ARCHIVED - Public Notice CRTC 2001-62Public Notice CRTC 2001-62

Public Notice CRTC 2001-62

Ottawa, 5 June 2001

Call for comments on a proposed policy to oversee the transition from analog to digital over-the-air television broadcasting

Background

Purpose of this notice

In this notice, the Commission calls for comments on various policy principles and on a regulatory framework herein proposed by the Commission to oversee the transition from analog to over-the-air digital television (DTV). Most of the proposed policy principles set out below address off-air broadcasting and mirror the approach taken by the Commission in its digital radio policy. The recommendations of the Task Force on the Implementation of Digital Television have greatly assisted the Commission in developing this proposed policy framework.

The Comission has not proposed any specific policy principles with respect to the carriage of off-air DTV signals by broadcasting distribution undertakings (BDUs). Rather, it asks a number of questions concerning what principles, when applied to the distribution of such signals, would best serve the objectives of the Broadcasting Act.

Nor does this notice specifically address the transition to the A/53 digital standard (see below) by the pay and specialty services. In Public Notice 2000-113, 4 August 2000, the Commission established an industry working group to examine the digital distribution of the existing analog pay and specialty services. Although this first step will take some years to complete for the industry as a whole, a few of the sports and movie services may soon offer at least a portion of their program schedules in DTV formats. The consequences for the distribution industry are examined later in this notice.

What is digital television?

DTV is a new, over-the-air transmission system. It is designed to serve as an eventual replacement for the current analog NTSC broadcast system that has been in use now in North America for over half a century. The new system is based on the Advanced Television Systems Committee standard (A/53) that has been adopted for use in Canada as well as in the U.S. The standard defines a number of digital television formats ranging from narrow screen to wide screen and from "low definition" to "high definition" television. The DTV standard also allows broadcasters to transmit multiple programs simultaneously (as well as up to five channels of high quality sound per program) using a single television channel. The new standard will overcome many of the shortcomings of today's analog system which have become increasingly apparent as consumer TV sets have become more technologically advanced.

Many countries are moving to digital television. Some of them have adopted variants of the transmission standard (DVB-T) that was developed in Europe. A third standard has been adopted in Japan.

Unlike the conversion from black and white to colour television, the new A/53 standard is not backward compatible. That is, these digital transmissions can only be received by new digital TV sets or, with some sacrifice in quality, on analog TV sets equipped with set top boxes that can convert A/53 digital signals to analog. In order to ensure that over-the-air television viewers without new digital sets or converters are not deprived of existing off-air signals, the current analog and the new digital transmission systems will broadcast in tandem for some years. The transition to digital will likely begin in the major population centres, including Toronto, Montréal, Ottawa and Vancouver. The next phase would see DTV service introduced to perhaps the 30 largest Canadian markets where programming is currently originated. Because the new standard encompasses only over-the-air transmissions, cable and satellite systems will use other modulation techniques to transmit high definition pictures.

To facilitate the introduction of DTV, Industry Canada has developed a digital television transitional channel allotment plan that provides every television broadcaster - including those operating low power undertakings - with a digital channel that is "equivalent" to their analog channel. Industry Canada has also published BPR (Broadcasting Procedures and Rules ) number 7 entitled Application Procedures and Rules for Digital Television (DTV) Undertakings.

For Canadian consumers, a number of factors will likely drive the conversion to digital in their homes. These will include a ready supply and a wide variety of attractive, high definition programming delivered free of charge by over-the-air transmitters and, for a reasonable fee, by cable, satellite and MDS distribution systems. Also important will be the availability, at reasonable prices, of digital television receivers and set-top digital to analog converters. A number of industry observers have further suggested that the arrival in a year or two of relatively inexpensive high definition DVD players, and the ready access they will provide to true high definition programming, will further hasten the replacement in the home of older analog television sets by digital sets.

Policy framework objectives

In developing its policy to oversee the transition from analog to digital television, the Commission will be guided by the following objectives:

In this notice, the Commission seeks comments on the advantages and disadvantages of the various proposals and options outlined below. Parties may also wish to advance other proposals that they believe would better meet the objectives set out in the Broadcasting Act. In providing their comments and suggestions to the Commission on the issues surrounding the transition to digital television, parties should give consideration to how the above objectives can best be met in the context of both digital television broadcasting and digital television distribution.

Policy issues relating to over-the-air digital television

General principles

Given DTV's superior picture quality and more efficient use of the broadcast spectrum, it is expected that today's analog broadcasting system will be phased out following the completion of the transition period from analog to digital. The Commission is of the preliminary view that digital technology should thus be treated as a replacement for analog technology. This would generally mean that existing broadcasters who wish to use digital television facilities to provide programming consisting essentially of a simulcast of their existing analog services would qualify, subject to specific terms and conditions, for what would be called transitional digital television licences. Applications by existing licensees that are based on Industry Canada's transitional allotment plan for DTV would be processed expeditiously by the Commission. The Commission also considers that a voluntary transition model, i.e. one that would develop at a pace set by the marketplace rather than mandated, is the most appropriate approach for the Canadian broadcasting system.

The Commission considers that issuing such new transitional digital television licences would be preferable to amending existing analog licences. For example, it would allow broadcasters to offer a certain amount of programming on their digital operations that differs from their traditional analog programming. It would also permit an appropriate and orderly examination of a number of related matters, including any outstanding distribution and simultaneous substitution issues, system implementation schedules and the possible broadcast of any accompanying multicast services. These related issues are discussed in more detail later in the notice.

Because DTV will be licensed as a replacement technology, the overall digital schedule must respect the broadcaster's analog obligations and conditions of licence, and the program content provided on the main DTV signal must, for the most part, duplicate that broadcast on the NTSC analog signal. Moreover, a significant number of Canadians continue to rely on the off-air reception of analog television signals. Accordingly, the Commission would generally expect broadcasters to provide digital coverage that matches their current analog coverage (within the constraints of Industry Canada's allotment plan), and to maintain their existing analog coverage in full during the transition period.

At the same time, in smaller secondary and rural markets, it may be too costly for broadcasters to construct new digital facilities and to operate them for any length of time in tandem with their existing analog stations. Technical alternatives may have to be considered. In such cases, a direct switchover to digital transmission may be the only affordable course of action. Smaller markets, however, are also those where the switch to DTV off-air broadcasting is generally expected to occur only after the transition has taken place in the larger markets. This could well be at a time when the penetration of digital television sets and the availability of affordable set top converters have significantly reduced the reliance of viewers on off-air analog reception.

The Commission would encourage existing broadcasters to apply for transitional digital television licences. However, should an existing broadcaster fail to apply for a transitional digital television licence within a reasonable period, or otherwise demonstrate that it is not prepared to make use of Industry Canada's spectrum allotment on a timely basis, the Commission might be willing to give favourable consideration to applications by prospective new entrants predicated on use of that digital spectrum. Similarly, where digital channel capacity exists beyond that allocated to existing broadcasters under Industry Canada's allotment plan, the Commission would be prepared to consider proposals from new entrants willing to make an investment in digital television. Such applications would be considered in accordance with the Commission's current practices and policies, including its policies regarding market entry, programming, ownership and licensing.

Programming

Broadcasters holding transitional digital television licences would be expected to provide viewers with the most enhanced signal quality possible for each high definition production they broadcast. At a minimum, all digital programming should be broadcast in the wide screen 16:9 aspect ratio. However, to encourage innovation and experimentation in the development of DTV, a broadcaster holding a transitional digital television licence might be permitted to offer as much as 14 hours per week of digital programming that is not duplicated on its analog service. Broadcasters would be expected to ensure that this unduplicated digital programming makes maximum use of the A/53 digital standard by delivering true, high definition, wide screen picture quality to viewers. In addition, broadcasters would be required to ensure that a minimum of 50% of this unduplicated programming is Canadian.

Multicast and data services

Each A/53 standard digital channel has the capacity to broadcast one high definition television (HDTV) signal within it. Alternatively, a channel may be used to broadcast up to three of what are described as medium definition signals, or as many as five standard definition (SDTV) signals. SDTV signals are roughly equivalent in technical quality to today's NTSC analog signals. Whatever the configuration of signals being broadcast on a digital channel, the channel also has the capacity to carry some amount of additional data. When multiple signals are being broadcast on a channel, the first signal is generally the one with the highest technical quality and is, by convention, identified as the main, or primary signal. The remaining signals are called multicast signals. The amount of high definition, digital television programming currently available is somewhat limited. Initially, during those hours in a schedule when the DTV transmitter is broadcasting other than HDTV programming, a licensee might reasonably seek to make optimum use of the transmitter's technical capacity to broadcast such multicast program streams, along with data services.

This, in turn, might help the licensee finance its transition to digital. In this regard, some in the industry have suggested that the multicast signal capacity of DTV could provide a broadcaster with the means to deliver specialty programming services to subscribers, including those in which it might have an ownership interest. This is because DTV technology offers the means to encrypt signals, thereby ensuring payment and addressing copyright issues. The regulatory implications of such a model would, of course, have to be examined.

For example, the availability of multicast signals in a market (whether advertiser supported or subscription-based) could have a disruptive impact on that market. As discussed later in this notice, multicast services also raise potential issues with respect to their impact on broadcasting distribution undertakings of all types, and with regard to the existing signal substitution regime.

It has been suggested that one possible use of the multicast capability of DTV might be the sharing of a single transmitter by several broadcasters during the early launch phase. Sharing would allow the broadcasters to transmit up to four or five standard definition digital television signals in a wide screen format for much of the day. In the prime time evening hours, however, the facility might be dedicated to the transmission of a single HDTV signal. Such sharing could continue until the number of viewers to DTV is sufficient to warrant construction of transmitters by each of the broadcasters.

On balance, the Commission considers that permitting television licensees to transmit multicast services separately from the main program channel could contribute in a positive manner to the Canadian broadcasting system. Specific issues associated with any particular proposal, as well as any outstanding transitional issues such as cable carriage, signal substitution and market impact, would be examined at the time of licensing.

However, as a general principle, when high definition programming is available, its broadcast should be given priority over the transmission of multicast and/or data services. Broadcasters should also ensure that the quality of the main programming signal is not affected by the transmission of multicast or data services.

Distribution issues

Overview

Section 3(1) of the Broadcasting Act states, as part of the broadcasting policy for Canada, that distribution undertakings "should give priority to the carriage of Canadian programming services and, in particular, to the carriage of local Canadian stations." Priority carriage and signal substitution requirements have been at the heart of the Commission's cable policies and regulations since 1971. In this section of the notice, the Commission seeks public comment on whether the current regulatory framework for distribution undertakings should be modified to accommodate the transition to DTV and, if so, how. Given that a large majority of Canadians currently receive their television services through BDUs, particularly cable systems, the Commission considers that a thorough examination of these questions is essential.

In the Commission's view, competitive alternatives to cable for the delivery of local HDTV signals will likely remain limited, at least in the immediate future. Satellite distributors currently offer only a small selection of local Canadian stations, and they certainly cannot offer them all. MDS undertakings, where they have been licensed, have only a limited amount of spectrum available to them. Even with the introduction of alternative means of distribution, such as local multi-point distribution systems (MDS) and digital subscriber line (DSL) technologies, it will take many years to establish networks to cover even the major urban areas of the country.

It could be argued that mandatory carriage of DTV signals by BDUs is unwarranted since the programming carried on digital signals, although of superior technical quality, would largely duplicate the programming broadcast on analog channels. This assumes that it would be some time before broadcasters are able to take full advantage of the proposal to permit up to 14 hours per week of unduplicated programming for broadcast on digital transmitters. The argument could also be made that having no mandatory carriage requirements for digital signals would have minimal impact, at least initially, because few subscribers would own digital television sets.

These arguments, however, do not appear to take into account the importance of such things as priority carriage and simultaneous substitution to local, regional and extra-regional television stations. These protect the program rights acquired by local broadcasters and are key financial underpinnings of the broadcast industry, especially in English-language markets. Extending the same regulatory treatment to DTV signals as their analog counterparts now receive would recognize this, as well as the fact that digital broadcasts will eventually replace analog broadcasts. In addition, the costs to broadcasters to build and operate digital facilities will be high. Arguably, broadcasters should be afforded every opportunity to re-coup these costs by extending their signals' market reach to include cable subscribers.

Whatever change is made to the current distribution regime, whether it takes the form of interim rules adapted for the transition period, and whether these rules might again require amendment once over-the-air digital television replaces the current analog technology, it is clear that these changes will have a very marked impact on the cable industry. A/53 digital signals require more (and, in some cases, much more) bandwidth than the digitized analog signals that are carried today. The challenge that will confront cable operators in accommodating these signals is compounded by the fact that they must, in the meantime, complete their own digital conversion. The demand for bandwidth capacity may also affect the pay and specialty services providers, who must make their own transition to A/53 digital and then secure space on the country's redistribution systems.

Carriage of the main DTV off-air signal

The current regulations set out the television programming services that licensees must distribute, as priorities, on the basic service or offer on an optional basis. The regulations also specify certain programming service deletion and substitution requirements. Since the Commission considers DTV to be a replacement technology, there are questions as to what regulatory approach should govern the distribution of DTV signals, both during the transition period and upon achieving a more complete replacement of analog by digital broadcasting. Concerns have been expressed that not all distributors will have the necessary bandwidth in place in time to comply with equivalent priority carriage requirements for digital and analog signals. In the circumstances, exceptions to the regulations or other special provisions may be necessary to take account of such things as capacity limitations, development delays, or perhaps even marketing and administrative considerations. The Commission therefore seeks comment on the following questions:

Carriage of multicast (i.e. secondary or subsidiary) services

Three broad regulatory approaches could be considered with respect to the treatment of multicast services distributed in addition to the main signal- no carriage requirement, carriage authorized on a case by case basis, or carriage required as a priority.

Broadcasters could also use their 6 MHz digital transmitting channels to download non-programming material such as data files, alphanumeric news reports, dedicated video clips not intended for reception by the public, commercial data (e.g. inventories or sales receipts for commercial business clients), and Internet services to individuals and/or business customers. The provision of such services could be a new revenue source for broadcasters during the digital transition. In some cases, however, these transmission services could compete directly with services provided by cable, MDS and satellite distribution undertakings.

As a matter of policy, broadcasting services should be given carriage priority over non-programming material such as data signals associated with digital over-the-air signals. Under the current distribution regulations, licensees are prohibited from deleting a subsidiary signal if it is, itself, a programming service or is related to the service being distributed.

· Would a similar approach be appropriate with respect to subsidiary signals of DTV services? Would such an approach help to ensure that distribution capacity is allocated to broadcast services on a priority basis?

Carriage of the DTV version of optional Canadian and foreign television signals

Given the capacity limitations of many systems, the question arises as to whether or not distributors should be granted authority in the regulations to carry the digital version of optional conventional Canadian or foreign television services. Considerations would include such matters as whether the distributor already carries the analog version; whether the analog programming is (completely) identical to the digital; whether the signals themselves are network duplicates, distant signals or non-Canadian stations; or whether there are any carriage issues outstanding. Alternatively, a case by case approval process could be established for the carriage of these non-priority services, subject to system capacity, the access requirements or perhaps even a non-duplication stipulation.

Simultaneous substitution

There could be as many as three categories of digital programming signals for which substitution rights might be sought: the main digital signal; multicast digital signals carrying conventional program services; and multicast digital signals carrying services that were originally licensed as specialty services. The question in each case is whether substitution requirements should apply and if so, based on what priority status. Possible approaches might include mandated substitution, application of substitution requirements to be decided on a case-by-case basis, or no substitution requirements with respect to some or all of the DTV signals.

For example, under a mandated substitution approach, the off-air signals of conventional television services - analog and digital - would share the same priority status once they are placed within a carriage line-up. That is, digital signals would hold the same substitution rights as their analog counterparts within their respective coverage areas. In addition, distinctions vis-à-vis substitution rights could also be made between the main digital signal and the multicast services, depending on how the latter are licensed.

Signal formats

As noted earlier, the A/53 standard allows for the transmission of signals ranging in technical quality from high definition to low definition. The question thus arises as to whether, for the purposes of the substitution requirements, the technical quality of the signal (i.e. the technical format) should be considered in determining if one programming service is "comparable" to another. For example, the Commission could decide that, even though one programming service might be of higher priority than another based solely on their respective signal contours, the two services would not be deemed to be "comparable" if the signal of the lower priority service is broadcast in a higher definition format. In this case, the licensee of the higher priority service could not request substitution against the lower priority service even if the programming being broadcast is otherwise identical. This approach would ensure that subscribers with digital television receivers do not suffer any loss of viewing quality or technical performance. This approach, however, might impose operational difficulties on distributors, given that broadcasters - both local and distant - might vary their technical formats program by program, perhaps with little or no notice. Alternatively, the definition of "comparable" could remain as currently worded. This would ensure that broadcasters continue to enjoy all of the program rights they have purchased for their respective coverage areas.

Distribution quality standards

Subscribers of broadcasting distribution undertakings will only receive the full benefits of the new digital technology if there is no degradation in the technical quality of the signals delivered to their homes. Concerns have been expressed that some distributors may increase signal compression or decrease signal resolution in order to accommodate the new A/53 broadcasts within their available system capacity. Should transparency, meaning protection against degradation of signal quality, be a requirement in areas where HDTV signals are available from a single distributor? Should system transparency be maintained throughout the redistribution chain? Would such a regulatory requirement impose unnecessary costs and/or bandwidth demands on distributors?

Other issues

The Commission intends the policy process initiated by this call for comments to culminate in the creation of a sound regulatory framework for the introduction of off-air digital television in Canada. However, there are other facets of the digital transition that will have to be considered in the longer term. These include:

The Commission intends to address these long terms aspects of digital broadcasting at a later date, under a separate process, following implementation of the transitional regime and after some operational experience has been gained.

Call for comments

The Commission seeks comments on the proposals outlined above and, in particular, on the specific terms and conditions to which the transitional digital television licences should be subject. It also seeks proposals to address the issues surrounding the signal carriage and substitution regime that should apply to the distribution of A/53 broadcasts in the transition period. In addition, the Commission encourages parties to discuss the advantages and disadvantages of all of the options set out in this notice. Parties may also wish to advance other proposals that they believe would better meet the objectives set out in the Broadcasting Act.

The Commission will follow a two-stage process for the submission of comments. First stage comments must be submitted by no later than by Friday, 7 September 2001. In the second stage, interested parties may file further comments with respect to the Commission's proposals or comments on the submissions filed in the first stage. Second round comments must be filed with the Commission by no later than Friday, 26 October 2001.

The Commission will not formally acknowledge comments. It will, however, fully consider all comments and they will form part of the public record of the proceeding, provided that the procedures for filing set out below have been followed.

Procedures for filing comments

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

Parties wishing to file their comments on paper should send them to the Secretary General, CRTC, Ottawa, K1A 0N2.

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

Electronic submissions should be in the HTML format. As an alternative, those making submissions may use "Microsoft Word" for text and "Microsoft Excel" for spreadsheets.

Please number each paragraph of your submission. In addition, please enter the line ***End of document*** following the last paragraph. This will help the Commission verify that the document has not been damaged during transmission.

The Commission will make comments filed in electronic form available on its web site at www.crtc.gc.ca in the official language and format in which they are submitted. This will make it easier for members of the public to consult the documents.

The Commission also encourages interested parties to monitor the public examination file (and/or the Commission's web site) for additional information that they may find useful when preparing their comments.

Examination of public comments and related documents at the following Commission offices during normal business hours

Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room G-5
Hull, Quebec K1A 0N2
Tel: (819) 997-2429 - TDD: 994-0423
Fax: (819) 994-0218

Bank of Commerce Building
1809 Barrington Street
Suite 1007
Halifax, Nova Scotia B3J 3K8
Tel: (902) 426-7997 - TDD: 426-6997
Fax: (902) 426-2721

405 de Maisonneuve Blvd. East
2^nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tel: (514) 283-6607 - TDD: 283-8316
Fax: (514) 283-3689

55 St. Clair Avenue East
Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
Fax: (416) 954-6343

Kensington Building
275 Portage Avenue
Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
Fax: (204) 983-6317

Cornwall Professional Building
2125 - 11^th Avenue
Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
Fax: (306) 780-3319

10405 Jasper Avenue
Suite 520
Edmonton, Alberta T5J 3N4
Tel: (780) 495-3224
Fax: (780) 495-3214

530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
Fax: (604) 666-8322

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 

¹ Public Notice 1995-184 dated 29 October, 1995.
² Whose report was submitted to the Honourable Sheila Copps, Minister of Canadian Heritage in October of 1997.
³ DTV should not be confused with today's distribution of analog services on a digital basis by MDS, satellite, and some distribution undertakings
⁴ The National Television Standards Committee (standard)
⁵ The ATSC A/52 Digital Audio Compression standard has also been adopted.
⁶ See paragraph 20
⁷ Conventional television signals usually from other markets, whose carriage is authorized by section 19 of the regulations.
⁸ For example, if there are specialty services that remain without carriage.
⁹ If capacity were limited, authority could be granted to distribute one version of an optional service. Under this approach, it would be up to the distributor to select either the analog version or the digital version.
¹⁰ As defined in the Broadcasting Distribution Regulations.