ARCHIVED -  Public Notice CRTC 1991-59

Public Notice

Ottawa, 5 June 1991

Public Notice CRTC 1991-59

Community Channel Policy

Introduction

On 5 June l990 the CRTC issued Public Notice CRTC l990-57 (the notice) entitled "Community Channel Policy Review". In the notice, the Commission announced that it was undertaking a review of its policy respecting the community programming service provided by cable television undertakings.

The current community channel policy has been in effect for l5 years. During that time the cable industry has matured considerably both in terms of subscriber growth and financial stability. This maturity has been reflected in the quality and quantity of community programming and is further evidenced by a generally supportive attitude on the part of cable operators toward their community channel activities.

In the notice, the Commission indicated that, while it was intent on preserving the fundamental principles and spirit of the 1975 community channel policy, it considered it necessary to review a number of key issues in order to strengthen the mechanisms by which the community channel would meet the objectives of the Broadcasting Act and ensure that community programming remains a vital and important component of the broadcasting system. It was intended that the review also accommodate the Commission's goal of streamlining its policies, regulations and administrative practices to retain only those mechanisms necessary to attain the objectives set out in the Broadcasting Act.

The notice set out the Commission's proposals on a number of key issues including financial support, sponsorship advertising, and certain content-related questions.

The Commission received 52 written submissions in response to the public notice, all of which have been carefully considered in
arriving at this new community channel policy.

The Commission will publish its proposed amendments to the Cable Television Regulations, l986 (the regulations) for public comment in the near future.

Role and Objectives

The Commission acknowledges the admirable degree of commitment and dedication of community programming staff and volunteers. In updating its regulations and policies with respect to community programming, the Commission seeks to build upon the proven strengths of the medium and encourage continued innovation in the years ahead. In many instances the community channel has developed into a vibrant and important element within the broadcasting system overall, and has become particularly meaningful as a provider of local information, views and entertainment. This function of local self-expression takes on even greater significance in those areas where the community channel is the only source of local television programming.

The role of the cable industry in the provision of local programming will become increasingly important in light of the evolving situation with respect to the provision of local services within the broadcasting system as a whole.

The Commission considers that the role of the community channel should be primarily of a public service nature, facilitating self-expression through free and open access by members of the community. Also, community programming should complement that provided by conventional broadcasters. The provision of adequate financial resources to support the community channel remains the cable licensee's principal contribution to the public in exchange for the privilege of holding a cable television licence. Within this context, licensees will be expected, as far as their individual circumstances permit, to:

- engender a high level of citizen participation and community involvement in community programming;

- actively promote citizen access to the community channel and provide and promote the availability of training programs; - provide feedback mechanisms, such as advisory boards, to encourage viewer response to the range and types of programs aired;

- seek out innovative ideas and alternative views;

- provide a reasonable, balanced opportunity for the expression of differing views on matters of public concern;

- reflect, where appropriate, the bilingual and ethnic composition of the community;

- provide coverage of local events; and,

- publicize the program schedule.

In addition, licensees are encouraged to develop innovative approaches toward collaborative efforts involving special projects which may extend beyond the traditional scope of a licensee's authorized service area. Recognizing the community channel's proven strengths in such areas as the production of telethons, coverage of local and regional sporting events, and other significant endeavours, the Commission encourages licensees to take the lead in further developing cable television's potential for new programming initiatives.

Financial Support

In its l975 policy, the Commission decided not to impose a fixed funding formula for the community channel. Instead, it established a policy guideline whereby licensees were expected to contribute l0% of gross subscriber revenues to the support of community programming, and noted that, since the cable industry was still in its formative stages, profits and cash flow available to the licensee would be taken into consideration in judging the adequacy of the resources made available. It is noteworthy that Statistics Canada data indicate an expenditure of $6.3 million in 1975, which had increased to $61.8 million by 1990.

In the notice, the Commission observed:

 A review of financial data provided in the Annual Returns indicates that the average industry allocation to the community channel between l985 and l988 remained constant at about 5 per cent of basic service revenues, although contributions by individual licensees range from l.2% to l9%.

With the intention of establishing a secure and consistent funding level, the Commission proposed in the notice to amend the regulations to require the licensees of Class 1 systems and Class 2 systems with more than 2,000 subscribers to provide financial support to the community channel of not less than 5% of the revenues derived from the base portion of the basic monthly fee, ie. exclusive of revenues earned as a consequence of fee increases introduced pursuant to subsections 18(3) and 18(6) of the regulations.

The Commission further proposed that this financial contribution relate solely to expenses on operations and not include capital expenditures, since capital expenditures are provided for separately in subsection 18(6) of the regulations. The Commission proposed to limit expenditures on overhead and other indirect expenses to a maximum of 30% of community programming expenses.

While most submissions from the cable industry were generally supportive of the 5% funding formula, the vast majority favoured a policy guideline similar to that in effect since 1975, rather than a regulation. Some cable operators suggested that the Commission address any concerns respecting the adequacy of the level of financial support on a case-by-case basis at the time of individual licence renewals.

A number of multiple system operators (MSOs), including Maclean Hunter Cable TV (Maclean Hunter) and Shaw Cable Systems Ltd., proposed that MSOs should be assessed differently because smaller systems generally require a financial contribution in excess of 5% while very large systems can meet their programming commitments with a lower percentage of revenues.

The Commission recognizes that there are inherent problems in the imposition of a rigid funding requirement and has decided to maintain a flexible approach. The Commission will retain its current method of assessing the financial contribution of licensees on a case-by-case basis and hereby announces as a policy guideline a funding benchmark, exclusive of capital expenditures, of 5% of base portion revenues. Licensees must continue to report their levels of direct and indirect expenses, and will be expected to dedicate the large majority of their expenditures to the direct expense category.

Direct expenses are those expenses solely attributable in full to the acquisition or production of programming. This would include, for example, salaries and benefits paid to staff who work exclusively in the programming department, non-staff talent fees, films, tapes, props, sets, program related materials and supplies as well as program vehicle operating costs.

Indirect expenses are those expenses that cannot be attributable in full to the acquisition or production of the programming but which are nevertheless necessary for the acquisition or production of programming. This would include, for example, a percentage of heat, light and hydro related to the building in which the programming facilities are located, a percentage of salaries and benefits paid to staff who do not work exclusively in the programming department, but are, at least on occasion, directly involved in its operation; programming equipment maintenance, and other costs for such things as office cleaning, entertainment related to the community programming department, etc.

In arriving at the 5% benchmark, the Commission has taken into consideration the historical operating expenses of the community channel, as reported in the Statistics Canada Annual Returns, exclusive of capital expenditures. To allow the inclusion of capital expenditures in this formula could result in a significant dilution of operating funds, possibly below the historic average of 5% of basic service revenues. Therefore, the Commission will not allow licensees to include capital expenditures, depreciation or lease payments, whether on account of capital or operating leases, in the calculation of their financial contribution to the operation of the community channel.

In the notice, the Commission observed that some licensees may have been including the costs associated with other services such as the barker channel, Broadcast News and stock market reports in their calculations of community programming expenses. Since these costs should be separately identified, and not included in the allocation to the community channel, the Commission intends to consult with Statistics Canada to formulate revisions to the Annual Return forms to identify only those expenses directly related to the operation of the community channel.

The 5% level of financial contribution will be the minimum required of licensees. The Commission will expect those licensees that currently fund their community channels at a higher level to continue to do so in the future.

Advertising

With the release of the revised regulations in 1986, the Commission permitted limited forms of sponsorship and contra advertising. Cable licensees are allowed to distribute simple oral or written acknowledgements in return for financial assistance or the provision of goods or services. The introduction of advertising on the community channel was followed by a period of experimentation, with the result that some licensees exceeded the intended limit of the regulations. In Circular No. 348 Sponsorship Messages on the Community Channel, dated 27 July l988, the Commission clarified the parameters of the regulations:

 In the case of "sponsorship" and "contra" messages, a moving visual presentation cannot be included because it consists of more than "an oral or written acknowledgement". Similarly, the still visual or pictorial display of goods sold by a sponsor cannot be included because a pictorial display of goods is clearly in excess of "an oral or written acknowledgement".

