ARCHIVED -  Decision CRTC 90-394

Decision

Ottawa, 20 April 1990

Decision CRTC 90-394

Approval of Applications to Extend Cable Service to 52 Manitoba Communities

W1 Cablesystems Inc.Alexander and 51 other Manitoba communities

Westman Media Co-operative Ltd.
Austin and 15 other Manitoba communities

Mascon Communications Corp., on behalf of a company to be incorporated
Alexander and 14 other Manitoba communities

4-12 Electronics Corporation
Arborg and 16 other Manitoba communities

Bernard Brocker, on behalf of a company to be incorporated
Lac du Bonnet, Manitoba

Sky Cable Inc.
Brandon and southwestern Manitoba, and 4 other areas in Manitoba

At a Public Hearing in Winnipeg on 5 and 6 December 1989, the Commission considered applications by the parties named above for licences to carry on broadcasting receiving (cable) undertakings or, in the case of Sky Cable Inc. (Sky Cable), broadcasting distributing undertakings (MDS, or multipoint distribution systems) at a number of locations in Manitoba. The Commission had issued a call for applications in Public Notice CRTC 1989-48 dated 18 May 1989.

The Commission, for the reasons set out below, has determined that the public interest is best served by approving applications by W1 Cablesystems Inc. (W1) to operate new cable television undertakings at 45 of the 52 communities it proposed to serve, and to license Westman Media Co-operative Ltd. (Westman) to serve 7 of the 16 communities it had applied for. All other applications by these and the remaining four applicants are denied. Details regarding the specific applications approved and denied, and the communities or areas affected, are set out later in this decision and in the decision's appendix.

Of the five applicants proposing the use of conventional cable television technology, the plans put forward by W1 were the most extensive. This applicant has considerable experience in establishing and operating cable undertakings in small communities and holds licences to operate systems at well over 100 locations in Saskatchewan and Alberta. W1's proposals are based upon the same regional company concept that has been applied successfully in several other regions across Canada. Under this concept, W1 has grouped the communities it proposes to serve into clusters or sub-regions, each containing a total number of potential subscribers deemed sufficient by the applicant to support the costs of constructing and maintaining the systems within the group. An implicit element of the regional company concept is a degree of cross-subsidization flowing from communities that are positive contributors to those that are negative contributors; this permits service to be extended to local populations that would otherwise be too small to support viable cable television operations of their own. W1 proposed the extension of service to more such negative contributors than any of the other cable television applicants.

All but 18 of the 52 Manitoba communities that W1 proposed to serve were the subject of competing proposals by one or more of the four other cable applicants. One of these, Westman, is an established regional cable operator in western Manitoba. Operating as a non-profit co-operative enterprise, it has established a strong record of performance in providing service to some 23,000 residents of 27 communities in that part of the province. The 16 new communities it applied to serve are all similarly located in western Manitoba and were all applied for by W1 as well.

A third cable applicant, 4-12 Electronics Corporation (4-12) is not an existing cable television licensee, but is involved in the industry as a Manitoba-based cable equipment supplier. 4-12's applications for authority to serve 17 communities in central Manitoba were thoroughly prepared and capably presented at the hearing. Although 4-12 was the sole cable applicant in respect of 6 of these communities, 11 of its applications were competing with those by W1. Mascon Communications Corp. (Mascon), which operates 11 cable systems in British Columbia, applied, on behalf of a company to be incorporated, to serve 15 communities located in the southwest corner of Manitoba. Seven of its applications were competing with applications by W1 and Westman, while a further seven were competing with those by W1 alone.

Bernard Brocker, representing a company to be incorporated, submitted a single application to serve the community of Lac du Bonnet. Mr. Brocker is a local businessman; his application was competing with applications by both W1 and 4-12.

The sixth applicant, Sky Cable, proposed to extend service through the use of MDS technology, a relatively new method of signal delivery which makes use of frequencies at the lower end of the microwave spectrum. Sky Cable proposed to install its microwave transmitters at five different locations across the southern portion of the province. At the hearing, Sky Cable made it clear that its five applications were not severable, and that the viability of its proposals would depend upon it having the exclusive right to provide service to currently unserved areas, not only within the 66 dB (uV/m) service contours of the microwave signals, but beyond them to the radio horizon:

 So we would require exclusivety in our outside circle (to the radio horizon). That map has been filed with the Commission, it's line of sight, and that is what we would request. Accordingly, Sky Cable's proposals were adjudged to be competing directly against virtually all of the cable television applications considered at the hearing.

The Commission examined Sky Cable's applications against the background of the following policy statement contained in Public Notice CRTC 1985-60 and reaffirmed in Public Notice CRTC 1987-254:

 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 and/or low density, over-the-air transmitters represent the only viable means of providing service to the particular area.

In the present circumstances, given the number of applications before it seeking authority to extend cable service to almost 60 different communities in Manitoba, the Commission is unable to conclude that the over-the-air MDS systems proposed by Sky Cable offer the only viable method of extending service to these unserved areas of the province. Moreover, the Commission does not consider that the circumstances of this particular case warrant making an exception to its usual policy. The Commission also notes that approval of Sky Cable's applications, including approval of its request for an exclusive right to provide service out to the radio horizon, would require that almost all the other applications at the Winnipeg hearing be denied. This, in turn, would render it difficult, if not impossible to provide cable service to any of the communities for which the other applicants had applied. Such approval would also preclude the licensing of virtually any other new cable undertakings in the southern portion of the province or any extension of the service area boundaries of most existing systems, including those serving Winnipeg.

In addition to these concerns, there were doubts left unresolved at the hearing regarding the reasonableness of Sky Cable's revenue projections, particularly given the lack of definitive information about, among other things, the number of home satellite receiving systems in use within the proposed coverage area, the willingness of potential subscribers to absorb the significant up-front costs associated with receiving MDS service, and the impact of competition from existing over-the-air services.

In view of all of the foregoing, the Commission denies the five MDS applications by Sky Cable to serve Brandon and southwestern Manitoba, Dauphin and Parkland, Foxwarren and central Manitoba, Riding Mountain and central Manitoba, and Winnipeg, Portage La Prairie and eastern Manitoba.

Following consideration of the proposals put forward by the remaining cable applicants, the Commission approves 45 of the 52 applications by W1 for licences to carry on new broadcasting receiving undertakings, namely those requesting authority to serve the following communities: Alexander, Arborg, Ashern, Austin, Baldur, Belmont, Cartwright, Crystal City, Cypress River, Dominion City, Dugald, Elm Creek, Emerson, Eriksdale, Ethelbert, Fisher Branch, Hartney, Inglis, La Broquerie, Lac du Bonnet, Lockport (Parkdale, Less Crossing, St. Andrews, McDonald, Little Britain, Lower Fort Garry, Old England), Lundar, Miniota, Newdale, Ninette, Oak Lake, Oakbank, Oakville, Ochre River, Pierson, Pilot Mound, Plumas, Rapid City, Reston, Roland, Sanford, Somerset, Ste. Agathe, Stony Mountain, St. Malo, Warren, Waskada, Wawanesa, Whitemouth, and Winnipegosis.

The Commission also approves 7 of the 16 applications by Westman for licences to carry on new broadcasting receiving undertakings, namely those requesting authority to serve Benito, Binscarth, Birch River, Bowsman, Minitonas, Sandy Lake and Strathclair.

The applications by W1 to serve the seven above-noted communities herein licensed to Westman, and the applications by Westman to serve 9 of the communities herein licensed to W1, namely Austin, Baldur, Cartwright, Crystal City, Hartney, Pilot Mound, Reston, Wawanesa and Winnipegosis, are denied.

Similarly, the Commission denies all of the applications by Mascon, on behalf of a company to be incorporated (to serve Alexander, Baldur, Belmont, Cartwright, Crystal City, Cypress River, Hartney, Ninette, Oak Lake, Pierson, Pilot Mound, Pipestone, Reston, Waskada and Wawanesa); all of the applications by 4-12 (to serve Arborg, Ashern, Dugald, East Selkirk, Eriksdale, Fisher Branch, Garson, Grunthal, Lac du Bonnet, LaSalle, Lundar, Oakbank, Oakville, Riverton, Stony Mountain, Tyndall and Warren); and the application by Bernard Brocker, on behalf of a company to be incorporated, to serve Lac du Bonnet.

