ARCHIVED -  Telecom Decision CRTC 97-2

Telecom Decision

Ottawa, 5 February 1997

Telecom Decision CRTC 97-2

REGULATION OF FULL CHANNEL TV SERVICES (E.G. ALPHANUMERIC SERVICES)

I BACKGROUND

In Regulation of Broadcasting Distribution Undertakings that Provide Non-programming Services, Telecom Decision CRTC 96-1, 30 January 1996 (Decision 96-1), the Commission found that companies which are broadcasting distribution undertakings under the Broadcasting Act may also in certain circumstances be Canadian carriers within the meaning of the Telecommunications Act (the Act) when they distribute non-programming services. The Commission used the term "non-programming services" to refer to telecommunications services that do not involve "programs" or "broadcasting" as those terms are defined in the Broadcasting Act, and that are provided by a broadcasting distribution undertaking using its distribution network. Such carriers were referred to in that Decision as "broadcast carriers". This term, which is not defined in either Act, is used for convenience only.

In Decision 96-1, the Commission grouped non-programming services into two categories: "full channel TV services" (FCTVS), and "other non-programming services". Both categories of non-programming services are telecommunications services within the meaning of the Act. FCTVS were defined in Decision 96-1 to be those services distributed using a full analog TV channel and displayed on the television screen, including services consisting predominantly of alphanumeric text, and also including services providing access to the carriage facilities needed to offer these services. This Decision sets out the Commission's conclusion with respect to the regulation of these services.

"Other non-programming services", defined in Decision 96-1 to be non-programming services that are not FCTVS, are currently the subject of a proceeding initiated by Regulation of Certain Telecommunications Services Offered by Broadcast Carriers, Telecom Public Notice CRTC 96-36, 6 December 1996.

The Commission noted in Decision 96-1 that severe limitations generally exist with respect to the capacity available to broadcast carriers to provide FCTVS using analog channels. However, the Commission expects that constraints on channel capacity will be significantly alleviated as broadcasting distribution undertakings convert their analog facilities to digital.

Also in Decision 96-1, the Commission expressed its preliminary view that it would be consistent with the policy objectives of the Act for it to refrain conditionally, pursuant to subsections 34(1) and 34(3), from exercising its powers and duties under subsections 25(1), 25(2), 25(3), 27(1), and sections 29 and 31 of that Act with respect to the provision by broadcast carriers of FCTVS. The Commission proposed to forbear on the basis of three conditions being met. First, FCTVS would be subject to pre-emption for the distribution of licensed or authorized broadcasting services under the Broadcasting Act. Second, broadcast carriers would not be permitted to distribute any additional FCTVS as of the date of Decision 96-1. Third, forbearance would be effective with respect to a given broadcast carrier's FCTVS only until that carrier has the capability to distribute services by means of digital technology. The Commission proposed that, when any of these conditions for forbearance are no longer met by a given broadcast carrier, that carrier would file proposed tariffs for the carriage of FCTVS, which tariffs would apply to FCTVS offered by itself as well as others. The Commission also granted interim approval under section 36 of the Act to the continued involvement by broadcast carriers in the FCTVS they currently distribute to their subscribers. The Commission sought comment from interested parties with respect to these proposals.

The Commission received submissions from: Association des câblodistributeurs du Québec (ACQ), Canadian Broadcasting Corporation (CBC), Canadian Cable Television Association (CCTA), Canadian Daily Newspaper Association (CDNA), Fédération nationale des associations de consommateurs du Québec (FNACQ), Northwestel Inc., Shaw Communications (Shaw), Stentor Resource Centre Inc. (Stentor), Sportscope Television Network Ltd. (Sportscope), Torstar Corporation (Torstar), and Western Co-Axial Limited.

Parties commenting generally supported the Commission's proposal with respect to forbearance. Many parties also requested various adjustments to that proposal, or clarification of certain aspects of it.

