ARCHIVED - Broadcasting - Commission Letter to K. McNair
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Ottawa, 14 March 2002
Ms. Kathleen McNair Dear Ms. McNair: Further to your letter of 14 January 2002, requesting that the Commission review the appropriateness of the 5:1 linkage requirement in respect of Category 2 services, the Commission considers that it would be premature at this time to undertake such a review. When the Commission outlined its Licensing framework policy for new digital pay and specialty services in Public Notice 2000-6, it allowed distributors to hold equity in the new services given the interest they have in the rollout of digital distribution and digital penetration. The Commission recognized the key role that distributors would have under this licensing framework. Specifically, distributors would negotiate terms of carriage, packaging and marketing arrangements and would, in the case of Category 2 services, select which services to carry. As a result, the Commission believed it appropriate to adopt measures that would ensure the fair treatment that non-affiliated services would receive. As outlined in your letter, the Commission is empowered to deal with situations of undue preference under the Broadcasting Distribution Regulations (BDU Regulations). Indeed, the Commission stated in the public notice that the prohibition against conferring undue preference or disadvantage which applies to all distributors under the BDU Regulations would continue to apply to terms of carriage issues, including those that might arise from distributor equity. However, the Commission considered that additional safeguards were required to address, among other things, concerns related to the potential for distributors to carry only their related services. The Commission therefore established specific access rules for the new services. Specifically, distributors using digital technology are required to distribute all Category 1 services appropriate to their market. For Category 2 services, distributors are required to distribute at least 5 non-affiliated Category 2 services for each affiliated service distributed. The latter rule ensures that distributors carry a minimum number of unrelated services in order to carry related services. An affiliated service is one in which a distributor controls, either directly or indirectly, more than 10% of the equity. As stated in your letter of 14 January 2002, the new Category 2 digital services launched in September 2001 and the free preview period recently ended in January. The Commission has no evidence before it which indicates that a review is necessary at this time. The Commission considers that it is too early in the digital rollout to draw any conclusions about the viability of the Category 2 services which have already launched and which will be launching in the future. Should the Commission be presented with a specific situation in which the 5:1 rule is seen to be causing an undue disadvantage to an interested party, the Commission may be willing to review such situations on a case-by-case basis. Sincerely,
Ursula Menke Date Modified: 2002-03-14 |
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