ARCHIVED -  Decision CRTC 97-87

AlphaStar stated that it will make use of satellite facilities in accordance with the government's satellite policy. The licensee's plans with respect to the satellite delivery of its service are examined later in this decision.

With regard to the proposed DTH PPV service, AlphaStar made a commitment to adhere to the same programming policies followed by currently licensed pay and PPV television networks which are discussed later in this decision.

The approvals granted herein shall only be effective, and the licences shall only be issued, at such time as:

a) the Commission receives documentation confirming that the Department of Industry has approved AlphaStar’s application for authorization to uplink its proposed DTH distribution and DTH PPV services to the U.S. satellites as well as Tee-Comm’s application for an operational licence of its satellite ground station facilities located at Milton, Ontario; and

AlphaStar is owned by Tee-Comm Satellite Television Holdings Inc., a subsidiary of Tee-Comm Electronics Inc. (Tee-Comm). These companies are ultimately controlled by Alvin G. Bahnman.

The Government of Canada’s Order-in-Council P.C. 1996-479 dated 11 April 1996 and entitled "Direction to the CRTC (Ineligibility of Non-Canadians)", (the Direction) specifies that the level of Canadian ownership for any parent holding company of a Canadian broadcasting licensee should be a minimum of 66 2/3% of all of the issued and outstanding voting shares. At the hearing, AlphaStar advised the Commission that the level of Canadian ownership of its parent, Tee-Comm, is 67.5%. AlphaStar assured the Commission that, although the parent is a public company, the applicant will continue to monitor Tee-Comm’s level of non-Canadian ownership. Should foreign ownership of the company exceed that allowed by the Direction, AlphaStar will take action to ensure that it remains eligible to hold a Canadian broadcasting licence. The Commission is satisfied that AlphaStar’s ownership structure complies with the Direction.

Plans for satellite delivery

In a letter to the Commission dated 14 June 1995, the government clarified its policy concerning the use of satellite facilities. The policy stipulates that undertakings "...should make use of Canadian satellite facilities to carry (i.e. receive and/or distribute to Canadians) all Canadian programming services...". The policy, however, permits Canadian broadcasting undertakings to use either Canadian or non-Canadian satellite facilities to carry foreign originated services that are intended primarily for foreign audiences and that are authorized by the Commission for distribution in Canada. In the case of emergencies leading to lack of availability of Canadian satellite capacity, the policy allows for Canadian broadcasting undertakings to use non-Canadian satellite facilities to distribute Canadian programming services on an interim basis.

AlphaStar intends to launch its proposed DTH distribution and DTH PPV undertakings in Canada by using AT&T’s 402R satellite. AlphaStar plans to transfer its operations to the TelStar 5 satellite, another U.S. facility, which is scheduled for launch this June. Noting that there is currently a shortage of available Canadian satellite facilities, AlphaStar stated that its proposed use of U.S. satellites complies with the government’s satellite policy outlined above. AlphaStar further noted that Telesat Canada (Telesat) agrees with the applicant’s proposed temporary use of foreign satellites until such time as sufficient Canadian satellite capacity becomes available. In this respect, AlphaStar stated that it is committed to transferring the services to be offered on both the proposed DTH distribution and the DTH PPV undertakings back to Canadian satellite facilities, once sufficient Canadian satellite capacity is available.

In its intervention, Allarcom Pay Television Ltd. (Allarcom) argued that all of the Canadian signals to be offered on the two proposed undertakings need not be repatriated to Canadian satellites as a single package. Allarcom contended that, if a situation should arise whereby sufficient Canadian satellite space existed to accommodate the Canadian portion of the PPV service, but not enough to carry all of the Canadian services on the DTH undertaking, then AlphaStar should repatriate the Canadian signals that can be accommodated at that time, and move the remaining signals when additional Canadian satellite capacity becomes available.

In response, AlphaStar stated that the partial migration of its services to Canadian facilities would engender technical difficulties. For example, AlphaStar indicated that, under the scenario proposed by Allarcom, Canadian subscribers would have to use special dual receiving antennas or even two completely separate units to receive the proposed services. AlphaStar further stated that such a piecemeal migration of its services to Canadian satellites might require modifications to the current model of its digital subscriber receivers, and would certainly require additional costs for both undertakings.

The Commission agrees with AlphaStar that a staggered partial migration of services is not practical. Furthermore, the Commission is satisfied that AlphaStar’s proposal complies with the government’s satellite policy. In light of that policy, the Commission notes AlphaStar’s clear commitment to move its services to Canadian satellites as soon as practicable, when adequate space is made available to AlphaStar on these facilities.

As stated in Public Notice CRTC 1995-217, the Commission requires the licensees of all DTH distribution undertakings and all DTH PPV television programming undertakings to fund Canadian program production by making contributions representing no less than 5% of their gross annual revenues to an existing, independently-administered Canadian program production fund.

In its application, AlphaStar requested that, in determining its gross annual revenues for the purpose of calculating the 5% to be directed to a program production fund, it be permitted to exclude the monies it pays to Canadian rights-holders for Canadian PPV movies. After discussion of this issue at the hearing, AlphaStar agreed to abide by the Commission’s requirement imposed on the other DTH licensees that the contribution be 5% of gross annual revenues.

In its application, AlphaStar also stated that, rather than contributing to an existing fund, it would like to establish a separate, independent fund that would focus on producing Canadian programming better suited to national, DTH distribution systems. The Commission’s policy, however, set out in Public Notice CRTC 1995-217, indicates that the contribution must be made to an existing fund. When questioned on this issue at the hearing, AlphaStar agreed to contribute to an existing, independently-administered Canadian program production fund.

Accordingly, by conditions of licence, the licensee is required to contribute a minimum of 5% of the gross annual revenues earned by the broadcasting activities of both its DTH distribution and DTH PPV undertakings, respectively, to an existing, independently-administered, Canadian program production fund. As part of these conditions, the licensee is required to report to the Commission, prior to commencing operations, naming the existing fund to which it will make its contributions. The licensee is further required to remit its contributions in the form of monthly instalments, the first to be made within 45 days of the end of the month in which it commences operation and, thereafter, within 45 days of each month's end, and representing a minimum of 5% of that month's gross revenues.

In Public Notice CRTC 1996-159, the Commission transferred oversight of the Cable Production Fund (CPF) to the Department of Canadian Heritage, which oversees the operation of the Canadian Television and Cable Production Fund (CTCPF). The Commission, in that public notice, encouraged DTH and MDS licensees who have not made a commitment to a specific fund to allocate their contribution to the CTCPF.

DTH distribution regulatory framework

In Public Notice CRTC 1995-217, the Commission outlined the regulatory framework that will apply to all DTH satellite distribution undertakings. DTH satellite distribution undertakings represent a new class of undertakings for which, at present, there are no applicable regulations. In Public Notice CRTC 1996-69, the Commission announced a public process for the purpose of establishing comprehensive regulations applicable to all broadband, subscription-based distribution undertakings. Accordingly, and until new regulations are in place, the licensee is required, by condition of licence, to adhere to sections 5, 6, 19 and Part IV of the Cable Television Regulations, 1986 respecting transfers of control and ownership, annual returns, the alteration and curtailment of programming services, and the mediation and resolution of disputes.

In accordance with the policy set out in Public Notice CRTC 1996-60 entitled "Access Rules for Broadcasting Distribution Undertakings", the licensee is required to distribute, at its own cost, all licensed English- and French-language specialty and pay television programming services, subject to available satellite capacity. Similarly, the licensee is required to distribute, at its own cost, at least one English- and one French-language general interest DTH PPV television programming service.

Under Order-in-Council P.C. 1995-1105 dated 6 July 1995, the Commission has been directed to ensure, by appropriate means, that if a DTH distribution undertaking offers one or more English-language PPV services, the licensee must also distribute a French-language PPV service. A condition of licence requiring AlphaStar to do so is set out in Appendix I to this decision.

As proposed, the national DTH PPV service shall consist of programming to be drawn from the categories set out in item 6 of Schedule I of the Pay Television Regulations, 1990 (the pay television regulations). The new service will make available for distribution by licensed DTH distribution undertakings 10 to 15 channels of programming, as well as a "Program Guide" service. The programming will consist, for the most part, of feature films, but will also include musical concerts, sports events and other special events and programs sold on an individual or series basis.

By virtue of paragraph 5(a) of Order-In-Council P.C. 1995-1106 dated 6 July 1995, the Commission is required "to prohibit, by appropriate means, [DTH pay-per-view programming undertakings] from acquiring exclusive or other preferential rights to pay-per-view distribution of feature films and other programming within Canada". Consistent with AlphaStar’s commitment not to buy programming on an exclusive basis, the licensee will be prohibited, by condition of licence, from acquiring exclusive or other preferential rights to pay-per-view programming.

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 should provide, as a minimum, at the output of each set-top decoder, a National Television System Committee (NTSC) television signal complete with its associated standard monaural audio. It should also distribute any closed captioned signals that were present with the programming service when it was received by the undertaking at the input to its system. The Commission expects the licensee to acquire and publicize the availability of a telecommunication device for the deaf (TDD).

The Commission acknowledges the interventions submitted both in support of and in opposition to these applications.

2. a) Unless otherwise prohibited by the Commission, and subject to the following, the licensee is authorized to distribute the signal of any licensed television programming undertaking. The licensee is authorized to distribute such a service unless the licensee of that service objects in Commission and subject to the following, the licensee is authorized to distribute the signal of any licensed television programming undertaking. The licensee is authorized to distribute such a service unless the licensee of that service objects in writing to the carriage, both to the Commission and to the distribution undertaking, within 90 days of the date of this decision. The licensee is also authorized to distribute the services of all other licensed or exempt programming undertakings (other than a pay television programming undertaking that provides a pay-per-view service). The licensee is also authorized to distribute, in the English language, an Electronic Program Guide, a pay-per-view marketing channel, and a marketing channel for its service.

b) Unless otherwise prohibited by the Commission, the licensee is authorized to distribute the following non-Canadian programming services:

*Pursuant to CRTC Circular Letter No. 377, dated 5 June 1991, the licensee is authorized to distribute only the 6:00 a.m. to 7:00 p.m. (ET) Monday to Friday programming component of CNBC/FNN.

3. The licensee shall offer a basic service that includes the signals of at least one of each of the CBC English- and French-language television network affiliates or member stations and at least one affiliate of the CTV English-language television network service. Every subscriber must subscribe to the basic service to receive any discretionary services, except the direct-to-home pay-per-view services.

4. a) For the purpose of this condition, the term "identical" shall have the same meaning as that set out in section 2 of the cable regulations.

b) Where the licensee receives, at least seven days before the date on which the programming is broadcast, a written request for substitution or deletion from the operator of a licensed Canadian television programming undertaking, the licensee shall:

i) delete a non-Canadian television programming service and substitute the identical programming service of the Canadian television programming undertaking whose signal is also distributed by the licensee; and

ii) delete a programming service that is identical to that of the Canadian television programming undertaking and that is receivable by subscribers located within the grade B contour of the Canadian television programming undertaking.

c) The licensee may discontinue a deletion and/or substitution made pursuant to paragraph b) where the licensee verifies that the programming service in respect of which the deletion or substitution is made is not, or is no longer, identical.

5. a) For the purposes of this condition, "identical", in respect of two or more programming services, means that not less than 95 per cent each of the video and audio components of those programming services, exclusive of commercial messages and any part of the services carried on a subsidiary signal, are the same and are broadcast on a non-simultaneous basis within the same broadcast week; "broadcast week" shall mean a period of seven consecutive days beginning on Sunday; "commercial message" shall have the same meaning as that set out in section 2 of the cable regulations.

b) Where the licensee receives, at least seven days before the date on which the programming service is broadcast, a written request for deletion from the operator of a licensed Canadian television programming undertaking, the licensee shall delete a programming service that is identical to that of the Canadian television programming undertaking and that is receivable by subscribers located within the grade B contour of the Canadian television programming undertaking.

c) The licensee may discontinue a deletion made pursuant to paragraph b) where the licensee verifies that the programming service in respect of which the deletion is made is not, or is no longer, identical.

6. The licensee shall ensure that no subscriber receives a total number of programming services that contains less than a preponderance of Canadian programming services.

For the purpose of this condition, multiplex programming channels, repeat channels and non-programming channels will be disregarded and the service of each licensed direct-to-home pay-per-view service distributed will be counted as a single service.

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

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

*U.S. Superstations

In no case, however, can a single discretionary package, whose Canadian component includes more than one pay television service, contain more than five channels of non-Canadian programming services, linked with those Canadian pay television services.

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