|
The regulatory framework for the distribution of digital television
signals
|
|
In Call for comments on a
proposed policy framework for the distribution of digital television services,
Broadcasting Public Notice CRTC 2002-32,
12 June 2002, the Commission invited comment from interested parties on the
policy, principles and related regulatory amendments that, during the
transition period, should govern the distribution of over-the-air digital
television services by broadcasting distribution undertakings (BDUs), as well
as the distribution of other mandatory, optional and discretionary services
that provide high definition (HD) programming. |
|
This public notice details the
conclusions that the Commission has reached regarding the regulatory
framework that will govern the distribution of digital television services.
In general, a BDU’s regulatory obligations and authority to distribute
digital signals will match those that currently apply to the distribution of
the analog versions of these signals. In addition, the Commission will launch
two follow-up proceedings. The first proceeding will establish a licensing
framework governing the transition of pay and specialty services to HD. It
will also establish a framework to govern the distribution of such services
by BDUs. The second proceeding will examine the regulatory framework
governing the carriage of HD services by direct-to-home satellite
undertakings. |
|
Background
|
1. |
In Call for comments on a proposed
policy to oversee the transition from analog to digital over-the-air
television broadcasting, Public Notice CRTC
2001-62, 5 June 2001 (Public Notice
2001-62), the Commission sought comment on its proposals concerning the
policy objectives and principles that would govern the transition from analog
to over-the-air digital television broadcasting, and asked various questions
as to what would constitute an appropriate regulatory framework for the
carriage of these signals by broadcasting distribution undertakings (BDUs).
|
2. |
Based on the comments received in
response to Public Notice 2001-62, the Commission issued A licensing
policy to oversee the transition from analog to digital, over-the-air
television broadcasting, Broadcasting Public Notice CRTC
2002-31, 12 June 2002 (Public Notice
2002-31). Public Notice 2002-31 established the policy framework for the
licensing of new over-the-air digital television services based on a
voluntary, market-driven model. |
3. |
On the same day, the Commission
issued a proposed policy framework in Call for comments on a proposed
policy framework for the distribution of digital television services,
Broadcasting Public Notice CRTC
2002-32 (Public Notice 2002-32; the proposed framework), based on the
comments received in response to Public Notice
2001-62. The key principle of the
proposed framework was that a BDU’s regulatory obligations to distribute the
primary signal of a licensed over-the-air digital television
service should essentially mirror the carriage obligations that apply to the
distribution of the analog version of the priority services identified in
sections 17, 32 and 37 of the Broadcasting Distribution Regulations
(the Regulations). The proposed framework also addressed such issues as the
distribution requirements for multicast signals, signal duplication and
placement, simultaneous signal substitution, and quality standards. |
4. |
In addition to inviting comments on
its proposed framework for the distribution of digital over-the-air services,
the Commission invited interested parties to comment on the distribution of
the upgraded versions of all other mandatory television services that must be
carried by a BDU under the Regulations or by a condition of licence
(mandatory services). The Commission also proposed to permit BDUs to
distribute upgraded versions of authorized optional or discretionary
television services, such as over-the-air, pay or specialty, or foreign
television services (optional or discretionary services), without having to
seek further authorization from the Commission. In addition, the Commission
sought comment on how best to determine if or when the programming contained
in the digital feed of a service has become sufficiently distinct from, or
non-duplicative of, the programming contained in the analog version to
conclude that it has become a separate and distinct service, for the purposes
of distribution. |
5. |
In Public Notice
2002-32, the Commission noted that, while
its intention was that the policy framework would apply to all BDUs, the
proposals had been drafted with only limited regard to the distinctions that
exist between the distribution technologies used by cable television,
multipoint distribution system (MDS) and direct-to-home (DTH) satellite
distribution undertakings. Accordingly, the Commission sought comment on how
its policy proposals should be adapted to take these different technologies
and their particular capabilities into account. The Commission noted, in
particular, the spectrum limitations of MDS undertakings and invited comment
on how these challenges could best be addressed. |
6. |
The over-the-air digital television
system uses the Advanced Television Systems Committee A/53 transmission
standard (the A/53 standard). The A/53 standard covers 18 digital television
formats from low definition (LD) to high definition (HD) television. A format
defines the aspect ratio of a picture, the number of lines, the frame rate
and the type of scanning. Of the 18 formats, the three most commonly used are
480 interlaced (480i), 720 progressive (720p) and 1080 interlaced (1080i).
|
7. |
LD refers to programming transmitted
in the 480i format, which is the digital equivalent of today’s analog format.
HD generally refers to programming transmitted in the 1080i format, although
some would argue that programming in the 720p format should also be included.
The Commission considers that the definition of HD is evolving and, for
purposes of the present regulatory framework, HD will encompass both the 720p
and 1080i formats. |
8. |
The A/53 standard contemplates the
simultaneous transmission of one or more television signals within a 6 MHz
television channel. These could include one HD television signal or up to
five LD television signals. Where the transmission involves more than one
signal (a situation referred to as multicasting), the main or primary signal
could be a digital over-the-air television service licensed in accordance
with Public Notice 2002-31, or the
digital version of a pay or specialty service. The other signals would be
referred to as secondary or subsidiary signals. In addition, a 6 MHz
television channel also has capacity to transmit a certain amount of data.
|
9. |
As in the case of over-the-air
digital television services, digital versions of pay or specialty services
that contain any amount of programming in HD are referred to as "upgraded
versions." Like the over-the-air digital television services, the balance of
the programming would be composed of material in the LD format. |
|
Overview of the positions of the parties
|
10. |
Many parties expressed general
agreement with the policy framework proposed by the Commission. According to
a joint submission from the partners of Bell ExpressVu Limited Partnership
and CTV Television Inc. (BEV/CTV), the proposed framework "carefully balances
the interests of broadcasters, distributors and consumers in adopting a
voluntary, market-driven transition model without mandated deadlines." |
11. |
The CAB and other parties
representing the broadcasting industry considered that the cable carriage and
simultaneous substitution rights that currently apply to their analog signals
should also apply to their digital signals during the transition to
over-the-air digital television. They argued that this level of carriage was
essential if they were to meet the objectives of their business plans. |
12. |
TELUS Communications Inc. (Telus)
submitted that market forces should dictate the transition from analog to
digital and that the Commission should adopt a framework that provides
"maximum flexibility" to BDUs as they move toward full HD television
distribution. |
13. |
The Canadian Cable Television
Association (CCTA) submitted that "the proposed framework clearly favours
broadcasters, with no recognition of the costs assumed by distributors and no
actual guarantees that broadcasters will deliver new or enhanced content to
consumers in return for free over-the-air broadcast and BDU distribution
capacity." The CCTA submitted that the distribution requirements for digital
services should be reduced given the substantial costs that will be incurred
during the transition to digital. The CCTA further submitted that all cable
systems with fewer than 6,000 subscribers should be exempted from priority
carriage obligations. |
14. |
Various parties raised specific
issues concerning how the proposed framework would apply to MDS and DTH
undertakings, as well as undertakings that use switched broadband. |
|
Principles of distribution
|
15. |
After considering the comments
received, the Commission considers that it is appropriate to adopt principles
for the distribution of digital television services that will apply to all
BDUs. The Commission recognizes, however, that there are specific issues that
must be addressed in its policy to take into account the particular
circumstances of different distribution undertakings, such as those relating
to size, capacity or the distribution technology that they use. Accordingly,
in the sections that follow, the Commission first sets out the principles of
distribution for digital television services that will generally apply to all
BDUs, including specific issues relating to cable BDUs. In later sections,
the Commission also addresses specific issues relating to DTH, undertakings
using switched broadband, MDS and exempt undertakings. |
|
Priority over-the-air Canadian digital television signals
|
16. |
The Commission’s preliminary view set
out in Public Notice 2002-32 was that,
except as otherwise provided under a condition of licence, a BDU’s regulatory
obligations to distribute the primary digital signal of a licensed
over-the-air television service should essentially match those that currently
apply to the distribution of the analog version of the service. |
17. |
In reaching this preliminary view,
the Commission addressed issues relating to the duplication of services, the
costs associated with building and operating digital facilities and the
importance of mandatory requirements in promoting the transition to a digital
environment. In this regard, the Commission noted that the business case
facing digital broadcasters was already a difficult one and that, without
mandatory cable carriage of digital television services and its impetus in
promoting the sale of digital television receivers, the business challenges
facing broadcasters would become more difficult. |
|
Positions of the parties
|
18. |
The CAB advanced a number of
arguments, many of which had been raised in response to Public Notice
2001-62, in favour of extending to
over-the-air digital television services the same regulatory treatment as
that now given analog services. The CAB noted, for example, that the language
of the Broadcasting Act (the Act), like that of the Regulations, is
technologically neutral. It further submitted that a broadcaster should be
afforded every opportunity to re-coup the costs of building and operating
digital facilities by having its digital television service reach all of the
potential viewers in the market it is licensed to serve, including those who
receive that signal through a BDU. According to the CAB, without priority
carriage, the over-the-air digital television signals "will be invisible to
approximately 75% of Canadian viewers that receive their broadcast signals
from a BDU rather than directly from the originating stations using an
antenna." In its view, priority carriage of over-the-air digital television
signals is necessary to achieve a quick and successful transition from analog
to digital transmission. |
19. |
Parties representing the cable
industry advanced a number of reasons why the mandatory carriage of
over-the-air digital signals should be restricted in the early years of the
digital transition. The Canadian Cable Systems Alliance Inc. (CCSA), an
association representing smaller cable systems, submitted that "any regime of
digital ‘must carry’ rules is bound to have a substantial and far-reaching
effect on the distribution obligations and economic health of a large number
of CCSA Member Companies." |
20. |
The CCTA reiterated its concerns with
respect to the duplication of conventional services and its view that this
would constitute inefficient use of capacity. The CCTA submitted that,
because of the low penetration of digital receivers, over-the-air digital
television would not warrant the level of widespread availability that is
achieved through the carriage on the basic service of cable undertakings. The
CCTA put forward the view that over-the-air digital television would likely
remain a duplicate, rather than a replacement, technology for at least a
decade. The CCTA added that small cable systems already face enormous
challenges and must make significant investments to complete the transition
to digital cable. In light of its concerns, the CCTA suggested that mandatory
carriage of priority services apply only to large systems and be limited to
local digital signals. The CCTA also submitted that HD programming
requirements should be imposed on broadcasters in return for cable carriage. |
|
The Commission’s analysis and determination
|
21. |
As noted in Public Notice
2002-32, the Commission considers that
requiring BDUs to distribute digital television services is wholly consistent
with the objective of section 3(1)(t)(i) of the Act, which provides that BDUs
"should give priority to Canadian programming services and, in particular, to
the carriage of local stations." The Commission also considers that the
mandatory distribution of digital television services is consistent with
section 3(1)(d)(iv) of the Act, which stipulates that the Canadian
broadcasting system should "be readily adaptable to scientific and
technological change." |
22. |
The Commission recognizes the
substantial costs that must be incurred by Canadian over-the-air broadcasters
to build and operate digital transmission facilities and considers that
broadcasters must be afforded the opportunity to maximize their advertising
revenues by having their over-the-air digital television services reach as
many viewers as possible. |
23. |
The Commission also recognizes the
challenges faced by cable distributors in terms of their capacity to carry
both analog and digital services, and the costs associated with upgrades of
their distribution systems. The Commission considers, however, that as BDUs
now account for three quarters of the television audience, with only one
quarter receiving television service through the direct reception of
over-the-air signals, cable distribution of over-the-air digital services is
not only consistent with the Act, but is critical to the success of the
digital transition. |
24. |
The Commission notes that capacity
upgrades will allow cable undertakings to provide other immediate
revenue-generating services, such as a wider variety of programming services
as well as Internet services. |
25. |
The Commission also notes its
conclusion in Public Notice 2002-31 that
digital television will be treated as a replacement technology for analog,
rather than as a new technology that would simply take its place alongside
the existing analog system. The Commission reaffirms that conclusion below,
and considers that capacity constraints will be eased in the longer term,
when distributors are no longer required to carry both the analog and digital
versions of the same signal. |
26. |
As noted in Public Notice
2002-32, one of the purposes of
introducing digital technology is to provide viewers with a superior
technical format. The Commission considers that the greater the opportunity
that consumers have to be exposed to the superior technical quality of
digital, and particularly of HD services, the greater their incentive will be
to purchase digital television receivers, which will in turn increase the
demand for digital television services. The faster the consumer take-up, the
shorter the time period during which broadcasters and distributors will have
to provide services in both analog and digital formats. A shorter transition
period will reduce the overall costs of the transition for both broadcasters
and distributors. |
27. |
The Commission notes the CCTA’s
suggestion that mandatory priority carriage obligations should be limited to
the distribution of local signals by large systems. In this regard, the
Commission notes that, although section 17(1)(e) of the Regulations requires
cable companies to distribute all local television signals, they are not
required to distribute regional or extra-regional stations if they are
already distributing "a television station that is an affiliate or member of
the same network." They are also not required, in virtue of section 17(3), to
distribute programming services that are identical. Given the proximity of a
number of broadcasting stations to each other, particularly in the Windsor to
Québec corridor, the Commission considers that the CCTA’s suggestion that
mandated carriage be limited to local digital signals would, in many cases,
be accommodated within the existing rules. |
28. |
The Commission recognizes that the
Regulations may not address the carriage of non-network stations from the
same ownership groups that are broadcasting essentially duplicate
programming. Accordingly, the Commission will be prepared to consider
granting, on a case-by-case basis, conditions of licence relieving licensees
of the mandatory carriage of priority signals that, except for their local
programming, essentially provide duplicate programming. |
29. |
With regard to smaller systems, the
Commission notes that, while the transition to over-the-air digital
television broadcasting has already begun in larger urban markets, it is not
expected to begin in smaller markets for some time. The Commission considers
that the costs of the equipment needed to upgrade cable systems are likely to
have fallen by the time the smaller cable undertakings are required to
upgrade their systems. |
30. |
The Commission expects all BDUs to
implement the necessary upgrades. Should capacity problems arise, the
Commission would, in exceptional circumstances, be prepared to grant relief
from the priority carriage requirements on a time-limited basis. The
Commission would, for example, be prepared to provide temporary relief from
the carriage of extra-regional priority signals to small cable undertakings
that are not interconnected. |
31. |
In light of the above, the Commission
concludes that it is reasonable to require BDUs to distribute the primary
digital signal of a licensed over-the-air television service in
accordance with the priorities that currently apply to the distribution of
the analog version of the services and, accordingly, adopts the following
principles: |
|
- Except as otherwise provided under a condition of licence, a
distribution undertaking must carry the primary signal of Canadian
over-the-air digital television signals identified in sections 17, 32 and
37 of the Regulations.
|
|
- The Commission expects all BDUs to implement the upgrades necessary in
order to comply with the priority carriage requirements for over-the-air
digital signals.
|
|
- In order to provide some flexibility and to make better use of limited
distribution capacity, the Commission will consider granting exceptions, by
condition of licence, to the carriage requirements related to priority
signals that, except for their local programming, essentially provide
duplicate programming.
|
|
- The Commission will, in exceptional circumstances, consider granting
exceptions by condition of licence, on a time-limited basis, to the
carriage requirements of priority signals in order to provide relief to
cable undertakings facing capacity problems.
|
|
- The Commission expects over-the-air digital television broadcasters to
provide affected BDUs with reasonable notice of the date they intend to go
on air. This information may be provided on a confidential basis.
|
|
Establishing priorities for the distribution of over-the-air digital
television services - Definitions of local, regional and extra-regional
over-the-air digital television stations
|
32. |
The current priority carriage
criteria for cable distributors are established by reference to the official
contours of analog television stations in relation to the service area
boundaries of BDUs. In Public Notice 2002-32,
the Commission proposed that the carriage priorities assigned to over-the-air
digital signals be defined in a similar manner, by reference to digital
television contours. The Commission accordingly proposed definitions of
local, regional and extra-regional digital television stations that
incorporated the technical criteria established in the Department of
Industry’s (the Department’s) definition of digital service area (DSA)
contour,1 with a view to
ensuring that the digital station receives the same carriage priority as its
analog counterpart. These were as follows: |
|
- A local digital television station, in relation to a BDU, is one whose
digital service area contour encloses an area that includes a minimum of
95% of the households in the BDU’s licensed service area.
|
|
- A regional digital television station is one whose digital service area
contour encloses any part of the licensed service area of the distribution
undertaking.
|
|
- An extra-regional digital television station is one whose digital
service area contour does not include any part of the licensed service area
of the distribution undertaking, but does include any point located 32 km
or less from the local head end of the undertaking.
|
33. |
The Commission noted that, although
there were technical criteria that could be applied to replicate the existing
Grade B contours of each analog television station, there was no digital
equivalent of the analog Grade A contour. The Commission therefore proposed a
definition of a Grade A contour for a local digital television station. For
this purpose, the Commission proposed that such a contour be defined as a
minimum field strength of six decibels above the field strength obtained at
the DSA contour defined by the Department. |
|
Positions of the parties
|
34. |
The CAB expressed concern about the
Commission’s proposal to use DSA contours to define the service areas where
mandatory carriage and substitution rules would apply. More specifically, in
its comments on Public Notice 2002-32,
the CAB objected to the Commission’s first suggestion that a local digital
television station be defined as a station whose DSA contour encloses an area
that includes a minimum of 95% of the households in the BDU’s licensed area.
The CAB was concerned that, because of shifts in population, a particular
digital station could qualify as local at one time but as regional at
another. The CAB also argued that the Commission’s alternate suggestion, that
a definition of a Grade A contour for a digital station be based on a minimum
field strength, would be arbitrary and artificial. |
35. |
Télé Inter-Rives ltée, licensee of
CIMT-TV Rivière-du-Loup, submitted that the proposed definitions would pose a
problem for stations operating outside metropolitan centres and suggested
that [translation] "the definition of the Grade A contour for a digital
television station should represent 70% of the authorized contour." |
36. |
The Canadian Broadcasting Corporation
(CBC) noted that the public interest would best be served if all services
available in analog format were also available in their digital format. The
CBC noted that, in many instances, the area enclosed by the DSA contour is
smaller than that enclosed by the analog Grade B contour. The CBC therefore
suggested that the regional contour of a digital station be defined on the
basis of the station’s DSA contour, as extended outwards by a distance
calculated to minimize the number of such instances. |
37. |
BEV/CTV submitted that the carriage
requirements should be based on the final DSA contour that would exist at the
end of the transition period, rather than on the DSA contour that would exist
during the transition period. They noted that digital television stations may
be permitted to amend their technical parameters since it will no longer be
necessary to protect analog assignments at the end of the transition period.
|
38. |
Quebecor Media Inc. (QMI), the parent
company of Vidéotron ltée, expressed concern about the possible mismatch of
carriage areas and authorized markets. It stated that applying the current
regulatory priorities would make little sense since the evolution of service
areas over the last 40 years has been largely determined by population growth
and by the establishment of new housing developments. It noted that
[translation] "regardless of the chosen method, what matters for Vidéotron is
that a television licensee not be allowed to go beyond … its market as
clearly defined by the Commission." |
|
The Commission’s analysis and determination
|
39. |
The Commission notes that,
historically, it has always used a station’s service contours to establish
priority ranking. The Commission considers that contours have the significant
advantage of tying cable carriage directly to the area in which a signal may
be received, and provide an important incentive for broadcasters to provide
full digital coverage of their licensed areas. The Commission considers that
substituting the projected final DSA contours for the DSA contours existing
during the transition to digital, as proposed by BEV/CTV, would eliminate the
link between a station’s priority and its actual coverage. The Commission
also questions the degree of certainty that would be achieved through
projected final DSA contours, given that changes may be made to the
Department’s channel allotment plan during the transition period. |
40. |
The Commission does not consider that
the CBC’s proposal for defining the regional contour of digital over-the-air
stations would be practicable, as it would involve adjusting DSA contours on
a case-by-case basis. The Commission notes that the Department has tried to
duplicate the area encompassed by each station’s analog Grade B contour with
its corresponding DSA contour and has succeeded to a large extent. |
41. |
The Commission notes that there may
be cases for exceptions to the distribution requirements where a licensed
over-the-air digital television broadcaster cannot duplicate its analog
coverage and faces the loss of cable carriage in a key market. The Commission
notes that the Regulations allow exceptions to the carriage requirements, by
condition of licence, and intends to retain this flexibility. If a
broadcaster and a BDU cannot come to an agreement with respect to carriage in
such cases, the broadcaster could raise the issue at the time of the BDU’s
licence renewal. |
42. |
The Commission acknowledges the CAB’s
concern that changes in the population could see a station’s DSA contour
enclose 95% of the households at one time, but cease to do so at another,
causing its priority status to change over time. The Commission therefore
considers that it is more appropriate to define a local digital television
station on the basis of its Grade A contour. However, the Commission no
longer considers that a field strength of six decibels above the field
strength obtained at the DSA contour, as proposed in Public Notice
2002-32, to be a suitable benchmark.
After further study, the Commission has determined that a benchmark value of
seven decibels, rather than six decibels, would be more appropriate. In the
Commission’s view, this small change will serve to ensure a signal of
sufficient strength to serve 90% of the locations within the DSA contour, 90%
of the time. |
43. |
In light of the above, the Commission
has determined that it is appropriate to use a station’s DSA contour, as
defined by the Department, to determine priorities for digital distribution.
Accordingly, the definitions of local, regional and extra-regional stations
will be amended in the Regulations to reflect the following principles: |
|
- A local digital television station, in relation to a BDU, is one that
has a local service contour that includes any part of the licensed area of
the distribution undertaking. A local service contour means a service
contour with a field strength of seven decibels above the field strength
obtained at its DSA contour, as defined in the Department’s BPR, Part 7.
|
|
- A regional digital television station, in relation to a BDU, is one
that has a DSA contour, as defined in the Department’s BPR, Part 7, that
includes any part of the licensed area of the distribution undertaking.
|
|
- An extra-regional digital television station, in relation to a BDU, is
one that has a DSA contour, as defined in the Department’s BPR, Part 7,
that does not include any part of the licensed area of the distribution
undertaking, but does include any point located within a radius of 32 km
from the local head end of the undertaking.
|
|
Position of over-the-air digital television signals in a BDU’s channel
line-up
|
44. |
In Public Notice
2002-32, the Commission expressed its
preliminary view that the position of an over-the-air signal in a BDU’s
line-up would matter less in a digital than in an analog environment and,
accordingly, proposed that distributors should be free to place over-the-air
digital services in their channel line-ups, without regard to their priority
status, as long as the services are included as part of the basic service, as
defined in the Regulations, and are thus available to all subscribers. The
Commission was also of the view that distributors and television broadcasters
should cooperate in the creation of navigation and menu systems that give
prominence to digital Canadian services. |
|
Positions of the parties
|
45. |
While most parties generally agreed
with this proposal, some recommended further regulatory measures.
