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Canadian Satellite Communications Inc.
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Across Canada - 199712008
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Licence renewal for the national satellite relay distribution undertaking carried on by Cancom
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1. Following a Public Hearing in the National Capital Region beginning on 16 February 1998, the Commission renews the broadcasting licence issued to Canadian Satellite Communications Inc. (Cancom) for authority to carry on a national satellite relay distribution undertaking (SRDU) from 1 September 1998 to 31 August 2000, subject to certain of the conditions in effect under the current licence, as well as to those conditions specified in this decision and in the licence to be issued.
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Background - Policy framework for the introduction of competition to the satellite relay distribution industry
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2. In other documents issued today, the Commission announces its decisions with respect to certain other applications presented at the 16 February 1998 hearing. These applications contemplate the introduction of competition on a national or regional basis to Cancom's licensed broadcasting activity, the distribution of television services to terrestrial broadcasting distribution undertakings (BDUs). In Decision CRTC 98-172, the Commission has approved an application by Star Choice Television Network Incorporated (Star Choice) for a licence to carry on a new, national SRDU service similar to that currently offered by Cancom. Star Choice is the licensee of an existing, national, direct-to-home (DTH) distribution undertaking. As in the case of Cancom, this licence is for a term of two years. All of the remaining applications have been denied, including one by Prime Time Canada, on behalf of a company to be incorporated, proposing a third national SRDU service (see Decisions CRTC 98-173 to 98-174).
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3. Further, in Public Notice CRTC 1998-60 of today's date, the Commission announces its policy framework for a competitive SRDU industry. This policy addresses, among other things, the role that such undertakings are expected to play within the Canadian broadcasting system and the contributions they are required to make to the creation and presentation of Canadian programming. In order to ensure fair and sustainable competition, the policy framework also prescribes a specific condition of licence to deal with concerns about undue preference or disadvantage. Further, the Commission has imposed requirements on licensees regarding their conduct and obligations in resolving disputes between themselves and their affiliates.
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4. As indicated above, the Commission's SRDU policy will generally rely upon competition to ensure that the broadest possible choice is available to BDUs at a reasonable cost. While the Commission has decided to renew Cancom's licence and issue a new licence to Star Choice, there exists uncertainty concerning the future ownership structure of the Canadian SRDU industry. In the circumstances, the Commission considers that the two year licence terms granted to Cancom and Star Choice are warranted.
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Terms and Conditions of Cancom's Renewed Licence
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5. Cancom's principal mandate shall remain the extension of Canadian broadcasting services to remote and underserved communities. At the same time, the Commission notes that Cancom's business includes the provision of signals to urban areas. The Commission expects that its policy to permit entry to the SRDU marketplace will bring the benefits of competition, including enhanced choice, cost competitiveness and innovation, to all areas served by Cancom and other SRDUs as they increasingly compete with each other and with terrestrial alternatives, such as optical fibre and microwave distribution networks.
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6. Consistent with the Commission's SRDU policy framework, Cancom is authorized, by condition of licence, to distribute via satellite to its affiliates, the television signals of any of the services that appear in the Appendix to this decision, subject to the following requirements:
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a) the licensee shall ensure that a majority of the television signals it distributes are of Canadian services, and;
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b) the licensee shall distribute the signals of all conventional, Canadian, French-language television services that purchase national program rights. These services exclude the French-language television network service of the Canadian Broadcasting Corporation (CBC).
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For the purpose of this condition, non-Canadian services of the same network affiliation will be counted as a single service.
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7. The Commission notes that the signals that Cancom is authorized to distribute by condition of licence also appear in the List of Part 2 Eligible Satellite Services and/or the List of Part 3 Eligible Satellite Services, as appropriate, issued today in Public Notice CRTC 1998-61. Class 1 and Class 2 licensees are reminded that, in accordance with the Distribution and Linkage Requirements for Class 1 and Class 2 licensees (Public Notice CRTC 1997-151 dated 22 December 1997), a condition of licence is required in order to distribute these signals as part of the basic service.
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8. The Commission also notes that Cancom and Star Choice both indicated that they did not require exclusivity with respect to the programming services they will offer. Accordingly, the Commission is disposed to deal expeditiously with applications by either licensee to distribute any service that has been authorized, by condition of licence, for distribution by the other.
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9. The Commission's exclusion of the CBC French-language television network service from those that SRDU licensees are required to distribute is in recognition of the fact that, although the CBC is a purchaser of national program rights, this service is already generally available to BDUs via satellite. The Commission notes that Cancom already distributes a number of other French-language services; it encourages the licensee to increase the range of such services as resources permit.
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10. In addition to the television signals referred to above, the licensee is authorized, by condition of licence, to distribute via satellite to its affiliates the signals of the Canadian radio stations that are listed in the Appendix to this decision.
