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Broadcasting Public Notice CRTC 2005-104
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Ottawa, 23 November 2005 |
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Revised approach for the consideration of broadcasting licence
applications proposing new third-language ethnic Category 2 pay and
specialty services
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This public notice outlines the revised
approach that the Commission will follow when considering broadcasting
licence applications proposing new third-language ethnic Category 2 pay
and specialty services. The purpose of the revised approach is to expand
the diversity and the range of Canadian television services available to
underserved third-language ethnic communities. |
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Background
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1. |
In Improving the diversity of third-language
television services – A revised approach to assessing requests to
add non-Canadian third-language television services to the lists of
eligible satellite services for distribution on a digital basis,
Broadcasting Public Notice CRTC 2004-96,
16 December 2004 (Public Notice 2004-96),
the Commission adopted a more open-entry approach to the addition
of non-Canadian, third-language, general interest services to the
lists of eligible satellite services for distribution by broadcasting
distribution undertakings (BDUs) on a digital basis (the digital lists).
A general interest service is one that, unlike a niche service, offers
programming from a broad spectrum of program genres and categories.
The Commission announced that, under its revised approach, requests
for the addition of non-Canadian, third-language, general interest
services to the digital lists would generally be approved, subject
to new distribution and linkage requirements aimed at minimizing the
potential negative impact on Canadian third-language ethnic services. |
2. |
In Public Notice 2004-96,
the Commission stated that, in light of the more open-entry approach
it would take in its consideration of requests to add non-Canadian
third-language services to the digital lists, it might also be appropriate
to modify the approach it takes when considering broadcasting licence
applications proposing new third-language ethnic Category 2 pay
and specialty services. Accordingly, the Commission issued Call
for comments on a proposed new approach to the consideration of
applications for Canadian third-language ethnic Category 2 pay and
specialty services, Broadcasting Public Notice CRTC 2005-17,
25 February 2005 (Public Notice 2005-17).
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3. |
In Public Notice 2005-17,
the Commission noted that its current approach to the consideration
of an application proposing a new Category 2 service includes an examination
of whether the service would compete directly with any Category 1
or analog specialty or pay television service. Under the approach
outlined in Public Notice 2005-17,
the Commission proposed that it no longer assess the potential competitiveness
of a proposed third-language ethnic Category 2 service with existing
analog third-language ethnic specialty services. The Commission called
for comment on an approach whereby, in place of such an assessment,
it would generally approve an application for a licence for a third-language
ethnic Category 2 service provided that the proposed service
satisfies the following criteria: |
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- The service qualifies as a third-language ethnic programming
service. Consistent with the approach adopted for non-Canadian
services in Public Notice 2004-96,
the Commission proposed to define a third-language ethnic programming
service as one that provides at least 90% of its programming in
languages other than English and/or French. For the purpose of
making this calculation, a program accompanied by secondary audio
programming (SAP) or subtitles in English and/or French would
not be counted as a third-language program.
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- The service meets the minimum licensing criteria for Category 2
services; in particular, it would be required to broadcast minimum
levels of Canadian content and comply with the Commission’s ownership
requirements.
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4. |
In Public Notice 2005-17,
the Commission also noted that it has generally permitted the ethnic
analog and Category 2 specialty services, upon application and approval,
to broadcast up to six minutes per hour of local advertising. The
Commission sought comment on the advisability of further streamlining
its approach to third-language ethnic Category 2 specialty services
by establishing a general rule that would permit such services to
broadcast up to six minutes per hour of local advertising. |
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Comments in response to Public Notice 2005-17
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5. |
In response to Public Notice 2005-17,
Rogers Cable Communications Inc. (Rogers), the Canadian Cable Telecommunications
Association (CCTA), Quebecor Media Inc. (QMI), Terraterra Communications
Inc. (Terraterra), Ethnic Channels Group Limited (ECGL), AJIT Broadcasting
Corporation Inc. (AJIT) and one individual generally supported the
increased availability of new third-language ethnic Category 2 pay
and specialty services. However, the Canadian Association of Broadcasters
(CAB), Global Television Network Inc.1
(Global), Fairchild Television Ltd. (Fairchild) and Asian Television
Network International Limited (ATN) expressed concern that the addition
of new third-language ethnic Category 2 services might threaten the
continued viability of existing analog third-language ethnic specialty
services. The key issues addressed in the comments filed are set out
below. |
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Impact on existing services
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6. |
The CCTA, Rogers, QMI, AJIT, ECGL,
Terraterra and one individual supported the Commission’s proposal to
modify its approach to the consideration of applications proposing new
third-language ethnic Category 2 programming services. They argued that
the addition of such services to the Canadian broadcasting system would
respond to an increasing demand for third-language services, result in
improved service to third-language communities, and possibly lessen
viewing to unauthorized satellite services. |
7. |
ATN, Fairchild, Global and the CAB
generally argued that the Commission’s longstanding policy not to
license new pay and specialty services that would be competitive with
existing Canadian services is an important mechanism for ensuring that
Canadian services are able to contribute to the objectives of the
Broadcasting Act (the Act). They considered that the current
licensing policy of assessing applications proposing new third-language
ethnic Category 2 services on a case-by-case basis should be maintained.
They contended that such new services would compete directly with analog
services for audiences, subscriber revenues and program rights, and
unlike foreign services, for advertising revenues as well. They noted in
this regard that the five existing analog third-language ethnic
specialty services generally have greater obligations with respect to
the exhibition of, or expenditures on, Canadian programming than do
third-language ethnic Category 2 services. These parties also submitted
that, as a consequence of the Commission’s revised approach to
non-Canadian services set out in Public Notice 2004-96, the five
existing analog services face the additional prospect of increased
competition from non-Canadian services operating in the same language.
Fairchild claimed that the proposed approach would further discriminate
against existing analog third-language ethnic specialty services because
the limited size of their markets make them more vulnerable to
competition, relative to their English- and French-language pay and
specialty counterparts. |
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The proposed minimum threshold requirement of 90% for third-language
programming, excluding that accompanied by English- or French-language
SAP or subtitles
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8. |
The Commission proposed to define a
third-language ethnic programming service as one that provides at least
90% of its programming in languages other than English or French. The
Commission further proposed that, for the purpose of making this
calculation, it would exclude from consideration those programs that are
accompanied by SAP or subtitles in English and/or French. |
9. |
Rogers, the CCTA and ECGL recommended that
third-language programs accompanied by SAP or subtitles in either
English or French not be excluded from the calculation of the minimum
required threshold amount of third-language programming. Rather, they
argued that a service should qualify as a third-language ethnic
programming service solely on the basis of the percentage of main audio
programming offered in languages other than French and English. ECGL
proposed that, should the Commission nevertheless decide, as a general
rule, to exclude from the calculation programming that is accompanied by
SAP or subtitles in English or French, it should consider permitting
exceptions, on a case-by-case basis, when warranted by the nature of a
particular service. |
10. |
According to ECGL, Category 2 services have
a legitimate interest in expanding their reach to include segments of
the English- and French-speaking audience. Rogers added that the
provision by a third-language ethnic programming service of some
third-language programming accompanied by subtitles or SAP in English
and/or in French should not be viewed in a negative light or be
penalized. According to Rogers, the Commission’s proposal to exclude
such programming from the calculation of the amount of qualifying
third-language programming would actually decrease the diversity and
choice offered by third-language ethnic services. |
11. |
AJIT and Terraterra also argued that the
Commission’s proposal to exclude from its calculation of the amount of
third-language programming in a service all such programming that is
accompanied by English- or French-language SAP or subtitles may be too
restrictive. They noted that some ethnic services provide programming
that, while in English or French, is directed specifically at ethnic
audiences. AJIT stated that, were the Commission to adopt its proposed
definition of a third-language ethnic service, those applications that
had been filed on the basis of the pre-existing policy approach, and
that have already been announced by the Commission in a public notice or
notice of public hearing, should be grandfathered. AJIT suggested that,
alternatively, a special expedited process be implemented whereby
applicants would be permitted to amend their applications to make them
consistent with the new policy. |
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The proposed buy-through requirement
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12. |
The CAB recommended that the Commission
maintain its current approach for assessing broadcasting licence
applications proposing new third-language ethnic Category 2 services. It
expressed concern that the Commission’s proposed approach would be an
inappropriate departure from its long-standing policy not to license new
specialty or pay services that are competitive with existing Canadian
services. The CAB suggested that, were the Commission nevertheless to
decide, in the interest of increased consumer choice, to adopt a new
approach to the licensing of new third-language ethnic Category 2 pay
and specialty services, it should impose certain distribution
requirements with respect to existing Canadian third-language ethnic
services to ensure that they are not unduly compromised by the new
approach. Specifically, the CAB recommended the following requirements: |
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a) Where the Commission licenses a new, third-language ethnic
Category 2 service operating in the same language as an analog
third-language ethnic specialty service, the Canadian content
obligations of the new Category 2 service should generally match those
of the analog service.
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b) A subscriber to a new, third-language ethnic Category 2 service
should be required also to subscribe to any analog third-language
ethnic specialty service operating in the same language (buy-through).
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c) Should a BDU choose to distribute a new, affiliated,
third-language ethnic Category 2 service, and should an unaffiliated
Category 2 service offering programming in the same principal language
as the affiliated Category 2 service then be in operation, the BDU
would be required also to distribute the unaffiliated service. A
subscriber would not be obliged to subscribe to the affiliated
Category 2 service in order to receive the unaffiliated Category 2
service.
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13. |
Fairchild agreed with the CAB that, should
the Commission adopt a more open-entry approach for new third-language
ethnic Category 2 services, it should also, at a minimum, impose a
buy-through requirement for analog third-language ethnic services
already in existence, as it did in the context of non-Canadian
third-language services pursuant to Public Notice 2004-96.
According to Fairchild, such a buy-through requirement would help offset
the negative impact resulting from the licensing of new, competitive
third-language ethnic Category 2 services. |
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Advertising
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14. |
QMI and Terraterra suggested that
third-language ethnic Category 2 specialty services should generally be
permitted to broadcast local advertising. QMI stated that many
advertisers in larger Canadian cities would benefit from the ability to
direct their advertising messages to specific cultural groups. QMI also
noted that the additional revenues that third-language ethnic specialty
broadcasters would earn as a consequence would help them to produce high
quality Canadian programming. |
15. |
The CAB, Global, Fairchild and ATN argued
that permitting new third-language ethnic Category 2 specialty services
to broadcast local advertising would place them in direct competition
for advertising revenues with existing analog ethnic specialty services.
They stated that the Commission should therefore continue to give
case-by-case consideration to broadcasting licence applications
proposing new third-language ethnic Category 2 services that would be
supported by revenues earned through the broadcast of local advertising.
They noted that such an approach would provide interested parties with
the opportunity to comment on the potential impact of any such proposal.
The CAB added that, while the Commission has, in the past, approved
applications by Canadian ethnic services for authority to
broadcast a maximum of six minutes per hour of local advertising,
such approvals have been granted on the basis of case-by-case
determinations by the Commission that market conditions would support
such activity. According to the CAB, suitable market conditions may not
be present in every instance. |
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Timing and consideration of applications
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16. |
AJIT expressed concern regarding the length
of time generally taken by the Commission to dispose of Category 2
broadcasting licence applications. While acknowledging that the purpose
of the proposed policy is to create a more streamlined process, AJIT
noted that the Commission has delayed the approval of pending
third-language ethnic Category 2 applications. |
17. |
ECGL stated that the licensing process for
Category 2 services should be no less expeditious than the process
followed by the Commission in its consideration of sponsored requests
for the addition of non-Canadian services to the digital lists. |
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Commission’s analysis and determinations
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18. |
In designing a new approach for
consideration of applications proposing new third-language ethnic
Category 2 pay and specialty services, the Commission has been guided by
the overall objective of maximizing the availability of such Canadian
services within the Canadian broadcasting system, thereby improving the
diversity and choice of programming available to underserved cultural
and linguistic communities. |
19. |
As noted in Public Notice 2004-96,
the Commission is of the view that Canadian third-language ethnic
services are best positioned to contribute to programming diversity,
and are thus important vehicles for meeting the needs and interests
of Canada’s third-language ethnic communities and for fulfilling important
objectives of the Act. They combine high quality Canadian programming
reflecting the perspectives, experiences and values of Canada’s third-language
ethnic communities with the most attractive non-Canadian programming.
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20. |
In light of the broad objective noted
above, and taking into account the Commission’s revised approach to the
consideration of non-Canadian third-language ethnic services, the
Commission considers that a framework that would encourage and expedite
the entry of new third-language ethnic Category 2 services would be
appropriate. At the same time, the Commission is mindful of the concerns
expressed by interested parties that an open-entry approach should not
be allowed to have an undue negative effect on the existing analog
ethnic specialty services and their ability to meet their more stringent
Canadian exhibition and spending requirements. In particular, the
Commission notes the views of some parties that a new third-language
ethnic Category 2 service that would compete directly with an analog
ethnic specialty service could have a negative impact on the
subscription and viewing levels of the latter, and could compete for
advertising revenue and for program rights. Accordingly, based on the
record of this proceeding, the Commission considers that appropriate
mechanisms should be put in place for the purpose of mitigating the
potential undue negative impact created by the licensing of new
third-language ethnic Category 2 services operating in the same
principal language as that of one of the five existing analog ethnic
specialty services. In this context, a principal language means a third
language that represents 40% or more of the program schedule of a
service. |
21. |
The Commission notes in this regard that
third-language ethnic Category 2 services operating predominantly in
languages other than the principal languages of the existing analog
ethnic specialty services, namely Cantonese, Greek, Hindi, Italian,
Mandarin or Spanish, would generally be approved under the current
licensing approach as they would not likely be found to be directly
competitive with the analog ethnic specialty services. For essentially
the same reasons, third-language niche services (services that are
focused on a specific programming genre or on a particular target
group), whether or not they operate in any of those six languages, would
also generally be approved. Accordingly, even under a more open-entry
approach, no additional mechanisms need be applied to such services.
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22. |
With respect to the CAB’s recommendation
that BDUs distributing new, affiliated third-language ethnic Category 2
services also be required to distribute at least one unaffiliated
Category 2 service operating in the same language, the Commission is
satisfied that the existing requirement to distribute five unaffiliated
Category 2 services for each affiliated Category 2 service is sufficient
to address the CAB’s concern. |
23. |
The Commission will adopt a revised, more
open-entry approach to its consideration of applications proposing new
third-language ethnic Category 2 pay and specialty services. Under this
approach, the Commission will no longer assess the potential
competitiveness of new, third-language ethnic Category 2 pay and
specialty services with existing analog third-language ethnic specialty
services. Instead, such applications will generally be approved, subject
in appropriate cases to the buy-through requirement and the criteria
specified below. |
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A minimum threshold requirement of 90% for third-language
programming
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24. |
In order to qualify for consideration under
this approach, an applicant proposing a new third-language ethnic
Category 2 service must commit to devote at least 90% of the program
schedule of the service to programming in languages other than English
or French. The remainder of the programming schedule, i.e., up to 10% of
a proposed third-language ethnic Category 2 service, may be in one or
both official languages. The Commission would encourage applicants to
ensure that all such programming serves to promote Canada’s linguistic
duality. |
25. |
The Commission has considered and agrees
with the views of those parties who argued that third-language
programming that is accompanied by English- or French-language SAP or
subtitles should qualify as third-language programming in calculating
the percentage of third-language programming necessary for a proposed
service to qualify for consideration under the revised approach. As
noted by several interveners, the provision of such programming can
serve important cross-cultural purposes by making such programming
accessible to Canadians who may not speak or understand the language in
question, but who nonetheless wish to be exposed to such programming. |
26. |
Accordingly, for the purpose of this
revised approach, a program whose main audio portion is in a third
language, and that is accompanied by SAP or subtitles in English or in
French, will qualify as a third-language program. A program whose main
audio portion is in French or English would not qualify as a
third-language program, even though it may be accompanied by SAP or
subtitles in a third-language. |
27. |
The Commission emphasizes that the
flexibility to be extended to new third-language Category 2 ethnic
services under this revised approach is for the purpose of making these
services more accessible and attractive to third-language ethnic
audiences. Accordingly, should an applicant propose a new third-language
ethnic Category 2 service that would offer a significant amount of
third-language programming that is accompanied by a SAP feed in English
or in French, the Commission may wish to consider whether the proposed
service would be competitive with English- or French-language services.
The Commission is satisfied that these provisions will ensure that new
third-language ethnic Category 2 services do not have an undue negative
impact on English- and French-language analog and Category 1 services,
and that they are indeed focused on serving third-language ethnic
audiences. |
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Buy-through requirement for new, general interest, third-language
ethnic Category 2 specialty services
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28. |
Where a broadcasting licence is issued for
a new, general interest, third-language ethnic Category 2 specialty or
pay service under the criteria set out above, including the requirement
that at least 90% of the program schedule be in languages other than
English and/or French, and where 40% or more of its program schedule is
in Cantonese, Mandarin, Italian, Spanish, Greek or Hindi, the Commission
will require BDUs choosing to distribute the service to do so only to
subscribers who also subscribe to the existing analog third-language
ethnic specialty service operating in that same language. As the
Commission stated at the beginning of this notice, a general interest
service, whether Canadian or non-Canadian, is one that, unlike a niche
service, offers programming from a broad spectrum of program genres and
categories. The Commission is satisfied that this buy-through
requirement will alleviate the impact of the revised approach on
existing analog third-language ethnic specialty services. |
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Applications proposing less than 90% third-language ethnic
programming
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29. |
Broadcasting licence applications proposing
new ethnic Category 2 services that would offer less than 90% of their
programming in a third language will continue to be assessed under
the case-by-case approach set out in Licensing framework policy
for new digital pay and specialty services, Public Notice
CRTC 2000-6, 13 January 2000. This
approach will assist the Commission in determining whether or not
a proposed service would be directly competitive with any existing
analog pay or specialty service, or any Category 1 specialty service. |
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Advertising
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30. |
As noted in Public Notice 2005-17,
the Commission has generally approved applications by the licensees
of ethnic specialty services to broadcast up to six minutes per hour
of local advertising. Based on the record of this proceeding, the
Commission has determined that it will generally continue to permit
new services to broadcast up to six minutes per hour of local advertising
unless an intervener makes a compelling case to the contrary. |
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Implementation
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31. |
The Commission will amend the relevant
application forms to reflect the revised approach it will now follow in
its consideration of broadcasting licence applications proposing new,
third-language ethnic Category 2 pay and specialty services. With
respect to such applications that have been filed with the Commission,
but that have not yet been announced, the Commission will permit
applicants to amend their applications to take into account the revised
approach set out above, should they wish to do so. An applicant wishing
to amend its application must file the appropriate amendments with the
Commission, in writing, by no later than 14 December 2005. Otherwise,
the Commission will proceed with consideration of the application as
filed. |
32. |
The Commission will amend Distribution
and linkage requirements for Class 1 and Class 2 licensees, Broadcasting
Public Notice CRTC 2005-98,
27 October 2005, and Linkage requirements for direct-to-home (DTH)
satellite distribution undertakings, Broadcasting Public Notice
CRTC 2005-46, 11 May 2005, both of which
are incorporated by reference into the Broadcasting Distribution
Regulations, to make these new requirements applicable to each
Class 1 and Class 2 BDU, and to each DTH operator, respectively, except
as otherwise provided by a condition of its licence. |
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Secretary General |
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This document is available in alternative
format upon request, and may also be examined in PDF
format or in HTML at the following Internet site: http://www.crtc.gc.ca
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Footnote:
On
1 September 2005, Global Television Network Inc., Global Communications
Limited, CanWest Media Inc. and certain other CanWest corporations
amalgamated to continue as CanWest MediaWorks Inc. |