The Circular further clarified that company slogans or jingles are not permitted, unless a slogan is trademarked and thus considered to be part of the name of the sponsor. Words that promote goods or services are not permitted; however, company logos and the still depiction of the sponsor's building are permitted as long as they do not include the display of any material that actively promotes goods or services.

The definition of sponsorship contained in the regulations allows the mention of the address or telephone number of a sponsor while the definition of contra advertising does not. In response to a request from the National Programming Committee of the Canadian Cable Television Association (CCTA), the Commission proposed in the notice to amend the regulations to permit the mention of a sponsor's address or telephone number in contra advertising.

Furthermore, the Commission proposed to enact a regulation limiting each contra or sponsorship message to 15 seconds duration. The cable industry argued that such a time limitation on contra and sponsorship messages would impose a further restriction on their ability to attract sponsors. The Commission considers that, in the absence of a demonstrated problem in this regard, it is unnecessary to impose time restrictions on sponsorship messages at this time.

However, the Commission proposes to amend subsection l4(l) of the regulations (logging requirements) to include the categories of "commercial message" and "alphanumeric programming", in order to monitor the time allocated to sponsorship activity and local bulletin board messages.

In the notice, the Commission also affirmed its intention to maintain restrictions limiting the commercial orientation of the community channel:

 The Commission is confident that most licensees are currently complying with the regulations respecting advertising. However, there is some concern that certain licensees are employing moving video and, in extreme cases, are engaging in conventional spot advertising. The Commission emphasizes that it will not tolerate such activity.  Moreover, the Commission will continue to insist that the orientation of the community channel must remain that of a public service vehicle for free and open access and community expression. Licensees must not deny, restrict or reduce access opportunities if a community citizen group or individual is unable or unwilling to attract a sponsor. Under no circumstances should a licensee charge a fee for providing access programming, or insist that programs have sponsorship.

 The Commission emphasizes that it is committed to retaining its prohibition against commercial spot advertising on the community channel.

Representatives of the commercial broadcasting sector were strongly opposed to the possibility of cable licensees competing with them for local advertising revenues. In support of this position, they pointed out that cable licensees have a stable revenue base through monthly subscriber fees, whereas commercial radio and television stations must rely on the support of local merchants.

A number of community groups and individuals stated that advertising is incompatible with the basic premise underlying the purpose of community access television, and would ultimately distort the principle of open citizen access.

The cable industry was strongly supportive of a regulatory framework that would permit greater opportunity to generate advertising revenue on the community channel. There was broad support for relaxing the advertising restrictions for small cable systems serving communities lacking local conventional broadcast outlets. The Commission's policy respecting small cable systems is outlined in a subsequent section of this notice.

On a number of occasions over the years, the Commission has cited two major concerns regarding the commercialization of the community channel. The first is the inevitable change in orientation brought about by a reliance on advertising revenue. The second is that cable licensees, who already have a reliable revenue base from subscription fees, would siphon advertising revenue from conventional broadcasters, who rely on this revenue as their major source of income. The Commission will therefore retain its current restrictions on sponsorship and contra advertising as outlined in the regulations and as clarified in Circular No. 348. The Commission proposes, however, to amend the regulations to permit the mention of both the address and telephone number of sponsors in contra and sponsorship messages.

All revenues generated by such advertising must be reinvested in the operation of the community channel. Since these revenues are incremental to the financial contribution required by the Commission, licensees must identify these revenues and associated expenditures separately when reporting their community programming expenses to the Commission. The Commission is aware that a number of licensees rent their production facilities for external commercial and industrial productions. The Commission considers that the revenue associated with this activity should also be reinvested in the community channel, thus avoiding the requirement for cost separation procedures.

Bicycling and Interconnection

The regulations allow for the exchange of relevant programs between licensees through bicycling or interconnection. In most cases, adjacent systems in urban areas have interconnected by means of microwave or hard wire and have thus created mini-networks.

