ARCHIVED -  Decision CRTC 95-265

Decision

Ottawa, 31 May 1995

Decision CRTC 95-265

Vidéotron Ltée

Quebec City, Lévis, Saint-Damien-de-Buckland and surrounding area, Quebec - 940799000

Licence renewal

Following a Public Hearing in Montréal beginning on 11 October 1994, the Commission renews the Class 1 licence issued to Vidéotron Ltée (Vidéotron), for the cable distribution undertaking serving the above-mentioned localities, from 1 September 1995 to 31 August 1997.

This short-term renewal reflects the Commission's dissatisfaction with the licensee's performance of its community programming responsibilities. It will also enable the Commission to monitor more closely the outcome of the licensee's in-depth review of this matter and to assess the manner in which the licensee meets the objectives set out in the Community Channel Policy (Public Notice CRTC 1991-59). Further, the Commission notes that Vidéotron's new licence expiry date coincides with that of the television stations serving Quebec City.

The operation of this undertaking is regulated pursuant to Parts I and II of the Cable Television Regulations, 1986 (the regulations) and the licence will be subject to the conditions in effect under the current licence, as well as to those conditions specified in this decision and in the licence to be issued.

The Commission called Vidéotron to appear at the public hearing on 11 October 1994 to discuss the licensee's performance with respect to its community programming commitments and the level of its support for community programming, as measured against the relevant objectives of the Community Channel Policy. The Commission also wished to discuss with Vidéotron the complaints received during the current licence term concerning its customer relations, including delays in completing cable connection orders.

Community Programming

At the time of Vidéotron's last licence renewal (Decision CRTC 90-1037), the Commission noted the licensee's commitment to increase its annual community programming budget from $546,660 in the first year of the current licence term to $758,236 in the fifth year, 1995. In addition, the Commission brought the licensee's attention to the community channel policy review it had initiated, particularly as regards financial support, and encouraged Vidéotron to increase its annual contribution to the community channel in a manner consistent with its revenues from basic service.

The Commission notes that, during its current licence term, Vidéotron failed to honour its commitments concerning the amounts to be allocated to community programming. In 1995, the licensee projects expenditures of $572,836 for this item; this represents a substantial decrease from its initial commitment. Based on the licensee's financial information, the Commission notes that subscriber revenues increased by approximately 10% per year from 1990 to 1993.

The Commission indicated in its Community Channel Policy that it would continue to assess community programming funding on a case-by- case basis, using a funding benchmark of 5% of the base portion of basic monthly fees, capital expenditures excluded. In applying this formula to Vidéotron, the Commission found that, in 1992 and 1993, the licensee spent an average of only 1.6% of eligible revenues on community programming. In addition, the licensee proposed in its renewal application to allocate the same annual average to community programming until 2002.

Responding to questions at the Public Hearing, the licensee argued that the funding discrepancies are attributable to the unique operating structure of its community channel. Vidéotron stated that the community channel in Lévis is managed by its employees while the Quebec City community channel is managed by an autonomous corporation consisting entirely of volunteers. The licensee indicated that its 1990 forecasts were based on the assumption that the autonomous corporation would be funded partly by Vidéotron, partly by sponsorship revenues, and partly by the community. It pointed out that the main reasons for the discrepancies are that the projected sponsorship revenues did not materialize and that inflation was much lower than forecast during that period.

Although the licensee acknowledged that its community channel contributions in Quebec City represent less than the benchmark level of 5% set by the Community Channel Policy, Vidéotron argued that its production level of more than 30 hours a week of original community programming compares favourably with the outputs of similar cable undertakings in Canada. It added that, despite its underspending, it has nonetheless succeeded in meeting the Commission's basic expectations regarding citizen participation, community channel access and volunteer training, essentially due to the large size of the undertaking.

The Provincial Council, Communications Sector, of the Canadian Union of Public Employees, representing unionized Vidéotron employees, intervened at the public hearing to criticize the inadequacy of Vidéotron's support for its community channel. The intervener cited a lack of suitable production equipment in Lévis for outdoor work, a lack of support and follow-up for program proposals submitted by volunteers, and inadequate volunteer training. It also submitted that the use of volunteers does not justify Vidéotron's lower level of funding for the community channel, and asked the Commission to require the licensee to meet the benchmark funding level of 5% stipulated in the Community Channel Policy.

In its Policy, the Commission describes the role of the community channel as, above all, a public service and a vibrant and important element of the Canadian broadcasting system. The Commission also stated that the provision of adequate financial resources for the community channel is the cable distributor's principal obligation to the public in exchange for the privilege of holding a licence.

Having considered all of the foregoing, the Commission is of the view that Vidéotron failed to meet its responsibilities with respect to the operation of the community channel during the current licence term. Moreover, the Commission notes that this is the second consecutive renewal in which it has found Vidéotron's efforts in this regard to be unsatisfactory. It is for this reason that it is renewing the licence for a term of only two years. The Commission views the licensee's manifest lack of interest in, and support for, the community channel as unacceptable in the circumstances, given the resources at its disposal, its leadership role in the cable industry, as well as its substantial investments in advanced technology in Canada and abroad.

Replying to interventions at the hearing, the licensee agreed that it [TRANSLATION] "has become evident" that it must increase its community channel funding. It also stated that it is clear [TRANSLATION] "that a thorough reassessment of community television is required at Vidéotron". It stated that, in the fall of 1994 it decided to hire a Vice-President of Programming, who was tasked with conducting such a reassessment. The licensee indicated that it planned to consult the concerned parties and other members of the community, and to submit a plan of action to the Commission by 30 June 1995, including specific recommendations and appropriate budget provisions. The Commission expects the report to be submitted as proposed.

Moreover, in view of Vidéotron's clearly inadequate plans for community channel funding in its licence renewal application, its failure to honour past commitments in this area, and the lack of any new, firm commitment at the hearing for the upcoming licence term, the Commission, by majority vote, has decided to require, by condition of licence, that Vidéotron devote to the community channel annual funding equal to at least 3.5% of its revenues from the base portion of basic monthly fees. In accordance with the Community Channel Policy, the Commission reminds the licensee that capital expenditures, depreciation charges and lease payments are not eligible expenditures for the purpose of calculating this funding. Moreover, the greatest portion of the expenditures claimed as funding must be direct expenditures, that is, expenditures incurred wholly and exclusively in the acquisition or production of programs.

In accordance with the Policy's provision for assessment of community channel funding on a case-by-case basis, the Commission has taken Vidéotron's particular circumstances into account in setting a required funding level of 3.5%. In Decision CRTC 90-1037, the Commission noted the major contribution made by volunteers to the operation of the Vidéotron community channel. In the present case, the Commission has also taken account of the characteristics of Vidéotron's market, including the relatively low level of penetration of its cable service. At the same time, the Commission notes that, because of the licensee's efforts to broaden its selection of French-language services, the base portion of its basic monthly fee is higher than the average charged by other Canadian cable companies.

With regard to training, the Commission expects Vidéotron to increase its efforts by establishing a professional training program for volunteer workers and specialist employees, thereby to expand its pool of trained volunteers and provide a better operational structure for them. The Commission also invites the licensee to encourage the public to use its community facilities, in fulfilment of its existing access policy.

Customer Relations

Section 17 of the regulations stipulates that licensees must provide cable service within a reasonable time after receiving a connection request that fulfils the conditions set out in that section. At the hearing the Commission questioned the licensee about complaints of excessive waiting periods for Vidéotron service which, in some cases have exceeded one year.

Based upon these discussions and additional documentation filed by Vidéotron after the hearing, the Commission notes the corrective measures taken by Vidéotron and the company's review of its relevant policies and practices now in progress. The Commission further notes the conclusions, reached by the licensee following its analysis, of what constitutes a reasonable delay; according the the licensee, this would vary from three days to three months depending on the circumstances, except in some cases requiring third party action or approval. The Commission also notes that the licensee has centralized the processing of complaints at the vice-president level. The Commission expects to receive the revised policies as soon as the licensee's review is completed. A copy of this review will be placed on the public file for consultation by interested parties.

Other Conditions and Expectations

The licensee is authorized, by condition of licence, to continue to distribute, at its option, CFCF-TV Montréal, received via microwave, on the basic service. It is also authorized to continue to distribute, at its option, WVNY (ABC) and WCAX-TV (CBS) Burlington, Vermont, and WPTZ (NBC) and WCFE-TV (PBS) Plattsburgh, New York, received via microwave, on the basic service.

Pursuant to Decision CRTC 91-329, the licensee is relieved, by condition of licence, of the requirement under subsection 16(2) of the regulations to distribute the audio programming service of the local radio station CIGB-FM Trois-Rivières.

The licensee is authorized, by condition of licence, to continue to distribute, at its option, the special programming services known as "Arts et Spectacles", "Événement", "Télémag", and "Télé-Enseignement"; these services, by definition, must contain no advertising messages, except "Télé-Enseignement", which may contain prestige sponsorship messages. The Commission reminds the licensee that programs on the "Arts et Spectacles" service are generally to draw from categories 7, 8 and 9, and category 6 for some sports programs, as defined in Schedule I to the Television Broadcasting Regulations, 1987.

The Commission notes that, since 1990, Vidéotron has been distributing interactive programming on an experimental basis, as a supplement to selected programs distributed on regular channels. The Commission, in correspondence following the 11 October 1994 hearing, asked the licensee to describe the nature of its interactive programming; this was for the purpose of assisting the Commission in developing regulatory requirements for programming distributed in interactive mode.

Based on the information gathered in this process, the licensee is authorized to continue to distribute accessory programming in interactive mode, on an experimental basis, to subscribers equipped with a Videoway terminal. The interactive programming, and the programming on the regular service that it is intended to complement, must be distributed at the same time and have the same theme; any advertising material contained in the accessory programming shall be distributed at the same time as that contained in the programming on the regular service; and the accessory programming shall comply with the same requirements for Canadian content and advertising material as programming on the regular service. The Commission reminds the licensee that services consisting of such accessory programming do not have priority over other programming services. In addition, the Commission expects the licensee to submit an application if it wishes to distribute any interactive programming that does not conform to the type of programming described above.

The Commission further notes the statements by the licensee at the hearing regarding its practices designed to ensure that basic service subscribers are not penalized by the company's proposed substantial investments in new technologies and the implementation of new discretionary multimedia services.

With regard to television violence, Vidéotron stated that it had taken measures designed to give parents some control over the channels their children can watch using the Videoway terminal. The licensee stated that it would continue working with other industry members to incorporated an electronic device that would allowing parents to control program access based on a program classification system. The Commission encourages the licensee to continue its work in this area.

In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled "Implementation of an Employment Equity Policy", the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. In this regard, the Commission encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Allan J. Darling
Secretary General