ARCHIVED -  Telecom Decision CRTC 96-1

Telecom Decision

Ottawa, 30 January 1996

Telecom Decision CRTC 96-1

REGULATION OF BROADCASTING DISTRIBUTION UNDERTAKINGS THAT PROVIDE NON-PROGRAMMING SERVICES

 I BACKGROUND

 On 1 February 1995, the Canadian Daily Newspaper Association (CDNA) filed an application, pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, against Rogers Cable T.V. Limited (RCTV) requesting that the Commission order RCTV to make capacity available on its cable systems to other parties on a non-discriminatory basis and to file tariffs for the distribution of non-programming services on RCTV's facilities. In support of its application, CDNA submitted that RCTV is acting as a telecommunications common carrier in providing non-programming services on its cable systems and is a Canadian carrier within the meaning of the Telecommunications Act.

 In Provision of Non-programming Services by Broadcast Distribution Undertakings, Telecom Public Notice CRTC 95-22, 9 May 1995, the Commission initiated a proceeding to consider the issues raised by CDNA's application as they relate to cable distribution undertakings. Subsequently, in Provision of Non-programming Services by Broadcast Distribution Undertakings - Changes to the Proceeding, Telecom Public Notice CRTC 95-34, 5 July 1995, the Commission broadened the scope of the proceeding to include all distribution undertakings as defined in the Broadcasting Act. The Commission specifically invited comment on the following:

 1. Under what circumstances, if any, would the carriage of non-programming services by a broadcasting distribution undertaking result in that undertaking operating as a Canadian carrier, as defined in the Telecommunications Act.

 2. If a broadcasting distribution undertaking is found to be acting as a Canadian carrier and, given the possibility of limited capacity, how the requirements established by the Commission pursuant to the Broadcasting Act are to be reconciled with the common carrier nature of an entity that is a Canadian carrier pursuant to the Telecommunications Act.

 The Canadian Cable Television Association (CCTA), Expressvu Inc. (Expressvu), RCTV, Shaw Communications Inc. (Shaw), Stentor Resource Centre Inc. (Stentor), Telesat Canada (Telesat), The Canadian Association of Broadcasters (CAB), Canadian Broadcasting Corporation (CBC), CDNA, Southam Inc. (Southam), Thomson Newspapers Company Limited (Thomson) and Torstar Corporation (Torstar) filed comments with the Commission. CDNA's 1 February 1995 application, RCTV's answer thereto and CDNA's reply also form part of the record of this proceeding.

 Parties were in general agreement that the key issue to be resolved relates to ensuring that providers of non-broadcasting/non-programming services have fair and equitable access to broadcasting distribution undertakings. There was also general agreement that the carriage of broadcasting services by distribution undertakings should be accorded priority over the carriage of non-broadcasting services given the scarcity of analog capacity on such undertakings.

 Further, parties generally agreed that the requirements of the Broadcasting Act and the Telecommunications Act can be reconciled. However, they did not agree on whether they need to be reconciled (i.e. whether carriage of non-programming services would result in a broadcasting distribution undertaking operating as a Canadian carrier) or, if so, on the specific way in which the requirements of the two Acts should be reconciled.

 For the purposes of this Decision, the Commission has grouped non-programming services into two categories: (full channel TV services(, and (other non-programming services(.

 (Full channel TV services( are services distributed using a full analog TV channel and displayed on the television screen, such as services consisting predominantly of alphanumeric text. For the purposes of this Decision, the Commission also includes, as part of this category, services providing access to the carriage facilities needed to offer the services.

 (Other non-programming services( (e.g. security services, Internet services) are non-programming services that are not (full channel TV services(, and include services providing access to the carriage facilities needed to offer the services.

 II STATUS OF BROADCASTING DISTRIBUTION UNDERTAKINGS UNDER THE TELECOMMUNICATIONS ACT

 A. Introduction

 This section of the Decision addresses the issue of the circumstances, if any, under which the carriage of non-programming services by a broadcasting distribution undertaking would result in that undertaking operating as a Canadian carrier as defined in the Telecommunications Act.

