ARCHIVED - Decision CRTC 97-635

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Decision
CRTC 97-635

Ottawa, 14 November 1997

Câble-Axion Québec inc.
Various rural localities and vicinity, Quebec (see list at Appendix I)
– 199606407 – 199606357 – 199606381
– 199606349 – 199606373 – 199606399
– 199606365

Câblodistribution de la Côte du Sud inc.
Armagh and Saint-Philémon; La Pocatière; Sainte-Perpétue and Tourville, Quebec
– 199610928 – 199610895 – 199610910

Télécâble Ste-Marie inc.
Saint-Joseph-de-Beauce; Sainte-Marie-de-Beauce; Saints-Anges, Quebec
– 199610853 – 199610861 – 199610845

Télécâble Régional inc.
Saint-Casimir, Quebec – 199611520

Applications by Câble-Axion Québec inc. to carry on 7 new cable distribution undertakings - Approved

Applications by Câblodistribution de la Côte du Sud inc., Télécâble Ste-Marie inc. and Télécâble Régional inc. to extend the authorized service areas of 7 other cable distribution undertakings - Approved

Following a Public Hearing in Montréal beginning on 7 July 1997, the Commission approves each of the applications, as listed in Appendix I to this decision, for authority to carry on new cable distribution undertakings, and for authority to change the authorized service areas of other, existing undertakings.

With regard to the applications by Câble-Axion Québec inc. (Axion-Québec) to carry on new undertakings, the Commission will issue cable distribution undertaking licences expiring 31 August 2001, subject to the terms and conditions set out in Appendix II to this decision and in the licences to be issued. The licences, however, will only be issued at such time as the Commission receives an executed and amended shareholder agreement that is acceptable to the Commission and that responds to the concerns discussed later in this decision with respect to the ownership and control of the applicant corporation and its parent corporation Consortium Câble-Axion Digitel inc. (the Consortium). The authority granted herein shall lapse, and no licence will be issued, if Axion-Québec does not file a proposed amendment to the agreement for the Commission’s approval within 60 days of this decision or within such further periods of time as approved in writing by the Commission on application prior to the expiry of the permitted period of time.

The licence terms granted by this decision, although shorter than the maximum seven years authorized under the Broadcasting Act, will allow the Commission to assess at an earlier date the extent to which Axion-Québec has succeeded in implementing its proposals.

Competitive aspect of the applications

The applications filed by Axion-Québec propose to provide cable television service to the rural areas of Beauce, Portneuf and Montmagny-L’Islet in eastern Quebec. The seven proposed undertakings are to serve a total of 13,148 additional households in these areas. The applications to extend service areas filed by Câblodistribution de la Côte du Sud inc., Télécâble Ste-Marie inc., and Télécâble Régional inc. propose to serve 2,414 additional households, including some to which the Axion-Québec applications relate.

The applicants and certain interveners submitted that the low density of households per kilometre in the rural areas to be served under the applications would make it difficult to achieve profitability in the presence of competition. The applicants requested that the Commission depart from its policy on competition and grant exclusive access to the proposed service areas. At the public hearing, Axion-Québec stated that it supported the principle of competition, but requested exclusive access, at least until the proposed undertakings are implemented. The three other applicants also requested that the Commission ensure that, if there is to be competition, such competition occur under conditions that are equitable to all parties concerned.

The Commission recently examined the framework for considering entry by competitive distribution undertakings into markets currently served by small broadcasting distribution undertakings. It stated its position on this issue in Decision CRTC 97-282 dated 30 June 1997, which set forth its reconsideration of earlier Decisions CRTC 96-630 and CRTC 96-631 dated 11 September 1996. The Commission made particular reference to the following statement of its general policy on the issue, as contained in Public Notice CRTC 1997-25 dated 11 March 1997 and entitled New Regulatory Framework for Broadcasting Distribution Undertakings:

... in considering a licence application by a new entrant, overall service to the public should have a higher priority than the economic viability of any incumbents against whom the new entrant would compete.

While recognizing that the introduction of competing distributors has implications for small rural markets that are not present in larger urban markets, the Commission indicated that, when considering the particular circumstances of an application, it would seek to ensure there be no negative impact on the overall service to the public. This assessment would include consideration of whether any adverse effects of authorizing more than one distribution undertaking to serve the same area would outweigh the benefits.

In approving all of the present applications, the Commission considers the principal benefit to be the availability of a new cable television service to all residents of the areas concerned in the near future. As to any adverse effects, the Commission took account of the fact that competition will exist only in some of the proposed areas, and that, in the case of the service area extensions, the existence of competition will not jeopardize the economic viability of the incumbents. At the public hearing, it was also noted that co-operation between the applicants could allow them to achieve better co-ordination with regard to the services offered and the areas to be served.

In light of the foregoing, the Commission considers there should not be any undue negative impact on overall service to the public in these areas as a result of the competition authorized herein. The Commission is also confident that the quality, variety and potential value of the services to be offered by the applicants are essentially equivalent and that a departure from its policy on competition is not warranted in the circumstances.

Ownership and control issues

The Commission has examined the ownership and effective control of Axion-Québec and Câble-Axion Digitel inc. (Axion-Digitel), who have the same shareholders. Axion-Digitel is currently licensee of the cable distribution undertakings serving Eastman, Compton and Dixville, Quebec. At the same public hearing, the Commission examined Axion-Digitel’s applications for authority to acquire control of two other small cable distribution undertakings serving La Patrie and Sawyerville, Quebec. These two applications are the subject of Decisions CRTC 97-636 and 97-637 also released today.

The parent corporation of Axion-Québec and Axion-Digitel is the holding company Consortium Câble-Axion Digitel inc. The shareholders of the Consortium are Investissements Novacap inc. (Novacap) (55.44%), Le Groupe Québec Téléphone inc. (Groupe QuébecTel) (33.33%), and Paul-A. Girard (11.23%). The Consortium holds, respectively, 89.16%, and 80% of the voting shares of Axion-Digitel and Axion-Québec. Groupe QuébecTel holds the remaining 10.84% of the shares of Axion-Digitel and 20% of those of Axion-Québec.

The ownership structures of Axion-Québec and Axion-Digitel raise two major concerns. The first is that, according to the Commission’s analysis, the ownership of Axion-Digitel is not as currently authorized. The addition of the Consortium as a holding company, and of Groupe QuébecTel as a minority shareholder owning 33.33% of the voting shares of the Consortium, are changes that require the prior approval of the Commission, in accordance with paragraphs 5(4)(a) and (b) of the Cable Television Regulations, 1986 (the regulations). At the public hearing, Axion-Digitel acknowledged this fact and undertook to file an application with the Commission to rectify this situation. That application (199707882) was given conditional administrative approval in letter of approval (A97-0146) released today. In that letter, the Commission notes that these changes were made prior to obtaining Commission approval, and that Axion-Digitel was operating in non-compliance with the regulations. Consequently, the Commission reminds Axion-Digitel that any transactions where assets or effective control of a regulated undertaking are being transferred require prior approval, and it expects the licensee to comply in the future.

The Commission’s second major concern relates to the involvement of Groupe QuébecTel in cable distribution undertakings, either existing or proposed. Groupe QuébecTel is 50.5% owned by the Anglo-Canadian Telephone Company of Montreal Inc., a wholly-owned subsidiary of the U.S. telecommunications firm GTE Corporation. Québec-Téléphone inc. (Québec-Téléphone), the second-largest telephone carrier in Quebec, is a wholly-owned subsidiary of Groupe QuébecTel.

The fact that Groupe QuébecTel is a non-Canadian-owned corporation raises the issue of the eligibility of the applicant corporations to hold broadcasting licences given the Direction to the CRTC (Ineligibility of Non-Canadians) (the Direction) P.C. 1997-486. In addition, the scale of Groupe QuébecTel’s involvement - whether as a shareholder of the Consortium, Axion-Québec and Axion-Digitel, through its membership on the boards of these corporations, by its financial and technical contribution, or in its role in implementing the new distribution undertakings proposed - raises the issue of where the effective control of the Consortium and of the applicant corporations lies.

Other concerns raised by the competing applicants or interveners relate to the issue of a headstart for a telephone company, the possibility of cross-subsidization between Québec-Téléphone’s Utility telephone services and the cable television services, and the risk of restrictive practices related to the leasing of terrestrial support structures by competing distribution undertakings.

With regard to compliance with the Direction, and in view of the proposed ownership structure, the Commission has determined that, in order to be eligible to hold broadcasting licences, Axion-Québec and Axion-Digitel must be "qualified corporations" as defined in the Direction. Second, even if the applicant corporations are deemed to be qualified corporations, the Commission must also consider the issue of whether they are effectively under non-Canadian control.

Given the ownership ties between the Consortium, Axion-Québec and Axion-Digitel, and the fact that the Consortium shareholder agreement dated 6 March 1996 (the agreement) applies to the three corporations, the Commission examined the issue of control of the Consortium, bearing in mind that its determination would apply to all three corporations. This examination does not take into account the changes to the agreement and to the board of directors proposed at the public hearing, as those changes were determined to be inadmissible at that time under the CRTC Rules of Procedure.

To determine which shareholder has control of the Consortium, the Commission considered the following factors: the composition of the board of directors, the nature of the decisions requiring a special majority of shareholders, including the approval of operating budgets; the role of the management committee; the financial and technical involvement of Groupe QuébecTel in the project; and the role of the majority shareholder Novacap. Having examined these matters, the Commission has determined that Groupe QuébecTel is, and continues to be in a position to exercise negative control over the Consortium. This determination is based on the following facts:

- Groupe QuébecTel and Novacap each have three directors on the board of directors, despite the fact Novacap is the majority shareholder;

- budget approvals require a special majority consisting of two directors nominated by Groupe QuébecTel and two directors nominated by Novacap;

- the existence of a management committee consisting of one representative of each of Groupe QuébecTel, Novacap and Mr. Girard, the role of which committee could eventually become comparable to that of a board of directors; and

- Novacap is an investment corporation that, according to statements made at the public hearing, plays a passive role in the control of the corporations in which it invests.

The Commission has determined that this negative control by Groupe QuébecTel would place the Consortium under non-Canadian control. Also, in view of the above facts and the expected financial and technical involvement of Groupe QuébecTel in Axion-Québec’s project, the Commission has further determined that Groupe QuébecTel could be in a position to exercise greater control over the Consortium which could ultimately amount to effective control.

The financial contribution of Groupe QuébecTel to the project is $2.4 million, or approximately 17% of the total financing. Groupe QuébecTel, through its affiliate Québec-Téléphone, will also make a technical contribution in the form of an exchange of optical fibre between the latter and Axion-Québec. According to the applicant, the exchange will be formalized by a leasing contract to be filed with the Commission for approval in accordance with the Telecommunications Act. Of the approximately 750 kilometres of optical fibre required for the project, about half will be leased from Québec-Téléphone. Based on its analysis, the Commission considers that, if Groupe QuébecTel contributed nothing other than its financial investment, the project would not be viable. This demonstrates the material influence of Groupe QuébecTel over the project from the outset of construction.

The Commission’s concerns with respect to the eligibility of Axion-Québec and Axion-Digitel under the terms of the Direction and with respect to the issue of control by non-Canadians were discussed at the public hearing. Axion-Québec acknowledged that Groupe QuébecTel could be in a position, at a minimum, to exercise negative control in the circumstances, and stated that it was prepared to make changes in the composition of the board of directors, the majority required for certain decisions, and the quorum required for meetings.

The Commission also notes that the boards of directors of the Consortium and of its subsidiaries Axion-Québec and Axion-Digitel would consist of the same persons, and that this would be in non-compliance with the Direction. The Commission notes that the definition of qualified corporation includes a restriction that, "in the case of a corporation that is a subsidiary corporation... the parent corporation or its directors do not exercise control or influence over any programming decisions of the subsidiary corporation". In the case of a cable distribution undertaking, the Commission considers programming decisions could relate to community programming as well as to the selection of signals to be distributed or to the terms of their distribution.

Having carefully considered all of the foregoing, the Commission has determined that the public interest would be best served by approval of the Axion-Québec applications. However, in view of the requirements of the Direction, and as indicated at the outset of this decision, broadcasting licences will only be issued to Axion-Québec at such time as the Commission receives an executed and amended shareholder agreement that is acceptable to the Commission and that addresses each of the following concerns:

A majority of the members of the board of directors must be representatives of Novacap;

A decision of the board of directors must not require additional or special approval of the representatives of Groupe QuébecTel on the board of directors or of any other person related directly or indirectly to Groupe QuébecTel;

The management committee must not be permitted to effectively replace the board of directors;

Programming decisions must not be controlled or influenced by the parent corporation or its directors.

However, the authority granted herein shall lapse, and no licence will be issued, if Axion-Québec does not file a proposed amendment to the agreement for the Commission’s approval within 60 days of this decision or within such further periods of time as approved in writing by the Commission on application prior to the expiry of the permitted period of time.

The authorizations granted in Decisions CRTC 97-636 and 97-637 of today’s date are also subject to the same requirements. As Axion-Digitel has the same ownership structure as Axion-Québec, the authorization granted in the above-mentioned letter of approval (A97-0146) will likewise only be effective at such time as Axion-Digitel complies with the above requirements. The Commission has given Axion-Digitel 60 days to submit for the Commission’s approval a proposed amended agreement.

Other concerns

At the public hearing, Axion-Québec described the benefits of the proposed partnership with Groupe QuébecTel. It submitted that pooling the resources and expertise of the partners will bring cable distribution services to rural areas that are considered difficult to serve because of low population density and, that have thus been neglected until now. Nevertheless, the alliance with Groupe QuébecTel raised concerns among some applicants and interveners, including Câblodistribution de la Côte du Sud inc. and the Association des câblodistributeurs du Québec inc. (ACQ). As noted earlier, the principal concerns relate to the headstart issue, cross-subsidization, and the potential for restrictive practices due to Québec-Téléphone’s involvement in the project.

The Commission considers that, in light of the convergence and the competition that is emerging in Canada’s broadcasting distribution industry, the type of partnership proposed by Axion-Québec could become more common, and could lead to the availability of more broadcasting services and enhanced access to such services. As indicated in Public Notice CRTC 1997-25, the new regulatory framework for broadcasting distribution undertakings will smooth the transition to a fully competitive regime in which all distributors are treated in a just and equitable manner.

The concern that Québec-Téléphone could enjoy a headstart relates to the current Commission policy generally requiring that telephone carriers not be authorized to carry on broadcasting distribution undertakings until their territory is open to competition in the local telephone market. In this regard, the Commission notes that, as a result of the changes to the agreement that are required by this decision, and even though the territory of Québec-Téléphone is not currently open to local competition, neither Axion-Québec nor Axion-Digitel will be controlled by Groupe QuébecTel. In the circumstances, the issue of headstart does not arise.

With regard to the issue of cross-subsidization, the concerns relate to the potential for cross-subsidization between the Utility telephone services provided by Québec-Téléphone and the cable television services proposed by Axion-Québec. The Commission notes in this regard that, on 30 April 1997, it issued Implementation of Regulatory Framework for Québec-Téléphone and Télébec Ltée - Telecom Public Notice CRTC 97-16 and announced that it would hold a proceeding on this matter. In this ongoing proceeding, the Commission is examining the appropriate allocation of capital expenditures for broadband facilities between the Utility and Competitive segments for Québec-Téléphone. Also, as noted earlier, the leasing of optical fibre from Québec-Téléphone will be the subject of an application for Commission approval pursuant to the Telecommunications Act.

Certain parties also suggested that there would be a potential for restrictive practices with respect to access to support structures due to the partnership with Québec-Téléphone. In Access to Telephone Company Support Structures - Telecom Decision CRTC 95-13 dated 22 June 1995, the Commission established the basic principles governing access to support structures for cable companies. In particular, it established that access to support structures is a "telecommunications service" within the meaning of the Telecommunications Act. Accordingly, access to structures is subject to the relevant provisions of that Act, including those relating to tariffs approved by the Commission; these provisions specify that tariffs must be just and reasonable, and prohibit an undertaking from unjustly discriminating or giving an undue or unreasonable preference to any person, including itself, or subjecting any person to an undue or unreasonable disadvantage. In light of these provisions, the Commission is of the view that sufficient safeguards already exist to ensure access to support structures.

Other matters

At the public hearing, the Commission discussed with Axion-Québec certain issues that would arise in the event that its applications were approved. These issues relate to the classes of the licences to be granted, contributions to Canadian programming, and the target date for implementing the proposed undertakings.

The issue of classes of licence is raised in the competitive context of the applications approved by this decision. In Public Notice CRTC 1997-25, the Commission stated that "a new entrant should generally be licensed according to the class of licence held by the incumbent with whom it will compete". In this case, some undertakings proposed by Axion-Québec will be in competition with Class 1 undertakings, or with Class 2 undertakings having 2,000 or more subscribers, both of which are subject to more regulatory requirements than smaller undertakings.

At the public hearing, Axion-Québec submitted that, if Class 1 licences were issued, its profitability could be jeopardized, and it might not be able to serve the areas it applied to serve. The Commission has considered the concerns raised at the hearing, and remains of the view that competition between licensees should be just and equitable and that all distribution undertakings serving the same market generally should be subject to the same regulatory requirements. The Commission considers that a departure from its policy is not warranted in the circumstances. As indicated in Appendix II to this decision, the Commission has decided to grant Axion-Québec three Class 1 licences, two Class 2 licences for 2,000 or more subscribers, and two Class 2 licences for under 2,000 subscribers.

In Public Notice CRTC 1997-25, the Commission stated that, although it still considers community programming and the broader objective of community expression to be vital components of the Canadian broadcasting system, the new regulatory framework will not require distributors to provide an outlet for community expression. The Commission nevertheless determined that Class 2 distribution undertakings with 2,000 or more subscribers would be permitted to devote their required contribution of 5% of gross annual revenues derived from their broadcasting activities entirely to community expression. Class 1 undertakings, however, would be required to devote part of this contribution to independently-administered production funds as defined in Contributions to Canadian Programming by Broadcasting Distribution Undertakings - Public Notice CRTC 1997-98 dated 22 July 1997.

In this regard, the Commission notes that Axion-Québec proposed in its applications to provide each of its seven undertakings with a community channel. Regarding the formula for contributions to Canadian programming set out in Public Notice CRTC 1997-25, Axion-Québec stated that, given the rural orientation of the proposed undertakings, it was imperative that they be able to devote exclusively to community programming their required contributions of 5% of gross annual revenues from broadcasting activities.

Having considered the applicant’s arguments concerning its contributions to Canadian programming, the Commission has decided to require Axion-Québec, in respect of its Class 1 undertakings and Class 2 undertakings with 2,000 or more subscribers, to comply with the relevant requirements set out in Public Notices CRTC 1997-25 and 1997-98, as indicated in Appendix II.

In its applications, Axion-Québec proposed a schedule of some 72 months for construction of the seven undertakings. When questioned at the hearing about the lengthy implementation period proposed, the applicant put forward a new schedule extending over a period of between 18 and 42 months. In view of the distances between the communities to be served and the low population density in each of the areas, the Commission agrees that an implementation period longer than the usual 12 months may be required in the circumstances. As indicated in Appendix II, the Commission has set a target of 24 months for implementation of the undertakings to be licensed to Axion-Québec. In so doing, the Commission seeks to ensure that the areas concerned receive cable service as soon as possible. In the context of universal competition that is currently unfolding, the Commission also notes that, if it receives new applications to serve these areas, they would be considered in the normal course.

Extension of authorized areas

With regard to the authorities included in this decision for the extension of service areas by Câblodistribution de la Côte du Sud inc., Télécâble Ste-Marie inc. and Télécâble Régional inc., each approval is subject to the requirement that construction in the extended area be completed and the extended system be in operation within twelve months of the date of this decision or, where the licensee applies to the Commission within this period, and satisfies the Commission that it cannot complete the construction and commence operations throughout the extended system 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.

Should construction not be completed within the twelve-month period stipulated in this decision or, should the Commission refuse to approve an extension of time requested by the licensee, the authority granted shall lapse and become null and void upon expiry of the period of time granted herein or upon the termination of the last approved extension period.

The Commission notes that the subscribers in the extended areas will be offered the same programming services and will be charged fees identical to those in the current licensed service areas.

Ìnterventions

The Commission notes the interventions submitted with respect to each of the applications approved by this decision.

This decision is to be appended to the licence for each of the undertakings concerned.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.

APPENDIX I TO DECISION CRTC 97-635 / ANNEXE I À LA DÉCISION CRTC 97-635

Applications by Câble-Axion Québec inc. to carry on new cable distribution undertakings

1. Application no. 199606407 to serve Pont-Rouge, Deschambault Station, Lac Pierre, Lac Rosa, L’Oasis, Perthuis, Sainte-Christine and surrounding areas, Quebec.

