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Ottawa, 20 October 1994
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Public Notice CRTC 1994-130
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CALL FOR COMMENTS CONCERNING ORDER IN COUNCIL P.C. 1994-1689
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On 11 October 1994, the Governor in Council issued Order in Council P.C. 1994-1689, a copy of which is appended to this notice. The Order in Council was issued pursuant to section 14 of the Telecommunications Act and section 15 of the Broadcasting Act, which provide that the Governor in Council may request the Commission to make a report on any matter within the jurisdiction of the Commission under these Acts.
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The Order in Council outlines the Government's current policy framework with respect to new communications technologies; it also requests the Commission to report on a number of wide-ranging questions covering three broad areas: facilities, content and competition.
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More particularly, the Schedule to the Order in Council states:
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The Governor in Council requests the Canadian Radio-television and Telecommunications Commission (CRTC) to gather information, seek input and report on a number of matters, as outlined below, as they relate to the Commission's area of responsibility.
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The Government has requested that the CRTC undertake this review in the belief that this process will permit all interested parties, including the CRTC itself, to make their views known, and furthermore, will provide an opportunity for the critical analysis of the positions advanced by interested parties. Given the fundamental importance of the issues under review, it is essential that there be a thorough airing of views prior to the government making its final policy determinations.
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In announcing the Order in Council on 11 October 1994, the Government noted that the convergence of media as well as technologies has huge implications for both Canadian culture and our economy:
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The questions we have asked will assist us in implementing our policy decisions regarding the nature of competition between cable companies and telecommunications and other information providers and the requirement that Canadian content have a prominent place on the Information Highway.
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The Commission understands and shares fully the Government's wish to derive maximum benefit from the results of the public consultation it has requested the Commission to undertake. Accordingly, the Commission is committed to conduct the review, not only as expeditiously, but as thoroughly, as possible.
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Prior to submitting its report, and in view of the Government's wish that this report take into account the views of all interested parties, the Commission will conduct a full and open public consultation with all such parties, including the general public and representatives of the broadcasting, telecommunications, information and creative arts industries.
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It is the Commission's objective to conduct a meaningful and fair process by allowing adequate opportunity to all interested parties to formulate their views and advice on the many important questions raised within the Order in Council. Clearly, however, the Commission must ensure that the process is completed in a timely manner. It will therefore depend upon the full cooperation of all parties in observing the various requirements and deadlines noted below.
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In preparation for a public hearing in the National Capital Region to be announced at a later date, the Commission will hold a two-stage written comment process. This two-stage process is intended to ensure that the questions contained in the Order in Council are canvassed as fully as possible. It will also focus discussion and thus allow a more expeditious and efficient oral phase to this proceeding.
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The deadline for the submission of written comments under the first stage is 16 January 1995. These initial comments will be made available for examination by the public as soon as possible following the deadline, in the Commission's offices at the addresses provided later in this notice.
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Interested parties, regardless of whether or not they participate in the first stage, will then have an opportunity to reply to the comments filed during that stage. These second-stage replies must be submitted by no later than 13 February 1995.
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The Commission wishes to emphasize that submissions filed in response to this notice must be complete and focused. Each submission must also include a short executive summary. Those wishing to include research findings as part of their submissions should provide details concerning the methodology employed in conducting their research. Such material must be filed by the first deadline for the submission of comments.
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The Commission notes that the issues to be discussed at the public hearing touch upon matters falling within the Commission's jurisdiction through two separate pieces of legislation. The procedures established for the conduct of broadcasting and telecommunications public hearings differ in many important respects. In recognition of these various factors, it may be necessary for the Commission to adopt procedures for the oral phase of this process that differ from those customarily followed at either broadcasting or telecommunications public hearings. For example, because of the very brief timetable established for completion of this process, it may be necessary for the Commission to limit the number of those parties subsequently invited to appear at the public hearing, as well as the length of their presentations. In addition, no cross examination will be permitted. Further details in this regard will be published at a later date.
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Submissions filed in response to this notice must be addressed to the Secretary General, CRTC, Ottawa, K1A 0N2, must be postmarked no later than the deadline dates noted above, and must be filed in hard copy form. All submissions following the above procedure will be considered by the Commission and will form part of the public record of the proceeding without further notification to those filing comments. Parties are also encouraged to provide the Commission with a copy of all text material contained in their submissions on IBM-compatible floppy diskettes, either in the WordPerfect 5.1 format or as an ASCII text file. The Commission also requests that, where applicable, copies of spread sheets be provided as Lotus WK1 or Micosoft Excel files. Electronic copies of graphs and diagrams should be provided in the default format of the software used to create them.
