ARCHIVED -  Decision CRTC 95-910

Decision

See also: 95-910-1

Ottawa, 20 December 1995

Decision CRTC 95-910

SkyCable Inc.

Brandon (rural regions surrounding), Foxwarren, McCreary, Baldy Mountain (Dauphin), Elie, Winnipeg, Interlake (Fraserwood) Lac du Bonnet and Falcon Lake, Manitoba - 952032100 - 952033900 - 952034700 - 952035400 - 952036200 - 952037000 - 952038800 - 952039600 - 952040400Starbuck (rural regions surrounding), Steinbach, Myrtle, Fisher Branch, Gimli, Boissevain, Basswood and Baldy Mountain, Manitoba - 952063600Pine Falls (area), Manitoba - 952041200

Applications by SkyCable Inc. for new MDS radiocommunication distribution undertakings - approved; two competing applications - denied

At a Public Hearing in the National Capital Region beginning on 30 October 1995, the Commission considered applications by SkyCable Inc.; as well as by a limited partnership to be organized among Westman Media Cooperative Ltd., Interlake Cable TV Ltd., Portage Community Cablevision Ltd., Shaw Communications Inc., and Winnipeg Videon Inc. (the Partners [a limited partnership]); and by Winnipeg River CATV Ltd. for licences to carry on radiocommunication distribution undertakings to serve the various communities and areas in Manitoba noted above. Each of these applicants predicated its proposal on the use of the same limited frequency spectrum to deliver signals to subscribers of its proposed multipoint distribution system (MDS). At the hearing, the Partners (a limited partnership) and Winnipeg River CATV Ltd. indicated that they would be able to co-exist with each other. It is clear, however, that the proposal by SkyCable Inc. is technically mutually exclusive and competitive with the other applications submitted because it would use the same frequencies in essentially the same areas.

Having considered these applications, the Commission approves those submitted by SkyCable Inc. The Commission will issue a single licence to this applicant, expiring 31 August 2002. The licence will be subject to the conditions specified in the appendix to this decision and in the licence to be issued.

The competing applications filed by the Partners (a limited partnership) and by Winnipeg River CATV Ltd. are denied.

Ownership

SkyCable Inc. is indirectly controlled by Stuart A. Craig of Craig Broadcast Systems Inc. (Craig), which also holds effective control of a number of radio and television stations operating in Manitoba.

Proposed MDS Service

SkyCable Inc. will operate an MDS undertaking consisting of nine transmitters, which will transmit broadcasting services in an encrypted mode using the MPEG-2, Main Profile with B-frames encoding and digital video compression system (DVC). SkyCable's nine transmitters will operate with the respective effective isotropic radiated power (EIRP) listed below:

Location/ EIRP/
Endroit PIRE
(watts)

Brandon 14
Foxwarren 14
McCreary 6.3
Dauphin 14
(Baldy Mountain)
Elie 9.9
Winnipeg 9.9
Interlake 9.9
(Fraserwood)
Lac du Bonnet 11
Falcon Lake 9.9

Each transmitter will use all fifteen MDS channels to provide its services, namely, E1, F1, E2, F2, E3, F3, E4, F4, G1, H1, G2, H2, G3, H3 and G4.

The MDS undertaking, approved herein, will provide, among other things, a new service to rural homes, towns and villages that currently do not receive cable service. The area to be served by the MDS undertaking will be divided into two distinct regions: one in eastern Manitoba with a head end at Elie, and the other in western Manitoba with a head end at Brandon.

Rationale for Approval

In approving SkyCable Inc.'s application, the Commission took into account the fact that the proposed service will include a more extensive package of television services than would those of the other two applicants, and will be available to a larger number of potential subscribers than would have been reached by the other two proposed systems combined.

Initially, SkyCable Inc. will offer 40 video services, including a basic service of 18 programming services in the western region and 19 programming services in the eastern region, as well as discretionary programming services, pay television programming services and pay-per-view movie services. SkyCable Inc.'s basic service will include all over-the-air, local and regional Canadian television stations(1).

((1) For the purposes of this decision, a station is normally considered "local" if the MDS transmitter site is located within the station's Grade A signal contour, and "regional" if the MDS transmitter site is between its Grade A and B contours/Aux fins de la présente décision, une station est habituellement considérée comme "locale" si l'emplacement de l'émetteur du SDM est situé à l'intérieur du périmètre de rayonnement de classe A de la station et comme "régionale" s'il se trouve entre les périmètres de rayonnement de classes A et B.)