 CDNA, Expressvu, Southam, Stentor, Telesat, Thomson and Torstar agreed that distribution undertakings that own or operate transmission facilities and that distribute non-programming services fall within the definition of (telecommunications common carrier( pursuant to the Telecommunications Act and are (Canadian carriers" subject to regulation by the Commission pursuant to that Act. Many of these parties referred to cable systems that distribute non-programming services as examples of distribution undertakings falling within this category.

CCTA and Shaw were of the view that the relevant provisions of the Telecommunications Act would apply to a broadcasting undertaking only when acting as a (common carrier(. Shaw, noting that the term (common carrier( is not defined in the Telecommunications Act, argued that the distribution of alphanumeric non-programming services, as currently provided by cable television licensees, does not result in their operating as common carriers.

CCTA, RCTV and Shaw submitted that the Broadcasting Act gives the Commission adequate jurisdiction to regulate broadcasting distribution undertakings, including the offering of non-programming services. They argued that these services are an integral part of, and inextricably linked to, a cable television licensee's primary role of distributing broadcasting services and therefore must be regulated under the Broadcasting Act. CDNA, Expressvu, Southam, Stentor, Thomson and Torstar submitted that the Commission has no direct jurisdiction under the Broadcasting Act with respect to the carriage of non-programming services by cable distribution undertakings.

 RCTV submitted that it is necessary to determine whether the provision of non-programming services by a distribution undertaking providing programming services constitutes a distinct undertaking. RCTV further argued, among other things, that the key issue is not whether the services in question should be classified as "broadcasting" or "telecommunications" services, but whether access to broadcasting distribution undertakings by third party service providers is fair and equitable. RCTV submitted that the CCTA's proposed Access Code for exempt programming and alphanumeric services shows that the process of establishing fair and equitable access rules is well-advanced. Shaw also argued that the changes in the current Broadcasting Act to exclude certain services consisting of predominantly alphanumeric text from the definition of "broadcasting", does not alter the Commission's comprehensive jurisdiction over "undertakings" which existed under the previous Broadcasting Act.

 CCTA, RCTV and Shaw further argued that the concept of common carriage, implicit in the Telecommunications Act, is not appropriate for the regulation of the distribution of non-programming services in the current distribution environment because of the scarcity of distribution capacity. Conversely, CDNA submitted that scarce capacity is not a factor in determining whether the Telecommunications Act should apply to the distribution of non-programming services.

 B. Conclusions

 The definition of "telecommunications" in the Telecommunications Act is cast broadly. It encompasses "broadcasting" as that term is defined in the Broadcasting Act, as well as, among other things, any other transmission of intelligence by any wire or other electromagnetic or similar technical system.

 However, in section 4 of the Telecommunications Act, Parliament specifically excluded "broadcasting" by a "broadcasting undertaking" from the scope of that Act. Accordingly, to determine whether the Telecommunications Act applies to the non-programming activities of an entity that is a broadcasting distribution undertaking, the Commission must first determine whether these activities involve "broadcasting" by a "broadcasting undertaking".

 The Commission uses the term (non-programming services( to refer only to services that do not involve (programs( or (broadcasting( as those terms are defined in the Broadcasting Act, and that are provided by an entity that is a broadcasting distribution undertaking using its distribution network. As noted in Part I, these services have been categorized for the purposes of this Decision as full channel TV or other non-programming services.

 In addition, the Commission agrees with Stentor's submission that, since the term "broadcasting" forms the basis for the definition of "broadcasting undertaking", to the extent that the activities of an undertaking do not involve "broadcasting," that undertaking does not operate as a "broadcasting undertaking" with respect to those activities.