II CONCLUSIONS

Subject to the modifications set out below with respect to broadcast carriers licensed as Class I distribution undertakings and subject to Part D below with respect to broadcast carriers licensed to operate as Class 2 and Part III distribution undertakings, as defined in the Cable Television Regulations, 1986, and any successor regulations which adopt a comparable classification system, the Commission confirms its preliminary view set out in Decision 96-1 that it is appropriate to forbear with respect to the regulation of FCTVS.

A. First Forbearance Condition Proposed in Decision 96-1

The Commission proposed that FCTVS be "subject to pre-emption for the distribution of licensed or authorized services which consist of programming within the meaning of the Broadcasting Act". Certain parties requested clarification of this condition. The Commission interprets "licensed services" in this context to mean broadcasting services provided by a programming undertaking licensed or exempt pursuant to the Broadcasting Act, and "authorized services" to mean non-Canadian programming services authorized for distribution in Canada. Subject to satisfying the applicable regulatory requirements with respect to distribution and access, distribution undertakings retain the general discretion to carry a FCTVS in preference to an authorized non-Canadian service.

B. Second Forbearance Condition Proposed in Decision 96-1

The Commission proposed that, because existing capacity to distribute FCTVS using analog channels is scarce, "broadcast carriers may not distribute any additional FCTVS as of the date of [Decision 96-1]".

Stentor, supported by FNACQ, proposed that, to avoid potential confusion over which services are FCTVS, the Commission direct broadcast carriers to file information to enable the Commission to issue a list of FCTVS. Shaw opposed this proposal, arguing that it is unnecessarily burdensome. The Commission considers that, if an issue arises as to whether a particular service is a non-programming service it would be more appropriate to deal with the issue at that time.

CCTA proposed that the second condition be modified to permit a broadcast carrier to add a non-revenue generating FCTVS. A number of parties opposed this proposed modification.

The Commission considers that it would be appropriate to modify this condition as follows to permit broadcast carriers, while remaining forborne with respect to the FCTVS distributed as of the date of Decision 96-1, to distribute additional FCTVS. A broadcast carrier may not distribute any additional FCTVS as of 30 January 1996 (the date of Decision 96-1), except as follows. A broadcast carrier may distribute: (1) a non-revenue generating FCTVS to fill a channel after the programming service has ceased its transmission for the broadcasting day; (2) a non-revenue generating FCTVS over multiplexed channels which are not in use for certain periods during the day; (3) a non-revenue generating FCTVS on a short-term temporary basis using capacity which has become available as cable operators build out their systems in the interval before introducing new licensed programming services, providing the carrier notifies the Commission in advance that it will be distributing a non-revenue generating FCTVS on this basis and advises the Commission of the expected duration of the distribution of this FCTVS; and (4) a predominantly alphanumeric service distributed on a community channel.

Sportscope, which described itself as offering a revenue generating alphanumeric service, proposed that it and other existing non-programming services be exempt from the condition of forbearance which prohibits a broadcast carrier from adding an additional FCTVS while remaining forborne from regulation of its existing FCTVS. A number of parties opposed Sportscope's proposal. The Commission agrees with parties who argued that granting Sportscope's request would confer an unjust preference on Sportscope. Sportscope's proposal is therefore denied.

C. Third Forbearance Condition Proposed in Decision 96-1

The Commission proposed that forbearance would be effective with respect to a given broadcast carrier's FCTVS "only until that carrier has the capability to distribute services by means of digital technology". Certain parties requested clarification of this criterion, and proposed various alternative additional criteria for determining when forbearance would cease. In the Commission's view, it is premature to provide more detailed criteria with respect to this forbearance criterion at this time. The Commission notes that, in Access Rules for Broadcasting Distribution Undertakings, Public Notice CRTC 1996-60, 26 April 1996, it commented on the uncertainty surrounding the timeframe for the rollout by the cable industry of digital video compression technology and its impact on channel capacity. The Commission further noted that a large number of cable licensees are currently faced with limited analog channel capacity and this situation will exist for the foreseeable future.

D. Broadcast Carriers which are Class 2 and Part III Distribution Undertakings

ACQ expressed concern that certain of its members have limited resources and requested that until the contents of tariffs are specified, undertakings should be exempted from the requirement to file tariffs if they add a new FCTVS. Stentor argued that there should be no special treatment for small systems owned by larger cable companies.

The Commission notes the limited resources of Canadian carriers that are licensed to operate Class 2 and Part III distribution undertakings, as defined in the Cable Television Regulations, 1986. Given the circumstances of such carriers, the Commission has determined that it would be appropriate to refrain, with respect to the regulation of FCTVS offered by such carriers, from exercising all powers and duties under subsections 25 (1), 25(2), 25(3), 27(1), 27(5) and 27(6), and sections 29 and 31 of the Act, on condition that the distribution of FCTVS is subject to pre-emption for the distribution of licensed or authorized broadcasting services under the Broadcasting Act, as discussed in Part A above.

The Commission notes that it is retaining its powers pursuant to subsections 27(2), 27 (3) and 27(4) of the Act in order, among other things, to consider any complaints it may receive with respect to a third party service provider's request for access to the system of a carrier licensed as a Class 2 or Part III distribution undertaking.

E. Ruling

Pursuant to subsection 34(1) of the Act, the Commission finds as a fact that to refrain from exercising powers and performing duties, under subsections 25(1), 25(2), 25(3), 27(1), 27(5) and 27(6), and sections 29 and 31 of that Act, with respect to the provision of FCTVS by distribution undertakings determined to be Canadian carriers in Decision 96-1, would be consistent with the Canadian telecommunications policy objectives, subject to the conditions set out in this Decision. With reference to subsection 34(3) of the Act, the Commission finds that to so refrain would not be likely to impair unduly the establishment of a competitive market for FCTVS.

The Commission forbears from regulating FCTVS offered, as of 30 January 1996, by a Canadian carrier that holds a Class 1 distribution undertaking license subject to the following three conditions:

(1) FCTVS are subject to pre-emption for the distribution of licensed or authorized services which consist of "broadcasting" within the meaning of the Broadcasting Act;

(2) a broadcast carrier may only distribute an additional FCTVS in the following circumstances:

(a) a non-revenue generating FCTVS to fill a channel after the programming service has ceased its transmission for the broadcasting day;

(b) a non-revenue generating FCTVS over multiplexed channels which are not in use for certain periods during the day;

(c) a non-revenue generating FCTVS on a short-term, temporary basis using capacity which has become available as cable operators build out their systems in the interval before introducing new licensed programming services, providing the carrier notifies the Commission in advance that it will be distributing a non-revenue generating FCTVS on this basis and advises the Commission of the expected duration of the distribution of this FCTVS;

(d) a predominantly alphanumeric service distributed on a community channel; and

(3) forbearance is effective with respect to a given broadcast carrier's FCTVS only until that carrier has the capability to distribute services by means of digital technology.

The Commission forbears from regulating FCTVS offered, as of 30 January 1996, by a Canadian carrier that holds a Class 2 or Part III distribution undertaking license subject to the following condition: FCTVS are subject to pre-emption for the distribution of licensed or authorized services which consist of "broadcasting" within the meaning of the Broadcasting Act.

Pursuant to subsection 34(4) of the Act and subject to the conditions set out above, the Commission declares, with respect to a Canadian carrier that holds a Class 1, Class 2 or Part III distribution undertaking license (or a license under successor regulations made under the Broadcasting Act which adopt a comparable classification system), that subsections 25(1), 25(2), 25(3), 27(1), 27(5), 27(6) and sections 29 and 31 do not apply to the extent that those provisions are inconsistent with the Commission's determinations in this Decision.

F. Definition of "Non-programming Services"

As noted above, in Decision 96-1 the Commission used the term "non-programming services" to refer only to telecommunications services that do not involve "programs" or "broadcasting" as those terms are defined in the Broadcasting Act, and that are provided by an entity licensed to operate as a broadcasting distribution undertaking using its distribution network. The Broadcasting Act defines "broadcasting" to mean "any transmission of programs ... for reception by the public ..." and defines "program" to mean "sounds or visual images, or a combination or sounds and visual images, that are intended to inform, enlighten or entertain, but does not include visual images, whether or not combined with sounds, that consist predominantly of alphanumeric text". Pursuant to its mandate under the Broadcasting Act, the Commission interprets the term "predominantly" as being used in its ordinary sense, to signify that which is more influential or powerful. For example, even where a moving image occupies one-quarter of the screen, the service may be characterized as a "program" if the moving image is the focus of attention. The Commission notes that, as ACQ suggested, services provided pursuant to the Exemption Order Respecting Still Image Programming Service Undertakings are programming services and, accordingly, do not fall within the scope of this proceeding.

ACQ proposed that undertakings offering only FCTVS that make up a minimal share of the schedule, do not occupy a channel full-time or occupy restricted channels should not be considered to be Canadian carriers. The Commission considers that the Act does not permit such an approach. The Commission further considers that, where a channel is "shared" between a programming and a non-programming service (e.g., where a non-revenue generating alphanumeric service is carried when regular programming ends for the day), two services, each subject to a different statute, are being offered over the same channel. With respect to other services comprised of both alphanumerics and video (such as a schedule guide, a TV guide), the Commission considers that the determination as to whether the service is a broadcasting or a telecommunications service must be made based on the specific facts of each case.

G. Approval of Carrier Involvement in Content Pursuant to Section 36 of the Telecommunications Act

The Commission considers that it is appropriate to give final approval pursuant to section 36 of the Act to broadcast carrier involvement in the content of FCTVS they carried as of the date of Decision 96-1. The Commission further approves any such involvement in non-revenue generating services or community channel services which may be provided by Class 1 broadcast carriers pursuant to its forbearance determinations in this Decision, and by Class 2 and Part III broadcast carriers.

With respect to the issue raised by Stentor, as to the circumstances which should prevail (e.g., with respect to broadcast carrier competitive safeguards) when the Commission determines whether to grant approval pursuant to section 36 with respect to a Class 1 broadcast carrier's involvement in the content of new FCTVS, whether analog or digital (other than those referred to in the preceding paragraph), the Commission considers that the issue should be resolved in the context of applications which may be received at that time.

With respect to Sportscope's submission on this issue, the Commission notes that the question of whether or not the broadcast carrier has an ownership interest in the service under consideration is not, in itself, determinative of whether it controls the content or influences the meaning or purpose of the telecommunications it carries.

H. Ratification Pursuant to Subsection 25(4) of the Telecommunications Act

The Commission expressed its preliminary view in Decision 96-1 that, at the conclusion of this proceeding, it would be appropriate to consider favourably applications under paragraph 25(4)(a) of the Act to ratify the provision of existing FCTVS by broadcast carriers without tariffs. The Commission confirms its view that the circumstances warrant such ratification and hereby ratifies, of its own motion, the past charging of rates for such FCTVS, otherwise than in accordance with an approved tariff.

I. Status of Direct to Home (DTH) Service Providers

Various parties requested that the Commission clarify whether DTH providers are broadcast carriers. The Commission notes that a DTH undertaking would be a Canadian carrier subject to the Act to the extent that it owns or operates the type of facilities that are identified as being included in the definition of "transmission facilities" in that Act, and that the undertaking provides non-broadcasting services to the public for compensation by means of "telecommunications facilities" as also defined in that Act, including the provision of access to those facilities to third parties for the distribution of non-broadcasting services. Therefore, the Commission considers that a DTH undertaking would be a broadcast carrier in those circumstances.

J. Request for Regulatory Parity

Stentor proposed that, to ensure regulatory symmetry, any future distribution undertaking be accorded identical treatment to that given by Decision 96-1 to incumbent distribution undertakings. The Commission notes that it would be prepared to consider submissions respecting regulatory parity in the treatment of FCTVS provided by new entrant distribution undertakings when a new entrant applies for a distribution undertaking license.

Allan J. Darling
Secretary General

DEC97-2_0