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Decision
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Ottawa, 2 October 1990
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Decision CRTC 90-1039
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A. Stuart Craig, representing a company to be incorporated
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Bonnyville and area; Calgary and area; Edmonton and area; Lethbridge and area; Lloydminster and area; and Red Deer and area, Alberta- 893178400 - 893176800 - 893177600- 893180000 - 893179200 - 893181800Northern Cablevision Ltd.Edmonton and area, Alberta- 893225300 - 900081100
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Bon Accord, Gibbons and area; Devon, Stony Plain, Spruce Grove and area; East Ardrossan and area; and Leduc and area, Alberta - 893228700 - 893227900 - 893226100 - 893229500
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Estate Television Limited
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Parkland (County of), Alberta- 890980600
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Following a Public Hearing commencing 15 May 1990 in Edmonton, the Commission denies the applications by A. Stuart Craig, representing a company to be incorporated (Craig), for licences to carry on new broadcasting undertakings (MDS or Multipoint Distribution Systems) in the six areas of Alberta noted above. The proposed MDS systems were intended to serve residents of these areas who are currently unserved by existing cable or other subscription-based (STV) television undertakings. The Commission also denies the application by Northern Cablevision Ltd. (Northern) for a licence to carry on an MDS undertaking to provide a package of television signals to serve Edmonton area residents who are similarly unserved by existing cable or STV undertakings.
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Further, the Commission denies Northern's four applications for licences to carry on new STV undertakings to serve areas to the north, east, south and west of Edmonton. These STV applications proposing service to areas on Edmonton's periphery were submitted by Northern as a mutually-exclusive alternative to its preferred plans for an MDS system.
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Finally, the Commission denies the application by Estate Television Limited (Estate) for a licence to carry on a new STV undertaking to serve the County of Parkland, an area located to the northwest of Edmonton, adjacent to the licensed boundary of the cable television undertaking operated by Videotron Communications Ltd.
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The applications by Craig and Northern were among several received by the Commission in response to its Public Notice CRTC 1989-54 entitled "Call for Applications for a Licence to Carry on a Broadcasting Receiving Undertaking for the Extension of Services to Unlicensed Localities in Saskatchewan and Alberta". The STV proposal by Estate had been submitted prior to the call. The MDS proposals by Craig and Northern were deemed to be competing, either with each other or with one or more other applications, most of the latter group being for licences to operate conventional cable television undertakings at small communities within the coverage areas of the proposed MDS signals. Because of a similar overlap in proposed service areas, the STV application by Estate was deemed to be competing with a proposal for a new cable television undertaking at Onoway, Alberta.
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In addition to the opposition expressed in interventions by these competing applicants, concerns regarding the proposed use of MDS or STV technology to reach unserved residents in areas surrounding Edmonton, Calgary and other urban areas in Alberta were expressed in other interventions, including those by some cable television licensees operating in these communities, by the Canadian Cable Television Association and by a number of conventional, over-the-air television broadcasters.
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Among the concerns raised by intervenors was the potential harm to both existing and proposed cable systems associated with the unauthorized use within cabled areas of "wandering" MDS or STV decoders. Certain intervenors challenged the accuracy of the estimates prepared by the MDS and STV applicants regarding the number of potential subscribers for their proposed services and questioned the validity of their financial projections. A major concern identified by intervenors was the effect that the licensing of such services would tend to have in discouraging the expansion of existing cable service boundaries or the construction of new cable systems. Further, some cable television licensees complained that they understood the call issued under Public Notice CRTC 1989-54 to be for cable television applications only, to the exclusion of MDS or STV technology. They suggested that, had they understood otherwise, they might well have applied for MDS licences to extend service, either by themselves or as part of a consortium of cable operators.
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For their part, the MDS and STV applicants defended their potential subscriber estimates. They also dismissed the intervenors' concerns regarding the use of illegal decoders, submitting that current decoder technology and other available security mechanisms are more than adequate to prevent any wide-scale abuse. As for the effect that their proposed undertakings might have in limiting the future expansion of cable television systems, Craig and Northern indicated that they would be prepared to forego any exclusive right they might have to provide service to households in areas where the Commission, in the future, should decide to license the extension of cable service by others. On this subject, assuming approval of their MDS proposals, both Craig and Northern suggested that they be given the opportunity to submit competing cable proposals, should later applications be submitted by others to provide cable service within their MDS service contours. The Commission has examined the MDS and STV proposals by Craig, Northern and Estate against the background of its longstanding policy position that cable television technology represents the preferred method of extending service. Further, the STV proposals by Northern and Estate have been assessed, bearing in mind that the areas to be served under these applications are not underserved areas as defined by the Commission, and are thus areas in which its policy would generally preclude the licensing of STV undertakings.
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The Commission has also taken into account Craig's and Northern's willingness to forego exclusive rights to provide service to households in areas where the Commission, in future, might approve applications by others to extend cable television service.
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The Commission is concerned about the financial viability of the subscription-based MDS undertakings proposed by these applicants, given that their business plans have been based on a gradual growth in subscribers when, in fact, there would not be growth, but only a gradual erosion of their potential subscriber base over time as the population expands in the areas they propose to serve and the viability of cable television service increases.
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Further, the Commission considers that to provide the MDS operator an opportunity to file a competing application, should there be an application to extend cable service to an area within the service contours of an MDS system, would be very burdensome. This is particularly the case given that the nearby presence of cable infrastructure and the potential for cross-subsidization would make approval of applications to extend existing cable boundaries the logical choice in almost every instance.
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Nevertheless, based upon the available evidence, most particularly that contained in the application by Northern, the Commission is convinced that the use of MDS technology to serve residents on the periphery of urban areas could be an appropriate and viable means of extending service, provided that certain issues and problems, such as the need to allow for future cable expansion in such areas, are effectively resolved. Accordingly, the Commission intends to make a further call for applications to serve such areas, specifying in detail the particular issues that it will expect all applicants to address.
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Alain-F. Desfossés
Secretary General
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