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Public Notice
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Ottawa, 4 November 1986
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Public Notice CRTC 1986-313
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THE INTRODUCTION OF CANADIAN PAY-PER-VIEW TELEVISION SERVICES
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Related Documents: Public Notices CRTC l98l-35 (2l April l98l), CRTC l984-l40 (ll June l984), CRTC l986-ll0 (l3 May l986), CRTC l986-l95 (5 August l986) and Decisions CRTC 82-240 (l8 March l982), CRTC 84-l and 84-3 (5 January l984) with Introductory Statement and CRTC 86-8l2 to 86-8l4 (2 September l986) with Introductory Statement.
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l. Introduction
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In its call for comments on the introduction of pay-per-view television services of l3 May l986 (CRTC l986-ll0), the Commission reiterated a statement made by the Chairman of the Commission in April l985:
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Pay-per-view should not deflect the energy and interest of the industry away from the major challenges of ensuring the success of existing services. We are not convinced that pay-per-view service is such a magic answer; it has had a questionable track record in the U.S. In fact, it is not really working yet. However, at an appropriate time, it is worth exploring with the industry, whether we can map out under which circumstances pay-per-view could be introduced. We surely need more input and discussion on this particular proposal and would welcome your comments in this regard. As part of our ongoing discussion with one another, it might be helpful to set out an agenda, which could perhaps then be discussed at a future public hearing to see just what opportunities exist in this specific and still untapped area.
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The Commission also stated that it continued to be concerned with the stability and growth of Canadian pay television and specialty programming services and the possible impact the implementation of one or more pay-per-view programming services might have on existing discretionary services.
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The Commission, with these considerations in mind, drew up a list of nine issues upon which it sought public comment before it was to proceed with any applications for pay-per-view services.
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A total of thirty-two (32) comments were received from interested parties including cable, pay and specialty, broadcasting and telecommunications interests, producers and distributors, and various associations and individuals.
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l. Summary of Responses to the Call for Comments
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The comments received by the Commission did not indicate consensus positions upon any of the nine issues raised by the call.
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l. It was generally agreed that the history of pay-per-view in the United States would be unreliable if an attempt were made to transpose it into the Canadian context for the purpose of making market ing and impact projections. Many comments were made reminding the Commission of earlier unsatisfactory attempts made initially by general interest pay television licensees to introduce pay-per-view services. Some comments, generally those of existing discretionary network licensees and broadcasting licensees, strongly suggested that further study and testing was needed prior to the Canadian introduction of pay-per-view services. Conversely, many comments, generally those of cable licensees, stressed that time was of the essence in introducing the service to Canada and that market forces should be given free play to determine the structure, content, and success of the service in Canada.
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2. Comments on the potential market for pay-per-view in Canada, or the impact on existing licensees that early introduction might have, were largely unsupported by empirical study. Generally, the proponents of pay-per-view, principally cable interests, were of the view that there existed a distinct market (mainly competitive with videocassette rentals) with small impact upon existing licensees, whereas the licensees of discretionary services stated that there would be major impact, with pay-per-view's market share obtained chiefly at the expense of the existing licensees' subscriber base. The Commission feels that it is unable to reconcile these opposing viewpoints of strongly interested parties without the assistance of relevant studies.
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3. There were very divergent opinions on the issues of national, regional, or local services, Canadian content requirements, structure to maximize investment in and production of Canadian programming and types of programming. Generally, the proponents of pay-per-view sought minimal regulatory requirements, while those opposed suggested requirements at least comparable to those faced by the existing general interest pay services.
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4. The Commission noted, in reviewing comments upon the availability of appropriate technology for pay-per-view systems, that although several options exist, generally addressability was felt to be a prerequisite to successful introduction of pay-per-view, preferably with "impulse ordering" capacity. Two-way operation was not felt to be necessary.
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5. Finally, most parties addressing the issue expressed a concern about the availability of Canadian programming adequately to supply a new service over and above existing services. Generally, the proponents of pay-per-view indicated a willingness to show all available suitable Canadian products without directly undertaking any further activity to create Canadian programming. Those opposing felt that pay-per-view should contribute directly to enhance Canadian production efforts.
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3. Conclusion
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The Commission would like to express its appreciation for the time and effort spent by all those responding to the call and has given careful consideration to the wide range of comments received and, in particular, notes the following:
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i) there is no valid comparable experience upon which to rely;
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ii) there is no conclusive evidence that there exists at present an urgent need for pay-per-view services;
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iii) there are divergent opinions as to the potential impact of the introduction of pay-per-view services upon existing discretionary services, or as to the benefits to Canadian producers or distributors. Furthermore, no evidence has been provided which would permit the Commission fairly and convincingly to select from among the opinions expressed in this regard;
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iv) moreover, it has not been demonstrated by those favoring the introduction of pay-per-view how the service would contribute to enhancing the Canadian programming policy objectives of the Broadcasting Act for a predominantly Canadian broadcasting system.
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The Commission recognizes the validity of many of the views expressed in response to the issues set out in the call and, taking into account this lack of consensus, considers that there is need for further study to develop appropriate implementation scenarios and timetables, and to determine the most effective regulatory approach.
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The Commission also notes that, among other recent regulatory action, it has permitted cable television licensees to distribute a variety of new non-programming services and enabled general interest pay network licensees to offer more attractive services by allowing them to reduce their repeat factors due to a revision to their conditions of licence. Under the circumstances, there is now a need for licensees to concentrate their efforts and energies in maximizing such opportunities offered to them.
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In light of all of the above, the Commission considers that it would be inappropriate, at this time, to permit the introduction into Canada of pay-per-view services. All parties are encouraged, however, to continue to pursue relevant studies, analyses and plans and to keep the Commission informed of these matters so that it may deal further with the subject of pay-per-view at the appropriate time.
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Fernand Bélisle Secretary General
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