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Public Notice
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Ottawa, 13 February 1986
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Public Notice CRTC 1986-27
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Proposed Regulations Respecting Cable Television Broadcasting Receiving Undertakings
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Table of Contents
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I Introduction
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II The New Regulatory Approach to the Cable industry
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III Carriage Issues
1. Use of Equipment and facilities (Section 3)
2. Television Service Priorities (Section 9)
3. Carriage of Optional Services (Section 10)
4. Audio Services (Section 16)
5. Proportion of Canadian Channels (Section 11, Subsection 16(4))
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IV Revenue Issues13
1. Fees for Service (Section13 18)
a) Partial Indexing (Subsection 18(1))
b) Pass-through (Subsection 18(2))
c) Capital Investment Credit Plan (Subsections 18(4), 18(5), 18(6))
d) Additional Rate Increase Procedures (Subsection 18(7))
2. Installation of Service (Section 17)
3. Other Rate and Financial Issues
a) Cost Separation
b) Research and Development
c) Financial Disclosure
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V Other Issues
1. Community Channel (Sections 13, 14, 15)
2. Classes of Licences (Section 8)
3. Effect on the Regulations of the Report of the Task Force on Access to
Television in Underserved Communities
4. Alteration or Curtailment of Signals (Section 19)
5. Restricted Channel (Section 12)
6. Substitution of Identical Services (Section 20) "Strip Programming" Substitution
7. Ownership of Cable Equipment (Section 4)
8. Transfer of Ownership or Control (Section 5)
9. Tiering
10. Subscription Television (STV)
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IV CONCLUSION
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Appendix A - Proposed Cable Television Regulations
Appendix B - Requirements for Financial Disclosure
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I Introduction
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On 12 December 1984 in Public Notice CRTC 1984-305, the Commission announced a proposal to enact new Cable Television Regulations to update those which were first put in place in 1976. In order to reflect the experience acquired through a decade of rapid growth and technological change, a period which witnessed the maturing of the cable industry, extension of service to small communities, the introduction of new discretionary Canadian services, the widespread use of satellites to deliver new programming options all across North America as well as the related increasing penetration of VCRs, the Commission invited public comment on a number of important changes. The changes were all designed to recognize or take into consideration these developments and set a course for the coming years. In light of the wide public interest evidenced by some 230 briefs received in response to Public Notice CRTC 1984-305, and in order to canvass fully all the issues raised by the many interveners, the Commission scheduled a public hearing to begin 30 April 1985.
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At the public hearing the proposed regulations were subjected to an in-depth clause-by-clause study. The Commission thanks all those who took part for the time and effort taken to comment on the proposed amendments and for their very positive contribution. On 29 October 1985 a further hearing related to cable policy issues was held to review non-programming services (including the use of undertaking section of the regulations) and cable advertising, two issues which were not covered in the earlier hearing. The public notice of the 30 April hearing indicated that in order to have the kind of detailed discussion necessary to explore the complexities of the issues involved, a separate proceeding was necessary. The Commission also thanks all those who participated at this hearing for their valuable assistance.
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Before the announcement scheduling the public hearing in April 1985 was issued, the report of the Task Force on Access to Television in Underserved Communities was made public. The report was entitled The Costs of Choice and each of its recommendations was endorsed by the Commission and a commitment made to integrate those regarding licensees of "core" market and certain Class "B" systems into the new regulations.
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Having completed its assessment of the comments received and the public hearing discussions, the Commission is now issuing for further public comment, pursuant to subsection 16(2) of the Broadcasting Act, a revised proposal for new Regulations Respecting Broadcasting Receiving Undertakings. The proposal is attached as Appendix A to this notice.
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II The New Regulatory Approach to the Cable Industry
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In Public Notice CRTC 1984-305 entitled Proposed New Cable and Subscription Television Regulations, three fundamental objectives were first put forward to explain the development of the proposals. These were: to incorporate certain recent policies into the regulations, to lighten the burden of regulation, and to clarify some provisions of the existing regulations. After taking into account the comment.s received in response to the public notice and the many views expressed at the 30 April and 29 October hearings, the Commission has further examined the proposals with a view to eliminating or reducing any provisions not seen as essential to the achievement of the goals of the Broadcasting Act and the strengthening of the overall system.
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In reviewing the Cable Television Regulations to determine where regulations could be eliminated or made more flexible and adaptable, the Commission is shifting to a regulatory environment that is less intrusive and to a more supervisory course of action. The Commission is confident that such an approach is now required in view of the increasingly competitive environment confronting the cable television industry, the perceived need for a more comprehensive menu of both programming and non-programming services to be offered to each community and the urgent need for re-investment in cable systems in order to ensure continued quality of service to all subscribers.
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As a result, the proposed regulations have eliminated or substantially reduced existing regulatory provisions which are not seen as essential or necessary to the achievement of tile policies set out in the Broadcasting Act or to the integrity of the broadcasting system.
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At the heart of the Commission's new approach to cable regulation is the concentration of effort and concern for the fostering and encouragement of a strong, identifiably Canadian broadcasting system. As a result the regulations will continue to specify priority carriage of Canadian services and indeed expand the range of such priority services to include various new services distributed to local cable systems by satellite. The existing requirement of carriage of such services on the "basic" service (beginning with channels 2 - 13 of a standard television receiver) of cable systems, on unrestricted channels, is maintained. Additionally, the Commission is committed to the principle that each system must devote a greater number of television channels to the distribution of Canadian than non-Canadian programming services for both video and audio service. This principle, which has been followed in recent years by the Commission in licensing decisions, has been incorporated in the proposed regulations. The requirement will apply to the combination of basic and discretionary programming services and will help ensure that the cable system as a whole carries a majority of Canadian services.
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The Commission is further proposing to authorize a large number of programming services directly by means of the regulations themselves rather than through its licensing process. This will eliminate the need for applications and the necessary regulatory process and attendant time delays in allowing specific Canadian and non-Canadian services to be distributed by cable systems.
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With respect to the regulation of cable rates, the Commission has decided to streamline the process for changes to fees. In addition to the partial C.P.I. indexing discussed at the 30 April Public Hearing the Commission is now proposing to authorize automatically a licensee to increase its rates in order to cover costs which are passed through to a third party, whose rates have been approved by a federal or provincial authority. In addition, an incentive for capital investment is proposed, the goal of which is to ensure that systems are encouraged to adapt to technological and market needs.
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Mindful of the impact this more streamlined process might have, the Commission will require that each subscriber is provided with a notice of increase with details which explain the increase. The new notification requirement (which improves the present public announcement formula) will enable subscribers to be fully informed so as to react to any increases put forward by the licensee serving them.
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These proposals should give increased flexibility and enable cable licensees to meet their revenue requirements and, in the Commission's view, reduce the need to develop new sources of revenues via the community or other cable channels. The Commission is therefore proposing that the existing role of the community channel and special programming channels be maintained by prohibiting conventional advertising on the community channel or local inserts on specialty programming services.
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On the other hand, community programming will be allowed to benefit from the use of contra, credit and sponsorship messages which will now be permitted on the community channel when directly related to the production of programming.
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The guaranteed distribution of local and regional broadcasting services has traditionally been a cornerstone of cable regulation, first expressed in policy and subsequently in formal regulations. It underpins what has been called the "logic of the local licence".
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To meet this objective the regulations respecting signal substitution were developed and have in this proposal been retained. Some minor modifications have been introduced to reduce daily operational problems.
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As well, a proposal put forward by the Canadian Association of Broadcasters (CAB) to extend the signal substitution provision to include non-identical episodes ("strip programming") is now incorporated for comment.
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Finally, under the new approach, non-programming services, which generally have little direct relationship or impact upon the objectives of the Broadcasting Act, will not require authorization pursuant to the Act. Licensees will be able to develop and put in place non-programming services under the general guidelines already in place as a result of hearings held in 1979 and 1981. In the Commission's view, the "experimental" approach initially taken for non-programming services on cable systems is now over.
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A more detailed discussion of each of these points follows.
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III CARRIAGE ISSUES
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1. Use of Equipment and Facilities (Section 3)
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Section 3 is a key section. In the existing Regulations, a licensee is required to apply to obtain authorization for any use of the undertaking other than for the distribution of priority services. Authorization is now proposed for the majority of programming services directly through the Regulations without the need for an application and a licensing decision.
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In order to offer non-programming services, another important effect on the proposed change in wording and approach in Section 3 is that licensees will not be required to go through an application process. They will be able to develop, distribute, adjust and adapt these services rapidly in the light of market and competitive requirements. Services which are not programming services within the meaning of the regulations will no longer fall within the proposed regulatory scheme. Therefore, an alphanumeric service may contain advertising as long as these messages are consistent with the requirements of an alphanumeric service. It is the Commission's hope that this approach will lead to new ideas and innovations and thus spur further activity in this field.
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This suggested change follows a careful study of the activity which has already taken place, the related developments in telecommunications regulation and data gathered from Canadian and U.S. experiments. It is the Commission's view that the short-to-medium term potential of these kinds of activities, most of which are at this stage only untested ideas, does not warrant Commission involvement beyond a reiteration of the general guidelines which have been in place since the experiments first began in 1981.
