Telecom Public Notice
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Ottawa, 17 May 1999
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Telecom Public Notice CRTC 99-14
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Broadcasting Public Notice CRTC 1999-84
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New Media
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TABLE OF CONTENTS Paragraph
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Introduction 1
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Attributes of new media 12
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The Commission's approach to new media 26
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A Canadian presence in new media 60
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How conventional broadcasting and telecommunications are
affected by new media 90
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Offensive and illegal content 117
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Appendix 1 Chronology of convergence-related initiatives
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Appendix 2 Glossary
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Summary
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Earlier this year, the Commission concluded its public
consultations under both the Broadcasting Act and the Telecommunications Act, regarding
the range of communications and information services referred to as "new media."
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Parties to the proceeding assumed new media to be
services delivered over the Internet and the Commission does not consider it necessary to
define the term further.
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In 1996, Industry Canada estimated that as many as 650
businesses, employing as many as 17,000 people, were active in multimedia, including new
media. Other studies suggest that there may be more than 1,000 such firms. Whatever its
actual size, it is clear that the multimedia industry is vibrant and growing, with the
numbers of firms and services expected to grow significantly as more Canadians acquire
personal computers (PCs) and seek access to the Internet.
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This section of the document summarizes the
Commission's determinations following the proceeding noted above.
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The Commission's approach to new media
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To date, there has been uncertainty about whether new
media services constitute broadcasting in light of the breadth of the definitions of
"program" and "broadcasting" as set out in the Broadcasting Act. The
Commission agrees with those parties who stated that such uncertainty could be problematic
for the developers and producers of new and emerging services. It therefore provides the
following views about the scope of the definition of "broadcasting" in the Act
and sets out its approach to new media.
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The Commission considers that the majority of services
now available on the Internet consist predominantly of alphanumeric text, and, therefore,
do not fall within the scope of the Broadcasting Act and are thus outside the Commission's
jurisdiction.
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Among the services that also do not fall within the
scope of the definition of broadcasting are those where the potential for user
customization is significant, i.e., services where end-users have an individual, or
one-on-one, experience and where they create their own uniquely tailored content. The
Commission considers that these types of services do not involve the transmission of
programs for reception by the public and are, therefore, not broadcasting.
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The proceeding also made it clear that some new media
services fall under the Broadcasting Act's definitions of "program" and
"broadcasting." These include digital audio services and audio/visual signals.
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For those undertakings that offer new media services
that do fall under the definition of broadcasting, the Commission has concluded that
regulation is not necessary to achieve the objectives of the Broadcasting Act. It will
issue, by 30 June 1999, a proposed exemption order without terms or conditions in respect
of all undertakings that are providing broadcasting services over the Internet, in whole
or in part, in Canada.
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Accordingly, the Commission will not regulate
new media activities on the Internet under the Broadcasting Act.
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A Canadian presence in new media
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In the Commission's view, there is no apparent
shortage of Canadian content on the Internet today. Rather, market forces are providing a
Canadian Internet presence that is also supported by a strong demand for Canadian product.
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The Commission notes that a number of initiatives and
funds have been developed in both the public and private sectors to help finance and
support Canadian new media product.
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For these reasons, the Commission concurs with the
majority of participants that there is no reason for it to impose regulatory measures to
stimulate the production and development of Canadian new media content.
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How conventional broadcasting is affected by new
media
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The Commission considers that new media have not had
any detrimental impact on conventional radio and television audiences. The Commission is
of the view that the effect of new media on television audience size will be limited at
least until such time as high-quality video programming can be distributed on the
Internet.
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The Commission also agrees with most participants in
the proceeding that there is no evidence that the Internet has had any negative financial
impact on the advertising revenues of traditional broadcasters. In fact, radio advertising
revenues have increased since 1993, and television advertising revenues have grown
steadily over the past twenty years.
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Illegal and offensive content
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The Commission acknowledges the expressions of concern
that have been made about the distribution of offensive and potentially illegal content on
the Internet.
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The Commission notes that Internet Service Providers
(ISPs) and their industry associations, in conjunction with government agencies and other
organizations, have made efforts to develop codes of conduct to help combat the
distribution of offensive material. It considers that more could be done for example, by
establishing complaint lines and industry ombudsmen and developing international
cooperation with law enforcement agencies. The Commission also notes that effective
content filtering computer software is being developed. Such software will assist those
who wish to control access to material that they feel is inappropriate.
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The Commission acknowledges the views of the majority
of parties to the proceeding that generally-applicable Canadian laws, coupled with
self-regulatory initiatives, rather than the Broadcasting Act are more appropriate means
for dealing with offensive material in new media. The vast majority of such content,
particularly hate propaganda, is beyond the regulatory jurisdiction of the Broadcasting
Act because it consists predominantly of alphanumeric text. As such, it falls outside of
the definition of a "program" set out in the Act. In keeping with the overall
policy stated earlier, significantly customized content does not fall within the
definition of broadcasting and that content which is broadcasting will be exempt from
regulation.
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Telecommunications
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The Commission considers that access by competitive
providers of Internet services to the facilities they require to offer services is an
important concern. In a 1998 decision (Telecom Decision CRTC 98-9), the Commission decided it would
approve the rates and terms under which incumbent cable and telephone companies provide
higher speed access to their telecommunications facilities to ISPs. The Commission will
set out its general regulatory approach to rates and terms for such cable carrier higher
speed access services in the near future.
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Introduction
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1. On 31 July 1998, in Broadcasting Public Notice
CRTC 1998-82 and Telecom Public Notice CRTC 98-20 (the Public Notice), the Commission
announced that it was initiating a proceeding under both the Broadcasting Act and the
Telecommunications Act calling for comments on the rapidly expanding and increasingly
available range of communications services collectively referred to as "new
media."
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2. The Commission held a three-phase process for the
submission of written comments by interested parties. This proceeding was unprecedented in
terms of the broad spectrum of individuals, industries, and interest groups from whom the
Commission received comments. The call for comments produced well in excess of 1000
contributions from individuals, multimedia companies involved in the production and
distribution of new media products and services, as well as the traditionally regulated
industries and their industry associations that are familiar and active participants in
Commission proceedings.
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3. Many of the submissions came from individuals, groups
and industries that had not previously appeared at or participated in Commission
proceedings. Their submissions were most useful in informing the Commission during its
deliberations on the prevailing technical and market realities in which new media players
operate.
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4. In addition, the McLuhan Program E-Lab unit, on behalf
of the CRTC, hosted an on-line forum that stimulated comment from a wide range of
individuals from across the nation and around the world on issues that were germane to the
matters under consideration in this proceeding.
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5. At the two oral phases of the public hearing held,
respectively, during eleven days last November and December and two days last February,
the Commission heard close to one hundred parties on the subject of new media.
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6. In the Public Notice, the Commission stated that the
purpose of the proceeding was to develop a comprehensive record to assist it in answering
the following questions:
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a) In what ways, and to what extent, do new media affect,
or are they likely to affect, the broadcasting and telecommunications undertakings now
regulated by the Commission?
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b) In what ways, and to what extent, are some or any of
the new media either broadcasting or telecommunications services?
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c) To the extent that any of the new media are
broadcasting or telecommunications, to what extent should the Commission regulate and
supervise them pursuant to the Broadcasting Act and the Telecommunications Act?
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d) Do the new media raise any other broad policy issues of
national interest?
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7. This document responds to these questions. The
following section describes the general attributes of the new media sector that emerged
throughout the written and oral phases of the proceeding. These attributes are intended
not only to describe the emerging new media sector, but are also key elements that
contribute to the Commission's determinations that follow later in the public notice.
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8. The Commission wishes to underscore that this
proceeding made clear the rapid change that has occurred in this industry within a very
short time frame. This pace will undoubtedly continue. It also considers that the
development of new media services will not necessarily be "linear" in their
evolution toward audio and video applications. Rather, they may develop in ways not yet
contemplated. As a result, by necessity, this report provides a snapshot of this important
and evolving industry at this stage of its development.
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9. Section 3 of this report presents the Commission's
determination that it will not regulate new media activities under the Broadcasting Act.
Therefore, it will issue, by 30 June 1999, a proposed exemption order without terms or
conditions in respect of all undertakings that are providing broadcasting services over
the Internet, in whole or in part, in Canada.
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10. The remaining sections provide discussion of some key
policy issues of national interest, including the impact of new media on conventional
broadcasting and telecommunications, support for Canadian new media content, and the
availability of illegal and offensive content on the Internet.
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11. This process has provided the Commission with a
substantial record of information and viewpoints on the four general questions posed by
the Commission, as well as on other important issues. The Commission wishes to thank all
parties for their views and participation.
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Attributes of new media
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12. The development of digital technologies has led to the
emergence of new media which can combine elements such as text, graphics, data, fixed
images, audio, full motion video and animation and deliver them to exhibition devices such
as personal computers (PCs) or television sets. The distinguishing features of new media
are its use of digitization, interactivity and interconnected networks.
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13. In 1996, Industry Canada estimated that 650 Canadian
multimedia firms had created over 17,000 jobs. Other studies, such as those conducted by
the Canadian Human Resources Council, estimate that there may be more than 1,000 such
firms. Most multimedia firms are privately held and small, with 80% having fewer than 25
employees. The industry is concentrated in the metropolitan areas of Quebec, Ontario and
British Columbia, but other regions are also developing significant amounts of Canadian
new media content.
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14. The term "new media" can refer to a diverse
range of communications products and services, which include but are not limited to video
games, CD-ROMs, electronic-mail (e-mail), on-line paging services, faxing, electronic
commerce, IP telephony, and services delivered over the World Wide Web and the Internet.
In the Public Notice initiating this proceeding, the Commission stated that as a working
definition:
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New media can be described as encompassing, singly or in
combination, and whether interactive or not, services and products that make use of video,
audio, graphics and alphanumeric text; and involving, along with other, more traditional
means of distribution, digital delivery over networks interconnected on a local or global
scale.
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15. Parties to the proceeding assumed new media to be
services delivered by means of the Internet. Given its regulatory approach, as set out
earlier, the Commission does not consider it necessary to further define new media.
Throughout this document, the Commission uses the term new media services to be those that
are delivered by means of the Internet.
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16. Parties to the proceeding brought a great deal of new
information to the Commission relating to the new media industry in Canada. A number of
factors relevant to the new media industry in Canada on which there was a high degree of
agreement on the record of the proceeding are summarized below. Some of these attributes,
particularly those that are integral to the Commission's policy direction for new media,
are discussed in greater detail in other sections of this public notice.
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17. The new media industry in Canada is highly
competitive. Both the industry and the market for new media products and services are
vibrant and growing, with the number of firms and services expected to expand considerably
as the penetration of information technologies increases. There is significant
participation by individuals and organizations, as well as by existing broadcasting
undertakings, in the creation and distribution of Canadian new media products and
services.
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18. One of the key factors in the growth of the market for
new media products and services is the increasing penetration of information technologies.
Canada has a relatively high level of penetration of computers in the home and in the
workplace when compared with other OECD countries. In 1997, Statistics Canada estimated
that 36% of Canadian households were equipped with PCs, an 11% increase over 1996. In
September 1998, Ekos Research estimated that close to 60% of households owned at least one
PC.
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19. Canada also has one of the lowest costs for consumer
access to the Internet when compared with those in other OECD countries. A huge rate of
growth in Internet use can also be noted. The October 1997 Statistics Canada Household
Internet Survey revealed that 42% of connected households spent over 20 hours per month
on-line, with 61% connecting at least seven times a week. The survey also found that the
most common uses were sending e-mail (77%) and accessing information (71%). In turn, a
study undertaken by Communications Management Inc. (CMI) filed in this proceeding
estimated that, by 2001, approximately five million Canadian households, or 40% of
households, will have access to the Internet, double the number of households which had
Internet access in 1998. According to CMI, most of the growth will take place in
households that already have PCs, as modems and Internet access features are added.
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20. A wide range of both public and private initiatives
are working together to facilitate the growth of new media in Canada. For instance, the
Community Access Program (providing public access to the Internet in urban and rural
communities), the Computers for Schools Program and the SchoolNet Program have hastened
the availability of access to Canadians in rural areas and public facilities across
Canada. Canadian educational institutions are actively involved in the development of
educational and training programs that take advantage of Canadian technological and
creative abilities.
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21. The availability of funds through the federal and
provincial governments, as well as certain private sector initiatives, provide valuable
core funding to the Canadian new media sector for both industry and content development.
Accordingly, most participants considered that a requirement to contribute to the
production of Canadian content through a levy is unnecessary and could even be detrimental
to the Canadian new media sector.
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22. New media content creators operate within a highly
diversified industry. Players range from traditional media extending their brands to the
Internet, to non-media companies seeking to use the Internet to promote their services, to
universities, libraries and individuals. As a result, the production of new media content
can range from very simple text and graphics, all the way to elaborate graphics and
streaming audio and video. Much of the content on the Internet, Canadian or otherwise, is
currently made up predominantly of alphanumeric text. Although there appears to be a trend
towards an increase in the use of audio and video elements either, singly or in
combination, the ability to deliver long-form programming of an acceptable technical
quality is emerging slowly, most particularly with respect to video.
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23. Much of the Canadian new media content available
complements either the existing programming of those Canadian broadcasting undertakings
involved in new media or provides a means for expressing a diversity of viewpoints to
niche audiences or others who perceive that they are not adequately represented by
traditional media in all of its forms. Portal operators make available a considerable
amount of Canadian new media content that is of local and regional interest.
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24. Participants provided statistics indicating that
Canadian web sites represent about 5% of all Internet web sites. The availability of a
number of Canadian search engines provides relatively easy access to Canadian new media
content. French-language content represents about 5% of total Internet content.
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25. In addition, the Commission considers that, due to the
nature of the networks that comprise the Internet, spectrum scarcity is not an issue and
the development of high bandwidth infrastructure is proceeding at a relatively rapid pace,
although its deployment appears to be proceeding more slowly. The Commission is of the
view that these developments are proceeding on the basis of business considerations and
financial investments made by firms in the marketplace, as well as through the efforts of
Government in funding the development of these technologies.
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The Commission's approach to new media
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26. Many parties to this proceeding agreed that there is a
need for greater regulatory clarity and certainty regarding services that are being
offered by way of the Internet. In this respect, parties submitted that there is a need
for the Commission to move beyond the statements included in its 19 May 1995 report to
Government entitled Competition and Culture on Canada's Information Highway: Managing the
Realities of Transition (the Convergence Report).
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27. In the Convergence Report, the Commission noted, among
other things, that the current Broadcasting Act will likely capture many of the new and
emerging services. Since that report was released, neither the Commission nor other
government bodies have clarified what approach or treatment should be applied to such
services.
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28. Parties differed on whether the Broadcasting Act
applies at all to new media undertakings and the services they provide. Some parties
argued that most new media services are beyond the scope of "broadcasting" as
defined in the Broadcasting Act and that the Commission should settle any uncertainty to
that effect. Others argued that none of the services delivered over the Internet are
consistent with any notion of broadcasting that would have been contemplated by the
Broadcasting Act.
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29. Interpretations on this point were varied. For
instance, the vast majority of individual Canadians who participated in the on-line forum
that was initiated at the outset of this proceeding, as well as the numbers of individuals
who e-mailed the Commission during the course of the proceeding, submitted, in essence,
that there should be no regulatory oversight of these services by the Commission pursuant
to the Broadcasting Act.
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30. Certain parties, however, argued that most new media
services would qualify as "broadcasting" and the undertakings that provide them
as "broadcasting undertakings" under the definitions set out in the Broadcasting
Act.
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31. Putting those differing interpretations aside, parties
were generally consistent in the view that there is a compelling need for the Commission
to provide more clarity and certainty as to the approach that it intends to develop with
regard to new media. They argued that the uncertainty surrounding this issue creates
difficulties for developers and distributors of such services in accessing capital markets
and in bringing new and innovative services to the Canadian market.
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32. The Commission agrees that there has been uncertainty
as to whether new media services constitute broadcasting in light of the breadth of the
definitions of "program" and "broadcasting" under the Broadcasting
Act. The Commission also agrees that such uncertainty could be problematic for the
developers and providers of new and emerging services. In the following section, the
Commission provides its views as to the scope of the definition of
"broadcasting" in the Act and sets out its approach to new media.
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Is new media "broadcasting"?
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Statutory Definitions
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33. "Broadcasting" is defined in section 2 of
the Broadcasting Act as follows:
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[a]ny transmission of programs, whether or not encrypted,
by radio waves or other means of telecommunication for reception by the public by means of
broadcasting receiving apparatus, but does not include any such transmission of programs
that is made solely for performance or display in a public place.
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34. The term "program" is in turn defined in
section 2 of the Act as:
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[s]ounds or visual images, or a combination of sounds and
visual images, that are intended to inform, enlighten or entertain, but does not include
visual images, whether or not combined with sounds, that consist predominantly of
alphanumeric text.
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Explicit statutory exclusions from the definition of
broadcasting
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35. The Commission notes that, as stated above, much of
the content available by way of the Internet, Canadian or otherwise, currently consists
predominantly of alphanumeric text and is therefore excluded from the definition of
"program". This type of content, therefore, falls outside the scope of the
Broadcasting Act. Accordingly, the remainder of this section contemplates Internet content
that consists only of audio, video, a combination of audio and video, or other visual
images including still images that do not consist predominantly of alphanumeric text.
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36. It was submitted, among other things, that information
displayed on the Internet can be considered to be solely for display in a public place and
therefore excluded from the definition of "broadcasting". Certainly, the
Canadian public expressed its view that the Internet has a unique ability to foster
citizen engagement and public discourse. While the Commission agrees, it considers that
the Internet is not in and of itself a "public place" in the sense intended by
the Act. Programs are not transmitted to cyberspace, but through it, and are received in a
physical place, e.g. in an office or home.
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37. The Commission considers, however, that the exception
to the definition of "broadcasting" for programs transmitted for display in a
public place would apply, as suggested by one participant, to a particular service
delivered via the Internet that is accessible by end-users only in a terminal or kiosk
located in a public place, such as a public library.
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Technological neutrality of "broadcasting"
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38. The Commission notes that the definition of
"broadcasting" includes the transmission of programs, whether or not encrypted,
by other means of telecommunication. This definition is, and was intended to be,
technologically neutral. Accordingly, the mere fact that a program is delivered by means
of the Internet, rather than by means of the airwaves or by a cable company, does not
exclude it from the definition of "broadcasting".
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39. Some parties argued that there is no
"transmission" of content over the Internet, and therefore, there is no
"broadcasting". The fact that an end-user activates the delivery of a program is
not, in the Commission's view, determinative. As discussed below, on-demand delivery is
included in the definition of "broadcasting". Further, the Commission considers
that the particular technology used for the delivery of signals over the Internet cannot
be determinative. Based on a plain meaning of the word, and recognizing the intent that
the definition be technologically neutral, the Commission considers that the delivery of
data signals from an origination point (e.g. a host server) to a reception point (e.g. an
end-user's apparatus) by means of the Internet involves the "transmission" of
the content.
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40. Some parties submitted that the definition of
"broadcasting receiving apparatus" was not intended to capture devices such as
personal computers or Web TV boxes when used to access the Internet. The Commission notes
that the definition of "broadcasting receiving apparatus" includes a
"device, or combination of devices, intended for or capable of being used for the
reception of broadcasting". The Commission considers that an interpretation of this
definition that includes only conventional televisions and radios is not supported by the
plain meaning of the definition and would undermine the technological neutrality of the
definition of "broadcasting". In the Commission's view, devices such as personal
computers, or televisions equipped with Web TV boxes, fall within the definition of
"broadcasting receiving apparatus" to the extent that they are or are capable of
being used to receive broadcasting.
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Transmission of programs for reception by the public
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41. It is therefore necessary to consider whether the
transmission of sounds or visual images (or a combination of sounds and visual images)
that do not consist predominantly of alphanumeric text by means of the Internet can be
said to involve the transmission of programs for reception by the public.
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42. A number of parties submitted that content that is
"customizable" does not constitute "broadcasting". The Commission
notes that parties have used the term "customizable" to mean different things.
For example, some parties cited the non-simultaneous characteristic of Internet services
as a basis for which such services cannot be considered to be "broadcasting".
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43. The Commission considers it important to distinguish
between the ability to obtain Internet content "on-demand" - the
non-simultaneous characteristic of Internet services - and the ability of the end-user to
"customize", or interact with, the content itself to suit his or her own needs
and interests.
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44. In the Commission's view, there is no explicit or
implicit statutory requirement that broadcasting involve scheduled or simultaneous
transmissions of programs. The Commission notes that the legislator could have, but did
not, expressly exclude on-demand programs from the Act. As noted by one party, the mere
ability of an end-user to select content on-demand does not by itself remove such content
from the definition of broadcasting. The Commission considers that programs that are
transmitted to members of the public on-demand are transmitted "for reception by the
public".
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45. The Commission considers, however, that some Internet
services involve a high degree of "customizable" content. This allows end-users
to have an individual one-on-one experience through the creation of their own uniquely
tailored content. In the Commission's view, this content, created by the end-user, would
not be transmitted for reception by the public. The Commission therefore considers that
content that is "customizable" to a significant degree does not properly fall
within the definition of "broadcasting" set out in the Broadcasting Act.
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46. By contrast, the ability to select, for example,
camera angles or background lighting would not by itself remove programs transmitted by
means of the Internet from the definition of "broadcasting". The Commission
notes that digital television can be expected to allow this more limited degree of
customization. In these circumstances, where the experience of end-users with the program
in question would be similar, if not the same, there is nonetheless a transmission of the
program for reception by the public, and, therefore, such content would be
"broadcasting". These types of programs would include, for example, those that
consist of digital audio and video services.
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Proposal to exempt all new media broadcasting
undertakings
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47. Section 9(4) of the Broadcasting Act requires the
Commission to exempt broadcasting undertakings from the licensing requirements in the Act
if the Commission is satisfied that compliance by these undertakings with these
requirements will not contribute in a material manner to the implementation of the
broadcasting policy for Canada.
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48. The record of this proceeding indicates that the
Internet has given rise to new avenues and forms of expression and communication for
Canadians, amongst themselves and others in both French and English. The proceeding also
highlighted the often local and regional nature of many of the services. They provide
valuable sources of information and other services to many Canadians that are otherwise
unavailable. Moreover, the demand for Canadian information and other services has led to
the development of search engines and aggregation sites that facilitate access to Canadian
services.
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49. Furthermore, the Commission considers 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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50. In light of the foregoing, the Commission is satisfied
that compliance with Part II of the Act, and any applicable regulations made thereunder,
by persons carrying on new media broadcasting undertakings will not contribute in a
material manner to the implementation of the policy objectives set out in section 3(1) of
the Act.
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51. Accordingly, the Commission will issue a proposed
exemption order without terms or conditions in respect of all undertakings that are
providing broadcasting services over the Internet, in whole or in part, in Canada.
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52. In addition, in light of the Commission's view with
respect to "customizable" content delivered by the Internet expressed above, it
considers it appropriate to review in the near future its current exemption order with
respect to video game programming undertakings.
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Telecommunications issues
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Competitors' access to carriers' facilities that are
closest to the end user
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53. Internet service providers consider that the most
immediate need is for Commission involvement in resolving access issues remaining with
respect to facilities that are closest to the customer ("last mile facilities"),
including higher speed access. It was submitted by others that the Commission must ensure
that such Internet service providers understand that tariffing such access is a
transitional step, and that Internet service providers should invest in their own
facilities. With respect to this position, it was stated that, under current legislation,
this approach would effectively require Internet service providers to be Canadian-owned to
supply high speed Internet services. Further, this would also amount to the government
assuming what should appropriately be business investment decisions by forcing investment
to be made in "transmission facilities" and away from "exempt transmission
apparatus" such as routers, servers, and software.
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54. The Commission agrees that it is important that
potential providers of competitive retail level Internet services have access to the
facilities of carriers that are dominant with respect to such facilities. For example, the
Commission has addressed such issues in Telecom Decision CRTC 98-9, Regulation under the
Telecommunications Act of Certain Telecommunications Services Offered by "Broadcast
Carriers", 9 July 1998. In that Decision, the Commission decided it would approve
("tariff") the rates and terms on which incumbent cable and telephone companies
provide higher speed access to their telecommunications facilities with respect to
competitive providers of retail level Internet services. The Commission anticipates that
it will issue, by 30 July 1999, its decision on the general regulatory approach to such
higher speed access services when they are offered by cable carriers.
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55. However, in light of the nature of the arguments made,
the Commission wishes to clarify that it does not agree with parties suggesting that the
Commission's objective is that all ISPs, providers of local exchange services or other
service providers must own or operate transmission facilities and so become
"facilities-based" carriers. The Commission has stated its objective of
promoting facilities-based entry in respect of switched services in particular (such as
local exchange and long distance services). However, this objective does not exclude
resale. While the Commission considers that facilities-based competition is important to
the realization of sustainable competition, it also recognizes that not all service
providers will invest in the transmission facilities that qualify them as
"telecommunications common carriers" under the Telecommunications Act.
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User Access to the Internet
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56. Various parties raised issues relating to the
affordability and universality of new media services. Certain parties discussed the
importance of an "electronic public commons" and addressed the various facets of
Internet access with reference to an "access rainbow" of various levels
(carriage and devices, software, content and services, service providers, literacy
facilitation and governance). Parties indicated that literacy and computer skills and the
cost of terminal equipment are more important to the achievement of universality in new
media than is the case with traditional telecommunications services. Because many
Canadians do not have literacy skills sufficient for Internet use, these Canadians will
never have access to the benefits of this medium. A partial solution is to explore ways to
use new media to advance literacy skills and, hence, Internet accessibility. Another
participant considered the government should clarify and elaborate on its commitment to
develop a national access strategy in respect of electronic networks.
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57. Some of the points raised by parties go beyond the
Commission's mandate under the Telecommunications Act. The Commission is currently
examining certain telecommunications issues related to access and its affordability in the
proceeding initiated by Telecom Public Notice CRTC
97-42, Service to High-Cost Serving Areas. The Commission intends to address issues
relating to whether access to the Internet should be considered as "basic"
service for subsidy purposes in its decision in that proceeding.
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Rationalizing interconnection and unbundling arrangements
for various service providers
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58. It was argued that the Commission should indicate that
it will begin a proceeding to rationalize all interconnection and unbundling arrangements,
and should include the issue of interconnection and unbundling rules for Internet service
providers in that proceeding. This was based on the view that such a proceeding is
required in order to realize the benefits of facilities-based competition in all areas.
Other parties, while agreeing that all interconnection and unbundling decisions should be
consistent with the Commission's fundamental competition principles, considered that it
may be useful to conduct a review if more issues come before the Commission and it is not
clear how fundamental competition principles would apply.
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59. The Commission notes that it has addressed a number of
interconnection and related issues on a case by case basis and, as a result, varying
regulatory arrangements are in place in respect of different service providers. Further,
the Commission recognizes that, with continuing developments in technologies, market
structure and service provider arrangements, a comprehensive review of all interconnection
and unbundling arrangements is appropriate. The Commission anticipates that such a review
will begin in the near future.
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A Canadian presence in new media
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60. Under its mandate to implement the policy objectives
set out in the Broadcasting Act, the Commission has imposed Canadian exhibition and
expenditure requirements on traditional broadcasters, as well as requirements for
distribution undertakings to contribute financially to the production of Canadian
programming. This was done in recognition of the fundamental importance of broadcasting to
Canadian sovereignty and cultural identity and the realization that market forces alone
would not provide a significant amount of Canadian broadcasting content. Canada's small
domestic market makes it difficult to finance the creation of competitive Canadian
programs. Whereas U.S. producers can recover the majority of their production costs
through domestic licence fees, the licence fees earned in Canada by most Canadian program
producers represent only a fraction of their total production costs.
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61. The economies of scale that exist in the United States
make American programming less expensive for Canadian broadcasters to acquire than
Canadian programming. At the same time, American programming has tended to attract larger
Canadian audiences than Canadian programming because of its higher production values and
well-established star system. This has particularly been the case for English-language
television. American broadcasters cannot provide their programming directly to Canadian
viewers except in situations where off-air signals are directly receivable. This has
resulted in a system whereby profitable non-Canadian programming is purchased by Canadian
broadcasters to subsidize the cost of Canadian programming.
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62. Similarly, in English-language radio, before the
advent of Canadian content regulations, it was difficult for Canadian sound recordings to
get airplay in Canada because they were competing against more heavily-financed and
promoted "hits" from the United States and other countries.
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63. The Commission confirms that its policies and
regulations for conventional broadcasting services remain appropriate.
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Canadian Content on the Internet
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Availability of Canadian Content
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64. In the Public Notice, the Commission set out a number
of questions related to Canadian content on the Internet. Specifically, the Commission was
interested in participants' views on the availability and visibility of Canadian new media
content and whether any incentives or regulatory measures were needed to prompt existing
or new industry participants to develop, produce, promote and distribute Canadian new
media content and services.
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65. Differing views on the need for public intervention to
foster the development and production of Canadian new media content were discussed at the
hearing. Some parties saw no need for any intervention at all, arguing that government
should not interfere in any way because there is no shortage of Canadian new media
content, no access problems for producers or consumers, and the new media industry is
developing rapidly.
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66. Other participants, however, favoured some form of
support for the production and distribution of new media content, although the majority of
these participants clearly preferred an incentive-based approach to one involving
regulation. To increase the level of support for Canadian new media content, a number of
initiatives were recommended. Among these were direct funding programs targeted
specifically at Canadian new media content, various tax incentives to support the new
media industry, content-specific industry development initiatives, and activities to
stimulate consumer demand for new media content.
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67. A few parties argued that a regulatory approach is the
only way to ensure that Canadian new media content is produced, promoted and guaranteed a
place of prominence on the Internet. The main suggestions for regulatory measures
included: (1) requiring ISPs to contribute a portion of their annual revenues to content
development funding; (2) requiring ISPs and/or content aggregators to ensure shelf space
and a place of prominence for Canadian new media content; and (3) requiring Canadian ISPs
to provide links to Canadian web sites.
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68. In the Commission's view, the circumstances that led
to the need for regulation of Canadian content in traditional broadcasting do not
currently exist in the Internet environment. Market forces are providing a Canadian
presence on the Internet that is also supported by a strong demand for Canadian new media
content. Participants provided statistics indicating that Canadian web sites represent
about 5% of all Internet web sites.
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69. Admittedly, the sheer amount of content available on
the Internet makes it difficult to measure Canadian-based content. However, parties
demonstrated that a strong Canadian presence exists on the Internet through reference to
some of the following: (1) the impressive number of Canadian web sites that exist; (2) key
partnerships that have developed between some ISPs and Canadian content creators for the
specific purpose of generating a supply of Canadian content; (3) the expansion of many
traditional Canadian media businesses to the Internet; and (4) the search tools available
that make it easier to locate Canadian content on the Internet.
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70. Further, during the hearing, many broadcasters
illustrated how they use their web sites to cross-promote their traditional Canadian
broadcasting services. There also appears to be a significant demand for local and
regional Canadian content on the Internet. Many Canadian television and radio stations
distribute some of their local news programming through their web sites.
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71. In light of the above, the Commission concurs with the
majority of participants that there is a significant amount of Canadian new media content
and services available on the Internet today and ample business and market incentives for
its continued production and distribution. In fact, many parties submitted that regulation
would serve to hinder, not help, the production and distribution of Canadian new media
content. Therefore, there is no policy rationale for the Commission to impose regulatory
measures to stimulate the production and distribution of Canadian content.
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Visibility of Canadian Content
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72. The issue of how Canadian new media content producers
will acquire visibility for their content was discussed at the hearing. Concern was
expressed that a few large content aggregators who might gain dominant positions could act
as gatekeepers to the most heavily trafficked web sites on the Internet.
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73. Parties disagreed on the urgency of this threat. Some
producers claimed to have already been asked to pay for access to search engines or
portals. However, many of the content aggregators that appeared before the Commission
denied that anyone is charging for access. Instead, they indicated that Canadian content
is always in demand because of the Internet's virtually limitless capacity to carry it.
Others have argued that producers are demanding and receiving significant compensation in
return for the right to mirror or cache their sites on a particular portal or server. Many
also noted that there are a number of Canadian content aggregators and portal sites that
are being established that could lead Canadian consumers easily to Canadian content.
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74. In the Commission's view, there was no convincing
evidence submitted throughout the hearing process to suggest that visibility of Canadian
content on the Internet is a problem and, therefore, no policy rationale to pursue
regulatory measures to support access to Canadian content on the Internet.
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75. The Commission is aware that the likely explanation as
to why Canadian content is flourishing on the Internet today is because the Internet is
still primarily a text-based information medium with a strong appeal to local and regional
interests. The type of content that is predominant on the Internet has low production
values; it is relatively inexpensive to produce; and it is in demand by Canadians who want
access to local, regional and national information in such areas as weather, sports,
current affairs and social services. If the Internet remains primarily a text-based,
information medium, then it is likely that market forces alone will continue to provide an
adequate supply of Canadian content.
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76. Many expressed concern about the preservation of
funding resources for high quality Canadian programming in the future new media
environment. A broad spectrum of participants recommended different funding initiatives to
support Canadian new media content. These included direct government funding of new media
content, in the form of grants, loans, and equity investments. A number of refundable tax
credits were also recommended to cover such new media expenses as investment in new media
production, labour, research and development, and capital costs. Several parties also
recommended that Section 19 of the Income Tax Act, which provides advertisers in Canadian
publications with deductions equal to the costs of their advertisements, should be applied
to new media.
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77. The Commission notes that a number of funds have
already been developed in both the public and private sectors to help finance Canadian new
media content. Funds such as The Multimedia Fund administered by Telefilm Canada, the
Stentor and Bell New Media funds and recent funds announced by Industry Canada have been
targeted toward Canadian new media content in the entertainment and educational genres.
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78. The Commission also acknowledges the work that is
being done to develop initiatives to support Canadian new media content and to nurture the
Canadian new media industry by such government departments as Canadian Heritage, Industry
Canada and the Department of Foreign Affairs and International Trade. Among a number of
noteworthy initiatives has been the government's "Connecting All Canadians"
agenda, which was announced in the 1998 Budget. This agenda has six pillars or areas of
emphasis for national leadership in new media which are intended to ensure that, among
other things, all Canadians will have access to new media, Canada will be a leader in
electronic commerce, and Canadian content will occupy a place of prominence on the
Internet.
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79. Funding initiatives may be particularly necessary for
the French-language new media market, which is significantly smaller than the
English-language market. Francophone new media developers are faced with higher production
costs than English-language producers because they often have to create a product in both
languages and develop more costly marketing and distribution strategies to expand their
market. Export options are also more limited in the francophone market. Not surprisingly,
the level of French-language content on the Internet is quite low when compared with
English-language content.
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80. Nevertheless, it is worth noting that the federal and
Quebec governments have been working to address this issue and have established funds that
are targeted specifically at French-language new media production. In addition, despite
the challenges it has faced, the new media industry in Quebec is one of the most vibrant
and well-developed in Canada. The Commission also notes the availability of a number of
French-language search engines that provide access to information in French.
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The Future of Canadian Content on the Internet
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81. There was a wide divergence of views among parties on
how the future of the Internet might unfold and the impact that this will have on
traditional media and on Canadian content.
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82. Many predicted that the future new media environment
could differ greatly from that of traditional broadcasting. For one thing, the notion that
the Internet might some day be a substitute for traditional television and radio
broadcasting is predicated on the assumption that it will be capable of delivering
broadband content. As mentioned previously, this will depend upon, among other things,
significant advances in bandwidth and processing speeds as well as the resolution of major
intellectual property issues. Several parties also pointed out that no new medium has ever
completely displaced a previous medium and it could be that television and radio will
continue to co-exist with the Internet, although perhaps in altered forms.
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83. Even if the Internet does become the dominant medium
for reaching mass audiences, it cannot be taken for granted that the economic model that
governs traditional broadcasting, whereby Canadian broadcasters can acquire discrete
Canadian rights for American programming, will exist on the Internet. This will depend on,
among other things, whether or not geographic rights markets for content on the Internet
will emerge.
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84. Some feel that it is more likely that production
companies such as Disney, Fox or MGM will have their own servers located in the United
States that will distribute video products cheaply and effectively direct to other
countries around the world. If there is no need for intermediaries, then Canadian
programmers or distributors may not be able to access the rights to non-Canadian
intellectual property. This could have an impact on the production of Canadian programming
if revenues from the exhibition of American programming are no longer available to
Canadians. In any case, the business model for the Internet would be significantly
different from that of traditional television. The business model could be driven by
Canadian content, eliminating the need for the regulation of Canadian content although not
necessarily the need for public funding of this content.
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85. By contrast, other parties predicted that the
emergence of geographic boundaries for intellectual property rights on the Internet is
imminent. Several parties also pointed out that some fundamental differences in the new
media environment are likely to provide Canadians with advantages that did not exist in
conventional broadcasting. For instance, some argued that the economies of scale in
distribution that have existed for U.S. content creators in traditional broadcasting will
not exist to the same extent in the new media environment. The advantage of the Internet
is that anyone can place their product or program on a server and immediately gain access
to a global audience. Similarly, technologies such as computer animation are already
resulting in lower costs for some types of production and further technological
innovations may continue this trend.
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86. There will also be many more outlets for alternative
voices and niche services that may be able to develop an audience or market base. An
example was given at the oral hearing of a Canadian artist who developed a following in
Japan where he sold some of his paintings via the Internet.
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87. Many Canadians will increasingly have access to a
diversity of content and services that might not have been available to them through
conventional broadcasting. This may benefit Canadians who belong to communities of
interest that have not been well-represented by mainstream media. This also raises the
question of whether the Internet will ever have the ability to create mass audiences in a
manner similar to that of conventional television, which is driven by mass-oriented
entertainment programming, or whether the sheer number of "channels" offered by
the Internet will always result in fragmentation. While some spoke of mass market Internet
services, others were of the view that the successful content creators on the Internet
will be the ones who target narrower communities of interest such as sports fans, art and
music lovers, youth culture, and so on.
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88. Finally, many consider Canada is ideally positioned to
achieve success in the new media market because of its expertise and strengths in several
of the creative and knowledge-based industries that fuel this growing industry including
telecommunications, software development, digital animation and multicultural/multilingual
content creation.
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89. In light of all of the above, the Commission does not
consider that it needs to impose any regulatory measures to support the development,
production, promotion and distribution of Canadian new media content and services. On
balance, while there may be both advantages and disadvantages in the future new media
environment, the Commission is confident, based on the record of this proceeding, that the
industry is moving in a direction that will result in a strong Canadian new media industry
and a strong Canadian presence on the Internet. Most noteworthy was the expression of
excitement and energy that was communicated by those who discussed their work in new
media. The Commission does not intend to impede this creative energy through unnecessary
regulatory measures but rather to encourage the continued leadership and innovation of the
Canadian new media sector.
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How conventional broadcasting and telecommunications are
affected by new media
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90. One of the issues raised by the Commission in its
Public Notice was whether, and if so, to what extent new media are now, or may be 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.
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91. The vast majority of participants agreed that, in the
short term, traditional media and new media services should be considered to be
complementary rather than substitute services. Participants noted key differences from
both a consumer's and a supplier's point of view when comparing traditional and new media.
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92. From the consumer's perspective, new media services
provide interactive and mostly unscheduled access, while traditional media offer mostly
one-way point-to-multipoint programming. Many participants also noted that the quality of
new media video is not of the quality available from traditional media. That situation is
expected to remain until extensive technological developments allow for improved quality.
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93. From a supplier's perspective, new media offer a
market where basic content can be produced and distributed at relatively little cost. New
media offer, among other things, consumer-specific messaging, an unlimited number of
distribution channels and a borderless distribution system through the Internet. This is
in contrast to the traditional media industry which is characterized by limited channel
capacity, a high degree of mass appeal programming, and high distribution costs and
barriers to entry. The Internet, which today has a penetration rate of approximately 20%,
compared to the much higher penetration rates of television and radio, cannot yet deliver
mass Canadian audiences.
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94. There was considerably less consensus among
participants regarding the longer term substitutability of new and traditional media
services and distribution systems. Some argued that there is no evidence that the Internet
will be capable of supporting the delivery of anything near broadcast quality video within
the next decade.
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95. Still other participants were of the view that new
media services will become substitutes for traditional media services within a shorter
time frame. Some suggested this could possibly occur within seven years.
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96. While views vary considerably, the Commission agrees
with most participants that key technological developments must take place before new
media services and distribution systems compete more directly with traditional media.
Should broadcast quality video and audio services become available, other factors need to
be considered before new media services and distribution systems can be considered to be
substitutes. Such factors include the cost of exhibition devices, the general appeal of
the service offerings, customers' willingness to pay, as well as PC and Internet access
penetration rates.
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97. The Commission notes, however, that new media may
evolve in ways that are entirely different from the current forms of conventional
broadcasting. For example, they may simply co-exist with and complement conventional
media, as in the cases of books, radio and television.
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Impact of new media on conventional broadcasters
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98. In order to establish whether new media activities are
having, or can be expected to have, a negative impact on the financial well-being of
regulated broadcasting services, parties discussed the major business models presently
used. It was generally agreed that definitive on-line business models have yet to emerge
in the nascent new media industry. Participants to this proceeding generally agreed,
however, that there are three major types of business models: advertising-driven,
subscription-based and transaction-driven. It was also generally agreed that most revenues
are currently derived from advertising and transactions, while subscription-based models
have so far rarely proven to be successful.
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99. A number of participants recognised that traditional
media firms undertaking new media ventures benefit from significant competitive advantages
that are generally not available to new entrants. One of the key opportunities afforded
traditional media firms is the ability to re-purpose their intellectual property for the
Internet, thus allowing for the amortization of costs over a larger audience. Traditional
media firms active in both industries can also expand their established brands, packaging,
publishing, marketing and content integration skills to the Internet, deriving a sizeable
advantage over firms that have yet to develop the same level of brand recognition and
managerial expertise. Finally, the new media industry provides new avenues for traditional
media growth. For instance, new media players that advertise on traditional media create
an increased demand for new media services which, in turn, creates an increased demand for
traditional avenues of distribution, such as telephone lines and cable access.
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100. Nevertheless, some participants expressed concern
about the potentially negative impact that the new media industry may have on the revenue
sources and the audiences of regulated broadcasters. There was a general consensus that
any such impact would result mainly from three factors: 1) a loss in radio and television
audiences to new media; (2) a loss in traditional media advertising revenues to new media
advertising; and (3) to a lesser extent, a loss in traditional media advertising revenues
due to the growth in electronic commerce.
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Impact of new media on traditional media audiences
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101. Some participants considered that, in the short term,
new media services will mostly compete for the time that Canadians have traditionally
allocated to leisure activities. Other parties, however, submitted that significant
declines in traditional media audiences are already taking place. It was argued that the
average number of hours that listeners tuned to radio dropped between 1993 and 1997 and
that younger Canadians are listening to less radio.
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102. With respect to radio audiences, the Commission notes
that the reference to a slight decrease in radio audiences between 1993 and 1997 does not
present cause for concern since yearly fluctuations in audiences generally take place. It
may be more relevant to note that, according to BBM data, the overall amount of radio
listening by Canadians has increased slightly over the past two decades, even in the face
of increased competition from other media such as television and computers. There is,
therefore, currently no obvious evidence of an impact on listening to conventional radio
as a result of the emergence of new media.
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103. It was also submitted that there has been a decline
in the amount of conventional television watched by Canadians in general. BBM data
indicate a gradual overall decline in per capita hours of viewing for Canadians of
approximately 1.7 hours per week, from a total of 24 hours per week, since 1986. Some
participants were of the view that in the mid to longer term, as current technological
constraints are addressed and as more Canadians gain access to the Internet, an
increasingly large number of Canadians will substitute the Internet for traditional media.
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104. Time spent in front of the television is a function
of a combination of factors including demographics, lifestyle, cost and price structures,
the introduction of substitute services and distribution systems, the general appeal of
programming, as well as the penetration rates of PCs and Internet access. The reasons for
the overall gradual decrease in television viewing over the past decade are complex and
cannot be attributed to any one factor. Specifically, the Commission considers that
participants have not demonstrated that new media services have thus far had a significant
and detrimental impact on traditional media audiences.
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Impact of new media advertising on traditional media
advertising
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105. A number of participants active in the new media
industry stated that advertising revenues are critical to their financial success. At this
time, it is estimated that the value of the Canadian on-line advertising industry stands
at approximately 1% of that in the U.S. However, many noted that the industry is still
regarded as being in an exploratory phase, experimenting with both U.S. and Canadian
sites. Participants generally considered that, while the Canadian on-line advertising
market could be expected to continue growing, such growth has to date been slow relative
to that in the U.S. One of the reasons given was that advertisers can reach Canadian and
other Internet users on U.S. sites, an indication of the global nature of the medium.
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106. Several participants also noted that a serious
impediment to the growth of on-line advertising results from the absence of sophisticated
and consistent measuring tools. Such tools are used to inform the advertisers of the
proportion of their target audience that is reached for a given dollar amount invested in
advertising. While a broad industry effort has been initiated to develop voluntary
standards for audience measurements, advertisers are taking a cautious approach to on-line
advertising until such tools are widely available.
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107. Most participants were of the view that new media
advertising has not, thus far, had a negative impact on the traditional media advertising
industry in any significant way. Some consider that the "advertising pie" is
getting larger, with the new media industry reaping incremental advertising dollars due to
the increased sales that Internet advertising generates. The participants considered that
the greater value of reaching more targeted audiences and getting more activity from those
audiences as a result of the advertising is being recognized.
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108. It was also submitted that when advertisers recognize
the consumer migration to new media, this will drive further development of new media and
attract more customers away from traditional broadcasters to the Internet. The suggestion
was made that, when this occurs, the value of advertising on the Internet with this large
consumer base will be recognized and may unleash a wave of advertisers onto the Internet,
with a dramatic negative impact on traditional media advertising budgets. However, there
was no evidence submitted that points to such a sudden and large shifting in advertising
resources to new media.
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109. The Commission agrees with most participants that
there is currently no evidence that the Internet has had a negative impact on the
advertising revenues of regulated broadcasters as a result of the growth in on-line
advertising. Analysis of the financial returns of radio broadcasters reveals increasing
annual growth in radio advertising revenue since 1993.
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110. Similar data from annual financial returns for the
television industry indicates a steady growth in advertising revenues over the past two
decades with minor slowdowns during the recessions of the early 1980s and 90s.
Accordingly, there does not appear to be any obvious impact of the growth of Internet
advertising on advertising dollars committed to the television industry.
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111. In addition, there may well be increased efficiencies
and cost savings as a result of technological developments, that will lead to more money
being available for advertising in all forms.
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Impact of electronic commerce on traditional media
advertising
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112. Participants at the hearing generally agreed that
electronic commerce has involved mostly business-to-business rather than
business-to-consumer transactions. A December 1998 Internet Survey conducted by A.C.
Nielson revealed that only 17% of Internet users made on-line purchases in 1998. Issues
such as online security, fraud and privacy were cited as concerns that continue to
discourage many consumers from venturing on-line to shop. This is, however, an area that
will continue to grow and evolve.
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113. Some participants expressed concern about the
potential negative impact of the growth of electronic commerce on the advertising base of
traditional media. It was suggested that electronic commerce could significantly affect
the manner in which advertising is bought and sold on traditional media. For instance, it
was argued that an increase in the number of cars sold on-line could lead to a reduction
in the number of retail outlets for cars, thus likely reducing the number of advertisers
who buy commercials on television and radio stations.
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114. While the Commission considers the scenario presented
above to be plausible in the mid to longer term, it notes that no evidence has been
submitted to substantiate that traditional media's advertising revenues have in any way
been negatively impacted by the advent of electronic commerce thus far. In fact, it is
equally plausible that the total advertising dollars will increase because of stimulation
by electronic commerce.
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Impact of new media on telecommunications
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115. Some parties submitted that the new media are
affecting telecommunications undertakings through the substitution of "telecom
analogous" services, such as e-mail and Internet telephony for traditional
telecommunications services, as well as fax and circuit-switched telephony.
Telecommunications undertakings are also being affected by the new media through the
convergence of data and voice networks and the dramatic demand for data carriage brought
on by the explosive growth in Internet use. These changes require telecommunications
undertakings regulated by the Commission to adopt the new technologies to remain
competitive. In a similar vein, it was noted that the deployment of new telecommunications
transport technologies, while enabling the offering of new media content services, is also
changing the way current services, such as voice long distance, are being offered. Various
providers of retail level Internet Services submitted that competitive access is crucial
to the success of the Canadian new media industry and that the Commission should ensure a
competitive infrastructure for new media services.
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116. The Commission notes that carriers and other service
providers are responding as they consider appropriate to new transmission and other
technologies. Because new technologies generally are not adopted across the industry on an
instantaneous basis, the impact of these technologies also manifests itself over a period
of time, and the Commission takes this into account in setting its regulatory agenda. For
example, the Commission has been aware that, for various reasons, including changing
technology (notably the move to packet technologies, which is also one of the attributes
of the Internet transmission protocol), it would likely become necessary to review the
current regime of contribution subsidy payments. Recently, the Commission began a
proceeding to review this subsidy regime, which supports affordable basic
telecommunications services (Telecom Public Notice CRTC
99-6, Review of Contribution Collection Mechanism and Related Issues, 1 March 1999).
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Offensive and illegal content
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117. Most parties to the proceeding acknowledged the
presence of both offensive and potentially illegal content on the Internet. Where parties
differed to some extent was in how best to deal with this type of content. Most agreed
that Commission regulation of participating undertakings and the services they provide is
either inappropriate or unnecessary. While the majority argued that issues of social
concern, such as hate propaganda and obscenity, are most appropriately dealt with under
existing Canadian laws, they also supported industry self-regulation as an effective means
of addressing offensive content, either through codes of conduct or other self-regulatory
mechanisms. They also pointed to a number of tools currently on the market, such as
content filters and blocking devices, which exist to protect children from content that
might be harmful to them.
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118. However, a number of parties expressed concern about
the ease with which both offensive and potentially illegal content can be accessed and
disseminated. Some called upon the Commission to regulate this type of content. Of those
expressing concerns, a number agreed that while the Criminal Code contains tools for
dealing with illegal content, using those tools can be a lengthy and arduous process. A
number of parties suggested that additional powers should be given to the Canadian Human
Rights Commission to combat certain hate propaganda and other activities prohibited by the
Canadian Human Rights Act. Some argued that stronger codes of conduct, including
procedures for notice and take down of offending web sites, should be developed by
industry groups.
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119. Most parties, while concerned about offensive and
potentially illegal content on the Internet, were reluctant to endorse regulation that
would restrict access to information or rights of rebuttal on the medium.
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120. It was also suggested that the Commission and
Government work with a variety of partners, in both the public and private sectors and on
both domestic and international levels, to deal with the issue of "illegal and
undesirable activity" on the Internet. The Commission notes that government agencies
and ISP industry representatives are currently discussing these matters.
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121. The Commission acknowledges the expressions of
concern about the dissemination of offensive and potentially illegal content over the
Internet. It also acknowledges the views of the majority of parties who argued that
Canadian laws of general application, coupled with self-regulatory initiatives, would be
more appropriate for dealing with this type of content over the Internet than either the
Broadcasting Act or Telecommunications Act. The vast majority of such content,
particularly hate propaganda, is beyond the regulatory jurisdiction of the Broadcasting
Act because it consists predominantly of alphanumeric text. As such, it falls outside of
the definition of a "program" set out in the Act. In keeping with the overall
policy stated earlier, significantly customized content does not fall within the
definition of broadcasting and that content which is broadcasting will be exempt from
regulation.
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122. The Commission also notes that Internet service
providers and their industry associations, in conjunction with both government agencies
and other organizations, have made efforts to develop codes of conduct that would assist
in combating the dissemination of offensive and potentially illegal material. The
Commission encourages these groups to continue their work in developing standards and
procedures for dealing with such content. The Commission considers that more can likely be
done in the area of illegal content by, for example, establishing complaint lines and
industry ombudsmen as well as developing international arrangements. Such arrangements
could include co-operation between law enforcement agencies for providing notice and take
down of web sites disseminating such content.
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123. The Commission also believes that users can assist in
controlling access to web sites that may be inappropriate for children. The existence of
content filtering software that is relatively inexpensive and, in some cases, free of
charge, is a useful tool for controlling access by children to unsuitable material. The
Commission notes that, like most other aspects of new media, effective content filtering
software is developing rapidly.
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124. Lastly, the Commission notes that, as with most other
media, awareness and knowledge of the benefits that can be obtained from the rich
diversity of content available on the Internet, as well as of the existence of offensive
content, can be a powerful tool in the hands of users. Organizations such as the Media
Awareness Network, a Canadian not-for-profit organization, are dedicated to media
education and media issues affecting children and youth. Useful information can be
obtained from such groups. The Media Awareness Network, for example, can be accessed on
the Internet at
http://www.media-awareness.ca
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Secretary General
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Appendix 1 (not available)
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The diagram on the following page illustrates the
chronology of the regulatory and policy initiatives leading up to the CRTC's policy on new
media
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This notice is available in alternative format upon
request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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APPENDIX 2
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Glossary of New Media Terms
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Browsing
Viewing World Wide Web sites and often following links to other sites.
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CAPs (Community Access Points)
The Internet can be accessed in a variety of public places in communities across
Canada. "Terminals", computers with internet access, are normally found in
libraries, schools and other public buildings and are available for use by the general
public subject to certain usage guidelines produced and enforced by the group which owns
and operates the terminals. Government assistance has supported and facilitated the
establishment of many of these CAPs.
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CD ROM
A Compact Disc is capable of storing large amounts of electronic data. If a CD ROM reader
is attached to a computer then the user can access that data. ROM stands for Read Only
Memory, meaning that the data on a CD ROM can only be viewed and used but not changed. CD
ROM writers, however, allow data to be changed and are becoming much more common.
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E-mail
E-mail or Electronic Mail is the most common use of the Internet. Messages can be
sent from one user to another over the network almost instantaneously. Documents or other
content may be attached to e-mail messages and also sent to other users. E-mail passes
through the network via Simple Mail Transfer Protocol (SMTP).
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FTP
Computer files may be moved (downloaded or uploaded) through the Internet using
File Transfer Protocol (FTP).
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Freenets (various other names)
These groups provide services for little or no charge and are a way for members
of a specific community to discuss, and provide information or assistance on topics of
importance to the group itself. Freenets operate much like ISPs although, since they
charge little or nothing for the services they provide, they are often more limited in
what they can offer users.
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Internet
The Internet is a distribution system that is capable of handling a wide variety
of data (text, pictures and sound) in any number of formats. In order to move through the
Internet, however, data and requests for data made by users must adhere to sets of rules
called "protocols." The Internet is a distributed, inter-operable,
packet-switched network which predominantly uses the TCP/IP protocol.
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· A distributed network has no one central repository of
information or control, but is comprised of an interconnected web of "host"
computers, each of which can be accessed from virtually any point on the network. An
Internet user can obtain information from a host computer in another province or another
country just as easily as obtaining information from across the street and often with
little knowledge of the location of its source.
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· An interoperable network uses "open
protocols" so that many different types of networks and facilities can be
transparently linked together, and allows multiple services to be provided to different
users over the same network. The Internet can run over virtually any type of facility that
can transmit data, including copper and fibre optic circuits of telephone companies,
coaxial cable of cable companies, and various types of wireless connections.
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· packet-based technologies transmit information over a
network by splitting up the data into small chunks, or "packets." Each packet
may take a completely different route through the network depending on congestion and
distance. As packets reach their destination they are reassembled into their original
form.
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IAP
Internet Access Provider. See Internet Service Provider
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ISP
Internet Service Provider. A company or other organization which provides access to the
Internet to its customers via one or a combination of dial-up lines (similar to telephone
service), coaxial cable ISDN, xDSL or other dedicated lines. The most typical example is a
home user who pays a fee to connect to the ISP's server. The connection is made by a
"modem" which makes the electronic data from the home user's computer
transmittable over a telephone line. The data then passes through the telephone company's
facilities in the same way as a normal telephone call. The "call" is received by
the ISP which "routes" the user's requests for information to the server that is
"hosting" the desired data. Note: The computer of an ISP customer is ordinarily
never actually "on-line", it simply sends requests and receives information via
the ISP's servers and routers.
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Intranet
An Intranet operates almost identically to the Internet but is normally shielded
off from access by the general public and the rest of the Internet by electronic barriers
called "firewalls". Other Intranets may be entirely self-contained and not
accessible at all over the Internet by normal means. An Intranet can be considered
essentially to be a small privately owned and operated Internet.
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Newsgroups (also called Usenet)
Focused discussion groups (newsgroups or Usenet) are conducted by Network News Transport
Protocol (NNTP). Each of these groups has a specific topic for discussion and a set of
principles that guide discussion that are usually set out in FAQs (Frequently Asked
Questions).
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Portal
A web-site that accumulates a wide variety of proprietary content and links that it offers
to users, sometimes on a subscription basis. A portal also organizes and provides links to
a great deal of non-proprietary information elsewhere on the Internet. Portals often
provide Internet search features (see search engines) and maintain links to other media
organizations to supply users with additional news and entertainment content.
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Protocol
A set of rules or an entire "language" which sets out what form content must be
in to be sent and received accurately and the way in which that content is transmitted.
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Search Engine
Many Internet sites offer the user the ability to search their databases for links to web
pages, news group articles, FTP sites or other Internet content.
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Surfing
See browsing.
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TCP/IP
The Transmission Control Protocol/Internet Protocol defines a common structure for
Internet data and for the routing of that data through the network. It is this protocol
that makes it possible for data (Internet content) to be transmitted via any type of
infrastructure (i.e. telephone cable, optical fibre, etc.)
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World Wide Web (www)
World Wide Web pages are one type of content that may be requested and distributed on the
Internet. Web pages are made up of "hypertext" which links together a
combination of pictures, sounds, text and other sites. Web pages, or collections of pages
by one author(s), which are called web sites, are based upon the rules of Hyper Text
Transfer Protocol (http). Web pages are viewed in a type of software called a
"browser" (browsers may also be used to view other types of Internet content as
well).
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Certain small programs may also be part of a web page.
These programs, or "apps" (applications), are normally used to enhance the other
features of a web page or site, such as causing pictures to move or a sound to be played.
A more sophisticated type of application is used to search databases such as those owned
and operated by the various "search engines." www applications are not created
in hypertext but are usually written in compatible computer languages.
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