The Commission's decision to deny the application by Bernard Brocker, representing a company to be incorporated, to serve Lac du Bonnet is based on the relatively large size of this community, its importance as a positive contributor in the plans of W1, and concern regarding the possibility that denial of W1's application to serve Lac du Bonnet might have rendered it difficult for W1 to proceed with its commitments to serve all of the other smaller communities for which it has been approved.

In denying the applications by 4-12 and Mascon to serve not only those communities for which they were competing with either W1 or Westman, but also those for which they were the sole applicants (4-12 in respect of East Selkirk, Garson, Grunthal, LaSalle, Riverton and Tyndall; and Mascon in respect of Pipestone), the Commission has taken into account the inability of these applicants at the hearing to make firm commitments to extend service to these smaller communities without the economic base represented by the larger communities for which they had applied.

In its deliberations with respect to the various cable television applications noted above, and as in other cases involving applications by competing groups to extend service, the Commission's objective has been to arrive at a licensing approach that will best ensure the establishment of viable operations offering an attractive package of broadcasting services to the greatest number of unserved communities, at an affordable price and at the earliest possible date. In its assessment, the Commission has also given careful consideration to, among other things, the statements by the various cable applicants on the subject of severability and, in particular, the conditions they have indicated must be present if they are to be able to extend service to the various communities for which they have applied. Further, the Commission has taken into account the number of negative contributors that the various applicants have proposed to serve.

The Commission is satisfied that its decision to approve the applications by W1 to serve 45 of the 52 communities it proposed to serve is consistent with the policy objective noted above. Specifically the Commission considers that such approval will establish W1 as a strong regional cable operator in southern Manitoba, with the economic base necessary to extend service to all 45 of the communities concerned (including a number of negative contributors) without delay.

At the same time, the Commission considers that its approval of 7 of Westman's 16 applications will consolidate that company's position as a strong regional player in the northwestern part of the province. Westman's position on the question of severability underwent some change at the hearing, specifically on the question of whether approval was required for certain communities before it would be able to extend service to others. The Commission, however, has taken note of the final word on this matter by Westman's General Manager, Mr. Gary Cooper, who stated: "A simple answer is we could serve any of them viably." The Commission is also satisfied that, like W1, Westman has the means at its disposal to implement its authorities without delay.

Accordingly, the Commission will issue licences to W1 and Westman, expiring 31 August 1994, subject to the conditions specified in this decision and in the licences to be issued.

Conditions, Expectations and Other Licensing Particulars

a) W1

The operation of W1's new undertakings at Arborg, Ashern, Baldur, Cartwright, Crystal City, Eriksdale, Ethelbert, Fisher Branch, Lac du Bonnet, Lundar, Pierson, Pilot Mound, Somerset, Waskada, Whitemouth, and Winnipegosis will be regulated pursuant to Parts I and III of the Cable Television Regulations, 1986 (the regulations).

The operation of the undertakings serving Alexander, Austin, Belmont, Cypress River, Dominion City, Dugald, Elm Creek, Emerson, Hartney, Inglis, La Broquerie, Lockport (Parkdale, Less Crossing, St. Andrews, McDonald, Little Britain, Lower Fort Garry, Old England), Miniota, Newdale, Ninette, Oak Lake, Oakbank, Oakville, Ochre River, Plumas, Rapid City, Reston, Roland, Sanford, Ste. Agathe., Stony Mountain, St. Malo, Warren and Wawanesa will be regulated pursuant to Parts I and II of the regulations, and will be issued Class 2 licences accordingly.

The Commission has considered the applicant's request for conditions of licence authorizing it to act as a Part III licensee in respect of the 29 Class 2 undertakings listed above. Among other things, W1 argued that "... there are technical, marketing and administrative costs associated with (Class 2) systems that frankly are not customer friendly."

The issuance of Class 2 licences in respect of these communities conforms with the Commission's policy in that the communities in question are all located within the Grade B official contour of at least three licensed television stations. The Commission does not consider that W1 has provided enough evidence to justify any exception to this policy and its request is accordingly denied.

