ARCHIVED -  Public Notice CRTC 1999-187

Report on the establishment of a national French-language arts television service

Programming content 9

Cost to viewers 18

Timing of the launch 20

Conditions for success 25

Regulatory framework and pending decisions 44

Timetable 53

2. In response to the Government's request, the Commission issued, on 8 September 1999, Public Notice CRTC 1999-146, announcing a public process and calling for comments from all interested parties to be submitted on or before 8 October 1999.

3. Without limiting the scope of the interventions, the Commission, in the context of this call for comments, asked interveners to address four questions:

- What are the key conditions for the successful establishment of a national arts television service?

- What types of programming content should be required for such a service to reflect the uniqueness of Quebec culture and the needs and circumstances of French-language communities in other parts of Canada?

- How should such a service be made available to viewers in Quebec and to viewers in communities in other parts of Canada?

- What are the factors that are relevant to the timing of the launch of such a new service?

5. This document is the Commission's report to the Government of Canada in response to Order in Council P.C. 1999-1454. It summarizes the interventions received from interested parties, indicates the Commission's position and describes the steps it proposes for implementing its position.

8. The Canadian Association of Broadcasters (CAB) expressed reservations concerning the urgency of establishing an arts service and objected to any preferential treatment that might be given to it. Opposition to the establishment of an arts service came primarily from associations of citizens and consumers, including Action Réseau Consommateur, the Quebec Federation of Senior Citizens and regional arms of the Association coopérative d’économie familiale, as well as from individuals. These interveners considered that the objective of enhancing the availability of French-language arts programming could be achieved by strengthening such programming within existing services, such as those of the CBC and of public educational and cultural networks. They considered that this could occur without consumers being subject to additional costs.

9. The importance of Canadian content is an element that recurs frequently in the interventions. A number of associations of creators and artists, noted that an arts service wishing to fulfill the objectives set out in the Order in Council should provide with a high level of programming Canadian content. These included the Association québécoise de l'industrie du disque, du spectable et de la vidéo (ADISQ), the Canadian Conference of the Arts (CCA), the Société des auteurs, recherchistes, documentalistes et compositeurs (SARDeC), the Society of Composers, Authors and Music Publishers of Canada (SOCAN) andthe Société professionnelle des auteurs et des compositeurs de Québec (SPACQ), and other parties.

10. Several parties emphasized that, if an arts service is to ensure that its programming reflects both the uniqueness of Quebec culture and the particular nature of other French-language communities in Canada, it must give priority to the broadcast of works, performances, events and cultural activities from all parts of Canada. The Center for Research - Action on Race Relations considered that such a service should include communities of diverse racial and ethnocultural backgrounds as well as French-speaking aboriginal peoples.

11. Some stressed the need to reflect creativity in all fields  not limited to: literature, theatre, dance, Quebec and Canadian cinema, opera, the visual arts and music in all its forms. Others emphasized that certain of the performing arts, such as dance, instrumental music and opera, may be of interest to audiences of different languages and cultures, and that this type of programming could therefore encourage cultural exchanges between francophones and anglophones, and attract more viewers.

12. A number of parties, including the CAB, SARDeC and SPACQ, asked the Commission to ensure that the establishment of an arts service would not result in any reduction in the quality, quantity or diversity of French-language cultural and artistic programming currently available on the general interest services, especially the national public broadcaster.

13. Among the conditions for successful establishment of an arts service, the need for various types of partnerships was mentioned by several interveners.

14. Certain spokespersons for French-speaking communities and associations of producers, creators and artists stressed that it was important for an arts service to involve creators in the development and production of its programming, to collaborate in the initiatives and projects of communities, to use the services of independent producers in all regions and to establish close relations with all agencies and institutions of French-speaking communities in Canada and other French-speaking countries.

15. Others emphasized that an arts service should have a sound ownership structure, and that it should benefit from the expertise and infrastructures of existing services. The service should take advantage of the synergistic effects of partnerships between French and English-language public and private broadcasters, general-interest and educational broadcasters, Canadian and foreign broadcasters, as well as producers, with varying degrees of importance attached to each of these.

Distribution and marketing

16. Opinions varied as to the best distribution and marketing scenario for an arts service. All scenarios, from mandatory carriage on the basic service in the French-language markets (CCA, the Canadian Association of Film Distributors and Exporters (CAFDE), Fédération culturelle canadienne-française) to discretionary or pay-per-view distribution and digital only distribution (the Canadian Cable Television Association (CCTA)) were mentioned. However, a majority of interveners, including those who indicated their interest in submitting an application for an arts service, expressed the view that, in French-language markets, such a service should benefit from a carriage status similar to that granted the French-language specialty services licensed since 1996. This involves distribution on an analog basis as part of a discretionary service package.

17. Regarding its distribution to French-language communities living in English-language markets, certain interveners, including the Fédération des communautés francophones et acadiennes du Canada, CCTA andthe Canadian Broadcasting Corporation, indicated that any distribution arrangements should take into account the decision that the Commission will issue upon completion of the Review of the access rules for Canadian pay and specialty services in bilingual markets, which it began in May 1999 (Public Notice CRTC 1999-74).

Cost to viewers

18. The Commission received a number of comments emphasizing that taxpayers and subscribers should not have to pay for a new arts service. For example, certain interveners were opposed to adding a new service to the basic service or to existing packages. They considered that such a decision would result in an increase in the current cost to those subscribers who only want to access to existing services and do not wish to receive a new service.

19. Others stressed the need to make the arts service widely available at an affordable price, an objective which they considered can only be achieved if the arts service is integrated into an existing package of services. Bell ExpressVu was of the view that consumers and the market could absorb an increase in the price of an existing block of French-language services, provided that such an increase is small and does not push the retail price of the service package above a reasonable level at which the penetration rate begins to decline, adversely affecting the marketing of other programming services and hurting distribution revenues.

Timing of the launch

20. Certain interveners suggested that the service should be launched as soon as possible during the year 2000; others, including the CAB, CCTA and CHUM Limited, pointed out that the process of setting up a new Licensing framework for new pay and specialty services, initiated 9 March 1999 (Public Notice CRTC 1999-19) had not yet been completed. They considered that a process for licensing an arts service should not be launched before this new framework is established, nor should it precede or delay the processing of licence applications for English-language specialty services which have been pending since 1997.

21. The CAB, amongst others, also emphasized that it is important not to delay or compromise the successful launching of French-language specialty services licensed in May 1999 and slated to go on the air in January 2000.

The Commission's position

22. After carefully analysing the interventions received, the Commission considers that the establishment across Canada of a French-language arts television service that reflects the uniqueness of Quebec culture and the needs and circumstances of French-language communities in other parts of Canada could, if certain conditions were fulfilled, make a significant contribution to achieving the objectives of the Broadcasting Act.

23. In particular, it could contribute to the enrichment and diversification of the high-quality French-language cultural programming provided by the Canadian broadcasting system, and could create new opportunities and revenue sources for Canadian producers, creators and artists.

24. The Commission therefore intends to issue a call for applications for a national French-language specialty television service based on the arts on 1 February 2000.

25. In the Commission's opinion, if an arts service is to be successful, it must be able to both comply with and benefit from certain conditions.

26. The Commission shares the view expressed by many interveners concerning the importance of Canadian programming in the schedule of an arts service whose mission is to reflect the uniqueness of Quebec culture and the needs and circumstances of French-language communities in other parts of Canada. It considers this to be one of the conditions for success of an arts service.

27. The Commission does not intend to impose Canadian content criteria that are different from those usually required of Canadian specialty services, and intends to continue analysing each application on its merits. It will, however, expect applicants to demonstrate that they intend to make maximum use of Canadian resources – creative and otherwise – in producing and broadcasting their programming, and that this programming will meet the objectives expressed in Order in Council P.C. 1999-1454.

28. The Commission is sensitive to the comments received to the effect that an arts service should be open to artistic creativity in all fields of endeavour and should give priority to the broadcast of works, performances, events and cultural activities from all parts of Canada. The Commission will therefore expect that the programming of this service will not consist largely of information programs on current events in the arts or of cultural magazine programs – a type of programming that is already very much in evidence on Canadian French-language television. The Commission will also expect applicants holding television licences to demonstrate that their proposals will not reduce the amount of cultural programming already available from their services.

29. In accordance with the general criteria for licensing French-language specialty services, set out in Public Notices CRTC 1996-120, 1997-33 and 1998-46, applicants must demonstrate that the proposed service contributes to the diversity of high-quality programming available to the French-speaking public and that it is not directly competitive with that of French-language conventional or specialty services already licensed. The Commission considers that the complementarity of an arts service, relative to currently available programming, is another condition for success.

30. The call for applications will be open to all normally eligible applicants and the Commission does not intend to favour any particular ownership structure.

31. However, the Commission would like to point out, as it indicated in Public Notice CRTC 1999-97, Building on Success: A Policy Framework for Canadian Television, that it favours a strong ownership structure and is open to various forms of partnership and cooperation. This is demonstrated in many of its decisions, including those licensing TV5 Québec Canada, MusiquePlus, Réseau des sports, Canal Indigo, MusiMax, Télétoon and, more recently, Canal Histoire and Canal Fiction, to mention only French-language specialty services.

32. The Commission will be receptive to applications from partnerships involving independent producers and Canadian broadcasters, such as between French or English-language private and public broadcasters, and broadcasters in different categories, to the extent that such partnerships will result in synergistic effects favourable to the financing and broadcast of high-quality Canadian programs. Similarly, the Commission will be receptive to partnerships between Canadian and foreign broadcasters, to the extent that the applicant can demonstrate that such partnerships will facilitate the acquisition of high-quality foreign French-language programs and, conversely, foreign broadcast and international exposure for Canadian programming.

33. The conditions for success of an arts service also depend on the terms of its distribution and pricing.

34. As a national service, any new arts service should be able to benefit from Canada-wide distribution. In licensing a new service, however, the Commission must take into consideration the current reality of the distribution market, particularly the available distribution capacity. It must also consider the fact that the service's viability will depend to a great extent on its distribution in French-language markets, the majority of which are located in Quebec.

35. Distribution in analog mode is the most prevalent method of distribution. However, the amount of available analog capacity is limited or non-existent in many markets. The number of current subscribers receiving digital distribution remains limited, although the Commission expects that this number will gradually increase in the years to come. According to the comments received in response to the public notice concerning a new framework for licensing new pay and specialty services, the penetration rate for digital distribution in Quebec will not be sufficient in the short and medium term to ensure the viability of new French-language specialty services. The Commission is therefore excluding at the outset the option of providing a new arts service solely for digital distribution to subscribers.

36. In addition, the Commission does not favour mandatory distribution of an arts service on the basic service of all Class 1 and Class 2 distribution undertakings, either in French-language markets or across Canada. Starting with the first licensing process for French-language specialty services, in 1987, the Commission has refused to grant such carriage status to the specialty services requesting it, including TV5 and RDS, considering, amongst other things, that this status would not ensure the accountability of applicants or "that they [would remain] accountable to their audiences and to the Canadian broadcasting system".

37. The Commission has not departed from this policy, which it still considers relevant. It has since denied all such applications, and no Canadian specialty service, whether of public, private or cross ownership, has such a status. Moreover, the evolution of the broadcasting system, its greater openness to competition, and the Commission's concerns regarding the affordability of the basic service, especially in Quebec, where the cable subscription rate (67%) is appreciably lower than elsewhere in Canada, are all factors that favour maintaining this policy.

38. Since 1997, the Commission has been gathering data on the capacity of the broadcasting distribution industry. Taking into account the licensing of four new French-language specialty programming undertakings, 39.3% of subscribers in Quebec are served by cable systems which, as of January 2000, will not have any vacant analog channels. In the English-language markets, 70.3% of subscribers are served by cable systems that have no vacant analog channels.

39. In other words, for an arts service to be distributed in analog mode in a service package offered on an optional basis to all cable subscribers, it must replace an existing service in the systems serving 39.3% of subscribers in the French-language markets of Quebec and 70.3% of subscribers in the English-language markets of Canada – a replacement strategy which, as recent experience shows, is not generally appreciated by subscribers.

40. The Commission must take this situation into consideration, just as it must also respect the concerns of consumers and subscribers, as well as those of distributors and other French-language programming services, regarding the affordability of any new French-language specialty service, especially if it is added to an existing tier. The Commission considers that cost continues to be an important factor, one that influences both the viability of a service and its appeal to the public.

41. The Commission therefore intends to favour an approach based on both analog and digital distribution. In French-language markets, it anticipates guaranteed distribution (subject to channel availability), as part of an existing specialty services tier, by all Class 1 and Class 2 licensees, in accordance with the Broadcasting Distribution Regulations, with priority over licensed English-language services, as indicated by the Commission in Public Notice CRTC 1998-46.

42. One limitation to this approach is that, for distribution in analog mode, certain cable operators use fixed traps to select the services to be received by a subscriber. It is thus difficult for a cable operator using this kind of trap to add a service to a discretionary package already set up without having to change the trap for each subscriber who does not receive these services. However, the Commission hopes that the advance notice it is providing in this report will allow cable operators to provide from the start for the possible subsequent addition of a service to one of their tiers.

43. With regard to distribution of the arts service in non-French-language markets, the Commission notes that direct-to-home (DTH) satellite distribution undertakings, which broadcast in digital mode and hold a national licence, are required to distribute all Canadian English- and French-language specialty services, under the Broadcasting Distribution Regulations. The Commission will address the situation of French-language communities outside Quebec when it announces its policy on access in bilingual markets at a later date. It will be open to proposals from applicants concerning the discretionary distribution of the arts service in these markets, including proposals for related pricing, to the extent that they take into account available channel capacity and the prevailing regulatory framework.

44. As a number of interveners have pointed out, various proceedings recently initiated by the Commission have not yet been completed.

45. Amongst the proceedings likely to affect the development of applicants' business plans, as well as the distribution environment and the regulatory framework in which the arts service must develop, are the following:

Licensing framework for new pay and specialty services

46. Before the end of the year, the Commission intends to adopt a licensing framework for new pay and specialty services. In particular, this regulatory framework could affect the process of licensing a new arts service.

47. In Public Notice CRTC 1999-19, the Commission called for comments on this new regulatory framework. The Commission also indicated that, following publication of its determinations on the various issues raised in that notice, it would reactivate the process of calling for licence applications for new English-language pay and specialty services that it had temporarily suspended. This new regulatory framework is likely to have an impact on distribution capacity, especially in the English-language markets.

Launch of new French-language specialty programming services

48. On 21 May 1999, the Commission issued licences to four new French-language specialty programming undertakings (Canal Évasion, Canal Fiction, Canal Histoire and Canal Z). Planned for January 2000, the launch of these services will allow measurement of the public's reaction to and appreciation of a new French-language program offering and should provide information about the willingness and ability of cable subscribers to pay for new services in the French-language markets. In the Commission's opinion, any application for a new French-language specialty service must take this reality into consideration. Furthermore, it is the Commission's policy in general to allow recently licensed services to become established in a market before calling for new specialty services in the same language.

Review of the access rules for Canadian pay and specialty services in bilingual markets

49. On 5 May 1999, the Commission issued a call for comments on the access rules in bilingual markets (Public Notice CRTC 1999-74). In that notice, the Commission invited comments to identify bilingual markets and the distribution undertakings serving them. In addition, the Commission wished to examine what measures, if any, should be taken to provide for an adequate range of services in French and English, in bilingual markets, in a digital distribution context and in an expanded analog environment.

50. The Commission intends to issue a policy on bilingual markets before the end of February 2000. This policy could have an impact on the distribution capacity available for new services, in both analog and digital modes.

51. Following the public hearing held in May 1999, the Commission will render a decision in December 1999 concerning the licence renewal for the Canadian Broadcasting Corporation (CBC). At that hearing, the Commission reviewed the CBC's overall activities and priorities, as well as the strategy it proposed to ensure that its television and radio services, including its specialty services, contribute fully to the fulfillment of its mandate.

52. Inasmuch as the CBC was one of the parties which, in their responses to Public Notice CRTC 1999-146, expressed interest in seeking an arts service licence, whether alone or in partnership, and whereas several interveners stated that they were in favour of an arts service headed by the CBC, the Commission considers that knowledge of its decision regarding its expectations for the coming years will provide useful information for the CBC, as well as for other potential applicants.

53. The timetable that the Commission proposes today concerning the process of calling for applications for a licence for a French-language specialty arts service that will be distributed nationally attempts to take all of these factors into account. It endeavours to reconcile a desire for the earliest possible implementation and compliance with ongoing procedures whose outcome is in certain cases an essential prerequisite.

54. The Commission therefore intends to issue its call for licence applications on 1 February 2000, with the objective of holding a public hearing in early summer and rendering its decision within a period that ideally will allow the service to be launched in January 2001.

55. The Commission will be in a position to specify, in the call for applications it will issue 1 February 2000, the licensing criteria, the filing date for applications and the distribution options for any arts service that it is prepared to consider.

56. Potential applicants will also be in a better position to prepare their applications, their business plans and their marketing strategies in light of the decisions on the new licensing framework for pay and specialty services and on the access rules in bilingual markets (of which they will be informed soon after publication of the call for applications).

57. Finally, the Commission would like to inform applicants that issuing a call for license applications for an arts service does not necessarily constitute a commitment by the Commission that such a licence will be issued upon completion of the process. Applications will be analysed on their merits and applicants must demonstrate that their proposals adequately fulfill the objectives stated in this report and in the Broadcasting Act..

Secretary General

This notice is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca