ARCHIVED -  Public Notice CRTC 1997-150

Public Notice

Ottawa, 22 December 1997

Public Notice CRTC 1997-150

BROADCASTING DISTRIBUTION REGULATIONS

INTRODUCTION

1. In Public Notice CRTC 1997-84 dated 2 July 1997 (PN 1997-84), the Commission published for comment proposed Broadcasting Distribution Regulations (the proposed regulations) that would apply to the following three distinct types of broadcasting distribution undertakings (BDUs):

· Cable distribution undertakings. This includes existing cable television systems, as well as new wireline distributors that may be licensed in the future to operate cable distribution undertakings.

· Direct-to-home (DTH) satellite distribution undertakings.

· Radiocommunication distribution undertakings that provide a broadband, subscription-based service comparable to that provided by cable distribution undertakings. At the present time, such "wireless" systems use multipoint distribution system (MDS) technology. In the future, the Commission expects to receive applications for licences to operate BDUs using local multipoint communications systems (LMCS) technology, and possibly other broadband over-the-air technologies.

2. The proposed regulations were the result of an extensive public process initiated by the Commission in May 1996, when it published for comment a proposal for a new regulatory framework that would apply to the types of BDUs described above, and would respond to the needs and realities of a rapidly-emerging competitive broadcasting distribution environment (Public Notice CRTC 1996-69). In updating its regulatory framework, the Commission's objectives were thus to foster the development of effective competition in the broadcasting distribution industry while ensuring attainment of the objectives of the Broadcasting Act.

3. The Commission conducted an oral public hearing in October 1996 to consider the issues raised by its May 1996 proposal and in the comments it received concerning that proposal. The policy framework resulting from the public consultation process was announced in Public Notice CRTC 1997-25 dated 11 March 1997 (PN 1997-25). The proposed regulations issued in July were intended to reflect the Commission's policy determinations as set out in PN 1997-25.

4. The Commission received more than 100 submissions in response to its request for comments on the proposed regulations. Parties submitting comments included representatives of all sectors of the broadcasting industry (distributors, broadcasters and producers), potential new entrants to the broadcasting distribution industry, various community organizations, public interest representatives and members of the general public.

5. The purpose of that phase of the proceeding was, foremost, to ensure that the Broadcasting Distribution Regulations would properly reflect the policy framework published in PN 1997-25. Additionally, the Commission sought comment on several matters that were not expressly addressed in PN 1997-25. The majority of the comments focused on the specifics of the proposed regulations, with numerous suggestions on possible refinements, additions or clarifications to better reflect stated policy. Some comments reiterated the parties' positions in relation to policy issues that were canvassed in previous phases of the proceeding leading to the policy determinations contained in PN 1997-25. In addition, a number of issues having policy implications were raised in the comments. All submissions have been taken into account by the Commission in determining whether there should be further changes to the proposed regulations.

6. The Commission thanks all parties who have participated in this phase of the proceeding. Their submissions have greatly assisted the Commission in its deliberations, the results of which are made public today.

COMMISSION'S DETERMINATION

7. Having considered the comments received pursuant to section 10(3) of the Broadcasting Act, the Commission has made the Broadcasting Distribution Regulations (the regulations), a copy of which is attached to this notice. The regulations are essentially the same as those proposed in PN 1997-84 and published in the Canada Gazette, Part I, on 12 July 1997.

8. The regulations were registered with the Clerk of the Privy Council on 8 December 1997 and come into effect on 1 January 1998. They will be published in the Canada Gazette, Part II, on 24 December 1997 (SOR/97-555).

9. In the remainder of this notice, the Commission reviews certain key revisions and clarifications to the proposed regulations that it considers to be appropriate in light of the comments received.

CONTENT ISSUES

Contributions to local expression and Canadian programming (sections 29 and 44)

10. With the addition of two important modifications that are discussed below, the regulations incorporate the Commission's policy with respect to programming contributions and the provision of opportunities for local expression, as set out in PN 1997-25. The key elements of that policy are:

· All BDUs, with the exception of Class 3 terrestrial distributors, must contribute a minimum of 5% of their gross annual revenues derived from broadcasting activities to assist in the creation and presentation of Canadian programming.

· DTH distributors must allocate the entire 5% programming contribution to one or more qualifying production funds.

· No distributor is required to provide or fund an outlet for local expression (e.g. a community channel). Any terrestrial distributor who intends to provide an outlet for local expression, other than a community channel, may present a proposal to the Commission to do so.

· If a terrestrial distributor elects to provide an outlet for local expression, a portion of the 5% funding contribution may be allocated for this purpose. The balance of the 5% contribution must be allocated to one or more qualifying production funds. The specific funding split between local expression and production funds depends on the class of system and on the number of subscribers served, and is set out in further detail below.

· All contributions to production funds must be made in accordance with Public Notice CRTC 1997-98, Contributions to Canadian Programming by Broadcasting Distribution Undertakings, dated 22 July 1997 (PN 1997-98), as amended from time to time. In that notice, the Commission determined that a BDU that is required to make a contribution to production funds: (1) must direct a minimum of 80% of its required contribution to the Canada Television and Cable Production Fund (CTCPF); and, (2) may direct up to 20% of its required contribution to one or more independently-administered production funds, other than the CTCPF, provided that the funds meet the criteria specified in PN 1997-98.

11. In response to PN 1997-84, the Commission received numerous comments concerning its policy framework for contributions by BDUs to Canadian programming and local expression.

12. Parties representing various local community organizations and consumer interests urged the Commission to maintain a requirement for the mandatory provision of a community channel by incumbent cable television licensees. Several parties advocated a further public hearing to assess the impact of the Commission's policy on the role and the continued existence of the community channel.

13. The Commission believes that there is little indication that existing cable licensees will discontinue their support for the community channel as an outlet for local expression. Accordingly, it has decided to maintain the policy set out in PN 1997-25 that leaves to all terrestrial distributors the decision whether to provide opportunities for local expression, such as a community channel.

14. A number of comments addressed the proposed formula establishing the permissible division of financial contributions between production funds and local expression. In particular, parties representing cable industry interests called on the Commission to reconsider the contribution formula for small Class 1 BDUs, with a view to increasing the level of contributions to local expression that would be permitted to serve as part of the overall contribution requirement. Several parties proposed alternative contribution formulas for small Class 1 undertakings of various sizes.

15. After considering the comments received, the Commission has decided to make two modifications to its policy framework respecting contributions by BDUs to the creation and presentation of Canadian programming, including the provision of opportunities for local expression.

16. Firstly, the Commission has decided to permit small Class 1 BDUs with fewer than 20,000 subscribers to allocate up to 3.5% of their gross annual revenues derived from broadcasting activities to the support of local expression. The Commission is satisfied that this will assist in maintaining the quality and vitality of the outlets for local expression provided by distributors in small communities. This means that such distributors must allocate a minimum of 1.5% of their gross annual revenues derived from broadcasting activities to one or more qualifying production funds.

17. Secondly, the Commission has decided to provide a further degree of flexibility by including a provision in the regulations that would permit exceptions to the specified contribution formula, by condition of licence. This flexibility will allow the Commission to examine, on a case-by-case basis, proposals that reflect special circumstances related to a licensee's operations. For example, the averaging of a multiple system operator's contributions across all of its systems could result in a more rational allocation of resources at the local level, without affecting the overall level of its financial contributions to production funds.

18. The regulations incorporate these two modifications, resulting in the following contribution formula for Class 1 and Class 2 terrestrial BDUs:

· Class 1 licensees with 60,000 or more subscribers may allocate up to 2% of their gross annual revenues derived from broadcasting activities to local expression. The balance of the 5% total required contribution must be allocated to one or more qualifying production funds.

· Class 1 licensees having at least 20,000, but fewer than 60,000 subscribers, may allocate up to 3% of their gross revenues derived from broadcasting activities to local expression, from 1 January 1998 until 31 August 1998. The balance of the 5% total required contribution must be allocated to one or more qualifying production funds.

· In the second year (i.e. up to 31 August 1999), Class 1 licensees having at least 20,000, but fewer than 60,000 subscribers, may allocate up to 2.5% of their gross annual revenues derived from broadcasting activities to local expression. The balance of the 5% total required contribution must be allocated to one or more qualifying production funds.

· In the third year (i.e. up to 31 August 2000) and in each broadcast year thereafter, Class 1 licensees having at least 20,000, but fewer than 60,000 subscribers, may allocate up to 2% of their gross annual revenues derived from broadcasting activities to local expression. The balance of the 5% total required contribution must be allocated to one or more qualifying production funds.

· Class 1 licensees with fewer than 20,000 subscribers may allocate up to 3.5% of their gross annual revenues derived from broadcasting activities to local expression. The balance of the 5% total required contribution must be allocated to one or more qualifying production funds.

· Class 2 licensees may devote the entire 5% required programming contribution to local expression.

· Proposed exceptions to the contribution formula for Class 1 licensees will be considered on a case-by-case basis, upon application by a licensee.

Access rules (sections 18, 21, 24, 38 and 41)

19. As proposed in PN 1997-25, the regulations include detailed rules with respect to access to BDUs by licensed specialty, pay and pay-per-view services, pay audio services and by exempt programming undertakings. These rules reflect access policies that were initially set out in Public Notice CRTC 1996-60 dated 26 April 1996 (PN 1996-60).

20. The regulations also give effect to the policy determination contained in Public Notice CRTC 1996-120 dated 4 September 1996 (PN 1996-120), which introduced a number of decisions relating to the licensing of new specialty and pay television undertakings. In particular, the second group of specialty services licensed on 4 September 1996 have the right, by condition of licence, to require access at the earlier of the date on which a BDU makes use of digital technology for the delivery of programming to subscribers and 1 September 1999.

21. The Commission further stated that distributors that have not implemented digital technology by 1 September 1999 must, at that time, provide access to these services on an analog basis, subject to available channel capacity.

22. Several parties commenting on the proposed regulations emphasized the importance of establishing a minimum number of digital subscribers that a BDU must have before it is deemed to have implemented digital technology. They argued that this is necessary to ensure that specialty services licensed as part of the second group on 4 September 1996 would have access to a meaningful number of digital subscribers, before a distributor is relieved of the obligation to provide analog access on 1 September 1999.

23. The Canadian Association of Broadcasters (CAB) reiterated the position taken in a previous proceeding that "...at a minimum, implementing digital means the complete swap-out and elimination of all analog addressable boxes in a system in favour of digital set-top boxes." The CAB went on to state that, if the Commission intends to maximize the diversity of Canadian programming, a higher threshold, such as the roll-out of digital boxes to a majority of subscribers, would be required.

24. For its part, the Specialty and Premium Television Association (SPTV) proposed that the minimum level of penetration required for digital boxes should be 20%, in order for a distributor to be relieved of the obligation to provide analog access on 1 September 1999.

25. The Commission acknowledges that, at this time, the pace and extent of the deployment of digital technology by cable television licensees remain uncertain. At the same time, the Com-mission agrees with those parties who argued that additional clarity is required in the regulations in order to identify the minimum level of digital deployment that will be required in order for a distributor to meet its access obligations with digital distribution. It also concurs with the CAB and the SPTV that the minimum threshold must ensure that digital services have an opportunity to reach a meaningful number of subscribers.

26. After consideration of the comments addressing this matter, the Commission has provided, in section 18(3) of the regulations, that a licensee will be deemed to make use of digital technology when at least 15% of the licensee's subscribers received one or more programming services on a digital basis. The Commission considers that this level of digital deployment provides a reasonable degree of certainty for the licensed specialty services that are yet to launch. It further notes that the 15% threshold approximates the average penetration of analog pay television for Class 1 cable systems for Canada.

27. Accordingly, the access rules for Class 1 terrestrial distributors set out in section 18 of the regulations specify the following terms for the distribution of the second group of specialty services licensed on 4 September 1996.

· Each Class 1 licensee is required to distribute such a service on the earlier of the date on which the licensee makes use of digital technology for the delivery of programming to subscribers and 1 September 1999.

· A licensee makes use of digital technology for the delivery of programming to subscribers when at least 15% of its subscribers receive one or more programming services on a digital basis.

· Where a licensee makes use of digital technology for the delivery of programming to subscribers, the licensee may distribute such a service on an analog channel or on a digital basis, or both.

· Where a licensee has not made use of digital technology for the delivery of programming to subscribers by 1 September 1999, the licensee shall distribute the service on an analog channel (to the extent of available channels), unless the operator of the service agrees otherwise.

28. Two other access issues that were raised in the comments require further clarification. These issues relate to the access rules for pay audio undertakings and for exempt programming undertakings.

29. The Commission stated in PN 1996-60 that, where a BDU elects to carry the service of a pay audio programming undertaking, and where the total ownership interest in that undertaking held by the BDU, its affiliates and any other similar type of distribution undertaking represents 30% or more, the distributor must provide access to at least one independent Canadian pay audio service. The Commission noted that it would consider a parent or a subsidiary to be an affiliate and, with respect to the term "similar type of distribution undertaking", further noted that it would consider two cable companies or two telephone companies to be of similar type. The Commission's intention was to preclude the possibility of industry alliances that might unfairly deny access to the programming service of an independent pay audio programming undertaking.

30. The Commission notes that section 24(2) of the regulations, pertaining to Class 1 terrestrial licensees, and section 41(2) of the regulations, pertaining to DTH licensees, require that, if a licensee distributes the programming service of a pay audio programming undertaking of which the licensee or an affiliate, or both, controls 30% or more of the total shares issued and outstanding, the licensee shall distribute the programming service of at least one third party pay audio programming undertaking.

31. The concept of ownership of a pay audio undertaking by a similar type of distribution undertaking has not been explicitly included in sections 24(2) and 41(2). The Commission, however, confirms that the policy stated in PN 1996-60 remains in effect, and considers that it is more appropriately applied through the undue preference or disadvantage provision contained in section 9 of the regulations.

32. Accordingly, the distribution by a Class 1 or DTH licensee of the programming service of a pay audio undertaking in which a similar type of distribution undertaking has an ownership interest of 30% or more would generally be considered by the Commission to constitute an undue preference or disadvantage under section 9 of the regulations, unless the licensee is also distributing an independently-owned pay audio service delivered to its head end in a format that is technically compatible with the licensee's method of signal distribution.

33. The Commission has taken an approach with respect to the access rules for exempt programming services that is similar to that described above. In PN 1996-60, the Commission decided that, where a Class 1 BDU distributes, on one or more analog channels, the programming service of an exempt programming undertaking in which the total ownership interest held by the BDU, its affiliates and any other similar type of distribution undertaking represents 15% or more, the distributor must make an equal number of analog channels available for the distribution of programming services of third party exempt programming undertakings.

34. As is the case with pay audio undertakings, section 21(3) of the regulations, pertaining to Class 1 licensees, give effect to that portion of the access policy relating to programming services of exempt programming undertakings in which the licensee or an affiliate, or both, control 15% or more of the total shares issued and outstanding.

35. That element of the access policy pertaining to ownership of exempt programming undertakings by a similar type of distribution undertaking will be enforced by means of the undue preference or disadvantage provision of section 9, as described above for pay audio programming undertakings.

Carriage of priority and optional signals (sections 17, 19, 22, 23, 32, 33, 34, 37 and 39)

36. The regulations incorporate the priority carriage rules for terrestrial and DTH distributors as set out in the proposed regulations. In light of comments received, however, the Commission has made certain modifications concerning the carriage of optional signals.

37. In the proposed regulations, the Commission included a provision intended to streamline the process for adding the programming service of a distant Canadian television station. Specifically, if a BDU were able to obtain: (1) written consent from each local television station; and, (2) written confirmation from the distant television station that it does not object to the distribution of its service by the BDU and that it will not solicit advertising in the BDU's market, then the distributor would
have been authorized under the proposed regulations to distribute the distant signal without having to go through the normal process of submitting an application for prior approval of such carriage.

38. In PN 1997-84, however, the Commission sought comment as to whether this provision should be retained in the regulations, in light of the very limited circumstances in which the provision could be utilized by a BDU.

39. Based on the comments received, it is apparent to the Commission that the inclusion of this provision in the proposed regulations created a degree of confu-sion for many parties who interpreted it as an amendment to the Commission's long-standing distant signals policy. In order to avoid such confusion, and because there are likely very few situations where it would have been used, the Commission has decided to delete this provision from the regulations.

40. The Commission reiterates that the distant signal policy, as set out in Public Notice CRTC 1993-74 dated 3 June 1993 (PN 1993-74), remains in effect. Accordingly, the distribution of distant Canadian signals by Class 1 and Class 2 licensees, whether as part of the basic service or on a discretionary tier, will require an application by the licensee for prior approval. This will provide an opportunity for local broadcasters and other interested parties to intervene as part of the normal public process. In assessing such applications, the Commission will be guided by the criteria set out in PN 1993-74.

41. Class 3 licensees will continue to be permitted to distribute distant Canadian signals contained on the List of Part 3 Eligible Satellite Services, without the need to obtain prior Commission approval.

42. The only exception to this approach would be in the case of a new entrant into a market where the incumbent BDU distributes one or more distant signals that were authorized for distribution prior to 3 June 1993. In such situations, the Commission agrees with the proposal advanced by Stentor Resource Centre Inc. (Stentor) that the new entrant could be authorized by the regulations to distribute the same distant signals as the incumbent distributor.

43. Accordingly, the Commission has added to the regulations a provision in section 19(j) that authorizes all competitors in a given area to distribute the programming service of any distant television station, other than a Part 2 eligible satellite service, that was distributed by the incumbent prior to 3 June 1993. The language of this provision ensures that the authorization applies only where the licensed area of the new entrant does not extend beyond that of the incumbent; otherwise, an application for prior approval of the distant signal will be required.

44. In a similar manner, the Commission has added a provision in section 23(2)(b)(i) of the regulations that authorizes all competitors in a given area to distribute any ethnic Canadian audio programming service that was authorized for distribution throughout the licensed area by any licensee on or before 4 July 1985. The language of this provision ensures that the authorization applies only where the licensed area of the new entrant does not extend beyond that of the incumbent; otherwise an application for prior approval of the ethnic audio programming service will be required.

45. In addition, in response to comments received, the Commission has clarified certain provisions in the regulations that authorize the distribution of promotional services. Specifically, the Commission has:

· deleted the reference to "any programming service that promotes a DTH pay-per-view service" from the list of television programming services that may be distributed by DTH undertakings, since such a service is provided as part of the pay-per-view service of a DTH pay-per-view undertaking; and

· revised the provisions authorizing the distribution of a barker channel by terrestrial and DTH undertakings to ensure consistency of treatment for all distributors. The authorization for all distributors, as contained in sections 19(n), 33(k) and 39(f), refers to "any programming service that promotes a programming service distributed by the licensee and that meets the criteria set out in Public Notice CRTC 1995-172 entitled Revision to the Commission's Policy Governing the Distribution of Pay Television Promotional Material by Cable Television Licensees" (PN 1995-172).

46. The Commission also received com-ments suggesting that the regulations should include an explicit authorization for a television guide service, an electronic program guide, or other types of navigational services that may be developed. The Commission notes that, depending on the precise nature of any such service, its distribution might be permitted as a non-programming service. Alternatively, if it contains programming, it might qualify for distribution as a promotional service, subject to the policy set out in PN 1995-172.

47. Finally, with respect to the distribution by DTH undertakings of multiple feeds of the 4+1 U.S. network stations, the Commission notes that such distribution by DTH undertakings will continue to require applications for prior approval.

Programming service deletion and substitution (sections 30, 42 and 43)

48. Consistent with the Commission's policy determination announced in PN 1997-25, the proposed regulations contained a provision that would permit, but not require, terrestrial distributors to fulfil simultaneous substitution requests by providers of Canadian specialty services. In making this determination, the Commission concluded that the limited benefits that the providers of most specialty services would likely derive from simultaneous substitution did not justify the costs that would be incurred by licensees if substitution for such services was made mandatory. At the same time, the Commission considered that licensees of specialty services should have an opportunity to negotiate arrangements with distributors for substitution, where there was a benefit to be derived.

49. There was considerable discussion of this provision in the comments received with respect to the proposed regulations. A number of specialty services argued that the Commission should modify the policy determination announced in PN 1997-25 by making simultaneous substitution on behalf of specialty services a mandatory requirement, at least for the larger Class 1 BDUs, for example those with 10,000 or more subscribers.

50. Conventional broadcasters, on the other hand, strongly opposed any mandatory requirement for distributors to fulfil substitution requests on behalf of specialty services. Furthermore, they argued that the provision in the proposed regulations permitting distributors to carry out substitution requests by specialty services on an optional basis should be deleted.

51. The Commission has considered the arguments advanced by both groups in support of their respective positions and has concluded that no change to its original policy determination with respect to specialty services is warranted. It remains of the view that the benefits of extending mandatory substitution to specialty services would be outweighed by the substantial costs that would be incurred by distributors, even if such requirements were limited to the larger Class 1 systems. In addition, the Commission considers that there is merit to the broadcasters' argument that mandatory substitution for specialty services could lead to siphoning of programming from conventional broadcasters.

52. In making this determination, however, the Commission acknowledges a concern raised by some parties related to distributor ownership interests in certain specialty services. These parties argued that, if simultaneous substitution for specialty services is optional, a distributor with an ownership interest in a particular specialty service might be inclined to fulfil substitution requests from that specialty service, while refusing similar requests from unaffiliated specialty services. Such a situation could be unfair and inequitable.

53. The Commission considers this to be a valid concern. Therefore, when a distributor is alleged to have fulfilled a substitution request for a specialty service in which it or an affiliate has an ownership interest, while refusing a substitution request from another specialty service, the Commission will consider a complaint from the other specialty service in light of the undue preference or disadvantage provision in section 9 of the regulations.

54. In its policy framework set out in PN 1997-25, the Commission had proposed to treat the Atlantic Satellite Network (ASN) in the same manner as a Canadian specialty service, by permitting distributors to fulfil substitution requests by ASN on an optional basis.

55. In its comments, the licensee of ASN, CHUM Limited (CHUM), argued that ASN should be treated, instead, as a conventional broadcaster for the purposes of simultaneous substitution. In support of this position, CHUM noted that ASN is required to adhere by condition of licence to the Television Broadcasting Regulations, 1987, not the Specialty Services Regulations, 1990, and that the only difference between ASN and a regional television station is that ASN uses satellite-to-cable delivery.

56. The Commission has concluded that CHUM's arguments are reasonable. Accordingly, in section 30(1) of the regulations, the Commission has included ASN in the definition of "local television station" for the purposes of program substitution. This ensures that ASN has the same entitlement to simultaneous substitution as a conventional broadcaster.

57. With the exception of this modification affecting ASN, the Commission has incorporated in the regulations all other provisions relating to program substitution that were included in the proposed regulations.

58. In this regard, the requirement that DTH undertakings carry out simultaneous and non-simultaneous program deletion under certain circumstances has been maintained. The Commission notes that similar deletion requirements have previously been imposed on DTH licensees by conditions of licence. At the present time, however, ExpressVu Inc. (ExpressVu), AlphaStar Canada Inc. and Star Choice Television Network Incorporated (Star Choice) are relieved of the requirement that they carry out simultaneous and non-simultaneous deletion, pursuant to licence amendments approved in Decision CRTC 97-576 dated 8 October 1997. As a result, the obligation contained in the regulations for these DTH undertakings to carry out simultaneous and non-simultaneous deletion does not apply at this time.

59. The Commission has considered other comments submitted in response to the proposed regulations and pertaining to, among other matters, compliance and monitoring procedures, and the need for precise definitions of the terms "program", "identical" and "simultaneous". It has concluded that further changes to the regulations in response to these comments are not necessary.

60. The Commission notes, however, that the question of whether a definition is needed for the term "simultaneous" may be raised in the context of the discussion of program rights and advanced substitution at the upcoming Television Policy Review hearing.

COMPETITION ISSUES

Rate regulation (sections 45 to 56)

61. In the proposed regulations, the Commission specified two criteria for the rate deregulation of Class 1 cable distribution undertakings, as well as the procedure under which rate deregulation would be implemented.

62. The first criterion required that the basic service of one or more other licensed distribution undertakings be available to 30% or more of the households in a cable licensee's service area.

63. Some parties suggested that this criterion could be eliminated, given that the recent nation-wide launch of the Star Choice and ExpressVu DTH undertakings would appear to satisfy the 30% test for all cabled areas in Canada. They noted that the Commission could simply specify a date at which the base number of subscribers would be established for the purpose of assessing the second criterion, the 5% loss of subscribers.

64. The Commission acknowledges that, with the launch of Star Choice and ExpressVu, the 30% criterion appears to have been met. Nevertheless, given the relative infancy of these new services, the Commission is not prepared to remove the 30% criterion from the regulations at this time.

65. However, in the interest of administrative simplicity, given the universal availability of licensed DTH services, and in the absence of evidence to the contrary, the Commission is prepared to accept 31 August 1997 as the date on which the 30% availability criterion was satisfied for all rate-regulated cable licensees. Any such licensees that considers that it was subject to competition from one or more other licensed BDUs prior to 31 August 1997 may make its case to use that earlier date when filing for rate deregulation.

66. The second proposed criterion for rate deregulation required that a Class 1 cable licensee demonstrate that it has lost 5% or more of its subscribers since the basic service of another licensed BDU first became available in its licensed service area.

67. Several comments by cable industry interests addressed the precise method of calculation of the 5% loss of subscribers for the purpose of rate deregulation. They suggested alternative means of interpreting this criterion, in order to take into account the impact of new growth within a licensee's service area after the onset of competition.

68. After considering these comments, the Commission has concluded that the calculation of the 5% loss of subscribers should be based on the loss of specific addresses served on or after the date the basic service of another licensed distribution undertaking first became available in the licensee's service area. For the purpose of this calculation, an address is defined as a single-unit dwelling, a unit in a multiple-unit dwelling, a hotel, a hospital, a nursing home or other commercial or institutional pre-mises to which the basic service is provided directly or indirectly by the licensee. Hotels, hospitals, nursing homes and other commercial or institutional premises are each counted as one address.

69. The Commission is satisfied that this methodology, based on the loss of specific addresses, is a better measure of competition than that contained in the proposed regulations, in that it will minimize distortions created by factors such as the routine month-end turn-over of occupants of rental units, and new residential construction within an undertaking's service area.

70. The Commission requested comments in PN 1997-84 as to the appropriateness of its proposal to require a Class 1 cable licensee to notify subscribers of its intention to seek rate deregulation 60 days prior to the proposed deregulation coming into effect, particularly given the objective nature of the criteria for rate deregulation and the Commission's power to suspend or disallow the proposed deregulation.

71. The comments received on this proposal ranged between the position that subscribers should have the fundamental right to be notified in advance in order to have sufficient time and information to challenge the proposed deregulation, and the position that, given the objective criteria, there is no need for subscribers to receive prior notification at all.

72. After considering all the comments received on this proposal, the Commission agrees that rate deregulation represents a fundamental change. Existing cable subscribers will move away from a 20-year regulatory regime with Commission scrutiny of basic service rate increases, to a regime where basic service rate increases will be regulated by market forces only. It is thus appropriate that subscribers be made aware of such a fundamental change through proper notification.

73. The Commission has therefore decided to maintain the subscriber notification requirements set out in the proposed regulations.

74. Until the licensee of a Class 1 cable distribution undertaking provides the Commission with evidence demonstrating that it has met the two criteria for rate deregulation, the basic service fee of the undertaking will continue to be regulated by the Commission as set out in sections 49 through 56 of the regulations.

Inside wire (section 10)

75. The Commission considers that the broad policy objective set out in PN 1997-25, namely the removal of barriers to new entrants caused by cable company ownership of inside wire, continues to be appropriate.

76. There were, however, numerous comments received in this proceeding on the issue of competitive access to multiple-unit dwellings. After reviewing these comments, the Commission has decided that a refinement to the policy set out in PN 1997-25 is appropriate in order to more fully foster the goal of end-user choice in those multiple-unit dwellings where end-user choice is technically feasible.

77. Some parties, including the Public Interest Advocacy Centre (PIAC), representing La Fédération nationale des associations de consommateurs du Québec, the National Anti-Poverty Organization and the Consumers' Association of Canada, encouraged the Commission to adopt a rule, similar to that applicable to Canadian carriers of telecommunications services, that no licensee may serve a multiple-unit dwelling whose owner denies access to other broadcasting distribution undertakings.

