Broadcasting Public Notice CRTC 2002-53

Ottawa, 12 September 2002

New licensing framework for specialty audio programming services

In Call for comments on a licensing framework for new specialty audio programming services and on proposed amendments to the Broadcasting Distributions Regulations regarding carriage of ethnic audio services, Public Notice CRTC 2001-85, 25 July 2001, the Commission invited submissions on issues relating to the development of an appropriate licensing framework for specialty audio programming services.

The present public notice sets out the new licensing framework for specialty audio programming services that will generally be distributed on the digital tiers of broadcasting distribution undertakings. The Commission considers that such services could increase the availability of programming for specialized audiences, especially ethnic audiences. The complete text of the Commission's new licensing framework for specialty audio programming services is set out in Appendix 1 of this public notice.

The Commission will also shortly issue another public notice that calls for comments on proposed amendments to the Broadcasting Distribution Regulations that are necessary to implement this new licensing framework for specialty audio programming services.

Background

1. In Report to the Governor in Council on measures to ensure that the residents of the Greater Toronto Area receive a range of radio services reflective of the diversity of their languages and cultures, Public Notice CRTC 2001-10, 31 January 2001, the Commission determined that the preferred solution for expanding the range of radio services would be the establishment of new radio services using over-the-air AM and/or FM frequencies. It subsequently issued Call for applications for a broadcasting licence to carry on a radio programming undertaking to service Toronto, Ontario, Public Notice CRTC 2001-39, 22 March 2001 (Public Notice 2001-39), inviting applications to provide radio programming services that "clearly reflect the diversity of languages as well as the multicultural and multi-ethnic reality of the Greater Toronto Area (GTA)."

2. However, given that such frequencies are in extremely short supply in the GTA, the Commission concluded that it would also be appropriate to review opportunities to promote the development and distribution of new audio programming services in the GTA by alternate means. Specifically, the Commission considered that the development of new specialty audio programming services, i.e. services delivered by broadcasting distribution undertakings (BDUs) but not licensed as over-the-air services, could serve to increase the diversity of audio programming available in the GTA and other markets.

3. The Commission stated that it would initiate a public process to develop an appropriate licensing framework, or exemption criteria, for specialty audio programming services. Such services could include ethnic services as well as other specialized services such as services in the official language of the minority, as well as religious, gay/lesbian or children's services.

The Commission's objectives for specialty audio programming services

4. The Broadcasting Act (the Act) states in section 3(1)(d)(iii) that the Canadian broadcasting system should:

through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal people within that society.

5. In light of the Act's objectives, the Commission is setting out this new licensing framework to expand the availability of specialty audio programming services, especially to underserved audiences, in markets across the country.

The call for comments

6. The Commission initiated a public process in Call for comments on a licensing framework for new specialty audio programming services and on proposed amendments to the Broadcasting Distribution Regulations regarding carriage of ethnic audio services, Public Notice CRTC 2001-85, 25 July 2001 (Public Notice 2001-85). In Public Notice 2001-85, the Commission, through a series of questions, sought public comments related to the development of a licensing or exemption framework for specialty audio programming services distributed by BDUs.

7. The notice also called for comments on a proposed amendment to the Broadcasting Distribution Regulations (the Distribution Regulations). The proposed amendment would permit digital distribution of ethnic audio programming services by Class 1 and Class 2 BDUs without prior Commission authorization.

General comments in response to Public Notice 2001-85

8. The Commission received a total of 15 submissions in response to the call for comments. Several interventions came from ethnic broadcasters: ITBC Radio Canada (ITBC), Infinity Broadcasting, Canadian Hellenic Cable Radio (CHCR), CRBC Russian Radio (CRBC), CIRV Radio International (CIRV) and Rogers Media (CFMT-TV). The Ontario arm of the Canadian Association of Ethnic Broadcasters (CAEB) filed a submission on behalf of its members: CJMR 1320 Radio Limited, Radio 1540 Limited, CKMW Radio Ltd. and Fairchild Radio (Toronto) Ltd.

