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Public Notice
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Ottawa, 1 August 1986
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Public Notice CRTC 1986-184
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IMPLEMENTATION PROCEDURES RELATED TO THE NEW CABLE TELEVISION REGULATIONS
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Introduction
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In Public Notice CRTC 1986-182, issued today, the Commission has published new Cable Television Regulations which will go into effect immediately.
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Among other things, the new regulations will streamline the Commission's regulation of cable television undertakings in several areas, including ownership requirements, distribution of authorized services, and the setting of maximum installation and monthly fees. The new regulations also require the preponderance of Canadian signals over foreign signals on any system and formally define a new type of cable licensee, the "Part III licensee" known as a "core market" licensee.
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The regulations are structured into three parts.
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Part I contains those basic requirements which pertain to all cable television licensees. These include matters related to transfers of ownership and the use of equipment and facilities.
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Part II, which pertains to all licensees who are not Part III licensees, contains the bulk of the new regulations. It covers such areas as carriage of television and audio services, the community channel, maximum fees, and simultaneous substitution. Within Part II, two classes of licence are established. Class l licences apply to undertakings having 6,000 or more subscribers, while Class 2 licences apply to undertakings having fewer than 6,000 subscribers. Some of the provisions contained in Part II, in particular those dealing with the distribution of complementary programming on the community channel, the carriage of audio services, and simultaneous substitution, differ in their application to Class 1 or Class 2 licensees.
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Part III of the regulations, which pertains only to Part III licensees, sets up a very simplified regulatory approach for these licensees, in accordance with recommendations contained in the Report of the Task Force on Access to Television in Underserved Communities (Klingle Report). With one exception, as specifically identified in Part III, the provisions of Part II do not apply to Part III licensees. In addition, all Part III licensees are treated in the same manner, regardless of size.
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In order for cable television licensees to take advantage of some of the provisions contained in the new regulations, it will be necessary to submit applications for Commission approval to add, delete, or amend certain conditions of their existing licences, as required under section 19 of the Broadcasting Act. This notice is intended to provide guidance to licensees as to the specific actions they should take in order to bring their undertakings fully under the new regulatory regime.
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Ownership Requirements
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All cable television licences currently have certain conditions of licence specifying Commission requirements with respect to changes in ownership or in the effective control of the licensed undertaking. These requirements, now somewhat modified and less onerous, have been incorporated into the new regulations (section 5).
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All cable television licensees wishing to fall under the new scheme are therefore invited to apply to the Commission to delete their existing conditions of licence regarding ownership. Such applications may be submitted using the form attached to this notice as Appendix A.
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Use of Equipment and Facilities
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Section 4 of the new regulations specifies the Commission's general requirements concerning licensee ownership of its local head end, amplifiers and subscriber drops. This duplicates a corresponding condition of licence which applies to most cable television licensees outside of the provinces Manitoba and Saskatchewan, and also to certain licensees within those two provinces.
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Therefore, licensees with an existing condition of licence requiring ownership of the local head end, amplifiers and subscriber drops are invited to apply to delete this condition of licence, using the application form in Appendix A.
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Those licensees which currently have a different condition of licence need take no action at this time.
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Distribution and Service Area
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Most cable television licences currently have a condition of licence which states:
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The approval of the Commission is required prior to any changes to the authorized service area or carriage of signals or services.
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Many optional programming services which previously were authorized only upon application, pursuant to this condition of licence, will now be authorized directly by sections 10 and 16 (Class 1 and Class 2 licensees) and 24 (Part III licensees) of the new regulations, making further applications for these services unnecessary. By the same token, applications to delete these optional services will no longer be required, once a licensee comes under the new regulatory scheme. Furthermore, alphanumeric services such as Broadcast News are not considered to be programming services and their distribution no longer requires Commission authorization.
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In order to become eligible for the automatic authorizations granted by the regulations, all licensees are invited to apply for an appropriate licence amendment and change in authorized distribution using the form attached in Appendix A. Licensees should note that any service currently authorized pursuant to a condition of licence cannot be deleted without Commission approval. However, Commission approval will no longer be required where the authorization is based on the new regulations.
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The Commission's current approach to regulation of the service area, i.e., obtaining prior approval before making any changes, will not be affected by the amendment to the condition of licence regarding distribution and service area. Accordingly, applications to increase or decrease service areas will continue to be required by the Commission.
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Maximum Fees
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The Commission's regulatory procedures with respect to rate regulation will undergo significant changes with the introduction of the new Cable Television Regulations.
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For Part III licensees, monthly fees and installation fees will no longer be regulated. In order to implement rate deregulation, and prior to putting into place any rate increases without having to obtain Commission authorization, a Part III licensee must first apply to the Commission, and receive approval, to amend its licence by deleting the existing specific condition of licence which sets the maximum fees and also the general condition of licence relating to maximum fees. All Part III licensees are invited to submit such applications, using the form provided in Appendix A.
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For all other licensees, the Commission will no longer approve specific installation fees. Cable licensees will be allowed to charge an installation fee that does not exceed the actual expenses incurred in making the installation of the subscriber drop. With regard to monthly fees for basic cable service, these will continue to be regulated, but under streamlined procedures. Four types of rate increase procedures are identified in the new Regulations. These procedures are discussed in more detail in Public Notice CRTC 1986-182.
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Before Class 1 and Class 2 cable licensees can take advantage of the streamlined rate increase procedures in the new regulations, they must first obtain approval from the Commission to amend their licences by deleting the existing conditions of licence pertaining to maximum fees and substituting a new general condition of licence. All Class l and Class 2 licensees should submit such applications, using the form provided in Appendix A. The Commission will not expect to receive filings for rate increases pursuant to the new regulations prior to the Commission's decision to amend the conditions of licence.
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Guidelines for Rate Increase Filings
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After obtaining Commission approval to change their condition of licence respecting maximum fees, Class 1 and Class 2 licensees will be able to file for a rate increase in accordance with section l8 of the new Cable Television Regulations. The following general guidelines are intended to assist licensees in these filings.
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For all four types of rate increase outlined in section 18, the actual increase in the basic monthly fee may not take place before a specified period of time has elapsed following receipt by the Commission of the notice sent to subscribers, a declaration as to the date this notice was sent, and any other documentation required in subsections 18(4), 18(7) and 18(8). The Commission does not intend to acknowledge or confirm the date of receipt of submissions; it will be the licensees' responsibility to confirm Commission receipt of submissions and to verify the date of such receipt. In this regard, licensees are encouraged to make use of postal double registering, courier service with return proof of delivery, or some similar method, in order to achieve this verification.
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For those increases based on changes in pass-through amounts payable to third parties, licensees should note that subsection 18(4)(b) requires that the documentation sent to the Commission include "the number of subscribers to whom a notice is sent pursuant to paragraph 4(a) and evidence of the increase in the amount payable by the licensee to a third party". The number of subscribers must include the total number of direct and indirect subscribers. Evidence of the increase will normally consist of a letter or invoice from the third party to the licensee, confirming the actual amount of the increased payment and the date on which it is to take effect.
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In the case of proposed rate increases based on the capital investment credit plan (subsection 18(6)) or on other criteria (subsection 18(8)), the applicable section of the regulations requires that the applicant send to the Commission "appropriate documentation to justify the proposed increase". For capital expenditure charges, such documentation must describe the proposal so as to allow the Commission to determine that the purpose of the expenditure does in fact conform to regulatory requirements relating to the reception, processing or distribution of the basic service. For other types of increases, filed under section 18(8), the Commission intends to produce a form specifically for this purpose, which, when properly filled out, would constitute the "appropriate documentation". Use of this form should reduce or eliminate the deficiency process.
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The Commission also wishes to emphasize the importance of ensuring that each subscriber receives timely notice of any proposed increase, and that the subscribers' notice contains the proper, relevant information as specified in section 18 of the regulations. Failure to provide the correct information could mean, for example, that an otherwise permissible increase would not be in accordance with section 18. For those increases which relate to partial indexing and pass-throughs, licensees are encouraged to use a form of notice to subscribers similar to that shown in Appendix B to ensure that all regulatory requirements are met in this regard. For those increases related to the capital investment credit plan and other types of increases, a form of notice and minimum information which must be given to subscribers are included as a schedule to the Cable Television Regulations, as published in Public Notice CRTC 1986-182.
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With regard to rate increase applications already filed with the Commission or filed after the new regulations come into force, they will be dealt with under the former regulatory procedure unless the licensees withdraw their applications. For those who do withdraw their rate applications, the Commission will deal expeditiously for changes to their conditions of licence so as to allow them to take advantage of the new simplified rate-setting procedures without undue delay. In the case of licensees who do not withdraw their rate applications, the Commission will not be in a position to consider their applications to amend their conditions of licence until it has disposed of their request for an increase in rates.
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Part III Licensees
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In general, a Part III licensee is a "core market" cable licensee and is defined in the new regulations as follows:
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"(a) the holder of a licence for an undertaking that, on April 14, 1981, had never been authorized to distribute the programming service of any non-Canadian television station received over the air or by microwave relay and the local head end of which is, on or after the date of coming into force of these Regulations, located within the Grade B official contour of two or fewer licensed television stations that are counted in the following manner:
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(i) affiliates or members of the same network are counted as one station,
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(ii) the CTV and TVA networks are considered as the same network,
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(iii) the Corporation is counted as if it held a single network licence, and
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(iv) an educational television programming service is not counted, or
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b) a licensee authorized by the Commission pursuant to a condition of its licence to act as a Part III licensee;"
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A list of those cable television licensees which the Commission has determined are Part III licensees in accordance with part (a) of the above definition is attached to this notice as Appendix C. Cable licensees not on the list in Appendix C may become Part III licensees, but only if a licence amendment application to add a specific condition of licence in accordance with part (b) of the definition is submitted to, and approved by, the Commission.
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Fernand Bélisle Secretary General
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