In the notice, the Commission recognized the benefits of program sharing among licensees, and acknowledged the particular benefit that interconnection provides by enabling live open-line programming to be made available across an entire city. The Commission further noted that interconnection has the potential to interfere with the scheduling of local programs and that the community programming of small systems on the outskirts of large metropolitan areas may, once interconnected to a regional network, be overshadowed or usurped by the programming of the larger systems. In the notice, the Commission stated:

 There are a number of options to resolve this concern. The Commission could establish a benchmark with respect to the percentage of an individual licensee's schedule to be devoted  to programs originating with another licensee. In this regard, the Commission considers that a level of 40% may be appropriate. Alternatively, the Commission could require systems that intend to utilize interconnection to a significant extent to apply for a network licence.

Most submissions opposed the imposition of a quota on the exchange of programs. The government of Ontario considered that there was insufficient data to suggest that there is a problem and suggested that the Commission could deal with situations of abuse on a case-by-case basis. Most parties expressed the view that the exchange of programs was a positive development and noted that small systems require maximum flexibility.

A number of cable operators suggested that programs from adjacent systems within a common metropolitan area should not be considered bicycled programs for the purpose of the suggested 40% quota on the basis that these programs are "local" to the area.

The Commission's primary concern with respect to the issue of bicycling and interconnection is the retention of the local flavour of the community channel.

The Commission considers that there is considerable merit to the argument that contiguous systems in a single urban area should not be subject to a 40% limitation on programs produced by another licensee since, typically, they each share a common schedule.

The Commission will therefore not consider those programs produced by an adjacent system in a common metropolitan urban area as bicycled or non-local programming. Non-adjacent systems will be subject to a policy benchmark whereby no more than 40% of the community programming schedule may be devoted to non-local programs.

With respect to interconnection,

the Commission considers that a network situation exists when one licensee delegates a portion of its schedule to another licensee and engages in simultaneous airing of programs originating from that licensee. In this regard, the Commission notes that, in most cases, adjacent systems in urban areas have interconnection by means of hard wire or microwave for the purpose of exchanging community programs and, essentially, share a common schedule.

This practice of interconnection is widespread and provides tangible benefits to licensees and audiences alike. After the new Broadcasting Act is proclaimed, the Commission will consider whether to exempt these networks from the requirement to hold a network licence.

Sharing the Community Channel with Complementary Programming

Pursuant to the regulations, Class 2 licensees are allowed to distribute complementary programming on the community channel. Complementary programming, as described in Public Notice CRTC l985-l5l, consists of:

 community programs produced by other cable television licensees, government or public service information material, NFB productions, children's programs,  educational programs not provided by the Provincial Education Authority, alphanumeric services such as Broadcast News, the Question Period portions of the House of Commons or provincial legislatures and multicultural programs.

Local programs must retain scheduling priority, and foreign or commercial programs are not permitted.

In the notice, the Commission acknowledged that, unlike conventional television stations, community channels must originate all their programs, creating a high proportion of repeat airings and long periods consisting of only alphanumeric messages.

The National Programming Committee of the CCTA requested that Class l systems be permitted to distribute limited forms of complementary programming, specifically "government or public service information material".

Broadcasters and some of the community groups that submitted comments in this proceeding indicated their opposition to diluting the local nature of the community channel.

Maclean Hunter suggested that registered charities continue to have free access to the community channel while government agencies and professional organizations pay for airtime. Maclean Hunter proposed that complementary programming should be limited to ten or fifteen per cent of the program schedule, and that any funds derived from such programming should be reinvested in community programming.

There was strong support from the cable industry for the authorization of the Question Period portions of the proceedings of the provincial legislatures.

The Commission is aware that many program directors include in their schedules programs supplied by the Red Cross, provincial tourism agencies, Revenue Canada, and others. All these programs are technically prohibited because they fall outside the definition of community programming, yet all appear to have a valid place within the public service mandate of the community channel. In the Commission's view, the exhibition of a limited amount of government and public service information material would be in the public interest.

There is also a valid argument for permitting the carriage of the Question Period portions of the provincial or territorial legislative proceedings since, in and of itself, such material would be beneficial to the public.

The Commission therefore proposes to amend the regulations to authorize the distribution, by Class l licensees, of government and public service information material as well as the provincial or territorial Question Period proceedings. Licensees will be expected to adhere to the principle that local programs be given scheduling priority. In keeping with the Commission's policy of free and open access, licensees will not be permitted to receive financial payment in exchange for the distribution of government or public service information material.

Small Class 2 Systems

The regulations require the licensees of all Class l and Class 2 systems to distribute community programming on the community channel. Many small Class 2 systems lack the financial resources necessary to program the channel actively, and provide instead an alphanumeric service consisting of local public service announcements.

In keeping with its objective of reducing the regulatory burden on small licensees, the Commission had proposed to amend the regulations to permit Class 2 systems with fewer than 2,000 subscribers to be relieved of the requirement to provide community programming on the community channel as long as a local non-commercial alphanumeric message service was provided.

The Ontario Cable Television Association and Cl Cablesystems Inc. were opposed to the notion that small Class 2 systems be required to provide a non-commercial alphanumeric service, favouring instead the ability to blend both classified ads and public service announcements on the alphanumeric channel.

The Commission considers that it would be an unnecessary burden on small licensees to provide a separate channel solely for community announcements. The Commission therefore proposes to amend the regulations to remove the requirement that licensees of Class 2 systems with fewer than 2,000 subscribers provide community programming on the community channel. In such instances, these licensees will be expected to provide a local alphanumeric service which could include both classified advertising and public service announcements.

Although small Class 2 licensees will no longer be required to program the community channel actively, the Commission considers it appropriate to adopt incentives that will encourage these licensees to maintain some degree of local service.

In this regard, the Commission acknowledges the numerous suggestions that Class 2 and Part III licensees serving communities that have no local commercial broadcasting service be permitted to engage in conventional local advertising.

The Commission proposes to amend the regulations to permit Class 2 licensees with fewer than 2,000 subscribers that provide service to unserved communities and Part III licensees also providing service to unserved communities to air up to l2 minutes of local advertising material per hour.

The Commission proposes to further amend the regulations to define an "unserved community" as having no local AM or FM radio stations or local television stations that originate programming, overlapping all or any part of a cable licensee's authorized service area. For this purpose, in this definition, local television station will be defined to exclude rebroadcasting undertakings. The regulations include this exclusion in the definitions of local AM and FM radio stations.

The Commission is confident that the increased ability of small cable systems to engage in advertising will be an incentive to actively program the community channel. However, the Commission would be concerned if this greater freedom to advertise resulted in a change in orientation of the programming provided.

Access

Citizen participation is the cornerstone of the community channel. The l975 policy noted that the factor that most distinguishes the content of community programming from conventional television services is the ability of community programming to turn the passive viewer of television into an active participant. From this participation flows programming of a nature that is as varied as the imagination and skills of the participants.

Licensees are expected to give the community the widest opportunity for self-expression by actively encouraging groups and individuals to present program ideas, produce their own programs with the help of the licensee's staff, and submit videotapes and films produced by them for replay by the licensee.

Licensees should actively consult members of the community to determine the mix, scope and types of programs that would best serve the needs and interests of the community at large. In some instances, licensees have established formal advisory boards while, in other cases, informal feedback from volunteers serves this purpose. What is important is that licensees actively encourage citizen participation in determining the range and types of programs aired. Care must be taken to ensure that no group or individual dominates the use of the channel and that all groups and individuals have the opportunity to participate in the presentation of program ideas.

In the notice, the Commission stated it is satisfied that, for the most part, licensees have succeeded in their efforts to animate their communities and foster citizen involvement. However, as stated earlier, the Commission requires that access to the community channel be free and open and insists that access should not, under any circumstances, depend on the availability of a sponsor, or other forms of financial support.

Licensees are reminded that the community channel should reflect the bilingual and multicultural natures and characteristics of their communities. Licensees should also make special efforts to meet the needs of the disabled and other minority groups.

Licensees are expected to provide regular training programs for volunteers and to publicize the availability of access opportunities and production training programs.

The Commission considers that community programmers should continue to strive for innovation in programming concepts and communications methods. The cable industry requested the Commission's acceptance of the CCTA's Industry Standards for Community Programming. These guidelines deal with issues such as access, balance, stereotyping and sponsorship.

The Commission has established Guidelines for Developing Industry-Administered Standards as outlined in Public Notice CRTC 1988-13. In particular, the Commission draws the CCTA's attention to guidelines 3 and 4, concerning the extent of public participation and the establishment of a fair consultative process in developing the standards.

Prior to accepting the CCTA's Industry Standards for Community Programming, the Commission expects the CCTA to respond to the guidelines contained in Public Notice CRTC 1988-13.

Finally, licensees are reminded to consult the guidelines and expectations regarding controversial subject matter or open-line programs in Public Notice CRTC 1988-61 entitled Balance in Programming in Community Access Media and Public Notice CRTC 1988-213 entitled Policy Regarding Open-Line Programming.

7. Assessment

In its public notice, the Commission indicated that it was necessary to update its community channel assessment mechanisms and to implement a monitoring program. The Commission proposed to adopt a simplified procedure based on three criteria: adherence to the 5% funding benchmark; the provision of regular training programs; and the implementation of an access policy.

As noted earlier, the Commission will retain its current method of assessing the funding of the community channel on a case-by-case basis and will be guided by the 5% benchmark.

The cable industry suggested that the requirement for individual licensees to develop and publicize an access policy and file it with the Commission is redundant if the Commission accepts the CCTA Industry Standards for Community Programming. These standards, once accepted, would be administered by the industry through the Cable Television Standards Council.

The criteria relating to training programs and access policies may be administered by the Cable Television Standards Council provided that the Commission receives copies of each complaint along with the disposition of the complaint by the Council. Licensees are reminded that the existence of a degree of industry self-regulation does not override the Commission's ultimate responsibility under the Broadcasting Act to regulate and supervise all aspects of the broadcasting system.

The Commission proposes to amend the regulations to require licensees to retain an audiovisual recording of all their programming for four weeks from the date of distribution, so that Class 1 and Class 2 licensees with 2,000 or more subscribers can submit an audiovisual recording, upon request, to the Commission to ensure that licensees are in compliance with the community channel policy, particularly with respect to advertising, citizen access and the overall orientation of the community channel. In this regard, the Commission notes that cable licensees generally supported the retention of an audiovisual recording of all their programming for a 28-day period.

Other Matters

In its public notice, the Commission announced its proposal to amend the regulations to include the provisions respecting "programming content" (i.e. abusive comment, etc.) that are found in the Commission's radio, television, pay television and specialty services regulations. The Commission also indicated that it proposed to amend its policy respecting special programming channels to allow the distribution of community programs containing the original sponsorship messages. There was widespread support for both these proposals and the Commission will proceed to implement each of these measures.

Finally, licensees are reminded that locally-originated special programming channels are subject to the logging requirements set out in section l4 of the regulations.

Related Documents: "Policies Respecting Broadcasting Receiving Undertakings (Cable Television)" dated l6 December l975; "A Review of Certain Cable Television Programming Issues" dated 26 March l979; "Bicycled Programs on the Community Channel" Circular No. 286 dated 6 December 1982; "Community Channel Policy Review" Circular No. 297 dated 12 June 1984; "Complementary Programming on the Community Channel" Public Notice CRTC 1985-151 dated 18 July 1985; "Regulations Respecting Broadcasting Receiving Undertakings" Public Notice CRTC 1986-182 dated 1 August 1986; "Sponsorship Messages on the Community Channel" Circular No. 348 dated 27 July l988; "Balance in Programming on Community Access Media" Public Notice 1988-161 dated 29 September 1988; "Policy Regarding Open-Line Programming" Public Notice CRTC 1988-213 dated 23 December 1988; and "Community Channel Policy Review" Public Notice CRTC 1990-57 dated 5 June 1990.

Allan J. Darling
Secretary General