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ARCHIVED - Order CRTC 2001-133

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Order CRTC 2001-133

  Ottawa, 12 February 2001
 

Request for an order pursuant to Sections 27(2) and 28 of the Telecommunications Act concerning access to transponders on the Anik F1 satellite

  Reference: 8622-S28-01/00
  The Commission makes an Order that Telesat not carry out the proposed claw back of Ku-band transponders on Anik F1 other than for the satellite distribution of existing services of parties with whom it has existing contractual arrangements.
 

Background

1. The Commission received an application dated 29 November 2000 from Canadian Satellite Communications Inc. and its two subsidiaries, Star Choice Television Network Incorporated and Direct Choice T.V. Inc. (Star Choice). The applicants requested that the Commission make:
 

.an order pursuant to sections 27(2) and 28 of the Telecommunications Act prohibiting Telesat Canada from depriving Star Choice of access to Ku-band transponders on the Anik F1 satellite which Telesat Canada previously agreed to sell to Star Choice.

2. In a further letter dated 12 December 2000, Star Choice requested that the Commission ".issue an interim order prohibiting the claw back of the Disputed Transponders." in anticipation of the possibility that further submissions or evidence might be required.
3. Comments and replies from Telesat Canada, CTV Inc., CHUM Limited, and Alliance Atlantis Communications Inc. concerning these matters, as well as those of Bell ExpressVu Inc. formed part of the initial public file of this application. The Commission decided not to issue the interim order that Star Choice had requested. Instead, the Commission decided to request further submissions on this application (see Public Notice CRTC 2000-178 dated 22 December 2000).
4. In response to this call for further comments, a total of 38 submissions were submitted, including 26 from the general public. The comments from subscribers, programmers and distributors submitted in both stages of this process were informative and helpful, and have permitted the Commission to develop a clear understanding of the relevant public policy issues and concerns.
 

The test for an order under section 28(2) of the Telecommunications Act

5. The Commission looked first at sections 28(2) and 28(3) of the Telecommunications Act, which state as follows:
(2) Satellite transmission of broadcasts - Where a person who carries on a broadcasting undertaking does not agree with a Canadian carrier with respect to the allocation of satellite capacity for the transmission by the carrier of programs, as defined in subsection 2(1) of the Broadcasting Act, the Commission may allocate satellite capacity to particular broadcasting undertakings if it is satisfied that the allocation will further the implementation of the broadcasting policy for Canada set out in subsection 3(1) of that Act.
(3) Idem - Before the Commission exercises its power under subsection (2), it shall take into account the carrier's role as a telecommunications common carrier and any operational constraints identified by the carrier.
6. Accordingly, in considering whether or not to grant the requested order under section 28(2) of the Telecommunications Act, the Commission must examine whether an allocation of satellite capacity will, in its view, further the implementation of the broadcasting policy for Canada as set out in section 3(1) of the Broadcasting Act. As regards section 28(3), Telesat did not identify any relevant operational constraints in its filings.
7. After carefully examining all the submissions, the Commission is satisfied that an allocation of satellite capacity will, on the specific facts of this case, further the implementation of the broadcasting policy for Canada. Its reasons for coming to this conclusion include those set out below:
 

Diversity of programming and the new Category 2 digital services

8. Section 3(1)(i)(i) of the Broadcasting Act states that the programming provided by the Canadian broadcasting system should, among other things, "be varied and comprehensive, providing a balance of information, enlightenment and entertainment for men, women and children of all ages, interests and tastes". The recent digital licensing decisions of November 2000, where in excess of 200 Category 2 services were authorized to a wide variety of players, are a recent example of the Commission's efforts to ensure that the Act's call for diversity in programming is met. However, none of these Category 2 services has guaranteed access rights to distribution undertakings. Each will be obliged to negotiate for carriage by distributors.
9. The proposed claw back could inhibit the implementation of the Act's policy objective of diversity. Specifically, the claw back could place many of these new services at a disadvantage in negotiating carriage in relation to CTV, CHUM and Alliance Atlantis, and thus lower their chances of having a reasonable opportunity to achieve a critical mass of digital subscribers from their distribution on the two Canadian DTH undertakings, as well as on cable and on other forms of distribution.
 

Wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity

10. Section 3(1)(d)(ii) of the Act states that the Canadian broadcasting system should "encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity." CTV, CHUM and Alliance Atlantis - the potential beneficiaries of the disputed Ku-band transponder capacity on Anik F1 - indicated in their respective comments that, with the claw back, they could resell to others any capacity excess to their own needs. It appears, however, that this might address the carriage needs of only a small number of other Category 2 services.
11. While there can be no guarantee that Star Choice's distribution decisions will be found satisfactory by all, the order that Star Choice has applied for would place the Category 2 services of CTV, CHUM, and Alliance Atlantis on a comparable footing with other Category 2 services in negotiating for carriage. Moreover, all would have recourse to the undue preference provisions in the Broadcasting Distribution Regulations. This approach, in the Commission's view, would better encourage the provision of a wide range of programming for subscribers.
 