2. Application no. 199606357 to serve Saint-Agapit, Côte du Chemin Craig, Lac des Sources, Lac du Sacré-Coeur, Les Équerres-à-Campbell, Le Radar, Parc-de-la-Chaudière, Parkhurst, Pointe-Saint-Gilles and surrounding areas, Quebec.

3. Application no. 199606381 to serve Saint-Damase-de-L’Islet, Lalement, Lafrance, Pellerin, Pinguet, Saint-Marcel, Saint-Omer, Saint-Roch-des-Aulnaies, Sainte-Félicité, Trois-Saumons-Station, Villages-des-Aulnaies, Villages-des-Belles-Amours and surrounding areas, Quebec.

4. Application no. 199606349 to serve Saint-Georges, Armstrong, Côte des Caps, Lac des Cygnes, Lac Laflamme, Lac Nassard, Lac Poulin, Lac Raquette, Lac Saint-Charles, Lieu-de-Roches, Morisse Station, Saint-Philibert, Saint-René, Saint-Robert-Bellarmin and surrounding areas, Quebec.

5. Application no. 199606373 to serve Saint-Philémon, Buckland-Est, Coteau-Mauvais-Riz, La Grillage, La Normandie, Lac Carré, Lac Crève-Faim, Lac Jally, Langlot, Le Gravier, Les Pointes, Rocher-de-la-Chapelle, Rocher-Noir, Saint-Nérée, Saint-Philémon-Nord, Saint-Philémon-Sud, Sainte-Apolline and surrounding areas, Quebec.

6. Application no. 199606399 to serve Saint-Stanislas, Chute Manitou, Lac à la Perchaude, Lac Blanc, Lac Bourdais, Lac Perreault, Lac Ricard, Lac Trotier, Le Village-Sainte-Catherine, Montauban, Sainte-Thècle, Sainte-Thècle-Station and surrounding areas, Quebec.

7. Application no. 199606365 to serve Sainte-Marie-de-Beauce, Fond-à-Patoche, Lac Baxter, Lac O’Neil, Lac Vert, Les Quatre-Chemins-de-la-Huitième, Ruisseau-à-Eau-Chaude, Saint-Damien-Station, Saint-Malachie, Saint-Malachie-Station, Saint-Nazaire-de-Dorchester, Springbrook and surrounding areas, Quebec.

Applications filed by Câblodistribution de la Côte du Sud inc. to change the authorized service area of cable distribution undertakings

8. Application no. 199610928 to change the authorized service area of the undertaking serving Armagh and Saint-Philémon, by adding an area northeast of Saint-Paul-de-Montminy, along Highway 216, including the municipality of Sainte-Apolline; an area north of Notre-Dame-du-Rosaire; and an area southeast of Armagh, along Highway 281 to Langlois.

9. Application no. 199610895 to change the authorized service area of the undertaking serving La Pocatière, by adding areas at Sainte-Louise, along Concession Road Haute-Ville and Concession Road 2 East; an area south of Bourgault, along Côte Des Bourgault; an area southwest of Saint-Jean-Port-Joli-Station, along Concession Road 2 West; an area south of Trois-Saumons, along Grand-Village and Du Moulin Streets, including Trois-Saumons-Station; an area southeast of Saint-Aubert, along Fronteau Road of Concession Road 2; Lac Trois-Saumons; an area southwest of Saint-Aubert, along Concession Road 3 West; an area northeast of L’Islet, along Morin Road; an area southwest of L’Islet, along des Belles Amours Road; an area northeast of Saint-Eugène, along Lamartine Road East; and an area southwest of Saint-Eugène, along Lamartine Road West as well as an area along Bellevue Road in the Municipality of Cap-St-Ignace.

10. Application no. 199610910 to change the authorized service area of the undertaking serving Sainte-Perpétue and Tourville, by adding the Municipalities of Sainte-Félicité-de-L’Islet and Saint-Marcel-de-L’Islet, including Lalement along Highway 216.

Applications filed by Télécâble Ste-Marie inc. to change the authorized service area of cable distribution undertakings

11. Application no. 199610853 to change the authorized service area of the undertaking serving Saint-Joseph-de-Beauce, by adding several areas surrounding the current service area.

12. Application no. 199610861 to change the authorized service area of the undertaking serving Sainte-Marie-de-Beauce, by adding several areas surrounding the current service area.

13. Application no. 199610845 to change the authorized service area of the undertaking serving Saints-Anges, by adding several areas surrounding the current service area.

Application filed by Télécâble Régional inc. to change the authorized service area of a cable distribution undertaking

14. Application no. 199611520 to change the service area of the undertaking serving Saint-Casimir, by excluding certain areas surrounding Saint-Casimir; by adding an area located at the northwest end of the undertaking; and by amalgamating the authorized service area of the undertaking serving Saint-Thuribe with that of the undertaking serving Saint-Casimir.

APPENDIX II TO DECISION CRTC 97-635 / ANNEXE II À LA DÉCISION CRTC 97-635

The following terms and conditions of licence apply to Câble-Axion Québec inc. as licensee of the cable distribution undertaking authorized to serve the localities mentionned in paragraph 1 of Appendix I.

1. The Commission will issue a Class 2 (less than 2,000 subscribers) licence. The operation of this undertaking will be regulated pursuant to Parts I, III and IV of the Cable Television Regulations, 1986 (the regulations).

2. In addition to the services required or authorized to be distributed pursuant to the applicable sections of the regulations, the licensee is authorized to distribute WVNY (ABC), WCAX-TV (CBS) and WETK (PBS) Burlington, Vermont as well as WPTZ (NBC) Plattsburgh, New York, as part of the basic service. The Commission notes that these signals will be received over the air by Câble-Axion Digitel inc.’s undertaking at Eastman, Quebec, which will feed these signals to the licensee’s undertaking by optical fibre.

3. It is a condition of licence that, for community programming and any other programming of a service that it originates, the licensee adhere to the guidelines on the depiction of violence in television programming set out in the Canadian Association of Broadcasters’ Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission.

4. This authority will only be effective and the licence will only be issued at such time as the applicant files an executed shareholder agreement that responds to the concerns expressed in this decision and is acceptable to the Commission. However, the authority granted herein shall lapse, and no licence will be issued, if Axion-Québec does not file a proposed amendment to the agreement for the Commission’s approval within 60 days of this decision or within such further periods of time as approved in writing by the Commission on application prior to the expiry of the permitted period of time.

5. In accordance with subsection 22(1) of the Broadcasting Act, the Commission will issue a licence to the applicant if it is in receipt of written notification from the Department of Industry, within twelve months of the date of this decision that it will issue a Broadcasting Certificate. No licence will be issued if the Commission does not receive this notification within said period or, where the applicant applies to the Commission within this period and satisfies the Commission that it is unable to obtain said notification 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.

6. This authority will only be effective and the licence will only be issued at such time as construction of the undertaking is completed and it is prepared to commence operation. The licence will not be issued if construction is not completed within twenty-four months of the date of receipt of the Department of Industry notification referred to in the preceding paragraph or, where the applicant applies to the Commission within this period and satisfies the Commission that it cannot implement its authority 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.

7. 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.

1. The Commission will issue a Class 2 (2,000 subscribers or more) licence. The operation of this undertaking will be regulated pursuant to Parts I, II (except for paragraph 9(1)(g)) and IV of the Cable Television Regulations, 1986 (the regulations).

2. In addition to the services required or authorized to be distributed pursuant to the applicable sections of the regulations, the licensee is authorized to distribute CFCF-TV (CTV) and CFTU-TV (IND) Montréal, WVNY (ABC), WCAX-TV (CBS) and WETK (PBS) Burlington, Vermont as well as WPTZ (NBC) Plattsburgh, New York, and may distribute community programming, as part of the basic service. The Commission notes that the signals will be received over the air by Câble-Axion Digitel inc.’s undertaking at Eastman, Quebec, which will feed these signals to the licensee’s undertaking by optical fibre.

3. Until the coming into force of the new broadcasting distribution regulations, the licensee must comply with the policy framework set out in Public Notices CRTC 1997-25 dated 11 March 1997 and 1997-98 dated 22 July 1997, as follows:

The licensee must contribute a minimum of 5% of its gross annual revenues derived from broadcasting activities to the development of Canadian programming. The licensee may elect to contribute the entire 5% to local expression, as defined in Public Notice CRTC 1997-25. Should the licensee spend less than 5% of its gross annual revenues on local expression, the balance shall be split as follows: at least 80% must be directed to the CTCPF, while up to 20% may be directed to one or more independently-administered production funds other than the CTCPF, provided that these other funds meet the criteria set out in Public Notice CRTC 1997-98.

4. It is a condition of licence that, for community programming and any other programming of a service that it originates, the licensee adhere to the guidelines on the depiction of violence in television programming set out in the Canadian Association of Broadcasters’ Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission.

5. This authority will only be effective and the licence will only be issued at such time as the applicant files an executed shareholder agreement that responds to the concerns expressed in this decision and is acceptable to the Commission. However, the authority granted herein shall lapse, and no licence will be issued, if Axion-Québec does not file a proposed amendment to the agreement for the Commission’s approval within 60 days of this decision or within such further periods of time as approved in writing by the Commission on application prior to the expiry of the permitted period of time.

6. In accordance with subsection 22(1) of the Broadcasting Act, the Commission will issue a licence to the applicant if it is in receipt of written notification from the Department of Industry, within twelve months of the date of this decision that it will issue a Broadcasting Certificate. No licence will be issued if the Commission does not receive this notification within said period or, where the applicant applies to the Commission within this period and satisfies the Commission that it is unable to obtain said notification 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.

7. This authority will only be effective and the licence will only be issued at such time as construction of the undertaking is completed and it is prepared to commence operation. The licence will not be issued if construction is not completed within twenty-four months of the date of receipt of the Department of Industry notification referred to in the preceding paragraph or, where the applicant applies to the Commission within this period and satisfies the Commission that it cannot implement its authority 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.

8. 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.

1. The Commission will issue a Class 1 licence. The operation of this undertaking will be regulated pursuant to Parts I, II (except for paragraph 9(1)(g)) and IV of the Cable Television Regulations, 1986 (the regulations).

2. In addition to the services required or authorized to be distributed pursuant to the applicable sections of the regulations, the licensee is authorized to distribute CBFT (SRC), CFTM-TV (TVA), CFCF-TV (CTV) and CFTU-TV (IND) Montréal, WVNY (ABC), WCAX-TV (CBS) and WETK (PBS) Burlington, Vermont as well as WPTZ (NBC) Plattsburgh, New York, and may distribute community programming, as part of the basic service. The Commission notes that the signals will be received over the air by Câble-Axion Digitel inc.’s undertaking at Eastman, Quebec, which will feed these signals to the licensee’s undertaking by optical fibre.

3. Until the coming into force of the new broadcasting distribution regulations, the licensee must comply with the policy framework for Class 1 undertakings having fewer than 60,000 subscribers, set out in Public Notices CRTC 1997-25 dated 11 March 1997 and 1997-98 dated 22 July 1997, as follows:

The licensee must contribute a minimum of 5% of its gross annual revenues derived from broadcasting activities to the development of Canadian programming in accordance with the following formula:

a) More specifically, from the commencement of operations until 31 August 1998, of the above-mentioned 5%, the licensee may allocate up to 3% of its gross annual revenues derived from broadcasting activities to local expression, as defined in Public Notice CRTC 1997-25. The balance of the 5% total contribution shall be split as follows: at least 80% must be directed to the CTCPF, while up to 20% may be directed to one or more independently-administered production funds other than the CTCPF, provided that these other funds meet the criteria set out in Public Notice CRTC 1997-98, as may be amended from time to time.

b) In the broadcast year ending 31 August 1999, the licensee may allocate up to 2.5% of its gross annual revenues to local expression. The balance shall be directed to production funds in accordance with Public Notice CRTC 1997-98.

c) In the broadcast year ending 31 August 2000 and in each broadcast year thereafter, the licensee may allocate up to 2% of its gross annual revenues to local expression. The balance shall be directed to production funds in accordance with Public Notice CRTC 1997-98.

4. It is a condition of licence that, for community programming and any other programming of a service that it originates, the licensee adhere to the guidelines on the depiction of violence in television programming set out in the Canadian Association of Broadcasters’ Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission.

8. The applicant proposed to charge a basic monthly fee of $27. In Public Notice CRTC 1997-25, the Commission reiterated its intention, as stated in Public Notice CRTC 1996-69, not to regulate the fees charged by new distribution undertakings entering into competition with existing undertakings, on the grounds that competition would render such regulation unnecessary.

9. 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.

The licensee must contribute a minimum of 5% of its gross annual revenues derived from broadcasting activities to the development of Canadian programming in accordance with the following formula:

8. 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.

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