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Broadcasting Decision CRTC 2003-453
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Ottawa, 9 September 2003
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TELUS Communications Inc.
Across Canada
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Application 2002-0680-7
Public Hearing at Edmonton
16 June 2003
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National video-on-demand service
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In this decision, the Commission approves an application by TELUS Communications Inc. for a licence to operate a national, general interest video-on-demand service largely composed of feature films. The conditions attached to the licence are set out in an appendix to this decision.
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The application
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1.
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The Commission received an application by TELUS Communications Inc. (TELUS) for a broadcasting licence to operate a national English-language video-on-demand (VOD) service composed primarily of feature films.
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2.
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TELUS indicated that the proposed service would be operated in conformity with the Commission's regulatory framework for VOD undertakings, as set out in Licensing of New Video-on-demand Programming Undertakings - Introduction to Decisions CRTC 97-283 to 97-287, Public Notice CRTC 1997-83, 2 July 1997 (Public Notice 1997-83) and Introductory statement to Decisions CRTC 2000-733 to 2000-738: Licensing of new video-on-demand and pay-per-view services, Public Notice CRTC 2000-172, 14 December 2000 (Public Notice 2000-172).
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Interventions
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3.
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The Commission received five interventions with respect to this application. Two interventions were in support of the application and three provided comments. The comments were received from the National Film Board (NFB), the Banff Television Foundation (the Foundation) and the Canadian Cable Television Association (CCTA).
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4.
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The NFB comment stressed the importance of providing on-demand access to Canadian audio-visual material. The Foundation took no official position on the merits of the TELUS application, but noted TELUS' past support for the Foundation.
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5.
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While not opposing TELUS' application for a VOD programming undertaking licence, the CCTA questioned whether TELUS should be required to obtain a broadcasting distribution undertaking (BDU) licence in order to deliver its proposed VOD service. In its written intervention, the CCTA argued that "allowing the distribution of programming under the authority of only a VOD licence would effectively result in programming undertakings being able to establish "mini cable" systems without having either to be licensed as a distribution undertaking or to satisfy the criteria of an existing exemption order".
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6.
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In response to the CCTA's concerns, TELUS noted that the CCTA's position was similar to its intervention in the matter of TELUS' application to serve CityPlace (Video-on-demand service for CityPlace, Broadcasting Decision CRTC 2003-210, 3 July 2003). In TELUS' view, its proposed national VOD service constituted a programming undertaking.
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The Commission's determinations
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The type of licence
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7.
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The Commission notes that the proposed undertaking will not receive and retransmit programming. The Commission therefore considers that the VOD service proposed by TELUS does not fall within the definition of a distribution undertaking as set out in the Broadcasting Act (the Act), and that it does not require a broadcasting distribution licence. In the Commission's view, the proposed service more appropriately meets the definition of a programming undertaking.
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8.
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In Public Notice 1997-83, the Commission established a regulatory framework for VOD undertakings. In Public Notice 2000-172, the Commission determined that the framework continued to be appropriate, subject to certain modifications.
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9.
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The Commission considers that the application complies with the regulatory framework for VOD undertakings and, accordingly, approves the application by TELUS for a licence to operate a national video-on-demand service. In the appendix attached to this decision, the Commission has imposed several conditions of licence in accordance with the regulatory framework for VOD undertakings.
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10.
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In the following sections, the Commission sets out its findings related to the applicant's commitments for programming, ownership issues, and the promotion of Canadian programs, as well as its determinations relating to cultural diversity, services to persons with visual and/or hearing impairments, and adherence to industry codes.
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Programming matters
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Programming packages
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11.
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In accordance with its policy set out in Public Notice 2000-172, the Commission expects the applicant to ensure that its programming packages will be made available to viewers for periods not exceeding one week.
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French-language service
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12.
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TELUS stated that it would make programming available in both English and French through the use of separate audio tracks whenever available. It also stated that it planned to offer all available Canadian films in both their original language and in dubbed versions. The applicant indicated that, by the end of its first term of licence, at least 75% of all programming would be available in both official languages. TELUS further noted that third-language programming would be made available according to market demand.
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13.