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11. The Commission notes the concerns expressed in interventions regarding the reception quality of SRDU signals, particularly in Canada's High Arctic. The Commission expects the licensee to ensure, as resources permit, that its signals are available for reception in all communities in Canada. This expectation does not apply to duplicate network signals or signals that are relevant only for a particular region.
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12. By condition of licence, the licensee must provide its service to all of the following undertakings whose operators are willing to enter into affiliation agreements with it:
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i) terrestrial BDUs that are licensed by the Commission or operating in accordance with an exemption from licensing granted by the Commission; and,
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ii) licensed DTH distribution undertakings (for retransmission to DTH subscribers only).
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13. It is a condition of licence that the licensee shall not delete, curtail or alter the programming services that it distributes to BDUs in any manner from the form in which they are transmitted for public reception by the originating broadcasters, except such alterations as are incidental to the transmission of the services using digital video compression technology and except as may be authorized or required by the Commission in writing.
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Contribution to Canadian programming
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14. Consistent with the Commission's policy framework for SRDUs, and as agreed to by the SRDU applicants at the hearing, all Canadian SRDUs are required to contribute a minimum of 5% of the annual gross revenues derived from their broadcasting activities to the creation and presentation of Canadian programming.
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15. This is the same level of contribution that the Broadcasting Distribution Regulations (the regulations) require of all BDUs, with the exception of Class 3 terrestrial distributors. It also approximates the amount that Cancom currently contributes to Canadian programming on an annual basis through a number of initiatives. These initiatives chiefly take the form of financial contributions to parties who might otherwise have difficulty obtaining funding, including groups active in Aboriginal and French-language broadcasting and in programming involving distance learning.
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16. Accordingly, the Commission requires Cancom, by condition of licence, to contribute a minimum of 5% of its annual gross revenues derived from broadcasting activities to the creation and presentation of Canadian programming.
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17. Cancom is also required, by condition of licence, to file a report for the Commission's approval within three months of the date of this decision, identifying the recipient(s) of its contributions to the creation and presentation of Canadian programming, as well as the projected annual amounts that Cancom intends to allocate to each and the timing of such contributions, if the contribution is to a recipient other than a production fund. Contributions directed to a production fund are required to be made on a monthly basis, the first payment to be made within 45 days of the end of the first month of the new licence term and, thereafter, within 45 days of each month's end.
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18. The Commission notes in this regard Cancom's commitment at the hearing to provide continued annual funding for the uplinking and distribution of four northern Aboriginal radio network services ($250,000). Further, Cancom will continue to provide annual funding to the Wawatay Native Communications Society for backhaul transmission facilities at Moose Factory ($85,000), and to Television Northern Canada Incorporated (TVNC) for satellite uplink facilities at Whitehorse ($150,000).
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19. Cancom also made a commitment to continue to offer the services of its sales force to TVNC, without charge, for the purpose of marketing the latter's service to BDUs across the country; and to provide TVNC with five free hours per week of video uplink time for the delivery of southern based Aboriginal programming.
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20. As new initiatives, Cancom stated that it would provide direct funding, representing a total of $850,000 in year one, to TVNC, Alliance des radios communautaires du Canada inc. (ARCC), Inuit Communications Services Ltd. (ICSL) and Corporation pour l'avancement de nouvelles applications des langues ltée (CANAL), licensee of CFTU-TV Montréal.
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21. At the hearing, the Commission discussed with Cancom the appropriateness of including, as part of the licensee's required contribution to Canadian programming, the annual costs that are currently absorbed by Cancom through its policy of subsidizing the cost of the devices used by its BDU affiliates to decode Cancom's satellite signals. Although Cancom's preference would be to include these decoder costs as part of its contribution, it stated at the hearing that it would abide by any Commission decision regarding their eligibility.
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22. In the Commission's view, Cancom's decoder subsidy program has served essentially as a marketing technique to attract and retain affiliates. As such, the costs associated with this program are most appropriately identified as a cost of doing business rather than as a bona fide contribution to Canadian programming. Accordingly, and as a matter of policy that would be applicable to any licensed SRDU, the Commission has decided to disallow the inclusion of these decoder costs as part of Cancom's required annual contribution to Canadian programming.
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Undue preference and dispute resolution
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23. The licensee, by condition of licence, shall not give an undue preference to any person, including itself, or subject any person to an undue disadvantage.
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24. In this regard, the Commission has considered requests from various parties that it require SRDU licensees to file affiliation agreements. The Commission has decided not to do so at this time, but may require that such agreements be filed, on a case by case basis, at a later date. The Commission may, on request, grant confidentiality concerning all or part of agreements that it requires be filed.
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25. It is a condition of licence that, if there is a dispute between the licensee and a distribution undertaking, whether operating by licence or by exemption order, concerning the terms under which programming services are or may be provided, then the licensee shall submit the matter to a dispute resolution process, if the Commission so requires.
