ARCHIVED - Broadcasting Public Notice CRTC 2005-115

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Broadcasting Public Notice CRTC 2005-115

  Ottawa, 1 December 2005

Distribution and Linkage requirements, paragraph 12

1. In Complaint by MTS Allstream Inc. regarding distribution of discretionary services as part of the "digital basic" package offered by certain Shaw Cable systems, Broadcasting Decision CRTC 2005-188, 5 May 2005 (Decision 2005-188), the Commission disposed of a complaint by MTS Allstream Inc. (MTS) with respect to the digital distribution of certain discretionary services by broadcasting distribution undertakings (BDUs) owned by Shaw Cablesystems (SMB) Limited and Videon CableSystems Inc. (collectively, "Shaw").
2. In its complaint, MTS had argued that distribution of the services in question to all of Shaw's digital subscribers effectively made these services part of Shaw's basic service. MTS had submitted that, under paragraph 12 of the distribution and linkage requirements (D&L requirements)1, the services in question must be distributed as "discretionary services" (i.e., non-basic services), and that Shaw's actions were thus in contravention of this requirement. Shaw, in response, did not dispute that it offers the services in question to all of its digital subscribers, but argued that this practice did not contravene the D&L requirements. In its view, the services were not part of its basic service, which is distributed on an analog basis. Rather, it stated that the services were distributed as discretionary services since they were offered to subscribers, at their option, for an additional fee.
3. In Decision 2005-188, the Commission noted that the intended purpose of paragraph 12 of the D&L requirements was to require that certain services be offered as discretionary services, thereby protecting subscribers from incurring increased costs through the inclusion of these services as part of the basic service. The Commission found that the Shaw offering was not inconsistent with the intended purpose of the requirement, since it did not increase the cost of the basic service to Shaw's subscribers. The Commission stated, however, that the arguments raised by MTS indicated that the clarity of the requirement could be improved to better reflect its intended purpose. In this regard, the Commission noted in Decision 2005-188 that the Broadcasting Distribution Regulations (the Regulations) define a discretionary service as follows:

"discretionary service" means a programming service that is not included in the basic service and that is distributed to subscribers on a discretionary basis for a fee separate from and in addition to the fee charged for the basic service.

4. The Commission further noted that, in order to receive the services in question, a subscriber must have a digital set-top box. While a reasonable case could be made that a monthly rental charge paid for the box might be considered a separate fee under the above definition, the purchase price of a box that is bought outright did not clearly distinguish the services in question from those provided as part of the basic service.
5. In order to clarify the purpose of paragraph 12 of the D&L requirements, the Commission issued Call for comments on proposed amendments to the distribution and linkage rules in response to issues raised in Broadcasting Decision CRTC 2005-188, Broadcasting Public Notice CRTC 2005-44, 5 May 2005 (Public Notice 2005-44), in which it proposed adding the following sentence to paragraph 12:

For the purposes of this rule, the term "a fee separate from and in addition to the fee charged for the basic service" in the definition of "discretionary service" in section 1 of the Broadcasting Distribution Regulations shall be deemed to include the amount charged for the rental or purchase of equipment in addition to that necessary for the reception of the basic service.

6. Noting that paragraph 9 of the D&L requirements also referred to distribution of discretionary services in a similar manner, the Commission also proposed amending paragraph 9 to include the sentence above.

Views of interested parties

7. The Commission received comments in response to Public Notice 2005-44 from Bell ExpressVu Limited Partnership2 and the prospective Class 1 Bell Canada BDU (collectively, "Bell"), from the Canadian Cable and Telecommunications Association (CCTA) and from MTS. All of these parties were generally opposed to the proposed amendments, although for different reasons.
8. Bell suggested that, since the proposed amendment would only be of benefit to hybrid, analog-digital cable BDUs, it could place fully digital BDUs at a competitive disadvantage. MTS opposed amendments to the D&L requirements for reasons of competitive equity similar to those cited by Bell.
9. Although the CCTA supported the substance of the proposed amendments and agreed with the Commission's conclusions in Decision 2005-188, it did not consider it necessary to make the proposed amendments. In the CCTA's view, the Commission's determinations in Decision 2005-188 were sufficient to clarify the purpose of paragraph 12. The CCTA also suggested that the Commission refrain from amending the D&L requirements at this time due to the fact that two other proceedings are currently underway that involve extensive potential amendments to the D&L requirements. The proceedings referred to by the CCTA are those initiated by Call for comments on a proposed framework for the licensing and distribution of high definition pay and specialty services, Broadcasting Public Notice CRTC 2004-58, 6 August 2004, and Determinations with respect to the establishment of rules to govern the distribution of specialty services on the basic service of fully digital cable undertakings; and call for proposals for a framework to guide the migration of pay and specialty services from analog to a digital distribution environment, Broadcasting Public Notice CRTC 2005-1, 7 January 2005.

The Commission's analysis and conclusions

10. Having considered the submissions received in response to Public Notice 2005-44, the Commission concludes that Decision 2005-188 clarifies the D&L requirements sufficiently to address any future complaints similar to the one leading to that decision. Accordingly, and taking into consideration that none of the interested parties supported the proposed amendments, the Commission has determined not to make the proposed amendments to the D&L requirements at this time.
  Secretary General
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[1] The current D&L requirements are set out in Distribution and Linkage requirements for Class 1 and 2 licensees, Broadcasting Public Notice CRTC 2005-98, 27 October 2005.

 [2] Bell ExpressVu Inc. (the general partner), and BCE Inc. and 4119649 Canada Inc. (partners in BCE Holdings G.P., a general partnership that is the limited partner), carrying on business as Bell ExpressVu Limited Partnership 

Date Modified: 2005-12-01

Date modified: