Search

ARCHIVED - Decision CRTC 2000-393

This page has been archived on the Web

Information identified as archived on the Web is for reference, research or recordkeeping purposes. Archived Decisions, Notices and Orders (DNOs) remain in effect except to the extent they are amended or reversed by the Commission, a court, or the government. The text of archived information has not been altered or updated after the date of archiving. Changes to DNOs are published as “dashes” to the original DNO number. Web pages that are archived on the Web are not subject to the Government of Canada Web Standards. As per the Communications Policy of the Government of Canada, you can request alternate formats by contacting us.

Archived

This page has been archived on the Web.

Decision CRTC 2000-393
Ottawa, 21 September 2000
World Television Network/Le Réseau Télémonde Inc.
Across Canada – 199618154
9 May 2000 Public Hearing
in Kingston
Proposed specialty television service
The Commission, by majority vote, denies a proposal by World Television Network/Le Réseau Télémonde Inc. that would have offered a national specialty service providing a variety of programming from around the world. Programs were to have been offered in the language of origin, subtitled in English and eventually in French on an additional feed. The applicant requested approval only on condition of dual status distribution, according to which, effectively, the service would have to be carried on an analog channel of the basic service provided by the majority of cable distributors. A monthly fee increase of approximately $0.30 per subscriber would have resulted in English-language markets.
Programming and business plan

1.

World Television Network/Le Réseau Télémonde Inc. (WTM) requested a licence to carry on a new national specialty television programming service. The proposed service, as described by WTM, was to have offered "the whole and wide world of television," providing all types of television content made available by general interest television stations, except formal education and game shows. The applicant proposed to offer news, public affairs, sports, film and entertainment programming from Canada and other countries, with an emphasis on programming from foreign countries other than the United States. Programs of U.S. origin were to be limited to 5% of total programming.

2.

WTM described its proposed service as one that would provide a diversity of programs from sources in Canada and around the world. The programs would be broadcast in their language of origin, with state-of-the-art subtitles to make them accessible to English-language audiences and, starting in year 3 of operation, French-speaking viewers. The programming would include coverage of political, cultural, economic and social events, intended to provide Canadian viewers with "perspectives, understandings, insights and entertainment that currently have little or very limited exposure on North American TV." The applicant was of the view that the service would play a special role in enhancing the attainment of the objectives of section 3(1) of the Broadcasting Act (the Act), but nevertheless stressed that the programming would be directed to a broad "mainstream" audience and was not intended to be "ethnic programming."

3.

The applicant indicated that at least 50% of all programming would be Canadian. Many of the Canadian programs would have been broadcast in English, while others would include components employing a variety of other languages, with subtitles.

4.

To ensure diversity of program origination, it was proposed that no more than 5% of the foreign content each month would come from any single country of origin, and that no more than 5% each month would be in any one language (other than English or French).

5.

WTM’s business plan was based upon the service receiving "dual status" distribution on cable distribution undertakings, with a mandatory fee of $0.30 per subscriber per month in English-language markets. Dual status means that Class 1 distributors (generally cable companies with more than 6,000 subscribers) are obliged to distribute the service on an analog channel of their basic service, unless both the service provider and the distributor agree to the service receiving discretionary carriage instead. Class 2 distributors (generally cable companies with between 2,000 and 6,000 subscribers) may choose whether or not to distribute a dual status service. However, if they decide to distribute the service, they must offer it as part of their basic service, unless both the service provider and the distributor agree to discretionary carriage instead. WTM emphasized that receiving dual status was central to its business plan, and that it was not seeking approval on any other basis.

6.

The applicant also based its request for dual status distribution on the argument that there is a strong interest in the type of service it has proposed, and presented the results of various surveys to support its view. The most recent study that the applicant filed was conducted in May 2000. It surveyed residents of Toronto and Montréal. The study indicated that 25% of Toronto residents and 17% of Montréal residents would be very interested in watching programming produced outside of North America, and that 29% of Toronto residents and 25% of Montréal residents would be willing to pay fee increases of between $0.30 and $0.38 per month to receive such a service.

7.

As noted above, the applicant proposed to charge a wholesale rate of $0.30 per subscriber in all English-language markets. This would have translated into a mandatory increase in the actual cost borne by all cable subscribers of somewhat more than $0.30, taking into account such things as the distributor's mark up and taxes.
Interventions

8.

The Commission notes the numerous interventions submitted in support of this application, and the views expressed regarding the potential of the proposed service, among other things, to add diversity to the Canadian broadcasting landscape. These interventions were carefully considered by the Commission in coming to its determination.

9.

There were also several opposing interventions, including those filed by the Canadian Cable Television Association (CCTA), the Canadian Association of Broadcasters (CAB), existing ethnic broadcasters, and licensees of various specialty television undertakings.

10.

The CCTA expressed concern about the required distribution status of the proposal, not just because of the lack of analog channel capacity, but also because of the need to use channel capacity for new discretionary digital services to hasten the roll out of digital distribution technology.

11.

The CAB argued that the proposed nature of WTM's service was too broad, and that it would essentially amount to a general interest service. The CAB noted that the wide-ranging schedule included such elements as news, public affairs, sports, film and family entertainment. It was of the view that licensing WTM would create an overlap with virtually every other existing specialty service, and also inhibit the licensing of new digital specialty services. In Public Notice CRTC 2000-6, Licensing framework policy for new digital pay and specialty services, the Commission stated that such new services should not be directly competitive with already licensed analog services.

12.

The main concern of licensees of ethnic specialty services was that WTM would effectively operate as a multilingual ethnic service, but would possess the distinct advantage of mandated distribution as part of the basic service. These licensees noted that, by contrast, they have access to distribution systems only in certain circumstances and are licensed for distribution on a discretionary basis only. They argued that granting basic carriage to WTM would have negative financial implications for their services.
Commission determination

13.

In Public Notice CRTC 1997-33 announcing its timetable for consideration of various applications for new specialty and pay television services, the Commission stated:
…applications proposing new English- and French-language services that are premised on carriage on basic service, or on a high penetration discretionary tier, must justify such distribution on the basis of agreements with distributors or on the basis of evidence demonstrating the exceptional importance of the proposed service to the achievement of the objectives of the Broadcasting Act.

14.

As indicated in the above passage, the Commission expects applicants to justify carriage of their services on the basic service or on a high penetration discretionary tier.

15.

The Commission wishes to emphasize that it does not consider that the potential overlap of WTM with the services of existing ethnic licensees would have had an undue economic impact on those services. The service, as proposed and put forward by the applicant at the hearing, would have been aimed primarily at mainstream audiences interested in world affairs and entertainment from outside North America, rather than at Canadian ethnic audiences.

16.

The Commission notes that the applicant insisted at the hearing that the proposed service was directed to mainstream audiences, audiences that are already served by a wide variety of conventional and specialty television services. In the Commission's view, the attraction of the service to such audiences would likely have been limited by the large amount of third-language, subtitled programs that it would have offered.

17.

The Commission considers that a proposal such as WTM's may have the potential to add diversity to the Canadian broadcasting landscape. However, at a time of pressure on the availability of analog channel capacity on most cable distribution undertakings, and of increased expectation by consumers that they will have a greater ability to choose the specialty services they receive, the Commission has not been convinced that it is in the public interest to grant the proposal the distribution status the applicant required for its implementation.

18.

The Commission is of the view that WTM did not demonstrate that the proposed service would have been of exceptional importance to the achievement of the objectives of the Act, warranting what would in effect be mandatory distribution on the basic service of distribution systems at a monthly subscriber fee. Neither is the Commission convinced that the evidence of demand filed justifies carriage of the proposal on the basic service. The Commission therefore, by majority vote, denies the application.
Secretary General
This decision is available in alternative format upon request, and may also be examined at the following Internet site: www.crtc.gc.ca

 

Dissenting opinion of Commissioner Stuart Langford
I disagree with the majority and would have approved this application. To deny it is to miss an opportunity to fulfill part of the legislated mandate of this Commission regarding the identity and purpose of the Canadian broadcasting service. It is an opportunity that once missed may not present itself again.
A missing piece
Section 3 of the Broadcasting Act (the Act) sets out Parliament's vision for Canadian broadcasting and establishes by way of legislated policy the essential elements of that vision. It could be viewed as a checklist of what Parliament deems to be the requisite components of a balanced and reflective broadcasting system. Over the years, the Commission has ticked off many of those components or elements. One box dealing with the benefits of embracing Canada's cultural diversity, remains conspicuously unchecked.1 I refer to Parliament's direction in paragraph 3(d)(iii) of the Act that the Canadian broadcasting system should "¼ serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including ¼ the ¼ multicultural and multiracial nature of Canadian society¼ "
This application presented the Commission with a chance to further the work Parliament set out for it, to embrace the spirit of the Act by fitting a missing piece to Canada's broadcasting mosaic. It afforded the opportunity to bring into the mainstream of this country's broadcasting community a large and growing segment of Canada's changing population, a segment that in recent years has been complaining ever more vocally about its marginalized status. There would no doubt have been certain costs attached to taking the chance and opportunity this application provides. The majority decision details them. On balance, it seems to me that the long term benefits far outweigh those costs, real as they are.
The benefits
In meeting the specific objective of the Act quoted above, an objective no doubt inspired by the changing face of Canada, the WTM service as described in this application would greatly enrich television in this country. It would bring to the industry a new team of highly experienced professional broadcasters and to viewers content that is virtually unavailable to them today.
Described as "powerful and revolutionary" by the McLuhan Foundation at the University of Toronto2, WTM's planned programming schedule would bring to Canadians access to the 94% of television shows produced in the world that they cannot find now in their TV guides. With few exceptions, mainstream television in Canada is produced either at home or in the United States. A few specialty services seek farther afield for programs and very occasionally something from outside of North America shows up on conventional television listings. WTM's intent was to turn that formula on its head. Mr. Daniel Iannuzzi, President of WTM, put it this way:3
"World Télémonde will be a unique national service with the best of the world's programming broadcast in their original languages, subtitled in English and French, using state-of-the-art technology.
"We plan to provide two channels, one in English, the other in French. As such, this entertaining, informative and insightful programming will be accessible to all Canadians.
"We will have quality programming from all regions of the world. To ensure this diversity we are making two key commitments here today:
"First, all of our foreign programming will be broadcast in the original language of production and not more than 15% in any one language. 4
"Second, a maximum of 5 percent of our programming will come from the United States of America."
Expanding on these undertakings, Mr. Michael McHale, Vice President, Programming, English Services, had this to say about WTM's goals and specific plans for purchasing and producing programs:
"World Télémonde will provide Canadian viewers with perspectives, insights and entertainment that currently have little or no exposure on Canadian television.
"Programs such as The Bus from the Netherlands; from Ethiopia, Blood is Not Fresh Water; from the Czech Republic, Divided We Fall; from Israel, Ahron Cohen's Debt; from Brazil, Confidences from the River of Deaths; and the Japanese production of Manhole Children of Mongolia. These are just a few of the quality and award-winning programs previously unavailable to Canadians.
"During the first seven years we will spend close to $36 million on fresh, new and exciting entertaining international programming, programming that will add exponentially to the diversity in our broadcasting universe.
"But Télémonde is much more than international programming. We will spend $75 million, or 33 per cent of gross revenues, on Canadian programming during the licence period."5
WTM's principals pledged to meet a 50% Canadian content level over the licence term and to acquire 45% of all Canadian programming from independent producers. With these tangible benefits added to an inclusive programming approach intended to broaden choices and build bridges between Canada and the world and among Canadians of every racial and cultural origin, it is little wonder that so many intervenors, over 4000, added their names to the long list of those supporting the WTM application.
One intervenor, Member of Parliament, Joseph Volpe, saw the positive side of any cost-benefit analysis of this application so outweighing the negative as to make the decision to license WTM, in his words "very easy". "The decision would be a slam dunk, as they say in basketball, it would be absolutely yes."6 Mr. Volpe saw the WTM application as giving the Commission a chance to reach out to those many Canadians who feel excluded from the world of television: "I think the CRTC, the Commission, has an opportunity with this application to finally give a sense of meaning to those who want to see themselves reflected in those images that are part and parcel of life today."7
Mr. Volpe's expectation that approval of the WTM application would help foster a greater sense of belonging among a Canadian population that is becoming year by year more culturally diverse, echoed similar sentiments in a recently published Government policy paper. The following passage excerpted from Connecting to the Canadian Experience: Diversity, Creativity and Choice, 8 indicates that television has a key role to play in building a sense of inclusiveness and community among all Canadians: "The Government of Canada recognizes that we must also ensure that Canadians see themselves reflected in the more traditional communications media. Many of these media -- broadcasting, cable, satellite and telecommunications technologies -- that are making culture from around the world available to Canadians originated in Canada. While they have enriched our lives, they have also made it more difficult for Canadians to find choices that reflect their reality as they 'surf' over 100 channels on TV¼ "
WTM's Vice-President, Information Programming, Mr. Howard Bernstein, in describing the applicant's approach to news gathering also commented upon the rare opportunity this application presented for reaching out in a different sense: "This is an opportunity for Canadians to understand the way major news events are perceived in their countries of origin, the countries affected by the stories and the third countries whose views are seldom heard."9 Put another way, Canadians will be treated to a brand new perspective, to pictures taped by cameras held in non-North American and often non-European hands. They will be given a look at the world's and indeed their own stories, through different sets of eyes.
Cost, carriage and competitiveness
Despite the benefits, some of which are highlighted above, three aspects of this application were considered by some opposing intervenors as fatal to it. I refer to the impact on cable capacity of analog carriage of WTM's service in a time of transition to digital, to the cost to subscribers (around 37 cents per month) of carriage on basic and to the effect the licensing of WTM would have on existing ethnic broadcasters.
I agree with the conclusion, found in the opening sentence of paragraph 15 of the majority decision, that the fears of ethnic broadcasters are unfounded. The issues of carriage and cost require further analysis.
If the Commission approved this application most cable subscribers in Canada would be forced to pay for a service that not all of them want, not an unprecedented occurrence. As well, at a time when cable operators are scrambling to free up scarce capacity so as to facilitate the gradual transition over the next few years from analog to digital transmission, approval of this application would burden them with the requirement, technologically speaking, to take a significant step backwards, to dedicate 6 MHz of capacity (enough to carry as many as six or perhaps more digital signals) to this new WTM service.
Speaking for the Canadian Cable Television Association (CCTA), Mr. Christopher Taylor had this to say regarding carriage: "WTM has asked for dual status analog carriage. The CCTA opposed WTM being granted any form of analog carriage."10
The CCTA's chief concern, according to Mr. Taylor was not with what WTM might bring to the Canadian broadcasting system but with what analog carriage of WTM could keep from it: "In the CCTA's view, there is nothing in the record of this proceeding which would warrant the Commission taking such an extraordinary approach as licencing one new service and therefore denying carriage to six others."11
Making particular reference to the capacity issue (see majority decision, paragraph 17), the majority denied WTM's application despite concluding that it, "¼ may have the potential to add diversity to the Canadian broadcasting landscape." (paragraph 17). In my view, though significant, carriage concerns do not outweigh, to quote from the same statement in Public Notice 1997-33 relied upon in part by the majority in paragraph 13 of its decision, "¼ the exceptional importance of the proposed service to the achievement of the objectives of the Broadcasting Act."
The dedication of 6 MHz of analog capacity need not necessarily trigger the loss of future digital services. By the CCTA's own admission, there is more to digital capacity than "harvesting" existing analog channels and dedicating them to digital. Again, to quote the CCTA's Mr. Taylor: "There are two ways of getting that additional analog capacity. One is, you can build out your system, upgrade your system. The second way is by taking existing analog capacity and dedicating it to digital. It's my understanding that virtually every system is looking at both ways of doing it."12
Clearly, the licencing of WTM on basic would not automatically confront cable operators with an either/or dilemma. They would not be left with no option but to drop an existing service for WTM or to forego the carriage of newly licensed digital services because WTM had usurped capacity. Faced with a capacity problem, a cable distributor that wished to add digital services could, to quote Mr. Taylor, "build out" its system. True, that would mean additional costs incurred but, again to quote Mr. Taylor, "virtually every system" plans to incur such costs already. Equally, it seems logical to suppose that no distributor will add digital signals in the future unless market studies indicate sufficient demand to guarantee a profit from so doing.
The issue of costs to subscribers was also mentioned specifically by the majority. In my view, the negative impact of a monthly fee increase of around $.37, though not insignificant, pales in comparison to the public interest arguments underpinning this application. No one wants to push up consumer costs, particularly when an increase is triggered by the addition of a service that studies indicate will not be universally welcomed. However, the Commission has done so in the past when it interpreted such action as consistent with the Act's public policy requirements and universal demand has never before been viewed as a condition precedent to carriage on basic.
The applicant's market research demonstrates a significant viewer demand for a service like the one proposed. Such surveys measure consumer reaction not to a fully operational broadcasting service but to an abstract notion. The product does not exist when the interest measurements are taken. Given the changing demographics of Canada and the growing sense that even with so many channels available there is something missing13, it is reasonable to expect that once WTM's service is actually available in the living rooms of the nation, viewer interest will grow.
The WTM application, designed as it is to meet what one intervenor called, "a major missing component"14 in the Act's mission statement, is analogous to a recently approved application by Television Northern Canada Incorporated to operate a national Aboriginal programming network (APTN).15 In that application, as in this one, modest viewer demand and carriage on basic for a monthly fee were also controversial issues. Citing the priority of the public interest over carriage and cost obstacles, the Commission had no difficulty in approving the APTN application:
"In its evaluation, the Commission has taken into consideration the substantial support for APTN expressed in the numerous interventions submitted¼
"The Commission also examined APTN's proposal in light of the objectives set out in the Act and the benefits that approval of the application would bring to the Canadian public and to the Canadian broadcasting system as a whole."16
In support of its decision to license, the Commission proceeded in the APTN decision to quote the same legislated mission statement contained in section 3 of the Act upon which WTM's principals and many supporters relied. Carriage and cost are reviewed in the APTN decision, but as mentioned above were ultimately declared, on balance, to be far outweighed by public policy considerations:
"The Commission considers it vitally important that APTN's new and unique service be available to all Canadians, consistent with the objectives of the Canadian broadcasting policy." ¼ "The Commission considers that distribution of APTN as part of the basic service is necessary to ensure that it will be widely available across the country."17
Déjà vu, not
Noting that it had "¼ received over 300 supporting interventions and letters"18, the Commission, in the APTN decision, had little difficulty disposing of recommendations from the CCTA and others (recommendations, by the way, that were remarkably similar to those made by the CCTA and other opposing intervenors in this application) that mandatory carriage should be denied and the proposed Aboriginal service be licensed on a digital only basis:
"APTN responded that its service needs mandatory carriage in order to fulfill key objectives of the Act. With regard to the proposal that APTN be licensed on a digital-only basis, the applicant replied that it 'is not an option: APTN could never be offered at a reasonable cost on digital and still meet its business plan.' Furthermore, the Commission considers that there is still uncertainty about the timing of a large scale digital roll out."19
It is difficult, after comparing the APTN and WTM applications, to comprehend how the former resulted in approval and the latter in denial. Three hundred intervenors stood in support of APTN; over 4,000 stand in support of WTM. Contrasted to the identical arguments against carriage and cost made by the CCTA and others against both APTN and WTM, stand identical public policy considerations founded upon identical legislated policy principles. The exigencies of "its business plans" drove APTN to insist on basic analog carriage rather than digital delivery. The case is identical for the applicant, though WTM's proposed monthly rate was $.15 higher than that proposed by APTN. The Commission approved the APTN application but denies WTM's. The process of cost benefit analysis focused on identical elements in both applications but led to different results.
To lay the APTN and WTM decisions side by side is to invite questions to which consistent answers are not easily found. Three hundred supporters are a notable factor in one; 4,000 barely rate mentioning in the other. Carriage and cost considerations are minor obstacles in one but insurmountable barriers to approval in the other. The business plan of one applicant rendering the digital option unacceptable is persuasive in one while a virtually identical business approach in the second case is deemed unacceptable. The records underpinning the two applications demonstrate that general population viewer demand figures supplied by WTM were significantly higher than those provided by APTN. According to the majority decision, however, demand for WTM's proposed service is not high enough: "Neither is the Commission convinced that the evidence of demand filed justifies carriage of the proposal on the basic service."20

