CRTC issues new policies for the Canadian broadcasting system: Preparing for a digital future



    OTTAWA-GATINEAU, Oct. 30 /CNW Telbec/ - The Canadian Radio-television and
Telecommunications Commission (CRTC) today introduced new policies to prepare
the Canadian broadcasting industry for the transition to a fully digital
environment. In developing these policies, the Commission has simplified its
regulation in order to foster a more coherent and well-calibrated broadcasting
system.
    "Following a comprehensive review, we have streamlined a number of rules
and eliminated those that were no longer necessary," said Konrad von
Finckenstein, Q.C., Chairman of the CRTC. "These measures will contribute to a
more dynamic broadcasting system, which will be in a better position to
respond to the opportunities and challenges presented by new media. They will
also make it easier for viewers to choose the programs they want."
    "The desire for better local programming in Canada's smaller markets was
clearly made evident during this proceeding," added Mr. von Finckenstein. "We
have taken concrete steps to make sure that viewers in these markets continue
to benefit from a diversity of local programming."
    The CRTC has developed forward-looking policies that will give the
broadcasting system added flexibility while retaining the necessary
regulations to achieve the objectives of the Broadcasting Act. The majority of
the changes will come into effect on August 31, 2011. This date coincides with
the end of analog over-the-air broadcasting in Canada and will give the
industry time to adapt.
    Broadcasting distribution companies, pay and specialty services, and
conventional television broadcasters will be affected by the Commission's new
policies. The principal changes are described below.

    
    Broadcasting distribution companies

    In reviewing the rules that affect broadcasting distribution companies,
such as cable and satellite providers, the Commission has decided to:

    - exempt from its licensing requirements broadcasting distribution
      companies with fewer than 20,000 subscribers
    - harmonize as much as possible the rules between satellite and
      terrestrial distribution companies
    - eliminate most rules governing how channels are packaged
    - modify its approach to dispute resolution for complaints that involve
      allegations of undue preference or undue disadvantage
    - require broadcasting distribution companies to continue offering a
      basic service package after the transition to digital, and
    - initiate proceedings to explore how new forms of digital and
      interactive advertising could benefit the broadcasting system as a
      whole.

    Pay and specialty services

    In reviewing the rules that affect pay and specialty services, the
Commission has decided to:

    - allow direct competition between Canadian services in mainstream sports
      and national news
    - maintain exclusivity across other genres while allowing for greater
      flexibility in the types of programming pay and specialty services may
      broadcast
    - introduce a mechanism to introduce competition in other genres in the
      future, and
    - maintain access rights for Canadian pay and specialty services in a
      digital environment.

    Conventional television broadcasters

    In reviewing the rules that affect conventional television broadcasters,
the Commission has decided to:

    - deny the request for a subscriber fee for the carriage of local
      conventional television stations, and
    - allow conventional broadcasters to negotiate payments for the
      retransmission of their signals to other provinces (known as distant
      signals).
    

    The CRTC will also support local programming by increasing to 6 per cent,
up from 5 per cent, the contribution broadcasting distribution companies must
make to Canadian programming. This increase will amount to approximately
$60 million and will be allocated to a new Local Programming Improvement Fund.
    The increased contribution represents a monthly average of $0.50 per
subscriber. Given the health of the broadcasting distribution industry and the
new revenue streams provided by the policies announced today, the CRTC does
not expect companies to pass this cost along to their subscribers.

    Broadcasting Public Notice 2008-100 (Regulatory frameworks for
    broadcasting distribution undertakings and discretionary programming
    services)
    http://www.crtc.gc.ca/eng/whatsnew.htm

    Broadcasting Public Notice 2008-101 (Call for comments on a proposed
    regulatory framework for video-on-demand undertakings)
    http://www.crtc.gc.ca/eng/whatsnew.htm

    Broadcasting Public Notice 2008-102 (Call for comments on a proposed
    framework for the sale of commercial advertising in the local
    availabilities of non-Canadian services)
    http://www.crtc.gc.ca/eng/whatsnew.htm

    Broadcasting Public Notice 2008-103 (Call for comments on proposed
    conditions of licence for competitive mainstream sports and national news
    specialty services)
    http://www.crtc.gc.ca/eng/whatsnew.htm

    The CRTC

    The CRTC is an independent public authority that regulates and supervises
broadcasting and telecommunications in Canada.

