Vol. 139, No. 6 — February 5, 2005

Regulations Amending the Definition of Small Retransmission Systems Regulations

Statutory authority

Copyright Act

Sponsoring department

Department of Industry

REGULATORY IMPACT
ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

The proposed amendments to the Definition of Small Retransmission Systems Regulations (SOR/89-255, as amended by SOR/94-754) and the Definition of "Small Cable Transmission System" Regulations (SOR/94-755) [collectively the "Small Systems Regulations"] would adapt these Regulations to respond to recent changes that the Canadian Radio-television and Telecommunications Commission (CRTC) has started to implement in the way it licenses, or exempts from licensing, small distribution systems that deliver television and radio signals to subscribers. Specifically, the proposed amendments will ensure that the Copyright Board can continue to establish a special copyright royalty rate payable by these small systems in the same manner as prior to the CRTC's changes.

Description

The Copyright Board is required to set the tariff of copyright royalties payable to rights holders for the retransmission of the programs contained in free, over-the-air television and radio broadcasts. Royalties are payable by the broadcasting distribution undertakings or BDUs (e.g. cable companies, Direct-to-Home satellite retransmitters) which pick up and retransmit these over-the-air television and radio broadcasts to subscribers. However, the Copyright Act provides that the Board must set preferential tariffs for "small retransmission systems" [subsection 74(1)] when establishing these rates.

Similarly, the Copyright Board is required to set the tariff of copyright royalties payable to rights holders for the transmission by cable-based BDUs of music contained in direct-to-cable television and radio signals (i.e. the signals representing specialty channels such as CBC Newsworld and RDI which are only available through a subscription with a BDU). The Copyright Act provides that the Board must set preferential tariffs for "small cable transmission systems" [subsection 68.1(4)].

For the purpose of setting these preferential rates, the Small Systems Regulations define a "small retransmission system" and a "small cable transmission system" as systems that serve not more than 2 000 premises in the same licensed area. The reference to a licensed area reflects the fact that the CRTC previously generally required each BDU to hold a broadcasting licence. However, the CRTC recently made significant changes in the way it licenses BDUs and now exempts most small BDUs from licensing.

In 2001 and 2002, the CRTC issued orders exempting from licensing small cable and wireless systems that meet prescribed criteria (Broadcasting Public Notice CRTC 2002-74, www.crtc. gc.ca/archive/eng/notices/2002/pb2002-74.htm, which amends Public Notice CRTC 2001-121, www.crtc.gc.ca/archive/eng/notices/ 2001/pb2001-121.htm; and Broadcasting Public Notice CRTC 2002-45, www.crtc.gc.ca/archive/eng/notices/2002/pb2002- 45.htm). As a result, small systems could turn in their licence or simply not renew a licence in the future, as long as they met the prescribed criteria.

The CRTC also announced on September 17, 2003, amendments to the Broadcasting Distribution Regulations (SOR/97-555, as amended), which will permit the implementation of a regional approach to licensing cable distribution undertakings (Broadcasting Public Notice CRTC 2003-48, www.crtc.gc.ca/ archive/eng/notices/2003/pb2003-48.htm). Prior to these changes, which have not yet been fully implemented, every cable system that was not exempt from licensing was issued a licence under one of three classes, generally depending on the number of subscribers served: Class 1 licences for systems serving 6 000 or more subscribers; Class 2 licences for systems serving 2 000 or more, but fewer than 6 000 subscribers; and Class 3 licences for systems serving fewer than 2 000 subscribers. Under regional licensing, the CRTC will issue a single licence for all cable systems that are commonly owned, are of the same Class and operate in the same region. For example, all Class 3 systems that operate in the same region (e.g. Ontario) and are owned by one licensee (e.g. Rogers, Shaw) will operate under one Class 3 regional licence, with separate service areas for each system.

The CRTC's changes to its licensing regimes have a two-fold impact on the systems that benefit from the Small Systems Regulations. First, as some small systems may opt to rely on their exemption from licensing they will no longer operate in "licensed areas" and therefore might not be eligible to receive the benefit of the preferential rate. Second, the small systems that will be licensed under regional licensing, might no longer benefit from the preferential small system rate as they may be part of a consolidated licensed area which serves more than 2 000 premises in total.

Therefore, in response to these changes, it is proposed that each of the Small Systems Regulations be amended by changing the expression "licensed area" to "service area." The "service area," which would be defined as an area in which premises served in accordance with the laws and regulations of Canada by the relevant system are located, would relate to each small system that is covered under a regional licence and to each small system that is exempt from licensing. Thus, such systems could continue to have the benefit of the preferential rates provided under the Copyright Act.

Finally, it is proposed that the French version of the Small Systems Regulations be amended for consistency of terminology. Currently, the Regulations refer interchangeably to "système(s) ... par fil" and "système(s) ... par câble" when referring to cable systems. The future reference would only be "par fil."

Alternatives

The alternative to changing the expression "licensed area" with "service area" is to do nothing. However, in order to maintain the application of the Small Systems Regulations to its intended beneficiaries, the definition must be changed. Without the changes, such systems could lose the benefit of these preferential rates.

Benefits and costs

The amended Small Systems Regulations will maintain the status quo in the application of the beneficial rate to small systems by amending the definition of an area in which these systems operate. The benefits of maintaining the status quo is to ensure that small distribution systems can continue to receive an incentive to distribute signals to small and often geographically isolated communities in Canada.

Consultation

Proposed amendments to the Small Systems Regulations were put forth on the Web sites of Canadian Heritage and Industry Canada, and calls for comments were sent out by mail to affected stakeholders in May 2004. Stakeholders were asked to comment on the proposal to amend the Regulations in the manner described above. Stakeholders notified directly included the collective societies representing copyright owners and the small systems that would be affected by the proposals.

Only one response was received, from the Canadian Cable Telecommunications Association (CCTA), which welcomed the change.

Compliance and enforcement

The Regulations are strictly definitional and form a key element of the royalty tariffs certified by the Copyright Board pursuant to subsections 68(3) and 73(1) of the Act. It will be for the courts to enforce whatever rights or liabilities may flow therefrom.

Contacts

Albert Cloutier, Acting Director, Intellectual Property Policy Directorate, Industry Canada, (613) 952-2527; and Jean-Paul Boulay, Director, Policy Development, Copyright Policy Branch, Canadian Heritage, (613) 990-6254.

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to subsections 62(1) (see footnote a) and 74(2) (see footnote b) of the Copyright Act, proposes to make the annexed Regulations Amending the Definition of Small Retransmission Systems Regulations.

Interested persons may make representations with respect to the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Albert Cloutier, Acting Director, Intellectual Property Policy Directorate, Department of Industry, 235 Queen Street, 10th Floor East, Ottawa, Ontario K1A 0H5.

Ottawa, January 31, 2005

EILEEN BOYD
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE DEFINITION
OF SMALL RETRANSMISSION
SYSTEMS REGULATIONS

AMENDMENTS

1. The long title of the Definition of Small Retransmission Systems Regulations (see footnote 1) is replaced by the following:

DEFINITION OF "SMALL RETRANSMISSION SYSTEMS" REGULATIONS

2. Section 1 of the Regulations and the heading before it are repealed.

3. (1) The definitions "license" and "licensed area" in section 2 of the Regulations are repealed.

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

"service area" means an area in which premises served in accordance with the laws and regulations of Canada by a retransmission system are located. (zone de service)

4. (1) Subsection 3(1) of the Regulations is replaced by the following:

3. (1) Subject to subsections (2) to (4) and section 4, "small retransmission system" means a cable retransmission system, or a terrestrial retransmission system utilizing Hertzian waves, that retransmits a signal, with or without a fee, to not more than 2,000 premises in the same service area.

(2) Subsection 3(2) of the French version of the Regulations is replaced by the following:

(2) Pour l'application du paragraphe (1), dans le cas d'un système de retransmission par fil qui, avec un ou plusieurs autres systèmes de retransmission par fil, fait partie d'une unité, le nombre de locaux auxquels ce système retransmet un signal est réputé correspondre au nombre total de locaux auxquels tous les systèmes de retransmission par fil de cette unité retransmettent un signal.

(3) The portion of subsection 3(3) of the French version of the Regulations before paragraph (a) is replaced by the following:

(3) Pour l'application du paragraphe (2), font partie d'une même unité les systèmes de retransmission par fil qui répondent aux critères suivants :

(4) Paragraph 3(3)(b) of the Regulations is replaced by the following:

(b) their service areas are each less than 5 km distant, at some point, from at least one other among them, and those service areas would constitute a series of contiguous service areas, in a linear or non-linear configuration, were it not for that distance.

(5) Subsection 3(4) of the French version of the Regulations is replaced by the following:

(4) Le paragraphe (2) ne s'applique pas aux systèmes de retransmission par fil qui faisaient partie d'une unité au 31 décembre 1993.

5. Section 4 of the Regulations is replaced by the following:

4. The definition set out in subsection 3(1) does not include a cable retransmission system that is a master antenna system if it is located within the service area of another cable retransmission system that retransmits a signal, with or without a fee, to more than 2,000 premises in that service area.

COMING INTO FORCE

6. These Regulations come into force on the day on which they are registered.

[6-1-o]

Footnote a

S.C. 1997, c. 24, s. 37(2)

Footnote b

S.C. 1997, c. 24, s. 50

Footnote 1

SOR/89-255

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with hypertext language (HTML). Its content is very similar except for the footnotes, the symbols and the tables.

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