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Decision

See also: 96-775-1

Ottawa, 4 December 1996

Decision CRTC 96-775

Image Wireless Communications Inc.

Aberdeen, Allan Hills, Gronlid, Lloydminster, Marquis, North Battleford, Prince Albert, Regina, Stranraer, Swift Current, Warmley, Wynyard and Yorkton, Saskatchewan - 952485100Colgate, Davidson, Disley, Fort Qu'Appelle, Gravelbourg, Greenwater Lake, Indian Head, Kamsack, Milestone, Nipawin, North Battleford, Outlook, Ponteix, Prince Albert, Saskatoon, Star City, Stranraer, Strasbourg, Swift Current, Viscount, Warmley, Willow Bunch, Wynyard, Yarbo and Yorkton, Saskatchewan - 199606943

Application by Image Wireless Communications Inc. for a licence for a new MDS radiocommunication distribution undertaking - Approved; competing application by Westman Media Co-operative Ltd. on behalf of a company to be incorporated - Denied

At a public hearing in Calgary beginning on 15 July 1996, the Commission considered applications by Image Wireless Communications Inc. (Image) and Westman Media Co-operative Ltd. on behalf of a company to be incorporated under the name of SkyLinks TV (Westman), for licences to carry on radiocommunication distribution undertakings to serve the various communities in Saskatchewan noted above. Both applicants based their proposals on the use of the same limited frequency spectrum to deliver signals to subscribers of their proposed multipoint distribution systems (MDS). The application by Image requested that a separate licence for each location be issued, in the event of approval.

The Commission has considered these applications and approves that submitted by Image. The Commission will issue a licence to the applicant for each of the above-noted locations, all of which will expire 31 August 2002. The licences will be subject to the conditions specified in the appendix to this decision and in the licences to be issued. The 13 transmitters will utilize effective isotropic radiated powers (EIRP) as indicated below:

Transmitter Location / Site des émetteurs EIRP/PIRE
(watts)

Aberdeen (Saskatoon) 19
Allan Hills 14
Gronlid 9.8
Lloydminster 13
Marquis (Moose Jaw) 17
North Battleford 18
Prince Albert 16
Regina 20
Stranraer 22
Swift Current 15
Warmley 13
Wynyard 12
Yorkton 19

The competing application by Westman, on behalf of a company to be incorporated, is denied.

Ownership

Image is ultimately controlled by Ronald L. Skinner through his majority ownership and control of several holdings. Mr. Skinner also controls Image Cable Systems Ltd., which operates cable distribution undertakings in fifty communities in Saskatchewan. Image Cable Systems Ltd. currently serves approximately 5% of the total cable subscribers in Saskatchewan.

Policy respecting MDS undertakings

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.

Rationale for approval

While both applicants presented licensable proposals, the Commission notes that the Image and Westman applications were technically mutually exclusive. In approving the application by Image, the Commission has taken into account the applicant's business experience in Saskatchewan, as well as the significant level of support expressed for the project by various communities. In addition, the Commission notes that Image's proposals for carriage of distant and priority Canadian signals are consistent with Commission policy as set out in Public Notices CRTC 1985-61, 1993-74 and 1993-76.

Image will offer to its subscribers an encrypted digital system that will initially provide a package of approximately 50 services including basic television signals as well as discretionary and pay services. The system will later be expanded to 60 services and could eventually provide between 100 and 150 television services. The Commission notes that Image proposed to charge a basic fee of $19.95 per subscriber per month. Consistent with its policy for such distribution undertakings, the Commission will not regulate Image's subscriber fees.

Interventions

Interventions in opposition to this application were submitted by The Battlefords Community Cablevision Co-operative (Battlefords), CanWest Television Inc. (CanWest) and Baton Broadcasting Incorporated (Baton), all of which appeared at the hearing to set out their concerns.

Battlefords is the licensee of cable distribution undertakings serving various communities in Saskatchewan, including North Battleford, one of the locations in which Image proposes to operate.

Battlefords expressed a concern that competition in the North Battleford area of Saskatchewan is not warranted, and that the area is not large enough to support two licensees. It maintained that the revenues it derives from the cable distribution undertaking in this area are required by Battlefords to assist in the development and expansion of its smaller systems in other locations.

In response to the concerns expressed by Battlefords, Image expressed its belief that competition between MDS and cable undertakings is inevitable, and pointed out that the Commission endorsed such competition in Public Notice CRTC 1995-183. In addition, Image noted that nearly 100 letters of support for their application were submitted by towns, villages and rural municipalities throughout the province of Saskatchewan.

CanWest is the licensee of CFRE-TV Regina and CFSK-TV Saskatoon. CanWest opposed Image's proposal to carry the signal of the independent CITV-TV Edmonton (owned by WIC Television Ltd.) rather than CanWest's CFRE-TV Regina or CFSK-TV Saskatoon, at all but five of its proposed locations. CanWest opposed the carriage of the signal of CITV-TV in Saskatchewan on the grounds that CanWest holds national program rights to a large number of programs carried on CITV-TV, while WIC Television Ltd., as a sublicensee, does not have the Saskatchewan broadcast rights. CanWest suggests the carriage of its signals by the entire MDS system instead of that of CITV-TV.

In response to this concern, the licensee stated that its plan for the distribution of the signal of CITV-TV instead of CFSK-TV in most locations was developed in response to concerns expressed by local broadcasters.