9. The Canadian Broadcasting Corporation (CBC), the Canadian Association of Broadcasters (CAB), as well as the National Campus and Community Radio Association (NCRA), also provided comments. In addition, the Commission received submissions from distributors and their representatives: Bell ExpressVu Limited Partnership (Bell ExpressVu), Rogers Cable Inc. (Rogers), Star Choice Communications Inc. (Star Choice) and the Canadian Cable Television Association (CCTA). One individual, Marek Michalsik, also provided comments.

10. The following issues, many of which were the subject of substantive comments from parties who made submissions, are addressed in the sections that follow:

Authorization: By licence or exemption?
Definition of specialty audio programming services
Nature of service
Canadian content
Canadian talent development
Other programming matters
Financing
Ownership
Filing requirements
Distribution
Access to carriage by BDUs
Proposed amendments to the Distribution Regulations

11. The complete text of the Commission's new licensing framework for Specialty Audio Programming Services is set out in Appendix 1 of this Public Notice.

12. The Commission appreciates the submissions filed during this proceeding. These comments have made a significant contribution to the Commission's final policy determination.

Authorization: By licence or exemption?

13. In Public Notice 2001-85, interested parties were asked whether specialty audio programming services should be licensed or exempted, and which of these two approaches would better encourage new or small players to enter the broadcasting system.

Positions of parties

14. Most parties were supportive of a licensing framework that ensured some protection for over-the-air radio services, particularly for those operating as ethnic stations. Recognizing the anticipated limited impact of new speciality audio programming services, these parties supported establishing a licensing framework with a "light-handed" regulatory approach that balanced ease of entry for new players and increased choice for consumers with accountability and a contribution to the Canadian broadcasting system by licensees.

15. The CAEB stated that "A policy and regulatory framework would facilitate the development of ethnic specialty audio services and other specialty audio services by establishing clear ground rules for their ownership, operation and carriage…" In support of establishing a licensing framework, Bell ExpressVu stated that this would ensure "ease of entry for the service, protection for the BDU, an appropriate degree of protection for licensed commercial radio services, and reduced administrative burden for all parties." In addition, Bell ExpressVu stated that "through a licensing framework, program accountability would be the responsibility of the audio service licensee." The NCRA supported a licensing framework adding that, to encourage new and small players to enter the broadcasting system, "a lower-requirement licence should be developed especially for this new service."

16. The CCTA and Rogers Cable submitted that specialty audio programming services should be exempt from the requirement to be licensed under the Act, and that such services are already exempt if delivered over the Internet. As noted by these parties, section 9(4) of the Act states that the Commission shall exempt a class of broadcasting undertakings in cases where the Commission is satisfied that compliance with certain requirements will not contribute in a material manner to the implementation of the broadcasting policy set out in section 3(1) of the Act.

The Commission's analysis and determination

17. Specialty audio programming services have the potential to offer a wide range of programming content throughout Canada. By addressing underserved audiences with programming not generally available on over-the-air radio, these services will add diversity to the Canadian broadcasting system and, as a consequence, will contribute to the attainment of the broadcasting policy set out in the Act.

18. In Policy regarding the use of exemption orders, Public Notice CRTC 1996-59, 26 April 1996 (Public Notice 1996-59), the Commission determined that a licensing regime will continue to be the norm as it provides the most effective means of ensuring that broadcasters fulfil the policy objectives set out in the Act. Specifically, the Commission stated that its policy, generally, is to exempt classes of programming undertakings only where:

it is evident to the Commission that the licensing and regulation of the class of undertaking will not result in a significantly greater contribution to the Canadian broadcasting system, whether with respect to the Canadian programming carried by undertakings of that class, or the expenditures on Canadian programming made by such undertakings; and,

it is evident to the Commission that undertakings operating under the exemption order will not have an undue impact on the ability of licensed undertakings to fulfil their regulatory requirements.

19. With respect to new classes of broadcasting undertakings, in Public Notice 1996-59, the Commission stated that it would be in the public interest to license such services at the outset, and to revisit the possibility of exempting a class at a later date, when its impact can be properly assessed. The licensing and licence renewal process provide the Commission with an opportunity to assess the ability of each element or undertaking in the Canadian broadcasting system to contribute to the attainment of the objectives of the Act. A licensing regime enables the Commission to establish commitments commensurate with the nature of the undertaking and to ensure that licensees contribute in a meaningful way to the Canadian broadcasting system.

20. The Commission considers that it is important to ensure that specialty audio programming services remain distinct from over-the-air services. Since the Act enables the Commission to exempt classes of undertakings, not individual undertakings, it is not possible in an exemption order to describe the variety of individual services that may develop in a manner that is precise enough to ensure that they would not compete unduly with over-the-air services. The most effective means to accomplish this is to impose, upon each licensee, a condition of licence on the proposed nature of service.

21. Finally, a licensing process permits the public and other interested parties to support, oppose or comment on any application for a new service or for licence renewal. This transparent public process assists the Commission in fulfilling its mandate.

22. The Commission will, therefore, establish a licensing regime for specialty audio programming services with licensing requirements appropriate to the services' ability to contribute to furthering the objectives of the Act. This licensing framework will:

recognize the scarcity of over-the-air frequencies by offering an opportunity for a range of new discretionary specialty audio programming services distributed through other means;
encourage a greater diversity of voices through simplified licensing procedures for applicants;
ensure that licensees have appropriate regulatory responsibilities and offer a contribution to the Canadian broadcasting system commensurate with the service provided; and
allow subscribers to receive a range of audio services reflective of the diversity of Canadian society.

Definition of specialty audio programming services

23. In Public Notice 2001-85, the Commission proposed that "specialty audio programming services" be defined as services, other than licensed over-the-air services, delivered by BDUs and that are specialized with respect to their content and/or target audience. Specialty audio programming services could, for example, include subsidiary communications multiplex operations (SCMO) services separated from their host FM licensees delivered via cable, and closed circuit services carried by cable and other BDUs.

Positions of parties

24. Most interveners were in agreement with the Commission's proposed definition of a specialty audio programming service. The CAEB, however, submitted that the use of the term "BDU" in the definition may be too restrictive since it was possible that such services could be delivered via different technologies, including cell phones, Personal Digital Assistants (PDAs) and integrated paging devices.

The Commission's analysis and determination

25. In Public Notice 2001-85, the Commission announced that this process involved BDU-delivered services, and did not contemplate any change to existing procedures involving the authorization of SCMO services or the existing framework for pay audio services. Further, in the Commission's view, there is no need to take action related to the distribution technologies cited by the CAEB at this time. While the technology to distribute licensed audio services to receivers such as cell phones may exist, there is no evidence to suggest that it will become an important tool for specialty audio programming services to reach their audiences, at least in the medium term. Should this situation change, the Commission would be prepared to consider an appropriate amendment.

26. For greater precision, the Commission considers that the definition of a specialty audio programming service should include the term "audio programming services." This clarifies that these services represent a new class of licensed audio programming services.

Accordingly, specialty audio programming services will be defined as:

audio programming services that are radio undertakings, other than licensed over-the-air services, delivered by BDUs and that are specialized with respect to their content and/or target audience.

27. The creation of this class of licensed services will make them a subset of audio programming services. In a separate process, the Commission intends to propose an amendment to the Distribution Regulations to ensure that BDUs electing to distribute licensed Canadian specialty audio programming services distribute only such services that have been licensed or exempted by the Commission.

Nature of service

28. In Public Notice 2001-85, the Commission sought comments on whether specialty audio programming services should be required to have a nature of service or format definition that would clearly distinguish them from conventional services and other specialty audio programming services.

Positions of parties

29. The CAEB stated that a nature of service definition is essential and that services of this type should be authorized only when the applicant can demonstrate that they would not be competitive with existing conventional radio services. The CAEB also noted that the category 2 television service licensing framework provides a useful model for the new specialty audio services. Most other parties who addressed the issue considered that a nature of service condition of licence would be a key requirement to ensure that the new services are complementary to existing services and remain distinct and supportive of their target audience.

The Commission's determination

30. Applicants seeking a licence for a new specialty audio programming service will be asked to propose a nature of service description that will define their programming. The description must include the geographical area of service (local, regional or national), the language or languages, and target audience (e.g. age group) in such a way as to differentiate the service from existing over-the-air radio services. Specialty audio programming services will be required to adhere to their nature of service definition by condition of licence.

Canadian content

31. In Public Notice 2001-85, the Commission sought comments on the appropriate Canadian content obligations for specialty audio programming services.

Positions of parties

32. The CAB, the CAEB, and CHCR all proposed that specialty audio programming services should have the same Canadian content obligations as over-the-air services. ITBC stated that these services should commit to the minimum level of Canadian content in both music and spoken word and that "regulated programming will mean better service to special communities." CIRV proposed that Canadian content requirements for specialty audio programming service licensees should generally be the same as those for over-the-air licensees. However, where this is not attainable, the applicant "should demonstrate why it cannot meet the regulated level and make commitments as to the attainable level."

33. Other interveners such as Bell ExpressVu made the point that, given the nature of specialty audio programming services, Canadian content requirements should be flexible. CRBC stated that Canadian content regulations are not necessary and that the amount of Canadian programming available in third languages is often very limited.

The Commission's analysis and determination

34. Section 3 of the Act requires, among other things, that the Canadian broadcasting system encourage the development of Canadian expression. Section 3 (1)(f) provides that :

each broadcasting undertaking shall make maximum use, and in no case less than predominant use, of Canadian creative and other resources in the creation and presentation of programming, unless the nature of the service provided by the undertaking, such as specialized content or format or the use of languages other than French and English, renders that use impracticable, in which case the undertaking shall make the greatest practicable use of those resources.

35. Specialty audio programming services will be complementary to what is offered by over-the-air radio services and, as such, may include some programming offerings that are innovative or experimental in nature. In many cases these services will include programming in languages other than English or French. The Commission is of the view that establishing a regulatory minimum level of Canadian content for all specialty audio programming services could discourage applicants from applying for new undertakings that will add diversity to the system. Accordingly, the Commission is adopting a flexible approach for those seeking new specialty audio programming service licences with regard to their Canadian content levels.

36. The Commission will generally require all specialty audio programming service licensees to adhere, by condition of licence, to the same Canadian content requirements as those as set out in section 2.2 of the Radio Regulations, 1986 (the Radio Regulations) for over-the-air licensees: a minimum of 35% Canadian content for Category 2 music, 10% for Category 3 musical selections and, during ethnic programming periods, a minimum of 7% Canadian musical selections. However, the Commission would be prepared to accept lower levels of Canadian content in circumstances where the applicant clearly demonstrates that the nature of the service being proposed warrants such an exception or otherwise meets the objectives of section 3 of the Act. In such cases, the Commission will request that applicants propose the level of Canadian content that is reflective of available content and is appropriate to the nature of service being proposed. If accepted by the Commission, these commitments will be imposed by condition of licence.

37. For French-language services, a similar approach will also apply to the requirement to broadcast French-language vocal music, which is included in section 2.2 of the Radio Regulations.

38. The Commission maintains its approach of not requiring a minimum level of Canadian content for spoken word programming. Nonetheless, the Commission expects licensees to be mindful of the provisions of the Act which emphasize the importance of Canadian content on Canadian broadcasting services.

Canadian talent development

Positions of parties

39. CIRV stated that "given the likelihood that these services will not draw large revenues, there should be no requirement for spending on Canadian talent development initially." On the other hand, the CAB proposed that specialty audio programming services that offer music should make financial contributions and that specialty audio programming services that offer ethnic programming should have similar obligations to Canadian talent development as those that apply to conventional ethnic radio services.

The Commission's determination

40. In light of the discretionary nature of specialty audio programming services and the expected low level of revenues to be generated by these licensees, the Commission considers it inappropriate to place a financial expenditure requirement for Canadian talent development on these services. Nonetheless, the Commission recognizes that specialty audio programming services will, in and of themselves, provide an outlet for Canadian artistic and musical talent that may not be available on over-the-air services. Consequently, the Commission will expect applicants to describe how their services will promote and develop Canadian artistic and musical talent.

Other programming requirements

Positions of parties

41. There was general agreement that licensees of specialty audio programming services should be responsible for all their programming and should adhere to the appropriate radio industry codes.

The Commission's analysis and determination

42. In light of section 3(1)(h) of the Act, which assigns responsibility to licensees for the programs they broadcast, the Commission will require, by condition of licence, that licensees of specialty audio programming services adhere to the following sections of the Radio Regulations:

Section 3 - broadcasting content;
Section 4 - broadcasting of commercial messages dealing with alcoholic beverages;
Section 6 - political broadcasts;
Section 7 - ethnic programs; and,
Section 8 - logs and records.

43. The Commission will also require specialty audio programming services to adhere, by condition of licence, to the Canadian Association of Broadcasters Code on Gender Portrayal. The application of this condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council. Further, the Commission will require licensees, by condition of licence, to adhere to the Broadcast Code for Advertising to Children.

Employment equity

44. The Commission encourages licensees of specialty audio programming services to consider employment equity issues in their hiring practices and in all other aspects of their management of human resources. Licensees with 100 employees or more are subject to the Employment Equity Act, and file reports concerning employment equity with Human Resources Development Canada.

Financing

45. In Public Notice 2001-85, the Commission sought comments on the most appropriate means for specialty audio programming services to raise the funds necessary to sustain their operation.

Positions of parties

46. Those parties who submitted comments relating to financing agreed that specialty audio programming services should be allowed to broadcast commercial messages. The parties also generally agreed that the growth of these services would be slow given that they will be carried on distributors' digital tiers. Several parties noted that the Commission does not restrict the amount of advertising on over-the-air radio. The CAEB, however, suggested that specialty audio programming services be subject to the same advertising limits as category 2 specialty television services - 12 minutes per hour.

47. Most parties proposed that specialty audio programming services should have the flexibility to negotiate a subscriber fee with a BDU. However, these parties considered that the subscriber fee should not be subject to approval by the Commission. Rogers Cable was opposed to any subscriber fee for specialty audio programming services. According to Rogers, "subscriber fees would represent a barrier to the distribution of these services, thereby limiting their availability."

The Commission's analysis and determination

48. The Commission does not anticipate that these services will have an undue impact on existing over-the-air services. Specialty audio programming services, carried by BDUs on their digital tiers, will have access to a limited audience compared to over-the-air services. In addition, the specialized nature of the programming will further limit the available audience.

49. The Commission is concerned that restrictions on the ability of these services to advertize will discourage applications and work against the objective of providing a diverse range of new services. The Commission will, therefore, not impose limitations on the amount of advertising that may be broadcast. However, the Commission notes that the public process associated with a licensing regime permits existing licensees or other interested parties to comment on the potential impact of any proposed new service.

50. With respect to subscriber fees, the Commission considers that this is a matter best left to negotiation between the licensee and the BDU, as is the case with discretionary specialty television services.

Ownership

51. The Commission raised, in Public Notice 2001-85, a number of questions with respect to the ownership of specialty audio programming services.

Positions of parties

52. Most parties who commented on ownership issues supported an approach that would treat specialty audio programming services in a similar manner to category 2 specialty television undertakings. The CAB and the CAEB proposed that any transfer of ownership be subject to Commission approval. These parties, as well as Rogers Cable and ExpressVu, argued that limitations on common ownership were unnecessary and that the ownership of specialty audio programming service undertakings by BDUs should not be prohibited.

The Commission's determination

53. The Commission considers that the ownership approach for category 2 television services is an appropriate model for specialty audio programming services. Accordingly, the Commission will require specialty audio programming service licensees to comply with the eligibility requirements, as set out in Direction to the CRTC (Ineligibility of non-Canadians), P.C. 1996-479, 11 April 1996, amended by P.C. 1997-486, 8 April 1997, and P.C. 1998-1268, 15 July 1998, and with the requirements set out in Direction to the CRTC (Ineligibility to hold broadcasting licences), P.C. 1985-2108, 27 June 1985, amended by P.C. 1997-629, 22 April 1997. Furthermore, the Commission will require licensees to adhere, by condition of licence, to section 11 of the Radio Regulations relating to transfer of ownership or control.

54. The Commission will not impose restrictions with respect to the number of specialty audio programming service licences held by a single undertaking.

Filing requirements

55. The Commission considers that, as licensed undertakings, specialty audio programming services must comply with standard filing requirements. Accordingly, it will require licensees to adhere, by condition of licence, to section 9(2) of the Radio Regulations relating to the requirement to submit an annual return. The Commission also reminds future licensees that they will be required to adhere to the Broadcasting Licence Fee Regulations, 1997 if their revenues exceed the threshold amount of $2 million per year.

Distribution of specialty audio programming services

56. In Public Notice 2001-85, the Commission asked whether specialty audio programming services should be restricted to carriage on a digital tier, whether they should be granted national carriage, and whether DTH services should be able to carry such services without authorization from the Commission.

Positions of parties

57. With respect to limiting carriage to digital tiers, most interveners agreed that there was little capacity on BDUs' analog services and that carriage on digital only was appropriate. Bell ExpressVu, however, saw no need for such a restriction stating that "a BDU providing an analog basic service to a community (e.g. a multiple dwelling unit) in which there was a concentration of residents that would find a particular ethnic specialty audio service of interest, should have the flexibility to add that service to the analog lineup in that community."

58. All parties agreed that specialty audio programming services could be licensed on a local, regional or national basis.

59. Finally, only the CAB argued that it was necessary for DTH services to obtain authorization from the Commission to carry specialty audio programming services. In the CAB's view, such authorization is appropriate, given capacity constraints, at least until all issues related to DTH carriage of local television stations have been resolved.

The Commission's analysis and determination

60. With respect to the mode of carriage, the Commission concludes that applications for new specialty audio programming services should be based primarily on digital distribution. The Commission will be amending section 23 of the Distribution Regulations to permit cable BDUs to carry specialty audio programming services on a digital tier without prior authorization from the Commission.

61. However, in order to limit any disruption to the few existing Canadian specialty audio programming services that have been carried on analog, the Commission would be predisposed to permit their continued carriage on the same basis. Additionally, the Commission is mindful that there may be instances where a BDU has available capacity to warrant the carriage of a specialty audio programming service on analog.

62. BDUs wishing to carry specialty audio programming services on analog will have to apply to the Commission, under certain circumstances, for a condition of licence to allow them to do so once the changes to the Distribution Regulations come into effect. For example, if there is a local ethnic radio station within the licensed area of a Class 1 or Class 2 BDU, the BDU will still have to apply for a condition of licence to allow it to distribute, on an analog basis, a licensed specialty audio programming service that is an ethnic service with commercial messages.

63. The Commission agrees with the parties who stated that there was no reason to limit geographically the carriage of specialty audio programming services. The Commission is satisfied that the requirement to set out a nature of service description which includes the area of carriage (local, regional or national), provides interested parties with an opportunity to comment on all proposals specific to the markets served.

64. The Commission notes that, once the changes to the Distribution Regulations that give effect to this policy come into force, only those specialty audio programming services that are licensed or exempted by the Commission may be carried by cable distribution undertakings.

65. With respect to carriage of specialty audio programming services by DTH undertakings, the Commission notes that section 39 of the Distribution Regulations permits the distribution of "the programming service of any licensed programming undertaking." The Commission therefore confirms that there is no need for DTH licensees to apply for the distribution of a licensed specialty audio programming service.

66. Finally, the Commission considers that the carriage by DTH undertakings of specialty audio programming services will not be at the expense of local television services.

Access to carriage by BDUs

67. The Commission sought comments on whether licensed specialty audio programming services should have guaranteed access rights to BDUs' digital tiers.