If not now when?

Licence applications proposing services with notable public interest elements cannot be weighed on the same scales used to evaluate other applications. Business cases and measurable consumer demand loom large as considerations in the commercial arena. These, too, are aspects to be evaluated in weighing the merits of proposals such as the one before us here but they are not necessarily dominant factors. In my view, the central policy questions underlying this application are those put both succinctly and in context by one of WTM's supporting intervenors, Mr. George Frajkor:
"If it is desirable to do something, that is really what the CRTC ought to decide. Is it Canadian policy to do this? Is it our policy to have a distinct Canadian cultural identity separate from that of the Americans? If that is desirable, then we must find the means to do it."21
Building on Mr. Fajkor's proposition, another supporting intervenor, The Honourable Gerry Weiner, put the case for licensing the WTM service in a somewhat broader context:
"We should be building a society focused on our common values, our common culture, building a country that is truly enriched by its diversity and finding unity in it, but not striving for harmony in some form of homogeneity.
"Is it possible for Canada to build a state on a foundation of cultural diversity? Can this diversity become a contributing factor toward national integration and unity? The World Television Network is an excellent example of how it can and must be done.
"If not this model for a state, what would we like to try, segregation or apartheid, assimilation or the melting pot? They have all been tried and have failed.
"The television medium must therefore participate in the growth and maturation of our society."22
If television can help realize such a public interest role, if a service can be structured so as to give life to that aspect of Parliament's vision in section 3 of the Act that remains unfulfilled, then it seems to me that such a development should be encouraged. The only question remaining is, is this the service and is this the time? On balance, I believe it is.
If not WTM and if not now, then what and when? No one would argue that the service proposed by this application is the best that could be conceived. It has, however, been over ten years in the making; the principals behind it are skilled; the business plan underpinning it is feasible. Perhaps a better proposition lies just around the corner but no sign of it exists anywhere in the extensive record of this proceeding. This service is what is available now to meet Parliament's legislated goal of a more inclusive more diverse, more truly Canadian broadcasting system. I would have granted this application.