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EXAMINATION OF PUBLIC COMMENTS DURING NORMAL OFFICE HOURS
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Commission Headquarters
Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage,
Room 201
Hull, Quebec K1A 0N2
Tels: (819) 997-2429 - TDD 994-0423;
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Atlantic Regional Office
Suite 1007 Bank of Commerce Building
1809 Barrington Street
Halifax, Nova Scotia B3J 3K8
Tels: (902) 426-7997 - TDD 426-6997;
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Quebec Regional Office
Place Montréal Trust
1800 McGill College Avenue Suite 1920
Montréal, Quebec H3A 3J6
Tels: (514) 283-6607 - TDD 283-8316;
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Ontario Regional Office
Standard Life Centre Suite 820
121 King Street West
Toronto, Ontario M5H 3T9
Tel: (416) 954-6273 - TDD 954-8420;
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Prairie Regional Office
Suite 1810 275 Portage Avenue
Winnipeg, Manitoba R3B 2B3
Tels: (204) 983-6306 - TDD 983-8274;
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Western Regional Office
Suite 1380, 800 Burrard Street
Vancouver, British Columbia V6Z 2G7
Tels: (604) 666-2111 - TDD 666-0778
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Allan J. Darling
Secretary General
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WHEREAS the development of new communications technologies, including the information highway, is vital to Canada's future;
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WHEREAS the Canadian Radio-television and Telecommunications Commission is responsible for regulating many elements involved in these new communications technologies;
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WHEREAS section 14 of the Telecommunications Act and section 15 of the Broadcasting Act provide that the Governor in Council may require the Canadian Radio-television and Telecommunications Commission to make a report on any matter within the Canadian Radio-television and Telecommunications Commission's jurisdiction;
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WHEREAS the Governor in Council has determined that it is in the public interest that the Canadian Radio-television and Telecommunications Commission examine several questions relating to the new communications technologies;
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AND WHEREAS the Canadian Radio-television and Telecommunications Commission has been consulted by the Minister of Communications in accordance with subsection 15 (2) of the Broadcasting Act;
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THEREFORE, HIS EXCELLENCY THE GOVERNOR GENERAL IN COUNCIL, on the recommendation of the Minister of Industry Science & Technology and the Minister of Communications, pursuant to section 14 of the Telecommunications Act and section 15 of the Broadcasting Act, hereby requests the Canadian Radio-television and Telecommunications Commission to report on a number of matters, as outlined in the schedule hereto, as they relate to the Canadian Radio-television and Telecommunications Commission's areas of responsibility and, where appropriate, to make recommendations, on or before February 28, 1995.
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SCHEDULE
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Request from His Excellency the Governor General in Council to the Canadian Radio-television and Telecommunications Commission (CRTC) for a Report under section 14 of the Telecommunications Act and section 15 of the Broadcasting Act
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The Governor in Council requests the Canadian Radio-television and Telecommunications Commission (CRTC) to gather information, seek input and report on a number of matters, as outlined below, as they relate to the Commission's area of responsibility.
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The Government has requested that the CRTC undertake this review in the belief that this process will permit all interested parties, including the CRTC itself, to make their views known, and furthermore, will provide an opportunity for the critical analysis of the positions advanced by interested parties. Given the fundamental importance of the issues under review, it is essential that there be a thorough airing of views prior to the government making its final policy determinations.
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BACKGROUND
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The term "Information Highway" describes a network of networks that will link Canadian homes, businesses and institutions to a wide range of services. The Information Highway will provide the necessary infrastructure for Canada's emerging knowledge-based economy, and therefore, development of the highway will be critical to the competitiveness of all sectors of the economy.
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The Government has announced that its Information Highway strategy will be based on three policy objectives:
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- to create jobs through innovation and investment
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- to reinforce Canadian sovereignty and cultural identity
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- to ensure universal access at affordable cost.
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Four operating principles will guide the development and implementation of this strategy:
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- an interconnected and interoperable network of networks
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- collaborative private and public sector development
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- competition in facilities, products and services
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- privacy protection and network security.
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The building blocks of the Information Highway are the existing telecommunications, cable-TV, broadcasting, satellite and wireless industries. These industries are announcing plans to launch or develop new communications and information services, including content-based services. If these plans are implemented, and if there is sufficient demand, Canadians will rely more and more on communications and information technologies for a wide range of services such as education, entertainment, social services, banking and cultural products. Current discussions about these potential new services offer an incomplete picture of what the information highway will provide because many of the services that will be commonplace by the end of the century are not yet available, and many have yet to be conceived.
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We do know that the information highway will be essential to Canada's emerging information economy. Many of its services, including some already being provided such as electronic banking, just-in-time inventory and electronic data interchange, will become critical to the competitiveness of all sectors of the economy, from manufacturing, to natural resources, to the service sector. The information highway will also present both new challenges and new opportunities for Canada's cultural industries. Deployment and acceptance of new technologies will be crucial to the pacing of implementation of new services; but so too will be the clarity of the ground rules, specifically, government policy and regulations.
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The real value Canadians will derive from a knowledge-based economy is the content that flows on the Information Highway and their ability to use it. Our policies must encourage the development of Canadian content that can compete with the best the world has to offer, including cultural, entertainment and educational products. Our policies must also ensure the continued support of our cultural industries by ensuring that new broadcasting content services meet the sovereignty and cultural identity objectives of the Broadcasting Act, and that content services are introduced in a manner which contributes to the objective of reinforcing Canadian sovereignty and cultural identity.
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The new policy framework must serve to reinforce Canadian sovereignty and cultural identity. Such a framework must recognize both the effectiveness of existing content support mechanisms in building our broadcasting and cultural industries, and the challenge of adjusting these mechanisms to an environment where competitive delivery of services brings unprecedented consumer choice. New technologies and the Information Highway should not simply provide more effective means of delivering foreign content to Canadians; they should also provide a powerful means to expand the market for Canada's world-class programming and various cultural products.
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Much of the discussion that follows deals with the Government's vision of competition, and it is essential that that vision be well understood at the outset. The government's goal is to preserve and expand fair competition, a framework for continuing vigourous competition -- one that, while not protecting individual firms, does not lead to the extinction of a particular sector. This can best be accomplished by eliminating situations where one group of competitors is in a privileged position, while others are disadvantaged. The principle applies equally to established firms and new entrants, or carriers and content providers, or any other grouping.
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Facilities
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(a) Policy
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In its recent review of the regulatory framework pertaining to the Stentor telephone companies it regulates, the CRTC committed itself to a regulatory model which is supportive of the Information Highway initiative. Among the more important aspects of the decision was the Commission's recognition that it is no longer sufficient to assess Canadian telecommunications needs simply in terms of telephone service. Instead, consistent with the objectives of the Telecommunications Act, it is necessary to consider the range of telecommunications services used by Canadians. The Commission also continued implementation of the statutory objective of increased reliance of market forces by requiring the Stentor companies to take a number of steps to improve competitors' access to network facilities.
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One of Canada's strengths is that its cable-TV and telephone industries both have networks that already reach nearly every Canadian. Together, their local network facilities are capable of providing most of the advanced communications services that now exist as well as many that will come to market in the next few years.
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Cable-TV systems are broadcasting undertakings subject to federal regulation under the Broadcasting Act, and when they deliver non-programming services on the same facilities they use to provide broadcasting, they also fall within the definition of a "Canadian carrier" under the 1993 Telecommunications Act.
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The interconnection and interoperability of cable-TV network facilities used to provide telecommunications with those of other facilities-based carriers and telecommunications service providers will serve to advance the Government's Information Highway strategy.
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Accordingly, it is Government policy that:
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- cooperation or sharing between cable licensees and telecommunications carriers should be permitted;
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- the facilities and capacity of telecommunications carriers under federal jurisdiction, including facilities of cable licensees beyond that used by the licensee for the carriage of broadcasting services to the extent practicable, be made available for lease, resale and sharing by service providers and other carriers on a non-discriminatory basis; and
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- facilities and capacity, including support structures, should, to the extent practicable, be provided in a manner that allows users to use and pay for only those parts of the network infrastructure that they require.
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The foregoing applies except where:
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- costs or market conditions make this inappropriate;
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- it would inhibit fair competition; or
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- it would be inconsistent with the objectives of the Broadcasting Act and/or the Telecommunications Act.
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(b) The Policy Implementation Challenge
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The Government recognizes that interconnection and interoperability of networks designed for different purposes will pose both technical and regulatory challenges. In this context, the Commission is requested to report on the following questions:
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- Within what timeframe can the Government's policies regarding interconnection and interoperability as well as the leasing, resale and sharing of cable facilities not used for broadcasting be implemented?
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- What, if any, conditions should apply, and what mechanisms should be in place to ensure effective cooperation and fair competition?