Through its wholly-owned subsidiary BBS Saskatchewan Incorporated, Baton is the licensee of CIPA-TV and CKBI-TV Prince Albert, CKCK-TV Regina, CFQC-TV Saskatoon, CKTV-TV Fort Qu'Appelle, CKMC-TV Swift Current, CKMJ-TV Marquis, CKBQ-TV Melfort, and CKOS-TV and CICC-TV Yorkton.

Baton opposed the proposed carriage of the signal of CFSK-TV Saskatoon where it is not currently carried, and in particular in Prince Albert. Baton expressed the concern that the carriage of the signal of CFSK-TV in that location could have a negative impact on the Baton twin-stick undertakings in Prince Albert (CKBI-TV and CIPA-TV) leading to serious financial consequences.

In response to this concern, Image stated that it was prepared to alter its distribution in Prince Albert to reflect a choice other than CFSK-TV.

The Commission has considered the views of the interveners and of the applicant. With respect to the issue of competition, the Commission reiterates its position, set out in its May 1995 Information Highway report, and in Public Notice CRTC 1995-183, that there is no further need to limit competition to cable. With regard to the issues surrounding signal carriage, as noted above, the Commission is satisfied that the carriage of the signal of CITV-TV Edmonton as proposed by Image is consistent with Commission policy respecting the carriage of distant Canadian signals as set out in Public Notice CRTC 1985-61 and 1993-74. With respect to the carriage of the CanWest signals, however, the Commission considers that it would be in the public interest at this time that the MDS transmitters carry this service only in those areas where it is currently available. Accordingly, Image is authorized to carry the CanWest signals on its proposed MDS transmitters at Aberdeen, Allan Hills, Marquis and Regina, but not at Prince Albert.

Authorized Programming Services and Distribution Requirements

The broadcasting services authorized for distribution by the various transmitters licensed to Image are listed in the appendix to this decision. Subscribers to this MDS undertaking may subscribe to pay-per-view programming services without subscribing to the basic service.

It is a Commission requirement that, if carried, Black Entertainment Television (BET), Comedy Central, Lifetime Television and the six U.S. superstations must be exclusively packaged with pay television services using a linkage ratio of 5:1, with the exception that an 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.

Image is also required, in the manner described in the condition of licence set out in the appendix to this decision, to effect simultaneous substitution.

In its written application, Image proposed that each of its MDS transmitters be regulated in the same manner as any cable distribution undertaking within its coverage area. The licensee anticipated, for example, that transmitters located in an area served by a Class 1 cable distribution undertaking would be required to perform simultaneous program substitution in the same manner as that Class 1 undertaking. Conversely, those transmitters located within the service area of a Class 2 or a Part III cable distribution undertaking would be treated in the same manner as those systems, and therefore not be required to perform simultaneous program substitution.

In discussions at the hearing, however, it was clarified that Image would perform simultaneous program substitution throughout its entire system by inserting the appropriate Regina signals at its headend in Yorkton. The licensee explained that the technology to be used by Image requires that substitution be performed by central insertion of the substituted signal, making local substitution costly and impractical.

Access

In Public Notice CRTC 1995-217, the Commission 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 Image to distribute the signals of all licensed English-language 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 notes the licensee's commitment at the hearing to adhere to the Commission's requirements in this regard. The Commission also considers that MDS services must give priority to the carriage of programming services over non-programming services.

Contribution to the Development of Canadian programming

i) Community programming

Consistent with the applicant's commitment, Image is required, by condition of licence, to operate a community programming channel on each of the undertakings licensed herein, in accordance with the appropriate provisions of the Cable Television Regulations, 1986.

The Commission notes Image's further commitment to contribute, on a yearly basis, a minimum of 5% of its total gross subscriber revenues for basic, discretionary, pay television and pay-per-view services, to either community programming or support for Canadian program production. The Commission requires the licensee to adhere to this commitment, by condition of licence.

Image stated at the hearing that it has the intention to develop the community channel over a period of three years, to a level where a minimum of five hours per week of first-run programming originated throughout the region will be carried.

In addition, Image is considering the implementation of programming initiatives such as a daily hour devoted to news from around the province that is not broadcast by conventional television stations. Image anticipates the grouping of such news by region in such a telecast, with various regions of the province having a predictable time slot within the program.

ii) Independent Production

As part of its 5% commitment to community programming or support for Canadian program production discussed above, Image made a commitment to make annual direct contributions, totalling $498,000 over a seven-year period, to an independently-administered Canadian program development fund. The Commission by condition of licence, requires Image to adhere to its schedule of payments to this fund, as set out in its application.

Implementation of service

In its original application, Image indicated that implementation of four of the proposed systems (Aberdeen, Yorkton, Regina and Wynyard) will take place initially, and that implementation of these four systems will be followed by that of Allan Hills, Prince Albert, Gronlid, Warmley, Marquis, Swift Current, Stranraer, North Battleford and Lloydminster, in that order. In its application, Image also projected that the entire system would be operational by June 1999. At the hearing, however, Image stated that recent improvements to the technology proposed would allow the whole system to be implemented within 18 months of a favourable decision, although it would be prepared to comply with any implementation period required by the Commission. The Commission requires, by condition of licence, that the entire system approved herein be in operation within twelve months of the date of this decision, or within 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 Image to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.

The Commission acknowledges and has considered all of the interventions submitted in respect of this application.

Allan J. Darling
Secretary General

APPENDIX / ANNEXE

Conditions of Licence:

For Aberdeen and Allan Hills: