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Broadcasting Public Notice CRTC 2003-2
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Ottawa, 17 January 2003
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Internet retransmission
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1.
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On 12 June 2002, the Governor General in Council issued Order in Council P.C. 2002-1043 (P.C. 2002-1043), requesting that the Commission seek public comment and, by 17 January 2003, report with respect to:
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a) the broadcasting regulatory framework for persons who retransmit, by the Internet, the signals of over-the-air television or radio programming undertakings,
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b) the appropriateness of amending the Exemption Order for New Media Broadcasting Undertakings (the New Media Exemption Order) published in Appendix A to Public Notice CRTC 1999-197, 17 December 1999 (PN 1999-197), regarding persons who retransmit by the Internet, the signals of over-the-air television or radio programming undertakings, and
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c) any other measures the Commission considers appropriate in this regard
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in order to meet the objectives of the broadcasting policy set out in the Broadcasting Act.
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2.
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On 19 July 2002, the Commission issued Call for comments concerning Internet Retransmission (Order in Council P.C. 2002-1043), Broadcasting Public Notice CRTC 2002-38 (PN 2002-38), seeking comment on the Internet retransmission of broadcasting services originally transmitted over the air. The Commission noted that this would exclude the Internet retransmission of specialty services. The Commission also noted that certain programming undertakings may be transmitting their own services via the Internet, and that such activities would not constitute Internet retransmission. The Commission requested that parties focus their comments on Internet retransmission by third parties of the signals of over-the-air programming undertakings.
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3.
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The Commission also posed a number of specific questions, including the following:
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a) Should Internet retransmission be seen as a substitute for, or a complement to, the activities of existing licensed over-the-air broadcasting and distribution undertakings?
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b) To the extent that Internet retransmission is now or may reasonably be expected to become complementary or substitutable for existing over-the-air broadcasting undertakings and/or distribution undertakings, what is its potential impact on the existing regulatory framework?
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c) What potential impact could Internet retransmission have on the broadcasting system, including, among others, viewers, subscribers, advertisers, producers and broadcasters?
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d) What are the mechanisms currently or potentially available that would ensure the protection of program rights? In particular, how could the territorial reach of Internet retransmission of programming be restricted to a particular region or to particular customers? Similarly, how could the repropagation of such programming by customers to other Internet users be prevented?
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e) Would regulation of undertakings providing Internet retransmission of the signals of over-the-air programming undertakings contribute materially to, or detract from, the attainment of the objectives set out in section 3 of the Broadcasting Act?
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4.
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The Commission also asked that parties highlight any significant differences that should be addressed between the retransmission of radio signals and of television signals on the Internet.
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5.
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A total of 40 parties participated in this proceeding, with 35 parties providing initial comments and 23 parties providing reply comments. A complete list of parties is provided in Appendix E to this Report.
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The current regulatory framework
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6.
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As noted in P.C. 2002-1043, parties that engage in Internet retransmission do so under the Commission's New Media Exemption Order. The New Media Exemption Order was issued pursuant to subsection 9(4) of the Broadcasting Act, which states as follows:
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(4) The Commission shall, by order, on such terms and conditions as it deems appropriate, exempt persons who carry on broadcasting undertakings of any class specified in the order from any or all of the requirements of this Part1 where the Commission is satisfied that compliance with those requirements will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1).
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7.
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The New Media Exemption Order was preceded by a public consultation process under both the Broadcasting Act and the Telecommunications Act regarding the range of communication and information services referred to as "new media". Following the consultation, the Commission issued a report entitled New Media, Broadcasting Public Notice CRTC 1999-84 and Telecom Public Notice CRTC 99-4, 17 May 1999 (the New Media Report).
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8.
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In Call for comments on a proposed exemption order for new media broadcasting undertakings, Public Notice CRTC 1999-118, 19 July 1999, the Commission published the specific wording of its proposed New Media Exemption Order. On 17 December 1999, after considering the comments received, the Commission issued the final New Media Exemption Order as Appendix A to PN 1999-197. In that Order, the Commission unconditionally exempted new media broadcasting undertakings from the requirements of Part II of the Broadcasting Act.
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9.
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In deciding to exempt new media broadcasting undertakings, the Commission considered whether and to what extent such undertakings were already contributing to the objectives of the Broadcasting Act, and whether and to what extent that contribution could be enhanced materially by the imposition of requirements under Part II of the Broadcasting Act.
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10.
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In the New Media Report, the Commission considered, among other things, that new media were making a positive contribution to the objectives of the Broadcasting Act by enhancing opportunities for Canadian expression. The Commission also found that a significant amount of Canadian content was present on the Internet and that this content was being created and made available in the absence of regulation. Further, it noted that many parties submitted that regulation would serve to hinder, not help, the production and distribution of Canadian new media content. The Commission therefore concluded that there was no policy rationale for the imposition of regulatory measures to stimulate the production and distribution of Canadian content.
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11.
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The Commission also considered whether new media were, or were expected to become, substitutes for existing broadcasting services and their distribution systems. It was argued by some parties that a high degree of substitutability could threaten regulated broadcasters' revenue sources and significantly impede their ability to fulfil their obligations under the Broadcasting Act. The vast majority of participants agreed that, in the short term, new media services should be considered complementary to traditional media, rather than as substitutes for them.
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12.
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The Commission also examined the potential impact of new media on existing broadcasting licensees and their ability to fulfil their objectives under the Broadcasting Act. As the Commission noted in the New Media Report, there was a general consensus among parties that new media had the potential to bring about the following:
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a) a loss in radio and television audiences to new media;
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b) a loss in traditional media advertising revenues to new media advertising; and
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c) to a lesser extent, a loss in traditional media advertising revenues due to the growth in electronic commerce.
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13.
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However, the Commission concluded in the New Media Report that new media had not had any detrimental impact on conventional radio and television audiences, and that there was no evidence that the Internet had had any negative financial impact on the advertising revenues of traditional broadcasters. It concluded further that the effect of new media on television audience size would be limited, until such time as high-quality video programming could be distributed on the Internet.
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14.
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In general, the Commission concluded, at paragraph 49 of the New Media Report, that "to impose licensing on new media would not contribute in any way to its development or to the benefits that it has brought to Canadian users, consumers and businesses."
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15.
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The prospect of the retransmission of over-the-air broadcasting signals via the Internet was not specifically addressed during the proceeding leading to the Commission's decision to exempt new media undertakings from regulation under Part II of the Broadcasting Act. In assessing the regulatory framework applicable to Internet retransmission, and whether or not it would be appropriate to amend the New Media Exemption Order to specifically address Internet retransmission, the Commission must, consistent with section 9(4) of the Broadcasting Act, consider whether or not it is necessary that persons carrying on new media broadcasting undertakings involving Internet retransmission be subject to requirements under Part II of the Broadcasting Act in order to contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1) of that Act.
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16.
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The Commission's discussion of the relevant issues and its overall conclusions are set out below. Background information with respect to the issues is provided in the Appendices to this Report.
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Internet retransmission - complement or substitute?
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Submissions of parties
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17.
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In order to assess the impact of Internet retransmission on traditional broadcasters, the Commission asked parties to comment on whether Internet retransmission should be seen as a substitute for, or a complement to, the activities of existing licensed over-the-air broadcasting and distribution undertakings.
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18.
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The majority of parties that commented on this question considered Internet retransmission, at this stage, to be a complement to, rather than a substitute for, the activities of existing licensed over-the-air broadcasting and distribution undertakings. The Canadian Association of Internet Providers (CAIP) noted that, at present, "there is no evidence that Internet retransmission of TV signals is having, or will have, any material impact on the Canadian broadcasting system because there is no undertaking currently offering the service to the general public and no proof yet that a working business model exists for such activity."