Positions of parties

68. Almost all of the parties supported a licensing framework with no guaranteed access rights for specialty audio programming services. Once licensed, these services would have to negotiate carriage by BDUs. As CFMT-TV stated, "like digital Category 2 services, an open and flexible licensing approach will encourage the development of Canadian programming options that will serve the needs and interests of the broadest possible range of viewers."

69. In their comments, cable and DTH licensees recognized the potential value that specialty audio programming services will offer to their subscribers. The CCTA stated: "we consider that the addition of new specialty audio programming services can and will serve as an attractive complement to existing and future digital specialty services."

70. Both the CAB and the CAEB argued that specialty audio programming services should be treated as digital discretionary services and be afforded no greater priority than a category 2 digital television service. ITBC, however, maintained that "if BDUs are not required to carry an audio service, they will most likely not. Hence the whole development of a framework and licensing specialty audio services would be pointless."

The Commission's determination

71. The Commission considers that an open-entry approach to the licensing of specialty audio programming services is appropriate. This approach is similar to the model developed for category 2 television services in that there will be no guaranteed access rights. Licensees of new specialty audio programming services will have to negotiate agreements between themselves and distributors with respect to carriage, packaging and marketing arrangements for their services. The Commission notes, in response to ITBC's concern, that some BDUs have already shown a willingness to distribute similar types of services without access rights.

72. Nevertheless, the Commission has concerns about the possibility of unfair treatment by BDUs, particularly where distributors own or control specialty audio licences. In order to minimize any undue preference towards BDU-affiliated services, the Commission will impose the following distribution requirement:

A BDU that distributes a specialty audio programming service in which it, or an affiliate, controls at least 10% of the equity must carry at least five non-affiliated specialty audio programming services: for every one affiliated service distributed, there must be five non-affiliated services distributed, unless that many have not been implemented and made available for distribution. Until at least five such services are available, the BDU shall distribute the number of those programming services that have been implemented and are available for distribution.

Proposed amendments to the Distribution Regulations

73. In order to implement the new licensing framework for specialty audio programming services, a number of changes to the BDU Regulations are required. These proposed changes are required, for example, to implement the policy allowing digital distribution of specialty audio programming services by a BDU without prior Commission authorization. They will also bring into effect the 5:1 rule which puts BDUs under obligation to distribute five unaffiliated specialty audio programming services for every affiliated specialty audio programming service distributed.

74. The Commission will shortly issue a separate public notice that sets out and invites comment on the proposed text of the amendments to the Distribution Regulations.

Implementation

75. The Commission proposes that the amendments to the Distribution Regulations will come into force in July 2003. This will allow interested parties sufficient time to submit, and for the Commission to deal with, applications for new licences and for BDU licence amendments before the changes to the Distribution Regulations come into force.

76. An application form for new Specialty Audio Programming Services will be available shortly. Parties interested in applying for licences to operate such services should contact the Commission and request copies of the application form.

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

Appendix 1

Licensing framework for specialty audio programming services

Definition of specialty audio programming services:

Specialty audio programming services are audio programming services that are radio undertakings, other than licensed over-the-air services, delivered by BDUs and that are specialized with respect to their content and/or target audience.

Nature of Service

Applicants seeking a licence for a new specialty audio service must propose a nature of service description that will define their programming. The description must include the geographical area of service (local, regional or national), the language or languages, and the target audience (e.g. age group) in such a way as to differentiate the service from existing over-the-air radio services.

A specialty audio programming service is required to adhere to its nature of service definition by condition of licence.

Canadian content

At least 35% of category 2 musical selections broadcast each week must be Canadian selections broadcast in their entirety.

At least 35% of category 2 musical selections broadcast between 6:00 am and 6:00 pm, Monday through Friday must be Canadian selections broadcast in their entirety.

At least 10% of category 3 musical selections in a broadcast week must be Canadian selections that are scheduled in a reasonable manner throughout each broadcast day.

At least 7% of all musical selections broadcast during ethnic programming periods must be Canadian selections and must be scheduled in a reasonable manner throughout the ethnic programming period.