    Reference document: Broadcasting Notice of Public Hearing CRTC 2007-10
    http://www.crtc.gc.ca/archive/eng/hearings/2007/n2007-10.htm


    Backgrounder on the new policies for the Canadian broadcasting system

    1. Broadcasting distribution companies

    Licensing requirements for broadcasting distribution companies

    The Commission will streamline its licensing regime for terrestrial
broadcasting distribution companies by adopting a single class of licence.
Furthermore, companies with fewer than 20,000 subscribers will be exempted
from its licensing requirements. As a result, more than 190 cable systems
serving over 950,000 customers will be exempt. The CRTC will issue for comment
its revised exemption order by April 1, 2009.
    At the present time, terrestrial broadcasting distribution companies are
divided into three licence classes, based primarily on the number of
subscribers that are served. The Commission previously exempted, under two
different exemption orders, companies with fewer than 6,000 subscribers.

    Harmonization of regulations

    The Commission first licensed direct-to-home satellite distribution
companies in 1995 and 1996. To give them an opportunity to compete with the
cable companies that were already well established, the requirements
associated with their licences were relatively light. This approach helped
satellite television companies grow into strong and mature competitors.
    In order to achieve coherence within the broadcasting system, the
Commission considers that its regulation should treat competitors who stand on
an equal footing in a similar fashion. The CRTC has therefore adjusted the
rules for both satellite and terrestrial distribution companies with the aim
of harmonizing them as much as possible. In doing so, the Commission has taken
into account the differences in technologies and distribution capacities, as
well as the fact that satellite television companies operate nationally.

    Packaging rules

    As of August 31, 2011, the Commission will remove most of its existing
rules governing how broadcasting distribution companies, such as cable and
satellite providers, package channels. This will permit them to give their
customers more choice in subscribing to pay and specialty services.
    Currently, broadcasting distribution companies must offer within the same
package one Canadian specialty service for every non-Canadian specialty
service. In the future, companies will have the flexibility to adjust their
packages according to their customers' wishes. They will simply need to ensure
that their customers receive a majority of Canadian programming services
(50 per cent plus one) as part of their overall subscription.
    The CRTC has also simplified its packaging rules for third-language
services by requiring that one Canadian third-language service be offered for
every three non-Canadian services in the same language(s).
    Similarly, the Commission will establish a simple rule to ensure the
distribution of minority-official-language pay and specialty services.
Broadcasting distribution companies will be required to offer one
minority-language service for every 10 services offered in a market's majority
official language.

    Dispute resolution

    Pay and specialty services negotiate with broadcasting distribution
companies to establish the terms under which their services will be provided
to viewers. Disagreements can arise between broadcasters and broadcasting
distribution companies in the course of these negotiations. The Commission has
reiterated its willingness to help resolve disputes in a timely manner through
mediation, final-offer arbitration or an expedited hearing.
    The Commission will modify its approach for complaints that involve
allegations of undue preference or undue disadvantage by introducing a reverse
onus provision. As in the past, a broadcaster will first need to demonstrate
that a preference or disadvantage exists. However, the broadcasting
distribution company will now be required to show why its actions were not
undue.

    New forms of advertising

    A digital broadcasting environment holds opportunities that would allow
viewers to watch ads that are more relevant and better suited to their
interests (i.e., targeted advertising). Such advertising could benefit the
broadcasting system as a whole by creating new sources of revenues and
improving its ability to compete with the opportunities offered by the
Internet.
    The Commission has initiated a proceeding to consider whether
broadcasting distribution companies should be permitted to insert targeted
advertising in the local availabilities of programs broadcast by foreign pay
and specialty services. Currently, the CRTC requires that this time, normally
two minutes per hour, be used primarily to promote Canadian programming
services.
    In addition, the Commission today issued a proposed framework for
video-on-demand services operated by the broadcasting distribution companies.
Among other things, the CRTC proposes to allow these services to insert
advertising in programming obtained from Canadian broadcasters or producers.
Such advertising time could also be used for targeted advertising.

    2. Pay and specialty services

    Competition in mainstream sports and national news

    The Commission will permit direct competition between Canadian services
in mainstream sports and national news. Existing services in these genres have
achieved maturity: they are strong, healthy, popular and highly competitive
despite the differences in their programming. They have also established
brands that are attractive to consumers and instantly recognizable.
    Previously, pay and specialty services were granted guaranteed access to
the broadcasting system and not allowed to compete directly with one another.
This policy was designed to encourage a diversity of programming genres and to
ensure that these services could contribute to the creation of Canadian
programming. The Commission considers that the provisions of guaranteed access
and genre protection are no longer necessary for mainstream sports and
national news services to achieve these objectives.
    In the future, the CRTC will consider opening other genres to competition
by examining the following criteria:

    
    - the economic health of existing services, based on profitability and
      revenues
    - the popularity of existing services, based on brand recognition as well
      as audience and subscriber information
    - the availability of programming
    - the current diversity within a given genre, and
    - the consequences that might result from the introduction of
      competition.
    

    Increased programming flexibility

    The Commission has simplified and streamlined the rules that apply to pay
and specialty services. These services will now be able to draw programming
from all program categories. However, the Commission has set limits on certain
categories to prevent a service from transforming itself and competing
directly with another service. During each broadcast month, no more than 10%
of their programming may be drawn from the categories of theatrical feature
films, professional sports and music, among others.

    3. Conventional television broadcasters

    Distant signals

    Time-shifting is a popular feature that allows satellite and digital
cable subscribers to watch local television stations that originate in other
provinces. The Commission recognizes that conventional broadcasters should be
compensated for the retransmission of these signals. Broadcasters will be
permitted to negotiate payments in order to recover the value of their signals
and the programming rights they have acquired.
    Moreover, the CRTC will retain the existing fund that compensates
independently owned broadcasters in small markets for the damages resulting
from the distant signals carried by direct-to-home satellite companies.

    Local Programming Improvement Fund

    The Commission will establish a Local Programming Improvement Fund to
support local programming in smaller markets. Over the last decade, stations
in markets with a population of less than one million, and particularly in
French-language markets, have invested fewer funds in this type of
programming. However, public and private stations have an important role to
play in enriching the diversity of information and editorial voices in Canada.
    The Fund is designed to:

    
    - ensure that viewers in smaller Canadian markets continue to receive a
      diversity of local programming, and particularly local news programming
    - improve the quality and diversity of local programming broadcast in
      these markets, and
    - ensure that viewers in French-language markets are not disadvantaged by
      the smaller size of these markets.

    Individual public and private local stations will be eligible for funding.
Stations must use these funds to increase their current expenditures on local
programming, which should result in expanded news bureaus and more original
local news stories.
    The Canadian Association of Broadcasters has been asked to propose a plan
for the administration of the Fund, in which it would suggest a third-party
administrator. Following its third year of operation, the Commission will
evaluate whether the Fund is fulfilling its objectives, and will decide
whether it should be maintained, modified or discontinued.
    The criteria the CRTC will use in its assessment could include:

    - the number of original local news stories broadcast in each year of the
      Local Programming Improvement Fund's operation, compared to the number
      of original stories broadcast during the three years prior to the
      Fund's implementation
    - evidence of increased resources allocated to local news gathering
    - evidence of the increased diversity of local programming, and
    - other quantifiable evidence of audience satisfaction, such as public-
      opinion polling.
    

    Community broadcasting

    The Commission has determined that broadcasting distribution companies
must continue to offer community channels with their basic service packages.
In addition, the CRTC will undertake a comprehensive review of its policies
relating to community broadcasting in 2009-2010. At that time, it will
consider whether community television broadcasters should have access to the
Local Programming Improvement Fund, as well as other issues related to
community broadcasting that were raised during this proceeding.




For further information:

For further information: Media Relations: (819) 997-9403, Fax:
819-997-4245, MediaRelations
(http://support.crtc.gc.ca/CRTCSubmissionMU/forms/Mediarelations.aspx?lang=e);
General Inquiries: (819) 997-0313, 1-877-249-CRTC (2782), TDD: (819) 994-0423,
TDD - Toll-free: 1-877-909-CRTC (2782), Fax: (819) 994-0218, On-line services
(http://support.crtc.gc.ca/crtcsubmissionmu/forms/main.aspx?lang=e); These
documents are available in alternative format upon request


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