Each element should contribute, and each undertaking shall make maximum use of Canadian creative and other resources in the creation and presentation of programming

12. Section 3(1)(e) of the Act states that "each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming". Section 3(1)(f) stipulates that each undertaking shall make maximum use of Canadian creative and other resources. In this regard, while Canadian DTH undertakings must employ Canadian satellite facilities, programmers have more options at their disposal, for example C-band transponders and/or non-Canadian satellites. Moreover, lack of capacity on Star Choice's main satellite could exacerbate the situation whereby Star Choice must use separate satellites for the delivery of its full service offerings. This could have significant implications, including service disruptions and higher costs for consumers wishing to purchase, or "swap out" existing receiver dishes for, new dual-horn receiver dishes. This, in turn, could damage the competitive position of Star Choice in the DTH marketplace, and impair competition and choice in broadcasting distribution in general.
 

Limited Canadian satellite capacity and the objectives of the Broadcasting Act

13. The Commission continues to support the principle that programmers should have direct access to Telesat satellite capacity. It would thus normally not distinguish between distributors and programmers in the allocation or use of such capacity. However, there is currently a Ku-band capacity shortage on Anik F1.
14. The Commission considers that, in these circumstances, the objectives of the Broadcasting Act would be better served by ensuring that the DTH operator (Star Choice) is in a position to determine those Category 2 services that it offers to its subscribers, rather than the desire by CTV, CHUM and Alliance Atlantis to ensure distribution for their Category 2 services.
15. The Commission reiterates that it is essential that all Category 2 services have an equitable opportunity for negotiating carriage. This will help ensure that Canadian subscribers have a wider choice in programming. In this regard, the Commission will closely monitor the situation to ensure equitable treatment of programming undertakings. The Commission notes that the launch of Anik F2, expected to occur in two years, should ease the shortage in satellite capacity.
16. Accordingly, given the Ku-band limited satellite capacity currently available on Anik F1, and to further the implementation of the broadcasting policy for Canada set out in section 3(1) of the Broadcasting Act, the Commission makes the following order pursuant to section 28(2) of the Telecommunications Act.
 

Disposition

17. The Commission, by majority decision, hereby orders, pursuant to subsection 28(2) of the Telecommunications Act, that Telesat not exercise any claw back provision for Ku-band transponders on Anik F1 other than for the satellite distribution of existing services of parties with whom it has existing contractual arrangements.
18. According to Star Choice, which had sought that all four transponders be allocated to it, implementation of an order that would permit a claw back for the purpose of existing services only may result in one of the four transponders being allocated to Telesat. Should this be the case, the Commission expects Telesat, in its role as common carrier, to then allocate the capacity of this transponder amongst the affected programming undertakings according to its longstanding "first come, first served" practice.
19. As the Commission has decided to grant an order pursuant to section 28(2) of the Telecommunications Act, it considers it unnecessary to discuss further the request for a declaration that any claw back of the disputed transponders would contravene the undue preference provisions set out in sections 27(2) or 28(1) of the Telecommunications Act.
  Secretary General
  This document is available in alternative format upon request and may also be examined at the following Internet site: www.crtc.gc.ca 

 

Dissenting opinion of Commissioner Andrew Cardozo

  While I appreciate the arguments put forward by the majority in this order, I find the case put forward by CTV, CHUM and Alliance Atlantis (the three broadcasters) to be more convincing. The inclusion of these three players in owning the transponders in question adds the all-important diversity to the distribution system, as it reduces the controlling gatekeeper role of any one party.
  I was struck by several arguments put forward in the record of the proceeding:
  - the original offer by Telesat was made publicly to the industry, including program service providers at large over the course of many months;
  - the three broadcasters would use this space to provide their programming services through a reliable and high quality signal to distributors of all kinds;
  - the reason for the clawback right was to allow customers who choose not to do business with Star Choice the ability to obtain Ku-band space or to purchase a transponder directly from Telesat;
  - the presence of the three broadcasters allows for the possibility for such unaffiliated customers to obtain space from these broadcasters as well;
  - with the agreements in place, these program providers and any others would have a competitive marketplace in which to purchase their required space segment for their new Category 2 services, without any distributor being in a monopolist or controlling gatekeeper role;
  - the three broadcasters note they are in contact with new licencees not affiliated with themselves or Star Choice with regards to use of space;
  - the three broadcasters have offered to release unused space for use by other services.
  I do agree with the majority that the Commission has the authority to intervene in matters such as this. Where I disagree, is whether such intervention is warranted at this time, when the issue at hand concerns a brand new transponder and new services yet to be launched. There is no history of misuse of power.
  In my view it would be more appropriate for the Commission to clearly set out its expectations at this time, with regards to fair and equitable carriage for Category 2 services, and to definitively leave open the door to intervene if there is unfair treatment by the three broadcasters, Star Choice or Telesat. In this regard I particularly agree with paragraph 15 of the majority decision, which I believe should have been the core of the order.
  In matters where parties have willingly entered into agreements and contracts, it is better for the Commission to intervene only when voluntary solutions are either exhausted or impractical.
  For these reasons I respectfully dissent from the majority in making this order.
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