ARCHIVED - Broadcasting Public Notice CRTC 2002-48

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Broadcasting Public Notice CRTC 2002-48

See also: 2002-48-1, 2002-48-2

Ottawa, 16 August 2002

Call for comments on the establishment of rules to govern the distribution of specialty services on the basic service of fully digital cable undertakings



In Call for comments on a proposed policy to oversee the transition from analog to digital over-the-air broadcasting,Public Notice CRTC 2001-62, 5 June 2001, the Commission stated that, among other things, the transition policy should provide guidance to distributors in their transition to a digital environment. In the Commission's view, it is important from the outset to establish a clear understanding among distributors of what their obligations will become in the future, as they move toward distribution in digital mode and as their distribution capacity increases.


At this time, the Commission considers it appropriate to reassess the rules governing the distribution of specialty services on the basic service of fully digital cable undertakings, i.e. those cable distribution undertakings that distribute programming to subscribers exclusively via digital technology (digital cable undertakings). Such a review is particularly relevant now, given that direct-to-home (DTH) satellite distribution undertakings, which distribute programming on a fully digital basis, have established themselves as viable alternatives to cable and are subject to less extensive carriage requirements than cable licensees.



The basic service refers to the services distributed by licensed broadcasting distribution undertakings (licensed BDUs) as a package for a single fee. It is composed of the programming services that licensed BDUs are required to distribute under sections 17, 32 or 37 of the Broadcasting Distribution Regulations (the Distribution Regulations), or pursuant to section 9(1)(h) of the Broadcasting Act (the Act) or a condition of a BDU's licence, and any other authorized service that a licensed BDU decides to include in the package.


Thus, Class 1 and 2 licensees must distribute the programming services of the Canadian Broadcasting Corporation (CBC) in French and English, the provincial education television stations, all local television stations, and regional/extra-regional television stations where a local station is not available. In addition, pursuant to section 9(1)(h) of the Act, the Commission requires the distribution of TVA and the Aboriginal Peoples Television Network (APTN).


Under the Distribution Regulations, the requirement to carry these services as part of the basic service is not influenced by the technology used for the distribution of programming services to subscribers. Digital cable undertakings will therefore still be required to distribute, as part of their basic service, the services listed in sections 17 or 32 of the Distribution Regulations, as appropriate.


The existing access rules set out in section 18(5) of the Distribution Regulations also require Class 1 licensees, to the extent of available channels, to carry all specialty and pay services appropriate to the linguistic and ethnic makeup of the markets they serve. The distribution and linkage requirements for Class 1 and Class 2 licensees are set out in Public Notice CRTC 2001-90 and are incorporated by reference into section 20(1) of the Distribution Regulations. They establish how these services must be carried by Class 1 and Class 2 licensees in an analog environment, depending on the status of the specific service in question:

· dual status means that, where carried, the service must be carried as part of the basic service, unless the programming service agrees in writing to be carried on a discretionary tier;
· modified dual status means that, where carried, the service must be carried as part of a discretionary tier, unless both the distribution undertaking and the programming service agree to carriage as part of the basic service, and;
· discretionary status means carriage on a purely discretionary basis in a tier or on a stand-alone basis.


For DTH satellite distribution undertakings (DTH operators), the Commission chose a more flexible approach based largely on the need to establish a competitive balance among new and existing distribution undertakings. While the Commission requires DTH operators to distribute all pay and specialty services, it does not require that they distribute any specialty service as part of the basic service. Neither the dual status nor the modified dual status definitions apply to DTH operators.

Scope of the call for comments


The Commission emphasises that comments filed in response to this notice should be confined to a discussion of the rules to be established to govern the distribution of specialty services on the basic service of digital cable undertakings. Comments should, therefore, not address the following matters, some of which are the subject of other proceedings:

· the basic service distribution rules found in section 17 of the Distribution Regulations for Class 1 and 2 BDUs and in section 32 for Class 3 BDUs, which apply regardless of the technology used for distribution to subscribers;
· the distribution of the proceedings of the House of Commons. In Call for comments - Proposed amendments to the Broadcasting Distribution Regulations, Broadcasting Public Notice CRTC 2002-34, 5 July 2002, the Commission sets out proposed requirements for the distribution, in both official languages, of the proceedings of the House of Commons and its various committees, by all Class 1 and Class 2 cable distribution undertakings;
· the conditions under which existing analog services may be duplicated on a digital basis or moved from analog to digital distribution. The conditions are being examined by the Digital Migration Group, as announced in For the attention of the participants in the Digital Migration Group, and other interested parties, Circular No. 446, 2 November 2001;
· the issues addressed in Call for comments on a proposed policy framework for the distribution of digital television services, Broadcasting Public Notice CRTC 2002-32, 12 June 2002, including the distribution in a digital television format of local, over-the-air services or other priority signals identified in section 17 of the Distribution Regulations; and
· the carriage of services authorized for carriage pursuant to section 9(1)(h) of the Act, in particular TVA and APTN.

Issues to be explored


The Commission invites comments in this proceeding on issues related to the establishment of rules to govern the distribution of specialty services on the basic service by digital cable undertakings. The Commission has identified five issues that are addressed in the following sections.

Issue 1 - Reliance on market forces vs. regulatory requirements


Given that the broadcasting system is rapidly moving towards an environment of increased consumer choice, the Commission has deliberately favoured increased regulatory flexibility in the digital environment. Thus, the question arises as to whether cable distribution undertakings, once fully digital, should continue to be required to distribute dual status specialty services on the basic service.


In an environment that is increasingly characterized by a market driven model, the Commission must consider whether it is appropriate to continue to preserve a place for certain specialty services on the basic service. These may include specialty services that may not, by themselves, be commercially supportable in a fully competitive environment, and yet have a significant public interest contribution to make to the Canadian broadcasting system.

· Are the existing rules that apply to cable distribution undertakings that distribute programming services on an analog basis still appropriate where these undertakings are distributing such services to all subscribers on a fully digital basis?
· In an environment characterized by an increased reliance on market forces, is it appropriate to require digital cable undertakings to make available, to the broadest possible audience, certain specialty services?

Issue 2 - Specialty services to be included in a digital basic cable service


A central question in the establishment of digital basic service rules for digital cable undertakings is how the Commission should determine what specialty services, if any, should be included in, or excluded from, the digital basic service and the criteria used for such determination.

· What criteria should be used to identify the specialty services that should be included in, or excluded from, the digital basic cable service?
· In order to qualify for distribution as part of the digital basic cable service, should specialty services be required to make a more significant contribution to the attainment of the objectives of the Act? If so, should any specific objective be emphasised and how should such a significant contribution be measured?
· How should the Commission apply the criteria? In other words, should the Commission evaluate new and existing services to determine if they meet the criteria established for distribution on the basic service? Or should the onus be on each service to specifically apply for distribution rights on the digital basic cable service?
· How many specialty services should be permitted on the digital basic cable service? Should the Commission set a numerical limit or would it be more appropriate to set aside a certain proportion of channels?
· Should the Commission contemplate a change to its current rules governing the distribution of non-Canadian services on the basic service?

Issue 3 - Impact on consumers


Changes to the rules could have a significant impact on consumers. The establishment of new rules to govern digital basic service could result in changes to the line-up of specialty services in the existing basic service. Although digital penetration is still relatively low, any change in current packaging arrangements is bound to result in some disruption for digital subscribers. Altering the number and nature of the specialty services to which subscribers have access and the amount they would have to pay for them would have the greatest impact on those subscribers who subscribe only to the basic service. At least 15% of cable subscribers in Canada subscribe only to the basic service. The proportion in the province of Quebec is higher at 23%.


Changes could have even more significant implications for subscribers of limited means. Section 3(1)(t)(ii) of the Act states that BDUs "should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost".

· How can the Commission limit subscriber disruption and ensure affordable basic digital service, particularly to those of limited means, while providing a diverse and attractive basic service package that still meets the objectives of the Act?
· Is it necessary that all basic service packages be identical? Is it feasible to mandate the carriage of a core number of specialty services on the digital basic service and allow subscribers to choose the remainder of the specialty services they wish to have included as part of their basic service?

Issue 4 - Basic service provision to official language groups


Section 3(1) of the Act explicitly requires that the broadcasting system be composed of both French- and English-language components.


The Commission recently amended the Distribution Regulations in Public Notice CRTC 2001-100, 14 September 2001, in order to implement recommendations from its Report on French-language broadcasting services in a minority environment,Public Notice CRTC 2001-25, and A Policy to increase the availability to cable subscribers of specialty services in the minority official language, Public Notice CRTC 2001-26, 12 February 2001.

· In light of the objectives of the Act and the Commission's policies regarding service to minority official language communities, should the rules governing digital basic service differ depending upon the language of the area being served?
· Should the Commission establish a basic service package in each official language and, if so, should a subscriber be able to choose between the two basic service packages? What are the implications of such an approach in terms of distribution requirements?

Issue 5 - Impact of change on programming services and distributors


Changes to the rules could have an impact on both the subscriber and the advertising revenues earned by a specialty service. This, in turn, could weaken the ability of some specialty services to meet their programming obligations and contribute to the attainment of the broadcasting policy objectives of the Act. Such changes could also mean that some specialty services and cable licensees might have to renegotiate terms of distribution, including wholesale rates, channel positions and packaging.

· What would be the impact on cable licensees, of the establishment of different basic service rules for digital distribution?
· What impact would the establishment of such rules have on existing specialty services and their ability to continue to meet their commitments, especially if the Commission were to no longer require their distribution on the digital basic service?
· If the Commission establishes new rules for the distribution of specialty services on the basic service of digital cable undertakings, should the same rules apply to DTH operators, and what are the implications of adopting such an approach?

Call for comments


The Commission invites comments that address the issues and questions set out in this notice. The Commission will hold a two-stage written comment process for this proceeding. In the first stage, the Commission will accept comments that it receives on or before 15 November 2002. The Commission invites interested parties then to file replies to any of the comments submitted during the first stage. Parties will have until 16 December 2002 to do so.


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, on diskette or by email. Submissions longer than five pages should include a summary.


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


Parties wishing to file their comments by email can do so by sending them to


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 in the official language and format in which they are submitted. All comments, whether filed on paper or in electronic form, will be available in the public examination file.


The Commission 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
2nd 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 - 11th 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:

Date Modified: 2002-08-16

Date modified: