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ARCHIVED -  Decision CRTC 91-98

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Decision

Ottawa, 14 February 1991
Decision CRTC 91-98
Saskatchewan Communications Network Corporation
Regina, Saskatchewan - 891162000
Following a Public Hearing commencing 23 October 1990 in Regina, the Commission approves the application by Saskatchewan Communications Network Corporation (SCN) for a licence to carry on a non-commercial, English-language television network operation for the distribution of educational programming via satellite.
The Commission will issue a licence expiring 31 August 1995, subject to the conditions specified in this decision and in the licence to be issued.
SCN is a corporation created by an Act of the Legislature of the Province of Saskatchewan for the purpose of disseminating educational, cultural and public information throughout the province via telephone conferencing, television, and data communications, using satellite and fibre optics cable. The applicant describes its mandate as being the provision of "equal access to learning opportunities for the residents of Saskatchewan", and its mission, "to encourage, facilitate and coordinate the use of communications technology in Saskatchewan in order to enhance the development and delivery of educational information and cultural programs for the improvement of human and economic resources."
The activities of the corporation for which this licence will be issued are solely those relating to the proposed "public broadcast" portion of its operations, involving the distribution of programming via satellite on Saskatchewan cable television undertakings. The Commission notes that, in addition to these public broadcast activities, the corporation is currently involved in the distribution of "closed circuit" and "data network" services to schools, as well as to other institutions and commercial users in Saskatchewan.
At the hearing, the Commission raised with SCN the matter of the Direction to the CRTC (Ineligibility to Hold Broadcasting Licences) dated 27 June 1985. The Direction specifies that, in order that it may issue a broadcasting licence to a corporation such as SCN, the Commission must first be satisfied that the applicant corporation is an "independent corporation" not directly controlled by the government of a province, and that its programming, taken as a whole, is "designed to furnish educational opportunities and [is] distinctly different from general broadcasting available on the national broadcasting service or on privately owned broadcasting undertakings".
The applicant stated that its Act is similar in form and substance to the enabling legislation of other provincial educational broadcasting authorities. Accordingly to the applicant, although the provincial statute establishing SCN does identify the corporation as a Crown agent, it is an independent corporation within the meaning of the Direction. The applicant submitted that the fact SCN is stated to be a Crown agent in its statute is not determinative of whether, for the purposes of the Direction, SCN is directly controlled by the government, the issue the Comission must address. SCN confirmed at the hearing that its Board of Directors, while appointed by the provincial government, includes no members or employees of government agencies other than one individual who is, in fact, an employee of SCN. As stated by SCN's Chairperson:
 I think that given the Act and the way it is established, that formally I would say the SCN has its own authority through its Board of Directors.... and that helps to protect our independence.
The applicant also stressed that its programming, on the whole, will be educational in nature and will be distinctly different from that provided by the CBC or by private broadcasters.
The application by SCN was opposed by the Canadian Cable Television Association (CCTA), who argued that the Commission was prohibited from licensing SCN. Although the CCTA did not object to the applicant's programming plans, it did question whether SCN was indeed an independent corporation. Specifically, the CCTA took the position that the Direction, which does not permit the Commission to issue a licence to an agent of Her Majesty in right of a province, applies in the case of the applicant on the grounds that subsection 4(3) of the Act establishing SCN describes it as being, for all its purposes, an agent of Her Majesty in right of Saskatchewan. Further, the CCTA argued that SCN has other attributes of an agent.
Of the differing interpretations given to the Direction by the applicant and the CCTA, the Commission considers that the one put forward by SCN more accurately reflects the intent of the Governor in Council's Direction. While a provincial government or a body it directly controls may not be issued a broadcasting licence, the Commission is authorized to issue a licence to a body whose operations, in its view, are not directly controlled by the government. Moreover in the Commission's view, the other attributes of SCN do not differ materially from those of other broadcasters licensed by the Commission. The Commission is also satisfied that, on the whole, the programming to be offered by SCN will be educational in nature and distinctly different from that offered by the CBC and by privately owned television stations in Saskatchewan.
SCN's operations are funded in part by grants from the provincial and federal governments. Additional funding will be generated by a "Distance Education Development Fee" (the Fee) to be levied against cable television subscribers in the province. The Fee is authorized by SCN's Act and is set by the Lieutenant Governor in Council. The Government of Saskatchewan, in presenting its intervention at the hearing, estimated that approximately 25% of the total SCN budget in year one, or some $2.7 million, will come from the Fee. The applicant advised at the hearing that the Fee will be set at $1.25 per subscriber per month.
The constitutionality of the Fee was the subject of some interventions and is before the courts. In its written reply to the interventions, SCN submitted that the Fee is constitutional as a form of direct taxation. The Government of Saskatchewan also submitted in its pleading to the Saskatchewan Court of Queen's Bench that the Fee is a direct tax and thus within the constitional authority of the provincial legislature. The imposition of such a tax does not fall within the Commission's jurisdiction to review. Until an ultimate court determination to the contrary, the Commission accepts the authority of the Saskatchewan Legislature to pass the legislation imposing the Fee. As a result, the Fee will not form part of, and will be in addition to, the basic monthly fee that cable television licensees are authorized by the Commission to charge their subscribers.
Noting that federal funding for the operations of SCN will cease on 31 March 1994, the Commission questioned the applicant regarding its plans for replacing the federal contribution at that time. At the hearing, the applicant gave clear assurance "...that the Saskatchewan government supports the implementation of the service and that it will ensure that what funds are required to keep the network viable, on the long term, will be accommodated." This was confirmed at the hearing by the spokesperson for the Government of Saskatchewan, Mr. Donald Hamm, who stated:
 ...should SCN, for any reason, require a source of funding other than that provided by these sources, I wish to assure the Commission that the Government of Saskatchewan will fully support the SCN Corporation and ensure that the funds required for its operation are made available.
In the Commission's view, this commitment by the Government of Saskatchewan provides sufficient guarantee that the resources needed to maintain the proposed service in operation, over both the short and long term, will be made available to SCN. The Commission notes in this connection that, in projections requested of SCN at the hearing and filed subsequent to it, the provincial grant portion of SCN's annual budget is shown to increase for fiscal years 1994/95 and 1995/96 to completely cover the phasing-out of the federal grant portion.
In appearing and non-appearing interventions, the CCTA, various Saskatchewan cable television licensees and several individuals expressed strong opposition to the province's plans to levy a monthly Fee against all cable television subscribers in Saskatchewan. According to certain of the interveners, imposition of the Fee could prompt a significant number of individuals to cancel their subscriptions to discretionary services or to disconnect from cable entirely. It was also suggested that the Fee could raise the cost of cable service to a level that would render non-viable the extension of service to smaller communities in the province.
Sask Cable Services Inc. (Sask Cable) is a consortium of Saskatchewan cable operators who, together, serve approximately 87% of the province's cable subscribers. At the hearing, Sask Cable presented the results of a survey conducted on its behalf by the Angus Reid Group. One purpose of the survey was to forecast the likely impact of the Fee on cable disconnections within the province. The survey, carried out before the province had announced the level at which the Fee would be set, assumed a charge of "somewhere under $2.00 extra per month". The survey results indicated that, at this level, between 11% and 13% of the province's subscribers would be very likely to cancel their cable service. At the hearing, Mr. Reid acknowledged that this percentage would have been lower had the actual monthly Fee of $1.25 been known at the time the survey was conducted. He was unable to specify, however, what percentage of subscribers might actually choose to disconnect given this lower Fee.
At the hearing, the applicant indicated that it was in the midst of discussions with the licensees of Part III cable television undertakings, with a view to providing a grant to such systems to assist with the cost of adapting their systems to carry the SCN service. In its appearance at the hearing, the Government of Saskatchewan indicated that it is considering "how the fee will be collected from rural areas, and whether or not it will be adjusted, shall we say, to ensure that further extension occurs and isn't impeded by application of the fee."
One of the Commission policy objectives is to ensure that, to the extent possible, Canadians living in underserved areas are given access to an attractive range of authorized broadcasting services, at an affordable cost. The Commission is therefore concerned that, without some level of financial support in each of the areas noted above, introduction of the SCN service could well have a negative impact on the viability of smaller cable systems. It will thus wish to be kept advised of the applicant's progress towards satisfactory completion of its discussions. The Commission also awaits the result of the provincial government's consideration of the Fee to smaller systems.
At the hearing, the Commission reminded the applicant of the importance of providing the Commission with financial information on a regular basis, in a form that will facilitate evaluation of SCN's performance. The Commission, therefore, requested the applicant to develop a cost allocation mechanism through which the expenditures associated with its licensed television network operation can be accounted for separately from the costs related to the operation of its closed circuit and data network services. In line with the applicant's commitments on this score, it is a condition of licence that SCN file, as part of its annual return, a complete breakdown of the expenses incurred in the provision of its television network services.
The Commission also raised with the applicant the concern that, as a satellite-to-cable service only, SCN will be available to less than 50% of Saskatchewan's population. This estimate is based on the applicant's own observations that, of the approximately 360,000 households in the province, only 179,700 subscribe to cable. SCN indicated that cost was a primary consideration in deciding to opt for cable rather than over-the-air distribution. It stated that the projected cost of more than $22 million for an over-the-air system falls well outside the realm of its present funding. SCN's Chairperson, Mr. W. Grieve did undertake, however, to raise the matter of over-the-air service with SCN's Board of Directors and "...try to set in motion some sort of planning that would give us an idea of the target or some sort of time frame within which we might be able...to do something like that."
At the time of licence renewal, the Commission will expect SCN to address the Commission's concern and describe its plans for the extension of service to a greater proportion of Saskatchewan's population.
Initially, SCN proposes to offer 52 hours 30 minutes of programming each week consisting of 29 hours of informal programming and 23 hours 30 minutes of formal programming. These hours of operation are to expand as SCN's program inventory grows. The informal programming will focus on personal development and on encouraging and stimulating education. The formal programming will be aimed at complementing and supporting elementary, secondary and post-secondary education, and will be produced or acquired in consultation with the province's universities and colleges and with the Saskatchewan Department of Education.
According to the applicant, its formal and informal programming will fall into four main themes, which it identified as: Education and Lifelong Learning; Agriculture and Rural Development; Health, Lifestyles and the Family; and Economic and Cultural Development. SCN indicated that Education and Lifelong Learning programs would account for approximately 50% of the schedule.
The Commission notes the applicant's plans to consult other educational broadcasters for their advice with respect to the establishment of one or more program advisory committees. The Commission expects SCN, upon determining its plans in this regard, to advise the Commission in writing with respect to how the committee or committees will operate and who will be appointed to serve on them.
According to the application, the Canadian content of the service will be no less than 60% over the entire broadcast day and no less than 50% during the evening broadcast period. At the hearing, the applicant stressed that these percentages represent "bare minimum" commitments, which it would "hope to gradually increase". The Commission encourages the applicant to pursue its plans to increase the Canadian component of its service. SCN emphasized its intention to make effective use of Saskatchewan's independent producers as a source of new educational programming. It considers that such local programs will be essential in helping SCN act as a "Saskatchewan voice or in providing a Saskatchewan viewpoint". To this end, the applicant committed to invest up to $2 million each year in the local production industry.
The Commission notes that SCN has already produced two half-hour programs in the under-represented category of drama. At the hearing, it raised the possibility of also becoming involved in the production of children's and musical/variety programs. The Commission encourages SCN, through its Canadian program expenditures, to participate in the development of Saskatchewan-based programs in these three under-represented categories.
In its application, SCN also indicated that an important aspect of its mandate would be to provide for adequate community reflection through programming depicting the mosaic of Saskatchewan peoples. Accordingly, the Commission questioned SCN on its specific proposals for programs directed to Saskatchewan's native, ethnic and Francophone communities.
SCN confirmed that it has already committed more than $150,000 for the development and production of native programming. It noted that one program with Louis Riel as its subject is currently in development, as are two other half-hour programs dealing with native agriculture. In addition, a 13-part series on Métis fiddle music is about to enter production.
In the area of ethnic/multicultural programming, the Commission notes SCN's production, in association with a Saskatoon-based independent producer, of "In Perfect Harmony". This program, based on varying multicultural values, is one of the half-hour drama productions referred to earlier. The Commission also notes SCN's statement that "...this is an area that will continue to be one of emphasis for us".
The Association culturelle franco-canadienne de la Saskatchewan, in its intervention to this application, urged the Commission at the hearing to ensure that the new educational programming service takes into account the needs of the province's French-speaking population. The Commission notes in this regard the applicant's plans to distribute two French-language series, one originating with TVOntario and the other acquired from a U.S. source. Although SCN, in responding to this intervention, was unable to put forward any plans for programming specifically reflecting the Fransaskois culture, it did state that it intends "to consult further with the Francophone community in the province", and expressed confidence that a "lasting and beneficial relationship in our programming and the development of new programming" can
be formed.
In keeping with the mandate prescribed by the applicant for this new educational programming service, the Commission encourages SCN to develop further programming for the native, Francophone and ethnic populations of Saskatchewan. The Commission authorizes SCN to make use of the Vertical Blanking Interval. The Commission expects SCN to adhere to the guidelines set out in Appendix A to Public Notice CRTC 1989-23 dated 23 March 1989 entitled Services Using the Vertical Blanking Interval (Television) or Subsidiary Communications Multiplex Operation (FM). This authority may only be implemented when the Department of Communications gives the technical approval required by the Radiocommunication Act and the regulations made thereunder.
The Commission notes the applicant's undertaking to acquire the closed captioned versions of programs whenever these are available, as a service to hearing-impaired viewers. Consistent with CRTC policy, the Commission also expects SCN to install a TDD device at an appropriate location within the province so that hearing-impaired viewers may have ready telephone access to the licensee for the purpose, among other things, of bringing attention to technical problems arising with respect to closed captioned programming.
The Commission reminds SCN that, at licence renewal, it intends to review thoroughly the applicant's performance in responding to this and the other encouragements and expectations contained in this decision. The Commission will also expect SCN, at that time, to have developed clearly-defined strategic and long-term plans for programs and program production directed towards the provision of a quality educational service responsive to the needs of Saskatchewan residents. As discussed with the applicant at the hearing, it is a condition of licence that SCN adhere to the requirements of the Television Broadcasting Regulations, 1987.
Similarly, it is a condition of licence that the applicant adhere to the guidelines on sex-role stereotyping set out in the Canadian Association of Broadcasters' "Sex-Role Portrayal Code for Television and Radio Programming", as amended from time to time and approved by the Commission.
In addition to the comments of intervenors addressed above, the Commission wishes to acknowledge the views expressed in the numerous appearing and non-appearing interventions submitted in respect of SCN's application.
Allan J. Darling
Secretary General