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ARCHIVED - Public Notice CRTC 2000-113

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Public Notice
CRTC 2000-113

See also: 2000-113-1

Ottawa, 4 August 2000

Establishment of an industry working group to examine the digital distribution of existing pay and specialty services

1.

In Public Notice CRTC 2000-6 dated 13 January 2000 (Licensing framework policy for new digital pay and specialty services), the Commission indicated that it would address, later, the issues related to the migration of existing pay and specialty services from analog to digital distribution.

2.

"Analog" and "digital" distribution are terms applied to different technologies used by distributors to deliver television programming and other services to their subscribers. Some distributors, such as those operating direct-to-home satellite undertakings and the larger multipoint distribution systems, make exclusive use of the new digital technology to deliver services to subscribers. Other distributors, including most cable television operators, still make predominant use of analog technology.

3.

There are several advantages that digital technology holds over analog technology for use in distributing programming and other services, including its more efficient use of available spectrum (channel capacity). This will include high definition television (HDTV) signals and interactive video-on-demand programming which may require a new generation of set-top box. It is expected that, once an industry standard for digital distribution technology is established, television manufacturers will begin to build this technology into their products. It is further expected that, over time, digital distribution will replace analog distribution entirely.

4.

For some time, rules have been in place with respect to access to analog cable distribution undertakings by programming services. Recently (see Public Notice CRTC 2000-6), the Commission established a licensing framework for new digital pay and specialty services. The Commission’s task now is to develop and implement a regulatory framework capable of facilitating, over time, an orderly transition to a wholly digital distribution environment.

5.

The Commission is aware of discussions between the providers of certain programming services and distributors concerning, among other things, the manner in which existing pay and specialty services now generally distributed in analog packages will be distributed in a digital environment. The Commission also understands that negotiations between pay and specialty programmers and distributors concerning the renewal of existing affiliation agreements have been proceeding with difficulty. This may be because of uncertainty created in the absence of rules to govern the distribution of these services either partly, or wholly, on a digital basis.

6.

In light of the above, the Commission hereby initiates a process for the purpose of designing a regulatory framework that will facilitate the transition to digital distribution. The process will be modelled on those undertaken in the past by the CRTC Industry Steering Committee (CISC). As a first step, the Commission requests that providers of existing pay and specialty services join with those distributors who continue to make use of analog technology to establish a working group. The role of the working group will be to develop a proposal for submission to the Commission that addresses the distribution of existing analog services in a digital environment.

7.

The Commission notes that the potential impact of this process will be experienced, ultimately and most directly, by those subscribing to the services of distribution undertakings. Accordingly, it considers that this working group process should provide an opportunity for input by other parties, particularly consumers.

8.

The Commission is confident that the cooperative, consensual approach implicit in such a working group process will provide interested parties with an opportunity to develop for the Commission’s consideration a proposal for an acceptable and effective regulatory framework to govern the distribution of services in a digital environment. The Commission emphasizes, however, that it shall ultimately determine the shape of this framework and the rules under which it will operate.

9.

For the purposes of this notice and the process that will follow from it, the Commission intends to make use of the following definitions for the two possible migration scenarios:

"complete migration" of the service from analog to digital cable would occur where the service is no longer available as an analog cable service; and

"partial migration" of the service from analog to digital cable would occur where the service remains available as an analog cable service and is also available as a digital cable service on a stand-alone and/or package basis.

10.

The Commission notes that these definitions are substantially the same as those used by the Canadian Association of Broadcasters in its 7 July 2000 submission to the Commission in relation to the upcoming hearing on new digital specialty and pay services.

11.

The Commission requests the working group to develop a proposal that addresses the issues related to each of the migration scenarios, including an implementation schedule. Without limiting the scope of the proposal, the working group should also address, at a minimum, the questions and issues set out below:
Issues in a partial migration scenario
  • Should distributors be required to continue to offer existing analog services on an analog basis once a significant level of digital distribution has been achieved? If so, is there a threshold (e.g. a subscribership level or level of penetration for digital boxes) where this would no longer be a requirement? Should this threshold apply at the level of each individual distribution undertaking, a market, a region, or on a national basis?
  • During the transition, should distributors be permitted to offer subscribers the option of receiving existing analog services in a digital format on an individual, à la carte, basis, or must these services also be offered as part of digital packages with other services?
  • Should one who distributes a service on an analog basis be required to obtain permission from the service provider before distributing the service on a digital basis as well?
Issues in either a partial or complete migration scenario
  • To date, access requirements have generally addressed analog distribution. What, if any, access requirements should there be in the digital environment for existing analog services?
  • What, if any, changes should be made in a digital environment to the current carriage status distinctions (dual, modified dual, discretionary)?
  • In an environment that is partially digital, what changes might be justified to the terms typically found in today’s affiliation agreements, particularly those dealing with rates and penetration? What changes might be justified in a wholly digital environment?
  • In a digital distribution environment, what degree of choice should the public have in subscribing to individual programming services?
  • Should the Commission’s general regulatory approach to these issues distinguish between the different circumstances of large and small distributors? If so, how?
  • Considering the size of the French-language market and the different provisions that, historically, have been applied to the distribution of French-language pay and specialty services, should the Commission consider creating different rules for the implementation of a partial or complete migration to digital in that market? If so, what should these different rules be?

12.

In addition to the above questions, the Commission encourages the working group to address in its report any other issues that it may find relevant.

13.

The Commission invites the licensees of all distribution undertakings that continue to employ analog distribution technology, in whole or in part, and the licensees of all pay and specialty undertakings, to participate in the working group, possibly through the formulation of submissions to their respective industry associations. In addition, the Commission will assign members of its own staff to participate as observers.

14.

As mentioned above, the Commission expects all participants in the working group to take into account the views and concerns of consumers in preparing the report. To assist in achieving this objective, the Commission considers that it would be beneficial for the working group to include participation by French- and English-language consumer organizations and other groups, representing the views of Canadians. In particular the Commission would encourage such groups to gather and present evidence of how consumers are likely to respond, overall, to the recommendations contained in the working group’s report.

15.

To ensure that as many groups and individuals as possible have the opportunity to make their views known to the working group, the Commission will accept written comments and relay these to the working group. Such comments should be submitted to the Commission (referencing this Public Notice) by 15 September 2000.

16.

Interested parties can file their comments on paper or electronically. Submissions longer than five pages should include a summary.

17.

The "hard copy" should be sent to the Secretary General, CRTC, Ottawa, K1A 0N2.

18.

Parties wishing to file electronic versions of their comments can do so by email or on diskette. The Commission email address is procedure@crtc.gc.ca

19.

The Commission requests that the working group submit its report to the Commission by 31 October 2000. The Commission intends to provide a subsequent opportunity for public comment on the working group’s report.
Secretary General

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