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Decision
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Ottawa, 30 January 1985
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Decision CRTC 85-66
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Classic Communications Ltd. Parts of the Towns of Vaughan, Richmond Hill, Markham and Whitchurch-Stouffville, Ontario - 841997000
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Aurora Cable TV Limited Aurora (Ontario) - 840863500For related documents
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Decision CRTC 84-607 dated 28 July 1984 and Introductory Statement Relating to Decisions CRTC 81-919 to 81-922: Cable Distribution of Non-Programming Services on an Experimental Basis, dated 30 December 1981.
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Following a Public Hearing in Hull, Quebec on 27 November 1984, the Commission denies the applications to change the authorized distribution for the broadcasting receiving undertakings serving the communities noted above by adding the distribution, on an experimental basis for a two-year period, of a digital, 24-hour, non-programming service consisting of advertiser-supported classified advertising and, in the case of Classic Communications Ltd. (Classic), also including community messages, to be distributed on a non-discretionary basis to all cable subscribers.
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In Decision CRTC 84-607, the Commission denied a similar application by Classic on the grounds that approval would be contrary to the Commission's policy not to permit advertising on cable-originated channels, and that it was not prepared to consider a major review of its cable television policy relating to advertising without an issue hearing. The Commission notes that, except for the inclusion of community messages with the advertiser-supported classified ads, the service now proposed by Classic is substantially unchanged from that which it proposed in its earlier application.
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The Commission's policy prohibiting cable television licensees from advertising on cable-originated channels, including the community channel, was set out in some detail in the 26 March 1979 document entitled "A Review of Certain Cable" Television Programming Issues". This policy was confirmed by the Commission in various subsequent decisions and notices, including Decisions CRTC 81-919 to 81-921 related to the distribution of non-programming services.
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At the 27 November 1984 Hull Public Hearing, the Commission considered two distinct applications by Classic Communications Limited and Aurora Cable TV Limited (Aurora). Due to their similarity and the fact that the policies and issues in question are applicable to both, the applicants made a joint presentation at the hearing and the applications are addressed jointly in this decision.
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The applicants argued that the proposed classified-advertising service would be a useful service for both cable subscribers and for local residents and small businesses who may want to make use of this less sophisticated and less costly form of advertising. In the applicants' view, such a classified advertising channel would not compete for advertising dollars with the services offered by conventional broadcasters:
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Broadcasters simply do not canvass for this type of advertising because (1) most classified advertisers cannot afford broadcast time and (2) the subject of the advertisement fits more comfortably in the printed media than over-the-air broadcasting.
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They suggested that cable television licensees should have access to new sources of revenue and stated that, if the proposed services were approved, they would be able to provide the Commission and interested parties with information that would be useful in the forthcoming review of the Commission's policy on the distribution of non-programming services.
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The applicants also suggested that there have already been precedents in this area including the teleshopping non-programming service experiments authorized in Decisions CRTC 81-919 and 920.
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In the Commission's view these approvals did not set a precedent for the current applications. The teleshopping experiments do not entail non-discretionary distribution; rather they are subject to the condition that the service "be provided to subscribers on a discretionary basis... and that the costs of the service be borne by the information providers and those subscribers who elect to make use of this service." Furthermore, they were fully discussed by all parties at the 1981 public hearings held in Toronto, Vancouver, Calgary and Hull in the context of the initial introduction of the cable distribution of experimental non-programming services.
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The Commission acknowledges the interventions from CKVR Channel 3 Limited, CTV Television Network Ltd., the Canadian Association of Broadcasters and the Canadian Daily Newspaper Publishers Association in opposition to these applications. In essence the broadcasters argued that, while approval of these particular applications may not have an undue negative impact on the advertising revenues of the local broadcasters, it would set a serious precedent for future advertiser-supported cable services, designed to compete in a more direct sense with local broadcasters and networks for advertising revenues. They also advanced the view that "advertising is not an appropriate revenue generating method for cable television licensees..." and that any review of the Commission's long-standing policy in this area should only occur in the context of a policy hearing.
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CKVR Channel 3 Limited is the licensee of CKVR-TV Barrie whose signal has priority status with respect to both the Classic and Aurora systems. At the hearing, the intervener indicated that approximately 20% of the advertising revenue of CKVR-TV Barrie is generated by co-operative advertising, and that approval of the applications could jeopardize its retail advertising revenues in the York region, where it has experienced much of its retail sales growth.
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There were numerous interventions from the cable industry in support of the applications the Canadian Cable Television Association, the Ontario Cable Telecommunications Association, the Greater Toronto Cable TV Association, Fundy Cablevision Ltd., Cablenet Limited, Fergus-Elora Cable T.V., Maclean Hunter Cable TV, Southport Cable TV Limited, Armstrong Communications Limited, CUC Limited, Ottawa Cable Cablevision Limited, Rogers Cablesystems Inc. and Scarboro Cable Communications. Other supporting interventions were received from local residents, businesses and business associations, Nabu Network Corporation, the Honourable James Snow, Ontario Minister of Transportation and Communications, the Honourable Sinclair Stevens, Minister of Regional Industrial Expansion, Mr. Anthony Roman, M.P., and the Councils of the Towns of Markham, Vaughan, Richmond Hill and Whitchurch-Stouffville.
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They supported the applicants' claims that a cable-originated classified advertising service would be beneficial to the residents of the area served by the licensees and would provide a unique service not currently available to individuals or businesses through any other electronic medium within these communities. Several also argued that cable television licensees should have access to new revenue sources.
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The Commission acknowledges the arguments put forward in support of these applications, particularly with respect to the requirement for a flexible regulatory approach which allows for innovation and experimentation. As indicated in Public Notice CRTC 1983-232, however, the Commission intends to hold a public hearing by the end of 1985 to undertake an overall policy review of the carriage of non-programming services including classified advertising services on cable television undertakings. Moreover, the Commission is not convinced that, given the size and nature of the proposed experiments and the time-frame involved, the results of these experiments would provide the Commission and interested parties with sufficient concrete evidence upon which to base the review.
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Accordingly, the Commission considers that, prior to a comprehensive policy review, a departure from its existing policy is not warranted in this case.
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Fernand Bélisle Secretary General
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