Specifically, the CAB suggested that digital Canadian services, starting with
priority over-the-air digital television services, be given prominence on
electronic program guides (EPGs). The CAB added: "To the extent that EPGs
might be controlled by BDUs with interests in various programming services,
they should be subject to regulations requiring that non-affiliated
[over-the-air digital television] services be treated equitably and not be
subjected to an undue preference or disadvantage." |
46. |
The CBC submitted that all navigation
and menu systems provided by BDUs should give prominence to Canadian
services, with special prominence given to Canadian programming. The CBC also
proposed a number of possible means by which this might be done, including
suggestions for regulatory changes and the establishment of specific
deadlines for distributors to implement navigation and menu systems. |
47. |
The CCTA, on the other hand,
submitted that "no further regulatory involvement is required on this
matter." |
|
The Commission’s analysis and
determination
|
48. |
The Commission agrees with the CAB
and the CBC’s suggestion that all navigation and menu systems provided by
BDUs should give prominence to Canadian services. |
49. |
The Commission remains of the view
that the current provision relating to undue preference or disadvantage set
out in section 9 of the Regulations adequately addresses such matters. |
50. |
Accordingly, the Commission adopts
the following principles: |
|
- Distributors are free to place digital priority signals anywhere in
their channel line-ups, without regard to their priority status, as long as
the services are included as part of the basic service and made available
to all subscribers at no additional charge.
|
|
- Distributors are expected to give prominence to digital Canadian
services in their French- and English-language navigation and menu systems.
|
|
Duplication of analog and digital versions of mandatory Canadian
services
|
51. |
In Public Notice
2002-32, the Commission noted that
digital television will be treated as replacement technology for analog
television. It also stated, however, that given that digital television
receivers and digital set-top boxes currently had only a very limited
penetration in the homes of Canadian cable subscribers, it expected that the
distribution of both the analog and digital versions of mandatory Canadian
services would be required for some time. For the longer term, the Commission
proposed that a BDU should not be required to distribute the analog version
of a mandatory television service once all, or substantially all, of its
subscribers are equipped with a digital receiver or have a set-top box
capable of converting the digital version of the service to analog. The
Commission noted that it would be necessary to set a practical and measurable
threshold and invited comment on what a suitable threshold might be. |
|
Positions of the parties
|
52. |
The CCTA submitted that, given the
projected length of the digital transition period, and the uncertainty about
what regulatory rules will apply in 10 to 20 years, any discussion about what
should constitute a threshold at this time would likely be academic. However,
it suggested that it might "be useful to set a target of 75% penetration as
the threshold, but retain the option for broadcasters to request to continue
duplicate carriage under a negotiated fee for carriage arrangement." Télé
Inter-Rives ltée, for its part, proposed a figure of 85%. |
53. |
The CAB recommended that the
Commission maintain the status quo and not address the matter at this time,
given the length of the digital transition period, the numerous policy issues
that must first be addressed, and the problems posed by the fact that while
the presence in the home of one digital television set would meet the test,
the test would partially disenfranchise those subscribers who also have
analog television sets served by other cable outlets in their homes. |
|
The Commission’s analysis and determination
|
54. |
The Commission is of the view that
its regulatory approach should encourage broadcasters to provide over-the-air
digital service and distributors to upgrade their undertakings. The
Commission considers that not requiring duplication of the analog and digital
services once the penetration of digital television receivers and set-top
boxes has reached a certain agreed threshold would help achieve these
objectives. In particular, it would motivate distributors to roll out set-top
boxes. The Commission considers that there is no benefit to be derived from
the carriage of duplicate services once substantially all subscribers can
receive digital services and reaffirms its view that digital television will
be treated as replacement technology for analog television. The Commission
further notes that, with the additional capacity gained through the removal
of analog services, distributors will have the ability to offer a wider
variety of HD services. The Commission therefore maintains its earlier view
that analog carriage should be phased out once all, or substantially all, of
a BDU’s subscribers have digital receivers or set-top boxes that can convert
digital signals to analog. |
55. |
In light of the concerns raised by
the parties in this proceeding, the Commission concludes that, rather than
setting a threshold level that would automatically trigger removal of analog
services, it would be more reasonable to set a threshold at which it would be
prepared to consider applications to discontinue the carriage of analog
signals. The Commission has determined that a threshold of 85% penetration
would be appropriate for such purposes. |
56. |
Accordingly, the Commission concludes
that: |
|
- A BDU may submit an application requesting the Commission’s approval to
cease the carriage of analog signals once 85% of the BDU’s subscribers have
the ability to receive digital services by means of digital television
receivers or set-top boxes. The Commission will determine, at that time,
the terms and conditions under which the analog services may be removed
from the system.
|
|
Carriage of optional and discretionary, Canadian and non-Canadian,
digital television services
|
57. |
In Public Notice
2002-32, the Commission proposed that a
BDU’s authority to distribute an optional and/or discretionary television
service, whether it is an over-the-air service, a pay or specialty television
service, or a service that appears on the Lists of eligible satellite
services, as amended from time to time, would be interpreted as including
authority to distribute the primary signal of the digital version of that
service, as furnished by its provider. The Commission also proposed that this
authority would be subject to the access provisions of section 18 of the
Regulations and the Distribution and Linkage Requirements for Class 1 and
Class 2 Licensees, as amended from time to time or, for DTH undertakings,
subject to the Linkage Requirements for Direct-to-home (DTH) Satellite
Distribution Undertakings, as amended from time to time (the distribution
and linkage requirements). It would also be subject to the requirement that
the primary signal be an upgrade of the analog signal. |
58. |
The Commission also proposed that any
condition of licence that applies to the authority to distribute an optional
and/or a discretionary analog service would also apply to the corresponding
digital version of the service. |
59. |
The Commission invited comment on how
best to determine whether and when the programming contained in the digital
version of a service has become sufficiently different from the programming
contained in the analog version to conclude that it has become a separate and
distinct service. |
|
Positions of the parties
|
60. |
The CCTA supported the Commission’s
policy proposal, adding that, if the policy were adopted, HD television would
enter Canadian homes more quickly, and Canadian broadcasters would have more
reason to produce and offer HD television. |
61. |
Other parties expressed support for
the Commission’s proposal but made further suggestions. BEV/CTV, for
instance, discussed the need to protect Canadian broadcasters while providing
distributors with flexibility. The CBC indicated that it did not oppose the
policy, but argued that the policy must be implemented with appropriate
cautionary measures. Parties focussed on three issues: service duplication,
carriage and program rights. Parties also raised a number of other issues in
relation to the carriage of the upgraded versions of pay and specialty
services, including questions as to what might be considered the HD version
of such services, what distribution capacity is available for them, whether
carriage rates should be set or negotiated, and what access rights, if any,
should be granted and under what conditions. |
|
Service duplication
|
62. |
BEV/CTV and the CBC suggested that a
Canadian service that provides more than 14 hours per week of unduplicated
programming on the digital service should be considered a distinct service
and therefore require separate authorization. They indicated that this
approach was consistent with the 14 hours per week of non-duplicated
programming that the Commission, in Public Notice
2002-31, has permitted over-the-air
services to offer under transitional licences. |
63. |
Many parties were of the view that
Canadian and non-Canadian digital services should have different thresholds
with regard to the number of unduplicated hours permitted before a digital
service is considered to be separate and distinct from the analog version.
The CBC suggested that U.S. digital services with more than seven hours of
unduplicated programming per week should require new authorization. The CAB
expressed concern that a BDU’s digital spectrum might be "quickly depleted by
the carriage of digital duplicates of analog foreign services." This, in the
CAB’s view, would impede the ability of that BDU to distribute Canadian
digital television signals. For this reason, the CAB suggested that the
Commission require that the digital version of a non-Canadian service be a
complete duplicate of the analog version as a condition of the digital
version being carried. |
|
Carriage
|
64. |
Many parties addressed carriage
issues, noting, in particular, that Canadian digital services should have
priority over other digital services. In a joint submission, Astral
Broadcasting Group Inc. and Alliance Atlantis Broadcasting Inc. proposed that
the Commission establish an "order of priority" for the carriage of digital
services. Similarly, Pelmorex Communications Inc. (Pelmorex) suggested that
the Commission should only allow a BDU to distribute optional non-Canadian
digital programming services once the BDU is distributing mandatory Canadian
programming services in both analog and digital formats. The CAB stated that
Canadian digital services should have priority over non-Canadian digital
services when carriage capacity is limited and that priority Canadian digital
signals should have priority over all digital services. |
|
Program rights
|
65. |
Finally, a number of parties
expressed concern that Canadian broadcasters might be forced to acquire
foreign programming in lower quality digital or analog format if rights
holders chose to withhold HD television rights from them. |
|
The Commission’s analysis and determination
|
66. |
The Commission notes that a number of
the issues raised in relation to the carriage of upgraded versions of pay and
specialty services were not specifically canvassed in Public Notice
2002-32. In view of the number and
importance of these issues, the Commission will launch a separate proceeding
to establish the licensing and distribution frameworks for Canadian pay and
specialty services as they move toward the broadcast of programming in HD
format. The Commission also considers that it would be appropriate to
determine a level for the amount of unduplicated programming that would be
permissible without a pay or specialty service being considered a distinct
service for the purposes of distribution and requiring a new licence. |
67. |
In the interim, the Commission will
permit the licensee of a Canadian pay or specialty service to make available
for distribution an upgraded version of the service, provided that not less
than 95% of the video and audio components of the upgraded and analog
versions of the service are the same, exclusive of the commercial messages
and of any part of the service carried on a subsidiary signal. The Commission
will authorize such an upgraded version by means of an amendment to the
licence of the corresponding analog service. The authorization will be
granted for a term of three years. Distributors will be permitted to add the
upgraded versions of Canadian pay and specialty television services whose
analog versions they are required, authorized or permitted to distribute. The
terms and conditions, including rates, will be negotiated between the parties
concerned. Licensees may apply for new licences to replace the short-term
authorizations once the licensing and distribution frameworks are
established. |
68. |
As regards the threshold of
unduplicated programming that would be allowed for a non-Canadian digital
service without further authorization, the Commission considers as too
restrictive the CAB’s proposal that the carriage of such a service require
separate authorization by the Commission if the programming is not identical
to that distributed on the analog service. It notes that, under the CAB’s
proposal, a single unduplicated program would result in removal of the
digital station unless it had been separately authorized. In the interim,
distributors will be permitted to distribute the upgraded version of an
authorized non-Canadian service, provided that not less than 95% of the video
and audio components of the upgraded and analog versions of the service are
the same, exclusive of the commercial messages and of any part of the service
carried on a subsidiary signal. This threshold will be reviewed in the
forthcoming proceeding that will establish a framework governing the
transition of pay and specialty services to HD. |
69. |
The Commission agrees with those
parties who considered that priority should be given to the distribution of
Canadian services over non-Canadian services. The Commission is satisfied
that its existing priority carriage rules address most of the stated
concerns, as do its access requirements for specialty services set out in
section 18 of the Regulations. The Commission considers it appropriate,
however, to amend the Regulations to specify that, if a non-Canadian analog
service was added to a distributor’s channel line-up before 6 May 1996,
either the upgraded version or the analog version of that service, at the
distributor’s option, will receive grandfathered carriage. The other version
will be considered a post-1996 service and, the channel on which it is
distributed will be considered an available channel for the purpose of the
Regulations. This will ensure that adequate capacity is available for the
carriage of Canadian services. |
70. |
The Commission will also amend
section 6(2) of the Regulations. This section currently stipulates that "… a
licensee shall ensure, in respect of each of analog and digital technology,
that a majority of the video and audio channels received by a subscriber are
devoted to the distribution of Canadian programming services …" The
Commission will amend this section to make it clear, in respect of digital
technology, that the upgraded versions of Canadian and non-Canadian services
are counted as distinct services when determining if the majority of video
services received by a subscriber are Canadian. |
71. |
Some parties were concerned that
rights holders would refuse to provide Canadian broadcasters with
non-Canadian programming in HD. While it is not clear at this time how
practices with respect to the granting of digital rights will evolve, the
Commission notes the parties’ concerns and, should the withholding of HD
rights become an issue, the Commission would consider an application to
remove the authority to distribute the non-Canadian service in question. |
72. |
Accordingly, the Commission adopts
the following principles: |
|
- Subject to the access requirements, the authority to distribute a
discretionary or optional service, whether it be over-the-air, pay or
specialty, and Canadian or non-Canadian, will also include the upgraded
version of that service.
|
|
- The Regulations will be amended to clarify that, if a non-Canadian
analog service was added to a distributor’s channel line-up before 6 May
1996, either the upgraded version or the analog version of that service, at
the distributor’s option, will receive grandfathered carriage. The other
version will be considered a post-1996 service.
|
|
- Distributors will be permitted to distribute the upgraded version of an
authorized service, provided that not less than 95% of the video and audio
components of the upgraded and analog versions of the service are the same,
exclusive of the commercial messages and of any part of the service carried
on a subsidiary signal.
|
|
- The Commission will authorize the upgraded version of a Canadian pay or
specialty service by means of an amendment to the licence of the
corresponding analog service.
|
|
Any condition that applies to the authority to distribute optional or
discretionary analog services will also apply to the corresponding upgraded
version of the service.
|
|
- For the purposes of the predominance rule, the upgraded version of a
Canadian or a non-Canadian service will be counted as a service that is
separate from the analog version.
|
|
Carriage of multicast services
|
73. |
In Public Notice
2002-32, the Commission proposed that
determinations concerning whether and under what terms a licensed multicast
service might be authorized for distribution by a BDU would be reached by the
Commission, on a case-by-case basis, at the time it considers the licence
application for the multicast service. The Commission also stated that it
would be disposed to authorize the distribution of new and innovative
multicast services in preference to those that merely duplicate other
services. The Commission added that a BDU would be required to obtain prior
authority if it wished to distribute a multicast service that was transmitted
as part of the digital signal of a non-Canadian service. The Commission
expressed its view that the distribution of programming in HD format should
take precedence over the distribution of multicast services. |
|
Positions of the parties
|
74. |
The CAB submitted that, should the
distribution of new and innovative licensed digital multicast services be at
the option of a BDU and not a requirement, the BDU would control access to
Canadian multicast services. Broadcasters would then have difficulty
developing viable business plans for the implementation of new multicast
services. For this reason, the CAB argued that "the Commission should provide
carriage guarantees for any licensed digital multicast service that it
determines to be new and innovative." |
75. |
In contrast, Pelmorex submitted that
the carriage rules for licensed multicast services should be similar to those
that apply to Category 2 digital specialty services. Under such rules, the
BDU would determine how multicast services are distributed. |
76. |
The CCTA recommended that priority
access not be given to multicast services and that applications for mandatory
carriage be considered only under "exceptional circumstances." |
77. |
The CBC and BEV/CTV agreed with the
Commission’s proposal. However, the CBC submitted that a multicast service
that was an enhancement of the main service should not require additional
licensing and should have the same carriage priority as the main service.
These enhancements could include, for example, live news coverage that offers
several "windows" on the screen, each presenting a different camera angle.
Viewers could select a window (or camera angle) and expand it to fill the
entire screen. |
|
The Commission’s analysis and
determination
|
78. |
The Commission recognizes that the
case-by-case approach outlined in Public Notice
2002-32 would leave a number of
regulatory questions open until specific decisions are taken. However, the
Commission considers that a number of suggestions put forward by parties
would be difficult to implement at this time, when digital television is
still in its early stages and the direction of the development of multicast
services remains uncertain. The Commission notes that multicast services
cannot be carried on the same channel as an HD service and that the future
development of multicast services will be significantly affected by
developments in HD programming. |
79. |
Moreover, the Commission expects
that, in the absence of specific proposals for multicast services, any
regulatory framework would likely raise further questions. The Commission
notes, for example, that the CAB’s suggestion that carriage guarantees be
provided for "new and innovative" services raises the question of what makes
a service new and innovative. It is also possible that certain elements of a
service might be sufficiently new and innovative to warrant licensing, but
insufficient to warrant priority carriage. |
80. |
In regard to the CBC’s suggestions
concerning the carriage of services that are enhancements of the main
service, the Commission notes that these issues are being considered as part
of a proceeding dealing with interactive programming.2 |
81. |
In light of the above, the Commission
has decided that it will adopt a case-by-case approach for the carriage of
particular multicast services, just as it has for the licensing of such
services. The regulatory approach to the carriage of multicast services will
thus reflect the policy as proposed in Public Notice
2002-32: |
|
- Determinations concerning whether and under what terms a licensed
multicast service might be authorized for distribution by a BDU would be
reached by the Commission, on a case-by-case basis, at the time it
considers the licence application for the multicast service.
|
|
- The Commission would be disposed to authorize the distribution of new
and innovative multicast services in preference to those that merely
duplicate other services.
|
|
- A BDU would be required to obtain prior authority if it wished to
distribute a multicast service that was transmitted as part of the digital
signal of a non-Canadian service.
|
|
- The distribution of HD programming should take precedence over the
distribution of multicast services.
|
|
Data services
|
82. |
In Public Notice
2002-32, the Commission proposed that a
BDU be required to give priority to the distribution of broadcasting services
over non-broadcasting services. A BDU’s authority to distribute any service,
whether this authority is contained in the Regulations or is granted by a
condition of licence, would not include the authority to distribute any
non-broadcasting material that is unrelated to that service’s programming.
Distributors would be permitted to delete the subsidiary signals of a
programming service in the course of distributing the service unless the
subsidiary signals are, themselves, programming services or are related to
the programming service being distributed. |
83. |
The Commission also discussed the
CCTA’s recommendation, in response to Public Notice
2001-62, that the Commission adopt the
test used by the Federal Communications Commission (FCC) in the U.S. to
determine what constitutes "program-related data." The "WGN test," as it is
known, provides that the following three criteria must be met in order for
data to qualify as program-related: the broadcaster’s intention must be that
the information be seen by the same viewers as those who are watching the
video signal, the information must be available during the same interval of
time as the video signal, and the information must be an integral part of the
program. |
|
Positions of the parties
|
84. |
Most of the parties agreed that
contracts for the distribution of data services should be arranged through
negotiations. |
85. |
The CBC submitted that the term
"program-related data" must be defined more specifically, and that the
mechanism by which a distributor may remove non-related data should also be
specified. The CBC was concerned that a lack of specificity in this regard
could result in disputes that would turn the attention of broadcasters, BDUs
and the Commission away from the development of new services that would
encourage the adoption of over-the-air digital television. The CBC suggested
a tagging system for all data whereby each service within a digital multiplex
of signals would carry numbers that identify the service and the broadcaster.
Data unrelated to any service would be assigned numbers that would never be
assigned to a programming service. This would enable BDUs to remove the
tagged data that is not program-related. To begin the process, the CBC
recommended that a joint committee of broadcasters submit for Commission
approval the range of numbers that broadcasters proposed to use to identify
data not related to programming services. |
86. |
Many parties opposed the CCTA’s
suggestion that the Commission determine what constitutes "program-related
data" using the WGN test. They argued that the test’s criteria were too
narrow. Pelmorex indicated that if this test were adopted, "a broadcaster
would not be able to offer program listings and schedule information of
upcoming programs on its own channel as this would not be ‘integral’ to the
program being watched." This was a particular concern for Pelmorex since The
Weather Network and MétéoMédia do not present a series of different program
episodes, as do most television services, but rather provide a continuous
stream of weather information. |
|
The Commission’s analysis and
determination
|
87. |
The Commission notes that, under
section 7 of the Regulations, distributors are permitted to delete the
subsidiary signals of a programming service in the course of distributing the
service unless the subsidiary signals are, themselves, programming services
or are related to the programming service being distributed. The Commission
considers that program-related subsidiary signals include closed captions or
descriptive video services. |
88. |
The Commission agrees with the CBC
that regulatory certainty is a valid objective, but notes that, although the
CBC’s proposal would provide for some Commission oversight, it would
essentially allow broadcasters to determine what data is program-related.
Further, the CBC’s suggestion for a joint committee to identify and submit
for Commission approval the range of numbers that would be used would involve
the Commission directly in the system’s administration. While the particulars
of a numbering scheme are important, they are not central to the Commission’s
mandate as set out in the Act. For these reasons, the Commission has
decided not to adopt the CBC’s proposal. |
89. |
With regard to Pelmorex’s concern, as
noted in the previous section, the Commission notes that issues regarding
program-related data, including the WGN test, are under consideration as part
of the proceeding initiated by Public Notice 2002-63. |
90. |
The Commission considers that none of
the concerns raised by the parties were significant enough to require an
amendment to the proposed policy. Accordingly, the Commission adopts the
following principles: |
|
- A BDU will be required to give priority to the distribution of
broadcasting services over non-broadcasting services.
|
|
- A BDU’s authority to distribute any service, whether this authority is
contained in the Regulations or is granted by a condition of licence, does
not include the authority to distribute any non-broadcasting material that
is unrelated to that service’s programming.
|
|
Simultaneous substitution
|
91. |
In Public Notice
2002-32, the Commission proposed the
following approach to simultaneous substitution: |
|
Substitution rights for the primary
digital service
|
|
- An over-the-air digital television service distributed by a BDU would
have the same substitution rights as any analog service having the same
level of priority under the Regulations, subject to the following
qualification concerning the definition of "comparable."
|
|
- The definition of "comparable" contained in the Regulations would be
amended to conclude with the phrase "and equivalent in signal quality."
Consequently, a BDU would only be required to carry out a substitution
where the quality of the signal provided by the broadcaster making the
request is the same as or is higher than the quality of the signal to be
replaced.
|
|
Substitution rights for a multicast
service licensed as a conventional over-the-air television service
|
|
A multicast service that is licensed as a conventional over-the-air
television service and that is distributed by a BDU would have the same
level of priority under the Regulations as the primary over-the-air digital
television service for the purpose of determining substitution rights.
|
|
Substitution rights for a multicast
service licensed as other than a conventional over-the-air television service
|
|
The substitution rights of a multicast service licensed as other than a
conventional over-the-air television programming service would be
determined on a case-by-case basis at the time of licensing, as part of the
Commission’s consideration of whether the service should be authorized for
distribution by BDUs.
|
|
Positions of the parties
|
92. |
The CAB, BEV/CTV and other
broadcasters supported the Commission’s proposal that the service of a
digital station carried as a priority service would have the same
substitution rights as an analog service with the same priority. However, the
CAB raised the concern that "rights holders of foreign digital programming
may elect to withhold HD rights from Canadian broadcasters, forcing them to
acquire that programming in lower quality digital or analogue format. This in
turn would eliminate substitution opportunities against identical programming
in HD format broadcast by U.S. border stations." |
93. |
In such cases, the CAB proposed that
the Commission authorize simultaneous substitution by condition of licence.
Specifically, BDUs would be required to "undertake special-case simultaneous
substitution on behalf of a digital TV station in circumstances where the
technical format of the signal to be substituted was lower than the one to be
replaced. The Commission could authorize this type of substitution by way of
condition of licence, permitting the Commission to react quickly to any
unreasonable withholding of digital rights by foreign rights-holders." |
94. |
The CCTA supported the Commission’s
proposal that a high quality signal should only be substituted by a signal
that is at least equivalent in quality, and not by a lower quality signal. It
expressed concern, however, regarding the availability and suitability of the
digital switching equipment that is currently available. |
|
The Commission’s analysis and
determination
|
95. |
Simultaneous substitution
requirements protect the program rights acquired by Canadian broadcasters and
help to underpin the continued financial health of the Canadian broadcasting
system. The Commission remains of the view that, if a Canadian over-the-air
digital signal is considered sufficiently valuable to be granted carriage by
distributors, then it should also be granted the substitution rights that
would accompany similar carriage under the current regulatory regime for
analog signals. For this reason, the Commission will require that a primary
digital signal carried by a distributor on a priority basis be afforded the
same substitution rights as an analog signal with the same priority status. |
96. |
The Commission notes the concerns
expressed by the CAB and BEV/CTV regarding the possible inability of Canadian
broadcasters to obtain HD television rights to non-Canadian programming.
However, as discussed above, should the withholding of rights to programming
in HD format become an issue, the Commission would consider an application to
remove the authority of BDUs to distribute the non-Canadian service in
question. |
97. |
Accordingly, the Commission will
amend the Regulations such that substitution will be required only if the
quality of the signal of the broadcaster making the request is the same as or
higher than the quality of the signal to be replaced. In making
determinations as to signal quality, the Commission will take a number of
factors into account, including signal format and compression ratio. |
98. |
The Commission considers that the
CCTA’s concern regarding the availability of equipment to implement
simultaneous substitution of digital signals is a temporary problem that
should resolve itself within the next few years. The Commission notes that
Canadian Digital Television (CDTV) submitted, in response to Public Notice
2002-32, that there is technology
available that could be adapted for simultaneous substitution. |
99. |
The Commission’s regulatory policy
for simultaneous substitution will therefore be as follows: |
|
- Substitution will be required only if the quality of the signal of the
broadcaster making the request is the same as or higher than the quality of
the signal to be replaced.
|
|
Substitution rights for the primary
digital service
|
|
A primary digital service that is carried by a distributor on a
priority basis will enjoy the same substitution rights as an analog service
with the same priority status.
|
|
Substitution rights for a multicast
service licensed as a conventional over-the-air television service
|
|
A multicast service that is licensed as a conventional over-the-air
programming service that is carried by a distributor will enjoy the same
substitution rights as the station’s primary service.
|
|
Substitution rights for a multicast
service licensed as other than a conventional over-the-air television service
|
|
The substitution rights of a multicast service licensed as other than a
conventional over-the-air television programming service will be determined
on a case-by-case basis at the time of licensing, as part of the
Commission’s consideration of whether the service should be authorized for
distribution by BDUs.
|
|
Distribution quality standards
|
100. |
In Public Notice
2002-32, the Commission proposed that an
over-the-air digital television signal distributed by a BDU to its
subscribers should be of the same quality and in the same format as that
received by the BDU, without any degradation. |
|
Positions of the parties
|
101. |
While the parties generally agreed
that the technical quality of an over-the-air digital television signal
should not be degraded by a BDU, their opinions differed on the regulatory
approach to be adopted. The CAB submitted that "specific regulatory measures"
should be adopted to ensure that BDUs maintain the quality of over-the-air
digital television signals and do not use digital capacity for other
purposes. |
102. |
Similarly, the CBC argued that the
phrase "without any degradation" is open to interpretation, and objective
criteria must be established to prevent BDUs from imposing additional
compression on over-the-air digital television signals. To this end, the CBC
put forward a detailed definition of the expression "distribution of a
digitally encoded service" to be incorporated into the Regulations. Under the
proposed definition, distributors would transmit all data packets and bits
used by the programming service to encode its video, audio and related data,
without any change in the coding parameters. |
103. |
The CCTA agreed that the quality of
over-the-air digital television signals should not be materially degraded by
distributors. It pointed out, however, that modulation and compression
technology will improve over time. |
|
The Commission’s analysis and
determination
|
104. |
The Commission is of the view that
the CBC’s proposed definition for the expression "distribution of a digitally
encoded service" has considerable merit, but considers it could be overly
restrictive. Such a definition would require, for example, that distributors
transmit every data packet and bit used by the program service to every
receiver on the network. However, such an objective would be impractical
without some allowance for a minimum error rate. |
105. |
At the same time, the Commission
recognizes that allowances should be made for improvements in modulation and
compression technology. Furthermore, the Commission notes that improvements
in production and display technology, as well as the bandwidth requirements
of the programming delivered, must also be considered. |
106. |
Given the number of elements that
must be taken into account in establishing a standard, as well as the rapid
rate of technological change, the Commission considers that it is more
appropriate to adopt the general principle set out in Public Notice
2002-32 rather than to adopt a specific
technical standard. |
107. |
Accordingly, the Commission adopts
the following principle: |
|
An over-the-air digital television signal distributed by a BDU to its
subscribers should be of the same quality and in the same format as that
received by the BDU, without any degradation.
|
|
Carriage of over-the-air digital television services by direct-to-home
(DTH) satellite distribution undertakings
|
108. |
In Public Notice
2002-32, the Commission proposed that DTH
licensees should be required to distribute the over-the-air digital
television versions of the analog services that they must currently
distribute as part of the basic service. It noted that such an approach would
be consistent with the proposed approach for terrestrially based BDUs. |
|
Position of the parties
|
109. |
BEV/CTV concurred with the
Commission’s proposal as set out in Public Notice
2002-32. The CAB also supported the
proposal, but submitted that DTH licensees should be expected to carry the
digital version of all the licensed analog services that they distribute. |
110. |
In its submission, CDTV noted that
the requirement that distributors carry both analog and digital signals
during the transition period could create a lack of bandwidth capacity. It
suggested that this could prevent DTH licensees from distributing a
broadcaster’s HD television signal from an originating station to other
affiliated stations across the country. It noted that the bandwidth
requirements could be four to five times greater than the current
distribution system for the networks. |
111. |
The CCTA expressed a number of
concerns with the proposed policy. In its view, the policy "would entrench
asymmetries in the regulatory obligations of distributors that could distort
market forces in the highly competitive digital market." In addition, since
only certain broadcasters have carriage rights on DTH undertakings, the
policy would create inequalities among broadcasters. |
|
The Commission’s analysis and determination
|
112. |
The Commission noted in Public Notice
2002-32 that the existing basic service
carriage rules for DTH differ in some respects from those that apply to
terrestrial BDUs. This regulatory approach, as set out in Part 4 of the
Regulations, reflects the fact that DTH distributors are licensed on a
national basis. It also reflects the role that DTH plays in the Canadian
broadcasting system as a competitive alternative to cable. |
113. |
The Commission agrees with CDTV’s
comment that capacity constraints will be a significant factor limiting the
provision of services by satellite. Given the bandwidth requirements of
programming in HD format, the Commission shares the view that DTH
distributors will be unable to replicate a majority of their current LD
services in HD format. Moreover, the Commission notes that, although not all
of the services currently carried by DTH distributors may wish to make the
transition to HD, a number of new broadcast services are being added to DTH
line-ups pursuant to Direct-to-home (DTH) broadcasting distribution
undertakings – simultaneous and non-simultaneous program deletion and the
carriage of local television signals in smaller markets, Broadcasting
Public Notice CRTC 2003-37, 16 July 2003.
Furthermore, the Commission’s regulatory approach to access and carriage of
HD pay and specialty services has yet to be determined. Consequently, today’s
broadcast services may have to be reconfigured and multi-satellite platforms
used to meet future distribution objectives. The Commission considers that
these changes will have a significant impact on DTH distributors, as well as
on programming undertakings. |
114. |
The Commission considers that the
regulatory obligations of BDU licensees operating in the same market should
in principle be equivalent, taking into account their different
circumstances, including the differences in their distribution technologies.
In view of the concerns raised by the CCTA and the potential capacity demands
discussed above, the Commission will launch a separate proceeding to examine
the regulatory framework governing the obligations of DTH undertakings with
respect to the carriage of HD services. The issues raised by the CCTA will be
addressed in this proceeding. |
115. |
In the interim, the Commission’s
regulatory approach to the carriage of digital services by DTH undertakings
will be as follows: |
|
DTH licensees will be required to distribute the upgraded versions of
the services that they must currently distribute as part of the basic
service.
|
|
Carriage of over-the-air digital television services by undertakings
using multipoint distribution system (MDS) and switched broadband
technologies
|
116. |
In Public Notice
2002-32, the Commission stated its
intention to adopt a policy framework that is applicable to all BDUs. It
noted, however, that the proposals set out in that notice had been drafted
with only limited regard to the distinctions that exist between the
distribution technologies used by BDUs. Accordingly, the Commission sought
comment on how its policy proposals should be adapted to take these different
technologies and their particular capabilities into account. The Commission
noted, in particular, the spectrum limitations that MDS undertakings face and
invited comment on how these challenges could best be addressed. |
|
Positions of the parties
|
117. |
Craig Wireless International Inc.
(SkyCable) noted that its current MDS technology does not support the
carriage of over-the-air digital television services. It further noted that,
although some costly technical upgrades could be made, there would still be
insufficient spectrum available to allow it to deliver additional
over-the-air digital television services. |
118. |
Similarly, Saskatchewan
Telecommunications submitted that, unless advances are made in digital
compression technologies, it will not be able to distribute HD television
services using asymmetric digital subscriber line (ADSL) technology. It added
further that distributing over-the-air digital television services raised
economic concerns since such distribution will not be commercially viable for
many years. |
119. |
However, Telus submitted that
capacity can be enhanced either by using compression technologies or by
moving from lower capacity xDSL technologies, such as ADSL, to higher
throughput versions such as Very High Rate Digital Subscriber Line (VDSL), by
upgrading distribution networks from Synchronous Optical Network (SONET) OC-3
to OC-12 or OC-48, by upgrading from SONET to Gigabit Ethernet,3
or by upgrading to faster Internet Protocol (IP) routers. |
|
The Commission’s analysis and determination
|
120. |
The Commission recognizes that the
amount of spectrum available to MDS undertakings is limited. |
121. |
The Commission concurs with Telus
that, although the maximum data rate that ADSL hardware can currently
transmit is limited, higher performance equipment should soon be available.
Moreover, while installing such equipment involves capital costs, so too do
digital upgrades that broadcasters and cable BDUs are implementing. |
122. |
As discussed in the preceding
section, the Commission is of the view that the carriage requirements of BDUs
operating in the same market should in principle be similar, but must take
into account their inherent technological and other differences. Therefore,
if a distributor lacks the infrastructure or spectrum necessary to carry
priority signals, or to provide the access required for Canadian upgraded pay
and specialty services, the Commission may grant, by condition of licence, an
exception to relevant regulatory requirements. Such conditions of licence
will be granted on a case-by-case basis and will be subject to any commitment
or undertaking that might be deemed necessary. |
|
Exempt undertakings
|
123. |
The Commission has issued two
exemption orders relating to certain classes of broadband distribution
undertakings. Final revisions to certain exemption orders, Public
Notice CRTC 2000-10, 24 January 2000,
pertains to master antenna television systems (MATV) that distribute services
to residents of multiple unit dwellings, such as hotels, apartment buildings,
condominiums and row houses. Exemption order respecting cable systems
having fewer than 2,000 subscribers, Public Notice CRTC
2001-121, 7 December 2001 (Public Notice
2001-121), governs cable undertakings that serve fewer than
2,000 subscribers. |
124. |
In addition, the Commission has
issued Call for comments on a proposed exemption order for cable
broadcasting distribution undertakings that serve between 2,000 and 6,000
subscribers; and changes to the exemption order respecting cable systems
having fewer than 2,000 subscribers, Broadcasting Public Notice CRTC
2003-41, 29 July 2003. In this notice, the
Commission invited comments on the proposed exemption order for cable BDUs
serving between 2,000 and 6,000 subscribers, and on the proposed revisions to
the Exemption order for small cable undertakings, set out in the appendix to
Public Notice 2001-121. |
|
The Commission’s analysis and determination
|
125. |
The Commission recognizes that exempt
undertakings operate in a competitive environment and must, in order to
survive, offer service packages to their subscribers that are comparable to
those offered by competitors. The Commission notes, however, that these
undertakings tend to be small in size and have access to limited technology
and resources. Given these realities, the Commission has determined that
these two classes of exempt undertakings will not be required to duplicate
mandatory services in digital format. The Commission is of the view that this
will afford these undertakings the flexibility to make the digital transition
at their own pace, while ensuring that subscribers continue to have access to
Canadian services. |
126. |
The Commission therefore intends to
propose amendments to the exemption orders that reflect the following
principle: |
|
Exempt undertakings will be permitted to distribute their mandatory
television services in either analog or digital format, that is, they will
not be required to carry both the analog and digital versions of a priority
service.
|
|
Provision of service – An interim solution
|
127. |
In Public Notice
2002-32, the Commission stated that, in
order to hasten the delivery of over-the-air digital television services to
Canadians, it would be predisposed to adopt an interim approach for a period
of between 12 and 18 months, while the licensees of transitional digital
television undertakings construct their over-the-air facilities. Under this
proposed approach, which was originally advanced by BEV/CTV, the service of a
transitional digital television undertaking might be delivered by direct feed
to a BDU’s uplink facilities or to its head end for distribution to
subscribers, pending construction of an over-the-air digital transmitter. |
128. |
Applicants for transitional digital
licences wishing to take advantage of this interim method of delivering their
digital services to BDUs would be required to submit with their applications
specific proposals and time frames for the construction of conventional
digital broadcast facilities. Furthermore, any such interim carriage
arrangements authorized by the Commission would be subject to conditions of
licence requiring that construction of these facilities be completed, and
that they be in operation, within specified deadlines. Such interim carriage
arrangements would not be mandated by the Regulations. Instead, they would be
the subject of negotiations between the television broadcaster and the BDU
concerned. |
|
Positions of the parties
|
129. |
The CAB supported the Commission’s
proposal for interim measures, but requested that the Commission add that,
when the service of a transitional digital television undertaking is
delivered by direct feed to a BDU for distribution to subscribers, "the
direct feed should receive priority carriage entitlement and substitution
privileges consistent with the requirement applicable to the over-the-air
station." |
130. |
For their part, BEV/CTV asked the
Commission to extend the 12- to 18-month interim period, noting that a longer
period may be necessary to make the cost of implementing the interim solution
worthwhile. Further, BEV/CTV suggested that the Commission consider on its
merits any future application that proposes this interim solution as a
permanent one for certain broadcasters in special circumstances. |
|
The Commission’s analysis and determination
|
131. |
Given the temporary nature of these
arrangements, the regulatory and policy implications of mandating carriage,
and the importance of ensuring that Canadian viewers are not disenfranchised
by the transition, the Commission concludes that the proposal for an interim
solution will stand as it was originally advanced. However, the duration of
the interim operation will correspond to the implementation period for the
licensed over-the-air facility, which is usually set at 24 months. |
132. |
Accordingly, the Commission’s interim
solution will be as follows: |
|
- Following the Commission’s approval of an application for a licence for
a transitional digital television undertaking, the undertaking’s service
may be provided through a direct feed to a BDU’s uplink facilities or head
end until the undertaking constructs its over-the-air facilities.
|
|
- These carriage arrangements will be the subject of negotiations between
the broadcaster and the BDU concerned; they will not be mandated by the
Regulations.
|
|
Other matters
|
133. |
Chris Stark and Marie Laporte-Stark
submitted that the Commission’s proposal does not acknowledge that
broadcasters and distributors must meet the needs of persons with
disabilities. In their view, "the services must carry captioning [and]
descriptive narration in an easily accessible way and the equipment attached
to it … must be completely … accessible." |
|
The Commission’s analysis and determination
|
134. |
The Commission agrees that the needs
of persons with disabilities must not be overlooked in the digital
transition. It notes that, in fact, broadcasters and distributors should find
it easier to meet these needs since the A/53 standard provides for five
separate audio channels, as well as for supplementary data services. The
Commission reminds broadcasters and distributors that the upgraded versions
of programming services will be subject to the same conditions of licence and
carriage requirements as their analog counterparts. This includes provisions
for closed captioning and for descriptive video as set out in individual
conditions of licence. The Commission likewise reminds distributors that
their obligations for the distribution of the digital versions of programming
services are the same as those that apply to their analog counterparts. |
|
The regulatory framework - Next steps
|
135. |
The Commission intends to issue for
public comment proposed amendments to the Regulations and exemption orders
that are necessary to implement this regulatory framework. |
136. |
The Commission will also launch two
follow-up proceedings. The first proceeding will establish a licensing
framework governing the transition of pay and specialty services to HD. It
will also establish a framework to govern the distribution of such services
by BDUs. The second proceeding will examine the regulatory framework
governing the carriage of HD services by DTH undertakings. |
|
Secretary General |
|
This document is available in
alternative format upon request and may also be examined at the following
Internet site:
http://www.crtc.gc.ca |