 The Commission concludes that, when a broadcasting distribution undertaking provides non-programming services, it is not engaged in (broadcasting( and is not operating as a (broadcasting undertaking(. Therefore, section 4 of the Telecommunications Act would not exclude these activities from the scope of that Act.

 Under the provisions of the Telecommunications Act, a broadcasting distribution undertaking that distributes a non-programming service will only be subject to that Act if it is a (Canadian carrier(, i.e. if it is a (telecommunications common carrier( that is subject to the legislative authority of Parliament.

 The Commission examines below the issue of whether a person that carries on a distribution undertaking under the Broadcasting Act is a (telecommunications common carrier( pursuant to the Telecommunications Act when it provides non-programming services using the same distribution network. The Commission then considers the second issue of whether the telecommunications common carrier is subject to the legislative authority of Parliament.

 The Telecommunications Act defines a (telecommunications common carrier( as a person who owns or operates a transmission facility (first criterion) used by that person or another person to provide telecommunications services (second criterion) to the public for compensation (third criterion).

 With respect to the first criterion, (transmission facility( is defined to mean:
 any wire, cable, radio, optical or other electromagnetic system, or any similar technical system, for the transmission of intelligence between network termination points, but does not include any exempt transmission apparatus.

 With the exception of those distribution undertakings that own or operate only (exempt transmission apparatus( as defined in the Telecommunications Act , the Commission finds that broadcasting distribution undertakings own or operate the type of facilities that are identified as being included in the definition of (transmission facilities( and, accordingly, meet the first criterion.

 With respect to the second criterion, the provision of "telecommunications services," the Commission notes that this term is defined broadly to include any service provided by means of "telecommunications facilities", and includes the provision of telecommunications facilities. The term (telecommunications facility( is, in turn, defined in a comprehensive way to mean:
 any facility, apparatus or other thing that is used or is capable of being used for telecommunications or for any operation directly connected with telecommunications, and includes a transmission facility.

 Given the all-encompassing definition of (telecommunications( in the Telecommunications Act, the Commission finds that the facilities, apparatus or things used by all broadcasting distribution undertakings to distribute their services include those that are used or are capable of being used for telecommunications and, as such, fall within the definition of (telecommunications facilities(. Accordingly, the Commission concludes that a broadcasting distribution undertaking provides (telecommunications services( when it provides non-programming services to its customers by means of its telecommunications facilities, and/or when it provides access to those facilities to third parties for the distribution of non-programming services.

 With respect to the third criterion, the Commission notes that some distribution undertakings offer and charge a separate fee for certain non-programming services (e.g. security, medical alarm, and other data services), and that many cable distribution undertakings carry one or more full channel TV services that are provided to enhance the value of the basic programming package. In these circumstances, the Commission considers that the third criterion is satisfied.

 Based on the foregoing, the Commission concludes that cable distribution undertakings, and other broadcasting distribution undertakings that own or operate a "transmission facility" as defined in the Telecommunications Act, are "telecommunications common carriers" when they use their distribution networks to provide a full channel TV service or other non-programming service to the public for compensation including the provision of access to others to use their facilities to provide these services.

 With respect to the second issue of whether the legislative authority of Parliament extends to "telecommunications common carriers" that are also broadcasting distribution undertakings, all parties assumed that the Commission has jurisdiction over the distribution of non-programming services by such undertakings.

 The Commission notes that the courts have confirmed that there is no single test to be applied in all cases in determining whether or not an undertaking is subject to federal jurisdiction. Rather, the determination of this constitutional issue depends on the specific facts of each case. The courts have identified a number of factors to be considered in making such a determination. With these factors in mind, the Commission notes the following.

 First, non-programming services distributed by a distribution undertaking may be received via satellite or other means of radiocommunication or may otherwise be interprovincial in nature. In these circumstances, the Commission considers that, as a (telecommunications common carrier(, such an undertaking would fall within the legislative authority of Parliament.

 Second, no party disputed that cable distribution undertakings that are currently providing non-programming services are doing so over the same facilities and in some cases, on the same channels, as their programming services. The Commission notes that some parties submitted that the provision of non-programming services is wholly integrated with and necessarily incidental to the broadcasting activities of a cable distribution undertaking.

 In addition, the Commission considers that the ownership, operation and maintenance by a cable distribution undertaking of the facilities used to provide telecommunications services, and the common management and administration of both its broadcasting and telecommunications activities, are factors that contribute to a finding that, as a "telecommunications common carrier", the undertaking is subject to the legislative authority of Parliament.

 The Commission therefore concludes that a "telecommunications common carrier" that is also a distribution undertaking under the Broadcasting Act is subject to the legislative authority of Parliament and is therefore a (Canadian carrier( depending on the extent to which the above considerations apply to the particular distribution undertaking.

 For the purpose of its disposition of CDNA's 1 February 1995 application against RCTV, the Commission finds, based on the record of this proceeding, that RCTV is operating as a Canadian carrier and is subject to the Commission's jurisdiction under the Telecommunications Act.

 The Commission directs each broadcasting distribution undertaking providing a full channel TV service that considers itself not to be a Canadian carrier within the meaning of the Telecommunications Act to show cause within 60 days of the date of this Decision why it is not a Canadian carrier.

 Broadcasting distribution undertakings which are also (Canadian carriers( within the meaning of the Telecommunications Act are referred to as (broadcast carriers( in the balance of this Decison for descriptive convenience.

 III RECONCILING THE REQUIREMENTS OF THE TELECOMMUNICATIONS ACT AND THE BROADCASTING ACT

 A. Introduction

 Parties generally agreed that the requirements of the two statutes as they apply to broadcast carriers can be reconciled, and that priority should be given by a broadcast carrier to the distribution of broadcasting over non-broadcasting services.

 CCTA, RCTV and Shaw proposed that, if cable distribution undertakings are found to be Canadian carriers, the requirements of the two Acts may be reconciled by the Commission exempting or forbearing with respect to the requirements of the Telecommunications Act, conditional upon cable distribution undertakings complying with an access policy accepted by the Commission under the Broadcasting Act. Cable interveners considered that existing capacity constraints render common carrier regulation unsuitable for cable distribution undertakings, and that the Telecommunications Act does not provide the flexibility needed to regulate them in their current circumstances.

 Other interveners generally argued that cable distribution undertakings providing non-programming services should file tariffs with respect to non-programming services offered on their systems, and that the Acts can be reconciled by ensuring that carriage of non-programming services is pre-emptible in favour of the carriage of programming services. CDNA argued that fairness in a situation of scarce capacity requires that all providers of non-programming services bear equally the disadvantages of pre-emption by programming services.

 B. Full Channel TV Services

 The Commission notes that severe limitations generally exist with respect to the capacity available to broadcast carriers to provide full channel TV services using analog channels.

 Moreover, the Commission has begun a process under the Broadcasting Act to consider applications for licences for new specialty programming services. The results of this process will place further demands on the capacity available to the extent that new services, distributed on analog channels, are licensed. The Commission expects, however, that constraints on channel capacity will be significantly alleviated as broadcasting distribution undertakings convert their analog facilities to digital.

 In the Commission's preliminary view it is appropriate to require that full channel TV services be subject to pre-emption for the distribution of broadcasting services. The Commission notes that, in exercising its jurisdiction under the Broadcasting Act, it has the power, under paragraph 9(1)(g) of that Act, to require any licensee who is authorized to carry on a distribution undertaking to give priority to the carriage of broadcasting. The Commission also notes that section 28 of the Telecommunications Act provides that the Commission shall have regard to the broadcasting policy set out in the Broadcasting Act in determining whether any discrimination is unjust or any preference is undue in relation to the transmission of programs as defined in the Broadcasting Act. Thus, both Acts support an approach to the reconciliation of their respective requirements, whereby telecommunications services could be subject to pre-emption for the carriage of broadcasting. Such a regime would also accord with the approach the Commission has historically taken with respect to the distribution of non-programming services.

