refers to its City Pulse program at 4 p.m., but realistically, what percentage of the population can watch TV at that time of day? I certainly can’t.24

Non-news local programming in decline
What about non-news local programming? According to the Commission’s policy framework for Canadian television:

The Commission notes that the amount of non-news local programming has declined over the past ten years. There appear to be two major reasons for the reduction. First, as a result of the regulatory emphasis on expensive, peak time entertainment programs, the largest broadcasters have had fewer resources to devote to local programs. Second, the consolidation of the ownership of local stations in the hands of a few corporate groups has encouraged management to effect operational efficiencies that have reduced resources at the local station level.25

Mr Pachul’s LPTV station would create more non-news local programming for East Toronto viewers, an initiative that directly addresses a problem identified by the Commission in its policy framework for Canadian television. Mr Pachul is not one of the "few corporate groups" that have consolidated the ownership of local stations. Although Mr Pachul’s proposed LPTV station is very small, he is a new and energetic face on the broadcasting scene who has demonstrated his ability to operate an East Toronto LPTV station in an experimental phase. In this connection, I do not decry the consolidation of ownership that has occurred in the broadcasting industry. In fact, in one decision I would have allowed more concentration of ownership than the majority of Commissioners allowed.26 I would, however, find room in Canada’s broadcasting system for Mr Pachul’s LPTV station, a station that makes efficient use of the radio frequency spectrum to broadcast more local programming.
Would accept over-the-air distribution
I now turn to the impact of relieving BDUs from the obligation to distribute Mr Pachul’s LPTV station. The annual revenue and expenses and programming commitments in Mr Pachul’s application assume that his station is distributed by cable distributors. During the Commission’s hearing to consider Mr Pachul’s application, he was asked whether or not he would accept a licence if the Commission relieved BDUs from the obligation to distribute his station:


MR. PACHUL: I would accept the licence on-air only, but I don’t think I could meet the various targets that I have because I think my targets were based on a high channel of some sort.
THE CHAIRPERSON: So would affect your business plan –
MR. PACHUL: Oh, sure. Sure.
THE CHAIRPERSON: – to the point where the programming plan that you posited would no longer be possible?
MR. PACHUL: Well, just like they were saying, you know, we would be a marginal channel, which I agree with.27
I would allow Mr Pachul the opportunity to operate his station without mandatory cable carriage. Mr Pachul may find it possible to meet his Canadian content exhibition and local production percentage undertakings without mandatory cable distribution. For example, Mr Pachul proposes to be on the air every day from 9 A.M. to 1 A.M. with alpha-numeric text and streaming images between 1 A.M. and 9 A.M. Perhaps a programming day that is less than 24 hours would allow Mr Pachul to operate a viable LPTV station. I note that the Commission licensed an LPTV station that "intends to initially broadcast approximately 15 hours per week of programming, (5 hours of original programming, repeated twice), which will consist of a 50-minute original feature presentation, TV Bingo, community meetings and sporting events as well as some programming obtained from other communities. In addition, alphanumeric advertising with background audio in English and French will be transmitted."28
LPTV projections always at risk
Regardless of whether or not Mr Pachul’s LPTV station has mandatory cable distribution, I give less weight to his estimate of revenue and expenses and his programming schedule than I do to his experience and demonstrated ability to operate an LPTV station. An LPTV station’s financial estimates and programming schedule are always at risk because, as I discussed earlier, LPTV stations must change channels or terminate operations if they interfere with the reception of an existing or new conventional station. The risk of being required to change channels or terminate operations is relatively high in Toronto where several conventional stations exist.
Lack of perceived viability could stifle innovation
Innovation is a risky business that can create an unfair lack of perceived viability by the Commission and others at the application stage. The Commission has acknowledged this problem in its approach to licensing Category 2 digital specialty services. The Commission "will not consider the viability of Category 2 services, their business or marketing plans, or the rates to be charged by them. This will ensure that highly experimental or innovative services will not be excluded due to a lack of perceived viability." 29 I would apply this approach to Mr Pachul’s application for an innovative LPTV station, particularly in light of Mr Pachul’s demonstrated ability to operate an LPTV station and the lack of risk to the broadcasting system if his proposed station does not succeed.
Proof in the pudding
I turn now to Mr Pachul’s experience and ability to operate an LPTV station. As described in Mr Pachul’s application and discussed at the Commission’s hearing of his application, Mr Pachul has direct LPTV experience in the U.S.30 Mr Pachul’s most relevant experience is the construction and operation in an experimental phase of the LPTV station for which he seeks a licence:


COMMISSIONER NOËL: Do I understand that all your equipment is already available?

MR. PACHUL: Oh, yes, it’s all in place, it’s already built. What we did was we basically built a station on speculation. That’s what we did.31

Mr Pachul’s facilities and equipment include a studio, cameras, production switcher, edit suite, and a remote truck equipped with cameras and a low power microwave transmitter.32
During the experimental phase, Mr Pachul demonstrated the ability to use his LPTV facilities and equipment. Two of the intervenors who appeared at the Commission’s hearing to support Mr Pachul’s application discovered his station when they were tuning their televisions and came across Mr Pachul’s test transmissions.33 Another intervenor was directly involved in program production during the experimental phase:


We had guests, we had phone-ins, we had taped interviews, we had maps, stills that we were showing. It was at that moment that I realized that television could actually play a role in local community development.34

Who is harmed?
I would also allow Mr Pachul to operate a community LPTV station in East Toronto without mandatory cable carriage because:
  • the financial failure of his station rests only on Mr Pachul’s shoulders. He would lose his investment and perhaps suffer other harm but this is a risk that he voluntarily assumes. The parties that oppose Mr Pachul’s application – CHUM, Rogers, CAB, CCTA, and CTV – would not be harmed. The broadcasting system would not be harmed: the system would go on as it does today without an urban LPTV station, and
  • I would require Mr Pachul to meet his proposed Canadian content exhibition and local production percentage undertakings. In other words, I would not allow Mr Pachul to convert his station into something other than a predominantly Canadian community station.
Call for competitive applications not necessary
CHUM objects to Mr Pachul’s application because the Commission did not issue a "call for applications". CHUM states:


The Applicant, Mr. Pachul, submitted the application utilizing the Commission’s pre-printed forms, which are normally used in the licensing of commercial television services. The licensing of a commercial television station to serve a major Canadian metropolitan area, without a "call for applications" would be contrary to the Commission’s usual procedures.35

With respect to Mr Pachul’s application, I do not find Mr Pachul’s use of pre-printed forms to be relevant to the matter at hand. Drawing attention to the use of pre-printed forms is a focus on the style of Mr Pachul’s application rather than the substance. I also note that, as I discussed earlier, the forms were sent to Mr Pachul by the Commission’s Secretary General and Chief Operating Officer to be used for a community service application.
Although the Commission has often issued a call for competitive applications, the Commission is not bound to do so. The decision to issue a call depends on the specific circumstances of an application. The circumstances of Mr Pachul’s application – an application for an LPTV station with Priority 2 interference protection status – do not require a call for competitive applications.
Still interesting – and more
In 1997 the Commission found that Mr Pachul’s proposal for a trial exemption order for an LPTV station to serve Toronto’s Beaches community was "an interesting concept for serving the needs of neighbourhoods and small communities."36 The record of this proceeding clearly shows that Mr Pachul’s proposed LPTV station is still an interesting concept – and more. For example, Mr Pachul has now demonstrated in an experimental phase that his proposed station is technically viable and that he has the capability to operate the station.
The Commission also said in 1997:


In the Commission’s view, [Mr Pachul’s] proposal has the potential to make a contribution to the broadcasting system. However, under certain circumstances, it may have an impact on the ability of existing licensees to fulfil their regulatory requirements.37

The record of this proceeding shows that the ability of existing licensees to fulfil their regulatory requirements will not be impacted by Mr Pachul’s LPTV station. In this connection, I note that the objections to Mr Pachul’s application raised by CHUM, Rogers, CAB, CCTA, and CTV essentially relate to matters other than the ability of existing licensees to fulfil their regulatory requirements.
Mr Pachul’s business plan has an element of risk because LPTV stations have secondary interference protection status and because I would relieve BDUs from the obligation to carry his station. However, the risk is to Mr Pachul – not to the broadcasting system. The broadcasting system stands to benefit from a predominantly Canadian community station that opens new entry into television broadcasting and permits fuller use of the radio frequency spectrum.
The Broadcasting Act requires the Commission to regulate and supervise the Canadian broadcasting system – a system that includes community elements – in a flexible manner that, among other things, is readily adaptable to technological change and facilitates the provision of broadcasting to Canadians.38 In this vein, the Commission decided not to regulate new media services on the Internet in order to support the growth of new media services in Canada.39 The Commission also decided not consider the viability of Category 2 digital specialty services, including their business plans, in order not to exclude highly experimental or innovative services due to a lack of perceived viability.40 I would do the same for Mr Pachul.

 

Notes:
1According to Mr Pachul’s application, his target audience resides in City of Toronto Wards 23, 24, 25, and 26. The population of this area is 329,000 people in 129,000 households.
2 Section 17 of the Broadcasting Distribution Regulations sets out in order of priority the programming services that BDUs shall distribute as part of their basic service. Mr Pachul’s service would fall within the services set out in section 17. However, the section also allows the Commission to relieve a BDU by a condition of its licence from the obligation to distribute a service set out in section 17. A BDU would need to apply to the Commission for a condition of licence to relieve it from the obligation to distribute Mr Pachul’s service.
3 Broadcasting Act, Sections 3(b) and 3(i).
4 http://www.fcc.gov/mmb/vsd/lptv/lptv.html
5 According to the U.S. Federal Communications Commission, there are about 2,200 licensed LPTV stations serving rural and urban audiences in about 1,000 communities. Buffalo, for example, has three licensed LPTV stations.
6 For example, see Decision CRTC 2000-46, Telile: Isle Madame Community Television Association/Association télévision communautaire de l’Île Madame, Isle Madame, Nova Scotia – 199906007, February 17, 2000.
7 CHUM, intervention, November 12, 1999, at 2; Rogers, intervention, November 12, 1999, at 9; CAB, intervention, November 12, 1999, at 1; CCTA, intervention, November 12, 1999, at 1; CTV, intervention, November 12, 1999, at 2.
8 Public Notice CRTC 1987-8, Regulations Respecting Television Broadcasting, January 9, 1987.
9 Id.
10 Letter to Mr Jan Pachul from the Commission’s Secretary General and Chief Operating Officer, November 18, 1997.
11 Policy Guidelines for the Use of Broadcasting Spectrum for Local Transmission of Multiple Broadcast Signals, Industry Canada, December 1986.
12 Id., at 3, emphasis added.
13 The possibility of interference in urban areas may take on even more significance for LPTV stations as the conversion to digital television occurs. This is because conventional stations may be assigned a second channel during the period of conversion to digital television.
14 Application, Schedule 29.
15Transcript, at paragraphs 9527 and 9555.
16 About 84 per cent of cable subscribers in metro Toronto are served by Rogers.
17 Transcript, at paragraph 9588.
18 Mr Pachul proposes gavel-to-gavel coverage of municipal council meetings. Rogers’ coverage ceases at 6:30 PM. According to Mr Pachul, this is an important difference because council meetings extend past 6:30 PM when an important matter is being considered. (Transcript, paragraph 9264.) Mr Pachul’s application states that his proposed station will provide daily live coverage of council committee meetings, coverage that is not currently available. (Application, Program Description; transcript, paragraph 9264.)
19 Public Notice CRTC 1997-150, Broadcasting Distribution Regulations, December 22, 1997, at paragraph 13. See Public Notice CRTC 1997-25, New Regulatory Framework for Broadcasting Distribution Undertakings, March 11, 1997, at paragraphs 131-132 for the rationale underlying this decision. See Public Notice 1991-59, Community Channel Policy, June 5, 1991, for the role and objectives of community channels.
20 Decision CRTC 99-150, Cable Atlantic Inc., Corner Brook; and St. John’s Newfoundland – 199807104 - 199807096, June 17, 1999, at paragraph 11.
21 For example, see Decision CRTC 99-149, Delta Cable Communications Ltd., Delta, British Columbia – 199802442, June 17, 1999; Decision CRTC 2000-76, Câblevision du Nord de Québec inc., Rouyn-Noranda, Quebec – 199906898, March 20, 2000; Decision CRTC 2000-169, Rogers Ottawa Limited/Limitée, Ottawa East and Ottawa West, Ontario – 199906434 – 199906418, May 17, 2000.
22 Public Notice CRTC 1999-97, Building On Success – A Policy Framework for Canadian Television, June 11, 1999, at paragraph 47.
23 Intervention, November 12, 1999, at 3.
24 Transcript, at paragraph 9586.
25 Public Notice CRTC 1999-97, Building On Success – A Policy Framework for Canadian Television, June 11, 1999, at paragraph 64, emphasis added.
26 See my dissenting opinion, Decision CRTC 2000-86, CTV Inc. on behalf of The Sports Network Inc. (TSN), Le Réseau des Sports (RDS) Inc. (RDS), and 2953285 Canada Inc. operating as The Discovery Channel, Across Canada – 199910899, March 24, 2000.
27 Transcript, at paragraphs 9942-9946. At paragraph 9419 Mr Pachul stated that the station would lose about two-thirds of its income if it was not distributed by cable.
28 Decision CRTC 2000-46, Telile: Isle Madame Community Television Association/Association télévision communautaire de l’Île Madame, Isle Madame, Nova Scotia – 199906007, February 17, 2000, at paragraph 4.
29 Public Notice CRTC 2000-6, Licensing framework policy for new digital pay and specialty services, January 13, 2000, at paragraph 34.
30 Application, Schedule 5; transcript, at paragraphs 8994-9032.
31 Transcript, at paragraphs 9367-9368.
32 Application, section 8.3; transcript, at paragraphs 9238-9251, 9367-9371, 9424-9443.
33 Id., at paragraphs 9561 and 9579.
34 Id., at paragraph 9538.
35 CHUM, intervention, November 12, 1999, at 8.
36 Letter to Mr Jan Pachul from the Commission’s Secretary General and Chief Operating Office, November 18,1997.
37 Id.
38 See section 5 of the Broadcasting Act.
39 News Release, CRTC Won’t Regulate the Internet, May 17, 1999; see also Broadcasting Public Notice CRTC 1999-84, Telecom Public Notice CRTC 99-14, New Media, May 17, 1999.
40 Public Notice CRTC 2000-6, Licensing framework policy for new digital pay and specialty services, January 13, 2000, at paragraph 34.

 

 

Dissenting opinion of Commissioner Barbara Cram
I agree with the reasons as stated in Commissioner McKendry’s dissent save and excepting that I did not and do not agree with his dissent in Decision CRTC 2000-86, CTV Inc. on behalf of The Sports Network Inc. (TSN), Le Réseau des Sports Inc. (RDS) and 2953285 Canada Inc. operating as The Discovery Channel.
I would however like to add one point.
Mr. Pachul applied to this Commission in 1997 initially for a trial exemption order. In November of the same year the Commission’s Secretary General sent the Commission reply to Mr. Pachul. The relevant portion of this correspondence is in Commissioner McKendry’s dissent.
The Broadcasting Distribution Regulations came into force effective January 1,1998. The equivalent of the present section 17 was reiterated providing mandatory access to Mr. Pachul’s station should it be licenced. Because Mr. Pachul’s station would qualify under the Broadcasting Distribution Regulations as a local television station in relation to cable systems serving Metropolitan Toronto, I believe that Mr. Pachul was entitled to presume in his application that he would receive such cable access and therefore, was entitled to make his financial projections accordingly.
However, I also am, at present, predisposed to grant an exception to mandatory carriage upon application by any of the relevant Broadcast Distribution entities who would be impacted in the event of licencing Mr. Pachul’s application. It does appear that the intensely local nature of this proposed service is incompatible with the actual coverage to which it would be entitled. It appears that this is one point upon which all members of this panel are in agreement.
Because of the increasing demand for local news and non news programming which we on the Commission hear constantly and because of the lack of harm to the broadcasting system referred to by Commissioner McKendry, my choice would have been to grant a licence to Mr. Pachul.
Mr. Pachul would then have a choice to implement or not to implement the licence, given his knowledge of the unanimous views of this panel that mandatory cable carriage is not appropriate for his service. Mr. Pachul would have to chose to take the risk of implementing the licence and further taking the risk that upon application, some exemptions may well be granted. In my view this route could accomplish the following:

a) it would indicate a continuation of the trend towards less protection by the Commission of broadcast undertakings and essentially allowing the possibility of failure or success to rest with the undertaking. As is the case with digital specialities, I believe it is the time for us to ‘let go’ to some degree.

b) this is a risk free manner (to the broadcasting system, certainly not to Mr. Pachul) of bringing new fresh faces, ideas, and programming into a system that is at present facing increased concentration which is inevitably leading to fewer voices and faces.

c) the Commission will soon be launching a proceeding to consider the issue of low power television in urban areas. Clearly this panel felt that mandatory cable carriage was not appropriate for Mr. Pachul’s service. Accordingly, I believe that the issue of financial viability of any LPTV will be an issue and on the other side, the obligations which can be reasonably expected of such undertakings. In terms of financial viability, clearly an undertaking licenced in one of the most densely populated cities in the country would have the highest probability of succeeding and if it did not succeed, it may well be that LPTV in urban areas in Canada is simply not viable.
I would have granted Mr. Pachul a licence.
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