The Commission reminds W1 that, as a consequence of this denial, carriage of the following regional or extra-regional signals, which were not included in the schedules accompanying the applications, will be mandatory at the communities indicated: CBWT Winnipeg and CHMI-TV Portage La Prairie at Austin, Cypress River and Plumas; CHMI-TV Portage La Prairie at Emerson and La Broquerie; and CBWST Dauphin at Inglis.

W1 is also reminded that all priority services must be distributed on unrestricted channels of Class 2 undertakings in accordance with section 12 of the regulations. Should W1 wish to distribute a priority service on a restricted channel of any of its new Class 2 undertakings, an application for a condition of licence allowing such distribution, together with a clear rationale for the request, must first be submitted for Commission approval. The Commission reminds W1 that it is required to submit, both to the CRTC and to the Department of Communications (DOC), its proposed head end co-ordinates in respect of each of the undertakings for the purpose of technical certification. No licence will be issued in respect of an undertaking until such technical certification is issued by the DOC.

In line with W1's commitment at the hearing, it is a condition of each new licence that construction of the undertaking concerned be completed and that it be in operation within 15 months of the date of this decision or, where W1 applies to the Commission and satisfies the Commission that it cannot implement its authority before the expiry of this period and that an extension is in the public interest, within such further period of time as is approved in writing by the Commission.

For the purpose of section 18 of the regulations, the amount of $20.95 will form the base portion of the basic monthly fee in respect of W1's new Class 2 undertakings. For Part III undertakings, the basic monthly fee is not regulated.

In addition to the services required or authorized to be distributed pursuant to the applicable sections of the regulations, W1 is authorized, by condition of licence, to distribute on each of the proposed Class 2 undertakings, at its option, the signals of WDIV (NBC) and WJBK-TV (CBS) Detroit, Michigan and CFTM-TV Montreal (TCTV) received via satellite from CANCOM, as part of the basic service. W1 is also authorized, by condition of licence, to distribute, at its option, the CANCOM signal of WXYZ-TV (ABC) Detroit as part of the basic service of all of its new Class 2 undertakings except those serving Dominion City, Emerson, Roland and St. Malo. The Commission notes that ABC network programming will be available at these four locations through the signal of WDAZ-TV Devils Lake, North Dakota, which will be received by W1 over the air.

In accordance with subsection 24(j) of the regulations, W1 is authorized to distribute the signal of CFJP-TV Montreal on the Somerset undertaking.

The Commission notes that, in the case of two of the communities at which W1 will be regulated as a Class 2 licensee, Ste. Agathe and St. Malo, more than half of the local population consists of those whose mother tongue is French. These two communities are thus francophone markets within the meaning set out in Public Notice CRTC 1987-261 entitled "Distribution and Linkage Requirements".

In its applications, W1 has proposed to distribute TV5 on a discretionary tier, and TSN on the basic service of the Ste. Agathe and St. Malo undertakings. Under the requirements of subsection 10(2) of the regulations, however, French-language programming services such as TV5 are generally to be distributed as part of the basic service of undertakings serving francophone markets, while English-language specialty services such as TSN are generally to be distributed as discretionary services. These requirements reflect the Commission's concern for the need to equalize the availability of French-language services to the extent possible and to avoid a gradual shift in francophone viewership to English-language services. In the circumstances, because the satellite footprint of RDS (the French-language equivalent of TSN) does not extend to provide a suitable signal to these communities, the Commission considers it reasonable that W1 be permitted to distribute TSN on the basic service at Ste. Agathe and St. Malo. Accordingly, by condition of licence, W1 is relieved of the requirement of subsection 10(2) of the regulations that it distribute TSN only on a discretionary basis at these two communities. In the case of the TV5 service, however, the Commission does not consider that any similar relief from the requirements of paragraph 10(2) is warranted, and accordingly directs W1, should it elect to distribute this service at St. Agathe and St. Malo, to do so on the basic service.

The Commission reminds W1 that it must obtain the prior consent of TV5 Québec Canada should it elect to distribute the TV5 service on a discretionary basis on any Class 2 undertaking serving a non-francophone community.

The Commission notes that no local or regional French-language television station owned and operated by the CBC will be received over the air at Plumas, Austin and Reston. W1 has proposed to distribute the CBC French-language service of CBWFT Winnipeg at Plumas and Austin, and the service of CBWFT-12 Oak Lake at Reston. CBWFT is a distant station in relation to Plumas and an extra-regional station in relation to Austin. CBWFT-12 is also an extra-regional station in relation to Reston.

The Commission considers that the proposed signals should be receivable with acceptable quality. Accordingly, it is a condition of licence in respect of each undertaking that W1 is relieved of the requirement of paragraph 9(1)(f) of the regulations to distribute the French-language programming service of a television station owned and operated by the CBC and distributed to the licensee by satellite or microwave relay so long as the signal of CBWFT at Plumas and Austin, and the signal of CBWFT-12 at Reston, is distributed and is of acceptable quality.

The Commission acknowledges W1's plans for the development of a community channel at each of the communities, including those at which it will be licensed as a Part III licensee. The Commission encourages W1 to promote community interest in, and access to, this channel.

b) Westman

The operation of Westman's new undertakings will be regulated pursuant to Parts I and III of the regulations with the exception of the Sandy Lake and Strathclair undertakings, which will be regulated pursuant to Parts I and II.

The Commission reminds Westman that no licence will be issued in respect of an undertaking until technical certification is issued by the DOC.

In line with Westman's commitment at the hearing, it is a condition of each new licence that construction of the undertaking concerned be completed and that it be in operation within 18 months of the date of this decision or, where Westman applies to the Commission and satisfies the Commission that it cannot implement its authority before the expiry of this period and that an extension is in the public interest, within such further period of time as is approved in writing by the Commission.

For the purpose of section 18 of the regulations, the amount of $20.95 will form the base portion of the basic monthly fee in respect of Westman's new Class 2 undertakings at Strathclair and Sandy Lake. As noted earlier, the basic monthly fee is not regulated for Part III undertakings.

In addition to the services required or authorized to be distributed pursuant to the applicable sections of the regulations, Westman is authorized, by condition of licence, to distribute at Sandy Lake and Strathclair, at its option, the signals of WXYZ-TV (ABC), WJBK-TV (CBS), WDIV (NBC) and WTVS (PBS) Detroit, Michigan received via satellite from CANCOM, as part of the basic service.

The Commission acknowledges Westman's plans for the development of a community channel at each of the communities, including those at which it will be licensed as a Part III licensee. The Commission encourages Westman to promote community interest in, and access to, this channel.

The Commission received interventions from Allarcom Limited, licensee of CITV-TV Edmonton, and from Global Communications Limited (Global) opposing the proposed redistribution of CITV-TV in Binscarth unless the applicant deletes from the CITV-TV programming service those programs that originate with Global for which distribution rights have been acquired by television stations serving the Binscarth market. The Commission is satisfied that the proposed distribution of CITV-TV is in accordance with the Commission's regulations for Part III licensees and with its policy for the extension of broadcasting services to the more remote and underserved areas of Canada.

Conclusion

The Commission wishes to acknowledge the views expressed in the many other interventions submitted in respect of one or more of the applications before it at the Winnipeg hearing. As emphasized by the Commission earlier in this decision, it examined in great detail several possible licensing options before reaching its decision to approve various applications by W1 and Westman. The Commission reiterates that its prime concern has been to ensure that the communities so awarded will provide a sufficient subscriber base to enable the parties to proceed with the extension of cable service to the maximum possible number of unserved households with the least possible delay.

At the hearing, certain of the applicants referred to plans to submit applications to the Commission for authority to extend service to additional Manitoba communities. The Commission encourages W1, Westman and any other interested parties to investigate the possibility of extending service to additional communities in that province. The Commission notes in particular W1's commitment at the hearing to "... file a second phase application for Manitoba by our fiscal year-end (31 August 1990)" to serve all seven of the communities for which either 4-12 or Mascon was the sole applicant, but whose applications are herein denied.

Rosemary Chisholm
Acting Secretary General

Appendix to Decision CRTC 90-394/

Annexe à la décision CRTC 90-394

a) Applications Approved/Demandes approuvées:

W1 Cablesystems Inc.

Alexander, Arborg, Ashern, Austin, Baldur, Belmont, Cartwright, Crystal City, Cypress River, Dominion City, Dugald, Elm Creek, Emerson, Eriksdale, Ethelbert, Fisher Branch, Hartney, Inglis, La Broquerie, Lac du Bonnet, Lockport (Parkdale, Less Crossing, St.Andrews, McDonald, Little Britain, Lower Fort Garry, Old England), Lundar, Miniota, Newdale, Ninette, Oak lake, Oakbank, Oakville, Ochre River, Pierson, Pilot Mound, Plumas, Rapid City, Reston, Roland, Sanford, Somerset, Ste. Agathe, Stony Mountain, St. Malo, Warren, Waskada, Wawanesa, Whitemouth and/et Winnipegosis, Manitoba - 892840000 - 892841800 - 892842600 - 892843400 - 892844200 - 892845900 - 892850900 - 892851700 - 892852500 - 892853300 - 892854100 - 892855800 - 892856600 - 892857400 - 892858200 - 892859000 - 892860800 - 892861600 - 892862400 - 892863200 - 892864000 - 892865700 - 892866500 - 892869900 - 892870700 - 892871500 - 892872300 - 892873100 - 892874900 - 892875600 - 892876400 - 892877200 - 892878000 - 892879800 - 892880600 - 892882200 - 892883000 - 892884800 - 892885500 - 892887100 - 892888900 - 892889700 - 892890500 - 892891300 - 892892100

Westman Media Co-operative Ltd.

Benito, Binscarth, Birch River, Bowsman, Minitonas, Sandy Lake and/et Strathclair, Manitoba - 891873200 - 891874000 - 891875700 - 891876500
- 891880700 - 891883100 - 891884900

b) Applications Denied/Demandes refusées:

W1 Cablesystems Inc.

Benito, Binscarth, Birch River, Bowsman, Minitonas, Sandy Lake and/et Strathclair, Manitoba - 892846700 - 892847500 - 892848300 - 892849100
- 892867300 - 892881400 - 892886300

Westman Media Co-operative Ltd.

Austin, Baldur, Cartwright, Crystal City, Hartney, Pilot Mound, Reston, Wawanesa and/et Winnipegosis, Manitoba - 891871600 -891872400 - 891877300
- 891878100 - 891879900 - 891881500 - 891882300 - 891885600 - 891886400

4-12 Electronics Corporation

Arborg, Ashern, Dugald, East Selkirk, Eriksdale, Fisher Branch, Garson, Grunthal, Lac du Bonnet, LaSalle, Lundar, Oakbank, Oakville, Riverton, Stony Mountain, Tyndall and/et Warren, Manitoba - 892952300 - 892954900 - 892948100
- 892957200 - 892961400 - 892958000 - 892960600 - 892951500 - 892950700
- 892963000 - 892955600 - 892947300 - 892956400 - 892953100 - 892949900
- 892959800 - 892962200

Mascon Communications Corp., on behalf of a company to be incorporated/au nom d'une compagnie devant être constituée

Alexander, Baldur, Belmont, Cartwright, Crystal City, Cypress River, Hartney, Ninette, Oak Lake, Pierson, Pilot Mound, Pipestone, Reston, Waskada and/et Wawanesa, Manitoba - 893014100 - 893004200 - 893007500 - 893005900 - 893002600
- 893008300 - 893010900 - 893006700 - 893011700 - 893015800 - 893001800
- 893012500 - 893009100 - 893013300 - 893003400

Sky Cable Inc.

Brandon and Southwestern Manitoba/et le Sud-Ouest du Manitoba; Dauphin and/et Parkland; Foxwarren and Central Manitoba/et le centre du Manitoba; Riding Mountain and Central Manitoba/et le centre du Manitoba; and/et Winnipeg, Portage la Prairie and Eastern Manitoba/et l'est du Manitoba, - 891587800
- 891591000 - 891589400 - 891590200 - 891588600

Bernard Brocker,representing a company to be incorporated/au nom d'une compagnie devant être constituée

Lac du Bonnet, Manitoba - 890657000