ARCHIVED -  Public Notice CRTC 1985-60

Public Notice

Ottawa, 22 March 1985

Public Notice CRTC 1985-60

CRTC Response to the Report of the Task Force on Access to Television in Underserved Communities

The extension of public and private Canadian broadcasting services to all parts of Canada is a fundamental objective which the Commission has consistently pursued since its inception. In particular, the Commission has long been concerned with the fact that many of the more remote and isolated communities remain critically underserved. This concern has been emphasized in a number of regulatory initiatives and procedures taken by the Commission to facilitate the provision of broadcasting services to such underserved communities, on a priority basis.

In a Public Announcement dated 8 January 1980, the Commission announced the formation of a committee chaired by Commissioner Réal Therrien, Vice Chairman of the CRTC, to study the problems related to the extension of broadcasting services to northern and remote communities and to submit recommendations as to the most effective means of providing service to these underserved communities.

Subsequently, consistent with the recommendations contained in the Therrien Report dated July 1980, the Commission issued a call for applications for a network for the satellite distribution of a variety of Canadian television services and, on 1 April 1981, licensed Canadian Satellite Communications Inc. (CANCOM) to deliver a basic package of attractive television and radio services to the more remote and underserved communities throughout Canada. Even though this service has now been extended to approximately 335 small and underserved communities, serious economic factors continue to impede the extension of additional broadcasting services to the 1.2 million Canadian households in small and rural communities who continue to receive over the air only two or less Canadian local services.

On 20 December 1984, the Honourable Marcel Masse, Minister of Communications, following consultations with the Commission and with representatives of various segments of the broadcasting industry, asked the Comission to give urgent consideration to ways in which concerted action can be taken to solve the fundamental problems inhibiting the extension of an adequate range of broadcasting services to Canadians living in smaller underserved communities throughout Canada.

In light of all of the above, on 20 December 1984, the Commission announced the formation of a Task Force to examine and make recommendations on the distribution of satellite-delivered services to the numerous small, underserved Canadian communities which still do not have access to an adequate range of over-the-air services. The Commission asked the Task Force to explore alternative means by which Commission regulations, policies and licensing procedures for small systems could be further modified to expedite such distribution. The Task Force, composed of three CRTC Commissioners and three outside members, was chaired by CRTC Commissioner Paul Klingle. Its report, entitled "The Costs of Choice", was submitted to the Commission on 25 February 1985.

The primary objective was to find ways by which Canadians in small underserved communities could receive an adequate range of broadcasting services, at an affordable price. The report clearly indicates that the major obstacle in achieving this goal is the cost involved in satellite-to-cable distribution. The Committee identified two principal economic factors:

- many small communities rely on satellite-delivered services, particularly those provided by CANCOM for their basic package of services, and the cost of providing these signals is substantial due primarily to the high transponder charges CANCOM must pay to Telesat for their delivery; and

- the expenditures involved in establishing a cable system in a small community are much higher, a per subscriber basis, than in urban centre, due to the fact that they must be recovered from a much smaller subscriber base.

The thirty-four recommendations in the report provide various methods whereby costs might be lowered to enable the remaining underserved communities to have access to an adequate range of Canadian broadcasting services and to wider viewing choices at an affordable price. They provide more options for systems currently serving small communities to expand the choice of services provided to their subscribers at minimal cost, and to increase the economic viability of these operations.

The Commission is convinced that the difficulties inherent in providing service to small and underserved communities warrant a new and more flexible approach in terms of its policies, regulations and procedures. Accordingly, the Commission agrees with and endorses each of the Task Force recommendations, set out in the Appendix to this notice, subject to the provisions outlined below.

Further, the Commission draws attention to the fact that a number of the recommendations (9, 10, 12 and 19) relate specifically to signal carriage policies pertaining to licensees of class B cable systems (serving 3,000 or less subscribers) outside of core market areas.

The Commission agrees with the Task Force assessment that non-core class B systems share many of the financial hardships experienced by undertakings serving core market areas, and notes that licensees of these systems have traditionally been regulated in a different manner from larger urban systems in areas such as simultaneous substitution and rate regulation. However, in accepting the recommendations related to class B systems, it has determined that they will apply only to those licensees who are currently utilizing 12 channels or less to distribute authorized services to subscribers.

Recommendation 1: Telesat

While this recommendation specifically refers to Telesat in terms of its current excess capacity, it is clear from the report that Telesat's transponder charges are a major factor in high costs associated with providing service to small and remote communities. A solution to this problem, therefore, is fundamental to any new policy approach for such communities.

Accordingly, the Commission recommends to the Minister of Communications that the Government give urgent consideration to a study of the overall problem of Telesat's high trans ponder charges with a view to finding ways by which the financial burden of present transponder charges might alleviated, particularly with regard to the provision of Canadian broadcasting services to core market areas and class B systems.

Recommendations 2 to 6: CANCOM

As noted in the report, CANCOM currently provides service to three distinct market areas described as "core", "extra-cable" and "replacement" which it has defined as follows:

(1) core: areas that receive two or less television signals;

(2) extra-cable: generally small to medium-sized communities already served by cable television, but not currently distributing one or more of the four U.S. network signals; and

(3) replacement: markets or systems which perceive their current level of service to be inadequate due to the poor quality of the U.S. signals received either over the air or by microwave, where satellite delivery is a feasible solution. 

Recommendations 2 through 6 are intended to facilitate the development of CANCOM's overall subscriber base in order to permit it to fulfill its original mandate, by subsidizing the cost of providing its services to core market communities from its other activities.

While fully endorsing recommendation 2, the Commission wishes to make it clear that it applies only to situations where a cable system is currently authorized to distribute the over-the-air signal of a station, and wishes to replace that signal with the CANCOM feed of the same station. In such cases, no new authority will be required.

With regard to recommendation 5 for the replacement of U.S. signals received via microwave with the CANCOM 3+1 signals, the Commission wishes to stress that any application which entails a change in signal source will be dealt with through the public process (notice or hearing) and will be considered on a case-by-case basis. Matters such as the impact of the new signals on local broadcasters will be carefully examined in the context of any such application.

Recommendations 7 to 12: Canadian Specialty and Pay Networks and U.S. Satellite Services

The report indicates that the provision of discretionary services to small communities has been severely inhibited by the cost of the security equipment required to scramble and tier such services, and by the relatively small subscriber base available to sustain these costs. The Commission, under such circumstances, considers it appropriate to reduce its regulatory requirements with respect to the distribution of discretionary services on systems serving small communities so as to make them available to subscribers at the lowest possible price.

Proposals by licensees in core market communities for the exhibition of discretionary services on an unscrambled basis on the basic tier will be processed expeditiously, on an administrative basis. However, similar applications by licensees of class B systems outside of core market areas will be processed either by public notice or hearing, and the Commission will take into consideration the number of local services available and the possible impact of the new services on them. It will also take into account the size and location of the community involved.

In accepting recommendations 10 and 11, the Commission notes that certain impediments with respect to current contractual arrangements may have to be resolved before such proposals can be implemented. The Commission shares the Task Force's concern that "with the unscrambled exhibition of pay television services ... there may be subscribers who object to the 'forced' reception of a service which, in their opinion, may contain objectionable material from time to time." In such instances, and when requested by subscribers, the Commission will require the cable operator to provide a suitable device to delete the service at no cost to subscribers.

Recommendations 13 to 19: Regulatory Framework for Small Cable Systems

These recommendations address cable television distribution in terms of mandatory carriage requirements and the need for a more flexible regulatory approach for core market and class B systems.

Although the Commission endorses recommendation 14 to exempt cable television undertakings serving core markets from the regulation of subscriber fees, it will wish to monitor the effectiveness of this approach. It will, therefore, implement this recommendation for a two-year trial period in order to assess whether there has been abuse of the process. All licensees of core market cable systems will be required to provide the Commission annually with a list of the fees charged to subscribers. This exemption from the regulation of subscriber fees will also apply to scrambled over-the-air transmission systems serving core markets, under the same conditions as outlined above.

With regard to recommendation 18, the Commission will soon issue a Public Notice containing a list of optional Canadian and U.S. satellite services which core market and class B licensees may distribute in addition to the Canadian signal carriage requirements set out in recommendation 15 of the report. The selection of optional services from this list will allow small systems maximum flexibility in providing an attractive package of services to their subscribers.

With respect to recommendation 17, Comissioner Rosalie Gower maintains her dissent as stated in the Report.

Recommendations 20 to 24: Regulatory Framework for Over-the-Air Systems

The Commission remains convinced that cable television technology represents the preferred method of extending service, due to its ability to deliver a large number of services and to meet future service needs. It recognizes, however, that in certain circumstances, for reasons of very limited population size and/or low density, over-the-air transmitters represent the only viable means of providing service to a particular area. Accordingly, consistent with its current policy, the Commission will continue to license over-the-air systems in core market communities.

With regard to recommendation 24, the Commission will seek an amendment to the Broadcasting Act to allow for the use of radio frequencies to distribute foreign signals in an unscrambled mode. Until such time as an appropriate amendment is passed, the Commission must continue to apply its current policy prohibiting such use (Public Notice CRTC 1983-164 dated 5 August 1983).

With respect to recommendation 21, the Commission will determine, on a case-by-case basis, the mandatory carriage requirements, if any, for over-the-air systems utilizing a number of transmitters.

A number of the Task Force recommendations require amendments to various acts or regulations before they can be implemented. The Commission will take all appropriate measures to facilitate the early implementation of the recommendations and is in the process of reviewing its rules and procedures with a view to reducing the regulatory burden on these small systems. A Public Notice will be issued shortly in this regard.

In the interim, recommendations 2, 3, 4, 5, 6, 7, 9, 10, 12, 15, 16, 17 and 19 may be implemented immediately, subject to the usual CRTC licensing and procedural requirements and as specified in this notice.

The Commission urges its licensees, who qualify under the criteria set out in this notice, to take full advantage of the new options open to them in order to provide their subscribers with a wider range of viewing choices, including an attractive core of Canadian, and non-Canadian services at low costs.

The measures proposed in this notice and the recommendations of the Task Force are designed primarily to solve the specific problems facing the smaller, more remote and rural communities across Canada that do not have access to an adequate range of French and English-language broadcasting services. Implementation of the various measures proposed herein should go a long way in solving the problems of these underserved areas and encouraging unlicensed operators to take advantage of the options now available to them within the Canadian broadcasting system.

While being concerned about the availability of services in these small and underserved areas, the Commission is, at the same time, highly sensitive to the need for enhancing the quality and availability of Canadian services. As noted in Public Notice CRTC 1985-61 of today's date the Extension of Distant Canadian Television Signals, in order to compete effectively in today's broadcasting environment, "concerted efforts must be made by all concerned to take new and imaginative initiatives to increase the availability of attractive, competitive, high quality Canadian programs." The Commission has already initiated consultations on this matter and intends to further review proposals designed to better reflect the objectives for a distinctive and strong Canadian broadcasting system.

In this regard, the Commission refers to its policy statement released earlier this week (Public Notice CRTC 1985-58 dated 20 March 1985) which introduces more flexibility in the concept of local television programming to stimulate the development of a greater number of local and regional co-productions of higher quality for scheduling at competitive viewing hours.

Fernand Bélisle
Secretary General