ARCHIVED - Broadcasting Notice of Consultation CRTC 2012-81
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Additional reference: 2012-81-1 and 2012-81-2
Ottawa, 9 February 2012
Call for comments on a revised licensing framework for pay-per-view services
In this notice, the Commission initiates a review of the licensing framework for pay-per-view services and poses various questions for parties to address in their comments. The deadline for filing comments is 12 March 2012. Parties may file replies to matters raised in the initial comments. The deadline for the filing of replies is 22 March 2012.
1. In the Broadcasting Distribution Regulations, a pay-per-view (PPV) service is defined as a “scheduled programming service that is provided to subscribers on a pay-per-view basis.” PPV services are usually composed of feature films, sports and events. PPV services use a separate channel for each programming stream. More than one channel may be used for the same film or program to allow multiple viewing opportunities, a practice known as “near video-on-demand.” Capacity constraints naturally limit the number of programs that can be offered by PPV services. A separate licence is required for the distribution of PPV programming by direct-to-home (DTH) broadcasting distribution undertakings (BDUs). These are DTH PPV licences, as opposed to terrestrial PPV licences. There are currently 11 authorized terrestrial and DTH PPV services in operation.
2. PPV services have become subject to increased competition from video-on-demand (VOD) services on terrestrial BDUs, over-the-top (OTT) services and Category C mainstream sports services, which may be affecting subscriptions and program availability. However, PPV is dominant on the DTH platform, where VOD services cannot practically be offered. It is also very competitive in the genre of niche sports, which make PPV services very profitable. According to the Commission’s Communications Monitoring Report, pay television, PPV and VOD revenues have been growing from 2008 to 2010, and profit before interest and taxes margins for PPV services have steadily increased during that same period.
3. The current licensing framework for PPV services is set out in Public Notice 2000-172. Current licensees are subject to individual conditions of licence based on the provisions of that notice.
4. In Public Notice 2000-172, the Commission stated that the regulatory approach to general interest PPV and VOD services should generally be consistent because new VOD services would compete with existing PPV services. In Broadcasting Public Notice 2008-101, the Commission called for comments on a possible common licensing framework for PPV and VOD services.
5. The Commission set out its new VOD policy in Broadcasting Regulatory Policy 2010-190. The Commission stated that VOD had moved away from a solely feature film-based service and its potential to compete with linear services led it to conclude that it was not practical to introduce a common licensing framework for PPV and VOD services. In fact, some of the changes to the VOD framework announced in that regulatory policy (e.g., with respect to packaging, advertising and programming produced by the licensee or a related party) only further differentiate the two frameworks. For these reasons, the Commission maintained separate licensing frameworks for PPV and VOD services.
6. In light of the above, the Commission has set out below a number of significant issues to be addressed in this review and poses various questions, in order to determine the most appropriate approach for PPV services, which will provide a fair, up-to-date, competitive environment for all players.
7. While the Commission has decided to maintain separate licensing frameworks for PPV and VOD services, it nonetheless considers PPV and VOD services to be similar types of services that have historically been subject to similar regulatory requirements. As such, the Commission intends to use the updated VOD licensing framework as a baseline with which to update the PPV licensing framework. With respect to each of the issues identified below, the Commission will examine whether and to what extent the policy framework for PPV services should differ from the updated VOD framework.
8. In accordance with the Commission’s normal process, it is the Commission’s intent to complete its review of the licensing framework for PPV services prior to the licence renewal process for the majority of PPV licences currently scheduled to take place in fall 2012.
9. The Commission invites interested persons to comment on the following specific issues:
Canadian content exhibition requirements
Promotion of Canadian titles
Contribution to Canadian programming
Support for Canadian feature films
Access to the distribution platform
Implementation of the Accessibility Policy
10. In the process that led to Public Notice 2000-172, the Commission stated that, in assessing applications for new programming services, it would examine the merits of each proposal on the basis of originality of the programming concept and the following criteria: financial viability, ownership and control, marketing strategy, contribution to Canadian production industry (exhibition and expenditures), impact on existing services, and carriage distribution.
11. In addition, applicants applying for a broadcasting licence to operate a PPV service are currently required to provide a description of the proposed service that they would accept as a condition of licence. They must also choose from the list of program categories set out in Item 6 of Schedule I to the Pay Television Regulations, 1990 (the Regulations) the categories from which they will draw programming. In this respect, PPV services, especially PPV services that consist primarily of feature films or sports programming, must operate within a genre and are similar to specialty and pay Category B services or Category C services.
12. By contrast, VOD services are licensed according to an open-entry, fully competitive approach. When licensing new VOD services, the Commission examines ownership and control, contribution to Canadian production and adherence to the standard requirements set out in Broadcasting Regulatory Policy 2011-59. VOD services are not defined by a genre; licensees are not required to adhere to a description of their service by condition of licence and they may broadcast programs from all the categories set out in the Regulations.
13. In light of the above, the Commission seeks comments on the following questions:
Q. 1. What role do PPV services play in the Canadian broadcasting system in light of the development of other services, for instance VOD and Category C services, that is distinct from the role of these services?
Q. 2. Should the Commission continue to license PPV services according to the criteria listed above? For instance, should it continue to require that PPV licensees adhere to a description of their service by condition of licence and restrict the program categories from which PPV services may draw their programming? If not, what would be the appropriate criteria?
Canadian content exhibition requirements
14. English-language PPV services are currently required, by condition of licence, to abide by the following minimum levels of Canadian content in each broadcast year:
a minimum of 12 Canadian feature films (including all new Canadian feature films suitable for PPV exhibition that meet the Industry Code of Programming Standards and Practices governing pay, pay-per-view and video-on-demand services [the Code]);
a minimum of four English-language Canadian-based events; and
yearly minimum percentages of Canadian programming as follows: 5% of feature film titles, and 20% of all program titles other than feature films.
15. If the PPV licensee offers French-language programming, it must ensure that, in each broadcast year, the following are made available to its subscribers:
a minimum of 20 Canadian feature films in the original French-language version, or dubbed in French, which have been exhibited in theatres in French-language markets, including all new Canadian feature films suitable for PPV exhibition that meet the Code;
a minimum of six French-language events in each of years one and two of operation, eight in each of years three and four; ten in each of years five and six; and twelve in year seven of operation; and
yearly minimum percentages of Canadian programming as follows: 8% of feature film titles, and 20% of all program titles other than feature films.
16. Currently, some licensees offer a bilingual service and must abide by the following condition of licence:
In markets where a bilingual service is offered, the licensee shall maintain the channels in a ratio of French to English of 1:3, with a minimum of five French-language signals in addition to the French-language barker channel.
17. By contrast, all VOD licensees must currently ensure that not less than 5% of the English-language feature films and not less than 8% of French-language feature films in the inventory available to subscribers are Canadian; that the feature film inventory includes all new Canadian feature films that are suitable for VOD exhibition and that meet the Code; and that no less than 20% of all programming other than feature films in the inventory available to subscribers is Canadian.
18. Accordingly, the Commission seeks comments on the following questions:
Q. 3. Would a condition of licence on the exhibition of Canadian content harmonized across English-language, French-language and bilingual PPV services be appropriate?
Q. 4. Are the minimum levels for Canadian content still appropriate for English- and French-language as well as bilingual services? If not, what level would be appropriate and why?
Q. 5. What would be the most appropriate methods of measuring the level of Canadian programming broadcast by PPV services? For example, should the Commission apply one type of measure to all programming (and authorized packages) offered by PPV?
Promotion of Canadian titles
19. Promotion is an important factor in the success of Canadian content on the PPV platform. Currently, PPV licensees must ensure that both English- and French-language Canadian feature films are scheduled, repeated and promoted in the same manner as non-Canadian feature films. By contrast, VOD licensees must ensure that not less than 25% of the titles promoted each month on their barker channel are Canadian titles. Consequently, the Commission calls for comments on the following question:
Q. 6. Should PPV services continue to be subject to the current requirement regarding the promotion of Canadian programs? If not, what would be the most appropriate method of ensuring the promotion of Canadian feature films scheduled by PPV services?
Contribution to Canadian programming
20. Currently, all PPV licensees are required, by condition of licence, to contribute 5% of their gross annual revenues to an independently-administered production fund or to the Canada Media Fund. Contributions must take the form of monthly instalments, to be remitted within 45 days of month’s end, and represent a minimum of 5% of that month’s gross revenues.