 The Commission further notes that parties have referred to various issues that would require resolution if broadcast carriers were to be required under the Telecommunications Act at this time to provide access to third parties to their facilities for the carriage of full channel TV services. These issues include, for example, rules respecting allocation of scarce capacity and pre-emptibility, unjust discrimination/undue preference in the provision of existing full channel TV services, and rates. A further proceeding under the Telecommunications Act would be required to resolve these and other issues. Such a proceeding would require broadcast carriers, interested parties and the Commission to devote considerable resources to establishing an appropriate access framework. However, it is the Commission's view that its disposition of these issues would be superseded by the priority that would be accorded to the distribution of broadcasting services.

 The Commission notes that section 34 of the Telecommunications Act empowers it to forbear with respect to a service or class of services:

 34. (1) The Commission may make a determination to refrain, in whole or in part and conditionally or unconditionally, from the exercise of any power or the performance of any duty under sections 24, 25, 27, 29 and 31 in relation to a telecommunications service or class of services provided by a Canadian carrier, where the Commission finds as a question of fact that to refrain would be consistent with the Canadian telecommunications policy objectives.

 34. (3) The Commission shall not make a determination to refrain ... if the Commission finds as a question of fact that to refrain would be likely to impair unduly the establishment or continuance of a competitive market for that service or class of services.

 In the Commission's preliminary view, it is consistent with the policy objectives of the Telecommunications Act for the Commission to refrain conditionally from exercising its powers and duties under subsections 25(1), (2), (3) and 27(1) and under sections 29 and 31 of that Act with respect to the provision by broadcast carriers of full channel TV services.

 The Commission proposes to forbear on the following basis. First, full channel TV services would be subject to pre-emption for the distribution of licensed or authorized services which consist of programming within the meaning of the Broadcasting Act. Second, because the existing capacity available to distribute full channel TV services using analog channels is scarce, broadcast carriers may not distribute any additional full channel TV services as of the date of this Decision. Third, forbearance would be effective with respect to a given broadcast carrier's full channel TV services only until that carrier has the capability to distribute services by means of digital technology.

 The Commission proposes that when any of the terms for forbearance contemplated in this Decision is no longer met by a given broadcast carrier, that carrier would file with the Commission proposed tariffs for the carriage of its full channel TV services, which tariffs would apply to full channel TV services offered by itself as well as others.

 The Commission does not propose to forbear from exercising its powers and performing its duties under section 24, or subsections 25(4), 27(2), (3) and (4) of the Telecommunications Act.

 Section 24 of the Telecommunications Act provides that the offering and provision of any telecommunications service by a Canadian carrier are subject to any conditions imposed by the Commission or included in a tariff approved by the Commission.

 Subsection 27(2) provides, among other things, that Canadian carriers shall not unjustly discriminate or give an undue or unreasonable preference in relation to the provision of a telecommunications service or the charging of a rate for it.

 Section 36 of the Telecommunications Act provides that: "Except where the Commission approves otherwise, a Canadian carrier shall not control the content or influence the meaning or purpose of telecommunications carried by it for the public.( The Telecommunications Act does not empower the Commission to forbear from the exercise of its powers and duties with respect to this section.

 The Commission considers that, where a broadcast carrier itself offers a full channel TV service over its facilities, it is, with respect to that service, controlling the content of telecommunications it carries. The issue of Commission approval for broadcast carrier involvement in the content of these services will be considered in the proceeding initiated in Part IV of this Decision.

 Pending the conclusion of that proceeding, the Commission grants interim approval under section 36 of the Telecommunications Act to the continued involvement by broadcast carriers in the full channel TV services they currently distribute to their subscribers.

 In light of the foregoing, the Commission seeks comment regarding its proposal for forbearance with respect to full channel TV services, and comment on the appropriateness of the Commission granting final approval pursuant to section 36 of the Telecommunications Act. The procedure established by the Commission for submitting comments is set out in Part IV below.

 In Public Notice CRTC 95-174, Commission Request for Information Concerning Cable Channel Capacity, 16 October 1995, the Commission noted that it had requested certain cable distribution undertakings to provide various information, including information regarding channel capacity, and the implementation of digital video compression technology. The information submitted by these undertakings will form part of the record of the proceeding initiated in Part IV of this Decision.

 The Commission is of the preliminary view that, at the conclusion of the proceeding established in Part IV below, it would be appropriate to consider favourably applications under paragraph 25(4)(a) of the Telecommunications Act to ratify the provision of existing full channel TV services by broadcast carriers without a tariff.

 A broadcast carrier that wishes to distribute new or additional full channel TV services prior to the conclusion of the proceeding initiated in Part IV below must file a proposed tariff for each of its existing and proposed full channel TV services, and demonstrate to the Commission that its analog capacity is sufficient to deal appropriately with issues of third party access for the provision of full channel TV services.

 C. Other Non-programming Services

 This section sets out the Commission's findings with respect to other non-programming services.

 The Commission directs each broadcast distribution undertaking which currently provides a non-programming service other than a full channel TV service to identify itself to the Commission within 60 days of the date of this Decision, listing all such services or showing cause why it is not a Canadian carrier within the meaning of the Telecommunications Act.

 On receipt of the information, the Commission intends to initiate a proceeding through a separate public notice to consider issues relating, among other things, to tariffing and forbearance with respect to broadcast carriers' other non-programming services. It is the Commission's preliminary view that, it would be appropriate to consider favourably applications under paragraph 25(4)(a) of the Telecommunications Act to ratify the provision of these services without a tariff.

 Where a broadcast carrier wishes to introduce a non-programming service other than a full channel TV service before the Commission releases its decision respecting the appropriate regulatory treatment of such other non-programming services, the carrier must file a proposed tariff for that service for Commission approval. Any such filing should demonstrate that the carriers' analog capacity is sufficient to deal appropriately with issues of third party access for the provision of like services.

 The issue of whether final Commission approval for broadcast carrier involvement in other non-programming services should be given under section 36 of the Telecommuncations Act will be considered in the proceeding to be initiated with respect to these services. Pending the conclusion of that proceeding, the Commission grants interim approval under section 36 of the Telecommunications Act to any such involvement.

 IV PROCEDURE - BROADCAST CARRIERS' FULL CHANNEL TV SERVICES

 1. Persons wishing to participate in the proceeding initiated by Part III.B of this Decision with respect to broadcast carriers' full channel TV services regarding the Commission's proposal to forbear under subsection 34(1) of the Telecommunications Act, and to approve broadcast carrier involvement in content under section 36 of that Act with respect to those services, must file a notice of intention to participate by writing to Mr. Allan J. Darling, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, Fax: 819-953-0795, by 20 February 1996. The Commission will issue a complete list of parties and their mailing addresses.

 2. All parties may file comments with the Commission serving copies on all other parties, by 12 March 1996.

 3. All parties may file replies to any comments with the Commission, serving copies on all other parties, by 2 April 1996.

 4. Where a document is to be filed or served by a specific date, the document must be actually received, not merely mailed, by that date.

 5. In addition to hard copy filings, parties are encouraged to file with the Commission electronic versions of their submissions in accordance with the Commission's Interim Telecom Guidelines for the Handling of Machine-Readable Files, dated 30 November 1995. The Commission's Internet eMail address for electronically filed documents is public.telecom@crtc.x400.gc.ca. Electronically filed documents can be accessed at the Commission's Internet site at http://www.crtc.gc.ca.

 Allan J. Darling
 Secretary General

DEC96-1_0