Speech by Chris Seidl, Executive Director, Telecommunications, Canadian Radio-television and Telecommunications Commission

To the Independent Communications Authority of South Africa’s International Regulatory Review Conference

Johannesburg, South Africa
February 20, 2012

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Thank you very much for your invitation to speak at this conference.

It is especially nice to be in South Africa at this time of the year. My home town of Ottawa certainly has much to be proud of, including the world’s longest skating rink, the Rideau Canal. But for a Canadian looking to escape winter, nothing can compare to what South Africa has to offer. Where else can you get an up-close view of a pride of lions or a black rhinoceros than in Kruger National Park?

As digital technology continues to evolve, it is good to meet with people from around the world to share best-practices and lessons learned. My colleagues at the Canadian Radio-television and Telecommunications Commission (CRTC) are looking forward to hearing about what I will undoubtedly learn during my time with you.

Let me begin by briefly explaining the role of the CRTC. The CRTC oversees Canada’s broadcasting and telecommunications systems. We work to ensure that Canadians have access to a variety of Canadian programming and high-quality telecommunications services. To that end, one of our key roles is to supervise and regulate over 2,000 broadcasters, by issuing broadcasting licences and reviewing ownership transactions.

Canada’s transition from analog to digital television is a good example of how the CRTC regulates the broadcasting system in the public interest. The transition took place on August 31, 2011, and was achieved at a minimal cost to the government. For the next few minutes, I would like to share our story by:

Setting the context for Canada’s transition

Let me begin by setting the context for Canada’s transition.

Canada is well known for its size, geography and climate. In terms of land mass, Canada is the second largest country in the world, spanning almost 10 million square kilometers. Much of that is uninhabited wilderness. Canada’s population of 33.5 million is heavily concentrated in the southernmost parts of our country. In fact, two-thirds of Canadians live within 200 kilometers of the Canada-United States border.

The vast majority of Canadians, a full 80%, live within concentrated urban areas: large metropolitan centres, smaller cities and towns. Rural, remote and northern parts of Canada are much less populated. Our three northernmost territories, for example, make up 41% of Canada’s land mass, but only account 0.3% of our population.

Our geography has affected the development of our broadcasting system. Over the years, cable and satellite networks were deployed to expand the reach of over-the-air television signals. More recently, telecommunications companies have begun delivering television programming through phone lines or fibre-optic cable—a service that’s known as Internet Protocol Television. As a result, 91% of Canadian households subscribe to one of these services. In comparison, the number of households relying solely on over-the-air television is less than 7%.

Canada’s cultural heritage has had no less of an impact on the broadcasting system’s development. It must reflect our two founding linguistic and cultural groups, English and French, our Aboriginal peoples, and the many languages and cultures of the immigrants who have made Canada their home. It has also been profoundly affected by our neighbour to the south, the United States.

I tell you all of this not as a geography or sociology lesson, but because it all has been particularly relevant in the development of our communications sector, including our digital transition. I will explain more about why and how that has been the case over the course of my presentation.

Rationale for the transition and the CRTC’s overriding objective

Let me turn to Canada’s rationale for transitioning to digital, and the overriding objective we were trying to achieve from a regulatory perspective.

Our digital transition was essential for three reasons, all of which can be boiled down to making the most efficient use of a scarce resource—spectrum:

The CRTC’s overriding objective for the transition was to find solutions so that Canadian viewers could retain access to the over-the-air television stations they watched via analog signals. As I will explain more fully, the CRTC worked closely with broadcasters, distributors, consumer groups and government officials to turn this objective into reality.

Overcoming challenges

Early on in the process, the CRTC hoped that Canada’s broadcasting industry would lead the way.

To that end, we consulted stakeholders, inviting them to propose policy objectives and principles that should govern the transition. We also asked what they thought would constitute an appropriate regulatory framework for the carriage of over-the-air digital television signals by cable and satellite providers.

In 2002, the Commission announced the framework for the transition, and the manner by which digital television services could be broadcast. We made it clear that the transition must:

Our hope was that the framework would be implemented on a market-driven basis, in which market forces, and not regulations, would drive the transition forward.

Unfortunately, this was not the case.

By 2007, it became clear that Canada’s broadcasting industry was hesitant to lead the way. The pace of transition was too slow, especially in comparison to what was happening in the United States as it sought to complete its transition by June 12, 2009.

To be fair, the CRTC recognized the very real technical, logistical and financial obstacles that broadcasters were facing. And so, we consulted, once again, to obtain industry views on what was needed to make the transition happen. Most stakeholders favoured an analog shut-down date that followed the American deadline by approximately two years, to ensure competitive parity between broadcasters and allow them to plan future capital needs.

In response, the CRTC set a transition deadline of August 31, 2011, after which television licensees would only be authorized to broadcast digitally.

To facilitate the transition, the Government of Canada adopted a digital television allotment plan. The plan had been negotiated with the United States to ensure a coordinated approach to assigning particular channels to broadcasters on both sides of the border in order to avoid interference issues. During the transition period, broadcasters were allowed to simulcast using both analog and digital transmitters. Regulatory approvals were granted quickly and efficiently to broadcasters that followed the plan.

The transition deadline certainly had the right effect. While regulatory oversight, and what I will call “regulatory encouragement,” were still required to move the process along, Canadian broadcasters gradually adapted their business plans to stay on track.

Mandatory versus non-mandatory markets

Our second challenge stemmed from some of the realities of Canada’s climate, geography and population distribution.

Canadians like to joke that we have two seasons—winter and construction! Our climate means that the construction season is relatively short. This is particularly true the further north you go. In the context of the digital transition, the short construction season meant that engineers and work crews had a limited window in which to convert their transmitters. Their ability to access certain transmitters was constrained, and the number of transmitters that could be worked on over the course of a year was reduced.

In terms of Canada’s geography and population distribution, southern and urban parts of Canada boast massive media markets and the full range of broadcasting services. Rural, remote and northern parts of Canada, on the other hand, have much smaller, more localized markets and services. Spectrum in these areas is not in such short supply, and the Commission made certain that analog transmitters did not cause interference with channels 52 to 69.

In light of these realities, it did not make financial or common sense for the CRTC to force broadcasters to replace every analog transmitter with a digital one. In some markets, for example, over-the-air penetration was so low that business models were just not available to sustain the transition. Likewise, it was unfair to penalize viewers by taking away their access to over-the-air stations, forcing them to pay for cable or satellite subscriptions.

Once again, the CRTC consulted industry stakeholders to find a way forward. The solution came in the form of a “hybrid” model. Broadcasters would be required to upgrade to digital transmission in large and medium markets, while analog transmission could remain in smaller markets subject to some conditions. Cable and satellite companies would continue to provide access to all local television stations.

We adopted the terms “mandatory” and “non-mandatory” markets to put the model into practice. Twenty-eight mandatory markets were defined, including provincial capital cities, markets with a population over 300,000 and markets in which there was more than one local television station.

Transmitters in non-mandatory markets were not required to meet the deadline. Broadcasters had the flexibility to continue broadcasting in analog as long as they did not interfere with spectrum needed for channels 52 to 69 (i.e., those affected by the agreement between Canada and the United States). Nevertheless, broadcasters converted over 40 transmitters in non-mandatory markets on a voluntary basis.

The establishment of mandatory and non-mandatory markets made the transition much more manageable. Instead of having to convert over 700 transmitters, broadcasters only needed to concentrate on the 193 transmitters operating on channels 52 to 69 and located in mandatory markets.

Before I move on to the next challenge, let me give you two great examples of how geography and climate influenced our transition. The CRTC had to give last-minute extensions in two extraordinary cases: the first, when Hurricane Irene slammed into the Atlantic provinces; and the second, when a Peregrine falcon, an endangered species, built a nest on a transmitter in the city of Montreal.

In both cases, crews simply could not access their transmitters and perform the work necessary to complete their transitions before the deadline. Both examples just go to show that regardless of how sophisticated technology becomes, there are some things human beings can never control—the weather and wildlife!

Consumer awareness campaigns

Turning now to our third challenge: by 2010, the transition was well underway. By and large, industry stakeholders were doing what was necessary to meet the deadline.

As for Canadian viewers, on the other hand, the degree to which they understood the digital transition varied. Many Canadians were aware of the importance of digital transition because of the large American education campaign of 2009. Nevertheless, most were unaware of the looming deadline, and uninformed about what the transition would actually mean for them.

While the vast majority of Canadians households subscribed to cable or satellite services, approximately 9% did not. All Canadians had to be told whether they would be affected, what to expect, and what they could do to maintain access to their local stations.

The CRTC required broadcasters to air public service announcements between May and August 2011, and to post detailed information about the transition on their websites. Meanwhile, the Government of Canada launched a print and radio advertising campaign, a single contact telephone number and a website, all of which were promoted on social media.

We wanted Canadians who subscribed to cable or satellite television services to understand that they would not be affected by the transition. We also wanted Canadians to understand that only those who watched television stations using an antenna would experience changes. We notified those consumers that they might need to purchase relatively inexpensive digital converter boxes to continue watching local stations on their existing analog television sets.

Our goal was to ensure clarity for Canadian viewers.

Helping Canadian viewers adjust to the transition

As part of that process, we responded to the fourth challenge of the transition: helping Canadian viewers adjust to the transition.

You may recall that the United States Government funded a $2.5-billion voucher program to help Americans during its transition. The Government of Canada considered that a similar program was not necessary, given that the prices of digital converters had come down considerably in the two years since the U.S. transition.

Other strategies were adopted instead to help Canadians adjust. For example, the CRTC made some regulatory changes in 2010 so cable and satellite companies could offer households that lost one or more over-the-air signals a package of local and regional stations at no charge.

One of Canada’s largest communications companies, Shaw Communications, expressed interest in this option when it purchased the television assets of another company, Canwest Global. In what became known as “the Local Television Satellite Solution,” Shaw agreed to spend $15 million to provide and install satellite receivers and dishes to viewers whose local stations decide to drop their over-the-air signals. In addition, Shaw agreed to spend another $23 million to covert 67 analog transmitters in non-mandatory markets.

These commitments were a result of our benefits policy that requires the buyer in an ownership transaction to make specific commitments to fund initiatives that will improve Canada’s broadcasting system.

The CBC

You will recall that I explained how Canada’s ethnic and linguistic groups have influenced the evolution of Canada’s cultural heritage. This is particularly true for Canada’s two official linguistic and cultural groups—French and English.

In fact, Canada’s public broadcaster, the Canadian Broadcasting Corporation (CBC), is legally required to operate two national networks, one in English and the other in French, to foster the two languages and cultures. The CBC is also legally required to provide French and English programming throughout Canada by the “most appropriate and efficient means and as resources become available.”

These statutory obligations have made the digital transition much more difficult for the CBC, given its unique mandate to serve all Canadians regardless of where they live, or the media market in which they are served.

Compounding these legal obligations is the fact that the CBC is responsible for Canada’s largest group of over-the-air transmitters. The CBC operates 66 transmitters in mandatory markets and 413 out of 509 transmitters in non-mandatory markets.

In recognition of the CBC’s dilemma, the CRTC gave it permission to continue broadcasting analog signals in certain mandatory markets until August 31, 2012. This approach was designed to give the CBC one extra year to find solutions for viewers who may have lost access to their over-the-air signals.

How the transition has unfolded

That brings me to today—almost six months after our digital transition deadline.

I am pleased to say that Canada’s transition has been a success, for a number of reasons.

First, it has delivered positive results for Canadian viewers, as they have access to HD over-the-air television.

Second, Canadian producers and broadcasters have the infrastructure they need to reach viewers with crystal-clear programming in HD, thus offering them a competitive advantage particularly in an age when content from around the world can be watched on different platforms.

Third, channels 52-69 have been cleared, freeing up much-needed spectrum in the 700 megahertz (MHz) band for public safety and advanced wireless services.

Fourth, as I explained earlier, the CRTC was able to work closely with the Government of Canada, stakeholders and Canadian viewers to develop acceptable and effective solutions to overcome the challenges along the way.

Lastly, regulations were developed and implemented in an efficient way to ensure that market-driven solutions were relied upon as much as possible. For example:

Negative impacts have been minimal. The CRTC has received questions or complaints from just over 2,000 people since August 31, 2011—a relatively small number given how many Canadians were potentially affected by the transition. Of that total, nearly 62% were about a loss of service (i.e., someone who no longer had access to his/her local television station).

In short, all of this has helped achieve the CRTC’s overriding objective for the transition: to find solutions so viewers can retain access to the free television stations they were watching via over-the-air transmission.

Looking ahead

Looking ahead, while Canada’s transition to digital was successful, more work remains to be done.

Once again, I would like to thank you for giving me the chance to speak on behalf of the CRTC. I hope Canada’s story has been instructive and helpful as South Africa moves forward with its own digital transition.

I hope to have the chance to speak with many of you over the next couple of days.

 

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