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Canadian Satellite Communications Inc.
Toronto, Ontario - 891151300
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Following a Public Hearing commencing 24 October 1989 in the National Capital Region, the Commission renews, from 1 October 1990 to 31 August 1995, the licence issued to Canadian Satellite Communications Inc. (CANC0M) to carry on a multiple channel television and radio broadcasting network operation to distribute via satellite, to affiliated broadcasting undertakings, the signals set out in the appendix to this decision. The licence will be subject to the conditions specified in this decision and in the licence to be issued.
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At the October hearing, the Commission reviewed with CANCOM its progress towards fulfilling its primary responsibility, that being the extension of Canadian broadcasting services to the more remote regions of Canada not yet provided with a comprehensive broadcasting service (the core market). The Commission also examined CANCOM's performance in respect of certain other longstanding objectives and related expectations as reiterated most recently in renewal Decision CRTC 85-423 dated 7 June 1985. Included among these was the expectation that CANCOM establish a pricing policy that does not discriminate against core market communities. The Commission also expected CANCOM to offer a certain amount of Atlantic-originated television programming, and to provide subscribers resident in the Mountain and Pacific time zones with programming delivered in appropriate time periods. Further, the Commission expected CANCOM to assist in the development of native-oriented programming by locating video uplink facilities in a northern community and required it to submit plans for the substitution, on one of its satellite-delivered television services, of ten hours per week of native-produced programming for delivery to those core market communities in which there is a predominantly native population.
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The term "core market", as originally defined by CANCOM and noted by the Commission in Decision CRTC 81-252 approving CANCOM's initial licence application, was to include "those remote and underserved communities that presently receive only two or less television signals". The Commission notes that the definition now employed by CANCOM specifies those communities "that presently receive only two or less Canadian television signals" (emphasis added). The definition was modified by the licensee to include certain communities that receive only two or less Canadian television signals, but because of their proximity to the U.S. border, are able to receive U.S. television signals as well. The Commission notes that CANCOM's modified definition does not depart from the purpose and intent of the original definition.
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With respect to the licensee's performance in extending service to the more remote regions of Canada, the Commission notes the important role CANCOM has played in the development and successful realization of the regional company concept in many parts of the country whereby several communities with as few as 50 households now receive service. The licensee advised the Commission at the October hearing that the number of core market subscribers has doubled since the time of its last licence renewal in 1985, while the number of core market communities receiving CANCOM service has tripled. Moreover, according to the licensee, the average size of a core market community has been reduced from 437 to 197 subscribers. CANCOM added that, during the same period, its cumulative losses have dropped from approximately $35 million to approximately $25 million, and that it expects to retire its accumulated deficit entirely so as to achieve "modest positive retained earnings" during the coming licence term.
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The Commission is satisfied with the licensee's accomplishments over the course of the current licence term in fulfilling its primary responsibility for the extension of service to core market communities, and is pleased to note CANCOM's improving financial circumstances. The Commission encourages the licensee to continue its efforts to extend service, with a view to bringing CANCOM's package of television and radio signals to even greater numbers of residents in Canada's more remote regions. CANCOM is expected to ensure that its rate structure does not discriminate against subscribers of its affiliates in core market communities. Currently, CANCOM employs a rate card that distinguishes between four categories of affiliates (A, B, C and D) on the basis of the number of non-CANCOM television signals receivable over the air in the community served by the affiliate. The highest rates apply to category A affiliates, or those serving communities where the fewest over-the-air signals are available. The rate card also provides for a lower average cost per signal as the number of CANCOM signals taken by an affiliate increases. The Commission currently limits its regulation of the rates charged by CANCOM to the imposition of a condition of licence that permits the licensee to charge affiliates a monthly maximum of $7.00 per subscriber for the provision of its package of eight television signals (four Canadian and four U.S.), or a maximum monthly charge of $500.00 for affiliates serving commercial camps.
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The Commission discussed at some length with the licensee at the hearing the measures it has taken during the current licence term to reduce the charges paid by core market subscribers. One such measure was CANCOM's decision in July 1988 to remove CFTM-TV Montreal from the rate card and to charge all of its affiliates a nominal rate of $0.05 for this French-language service. A second measure introduced on 1 September 1988 was a reduction of 5% in the monthly rate per subscriber charged to category A affiliates taking the full CANCOM package. As a consequence of these initiatives, no category A affiliate now pays more than $6.35 per subscriber. In the spring of 1989, CANCOM also announced a 50% reduction in the monthly per-subscriber rates paid by new affiliates authorized under the Commission's calls for the extension of broadcast services during their first year of operation. Later that year CANCOM announced that, effective 1 September 1990, all category A affiliates serving 150 or fewer subscribers will be subject to the lower category of rates.
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At the hearing, CANCOM indicated that its general plan in the new term will be to continue to move "toward equalizing the rate card overall". It confirmed its intention to maintain, throughout the new licence term, the 5% reduction in the rate charged to category A affiliates receiving the full CANCOM package, and its further policy of applying category B rates to category A affiliates serving 150 or fewer subscribers. The licensee added that it will continue to make its radio services available to affiliates without charge.
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On the matter of the one-year 50% rate reduction extended to new affiliates, the licensee stated that it would review the effectiveness of this particular policy after one year, but that it is "... likely that this will stand throughout the entire licence period". With regard to the CFTM-TV signal, CANCOM noted that, although the reduced rate of $0.05 implemented in July 1988 was intended to attract an expanded subscriber base, the increase in the number of affiliates taking the service has not compensated for the shortfall in revenue. As a result, the licensee continues to incur losses associated with the distribution of CFTM-TV, estimated by CANCOM to be in the range of $1.5 million per year. A spokesperson for CANCOM added:
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If it appears that by September 1990 we [have] not ... improved the situation there significantly, then I think that we will have to look at whether or not the $0.05 will have to be increased ...
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Interventions were presented at the hearing by the Ministry of Culture and Communications of the Province of Ontario and by C1 Cablesystems Inc. who suggested, among other things, that the Commission impose a maximum charge for CANCOM services on a per signal basis. The interveners argued that lower CANCOM charges, and the resultant lower operating costs for CANCOM affiliates, would enable affiliates to add other signals to their service offerings and would promote the extension of service to even smaller communities than it is currently economical to serve.
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For its part, CANCOM contended that the existing condition of licence, which sets a maximum rate for the full CANCOM package, allows the licensee to price its various broadcasting services competitively in response to market demand, not only in core market communities, but also in the other markets it serves (known as the extra-cable and replacement markets). According to the licensee, the revenues it earns from all its broadcasting services, including the revenues from affiliates serving other than core market communities, enables it to keep rates down in core markets:
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We have calculated that our rates to core markets would be 73% higher if we did not generate those other revenues.
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The Commission has taken note of the effective measures taken by CANCOM to reduce rates during the current licence term. It has also considered the arguments put forward by the various parties on the subject of CANCOM's rates. Although the Commission encourages CANCOM to continue to take steps to reduce core market rates during the new licence term, it is mindful of the licensee's continuing financial losses, and has decided to continue to limit its regulation of these rates to the setting of a maximum price for the delivery to affiliates of the eight CANCOM television signals. Based, however, on CANCOM's commitment at the hearing to continue to charge category A affiliates rates set at 5% below the present maximum of $7.00 throughout the new licence term, the Commission considers it appropriate to alter the condition of licence to reflect this commitment. Accordingly, it is a condition of this licence that the licensee is authorized to charge its affiliated undertakings for the provision of its satellite distribution service, a maximum monthly fee of
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a) $ 500.00 where its affiliate is a commercial camp, or
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b) in all other cases, $6.65 for each subscriber of its affiliate, for its eight television signal package (4 Canadian and 4 U.S.).
