ARCHIVED -  Notice of Public Hearing CRTC 1992-13

Notice of Public Hearing

Ottawa, 3 September 1992

Notice of Public Hearing CRTC 1992-13

HULL, QUEBEC

1 MARCH 1993, 9:00 A.M.STRUCTURAL HEARING

The Commission will hold a public hearing commencing 1 March 1993, at
the Conference Centre, Phase IV, 140 Promenade du Portage, Hull, Quebec, to consider the policy issues described below.

I. CURRENT BROADCASTING ENVIRONMENT

The Canadian broadcasting system faces a number of substantial technological and competitive pressures. The application of digital compression technology has the potential to transform the dynamics and economic landscape faced by programmers and distributors of both video and audio services. Digital compression is expected to yield significant increases in channel capacity by reducing bandwidth requirements, which could in turn lead to decreases in certain transmission costs. This could also foster the growth of new programming services and innovative service concepts.

Digital compression can be applied to several distribution technologies, including cable, over- the-air broadcasting, satellite and multipoint distribution systems (MDS). Consumers could potentially receive multichannel services from any of these distribution technologies. Digital compression also has implications for the terminal equipment that would be necessary in the subscriber home.

Digital video compression (DVC) is supporting, among other developments, the emergence of U.S.-based direct broadcast satellite (DBS) services. The availability of these services in Canada presents potential challenges to the regulated Canadian broadcasting system. Such services have the potential to bypass Canadian programming and distribution systems. This may have a negative impact on the ability of Canadian programmers and distributors to operate and compete in a manner that would contribute to the achievement of the objectives set out in the Broadcasting Act.

The growth of "extended basic" discretionary programming packages containing Canadian specialty and U.S. satellite services offered on an unscrambled basis at a relatively low cost (through the use of negative trap technology) has dramatically altered the structure of cable service. Mediastats statistics reveal that, as of May 1992, approximately 4.1 million of the 4.5 million cable households having access to such packages have, in fact, chosen to subscribe to them, representing a penetration rate of 91%. The Commission notes that, in certain provincial jurisdictions, legislation dealing with commercial practices may prohibit cable operators from negative option marketing, thereby precluding them from offering extended basic packages. While the extended basic service concept has been widely accepted among subscribers offered the service, these program tiers may raise issues about the impact of non-Canadian program services on both Canadian programming services and on the achievement of Canadian programming objectives. The evolution of the cable industry towards universal addressability, and the potential for new program packaging and service options, will also have implications for the cost and structure of cable service.

In order to respond to this more competitive and increasingly consumer-driven communications landscape, the Commission considers that it is timely to review the regulatory framework related to the packaging and distribution of programming services by various distribution systems, taking into account the ability of technology to foster enhanced choice of service.

The Commission is also aware of the need perceived by certain parties that it license new Canadian services and authorize additional non-Canadian programming services for distribution in Canada, particularly as a response to emerging foreign-based multichannel distribution systems. Consequently, the Commission considers that it is also appropriate, in the context of this review, to explore the criteria that should govern the licensing and authorization of potential new broadcasting undertakings and new Canadian and non-Canadian programming services.

II. OBJECTIVES IN THIS PROCEEDING

To assist interveners in this proceeding, the Commission sets out below the major objectives that will guide it in reviewing and considering changes to the existing policies and regulations governing the cable distribution, packaging and carriage of programming services.

In accordance with section 3 of the Broadcasting Act, the Commission is committed to the maintenance of a Canadian broadcasting system that will, among other things:

* strengthen and contribute to Canadian identity;

* promote the primacy of Canadian services;

* provide opportunity for exposing Canadian creative and artistic talent;

* add diversity to the menu of services; and

* be affordable and accessible to the public.

The Commission, in pursuit of its mandate, must be mindful of the impact of technological change on the Canadian broadcasting system, particularly with respect to distribution costs, the emergence of new services and consumer choice. The Commission must also take into account increasing competitive pressures from alternative distribution technologies and foreign services. The Commission, therefore, considers that the regulatory framework for the distribution and packaging of programming services should:

1. provide Canadians with a wide range of general interest and special interest programming to choose from that is accessible and affordable;

2. ensure that the Canadian broadcasting system remains strong and financially viable;

3. ensure that Canadian services have fair and equitable opportunity to become established in the system, without unduly limiting access to similar or comparable non-Canadian services;

4. ensure that Canadians have access to Canadian services that may be deemed "essential" or "vital";

5. be streamlined and limited to those regulatory elements necessary to achieve the objectives of the Broadcasting Act, and be flexible and responsive to technological developments and other changes in the broadcasting environment.

III. CURRENT REGULATORY ENVIRONMENT

The Cable Television Regulations, 1986 (the regulations) provide a framework for the distribution of programming services. Generally speaking, Class 1 and Class 2 cable operators are required to distribute all local Canadian television services, including stations of the CBC and educational television services, on a "must carry" or priority basis. Where the Commission has determined that a programming service is of national public interest and has licensed the service as a mandatory service, licensees must distribute the service as part of the basic service, to the extent that channel availability permits. In addition, cable systems are generally required to distribute and support a community programming service.

Where a cable licensee satisfies the priority carriage requirements, the licensee may carry various optional programming services, some of which may be distributed as basic services and some of which may be distributed as discretionary services (optional to subscribers). Canadian programming services authorized for basic distribution generally include the CBC, local and regional television stations, legislative services, and certain specialty services. Canadian programming services authorized as discretionary services may include pay television and pay-per-view (PPV) services, distant Canadian television stations, and certain specialty services.

With respect to Canadian specialty services, those that are authorized for basic carriage have a wholesale rate that is regulated by the Commission and is included in the basic monthly cable fee. The Commission does not set wholesale rates for Canadian specialty services that are distributed on a discretionary basis. Some Canadian specialty services also derive revenues from the distribution of advertising. Appendix I contains a list of existing Canadian specialty and pay television licensees.

With respect to optional non-Canadian programming services, cable operators may generally distribute all conventional U.S. broadcast services receivable over the air, excluding network duplicates, predominantly religious stations and stations that began operation after 1 January 1985. Where U.S. stations are received by the cable operator via microwave, not more than three commercial services and one non-commercial service are generally permitted. However, these optional U.S. conventional broadcast services received over the air may be distributed as basic or discretionary services.

In addition, the Commission has incorporated in its regulations authorization for the distribution of specific non-Canadian satellite services through its lists of Part II and Part III eligible satellite services, attached to this notice as Appendix II. As enunciated in Public Notice CRTC 1987-261 (incorporated by reference into the regulations), it is the policy of the Commission not to allow the carriage of non-Canadian satellite services that are deemed to be either totally or substantially competitive with Canadian pay or specialty services. For example, U.S. music video services such as MTV are not on the lists because they would duplicate and compete with the Canadian specialty service MuchMusic. In addition, any services that are deemed to be incompatible with stated Commission policies may also be excluded. Also, where an eligible non-Canadian satellite service becomes competitive to existing or future Canadian pay and specialty services, by virtue of a format change to itself or to a Canadian pay television or specialty service, the authority for the cable carriage of the non-Canadian satellite service could be terminated.

The distribution of these nonCanadian satellite services is subject to the Commission's "tiering and linkage" policies also set out in Public Notice CRTC 1987-261. These policies require, among other things, that non-Canadian services be packaged with Canadian specialty and pay television services at ratios of no more than 2:1 and 5:1, respectively, provided that no more than eight channels of the cable system are devoted to the distribution of non-Canadian satellite services. Tiers containing non-Canadian satellite services exclusively are prohibited. These policies are designed to ensure that non-Canadian satellite services serve as attractive packaging partners for Canadian services, and provide a meaningful contribution to the Canadian broadcasting system.

Part III cable licensees operate small cable systems serving remote or underserved communities having two or fewer licensed television stations, as defined by the regulations. Generally speaking, Part III licensees are required to distribute all local Canadian television services and certain Canadian regional television services. Where such licensees satisfy the priority carriage requirements, they may carry various optional programming services, as defined by the regulations. Part III licensees, however, are not subject to the Commission's tiering and linkage rules.

