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Broadcasting Public Notice CRTC 2003-14
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Ottawa, 18 March 2003
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Call for comments on possible amendments to the Commission's procedures for dealing with applications for new Category 2 pay and specialty services
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The Commission seeks comment on the procedures it follows in processing applications proposing new Category 2 pay and specialty services. In this proceeding, the Commission will focus on possible modifications and alternatives to its current approach that would serve the public interest and make the most efficient and effective use of Commission resources, while ensuring that all applicants receive fair and equitable treatment. This review will be informed by the objectives identified by the Commission in Licensing framework policy for new digital pay and specialty services, Public Notice CRTC 2000-6, 13 January 2000.
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Existing licensing framework for Category 2 services
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1.
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In Licensing framework policy for new digital pay and specialty services, Public Notice CRTC 2000-6, 13 January 2000 (Public Notice 2000-6), the Commission set out a licensing approach for new digital services. The objectives of this approach were to enhance diversity and choice for viewers, promote experimentation and innovation, and encourage the rollout of digital distribution technology. The framework provided a bridge between the traditional regulatory mechanisms and a more open-entry approach that would allow for greater risk taking; foster increased competition through a greater availability of services in the marketplace; and promote an environment in which customers increasingly determine the success of services.
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2.
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The Commission stated that it would create two new types of digital services, namely Category 1 and Category 2 services. The Commission indicated that new Category 1 services would be specialty services licensed under essentially the same framework as had been applied to existing analog pay and specialty services. For example, they would be afforded genre protection. They would also receive access to distribution by all broadcasting distribution undertakings (BDUs) that offer programming services to subscribers using digital technology. Category 2 services would be pay and specialty services licensed under a lighter regulatory regime, including less rigorous obligations for the provision of Canadian content. Unlike Category 1 services, Category 2 services would not be given access rights to carriage by BDUs, but rather would have to negotiate such rights with them. The Commission's licensing framework stipulated that where a BDU chooses to carry a Category 2 service with which it is affiliated, it would be required to distribute at least five non-affiliated Category 2 services. An affiliated category 2 service is one in which a BDU directly or indirectly controls more than 10% of the equity.
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3.
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To achieve the objectives outlined in Public Notice 2000-6, the Commission decided that it would not limit the number of Category 2 licences that it would issue. Instead, the Commission stated that all applicants proposing new Category 2 services would be licensed provided they met basic licensing criteria1 and would not compete directly with Category 1 or existing analog services.
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Subsequent events
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Licensing action
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4.
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At a public hearing commencing on 14 August 2000, the Commission considered applications for more than 361 Category 2 pay and specialty services, as well as those for almost 90 Category 1 specialty services and 6 pay-per-view and video-on-demand services.
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5.
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In Introductory statement - Licensing of new digital pay and specialty services, Public Notice CRTC 2000-171, 14 December 2000, as revised in Public Notice CRTC 2000-171-1 (Public Notice 2000-171), the Commission announced that, following the approval of an application, the licence for a Category 2 service would only be issued once the applicant had demonstrated that it had entered into a carriage agreement with a licensed BDU and was ready to launch2. The Commission also reiterated in Public Notice 2000-171 that it would only approve applications for new Category 2 services that would not be directly competitive with Category 1 or analog services.
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6.
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To date, the Commission has approved 304 applications for new Category 2 services. Of this number, only 41 (13% of the total approved) have actually launched, following their successful negotiation of carriage agreements with BDUs.
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Modification of the procedures - requirement for evidence of distribution prior to licensing
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7.
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Processing the very large number of applications for new Category 2 pay and specialty services over the course of the past three years has imposed a workload on the Commission that is clearly disproportionate to the number of such services that have subsequently been able to launch. For example, the Commission has found both time- consuming and costly the public process required, in each case, to verify that a proposed service is not directly competitive with any Category 1 or analog service. This has meant, in practice, ensuring that the nature of service condition of licence is clearly defined. In some cases, as explained in Public Notice 2000-171, the Commission has "narrowed the nature of service from that proposed, rather than deny the application".
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8.
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The proceedings dealing with the Category 2 pay and specialty services applications has also imposed a parallel administrative burden on the industry and other interested parties in reviewing the many applications and preparing interventions. Each such intervention requires further analysis by the Commission to complete its assessment of an application.
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9.
