ARCHIVED - Decision CRTC 2000-454

TechTV Canada - a new specialty channel

On 24 November 2000, the Commission made a decision to issue a licence for a new national English-language Category 1 specialty television service to be called "techTV Canada" (techTV) formerly known as ZDTV Canada. The Commission noted at that time that reasons, terms and conditions of the new licence would follow at a later date.

TechTV will provide lifestyle information for the "e-generation" with programming devoted to computers, technology and the Internet. TechTV will offer programs that will inform and entertain audiences, without regard to the level of technical knowledge of the viewer. TechTV will be an attractive addition to the digital environment, especially desirable to technophiles, who may be among the first to experiment with digital reception of television services. As noted in Public Notice CRTC 2000-171 issued today, techTV and 20 other new digital specialty services will be made available to subscribers by all distributors who offer programming to the public using digital technology and by some cable operators who serve smaller markets using analog technology. The licence, when issued, will expire 31 August 2007.

The applicant's view is that an understanding of the impact of technology at work, at home and at school is essential in an information-based economy. It stated that techTV will address that necessity, and increase the programming diversity available to Canadians by providing information focusing exclusively on technology that is not offered currently in the Canadian broadcasting system. In Public Notice 2000-171, the Commission discusses the general criteria for the approval of this and other applications for new specialty services.

The licensee of techTV will be techTV Canada Inc. a company to be incorporated, which will be owned by Rogers Broadcasting Ltd., Shaw Communications Inc. and techTV, LLC (formerly ZDTV, LLC) a U.S. corporation ultimately controlled by Paul Allen, co-founder of Microsoft. TechTV programs are now available in 55 million homes in 64 countries.

Terms and conditions of licence common to all of the new Category 1 specialty services are set out in an appendix to Public Notice 2000-171. Conditions specific to this application can be found in the appendix to this decision.

Programming

Nature of service

TechTV will offer a national English-language specialty television service dedicated to providing programming about computing, technology and the Internet. The program categories identified by techTV as forming the service's content are set out in a condition of licence found in the appendix to this decision.

Accordingly to the licensee, the new service will provide programs that will "take technology mainstream, with programming for every level of viewer." TechTV will not offer any drama-based programming, and will limit the provision of documentary programs. A condition of licence related to that limitation is set out in the appendix to this decision. At the outset the licensee plans to acquire all of the non-Canadian programming for the new service from techTV US, the leading provider of technology-lifestyle programming in the U.S., combining consumer-oriented content with interactivity. The licensee noted however, that it would be interested in acquiring foreign programming from other sources, if such programming becomes available.

The licensee indicates that the programs on techTV will include hourly news updates, investment advice, user-friendly computer tips, and product reviews. It will explore the business and financial issues driving Canadian computer and software companies, and expose digital culture and the dot.com lifestyle in Canada. It will place a strong focus on the leaders in, and the stories behind, Canadian new media content and services. TechTV will not use a program "wheel" format, although some programs will be repeated during any given day.

Contributions to diversity

Some technology-related programming is currently found in limited amounts on existing Canadian television services, but no current service focuses on technology in the same depth that techTV proposes. The licensee is of the opinion that techTV will contribute to diversity by providing "a source of, and forum for, Canadian input to the world of technology and will make a substantial contribution to Canadian production and the world of interactive television."

Canadian content

The licensee made a commitment to broadcast a minimum of 25% Canadian content from 6 a.m. to midnight, and a minimum of 25% from 6 p.m. to midnight, in the first year of the licence term. Those minimums will increase by 5% each year until the fifth year of the term. For the fifth year and the remainder of the licence term, techTV's commitment will be 50% of the day and 50% of the evening hours. A condition of licence setting out the levels of Canadian programming required annually can be found in the appendix to this decision.

Following discussions at the hearing, techTV further committed to broadcast between 350 and 400 hours of original Canadian programs in the first year of the licence term, increasing to between 900 and 1,000 hours in the seventh year of the term. According to the licensee's projections for the fifth year of the licence term, Canadian original programs will represent approximately 3 1/2 hours per weekday and the same amount during a weekend.

Canadian programming expenditures

Beginning in the year following the first year of operation, the licensee will expend a yearly minimum of 40% of its gross advertising, infomercial and subscription revenues on Canadian programming. The licensee estimates that, in accordance with this formula, it will spend more than $32 million over the licence term, to acquire or produce Canadian programs. A formula for the calculation of the amounts required is set out in a condition of licence, found in the appendix to this decision.

Independent production

The licensee expects that most of its Canadian programming will be produced in-house. TechTV estimates, however, that over the licence term, approximately $3.3 million will be spent on Canadian programs acquired from independent producers, beginning with a minimum of $308,000 in the third year of the licence term. The Commission notes the licensee's commitments, and as set out in Public Notice 2000-171, all Category 1 services will be subject to a standard condition of licence in this regard.

Interactivity

The programming offered by techTV will be integrated into Internet accessible, fully interactive new media content on the service's website. The interactive programming elements will offer an opportunity for viewers and users to become an active part of the content. Television programs will be accompanied by online chat groups and access through netcams with real time, live dialogue.

From the outset, viewers will be able to watch techTV while contributing to the programming through their computers. The introduction of fully-interactive television accessible through a new generation of set-top boxes will eventually allow true interactivity through the television alone. As a part of this application, two of the three shareholders, Rogers Broadcasting Ltd. (Rogers) and Shaw Communications Inc. (Shaw) indicated that they expect to provide Internet access through television, sometime within the next 12-18 months.

The website will provide dynamic, highly interactive web programming that invites audience participation. It will engage viewers via e-mail, interactive polls, chat groups and a Netcam Network. In the U.S., techTV has given away 3,500 netcams, and has plans to put at least 10,000 more into the hands of its viewers. Because so many techTV shows are "how-to" and "help" programs, the licensee believes that netcams are the ideal vehicle for audience participation.

Ownership and synergies

As noted earlier, Rogers, Shaw and techTV LLC will hold the voting interest in techTV Holding Inc., the parent company of techTV Canada Inc., which is the licensee of the new service. TechTV will use the production facilities of CFMT-TV in Toronto, which is owned by Rogers. As the "managing shareholder", Rogers will provide strategic, financial, development, operating, regulatory, management and sales services for techTV Holdings Inc.

As the two largest providers of cable television service in Canada, Rogers and Shaw have both been at the forefront of program distribution and are program producers. Both of these companies have made substantial investment in the development of interactive television technology and the development of digital set-top boxes, and are uniquely positioned to ensure that techTV is fully able to expand the boundaries of interactivity via set-top boxes.

The U.S. shareholder techTV, LLC is owned by Vulcan Programming Inc. which is ultimately controlled by Paul Allen. It has been offering a service similar to techTV to U.S. consumers over the past two years and, according to the applicant, is the fastest-growing specialty service in the U.S. The new Canadian service will have access to all of the U.S. service's resources for the gathering of "techno-news". The U.S. service will initially provide all of the non-Canadian programming content for the new service, and will provide brand recognition for the service, through the extensive Internet presence of its existing website techTV.com.

Filing requirements

This authority will only be effective and the Commission will only issue the licence when the applicant has clearly demonstrated that it is a "qualified corporation" as defined in the Direction to the CRTC (Ineligibility of non-Canadians) and is eligible to hold a licence. Consequently, the applicant is required to file all relative incorporation documents (certificate and articles, by-laws, etc.), copies of the programming supply agreement; unanimous Shareholders' Agreement, management agreement, or any other pertinent agreement related to the service, for review and approval by the Commission.

Other matters

Rate

In its business plan, the licensee proposed a monthly wholesale rate of $0.50 per subscriber throughout the licence term, and a three-month free trial period.

Service to the hearing-impaired

With respect to service for the hearing-impaired, techV has committed to install a TTY (teletypewriter), and ensure that, in the first year of the licence term, 50% of all programming will be closed captioned. That level will be increased gradually, and in the final year of the licence term, 90% of all programming will be closed captioned. The Commission expects the licensee to fulfil its commitments.

Service to the visually-impaired

As part of its application, techTV also committed to pursuing the acquisition of programming with descriptive video service (DVS), and to consult with the National Broadcast Reading Service on the implementation of DVS.

The Commission requires techTV to be technically equipped to deliver described video programming and to fulfil the commitments included in the application. In addition, the Commission encourages the licensee to provide audio description of visual information wherever possible, and to provide described video programming as outlined in Public Notice 2000-171.

Employment equity

The Commission notes that this licensee will be subject to the Employment Equity Act that came into effect on 24 October 1996 and therefore will file reports concerning employment equity with Human Resources Development Canada.

Conclusion

Canadians as a group are among the fastest-growing users of online services. According to Statistics Canada, in 1996, only about 800,000 Canadian households had access to the Internet. By 1998, that number had grown to over 2.6 million, and currently, according to the Bureau of Broadcast Measurement, over 13.5 million Canadians use the Internet. The Commission is satisfied that techTV will bring a modern, cutting edge, up-to-the-minute service to an audience that has an ever-increasing appetite for high technology information, and that is among the world's leaders in technology development. The expertise, experience, innovative plans, and financial stability of the three principal shareholders will ensure that techTV will be a successful and attractive new participant in the Canadian broadcasting system.

Secretary General

This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca

Appendix to Decision CRTC 2000-454

The licence for the national English-language programming undertaking (specialty television service) known as techTV Canada will be subject to the following conditions, as well as those set out both in Public Notice CRTC 2000-171, and in the licence to be issued.

Nature of service

2. The programming must be drawn exclusively from the following categories, as set out in Schedule I to the Specialty Services Regulations, 1990:

News

General entertainment & human interest

Analysis and interpretation

Interstitials

Long-form documentary

Public service announcements (PSAs)

Reporting and actualities

Infomercials, promotional/corporate video

Informal education/recreation and leisure

• No more than 5% of all programming broadcast during each broadcast week shall be drawn from category 2b.

Exhibition of Canadian programs

Broadcast day

Evening broadcast period

25%

25%

35%

35%

40%

40%

45%

45%

50%

50%

50%

50%

50%

50%

Expenditures on Canadian programs

Definition

The term "broadcast day" shall have the same meaning as that set in in the Television Broadcasting Regulations, 1987.