IV. KEY ISSUES

In the interest of encouraging the development and exposure of Canadian services, while taking into account the general consumer demand for enhanced choice and emerging technological and competitive challenges, the Commission seeks public comment on the following key issues, and on any other relevant issues that parties may wish to raise related to the distribution, packaging and carriage of programming services; alternative distribution technologies; and criteria for licensing and authorizing new broadcasting undertakings and new services.

1. What modifications, if any, are required to the present cable distribution and carriage policies for existing and new Canadian specialty services?

 For example:

* Should specialty services be authorized for distribution as part of the basic service, on a discretionary basis, or both? Should rates for these services be set and regulated by the Commission? Should existing specialty services have access to dual revenue streams?

*  Should carriage arrangements for Canadian specialty services be established by the Commission, or should they be negotiated on a case-by-case basis between each cable licensee and the specialty service operator?

2. What modifications, if any, are required to the "Tiering and Linkage" rules governing the distribution of non-Canadian satellite services on a discretionary basis?

 For example:

* Should Canadian distribution undertakings continue to be required to carry more Canadian than foreign programming services? Should this rule apply overall or within each tier or package of services?

* What limit, if any, should there be on the number of cable channels devoted to foreign satellite services at the level of the cable operator or the subscriber? (Current limit is 8 channels)

* Should current linkage rules (e.g. maximum of 2 U.S. services for each Canadian specialty service, 5 U.S. services for each Canadian pay television service) be retained, modified or eliminated?

* Should Canadian pay television services continue to have exclusive linkage to particular services?

* What criteria, if any, should the Commission use to add to or delete foreign services from the lists of eligible satellite services? Should criteria for authorizing U.S. services be different from criteria for authorizing other non-Canadian services?

* If new Canadian services are licensed that duplicate the programming offered by a non-Canadian service that is on the lists of eligible satellite services, should the policy of prohibiting continued distribution of the non-Canadian service be maintained?

* Should Class 2 systems with fewer than 2,000 subscribers, and that meet the signal carriage requirements for Part III cable systems, be permitted to act as Part III systems and thus not be subject to the tiering and linkage rules?

3. Alternative Distribution Technologies

 For example:

* What should be the role of alternative distribution technologies such as MDS and direct-to-home (DTH) satellite services in the delivery of programming to Canadians?

* Should technologies such as MDS be considered as competing or complementary services to cable?

* To what extent should the regulation of MDS parallel cable regulation?

* What is the potential impact of non-Canadian DTH and DBS on the Canadian broadcasting system?

* What is an appropriate regulatory response to non-Canadian DTH/DBS services, taking into account the Commission's jurisdictional authority and its enforcement options?

4. Criteria for Licensing and Authorizing New Broadcasting Undertakings and New Canadian Pay Television and Specialty Services

 For example:

* To what extent should market forces (e.g. financial viability and demonstrated audience demand) be a determinant in authorizing new satellite-to-cable Canadian programming services?

* To what extent should the projected impact upon existing licensees be a criterion for authorizing new services?

* What criteria should be used to determine Canadian content requirements for programming services distributed on an optional basis?

* What criteria, if any, should govern the amount and the access of new Canadian programming services to revenues derived from cable subscriber fees?

* With respect to cross-ownership of cable distribution and programming undertakings, are safeguards required to ensure fair and equitable treatment and access for all services respecting cable distribution?

V. PROCESS

For this review, the Commission will hold a two-stage written comment process to ensure that issues to be discussed at the public hearing will have been canvassed as fully as possible in advance of the oral phase of this proceeding.

Accordingly, the deadline for the submission of written comments is 4 December 1992. In addition, prior to the commencement of the 1 March 1993 public hearing, interested persons and parties will be permitted to submit a written comment regarding any issue(s) raised in comments submitted during the first stage of the written proceeding. The deadline for written comments submitted as part of this second stage is 5 February 1993.

The Commission considers that this process should provide interested persons a full opportunity to make their views known in the written phase of this proceeding. In the interest of focusing and streamlining the oral phase of the proceeding, the Commission will not generally be prepared to concentrate on issues other than those raised by interested persons in the written comments.

VI. PUBLIC PARTICIPATION

Comments should be addressed to Allan J. Darling, Secretary General, Ottawa, Ontario, KlA ON2. Please indicate if you wish to appear at the public hearing.

Comments must be received by the CRTC ON or BEFORE the deadline dates indicated above. The Commission will not take into consideration comments received after these dates nor can it be held responsible for postal delays.

One may also communicate with the Commission
- by Telex: 053-4253
- by Telecopier: (819) 994-0218

SPECIFIC INDIVIDUAL REOUIREMENTS

PERSONS WISHING TO APPEAR AT THE HEARING AND REQUIRING SIGN LANGUAGE INTERPRETATION ARE REQUIRED TO INFORM THE COMMISSION AT LEAST TWENTY (20) DAYS BEFORE THE COMMENCEMENT OF THE PUBLIC HEARING SO THAT THE NECESSARY ARRANGEMENTS CAN BE MADE.

Related Documents: Public Notices CRTC 1985-61 dated 22 March 1985, CRTC 1986-182 dated 1 August 1986, CRTC 1987-27 dated 30 January 1987, CRTC 1987-177 dated 28 July 1987, CRTC 1987-254 dated 26 November 1987, CRTC 1987-261 dated 30 November 1987, CRTC 1988-57 dated 13 April 1988, CRTC 1988-72 dated 29 April 1988, CRTC 1990-53 dated 15 May 1990, CRTC 1990-66 dated 5 July 1990, CRTC 1991-12 dated 24 January 1991, CRTC 1991-23 dated 18 February 1991, CRTC 1991-72 dated 17 July 1991, CRTC 1991-104 dated 8 October 1991 and Decision CRTC 92-369 dated 18 June 1992.

Documents noted above are available upon request by interested parties at the addresses provided below:

Commission Headquarters

Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room 201
Hull, Quebec KlA ON2
Tels: (819) 997-2429 - TDD 993-0423

Atlantic Reqional Office

Suite 1007
Bank of Commerce Building
1809 Barrington Street
Halifax, Nova Scotia B3J 3K8
Tels: (902) 426-7997 - TDD 426-7268

Quebec Regional Office

Guy-Favreau Complex, East Tower
200 René-Lévesque Boulevard West
Suite 602
Montréal, Quebec H2Z LX4
Tels: (514) 283-6607 - TDD 283-8316

Prairie Regional Office

Suite 1810
275 Portage Avenue
Winnipeg, Manitoba R3B 2B3
Tels: (204) 983-6306 - TDD 983-8274

Pacific and Northern Reqional Office

Suite 1380, 800 Burrard Street
Vancouver, British Columbia
V6Z 2G7
Tels: (604) 666-2111 - TDD 666-0778

Copies of the comments received by the Commission during the written phase of this proceeding will be placed on public examination files for viewing at each of the addresses noted above, as well as at the following offices of the Department of Communications:

Department of Communications
Building 302, 2nd Floor Pleasantville
St.John's, Nfld.

Attention: Ghislaine Didham
Department of Communications
Dominion Building
97 Queen Street
Charlottetown, P.E.I.

Attention: Mary Clare Butler
Depart of Communications
Terminal Plaza Building
1222 Main Street
Moncton, New Brunswick

Attention: Diane Chapman
Department of Communications
1141, de l'Église Street
5th Floor Ste-Foy, Quebec

Attention: Yvon Trudel
Department of Communications
135 James Street South, Room 210
Hamilton, Ontario

Attention: Ron Wheeler
Department of Communications
30 Duke Street West, 5th Floor
Kitchener, Ontario

Attention: Art Solomon
Department of Communications
55 St. Clair Avenue East, 9th Floor
Toronto, Ontario

Attention: Calmeta Tyrell
Department of Communications
421 Bay Street, Box 727
Sault Ste. Marie, Ontario

Attention: Lyzette Gagnon
Department of Communications
451 Talbot Street, Room 1112
London, Ontario

Attention: Sue Anderson
Department of Communications
Dominion Public Building, Room 330
33 South Court Street
Thunder Bay, Ontario

Attention: Gerry Lyngstad
Department of Communications
19 Lisgar Street, Room 301
Box 1120
Sudbury, Ontario

Attention: Rick Hansen
Department of Communications
880 Ouellette Avenue
Room 803, Box 450
Windsor, Ontario

Attention: Paul GrynDepartment of Communications
Federal Building, Room 215
120 Clarence Street
Box 633
Kingston, Ontario

Attention: Sherrie Noseworthy
Department of Communications
153 - 11th Street, Room 201
Brandon, Manitoba

Attention: Andy Anderson
Department of Communications
606 Spadina Crescent East
Room 1150
Saskatoon, Saskatchewan

Attention: Raymond Morin
Department of Communications
2002 Victoria Avenue
Room 1020
Regina, Saskatchewan

Attention: Terry Keim
Department of Communications
9700 Jasper Avenue
Room 1610
Edmonton, Alberta

Attention: Dave Migadel
Department of Communications
220 - 4th Ave. S. E.
Room 820
Calgary, Alberta

Attention: Paul Neufeld
Department of Communications
102nd Street, 8th Floor
Room 9909
Grande Prairie, Alberta

Attention: Bud Bate
Department of Communications
Precambian Bldg - 10th Floor
4922 - 52nd Avenue
Yellowknife, N.W.T.

Attention: Rolf Ziemann
Department of Communications
410 - 300 Main Street
Whitehorse, Yukon Territory

Attention: Jim Laursen
Department of Communications
Federal Building, Room 283
101 - 10th Avenue South
Cranbrook, B.C.

Attention: R. Stelmack
Department of Communications
Federal Building, Room 304
471 Queensway Avenue
Kelowna, B.C.

Attention: D.B. Bissell
Department of Communications
515 - 280 Victoria Street
Prince George, B.C.

Attention: I. Carthwright
Department of Communications
Room 224 - 816 Government Street
Victoria, B.C.

Attention: J. Anderson
Department of Communications
309 - 2nd Avenue, Room 583
Prince Rupert, B.C.

Attention: H. Henderson
Department of Communications
3994 - 192nd Street
Langley, B.C.

Attention: J. Nosotti

Allan J. Darling
Secretary General

APPENDIX I/ANNEXE I

CANADIAN SPECIALTY SERVICES/SERVICES SPÉCIALISÉS CANADIENS

LICENSEE/TITULAIRE

Chinavision Canada Corporation
CHUM Limited (MuchMusic Network)

The Sports Network

Telelatino Network Inc.

Canadian Broadcasting Corporation/
Société Radio-Canada

Canadian Interfaith Network

YTV Canada Inc.

Premier Choix: TVEC Inc.

MétéoMédia Inc.

MusiquePlus Inc.

Le Réseau des Sports

Consortium de télévision Québec
Canada (TV5)

Cathay International Television Inc.

CANADIAN PAY TELEVISION SERVICES/SERVICES DE TÉLÉVISION PAYANTE CANADIENS

LICENSEE/TITULAIRE

Allarcom Pay Television Limited

First Choice Canadian Communications
Corporation

Premier Choix: TVEC Inc.

The Family Channel Inc.

CANADIAN PAY-PER-VIEW SERVICES/SERVICES À LA CARTE CANADIENS

LICENSEE/TITULAIRE

Allarcom Pay Television Limited

Viewer's Choice Canada 1991

APPENDIX II / ANNEXE II

LIST OF PART II ELIGIBLE SATELLITE SERVICES/
LISTE DES SERVICES PAR SATELLITE ADMISSIBLES EN VERTU DE LA PARTIE II

(Cable Television Regulations, 1986, section 10)/
(Règlement de 1986 sur la télédistribution, art. 10)

A) Access Network
Radio Québec
TVOntario
Knowledge Network
Atlantic Television System Ltd. (ASN)
CBC English-language Television Service/Service de télévision de langue
anglaise de la SRC
CANCOM
- CHCH-TV Hamilton Ind
- CFTM-TV Montréal TVA
- CITV-TV Edmonton Ind
- CHAN-TV Vancouver CTV
- WDIV-TV Detroit NBC
- WTVS-TV Detroit PBS
- WJBK-TV Detroit CBS
- WXYZ-TV Detroit ABC
Cable News Network (CNN)
CNN Headline News (CNN-2)
The Nashville Network (TNN)
The Arts and Entertainment Network (A&E)
CNBC/FNN*
The Weather Channel (TWC)
Country Music Television
Cable Satellite Public Affairs Network (C-Span)
The Silent Network
The Learning Channel (TLC)

b) WTBS-TV Atlanta
WGN-TV Chicago
WOR-TV New York City
WPIX-TV New York City
WSBK-TV Boston
KTLA-TV Los Angeles
Black Entertainment Television (BET)
Lifetime Television
Comedy Central

Authorization for the above-noted services is subject to the following:

 when this list of Part II Eligible Satellite Services is replaced by another list of Part II Eligible Satellite Services, the only authorized services will be those contained in the most recent list; accordingly, this list supersedes the list dated 29 April 1991;

 in the case of CANCOM signals, ASN, the CBC English- and French-language Television Services and U.S. satellite services, licensees are required to enter into the necessary contractual arrangements for such carriage;

* pursuant to CRTC Circular Letter No. 377, dated 5 June 1991, licensees are authorized to distribute only the 6:00 a.m. to 7:00 p.m. (ET) Monday to Friday programming component of CNBC/FNN.

Date of issue:

17 July 1991

LIST OF PART III ELIGIBLE SATELLITE SERVICES/
LISTE DES SERVICES PAR SATELLITE ADMISSIBLES EN VERTU DE LA PARTIE III

(Cable Television Regulations, 1986, section 24)/
(Règlement de 1986 sur la télédistribtion, art. 24)

Part III Eligible Canadian Satellite Services/Services par satellite canadiens admissibles en vertu de la partie III

Access Network
Radio Québec
TVOntario
Knowledge Network
Atlantic Television System Ltd. (ASN)
CBC English-language Television Service/Service de télévision de langue
anglaise de la SRC
CBC French-language Television Service/Service de télévision de langue
française de la SRC
CANCOM
- CHCH-TV Hamilton Ind
- CFTM-TV Montréal TVA
- CITV-TV Edmonton Ind
- CHAN-TV Vancouver CTV
- WDIV-TV Detroit NBC
- WTVS-TV Detroit PBS
- WJBK-TV Detroit CBS
- WXYZ-TV Detroit ABC

Part III Eligible Non-Canadian Satellite Services/Services par satellite non
canadiens admissibles en vertu de la partie III

WTBS-TV Atlanta
WGN-TV Chicago
WOR-TV New York City
WPIX-TV New York City
WSBK-TV Boston
KTLA-TV Los Angeles
Cable News Network (CNN)
CNN Headline News (CNN-2)
The Nashville Network (TNN)
The Arts and Entertainment Network (A&E)
CNBC/FNN*
The Weather Channel (TWC)
Country Music Television
Cable Satellite Public Affairs Network (C-Span)
The Silent Network
The Learning Channel (TLC)
Black Entertainment Television (BET)
Lifetime Television
Comedy Central

Authorization for the above-noted services is subject to the following:

 when these lists of Part III Eligible Satellite Services are replaced by other lists of Part III Eligible Satellite Services, the only authorized services will be those contained in the most recent list; accordingly, these lists supersede the list of Part III Eligible Canadian Satellite Services and the list of Part III Eligible Non-Canadian Satellite Services dated 29 April 1991;

 in the case of out-of-province educational services, there should be no objection on the part of the originating service;

 in the case of CANCOM signals, ASN, and the CBC English- and French-language Television Services, licensees are required to enter into the necessary contractual arrangements for such carriage;

 in the case of CFTM-TV and CHAN-TV, a licensee also distributing the signal of a local TVA/CTV affiliate shall delete the duplicate programming from the CANCOM services or substitute the local service(s) when the programming is identical;

* pursuant to CRTC Circular Letter No. 377, dated 5 June 1991, licensees are authorized to distribute only the 6:00 a.m. to 7:00 p.m. (ET) Monday to Friday programming component of CNBC/FNN.

Date of issue:

17 July 1991