SkyCable Inc. stated that the digital signal compression technology to be used by its MDS undertaking will allow for a capacity of 60 channels at the outset, with the capability to expand to more than 150 channels as additional programming services become available.

The applicant estimated that there are 48,865 households within its proposed service area that do not have access to cable. Of these, SkyCable Inc. projected that it would attract 6,000 subscribers in the first year of the licence term, rising to 15,000 in the second year and to 24,000 in the third year.

Policy Respecting MDS Undertakings

The Commission originally set out its regulatory policy for MDS-based broadcasting undertakings in Public Notice CRTC 1993-76 dated 3 June 1993 and entitled "Regulatory Policy for Multipoint Distribution Systems (MDS)". At that time, the Commission stated that it saw the role of MDS as one that would be complementary to the service provided by cable distribution undertakings. In that Public Notice, the Commission also stated that:

 an appropriate role for MDS, at this time, is to provide a broad range of television services, on a subscription basis, to households in areas not served by cable television undertakings; and that the regulation of MDS, while taking into account the differences between the two technologies, should generally parallel that of cable television.

Since that time, the evolution of new broadcasting technologies has brought about significant change in the Canadian broadcasting environment. In its 19 May 1995 report to the Government entitled "Competition and Culture on Canada's Information Highway", the Commission expressed the view that consumers should have increased choice among distributors of broadcasting and other services. Specifically, the Commission stated that:

 ... in light of the dominance of the cable industry relative to other potential entrants, there is no need to limit competition by other entrants in the broadcasting distribution market.

Subsequently, in Public Notice CRTC 1995-183 dated 26 October 1995, the Commission announced that it would no longer routinely impose conditions of licence restricting licensees of radiocommunication distribution undertakings from soliciting or accepting subscriptions within the authorized service areas of other subscription-based distribution undertakings.

In the Commission's view, the evolution of the Canadian broadcasting environment has been such that the role of MDS must now be seen as being competitive, rather than complementary to cable. In keeping with this competitive model, the Commission will not impose a condition of licence restricting SkyCable Inc. from soliciting or accepting subscriptions within the authorized service areas of other subscription-based distribution undertakings, nor will the Commission regulate SkyCable Inc.'s subscriber fees.

The Commission notes that SkyCable Inc. proposed to charge a basic fee of $19.95 per subscriber per month. At the hearing, SkyCable Inc. stated that it would maintain this basic subscriber fee throughout the licence term. Subscribers to this MDS undertaking may, as may subscribers to DTH distribution undertakings, subscribe to pay-per-view programming services without subscribing to basic service.

Authorized Programming Services and Distribution Requirements

The broadcasting services to be distributed by SkyCable Inc.'s MDS undertaking are listed in the appendix to this decision. SkyCable Inc. is also authorized to distribute a pay-per-view marketing channel.

At the hearing, the Commission discussed with SkyCable Inc. the carriage of pay audio services proposed in other applications also being considered at the hearing. SkyCable Inc. indicated a willingness to carry all licensed pay audio services.

The Commission hereby authorizes SkyCable Inc. to carry licensed Canadian pay audio services.

With respect to the distribution of U.S. television network signals, the Commission authorizes SkyCable Inc. to distribute the proposed U.S. network television signals as part of the basic service or as part of a discretionary tier.

The Commission notes that SkyCable Inc.'s MDS undertaking will deploy addressable digital technology to all subscribers. The Commission considers that, since DTH and MDS are both over-the-air technologies which utilize DVC technology, they should have common regulatory requirements respecting the distribution and linkage of programming services. Accordingly, U.S. superstations and U.S. specialty services may only be distributed on MDS undertakings on a discretionary basis in accordance with the requirements discussed in Public Notice CRTC 1995-217 issued today. Furthermore, the same linkage requirements set out for DTH distribution undertakings in the above public notice will also apply to MDS undertakings.

The Commission notes that the six U.S. superstations, Black Entertainment Television (BET), Comedy Central and Lifetime Television must continue to be exclusively packaged with pay television services using a linkage ratio of 5:1, with the exception that a MDS licensee may designate and package one of the six authorized U.S. superstations with Canadian specialty services on a 1:1 basis. This constitutes an exception to the Commission's existing linkage policy and offers the same level of flexibility to MDS undertakings with regard to linkage as is offered to DTH distribution undertakings in Public Notice CRTC 1995-217. A condition of licence in this regard is set out in the appendix to this decision.

The Commission considers that MDS licensees should adhere to the same requirements as set out for DTH licensees in Public Notice CRTC 1995-217 regarding the distribution of a preponderance of Canadian programming services. Accordingly, MDS licensees will be required to ensure that no subscriber may ultimately receive a total package of services that contains less than a preponderance of Canadian programming services. A condition of licence in this regard is set out in the appendix to this decision.

SkyCable Inc. is also required in a manner specified in the condition of licence set out in the appendix to this decision to effect simultaneous program substitution.

Further, the Commission has determined that the guidelines for cable distribution undertakings with respect to the distribution of distant Canadian television signals set out in Public Notices CRTC 1985-61 and CRTC 1993-74 will also apply to MDS undertakings.

Access

In Public Notice CRTC 1995-217, the Commission has set out its requirements for DTH distribution undertakings regarding the provision of access to licensed Canadian pay television and specialty programming undertakings. The Commission considers that this policy also has general application to MDS undertakings. Accordingly, and consistent with those requirements, the Commission expects SkyCable Inc. to distribute all licensed Canadian pay television and specialty programming undertakings, subject to the availability of MDS channel capacity, and other considerations discussed in Public Notice CRTC 1995-217. The Commission also considers that MDS services must give priority to the carriage of programming services over non-programming services.

Contributions to the Development of Canadian Programming

(i) Community Programming

Consistent with the applicant's commitment, SkyCable Inc. is required, by condition of licence, to operate a community programming channel in accordance with the applicable provisions of the Cable Television Regulations, 1986.

The Commission notes SkyCable Inc.'s further commitment to contribute, on a yearly basis, a minimum of 6% of its total subscriber revenues for basic, discretionary, pay television and pay-per-view services to community programming, net of its commitment to make direct contributions totalling $360,000 to a Canadian program development fund discussed later in this decision. The Commission requires the licensee to adhere to this commitment, by condition of licence.

At the hearing, SkyCable Inc. stated that it will assign a team of nine community programming producers to cover community events throughout the MDS undertaking's service area. SkyCable Inc. also stated that it will acquire a mobile production facility that will travel throughout the region to cover rural events and activities.

The Commission requires the applicant, by condition of licence, to adhere to its commitment to provide a mobile production facility and to begin broadcasting regional programming on the community channel by the end of the first twelve-month period of operation of its MDS undertaking.

The Commission notes that, beginning in the third year of the licence term, SkyCable Inc. will broadcast a minimum of 14 hours each week of regional programming on the community programming channel.

At the hearing, the Commission asked SkyCable Inc. whether it would share programming facilities with television stations owned and operated by Craig. In response to the Commission's request at the hearing for more information on this matter, SkyCable Inc. confirmed that it would have access to Craig's studio facilities in Dauphin, Brandon, Portage la Prairie and Winnipeg for an average of 30 days each year, and that Craig's television stations would have access to SkyCable Inc.'s mobile facility for an average of 10 days each year.

SkyCable Inc. stated that, before filing its application, it had discussions with Manitoba provincial educational authorities regarding educational programming to be broadcast on its proposed undertaking. The applicant also indicated that it has had discussions with Manitoba's three universities regarding the potential use of its MDS undertaking for delivering accredited university courses to residents in rural areas.

Initially, SkyCable Inc. proposed to provide only one channel to be used for both community programming and for the proposed educational programming. The Commission's policy, set out in Public Notice CRTC 1994-76 dated 29 June 1994, does not include educational programming as a type of complementary programming that may be broadcast on the community channel. When questioned on this issue at the hearing, SkyCable Inc. argued that there is not enough community and educational programming to warrant separate channels. SkyCable Inc. was asked to advise the Commission regarding the number of educational programming hours that it considers would justify allocating a separate educational channel on the MDS undertaking. In its response to this request, SkyCable Inc. agreed to establish a separate educational channel beginning in the third year of its licence term, or "sooner if there are conflicts in scheduling between the community program channel and the educational channel that cannot be worked out". The Commission requires SkyCable Inc. to adhere to this commitment, by condition of licence.

The Commission also notes SkyCable Inc.'s commitment to adhere to the cable television community channel standards administered by the Canadian Cable Television Standards Foundation.

(ii) Independent Production

Beginning in the third year of the licence term, SkyCable Inc. will, out of its 6% commitment to community programming discussed earlier in this decision, make annual direct contributions, totalling $360,000 over the remainder of the seven-year licence term, to a Canadian program development fund. This fund will be administered by an independent third party, the Manitoba Cultural Industries Development Office, a provincial government organization. Monies allocated to the fund will be used to support the work of Manitoba producers developing television programs, feature films and audio programs.

The Commission is satisfied with SkyCable Inc.'s proposed contributions to the development of Canadian programming through its commitments to community programming and to a Canadian program development fund.

Implementation of Service

In its application, SkyCable Inc. stated that the transmitters at Brandon, Elie and Winnipeg would be operational within twelve months of approval of its application. SkyCable Inc. further indicated that the remaining transmitters would be implemented over a period of 15 to 30 months from the date of licensing. When questioned regarding the delay in installing some of the transmitters, SkyCable Inc. agreed to implement all of the transmitters within twelve months of the date of a favourable decision on its application.

Accordingly, it is a condition of this licence that construction of this undertaking be completed and that it be in operation within twelve months of the date of this decision or, where the applicant applies to the Commission within this period and satisfies the Commission that it cannot complete implementation before the expiry of this period and that an extension is in the public interest, within such further periods of time as are approved in writing by the Commission.

Employment Equity

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 applicant to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

Other Matters

The Commission notes SkyCable Inc.'s commitment to provide closed-captioning capability to subscribers for their decoders.

With respect to the issue of television violence, SkyCable Inc. stated that, if a program, whether it be Canadian or foreign, was determined by the Canadian Broadcast Standards Council or by the Commission to be too violent for broadcast, the proposed MDS undertaking would have the technical capability to curtail or scramble such a program in accordance with the Commission's proposal set out in Notice of Public Hearing CRTC 1995-5.

Allan J. Darling
Secretary General

APPENDIX TO DECISION CRTC 95-910

Conditions of Licence

1. The licensee shall adhere to the Cable Television Regulations, 1986, with the exceptions of sections 3, 4, 7, 8, 9, 10, 11, 17, 18, 20 and Part III.

2. Unless otherwise authorized by the Commission, the licensee is required to distribute the following programming services:

West Region
 (Brandon, Foxwarren, McCreary and Baldy Mountain [Dauphin], Manitoba)

CKX-TV (CBC) Brandon
CKYB-TV or CKYD-TV (CTV) Brandon/Dauphin
CKND-TV (IND) Winnipeg
CBWFT-TV (SRC) Winnipeg
Community Channel/
Canal communautaire
Educational Programming Channel/
Canal d'émissions éducatives

East Region
 (Elie, Winnipeg, Interlake (Fraserwood), Lac du Bonnet and Falcon Lake, Manitoba)

CBWT-TV (CBC) Winnipeg
CKY-TV (CTV) Winnipeg
CKND-TV (IND) Winnipeg
CHMI-TV (IND) Portage La Prairie/Winnipeg
CBWFT-TV (SRC) Winnipeg
Community Channel/
Canal communautaire
Educational Programming/
Canal d'émissions éducatives

3. The licensee is authorized to distribute the Cable Parliamentary Channel Inc. (CPAC), English and French services, as well as all licensed specialty, pay television, pay audio programming undertakings and any radio services.

4. Unless otherwise authorized by the Commission, the licensee is authorized to distribute the following programming services:

Basic services / Service de base

WXYZ-TV (ABC) Detroit, Michigan
WDIV-TV (NBC) Detroit
WTVS-TV (PBS) Detroit
WTOL-TV (CBS) Toledo, Ohio

Discretionary Services / Services facultatifs

Cable News Network
WUHF (FOX) Rochester, New York
Arts and Entertainment Network
The Nashville Network
The Learning Channel

Pay Television Services / Services de télévision payante

Allarcom Pay Television Limited
(Super Channel)
Movie Max
The Family Channel
WGN-TV Chicago, Illinois
WPIX-TV New York, New York
KTLA-TV Los Angeles, California/(Californie)
Pay-per-view 1/
Télé à la carte 1
Pay-per-view 2/
Télé à la carte 2
Pay-per-view 3/
Télé à la carte 3
Pay-per-view 4/
Télé à la carte 4
Pay-per-view 5/
Télé à la carte 5

5. The licensee is authorized to distribute a Pay-per-view Preview Channel.

6. Unless otherwise authorized by the Commission:

 a) the licensee shall delete the distribution of the programming of a non-Canadian television programming service and substitute the identical programming of a Canadian television programming undertaking, licensed to serve the province of Manitoba, where that Canadian television programming undertaking is distributed by the licensee; and

b) the licensee shall delete and substitute the programming of television programming services, in the manner contemplated in paragraph a) above, where the licensee has received, at least seven days prior to the date on which the programming is broadcast, a written request for the deletion and substitution of the programming of the television programming service.

 The licensee may discontinue the deletion and substitution of programming of a television programming service where the licensee verifies that the programming of the television programming services in respect of which the deletion is made, is not, or is no longer scheduled for distribution in identical periods.

7. The licensee is required to devote a greater number of its video channels to the distribution of Canadian programming services than to the distribution of non-Canadian programming services in the total package of services received by a subscriber. For the purpose of this condition, multiplex programming channels, repeat channels and non-programming channels will be disregarded and each licensed PPV service distributed will be counted as a single channel.

8. The non-Canadian programming services listed below may only be offered in a discretionary package with Canadian pay television and/or Canadian specialty services, and are subject to the following linkage requirements:

a) each Canadian pay television service (excluding a pay-per-view service) may be linked in a single discretionary package with no more than five channels of the following authorized non-Canadian programming services:

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)
Cable Satellite Public Affairs Network (C-Span)
The Silent Network (Kaleidoscope)
The Learning Channel
WTBS Atlanta*
WGN-TV Chicago*
WWOR-TV New York City*
WPIX New York City*
WSBK-TV Boston*
KTLA Los Angeles*
Black Entertainment Television (BET)
Lifetime Television
Comedy Central

*U.S. Superstations /
* Superstations américaines

 In no case can a single discretionary package, whose Canadian component includes more than one pay television service contain more than five channels of non-Canadian programming services linked with the Canadian pay television services included in that package;

b) each Canadian specialty service, distributed within a discretionary package that may include one or more Canadian specialty and/or pay television service, may be linked with no more than one of the following authorized non-Canadian programming services:

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)
Cable Satellite Public Affairs Network (C-Span)
The Silent Network (Kaleidoscope)
The Learning Channel
Black Entertainment Television (BET)
Lifetime Television
Comedy Central

The licensee may designate one of the U.S. superstations authorized in paragraph a) above and distribute the signal of that superstation within discretionary packages that may include one or more Canadian specialty and/or pay television service.

 c) the licensee is not permitted to offer a package of services containing only non-Canadian programming services; and

d) the licensee is not permitted to link authorized non-Canadian programming services with a Canadian specialty service distributed on the basic service.

9. The licensee shall operate a community programming channel in accordance with sections 13, 14 and 15 of the Cable Television Regulations, 1986.

10. The licensee shall contribute to community programming, in each broadcast year, a minimum of 6% of its total subscriber revenues for basic, discretionary, pay television and pay-per-view services. Over the licence term, and from the above-noted financial commitment, the licensee shall make direct contributions totalling $360,000 to the Manitoba Cultural Industries Development Office or to other independent Canadian program development funds.

11. The licensee shall provide a mobile production facility and begin broadcasting regional programming on the community channel by the end of the first twelve-month period of operation of its MDS undertaking.

12. The licensee shall establish a separate educational programming channel beginning in the third year of operation, or sooner where there are conflicts in scheduling between community programming and the educational programming that cannot be resolved. For the purpose of this condition of licence, community programming shall have priority over educational programming distributed on the community channel.

13. The licensee shall complete construction of this undertaking and it shall be in operation within twelve months of the date of this decision or, where the applicant applies to the Commission within this period and satisfies the Commission that it cannot complete implementation before the expiry of this period and that an extension is in the public interest, within such further periods of time as are approved in writing by the Commission.