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19.
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Parties further submitted that Internet retransmission currently does not have a substantial impact on broadcasters' revenues. Parties also cited a number of factors to explain why Internet retransmission is not now, and, according to some, may never be, a substitute for traditional broadcasting. These included:
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- the low penetration of high speed Internet service compared to services provided by broadcasting distribution undertakings (BDUs);
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- the limitations of available bandwidth for Internet retransmission and the current inferior quality of television signals delivered over the Internet compared to those provided by BDUs;
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- the high costs associated with distributing a service over the Internet;
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- the high costs associated with providing an array of programming services comparable to the choice offered by BDUs (involving capital investment and rights negotiations); and
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- the technical limitations of the personal computer as a broadcasting receiving apparatus.
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20.
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TELUS Communications Inc. (TELUS) commented on the factors that would be required for Internet retransmission to be considered a substitute for the activities of existing licensed over-the-air broadcasting and distribution undertakings. According to TELUS, "Internet retransmission will not emerge to be a meaningful substitute for conventional program delivery technologies unless Internet network technologies develop that allow Internet retransmitters to offer a service comparable in price, choice and quality to the services available today from conventional distribution undertakings." TELUS was of the view that, until this does occur, "Internet retransmission will remain at best, a peripheral complement to the existing delivery of broadcasting services. At most, Internet retransmission may serve niche markets of consumers that are somehow limited in their capability to access local over-the-air broadcasters and distribution undertakings."
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21.
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The Canadian Association of Broadcasters (CAB) submitted that, in Canada, the penetration rate for television sets is expected to remain much higher than that for computers for the foreseeable future, reducing the likelihood that Internet retransmission would compete with the reception of broadcasting on television sets. CAB, the Canadian Retransmission Collective, and the Directors Guild of Canada (DGC) did not consider Internet retransmission to be even a complement to the activities of existing licensed over-the-air broadcasting and distribution undertakings. CAB asserted that Internet retransmitters should not be considered complementary to conventional broadcasters because they offer nothing new to the system, but simply retransmit "the signal created and paid for by another undertaking."
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22.
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In contrast, JumpTV.com Canada, Inc. (JumpTV) suggested the possibility of a time when "the Internet will replace cable systems as the single method of distribution of television, radio and other content ., becoming the sole medium for the distribution of digital works".
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The Commission's view
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23.
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The Commission agrees with the majority of parties that Internet retransmission, at this stage, cannot be considered a substitute for the activities of existing, licensed over-the-air broadcasting or distribution undertakings. As noted by parties, very little Internet retransmission of broadcasting signals is currently taking place in Canada, and parties who have attempted to retransmit Canadian over-the-air signals, such as iCraveTV.com (iCraveTV) and JumpTV, have been curtailed through legal challenges involving rights issues. In order for these kinds of activities to have a material impact on conventional over-the-air broadcasters or distributors, the Commission considers that certain benchmarks in the development of Internet retransmission would first have to be reached.
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24.
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In the Commission's view, Internet retransmission will not be a substitute for licensed over-the-air broadcasting or distribution undertakings until it is capable of performing the same functions less expensively, more conveniently, with greater choice or higher quality, or unless it offers content that cannot be provided by such undertakings. Based on the record of this proceeding, it is not immediately evident that Internet retransmission could provide customers with services that would not be offered by a conventional BDU. Since over-the-air television is already available at no cost to the consumer, Internet retransmission would not be less expensive for the consumer. As noted by parties, there is not likely to be a greater choice of programming available through Internet retransmission if territorial rights are respected. In addition, significant technical and economic challenges must be overcome before television-quality signals can be delivered over the Internet.
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25.
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The Commission also considers that Canadian Internet users would have to demonstrate a substantial interest in accessing programming on their computers before Internet retransmission could become a substitute for licensed over-the-air broadcasting or distribution undertakings. Yet, as indicated by the data set out in Appendix C, existing audiences for Internet radio and television remain minimal compared to audiences for conventional television and radio. While Internet retransmission could make over-the-air television signals available in some locations, such as offices, where it currently is not available, the Commission does not consider that this would be sufficient to render it a BDU substitute. The minimal penetration of Internet radio listening, a free service available to Internet users, suggests that Canadians will continue to choose licensed over-the-air radio stations for the delivery of this programming, particularly since most radio listening occurs in cars and buses during the morning and evening rush hours. Thus, radio listening via the Internet will likely continue to be a complement to, rather than a substitute for, over-the-air listening.
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26.
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Other data support the conclusion that, for the foreseeable future, Internet retransmission is likely to remain a complementary service. As reported in March 2002 in Cyber Trends magazine, almost half of Canadians that do not have access to the Internet report that they feel no need for such access or are not interested in it. That same publication indicates that the number of Canadians citing a lack of need or interest in using the Internet has risen from 38% to 44% over the period 2001 to 20022. While it would be premature to conclude that Internet penetration has reached a plateau, it seems likely that advertisers and content producers will continue to view television as the delivery platform of choice for their respective products for the foreseeable future.
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Impact of Internet retransmission on the broadcasting system
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27.
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In PN 2002-38, the Commission sought comment on the potential impact that Internet retransmission might have on the broadcasting system, including broadcasters, producers, advertisers, viewers and subscribers.
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Submissions of parties
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Impact on over-the-air television broadcasters
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28.
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While the majority of parties focussed on the negative impact that Internet retransmission might have on the broadcasting system, a number of parties argued that Internet retransmission, provided it was subject to specific safeguards, would bring positive benefits to Canadian over-the-air broadcasters and their audiences. Several parties described the benefits of Internet retransmission, including Aliant Telecommunications Inc. (Aliant); Aliant, Bell Canada, Bell ExpressVu Limited Partnership, Northwestel Inc. and Télébec Inc. (collectively, the Bell companies, in a joint submission); CAIP; Canadian Broadcasting Corporation (CBC); Community Media Education Society; Information Technology Association of Canada; and TELUS.
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29.
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CBC supported the use of Internet retransmission as a platform for the distribution of television services. It noted in its reply comments that "effectively harnessed Internet retransmission" could help it to:
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a) extend its core services to audiences using this new platform;
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b) provide an additional outlet for reaching new, younger, non-traditional audiences and, in the process, shaping and enhancing their experience of Canada's cultural identity;
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c) ensure its presence on emerging broadband networks;
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d) maximize investment in exclusive Canadian exhibition rights; and
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e) support Canadian creators and rights holders who depend on the ability to generate licence fees from multiple users.
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30.
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The National Film Board (NFB) considered Internet retransmission to be in the public interest, and argued that Internet retransmission companies should be able to pursue various business models such as banner advertising and the provision of subscription services. NFB suggested that over-the-air broadcasters have an opportunity to offset whatever impact might be associated with the competition provided by Internet retransmission by acquiring their own Internet programming rights and retransmitting their signals over the Internet.
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31.
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TELUS described a number of potential benefits for all existing broadcasters from the retransmission of their services over the Internet. According to TELUS, Internet retransmission would provide local over-the-air and specialty service broadcasters with an additional delivery platform that would result in greater viewership for their services. Greater viewership via the Internet would, in turn, yield opportunities for additional advertising revenues, for example, banner and pop-up advertisements. TELUS also noted that Internet retransmission would allow broadcasters to receive real-time feedback on viewership and demographics that they could use in their negotiations with advertisers.
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32.
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TELUS added that Internet retransmission would provide supplementary programming opportunities for broadcasters to create customized or interactive versions of their broadcasts.
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33.
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Similarly, Aliant argued that a service such as its own TV on my PC could only have a positive impact on broadcasters' advertising opportunities and the value of their broadcasts by extending their programming to a new market.3
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34.
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CAIP contended that "there is no evidence that Internet retransmitters will have any negative impact on conventional broadcasters". On the contrary, CAIP suggested that Internet retransmission would provide additional sources of broadcasting in locations where over-the-air broadcasts may not be available or in locations where television broadcasts are not routinely watched, for example, the work place. CAIP argued that the potential to deliver television broadcasts to a wider audience via Internet retransmission creates new advertising opportunities to the benefit of both advertisers and broadcasters. Because of the niche nature of the Internet retransmission audience, CAIP rejected the suggestion that Internet retransmission would negatively affect over-the-air broadcasters.
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35.
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There was a general consensus among those submitting comments that the main possible negative economic impact on over-the-air broadcasters related to the potential for Internet retransmission to undermine programming rights.
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36.
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Parties predicted significant negative consequences for over-the-air broadcasters if Internet retransmitters were to gain access to the compulsory licence scheme of the Copyright Act while remaining unconditionally exempted from the requirements of Part II of the Broadcasting Act. According to many parties, these consequences would stem mainly from the fact that a program that is retransmitted on the Internet can be received by audiences living outside the territory for which the program is licensed, thus rendering Internet retransmitters unable to respect broadcast licensing agreements for programming and advertising, which are limited to specific territories. Parties argued that this would significantly lessen the value of programming rights, as well as the value of programs to advertisers.
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37.
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Some parties expressed doubt as to whether an effective technical means for limiting the global reach of the Internet now exists or will eventually be found. For instance, FWS Joint Sports Claimants Inc. (FWS) stated:
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If content is made available on a server connected to the Internet, it is potentially available immediately to anyone with Internet access anywhere in the world. Indeed, were such limitations on the dissemination of information possible, many governments would have imposed them.
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As a result, FWS predicted that Internet retransmission of television programming "would effectively undermine the territorial broadcast agreements which form the basis for the broadcast and advertising industries."
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38.
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CAB described this potential for virtually global availability as "an extremely grave situation for Canadian broadcasters." CAB, like several others, pointed out that the most damaging impact of Internet retransmission would be the likelihood that U.S. program rights holders would no longer provide programming to Canadian broadcasters if they could not be assured that global retransmission of this programming could be prevented. Acknowledging that Canadian broadcasters use highly rated, more profitable American programming to subsidize the high cost of Canadian programming, CAB argued that Internet retransmission could have a significant impact on the economic viability of Canadian broadcasters:
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It is very clear to the CAB and its members that if U.S. program rights holders cannot have any level of assurance that their programs will not be retransmitted over the Internet at large, they will simply cease providing programming to Canadian broadcasters. This in turn will have a devastating impact upon the ability of those undertakings to honour their respective commitments to the Canadian broadcasting system.
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39.
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The Canadian Motion Picture Distributors Association (CMPDA) emphasized the specific impact that Internet retransmission would have on local over-the-air broadcasters, submitting that the latter would have difficulty gaining access even to Canadian programming. According to CMPDA, since Canadian programming suppliers "do not yet trust the Internet as a distribution mechanism", rights holders would instead gravitate to pay and specialty services that are not subject to a compulsory licence.
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40.
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FWS also reasoned that copyright owners would attempt to minimize the impact of Internet retransmission by licensing their programs to cable-only or satellite-only (i.e., specialty and pay) services. In this event, conventional broadcasters would see a loss of audience, and associated advertising revenue, as a result of a potentially less attractive programming schedule.
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41.
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Parties also described the potential negative consequences of Internet retransmission on advertising revenues resulting from the availability of distant signals in local markets. Parties noted that, when purchasing air-time from an over-the-air broadcaster, an advertiser is buying the exclusive rights to advertise to the local market during a specific program. In return, the advertiser expects that there will be no other source for that program in the market. Some parties considered that Internet retransmission would constitute a threat to this exclusivity, and thus would lessen the value of air-time to advertisers. They suggested that advertisers would accordingly be less likely to advertise on over-the-air broadcasts, or would expect reductions in the rates they pay to broadcasters, which would in turn have a negative impact on broadcasters' revenues and hence on their ability to produce Canadian programming. The National Association of Broadcasters described how this could have a cumulative impact, affecting both producers and audiences, as local stations found themselves forced to reduce their spending on local news and information, community service and outreach programs.
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42.
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Parties also considered that the negative consequences of Internet retransmission on advertising revenues would be exacerbated if retransmitters chose to frame broadcasters' signals with banner or pop-up advertising. Not only would this result in greater competition for advertising revenues, but it could also cause conflict between broadcasters and advertisers, if the Internet retransmitter added banner or pop-up advertisements for products competing with the advertisements in the original broadcast.
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43.
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Several parties characterized the addition of banner or pop-up advertising by an Internet retransmitter as, in effect, altering the signal of a broadcaster, which conventional BDUs are prohibited from doing. As stated by the Bell companies:
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This business model stands in stark contrast to the role of a traditional BDU, which functions as a mere packager and "conduit" for broadcasters' signals, adding no content to the signals yet generally enhancing the quality of reception. The addition of advertising to the signal upsets the important balance between the interests of retransmitters and rights holders.
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Impact on other television broadcasters
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44.
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Generally, parties did not predict a negative impact on pay and specialty services from Internet retransmission, since pay and specialty services are not covered by the compulsory licensing provisions of the Copyright Act. Rather, as noted earlier, some parties argued that Canadian producers may become reluctant to sell their productions to over-the-air broadcasters, preferring instead to sell them to specialty and pay services.
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Impact on producers
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45.
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The Commission notes that the television broadcasting marketplace is currently structured according to a hierarchy of broadcast windows that are available to rights holders. These windows represent distinct revenue streams that rights holders can exploit for a single product, with the value of the product decreasing as it moves down the hierarchy. Typically, over-the-air broadcasters represent the first window in the hierarchy because they capture the largest audiences for a program.4 The Canadian Film and Television Production Association (CFTPA) argued that Internet retransmission would have significant consequences for Canadian program producers by eliminating the first broadcast window of local, over-the-air television in every territory of the world.
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46.
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Foreign sales represent another separate revenue stream. According to CFTPA, Internet retransmission "would result in lower broadcast fees outside Canada and a reduction (or the elimination) of the program distributor's advance on sales in foreign markets. As a consequence, we would have less money with which to produce our programs and a reduced ability to tell our stories to Canadians and to the world."
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47.
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The Bell companies also discussed how foreign markets for domestic programs may be adversely affected:
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If Canadian programs were to be disseminated widely over the Internet, Canadian content producers could expect to generate lower licence fees from foreign markets, which in turn could negatively impact the production of Canadian programming.
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48.
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As noted earlier, FWS argued that Internet transmission could result in copyright owners such as producers preferring to licence their programs to pay and specialty services.
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49.
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Producers were also concerned about the unauthorized reproduction of their works through the Internet. DGC raised the potential for Internet retransmission to further exploit rights holders' works by subjecting them to "rampant unauthorized downstream uses which could seriously damage their worth in existing markets" and "clearly interfere with the normal exploitation of audio-visual works."
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Impact on distributors
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50.
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Several parties expressed concern about the possibility that Internet retransmitters would be competing with conventional BDUs but would not be subject to the requirements that the Commission imposes on conventional BDUs, including regulations governing programming carriage, priority signals, alteration or deletion of signals, distant signal carriage, simultaneous substitution and contributions to Canadian programming.
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51.
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Many parties were concerned about the creation of a parallel system that would result in an unfair advantage for Internet retransmitters. For instance, FWS argued that, "if Internet retransmission were allowed, existing retransmitters would face competition from distribution undertakings with minimal capital costs and virtually no legal obligations to promote Canadian broadcast policy."
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52.
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The Canadian Cable Television Association (CCTA) did not express great concern about the practical impact of Internet retransmitters as competitors to BDUs. Rather, CCTA submitted that, while Internet retransmission would increase the amount of Internet traffic that exists, "this increase would not be substantial given the popularity and the presence of video already present on all networks today." That being said, CCTA advocated that Internet retransmitters be subject to licensing by the Commission, and in particular, to certain conditions that would minimize their impact on the system.
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Impact on audiences
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53.
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Some parties considered that Internet retransmission, provided it was subject to specific safeguards, would have a positive impact on Canadian audiences, mainly by extending the availability of Canadian broadcasting services. For example, CBC elaborated on how Internet retransmission would make Canadian content available in a wider range of venues, to the benefit of the Canadian broadcasting system. According to CBC, the "unique features" of Internet retransmission "will make access convenient to consumers in more places, where reception of over-the-air signals is usually either limited or non-existent, such as in offices, studies, public libraries, etc. It introduces portability, allowing consumers to access broadcasting services directly from portable computers and handheld personal digital assistants (PDAs)."
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54.
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FWS argued that Internet retransmission, without safeguards, would ultimately have a negative impact on Canadian audiences by diminishing their viewing and listening options. As mentioned above, FWS reasoned that copyright owners would attempt to minimize the impact of Internet retransmission by licensing their programs to cable-only or satellite-only (i.e., specialty and pay) services.
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55.
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FWS described other specific consequences such as the inability to enforce court-ordered media blackouts in the case of elections, and even a delay in the move to high-definition digital television, since program creators and broadcasters would not want to provide programs and signals "ready-made" for Internet retransmission.
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Specific impact on over-the-air radio broadcasters
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56.
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The Commission received very little comment related specifically to the Internet retransmission of radio signals. However, both the Canadian Independent Record Producers Association and the Society of Composers, Authors and Music Publishers of Canada submitted that Internet radio retransmission, because of the smaller bandwidth requirements, is more developed than Internet television retransmission.
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57.
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The Commission is not aware of any radio services being retransmitted by third parties. Rather, radio stations themselves make their signals available over the Internet. In addition, there are several websites that merely provide links to the websites of these radio stations. The provision of such links does not constitute Internet retransmission, as they direct the listener to the originating station.
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Impact of Internet retransmission on the attainment of the objectives of the Broadcasting Act
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58.
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Several parties argued that Internet retransmission, if properly controlled, would bring positive benefits to the broadcasting system as a whole and would further the objectives of the Broadcasting Act. As noted above, many cited the potential of Internet retransmission to extend the availability of Canadian programming as its most positive benefit.
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59.
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William Craig, the founder of iCraveTV, contended that Internet retransmission holds the promise of a "clear benefit" to all interested parties, including advertisers, broadcasters, producers, listeners and viewers. He stated that Internet retransmission will act to increase audiences in Canadian radio and television stations. He further stated that examples of past technological innovation prove that new technology does not necessarily displace old technology. For example, he suggested that the development of UHF television broadcasting did not harm VHF broadcasters, nor did the development of FM radio harm AM broadcasters.
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60.
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Several parties regarded the development of Internet retransmission under a light-handed regulatory framework as fostering innovation, thus furthering the Broadcasting Act's objective that the Canadian broadcasting system be "readily adaptable to scientific and technological change".
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61.
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CCTA stated that the Commission must adhere to the policy objectives of promoting and not hindering technological innovation. According to CCTA, "the use of the Internet and Internet technology is not, in and of itself, a problem". CCTA expressed concern about any regulation that might prevent its members from using the Internet in future to enhance the delivery of their licensed services. Citing sections of the Broadcasting Act that support the development of new technologies, CCTA added that no regulatory measures that the Commission might adopt to govern Internet retransmission should impede the deployment of technological developments that would otherwise not have a negative impact on the broadcasting system. Rather, CCTA stated that "the adoption of advanced communication technologies5 in the delivery of television programming will benefit broadcasters and program producers by enabling the introduction of value-added services and features into the programming."
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62.
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As noted above, most parties argued that, if given the benefit of a compulsory licence under the Copyright Act in conjunction with unconditionally exempt status under the Broadcasting Act, Internet retransmission would have a negative impact on the system as a whole through its direct impact on various sectors of the system, particularly broadcasters and producers. Many parties were of the view that Internet retransmitters could ultimately make it difficult for conventional broadcasters to fulfil obligations imposed on them in furtherance of the objectives of the Broadcasting Act, in particular, to provide Canadian programming.
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63.
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Several parties expressed concern that Internet retransmitters would not be subject to the same requirements that the Commission imposes on conventional BDUs. Some parties also noted that, while providing competition to conventional broadcasters, exempt Internet retransmitters would not themselves make any material contributions to the Canadian broadcasting system and thus would not be furthering the objectives of the Broadcasting Act. DGC argued that:
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With the help of the compulsory licence, existing BDUs already provide virtually all Canadian households with non-discriminatory access to a broad range of off-air signals, on a basis that is regulated by the CRTC, and upon payment of royalties set by the Copyright Board. Extending a compulsory licence to Internet-based retransmitters will not provide the same public policy benefits realized through the licensing of cable, [Multipoint Distribution Systems] and [Direct-to-home]systems.
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64.
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DGC submitted that Internet retransmitters make no significant capital investment in building an infrastructure to reach under-served communities, and contended that this is one reason why they should not be regarded in the same way as BDUs. In DGC's view, these retransmitters are "simply not fulfilling the kind of role in the system that conventional BDUs fulfil." DGC argued further that:
|
|
This effectively nullifies any public policy argument suggesting that Internet-based retransmitters should be given the benefit of the compulsory licence so that they can do what cable does in supplying Canadian households with access to a wide range of over-the-air signals.
|
|
The Commission's view
|
|
65.
|
The Commission considers that the record of this proceeding demonstrates that Internet retransmission, subject to appropriate controls, has the potential to bring certain benefits to the Canadian broadcasting system by providing a new distribution platform for Canadian programming services. The Commission agrees with parties who submitted that Internet retransmission has the potential to extend the availability of Canadian programming to new venues such as offices and public libraries and to portable devices such as computers and handheld PDAs. To that extent, the Commission considers that Internet retransmission could increase audiences for Canadian services, thereby providing new sources of revenue for Canadian rights holders.
|
|
66.
|
The Commission also agrees with parties who considered that Internet retransmission would foster technological innovation, consistent with section 3(d)(iv) of the Broadcasting Act, which states that the Canadian broadcasting system should be "readily adaptable to scientific and technological change."
|
|
67.
|
As discussed above, the Commission's assessment of the record of this proceeding is that Internet retransmission, at this stage of its development, is not a substitute for the activities of existing licensed distributors and over-the-air radio and television broadcasters. Further, in the Commission's view, Internet retransmission could only become a substitute for conventional broadcasting and distribution services if and when it can provide a service comparable in price, choice and quality. In the Commission's view, significant capital investment in infrastructure and the development of successful business models will be required before this can occur. For reasons discussed above and in Appendix D to this Report, the Commission considers this unlikely to occur in the near future. Therefore, the Commission does not consider that Internet retransmission would, in the near term, constitute a competitive alternative to the services provided by conventional distributors or over-the-air broadcasters. Accordingly, the Commission does not at this time foresee a material migration of audiences from such licensed undertakings to undertakings engaged in Internet retransmission.
|
|
68.
|
Nonetheless, as discussed in Appendix D, the record of the proceeding indicates that, at present, there is no completely workable method of ensuring that Internet retransmissions are geographically contained. Since the current regime under which program rights are licensed is territorially based, the likelihood that a program retransmitted over the Internet would become available world wide could significantly reduce the opportunities that a holder of rights in the program would have to license it for a number of territorially limited markets. The Commission considers that this would have serious negative effect on Canadian television producers and broadcasters and on the Canadian broadcasting system as a whole.
|
|
69.
|
The Commission notes that conventional BDUs are entitled to avail themselves of the compulsory licensing regime set out in section 31 of the Copyright Act. Section 31 of the Copyright Act permits such BDUs to distribute local and distant radio and television signals without having to negotiate with broadcasters or other copyright holders as to appropriate terms and conditions, provided that certain conditions set out in section 31 are met. Several parties to this proceeding commented on the negative effects that would result if Internet retransmitters were permitted to avail themselves of this compulsory licence, without having to meet the regulatory obligations imposed on conventional BDUs, or to satisfy other conditions that would address, among other things, the issue of the territorial control of signals.
|
|
70.
|
The Commission acknowledges the concern expressed by some interveners that, if Internet retransmitters were to have access to the compulsory licensing provisions of the Copyright Act, foreign rights holders might be reluctant to license their programs to Canadian over-the-air broadcasters, since to do so would result in a significant loss of control over the geographical reach of programs. The Commission considers this concern to be justified, and notes the opposition by broadcasters and producers in the United States to operations such as iCraveTV and JumpTV. The Commission further notes that, at present, most English-language Canadian broadcasters rely on the revenues generated by popular foreign programs to support their business model and to contribute to the production of Canadian programming. The same is true to a lesser extent of French-language Canadian broadcasters. The loss of these revenues could result in a decrease in the production and broadcast of Canadian programming, contrary to the objectives of the Broadcasting Act.
|
|
71.
|
The Commission also considers that, for reasons discussed in paragraph 68 related to loss of control over the geographic reach of signals, Internet retransmission under the compulsory licensing provisions of the Copyright Act could undermine the potential for Canadian broadcasters to obtain additional revenues by licensing programs they have created to foreign markets. In addition, it could undermine the potential for Canadian broadcasters and other rights holders to license separately the rights for broadcast over the Internet.
|
|
72.
|
As indicated above, parties also raised issues related to the addition of advertising to retransmitted signals. Parties noted, among other things, that Internet retransmitters pursuing an advertising-based business model would likely combine their own banner or other advertising with the retransmitted signal. The Commission agrees with parties that this would likely lower the potential value of advertising time offered by over-the-air broadcasters, thus lowering broadcasters' revenues and thereby making it more difficult for them to produce Canadian programming.
|
|
73.
|
Finally, the Commission agrees with parties who indicated that, if Internet retransmission under the compulsory licensing provisions of the Copyright Act were permitted, Canadian producers may become reluctant to sell their productions to over-the-air broadcasters, preferring instead to sell them to specialty and pay services because such services are not covered by the compulsory licensing regime. As a result, fewer Canadians would have access to a full range of Canadian programming, since specialty and pay services are not as widely distributed or received as over-the-air signals. In addition, producers would have fewer attractive outlets for their programs, possibly resulting in reduced licence fees for their program rights.
|
|
74.
|
If Internet retransmitters were to be granted access to the compulsory licensing provisions of the Copyright Act, the Commission considers it possible that at least some of the negative consequences described above would manifest themselves relatively quickly. Further, the Commission considers that these disadvantages would likely outweigh any positive benefits that Internet retransmission might bring to the Canadian broadcasting system.
|
|
75.
|
The Commission considers that Internet retransmission of radio signals by third parties would raise concerns similar to those raised by such retransmission of television signals. For example, Internet retransmission of radio signals would raise concerns related to advertising if an Internet retransmitter added its own banner or pop-up advertising that might compete with the advertising on the originating station. The Commission therefore sees no reason, in terms of broadcasting policy, to distinguish between the Internet retransmission of radio programs and the Internet retransmission of television programs.
|
|
The appropriate regulatory framework
|
|
76.
|
In respect of regulatory measures that might be appropriate at this time to ensure that Internet retransmission contributes to the attainment of the policy objectives of the Broadcasting Act a number of parties proposed conditions that, in their view, should be imposed on Internet retransmitters, either through the terms of a new or amended exemption order or through condition of licence. While focussing generally on regulatory measures that might enhance signal integrity or limit the geographic reach of Internet signals, they covered a wide range of possibilities.
|
|
77.
|
In the Commission's view, this diversity of opinion reflects the relative immaturity of Internet retransmission, the absence of clear answers to many technical questions at this time, and the lack of reasonably developed business models. Without a reasonably clear indication as to how the industry will develop, the Commission considers that the development of conditions of exemption or a licensing framework at this point would entail considerable speculation.
|
|
78.
|
The Commission further notes, as discussed in Appendix B, that recent amendments to the Copyright Act exclude Internet retransmitters from the compulsory licensing regime embodied in section 31 thereof. Accordingly, Internet retransmitters will be obliged to negotiate with copyright holders and obtain their consent in order to retransmit the programming of over-the air broadcasters. The Commission considers that the negotiation of Internet retransmission rights will allow broadcasters and producers to address the potential negative effects discussed above on a case-by-case basis, while leaving open the possibility that business models will evolve that will permit the realization of the potential benefits of Internet retransmission. The Commission further considers this requirement for negotiation sufficient at this time to ensure that Internet retransmission contributes to the attainment of the objectives of the Broadcasting Act.
|
|
79.
|
In light of the above, the Commission does not consider it necessary or appropriate to require the licensing of Internet retransmitters. Rather, Internet retransmission undertakings should remain exempt from these and from other requirements under Part II of the Broadcasting Act. In addition, since the recent amendments to the Copyright Act address the main concern identified in this proceeding, the Commission sees no need to amend the New Media Exemption Order at this time.
|
|
80.
|
The Commission's current practice is to review exemption orders approximately every five years. The current proceeding addressed one particular type of new media activity, and does not constitute a complete review of the New Media Exemption Order. The Commission anticipates conducting a complete review of the New Media Exemption Order at the appropriate time.
|
|
Appendices
|
|
Appendix A
|
Basics of Internet retransmission
|
|
Appendix B
|
Copyright - Background information
|
|
Appendix C
|
Penetration rates of various media
|
|
Appendix D
|
Technical issues
|
|
Appendix E
|
List of participants
|
|
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 A
|
|
Basics of Internet retransmission
|
|
|
Internet retransmitters receive over-the-air broadcast signals, convert them to a digital format, and make them accessible through an Internet website. An Internet user selects a retransmitted broadcast signal by clicking on the appropriate link.
|
|
|
In terms of underlying costs, Internet retransmission is significantly different from over-the-air broadcasting or cable retransmission. In these latter media, capital costs are incurred up front and do not necessarily increase significantly with increasing viewership. The cost of operating is much different for Internet retransmitters, because many of the costs are usage sensitive, that is, they are based on the amount of content transferred to the user, measured in 'bits'. Therefore, an increase in viewership results in a proportionate increase in costs. However, William Craig noted that there are design techniques, such as network streaming and multicasting, which might, in the future, allow many end-users to view the same signal in a 'party line' approach. The use of such technologies could greatly reduce the cost of Internet retransmission.
|
|
|
Two types of Internet retransmission business models are foreseen at present, the subscription model and the advertising model.
|
|
Subscription model
|
|
|
Under the subscription model, Internet retransmitters would enter into agreements with customers whereby specific retransmitted over-the-air television signals would be made available to an Internet user for a fee.
|
|
Advertising model
|
|
|
Under the advertising model, Internet advertisers would pay for a variety of advertisements associated with the Internet retransmission of the over-the-air signals of conventional broadcasters. Advertising could consist of a mixture of banner ads placed around the frame of the retransmitted broadcast and pop-up windows also containing advertising.
|
|
Appendix B
|
|
Copyright - Background information
|
|
Relevant provisions of the Copyright Act
|
|
|
Order in Council P.C. 2002-1043 stated that, since the New Exemption Order for New Media Broadcasting Undertakings, Appendix A to Public Notice CRTC 1999-197, 17 December 1999 came into force, new media broadcasting undertakings have emerged who may wish to avail themselves of provisions of the Copyright Act to retransmit the signals of over-the-air radio or television programming undertakings.
|
|
|
In general terms, copyright is a bundle of separate rights that arise automatically upon the creation of an original literary, dramatic, musical or artistic work that has been fixed in a material form (for example, paper, audio tape). The separate rights comprising the copyright in such works include the sole right to produce, reproduce, publish or perform the work, or any substantial part thereof, and to authorize the same.6 In addition, the holder of the copyright has the right to communicate the work to the public by telecommunication.
|
|
|
An over-the-air broadcaster wishing to air a dramatic work would have to acquire various separate rights in that work, for example, the right to perform the work and the right to communicate the work to the public by means of telecommunication. It would acquire these separate rights by way of licence through negotiations with the person or persons holding the particular rights in question. Since the various rights may, in fact, be held by different persons, the process of acquiring them can prove to be lengthy and complex. Further, the rights are usually licensed for a particular geographic market, for example, a local, regional or national market.
|
|
|
Under section 21 of the Copyright Act, the broadcaster itself acquires certain rights in its communications signal, including the sole right to authorize another over-the-air broadcaster to transmit the signal to the public simultaneously with its own broadcast.
|
|
|
Broadcasting distribution undertakings (BDUs) aggregate the signals of various broadcasters, and in turn retransmit those signals to their subscribers. Under the Copyright Act, BDUs are not obliged to negotiate either with the underlying rights holders or with the various over-the-air broadcasters to obtain a licence to do so. Rather, under section 31 of the Copyright Act, they are granted what is referred to as a compulsory licence.
|
|
|
As specified in section 31(2)(a), the compulsory copyright licence applies to both local and distant signals. However, under section 31(2)(d), a BDU pays royalties only with respect to distant signals. Since local signals could have been received over the air in any event, it is considered that the local area broadcaster will have already paid any royalties applicable for communicating the works in question to the local audience.
|
|
|
The royalties referred to in section 31(2)(d) are established by the Copyright Board. These royalties are paid to the various copyright collectives who, in turn, distribute them to the underlying rights holders who are members of those collectives (authors, composers, etc.). The royalties paid do not vary with the number of signals distributed, i.e., the same royalty fee is paid if one or ten distant signals are distributed.
|
|
|
Had this compulsory licensing system for copyright not been developed and incorporated into the Copyright Act, cable companies and other distribution undertakings would have to negotiate separately with the rights holders of each and every program they wished to retransmit, as well as with the holders of each and every underlying right comprising the program.
|
|
|
It is emphasized that the compulsory licence scheme set out in section 31 of the Copyright Act applies only to the retransmission of local and distant signals. The compulsory licence is not available for the retransmission of specialty and pay services. In general, such services are licensed by the Commission for broadcasting purposes on a regional or national basis. Accordingly, specialty and pay services negotiate for and purchase program rights on a regional or national basis. Such services generally negotiate on a one-to-one basis with cable companies and other BDUs regarding the distribution of their signals.
|
|
Bill C-11 (formerly, Bill C-48) - An act to amend the Copyright Act
|
|
|
Bill C-48, An Act to Amend the Copyright Act, was introduced in the House of Commons in December 2001, and was adopted by the House at third reading on 18 June 2002. When Parliament prorogued for the summer in 2002, the Bill had been introduced in the Senate but had not yet been passed. It was reintroduced as Bill C-11 in the Fall session of 2002, and has been passed by both the House of Commons and the Senate. The Bill received royal assent on 12 December 2002, and will come into force on a date set by order of the Governor in Council, pursuant to section 5 of the Bill.
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|
|
Bill C-11 explicitly excludes third party Internet retransmitters from the compulsory licence regime embodied in section 31 of the Copyright Act, creating what is sometimes referred to as an "Internet carve-out". It does so by excluding Internet retransmitters from the definition of "retransmitter" in section 31(1), and through related amendments to section 31(2). The key amendments are set out below, with changes shown in italics.
|
|
|
31(1) In this section,
|
|
|
"new media retransmitter" means a person whose retransmission is lawful under the Broadcasting Act only by reason of the Exemption Order for New Media Broadcasting Undertakings issued by the Canadian Radio-television and Telecommunications Commission as Appendix A to Public Notice CRTC 1999-197, as amended from time to time;
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|
|
"retransmitter" means a person who performs a function comparable to that of a cable retransmission system, but does not include a new media retransmitter;
|
|
|
"signal" means a signal that carries a literary, dramatic, musical or artistic work and is transmitted for free reception by the public by a terrestrial radio or terrestrial television station.
|
|
|
(2) It is not an infringement of copyright for a retransmitter to communicate to the public by telecommunication any literary, dramatic, musical or artistic work if
|
|
|
(a) the communication is a retransmission of a local or distant signal;
|
|
|
(b) the transmission is lawful under the Broadcasting Act;
|
|
|
(c) the signal is retransmitted simultaneously and without alteration, except as otherwise required or permitted by or under the laws of Canada;
|
|
|
(d) in the case of the retransmission of a distant signal, the retransmitter has paid any royalties, and complied with any terms and conditions, fixed under this Act; and
|
|
|
(e) the retransmitter complies with the applicable conditions, if any, referred to in paragraph 3(b).
|
|
|
(3) The Governor in Council may make regulations
|
|
|
(a) defining "local signal" and "distant signal" for the purposes of subsection 2; and
|
|
|
(b) prescribing conditions for the purposes of paragraph (2)(e), and specifying whether those conditions apply to all retransmitters or only to a class of retransmitter.
|
|
Appendix C
|
|
Penetration rates of various media
|
|
Penetration rates - cable, direct-to-home (DTH) satellite and Internet access
|
|
|
The tables set out below display comparative data on the penetration of various technological elements essential to the economics of the broadcasting system.
|
|
|
Penetration of Cable and Satellite
Canada, of Homes Passed (%)
|
|
|
Sept. 1999
|
Sept. 2000
|
Sept. 2001
|
June 2002
|
|
Cable
|
75
|
74
|
72
|
68
|
|
Satellite
|
6
|
11
|
13
|
16
|
Source: Mediastats, September 1999 to 2001, and June 2002
|
|
Personal Computer Ownership Rates
Canadian Households (%)
|
|
December
1997
|
December
1998
|
December
1999
|
December
2000
|
December
2001
|
March
2002
|
|
46
|
51
|
52
|
58
|
63
|
64
|
Source: Cyber Trends, ComQUEST Research Inc.
|
|
Home Internet Access
Canadian Households (%)
|
|
June
2000
|
December
2000
|
June
2001
|
December
2001
|
March
2002
|
|
43
|
43
|
50
|
52
|
52
|
Source: Cyber Trends, ComQUEST Research Inc.
|
|
Canadian Internet Households
High Speed vs. Dial-up Internet Access (%)
|
|
|
March
2000
|
March
2001
|
March
2002
|
|
High Speed
|
17
|
30
|
40
|
|
Dial-up
|
83
|
70
|
60
|
Source: Cyber Trends, ComQUEST Research Inc.
|
|
The data reveal the following trends:
|
|
|
a) over three-quarters of Canadian households subscribe to a cable or satellite service; and
|
|
|
b) the percentage of Canadian households with high speed Internet access reached 21%7 in March 2002, or approximately one quarter of the combined penetration rate of cable and satellite.
|
|
|
This data indicates that the penetration of high-speed Internet access must increase significantly before reaching penetration rates comparable to those of cable.
|
|
Radio
|
|
|
Radio signals have been available on the Internet for a number of years. In order to access these signals, end-users only need a computer with an Internet connection and compatible media-player software, which is generally available at no cost.
|
|
|
The Commission is not aware of any radio services being retransmitted by third parties. Rather, many radio stations make their own signals available over the Internet. In addition, there are several websites that provide links to the websites of radio stations.
|
|
|
The Bureau of Broadcast Measurement (BBM) tracks listening to Internet radio in its listener surveys. Relevant figures are set out below.
|
|
|
Listening to Radio via the Internet
|
|
Fall Survey
|
Total Hours of Internet Listening
(000)
|
Share of All
Listening (%)
|
|
1997
|
8
|
0.0
|
|
1998
|
94
|
0.0
|
|
1999
|
279
|
0.1
|
|
2000
|
454
|
0.1
|
|
2001
|
634
|
0.1
|
Source: MicroBBM, Fall 1997 to Fall 2001, as cited in the 2002 CRTC Broadcasting Monitoring Report
|
|
The data reveals that the overall share of listening to radio via the Internet remains extremely small relative to conventional over-the-air reception in 2001, with listening to radio via the Internet representing only 0.1% of all radio listening.
|
|
Appendix D
|
|
|
|
Geographic reach of Internet retransmissions
|
|
Submissions of parties
|
|
A primary concern raised by parties was that, once a signal becomes available on the Internet, it is available globally. This section discusses the technologies, available and foreseeable, intended to prevent the unauthorized use of Internet retransmissions through the re-routing of signals to other users for the purposes of program decoding, sharing and recording.
|
|
A paper entitled Shortcomings and Challenges in the Restriction of Internet Retransmissions of Over-the-Air Television Content to Canadian Internet Users by Benjamin Edelman was attached to several of the submissions. This paper discusses the operation of Internet-based geographic access control systems, which attempt to determine a user's location from the numerical identifier, i.e., the IP address, associated with a device used to connect to the Internet. Geographical analysis tools make this determination by referring to a previously prepared database that purports to identify the location of the device. A variety of inferential methods are also used to amend the database based on indirect information about location, obtained from inspecting domain names associated with Internet addresses, monitoring of routes by which data travel across the Internet and determining the designated administrator of the Internet addresses in question.
|
|
Edelman notes that there are problems associated with determining a user's location through this type of geographical analysis. These problems result mainly from a lack of an established listing of Internet device locations and the difficulty of inferring device locations from Internet architecture, particularly the challenge of distinguishing between Canadian and American Internet devices.
|
|
An additional difficulty arises from the use of proxy servers, which are Internet devices that receive and forward certain types of content requests between a user's own server and a website the user wishes to view. They are used to improve network efficiency, to restrict access to certain sites and to address privacy concerns. Edelman noted that, by using such servers, Internet users would be able to disguise their location to most commonly used geographic analysis tools. Further, certain users with unlimited high-speed Internet access could volunteer the use of their systems to relay content requested by others who, for any of several reasons, could not retrieve that content directly from its source.
|
|
Edelman also noted that users could "deep-link" to a retransmitted signal, that is, they could create a direct link to the page where the retransmitted content could be found, rather than to the front page of the website where geographical analysis tools would normally be applied. In short, Edelman contended that:
|
|
The interconnected global architecture of the Internet is at odds with an attempt to 'fence off' a country through technological means, and the challenges confronting geographical access control systems that attempt to do so are . effectively insurmountable at the present time.
|
|
Matthew Skala agreed with Edelman's general position that geographic limitations on Internet retransmissions are unlikely to be successful. He added that, in any case, these limitations could only be applied to users that received this content directly from the Internet retransmitter, i.e., on what he described as the "first hop". Any user, even a user viewing the retransmission without circumventing any security measures, could choose to retransmit, or copy and then retransmit, the signal to other users. In Skala's view, all systems that seek to prevent recording, copying or sharing of Internet content will be unsuccessful.
|
|
Although not opposed to Internet retransmission, the Canadian Broadcasting Corporation (CBC) suggested that, before beginning operations, Internet retransmitters should have to demonstrate that they are able to limit access to retransmitted signals to a Canadian audience. However, CBC also noted that "while some technology vendors are promoting digital rights management technology to distribute securely digital content over the Internet, no single standard has emerged, making it impossible . to control dissemination and reception of services offered by Internet retransmission."
|
|
In their joint submission, Aliant Telecommunications Inc. (Aliant), Bell Canada, Bell ExpressVu Limited Partnership, Northwestel Inc. and Télébec Inc. (collectively, the Bell companies) took the position that the subscription model could assist in ensuring that retransmitted signals are received only in Canada, or designated parts of Canada, as intended. A subscriber model would also make the collection of copyright royalties easier pursuant to the existing structure of the Retransmission Tariff certified by the Copyright Board. Specifically, the Bell companies advocated a system based on Canadian telephone area codes, arguing that the Internet retransmitter "should be allowed to rely on the reception point identified by the subscriber, together with monitoring of the origination point of the electronic communication from the subscriber (essentially the method used by direct-to-home operators), in establishing the geographic location of subscribers." The Canadian Association of Broadcasters replied that "the area code approach is fraught with enforceability problems."
|
|
The Commission's view
|
|
There was a general consensus that there is currently no completely workable means of preventing unauthorized use of Internet retransmissions, whether it be program decoding, sharing and recording, re-routing to other users or signal modification to insert or remove advertising.
|
|
There are, however, certain networks that use internet infrastructure that are reasonably secure today. For example, some virtual private networks use Internet infrastructure for the secure and private transmission of data between individuals. There was a general consensus that such systems are sufficiently secure. Further, Aliant submitted that its network is a closed system and that it can control access to its retransmitted signals, that is, Aliant has the ability to stop distribution to a customer's home.
|
|
CBC proposed that parties wishing to provide internet retransmission service be required to demonstrate to the Commission that they would implement effective access controls. In the Commission's view, given the rapid rate of technical change on the Internet and the difficulty of predicting possible means by which security systems might be compromised, such an approach would not be workable at this time.
