ARCHIVED -  Public Notice CRTC 1999-70

Public Notice

Ottawa, 21 April 1999

Public Notice CRTC 1999-70

Order respecting the distribution of the Aboriginal Peoples Television Network

Summary

Attached to this Public Notice is the Commission's Distribution Order (1999-2) respecting the national distribution of APTN. Consistent with the objectives of Decision CRTC 99-42, all broadcasting distribution undertakings to which this Order applies must distribute APTN's signal as part of any basic service, effective 1 September 1999, or when the service begins operating should this be after 1 September 1999. These distributors are authorized to increase their basic monthly subscriber fee by $0.15 per subscriber per month. In this Order, the Commission finalizes the terms upon which APTN is to be carried, as mandated in Decision CRTC 99-42.

Background

1. In Decision CRTC 99-42 dated 22 February 1999, the Commission approved an application by Television Northern Canada Inc. (TVNC) to operate a national Aboriginal television programming network to be known as the Aboriginal Peoples Television Network (APTN).

2. In that decision, the Commission stated that it considers it vitally important that APTN's new and unique service be available to all Canadians, consistent with the objectives of the Canadian broadcasting policy set out in section 3 of the Broadcasting Act (the Act). It also stated that distribution of APTN as part of basic service is necessary to ensure that it will be widely available across the country. Furthermore, the Commission authorized APTN to charge a maximum fee of $0.15 per subscriber per month, in all markets to generate the revenues needed to maintain its service.

3. In Public Notice CRTC 1999-31, published the same day, the Commission called for comments on a proposed Order, pursuant to section 9(1)(h) of the Act, to implement Decision CRTC 99-42. Under the proposed Order, Class 1 and Class 2 distribution undertakings (including multipoint distribution system undertakings) as well as direct-to-home (DTH) distribution undertakings would be required to distribute APTN's signal as part of any basic service. The proposed Order also authorized these distributors to increase their basic monthly subscriber fees by no more than the amount authorized under the terms of APTN's licence, that is, $0.15 per subscriber per month. The Commission invited interested parties to submit comments regarding the terms and conditions of the proposed Order.

4. In response to its public notice, the Commission received almost 300 letters in support of the APTN decision and approximately 55 letters in opposition, as well as about a dozen letters commenting on the decision or the proposed Order. Some of these submissions did not discuss the terms and conditions of the proposed Order itself, but rather contained comments on Decision CRTC 99-42. While these comments are not relevant to the Order, the Commission has, nevertheless, noted the concerns expressed in the submissions.

5. In its written reply, APTN responded to comments made by the Association des câblodistributeurs du Québec (ACQ), the Canadian Cable Television Association (CCTA), Battlefords Community Cablevision (Battlefords), Missinipi Broadcasting Corporation (MBC), Northern Native Broadcasting, Yukon (NNBY), the Specialty and Premium Television Association (SPTV) and the Canadian Cable Systems Alliance (CCSA). The main issues raised in the submissions are addressed below.

Costs and subscriber fees

6. Battlefords suggested that small cable systems should be authorized to pass the head end capital costs associated with delivery of APTN through to their subscribers. The CCSA, which represents small cable systems, requested that the Order, either by requirement or by expectation, provide for a "full subsidy" for the decoding equipment used to distribute APTN by cable systems with fewer than 6,000 subscribers. For its part, MBC suggested that costs associated with the introduction of APTN as part of a cable system's basic service should be considered part of the normal cost of doing business.

7. APTN responded that, as part of its application, it made a commitment to introduce an incentive plan to offset distribution costs for Class 3 systems (those with fewer than 2,000 subscribers). APTN did not propose to extend the incentive plan to Class 2 systems (those with between 2,000 and 6,000 subscribers) because it considers that they are large enough to absorb the cost of a decoder.

8. The Commission notes that the proposed Order applies only to Class 1 and Class 2 distributors and to DTH services. While Class 3 systems are encouraged to distribute APTN, they are not obligated to do so. Furthermore, the Commission does not regulate the rates of Class 2 or Class 3 systems. Such systems do not, therefore, require authorization from the Commission to pass any head end capital costs through to their subscribers.

Satellite transmission costs

9. The CCTA expressed concern about the absence of wording in the proposed Order to ensure that distributors are not required to pay any costs associated with the satellite transmission of APTN. The CCTA proposed that the Commission add a clause to the finl Order stipulating that distributors are not obligated to carry APTN unless the licensee pays for its satellite transmission costs.

10. In response, APTN stated that it "will assume the entire costs [for] the satellite uplink and the satellite space segment for APTN's three feeds." Based on discussions APTN is currently holding with various satellite companies, no downlink charges will apply to cable operators.

11. The Commission has decided to add a clause to the final Order stipulating that distribution licensees shall not be required to distribute APTN's programming service unless APTN or a third party pays for the satellite uplink and transponder costs with respect to the transmission of its programming service.

12. The Commission understands that there will be no satellite downlink fee associated with the transmission of APTN.

Distributor mark-up

13. Section 52 of the Broadcasting Distribution Regulations (the regulations) permits a distributor to add a $0.02 mark-up (in anglophone markets) or a $0.03 mark-up (in francophone markets) to its basic subscriber fee for each specialty service it carries as part of its basic service. The Association des câblodistributeurs du Québec argued that, as a satellite-to-cable undertaking with a subscriber fee, APTN is similar in style to a specialty service. For this reason, the ACQ maintained that the mark-up provision should apply to APTN, at least for Quebec distributors: it would help distributors recover some of the costs associated with distributing APTN.

14. In response, APTN noted that it is licensed as a satellite-to-cable programming service and that section 52 applies only to specialty services.

15. The Commission agrees that section 52 of the regulations applies only to specialty services and not to satellite-to-cable programming services, such as APTN. Consequently, distributors may not apply the mark-up set out in this provision to APTN.

Subscription fee

16. Battlefords argued that the $0.15 per subscriber per month fee "should be locked in for a minimum of 5 years initially" and "future fee increases should be determined by the Commission in the normal hearing process."

17. In response, APTN stated that it does not foresee any fee increases over the next five years. Nevertheless, it opposed "locking in" the fee for that period. APTN stated that the Commission could deal with any requests for rate increases in accordance with normal procedures.

18. The Commission notes that regulated undertakings may submit applications at any time. It would deal with an application for a subscriber fee increase on its merits, according to the Commission's usual procedures. At the same time, the Commission notes that, in approving the $0.15 subscriber fee for the licence term, it stated that this rate would provide APTN with a level of revenues needed to maintain the service.

Notification of APTN's launch

19. The CCTA raised the question of how much notification APTN should be required to provide to distributors concerning its launch plans. The CCTA noted that, while the proposed Order requires distributors to distribute APTN effective 1 September 1999, or when the service begins operation should this be after 1 September 1999, it does not require APTN to provide any notification to distributors as to when it will launch its service.

20. Under the regulations, distributors are required to provide 60 days prior notification before increasing subscriber fees or realigning channels. In order to meet these notification requirements, the CCTA argued that APTN should give distributors 120 days advance notice of the date on which it intends to launch.

21. In response, APTN stated that it "will launch, at a minimum, its taped programming 1 September 1999, unless unforeseen circumstances arise". While it agreed that distributors do need some advance notice of APTN's launch, it claimed that 90 days would be sufficient, "given that APTN is resolved to meet its 1 September 1999 launch date."

22. The Commission agrees that a requirement to provide formal notification to distributors is appropriate. The Commission notes that, in this case, distributors received notice on 22 February 1999 (the day the Commission issued APTN's licensing decision) that they will be required to carry APTN as part of any basic service beginning 1 September 1999 or soon after. Accordingly, the Commission considers that a 90-day notification period for distributors is adequate in this case.

23. The Commission has decided to add a clause to the final Order stating that distribution licensees are not required to distribute APTN's programming pursuant to this Order, unless APTN provides them with 90 days advance notice of its intended launch date, whether that is 1 September 1999 or later.

Quebec launch date

24. The ACQ noted that one of the reasons APTN chose 1 September 1999 as a launch date was because most cable systems would be adding other new specialty services at that time, so the addition of APTN then would be less disruptive. The intervener argued that cable systems in Quebec would generally not be adding new services in September, since the remaining unlaunched specialty services are English-language. The ACQ added that it expects any new French-language specialty services that may be approved by the Commission following the 7 December 1998 public hearing would be launched on 1 January 2000. For this reason, the ACQ proposed that distributors in Quebec should not be required to begin carrying APTN until 1 January 2000, to coincide with the launch of new French-language specialty services.

25. In response, APTN stated that "there is no guarantee that all Quebec cable operators will carry the new services by January 2000 or any time after that." APTN further argued that it would be unable to meet its programming commitments without the revenues it projected from two million cable subscribers in Quebec.

26. In licensing APTN, the Commission stated that the service should be widely available across Canada. The Commission, therefore, considers that the service should be distributed nationally on 1 September 1999, or when the service begins operation should this be after 1 September 1999. The Commission further notes that delaying the distribution of APTN in Quebec could have a negative effect on APTN's revenues.

Launch deadline

27. Missinipi Broadcasting Corporation proposed that the Commission establish a "final deadline" for the distribution of APTN, given that the proposed Order requires distributors to carry the service as of 1 September 1999, or when the service begins operation should this be after 1 September 1999. MBC argued that a deadline would help it and other interested parties to establish marketing and promotion plans, as well as television production and distribution schedules for the upcoming season.

28. In response, APTN stated that the wording in the proposed Order respecting the implementation date is "adequate."

29. The Commission notes that the Order will take effect when APTN launches. Decision CRTC 99-42 requires APTN to be in operation within 12 months of the date of that decision, that is, by 22 February 2000. If APTN is not ready to begin operations within this timeframe, it must apply to the Commission for an extension of this deadline. The Commission considers that these requirements provide interested parties with sufficient certainty concerning APTN's plans.

Available channels

30. In its supporting intervention, the Specialty and Premium Television Association noted that the proposed Order contains a clause stipulating that distributors removing a service to comply with the Order may only remove services carried on an available channel. The SPTV argued that it is "essential" that existing Canadian premium and specialty services not be dislocated by the addition of APTN. It also stated that it expects that the addition of APTN will not affect the launch of the remaining specialty services licensed in 1996.

31. APTN responded that it agrees with the principles set out by the SPTV in its submission.

32. The Commission notes that the definition of "available channel" in section 1 of the regulations effectively means a channel used for the distribution of non-programming services, exempt programming services, as well as foreign services first distributed on or after 6 May 1996. Given that Canadian specialty services are none of these services, the Commission notes that a channel or channels on which Canadian specialty services are distributed would not be "available channels" as contemplated by section 1.

Programming equity

33. Battlefords stated that APTN's programming should be "directly proportional to, and reflect the culture present in the various native groups in Canada" and that, if the programming does not provide fairness and equity in this area, Battlefords "should not be required to carry the service."

34. In response, APTN reiterated its commitments to serve and reflect the Aboriginal cultures of all regions of Canada.

35. The Commission considers that programming issues were thoroughly discussed at the public hearing and that the commitments made by APTN in this regard are clear and comprehensive. In addition, the Commission notes that these commitments form part of Decision CRTC 99-42. Accordingly, the Commission considers that no changes to the Order are necessary in this regard.

Structure of the Board of Directors

36. Northern Native Broadcasting, Yukon stated that TVNC held a workshop with various TVNC stakeholders in December following its appearance at the November 1998 public hearing. The intervener stated that at this workshop, TVNC agreed to increase the number of members of APTN's Board of Directors in order to address concerns raised by NNBY. However, in Decision CRTC 99-42, the Commission imposed a condition of licence requiring APTN to have 21 members on its Board of Directors, as described in the application. NNBY asked the Commission to change the condition to allow APTN to have more than 21 members on its Board of Directors.

37. In response, APTN "declined to address the specific concerns raised by NNBY because it considered that they are beyond the scope of the current proceeding." At the same time, APTN stated that it "will continue to work closely with NNBY in an attempt to alleviate their concerns."

38. For its part, MBC stated that:

APTN has a major role to fulfil in Saskatchewan and that role must be decided upon, in full consultation and with the direct participation of MBC, in terms of representation on the 21 person board of directors, programming, revenue sharing and access to production funds that reflect Saskatchewan interests.

39. The Commission agrees with APTN's response that regional representation on the Board of Directors was dealt with in the licensing decision. Nevertheless, the Commission reiterates the importance of maintaining regional reflection on APTN's Board of Directors.

40. With regard to NNBY's request to change APTN's condition, the Commission notes that it can change a condition of licence in the first five years of a licence term only if the licensee files an application requesting the change. If APTN wishes to change the composition of its Board of Directors to reflect better the concerns of its member organizations, it can apply for an amendment to its condition of licence to this effect. Any such amendment would have to continue to satisfy the Commission's general concerns regarding regional representation as expressed in Decision CRTC 99-42.

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

Appendix to Public Notice CRTC 1999-70

Distribution Order 1999-2

Distribution of the programming service of Television Northern Canada Incorporated to be known as the Aboriginal Peoples Television Network (APTN) by persons licensed to carry on certain types of broadcasting distribution undertakings

The Commission hereby orders, pursuant to section 9(1)(h) of the Broadcasting Act, persons licensed to carry on broadcasting distribution undertakings of the types identified in paragraph a. below to distribute APTN's programming service as part of any basic service, effective 1 September 1999 (or when the service begins operation, should this be after 1 September 1999), on the following terms and conditions:

a. This Order applies to Class 1 and Class 2 distribution undertakings, including multipoint distribution system undertakings, and direct-to-home distribution undertaking licensees not otherwise required to distribute APTN's programming service pursuant to the Broadcasting Distribution Regulations. These licensees are collectively referred to in this Order as distribution licensees.

b. Distribution licensees offering more than one basic service shall distribute APTN's programming service on each basic service.

c. Class 1 and Class 2 licensees shall not distribute APTN's programming service on a restricted channel unless APTN consents in writing to its distribution on such a channel.

d. Distribution licensees are authorized to increase the basic monthly fee to be paid by their subscribers by no more than the amount authorized under the terms of APTN's licence.

e. Distribution licensees who remove a service in order to comply with this Order may only remove a service carried on an available channel.

f. Notwithstanding the foregoing, distribution licensees shall not be required to distribute APTN's programming pursuant to this Order unless APTN or a third party pays for the satellite uplink and transponder costs with respect to the transmission of its programming service.

g. Distribution licensees shall not be required to distribute APTN's programming pursuant to this Order, unless APTN provides distribution licensees with 90 days advance notice of its intended launch date, whether that is 1 September 1999 or a later date.

For the purposes of this Order, available channel, basic service, Class 1 licensee, Class 2 licensee, Class 3 licensee, DTH distribution undertaking, licensed, programming service and restricted channel carry the meanings assigned to them in the Broadcasting Distribution Regulations, as amended from time to time.