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Public Notice
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Ottawa, 7 November 1988
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Public Notice CRTC 1988-179
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Master Antenna Television Systems Request for Comments on the Criteria for Exemption from Licensing
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Related Documents: Public Announcements dated 15 April 1976 and 16 March 1977. Public Notices CRTC 1982-45 dated 31 May 1982, 1983-88 dated 29 April 1983 and 1983-255 dated 10 November 1983.
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Background
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On 16 March 1977, the Commission issued a public announcement entitled MATV Licensing and Exemption. It set out criteria to allow persons operating broadcasting receiving undertakings, known as Master Antenna Television (MATV) systems, to be exempted, under certain conditions, from the requirement to hold a broadcasting licence.
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During the late 1970's and early 1980's, the expanded use of satellites for the distribution of Canadian and foreign services, and the licensing of new satellite-delivered Canadian discretionary services, gave rise to the need to revise the 1977 exemption criteria. In Public Notice CRTC 1983-255, the Commission announced that it would not change its policy of exempting MATV systems due to the substantial legal and regulatory problems that would be involved in so doing.
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Instead, to achieve an equitable balance between the services offered by MATV and SMATV systems (collectively referred to in this notice as SMATV) and cable television licensees, the Commission modified its 1977 exemption criteria to permit MATV systems to distribute all the programming services authorized for distribution by the cable television system serving the same area. Where services received by microwave or by satellite transmission by means of a TVRO earth station were distributed, MATV operators would be permitted to charge their users the pass-through fee for the reception of these services and would be expected to enter into the necessary contractual arrangements that might be required with respect to such carriage. However, the prohibition against any charge to users for the off-air signals provided by an MATV system would be maintained. The 1983 criteria presently govern the exemption of MATV systems from licence requirements (see Appendix).
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Issues and Concerns
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Since 1983, the broadcasting environment has undergone fundamental changes. U.S. satellite-delivered services have proliferated, and a whole new range of Canadian satellite-delivered services are now available in Canada. Over the past few years, most U.S service providers have scrambled their signals and Canadian discretionary service providers have begun to follow suit. These developments have had a profound impact on both the SMATV industry and the cable television industry.
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As stated in 1977 and reiterated in 1983, the Commission recognizes the need for fair and equitable treatment of both cable and SMATV operators and their subscribers. The Commission remains of the view that this policy is appropriate.
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Questions have been raised regarding the 1983 criteria for exemption, particularly paragraphs 1(a), 3 and 5, and the wholesale rates charged by network service providers to SMATV operators. These questions relate respectively to whether a third party may maintain, service and provide a signal package to an SMATV operator; whether SMATV operators may charge residents a separate fee, over and above the pass-through fee; and whether SMATV operators must carry signals identical to those distributed by the local cable system serving the same area.
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The issue of wholesale rates charged to SMATV operators was raised at the Pay and Specialty Services Licence Renewal Public Hearing in June 1988. Interventions were received from the SMATV industry and the Ministry of Culture and Communications of the Government of Ontario. The main concern expressed by the SMATV industry was that the wholesale rates charged by some specialty services to SMATV operators were substantially higher than those charged to cable operators. Essentially, the question raised is whether all network service providers should be required to charge all exhibitors (including SMATV operators) the regulated wholesale rate for their services. The Commission will deal with this issue of specialty services in the context of this review of the MATV criteria for exemption.
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Recognizing the need for flexibility in a changing technological environment, the Commission has, to date, addressed on a case-by-case basis inquiries concerning individual SMATV operations, such as those from Ronald Bothwell, seeking to ensure that a system complies with the 1983 criteria for exemption.
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In light of the new developments outlined above and the Commission's policy of ensuring that fair competition exists between SMATV and cable operators and that their subscribers are fairly treated, the Commission considers it appropriate to call for comments from interested parties in order to determine whether and to what extent the 1983 exemption criteria should be modified. The Commission seeks comments in response to this public notice that will help it to assess the potential impact on both the cable and SMATV industries, and on the Canadian broadcasting system as a whole, of changes to the criteria for exemption. In this regard, and with respect to the number of SMATV systems in operation, the Commission invites comment on: 1) the role of SMATV in the distribution of new Canadian specialty services delivered by satellite; 2) the extent to which SMATV competes with cable operators; and 3) suggestions as to how to ensure that there is a level playing field for SMATV and cable operators and that their subscribers are fairly treated.