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These guidelines, which were included in the Commission's introductory statement to Decisions CRTC 81-919 and following, require that spectrum priority be given to programming services over non-programming services and that there be no direct or indirect subsidy of non-programming services by subscribers taking only basic service. Consultation with the industry on the format of reports to the Commission to show that cross subsidization does not exist will continue.
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The Commission has noted the concerns expressed by some interveners during the 29 October hearing on issues such as third party access, privacy, and separation of carriage and content, which are more directly related to the provision of telecommunications rather than broadcasting services. In the Commission's view, there is no reason at this time to provide for a different regulatory approach. The Commission continues to view the question of privacy with serious concern and notes that the Canadian Cable Television Association (CCTA) has already developed an industry code which incorporates many of the points raised by the Commission in 1981.
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With the exception of the change regarding advertising material, the Commission expects licensees to continue to adhere to the two provisions noted above and other requirements which may be part of any existing authorization of non-programming services and will verify that these principles are being followed as part of the normal renewal process.
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2. Television Service Priorities (Section 9)
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The regulations governing television service priorities remain at the centre of the Commission's approach to cable. Some subsections have been modified and others added to strengthen the overall thrust of the requirements.
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Paragraph 9(1)(g) has been added following the 30 April hearing to ensure that CBC satellite or microwave delivered signals are given priority when no CBC service is available over the air either locally or regionally.
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Should the Commission license any additional service owned and operated by the Corporation and as part of the licensing proceeding determine that the service should be made available to all cable subscribers rather than remain optional, subsection 9(3) allows for mandatory carriage as part of the basic service.
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A similar provision has been added for satellite delivered educational programming services. A related matter connected to carriage of educational services is the issue of consent in relation to carriage of out of province educational programming services. This issue was raised at the 30 April hearing. The Commission is of the view that whatever arrangements may be necessary should be settled by the parties involved rather than be required by the Commission.
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In cases where an educational service in a second official language is authorized for the province in which a licensee operates, a new subsection in the regulations will require systems to carry that signal as part of the basic service.
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3. Carriage of Optional Services (Section 10)
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The attached proposed Regulations would permit licensees to distribute eligible optional services without having to obtain the prior approval of the Commission, once the existing priority carriage requirements are met. This approach which is consistent with the one proposed in the earlier draft is expected to reduce substantially the regulatory burden on the cable industry and accelerate the offering of these services to subscribers.
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Licensees would simply notify the Commission of services which they are carrying as part of annual reporting requirements. Where a licensee wishes to carry a service not specifically authorized by regulations, application would be made and authorization may be given pursuant to a general condition of licence. The Commission will normally deal with such requests administratively as outlined in Public Notice CRTC 1982-42 or by decision consistent with existing policy.
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4. Audio Services (Section 16)
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Cable licensees must currently offer an audio service which is composed predominantly of FM stations to subscribers on all Class A and C systems. A number of problems in the earlier draft of the proposal including some related to FM spectrum availability were identified by interveners and were then comprehensively discussed during the 30 April hearing. In the initial proposal, the Commission had expanded the mandatory requirements and authorized a large number of services directly through the regulations. Broadcasters were generally strongly in favour of this approach. At the same time, the cable industry opposed the expanded mandatory requirement and preferred to be able to increase the number of optional services which could be offered. The Commission is now proposing an approach which should enable licensees to provide a greater diversity of services and correct the spectrum availability problems of many large urban systems. The Commission will impose minimum mandatory carriage requirements to provide for priority carriage of local FM and now AM services, and a broad selection of optional carriage services while maintaining an overall majority of Canadian to non-Canadian services.
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In placing the authority for carriage of priority and optional audio signals directly in the regulations, the scheme differs slightly from that used for video. Unlike video programming services where the regulations give explicit guidance as to the services which are authorized for optional carriage, any audio service may be carried unless it is explicitly excluded. The exclusions reflect current policy concerns respecting the soliciting of advertising by non-Canadian stations, religious programming services, and policy provisions which give effect to portions of the new Ethnic Broadcasting Policy for Canada. Existing closed circuit services or other audio service which are carried pursuant to a general condition of licence may not be deleted without authorization from the Commission in keeping with the current provisions of each cable licence. 5. Proportion of Canadian Channels (Sections 11, Subsection 16(4))
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The wording of the provisions enacting the Commission's policy on balance between Canadian and non-Canadian programming services has been changed, with "equal to" being replaced by "greater than" to make it consistent with the policy stated in Public Notice CRTC 1984-81. In addition, the wording has been clarified to ensure that alphanumeric services will not be counted for purposes of balance although the community channel will qualify as a Canadian programming service.
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There is a similar requirement pertaining to the carriage of audio services contained in subsection 16(4) of the regulations.
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IV REVENUE ISSUES
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1. Fees for Service (Section 18)
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The number of cable systems licensed by the Commission has more than doubled in the last ten years; from 419 licensed undertakings in 1975 to about 940 in 1985. Many of these new systems and others which can be licensed have become viable because of the availability of satellite signals rather than those delivered over the air, and are therefore now found in communities which previously had little real choice in television viewing. About 80 systems are now licensed to serve fewer than 200 households.
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In the already established areas, the major cities and towns where cable has been in place for a number of years, systems are mature. With high levels of penetration already achieved, (in 1984 the average of almost 600 systems reporting is over 72%) the level of revenues has stabilized in contrast to increases which came from subscriber growth as the systems were developing.
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In areas served by mature cable systems, rebuilding is critical to accommodate advances in technology such as multi-channel sound or to expand capacity for new services and more simply to replace worn out or obsolete equipment. At present applications for rate increases which may be necessary to help finance the costs associated with these changes must take account of the current level of rates, the costs associated with regulatory lag and increasing public awareness of the alternatives to traditional cable service.
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These alternatives are likely to become a significant factor in the next few years. While still maintaining a licensed monopoly in many areas of the country, there is some competition to cable. This competition is generally found in apartment buildings, condominiums and other multiple units which use SMATV systems rather than cable. Although SMATV systems are used all across the country, they are more numerous in western Canada.
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In the early 1980s direct competition from MATV and SMATV systems started to increase more rapidly and the broadcasting environment was altered significantly because of the expanded use of satellites for the distribution of unscrambled foreign and Canadian services including both pay and specialty Canadian services.
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Indirect competition from alternate sources of video delivery is also increasing. Over 30 per cent of Canadian households possess video cassette recorders (VCRs). The home video rental market has expanded rapidly over the last three years and video cassette rentals in 1985 are estimated to have generated over $500 million in revenues. Sales of individually-owned TVRO's are reported to average 4,000/month and currently serve 175,000 households. Emerging technologies, such as direct broadcasting by satellite (DBS) and multi-point distribution systems (MDS), may develop along competitive lines.
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As a result of these trends and as people are increasingly exercising their options, the industry and the Commission are searching for ways to satisfy this demand for service by creating an environment in which licensees may respond to consumers quickly while offering them real programming value for their dollar.
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The rapidly changing environment in which cable television licensees operate, together with the introduction of discretionary tiers of programming services which are not rate regulated and other related policies adopted by the Commission, have resulted in the need to revise the Commission's general policies and practices related to rate regulation.
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Starting in 1980, the Commission introduced a streamlined process for setting maximum monthly and installation fees when the cable system served less than 3,000 subscribers. The extension of this approach through a "passive disallowance" option was proposed by the Commission in the proposed cable television regulations issued in December 1984. As well, installation fees were to be free of any requirement for authorization. At the 30 April 1985 hearing, an extensive discussion took place on the basic principle of reducing the regulatory scrutiny of rates and on the mechanics of its implementation.
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While proceeding with such a revision the Commission remains concerned with its potential impact on individual subscribers. For this reason, the proposed relaxation in rate regulation is accompanied by an additional and new obligation on licensees to inform each subscriber of any upcoming rate increase.
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The Commission intends to adopt an approach to the regulation of basic monthly subscriber rates which provides for four separate processes, which apply to all Part II licensees.
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The first two processes would allow a licensee to increase its monthly fee without application, automatically after proper notification to subscribers and to the Commission. There will be no other regulatory requirements to satisfy prior to the increase taking effect. These will allow a licensee to recover partially increased expenses related to inflation (indexing) and certain third party charges (pass-through).
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Under the third and fourth processes, a passive disallowance approach has been suggested. According to this approach, a licensee may implement a rate increase filed under either of the two passive disallowance plans unless the Commission, prior to the date on which a proposed rate increase is to take effect, suspends the implementation of all or part of that increase pending further consideration. This could include either requesting additional information, further public process, or both. These processes will allow for recovery of certain investments in plant and equipment (capital investment credit plan) and other increases which may be required based on economic need or on the other criteria contained in the Commission's public notice of 18 September 1974 regarding rate change applications.
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Should the Commission not take action, the rate becomes Lawful at the end of the notification period. If the Commission intervenes, the licensee will not be allowed to change the monthly fee until the Commission issues a decision.
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a) Partial Indexing (Subsection 18(1))
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As discussed at the 30 April public hearing, the Commission now proposes to allow annual rate adjustments of up to 80 per cent of the percentage increase in the Consumer Price Index (CPI) for all Part II cable licensees. The Commission expects that the indexing scheme will allow for more timely implementation of rate increases which will in part recover expenses by using the CPI index without the regulatory costs and delays that occur under the existing rate approval process.