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As noted earlier, the Commission stated its expectation in Decision CRTC 85-423 that CANCOM provide for the inclusion of Atlantic-originated programming in its overall service offering. At the October hearing CANCOM indicated that it had attempted to respond to this expectation in May of 1986 by distributing three hours per week of such programming in place of the regularly-scheduled programming carried on one of its other Canadian television services. According to the licensee, this interruption of regularly-scheduled programming was the subject of a large volume of complaints from affiliates and their subscribers, and it was therefore obliged to cease the program substitution in July 1986. CANCOM indicated that it next attempted to reach an agreement to share transponder costs for the satellite distribution of the new Maritime-based third television service (MITV), but that negotiations fell through when the licensee of this service selected a fibre optic link for distribution of its television signal throughout the region.
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A majority of the Commission accepts CANCOM's argument that the introduction in 1983 of the Atlantic Satellite Network (ASN), at no cost to cable licensees in the region, and the presence of a significant amount of Atlantic-produced programming in the schedule of the recently-launched CBC Newsworld service, have affectively rendered the national distribution by CANCOM of an Atlantic-originated service uneconomical.
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A further expectation contained in the earlier renewal decision was that CANCOM provide subscribers resident in the Mountain and Pacific time zones with programming delivered in appropriate time periods "as soon as it is financially feasible to do so". CANCOM advised in this regard that, while two Seattle television signals were uplinked in September 1987, affiliates serving only 40,000 to 45,000 subscribers, or some 4.5% of all CANCOM subscribers in western Canada, elected to distribute the signals. According to the licensee, this level of demand fell well short of that required to meet the high transponder costs involved, and it was obliged to cease distribution of the Seattle signals in September 1988. Based on the absence of any significant demand for the Seattle signals, the Commission agrees that it would be unreasonable to continue to expect CANCOM to distribute them and, accordingly, has removed them from the list of authorized television services contained in the appendix to this decision.
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At the October hearing, there was also considerable discussion of CANCOM's ongoing responsibility to provide assistance for the development of native-oriented programming, and the licensee's performance in this regard. Interventions dealing with these matters were presented at the hearing by the representatives of two native groups: National Aboriginal Communications Society (NACS) and Northern Native Broadcasting, Yukon (NNBY). One of their concerns related to a commitment made by CANCOM at the time of its original licence application to appoint a native representative as vice president of the company with direct responsibility for the co-ordination and scheduling of native programming. The fulfillment of this commitment was noted by the Commission as an expectation in Decision CRTC 81-252. The native representative employed in this position died in 1987 and responsibility for native programming matters was assumed by another CANCOM vice president, a non-native. According to NACS, provision should again be made for native representation within CANCOM's senior management. A similar view was expressed in a written intervention submitted by the Department of Community and Transportation Services of the Government of the Yukon. In light of CANCOM's ongoing responsibility for facilitating the development of northern and native-originated broadcasting services, the Commission strongly encourages the licensee, in consultation with the native community, to select a new native representative as vice president with responsibility for CANCOM's activities in these areas.
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A second issue raised by these interveners was the status of CANCOM's undertaking, noted in Decisions CRTC 81-252 and 85-423, to provide a video uplink for the distribution of native-produced programming. CANCOM currently provides audio uplinks for the distribution of such programming at each of Whitehorse and Yellowknife. At the hearing the licensee reconfirmed its commitment to provide a video uplink as well, but stated that it first wished to have the advice of NACS regarding an appropriate site for the uplink facilities. NNBY argued strongly that Whitehorse should be chosen as the uplink site. For its part, NACS stated that its members had not yet ratified any specific location, but that a decision could be reached within a month.
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In view of the above, the Commission expects CANCOM to provide video uplink facilities at a location deemed suitable by the appropriate native groups as soon as they reach a concensus on this matter. The Commission requires CANCOM to report, within 90 days of the date of this decision, on the results of the consultations with the appropriate native groups to select a site for the video uplink. If, at the end of the 90-day period, no concensus has been reached amongst the parties concerned, the Commission expects CANCOM, without any undue delay, to locate the uplink at the northern location the licensee considers to be most suitable.
