ARCHIVED -  Decision CRTC 97-499

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Ottawa, 26 August 1997
Decision CRTC 97-499
VDN Private Cable Inc.
Montréal, Quebec - 199616588
New cable distribution undertaking
1. Following a Public Hearing in Montréal beginning on 7 July 1997, the Commission approves the application by VDN Private Cable Inc. (VDN) for a licence to carry on a cable distribution undertaking to serve parts of Montréal and will issue, subject to the requirements of this decision, a Class 1 licence expiring 31 August 2003.
2. The operation of this undertaking will be regulated pursuant to Parts I, II and IV of the Cable Television Regulations, 1986 (the regulations) and the licence will be subject to the conditions specified in this decision and in the licence to be issued.
3. VDN was incorporated under the Canada Business Corporations Act. It is controlled by Mr. Philip Gale who owns 70% of the shares of VDN.
4. VDN intends to serve parts of Montréal-Est, Saint-Laurent, Côte-Saint-Luc, Outremont, Westmount, Mont-Royal, parts of Verdun, Montréal-Ouest and Hampstead as well as Nun's Island. The Commission notes that, although VDN intends to eventually serve all of the area it applied for, its initial plans are to serve its customers residing in multiple unit dwellings served by master antenna television (MATV) systems, then to provide service to other MATV systems during the first three years of operation, with installations for single family dwellings, in competition with Videotron ltée, to commence in the fourth year.
5. The Commission is satisfied that approval of this application, which will introduce competition in the Montréal area, is consistent with the policy framework for broadcasting distribution undertakings set out in Public Notice CRTC 1997-25, and will further the objectives of the Broadcasting Act in a competitive environment.
6. The applicant proposed to charge a basic monthly fee of $22. In Public Notice CRTC 1997-25, the Commission reiterated its intention, as stated in Public Notice CRTC 1996-69, not to regulate the fees charged by new distribution undertakings entering into competition with existing undertakings, on the grounds that competition would render such regulation unnecessary.
Service requirements
7. Also in Public Notice CRTC 1997-25, the Commission stated its intent, in drafting the new distribution regulations, not to impose obligations on new distributors with respect to the provision of service. It also stated its intention to lift the obligations to provide service currently imposed on existing Class 1 and larger Class 2 cable undertakings (based on the availability to a household of municipal water or sewer services), once the basic service package of one or more licensed DTH or terrestrial distributors is available to 30% or more of the households in the service area of the existing undertaking and the number of its basic service subscribers has decreased by at least 5% from the date that the basic service of a licensed competitor was first introduced in the licensed area of the incumbent. In the Commission's view, there was a need for such requirements in the old distribution environment of limited market entry. In the new environment, these requirements will not be needed as competing terrestrial distributors seek to attract and retain market share. Additionally, the new DTH and wireless distribution undertakings will have the capacity to provide Canadians with attractive alternatives.
8. In keeping with the above approach, the Commission relieves VDN, by condition of licence, from the provisions of service requirements that are contained in section 17 of the current regulations.
Access to subscribers by competing distributors
9. As part of its application, the Commission notes that VDN requested a reasonable period of exclusivity when providing service to multiple unit dwellings in order to allow it to recover its initial capital investments. In this regard, the Commission notes that in Public Notice CRTC 1997-25, it stated that "... there should be few, if any, restrictions on a party's ability to negotiate exclusive or long-term contracts in a competitive market." In such a market, the mere exclusivity or long-term nature of a contract with a building owner will not generally be considered to constitute an undue preference or advantage. Under the proposed regulations to implement the new policies respecting distribution undertakings (published in Public Notice CRTC 1997-84), the Commission would determine, on the basis of the relevant facts, whether an exclusive or long-term contract constitutes an undue preference, contrary to the regulations.
Contribution to the development of Canadian programming
10. In its application, VDN has committed to allocate a total of 5% of its gross annual revenues derived from broadcasting activities (hereinafter "gross annual revenues") to support the development of Canadian programming. According to VDN's proposal, 3% would be allocated to the Canada Television and Cable Production Fund (the CTCPF) and a maximum of 2% towards conventional community programming.
11. Consistent with the policy framework set out in Public Notices CRTC 1997-25 and 1997-98, VDN is required, by condition of licence, to contribute a minimum of 5% of its gross annual revenues to support the development of Canadian programming.
12. More specifically, of the 5% above, VDN must contribute a minimum of 3% of its gross annual revenues to independently-administered Canadian production funds. Of this amount, 80% must be directed to the CTCPF, while up to 20% may be directed to one or more independently-administered production funds other than the CTCPF, provided that these other funds meet the criteria set out in Public Notice CRTC 1997-98.
13. With respect to the remainder, VDN may elect to contribute up to 2% of its gross annual revenues to local expression. Should the licensee choose to contribute less than 2%, the balance shall be directed to independently-administered production funds in accordance with the provisions set out above.
Community programming
14. The Commission notes VDN's commitment to produce community programming of interest to each community to be served, consisting of news, information and additional general programming produced by volunteers, gradually increasing from 4 hours per week in the first year of operation, to 8 hours in the second year, and to 16 hours in the third year. Programming will be in the French language (70%) and in the English language (30%).
15. For community programming and any other programming of a service that it originates, the licensee shall adhere, by condition of licence, to the Canadian Cable Television Association's Cable Community Channel Standards and to the guidelines on the depiction of violence in television programming set out in the Canadian Association of Broadcasters' Voluntary Code Regarding Violence in Television Programming, as amended from time to time and approved by the Commission.
Employment equity
16. In Public Notice CRTC 1992-59 dated 1 September 1992 and entitled Implementation of an Employment Equity Policy, the Commission announced that the employment equity practices of broadcasters would be subject to examination by the Commission. It encourages the licensee to consider employment equity issues in its hiring practices and in all other aspects of its management of human resources.
17. The Commission acknowledges the numerous interventions received in support of this application. The Commission also acknowledges the concerns expressed in the intervention submitted by Vidéotron ltée, licensee of the cable distribution undertaking serving Montréal and surrounding areas, and is satisfied with the applicant's response thereto.
Construction requirements
18. This authority will only be effective and the licence will only be issued at such time as the construction of the undertaking is completed and it is prepared to commence operation. If the construction is not completed within twelve months of the date of this decision or, where the applicant applies to the Commission within this period and satisfies the Commission that it cannot complete construction and commence operation before the expiry of this period and that an extension of time is in the public interest, within such further periods of time as are approved in writing by the Commission, the licence will not be issued. The applicant is required to advise the Commission (before the expiry of the twelve-month period or any extension thereof) in writing, once it has completed construction and is prepared to commence operation.
This decision is to be appended to the licence.
Laura M. Talbot-Allan
Secretary General
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