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Public Notice
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Ottawa, 26 November 1987
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Public Notice CRTC 1987-254
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REGULATORY POLICY FOR DIRECT-TO-HOME (DTH) SATELLITE BROADCASTING SYSTEMS, MULTIPOINT DISTRIBUTION SYSTEMS (MDS), AND SUBSCRIPTION TELEVISION (STV) SYSTEMS
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Related documents: Public Notices CRTC 1983-164 dated 5 August 1983, CRTC 1984-195 dated 26 July 1984, CRTC 1985-60 dated 22 March 1985, CRTC 1986-136 dated 9 June 1986, CRTC 1986-191 dated 5 August 1986 and Telecom CRTC 1985-71 dated 15 October 1985.
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Introduction
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The purpose of this Public Notice is to announce the Commission's policy on the regulation of television broadcasting services distributed nationally or regionally by communications satellite on a Direct-To-Home (DTH) basis, or locally by means of Multipoint Distribution Systems (MDS) or by Subscription Television (STV) Systems.
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A major and longstanding objective of the Commission has been the extension of broadcasting services to all regions of Canada in order to serve all Canadians. Most of the successes in this regard have made use of what are now conventional technologies and include broadcasting stations, cable systems and networks of terrestrial microwave and satellite distribution systems. The technologies discussed in this document represent alternatives in signal distribution which would be used most often where it may not be economically feasible to provide service using the more common methods, to achieve a further extension of broadcasting services to Canadians.
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At the present time the Commission regulates the three types of undertakings included in the definition of a broadcasting undertaking in the Broadcasting Act, that is, broadcasting transmitting undertaking, broadcasting receiving undertaking, and a network operation. With the evolution of communications technology, these regulatory definitions have been applied to the licensing of a wide range of signal delivery systems mentioned above.
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Broadcasting transmitting undertakings include television stations which originate Canadian programming or rebroadcast the signals of Canadian stations in an unscrambled mode.
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Broadcasting receiving undertakings are principally receivers and local distributors of programming that make use of cable television (CATV) technology or alternately employ over-the-air distribution systems operating in an encoded, or scrambled mode to reach the viewers. Such over-the-air operations are known as subscription television, or STV, systems.
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Network operations may originate programming as in the case of the national networks of the CBC, the CTV, TVA, and the pay television services, or distribute programming from other sources, as in the case of the network operated by Canadian Satellite Communications Inc. (CANCOM).
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While broadcasting transmitting and receiving undertakings make their signals directly available to the public, network operations as a rule provide their signals to affiliated transmitting or receiving undertakings for local distribution.
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The Commission has considered the applicability of the foregoing types of undertakings to the regulation of emerging technologies such as Direct-to-Home (DTH) satellite systems and Multipoint Distribution Systems (MDS). It has concluded that in order to accommodate the licensing of such a variety of distribution systems, it is necessary to introduce a new type of broadcasting undertaking.
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Consequently, the Commission announces that it will in the future issue licences for a new type of undertaking -- the broadcasting distributing undertaking (BDU) -- which will include those types of systems which do not as their principal activity originate programming, but rather receive the programming of others and distribute it over-the-air. This type of undertaking could include systems based upon conventional VHF and UHF, MDS or satellite communications technology. The systems would in most cases provide their signals directly to the public rather than to other undertakings and would broadcast signals in either the non-scrambled or scrambled modes.
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I. DIRECT-TO-HOME (DTH) SATELLITE SYSTEMS
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Canadian broadcasters and network operators have increasingly used satellites for the distribution of their services to broadcasting undertakings for retransmission via cable, or for over-the-air broadcasting, to individual homes and other recipients. The Committee on the Extension of Service to Northern and Remote Communities, formed in l980 by the Commission, made recommendations which led to the licensing of Canadian Satellite Communications Inc. (CANCOM) to extend a variety of Canadian television and radio services, as well as certain U.S. broadcasting services via satellite to cable systems, or via satellite to other broadcasting undertakings in the remote and underserved communities in Canada. The CBC, the Atlantic Satellite Television Network service, educational services, pay and specialty television services, and other television programming services such as TVFQ-99, Le Réseau Quatre Saisons, and the CBC Parliamentary Television Networks are also examples of services distributed by satellite.