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In Decision CRTC 85-423 the Commission required CANCOM to file plans for the substitution of ten hours per week of native-produced programming for delivery to those core market communities with a predominantly native population. At the October hearing the licensee submitted that such program substitution would not constitute the most effective method for it to support native broadcasting. It therefore proposed that the CRTC expectation be dropped, in return for which CANCOM offered its commitment to provide native groups with access to two additional audio subcarriers, the necessary uplinking facilities at existing sites where capacity is available, and the further use of a satellite audio uplink from a remote site using Single Channel Per Carrier (SCPC) technology.
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Although support for CANCOM's proposal was expressed at the hearing by NACS, the Department of Community and Transportation Services of the Government of the Yukon argued in its written intervention that the expectation regarding the provision of ten hours per week of native-produced programming should be retained. NNBY took a similar position:
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Our opposition (to CANCOM's proposal) is primarily because although the Commission can give agreement to the exchange of expectations ... there is no guarantee that once they do get satellite access they will have the necessary receive facilities in the communities.
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The Commission has considered the arguments put forward on this issue by the licensee and the interveners. Based on its assessment of all the evidence before it, including the immediate benefit or value to be derived from the various new audio facilities CANCOM has stated it would make available to native groups, as balanced against the value that certain of these groups attach to the distribution of the native-produced television programming required under the original expectation, the Commission has decided to endorse CANCOM's proposal in part.
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Specifically, the Commission expects the licensee, during the new licence term, to make available for use by native groups the two additional audio subcarriers it has proposed, the necessary uplinking facilities at existing sites where capacity is available, and a further satellite uplink from a remote site using SCPC technology. The Commission also expects CANCOM to substitute (or otherwise distribute) a minimum of five hours per week of native-produced television programming during the new licence term. In the Commission's view, this modified expectation represents a fair and equitable resolution of this issue.
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At the hearing the Commission also discussed with CANCOM its current condition of licence pertaining to changes of ownership. CANCOM agreed that the current condition should be replaced by one that is in conformity with section 5 of the Cable Television Regulations, 1986 (the Regulations). Accordingly, by condition of licence, in respect of any transfers of ownership or control, the licensee must adhere to the provisions of section 5 of the Regulations together with the associated definitions contained in section 2 of the Regulations. It remains a condition of this licence that the licensee shall offer these services to all undertakings willing to enter into affiliation agreements with it and shall provide to all such undertakings, in accordance with the terms of affiliation agreements filed with the Commission, such services as the Commission may authorize such undertakings to distribute.
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It also remains a condition of this licence that the signals and program services provided to each affiliate shall not be deleted, curtailed or altered in any manner by the licensee except as may be authorized or required by the Commission in this decision or otherwise.
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The Commission has taken into consideration the comments contained in the approximately 100 non-appearing interventions submitted with respect to CANCOM's application for licence renewal.
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Fernand Bélisle
Secretary General
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Signals Authorized for Distribution by CANCOM/Signaux provenant du réseau de la CANCOM dont la distribution est autorisée
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CHAN-TV*Vancouver, British Columbia/ Colombie-Britannique
CITV-TV* Edmonton, Alberta
CHCH-TV* Hamilton, Ontario
CFTM-TV Montreal, Quebec
WJBK-TV (CBS) Detroit, Michigan
WTVS (PBS) Detroit, Michigan
WDIV (NBC) Detroit, Michigan
WXYZ-TV (ABC) Detroit, Michigan
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* Native-produced television programs, on a part-time basis, on satellite channels used for the distribution of these services/Émissions de télévision produites par les autochtones, à temps partiel, sur les canaux de satellite qui servent à distribuer ces services.
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CKAC Montreal, Quebec
CITE-FM Montreal, Quebec
CHFI-FM Toronto, Ontario
CIRK-FM Edmonton, Alberta
CISN-FM Edmonton, Alberta
CFMI-FMVancouver, British Columbia/ Colombie-Britannique
CKNM-FM Yellowknife, N.W.T./T.N.O.
CKRWWhitehorse, Yukon Territory/Territoire du Yukon
CHON-FMWhitehorse, Yukon Territory/Territoire du Yukon
VOCMSt. John's, Newfoundland/Terre-Neuve
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