|
|
The Commission also considers that the secondary capture and retransmission of broadcasting signals over the Internet on a commercial scale would require a significant investment of resources and bandwidth. For individual users, the secondary retransmission of a video signal, even on a very limited scale, would pose problems since the bandwidth available from the household to the Internet8 service provider (ISP) is unlikely to be sufficient to effect such a retransmission. Further, ISPs are moving towards bandwidth caps to control their costs, and customers would have to pay for bandwidth usage that exceeded those caps. In short, it appears unlikely that secondary retransmission by individual customers of Internet retransmissions would be a wide-scale commercial reality.
|
|
|
|
Submissions of parties
|
|
A number of parties expressed concern that retransmission of a signal over the Internet would, for technical or commercial reasons, entail altering or otherwise compromising the original signal's quality, content or commercial value. These parties submitted that the regulatory framework for conventional broadcasting distribution undertakings (BDUs) contains elements related to the maintenance of signal integrity that could be applied to Internet retransmitters. For example, rights holders argued that the application of the existing program substitution requirements would recognize the program rights purchased by Canadian broadcasters for their licensed service areas.
|
|
Certain parties took the view that all retransmissions should be made in conformity with the requirements of section 7 of the Broadcasting Distribution Regulations, which states that a licensee shall not alter or delete a programming service except in certain specified circumstances. In their view, a provision such as section 7 would prohibit an Internet retransmitter from surrounding or inserting additional commercial information into the retransmitted signal as seen on the Internet user's screen. They argued that an alteration of the signal occurs if the viewer is unable to receive only the retransmitted signal, whether or not the additional information is, technically, a separate transmission (an exception would be made for a non-commercial navigational device).
|
|
In particular, broadcasters and rights holders argued that signals should not be altered, in any way, through retransmission. These parties generally submitted that the addition or deletion of content, such as commercial messages, would constitute a modification of the signal. In their view, content that is used to "frame" or is otherwise placed around a retransmitted broadcast signal should also be considered a modification of the signal. These parties also contended that retransmissions that were of lower quality than the original signal, or that were time-delayed, should also be regarded as modified retransmissions.
|
|
Other parties, generally non-broadcasters, took an opposing view. For example, they argued that the display of a television signal that is framed or surrounded by other material does not constitute a modification of the signal. In their view, it is irrelevant that things other than the retransmitted signal might also be visible on the same screen, be it banner advertising, channel controls or other software that may happen to be running on the computer at the same time.
|
|
Certain parties also submitted that it is impossible to prevent the modification of a signal, for example, by deleting commercial messages. Furthermore, retransmitters could not be prevented from converting a signal to a lower quality format or applying additional compression. In fact, Matthew Skala suggested that, given the Internet's current capacity limitations, "a requirement for Internet retransmission to maintain all of the original quality of the signal would be the same as a ban on Internet retransmission."
|
|
The Commission's view
|
|
The Commission concludes that there are three central issues with respect to signal integrity. The first of these is alteration of the content of a signal, for example, by directly removing or inserting commercial messages. The Commission notes that there was general agreement that this should be precluded, except where the alteration is specifically authorized by the rights holders.
|
|
The second issue is the display of other content, such as another program or an advertisement, on those parts of the display screen not used by the retransmission. There was some agreement that the first example, displaying two programs on the same screen, should not be considered an alteration of either signal.
|
|
The third issue involves the technical modifications made to the signal for the purpose of expediting Internet retransmission, such as further compression or the removal of subsidiary signals or interactive elements.
|
|
The Commission considers that negotiation between Internet retransmitters and broadcasters and other rights holders is the most appropriate means to address issues such as those described above.
|
|
Finally, there is the related issue of time delay. The Commission notes that, because Internet retransmission involves the encoding and forwarding of the video program stream, there will always be a short inherent delay in the retransmission of the signal. However, in the Commission's view, a service that, for instance, stored and later forwarded a signal or portions of a signal at the request of users would generally not constitute a retransmission service.
|
|
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The performance of the Internet is restricted by capacity limitations and bottlenecks in all three of its basic components, that is, the end-user connection, the ISP and the backbone facilities.
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The Commission is of the view that the widespread distribution of broadcast-quality video, as envisaged by some, would place enormous demands on the capacity currently available in the various systems and networks of the backbone providers, ISPs and end-users that make up the Internet. Capacity is an issue throughout the entire system, but especially with respect to the end-user connection. As noted by the Directors Guild of Canada, until the capacity issue is addressed, the Internet will be unable to deliver audio-visual works in an acceptable quality to a wide audience.
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Since capacity is limited to that of the narrowest bottleneck, backbone carriers, ISPs and end-users would all have to upgrade their facilities before Internet retransmission could take place on a scale comparable to the distribution services provided by conventional BDUs. However, the evidence presented in this proceeding has led the Commission to conclude that the capacity limitations affecting Internet retransmission are primarily economic, rather than technological in nature. In other words, the capital investments for the necessary upgrades would be made, if there was a business case to support them.
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Appendix E
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List of participants
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Aliant Telecommunications Inc.
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Aliant Telecommunications Inc., Bell Canada, Bell ExpressVu Limited Partnership, Northwestel Inc., Télébec Inc. (joint submission)
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Assent Entertainment Ltd.
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Association des producteurs de films et de télévision du Québec
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Association québécoise de l'industrie du disque, du spectacles et de la vidéo
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Astral Broadcasting Group Inc.
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Bourchier, Jerome, CIZZ/CKGY Red Deer, Alberta
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Brand, Chris
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Canadian Advanced Technology Alliance
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Canadian Association of Broadcasters
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Canadian Association of Internet Providers
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Canadian Broadcasting Corporation
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Canadian Cable Television Association
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Canadian Film and Television Production Association
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Canadian Independent Record Production Association
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Canadian Motion Picture Distributors Association
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Canadian Recording Industry Association
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Canadian Retransmission Collective
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Community Media Education Society
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Craig, William R.
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Directors Guild of Canada
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FWS Joint Sports Claimants Inc.
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Global Television Network Inc.
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Information Technology Association of Canada
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JumpTV.com Canada, Inc.
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Mann, Ted
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Martel, Denis, Man Machine Multimédia
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McIntyre, Rob
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National Association of Broadcasters
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National Film Board
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Quebecor Média inc.
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Saskatchewan Telecommunications
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Shuler, Mark
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Skala, Matthew
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Societé des auteurs et compositeurs dramatiques et Société civile des auteurs multimédia
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Société pour la promotion de la relève de l'espace musical francophone
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Society of Composers, Authors and Music Publishers of Canada
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Star Choice Television Network Inc.
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TELUS Communications Inc.
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Union des Artistes
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Part II of the Broadcasting Act.
Cyber Trends, ComQUEST Research Inc.
Aliant described its service as a geographically constrained, subscription-based model, with no banner advertising and no signal alteration or deletion.
This is in contrast to the feature film market where conventional television is usually one of the last windows for feature films, following, in order, theatrical release, videocassette/DVD release, pay-per-view and subscription pay television.
For example, the CCTA cited section 3(1)(t), which states that "distribution undertakings should provide efficient delivery of programming at affordable rates, using the most effective technologies available at a reasonable cost" and section 5(2), which states that the "Canadian broadcasting system should be regulated and supervised in a flexible manner that . (c) is readily adaptable to scientific and technological change" and "(f) does not inhibit the development of information technologies and their application or the delivery of resultant services to Canadians".
Section 3 of the Copyright Act.
As of March 2002, 52% of Canadian households had Internet access, and 40% of these households had high-speed access. Therefore, 20.8% of all Canadian households had high speed Internet access at that time.
i.e., further retransmission of the signal by an Internet end-user.
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Date Modified: 2003-01-17
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