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In parallel with this use of satellites for network delivery, there has been a gradual growth in demand for Direct-To-Home (DTH) delivery of broadcasting programming being provided via satellite, particularly to the rural and remote areas of Canada where other technologies are not economically viable.
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In Public Notice CRTC l984-l95, the Commission outlined certain regulatory guidelines regarding the DTH delivery of programming services via satellite by existing licensees.
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During the Construction Program Review of the next generation of Telesat Canada satellites, the Anik E series, several important regulatory issues regarding DTH services were raised (CRTC Telecom Public Notice CRTC 1985-71).
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Consequently, in Public Notice CRTC 1986-136, the Commission outlined a general regulatory approach with regard to DTH satellite delivery of programming services solely to individual homes, and invited comments. The Commission received responses from various associations, provincial governments, from broadcasting licensees, from a number of individuals and other interested parties.
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A range of comments were received including a number from the cable industry. The major thrust of their concerns related to the possibility of an unregulated, or differently regulated, DTH service providing programming services that the cable sector was not authorized to carry.
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The primary importance which the cable industry accorded to the maintenance of equality of programming availability between cable and DTH was not, however, shared by all of those in favour of the introduction of DTH services. In general, the emphasis of this latter group was on the regulation of DTH market entry and/or conforming to Commission policies on the appropriate mix of Canadian and non-Canadian signals.
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Other comments received concerned the degree of regulation of DTH services. While a number of interveners favoured rate regulation, it was generally considered that the DTH services should not be heavily regulated.
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The Commission now wishes to announce its regulatory policy for DTH satellite systems. It has retained the existing policy which applies to those DTH services which are an incidental add-on to an existing network licence operation, or an existing broadcasting transmitting undertaking.
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The policy also addresses new stand-alone DTH services where the operator provides service only and directly to the general public and not to any broadcasting undertakings.
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Taking into consideration the comments received, the Commission has decided that the appropriate licensing approach for DTH only systems would be to determine the type of licensing action required on the basis of the manner in which the undertaking is operated, rather than on whether the service is scrambled or not.
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Under this new approach there will be two types of broadcasting undertakings for DTH only systems.
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The first type is one in which the operator acts in a manner whereby it serves as a conduit to deliver existing programming signals. Such an operator would not produce, or assemble any programming, nor alter the programming content of any signals which it distributes.
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This type of DTH undertaking will be treated as a new type, to be called a broadcasting distributing undertaking (BDU), and if authorized will be issued a BDU licence. The programming of a BDU service could be delivered either in a non-scrambled, or a scrambled mode.
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The second type of DTH undertaking is one which is operated in a manner similar to a terrestrial broadcasting transmitting undertaking (BTU), where the operator produces, assembles, or originates at least some of the programming. Such an undertaking will be treated as a BTU, which if authorized, will be issued a BTU licence.
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The DTH delivery of authorized services by existing broadcasting undertakings, however, will be treated in accordance with the existing policy which is re-stated below.
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Detailed Licensing Policy
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1. Distribution of Authorized Services by Existing Broadcasting Undertakings
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a) Licensees delivering authorized services by satellite under a network licence can deliver those services Direct-to-Home without any additional licensing action where the DTH service does not extend beyond the territory covered by the network licence.
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b) The licensee of an existing over-the-air television service (a BTU) can deliver that service on a Direct-to-Home basis without any additional licensing action where the DTH service is not distributed outside of the original BTU licensed service area.
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c) If the DTH service contemplated under a) or b) would extend beyond the licensed service area, then an application will have to be made for an amendment to the licence to extend the service area.