21. VOD licensees are also required, by condition of licence, to contribute 5% of their gross annual revenues to a certified Canadian program production fund administered independently of their undertakings. If the VOD service is a related service,1 its gross annual revenues are deemed to be 50% of the total VOD associated revenues received from customers by the BDU distributing the VOD service. For a VOD service that is not a related service, gross annual revenues are the total amounts received from the BDU distributing the VOD service.
22. The Commission therefore calls for comments on the following questions:
Q. 7. Is the current requirement to contribute 5% of gross annual revenues to a certified Canadian program production fund administered independently of the undertaking still appropriate? If not, what contribution level(s) would be appropriate and why?
Q. 8. Given that some PPV services are related to BDUs, would it be appropriate to deem the PPV services’ gross annual revenues as a percentage of the related BDU’s revenues received from customers for the PPV service? If so, what would be the appropriate percentage?
Support for Canadian feature films
23. Feature film-based PPV services constitute an important exhibition window for new Canadian feature films. As such, PPV provides significant support to that sector. PPV and VOD licensees must remit 100% of gross revenues earned from the exhibition of all Canadian films to their rights holders. With respect to French-language Canadian feature films, PPV licensees must remit 100% of the gross revenues earned by the licensee from the exhibition of these films to distributors and providers with a minimum of 60% to the programming providers.
24. VOD licensees are authorized to exclude the amount remitted to Canadian feature film rights holders as revenue for the purpose of calculating the contribution to a production fund. In addition, some Canadian feature films may be the subject of a negotiated revenue-sharing agreement between the VOD licensee and the rights holder of Canadian feature films. As such, any revenues retained by the VOD licensee with respect to such Canadian feature films are included as gross broadcasting revenues for the purposes of calculating the contribution to a production fund.
25. The Commission calls for comments on the following questions:
Q. 9. With respect to support for Canadian feature films, would the approach adopted for VOD services be appropriate for PPV services?
Q. 10. Is the current requirement to remit 100% of revenues earned from the exhibition of Canadian feature films to the rights holders of those films still appropriate? If not, what level, if any, would be appropriate and why?
Q. 11. Is the distinction between the distribution of revenues from the exhibition of French-language and English-language movies still appropriate? If so, why?
26. In Public Notice 2000-172, the Commission stated that PPV services offering programming packages must ensure that the total period during which the programming is to be viewed does not exceed one week. However, in light of the likely competitive pressure on PPV services arising from the launch of VOD services, the Commission considered it important that PPV services have as much packaging flexibility as VOD services.
27. The Commission noted that some packages of events programming, such as seasonal sports or a Christmas concert series, make attractive programming packages that naturally continue for more than one week. Such programming is particularly appropriate for PPV services. Therefore, for this reason, the Commission stated that it would not apply the limitation of one week to packages that are exclusively comprised of events. However, the Commission stated that events programming must be limited to the events themselves and not include “wrap-around” programming that would tend to give the package the characteristics of a specialty service.
28. Pursuant to Broadcasting Regulatory Policy 2010-190, VOD licensees may offer programming packages of more than one week in duration. However, licensees are prohibited, by condition of licence, from offering: (a) a non-Canadian subscription VOD (SVOD) package that is directly competitive with a Canadian linear pay or specialty service or (b) a Canadian SVOD package that is directly competitive with a genre-protected Canadian linear pay or specialty service, unless the package is an on-demand extension of this Canadian linear pay or specialty service. This constitutes a safeguard to address the potential for SVOD packages to directly compete with Canadian linear discretionary services.
29. Accordingly, the Commission is seeking comments on the following questions:
Q. 12. Should PPV services have the same packaging flexibility as VOD services and, if not, should PPV services remain subject to the current restriction?
Q. 13. What would constitute an appropriate safeguard to ensure that packages of PPV programming do not compete with Canadian linear discretionary services?
Access to the distribution platform
30. Pursuant to section 6.1 of the Regulations, PPV licensees are prohibited from giving undue preference to any person, including themselves, or subject any person to an undue disadvantage. Licensees are considered to have given themselves an undue preference if they distribute a PPV program for which they have acquired exclusive or preferential rights.
31. In the regulatory framework relating to vertical integration set out in Broadcasting Regulatory Policy 2011-601, the Commission reiterated that no licensee shall give an undue preference to any person, including itself, or subject any person to an undue disadvantage. The Commission also determined that in any proceeding before the Commission, the burden of establishing that any preference or disadvantage is not undue is on the licensee that gives the preference or subjects the person to the disadvantage.
32. In Broadcasting Notice of Consultation 2011-806, the Commission called for comments on proposed amendments to the Regulations, including the addition of a reverse onus provision.
33. In addition, pursuant to sections 3(2)(e) and 3(2)(f) of the Regulations, licensees are prohibited from distributing a program that is produced by itself or by a related undertaking. Some licensees, however, are exempt from sections 3(2)(e) and 3(2)(f), and are allowed to devote a percentage of their programming to programs produced by a related undertaking.
34. By contrast, in Broadcasting Regulatory Policy 2010-190, the Commission determined that it need not continue to apply the prohibition on the distribution by VOD services of programming produced by the licensee or a related party, given that server capacity is generally not an issue on this platform and that there is no reason to impose limits on the availability of any type of programming on the VOD platform. The Commission stated that any issues that may arise from the removal of this prohibition can be dealt with through the undue preference provision.
35. As such, the Commission calls for comments on the following question:
Q. 14. Should PPV services continue to be prohibited from distributing programming produced by themselves or by related undertakings? Please justify.
36. Currently, PPV licensees are prohibited, by condition of licence, from entering into an affiliation agreement with the licensee of a terrestrial or DTH BDU unless the agreement incorporates a prohibition against the linkage of the licensee’s PPV service with any non-Canadian discretionary service.
37. As announced in Broadcasting Public Notice 2008-100, packaging rules were eliminated as of 31 August 2011 pursuant to Broadcasting Regulatory Policy 2011-455, rendering obsolete this condition of licence. The Commission therefore calls for comments on the following question:
Q. 15. Is the condition of licence prohibiting a PPV licensee from entering into an affiliation agreement with the licensee of a terrestrial or DTH BDU unless the agreement incorporates a prohibition against the linkage of the licensee’s PPV service with any non-Canadian discretionary service still relevant or can it be eliminated?
38. Currently, terrestrial PPV licensees are not allowed to distribute any advertising, pursuant to section 3(2)(d) of the Regulations. However, they may broadcast infomercials, promotional and corporate videos, as well as filler programming, which may consist of material that promotes programs and services provided by the licensee. Some DTH PPV licensees are exempt from section 3(2)(d) of the Regulations, but are subject to a condition of licence prohibiting the licensee from including in its DTH PPV offering any program containing a commercial message except where: (a) the message was already included in a program previously broadcast by a Canadian programming service; (b) the program’s inclusion as part of the DTH PPV offering is in accordance with the terms of a written agreement entered into with the operator of the Canadian programming service that broadcast the program; and (c) the program is offered to subscribers at no charge.
39. In Broadcasting Regulatory Policy 2010-190, the Commission stated that advertising should be permitted on the VOD platform, under specific circumstances, in order to offset the costs of acquiring VOD rights to programming and to help create a viable business model for VOD. Accordingly, the Commission permitted advertising only in programming acquired directly from an unrelated licensed Canadian broadcaster or from a related broadcaster that has also acquired the linear rights to the program. The Commission is of the view that this model will allow other broadcasters to share in the new revenue opportunities offered by VOD, thus limiting any potential revenue impact on linear broadcasters.
40. Given that terrestrial PPV services are subject to competition from VOD services, the Commission is seeking comments on the following questions:
Q. 16. Should the authority granted to some DTH PPV licensees also be granted to terrestrial PPV services?
Q. 17. Would it be appropriate to grant PPV services the same flexibility with respect to advertising as VOD services? If not, should PPV services remain subject to the current prohibition?
41. In addition, in Broadcasting Notice of Consultation 2011-803, the Commission called for comments on proposed amendments to the standard conditions of licence for VOD services set out in Broadcasting Regulatory Policy 2011-59 in order to implement measures to control the loudness of commercial messages. If implemented as proposed, licensees would be required, by condition of licence, to ensure that commercial messages comply with the technical requirements set out in ATSC Recommended Practice A/85: Techniques for Establishing and Maintaining Audio Loudness for Digital Television (the Recommended Practice), published by Advanced Television Systems Committee Inc.
42. Given that the Commission is seeking comments on the appropriateness of granting PPV services the same flexibility as VOD services with respect to advertising, the Commission is also calling for comments on the relevance of implementing measures to control the loudness of commercial messages. Accordingly, the Commission is seeking comments on the following question:
Q. 18. If PPV services were authorized to broadcast commercial messages, should licensees be required to ensure that commercial messages comply with the technical requirements set out in the Recommended Practice?
Implementation of the Accessibility Policy
43. In Broadcasting Public Notice 2007-54, the Commission indicated that it would require all English- and French-language broadcasters to caption 100% of their programs over the broadcast day, with the exception of advertising and promos, beginning in the first year of the licence term. Accordingly, PPV licensees that have been renewed or approved since the issuance of Broadcasting Public Notice 2007-54 are now subject to a condition of licence for closed captioning.
44. Further, in Broadcasting and Telecom Regulatory Policy 2009-430 (the Accessibility Policy), the Commission stated that it intends to require broadcasters to adhere to the quality standards on closed captioning developed by the television industry’s working groups once approved by the Commission. At that time, the Commission also stated its intention to require broadcasters to implement a monitoring system to ensure that, for any signal that is closed captioned, the correct signal is captioned, the captioning is included in its broadcast signal and this captioning reaches the distributor of that signal in its original form.
45. With respect to described video,2 as indicated in the Accessibility Policy, the Commission is of the view that persons with disabilities should be able to access programming with described video from both the public and private broadcasters in French and English. The Commission further considered that basic levels of described video should be available on a wide variety of services. The Commission indicated that it intends to apply, through conditions of licence, the existing described video requirements not only to English-language private broadcasters but also to French-language private broadcasters and to the CBC. The Commission also indicated its intention to consider expanding the types of licensees to which it will apply described video requirements in the future. In its implementation of the Accessibility Policy, the Commission generally expects licensees that do not currently have a condition of licence regarding described video, such as PPV services, to acquire and make available described versions of programming whenever possible.
46. Similarly, the Commission noted in its Accessibility Policy, the importance of audio description3 and has set out an expectation that licensees provide audio description of all programming that provides textual or graphic information, including programming broadcast on the barker channel.
47. Consistent with the Accessibility Policy, the Commission intends to impose these conditions of licence and expectations with respect to closed captioning, described video and audio description on new services and on existing services at licence renewal. The Commission calls for comments on the following question:
Q. 19. Is the implementation of the above-mentioned requirements appropriate for PPV services? If not, why?
48. The Commission recognizes that the current framework for PPV services has not been revised in a number of years. While the Commission has identified a number of issues and a broad scope for this review, it is nevertheless open to considering other issues and concerns. The Commission, however, reminds interested persons that their comments should be limited to matters falling within the Commission’s jurisdiction and powers under the Broadcasting Act (the Act). Further, interested persons should discuss such matters in the context of the various cultural, economic, social and technological policy objectives set out in the Act.
Call for comments
49. The Commission calls for comments on the questions set out in this notice. The Commission has numbered its questions for ease of reference. Interested persons wishing to comment on these questions should identify them by their number. The Commission will accept comments that it receives on or before 12 March 2012. Parties may file replies to matters raised in the initial comments. The deadline for the filing of replies is 22 March 2012.
50. The Commission notes that it may decide to hold a public hearing on this matter if it considers that the comments received warrant it.
51. The new Canadian Radio-television and Telecommunications Commission Rules of Practice and Procedure, SOR/2010-277 (the Rules of Procedure), set out, among other things, the rules for content, format, filing and service of interventions, the procedure for filing confidential information and requesting its disclosure, and the conduct of the public hearing. Accordingly, the procedure set out below must be read in conjunction with the Rules of Procedure and its accompanying documents, which can be found on the Commission’s website under “CRTC Rules of Practice and Procedure.”
52. In accordance with the Rules of Procedure, a document must be filed with, not merely sent to, the Commission by 5 p.m. Vancouver time (8 p.m. Ottawa time) on the date it is due. The Commission takes no responsibility for postal delays and will not notify a party whose submission is received after the deadline date. Late submissions will not be considered by the Commission and will not be made part of the public file.