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In Public Notice 2000-172, the Commission underscored the importance it places on subscribers being able to select programming in the official language of their choice. Accordingly, as part of its licensing framework for VOD services, the Commission stated that it would expect, to the maximum extent possible, that: ".each VOD service make its on-demand program offering available to customers in both official languages [and that licensees] adhere to their commitments with respect to French-language programming." The Commission reiterates these expectations and confirms their applicability to TELUS's proposed VOD service.
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Adult programming
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14.
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In Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services, Broadcasting Public Notice CRTC 2003-10, 6 March 2003, the Commission approved the industry code of the same name. That code sets out standards and practices for the broadcast of adult programming. The Commission considers it appropriate, and the applicant agreed, that TELUS should be subject to a condition of licence that the new VOD undertaking should adhere to this code. The text of the condition of licence is set out in the appendix to this decision.
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15.
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The Commission also expects the applicant to submit to the Commission its policy on the broadcast of adult programming, before the service is implemented.
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Ownership issues
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16.
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As a licensee with a parent company that has more than 20% non-Canadian ownership, TELUS is required to satisfy specific requirements as set out in the definition of a "qualified corporation" pursuant to the Direction to the CRTC (Ineligibility of Non-Canadians) (the Direction), P.C. 1997-486, as modified by P.C. 1998-1268. In fact, TELUS must comply with the requirement that neither the parent corporation nor its board of directors control or influence the programming decisions of the licensee. To address this obligation, TELUS proposed the creation of an independent Programming Committee via a corporate by-law, that would reflect the following criteria:
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a) There shall be a committee of three persons to be known as the Programming Committee, which shall be responsible for making all programming decisions of the licensed undertaking.
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b) "Programming decisions" means all decisions of any kind relating to or affecting television programming broadcasts by the licensed undertaking and includes all decisions relating to the content and presentation of the licensed undertaking's programming.
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c) The directors of the licensee, by enactment of the appropriate by-law, will delegate to the Programming Committee the sole and exclusive responsibility and authority to make all programming decisions on behalf of the licensed undertaking, and to supervise the implementation thereof.
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d) The members of the Programming Committee shall be Canadian citizens, ordinarily resident in Canada.
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e) No member of the Programming Committee may be either a director, an officer, or a current or former employee of TELUS Corporation and no member of the Programming Committee may be either a director, an officer, or a current or former employee of any non-Canadian shareholder of the licensed undertaking.
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f) At least one member of the Programming Committee shall be an independent member having no links to the licensed undertaking, its affiliates or its shareholders.
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g) A quorum of the Programming Committee shall be made by a majority of members present at a meeting of the Programming Committee, either in person or by telephone.
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h) Any decisions respecting removal of members of the Programming Committee shall be made by majority vote of the Programming Committee.
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i) The Programming Committee shall ensure that the programming will be in conformity with any applicable conditions, regulations and policies of the CRTC, as well as with the Broadcasting Act.
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j) No change may be made to these criteria unless prior Commission approval is obtained.
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17.
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The Commission considers that the criteria set out above are appropriate in the circumstances. It should be noted that the licence for the undertaking will not be issued until TELUS submits to the Commission an executed copy of the by-law for the implementation of an independent Programming Committee that will ensure that the applicant complies with the Direction.
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Cultural diversity
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18.
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Section 3(1)(d)(iii) of the Actstipulates 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 peoples within that society".
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19.
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More broadly, the Commission expects the licensee to endeavour, through its programming and employment opportunities, to reflect the presence in Canada of cultural and racial minorities and Aboriginal peoples. The Commission further expects the licensee to ensure that the on-screen portrayal of such groups is accurate, fair and free of stereotypes.
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Service to persons with hearing impairments
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20.
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The Commission is committed to improving service to viewers who are deaf or hard of hearing, and has consistently encouraged broadcasters to increase the amount of closed captioned programming they broadcast. The Commission generally requires all broadcasters to offer a minimum percentage of closed captioned programs consistent with the nature of their services.
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21.
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Accordingly, and consistent with Public Notice 2000-172, the applicant shall, by condition of licence, provide closed captioning for not less than 90% of all programs in its inventory, by no later than 1 September 2008, and for the remainder of the licence term.
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Service to persons with visual impairments
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The Commission is committed to improving the television service available to persons with visual impairments through the provision of audio description and video description (also known as described video).
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23.
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Consistent with this objective, the Commission expects the applicant to provide an audio description of all programming that provides textual or graphic information, including programming broadcast on the barker channel.
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24.