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26. As stated in Public Notice CRTC 1998-60, the Commission has decided not to regulate the rates charged by SRDUs at this time, given that Star Choice brings immediate competition to the SRDU market place. Nevertheless, as mentioned earlier in this decision, there exists uncertainty surrounding the future ownership structure within the Canadian SRDU industry. The Commission therefore emphasizes that it is prepared to reconsider the possibility of regulating the rates charged by SRDUs at the time it considers the licence renewals of Cancom and Star Choice in two years.
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27. On a related subject, the Commission has also decided not to intervene in the matter of the signed affiliation agreements that Cancom has with most of the BDUs who currently receive satellite signals from it. Although the Commission has considered requests from various parties that it do so, it has determined that it would be inappropriate for it to intervene in these agreements. No compelling evidence was presented to support the claim that sustainable competition could not be achieved without intervention in Cancom's long-term contracts, and the terms of the agreements fall within the requirements of the rate cap regime in place at the time of their signing.
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28. With respect to the agreements noted above, the Commission expects the licensee to fulfill its commitment to provide each affiliate with the opportunity to cancel any existing contract entered into prior to the entry of competition, at that affiliate's discretion, and at any time during the remaining life of the contract. The option to cancel existing contracts may be conditional upon the payment of compensation to Cancom of the amount which would be calculated in accordance with contractual arrangements entered into, and in the absence of a specific contractual provision relating to the cancellation of the agreement, in accordance with Cancom's current administrative practices (i.e. compensation calculated based on the difference between the rates which were paid and the rates that would have been paid if the affiliate had entered into a shorter-term agreement at the time of the agreement in question). Parallel treatment should also be accorded to decoder leases entered into prior to the entry of competition.
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29. The Commission notes that this licensee is subject to the Employment Equity Act that came into effect on 24 October 1996 (1996 EEA), and therefore files reports concerning employment equity with Human Resources Development Canada. As a result of a consequential amendment to the Broadcasting Act, the Commission no longer has the authority to apply its employment equity policy to any undertaking that is subject to the 1996 EEA.
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30. It is a condition of licence, in respect of any transfers of ownership or control, that the licensee adhere to the provisions of section 4 of theregulations.
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31. The Commission acknowledges the numerous interventions submitted with respect to Cancom's application, and has taken into consideration the comments contained therein and Cancom's replies.
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This decision is to be appended to the licence.
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Laura M. Talbot-Allan
Secretary General
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This document is available in alternative format upon request.
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Appendix to Decision CRTC 98-171
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Signals authorized for distribution by Cancom
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CHAN-TV* (CTV) Vancouver
CITV-TV (IND) Edmonton
CHCH-TV* (IND) Hamilton
CFMT-TV (IND) Toronto
CITY-TV (IND) Toronto
CIII-TV (Global) Toronto
CFTO-TV (CTV) Toronto
CFCF-TV (CTV) Montréal
CFTM-TV (TVA) Montréal
CJNT-TV (IND) Montréal
CFJP-TV (TQS) Montréal
CFTU-TV (IND) Montréal
Quebec National Assembly Proceedings
CJON-TV (CTV) St. John's
WDIV (NBC) Detroit
WTVS (PBS) Detroit
WTOL-TV (CBS) Toledo
WXYZ-TV (ABC) Detroit
WUHF (FOX) Rochester
WHDH-TV (NBC) Boston
WGBH-TV (PBS) Boston
WBZ-TV (CBS) Boston
WCVB-TV (ABC) Boston
KARE (NBC) Minneapolis
WCCO-TV (CBS) Minneapolis
KSTP-TV (ABC) Minneapolis
WFTC (FOX) Minneapolis
KING-TV (NBC) Seattle
KCTS-TV (PBS) Seattle
KSTW (CBS) Tacoma/Seattle
KOMO-TV (ABC) Seattle
KCPQ (FOX) Tacoma/Seattle
KIRO-TV (IND) Seattle
Radio-France outre-mer (RFO1) Saint-Pierre and Miquelon
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* Native-produced television programs, on a part-time basis, on satellite channels used for the distribution of these services
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CKRW Whitehorse
CHON-FM Whitehorse
CKNM-FM Yellowknife
CFMI-FM Vancouver
CFUN Vancouver
CJJR-FM Vancouver
CKNW Vancouver
CBU-FM Vancouver
CISL Richmond
CIRK-FM Edmonton
CISN-FM Edmonton
CJCA Edmonton
CING-FM Burlington
CHFI-FM Toronto
CISS-FM Toronto
CHIN Toronto
CHIN-FM Toronto
CHOG Toronto
CJRT-FM Toronto
CILQ-FM Toronto
CFMX-FM Cobourg
CKAC Montréal
CITE-FM Montréal
CKOI-FM Montréal
CKVL Montréal
CBF Montréal
CBF-FM Montréal
CFGL-FM Montréal
VOCM St. John's
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