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Specifically, comments are sought on the following matters:
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1. With regard to paragraph 1 (a) of the 1983 exemption criteria and in light of the growth of the SMATV industry and the development of entrepreneurial interests set up to service the industry, should the Commission revise this paragraph to clarify the role of individual companies which service, maintain and provide signals to SMATV systems which they do not own and operate?
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2. With regard to paragraph 3 of the 1983 exemption criteria, should operators of SMATV systems, who are carrying the signals as required, be permitted to charge a separate fee over and above the pass-through fee for the provision of SMATV service?
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3. The Commission has interpreted paragraph 5 of the 1983 exemption criteria to mean that the signals carried by SMATV systems need not be identical to those signals carried by the cable system serving the same area so long as they are the same network services. With regard to paragraph 5 of the 1983 exemption criteria, should the Commission restrict SMATV systems to carrying signals identical to the signals carried by the cable system serving the same area? In the alternative, should it permit SMATV systems to carry the same network services in cabled areas, as are distributed by the local cable system, regardless of their originating station?
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4. With regard to the regulatory treatment of SMATV and cable systems with respect to rates, should the Commission require that all network service providers charge SMATV and cable operators the same wholesale rate?
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The Commission encourages interested parties recommending any significant modifications to any of the criteria for exemption to provide specific wording where possible.
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Comments should be addressed to Mr. Fernand Bélisle, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2 and should be received not later than 15 December 1988.
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Fernand Bélisle Secretary General
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APPENDIX
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Criteria exemption attached to Public Notice CRTC 1983-255 dated 10 November 1983.
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MATV Licensing and Exemption
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Pursuant to paragraph 16(1)(a) and 17(1)(e) of the Broadcasting Act, the Commission has exempted persons carrying on a broadcasting receiving undertaking of the class known as master antenna television (MATV) from the requirement of holding a broadcasting licence.
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The effect of the Commission's action is as follows:
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A. Effective 1 February 1984, the class of licence known as MATV set out in the CRTC Public Announcement entitled MATV Licensing and Exemption dated 16 March 1977 is revoked and replaced by the new MATV class of licence outlined below.
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B. Effective 1 February 1984, all persons carrying on a broadcasting receiving undertaking in compliance with the criteria set out below under the heading "Criteria for Exemption" are exempt from the requirement to hold a broadcasting licence.
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Therefore, any broadcasting receiving undertaking which does not qualify for exemption under paragraph B above must be operated in accordance with a broadcasting licence.
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Criteria for Exemption
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1. The entire undertaking:
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(a) is located exclusively on land owned or leased by the person carrying on the undertaking, or, in the case of an undertaking carried on by a condominium corporation, by such corporation or any of its members; or
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(b) is effectively controlled by and provides service only to an educational institution, including residential buildings owned by and forming a part of such institution.
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2. The undertaking is not connected by any form or means of transmission, apart from the direct off-air reception of conventional broadcast signals or the direct satellite or microwave reception of services
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(a) to any land not owned or leased by the person or persons described above, or
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(b) over any public street or highway, except in the case of an undertaking carried on by a condominium corporation, or by a registered cooperative society, all of whose members reside on the land on which the undertaking is situated, or by an educational institution described in 1.(b).
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3. No separate charge is levied or direct commercial gain obtained for the use of any part of the undertaking or for any service provided thereover, except for the charge or fee payable by the operator of the undertaking to the distributor of a service.
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4. All signals of local Canadian television stations are distributed over the undertaking, in each case with no degradation of received signal.
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"Local Canadian television signals" means the signals of all television broadcasting stations licensed by the Commission having Grade A "official contours" (as defined in the Cable Television Regulations) enclosing the area in which the undertaking in question is carried on.
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5. No service received by satellite or microwave transmission is distributed over the undertaking, other than a service that the Commission has authorized the licensee of a broadcasting receiving undertaking, serving the area within which the undertaking is located, to distribute on its undertaking.
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6. No feature motion picture locally originated is distributed over the undertaking.
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