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d) The programming services delivered by the above DTH undertakings could be offered either in a non-scrambled or scrambled mode.
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2. Distribution of Broadcasting Services Solely for DTH Reception
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a) All parties wishing to provide such DTH services must apply for a licence prior to the implementation of the service.
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b) If the undertaking is to be operated in a manner similar to a terrestrial BTU, where the operator produces, or assembles, at least some of the programming, this DTH service will be treated as a BTU, and if authorized it will be issued a BTU licence. Such undertakings will be required to comply with the Television Broadcasting Regulations, 1987 and will be expected to follow applicable policies or guidelines.
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c) If the undertaking is to be operated as a conduit to deliver existing programming signals, and its operator does not produce or assemble any programming, nor alter the programming content of any signals which it distributes, it will be treated as a broadcasting distributing undertaking (BDU) and, if authorized, it will be issued a BDU licence. The method of regulation will be by condition of licence.
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3. The programming signals of either a BTU or a BDU providing a DTH service could be delivered either in a non-scrambled or a scrambled mode. For the purpose of this policy, the scrambling of the signal will not be considered an alteration of the program content.
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4. The Commission will not, at this time, regulate the subscriber rates for any DTH service.
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II. MULTIPOINT DISTRIBUTION SYSTEMS (MDS)
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The Multipoint Distribution System (MDS) is a new delivery system capable of distributing television signals and operates in the lower end of the microwave frequency spectrum. These signals can be received by a standard VHF/UHF television receiver provided it is equipped with a special antenna and converter. Since microwave frequencies are used for transmission of the signals, line-of-sight clearance is required between the MDS transmitter and each individual receiving antenna. Being a new delivery system for broadcasting programming services, there is therefore a need for a licensing policy relating to it.
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In Public Notice CRTC 1986-191 the Commission invited public comments on the potential use of the 2500-2686 MHz frequency band by MDS broadcasting undertakings.
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The Commission received responses from various associations, broadcasting licensees, provincial governments, and individuals. The comments ranged rather widely, but there was general support for the licensing of MDS services. Some cable operators saw MDS as a potential threat to their cable business, and consequently were opposed to its use. The response of the broadcasters was mixed, with some in favour of MDS, and some opposed. There was strong support for a flexible approach to the licensing policy for MDS, although the opinions on the degree of rate regulation were mixed.
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The Commission now wishes to announce the following licensing policy. Since this is a new use of microwave technology, neither the specific hardware required, nor the system planning is as yet fully developed. Consequently, the Commission considers that there is a need for a licensing policy which will allow this new delivery system to be introduced without an undue regulatory burden. The licensing policy may be revised in future if the evolution of either the technology or its use indicate the need for changes.
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Detailed Licensing Policy
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1. MDS systems can be used for:
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1) A delivery service to:
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a) extend the service of a cable television system into less populated areas within its authorized service area where cable extension would be un-economical.
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b) Introduce a new cable-type service into an unserved area.
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c) Provide a competing delivery system in cabled areas for discretionary services as defined the Cable Television Regulations, 1986.
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2) A conventional type of over-the-air television station where the main difference between it and present VHF or UHF television stations would be the frequency used for delivery of the signal.
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2. Licensing Policy for Undertakings Using MDS Delivery Systems
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1) Undertakings using MDS systems will be licensed as broadcasting distributing undertakings (BDU) when used as a delivery service.
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Definition Such a delivery service is one where the MDS operator acts in a manner whereby it merely serves as a conduit to deliver existing programming signals. Such an operator would not produce, or assemble any programming, nor alter the programming content of any signals which it distributes. Undertakings using such MDS systems will be treated as a new type of undertaking, namely, a broadcasting distributing undertaking (BDU), and if authorized will be issued a BDU licence. The programming of a BDU undertaking could be delivered either in a non-scrambled or a scrambled mode. For the purpose of this policy, the scrambling of the signal will not be considered an alteration of the program content.
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2) When MDS is used for the extension of a cable service by an undertaking within its authorized cable service area:
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a) since the channel capacity of an MDS system is limited, the licensee shall be required by condition of licence to include the carriage of all television service priorities as set out in the Cable Television Regulations, l986, except those available off-air and whose grade B contour completely covers the authorized area to be served by MDS.
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b) The Commission will expect that the rate for subscribers served by the MDS system shall be no higher than that authorized for subscribers served by cable and any higher rate will require the prior approval of the Commission.
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c) The applicant proposing these MDS services will have to demonstrate that a cable television system is not economically feasible, and that the proposed system will not jeopardize the viability of neighbouring subscription-based services.
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3) When MDS is used for provision of a new cable-type service in a new area (i.e. an uncabled area and one not presently served by any other multichannel delivery systems):
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a) since the channel capacity of an MDS system is limited, the licensee shall be required by condition of licence to carry all television service priorities as set out in the Cable Television Regulations, 1986, except for those services which are already available off-air and whose grade B contour completely covers the MDS service area.
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b) The rates for these MDS services will not be regulated.
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c) The applicant proposing these MDS services will have to demonstrate that a cable television system is not economically feasible, and that the proposed system will not jeopardize the viability of neighbouring subscription-based services.
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4) An MDS system can be used to provide, within the authorized service area of licensed cable undertakings, a competing delivery system for discretionary services, as defined in the Cable Television Regulations, 1986 and in conformity with the regulations, policies and guidelines applicable to the distribution of discretionary services.
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Undertakings using MDS services for this purpose will:
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a) not be required to carry any priority services;
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b) be able to choose from the same list of authorized Canadian or non-Canadian services as the licensed cable undertakings and under the same rules;
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c) not be subject to regulation of their rates;
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d) be required by condition of licence to distribute a greater number of Canadian programming services than non-Canadian services.
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5) The distribution of U.S. services in the non-scrambled mode will only be permitted where the licensee can demonstrate that distribution in a scrambled mode is not financially feasible.
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3. Licensing Policy for Undertakings Using MDS for Conventional Over-the-Air Television Stations
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Undertakings using MDS for conventional over-the-air television stations will be licensed as broadcasting transmitting undertakings (BTU's) and they must comply with the Television Broadcasting Regulations, 1987 and follow applicable policies or guidelines. If authorized, they will be issued a BTU licence.
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III. SUBSCRIPTION TELEVISION SYSTEMS (STV)
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The Commission has since 1981 licensed Subscription Television (STV) undertakings to provide television service to small communities in underserved areas. These undertakings broadcast their signals in an encoded, or scrambled, mode by means of low-power transmitters and have been licensed as broadcasting receiving undertakings.
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These undertakings were first licensed to distribute Canadian services. However, following Public Notice CRTC l983-164 of 5 August l983, "Guidelines - Exhibition of 3+l CANCOM Service by Off-Air Broadcasting Undertakings", the Commission has licensed STV undertakings to carry U.S. services distributed nationally by Canadian Satellite Communications Inc. (CANCOM) as well as some delivered via U.S. communications satellites.
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The Commission has obtained considerable experience in the licensing and regulation of STV undertakings since l98l, and has had the benefit of the recommendations of the 1985 task force headed by Commissioner Paul Klingle. The task force's report, "The Costs of Choice", was addressed in Public Notice CRTC 1985-60, "CRTC Response to the Report of the Task Force on Access to Television in Underserved Communities."
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The task force considered the local distribution of television services by a number of methods including cable television systems and over-the-air systems operating in both the non-scrambled and scrambled modes. The task force's recommendations with reference to cable systems have since been incorporated into the Cable Television Regulations, l986. In particular, the creation of the "Part III cable licensee" allows a less stringent approach to the regulation of cable undertakings in underserved areas.
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The same less stringent approach has been adopted in formulating the STV licensing policy. The Commission does not intend to establish regulations for STV undertakings but will continue to regulate them through conditions of licence.
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In recent years the Commission has received many applications and representations proposing the over-the-air distribution of U.S. television services in the non-scrambled mode. The Commission has determined that it will, in exceptional circumstances, issue licences for such undertakings generally in accordance with its STV licensing policy. They will be licensed as broadcasting distributing undertakings (BDU).
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In announcing its licensing policy, however, the Commission notes the success of its cable licensees in extending service to communities of ever decreasing size and reaffirms its position regarding the role of cable television stated in Public Notice CRTC 1985-60.
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The Commission remains convinced that cable television technology represents the preferred method of extending service, due to its ability to deliver a large number of services and to meet future needs. It recognizes, however, that in certain circumstances, for reasons of limited population size and/or low density, over-the-air transmitters represent the only visible means of providing service to the particular area.
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Detailed Licensing Policy
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1. Areas Where STV Undertakings Will Be Licensed
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STV systems will normally be confined to those parts of Canada where the Commission regulates cable television operators under Part III of the Cable Television Regulations, l986. These areas generally have two or less television services available off-air. The number of services available will be counted using the method specified for Part III licensees in the Cable Television Regulations, 1986.
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2. Cable Television Technology
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An applicant for a licence for an STV undertaking must demonstrate that because of a small population base, low population density or other reasons, it is not economically feasible to serve the area using cable television technology.
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An applicant proposing the distribution of non-Canadian services in the non-scrambled mode must demonstrate that it is not economically feasible to serve the area by means of either cable television or an STV system.
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3. Impact on Neighbouring Subscription-Based Systems
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STV systems should not jeopardize the financial viability of neighbouring subscription-based systems, be they cable, STV or MDS systems.
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Licensees of STV undertakings should not solicit or accept subscribers within the authorized service area of any neighbouring subscription-based undertaking without the concurrence of its licensee.
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Applicants proposing the non-scrambled, over-the-air distribution of U.S. services will be required to demonstrate to the Commission's satisfaction that their signals will not be receivable within the service area of neighbouring subscription-based systems.
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4. Use of Unprotected Frequencies
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STV undertakings should employ low-power transmitters using unprotected frequencies.
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5. Permissible Television Services
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STV undertakings shall have access to the same range of television services as Part III cable television systems. The Commission publishes a list of Part III eligible Canadian and non-Canadian satellite services pursuant to the Cable Television Regulations, l986.
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6. Television Service Priorities
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Cable undertakings are required to carry television services according to a priority structure set out in the Cable Television Regulations, l986. A general mandatory signal carriage requirement for STV undertakings is not desirable, however, as the number of channels available is much more limited. Further, such a requirement could impose an additional burden upon licensees and could result in an unwarranted duplication of services available off-air.
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Therefore:
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a) STV undertakings will not be subject to general television service priority requirements.
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b) Television service priorities will be determined on a case-by-case basis and will be regulated by condition of licence.
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c) In considering the application of television service priorities to particular undertakings, the Commission will take into account:
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- the number of Canadian television services available off-air in the community and their technical quality;
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- the number of Canadian services proposed, and;
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- the financial resources current ly or potentially available to the applicant.
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7. Technical and Financial Feasibility
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An applicant for a new licence must demonstrate the financial feasibility of the proposed operation and must meet the technical requirements of the Department of Communications.
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For STV undertakings, the Commission will also wish to be assured that the applicant has access to a reliable supply of scrambling and descrambling equipment.
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8. Regulation of Subscriber Fees
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Subscriber fees for STV undertakings will not be regulated.
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For existing undertakings, the Commission intends to remove the condition of licence pertaining to installation and monthly fees upon renewal of the licence. Licensees may, however, apply to the Commission to remove this condition of licence during the current licence term.
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Fernand Bélisle Secretary General
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