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The expenditures of time and effort described above prompted the Commission to examine its procedures to find ways to reduce its workload and ensure that its scrutiny of Category 2 licence applications is conducted with greater efficiency. In January 2002, the Commission began to require applicants, as part of the initial deficiency process for Category 2 services, to provide evidence of a reasonable likelihood that the proposed service would obtain carriage by a licensed BDU. Accordingly, since that time, the Commission has not analyzed or processed any Category 2 pay and specialty service application in the absence of such evidence.
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Concerns expressed by Category 2 applicants
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10.
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Over the course of the past year, applicants for Category 2 services have expressed concern about the Commission's requirement that they demonstrate, as part of the deficiency process, a reasonable likelihood that their proposed services would receive carriage. According to these parties, the requirement is prejudicial to applicants for Category 2 licences. They stressed the importance of the Commission's approval, especially to smaller, independent players or new entrants, in negotiating a carriage agreement, and the difficulty of obtaining such an agreement, or even evidence that such an agreement might be possible, in the absence of the Commission's approval. They also noted the gate-keeping role that could be played by distributors in selecting which Category 2 services would be provided with letters of carriage. Further, they expressed concern about the potential difficulty that the requirement creates for them in protecting their concepts and plans for new services prior to the gazetting of an application by the Commission.
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Call for comments
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11.
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The Commission acknowledges the concerns expressed by applicants for Category 2 services. At the same time, the Commission underscores the importance of making the most efficient and effective use of its resources. With a view to ensuring that all applicants continue to receive fair and equitable treatment, and that the objectives identified by the Commission in Public Notice 2000-6 are respected, the Commission invites comments on the following:
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- Is the requirement that a reasonable likelihood of carriage be demonstrated before an application is deemed to be complete the most appropriate way to balance the Commission's objectives of ensuring an open and flexible licensing framework, and making the best use of its resources?
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- Are there alternative approaches the Commission could take that would permit it to better balance resource demands with the objective of a fair and more open-entry licensing framework?
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- Would an approach based on processing applications for Category 2 undertakings only at specific time intervals be reasonable? If so, what would the most appropriate time interval be?
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- What other possible approaches could be considered for dealing with Category 2 services that would be consistent with the Broadcasting Act, the approach set out in Public Notice 2000-6, and the requirements of efficient regulation?
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12.
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The Commission will accept comments that it receives on or before 16 June 2003. 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.
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Procedures for filing comments
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13.
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Interested parties can file their comments either electronically (i.e. by email) or on paper. Submissions longer than five pages should include a summary.
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14.
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The Commission encourages parties to file their comments electronically by sending them to procedure@crtc.gc.ca.
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15.
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Parties wishing to file their comments on paper should send them to the Secretary General, CRTC, Ottawa, K1A 0N2.
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16.
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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.
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17.
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The Commission will make comments filed in electronic form available on its web site at www.crtc.gc.ca but only in the official language and format in which they are submitted. Such comments may be accessed in the Public Proceedings section of the CRTC web site. Copies of all comments, whether filed on paper or in electronic form, will also be placed on the public examination file.
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18.
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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.
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Examination of public comments and related documents at the following Commission offices during normal business hours
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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
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Metropolitan Place,
99 Wyse Road, Suite 1410,
Dartmouth, Nova Scotia, B3A 4S5.
Tel: (902 426-7997 - TDD: 426-6997
Fax: (902) 426-2721
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405 de Maisonneuve Blvd. East
2nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tel: (514) 283-6607 - TDD: 283-8316
Fax: (514) 283-3689
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55 St. Clair Avenue East
Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
Fax: (416) 954-6343
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Kensington Building
275 Portage Avenue
Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
Fax: (204) 983-6317
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Cornwall Professional Building
2125 - 11th Avenue
Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
Fax: (306) 780-3319
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10405 Jasper Avenue
Suite 520
Edmonton, Alberta T5J 3N4
Tel: (780) 495-3224
Fax: (780) 495-3214
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530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
Fax: (604) 666-8322
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Secretary General
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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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The criteria are set out in Public Notice 2000-6.
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Appendix 2 to Public Notice 2000-171 sets out the requirements to be met prior to obtaining a licence, including the prerequisite that evidence be filed demonstrating that a Category 2 service has negotiated its carriage with a BDU. This prerequisite was reiterated in Ownership and launch requirements for Category 1 and Category 2 specialty services, Public Notice CRTC 2001-98, 30 August 2001, which was accompanied by a list of the Category 1 and 2 services that had fulfilled the Commission's requirements and would be issued a licence.
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Date Modified: 2003-03-18