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b) Pass-through (Subsection 18(2))
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All Part II cable licensees will be permitted to increase their monthly subscriber fee by an amount consisting of a licensee's direct per subscriber payment to another person where that payment has been separately approved by the Commission or a provincial regulatory authority. This procedure would enable licensees to pass through cost increases over which they have no control and which are normally approved anyway under the existing rate approval process and thus allow for the immediate addition of service for which a fee must be paid by the cable licensee.
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With respect to both indexing and pass-through increases, to safeguard of subscriber interests, advance notice at least 40 days will be given to all subscribers and the Commission setting out the existing authorized rate and the amount of the proposed increase in the basic monthly fee. The period of notice should allow subscribers sufficient time to make their views known to the licensee and to cancel the service if they wish before the increase takes effect.
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c) Capital Investment Credit Plan (Subsections 18(4), 18(5), 18(6))
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The capital investment credit would permit licensees who make eligible capital expenditures to recover 50 per cent of the capital expenditure amortized over 60 months on a pro rata per subscriber basis. That is, licensees would be permitted to adjust the monthly fee upwards to recover directly 10 per cent of the amount of the eligible investment made in each year. Forty days following notification of all subscribers and providing the Commission does not suspend the implementation of all or part of the increase pending its further consideration, the increase could be put into effect. In cases where the Commission has already awarded a fee increase based on future capital expenditures, it will take this into account in making the determination whether or not to intervene.
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The Commission's objective with respect to this proposal is to encourage licensees to rebuild and improve old plant and equipment, to increase channel capacity and to improve the technical capabilities of their systems in order that delivery of Canadian services will be facilitated and the quality of service to subscribers improved. In designing it, the Commission wishes to reiterate its determination that cable systems remain the preferred means of distributing, at an affordable rate, services which are vital to the Canadian broadcasting system.
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Eligible capital investment projects, either purchase or lease, are defined as capital expenditures for new construction and replacement or improvement of existing physical plant which will enhance basic service including head-ends, amplifiers and distribution plant. Capitalized leases are eligible under this option; interest allocations however are not included. The Commission will monitor systems making capital investment using this process to ensure that the projects have been carried out.
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The notification of subscribers with respect to any rate increase proposed under this procedure would be in the form set out in Schedule 1 to the proposed regulations and will in fact provide more immediate and pertinent information as to changes they may anticipate in the next year, than at present under the public notification system.
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d) Additional Rate Increase Procedures (Subsection 18(7))
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The fourth procedure provides for those cases where a licensee requests a rate in excess of that which would be allowed under the other options. The licensee would be permitted to implement such an increase 90 days following notification of all subscribers and the Commission, providing the Commission does not suspend the implementation of all or part of the increase as described above during the 90 day period.
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The notification to each individual subscriber under this rate increase procedure would be in the form set out in Schedule II to the proposed regulations.
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For both schedules I and II, an outline of the rate change will be provided along with the address where the complete filing, including the financial disclosure indicated in Appendix B and any other information which may be requested by the Commission, is available for public inspection. The Commission's address will he included should any subscriber wish to comment on the suggested increase.
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The Commission wishes to emphasize that the provisions for partial indexing and pass-through increases and the capital investment credit should not be used as a means of obtaining interim partial rate increases. A filing for further increases in the same year where a licensee has implemented a rate change using any or all of the other options would not ordinarily be granted unless exceptional economic need, substantially higher operating costs or qualification under any of the other 1974 criteria can be clearly demonstrated.
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This regulatory approach to rate regulation will be subject to a complete review approximately two years following the date upon which the new proposed regulations go into effect.
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2. Installation of Service (Section 17)
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In determining the appropriate approach to the provision of service regulation, the Commission considered, among other things, the circumstances under which cable operators should have an obligation to provide service and the type of service they should be obliged to provide. It also considered whether or not there should be a "cap" on installation fees and the concerns expressed by cable operators at the public hearing about the collection of fees in arrears and reconnections to households where fees are in arrears but where service is requested by a different family member.
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The Commission has proposed that it will no longer approve installation fees. It is of the view that cable operators should be allowed to charge an installation fee up to a maximum ("cap"), equivalent to the actual expenses incurred in making the installation. In addition, the Commission has determined that an explicit requirement will be included for the wiring of all residential areas provided with municipal water or sewer services within the service area. Exceptions for unusual situations where service cannot reasonably be provided can be authorized by conditions of licence. Operators will not be obliged to provide service where an outstanding debt for basic service is owed to the licensee by the person requesting provision of service, nor is a licensee required to provide a converter as part of the installation.
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3. Other Rate and Financial Issues
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a) Cost Separation
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The Commission wishes to take this opportunity to dispose of several other rate and financial reporting issues which have not been formally concluded by the Commission.
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Public Notice CRTC 1984-143 dated 12 June 1984, in part raised the issue of cost separation. The notice stated:
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In Public Notice CRTC 1983-245, dated 25 October 1983, entitled Cable Television Tiering and Universal Pay Television Service, the Commission stated, in part, that it "will not at this time regulate the retail rate for the discretionary tiers" and "will continue, at this time, to regulate the rate for the basic tier as it has in the past and will also be concerned that the basic tier rate not subsidize, either directly or indirectly, the discretionary tier services".
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With the introduction of new pay television and specialty and other services on discretionary tiers, the Commission now wishes to ensure that it continues to have a proper accounting of the financial results of the rate-regulated basic tier services.
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The Commission now reiterates its position about the need for cost separation and confirms its concern that "the basic tier rate not subsidize, either directly or indirectly, the discretionary tier services". Similarly, the Commission is of the view that programming services should not subsidize non-programming services.
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As a result, new incremental operating and capital costs associated with the provision of discretionary and non-programming services may not be included in the rate base relating to basic services. The Commission will continue to consult with the industry to develop a financial reporting form which will facilitate supervision of this cost separation requirement for all systems required to file annual returns.
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b) Research and Development
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The issue of research and development has been the subject of discussion from time to time between the Commission and certain of its licensees.
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At issue is the question of whether or not research and development should be carried out at the individual system level or whether these costs incurred by a multi-system operator represent legitimate charges against an individual system's operations. Additionally, what types of research and development, if any, should be allowable expenses for inclusion in the basic regulated service; what benefits, if any, flow through to the basic service subscriber; and how can these benefits be measured?
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After considerable discussion and deliberation on the above issues, the Commission's position is that, for purposes of regulating the basic monthly fee, it will no longer take into account expenditures on account of research and development which are incurred either directly by an individual licensee or through a related third party.
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c) Financial Disclosure
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Public Notice CRTC 1983-156 issued 21 July 1983, proposed certain requirements relating to financial disclosure for Class A and C cable television undertakings. Further comments were requested in Public Notice CRTC 1984-143 issued 12 June 1984. The Commission now announces that its requirements pertaining to the financial information to be disclosed by all licensees, other than Part III licensees, for proposed fee increases pursuant to subsection 18(7) of the proposed regulations, are set out in Appendix B to this Notice.
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V Other Issues
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1. Community Channel (Sections 13, 14, 15)
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Over the years the Commission has devoted a great deal of attention to the development of the local alternative programming offered on the community channel. There is now a recognition by licensees of the value of this service. Aided by the many documents pertaining to the philosophy and practice of the channel, the constant review of that mandate at licence renewal time and some additional flexibility resulting from the 1984 review, titled Sharing the Community Channel, there is a well developed core of programmers and volunteers across the country who produce a significant amount of locally oriented programming. The Commission expects this effort to continue in the future.
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While the actual animation of the channel has moved through many phases, advertising material has been prohibited by regulation. The cable policy review of 1979 reaffirmed that position. By mid-1984, as part of a community channel review which focused primarily on changes to the channel suggested by community programmers themselves, the advertising question was raised again, particularly for contra recognition. The fear of a potential reorientation of the channel and possible negative effects on the revenues of over the air broadcasters were cited as the two reasons for rejecting the idea at that time.
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However, the Commission is now proposing that contra, credit and sponsorship messages be permitted, provided they relate to the provision of a community program, but that traditional "spot" advertising of the type normally seen on conventional broadcasting outlets, continue to be prohibited.
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There is no evidence that this limited relaxation would have any serious effect on the revenues of local broadcasters or that the orientation of the programming would be altered by this change. The regulations make it clear that this new revenue is intended to help create community programs, and not simply to accrue to the general revenues of cable systems. The Commission will follow with interest the practical results these changes may bring and will assess their impact at renewal time. It is proposed that all licensees be permitted to use local FM or AM programming as background on the community channel.
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A number of other minor amendments and deletions have been made in an effort to reduce unnecessary reporting requirements for licensees.
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2. Classes of Licences (Section 8)
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The Commission proposes two classes: all cable undertakings (except Part III licensees) having 6,000 or more subscribers (currently Class A), will hold Class 1 licences; the existing Class C and Class B systems, i.e., those cable undertakings having fewer than 6,000 subscribers, will be defined as Class 2.
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A somewhat different regulatory scheme would apply to each of the two classes. The provisions relating to the carriage of audio signals would be mandatory for Class 1 licensees hut for Class 2 licensees only when they elect to distribute audio services. The provisions relating to signal substitution would be mandatory for Class 1 licensees and permissible for Class 2 licensees.
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Should a Class 2 operator choose to distribute audio services, the carriage rules set out in Section 14 must be followed. It is expected that approximately 72 licensees will be affected by this change.
