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ARCHIVED - Public Notice CRTC 2000-132

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  Public Notice CRTC 2000-132
  Ottawa, 20 September 2000
  Simultaneous substitution of programming on U.S. superstations
  Simultaneous substitution occurs when a broadcasting distribution undertaking (BDU) such as a cable system inserts the signal of a local or regional Canadian television station on the channel of a more distant station showing programming that is largely or substantially the same, at the same time. For substitution to take place, the local or regional television station has to make a request to the BDU in advance.
  Simultaneous substitution helps protect the program rights that local broadcasters acquire for their market. While substitution can apply to two Canadian stations, it most often involves the substitution of a Canadian signal for a non-Canadian one.
  In response to requests from the broadcasting industry, the Commission clarifies that, under the Broadcasting Distribution Regulations, Class 1 and Class 2 BDU licensees must carry out requests for simultaneous substitution related to programming on U.S. superstations. Such stations offer programming using over-the-air transmitters in their primary U.S. markets, but their signals are also made available by satellite to BDUs so that their signals can be extended to other areas.
  The Commission is, however, prepared to consider favourably applications by Class 2 BDU licensees to be exempted from the requirement to carry out simultaneous substitution requests relating to U.S. superstations where the licensee can demonstrate that implementing such substitutions would result in significant incremental costs outweighing the benefits to be gained in the circumstances. Class 2 BDUs are smaller systems that generally have between 2,000 and 6,000 subscribers.
  Background
  The process

1.

In letters dated 7 March, 29 March and 23 May 2000, the Canadian Association of Broadcasters (CAB) asked the Commission to formally clarify if section 30 of the Broadcasting Distribution Regulations (the regulations) requires Class 1 BDU licensees to carry out simultaneous substitution requests relating to the programming on U.S. superstations.

2.

On 28 April 2000, the Commission sought comments from the Canadian Cable Television Association (CCTA) on the issues raised in the CAB’s letters. The CCTA replied to the Commission on 15 May 2000.
  Applicable regulations and definitions

3.

Section 30 of the regulations provides that Class 1 and Class 2 licensees shall, upon receiving a written request from an eligible station, delete the programming service of a "television station" and carry out substitution if the services to be deleted and substituted are comparable and simultaneously broadcast.

4.

While the regulations do not contain a definition of a "television station", in section 1 a "station" is defined as follows:
  "station" means a radio or television programming undertaking, or a radiocommunication distribution undertaking that broadcasts the programming service of a radio or television programming undertaking and whose signal is not encrypted and for which no fee is payable to a third party for the undertaking's right to distribute the programming.
  Positions of parties
  The CAB

5.

The CAB considered that the Commission should formally require Class 1 licensees to carry out substitution requests relating to U.S. superstations. It considered that these superstations qualify as "television stations" under the regulations and should be treated no differently than other U.S. television stations against which broadcasters routinely request and receive simultaneous substitution.

6.

The CAB further noted that the Commission has not issued any statement or policy that would exempt Class 1 licensees from carrying out simultaneous substitution requests related to U.S. superstations. It also pointed out that the Copyright Board considers U.S. superstations to be over-the-air signals at their point of origin, and makes no distinction between superstation signals and other over-the air signals for the purpose of administering retransmission rights and tariffs.

7.

The CAB noted that U.S. superstations are subject to the American Federal Communications Commission’s (FCC) Syndicated Program Exclusivity Rules (Syndex). The Syndex rules are designed to protect the program rights of U.S. local broadcasters and generally require deletion of duplicate distant television signals by distributors.
  The CCTA

8.

The CCTA considered that the requirements for simultaneous substitution set out in the regulations do not apply to U.S. superstations. It was of the view that a superstation does not fall under the definition of "station" set out in section 1 of the regulations since the signal of a superstation is encrypted and a fee is payable by a BDU to a third party for the right to distribute the service.

9.

The CCTA therefore considered that a U.S. superstation should be treated as a satellite-to-cable service, not a television station. The signals of satellite-to-cable services are not subject to simultaneous substitution for Class 1 and Class 2 licensees under section 30 of the regulations.

10.

The CCTA further pointed out that the Commission regulates the distribution of U.S. superstations and U.S. cable channels through its distribution and linkage requirements for BDUs. Since these requirements generally limit the distribution of U.S. superstations to packages that contain Canadian pay television services, the CCTA considers that Canadian over-the-air stations are not unduly affected by the activities of U.S. superstations and simultaneous substitution is not necessary in this instance.

11.

With respect to the CAB’s comments relating to copyright, the CCTA was of the view that the Copyright Board operates under a different statutory mandate than does the Commission, and the board’s tariff approval powers deal with totally different issues.

12.

The CCTA also noted that the cost of implementing simultaneous substitution in relation to U.S. superstations can be significant. This is particularly the case for digital cable systems since effecting substitutions would require the transfer of an analog feed to a digital distribution system. The association considered that the costs of implementing such substitutions cannot be justified given the minimal benefits that it would bring to Canadian conventional broadcasters. The CCTA, however, provided only general information concerning the additionals costs that would be incurred by carrying out substitution requests relating to U.S. superstations.
  The Commission’s determination

13.

Simultaneous substitution is an important mechanism that protects the program rights purchased by local broadcasters. It serves to prevent situations where a program for which a local broadcaster holds the rights for a given territory is broadcast simultaneously on the local station and on an out-of market station, thus decreasing the local station’s audience.

14.

The Commission does not agree with the CCTA's interpretation of the regulations under which U.S. superstations would not qualify as "television stations" because some BDU’s receive them on an encrypted basis for a fee. The Commission is of the view that stations such as U.S. superstations that are available over-the-air in their primary markets are to be considered as "television stations" for the purposes of simultaneous substitution. This would be the case even when their signals are extended to more distant areas by a satellite relay distribution undertaking (SRDU).

15.

Such an interpretation is consistent with that given to the same words as they are used in the definitions of "local television station", "regional television station", "extra-regional television station", and " non-Canadian television station", in the regulations.

16.

Section 42 of the regulations sets out simultaneous substitution requirements for DTH licensees. Under this regulation, DTH undertakings must implement simultaneous substitution requests made with respect to U.S. superstations. The Commission notes that it is consistent with its policies to treat larger BDUs in a similar way.

17.

The Commission therefore wishes to clarify that, under the terms of section 30 of the regulations, Class 1 and Class 2 licensees must implement simultaneous substitution requests related to the signals of U.S. superstations provided that these stations are available over-the-air in their U.S. markets.
  Class 2 licensees – a flexible approach

18.

The Commission notes that the CAB’s request only addressed the issue of simultaneous substitution for U.S. superstations by Class 1 licensees. Section 30 of the regulations, however, also applies to Class 2 licensees. The Commission notes the concerns expressed by the CCTA about the additional costs that might be incurred for implementing simultaneous substitution in relation to the programming broadcast by U.S. superstations. Although only general data on the level of costs involved was filed, the Commission considers that the impact would be strongest on smaller BDUs.

19.

The Commission is prepared to consider favourably applications by Class 2 licensees for conditions of licence granting them an exemption from the requirement to implement simultaneous substitution requests related to the programming on U.S. superstations, in cases where the licensee can demonstrate that implementing such substitutions would result in significant incremental costs outweighing the benefits to be gained from substitution under the circumstances.

 

  Secretary General
  This document is available in alternate format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca.

 

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