ARCHIVED -  Public Notice CRTC 1994-118

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Public Notice

Ottawa, 16 September 1994
Public Notice CRTC 1994-118
Exemption Order Respecting Experimental Video-on-Demand Programming Undertakings
In Public Notice CRTC 1994-33 dated 23 March 1994, the Commission proposed to exempt from licensing requirements persons carrying on experimental Video-on-Demand (VOD) programming undertakings in conformity with subsection 9(4) of the Broadcasting Act (the Act). In response to the notice, the Commission received 35 submissions from various interested parties including broadcasters, cable licensees, licensees of pay television and specialty programming undertakings, telephone companies, provincial governments, program producers and satellite users.
The Commission, having considered the submissions, hereby issues its Exemption Order Respecting Experimental Video-on-Demand Programming Undertakings, attached as an appendix to this notice. The Commission acknowledges the comments and suggestions by interveners, and has taken these into account in arriving at the various modifications to the exemption criteria summarized below. The comments raised a number of additional issues, and these are also discussed below.
Some interveners opposed exempting persons carrying on experimental VOD programming undertakings, arguing that VOD will have a major impact on the implementation of the broadcasting policy for Canada, and that the proposed exemption would therefore be contrary to subsection 9(4) of the Act.
The Commission notes, however, that under subsection 9(4) of the Act, the determination of whether or not an undertaking should be exempted depends not on the contribution that the undertaking may make to the implementation of the broadcasting policy for Canada, but rather on the contribution that licensing, and application of the regulations to, the undertaking would make.
In the case of experimental VOD programming undertakings, the Commission is satisfied that the licensing of, or application of the regulations to, those carrying out such experiments will not contribute in a material manner to the implementation of the broadcasting policy for Canada as set out in subsection 3(1) of the Act and has decided to exempt these undertakings. In reaching this determination, the Commission notes that the purpose of this exemption is simply to facilitate limited, short-term experiments with various VOD technologies.
The Commission notes that, should a party wish to offer a VOD programming service other than on an experimental basis, and where the service would clearly have a bearing on attainment of the cultural objectives of the Act, it will regulate such a service through licensing. The Commission further notes that other types of services may well emerge, which are broadcasting services within the meaning of the Act, but to whom licensing and application of the regulations would not contribute in a material manner to the implementation of the broadcasting policy for Canada. Generally, where it is clear that licensing such services would also not affect the attainment of the cultural objectives of the Act, the Commission may consider issuing further exemption orders, whether upon request or on its own initiative.
Several interveners requested that the Commission provide a precise definition of VOD and suggested wording that would distinguish between "true" VOD and "near" VOD, the latter including variations of Pay-per-View (PPV) services, such as multi-scheduled PPV.
To respond to these requests, the exemption order now includes a definition of VOD. The definition makes it clear that the exemption order deals only with "true" VOD programming services that constitute broadcasting within the meaning of the Act. Experiments with "near" VOD services, such as multi-scheduled PPV services, do not qualify for exemption.
With regard to the Purpose clause, the description of the facilities that an exempt undertaking may use has been removed in order to avoid duplication with text that follows later in the Description section.
Criterion 2 has been updated to refer to the Department of Industry, Science and Technology.
Criterion 3, as originally proposed in Public Notice CRTC 1994-33, was intended to permit the operator of an exempt VOD programming undertaking to use the facilities of telephone companies or cable distribution undertakings to deliver its programming. Some interveners argued that telephone companies should not be allowed to conduct or otherwise participate in VOD experiments. However, in view of the technological nature of these experiments, the Commission has decided not to preclude telephone companies, or any other parties, from conducting or participating in VOD experiments, subject to the provisions of the exemption order, so as to ensure that the experiments benefit from the widest possible range of technological expertise available in Canada. Consistent with this approach, Criterion 3 has been amended to permit any distribution undertaking licensed or exempted by the Commission to be used to deliver the programming of an exempt experimental VOD programming undertaking.
Furthermore, with regard to Criterion 3, some parties suggested in their comments that, in the case of common carrier facilities, only public networks be allowed to deliver experimental VOD services. The Commission considers, however, that any concern regarding the possibility of telephone companies building private cable systems for the purpose of carrying out experiments under this exemption is unfounded in view of the limited scope and size of the experiments. Moreover, the proposed addition of the word public to Criterion 3 would be inappropriate because it would restrict unduly the ability to experiment with new and different technologies.
Criterion 6 has been revised slightly to minimize the possibility of unwarranted repetition of similar experiments. The Commission notes that, while this criterion would not preclude the conduct of similar experiments by different undertakings, it should not be interpreted as permitting undertakings in non-arm's-length relationships to conduct, simultaneously or subsequently, similar experiments employing substantially the same equipment.
Criterion 7 has been amended to require exempt experimental VOD undertakings to obtain the rights for any feature motion picture film distributed by the undertaking exclusively from PPV licensees who usually purchase the appropriate transactional exhibition rights. The Commission notes that the licensees of the two existing PPV undertakings, Home Theatre and Viewer's Choice Canada, have both undertaken to make available, in a non-discriminatory fashion, to all exempt experimental VOD undertakings, all programming acquired with a transactional exhibition window. With regard to other programming provided by an exempt VOD undertaking, the rights to distribute any programming originally broadcast by conventional television stations must be obtained exclusively from a licensed programming undertaking. The Commission expects licensees to make available, in a non-discriminatory fashion, to all exempt programming undertakings carrying on VOD trials, all programming the licensees acquire with a transactional exhibition window.
Some interveners expressed concern about proper cost separation of the investment made in an experimental VOD undertaking and the monopoly services provided by telephone companies and/or cable companies. The Commission considers that its existing procedures, under the Broadcasting Act for cable companies and under the Telecommunications Act for telephone companies, are sufficient for the purpose of experimental VOD undertakings.
Some interveners suggested that the exemption order include technical criteria that would require experiments to comply with the resolution of Advanced Broadcasting Systems of Canada Inc. (ABSOC) dated 16 December 1993 concerning digital TV. This resolution calls for all digital video compression decoders placed in Canada to be capable of reconstructing a picture compressed in accordance with the MPEG 2 standard and audio compressed as per the North American Advanced Television (ATV) standard.
While the Commission has decided not to adopt a specific criterion with regard to technical standards, it wishes to state its support for the 16 December 1993 ABSOC resolution concerning digital TV, and expects those carrying out the experiments to conform to it as closely as possible.
The Exemption Order contained in the appendix is effective immediately. The Commission notes that, where the facilities of a telephone company are used to distribute the programming of an exempt VOD undertaking, no further Commission authorization is required. To provide similar treatment when the use of cable distribution facilities is involved, the Commission announces that, pursuant to their conditions of licence and paragraph 10(1)(l) of the Cable Television Regulations, 1986, cable licensees are hereby authorized to carry the programming services of exempt experimental VOD programming undertakings on their facilities.
Allan J. Darling
Secretary General
The Commission, pursuant to subsection 9(4) of the Broadcasting Act (the Act), by this order, exempts from the requirements of Part II of the Act and any regulation made thereunder, those persons carrying on broadcasting undertakings of the class defined by the following criteria:
For the purpose of this Exemption Order, a Video-on-Demand (VOD) service is a service that provides programs, as defined by the Act, transmitted by means of telecommunications, where individual consumers select specific programs to be received by means of broadcasting receiving apparatus at any time of their choosing.
The purpose of the programming undertaking is to conduct a limited field trial or experiment in order to test and develop the technology for providing a VOD programming service and to determine the technical feasibility of delivering such a service.
1. The Commission would not be prohibited from licensing the undertaking by virtue of any Act of Parliament, of the Direction to the Commission (Eligible Canadian Corporations) or of any other direction to the Commission by the Governor in Council.
2. The undertaking meets all technical requirements of the Department of Industry, Science and Technology and has acquired all authorizations or certificates prescribed by the Department.
3. The undertaking uses the facilities of a Canadian carrier, as defined by the Telecommunications Act or a distribution undertaking licensed or exempted by the Commission.
4. The programming service of the undertaking is not generally available on the facilities of the Canadian carrier or on those of the distribution undertaking licensed or exempted by the Commission. The selected portion of those facilities on which it is available is limited,
a) in the case of a carrier, to not more than either 400 terminals, 95 per cent of which are located in the same local calling area, or to 5 per cent of the terminals in a single calling area, whichever is the lesser or,
b) in the case of a distribution undertaking licensed or exempted by the Commission, to not more than either 400 subscribers or 5 per cent of its subscribers, whichever is the lesser.
5. The experiment is less than two years in duration.
6. Unless the experiment involves only the distribution of course materials by educational institutions, or unless the equipment used is substantially different from that used in any other similar experiment previously or simultaneously carried on by the undertaking, or by another non-arm's-length undertaking, the experiment is conducted only once, using any part of the facilities of a Canadian carrier or a distribution undertaking licensed or exempted by the Commission.
7. The undertaking obtains the right to distribute its programming exclusively:
(a) from a pay-per-view programming undertaking licensed by the Commission to operate in the territory in which the experiment is conducted, in respect of any feature motion picture film;
(b) from the educational institutions or others who hold the appropriate rights, in respect of programming consisting of course materials; and
(c) from a programming undertaking licensed by the Commission, in respect of any other programming originally intended for broadcast by conventional television stations.
8. The undertaking is conducted on a not-for-profit basis.
9. The undertaking distributes no advertising material as defined in the Television Broadcasting Regulations, 1987, as amended from time to time.

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