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3. Effect on the Regulations of the Report of the Task Force on Access to Television in Underserved Communities (Klingle Report)
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The Report of the above-noted Task Force which was submitted to the Commission on 25 February 1985 contained 34 recommendations each of which was subsequently endorsed by the Commission, subject to certain provisions (Public Notice CRTC 1985-60 dated 22 March 1985). The Commission intends to give effect to those recommendations by the creation of a Part III to its regulations which will apply to licensees formally referred to as "core" licensees.
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In recognition of the already high monthly fees required to keep most of these small systems in operation, the Commission considers that these licensees should be subject to a minimum amount of regulation.
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With respect to Part III licensees, mandatory television carriage is limited by regulation to local and regional programming services; monthly fees, provision of service and installation fees will not be regulated; all eligible programming services may be distributed as part of the basic service; and the proportion of Canadian to non-Canadian channels applicable to Class 1 and 2 licensees, will not apply.
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The definition of a "Part III licensee" puts in place the essential eligibility criterion of two or less Canadian stations and explains how signals are counted. Affiliates or members of the same network are counted as one station and an educational television station or educational programming service is not counted. House of Commons and provincial legislature services are not counted as they are not stations" for the purposes of the definition of a "Part III licensee."
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The provision limiting certain of the report's recommendations directed towards all Class B licensees to include only "B 12" systems, referred to in the notice, has been changed to reflect the new classes of licence. The policy options previously available to "B 12" systems will now apply to all Class 2 systems utilizing 12 channels (channels 2 - 13) or less to distribute authorized services to subscribers.
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4. Alteration or Curtailment of Signals (Section 19)
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The Commission has redrafted the provisions pertaining to alteration or curtailment of signals to accommodate alteration or curtailment which occurs as a result of legitimate operating circumstances. Also, as stated in the 30 April Notice of Public Hearing, this section has been revised to permit a licensee to alter or curtail a signal for the purposes of complying with subsection 195(1) of the Canada Elections Act.
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5. Restricted Channel (Section 12)
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In response to suggestions by both CAB and CCTA, the Commission has adopted a definition of restricted channel which takes into account the difficulties associated with the question of determining what signal strength level causes impairment. Accordingly, for stations outside Canada, the definition of a restricted channel contained in the new proposed regulations uses 60 kms. from the transmitter site of a TV or FM station as the criterion for determining when a channel is restricted. For Canadian stations the Grade A contour will still define a restricted channel.
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6. Substitution of Identical Services (Section 20)
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The regulations relating to the substitution of identical signals have been changed to enable the cable licensee to discontinue the substitution when the signal is found not to be identical. In response to positions put forward by the CCTA, Section 20(5) will be permissable rather than mandatory.
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The Commission notes that some operational difficulties arising from simultaneous signal substitution could be overcome by the adoption of signalling by broadcasters and cable operators. Paragraph 20(1)(b) of the proposed regulations has been amended by changing "located in" to "operated from" to recognize that remote switching may take place away from the station.
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Provision has been made to ensure that the subsidiary signal (closed captioning) arrangements, as previously agreed to by the Commission, have been included.
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"Strip Programming" Substitution
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A proposal to amend the regulations to allow substitution for non-identical episodes of strip programs was raised at the public hearing by the CAB.
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"Strip programming" generally refers to re-runs of serialized programming originally seen in prime time. A strip is made up of a number of different episodes or shows, usually scheduled Monday to Friday at the same time each day after it has completed its original weekly network distribution. Typically "strip programs" need not be released in any particular sequence of episodes and stations purchase the right to repeat each episode a number of times during the term of the contract.
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A change in the definition of "identical signals" as contained in Section 20 of the Cable Television Regulations has been proposed to permit substitution requests from broadcasters scheduling strips at the same time as a station having a lower priority. This provision would allow broadcasters to extend the current signal substitution requests to episodes which are not identical.
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7. Ownership of Cable Equipment (Section 4)
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By including this section in the regulations, the Commission will no longer need to add the specific condition of licence dealing with ownership of the technical equipment in all new and renewal licence decisions. The existing policy and practice of the Commission is maintained in this area.
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Since "subscriber drop" is defined as both inside and outside wiring, cable television licensees in certain western provinces may need a specific condition of licence to accommodate their agreements with provincial carriers.
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8. Transfer of Ownership or Control (Section 5)
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Section 5 incorporates into the regulations, in a slightly revised form, the revised condition of licence as set out in the Public Announcement issued by the Commission on 7 January 1980, entitled Transfers of Ownership of Licensed Broadcasting Undertakings. The Regulations require that licensees notify the Commission of any act, agreement or transaction whereby a person ends up with 20 to 39 percent of the voting shares of a licensee. A similar obligation exists whenever control over 40 percent or more of the voting shares is obtained. This change has been made to reduce the regulatory lag facing licensees. The Commission has retained the requirement for prior approval for changes in effective control and added a provision for changes involving over 30 percent of the issued voting securities.
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9. Tiering
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The Commission will continue to apply the existing policy framework as set out in Public Notice CRTC 1984-81. This will allow the Commission to respond to individual circumstances and the rapidly changing environment currently affecting the market strategies and public acceptance of pay and discretionary services.
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It is therefore proposed that the provisions which were contained in sections 9 and 10 of the regulations proposed at the 30 April 1985 public hearing should be deleted pending the outcome of the review of tiering and linkage announced in Public Notice CRTC 1984-81 Specialty Programming Services. This review is now tentatively scheduled for early 1987.
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10. Subscription Television (STV)
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Most of the regulations applying to cable are inapplicable or inappropriate for STV, such as those relating to signal substitution and audio carriage. The Commission has determined that in order to eliminate any confusion that might occur as a result of the inclusion of STV, the new proposed regulations will not deal with these undertakings. Until specific STV regulations come into effect the Commission will continue with the current practices regarding STV as set out in Public Notice CRTC 1983-164 dated 5 August 1983.
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IV Conclusion
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WRITTEN COMMENTS ON THE PROPOSED REGULATIONS SET OUT IN APPENDIX A TO THIS NOTICE SHOULD BE SUBMITTED NO LATER THAN 27 MARCH 1986. ALL COMMENTS SHOULD BE ADDRESSED TO THE SECRETARY GENERAL, CRTC, OTTAWA, ONTARIO, K1A 0N2.
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Fernand Bélisle
Secretary General
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APPENDIX A
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REGULATIONS RESPECTING BROADCASTING RECEIVING UNDERTAKINGS
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Short Title
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1. These Regulations may be cited as the Cable Television Regulations.
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Interpretation
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2. In these Regulations,
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"alphanumeric service" means any combination of letters, numbers, graphic designs, still images or spoken words that simply and briefly explain or describe what is represented by the letters, numbers, graphic designs or still images; (service alphanumérique)
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"A.M. station" means a station that broadcasts sound only in the A.M. band; (station M.A.)
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"audio channel" means a channel of an undertaking on which is distributed a frequency-modulated transmission capable of being received by subscribers by means of a conventional F.M. radio receiver; (canal sonore)
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"base portion" means the basic monthly fee exclusive of the pass-through portion; (frais de base)
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"basic band" means the channels of an undertaking that correspond to channels 2 through 13 on a conventional television receiver; (bande de base)
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"basic monthly fee" means the total amount that a licensee is authorized by the Commission to charge to a subscriber on a monthly basis for provision of the basic service but does not include federal or provincial taxes; (tarif mensuel de base)
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"basic service" means the services distributed by a licensee as a package and composed of the programming services whose distribution is required by sections 9 or 16 or pursuant to a condition of its licence, and any other services that are included in the package for the basic monthly fee; (service de base)
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"Canadian programming service" means a programming service consisting of community programming or a programming service originating entirely within Canada; (service de programmation canadien)
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"commercial message" means an announcement intended to sell or promote goods, services or activities directly or indirectly or an announcement that mentions or displays in a list of prizes e name of the person selling or promoting those goods, services or activities; (message commercial)
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"community channel" means the channel of an undertaking that is used for the distribution of community programming; (canal communautaire)
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"community programming" means, in relation to an undertaking, programming that
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(a) is produced by the licensee of that undertaking or by members of the community served by that undertaking,
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(b) is produced by the licensee of another undertaking or by the members of-the community served by that other undertaking and is relevant and of particular interest to the community referred to in paragraph (a), or
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(c) is produced by a network operator licensed to provide programming to a licensee for distribution on a community channel; (programmation communautaire)
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"discretionary service" means a programming service that is not included in the basic service and that is distributed to subscribers on a discretionary basis for a fee separate from and in addition to the basic monthly fee; (service facultatif)
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"distant television station" means a licensed television station that is not a local television station, a regional television station or an extra-regional television station; (station de télévision éloiqnée)
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"distribution system" means the equipment and facilities used by a licensee for the distribution of its basic service from its processing facilities to the points at which that service is diverted for the exclusive benefit of a subscriber; (système de distribution)
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"educational authority" means a body that is
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(a) an independent corporation, as defined in the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences), or
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(b) a provincial authority, as defined in the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences); (autorité educative)
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"educational programming" means the programming described in the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences); (programmation éducative)
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"educational programming service" means a programming service that provides educational programming and whose operation is the responsibility of an educational authority; (service de programmation éducative)
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"educational television station" means a licensed television station that transmits educational programming and whose operation is the responsibility of an educational authority; (station de télévision éducative)
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"ethnic station" means a station that is licensed to devote at least 60 per cent of its broadcast week to ethnic programs; (station à caractère ethnique)
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"extra-regional educational television station" means an extra-regional television station that is an educational television station; (station de télévision éducative extra-régionale)
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"extra-regional television station" means, in relation to an undertaking, a licensed television station having
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(a) a Grade A official contour or Grade B official contour that does not include any part of the licensed area of that undertaking, and
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(b) a Grade B official contour that includes any point located 32 Km or less from the local head end of that undertaking; (station de télévision extra-réqionale)
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"F.M. station" means a station that broadcasts sound only in the F.M. band; (station M.F.)