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The Commission also expects that TELUS will acquire and make available the described video versions of programs wherever possible, and encourages the applicant to ensure that a proportion of its titles is available with description. The Commission further expects the applicant to take the necessary steps to ensure that its customer service responds to the needs of visually impaired viewers.
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Compliance with industry codes
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25.
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In accordance with its usual practice, the Commission is imposing conditions of licence requiring the applicant to adhere to industry codes related to violence and sex-role portrayal. The texts of these conditions are set out in the appendix to this decision.
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Employment equity
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26.
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Because this applicant is subject to the Employment Equity Act and files reports concerning employment equity with Human Resources Development Canada, its employment equity practices are not examined by the Commission.
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Issuance of the licence
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27.
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Subject to the requirements of this decision, the Commission will issue a broadcasting licence to TELUS to operate a national English-language video-on-demand service. The licence will expire 31 August 2010, and will be subject to the conditions therein as well as those set out in the appendix to this decision.
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28.
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The licence for this undertaking will be issued only when:
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- the applicant submits to the Commission an executed copy of the by-law for the implementation of an independent Programming Committee that will ensure that the applicant complies with the Direction.
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- the applicant has informed the Commission in writing that it is prepared to commence operations. The undertaking must be operational at the earliest possible date and in any event no later than 24 months from the date of this decision, unless a request for an extension of time is approved by the Commission before 9 September 2005. In order to ensure that such a request is processed in a timely manner, it should be submitted at least 60 days before this date.
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Secretary General
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This decision is to be appended to the licence. It is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca
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Appendix to Broadcasting Decision CRTC 2003-453
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Conditions of licence
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1.
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The licensee shall adhere to the Pay Television Regulations, 1990, with the exception of section 4 (logs and records).
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2.
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The licensee shall maintain for a period of one year, and submit to the Commission upon request, a detailed list of the inventory available on each file server, identifying each program by programming category and by country of origin, and indicating the period of time that each program was on the server and available to subscribers.
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3.
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Except as authorized by the Commission, the broadcasting undertaking licensed herein shall be operated in fact by the licensee itself.
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4.
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The licensee shall ensure that, at all times:
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a) Not less than 5% of the English-language feature films and not less than 8% of the French-language feature films in the inventory available to subscribers are Canadian;
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b) the feature film inventory includes all new Canadian feature films that are suitable for VOD exhibition and which meet the approved Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services; and
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c) Not less than 20% of all programming other than feature films in the inventory available to subscribers is Canadian.
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5.
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The licensee shall contribute 5% of its gross annual revenues to an existing Canadian program production fund administered independently of its undertaking.
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For the purpose of this condition:
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a) "gross annual revenues" shall be 50% of the total revenues received from customers of the broadcasting distribution undertaking distributing the video-on-demand service, when the video-on-demand service is a "related service";
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b) a "related service" is one in which the broadcasting distribution undertaking distributing the video-on-demand service, or any of its shareholders owns, directly or indirectly, 30% or more of the equity of the video-on-demand service;
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c) "gross annual revenues" shall be the total amount received from the broadcasting distribution undertaking distributing the video-on-demand service, when the video-on-demand service is not a "related service".
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6.
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The licensee shall ensure that not less than 25% of the titles promoted each month on its barker channel are Canadian titles.
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The licensee shall remit to the rights holders of all Canadian films 100% of revenues earned from the exhibition of these films.
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8.
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The licensee shall not enter into an affiliation agreement with the licensee of a distribution undertaking unless the agreement incorporates a prohibition against linkage of its service with any non-Canadian discretionary service.
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9.
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No later than 1 September 2008 and until the end of the licence term, the licensee shall caption at least 90% of all titles in its inventory.
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10.
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The licensee shall adhere to the guidelines on gender portrayal set out in the Canadian Association of Broadcasters' Sex-role portrayal code for television and radio programming, as amended from time to time and approved by the Commission. The application of the foregoing condition of licence will be suspended as long as the licensee is a member in good standing of the Canadian Broadcast Standards Council.
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11.
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The licensee shall adhere to the Pay television and pay-per-view programming code regarding violence, as amended from time to time and approved by the Commission.
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12.
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The licensee shall adhere to the Industry code of programming standards and practices governing pay, pay-per-view and video-on-demand services, as amended from time to time and approved by the Commission.
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Date Modified: 2003-09-09