Convergence Policy - Backgrounder

The Policy Statement for Convergence is an important step in fulfilling the Government's commitment to ensure that Canadians can participate fully in the information society. It culminates a long process of public consultations and studies. The goal has been to create the conditions needed for fair and sustainable competition, expanded consumer choice, and continued support for Canadian culture.

Process

• October 1994, Government issues an Order in Council related to convergence and requests the Canadian Radio-television and Telecommunications Commission (CRTC) to hold hearings and report back on issues associated with its implementation.
• CRTC Report, "Competition and Culture on Canada's Information Highway: Managing the Challenges of Transition" released May 19, 1995. More than 1,000 written submissions and 78 oral presentations made. Report supports Government policy and suggests implementation principles.
• Information Highway Advisory Council (IHAC) reviews and comments on CRTC report. IHAC's "Connection, Community, Content: The Challenge of the Information Highway", released Sept. 27, 1995. IHAC's working group report on Canadian content and culture, "Ensuring a Strong Canadian Presence on the Information Highway", released October 2, 1995. V
• Government's overall action plan for Information Highway, "Building the Information Society: Moving Canada into the 21st Century" released by Industry Minister Manley on May 23, 1996.

Highlights

The Policy Statement is intended to guide the CRTC as it establishes rules and regulations for broadcasting and telecommunications in the convergence era. It will also provide greater clarity and confidence for broadcasting and telecommunications firms as they enter each other's traditional areas of activity. For consumers, the policy framework will help bring about more choices and the assurance that Canadian content remains prominent on their screens.

While new technologies allow telecommunications and broadcasting companies to offer similar services, the distinction between telecommunications, broadcasting, and their services will remain, and will be guided by distinct regulatory systems. For example, when a telecommunications company provides broadcasting services, those services will fall under the Broadcasting Act and its regulations; when a cable company provides telecommunications services, they will fall under the Telecommunications Act and its regulations.

The Policy Statement falls into three broad categories: facilities, content and competition. Following is a list of major benefits in each area: 

Facilities

• Canadians will have access to competitive communications services. In small markets, economic conditions may make the sharing of facilities desirable to achieve this objective.
• When cablecos provide telecommunications services, they will have to make their facilities available for lease, resale and sharing by third parties, as is currently the requirement for telcos.
• It will not be mandatory for cable television services to make their facilities available to others for broadcasting purposes. Competition will be better achieved through the creation of alternative broadcasting distribution networks.
• Consumers will be free to use the telephone and cable wires inside their homes to obtain services from any combination of suppliers they choose.

Content

• Canadians will continue to own and control their broadcasting system.
• Broadcasting distribution undertakings will contribute to the production of Canadian programming.
• With due regard for differences in technologies, all broadcasting distribution undertakings, including new types of services, will be subject to essentially the same rules governing contributions to Canadian programming.
• All broadcasting distribution undertakings will provide an affordable and attractive basic package of services, including a predominant Canadian choice.
• Navigational systems, that is, the menus from which people will select programs, must facilitate access to Canadian programming, including French-language services.
• New broadcasting services will also be expected to respect industry guidelines on violence, sexual stereotyping, intolerance, or, in the case of children, programming and advertising not intended for them.

Competition

• All telecommunications carriers that meet the Canadian broadcasting ownership and control requirements will be eligible to hold broadcasting licences.
• Most rules governing foreign investment in telecommunications and broadcasting have been harmonized. However, it is not government policy to ensure ongoing harmonization of ownership rules for broadcasters and Canadian carriers in the future.
• If a broadcasting undertaking or a telecommunications undertaking wishes to provide a broadcasting programming service, the programming licence must be held by a structurally separate company.
• The Bell Canada Act will be amended to enable Bell Canada to be eligible to hold broadcasting licences.
• The Direction to the CRTC which limits the ability of provincial crown corporations to enter broadcasting will be modified to allow them to hold broadcasting licences, while requiring an arm's length relationship and programming independence from governments.
• BC Tel and Québec-Téléphone were "grandfathered" under the Canadian ownership requirements of the Telecommunications Act in 1993. Given this special treatment, the Government will amend the Direction to the CRTC dealing with Canadian ownership requirements for broadcasting companies to allow these two companies to apply and to hold broadcasting distribution licences. This would be done through separate broadcasting distribution subsidiaries. The licensees would have all-Canadian boards of directors and would have to ensure that Canadians control all programming decisions.
• To ensure that competition will be fair and sustainable, neither cablecos nor telcos should have a head start over the other in entering each other's core market. At the same time, competition should not be unduly delayed.
• Telecos will be able to offer cable services once the rules for competition in local telephone services, including tariffs to enable cable companies and others to launch competitive local telephone services have been implemented. This may be done on a market-by-market basis.
• To ensure fair and sustainable competition, regulation should prevent cross-subsidization and other forms of anti-competitive behaviour.