53. Submissions must be filed by sending them to the Secretary General of the Commission by only one of the following means:
by using the
by mail to
CRTC, Ottawa, Ontario K1A 0N2
by fax at
54. Submissions longer than five pages should include a summary.
55. Each paragraph of the submission should be numbered. In addition, where the intervention is filed by electronic means, the line ***End of document*** should be entered following the last paragraph of the document, as an indication that the document has not been altered during electronic transmission.
56. All information that parties provide as part of this public process, except information designated confidential, whether sent by postal mail, facsimile, e-mail or through the Commission’s website at www.crtc.gc.ca, becomes part of a publicly accessible file and will be posted on the Commission’s website. This information includes personal information, such as full names, e-mail addresses, postal/street addresses, telephone and facsimile numbers, and any other personal information parties provide.
57. The personal information that parties provide will be used and may be disclosed for the purpose for which the information was obtained or compiled by the Commission, or for a use consistent with that purpose.
58. Documents received electronically or otherwise will be put on the Commission’s website in their entirety exactly as received, including any personal information contained therein, in the official language and format in which they are received. Documents not received electronically will be available in PDF format.
59. The information that parties provide to the Commission as part of this public process is entered into an unsearchable database dedicated to this specific public process. This database is accessible only from the web page of this particular public process. As a result, a general search of the Commission’s website with the help of either its own search engine or a third-party search engine will not provide access to the information that was provided as part of this public process.
60. The Commission encourages parties and interested persons to monitor the record of the proceeding, available on the Commission’s website, for additional information that they may find useful when preparing their submissions.
Examination of documents
61. A list of all interventions will also be available on the Commission’s website. The list is accessible by selecting “View all proceedings open for comment” from the “Public Proceedings” section of the Commission’s website and clicking on the “Interventions/Answers” link associated with this notice.
62. The public may examine public interventions and related documents at the following Commission offices during normal business hours.
Location of Commission offices
Toll-free telephone: 1-877-249-2782
Toll-free TDD: 1-877-909-2782
Les Terrasses de la Chaudière
1 Promenade du Portage, Room 206
99 Wyse Road
Dartmouth, Nova Scotia
205 Viger Avenue West
55 St. Clair Avenue East
360 Main Street
2220 – 12th Avenue
100 – 4th Avenue South-West
858 Beatty Street
Vancouver, British Columbia
Call for comments on proposed amendments to the Broadcasting Distribution Regulations and other Commission regulations—provisions relating to vertical integration, Broadcasting Notice of Consultation CRTC 2011-806, 22 December 2011
Call for comments on amendments to various regulations, standard conditions of licence and an exemption order to implement measures to control the loudness of commercial messages, Broadcasting Notice of Consultation CRTC 2011-803, 22 December 2011
Regulatory framework related to vertical integration, Broadcasting Regulatory Policy CRTC 2011-601, 21 September 2011
Standard requirements for video-on-demand undertakings, Broadcasting Regulatory Policy CRTC 2011-59, 31 January 2011
Regulatory framework for video-on-demand undertakings, Broadcasting Regulatory Policy CRTC 2010-190, 29 March 2010
Accessibility of telecommunications and broadcasting services, Broadcasting and Telecom Regulatory Policy CRTC 2009-430, 21 July 2009
A new policy with respect to closed captioning, Broadcasting Public Notice CRTC 2007-54, 17 May 2007
Introductory statement to Decisions CRTC 2000-733 to 2000-738: Licensing of new video-on-demand and pay-per-view services, Public Notice CRTC 2000-172, 14 December 2000
 A “related service” is a service in which the BDU that distributes it, or any of its shareholders owns, directly or indirectly, 10% or more of the equity of the service.
 “Described video” is also called video description or described narrative. Described video is a narrated description of a program’s main visual elements, such as settings, costumes, or body language. The description is added during natural pauses in dialogue, and enables people to form a mental picture of the program. Described video uses a separate audio track.
 “Audio description” uses an on-air program host or announcer to provide a basic voice-over, reading text and describing graphics that appear on the screen. Audio description is often used for newscasts, weather reports, sports scores or financial data, and is best suited to live, information-based programming.
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