ARCHIVED -  Decision CRTC 97-286

Decision

Ottawa, 2 July 1997

Decision CRTC 97-286

Allarcom Pay Television Limited

Across Canada - 199614996

New national video-on-demand service - Approved

1. Following a Public Hearing in the National Capital Region beginning on 17 March 1997, the Commission approves the application for a broadcasting licence for a national, digital, English- and French-language video-on-demand (VOD) programming undertaking. The service will be delivered, via satellite or other links, to affiliated terrestrial distribution undertakings, and onwards to individual subscribers.

2. The Commission's policy objectives for this and four other VOD programming undertakings whose licence applications are approved today are set out in the accompanying Public Notice CRTC 1997-83.

3. Subject to the requirements of this decision, the Commission will issue a licence expiring 31 August 2003. This licence will be subject to the conditions specified in this decision and in the licence to be issued.

4. This authority will only be effective and the licence will only be issued at such time as the construction of the undertaking is completed and it is prepared to commence operation. If the construction is not completed within 18 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 construction and commence operation before the expiry of this period, and that an extension of time is in the public interest, within such further periods of time as are approved in writing by the Commission, the licence will not be issued. The applicant is required to advise the Commission (before the expiry of the 18-month period or any extension thereof) in writing, once it has completed construction and is prepared to commence operation.

Ownership

5. Allarcom Pay Television Limited (Allarcom) is the licensee of two English-language pay television programming undertakings (SuperChannel and MOVIEMAX) , and of a pay-per-view (PPV) and a direct-to-home PPV programming undertaking, all of which are licensed to serve Western Canada. It also owns 50% of The Family Channel Inc., licensee of the national, English-language pay television service for children, youth and families. Allarcom is a wholly-owned subsidiary of WIC Western International Communications Ltd. (WIC), a major participant in Canada's over-the-air television and radio industries. WIC is a minority shareholder in ExpressVu's DTH satellite distribution undertaking, and is also an 80% shareholder in Electronic Digital Delivery Inc., whose application for a licence to carry on another national, English- and French-language VOD programming service, also considered at the 17 March 1997 public hearing, is approved today in Decision CRTC 97-287. WIC also has ownership interests in a broadcasting relay distribution undertaking (Cancom), a pay audio undertaking, and two national specialty programming undertakings.

Nature of service

6. The licensee shall, by condition of licence, adhere to the Pay Television Regulations, 1990 (the pay television regulations), with the exception of section 4, which relates to the keeping of logs and records. Rather than being subject to section 4 of the pay television regulations, the licensee is required, by condition of licence, to maintain for a period of one year, and to submit to the Commission, upon request, a detailed list of the inventory available on each file server, identifying each program by programming category and by country of origin, and indicating the period of time that each program was on the server and available to subscribers.

7. The licensee will provide a general interest VOD service featuring programming that will consist, for the most part, of feature films. A maximum of 10% of the programming may consist of third-language programming. The service may also include programming from all categories set out in item 6 of Schedule I to the pay television regulations.

8. Consistent with the licensee's commitment, it is a condition of licence that the inventory available to subscribers contain, at all times, at least one Canadian feature film for each 20 non-Canadian feature films, including all suitable new English- and French-language feature films. By condition of licence, the inventory shall also contain, at all times, at least one Canadian title for each ten non-Canadian titles of all programs other than feature films. In addition, it is a condition of licence that not less than 25% of the titles promoted each month on the licensee's barker channel be Canadian titles.

9. The Commission expects the licensee to adhere to its commitments to ensure that all Canadian titles are given treatment that is at least equal to that given comparable foreign product in the menu-based navigation system. The Commission notes that the navigation system will be available in both English and French. It expects the licensee to ensure that the exhibition window for Canadian films is at least equal to the minimum exhibition window given to non-Canadian films.

10. The Commission notes the licensee's further commitment to ensure that approximately 100 original French-language titles are available to subscribers each year, including both Canadian and non-Canadian productions. The licensee also indicated that, should its service achieve distribution in Quebec markets, it will establish an office in Montréal.

Contributions to Canadian programming

11. As stated in Public Notice CRTC 1997-83, the Commission has decided to require the licensees of all VOD programming undertakings to make contributions representing no less than 5% of their gross annual revenues to fund Canadian program production. In the interest of cost effectiveness and efficiency, the Commission requires that such contributions be made to an existing, independently-administered Canadian program production fund.

12. In its application, Allarcom made a commitment to make its contribution to the Canadian program production fund independently administered by WIC Entertainment Ltd.

13. Accordingly, by condition of licence, the licensee is required to contribute a minimum of 5% of the gross annual revenues earned by its VOD programming undertaking to the Canadian program production fund noted above.

14. The Commission notes the licensee's commitment that, provided its service achieves distribution in Quebec markets, it will allocate one-third of its program production fund contribution to the development and creation of French-language programming.

15. By condition of licence, the licensee shall remit to the rights holders of all Canadian films 100% of revenues earned from the exhibition of these films.

Exclusivity and preferential rights

16. In Order-In-Council P.C. 1995-1106 dated 6 July 1995 (the Order), the Governor in Council required the Commission to prohibit, by appropriate means, direct-to-home (DTH) PPV programming undertakings "from acquiring exclusive or other preferential rights to pay-per-view distribution of feature films and other programming within Canada". In subsequent decisions approving applications for licences to carry on DTH PPV undertakings, the Commission imposed such a prohibition on applicants by condition of licence. The Commission is satisfied that a similar prohibition is warranted in the case of VOD undertakings. Accordingly, and consistent with Allarcom's commitment, the licensee is prohibited, by condition of licence, from acquiring exclusive or other preferential rights to any programming exhibited as part of its service.

17. The term "preferential rights" is broad in scope and could be the subject of different interpretations in light of the particular circumstances at hand. For this reason, the Commission considers that, in dealing with complaints relating to the acquisition of preferential rights, it is preferable to allow the parties to frame the issues as they see fit, and to put forward their respective views as to what might constitute a breach of the condition of licence, on a case-by-case basis.

Non-proprietary rights

18. The Canadian Association of Film Distributors and Exporters submitted an intervention to this and other VOD applications, requesting that the Commission require all VOD licensees to purchase non-proprietary exhibition rights for feature films from Canadian distributors. This would include any production other than the exceptions specified in the current Investment Canada policy, which defines proprietary rights as those where the world-wide distribution rights to the program are owned by the licensor, or where the licensor has provided not less than one-half of the cost of the creation of the film.

19. The Commission considers that such a requirement would provide strong support for Canada's film distribution industry, which is an important element of the broadcasting system. The Commission has therefore decided to include this requirement as a condition of licence applicable to this and all other general interest VOD programming undertakings.

Closed captioning

20. The Commission expects the licensee to adhere to its commitment to ensure that all new Canadian and non-Canadian feature films it distributes, as well as virtually all other feature films, are closed captioned. The Commission also expects the licensee to publicize the availability of its telecommunication device for the deaf (TDD), and the telephone number used to access it.

Employment equity

21. The Commission notes that this licensee is subject to the Employment Equity Act that came into effect on 24 October 1996 (1996 EEA), and therefore files reports concerning employment equity with Human Resources Development Canada. As a result of a consequential amendment to the Broadcasting Act, the Commission no longer has the authority to apply its employment equity policy to any undertaking that is subject to the 1996 EEA.

Other matters

22. It is a condition of licence that the licensee adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission.

23. By condition of licence, the licensee shall adhere to the Pay Television Programming Standards and Practices Code, as amended from time to time and approved by the Commission.

24. Also by condition of licence, the licensee shall adhere to the Pay Television and Pay-Per-View Programming Code Regarding Violence, as amended from time to time and approved by the Commission.

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

This decision is to be appended to the licence.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.

Appendix to Decision CRTC 97-286

Conditions of Licence for the VOD Programming Undertaking operated by Allarcom Pay Television Limited

1. The licensee shall adhere to the Pay Television Regulations, 1990, with the exception of section 4 (logs and records).

2. The licensee shall maintain for a period of one year, and submit to the Commission upon request, a detailed list of the inventory available on each file server, identifying each program by programming category and by country of origin, and indicating the period of time that each program was on the server and available to subscribers.

3. Except as authorised by the Commission, the broadcasting undertaking licensed herein shall be operated in fact by the licensee itself.

4. The licensee shall ensure that the inventory available to subscribers contains at all times:

(a) a minimum 1:20 ratio of Canadian to non-Canadian feature film titles, including all available new Canadian feature films in both French and English, that are suitable for VOD exhibition, and which meet the Pay Television Programming Standards and Practices Code; and

(b) a minimum 1:10 ratio of Canadian to non-Canadian titles for all other program categories.

5. The licensee shall contribute to the Canadian production fund administered by WIC Entertainment Ltd. for equity investment in Canadian films, a minimum of 5% of the gross annual revenues earned by its VOD programming undertaking. The licensee is required to remit its first contribution no later than 45 days following the end of the month in which it commences operations. Contributions made thereafter shall take the form of monthly instalments to be remitted within 45 days of month's end and representing a minimum of 5% of that month's gross revenues.

6. The licensee shall ensure that not less than 25% of the titles promoted each month on its barker channel are Canadian titles.

7. The licensee shall not enter into an affiliation agreement with the licensee of a distribution undertaking unless the agreement incorporates a prohibition against linkage of Allarcom's service with any non-Canadian discretionary service.

8. The licensee shall not acquire exclusive or other preferential rights to any programming exhibited as part of its service.

9. The licensee shall purchase non-proprietary exhibition rights for feature films from Canadian distributors. This includes any production other than the exceptions specified in Investment Canada's current policy which defines proprietary rights as those where the world-wide distribution rights to the program are owned by the licensor, or where the licensor has provided not less than one-half of the cost of the creation of the film.

10. The licensee shall remit to the rights holders of all Canadian films 100% of revenues earned from the exhibition of these films.

11. The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' Sex-Role Portrayal Code for Television and Radio Programming, as amended from time to time and approved by the Commission.

12. The licensee shall adhere to the Pay Television Programming Standards and Practices Code, as amended from time to time and approved by the Commission.

13. The licensee shall adhere to the Pay Television and Pay-Per-View Programming Code Regarding Violence, as amended from time to time and approved by the Commission.

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