Applicants may request an exception to the above provisions and propose their own Canadian content level that is reflective of available content or product appropriate to the nature of service being proposed. The Commission may grant such an exception if the applicant clearly demonstrates that the nature of the service being proposed warrants such an exception or otherwise meets the objectives of Section 3 of the Broadcasting Act.

Adherence to the accepted Canadian content level will be imposed by condition of licence.

The definitions of content categories referred to above will be those set out in Revised content categories and subcategories for radio, Public Notice CRTC 2000-14 dated 28 January 2000.

French-language vocal music

For French-language specialty audio programming services, each licensee must devote, in each broadcast week, 65% or more of its vocal musical selections from content category 2 to musical selections in the French language broadcast in their entirety.

For French-language specialty audio programming services, each licensee must, between 6:00 am and 6:00 pm, Monday through Friday, devote 55% or more of its vocal musical selections from content category 2 to musical selections in the French language broadcast in their entirety.

Applicants may request an exception to the above provisions and propose their own French-language vocal music level that is reflective of available content or product appropriate to the nature of service being proposed. The Commission may grant such an exception if the applicant clearly demonstrates that the nature of the service being proposed warrants such an exception or otherwise meets the objectives of Section 3 of the Broadcasting Act.

Adherence to the accepted French-language vocal music level will be imposed by condition of licence.

Canadian spoken word content

No minimum level of Canadian spoken word is required. However, licensees must keep in mind the importance of Canadian content in Canadian broadcasting services.

Canadian talent development

Applicants must describe how they will promote and develop Canadian artistic and musical talent.

Other programming requirements

By condition of licence, licensees will be required by adhere to the following industry codes:

Canadian Association of Broadcasters' Code on Gender Portrayal
Broadcast Code for Advertising to Children

The application of the condition of licence related to adherence to the Canadian Association of Broadcasters' Code on Gender Portrayal will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.

By condition of licence, licensees will be required to adhere to the following sections of the Radio Regulations, 1986:

Section 3 - Broadcasting Content
Section 4 - Broadcasting of commercial messages dealing with alcoholic beverages
Section 6 - Political Broadcasts
Section 7 - Ethnic Programs
Section 8 - Logs and Records

Employment equity

The Commission encourages licensees of specialty audio programming services to consider employment equity issues in their hiring practices and in all other aspects of their management of human resources. Licensees with 100 employees or more are subject to the Employment Equity Act, and file reports concerning employment equity with Human Resources Development Canada.

Financing

There is no limit on the amount of advertising that may be broadcast.

The specialty audio programming service licensee may negotiate with a broadcast distribution undertaking to charge a subscriber fee for the service.

Ownership

Specialty audio programming service licensees must comply with standard ownership policies and eligibility requirements, as set out in P.C. 1997-486, dated 8 April 1997, Direction to the CRTC (Ineligibility of non-Canadians), amended by P.C. 1998-1268, dated 15 July 1998, and in P.C. 1985-2108, dated 27 June 1985, Direction to the CRTC (Ineligibility to hold broadcasting licences), amended by P.C. 1997-629, dated 22 April 1997.

By condition of licence, specialty audio programming service licensees will be required to adhere to Section 11 of the Radio Regulations, 1986 related to Transfer of Ownership or Control.

Filing requirements

By condition of licence, specialty audio programming service licensees will be required to adhere to section 9(2) of the Radio Regulations, 1986 related to the requirement to submit an annual return.

Licence fees

Specialty audio programming services will be required to adhere to the Broadcasting Licence Fee Regulations, 1997, if the revenues exceed the threshold amount of $2 million per year.

Distribution of specialty audio programming services

Applications for new specialty audio programming services should be based on digital distribution.

The Commission would be predisposed to allow existing Canadian specialty audio programming services that have been long-carried on analog, to continue distribution on analog.

Access to carriage by BDUs

There is no guaranteed access for carriage by a BDU. Licensees of specialty audio programming services will have to negotiate agreements between themselves and distributors with respect to carriage, packaging and marketing arrangements for their services.

5:1 Rule for BDUs carrying affiliated specialty audio programming services

Date modified:: 2002-09-12