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ARCHIVED - Broadcasting Public Notice CRTC 2002-44

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Broadcasting Public Notice CRTC 2002-44
Ottawa, 12 August 2002

Rogers Cable Inc. - Breach of Broadcasting Distribution Regulations and Conditions of Licence
In this notice, the Commission finds Rogers Cable Inc., its subsidiaries or affiliates (Rogers) breached Section 27(1) of the Broadcasting Distribution Regulations and conditions of licence relating to the use of local availabilities. As a result, the Commission requires Rogers to file quarterly compliance reports for the next three years.

The application

1.

 The Commission received an application by Independent Members of the Canadian Association of Internet Providers (IMCAIP) requesting that the Commission issue mandatory orders to Rogers Cable Inc. (Rogers), its subsidiaries or affiliates, in their capacity as licensees of broadcasting distribution undertaking BDU's, that would:
  • direct Rogers' cable distribution undertakings to cease and desist advertising Rogers' retail Internet service on its community channel or its promotional channel;
  • direct Rogers' cable distribution undertakings to cease and desist inserting any promotion, advertisement or announcement for Rogers' retail Internet service in the local availabilities of U.S. satellite services;
  • require Rogers to deliver programming logs to confirm the extent of the allegedly illegal advertising and supply IMCAIP an equivalent amount of advertising time as that allegedly illegally used by Rogers; and
  • grant any further relief, as the Commission considers reasonable.

2.

 The Commission notes that the term "promotional channel" used above refers to a channel (also called a digital barker channel) consisting of pay television promotional material that the Commission has approved for distribution by cable licensees as a special programming service. Distribution of the service is subject to the condition that access to it be available on a non-discriminatory, equitable basis for the promotion of all pay and non-pay Canadian television services that a licensee is authorized to exhibit. "Local availabilities" refers to periods of airtime within the programming of U.S. satellite services that are provided to distribution undertakings for the insertion of promotional messages.

3.

 IMCAIP submitted that Rogers' use of the community channel, the promotional channel and local availabilities to promote and advertise non-programming services, including its Rogers@Home high speed retail Internet service, contravened the Broadcasting Act, the Commission's Broadcasting Distribution Regulations (Distribution Regulations) and Rogers' conditions of licence. In addition, IMCAIP argued that these activities conferred an undue preference on Rogers and subjected to an undue disadvantage the respective members of IMCAIP and other Internet service providers competing against Rogers in the areas served by Rogers' BDUs.

4.

 IMCAIP also submitted that Rogers' announcement for the Media Awareness Network on its community channel contained Rogers@Home branding and did not identify other Media Awareness Network sponsors. IMCAIP contended that the announcement was a commercial message and ineligible as a public service announcement (PSA).

Messages at issue

5.

 IMCAIP provided videotaped evidence of the messages identified in its application. This included three examples of programming that was aired on the community channel:
  • a 30-second program called "No More Access to Rogers@Home" for existing Rogers subscribers on the transition from the @Home network to the @Rogers network;
  • a 15-minute special program for existing Rogers subscribers that provided step-by-step information on the transition from the @Home network to the @Rogers network; and
  • a 60-second announcement for the Media Awareness Network describing how to use the Internet safely with the help of the Media Awareness Network.

6.

 In addition, the videotaped evidence included four examples of promotions inserted into local availabilities. All of these programs concerned the transition from the @Home network to the @Rogers network:
  • the 30-second program called "No More Access to Rogers@Home;
  • a 60-second message by John Tory, President and CEO of Rogers, where he speaks about the financial instability of @Home and the fact that Rogers was negotiating a transition for Rogers@Home customers;
  • another 60-second message by John Tory, called "John Tory speaks out" where he describes the successful negotiations with Excite@Home and indicates how Rogers is going forward with a network it will control completely in Canada; and
  • a 60-second program that demonstrates the step-by-step transition process to the Rogers Internet service, using a personal computer image.

7.

 Finally, the video evidence also included a single example of a program aired on Rogers' promotional channel. This consisted of the 15-minute special program, also aired on the community channel, that provided step-by-step information on the transition from the @Home network to the @Rogers network.

Rogers' position

8.

 In its 23 January 2002 response to the application, Rogers acknowledged that it had inserted and distributed messages on the community channel and in local availabilities, as identified by IMCAIP. Rogers argued, however, that the messages did not constitute advertisements or promotions of any Rogers' service. Rogers contended that the messages had addressed an issue of public concern and were PSAs. It argued that the messages were not aimed at stimulating the use of its Internet service and their broadcast did not confer an undue preference.

9.

 Rogers stated that the messages were broadcast to manage an extraordinary one-time circumstance arising from the bankruptcy of the At Home Corporation (@Home) of California that had been supplying Rogers with Internet services. According to Rogers, the @Home bankruptcy forced Rogers to rapidly launch its own Internet service and convert the almost 500,000 Rogers@Home customers to this service. Rogers asserted that the promotions in question were PSAs designed to walk customers through the transition from the @Home Internet service to the @Rogers Internet service and were not an attempt to sell or promote its own Internet service.

10.

 Rogers disagreed with IMCAIP's argument that the announcement for the Media Awareness Network was ineligible as a PSA because of Rogers@Home branding during the announcement. Rogers argued that this announcement was a PSA and that it is common for the sponsor of a PSA to receive acknowledgement as the sponsor.

The Commission's analysis

Community channel

11.

 Upon review, the Commission notes that the 15-minute special program aired on the community channel included repeated references to various benefits associated with the @Rogers service. Throughout the program there were references to the "better services" and "more services" associated with the @Rogers high speed Internet service. The "better services" messages indicated that the new @Rogers service allows for access to e-mail accounts from anywhere. The "more services" messages addressed long-term advantages associated with Rogers owning its own network.

12.

 The Commission also notes that the 30-second program called "No More Access to Rogers@Home" highlights benefits associated with the @Rogers services, particularly in the program's concluding statement:

These changes will result in a better high speed Internet service including web-based e-mail with access from anywhere in the world. Go to Rogers.com now!

13.

 In Advertising Internet services on community channels or during "local availabilities", Public Notice CRTC 1999-93, 27 May 1999 (Public Notice 1999-93), the Commission, referring to Section 27 of the Distribution Regulations, stated that a licensed BDU is not permitted to distribute an announcement that promotes a retail Internet service, or video demonstrations or promotions of its retail Internet services on the community channel. The Commission added that the limited types of advertising permitted on the community channel do not include a video of the launch of a BDU's own retail Internet services.

14.

 The Commission acknowledges that the messages Rogers aired on its community channel communicated information to inform or assist clients in making the transition from the @Home service to the @Rogers service. However, it finds the messages also promoted the Rogers retail Internet service. Accordingly, the Commission finds Rogers in breach of Section 27(1) of the Distribution Regulations.

Promotional channel

15.

 The Commission notes that the 15-minute special program shown on the promotional channel was the same special program that was aired on the community channel.

16.

 In Revision to the Commission's Policy Governing the Distribution of Pay Television Promotional Material by Cable Television Licensees, Public Notice CRTC 1995-172, 12 October 1995, the Commission revised certain terms and conditions for the distribution of pay television promotional material. Among other things, the Commission made the distribution of pay television promotional material subject to the condition that:

access to this service be available on a non-discriminatory, equitable basis for the promotion of all pay and non-pay Canadian television services which a licensee is authorized to exhibit. In this respect, the Commission notes that the promotional material should be supplied to the licensee by the service's distributor or its agent.

17.

 The Commission notes Rogers' statement in its 23 January 2002 response that the program had been aired on the promotional channel in error and had been removed. Nonetheless, the Commission finds that Rogers' use of the promotional channel to show this particular program is inconsistent with the Commission's policy respecting the distribution of pay television promotional material by BDUs.

Local availabilities

18.

 Upon review, the Commission notes that the programs inserted into the local availabilities address the benefits of subscribing to the @Rogers Internet service as well as the transition from @Home Internet services to @Rogers Internet service.

19.

 In Proposal to insert certain promotional material in the local availabilities of U.S. satellite services, Decision CRTC 95-12, 18 January 1995, the Commission allowed Rogers, by condition of licence, to insert certain promotional material as a substitute for the local availabilities of non-Canadian satellite services. The condition of licence did not allow Rogers to insert promotions for other services that it offers and the Commission stated that it was not prepared to consider applications to use such availabilities for the broadcast of commercial advertising. Several distribution undertakings have since applied for and have been granted the same condition of licence.

20.

 In Public Notice 1999-93, the Commission clarified that it would be contrary to the condition of licence allowing BDUs to use local availabilities if BDUs were to distribute commercial advertisements for their own retail Internet service.

21.

 The Commission concludes that the messages inserted by Rogers into the local availabilities of U.S. satellite services include commercial advertising for its retail Internet Service. Accordingly, the Commission finds Rogers in breach of its conditions of licence that governs the use of local availabilities.

Public service announcements

22.

 Upon review, the Commission notes that the 60-second announcement for the Media Awareness Network (the Network) aired on the community channel describes how, with the help of the Network, children can use the Internet safely. The message describes the four pillars of the not-for-profit Network: not to believe everything you read on the Internet, copyright protection, no release of personal information and not to make Internet purchases without parental approval. The Commission also notes that the Rogers@Home logo is displayed for approximately 15 seconds, and a notice that Rogers@Home is strongly committed to Internet safety is also displayed for about 10 seconds.

23.

 In Definitions for new types of priority programs; revisions to the definitions of television content categories; definitions of Canadian dramatic programs that will qualify for time credits towards priority programming requirements, Public Notice CRTC 1999-205, 23 December 1999, the Commission revised the definition of a PSA as follows:

Messages of less than 5 minutes duration intended to educate the audience about issues of public concern, encourage public support and awareness of a worthy cause, or promote the work of a non-profit group or organization dedicated to enhancing the quality of life in local communities or in society or the world at large. These include community billboards. These messages are not intended to sell or promote goods or commercial services. No payment is exchanged between broadcasters and producers for the broadcast of these messages.

24.

 The Commission notes that the definition of a PSA does not prohibit branding or references to sponsors. Furthermore, in the Commission's view, Rogers' announcement for the Media Awareness Network does not attempt to solicit sales or promote goods or commercial services. Accordingly, the Commission concludes that the acknowledgement of Rogers@Home during Rogers' announcement for the Media Awareness Network does not constitute an advertisement and the announcement itself falls within the definition of a PSA.

25.

 As noted previously, Rogers submitted that its messages for Rogers@Home were PSAs. Upon review of the 30- and 60-second messages about the transition to the @Rogers service, the Commission notes that the messages target Rogers@Home clients regarding a matter of commercial interest to Rogers. Accordingly, the Commission finds that the transitional messages are commercial promotions for Rogers' retail Internet service and do not qualify as PSAs.
Undue preference

26.

 Given the Commission's findings in this proceeding, the Commission does not consider it necessary to address and dispose of the allegations of undue preference and unjust discrimination made by IMCAIP.
Mandatory orders

27.

 As Rogers has stated it has ceased all announcements regarding its retail Internet service in local availabilities, the community channel and on promotional channels, the Commission is not persuaded that it is necessary to issue mandatory orders. Accordingly, the Commission denies IMCAIP's request for relief by way of mandatory orders.

28.

 The Commission also denies IMCAIP's claim for relief that would require Rogers to give IMCAIP advertising time equivalent to that used by Rogers. In the Commission's view such relief would cause Rogers to be in breach of the Distribution Regulations and its conditions of licence, and would be inconsistent with applicable Commission policies and decisions.
Compliance Reports

29.

 While Rogers has already removed the programming at issue, the Commission remains concerned with the above-noted breaches of the Distribution Regulations and conditions of licence. Rogers ought reasonably to have known that its actions were inconsistent with its regulatory obligations. Following careful consideration and pursuant to Section 11(3) of the Distribution Regulations, the Commission accordingly orders Rogers to file a quarterly compliance report beginning 1 September 2002, and thereafter on the first day of every third month for the next three years. Each report shall:
  • Include a declaration from a senior officer of Rogers, on behalf of all of its BDUs, confirming that Rogers is in compliance with the Distribution Regulations, and all applicable conditions of licence, Commission decisions and policies relating to the promotion of retail Internet services by BDUs.
  • Identify and describe any programming, announcement or promotion aired during the period of the report on the community channel, in local availabilities or on the promotional channels that refer to their Internet service. The report must list how many times these were aired and specify the system or systems on which these announcements were aired.

30.

 The compliance report is in addition to any measures that may be established by the proceeding initiated by Proposed policy framework for community-based media, Public Notice CRTC 2001-129, 21 December 2001.
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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