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"licence" means a licence issued by the Commission to carry on an undertaking; (licence)
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"licensed" means licensed by the Commission pursuant to subsection 17(1) of the Broadcastinq Act; (autorisé)
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"licensed area" means the area for which a licensee has been licensed to provide service; (zone de desserte autorisée) "licensee" means a person to whom a licence has been issued; (titulaire)
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"local A.M. station" means, in relation to an undertaking, a licensed A.M. station having a night-time interference-free official contour that includes the local head end of the undertaking; (station M.A. locale)
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"local F.M. station" means, in relation to an undertaking, a licensed F.M. station having a 500 microvolt-per-metre official contour that includes any part of the licensed area of the undertaking; (station M.F. locale)
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"local head end" means
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(a) the equipment and facilities at any specific location that are used for the reception and processing of programming services that are transmitted by local television stations or, if there are no such stations, by regional television stations and that are distributed by the licensee, and for the processing of other services that are distributed by the licensee, or
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(b) where there is more than one such location, the head end that receives the majority of the programming services referred to in paragraph (a); (tête de ligne locale)
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"local educational television station" means a local television station that is an educational television station; (station de télévision locale éducative)
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"local television station" means, in relation to an undertaking, a licensed television station having a Grade A official contour that includes any part of the licensed area of the undertaking; (station de télévision locale)
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"network operator" means a person licensed to carry on a network; (exploitant de réseau)
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"non-Canadian programming service" means a programming service other than a Canadian programming service; (service de programmation non canadien)
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"non-Canadian television station" means a television station having a transmitter site that is located outside of Canada; (station de télévision non canadienne)
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"official contour" means a service contour marked for a licensed television station, licensed A.M. station or licensed F.M. station on the map most recently published pursuant to the Department of Communications Act by the Minister of Communications pertaining to that station; (périmètre de rayonnement officiel)
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"Part II eligible Canadian satellite service" means a programming service available from a Canadian satellite and included by the Commission in the list of services authorized by the Commission for carriage by a licensee other than a Part III licensee; (service admissible par satellite canadien assujetti à la partie II)
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"Part II eligible non-Canadian satellite service" means a programming service available from a non-Canadian satellite and included by the Commission in the list of services authorized by the Commission for carriage by a licensee other than a Part III licensee; (service admissible par satellite non Canadien assujetti a la Partie II)
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"Part III eligible Canadian satellite service" means a programming service available from a Canadian satellite and included by the Commission in the list of services authorized by the Commission for carriage by a Part III licensee; (service admissible par satellite canadien assujetti à la partie III)
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"Part III eligible non-Canadian satellite service" means a programming service available from a non-Canadian satellite and included by the Commission in the list of services authorized by the Commission for carriage by a Part III licensee; (service admissible par satellite non canadien assujetti à la partie III) "Part III licensee" means
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(a) a licensee who, 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 whose local head end is located within the Grade B official contour of two or fewer licensed television stations, and
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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 counted as one 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 station 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; (titulaire assujetti à la partie III)
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"pass-through portion" means that part of the basic monthly fee that reflects the amount payable by a licensee to a third party for the transmission of programming services where that amount varies in proportion to the number of subscribers to whom the licensee distributes those programming services and where the third party is
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(a) a provincially-regulated telephone company and the amount has been approved or, where applicable, not disallowed by the relevant provincial public authority,
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(b) licensed to operate a broadcasting undertaking and the amount has been authorized by the Commission pursuant to subsection 17(1) of the Broadcasting Act, or
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(c) a company within the meaning of section 320 of the Railway Act and the amount has been approved by the Commission under that section; (frais imputables)
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"pay television service" means a programming service provided Pursuant to an agreement between a licensee and a person licensed to carry on a pay television network; (service de télévision payante)
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"programming service" means any combination of images, sounds or images and sounds including a commercial message, other than an alphanumeric service, that is designed to inform or entertain the public, and is
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(a) transmitted to a cable head end over the air, by microwave or satellite relay or by means of a hard wire feed, or
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(b) distributed by a licensee; (service de programmation)
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"regional educational television station" means a regional television station that is an educational television station; (station de télévision éducative réqionale)
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"regional television station" means, in relation to an undertaking, a licensed television station, other than a local television station, having a Grade B official contour that includes any part of the licensed area of that undertaking; (station de télévision régionale)
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"restricted channel" means any channel of an undertaking that is the same channel on which signals are transmitted by
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(a) a local television station or a local F.M. station, or
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(b) a television station or an F.M. station having a transmitter site that is located outside of Canada within 60 Km of any part of the licensed area of an undertaking; (canal à usage limité) "specialty service" means a programming service provided pursuant to an agreement between a licensee and a person licensed to carry on a specialty service network; (service spécialisé)
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"station" means a broadcasting transmitting undertaking; (station)
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"subscriber" means
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(a) a household of persons, whether occupying a single-unit residence or a multiple-unit residence, to which service is provided directly or indirectly by a licensee, or
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(b) the owner or operator of a hotel, hospital, nursing home or other commercial or institutional premises to which service is provided by a licensee; (abonné)
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"subscriber drop" means the equipment or facilities used by a licensee for the distribution of the programming services distributed on its basic band from the point at which these services are diverted from the distribution system for the exclusive benefit of a subscriber to a television receiver, F.M. receiver, channel converter or terminal device in that subscriber's household or premises; (prise de service)
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"undertaking" means a broadcasting receiving undertaking that distributes programming services to subscribers by means of cable; (entreprise)
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"unrestricted audio channel" means an audio channel of an undertaking that is not a restricted channel; (canal sonore à usage illimité)
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"unrestricted channel" means a channel of an undertaking that is not a restricted channel. (canal à usage illimité)
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PART I
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Use of Equipment and Facilities
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3. A licensee shall not use or permit the use of its local head end, distribution system or subscriber drop for the distribution of programming services except as required or authorized pursuant to its licence or these Regulations.
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4. Except as otherwise provided pursuant to a condition of its licence, a licensee shall own and operate its local head end, amplifiers and subscriber drops.
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Transfer of Ownership
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5.(1) For the purposes of this section, "associate", "person" and "voting securities" have the meanings set out in the public announcement issued by the Commission on January 7, 1980, entitled Transfers of Ownership of Licensed Broadcasting Undertakings.
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(2) Except as otherwise provided pursuant to a condition of its licence, a licensee shall obtain the prior approval of the Commission with respect to any act, agreement or transaction that would directly or indirectly result in
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(a) a change of the ownership or effective control of its undertaking; or
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(b) a person or a person and an associate having control of a total of 30 per cent or more of the issued voting securities of the licensee or of a person that has, directly or indirectly, effective control of the licensee.
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(3) For the purposes of subsection (4), "control" has the meaning set out in the public announcement issued by the Commission on January 7, 1980, entitled Transfers of Ownership of Licensed Broadcasting Undertakings
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(4) Where, after the coming into force of these Regulations, any act, agreement or transaction occurs that directly or indirectly results in a person or a Person and an associate having control of a total of at least 20 per cent but less than 40 per cent of the issued voting securities of a licensee or of a person that has, directly or indirectly, effective control of the licensee, the licensee shall notify the Commmission of that result within 30 days after the occurrence and shall provide the Commission with the further information that is required by subsection (6).
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(5) Where, after the coming into force of these Regulations, any act, agreement or transaction occurs that directly or indirectly results in a person or a person and an associate having control of a total of 40 per cent or more of the issued voting securities of a licensee or of a person that has, directly or indicrectly, effective control of the licensee, and whether or not that licensee has previously been required to notify the Commmission under subsection (4), the licensee shall notify the Commission of that result within 30 days after the occurrence and shall provide the Commission with the further information that is required by subsection (6).
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(6) Within the 30 day period referred to in subsection (4) or in subsection (5) the licensee shall provide the Commission with
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(a) the name of that person or the names of that person and an associate;
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(b) the percentage of the issued voting securities controlled by that person or that person and an associate; and
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(c) a copy or other complete evidence of that act, agreement or transaction.
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Request for Information 6. A licensee shall furnish, upon the request of the Commission, such information as is reasonably necessary for-the proper administration of the Broadcastinq Act and these Regulations.
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PART II
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Application
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7. Subject to subsection 24(2), this Part does not apply to Part III licensees.
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Class of Licence
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8. For the purposes of this Part
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(a) a Class 1 licence is a licence to carry on an undertaking having 6000 or more subscribers; and
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(b) a Class 2 licence is a licence to carry on an undertaking having less than 6000 subscribers.
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Television Service Priorities
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9.(1) Except as otherwise provided in this section or pursuant to a condition of its licence, a licensee shall distribute as part of its basic service, beginning with its basic band, in the following order of priority and to the extent of available channels
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(a) the programming services of all local television stations owned and operated by the Corporation;
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(b) the programming services of all local educational television stations;
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(c) the programming services of all other local television stations;
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(d) the programming service of a regional television station owned and operated by the Corporation, unless the licensee is distributing, pursuant to paragraph (a), the programming service of a local television station owned and operated by the Corporation that broadcasts in the same official language as the regional television station;
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(e) the programming service of a regional educational television station, unless the licensee is distributing, pursuant to paragraph (b), the programming service of a local educational television station;
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(f) the programming services of all other regional television stations that are not affiliates or members of the network to which a station referred to in paragraph (c) belongs;
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(g) the programming service of a television station owned and operated by the Corporation and distributed to the licensee by microwave satellite relay, unless the licensee is distributing, pursuant to paragraph (a) or (d), the programming service of another television station owned and operated by the Corporation that broadcasts in the same official language as the programming service distributed by satellite or microwave relay;
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(h) the programming service of an educational television station or video educational programming service distributed to the licensee by microwave or satellite relay, unless the licensee is distributing, pursuant to paragraph (b) or (e), the programming service of an educational television station;
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(i) community programming;
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(j) the programming service of an extra-regional television station owned and operated by the Corporation, unless the licensee is distributing, pursuant to paragraph (a), (d) or (g), the programming service of a television station owned and operated by the Corporation that broadcasts in the same official language as the extra-regional television station;
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(k) the programming service of an extra-regional educational television station, unless the licensee is distributing, pursuant to paragraph (b), (e) or (h), a video educational programming service;
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(l) the programming service of all other extra-regional television stations that are not affiliates or members of the network to which a station referred to in any of paragraphs (a) to (k) belongs.
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(2) Where the educational authority that is responsible for the operation o' a station or for the provision of a programming service referred to in paragraph (1)(b), (e), (h) or (k) is not an educational authority designated by a province in which the licensed area of the licensee's undertaking is located, distribution of the service is not required.
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(3) Where a licensee has satisfied the requirements set out in subsection (1) and the Commission has licensed the Corporation to act alone for the purpose of distributing a programming service that the Commission has designated as a mandatory service, the licensee shall distribute that service as part of the basic service, to the extent of available channels.
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(4) Where a licensee has satisfied the requirements set out in subsections (1) and (3) and educational programming services are transmitted to a licensee in English and in French over the air or by microwave or satellite relay, the licensee shall distribute the programming service provided ln one of those languages according to the priorities set out in subsection (1) and the programming service provided in the other of those languages shall be distributed as part of the basic service, to the extent of available channels.
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(5) Where a licensee distributes a programming service comprising the proceedings of the House of Commons or the proceedings of the legislature of the province in which its undertaking is located, the licensee shall include that programming service as part of its basic service. (6) Where the programming services of two or more local television stations rank equally in the order of priority established by paragraphs (1)(a) to (c), a licensee shall give priority
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(a) to the programming service of the station whose studio is located in the same province as the undertaking; or
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(b) where the studios of two or more such stations are located in the same province as the undertaking, to the programming services of the stations in the order of the proximity of their studios to the local head end of the undertaking.
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(7) Where pursuant to paragraph (1)(d),(e), or (f) a licensee is required to distribute the programming service of a regional television station and where the programming services of two or more regional television stations that are affiliates or members of the same network are received at the local head end, the licensee shall distribute the programming service of the affiliate or member
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(a) whose studio is located in the same province as the undertaking; or
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(b) where the studios of two or more affiliates or members are located in the same province as the undertaking, whose studio is located closest to the local head end of the undertaking.
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(8) Where pursuant to paragraph (1)(j),(k), or (l) a licensee is required to distribute the programming service of an extra-regional television station and where the programming services of two or more extra-regional television stations that are affiliates or members of the same network are received at the local head, the licensee shall distribute the programming service of the affiliate or member
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(a) whose studio is located in the same province as the undertaking; or
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(b) where the studios of two or more affiliates or members are located in the same province as the undertaking, whose studio is located closest to the local head end of the undertaking.
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10.(1) Subject to subsection (2), where a licensee satisfies the requirements set out in section 9 and in the conditions of its licence, the licensee may distribute
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(a) the programming service of any regional television station or any extra-regional television station that is not distributed pursuant to section 9;
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(b) any programming service comprising the proceedings of the House of Commons or the proceedings of the legislature of the province in which the undertaking is located;
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(c) any pay television service the originator of which is licensed to provide the service to all or any part of the licensed area of the undertaking;
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(d) any specialty service the originator of which is licensed to provide the service to all or any part of the licensed area of the undertaking;
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(e) the programming service of any non-Canadian television station that is received directly over the air at the local head end, unless
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(i) the licensee is distributing the programming service of an affiliate of the network to which that non-Canadian television station belongs, or
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(ii) the programming service consists of programming with predominantly religious themes;
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(f) any Part II eligible Canadian satellite service;
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(g) any Part II eligible non-Canadian satellite service; (h) the programming service of any distant television station; and
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(i) any other programming service authorized by the Commission pursuant to a condition of its licence.
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(2) Except as otherwise provided pursuant to a condition of its licence, if a licensee distributes any of the following services, they shall be distributed as a discretionary service
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(a) a pay television service;
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(b) a specialty service; and
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(c) a programming service referred to in paragraph (1)(f), (g) or (h).
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11. Except as otherwise provided pursuant to a condition of its licence, a licensee shall devote a greater number of the video channels of its undertaking to the distribution of Canadian programming services than to the distribution of non-Canadian programming services.
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Restricted Channel
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12. Except as otherwise provided pursuant to a condition of its licence, a licensee shall not distribute on a restricted channel of its undertaking a programming service referred to in subsection 9(1),(3),(4) or (5).
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Community Channel
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13.(1) Except as provided in subsection (2) or pursuant to a condition of its licence, a licensee shall not distribute on its community channel any programming service other than
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(a) community programming;
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(b) an announcement promoting services that the licensee is licensed to provide;
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(c) a public service announcement;
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(d) an announcement providing information about the programming to be distributed on the community channel;
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(e) a commercial message that mentions or displays the name of a person who has sponsored a community event or goods, services or activities sold or promoted by that person, when the mention or display of the name, goods, services or activities is in the course of and incidental to the production of community programming dealing with the event;
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(f) an acknowledgement contained in community programming that mentions no more than the name of a person, the goods, services or activities that are being sold or promoted by that person or the address or telephone number of that person, where that person was provided direct financial assistance for the community programming in which the acknowledgement is contained; or
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(g) An acknowledgement contained in community programming that mentions no more than the name of a person and goods or services provided by that person, where the goods or services were provided free of charge to the licensee for use in connection with the production of the community programming in which the acknowledgement is contained.
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(2) When a licensee is not distributing community programming on its community channel, or is distributing on that channel community programming having no audio component, the licensee may distribute on that channel the programming service of a local F.M. station or a local A.M. station. 14.(1) Except as otherwise provided pursuant to a condition of its licence, a licensee shall maintain a program log or a machine readable record of programs distributed on its community channel and shall cause to be entered therein each day the following information in respect of each program:
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(a) the date of distribution;
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(b) the title;
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(c) the name of the undertaking at which it was produced;
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(d) a brief description of the program including a statement as to whether it was produced by employees of the undertaking or volunteers; and
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(e) the duration.
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(2) A licensee shall retain the program 109 or machine readable record required under subsection (1), together with a clear and intelligible video recording of the program, for a period of
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(a) four weeks from the date of distribution of the program; or
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(b) where the Commission receives a complaint from any person regarding the program or where the Commission for any other reason wishes to investigate it and so notifies the licensee before the expiration of the period of four weeks from the date of distribution of the program, eight weeks from the date of distribution of the program.
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(3) Where, before the expiry of the relevant period referred to in subsection (2), the Commission requests from a licensee a program log, machine readable record, or clear and intelligible video recording of a program, the licensee shall furnish the log, record or recording to the Commission forthwith.
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15. Where a licensee provides time on its community channel during an election period for the distribution of programming of a partisan political character, it shall allocate that time on an equitable basis to all political parties and rival candidates.
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Audio Programming Services
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16.(1) This section applies to all licensees holding a Class 1 licence and to any licensee holding a Class 2 licence that elects to distribute any programming service on the audio channels of its undertaking.
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(2) Except as otherwise provided pursuant to a condition of its licence, a licensee shall distribute on an unrestricted audio channel the programming services of
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(a) all local A.M. stations;
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(b) all local F.M. stations; and
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(c) where they are not distributed pursuant to paragraph (a) or (b),
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(i) at least one A.M. station or F.M. station owned and operated by the Corporation that broadcasts in English and at least one that broadcasts in French, and
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(ii) an educational authority designated by the province in which the licensed area of the licensee's undertaking is located,
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that is received over the air or by means of satellite or microwave relay.
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(3) Except as otherwise provided pursuant to a condition of its licence, where a licensee satisfies the requirements set out in subsection (2) it may distribute on an audio channel any audio programming service other than (a) an audio non-Canadian programming service that is not
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(i) an F.M. station or an A.M. station receivable over the air at the local head end, or
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(ii) an international radio service operated or funded by a national government or its agent;
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(b) an audio non-Canadian programming service for which advertising is solicited in Canada;
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(c) an audio non-Canadian programming service consisting of programming with predominantly religious themes; or
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(d) an audio programming service in a language other than French, English or a language spoken by any aboriginal people of Canada that contains commercial messages unless
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(i) the licensee was authorized by the Commission to distribute that service on its undertaking on July 4, 1985, or
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(ii) there is no local A.M. station or local F.M. station that is licensed as an ethnic station.
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(4) Except as otherwise provided pursuant to a condition of its licence, a licensee shall devote a greater number of the audio channels of its undertaking to the distribution of Canadian programming services than to the distribution of non-Canadian programming services.
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Installation and Provision of Basic Service
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17. Except as otherwise provided pursuant to a condition of its licence, a licensee shall
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(a) install the distribution system necessary for the provision of its basic service at a household or premises within a reasonable time after a request therefor from a member of the household or an owner or operator of the premises if the household or premises is
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(i) situated in a residential area within the licensed area, and
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(ii) Provided with water or sewer services by a municipal or other public-authority;
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(b) at the request of a member of a household or an owner or operator of premises referred to in paragraph (a), install the subscriber drop and provide the basic service to that household or those premises, unless that member, owner or operator has not complied with the licensee's request for payment of
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(i) an amount not exceeding the amount of the non-recurring costs to be reasonably incurred by the licensee for the installation of the subscriber drop,
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(ii) the licensee's fee for the provision of the basic service for one month to that household or those premises; or
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(iii) an overdue debt for the provision of basic service that the member, owner or operator owes to the Licensees, and
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(c) provide the basic service to a subscriber as long as the subscriber pays in advance the fee for each month of the basic service.
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Fees for Basic Service 18.(1) Except as otherwise provided in subsection (6) or as pursuant to a condition of its licence, a licensee shall not increase its base portion during a twelve month period commencing on September 1 in any year unless the difference between the increased base portion and the amount of the base portion charged on the last preceding August 31 expessed as a percentage of that amount, is less than or equal to 80 per cent of the percentage increase in the Consumer Price Index published by Statistics Canada for the twelve month period ending on the last preceding April 30.
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(2) Except as authorized pursuant to a condition of its licence, a licensee shall not increase its pass-through portion during a twelve-month period commencing on September 1 in any year unless the increase is less than or equal to the amount of an increase already authorized by the Commission or approved or, where applicable, not disallowed by the relevant provincial public authority for the amount payable to a third Party that is contained in the pass-through portion.
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(3) Where a licensee intends to increase its basic monthly fee by an amount permitted pursuant to subsection (1) or (2), it shall not implement the increase unless
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(a) it sends to each of its subscribers a written notice of the increase setting forth separately the dollar and percentage increase in the base portion and the pass-through portion as applicable, of the basic monthly fee;
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(b) it sends to the Commission a copy of the notice referred to in paragraph (a) together with a declaration as to the date that the notice was sent; and
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(c) 40 days have elapsed following receipt by the Commission of a copy of the notice together with the declaration referred to in paragraph (b).
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(4) For the purpose of this subsection, "capital expenditure" means the estimated capital costs to be incurred by a licensee during any twelve month period commencing on September 1, 1986 and on September 1 in any year thereafter, amortized over a 5 year period, for the purchase or capital lease of its head end or distribution system to the extent these capital costs relate to the reception, processing or distribution of the basic services; (dépenses d'immobilisation) and
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"head end" means the combination of equipment and facilities used for the reception and processing of programming services that are distributed by a licensee. (tête de ligne)
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(5) Subject to subsections (6) and (8), a licensee may increase its basic monthly fee by an amount not greater than the result obtained by dividing 50 per cent of its capital expenditure by 12 times the number of subscribers to whom it is required to send a notice under paragraph (6)(b).
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(6) A licensee may increase the basic monthly fee as set out in subsection (5) where:
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(a) it sends each of its subscribers a written notice of the increase in the form set out in Schedule I;
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(b) it sends to the Commission a copy of the notice referred to in paragraph (a) together with a declaration that the notice has been or will be sent to each of its subscribers at least 40 days prior to the proposed date of the increase; and
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(c) 40 days have elapsed following receipt by the Commission of a copy of the notice together with the declaration referred to in paragraph (b).
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(7) Subject to subsection (8), a licensee may increase the base portion of its basic monthly fee by an amount in excess of the difference referred to in subsection (1) or the amount referred to in subsection (5), where
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(a) it sends to each of its subscribers a written notice in the form set out in Schedule II;
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(b) it sends to the Commission a copy of the notice referred to in paragraph (a) together with a declaration on behalf of the licensee that the notice has been or will be sent to each of its subscribers at least 90 days prior to the proposed effective date of the increase;
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(c) 90 days have elapsed following receipt by the Commission of a copy of the notice together and the declaration referred to in paragraph (b).
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(8) The Commission may, prior to the date on which an increase in the basic monthly fee referred to in subsection (5) or an increase in the base portion of the basic monthly fee referred to in subsection (7) is to take effect,
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(a) suspend the implementation of all or part of that increase pending further consideration of the increase and
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(i) the receipt of additional information pertaining to the increase,
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(ii) the completion of a public hearing into the increase, or
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(iii) both the receipt of additional information and the completion of a public hearing into the increase; and
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(b) disallow the implementation of all or part of the increase either without any suspension under paragraph (a) or after such a suspension.
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|
Alteration or Curtailment of Programming Service
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19. A licensee shall not alter or curtail any programming service or radiocommunication in the course of its distribution except
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(a) as required or authorized pursuant to a condition of its licence or these Regulations;
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|
(b) in accordance with an agreement entered into with a network operator; or
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|
(c) for the purpose of complying with subsection 105(1) of the Canada Elections Act.
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|
|
Substitution of Identical Programming Services
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20.(1) For the purposes of this section,
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"broadcaster" incudes an educational authority responsible for an eductional programming service; (radiodiffuseur)
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"identical", in respect of two or more programming services means
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(a) not less that 95 per cent of the video and audio components of those programming services, exclusive of commercial messages, are the same, or
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(b) the programming services consist of different episodes of the same television series and the stations broadcasting the programming services do so on the same five consecutive days in a calendar week between midnight and six o'clock in the evening; (identique)
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|
"television station" includes an education authority responsible for an educational programming service. (station de télévision)
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(2) Except as otherwise provided in subsection (4) or pursuant to a condition of its licence, a licensee holding a Class 1 licence shall curtail its distribution of the programming service of a television station and substitute the identical programming service of another television station where the other television station has higher priority under section 9 and
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(a) the licensee has, at least seven days prior to the date on which the programming service is broadcast, received from the broadcaster operating the other television station a written request for the curtailment and substitution; or
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(b) upon agreement with the licensee, the broadcaster operating the other television station effects the curtailment and substitution by means of a switching device operated from the station.
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(3) Except as otherwise provided in subsection (4) or pursuant to a condition of its licence, a licensee holding a Class 2 licence may curtail and substitute the programming service of another television station in the circumstances where a licensee holding a Class 1 licence is required by subsection (2) to make a curtailment and substitution.
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(4) A licensee shall not curtail the programming service of a television station and substitute that of another television station where the Commission notifies the licensee that the curtailment and substitution is not in the public interest because
|
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(a) undue financial hardship would result for the operator of the television station; or
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(b) the programming service contains subsidiary signals designed to inform or entertain and the programming services to be substituted do not contain the same or similar subsidiary signals.
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(5) A licensee may discontinue a curtailment and substitution made pursuant to subsection (2) or (3) where the licensee verifies that the programming services in a specific time period in respect of which that substitution is made are not, or are no longer, identical.
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(6) Where, in the circumstances and in respect of the programming service referred to in subsection (2), a substitution is requested by more than one broadcaster, the licensee shall substitute the programming service of the television station having the highest priority under section 9.
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21. This Part applies to Part III licensees only.
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Programming Services
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22.(1) Subject to subsection (2), a Part III licensee shall distribute on the basic band of its undertaking
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|
(a) the programming services of all local television stations; and
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|
(b) the programming services of all regional television stations other than affiliates or members of a network of which a local television station is an affiliate or member.
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|
(2) Where the programming services of two or more regional television stations that are affiliates or members of the same network are received at the local head end, the licensee is not required to distribute more than one of those programming services and may select which one of the services to distribute.
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Distribution
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23. Except as otherwise provided pursuant to a condition of its licence, where a Part III licensee elects to distribute a Part III eligible non-Canadian satellite service or a pay television service or specialty service delivered by satellite, it shall distribute at least four television programming services delivered to its local head end by a network operator licensed to extend television and radio services to remote and underserved communities, at least one of which must be a Canadian programming service.
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24.(1) Except as otherwise provided pursuant to a-condition of licence, a Part III licensee may distribute
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(a) the programming service of any television station receivable over the air at its local head end;
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|
(b) community programming;
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|
(c) a Part III eligible Canadian satellite service;
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|
(d) a Part III eligible non-Canadian satellite service;
|
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|
(e) any audio programming service other than
|
|
|
(i) an audio non-Canadian Programming service that is not an F.M. station or an A.M. station receivable over the air at the local head end, or an international radio service operated or funded by a national government or its agent;
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|
|
(ii) an audio non-Canadian programming service for which advertising is solicited in Canada, or
|
|
|
(iii) an audio non-Canadian programming service consisting of programming with predominantly religious themes; and
|
|
|
(f) any other programming service authorized by the Commission pursuant to a condition of its licence.
|
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|
(2) Where a Part III licensee elects to distribute community programming pursuant to paragraph (1)(b), the Part III licensee shall satisfy the requirements of sections 13 and 15.
|
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|
25. A Part III licensee shall not alter or curtail any programming service or radiocommunication in the course of its distribution except
|
|
|
(a) as required or authorized pursuant to a condition of its licence;
|
|
|
(b) in accordance with an agreement entered into with a network operator; or
|
|
|
(c) for the purpose of complying with subsection 105(1) of the Canada Elections Act.
|
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SCHEDULE I
|
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(Subsection 18(6))
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NOTICE TO SUBSCRIBERS
|
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(Name of licensee) is proposing to increase its basic monthly fee, in accordance with subsection 18(5) of the Cable Television Regulations. This subsection of the Regulations permits a licensee to recover 50 per cent of certain of its investment in cable equipment and facilities through an increase in the basic monthly fee, unless the CRTC intervenes to disallow all or part of the increase. Under this subsection of the Regulations, only 20 per cent of this investment may be claimed each year, for five years.
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The proposed amount of the increase and effective date of the increase for this year are set out below, in items 1 and 2. The uses to which the proposed rate increase will be put are indicated in item 3 and the method used to calculate the increase is given in item 4.
|
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You may express your comments on the proposed increase by writing to: Secretary General CRTC Ottawa, Ontario K1A 0N2
|
|
|
no later than (20 days before the proposed effective date of increase). A copy of your letter should also be sent to (name of representative of licensee, title, address).
|
|
|
Item 1. Current basic monthly fee $ ________
|
|
|
Proposed basic monthly fee $ ________
|
|
|
Amount of increase proposed $ ________
|
|
|
Item 2. Proposed effective date of the increase ________
|
|
|
Item 3. (a) Equipment or facilities that will be purchased or leased
|
|
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(i) Head end $ ________
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|
(ii) Distribution system $ ________
|
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|
Total $ ________
|
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|
(b) Purpose of investment
|
|
|
(i) Rebuilding existing plant to
|
|
|
(A) upgrade quality of basic service $ ________
|
|
|
(B) increase channel capacity for provision of basic service $ ________
|
|
|
(ii) Building new facilities to serve new subscribers $ ________
|
|
|
(iii) If some equipment or facilities will be used for other than basic service, indicate the. portion thereof that will be allocated to basic service $ ________
|
|
|
Item 4. (a) Total cost of equipment or facilities that will be recovered through increase proposed for (year) $ ________
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|
(b) Number of subscribers at date of notice of proposed increase $ ________
|
|
|
(c) Increase in fee per subscriber per year (a) (b) $ ________ (d) Increase in fee per subscriber per month (c) (12) $ ________ SCHEDULE II
|
|
|
(Subsection 18(7))
|
|
|
NOTICE TO SUBSCRIBERS
|
|
|
(Name of licensee) is proposing to increase its basic monthly fee, in accordance with subsection 18(7) of the Cable Television Regulations. This subsection of the Regulations permits a licensee to increase its basic monthly fee, unless the CRTC intervenes to disallow all or part of the increase.
|
|
|
The proposed amount and effective date of the increase are given below, in items 1 and 2. The reason for the proposed increase is given in item 3.
|
|
|
The details of (name of licensee) justification for this proposed increase are set out in documentation filed with the Commission, which is available for public inspection during normal business hours at (address of licensee) and at the offices of the CRTC, 1 Promenade du Portage, Hull, Quebec, and (address of nearest regional office). You may express your comments on the proposed increase by writing to:
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|
|
Secretary General CRTC Ottawa, Ontario K1A 0N2
|
|
|
no later than (60 days before the proposed effective date of increase). A copy of your letter should also be sent to (name of representative of licensee, title, address).
|
|
|
Item 1. Current basic monthly fee $ _______
|
|
|
Proposed basic monthly fee $ _______
|
|
|
Proposed amount of increase $ _______
|
|
|
Item 2. Effective date of the last increase pursuant to subsection 18 (5) or 18 (7) of the Cable Television Regulations ________
|
|
|
Proposed effective date of increase ________
|
|
|
Item 3. Reason for proposed increase
|
|
|
(provide brief statement)
|
|
|
EXPLANATORY NOTE
|
|
|
(This note is not Part of the Regulations.)
|
|
|
These Regulations establish classes of licences, terms and conditions in respect of programming services distributed by the holders of those licences and the requirements pertaining to fees for the basic service distributed to cable television subscribers.
|
|
|
APPENDIX B
|
|
|
REQUIREMENTS FOR FINANCIAL DISCLOSURE FOR FEE INCREASE PROPOSALS FILED UNDER SECTION 18(7) OF THE PROPOSED CABLE TELEVISION REGULATIONS
|
|
|
All licensees, other than Part III licensees, shall upon request by the Commission provide, as an integral part of each application for a fee increase(s), the following information:
|
|
|
a) audited financial statements for each cable television undertaking for which a fee increase is sought, and where applicable, consolidated financial statements prepared in accordance with the standards of disclosure recommended by the Canadian Institute of Chartered Accountants, or
|
|
|
b) as an alternative to a), those licensees which hold more than one licence (multi-systems operators) may elect to provide audited financial statements for the company as a whole which are accompanied by the schedules specified below and, where applicable, consolidated financial statements, all prepared in accordance with the standards of disclosure recommended by the Canadian Institute of Chartered Accountants:
|
|
|
although not forming part of the audited financial statements there shall be included, where applicable, two schedules, each prepared and certified by the licensee and subject to a review engagement by the licensee's auditors, which detail "common" (e.g., head-office) costs which nave been allocated to the licensed undertakings, one for operational costs and the other for capital costs, whereby: - the totals of the schedule(s) shall clearly reconcile with the figures contained in the various statements within the audited financial statements.
|
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- the totals of the schedule(s) shall be clearly separated and allocated to each of the specific licensed cable undertakings (systems); and
|
|
|
- an explanation shall be provided as to the method used in arriving at the amounts allocated to each of the specific licensed cable undertakings (systems).
|
|
|
c) audited financial statements of the licensee, submitted under a) or b) above, shall be for the latest reporting period specified in the "Annual Return Cable Television." Licensees whose normal fiscal year end does not coincide with the "Annual Return Cable Television" may, alternatively provide unaudited interim financial statements for that period on which the licensee's auditor has performed a review in accordance with Section 8200 of the Canadian Institute of Chartered Accountants (C.I.C.A.) Handbook.
|
|
|
Licensees who provide unaudited interim financial statements shall also provide audited financial statements and, where applicable, consolidated financial statements for their latest completed fiscal year.
|
|
|
d) Although not forming part of the financial statements, all licensees (a) or b) above) shall provide the following, prepared and certified by the management of the licensee and subject to a review engagement by the licensee's auditors:
|
|
|
1. schedule of operational results of the basic service for each of the licensed cable television undertakings (systems) identifying, as a minimum:
|
|
|
i) revenues - monthly.subscriber revenues - direct and indirect - installation revenues - other revenues
|
|
|
ii) operational expenses(other than those specified in (iii) below) by the major classifications and within these classifications a detailed breakdown that is not less than that provided for in the "Annual Return Cable Television":
|
|
|
- programming - technical - sales and promotion - administration - depreciation - interest iii) operational expenses charged to the cable television undertaking (system) per b) above, where applicable.
|
|
|
2. a schedule of capital costs of the basic service for each of the cable television undertakings (systems), identifying as a minimum:
|
|
|
i) fixed assets under the direct control of the cable television undertaking (system), and
|
|
|
ii) where applicable, capital costs allocated to the cable television undertaking (system) per b) above:
|
|
|
3. schedule of operational results of the discretionary and other non-basic tier services for each of the licensed cable television undertakings (systems) identifying, as a minimum:
|
|
|
i) total revenues - for all discretionary and other non-basic tier services combined.
|
|
|
ii) operational expenses (other than those specified in (iii) below) by the major classifications and within these classifications a detailed breakdown that is not less than that provided for in the "Annual Return Cable Television":
|
|
|
- affiliation payments - technical - sales and promotion - administration - cost of converters sold
|
|
|
- depreciation - interest
|
|
|
iii) operational expenses charged to the cable television undertaking (system) per b) above, where applicable.
|
|
|
4. a schedule of capital costs of the discretionary and other non-basic tier services for each of the cable television undertakings (systems), identifying as a minimum:
|
|
|
i) fixed assets under the direct control of the cable television undertaking (system), and
|
|
|
ii) where applicable, capital costs allocated to the cable television undertaking (system) per b) above.
|
|
|
e) Where applicable, although not forming part of the financial statements, the following, prepared and certified by the management of the licensee and subject to a review by the licensee's auditors, in accordance with the provisions of Section 3840 of the Canadian Institute of Chartered Accountants (C.I.C.A.) Handbook, shall be provided by all licensees (in a) or b) above):
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i) Schedules of costs (one for operational costs and another for capital costs) charged or allocated to the licensee(s) by a related entity(s) (incorporated or not) where the licensee(s) and related entity(s) are dealing at "non-arm's length" as defined by Section 251 of the Income Tax Act;
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ii) management's estimate addressing the extent and level of profit (if any) incorported in the amounts, shown on the schedules required by a) above.
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