78. Although the Commission's policy, as set out in PN 1997-25, encouraged the owners of multiple-unit dwellings to provide access to all distributors, the Commission recognizes that such owners may often be unable to do so for a number of reasons. These may include situations where it is simply not practical or feasible to retrofit buildings with duplicate wiring. In such circumstances, and in the absence of technology that would permit two or more distributors to share a single distribution network, the Commission considers that it would be unreasonable to prohibit a BDU from continuing to provide service.

79. In the case of some multiple-unit buildings, however, it may be possible to provide end-users with a choice between the services of two or more competing distributors. For example, some buildings have been wired with duplicate distribution facilities throughout, and it is likely that such installations will become more common as competition emerges in the market place. In other situations, it may be relatively simple to install a second distribution network in the same building.

80. In view of the above, the Commission considers that it is appropriate to modify the policy approach set out in PN 1997-25 of simply encouraging the provision of end-user choice. Specifically, in the case of a multiple-unit dwelling where it is technically feasible to provide competitive access to individual units, the Commission has determined that an exclusive contract between a BDU and the building's owner would not be in the public interest. In the Commission's view, an exclusive contract in such circumstances would generally constitute the conferring of an undue preference by the BDU on itself, in contravention of section 9 of the regulations. A long term contract, however, provided that it is not exclusive, would not be deemed to constitute such an undue preference.

81. In multiple-unit dwellings where the provision of end-user choice is not technically feasible, the Commission considers that a different approach is appropriate. Specifically, the licensee of a BDU should not take any measure to prevent the building owner from contracting with another distributor to serve the residents of the building, notwithstanding the existence of a long-term, exclusive contract between the licensee and the building owner, if that contract was entered into prior to the deregulation of the licensee's rates and more than five years have passed since its execution. Any such measure would generally be found to constitute an undue preference being conferred by the licensee on itself, in contravention of section 9 of the regulations. If, on the other hand, the long-term contract was entered into after the deregulation of the licensee's rates, the Commission considers that this would not generally constitute an undue preference.

82. In addition to the policy refinements outlined above, the Commission considers that a number of revisions to the proposed regulations are required to give effect to its broad policy objectives with respect to inside wire. These changes are discussed below.

83. The Canadian Cable Television Association (CCTA), Rogers Cablesystems Limited (Rogers) and Shaw Communications Inc. (Shaw) submitted that a cable company should only be required to offer to sell its inside wire to a subscriber where the subscriber: (1) is no longer receiving any service from the distributor (e.g. currently, cable service and Internet access; in the future, telephony and other services); (2) is moving to an alternate service provider; and, (3) has paid his or her account.

84. The Commission considers that a requirement that would restrict the offer to sell the inside wire only to those instances outlined by the CCTA, Rogers and Shaw would be inconsistent with the general Commission finding in PN 1997-25 that cable licensee ownership of existing inside wire constitutes a major barrier to competition and consumer choice. In the Commission's view, an appropriate balance is struck where the offer to transfer inside wire is made at the time a request to terminate "basic service" is received. Section 10(1) of the regulations has been modified accordingly.

85. Several parties had divergent views as to the proper form of notice that should be required to effect such termination. The Commission has futher modified section 10(1) of the regulations to explicitly provide that the notice of termination may be given orally or in writing.

86. The Commission is also of the view that such notice may be given by the customer personally or by the customer's agent. The Commission considers that a requirement that the customer personally notify the existing distributor would be an unnecessary inconvenience and would constitute an obstacle that could put new entrants at a significant disadvantage. In addition, the Commission considers that, where a competing BDU is acting as a customer's agent, it may provide notice in an electronic format.

87. A number of parties commented on the issue of valuation of the existing inside wire. The Commission notes that the price of $0.33 per metre contained in the proposed regulations reflected the CCTA's estimate of the replacement cost of inside wire provided during the proceeding leading to PN 1997-25 and, as such, represented a reasonable level of compensation to the distributor for the transfer of the inside wire to the customer.

88. The Commission agrees, however, with the CCTA and Stentor, who both submitted that, for the sake of administrative simplicity and in order to avoid premises visits to measure the inside wire, it would be more practical to implement a flat rate approach for the valuation of inside wire. In the case of single-unit dwellings, the Commission considers that, consistent with its finding in PN 1997-25 concerning the typical level of compensation for inside wire, a flat rate of $5.00 is appropriate. It has therefore specified this amount as a maximum in section 10(2) of the regulations.

89. In the case of multiple-unit dwellings, the Commission considers that determinations related to the valuation of inside wire and related equipment are matters that require further examination and may be best resolved by the approach set out in paragraphs 96 and 97 below.

90. A number of parties called for greater precision with respect to the definition of inside wire. The Commission agrees, and has revised the definition to clarify that inside wire includes outlets, splitters and faceplates that are attached or connected to the wire, but does not include secured enclosures attached to the exterior wall, amplifiers, converters, decoders or remote control units.

91. The CCTA submitted that a BDU should be permitted, but not required, to offer a customer the opportunity to purchase certain other equipment or facilities, in addition to the inside wire. Such equipment includes amplifiers, converters, decoders and remote control units that may be attached or connected to, or used in conjunction with, the inside wire.

92. The Commission agrees with the CCTA's submission. Accordingly, while a specific provision to this effect is not required in the regulations, the Commission confirms that the licensee of a BDU may, at its option, offer for sale these other types of equipment or facilities at their actual replacement cost, or at such other price that the licensee deems appropriate.

93. With respect to the definition of "demarcation point" in single-unit dwellings, the Commission acknowledges a point 30 cm from the outside of the exterior wall may not be, in every circumstance, the most appropriate demarcation point. The Commission agrees with the CCTA that the definition should provide for a degree of flexibility.

94. Accordingly, the Commission has determined that the definition of demarcation point should permit the distribution undertaking transferring the inside wire and the customer or the customer's agent to agree that another demarcation point is appropriate. The Commission has determined that similar flexibility is also appropriate in respect of multiple-unit dwellings. The Commission suggests that possible alternative demarcation points, particularly in the case of multiple-unit dwellings, be further considered through the process described in paragraphs 96 and 97 below.

95. Finally, the Commission notes that, as drafted, section 10(4) of the proposed regulations could have been interpreted as permitting a licensee to interfere with the use of the inside wire by a former subscriber for the reception of other services. Therefore, the Commission has changed this section of the regulations, now identified as section 10(5), to prohibit a licensee who has chosen not to remove the inside wire from the premises of a customer who has not purchased it, from interfering with the ability of any person to use the wire.

96. As noted above, beyond the general framework established in the regulations concerning inside wire, the Commission considers that there are a number of technical and administrative issues associated with the transfer of inside wire that could be resolved more effectively by a multi-party working group. The Commission notes that a number of working groups operating under the auspices of the CRTC Interconnection Steering Committee (CISC), including an inside wire working group, are currently examining similar issues in the context of implementing competition in local telephony. As that process is well underway and involves many of the parties who commented in this proceeding, the Commission considers that it would be appropriate to request the CISC to examine issues associated with the transfer of inside wire, in order to facilitate the ability of subscribers to freely choose alternate BDU service suppliers.

97. The Commission has identified the following as a preliminary list of details that it considers could be appropriately resolved through the CISC process:

· processes for customer transfer between competitive distributors, including such things as development of service intervals, process maps, ordering and billing, and information exchange standards;

· agreement on alternative demarcation points, with particular reference to multiple-unit dwellings;

· valuation of inside wire and other related equipment in multiple-unit dwellings; and,

· other issues that the parties may identify.

98. Notwithstanding the fact that matters such as these may require further discussion, the Commission notes that the transfer of inside wire regime will be in effect on 1 January 1998, and it expects licensees to comply with these regulations as of that date.

Undue preference or disadvantage (section 9)

99. The Commission has modified the prohibition against undue preference or disadvantage set out in section 9 of the regulations by removing the words "in relation to the acquisition or distribution of programming services". These words were deleted in response to comments that section 9, as worded in the proposed regulations, could be interpreted in a manner that could unduly limit the scope of its application. The section as now drafted will continue to apply to all matters related to the acquisition and distribution of programming services but will, more generally, apply to all broadcasting activities of BDUs. The Commission confirms, in response to comments received, that section 9 covers the acquisition and distribution of eligible satellite services and services in which a licensee has a minority interest.

100. The Commission has decided to set out in this notice a number of circumstances that, in its view, could constitute instances of undue preference or disadvantage under section 9 of the regulations. The following examples are for purposes of illustration and do not constitute an exhaustive list:

· The acquisition of a programming service for distribution by a licensee, other than the service of an exempt programming undertaking, at a price or upon terms and conditions that are more advantageous than the price or terms and conditions available to another licensee, when such differences are not justified by a difference in cost. Legitimate cost differences include economies of scale and other direct and legitimate economic benefits reasonably attributable to the number of subscribers served by the licensee.

· The acquisition of a licensed programming service for distribution by a licensee upon terms or conditions that have the direct or indirect effect of preventing another licensee from acquiring that programming service.

· The provision of service by a licensee to a multiple-unit dwelling pursuant to a contract that gives the licensee the exclusive ability to distribute programming services to that dwelling, where it is technically feasible for the licensee of another distribution undertaking to offer its service on a competitive basis to end-users.

· Any measure taken by a licensee, in cases where it is not technically feasible for the licensee of another BDU to offer its service on a competitive basis to end-users, to prevent the building owner from contracting with another distributor to serve the residents of the building, notwithstanding the existence of a long-term, exclusive contract between the licensee and the building owner, if that contract was entered into prior to the deregulation of the licensee's rates and more than five years have passed since its execution.

· The distribution by a Class 1 licensee or by a DTH licensee of the programming service of a pay audio programming undertaking in which a similar type of distribution undertaking has an ownership interest of 30% or more, where the licensee is not distributing an independently-owned pay audio service delivered to its head end in a format that is technically compatible with the licensee's method of signal distribution. The Commission considers, for example, two cable companies and their affiliates, or two telephone companies and their affiliates, to be of similar type.

· The analog distribution by a Class 1 licensee of one or more exempt programming services in which a similar type of entity has an ownership interest of 15% or more, where the licensee is not making available an equal number of analog channels for the distribution of independently-owned exempt programming services. As above, the Commission considers, for example, two cable companies and their affiliates, or two telephone companies and their affiliates, to be of similar type.

· The refusal by a licensee to fulfil the written request by the operator of a specialty service for substitution, where the licensee does fulfil such requests by the operator of a specialty service in which the licensee or its affiliate has an ownership interest.

OTHER ISSUES

Alteration or deletion of programming services (section 7)

101. In response to comments received, the Commission notes that it has expanded section 7 of the regulations to include the three following instances in which a licensee is permitted to alter or delete a programming service in the course of its distribution:

· Alteration of a programming service to insert an emergency alert message warning the public of imminent danger to life or property, in accordance with an agreement entered into with the programming undertaking or with the network responsible for the programming service.

· Deletion of a programming service to comply with an order of a court prohibiting the distribution of the service in any part of the licensed area.

· Deletion of a subsidiary signal, except where that signal is, itself, a programming service, or where it is related to the programming service being distributed. The Commission considers subsidiary signals such as closed captioning contained in the vertical blanking interval and descriptive video services in the secondary audio programming channel to be related to programming services.

Dispute resolution (sections 12 to 15)

102. The regulations incorporate changes to more accurately reflect the Commission's dispute resolution policy described in PN 1996-60. Based on the comments received, it was evident that parties were uncertain as to how to reconcile the regulations with the existing policy.

103. In PN 1996-60, the Commission stated that it viewed regulatory intervention in disputes strictly as an option of last resort. It further stated that it would "continue to require all distribution and programming undertakings to have matters in dispute mediated for at least 45 days prior to referring these matters to the Commission for resolution".

104. Parties submitting comments on this matter noted that the proposed regulations were worded in a manner that would permit a dispute to be referred to the Commission for resolution without mediation. They requested that the Commission confirm its general policy of requiring mediation before accepting a dispute for resolution.

105. The approach to dispute resolution described in PN 1996-60 continues to apply. Accordingly, section 12(3) has been added to the regulations to explicitly provide that the Commission may require the parties to engage in mediation before it accepts a referral of the matter for dispute resolution. The Commission will generally require distribution and programming undertakings to have matters in dispute mediated for at least 45 days prior to referring the matter to the Commission for resolution.

106. Nevertheless, the Commission recognizes that there may be exceptional circumstances where it might not be appropriate to require mediation prior to the referral of a matter to the Commission for dispute resolution. For example, there could be an urgent need that could not reasonably have been foreseen by the parties to resolve a particular dispute on an expedited basis. In such exceptional cases, the Commission may agree to accept a matter for dispute resolution without requiring mediation prior to the referral.

107. A private mediation process, either initiated by the parties or required by the Commission prior to accepting a matter for dispute resolution, is separate from the processes that may be initiated once the Commission accepts the referral of a matter for dispute resolution.

108. Parties engaging in private mediation may make use of the services provided by the Cable Television Standards Council or appoint any other independent mediator. Parties are expected to establish their own procedure, including any restrictions on the use of the information provided by a party for the purpose of the dispute resolution.

109. Based on the comments received, the Commission considers that the regulations should more clearly prescribe that, upon accepting the referral of a matter for resolution, the Commission may either require the parties to participate in a dispute resolution process or it may immediately proceed to a determination.

110. Accordingly, section 12(4) has been reworded to provide that, if the Commission accepts the referral of a matter for dispute resolution, it may appoint a person to assist in the resolution of the dispute by way of mediation or otherwise, or it may proceed to render a decision in accordance with section 15. The Commission notes that the regulations refer to the "resolution of a dispute" rather than strictly to mediation as a dispute resolution process.

111. Where the parties have attempted, in good faith, to resolve a dispute by way of mediation prior to referring the dispute to the Commission, and where they have met the procedural requirements set out in PN 1996-60, the Commission will endeavour to render a determination within 45 days of receipt of requests for dispute resolution. The Commission generally intends to deal with disputes by way of final offer selection in those cases where the 45-day mediation process is followed. Where the parties have not met these procedural requirements, or where the dispute does not, in the Commission's view, lend itself to resolution within 45 days, it will deal with the dispute using a process determined at that time.

112. Some parties expressed concern that the dispute resolution provisions introduced the notion that the Commission might decline to accept the referral of a matter for dispute resolution. They requested that the regulations set out criteria that the Commission would apply in making such a determination. In the Commission's view, the enumeration of criteria in relation to this matter would not be useful, in that such a determination will largely depend on the circumstances and is best made on a case-by-case basis.

113. Parties also raised questions relating to confidentiality and to the provision restricting the use of information provided for the purposes of the dispute resolution. In light of these comments, the confidentiality provision now specifies, under section 12(5), that any information filed with the Commission relating to the resolution of a dispute will be kept confidential, unless the Commission determines otherwise.

114. As noted above, the Commission expects that parties will develop mutually satisfactory procedural rules as a preliminary step in the private mediation process. The Commission considers that the regulatory protection regarding the use of information should have effect only when the Commission accepts the referral of a matter for dispute resolution. Accordingly, the regulations expressly provide, under section 12(6), that the restrictions on the use, by either party, of information provided by the other party for the purposes of the dispute resolution, will apply once the Commission accepts the referral of the matter for dispute resolution.

115. Finally, there were a number of comments relating to the scope of application of the dispute resolution provisions and to the withdrawal of services during mediation. While none of these comments have resulted in any change to the regulations, the Commission considers that the following clarifications are appropriate.

116. Some parties proposed that the dispute resolution provisions should be expanded to include disputes involving relay distribution undertakings and foreign satellite services authorized for distribution in Canada. It was also proposed that these provisions should apply to disputes between two distribution undertakings.

117. The Commission notes that application of the dispute resolution process prescribed in the regulations is limited to disputes between programming and distribution undertakings that concern the carriage or terms of carriage of programming originated by the programming undertakings. This is in accordance with the Commission's regulation-making power under section 10(1)(h) of the Broadcasting Act.

118. Use of the dispute resolution provisions for disputes relating to access to foreign satellite services was addressed in PN 1997-25. The Commission concluded that these provisions could not be used effectively to ensure access to foreign services. Instead, the Commission decided that any dispute relating to access to foreign satellite services would be best dealt with under the undue preference provision.

119. As for extending the application of the dispute resolution mechanisms to relay distribution undertakings, the Commission notes that the regulations do not apply to such undertakings.

120. In response to the concerns about the withdrawal of services during mediation, the Commission reiterates the position taken in PN 1997-25 that withdrawal by a programmer of access to its programming during the mediation process would be contrary to the public interest. The Commission expects all programmers to provide continued access to their programming services during an ongoing dispute with a distributor.

OTHER DOCUMENTS

121. In separate public notices issued today, the Commission has published revised Distribution and Linkage Requirements for Class 1 and Class 2 Licensees (Public Notice CRTC 1997-151) and Revised Lists of Eligible Satellite Services (Public Notice CRTC 1997-152). Earlier, on 2 May 1997, it published Linkage Requirements for Direct-to-Home (DTH) Satellite Distribution Undertakings in Public Notice CRTC 1997-50. These documents are incorporated by reference into the regulations.

122. The Commission has also issued today circulars setting out guidelines respecting financial contributions by the licensees of broadcasting distribution undertakings to the creation and presentation of Canadian programming (Circular No. 426), and filing guidelines respecting proposed rate deregulation and rate increases pending such deregulation, for rate-regulated Class 1 cable distribution undertakings (Circular No. 427).

CONCLUSION

123. The publication of the Broadcasting Distribution Regulations constitutes an important step by the Commission in attaining the objectives set out in the Broadcasting Act and in promoting the development of effective competition in the delivery of broadcasting services to Canadians. Nevertheless, the competitive environment will continue to develop and market forces will have an increasingly important influence on consumers and on the Canadian broadcasting system.

124. The Commission therefore intends to undertake a general review of the effectiveness and appropriateness of the new regulations after two years, and to consider whether further refinements to the regulatory framework are appropriate in pursuit of the objectives of the Broadcasting Act.

125. The Commission will, of course, closely monitor the development of the competitive environment in the meantime, and it will address specific issues and concerns as they are brought to its attention.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.

JUS-97-197-02
(SOR/DORS)

Whereas, pursuant to subsection 10(3) of the Broadcasting Acta, a copy of the proposed Broadcasting Distribution Regulations, substantially in the annexed form, was published in the Canada Gazette, Part I, on July 12, 1997, and a reasonable opportunity was given to licensees and other interested persons to make representations to the Canadian Radio-television and Telecommunications Commission with respect thereto;

Therefore, the Canadian Radio-television and Telecommunications Commission, pursuant to subsection 10(1) of the Broadcasting Acta, hereby makes the annexed Broadcasting Distribution Regulations.

Hull, Quebec, December 8, 1997

Laura M. Talbot-Allan
Secretary General

JUS-97-197-02
(SOR/DORS)

BROADCASTING DISTRIBUTION REGULATIONS

interpretation

1. The definitions in this section apply in these Regulations.

"Act" means the Broadcasting Act. (Loi)

"AM station" means a station that broadcasts in the AM frequency band of 525 to 1 705 kHz. It does not include a carrier current undertaking or a transmitter that only rebroadcasts the radiocommunications of another station. (station AM)

"available channel" means any unrestricted channel of a distribution undertaking, other than a channel on which is distributed

(a) the programming service of a licensed programming undertaking other than a video-on-demand programming undertaking;

(b) community programming;

(c) a programming service comprising the proceedings of the House of Commons; or

(d) a programming service comprising the proceedings of the legislature of the province in which the undertaking is located. (canal disponible)

"basic band" means the 12 analog cable channels that are commonly identified by the numbers 2 to 13 and that are used in the frequency bands 54 to 72 MHz, 76 to 88 MHz and 174 to 216 MHz. (bande de base)

"basic monthly fee" means the total amount that a licensee is authorized to charge to a subscriber on a monthly basis for provision of the basic service to an outlet to which a television receiver, FM receiver, channel converter or other terminal device may be connected in the subscriber's residence or premises. It does not include federal or provincial taxes. (tarif mensuel de base)

"basic service" means the services distributed by a licensee as a package and composed of the programming services the distribution of which is required under sections 17, 22, 32 or 37, or a condition of its licence, and any other services that are included in the package for a single fee. (service de base)

"broadcast week" means a period of seven consecutive days beginning on a Sunday. (semaine de radiodiffusion)

"broadcast year" means the period beginning on September 1 in a calendar year and ending on August 31 of the following calendar year. (année de radiodiffusion)

"cable distribution undertaking" means an undertaking that distributes broadcasting to subscribers predominantly over closed transmission paths. (entreprise de distribution par câble)

"Canadian production fund" means the Canada Television and Cable Production Fund, or its successor. (fonds de production canadien)

"Canadian programming service" means

(a) a programming service that originates entirely within Canada or is transmitted by a licensed station;

(b) a programming service consisting of community programming;

(c) a specialty service;

(d) a pay television service;

(e) a television pay-per-view service;

(f) a DTH pay-per-view service;

(g) a video-on-demand service; or

(h) a pay audio service. (service de programmation canadien)

"channel" includes a digital channel. (canal)

"Class 1 licensee" means the holder of a Class 1 licence. (titulaire de classe 1)

"Class 2 licensee" means

(a) the holder of a Class 2 licence issued on or after the coming into force of these Regulations; or

(b) for the remainder of the term of a licence issued before the coming into force of these Regulations, the holder of a Class 2 licence that carried on an undertaking that had 2,000 or more subscribers immediately before the coming into force of these Regulations. (titulaire de classe 2)

"Class 3 licensee" means

(a) the holder of a Class 3 licence issued on or after the coming into force of these Regulations; or

(b) for the remainder of the term of a licence issued before the coming into force of these Regulations,

(i) the holder of a Class 2 licence that carried on an undertaking that had fewer than 2,000 subscribers immediately before the coming into force of these Regulations, or

(ii) a licensee that, immediately before the coming into force of these Regulations, was a Part III licensee within the meaning of section 2 of the Cable Television Regulations, 1986. (titulaire de classe 3)

"clock hour" means a period of 60 minutes beginning on each hour and ending immediately before the next hour. (heure d'horloge)

"commercial message" means an advertisement that is intended to sell or promote goods, a service or an activity, directly or indirectly, or an announcement that mentions or displays in a list of prizes the name of the person selling or promoting those goods or that service or activity. (message publicitaire)

"community channel" means the channel of a distribution undertaking that is used for the distribution of community programming. (canal communautaire)

"community programming" means, in relation to a distribution undertaking, programming that is produced

(a) by the licensee of the undertaking or by members of the community served by the undertaking;

(b) by the licensee of another undertaking or by the members of the community served by that other undertaking and that is relevant to the community referred to in paragraph (a); or

(c) by a person licensed to operate a network for the purpose of producing community programming for distribution by the licensee on a community channel. (programmation communautaire)

"comparable", in respect of two or more programming services, means that not less than 95% of the video and audio components of those programming services, exclusive of commercial messages and of any part of the services carried on a subsidiary signal, are the same. (comparable)

"customer" means a person who is liable for payment for programming services that are distributed by a licensee and that are received directly or indirectly by one or more subscribers. It does not include the owner or operator of a hotel, hospital, nursing home or other commercial or institutional premises. (client)

"demarcation point", in respect of the wire that is used by a distribution undertaking for the distribution of programming services to a subscriber, means

(a) if the subscriber resides in a single-unit dwelling,

(i) 30 cm outside the exterior wall of the subscriber's premises, or

(ii) any point to which the licensee and the customer have agreed; and

(b) if the subscriber resides in a multiple-unit dwelling,

(i) the point inside the dwelling at which the wire is diverted to the exclusive use and benefit of that subscriber, or

(ii) any point to which the licensee and the customer have agreed. (point de démarcation)

"digital radio station" means a station that broadcasts in the frequency band of 1 452 to 1 492 MHz (L-Band) using a digital transmission system. (station de radio numérique)

"digital service area" means a service area marked for a licensed digital radio station on the map that pertains to that station and that is most recently published under the Department of Industry Act by the Minister of Industry. (zone de desserte numérique)

"discretionary service" means a programming service that is not included in the basic service and that is distributed to subscribers on a discretionary basis for a fee separate from and in addition to the fee charged for the basic service. (service facultatif)

"distant television station" means a licensed television station that is not a local television station, regional television station or extra-regional television station. (station de télévision éloignée)

"DTH distribution undertaking" means a direct-to-home (DTH) satellite distribution undertaking. (entreprise de distribution par SRD)

"DTH eligible satellite service" means a programming service included in Appendix C of the Commission's Revised Lists of Eligible Satellite Services, as amended from time to time. (service par satellite admissible distribué par SRD)

"DTH pay-per-view service" means the pay-per-view service provided by a person licensed to carry on a direct-to-home pay-per-view television programming undertaking. (service à la carte par SRD)

"educational authority" means a body that is

(a) an independent corporation, within the meaning of section 2 of the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences); or

(b) a provincial authority, within the meaning of section 2 of the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences). (autorité éducative)

"educational radio programming service" means a radio programming service that provides the programming described in the definition of "independent corporation" in section 2 of the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences). (service de programmation de radio éducative)

"educational television programming service" means a television programming service that provides the programming described in the definition of "independent corporation" in section 2 of the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences). (service de programmation de télévision éducative)

"election period" means

(a) in the case of a federal or provincial election or of a federal, provincial or municipal referendum, the period beginning on the date of the announcement of the election or referendum and ending on the date of the election or referendum; or

(b) in the case of a municipal election, the period beginning two months before the date of the election and ending on the date of the election. (période électorale)

"emergency alert message" means a warning to the public announcing an imminent or unfolding danger to life or property. (message d'alerte d'urgence)

"ethnic station" means a station that is licensed as an ethnic station. (station à caractère ethnique)

"exempt programming undertaking" means a programming undertaking the operator of which is exempted from any or all of the requirements of Part II of the Act in an order made by the Commission under subsection 9(4) of the Act. (entreprise de programmation exemptée)

"extra-regional television station" means, in relation to a distribution undertaking, a licensed television station that has

(a) a Grade A official contour or Grade B official contour that does not include any part of the licensed area of the undertaking; and

(b) a Grade B official contour that includes any point located 32 km or less from the local head end of the undertaking. (station de télévision extra-régionale)

"FM station" means a station that broadcasts in the FM frequency band of 88 to 108 MHz. It does not include a carrier current undertaking or a transmitter that only rebroadcasts the radiocommunications of another station. (station FM)

"independent production fund" means a production fund, other than the Canadian production fund, that meets the criteria listed in the Commission's Public Notice entitled Contributions to Canadian Programming by Broadcasting Distribution Undertakings, as amended from time to time. (fonds de production indépendant)

"inside wire" means the wire that is used by a distribution undertaking for the distribution of programming services that extends from the demarcation point to one or more terminal devices inside a subscriber's residence or premises. It includes the outlets, splitters and faceplates that are attached or connected to the wire but does not include a secured enclosure that is used to house the wire and that is attached to the exterior wall of a subscriber's premises, an amplifier, a channel converter, a decoder or a remote control unit. (câblage intérieur)

"licence" means a licence issued by the Commission to carry on a distribution undertaking. (licence)

"licensed" means licensed by the Commission under paragraph 9(1)(b) of the Act. (autorisé)

"licensed area" means the area for which a licensee has been licensed to provide service. (zone de desserte autorisée)

"licensee" means a person who is licensed to carry on a distribution undertaking. (titulaire)

"local AM station" means, in relation to a distribution undertaking, a licensed AM station that has its principal studio located within 32 km of the local head end of the undertaking. (station AM locale)

"local digital radio station" means, in relation to a distribution undertaking, a licensed digital radio station that has a digital service area that includes any part of the licensed area of the undertaking. (station de radio numérique locale)

"local FM station" means, in relation to a distribution undertaking, a licensed FM station that has a 500 µV/m official contour that includes any part of the licensed area of the undertaking. (station FM locale)

"local head end", in respect of

(a) a cable distribution undertaking, means the specific location at which a licensee receives the majority of the programming services that are transmitted by local television stations or, if there are no such stations, by regional television stations, and that are distributed by the licensee; and

(b) a radiocommunication distribution undertaking, means the licensee's transmitter site. (tête de ligne locale)

"local radio station" means a local AM station, a local FM station or a local digital radio station. (station de radio locale)

"local television station", in relation to a distribution undertaking, means a licensed television station that

(a) has a Grade A official contour that includes any part of the licensed area of the undertaking; or

(b) has, if there is no Grade A official contour, a transmitting antenna that is located within 15 km of the licensed area of the undertaking. (station de télévision locale)

"non-Canadian television station" means a television station that has a transmitter site located outside Canada. (station de télévision non canadienne)

"official contour" means a service contour marked for a licensed television station, licensed AM station or licensed FM station on the map most recently published under the Department of Industry Act by the Minister of Industry and that pertains to that station. (périmètre de rayonnement officiel)

"Part 2 eligible satellite service" means a programming service included in Appendix A of the Commission's Revised Lists of Eligible Satellite Services, as amended from time to time. (service par satellite admissible en vertu de la partie 2)

"Part 3 eligible satellite service" means a programming service included in Appendix B of the Commission's Revised Lists of Eligible Satellite Services, as amended from time to time. (service par satellite admissible en vertu de la partie 3)

"pay audio service" means the programming service provided by a person licensed to carry on a pay audio programming undertaking. (service sonore payant)

"pay-per-view service" means a scheduled programming service that is provided to subscribers on a pay-per-view basis. (service à la carte)

"pay television service" means the programming service, other than the pay-per-view service, provided by a person licensed to carry on a pay television programming undertaking. (service de télévision payante)

"programming service" means a program that is distributed by a licensee. (service de programmation)

"public affairs programming service" means the programming service of a person licensed to carry on a programming undertaking of which 100% of the programming provided represents categories 3 (reporting and actualities) and 12 (filler programming), as referred to in column I of item 6 of Schedule I to the Specialty Services Regulations, 1990. (service de programmation d'affaires publiques)

"radiocommunication distribution undertaking" means a distribution undertaking, other than a DTH distribution undertaking, that distributes programming services predominantly by means of radio waves. (entreprise de distribution de radiocommunication)

"regional television station" means, in relation to a distribution undertaking, a licensed television station, other than a local television station, that has a Grade B official contour that includes any part of the licensed area of the undertaking. (station de télévision régionale)

"relay distribution undertaking" means a distribution undertaking that receives the programming services of radio or television programming undertakings and distributes them only to one or more other distribution undertakings. (entreprise de distribution par relais)

"restricted channel" means a channel of a cable distribution undertaking that is the same channel on which signals are transmitted by

(a) a local television station or a local FM station; or

(b) a television station or an FM station that has a transmitter site located outside Canada within 60 km of any part of the licensed area of the undertaking. (canal à usage limité)

"specialty service" means the programming service provided by a person licensed to carry on a specialty programming undertaking. (service spécialisé)

"station" means a radio or television programming undertaking, or a radiocommunication distribution undertaking that rebroadcasts the programming service of a radio or television programming undertaking and whose signal is not encrypted and for which no fee is payable to a third party for the undertaking's right to distribute the signal. (station)

"subscriber" means

(a) a household of one or more persons, whether occupying a single-unit dwelling or a unit in a multiple-unit dwelling, to which service is provided directly or indirectly by a licensee; or

(b) the owner or operator of a hotel, hospital, nursing home or other commercial or institutional premises to which service is provided by a licensee. (abonné)

"subscription television system" means an undertaking that distributes encrypted programming services by low-power transmitters using the conventional VHF or UHF television bands. (système de télévision par abonnement)

"television pay-per-view service" means the pay-per-view service provided by a person licensed to carry on a pay television programming undertaking. (service de télévision à la carte)

"unserved community" means the licensed area of a distribution undertaking where there is no local radio station and no local television station. (collectivité non desservie)

"video-on-demand service" means the programming service provided by a person licensed to carry on a video-on-demand programming undertaking. (service de vidéo sur demande)

application

2. These Regulations apply to persons licensed to carry on a distribution undertaking, other than a person licensed to carry on

(a) a subscription television system;

(b) a relay distribution undertaking; or

(c) an undertaking that only rebroadcasts the radiocommunications of one or more other licensed undertakings.

PART 1

GENERAL

Prohibition

3. A licensee shall not distribute programming services except as required or authorized under its licence or these Regulations.

Transfer of Ownership

4. (1) The definitions in this subsection apply in this section.

"associate", when used to indicate a relationship with a person, includes

(a) a partner of the person;

(b) a trust or an estate in which the person has a substantial beneficial interest or in respect of which the person serves as a trustee or in a similar capacity;

(c) a spouse, common-law spouse of the same or opposite sex, son, daughter, son-in-law or daughter-in-law of the person;

(d) a relative, not referred to in paragraph (c), of the person, or of the person's spouse or common-law spouse of the same or opposite sex, who has the same residence as the person;

(e) a corporation of which the person alone, or the person together with one or more associates as described in this definition, has, directly or indirectly, control of 50% or more of the voting interests;

(f) a corporation of which an associate, as described in this definition, of the person has, directly or indirectly, control of 50% or more of the voting interests; and

(g) a person with whom the person has entered into an arrangement, a contract, an understanding or an agreement in respect of the voting of shares of a licensee corporation or of a corporation that has, directly or indirectly, effective control of a licensee corporation, except when the person controls less than 1% of all issued voting shares of a corporation whose shares are publicly traded on a stock exchange. (liens)

"common shares" means the shares that represent the residual equity in the earnings of a corporation, and includes the preferred shares to which are attached rights to participate in the earnings of the corporation with no upper limit. (actions ordinaires)

"person" includes an individual, a partnership, a joint venture, an association, a corporation, an estate, a trust, a trustee, an executor and an administrator or a legal representative of any of them. (personne)

"voting interest", in respect of

(a) a corporation with share capital, means the vote attached to a voting share;

(b) a corporation without share capital, means an interest that entitles the owner to voting rights similar to those enjoyed by the owner of a voting share;

(c) a partnership, a trust, an association or a joint venture, means an ownership interest in the assets of it that entitles the owner to receive a share of its profits, to receive a share of its assets on dissolution and to participate directly in its management or to vote on the election of the persons to be entrusted with the power and responsibility to manage it; and

(d) a not-for-profit partnership, trust, association or joint venture, means a right that entitles the owner to participate directly in its management or to vote on the election of the persons to be entrusted with the power and responsibility to manage it. (intérêt avec droit de vote)

"voting share" means a share in the capital of a corporation, to which is attached one or more votes that are exercisable at meetings of shareholders of the corporation, either under all circumstances or under a circumstance that has occurred and is continuing, and includes any security that is convertible into such a share at all times at the option of the holder. (action avec droit de vote)

(2) For the purposes of this section, control of a voting interest by a person includes situations in which

(a) the person is, directly or indirectly, the beneficial owner of the voting interest; or

(b) the person, by means of an arrangement, a contract, an understanding or an agreement, determines the manner in which the interest is voted, but the solicitation of proxies or the seeking of instructions regarding the completion of proxies in respect of the exercise of voting interests is not considered to be such an arrangement, contract, understanding or agreement.

(3) For the purposes of this section, effective control of a licensee or its undertaking includes situations in which

(a) a person controls, directly or indirectly, other than by way of security only, a majority of the voting interests of the licensee;

(b) a person has the ability to cause the licensee or its board of directors to undertake a course of action; or

(c) the Commission, following a public hearing of an application for a licence, or in respect of an existing licence, determines that a person has such effective control and sets out that determination in a decision or public notice.

(4) Except as otherwise provided under a condition of its licence, a licensee shall obtain the prior approval of the Commission in respect of any act, agreement or transaction that directly or indirectly would result in

(a) a change of the effective control of its undertaking; or

(b) a person who, alone, or together with an associate,

(i) controls less than 30% of the voting interests of the licensee, having control of 30% or more of those interests,

(ii) controls less than 30% of the voting interests of a person who has, directly or indirectly, effective control of the licensee, having control of 30% or more of those interests,

(iii) owns less than 50% of the issued common shares of the licensee, owning 50% or more of those shares but not having, directly or indirectly, effective control of the licensee, or

(iv) owns less than 50% of the issued common shares of a person who has, directly or indirectly, effective control of the licensee, owning 50% or more of those shares but not having, directly or indirectly, effective control of the licensee.

(5) A licensee shall notify the Commission within 30 days after the occurrence of any act, agreement or transaction that, directly or indirectly, results in a person who, alone, or together with an associate, controls less than

(a) 20% of the voting interests of the licensee, having control of 20% or more but less than 30% of those interests;

(b) 20% of the voting interests of a person who has, directly or indirectly, effective control of the licensee, having control of 20% or more but less than 30% of those interests;

(c) 40% of the voting interests of the licensee, having control of 40% or more but less than 50% of those interests but not having, directly or indirectly, effective control of the licensee; or

(d) 40% of the voting interests of a person who has, directly or indirectly, effective control of the licensee, having control of 40% or more but less than 50% of those interests but not having, directly or indirectly, effective control of the licensee.

(6) A notification referred to in subsection (5) shall set out the following information:

(a) the name of the person or the names of the person and the associate;

(b) the percentage of the voting interests controlled by the person or by the person and the associate; and

(c) a copy or a complete description of the act, agreement or transaction.

Distribution of Basic Service

5. Except as otherwise provided under a condition of its licence or these Regulations, no licensee shall provide a subscriber with any programming services, other than pay-per-view services, video-on-demand services or the programming services of exempt programming undertakings, without also providing the basic service of the licensee.

Majority of Canadian Programming Services

6. (1) For the purposes of this section, each pay television service, television pay-per-view service, DTH pay-per-view service and video-on-demand service shall be counted as a single video channel.

(2) Except as otherwise provided under a condition of its licence, a licensee shall ensure that a majority of the video channels and a majority of the audio channels received by a subscriber are devoted to the distribution of Canadian programming services, other than the programming distributed on program repeat channels.

(3) Except as otherwise provided under a condition of its licence, this section does not apply to a Class 3 licensee of a cable distribution undertaking that only distributes programming services on the basic band.

Alteration or Deletion of Programming Service

7. A licensee shall not alter or delete a programming service in the course of its distribution except

(a) as required or authorized under a condition of its licence or these Regulations;

(b) for the purpose of complying with subsection 328(1) of the Canada Elections Act;

(c) for the purpose of deleting a programming service to comply with an order of a court prohibiting the distribution of the service to any part of the licensed area;

(d) for the purpose of altering a programming service to insert an emergency alert message in accordance with an agreement entered into with the operator of the service or the network responsible for the service;

(e) for the purpose of deleting a programming service in accordance with an agreement entered into with the operator of the service or the network responsible for the service; or

(f) for the purpose of deleting a subsidiary signal, unless the signal is, itself, a programming service or is related to the service being distributed.

Prohibited Programming Content

8. (1) No licensee shall distribute a programming service that the licensee originates and that contains

(a) anything that contravenes any law;

(b) any abusive comment or abusive pictorial representation that, when taken in context, tends to or is likely to expose an individual or group or class of individuals to hatred or contempt on the basis of race, national or ethnic origin, colour, religion, sex, sexual orientation, age or mental or physical disability;

(c) any obscene or profane language or pictorial representation; or

(d) any false or misleading news.

(2) For the purpose of paragraph (1)(b), sexual orientation does not include the orientation towards a sexual act or activity that would constitute an offence under the Criminal Code.

Undue Preference or Disadvantage

9. No licensee shall give an undue preference to any person, including itself, or subject any person to an undue disadvantage.

Transfer of Inside Wire to Customer

10. (1) Subject to subsections (2) and (3), if a licensee owns the inside wire, it shall offer it for purchase to a customer when the customer's oral or written notice to terminate basic service is received.

(2) In the case of a single-unit dwelling, the licensee's offer under subsection (1) shall be at a price of not more than $5.

(3) If the customer is the owner or operator of a multiple-unit dwelling, the licensee shall offer to the customer for purchase the inside wire of each subscriber residing in the multiple-unit dwelling.

(4) If a customer decides not to purchase the inside wire, the licensee owning the wire may remove it within seven days after the date of the termination of service.

(5) If a licensee decides not to remove the inside wire under subsection (4), the licensee shall not later interfere with the ability of any person to use the wire.

Information To Be Submitted to the Commission

11. (1) On or before November 30 of each year, a licensee shall submit to the Commission a statement of accounts, on the annual return of broadcasting licensee form, for the 12-month period ending on the previous August 31.

(2) At the request of the Commission, a licensee shall submit to the Commission information in accordance with the form entitled Summary of Basic Tier/STV Fixed Assets, and any other forms that are issued by the Commission.

(3) At the request of the Commission, a licensee shall provide the Commission with a response to any inquiry regarding the licensee's programming, ownership or any other matter within the Commission's jurisdiction that relates to the licensee's undertaking.

Dispute Resolution

12. (1) For the purposes of sections 12 and 15, "wholesale rate" means the fee payable on a monthly basis by a licensee to a programming undertaking to receive a programming service.

(2) If there is a dispute between the licensee of a distribution undertaking and the licensee of a programming undertaking or the operator of an exempt programming undertaking concerning the carriage or terms of carriage of programming, including the wholesale rate, originated by the programming undertaking, one or both of the parties to the dispute may refer the matter to the Commission for dispute resolution.

(3) The Commission may require the parties to engage in mediation before the Commission accepts a referral of the matter for dispute resolution.

(4) If the Commission accepts a referral of a matter for dispute resolution, the Commission may appoint a person to assist in the resolution of the dispute, by way of mediation or otherwise, or may proceed to render a decision in accordance with section 15.

(5) Any information relating to the resolution of a dispute filed with the Commission must be kept confidential, unless the Commission determines that it would be in the public interest to do otherwise.

(6) When the Commission accepts a referral of a matter for dispute resolution, information provided by a party for the purposes of the dispute resolution may not be used by the other party to the dispute for any other purpose except with the prior consent of the party providing the information.

(7) During dispute resolution, the person appointed under subsection (4) may request additional information from the parties or require their attendance at a meeting to discuss the matters in dispute.

(8) A person appointed under subsection (4) may refer a matter to the Commission if a party does not comply with a request under subsection (7), and the Commission may require the additional information or attendance at a meeting in order to discuss the matters in dispute.

13. An agreement that is reached after dispute resolution must be in writing and be signed by all parties.

14. If no agreement is reached by the parties, the person appointed under subsection 12(4) must submit a report to the Commission concerning all unresolved matters within the period established by the Commission.

15. The Commission may, after accepting a referral of a matter for resolution under section 12, render a decision concerning any unresolved matters, including the wholesale rate.

PART 2

CLASS 1 AND CLASS 2 LICENSEES

Application

16. Except as otherwise provided in this Part or in a licensee's condition of licence, this Part applies to Class 1 and Class 2 licensees.

Television Programming Services that Must Be Distributed as Part of the Basic Service

17. (1) Except as otherwise provided in subsections (3) to (6) or under a condition of its licence, a licensee shall distribute the following as part of its basic service, in the following order of priority:

(a) the programming services of all local television stations owned and operated by the Corporation;

(b) the educational television programming services received over the air or by satellite or microwave relay, the operation of which is the responsibility of an educational authority designated by the province in which the licensed area of the undertaking is located;

(c) the programming services of all other local television stations;

(d) the programming services of a regional television station owned and operated by the Corporation, unless the licensee is distributing, under paragraph (a), the programming services of a local television station owned and operated by the Corporation that broadcasts in the same official language as the regional television station;

(e) the programming services of all other regional television stations, unless the licensee is distributing, under paragraph (a), (c) or (d), the programming services of a television station that is an affiliate or member of the same network;

(f) if they are received by satellite or microwave relay and if they are not being distributed under paragraph (a), (c), (d) or (e), the programming services of at least one television station that broadcasts in English and at least one that broadcasts in French that are owned and operated by, or that are affiliates of, the Corporation;

(g) the programming services of an extra-regional television station owned and operated by the Corporation, unless the licensee is distributing, under paragraph (a), (d) or (f), the programming services of a television station owned and operated by the Corporation that broadcasts in the same official language as the extra-regional television station; and

(h) the programming services of all other extra-regional television stations that are not affiliates or members of the network to which a station referred to in any of paragraphs (a) to (g) belongs.

(2) A licensee of a cable distribution undertaking shall distribute the services in subsection (1) beginning with the basic band of its undertaking.

(3) If a licensee receives programming services that are identical, the licensee is required to distribute, under subsection (1), only one of them.

(4) If a licensee receives over the air an educational television programming service the operation of which is the responsibility of an educational authority designated by a province other than the province in which the licensed area of the undertaking is located, the licensee is not required to distribute it under subsection (1) but may distribute the service as part of the basic service.

(5) If the Commission has determined that a programming service is of national public interest and has licensed the service as a mandatory service, the licensee shall distribute the service as part of the basic service.

(6) If the programming services of two or more television stations rank equally in the order of priority established by this section, unless the operators of the stations agree otherwise in writing, a licensee shall give priority

(a) if the studios of the stations are located in the same province as the licensee or in the National Capital Region, as described in the schedule to the National Capital Act, to the programming services of the stations in the order of the proximity of their main studios to the local head end of the licensee; and

(b) in any other case, to the programming service of the station the studio of which is located in the same province as the licensee.

Access for Specialty, Pay Television and Television Pay-per-view Services

18. (1) Except as otherwise provided under a licensee's condition of licence, this section applies to Class 1 licensees.

(2) In this section, "general interest television pay-per-view service" means a television pay-per-view service the programming of which may be selected from any of the categories listed in column I of item 6 of Schedule I tothe Pay Television Regulations, 1990, that selection not being restricted by a condition relating to the service.

(3) For the purposes of this section, a licensee makes use of digital technology for the delivery of programming to subscribers when at least 15% of its subscribers receive one or more programming services on a digital basis.

(4) For the purposes of this section,

(a) a licensee is considered to be operating in a francophone market if more than 50% of the total population of all cities, towns and municipalities encompassed in whole or in part within the licensed area of the licensee has French as its mother tongue, according to the most recent population figures published by Statistics Canada; and

(b) a licensee that is not operating in a francophone market is considered to be operating in an anglophone market.

(5) Except as otherwise provided under a condition of its licence or in this section, and subject to section 20, a licensee shall distribute, to the extent of available channels,

(a) if the licensee is operating in an anglophone market,

(i) each English-language specialty service, the operator of which is authorized to provide the service to all or part of the licensed area of the undertaking, other than a single or limited point-of-view religious specialty service,

(ii) each English-language pay television service, the operator of which is authorized to provide the service to all or part of the licensed area of the undertaking, other than a single or limited point-of-view religious pay television service, and

(iii) at least one English-language general interest television pay-per-view service;

(b) if the licensee is operating in a francophone market,

(i) each French-language specialty service, the operator of which is authorized to provide the service to all or a part of the licensed area of the undertaking, other than a single or limited point-of-view religious specialty service,

(ii) each French-language pay television service, the operator of which is authorized to provide the service to all or a part of the licensed area of the undertaking, other than a single or limited point-of-view religious pay television service, and

(iii) at least one French-language general interest television pay-per-view service; and

(c) the ethnic programming service of a programming undertaking authorized to provide the service to all or any part of the licensed area of the undertaking if

(i) the licensee was distributing the service on May 16, 1994, or

(ii) 10% or more of the total population of all cities, towns and municipalities encompassed in whole or in part within the licensed area of the licensee is of one or a combination of the ethnic origins to which the service is intended to appeal, according to the most recent population figures published by Statistics Canada.

(6) If a licensee is distributing a pay-per-view service on more than 10 analog channels, the Commission may declare one or more channels to be available channels for the purposes of subsection (5).

(7) A licensee is not required to distribute, under subsection (5), the service of a programming undertaking that was licensed after May 6, 1996 if the only available channel is one on which the licensee is distributing a non-Canadian programming service that was distributed by the licensee before May 6, 1996.

(8) If, at the time the Commission licensed a programming undertaking, the Commission included a condition authorizing the programming undertaking to require the licensee to commence distribution of its programming service on the earlier of the date on which the licensee makes use of digital technology for the delivery of programming to subscribers and September 1, 1999, the licensee is not required to distribute the service under subsection (5) until the earlier of the two dates.

(9) Subject to subsection (10), if a licensee has not made use of digital technology for the delivery of programming to subscribers by September 1, 1999, the licensee shall distribute the programming service referred to in subsection (8) on an analog channel, unless the operator of the programming service agrees in writing to the distribution of its service on a digital basis.

(10) When a licensee makes use of digital technology for the delivery of programming to subscribers, the licensee may distribute the programming service referred to in subsection (8) on an analog channel or on a digital basis, or both.

Television Programming Services that May Be Distributed

19. Except as otherwise provided under a condition of its licence, if a licensee satisfies the requirements of sections 17 and 18, it may distribute

(a) the programming service of any regional television station that is not distributed under section 17;

(b) the programming service of any extra-regional television station that is not distributed under section 17;

(c) any pay television service and any television pay-per-view service that is not distributed under section 18, the operator of which is authorized to provide the service to all or part of the licensed area of the undertaking;

(d) any specialty service that is not distributed under section 18, the operator of which is authorized to provide the service to all or part of the licensed area of the undertaking;

(e) any video-on-demand service, the operator of which is authorized to provide the service to all or part of the licensed area of the undertaking;

(f) subject to subsection 20(3) and section 27, community programming;

(g) the programming service of any non-Canadian television station that is received directly over the air at the local head end, other than

(i) a programming service consisting of programming that has predominantly religious content, and

(ii) the programming service of a non-Canadian television station that began operation after January 1, 1985;

(h) any Part 2 eligible satellite service that the licensee was authorized to distribute as part of its basic service before June 3, 1993;

(i) any Part 2 eligible satellite service other than one referred to in paragraph (h);

(j) the programming service of any distant television station that is not a Part 2 eligible satellite service and that was distributed throughout the licensed area by any licensee before June 3, 1993;

(k) the programming service of any local television station or any specialty service authorized by the Commission for distribution on program repeat channels, in accordance with Public Notice CRTC 1993-74, entitled Structural Public Hearing;

(l) any public affairs programming service;

(m) subject to section 21, the programming service of any exempt programming undertaking;

(n) any programming service that promotes a programming service distributed by the licensee and that meets the criteria set out in Public Notice CRTC 1995-172, entitled Revision to the Commission's Policy Governing the Distribution of Pay Television Promotional Material by Cable Television Licensees; and

(o) any programming service authorized under a condition of its licence.

Distribution and Linkage

20. (1) Except as otherwise provided under a condition of its licence, if a licensee distributes a programming service referred to in subsection 18(5) or paragraph 19(c), (d) or (i), the licensee shall distribute the service in accordance with the Commission's Public Notice entitled Distribution and Linkage Requirements for Class 1 and Class 2 Licensees, as amended from time to time.

(2) If a licensee distributes a programming service that comprises the proceedings of the House of Commons or the proceedings of the legislature of the province in which its undertaking is located, the licensee shall include that service as part of its basic service, unless the operator of the programming service agrees in writing to the distribution of its service as a discretionary service.

(3) If a licensee distributes community programming, the licensee shall distribute it as part of the basic service.

Access by Exempt Programming Undertakings

21. (1) Except as otherwise provided under a licensee's condition of licence, this section applies to Class 1 licensees.

(2) The definitions in this subsection apply in this section.

"affiliate" means a person who controls the licensee, or who is controlled by the licensee or by a person who controls the licensee. (affiliée)

"control" means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, an agreement or an arrangement, the ownership of a body corporate or otherwise. (contrôle)

"share" means a share in the capital of a corporation and includes a security that is convertible into a share at all times at the option of the holder. (action)

"third party exempt programming undertaking" means an exempt programming undertaking of which the licensee or an affiliate, or both, controls less than 15% of the total shares issued and outstanding. (entreprise de programmation tierce exemptée)

(3) If a licensee distributes on one or more analog channels the programming services of an exempt programming undertaking of which the licensee or an affiliate, or both, controls 15% or more of the total shares issued and outstanding, the licensee shall make available an equal number of analog channels for the distribution of programming services of third party exempt programming undertakings.

Audio Programming Services that Must Be Distributed

22. (1) Except as otherwise provided under a condition of its licence, a Class 1 licensee, and any Class 2 licensee that elects to distribute an audio programming service, shall distribute

(a) the programming services of all local radio stations; and

(b) if they are not distributed under paragraph (a),

(i) the programming services of at least one radio station that broadcasts in English and at least one that broadcasts in French that are owned and operated by the Corporation, and

(ii) the educational radio programming service of an educational authority designated by the province in which the licensed area of the undertaking is located.

(2) Despite subsection (1), a licensee is not required to distribute the programming service of a local digital radio station that is licensed on a transitional basis.

Audio Programming Services that May Be Distributed

23. (1) Except as otherwise provided under a condition of its licence or in subsection (2), a licensee may distribute

(a) any audio Canadian programming service;

(b) any audio non-Canadian programming service that is received over the air at the local head end, unless the service

(i) solicits advertising in Canada, or

(ii) consists of programming that has predominantly religious content;

(c) any international radio service operated or funded by a national government or its agent; and

(d) any audio programming service authorized under a condition of its licence.

(2) Except as otherwise provided under a condition of its licence, no licensee shall distribute

(a) the programming service of a carrier current undertaking that is an exempt programming undertaking; or

(b) any audio Canadian programming service in a language other than French, English or a language spoken by an aboriginal people of Canada, that contains commercial messages unless

(i) the audio programming service was authorized by the Commission for distribution throughout the licensed area by any licensee on or before July 4, 1985, or

(ii) there is no local radio station that is an ethnic station.

Access by Pay Audio Programming Undertakings

24. (1) The definitions in this subsection apply in this section.

"affiliate" has the same meaning as in subsection 21(2). (affiliée)

"control" has the same meaning as in subsection 21(2). (contrôle)

"share" has the same meaning as in subsection 21(2). (action)

"third party pay audio programming undertaking" means a pay audio programming undertaking of which the licensee or an affiliate, or both, controls less than 30% of the total shares issued and outstanding. (entreprise tierce de programmation sonore payante)

(2) Subject to subsection (3), if a Class 1 licensee distributes the programming service of a pay audio programming undertaking of which the licensee or an affiliate, or both, controls 30% or more of the total shares issued and outstanding, the licensee shall distribute the programming service of at least one third party pay audio programming undertaking.

(3) A licensee is not required to distribute the programming service of a third party pay audio programming undertaking that is delivered to the licensee's head end in a format that is technically incompatible with the licensee's method of signal distribution.

Restricted Channel

25. Except as otherwise provided under a condition of its licence, a licensee shall not distribute on a restricted channel

(a) a programming service referred to in subsection 18(5) or paragraph 19(f); or

(b) a programming service referred to in subsection 17(1) or (5) or 20(2) or section 22, unless the licensee has the prior written agreement of the operator of the programming service.

Notice of Channel Realignment

26. If a licensee intends to change the channel on which a Canadian programming service is distributed, the licensee shall not implement the change unless, at least 60 days before the proposed effective date of the change, it sends a written notice indicating the intended date of the change and the channel number on which the programming service will be distributed, to each of the operators of the programming services whose channel placements will be affected by the proposed realignment.

Community Channel

27. (1) If a licensee elects to distribute community programming, except as otherwise provided in subsections (2) and (3) or under a condition of its licence, a licensee shall not distribute on the community channel any programming service other than

(a) community programming;

(b) an announcement promoting broadcasting services that the licensee is authorized to provide;

(c) a public service announcement;

(d) an information program funded by and produced for a federal, provincial or municipal government or agency or a public service organization;

(e) the question period of the legislature of the province in which the undertaking is located;

(f) an announcement providing information about the programming to be distributed on the community channel;

(g) a commercial message that mentions or displays the name of a person who sponsored a community event or the goods, services or activities sold or promoted by the person, if the mention or display is in the course of, and incidental to the production of, community programming relating to the event;

(h) an oral or a written acknowledgement contained in community programming that mentions no more than the name of a person, the goods, services or activities that are being sold or promoted by the person and their address and telephone number, if the person provided direct financial assistance for the community programming in which the acknowledgement is contained;

(i) an oral or a written acknowledgement contained in community programming that mentions no more than the name of a person, the goods or services provided by the person and their address and telephone number, if the person provided the goods or services free of charge to the licensee for use in connection with the production of the community programming in which the acknowledgement is contained; or

(j) a still image programming service as described in Public Notice CRTC 1993-51, entitled Exemption Order Respecting Still Image Programming Service Undertakings, if the service is produced by the licensee or by members of the community served by the undertaking and does not contain commercial messages, other than commercial messages contained within the programming service of a licensed radio station.

(2) Whenever a licensee is not distributing community programming on the community channel, or is distributing on that channel community programming that has no audio component, the licensee may distribute on that channel the programming service of a local radio station other than an educational radio programming service the operation of which is the responsibility of an educational authority.

(3) Whenever a Class 2 licensee is not distributing community programming on the community channel, the licensee may distribute the programming services referred to in Public Notice CRTC 1985-151, entitled Complementary Programming on the Community Channel.

(4) If a licensee provides time on the community channel during an election period for the distribution of programming of a partisan political character, the licensee shall allocate that time on an equitable basis among all accredited political parties and rival candidates.

28. (1) Except as otherwise provided under a condition of its licence, a licensee shall

(a) keep a program log or a machine-readable record of programs distributed on the community channel and retain it for a period of one year after distribution of the programs; and

(b) enter into the program log or machine-readable record of programs each day the following information for each program:

(i) the date of distribution,

(ii) the title,

(iii) the name of the undertaking at which the program was produced,

(iv) a brief description of the program, including a statement as to whether it was produced by employees of the undertaking or by volunteers, and

(v) the duration of the program.

(2) A licensee shall retain a clear and intelligible audio-visual recording of each program distributed on the community channel for a period of

(a) four weeks after the date of distribution of the program; or

(b) if the Commission receives a complaint from a person regarding the program or for any other reason wishes to investigate the complaint and so notifies the licensee before the end of the period referred to in paragraph (a), eight weeks after the date of distribution of the program.

(3) If, before the end of the relevant period referred to in subsection (1) or (2), the Commission requests from a licensee a program log, machine-readable record or clear and intelligible audio or audio-visual recording of a program, the licensee shall immediately furnish the log, record or recording to the Commission.

Contribution to Local Expression and Canadian Programming

29. (1) In this section, "contribution to local expression" means a contribution made in accordance with Public Notice CRTC 1997-25, entitled New Regulatory Framework for Broadcasting Distribution Undertakings.

(2) If a licensee is required under this section to make a contribution to Canadian programming, it shall contribute

(a) to the Canadian production fund at least 80% of its total required contribution; and

(b) to one or more independent production funds, the remainder of its total required contribution.

(3) Except as otherwise provided by a condition of its licence, a Class 1 licensee that had 60,000 or more subscribers on August 31 of the previous broadcast year shall make a contribution to Canadian programming

(a) in the broadcast year ending on August 31, 1998, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in the period beginning on the day these Regulations come into force and ending on August 31, 1998, less any contribution to local expression made by the licensee during that period, and

(ii) 3% of its gross revenues derived from broadcasting activities in the period referred to in subparagraph (i); and

(b) in the broadcast year ending on August 31, 1999, and in each broadcast year thereafter, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in the year, less any contribution to local expression made by the licensee in that year, and

(ii) 3% of its gross revenues derived from broadcasting activities in that year.

(4) Except as otherwise provided by a condition of its licence, a Class 1 licensee that had at least 20,000 but fewer than 60,000 subscribers on August 31 of the previous broadcast year shall make a contribution to Canadian programming

(a) in the broadcast year ending on August 31, 1998, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in the period beginning on the day these Regulations come into force and ending on August 31, 1998, less any contribution to local expression made by the licensee during that period, and

(ii) 2% of its gross revenues derived from broadcasting activities in the period referred to in subparagraph (i);

(b) in the broadcast year ending on August 31, 1999, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in that year less any contribution to local expression made by the licensee in that year, and

(ii) 2.5% of its gross revenues derived from broadcasting activities in that year; and

(c) in the broadcast year ending on August 31, 2000, and in each broadcast year thereafter, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in the year, less any contribution to local expression made by the licensee in that year, and

(ii) 3% of its gross revenues derived from broadcasting activities in that year.

(5) Except as otherwise provided by a condition of its licence, a Class 1 licensee that had fewer than 20,000 subscribers on August 31 of the previous broadcast year shall make a contribution to Canadian programming

(a) in the broadcast year ending on August 31, 1998, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in the period beginning on the day these Regulations come into force and ending on August 31, 1998, less any contribution to local expression made by the licensee during that period, and

(ii) 1.5% of its gross revenues derived from broadcasting activities in the period referred to in subparagraph (i); and

(b) in the broadcast year ending on August 31, 1999, and in each broadcast year thereafter, of an amount not less than the greater of

(i) 5% of its gross revenues derived from broadcasting activities in the year, less any contribution to local expression made by the licensee in that year, and

(ii) 1.5% of its gross revenues derived from broadcasting activities in that year.

(6) Except as otherwise provided by a condition of its licence, a Class 2 licensee shall make a contribution to Canadian programming

(a) in the broadcast year ending on August 31, 1998, of an amount not less than 5% of its gross revenues derived from broadcasting activities in the period beginning on the day these Regulations come into force and ending on August 31, 1998, less any contribution to local expression made by the licensee during that period; and

(b) in the broadcast year ending on August 31, 1999, and in each broadcast year thereafter, of an amount not less than 5% of its gross revenues derived from broadcasting activities in the year, less any contribution to local expression made by the licensee in that year.

Programming Service Deletion and Substitution

30. (1) The definitions in this subsection apply in this section.

"broadcaster" includes an educational authority responsible for an educational television programming service. (radiodiffuseur)

"local television station", in addition to the meaning set out in section 1, includes the Atlantic Satellite Network and an educational authority responsible for an educational television programming service. (station de télévision locale)

"privately owned local television station" means a local television station that is not owned by the Corporation. (station de télévision locale privée)

(2) Except as otherwise provided under a condition of its licence, and subject to subsection (5), a Class 1 licensee

(a) shall delete the programming service of a television station and substitute the programming service of a local television station or a regional television station or, with the agreement of the broadcaster operating the local television station or regional television station, shall have that broadcaster carry out the deletion and substitution, if

(i) the programming service to be deleted and the programming service to be substituted are comparable and simultaneously broadcast,

(ii) the local television station or regional television station has a higher priority under section 17, and

(iii) in a case when the broadcaster operating the local television station or regional television station is not to carry out the deletion and substitution under an agreement with the licensee, the licensee has, at least four days before the date on which the programming service is broadcast, received from the broadcaster operating the local television station or regional television station a written request for the deletion and substitution;

(b) may delete and substitute in accordance with paragraph (a) notwithstanding that the licensee has received a written request from the broadcaster operating the local television station or regional television station less than four days before the date on which the programming service is broadcast; and

(c) may delete the programming service of a television station and substitute the programming service of a specialty service if

(i) the programming service to be deleted and the programming service to be substituted are comparable and simultaneously broadcast, and

(ii) the operator of the specialty service has delivered to the licensee a written request for the deletion and substitution.

(3) Except as otherwise provided under a condition of its licence, and subject to subsection (5), a Class 2 licensee

(a) shall delete the programming service of a television station and substitute the programming service of the privately owned local television station or, with the agreement of the broadcaster operating the privately owned local television station, shall have that broadcaster carry out the deletion and substitution, if

(i) the main studio of the privately owned local television station

(A) is located within the licensed area of the licensee, and

(B) is used to produce locally originated programming,

(ii) the programming service to be deleted and the programming service to be substituted are comparable and simultaneously broadcast,

(iii) the privately owned local television station has a higher priority under section 17, and

(iv) in a case when the broadcaster operating the privately owned local television station is not to carry out the deletion and substitution under an agreement with the licensee, the licensee has, at least four days before the date on which the programming service is broadcast, received from the broadcaster operating the privately owned local television station a written request for the deletion and substitution; and

(b) may delete the programming service of a television station and substitute that of a local television station, regional television station or specialty service in the circumstances in which a Class 1 licensee is required or authorized by subsection (2) to make the deletion and substitution.

(4) If a substitution is requested by more than one broadcaster under paragraph (2)(a) or (3)(a), the licensee shall give preference to the programming service of the television station that has the highest priority under section 17.

(5) A licensee shall not delete the programming service of a television station under subsection (2) or (3) if the Commission notifies the licensee that the deletion is not in the public interest because

(a) undue financial hardship would result for the operator of the television station; or

(b) the programming service to be deleted contains subsidiary signals designed to inform or entertain and the programming service to be substituted does not contain similar signals.

(6) A licensee may discontinue a deletion and substitution made under subsection (2) or (3) if the programming services in respect of which the deletion and substitution are made are not, or are no longer, comparable and broadcast simultaneously.

PART 3

CLASS 3 LICENSEES

Application

31. Except as otherwise provided under a licensee's condition of licence, this Part applies to Class 3 licensees.

Television Programming Services that Must Be Distributed as Part of the Basic Service

32. (1) Except as otherwise provided in this section or under a condition of its licence, a licensee shall distribute as part of its basic service

(a) the programming services of all local television stations; and

(b) the programming services of all regional television stations other than affiliates or members of a network of which a local television station is an affiliate or member.

(2) A licensee of a cable distribution undertaking shall distribute the programming services referred to in subsection (1) beginning with the basic band of its undertaking.

(3) If a licensee receives programming services that are identical, the licensee is required to distribute, under subsection (1), only one of them.

(4) If the programming services of two or more regional television stations that are affiliates or members of the same network are received at the local head end, the licensee is required to distribute only one of them.

(5) If a licensee receives over the air an educational television programming service the operation of which is the responsibility of an educational authority designated by a province other than the province in which the licensed area of the undertaking is located, the licensee is not required to distribute it under subsection (1) but may distribute it as part of the basic service.

Television Programming Services that May Be Distributed

33. Except as otherwise provided under a condition of its licence, a licensee may distribute

(a) the programming service of any regional television station that is not distributed under section 32;

(b) the programming service of any extra-regional television station;

(c) any pay television service and any television pay-per-view service the originator of which is authorized to provide the service to all or part of the licensed area of the undertaking;

(d) any specialty service the originator of which is authorized to provide the service to all or part of the licensed area of the undertaking;

(e) any video-on-demand service the originator of which is authorized to provide the service to all or part of the licensed area of the undertaking;

(f) the programming service of any television station that is received directly over the air at the local head end, other than a non-Canadian television station

(i) the programming of which has predominantly religious content, or

(ii) that began operation after January 1, 1985;

(g) subject to section 35, community programming;

(h) any Part 3 eligible satellite service;

(i) any public affairs programming service;

(j) the programming service of any exempt programming undertaking;

(k) any programming service that promotes a programming service distributed by the licensee and that meets the criteria set out in Public Notice CRTC 1995-172, entitled Revision to the Commission's Policy Governing the Distribution of Pay Television Promotional Material by Cable Television Licensees;

(l) any educational television programming service the operation of which is the responsibility of an educational authority designated by the province in which the licensed area of the undertaking is located; and

(m) any programming service authorized under a condition of its licence.

Audio Programming Services that May Be Distributed

34. Except as otherwise provided under a condition of its licence, a licensee may distribute

(a) any audio Canadian programming service;

(b) any audio non-Canadian programming service that is received over the air at the local head end, unless the service

(i) solicits advertising in Canada, or

(ii) consists of programming that has predominantly religious content;

(c) any international radio service operated or funded by a national government or its agent; or

(d) any audio programming service authorized under a condition of its licence.

Community Programming

35. Except as otherwise provided under a condition of its licence, if a licensee elects to distribute community programming under paragraph 33(1)(g), the licensee

(a) shall distribute the programming as part of the basic service;

(b) shall comply with the requirements of paragraphs 27(1)(a) to (i) and subsections 27(2) to (4);

(c) may distribute a still image programming service as described in Public Notice CRTC 1993-51, entitled Exemption Order Respecting Still Image Programming Service Undertakings, if the service is produced by the licensee or by members of the community served by the undertaking; and

(d) may, if it provides service to an unserved community, distribute a maximum of 12 minutes of commercial messages during each clock hour of community programming.

PART 4

DTH DISTRIBUTION UNDERTAKINGS

Application

36. This Part applies to licensees who hold a licence to operate a DTH distribution undertaking.

Television Programming Services that Must Be Distributed as Part of the Basic Service

37. Except as otherwise provided under a condition of its licence, a licensee shall distribute as part of its basic service

(a) the programming service of at least one of each of the Corporation's English-language and French-language television network affiliates or members; and

(b) the programming service of at least one affiliate of each television network licensed on a national basis.

Access for Specialty, Pay Television and DTH Pay-per-view Services

38. (1) In this section, "general interest DTH pay-per-view service" means a DTH pay-per-view service, the programming of which may be selected from any of the categories listed in column I of item 6 of Schedule I to the Pay Television Regulations, 1990, that selection not being restricted by a condition relating to the service.

(2) Except as otherwise provided under a condition of its licence, a licensee shall distribute, to the extent of available channels,

(a) each specialty service, other than a single or limited point-of-view religious specialty service;

(b) each pay television service, other than a limited point-of-view religious pay television service;

(c) at least one English-language general interest DTH pay-per-view service; and

(d) at least one French-language general interest DTH pay-per-view service.

Television Programming Services that May Be Distributed

39. Except as otherwise provided under a condition of its licence, a licensee may distribute

(a) the programming service of any licensed programming undertaking, other than a television pay-per-view service;

(b) any DTH eligible satellite service;

(c) any package that consists of

(i) the programming services of four non-Canadian television stations that are each affiliated with a different commercial network, and

(ii) the programming service of one non-Canadian non-commercial television station;

(d) any public affairs programming service;

(e) subject to section 41, the programming service of any exempt programming undertaking;

(f) any programming service that promotes a programming service distributed by the licensee and that meets the criteria set out in Public Notice CRTC 1995-172, entitled Revision to the Commission's Policy Governing the Distribution of Pay Television Promotional Material by Cable Television Licensees; and

(g) any programming service authorized under a condition of its licence.

Distribution and Linkage

40. (1) Except as otherwise provided under a condition of its licence, if a licensee distributes one of the programming services referred to in subsection 38(2) or section 39, the licensee shall distribute the service in accordance with the Commission's Public Notice entitled Linkage Requirements for Direct-to-home (DTH) Satellite Distribution Undertakings, as amended from time to time.

(2) If a licensee distributes a programming service that comprises the proceedings of the House of Commons, the licensee shall include that service as part of its basic service, unless the licensee and the operator of the programming service agree in writing to the distribution of the service as a discretionary service.

(3) A licensee shall not distribute an English-language DTH pay-per-view service unless it also distributes a French-language DTH pay-per-view service.

Access by Pay Audio Programming Undertakings

41. (1) The definitions in this subsection apply in this section.

"affiliate" has the same meaning as in subsection 21(2). (affiliée)

"control" has the same meaning as in subsection 21(2). (contrôle)

"share" has the same meaning as in subsection 21(2). (action)

"third party pay audio programming undertaking" has the same meaning as in subsection 24(1). (entreprise tierce de programmation sonore payante)

(2) If a licensee distributes the programming service of a pay audio programming undertaking of which the licensee or an affiliate, or both, controls 30% or more of the total shares issued and outstanding, the licensee shall distribute the programming service of at least one third party pay audio programming undertaking.

(3) Despite subsection (2), a licensee is not required to distribute the programming service of a third party pay audio programming undertaking that is delivered to the licensee in a format that is technically incompatible with the licensee's existing method of signal distribution.

Simultaneous Program Substitution and Deletion

42. (1) Except as otherwise provided under a condition of its licence, if a licensee receives, at least four days before the date on which the programming service is broadcast, a written request for substitution or deletion from the operator of a licensed Canadian television programming undertaking, the licensee shall

(a) delete a non-Canadian programming service and substitute the comparable and simultaneously broadcast programming service of the Canadian television programming undertaking whose signal is distributed by the licensee; and

(b) delete, in respect of subscribers located within the Grade B contour of the Canadian television programming undertaking, a programming service that is comparable to that of the Canadian television programming undertaking and that would otherwise be received simultaneously by those subscribers.

(2) A licensee may delete and substitute in accordance with subsection (1) notwithstanding that the licensee has received a written request from the operator of the licensed Canadian television programming undertaking less than four days before the date on which the programming service is broadcast.

(3) A licensee shall not delete the programming service under subsection (1) or (2) if the Commission notifies the licensee that the deletion is not in the public interest because the programming service to be deleted contains subsidiary signals designed to inform or entertain and the simultaneously broadcast programming service does not contain similar signals.

(4) A licensee may discontinue a deletion or substitution made under subsection (1) or (2) if the programming services in respect of which the deletion or substitution is made are not, or are no longer, comparable and broadcast simultaneously.

Non-simultaneous Program Deletion

43. (1) Except as otherwise provided under a condition of its licence, if a licensee receives, at least four 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, in respect of subscribers located within the Grade B contour of the Canadian television programming undertaking, a programming service that is comparable to that of the Canadian television programming undertaking and that would otherwise be received by those subscribers on a non-simultaneous basis within the same broadcast week.

(2) A licensee shall not delete the programming service under subsection (1) if the Commission notifies the licensee that the deletion is not in the public interest because the programming service to be deleted contains subsidiary signals designed to inform or entertain and the non-simultaneously broadcast programming service does not contain similar signals.

(3) A licensee may discontinue a deletion made under subsection (1) if the programming services in respect of which the deletion is made are not, or are no longer, comparable and broadcast on a non-simultaneous basis within the same broadcast week.

Contribution to Canadian Programming

44. (1) If a licensee is required under this section to make a contribution to Canadian programming, it shall contribute

(a) to the Canadian production fund at least 80% of its total required contribution; and

(b) to one or more independent production funds the remainder of its total required contribution.

(2) A licensee shall make a contribution to Canadian programming

(a) in the broadcast year ending on August 31, 1998, of an amount not less than 5% of its gross revenues derived from broadcasting activities in the period beginning on the day these Regulations come into force and ending on August 31, 1998; and

(b) in the broadcast year ending on August 31, 1999, and in each broadcast year thereafter, of an amount not less than 5% of its gross revenues derived from broadcasting activities in that year.

PART 5

FEES FOR AND PROVISION OF BASIC SERVICE

Interpretation

45. The definitions in this section apply in this Part.

"base portion" means the basic monthly fee less the pass-through portion. (frais de base)

"distribution system" means the equipment and facilities used by a licensee for the distribution of its basic service from its processing facilities to the points at which the service is diverted for the exclusive benefit of a subscriber. (système de distribution)

"pass-through portion" means the part of the basic monthly fee that reflects the amount payable by a licensee to a person licensed to operate a broadcasting undertaking for the transmission of programming services, where

(a) the amount varies in proportion to the number of subscribers to whom the licensee distributes the programming services; and

(b) the Commission has authorized the amount as a condition relating to the broadcasting undertaking under subsection 9(1) of the Act. (frais imputables)

"subscriber drop" means the equipment or facilities used by a licensee for the distribution of the programming services distributed on its basic band from the point at which those services are diverted from the distribution system to a terminal device located in the subscriber's residence or premises for the exclusive benefit of the subscriber. (prise de service d'abonné)

Application

46. Except as otherwise provided in this Part or under a condition of its licence, this Part applies to

(a) a Class 1 licensee that on May 17, 1996 held a licence to carry on a cable distribution undertaking and to which subsection 18(4) of the Cable Television Regulations, 1986 applied immediately before the coming into force of these Regulations; and

(b) the successor of a licensee referred to in paragraph (a).

47. (1) Subject to subsection (3), this Part does not apply to a licensee referred to in paragraph 46(a) or (b) if

(a) the licensee sends to each of its subscribers a written notice that contains the information set out in Schedule 1;

(b) the licensee sends to the Commission

(i) a copy of the notice referred to in paragraph (a),

(ii) a declaration verifying the date on which the notice was sent to subscribers under paragraph (a), and

(iii) on or before the date on which notice was sent to subscribers under paragraph (a), documentation consisting of

(A) evidence demonstrating that the basic service of one or more other licensed distribution undertakings is available to 30% or more of the total of single-unit dwellings, units in multiple-unit dwellings, hotels, hospitals, nursing homes and other commercial or institutional premises in its licensed area, and

(B) an opinion provided by the licensee's auditor, in accordance with section 5815 of the Canadian Institute of Chartered Accountants Handbook, confirming that, on a specified date, the licensee was no longer providing its basic service to 5% or more of the total of single-unit dwellings, units in multiple-unit dwellings, hotels, hospitals, nursing homes and other commercial or institutional premises that it served on a date specified in the opinion, on condition that the date of determination of that total and the date of determination of the percentage lost are on or after the date when the basic service of another licensed distribution undertaking first became available in its licensed area; and

(c) 60 days have elapsed since the date on which the notice was sent to subscribers under paragraph (a).

(2) Subject to subsection (3), section 48 does not apply if

(a) the licensee sends to the Commission the documentation referred to in clauses (1)(b)(iii)(A) and (B); and

(b) 60 days have elapsed since the date on which the documentation referred to in paragraph (a) was received by the Commission.

(3) The Commission may, before the date on which a licensee would no longer be subject to the obligations of this Part under subsection (1) or (2),

(a) suspend the application of subsection (1) or (2) in respect of the licensee, pending further consideration of the licensee's proposal and

(i) the receipt of additional information,

(ii) the completion of a public hearing into the matter, or

(iii) both the receipt of additional information and the completion of a public hearing into the matter; and

(b) disallow the licensee's proposal to be removed from the obligations of this Part either without suspension under paragraph (a) or after such a suspension.

Installation and Provision of Basic Service

48. Except as otherwise provided under a condition of its licence, each Class 1 and Class 2 licensee shall

(a) install the distribution system necessary for the provision of its basic service at a household or premises within a reasonable time after a request for the service is received from a member of the household or an owner or operator of the premises, if the household or premises are

(i) situated in a residential area within the licensed area, and

(ii) provided with water or sewer services by a municipal or other public authority;

(b) at the request of a member of a household or an owner or operator of premises referred to in paragraph (a), install the subscriber drop and provide the basic service to that household or those premises, unless the member, owner or operator has not complied with the licensee's request for payment of

(i) an amount not greater than the amount of the non-recurring costs to be reasonably incurred by the licensee for the installation or reconnection of the subscriber drop, determined in accordance with Circular No. 354 to All Class 1 & 2 Cable Licensees, published by the Commission on November 29, 1988,

(ii) the licensee's fee for the provision of the basic service for one month to that household or those premises, or

(iii) an overdue debt for the provision of basic service that the member, owner or operator owes to the licensee; and

(c) provide the basic service to a subscriber as long as the subscriber pays in advance the fee for each month of the basic service.

Prohibition

49. A licensee shall not increase its basic monthly fee except in accordance with this Part.

Increase in Base Portion

50. Subject to section 51, a licensee may increase the base portion of its basic monthly fee if

(a) it sends to each of its subscribers a written notice that includes the relevant information set out in Schedule 2;

(b) it sends to the Commission

(i) a copy of the notice referred to in paragraph (a),

(ii) a declaration that the notice has been or will be sent to each of its subscribers at least 90 days before the proposed effective date of the increase, and

(iii) appropriate documentation to justify the proposed increase, in accordance with Public Notice CRTC 1993-146, entitled New Assessment Guidelines for Fee Increases Under Subsection 18(8) of the Cable Television Regulations, 1986; and

(c) 90 days have elapsed since receipt by the Commission of the documents referred to in paragraph (b).

Commission Suspension or Disallowance

51. The Commission may, before the date on which an increase in the base portion of the basic monthly fee referred to in section 50 is to take effect,

(a) suspend the implementation of all or part of the increase pending further consideration of the increase and

(i) the receipt of additional information,

(ii) the completion of a public hearing into the matter, or

(iii) both the receipt of additional information and the completion of a public hearing into the matter; and

(b) disallow the implementation of all or part of the increase either without suspension under paragraph (a) or after such a suspension.

Increase in Base Portion for Distribution of Specialty Services

52. (1) For the purposes of subsection (2), a licensee is considered to be operating in a francophone market if more than 50% of the total population of all cities, towns and municipalities encompassed in whole or in part within the licensed area of the licensee has French as its mother tongue, according to the most recent population figures published by Statistics Canada.

(2) Subject to section 54, a licensee may increase its base portion by a maximum of

(a) $0.03 for each specialty service that it distributes as part of the basic service, if that licensee is operating in a francophone market; or

(b) $0.02 for each specialty service that it distributes as part of the basic service, if that licensee is not operating in a francophone market.

(3) If a licensee has increased its base portion under subsection (2) with respect to a specialty service and ceases to distribute that service as part of the basic service, the licensee shall decrease its base portion by an amount equal to the amount of the increase.

Increase in Pass-through Portion

53. (1) Subject to section 54, a licensee may increase its pass-through portion if the increase is less than or equal to the amount of an increase that the Commission has, after September 1, 1986, authorized to be payable to the operator of a broadcasting undertaking.

(2) If a licensee has increased its pass-through portion under subsection (1) with respect to a programming service and ceases to distribute that service as part of the basic service, the licensee shall decrease its pass-through portion by an amount equal to the amount of the increase.

(3) If a licensee has increased its pass-through portion under subsection (1) with respect to a programming service and the operator of the broadcasting undertaking charges the licensee less than the amount in the pass-through portion that reflects the amount payable to the operator of that undertaking for the service, the licensee shall decrease its pass-through portion by an amount equal to the difference.

Notice

54. If a licensee intends to increase its basic monthly fee under subsection 52(2) or 53(1), it shall not implement the increase unless

(a) it sends to each of its subscribers a written notice of the increase, setting out the amount of the increase, expressed in dollars, in respect of each part of the basic monthly fee increased under subsection 52(2) or 53(1), as applicable;

(b) it sends to the Commission

(i) a copy of the notice referred to in paragraph (a),

(ii) a declaration that the notice has been or will be sent at least 60 days before the proposed effective date of the increase, and

(iii) in the case of an increase referred to in subsection 52(2), a list of the specialty services for which the increase is sought; and

(c) 60 days have elapsed since receipt by the Commission of the documents referred to in paragraph (b).

55. The written notice sent to subscribers under paragraphs 47(1)(a), 50(a) and 54(a) must be clearly identifiable as coming from the licensee and must not be packaged with any material emanating from a person other than the licensee.

Availability of Refund or Credit

56. If a licensee charges a fee for the provision of the basic service that is greater than the basic monthly fee, the licensee must, on receipt of a notice from the Commission that the licensee's fee is greater than the basic monthly fee, provide to each subscriber who is so over charged a refund or credit that is equal to the unauthorized amounts paid by the subscriber.

PART 6

REPEAL AND COMING INTO FORCE

Repeal

57. The Cable Television Regulations, 19862 are repealed.

Coming into Force

58. These Regulations come into force on January 1, 1998.

SCHEDULE 1

(Paragraph 47(1)(a)

NOTICE TO SUBSCRIBERS

(Name of licensee) is proposing that its basic monthly fee be deregulated, in accordance with subsection 47(1) of the Broadcasting Distribution Regulations. If a licensee meets the criteria set out in that subsection, its basic monthly fee will no longer be regulated by the Canadian Radio-television and Telecommunications Commission under Part 5 of the Regulations unless the Commission intervenes to suspend or disallow the proposed deregulation.

The details of (name of licensee)'s justification for the proposed deregulation are set out in documents filed with the Commission, which are available for public inspection during normal business hours at (address of licensee) and at the offices of the CRTC, 1 Promenade du Portage, Hull, Quebec, and (address of nearest regional office).

SCHEDULE 2

(Paragraph 50(a))

NOTICE TO SUBSCRIBERS

(Name of licensee) is proposing to increase its basic monthly fee, in accordance with section 50 of the Broadcasting Distribution Regulations. That section permits a licensee to increase its basic monthly fee unless the Canadian Radio-television and Telecommunications Commission intervenes to disallow all or part of the increase.

The proposed amount and effective date of the increase are given below, in items 1 and 2. The reason for the proposed increase is given in item 3.

The details of (name of licensee)'s justification for the proposed increase are set out in documents filed with the Commission, which are available for public inspection during normal business hours at (address of licensee) and at the offices of the CRTC, 1 Promenade du Portage, Hull, Quebec, and (address of nearest regional office). You may express your comments on the proposed increase by writing to:

Secretary General
Canadian Radio-television and Telecommunications Commission
Ottawa, Ontario
K1A 0N2

before (30 days after the date of sending of this notice). A copy of your letter must be sent to (name of licensee's representative, title, address).

Item 1:

Proposed amount of increase per subscriber per month $_________
Your current basic monthly fee is $_________

If the CRTC does not disallow this increase, your new basic monthly fee will be $_________

Item 2:

Effective date of the proposed increase: ____________

Item 3:

Reason for the proposed increase

(Provide a brief statement outlining the purpose of the proposed increase and any other relevant information.)