 

1 I note that the Commission has licensed a number of ethnic specialty services but that such services are both expensive and intended to serve niche markets, whereas WTM's proposed service was designed to have far broader audience appeal.
2 Transcript, paragraph 64.
3 Ibid, paragraphs 66 - 70.
4 Under questioning from the Chairperson regarding the degree of diversity a 15% commitment would guarantee, the applicants undertook to reduce the 15% figure to 3%. (Transcript, paragraph 618.)
5 Transcript, paragraphs 93 - 96.
6 Ibid, paragraph 1769.
7 Ibid, paragraph 1761.
8 Connecting to the Canadian Experience, November 1, 1999, was the Government's response to A Sense of Place, A Sense of Being, the ninth report of the Standing Committee on Canadian Heritage tabled June 10, 1999. (excerpt is from page 6)
9 Transcript, paragraph 87.
10 Ibid, paragraph 1193.
11 Ibid, paragraph 1195.
12 Ibid, paragraph 1231.
13 Intervenor, Ken Marchant, at paragraph 1703 of the transcript, put it this way: "But when I turn on my cable and I get 70-odd channels, there is a big missing piece there."
14 Transcript, paragraph 1661.
15 See Decision CRTC 99-42.
16 Decision CRTC 99-42, paragraphs 6 and 7.
17 Ibid, paragraph 22.
18 Ibid, paragraph 29.
19 Ibid, paragraph 30.
20 Majority decision, paragraph 18.
21 Transcript, paragraph 1450.
22 Ibid, paragraphs 1496 - 1499.

 

Date modified: