ARCHIVED - Decision CRTC 2000-754

Decision CRTC 2000-754

Ottawa, 14 December 2000

Suite Systems Inc. (formerly Boardwalk Tele.com Inc.)
Across Canada - 200006470

18 September 2000 Public Hearing
National Capital Region

New cable distribution undertakings to serve various communities across Canada

The Commission approves in part the application by Suite Systems Inc. for a licence to carry on a broadcasting distribution undertaking (BDU). The applicant had sought a broadcasting licence to carry on a national Class 1 cable distribution undertaking. In the circumstances, the Commission considers it appropriate to issue two regional Class 1 licences, one for the Prairie Region and one for Ontario. Both licences would authorize Suite Systems to offer broadcasting services only in those communities where it has proposed to offer them as part of the initial phase of its business plan. These communities are: Calgary, Edmonton, Red Deer, Fort McMurray, Grande Prairie, Airdrie and Banff, Alberta; Regina and Saskatoon, Saskatchewan; Winnipeg, Manitoba in the case of the Prairie regional licence; and Windsor, London, Kitchener, Toronto, Hamilton, Kingston and Ottawa in the case of the Ontario regional licence. Once the applicant is prepared to introduce service to other communities, it may apply to the Commission for a licence amendment (or if appropriate, for a new licence) authorizing it to do so. The licences will expire 31 August 2007.

The applicant and its proposal

The Commission received an application in March of this year from Boardwalk Tele.com Inc. for a national Class 1 BDU licence. The applicant subsequently advised the Commission that it intended to operate under the name Suite Systems Inc., a company owned 100% by Boardwalk Equities Inc. Boardwalk Equities is the owner of more than 150 residential properties in Alberta, Saskatchewan and Ontario representing some 25,000 apartment, town home and garden home units. The applicant plans to use Internet Protocol (IP) digital technology to deliver programming services to persons residing in these properties, as well as to those living in additional multiple unit dwellings in the various communities noted above and owned by companies other than Boardwalk Equities. In time, Suite Systems intends to extend service to subscribers in single unit dwellings. In addition to the delivery of television programming services, the applicant proposes to offer subscribers an interactive programming guide, local telephone service, Internet access and other related services.

Interventions

Nineteen interveners filed comments with respect to this application. All but two supported the proposal. Among other things, they noted the potential benefits of the application, including the competitive choice that Suite Systems would provide in the delivery of television, telephone and Internet services. They also noted the favourable record of the applicant's parent company in property management and in providing customer service, and the commitment of Boardwalk Equities to technological innovation.

The two opposing interveners are the Canadian Association of Broadcasters and the Canadian Cable Television Association. One CAB concern was with respect to uncertainty regarding which 4+1 U.S. television network signals the applicant would distribute in the various markets. The CAB also raised questions regarding the protection of program rights; equitable access by Canadian broadcasters to the electronic programming guide; and equitable access by Canadian specialty licensees to the local availabilities contained in U.S. specialty services. Both interveners expressed concern with respect to the applicant's request for a national licence. These and other related issues are discussed below.

Issues for consideration

Carriage of U.S. network signals

The CAB noted that the application did not contain a complete list of the U.S. 4+1 television signals that Suite Systems will distribute in each of the communities it will serve. The intervener argued that local broadcasters should be permitted to comment on whether the distribution of these services would have a negative impact on their operations. In response, the applicant stated that it will file a complete list of all those services it intends to distribute in each of the communities concerned, including the 4+1 U.S. signals. It added that, in the case of each community, the U.S. television network signals it distributes will be identical to those offered by incumbent distributors or, at the very least, will originate in the same time zone as the community served.

The Commission is satisfied with the applicant's response. As explained in detail in the appendix to this decision, it is a condition precedent to issuance of the licences that Suite Systems file a complete list of all programming services it intends to distribute in each of the communities to be served.

Protection of program rights

Another CAB concern was with respect to the applicant's proposed use of IP technology to distribute television programming, the possibility that subscribers might be able to redirect such programming to the Internet, and the negative impact this might have on the value of local program rights purchased by television broadcasting licensees. In response, Suite Systems gave assurances that its proposed distribution network in each community would be private and without links to the public Internet. More specifically, it stated that the Internet connection it would provide subscribers would be a service offered separately from its proposed programming distribution service and that the connection would not have the capability to redirect a video stream in the manner described by the intervener. The Commission is satisfied with the licensee's assurances.

Access

In responding to the CAB's concerns about access, the applicant stated that it would provide Canadian broadcasters with equitable access to its electronic programming guide. Suite Systems also confirmed that it was familiar with the Commission's past determinations regarding undue preference, access and marketing practices. It stated that it would comply fully with the undue preference provision contained in section 9 of the Broadcasting Distribution Regulations, as well as with any future access requirement that may be specified by the Commission.

As for access by Canadian specialty licensees to the local availabilities contained in U.S. specialty services, the applicant stated that it would be willing to adhere to the same requirements as those that the Commission has imposed, by condition of licence, on various incumbent distributors concerning this matter.

The term "local availability", when used with reference to a U.S. satellite service, means the time set aside in a program by the program service provider for the insertion of advertising material by its local cable television affiliates in the U.S. A condition of licence specifying the requirements concerning the licensee's use of these local availabilities is set out in the appendix to this decision.

Request for a national licence

While both the CAB and the CCTA opposed the applicant's request for a national licence, the nature of their concerns differed. The CCTA claimed that it would be unreasonable to grant a national licence to an applicant whose plans, in fact, fall well short of providing service on a national basis. It argued further that, because the channel line-up would vary from community to community, Suite Systems should be obliged to seek licences for each location it proposes to serve.

The CAB's concerns were more closely related to those discussed above regarding the protection of program rights. The CAB noted that national direct-to-home distribution undertakings are generally required to respond to requests by local broadcasters to perform both simultaneous and non-simultaneous program substitution. It argued that, should Suite Systems be accorded a national licence, it should be obliged to meet these same substitution requirements.

The applicant replied that its request for a national licence was for the purpose of avoiding any unnecessary delay in its market entry. It emphasized, however, that it would essentially function as a local distributor in each of the communities it has proposed to serve. It also stated that it would accept licensing on less than a national basis should the Commission deem this appropriate.

In order to maintain the integrity of the licensing process and ensure administrative efficiency, the Commission has generally licensed new entrants to offer broadcasting distribution services only in those areas where they intend to provide service within a reasonable period. Consistent with this approach, the two regional licences to be issued will authorize Suite Systems to offer broadcasting services only in those communities where it has proposed to offer them as part of the initial phase of its business plan. Once it is prepared to expand its operations to include other communities, Suite Systems is free to return to the Commission with an application for a licence amendment or, should the communities fall outside of the Prairies and Ontario, for a new licence.

Secretary General

This decision is to be appended to the licences. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca 

Licence terms

In the case of each of the two undertakings, the Commission will only issue a licence to Suite Systems Inc., and the licence will only be effective, at such time as the licensee confirms in writing that it is ready to begin operation in at least one of the communities it has proposed to serve in the region to be served under that licence. In the case of each undertaking, this must take place within twelve months of today's date. Any request for an extension to that deadline requires Commission approval and must be made in writing within that period.

The two licences, when issued, will expire 31 August 2007. The licences will authorize the licensee to carry on Class 1 BDUs, one to serve the communities of Calgary, Edmonton, Red Deer, Fort McMurray, Grande Prairie, Airdrie and Banff, Alberta; Regina and Saskatoon, Saskatchewan; Winnipeg Manitoba; and the other to serve Windsor, London, Kitchener, Toronto, Hamilton, Kingston and Ottawa, Ontario.

The operation of these Class 1 undertakings will be regulated pursuant to the Broadcasting Distribution Regulations (the regulations).

The signals that the licensee is authorized to distribute may be received by direct reception, or from any Canadian broadcasting distribution undertaking (licensed or exempted) that is authorized to provide signals to other distributors.

As a condition precedent to issuance of each licence, Suite Systems must file a complete list of all programming services it intends to distribute in each of the communities to be served. The lists must conform fully to the carriage requirements set out in the regulations.

The Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources (PN 1992-59).

Conditions of licence

The licences will be subject to the conditions specified below and to any other condition specified in the licences to be issued.

1. The licensee is authorized to distribute, at its option, as part of the basic service at each community served, the signals of five television stations, one affiliated to each of the ABC, CBS, NBC, FOX and PBS (U.S. 4+1) television networks. This is subject to the requirement that all of the five non-Canadian television network signals so distributed originate within the same time zone as the community served. The Commission notes that the specific U.S. network affiliates whose signals the licensee chooses to distribute may thus differ from those distributed by incumbent distributors.

2. For community programming and any other programming of a service that it originates, the licensee shall adhere to the guidelines on the depiction of violence in television programming set out in the Canadian Association of Broadcasters' Voluntary code regarding violence in television programming, as amended from time to time and approved by the Commission.

3. a) The licensee may, at its option, insert promotional material into the local availabilities of non-Canadian satellite services.

b) If the licensee chooses to utilize local availabilities, at least 75% of them must be made available for the promotion of licensed Canadian programming services, promotion of the community channel, or the distribution of unpaid Canadian public service announcements.

c) A maximum of 25% of the local availabilities may be used by the licensee for the promotion of its own discretionary programming services and packages, promotion of additional cable outlets, and the provision of information concerning such matters as customer service and channel realignments.