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Content
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(a) Policy
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Within the context of the Information Highway, the Government is committed to ensuring the continuance of the cultural content and ownership objectives of the Broadcasting Act. Section 3 of the Act sets out Canada's broadcasting policy including the role of broadcasters in the creation, exhibition and distribution of Canadian content. As a mirror of Canadian society, the broadcasting system is enjoined to reflect all Canadians in both its programming and in its operations and to encourage the development of Canadian expression. There are specific references not only to Canadian creative and other resources but also to Canadian entertainment programs, information programs with a Canadian point of view, and programs produced by the Canadian independent production sector (which provides a link to Government support programs for Canadian production). The 1991 Act clearly directs the CRTC to regulate with a view to enhancing the presence of Canadian programming in the broadcasting system wherever possible.
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All the objectives of the Broadcasting Act will continue to apply in any new policy or regulatory environment. However, in the development of a new policy with regard to new players, new services and new technologies, several objectives for the Canadian broadcasting system must be specifically addressed:
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- effective Canadian ownership and control and an appropriate contribution by each element of the Canadian broadcasting system to the creation and presentation of Canadian programming;
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- the Canadian broadcasting system should: serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada; encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view; serve the needs and interests as well as reflect the circumstances and aspirations of Canadian men, women and children (including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of Aboriginal peoples within that society); and be readily adaptable to scientific and technological change; and
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- each broadcasting undertaking should make maximum use, and in no case less than predominant use, of Canadian creative and other resources in the creation and presentation of programming, to the greatest extent practicable.
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It is Government policy that:
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- Participants in the Information Highway make equitable and appropriate contributions to the production and distribution of and access to Canadian-cultural-content products and services; and,
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- Government continue to have the tools and mechanisms necessary to promote Canadian content.
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(b) The Policy Implementation Challenge
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The challenge for the Government will be to find a way to ensure continued support for the production, distribution and exhibition of Canadian programming and cultural products, and, in the case of broadcasting undertakings, to maintain Canadian ownership and control. It is essential that all Canadians continue to have access to quality content services, both domestic and foreign. However, the distribution of and access to Canadian cultural products must continue to be given priority. In order to ensure the continued availability and viability of Canadian cultural products, producers must be assured of funding for content development and also be assured that Canadians will be able to access those products.
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It is critical that the new policy framework strengthen support mechanisms for the Canadian cultural sector. Under the present regulatory environment, the Canadian cultural sector relies heavily on the Canadian broadcasting sector for support, primarily through the broadcasting sector's Canadian content exhibition and expenditure obligations. The challenge will be to modify the existing support mechanisms, if necessary, and develop new ones, which together will ensure that existing level of support for the Canadian cultural industries and the availability of Canadian content is, at a minimum, maintained. Although new technologies and the Information Highway will pose challenges to the cultural sector, particularly in the form of foreign competition, it will also provide opportunities for Canadian cultural content providers to exploit markets for new services.
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In Public Notice CRTC 1994-118, dated September 16, 1994, the CRTC exempted technical trials of "true" Video-on-Demand (VOD) from the licensing requirements of the Broadcasting Act, thereby finding that "a VOD service is a service that provides programs, as defined by the (Broadcasting) 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 Commission also stated that the telephone companies can enter the content side of the information services business, noting that an application for a broadcasting licence will be required where the service qualifies as a broadcasting service under the Broadcasting Act. As the functions of carriage and content provision overlap, the question arises as to whether there is sufficient precision in the existing legislative definitions.
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In this context, the Commission is requested to report on the following questions:
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- Are the current legal definitions under the Broadcasting Act and the Telecommunications Act sufficiently clear to enable new and emerging services to develop under a coherent regulatory approach or is there a need for review of definitions such as "broadcasting" and "telecommunications service"?
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- Do the tools and instruments existing under the Broadcasting Act and the Telecommunications Act ensure that content-based services, whether Canadian or foreign, are made available in a manner that furthers Canadian cultural policy objectives? If not, what modifications are required?
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- Under section 9.4 of the Broadcasting Act, the Commission shall exempt undertakings from regulation where the Commission is satisfied that compliance would not contribute to the objectives of the Act. Would it be appropriate to establish specific criteria which could be used in determining which services could be exempted? If so, what should be the criteria against which such services would be judged? Should a distinction be made between services that the CRTC could exempt without further notification and the type of services that the CRTC would continue to exempt only after the usual public process?
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- Would it be appropriate for all telecommunications carriers to become eligible to hold broadcast licences subject to Canadian ownership rules and generally applicable regulation? Within what timeframe and under what conditions might this be considered?
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- In exploring the above questions, the Commission may wish to seek opinions on the following matters:
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i) How should new originators and new distributers of video, audio, and other programming services contribute to the creation and presentation of Canadian programming?
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ii) How will the presence of new programming services impact Canadian public and private broadcasters?
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iii) How should new services maintain and enhance national identity and cultural sovereignty?
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iv) How should new distributors of video, audio and other programming services give priority to the distribution of Canadian video, audio and other programming services?
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Competition
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(a) Policy
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In Canada and the world, the past decade has seen greater reliance on market forces in the provision of communications services. Competition stimulates investment and innovation and reduces the gap between the development and the deployment of new technologies, products and services, thereby quickly expanding the range of products and services available to consumers. Competition can also serve to reduce prices.
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Canada's progress toward open competition in the sale of telecommunications terminal equipment and in the resale of telecommunications services has been considerable. Other competitive initiatives include the licensing of competitive suppliers of cellular and personal communications services, the adoption of competition in the public long-distance telephone service market, and the licensing of an ever-expanding number of specialty and pay television services in competition with conventional broadcasters and with each other. More recently, the CRTC determined in the Regulatory Framework decision, that it could best implement the objectives of the Telecommunications Act by opening all aspects of the telephone business to competition. The Commission also ruled that the telephone companies should be allowed to provide video dial tone service and, as noted above, they should be permitted to be involved in the content of information services.
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A competitive model for Canadian communications facilities must, however, be consistent with the objectives and principles underpinning the Information Highway strategy and the objectives of both the Broadcasting Act and the Telecommunications Act. The regulatory framework must ensure that obligations and opportunities are shared equitably by all participants, i.e., the competitive model must allow each participant an equal opportunity to succeed, or fail, based on their efforts.
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It is Government policy to:
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- foster fair competition and an increased reliance on market forces in the provision of facilities, products and services;
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- encourage the regrouping and interconnection of cable licensees' systems on a national basis in order to maximize their efficiency as long as this does not impede access;
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- update Canadian ownership rules for broadcasting licensees to encourage the investment required to accelerate the implementation of the advanced technologies and to increase Canadian content services by harmonizing the rules for the broadcasting industry with those of the telecommunications industry;
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- ensure that anyone acting as both a broadcasting undertaking, as defined by the Broadcasting Act, and as a "Canadian carrier" as defined by the Telecommunications Act is subject to both Acts, for those activities to which they respectively apply.
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(b) The Policy Implementation Challenge
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Given that fair competition in the provision of all communications services is the long-term objective, questions arise as to how, and within what framework, this policy can be implemented. The competitive framework must be consistent with the objectives and principles of the Information Highway strategy. It should foster investment and innovation by removing any outdated barriers to competition. However, if competition is to be viable in the long-term, the framework should recognize the discrepancies which exist between potential competitors, notably the cable-TV and telephone industries. Policy initiatives should lead to fair competition in the delivery of services to the public. The framework should also serve to reinforce our cultural sovereignty and identity, and should therefore take into account the impact of increased competition on the broadcasting system.
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In the circumstances, the Government believes that transitional measures are appropriate to provide the cable-TV and telephone industries with a policy framework and a climate of certainty to make multi-billion dollar investments today, and to have a clear vision for the future. The removal of some barriers to competition would provide benefits to consumers and stimulate investments in both industries, without unduly inhibiting either. Also, the increased certainty provided by a transition period should lead to sustainable competition, which is also in the best interest of consumers. It would give the Government, the CRTC and the industries some latitude to adjust regulatory and other existing support mechanisms as part of the evolution towards competition for the delivery of all communications services to the home.
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Views will differ on how long such a transition period should last and on what transitional measures would be appropriate. The transition period should be short enough to encourage the industries to move as quickly as possible to bring the benefits of competition to the public, but long enough to ensure the attainment of the objective of fair competition.
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The Government supports the recent determination of the CRTC that there is no need to limit competition in activities subject to the Telecommunications Act. The Government expects that a transition period is required to implement measures and mechanisms to ensure fair competition and invites the CRTC to make recommendations on an appropriate duration. During the transition period, measures to protect the existing core market activities of the cable companies may be appropriate.
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In this context, the Commission is requested to report on the following questions:
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- What is the appropriate timeframe to complete the move to fair competition in the delivery of telecommunications and broadcasting services to Canadians?
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- What measures, transitional or otherwise, are required to ensure that competition is fair in the long term? Such measures might include line-of-business restrictions and restrictions on cross-ownership for the transition period.
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The views of all interested parties on these questions and any additional questions which may arise during the discussion, will assist the Government in developing policy decisions on the matters contained herein.
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The Commission's report will be made public and will be forwarded by the Ministers of Industry and Canadian Heritage to the Information Highway Advisory Council for comment. After considering the CRTC's report and the comments of the Advisory Council, the Government will take appropriate action to address the policy concerns raised in this request.
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