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Public Notice CRTC 1994-19
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Call for Comments - Proposed Exemption Order Respecting Direct-to-Home Satellite Distribution Undertakings
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In Public Notice CRTC 1987-254, dated 26 November 1987, the Commission established a licensing policy for Canadian undertakings distributing broadcasting services using direct-to-home (DTH) transmissions. DTH transmissions are defined as those that are distributed via Canadian satellite, whether or not in encrypted form, and are intended for direct reception by individuals, generally at their residences.
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Under this policy, Canadian undertakings that deliver existing programming services on a DTH basis, or that produce, assemble or originate programming for the DTH market, would require a broadcasting licence. In general, however, the licensee of an existing programming undertaking, including a radio, television, pay television, specialty or a pay-per-view undertaking, may deliver its service to the DTH market without any additional licensing action, provided the service is marketed only within its licensed service area. Under the policy, the Commission does not regulate subscriber rates for DTH services. To date, no undertaking has been licensed for the provision of DTH services only. Programming services that are currently available to the DTH market are either provided by undertakings that distribute programming to cable system headends and already hold a licence from the Commission, or are offered through marketing "agents".
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In Public Notice CRTC 1993-74, dated 3 June 1993 and issued following the March 1993 "Structural hearing", the Commission made the following comments respecting the provision of DTH broadcasting services:
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As the use of satellite technology increases, particularly through the application of digital technology, the Commission considers that DTH delivery of programming services will play a greater role in the Canadian broadcasting system....
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The Commission is encouraged that both programmers and distributors have demonstrated a renewed interest in providing Canadian services to the Canadian DTH marketplace. The Commission supports this renewed interest, and emphasizes that it considers DTH delivery of Canadian services to be an important vehicle for providing programming services to Canadians. The Commission considers that the emergence of a strong Canadian DTH industry may provide a degree of price competition to services delivered within Canada by other distribution technologies, and will form an effective part of the overall response by the Canadian broadcasting system to non-Canadian DBS services.
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Subsection 9(4) of the Broadcasting Act (the Act) states that:
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The Commission shall, by order, on such terms and conditions as it deems appropriate, exempt persons who carry on broadcasting undertakings of any class specified in the order from any or all of the requirements of this Part or of a regulation made under this Part where the Commission is satisfied that compliance with those requirements will not contribute in a material manner to the implementation of the [broadcasting policy for Canada].
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The Commission has recently received separate proposals from Telesat Canada (Telesat) and TEE-COMM Electronics Inc. (TEE-COMM) suggesting that the Commission exempt from licensing requirements persons who carry on Canadian undertakings distributing DTH services. The Commission also received requests from a number of interested parties that the Commission undertake a public process to consider the exemption proposals.
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As stated in its 3 June 1993 notice, the Commission considers that the distribution by Canadians of DTH services can become an important element of the Canadian broadcasting system. The Commission considers, however, that to require the operators of certain Canadian DTH distribution undertakings (those described in the proposed exemption order) to comply with Part II of the Act or with all regulations will not contribute in a material manner to the implementation of the broadcasting policy for Canada. Instead, the Commission considers that establishing exemption criteria may provide an appropriate degree of regulation for Canadian DTH distribution undertakings, while ensuring that such DTH services contribute to achieving the objectives of the Act. To the extent that an exemption approach may facilitate the development of new Canadian DTH undertakings by removing licensing requirements, such undertakings may also contribute to the introduction of a "headend in the sky" (HITS) to serve small cable systems and satellite master antennae television systems (SMATV), thus offering an attractive Canadian alternative to emerging non-Canadian direct broadcast satellite (DBS) services. Accordingly, the Commission is seeking public comment on the proposed exemption order for Canadian DTH services contained in the attachment to this notice. Canadian DTH distribution undertakings that do not meet these criteria would require a licence from the Commission to operate in Canada. Licensees of existing Canadian programming undertakings would be able to deliver their services to the DTH market without any additional regulatory approval, provided the service is operated in accordance with the proposed criteria set out in the attachment to this notice. Consistent with current policy, exempt DTH undertakings would not be subject to rate regulation by the Commission.
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In addition to public comment on the criteria contained in the proposed exemption order, the Commission seeks the views of interested parties on certain other policy issues related to the packaging of programming services and the ownership of exempt DTH undertakings. In particular:
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* Should an exempt DTH undertaking be required to adhere to the distribution and linkage requirements established for cable television distribution undertakings in Public Notice CRTC 1993-75, as amended from time to time? The Commission notes that such a requirement was proposed by Telesat.
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* Should there be any restrictions on the ownership of an exempt DTH distribution undertaking? For example, the Commission notes that TEE-COMM proposed that a Canadian carrier, within the meaning of the Telecommunications Act, or the licensee of a Class 1 cable television system in Canada, or an affiliate of either, should be prohibited from owning exempt DTH distribution undertakings. Interested parties should also note that the proposed exemption order, as drafted, would permit DTH distribution undertaking operators who are exempted from licensing requirements to distribute certain signals to viewers, indirectly, through cable distribution undertakings, radiocommunication undertakings or SMATV undertakings. Such distribution has been referred to as a headend in the sky.
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The submissions received by the Commission from Telesat and TEE-COMM proposing that the Commission exempt operators of Canadian DTH undertakings from licensing requirements are available on the public file.
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Persons wishing to comment on the proposed exemption order as set out in the attachment, or on other related policy issues, must submit their comments to the Secretary General, CRTC, Ottawa, K1A 0N2 by 15 April 1994. While receipt of submissions will not be acknowledged, they will be considered by the Commission and will form part of the public record of the proceeding.
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Related Documents: Public Notices CRTC 1987-254 and 1993-74.
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Allan J. Darling
Secretary General
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PROPOSED EXEMPTION ORDER RESPECTING CANADIAN DIRECT-TO-HOME SATELLITE DISTRIBUTION UNDERTAKINGS
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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 regulations, those persons carrying on broadcasting undertakings of the class defined by the criteria set out below.
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The purpose of these Canadian Direct-To-Home (DTH) distribution undertakings is to receive the programming services of radio, television, specialty and pay television (including pay-per-view) undertakings that are licensed or authorized by the Commission, and to distribute those programming services locally, regionally or nationally to viewers on a DTH basis, with or without a fee, using Canadian satellite facilities.
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1. The Commission would not be prohibited from licensing the undertaking by virtue of any Act of Parliament, of the Direction to the CRTC (Eligible Canadian Corporations) or of any other direction to the Commission by the Governor in Council.
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2. The undertaking meets all technical requirements of the Department of Communications and has acquired all authorizations or certificates prescribed by the Department.
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3. The undertaking makes use of Canadian satellite facilities to distribute programming services to viewers on a DTH basis.
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4. Subject to criterion 5, the undertaking may distribute programming services indirectly to viewers through cable distribution undertakings, radiocommu- nication distribution undertakings, or satellite master antenna television (SMATV) undertakings.
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5. The undertaking does not distribute the service of a programming undertaking licensed by the Commission:
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a) to any Canadian cable or radiocommunication distribution undertaking that is, itself, not permitted by regulation or otherwise authorized by the Commission to distribute that programming service, or;
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b) to any SMATV undertaking located outside of the authorized service area* established by the Commission for that programming undertaking, unless the SMATV undertaking is located inside the authorized service area of a cable or radiocommunication distribution undertaking that is permitted by regulation, or otherwise authorized by the Commission, to distribute that programming service.
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c) to any DTH subscribers situated outside of the programming undertaking's authorized service area unless that service is specified in the Lists of Part II and Part III Eligible Satellite Services, as amended from time to time, and which are incorporated by reference into the
Cable Television Regulations, 1986.
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6. The undertaking does not originate any programming.* "Authorized service area" means, in respect of a pay television (including pay-per-view) or specialty programming undertaking, the service area specified by the Commission for the service in the terms or conditions of its licence. In respect of a television programming undertaking, "authorized service area" means the undertaking's official Grade B contour.
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7. The undertaking distributes no non-Canadian programming services other than those specified in the Lists of Part II and Part III Eligible Satellite Services, as amended from time to time, and which are incorporated by reference into the Cable Television Regulations, 1986.
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8. The undertaking devotes a greater number of both video and audio channels to the distribution of programming services licensed by the Commission than to the distribution of non-Canadian programming services.
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