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	Broadcasting Public Notice CRTC 2008-100
	Ottawa, 30 October 2008
	Regulatory policy
	Regulatory frameworks for broadcasting distribution undertakings and discretionary programming services
	Table of contents	Paragraph
	Summary
	Introduction	1
	Background	5
	The Canadian broadcasting system	11
	Need for a new regulatory framework	27
	Calibrating the role of broadcasting distribution undertakings and the programming sector	30
	Key elements of the Call for comments	34
	Regulatory framework for broadcasting distribution undertakings	35
	Basic service - Terrestrial broadcasting distribution undertakings	36
	Basic service - Direct-to-home undertakings	46
	Access rules for Canadian programming services	60
	Access rules for high definition pay and specialty services	74
	Access rules for minority-language services	80
	Access rules for unrelated Category B, exempt and pay audio services	87
	Preponderance of Canadian programming services	95
	Packaging requirements	103
	Third-language services distributed by broadcasting distribution undertakings	129
	New forms of advertising available to broadcasting distribution undertakings	139
	Advertising in local availabilities of non-Canadian services	144
	Issues relating to dispute resolution	154
	Signal sourcing and transport	169
	Licence classes and exemptions for broadcasting distribution undertakings	187
	Other issues relating to broadcasting distribution undertakings	202
	Regulatory framework for pay and specialty programming undertakings	235
	Authorization of non-Canadian services	239
	Genre exclusivity - Canadian services	250
	Advertising limits for specialty services	281
	Processing of Category B applications	287
	Policies relating to over-the-air television undertakings	290
	Distant Signals	291
	Fee for carriage	322
	Support for local programming in smaller markets	335
	Conclusion	385
	Appendix 1 - All discretionary services by year of licensing and major ownership groups / owners
	Appendix 2 - Major Canadian broadcasting distribution undertakings - Revenues from broadcasting and telecommunication activities - 2007
	Appendix 3 - Revised Morin Model
	Appendix 4 - Follow-up and related proceedings
	Dissenting opinion of Commissioner Peter Menzies
	Dissenting opinion of Commissioner Michel Morin
	In this public notice, the Commission sets out its determinations regarding its review of the regulatory frameworks for broadcasting distribution undertakings (BDUs) and discretionary programming services, which was announced in Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services, Broadcasting Notice of Public Hearing CRTC 2007-10, 5 July 2007. The key areas addressed include the following:
	Regulatory framework for BDUs packaging and access rules for Canadian programming services new forms of advertising issues relating to dispute resolution licensing of and exemptions for BDUs
	Regulatory framework for pay and specialty services authorization of non-Canadian services genre exclusivity and programming flexibility for Canadian services
	Policies relating to over-the-air television undertakings distant signals fee for carriage support for local programming in smaller markets
	Unless otherwise specified, the proposed amendments to the Broadcasting Distribution Regulations will be implemented 31 August 2011 in order to coincide with the transition from analog to digital.
	Within the context of this review, the Commission has also issued today calls for comments on the following:
	a proposed framework for the sale of commercial advertising in the local availabilities of non-Canadian satellite services;
	a proposed regulatory framework for video-on-demand undertakings; and
	proposed conditions of licence for competitive Canadian specialty services operating in the genres of mainstream sports and mainstream national news.
	The details of these new proceedings and other activities related to the implementation of the Commission's new policies are set out in Appendix 4 to this public notice.
	Dissenting opinions by Commissioners Peter Menzies and Michel Morin are attached.
	Introduction
1.	In the call for comments announced in Broadcasting Notice of Public Hearing 2007-10 (the Call for comments), the Commission announced that it would hold a public hearing commencing 28 January 2008 in the National Capital Region to consider the matters addressed in that notice as part of a review of the regulatory frameworks for broadcasting distribution undertakings (BDUs) and discretionary programming services¹. The Commission invited written comments and proposals, along with supporting evidence, on the matters for consideration set out in that notice. In Broadcasting Notice of Public Hearing 2007-10-5, the Commission announced that the public hearing would commence on 8 April 2008.
2.	The written record and the oral public hearing (the Proceeding) provided an opportunity to review the unique, complex structure governing the relationship between Canadian BDUs and programming undertakings. Since 1968, this structure has been constructed through successive waves of new technologies and industry consolidations. Now, however, a new reality must be faced. New media and the rapid evolution of related digital technologies require the Canadian broadcasting system to be regulated in a more flexible way to permit it to continue achieving the objectives set out in the Broadcasting Act (the Act) and to retain its relevance for and connection to Canadians.
3.	The overarching principles of the Act require that Canadian content be fostered by the Canadian broadcasting system in both official languages. Equally important, access to this content must be assured so that broadcasters may deliver those programs through all parts of the system and so that viewers may select the content that is relevant to them.
4.	To accomplish these goals and to ensure that the Canadian broadcasting system can effectively face a future where new media is a dramatically growing force, the regulatory environment for broadcasting must ensure that:
	any regulation be as flexible and responsive as possible;
	necessary regulation be as targeted as possible and impose the least burdensome constraints;
	industry solutions, wherever possible, be preferred to regulatory intervention; and
	the broadcasting system, as a whole, be calibrated such that no single player or group of players can exercise undue influence.
	Background
5.	In the 1960s and 1970s, cable BDUs emerged as new parts of the Canadian broadcasting system. From their origins as twelve channel analog systems to their status as fixtures in today's world of digital, optical fibre and satellite transmission, BDUs have grown to offer hundreds of broadcast channels as well as high-speed connections to the Internet. Cable BDUs continue to be the primary access point to the Canadian broadcasting system for nearly two-thirds of Canadians. More recently, direct-to-home (DTH) undertakings have become a pervasive competitive force, first introduced through the licensing of these undertakings in 1995 and 1996. An estimated 90% of Canadian households now rely on BDUs of one kind or another to access television programming².
6.	In 1976, the Commission made public the first cable television regulations. These were subsequently replaced by the Cable Television Regulations, 1986, which, in 1998, were repealed and replaced by the Broadcasting Distribution Regulations (the BDU Regulations).
7.	Since that time, fundamental changes have taken place with respect to new technologies, consumer expectations and the ownership structure of the Canadian broadcasting system, as discussed in the Call for comments. Notable amongst the developments in the sector has been the huge increase in the variety and diversity of programming services, both Canadian and non-Canadian, being made available to Canadians today. The regulations and policies governing these services were originally developed in the 1980s and have evolved to include the policies relating to digital distribution of programming services, announced in 2000 and 2006.³ These fundamental changes and the complexity of the current regulatory environment led the Commission to conclude that it was timely to review the frameworks for BDUs and discretionary programming services and thus issue the Call for comments.
8.	The public process leading up to this public notice included an oral public hearing, held from 8-24 April 2008 in the National Capital Region. That hearing was preceded by three rounds of written comments. Oral submissions were received at the hearing and final written comments were subsequently submitted. A total of 67 parties appeared at the oral public hearing. The public record of this proceeding is available on the Commission's website at www.crtc.gc.ca under "Public Proceedings."
9.	In the Call for comments, the Commission indicated that, relying on market forces wherever possible, it sought to:
	develop forward-looking regulatory frameworks that are strategic, straightforward, flexible and equitable;
	ensure a strong Canadian presence in the broadcasting system in the form of distinct and diverse Canadian programming and services; and
	recognize the increasing autonomy of audiences and consumers, providing them with the greatest possible choice of services at affordable prices.
10.	Following the issuance of the Call for comments, the Commission expanded the scope of the Proceeding to include issues related to a possible fee for the distribution by BDUs of over-the-air television (OTA) services. The Commission further expanded the scope of the Proceeding to include issues related to the distribution by BDUs of distant signals, that is, OTA signals distributed by BDUs to subscribers outside the markets in which the OTA services originate.
	The Canadian broadcasting system
11.	The Proceeding provided the Commission with an opportunity to review key components of the Canadian broadcasting system and examine how that system is positioned to face the changes in technology and consumer expectations that are already occurring and that are expected to intensify over the next five years. The Proceeding also provided the opportunity to reflect on how the Canadian broadcasting system has developed and on the reasons for the successes it has achieved.
12.	According to section 3(1)(d)(ii) of the Act,
	the Canadian broadcasting system should [.] encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view.
	The Commission has sought to achieve these central objectives of the Act primarily through the licensing of Canadian broadcasting services that provide distinctively Canadian information and entertainment programming. In television, these services include OTA public and private stations, pay and specialty services (including analog, Category 1 and 2 digital services), pay-per-view (PPV) and video-on-demand (VOD) services, and community programming undertakings.
13.	As noted in the Call for comments, the Commission's approach to analog pay and specialty services and digital Category 1 services has been to provide a supportive and structured environment in which the services can maximize their contributions to achieving the objectives of the Act. Digital Category 2 services have been licensed on a more open-entry basis characterized by greater risk and competition.
14.	The Act does not leave the operation of BDUs solely to the general principles of the broadcasting policy for Canada articulated in section 3, but also specifies in section 3(1)(t) the specific criteria for distribution undertakings. Specifically, distribution undertakings
	(i) should give priority to the carriage of Canadian programming services and, in particular, to the carriage of local Canadian stations,
	(ii) should provide efficient delivery of programming at affordable rates, using the most effective technologies available at reasonable cost,
	(iii) should, where programming services are supplied to them by broadcasting undertakings pursuant to contractual arrangements, provide reasonable terms for the carriage, packaging and retailing of those programming services, and
	(iv) may, where the Commission considers it appropriate, originate programming, including local programming, on such terms as are conducive to the achievement of the objectives of the broadcasting policy set out in this subsection, and in particular provide access for underserved linguistic and cultural minority communities.
15.	As noted in the Call for comments, most Canadians now have a choice from among two or more licensed distributors. Moreover, BDUs generally offer, in addition to a wide range of Canadian and non-Canadian programming services, wireless and wireline telephony as well as broadband Internet access. Since the last review of the BDU Regulations, competition in the sector has increased and, at the same time, ownership has become more consolidated.
16.	Based on evidence collected during the Proceeding, the Commission is of the view that most subscribers are satisfied with the wide range of Canadian and non-Canadian programming services offered by most BDUs.
17.	The Canadian broadcasting system faces many challenges - not least, a small population spread over a very large territory. At the public hearing, the Commission was reminded that the population of English Canada is less than that of the state of California, whereas the population of French Canada is less than that of the city of San Francisco. Nevertheless, the variety of domestic services available to Canadian viewers is greater than that of any other country except the U.S.
18.	In order to ensure a distinct Canadian presence in Canadian broadcasting, regulation - sometimes detailed regulation - has been considered necessary. There has been a concern that, without regulation, broadcasters might not find it in their economic interest to provide a full range of Canadian programming and might seek to enhance their profits primarily through the importation of large quantities of very popular U.S. programming. Since U.S. programs generally recoup their costs in the U.S. market, Canadian rights to these programs are available at relatively low cost.
19.	Canadian broadcasting is significantly concentrated. In distribution, the six largest companies account for over 90% of all cable and DTH subscribers.⁴
20.	BDUs are also permitted to control programming services, including VOD undertakings. The evolution of large and profitable distribution undertakings has allowed these companies to raise the capital required to enable them to provide subscribers with the necessary technologies to take advantage of high definition (HD), VOD and interactive programming opportunities. A chart outlining the regulated sources of revenue for the major distribution companies is set out in Appendix 2 to this public notice.
21.	Similar concentrations are seen in audiences for Canadian private OTA and discretionary programming services. For English-language television, two companies account for more than 60% of all viewing to Canadian services and stations; for French-language television, the two largest companies account for over 55% of all viewing to Canadian services and stations.
22.	This ownership concentration has taken place within the ongoing fragmentation of television audiences and revenues between OTA television and pay and specialty television, and new digital platforms. Canadian private broadcasters have argued that, to make an appropriate contribution to the creation of quality Canadian programming, they must be able to acquire the resources to fund that programming. However, reasonable limits to ownership concentration are also necessary to preserve a diversity of voices in the system. The Commission has recently set out its policies in this area in Broadcasting Public Notice 2008-4.
23.	The objectives of Canadian broadcasting policy are found in the Act and have been implemented in various Commission policies. In summary, those policies have been designed to foster a system that provides Canadians with high quality Canadian content and access to the programming services that provide this content.
24.	Fulfilling these objectives, as well as many other objectives set out in the Act, has always required regulatory intervention, and the Commission anticipates that some regulation will continue to be necessary.
25.	At the same time, in reviewing its regulatory framework for BDUs and discretionary programming services, the Commission has been guided by the need, as articulated in the Call for comments, to eliminate regulation where possible and to ensure that the regulation that is retained is not unduly burdensome.
26.	Corus Entertainment Inc. (Corus), in its final written comments, set out a position that reflects the Commission's views:
	The existing regulatory framework for discretionary services, although complicated in some of its detailed measures, has been tremendously successful in creating a vibrant specialty and pay sector that provides an abundance of choice at reasonable cost to viewers. The Canadian distribution system is also first-class. Corus urges the Commission, in undertaking a simplification and streamlining of the current system, to adopt a measured approach that supports the continued success of the broadcasting sector and its contributions to the goals of the Act.
	Need for a new regulatory framework
27.	The Canadian broadcasting system, like other broadcasting systems throughout the world, is currently adapting to new, multi-platform, digital technologies. While traditional linear television channels⁵ still command the largest audiences and revenues, there is no denying the growing impact of VOD and new media platforms.
28.	The Commission is studying the impact of new media on traditional media, and recently issued Broadcasting Notice of Public Hearing 2008-11, in which it sought responses to a series of questions concerning broadcasting in new media. The Canadian broadcasting system - if it is to be attractive and competitive in the evolving environment - must operate under a regulatory framework that is flexible and supports the transition from analog mass media to personal and interactive digital media. The framework must be responsive to Canadian consumers and recognize their demand for quality content that is available through multiple platforms, including on demand. Such a framework should encourage the use of new revenue sources such as those derived from advanced advertising techniques. The framework must also support the objectives of the Act through ensuring that all participants contribute appropriately to the creation of new Canadian programming suitable for all platforms.
29.	In order to make a successful transition and ensure a wide range of programming, the regulator must ensure that no single undertaking or sector of the system is in a position to dominate either the creation of Canadian programming or access to it. In this regard, the Commission recognizes the key role played by terrestrial and satellite BDUs in providing Canadians with access to the diverse programming that enables the Canadian broadcasting system to function effectively.
	Calibrating the role of broadcasting distribution undertakings and the programming sector
30.	Evidence presented in the Proceeding reinforced for the Commission the fact that Canadian BDUs possess very significant market power in the broadcasting system. This power stems in part from the fact that over 90% of Canadian households receive their television programming through BDUs and also from the fact that most large BDUs are now vertically integrated with programming undertakings. The powerful position of BDUs in the Canadian broadcasting system potentially enables them to determine the range of services offered to their subscribers, while vertical integration raises legitimate concerns about whether BDUs might unduly favour their own affiliates in the packaging and marketing of television services.⁶
31.	In the Commission's view, a regulatory framework that will carry the system through this transitional period must not allow any one sector to exercise unreasonable power over the services available to subscribers. Because Canadian programming services and the Canadian programs they broadcast are central to the Canadian broadcasting system, the Commission considers that it has the obligation to ensure that these services are made available on a reasonable basis to BDU subscribers.
32.	The Proceeding also demonstrated the important role that conventional, OTA services continue to play. Although their audience share may be declining and the advertising revenue of these undertakings, on average, has ceased to grow, OTA services continue to be the cornerstone of the Canadian broadcasting system. For most Canadians, it is the local OTA station that provides their window on the world through the local, national and international news it provides. This function, provided by public and private stations, is an essential part of a successful broadcasting system that provides Canadians with a diversity of editorial points of view on matters of public concern. It is the OTA services that continue to be able to apply the resources necessary to acquire new Canadian priority programming - particularly drama.
33.	The Commission therefore considers that any new regulatory framework must recognize and support the important role played by the OTA sector and, in particular, its role in providing Canadian programming, including local and regional news.
	Key elements of the Call for comments
34.	In the sections that follow, the Commission sets out its determinations with respect to revised policy frameworks for both BDUs and discretionary programming services, as well as its policies relating to the distribution by BDUs of distant OTA signals and the issue of a fee for carriage by BDUs of OTA stations. Unless otherwise noted, the new policies are applicable to digital services and will take effect on 31 August 2011, to be consistent with the date OTA television in Canada must switch from analog to digital transmission.⁷Many of the new policies will require changes to the relevant Commission regulations. Others will be implemented through appropriate conditions of licence. In some cases, the Commission has proposed new policies for further public comment prior to a final decision.
	Regulatory framework for broadcasting distribution undertakings
35.	In this section, the Commission sets out its policies for BDUs under the following headings:
	basic service - terrestrial BDUs;
	basic service - DTH undertakings;
	access rules for Canadian programming services;
	access rules for HD pay and specialty services;
	access rules for minority-language services;
	access rules for unrelated Category B, exempt and pay audio services;
	preponderance of Canadian programming services;
	packaging requirements;
	third-language services distributed by BDUs;
	new forms of advertising available to BDUs;
	advertising in local availabilities of non-Canadian services;
	issues relating to dispute resolution;
	signal sourcing and transport;
	licence classes and exemptions for BDUs; and
	other issues relating to BDUs.
	Basic service - Terrestrial broadcasting distribution undertakings
	Issues
36.	The basic service comprises those programming services that a BDU distributes to all its subscribers. Section 17 of the BDU Regulations sets out the services that are currently required to be distributed as part of the basic service on larger terrestrial systems. Currently, the Commission has de-regulated the price of the basic service for over 95% of terrestrial BDUs.
37.	In the Call for comments, the Commission considered that a requirement to offer a basic service was still appropriate, but raised a number of questions regarding its composition. At the public hearing, discussion focused on the desirability of requiring BDUs to offer a small, affordable, all-Canadian basic service. The Canadian Broadcasting Corporation (CBC) and other parties argued that such a requirement would be in the interest of subscribers - particularly those who could not afford the cost of the larger basic service currently offered by most BDUs.
38.	Most BDUs, on the other hand, submitted that there was no evidence that subscribers wanted a small basic service, and argued that the BDU operator was in the best position to assess the needs of its customers. BDUs also noted that approximately 95% of their customers subscribe to packages over and above the basic service, which they considered to be an indication that affordability is not a significant issue for subscribers. Bell TV (formerly Bell ExpressVu) submitted that it had offered a small, low-cost basic service in the past but found that customer acceptance was not strong.
	Commission's determinations
39.	Although the re-regulation of basic service rates and regulated limits on the size and structure of basic services would assure a small, low-cost, all-Canadian basic service, the Commission considers that such a course of action would be contrary to its approach of relying on market forces wherever possible. The Commission considers that BDU competition will be sufficient to ensure that rates are affordable. Further, in light of discussions at the public hearing, the Commission considers that there is insufficient evidence to suggest that BDU subscribers are interested in a small basic service.
40.	Accordingly, the Commission determines that it will not introduce a requirement that BDUs distribute a small, all-Canadian basic service.
41.	Most parties agreed that BDUs should be required to distribute, on the basic service, local OTA stations (including the CBC) as well as services that must be distributed on basic pursuant to an order under section 9(1)(h) of the Act (the 9(1)(h) services).⁸ Broadcasters also advocated the distribution of provincial educational services and regional stations. BDUs generally argued for a smaller basic service and reasonable parity in the requirements between cable and DTH undertakings.
42.	The Commission considers that, while BDUs should have the flexibility to offer the most attractive and competitive basic service possible, it is essential to the fulfilment of the objectives of the Act that all Canadians have access to those OTA stations licensed as local or regional, public or private. Canadians should also have access to the community channel and the provincial legislature when either is offered by a BDU. The 9(1)(h) services must also continue to be offered on the basic service.
43.	Accordingly, the Commission will amend the BDU Regulations so as to require terrestrial BDUs to distribute the following priority services on the basic service (the order of services establishes priority for simultaneous substitution purposes, where applicable):
	locally-owned and operated English- and French-language CBC television stations broadcasting in the market served;
	the educational television programming service, the operation of which is the responsibility of an educational authority designated by the province in which the licensed area of the undertaking is located (provincial educational programming service);
	all other local television stations;
	regional stations owned and operated by the CBC, if no local CBC stations are already carried;
	all other regional stations, other than those regional stations affiliated with local stations of the same network already carried;
	at least one owned and operated or affiliate CBC English-language television station and one owned and operated or affiliate CBC French-language television station, if not already carried; and
	services mandated for distribution on the basic service pursuant to an order under section 9(1)(h) of the Act.
44.	The basic service must also include:
	the community channel, if offered by the BDU; and
	the relevant provincial legislature service, if offered by the BDU, unless the service agrees otherwise.
45.	As proposed in the Call for comments, the current obligation to distribute the House of Commons service will be removed from the BDU Regulations. Instead, this obligation will be incorporated into the distribution order for the English- and French-language wrap-around services of Cable Public Affairs Channel Inc. (CPAC).
	Basic service - Direct-to-home undertakings
	Issues
46.	The basic service requirements for DTH undertakings were set at the time these undertakings were first licensed in 1995 and 1996. At that time, the Commission established a policy framework that both recognized the national service area of DTH undertakings and minimized distribution requirements in order to encourage viable competitors to terrestrial BDUs. Accordingly, as set out in section 37 of the BDU Regulations, DTH undertakings are required to distribute one English- and one French-language service of the CBC, and one service of each national network. DTH undertakings must also distribute the 9(1)(h) services.
47.	Sections 42 and 43 of the BDU Regulations also require DTH undertakings, upon request by a Canadian broadcaster, to delete programming distributed by a non-Canadian or distant Canadian service that is the same as programming distributed by the requesting broadcaster within its Grade B contour.
48.	Currently, in lieu of broadcasters exercising their rights to program deletion, Canada's two DTH licensees are required to distribute an equitable number of local OTA stations from each major ownership group (i.e., CBC, CTV, TVA, Canwest, TQS and Rogers) and at least 13 small market OTA stations. In addition, DTH licensees have conditions of licence requiring them to distribute at least one English-language and one French-language CBC television station from each time zone. While the various requirements above are minimum requirements, DTH licensees in fact offer a much larger number of public and private stations as well as all of the provincial educational programming services.
49.	With respect to the distribution of local television stations, positions of parties varied widely. The Canadian Association of Broadcasters (CAB) argued that DTH licensees should be required to distribute all Canadian television stations that originate programming, so as to ensure that local and regional programming from each station is available to all DTH subscribers. CTVglobemedia Inc. (CTVgm) and Canwest Media Inc. (Canwest) jointly proposed, as an alternative, that DTH undertakings be required to distribute all television stations from those local markets where DTH undertakings have a 30% or greater market penetration.
50.	DTH licensees, on the other hand, strongly opposed any requirement to distribute all local stations - including the CTVgm/Canwest variant. They argued that regulatory flexibility is necessary to ensure that they can continue to compete with terrestrial BDUs and manage their limited capacity in the face of increasing demand for HD services.
51.	Other BDUs pointed out that the current Commission regulations impose more onerous requirements on terrestrial BDUs than on DTH undertakings with respect to the distribution of local television stations. They emphasized the importance of addressing this competitive disparity by increasing the requirements for DTH undertakings to distribute local television stations.
	Commission's determinations
52.	The Commission acknowledges the difference between DTH services, which are distributed on a national basis, and terrestrial BDU services, which operate local or regional distribution undertakings. DTH operators also have significantly less flexibility in expanding their capacity to accommodate new services and high bandwidth HD television. These differences mean that perfect regulatory symmetry between terrestrial and DTH undertakings is not reasonable. Nevertheless, the Commission recognizes that DTH undertakings have now become a strong competitor to terrestrial BDUs and that an equitable regulatory framework providing subscribers across the country with access to important Canadian services should be implemented.
53.	The Commission considers that the proposal to require distribution of all of Canada's 148 local television stations is not a reasonable request to make of DTH undertakings. Having reviewed planned capacity upgrades, the Commission considers that such a requirement would consume an unreasonable proportion of the satellite capacity available to Bell TV and Star Choice. Given the importance of allocating capacity for the delivery of Canadian HD services, a requirement for the delivery of local signals that have, in some cases, minimal amounts of local programming and largely duplicative non-local programming would not be in the public interest.
54.	However, the Commission also considers that DTH subscribers should have a reasonable diversity of regional and local television services that reflect the issues and concerns relevant to their places of residence. In the Commission's view, a reasonable approach would be to require distribution, on the basic service within each province, of a selection of provincially-based local television stations, including educational services. Specifically, DTH undertakings would be required to distribute one television station per province, where such a station exists, from each of the major broadcast ownership groups: CBC English, CBC French, Canwest, CTV, Rogers, TQS and TVA. This is similar to the proposal by the CBC that DTH undertakings be required to distribute one station from each broadcast ownership group per province. Such an approach would result in a significant increase in the regulatory requirements of DTH undertakings with respect to regional and local television services, yet would not require the distribution of as many local stations as are distributed by the DTH undertakings at the present time.
55.	With respect to independently-owned local stations, that is, stations not owned by one of the major ownership groups, the Commission considers that DTH licensees should be required to distribute at least one such station from each province where such stations have been licensed. This requirement would replace the current obligation to distribute 13 independent stations. In this regard, the Commission notes that part of its new framework for distant signals, set out later in this public notice, is to maintain the existing small market local programming fund. This fund compensates independently-owned, small market local stations for the harm caused by viewer migration to DTH services, which is especially significant in rural and remote areas of Canada.
56.	With respect to the four Atlantic provinces, the Commission considers that the provincial approach for regional and local television services and for independently-owned local television stations may place too great a burden on DTH undertakings in light of increasing demands for bandwidth. Further, viewers in these provinces could be served appropriately through a regional approach, for example, through an obligation to distribute at least two stations per ownership group in the region. Accordingly, DTH licensees are required to file with the Commission up-to-date information outlining their projected capacity levels as of 31 August 2011. Such information, to be filed no later than 31 December 2008, will enable the Commission to determine whether special rules for the Atlantic provinces are necessary.
57.	With respect to the provincial educational programming services, Bell Canada (Bell) suggested that the distribution of such services continue to be optional. Shaw Communications Inc. (Shaw)⁹ did not address this issue specifically. The Commission considers that DTH licensees, like other BDUs, should be required to offer these services to subscribers within the applicable jurisdiction.
58.	Subject to the Commission's final determination with respect to the Atlantic provinces, the Commission will amend the BDU Regulations so as to require DTH undertakings to distribute the following on the basic service within each province, where stations are licensed (the specific stations to be distributed will ultimately be determined by the DTH undertakings):
	one television station per province from each of the following major ownership groups: CBC English, CBC French, Canwest, CTV, Rogers, TQS and TVA;
	one independently-owned local television station per province;¹⁰
	the provincial educational programming service, within the appropriate jurisdiction; and
	services mandated for distribution on the basic service pursuant to an order under section 9(1)(h) of the Act.
	In regard to the Territories, each subscriber should receive a basic service that consists of at least one signal from the CBC Northern Television Service as well as the most appropriate set of television stations from one of the provinces.
59.	As noted above, the current obligation to distribute the House of Commons service will be incorporated into the distribution order for CPAC's English- and French-language wrap-around services.
	Access rules for Canadian programming services
	Issues
60.	The question of what, if any, access rights should be granted to Canadian services - other than those that must be carried on the basic service - was a major topic of discussion during the Proceeding. Under the BDU Regulations, the access requirements are based on factors such as the BDU's size, capacity and distribution technology, and on the language of the market for the BDU. For instance, Class 1 BDUs¹¹ are generally required to distribute all analog Canadian specialty and pay television services as well as all Category 1 digital specialty services appropriate to the linguistic market served. Terrestrial BDUs must carry at least one Canadian PPV service appropriate to the linguistic market and DTH undertakings must carry all analog and Category 1 pay and specialty services as well as at least one English- and one French-language PPV service. The access requirements for digital terrestrial BDUs are, in part, based upon the bandwidth of the system. There are also special access requirements in regard to minority-language services and third-language services, which will be discussed later in this public notice.
61.	The Commission notes that it also licenses Category 2 pay and specialty services, which do not have any access rights and must negotiate with BDUs to gain distribution.
62.	In the Call for comments, the Commission proposed that it was timely to consider the elimination of most, if not all, existing access requirements and rely instead on an overall requirement that BDUs distribute a preponderance (i.e., 50% plus one) of Canadian broadcasting services. This requirement would ensure that the majority of services received by subscribers from their BDUs are Canadian services.
63.	The majority of BDUs supported such an approach, arguing that the existing access rules have become increasingly prescriptive, complex and onerous. They argued that the elimination of access rules would provide BDUs with more flexibility to respond quickly to changing consumer demands and would allow BDUs to better differentiate their services. TELUS Communications Company (Telus), however, took the position that the access requirements are a reasonable means of ensuring that the Canadian broadcasting system remains Canadian, and that they pose no significant problems for distributors or consumers.
64.	Programming services and cultural organizations were strongly in favour of maintaining the existing access rules - in some cases with minor modifications. These parties argued that the elimination of guaranteed access for Canadian services - even with a preponderance requirement - would place too much power in the hands of the BDUs. According to many broadcasters, negotiations with certain BDUs over fees, packaging and marketing are already extremely difficult, even with guaranteed access. This is particularly true if the programming service is independent of a major ownership group. These parties also noted that their existing high Canadian programming contributions were set on the basis of guaranteed access. Without such a guarantee, contribution levels would have to be re-calibrated with an inevitable reduction in the overall support for Canadian programs.
	Commission's determinations
65.	The Commission considers that the issue of access rights is fundamental to any regulatory framework for the digital world. Removing most access requirements would unquestionably result in a simpler, more flexible and more market-oriented approach. However, such a market-oriented approach must not come at the expense of other objectives, in particular those that foster diverse programming choices and support Canadian services through the production and acquisition of Canadian programming.
66.	One of the contributing factors to the success of Canadian analog and Category 1 services has been their ability to develop a unique genre of programming and present that programming to Canadian viewers. Many such services that are now considered successful might have never had the chance to succeed if BDUs had not been obliged to distribute them. Guaranteed access has not only allowed mass-appeal Canadian services in genres such as news and sports to thrive, but has also made it possible for services in more specialized genres such as history, food and travel to find sufficient audiences and revenues to become profitable. The Commission is concerned that the wholesale elimination of access requirements could result in the removal of certain more specialized Canadian services, with the consequent loss of diversity from the system as a whole.
67.	Equally important is the impact that the elimination of access would have on the contributions that analog and Category 1 services make to the creation of Canadian programming. While Canadian content obligations vary according to genre, specialty services, as a group, spend approximately 40% of their total revenues on the acquisition and production of Canadian programs. This spending is critical to the creation of Canadian programs in all genres. It also supports an independent Canadian production sector and provides viewers with a broadcasting system that reflects Canadian needs, concerns and values.
68.	In light of the above, the Commission considers that it would be appropriate to retain access rights, in the digital environment, for Canadian analog and Category 1 pay and specialty services. In the amended BDU Regulations, services with access rights will be referred to as Category A services. The existing Category 2 services and any new services that the Commission may choose to license without access rights will be referred to as Category B services. This terminology will be employed in the balance of this public notice.
69.	As of 31 August 2011, licensed BDUs will only be required to distribute Category A services on a digital basis; as of that date, BDUs will no longer be required to distribute Category A services on an analog basis. To the extent that BDUs wish to continue providing their subscribers with an analog offering, the Commission will propose rules to cover such offerings when it issues its proposed amendments to the BDU Regulations.
70.	The Commission considers that the current range of Category A services provides Canadians with a diverse array of program genres, whereas Category B services provide the opportunity to address more niche-oriented genres. Nevertheless, the Commission notes that tastes in programming change and as such does not consider it necessary or appropriate to freeze Category A services at their present number.
71.	Accordingly, the Commission will be prepared to entertain applications for new Category A services filed on or before 1 April 2010, with a view to issuing decisions (either approvals or denials) in advance of 31 August 2011. The Commission notes that, for guaranteed access to be granted, applicants will have to clearly demonstrate that the proposed service is both unique and of sufficient importance to subscribers.
72.	At the public hearing, Commissioner Michel Morin presented a model (the Morin model) that would serve to determine those services that should be granted basic distribution and those that should not be granted guaranteed access. The Morin model consisted of a mathematical calculation using an extrapolation from the sum of the licensee's Canadian content level and Canadian programming expenditure percentage, less any wholesale fee received from a BDU. In order to determine the services that would be granted basic distribution, the resulting value ascribed to a particular service would be measured against a pre-determined numeric threshold, which would be set by the Commission, with services exceeding the threshold being granted basic distribution, and all others not being granted guaranteed access. To qualify for inclusion under the Morin model, the service would also have to derive at least one third of its revenue from sources other than subscription revenue.
73.	In retaining an access right for Category A services, the Commission is cognizant of the potential impact that the licensing of new Category A services could have on BDU capacity, particularly as services change their format to HD. In this regard, in its examination of applications for new Category A services, the Commission will assess how such a service will contribute to the objectives of the Act, including the significant contribution to the diversity of the range of genres available to Canadians. This will be complemented by a second, objective evaluation test, based upon the Morin model. An example of this tool is set out in Appendix 3 to this public notice. The revised Morin model will also be a factor in the Commission's consideration of applications for mandatory distribution on digital basic via distribution orders under section 9(1)(h) of the Act.
	Access rules for high definition pay and specialty services
74.	Under the framework for the licensing and distribution of HD pay and specialty services, set out in Broadcasting Public Notice 2006-74, the Commission adopted a hybrid approach under which it would grant access rights to new HD licensees, provided that they made specific commitments to minimum levels of HD programming, or permit, for a period of time, existing services to offer an HD version of their services via condition of licence. Such HD services have no access rights.
75.	The Commission notes that, at this time, no services have applied for an HD licence that would oblige them to air minimum amounts of HD content in exchange for continued genre exclusivity and access rights. However, many services have applied for the authority to offer an HD version via condition of licence and are in operation. The Commission also notes that, according to the 2006/2007 Canadian Television Fund (CTF) annual report, Canadian HD production increased from 7% in 2003/2004 to 30% in 2006/2007. English-language HD production represented 44% of all English-language production in 2006/2007.
76.	In light of the significant growth in the production of Canadian HD programming, the Commission considers that market forces will be effective in ensuring that Canadian viewers have access to HD services. Further, considering that BDUs will have to expand their bandwidth capacity significantly to accommodate the demand for HD services, the Commission is of the view that a change to the HD framework is appropriate.
77.	Accordingly, the Commission determines that the requirement for BDUs to distribute Category A services on a digital basis will apply to either a standard definition (SD) or HD version of the service. The Commission is of the view that this will be sufficient to ensure distribution of Canadian HD services where such services are made available to BDUs. As a result, the relevant policies respecting HD transitional licences set out in Broadcasting Public Notice 2006-74 will not be included in the amended BDU Regulations. Licensees will continue to be permitted to offer HD versions of their services via condition of licence.
78.	The Commission expects that BDUs will treat Canadian HD services and non-Canadian HD services equitably.
79.	The Commission intends to amend the Pay Television Regulations, 1990 and the Specialty Services Regulations, 1990 in order to require explicitly that Category A services provide their signals to BDUs.
	Access rules for minority-language services
	Issues
80.	Each market served by a terrestrial BDU is referred to as either a French-language or an English-language market. In French-language markets, English-language services are considered to be minority-language services; in English-language markets, French-language services are considered to be minority-language services.
81.	The existing minority-language rules for terrestrial BDUs vary according to their size and digital capacity, and depending on whether they offer a digital service. Generally, the BDUs with large digital capacity must distribute all minority-language analog and Category 1 specialty services. Smaller BDUs must distribute one specialty service in the minority language for each ten services that they distribute in the majority language (the 1:10 rule).¹² The smallest BDUs are not required to distribute any minority-language services. In English-language markets, the larger BDUs must continue to distribute the same number of French-language services on an analog basis as they did on 10 March 2000.
82.	DTH undertakings are required to distribute all English- and French-language pay and specialty services, other than Category 2 services.
83.	In the Proceeding, a number of BDUs, including Shaw, Telus and Access Communications Co-operative Limited (Access), proposed to eliminate all minority-language access rules. Others, such as Rogers Communications Inc. (Rogers), Quebecor Media Inc. (QMI), Cogeco Cable Inc. (Cogeco) and Bragg Communications Inc. (Bragg) proposed retaining variations of the 1:10 rule. Most BDUs considered that the rule related to the analog distribution of French-language services in English-language markets was unnecessary in a digital environment.
84.	Most broadcasters did not address minority-language access rules specifically, although both TV5 Québec Canada (TV5) and Astral Media inc. (Astral) proposed that BDUs be required to distribute all French-language specialty services, and this, as part of the same package.
	Commission's determinations
85.	The Commission considers that the existing minority-language access rules are complex. Nevertheless, a reasonable assurance that minority-language communities across the country will continue to receive Canadian services in their language remains a fundamental objective for the Canadian broadcasting system. In the Call for comments, the Commission proposed that applying the 1:10 rule to all terrestrial BDUs would both simplify the BDU Regulations and result in the distribution of a comparable number of services in the language of the minority as compared to the number of such services that are currently distributed.
86.	Accordingly, the Commission determines that, as of 31 August 2011, the existing minority-language access rules for terrestrial BDUs will be replaced with a single rule stipulating that all licensed terrestrial BDUs be required to distribute one (1) minority-language Category A or Category B service, where licensed,¹³ for every ten (10) majority-language services they distribute. DTH undertakings will continue to be required to distribute all Category A services.
	Access rules for unrelated Category B, exempt and pay audio services
	Issues
87.	The BDU Regulations require BDUs to distribute at least five unrelated Category 2 services¹⁴ for each Category 2 service of a "related programming undertaking" that it distributes. A "related programming undertaking" means a programming undertaking of which the licensee or an affiliate, or both, controls more than 10% of the total shares issued and outstanding.
88.	The BDUs that commented on this rule were generally of the view that it was unnecessary and that instances of preferential treatment for related programming services could be addressed through the application of the undue preference provision of the BDU Regulations.
89.	Broadcasters - and especially the Canadian Independent Programming Services (CIPS), which represent several smaller, independent discretionary programming services - were in favour of specific rules to protect independently-owned services. The CAB recommended that the existing rule could be eliminated if the Commission maintained access rules and a strengthened preponderance rule. Astral noted that the current rule is not language specific and recommended that the rule be applied on an official-language basis.
	Commission's determinations
90.	The Commission recognizes that BDUs currently offer more Category B services than the current rule requires. However, it also understands that the undue preference regulations alone may not be enough to ensure that unrelated Category B services receive adequate distribution in the system. Many interveners noted that programmers are frequently reluctant to launch undue preference complaints due to fear of retaliation; they also noted that not all such complaints result in a finding of undue preference. Furthermore, the processing of such complaints can be time-consuming and resource intensive.
91.	On the other hand, while the existing rule is simple and effective, it could raise capacity concerns for some BDUs - especially since more capacity is required for HD versions of Canadian and non-Canadian services. In the Commission's view, a ratio of three unrelated Category B services for every one related service would give BDUs greater flexibility while still ensuring the distribution of a range of unrelated Category B services within the system.
92.	In addition, the Commission agrees that the current rule would be improved by requiring that, with respect to French-language services, the unrelated Category B services be in the French language. Further, the ratio can be less with respect to French-language services since there are relatively fewer French-language Category B services.
93.	Accordingly, the Commission's determines that BDUs must distribute, regardless of language, three (3) unrelated Category B services for every one (1) related Category B service they distribute. Further, where a BDU is carrying a related French-language Category B service, two (2) of the three (3) unrelated Category B services must be French-language Category B services. For the purpose of these requirements, Category B services will include exempt third-language services.
94.	The Commission will apply the existing access rules for unrelated exempt services and for unaffiliated pay audio and specialty audio services. However, the Commission determines that, for these services to be considered unrelated, the ownership threshold for these services should be reduced to 10% from the existing 15% for exempt services and from the existing 30% for pay audio services. Any BDU that carries an unrelated service of which it owns more than 10% as of the date of this public notice will be permitted to continue to carry that service as an unrelated service.
	Preponderance of Canadian programming services
	Issues
95.	The BDU Regulations require BDUs to 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 other than the programming distributed on program repeat channels. For the purpose of preponderance, Canadian programming services include both licensed and exempt Canadian video and audio programming services.
96.	In the Proceeding, BDUs generally took the position that a simple preponderance rule at the level of the subscriber should replace detailed access requirements.
97.	Several broadcasters and cultural groups advocated that, in addition to access requirements, the Commission should apply a "double preponderance" rule to BDUs. According to that rule, BDUs would be required to distribute a preponderance of Canadian services overall, in addition to ensuring that each subscriber receives a preponderance of Canadian services.
98.	The CAB submitted that it would be inappropriate to include, in the preponderance calculation, Canadian services that must be carried on the basic service, arguing that, "as subscribers must already take these services, including them in the [preponderance] test does nothing to incent their subscriber take up."
	Commission's determinations
99.	The Commission notes that, under the current model, which includes access requirements as well as a preponderance of services received, most BDUs offer far more Canadian services than non-Canadian services. For example, Canwest noted at the public hearing that, of all the services currently distributed by Rogers in Toronto, approximately 75% are Canadian services.
100.	The introduction of a new regulation that would also require a preponderance of Canadian services offered, in addition to the existing rule requiring that a majority of the channels received by a subscriber are devoted to Canadian programming services, would, in the Commission's view, not address a demonstrated problem and may very well unnecessarily restrict the diversity of services available to subscribers. The existing combination of access requirements and preponderance at the subscriber level has worked well to ensure that Canadian programming services have an opportunity to reach audiences and that Canadian subscribers can choose the services they wish to watch from an offering that is predominantly Canadian.
101.	Similarly, in regard to excluding, in the calculation of preponderance, a count of the services required to be carried on the basic service, the Commission has not received any evidence that this more restrictive approach would be required.
102.	In the Commission's view, the existing preponderance rule is both simple and effective. It serves to ensure that Canadian subscribers have access to a Canadian broadcasting system with minimal limitations on consumer choice. Accordingly, the Commission determines that the existing preponderance rule set out in paragraph 95 of this public notice will be included in the amended BDU Regulations.
	Packaging requirements
	Issues
103.	In the Call for comments, the Commission stated its intention to generally leave the matter of the packaging of programming services as one for negotiation between programmers and distributors. Accordingly, it proposed to eliminate most of the existing packaging rules, with the exception of those pertaining to adult services and those pertaining to the packaging of single-point-of-view religious services.
104.	The current distribution and linkage rules,¹⁵ which were originally adopted to support Canadian services, set out a wide range of packaging rules for various types of BDUs. Among other things, these rules specify that, for every non-Canadian specialty service offered in a package, there must be one Canadian specialty service (the 1:1 rule), and, for every five non-Canadian pay services offered in a package, there must be one Canadian pay service (the 5:1 rule). In addition, there are more detailed rules regarding the distribution of French-language services in French-language markets as well as rules related to third-language services.
105.	In Broadcasting Public Notice 2006-23, the Commission set out its policies with regard to the digital migration of pay and specialty services. Among other things, these included a requirement that BDUs offer analog and Category 1 digital services in a package before offering them on a stand-alone basis. In addition, BDUs must "mirror" the analog tiers on digital; that is, the existing analog tiers must also be offered on a digital basis until at least January 2010, and thereafter until the earlier of January 2013 or the time at which the BDU has achieved 85% digital penetration.
106.	At the public hearing, most parties agreed that the various detailed packaging rules should be eliminated or, at least, reduced to a minimum. However, some parties proposed that there should be a predominance of Canadian services in each tier offered by a BDU, or that tiers consisting uniquely of non-Canadian services should be prohibited.
	Commission's analysis
	Preponderance in packages
107.	A rule requiring BDUs to ensure that each discretionary package of services offered to subscribers contain more Canadian services than non-Canadian services would be more onerous than the current 1:1 rule for specialty services and the current 5:1 rule for pay services. Should a rule for preponderance in packages be combined with the overall preponderance requirement and the access rules, there would be less flexibility for BDUs than currently exists.
108.	The Commission notes that no parties filed compelling evidence that a significant problem would arise from the absence of a preponderance rule for individual packages. On the contrary, it seems clear that most subscribers prefer thematically-organized packages. Further, it is in the interest of BDUs to offer both Canadian and non-Canadian services so that subscribers have the widest range of services within the relevant theme package.
	Non-Canadian packages
109.	The current rules restrict BDUs from offering a package consisting only of non-Canadian services. At the public hearing, CTVgm argued that this rule should be maintained because non-Canadian packages could be detrimental to Canadian discretionary programming services and to the Canadian broadcasting system as a whole.
110.	MTS Allstream Inc. (MTS), on the other hand, opposed this rule, arguing that there could be circumstances where a non-Canadian package was appropriate, and that an overall preponderance requirement was sufficient to both prevent harm to discretionary programming services and ensure the Canadian character of the system as a whole.
111.	The Commission finds no evidence that maintaining the prohibition against non-Canadian packages is necessary in order to support Canadian services or to fulfil the objectives of the Act. The Commission considers that the combination of must-carry Canadian services on the basic service, access rights for Category A services and an overall preponderance requirement is sufficient to ensure that subscribers will receive a distinctively Canadian offering and that any non-Canadian packages that may be offered will not harm Canadian discretionary programming services. Again, the evidence is that most packages will be thematically oriented and will include the relevant Canadian services. Certain non-Canadian packages, such as international news packages, could add to the diversity of services offered to subscribers.
	Digital migration framework: Distribution in packages and on a stand-alone basis
112.	The current packaging rules require BDUs to offer all Category 1 digital services in a package before offering them on a stand-alone basis. As part of its digital migration framework, the Commission extended this requirement to include analog specialty services as well. This rule prevents BDUs from effectively "stranding" certain specialty services by making them available only on a stand-alone basis, often at a higher cost.
113.	Broadcasters, including the CAB, Alliance Atlantis Communications Inc. (Alliance Atlantis) and Corus, proposed maintaining the rule and extending it to all specialty services.
114.	Rogers and Telus opposed this proposal, arguing that it could be more onerous for distributors than the current rules. However, neither party provided reasons for opposing the proposal.
115.	The Commission notes that this rule itself does not force BDUs to distribute any specific service, nor are subscribers limited to receiving services in one particular way under this rule. However, it does provide some support for specialty services by ensuring that they receive the benefits of packaging with other services.
	Digital migration: All-in-one French-language specialty package
116.	The digital migration framework also requires cable BDUs operating in French-language markets to offer their digital subscribers a package that includes all of the French-language specialty services approved prior to the 2000 digital licensing framework. These services can also be offered in other smaller packages as well as on a stand-alone basis.
117.	Most broadcasters who commented on this provision supported the retention of the rule; furthermore, BDUs did not object.
118.	Going forward, the Commission considers that this rule may provide significant benefits to subscribers as well as to Canadian French-language specialty services. Further, the Commission is of the view that the rules should be extended in order to include the three existing digital French-language Category 1 services (Mystère, Argent and Réseau Info Sport) and should be applied to all licensed BDUs operating in French-language markets. Applying this rule to all Category A services imposes no unreasonable limitations on the flexibility of BDUs since, in a digital environment, in addition to offering this package, they will also be able to offer these services in other packages and on a stand-alone basis.
	Digital migration: Mirroring rules
119.	The Canadian Cable Systems Alliance (CCSA), QMI, Rogers and Cogeco all opposed the mirroring rules, which are set out in Broadcasting Public Notice 2006-23, primarily on the basis that they impose requirements on cable services that are not imposed on DTH or digital subscriber line (DSL) undertakings.
120.	Few broadcasters commented on the mirroring rules. The CAB made no specific proposal but suggested that the digital migration of pay and specialty services should take place within a "reasonable period of time, for example, two years [after the conversion of OTA television stations]."
121.	The Commission considers that the existing mirroring requirements are unnecessarily complex for the new regulatory environment. The new rules related to the basic service, access and preponderance will, in the Commission's view, provide sufficient protection for programming services. The Commission also notes that it is retaining rules that require BDUs to provide programming services with prior notice of any packaging changes.
122.	Finally, the Commission notes that the current rules were intended as a temporary measure to assist programming services during the transition from analog to digital. The course of that transition is now clearer, permitting the policies set out as a result of this proceeding to be designed more appropriately for the emerging environment. Accordingly, the Commission considers that there will be no need for mirroring requirements following the implementation of the amended BDU Regulations on 31 August 2011.
123.	In regard to the above-mentioned suggestion by the CAB, the Commission notes that programming licensees will have more than two years to prepare for the digital transition between the issuance of this public notice and the date at which these changes come into effect in August 2011.
	Adult services
124.	The current rules prohibit the packaging of an adult service in such a way that subscribers are obliged to purchase the service in order to purchase other programming services. This prevents subscribers from being forced to receive adult services as a by-product of ordering other programming services. The Commission considers that this rule is an important way to manage the distribution of adult services and therefore considers it appropriate to retain it as part of the amended BDU Regulations.
	Account stacking
125.	The current packaging rules require BDUs to pay wholesale fees to pay and specialty services for each residence served, including where multiple residences are served as part of the same account. The Commission notes that no parties submitted interventions in opposition. The Commission therefore considers it appropriate to retain this rule as part of the amended BDU Regulations.
	Single-point-of-view religious services
126.	The current rules prohibit the packaging of single-point-of-view religious services with programming services of other types. The Commission notes that, consistent with Public Notice 1993-78, this rule is intended to ensure that subscribers are not forced to receive a service promoting a specific religious faith as a by-product of ordering other programming services.
127.	Parties to the Proceeding did not propose changing this rule and the Commission considers it appropriate to retain it for the time being. However, the Commission is of the view that its religious policy framework may benefit from a review and that the relevance of this rule should be considered in the context of any such a review.
	Commission's determinations
128.	In light of the above, as of 31 August 2011, the Commission will eliminate the 1:1 and 5:1 packaging rules. The new rules will consist of the following packaging requirements:
	BDUs shall offer Category A services as part of a package before offering them on a stand-alone basis.
	BDUs licensed to serve French-language markets shall offer a discretionary package containing all French-language Category A services (with the exception of French-language services that may be mandated for distribution on basic).
	Adult services shall not be packaged in such a way that subscribers are obliged to purchase the service in order to purchase other programming services.
	BDUs shall pay wholesale fees to pay and specialty services for each residence served, including where multiple residences are served as part of the same account.
	Single-point-of-view religious services shall not be packaged with other types of services.
	Third-language services distributed by broadcasting distribution undertakings
	Issues
129.	There are currently five Canadian ethnic services licensed for analog distribution (now Category A) and numerous Category 2 (now Category B) third-language services, the latter having no access rights. The Commission generally defines a third-language service as a service that offers at least 90% of its programming in a language other than English or French.
130.	In Broadcasting Public Notice 2004-96, the Commission set out a new framework for the authorization of non-Canadian third-language services. In order to expand the diversity and choice available to under-served third-language communities, the Commission adopted a more liberalized approach to the addition of non-Canadian, general interest third-language services, stating that they would generally be approved. In order to continue supporting Canadian third-language services, the Commission adopted specific packaging rules requiring that any third-language non-Canadian service in the same language as one of the five ethnic services must be offered in a package with the relevant Canadian service.
131.	All DTH services must distribute the five ethnic services, absent a condition of licence to the contrary. Licensees of Class 1 BDUs must distribute those services under the following conditions:
	the licensee was distributing the service on 16 December 2004, or
	10% of the population in the service area is of the ethnic origin to which the service is intended to appeal.
132.	In the Proceeding, third-language broadcasters were generally in favour of maintaining the existing rules. Some parties proposed adding measures to protect Canadian third-language services, such as the imposition of a 1:1 Canadian versus non-Canadian packaging rule.
	Commission's determinations
133.	The Commission notes that the market for third-language services in Canada, although relatively small, is growing, and that these services make a valuable contribution towards ensuring that a Canadian perspective is offered in the languages of various ethnic communities. For that reason, the Commission considers that continued regulatory support for third-language Canadian services remains warranted.
134.	Nevertheless, the Commission considers that the existing rules could be streamlined and that a better balance could be struck between support for these services and regulatory simplicity.
135.	In the Commission's view, the relevant date to identify those ethnic Category A services that are to be distributed should be the date of this public notice, and not 16 December 2004. As well, a simplified packaging rule for third-language services would benefit both Canadian distributors and programmers. On the first point, establishing the date of this public notice will ensure that these services see no reduction in their current distribution. On the second point, since BDUs distributing these services have an incentive to package them as attractively as possible, these services will likely be included in a package with attractive non-Canadian services relevant to the viewers in question.
136.	The Commission considers that a simple packaging requirement of one Canadian ethnic/third-language service, if one exists, with up to three non-Canadian third-language services in the same language(s) would provide BDUs with an incentive to create attractive packages including popular non-Canadian services and the appropriate Canadian services. This would increase the revenue potential for both the BDUs and the Canadian programming services.
137.	In striving to simplify its rules, the Commission will amend its current policy with respect to niche non-Canadian third-language services. The simple packaging requirement of one Canadian third-language service to three non-Canadian services will apply to all non-Canadian third-language services, whether they are niche or general interest services. Further, niche non-Canadian third-language services will be subject to the same approach for authorization as general interest non-Canadian third-language services.
138.	In summary, the amended rules for ethnic/third-language services will consist of the following:
	All BDUs distributing any of the following ethnic services - Telelatino, Odyssey, Talentvision, Fairchild and Asian TV Network - as of the date of this public notice will be required to continue distributing them.
	Terrestrial BDUs will be required to distribute the appropriate above-noted ethnic service(s) when 10% of the population in the service area of the terrestrial BDU is of the ethnic origin targeted by the service(s).
	Non-Canadian third-language services can only be offered in a package with Canadian ethnic/third-language services in the same language(s) if one exists, in a ratio of one (1) Canadian service to up to three (3) non-Canadian services.
	New forms of advertising available to broadcasting distribution undertakings
139.	Discussions at the public hearing made it clear that new forms of digitally-based advertising represent a significant new revenue opportunity for all sectors in the Canadian broadcasting system. In most cases, the use of these new forms of advertising will require cooperation between the broadcasters - who control the programming - and the distributors - who have the addressable digital networks that reach subscribers/viewers.
140.	New forms of advertising, such as targeted advertising that allows advertisers to address different audience segments, will require an amendment to section 7 of the BDU Regulations so as to enable BDUs to make the necessary changes to the programming supplied by the programming undertaking.
141.	The BDU Regulations state that a BDU "shall not alter or delete a programming service." At the public hearing, Bell, Cogeco and Rogers proposed wording that would enable a BDU to make the necessary changes, with the agreement of programming undertakings.
142.	The Commission agrees that such an amendment is an important step in permitting BDUs and broadcasters to work cooperatively so as to manage and exploit the possibilities of new forms of advertising. Accordingly, the Commission will amend section 7 of the BDU Regulations by adding a provision similar to the following:
	7. A licensee shall not alter or delete a programming service in a licensed area in the course of its distribution except
	(g) for the purpose of inserting a commercial message in the programming service in accordance with an agreement entered into with the operator of the service or the network responsible for the service.
143.	Given that new forms of advertising represent new revenue opportunities for all parties and the Canadian broadcasting system in general, and will require, in most cases, cooperation between broadcasters and BDUs, the Commission is of the view that it may be appropriate to convene an industry working group that would be responsible for developing best practices to guide arrangements between broadcasters and BDUs regarding various matters. Such matters would include, among others, those relating to determining the party that would be responsible for selling the advertising inventory and the appropriate sharing of costs and revenues. The Commission considers that the appropriate time to establish such a working group may be following the establishment of the framework for VOD undertakings, in regard to which it has today issued a call for comments in Broadcasting Public Notice 2008-101.
	Advertising in local availabilities of non-Canadian services
	Issues
144.	In the Call for comments, the Commission sought public comment on proposals for various new revenue streams for distributors and programmers, including the possibility of advertising in the local availabilities in U.S. specialty services. These local availabilities are periods of advertising time (normally two minutes per hour) which are available in non-Canadian (U.S.) specialty services. This advertising time can be sold by U.S. cable and satellite distributors. In Canada, when the same services are distributed by Canadian BDUs, the Commission's policy has been to permit BDUs to use this time for the promotion of Canadian programming services and other services offered by BDUs.
145.	At the public hearing, BDUs argued that they have already paid the U.S. programming services for the right to insert commercial advertising in the time provided by those services for local availabilities. These BDUs submitted that the Commission should therefore change its policy in order to permit them to insert such commercial advertising.
146.	Most BDUs accepted that, if they were granted the right to advertise in local availabilities, a specific contribution should be made to support Canadian programming. For example, Rogers proposed that 50% of net revenues be contributed to the CTF; Bragg proposed that 30% of gross revenues be contributed to the BDU's community channel; and Cogeco proposed that 50% of the local availabilities be reserved for the promotion of independently-owned Canadian programming services.
147.	Broadcasters generally opposed any change to the existing policy, arguing that the additional advertising inventory represented by the local availabilities would dilute the value of advertising on their services. They noted the decline in advertising growth on most linear services and the fact that, for OTA services, advertising is the only source of revenue.
	Commission's determinations
148.	The Commission considers that, in certain circumstances, revenues from the sale of advertising in the local availabilities of non-Canadian specialty services could provide a net benefit to the Canadian broadcasting system.
149.	The Commission considers that any additional advertising inventory made available through local availabilities should encourage the development of new forms of advertising content that utilize the potential of digital platforms. Such targeted advertising should provide additional value to advertisers and result in new sources of revenue for the system. The Commission considers that BDUs are in the best position to exploit these new forms of advertising.
150.	Nevertheless, any new source of revenue should result in a net benefit to the Canadian broadcasting system, including a contribution to the Canadian programming sector, and should increase the funds available for the creation of new Canadian programming.
151.	The Commission considers, however, that it does not have a sufficient record in order to accurately assess the likely costs and potential revenues associated with the exploitation of new forms of advertising. In particular, the Commission requires up-to-date information with respect to the time lines for the development of the technological infrastructure to support new forms of advertising, the anticipated reach of these new platforms, and the potential business case for their exploitation.
152.	Accordingly, the Commission considers it appropriate to explore these issues before determining how local availabilities should be used for advertising, the extent to which the new digital platforms should be used, and how to ensure a net benefit to the Canadian broadcasting system in order to further the objectives of the Act.
153.	In Broadcasting Public Notice 2008-102, also released today, the Commission seeks comment from interested parties with respect to the Commission's objectives for the use of local availabilities and the best means to fulfil these objectives, as well as detailed information regarding licensees' plans with respect to developing and exploiting new forms of advertising. Following the Commission's consideration of any comments received, it will make a final decision on the use of local availabilities so that the system can benefit from this new source of revenues as quickly as possible.
	Issues relating to dispute resolution
	Issues
154.	In the Call for comments, the Commission sought public comment on the appropriate role of dispute resolution in an environment of reduced regulation and on any changes that may be required to the applicable sections of the BDU Regulations and related policies.
155.	At the same time, the Commission also proposed that, in regard to disputes relating to undue preference, it may be appropriate to incorporate a reverse onus provision into the regulations that are applicable to BDU, pay (including PPV and VOD) and specialty licensees. Such a provision would be similar to that set out in section 27(4) of the Telecommunications Act.
156.	In the Proceeding, a number of parties called for increased rigour in the Commission's approach to dispute resolution, including the establishment of relatively short deadlines. Astral, in a study attached to its intervention,¹⁶ proposed an approach, based on final offer arbitration, that uses third-party arbitrators rather than Commission resources. In making its determination on this issue, the Commission has taken careful consideration of that study.
157.	In regard to the proposed reverse onus provision, most parties either supported the amendment or at least did not oppose it. Shaw nevertheless warned that shifting the onus could result in a flurry of frivolous complaints. Bell suggested that the difficulties associated with undue preference could be addressed through an explicit disclosure process for relevant documents.
	Commission's determinations
158.	The Commission notes that most allegations to date regarding undue preference have been filed by programming undertakings against BDUs. The Commission recognizes that, in most cases, BDUs are in sole possession of key information without which complainants cannot fully argue their cases. The Commission therefore considers that a reverse onus provision similar to that set out in the Telecommunications Act would be appropriate with respect to BDUs. A reverse onus provision would specify that a complainant must demonstrate that a preference and/or disadvantage exists, at which point the BDU would then be required to demonstrate that its actions are not undue.
159.	Therefore, the Commission will issue proposed amendments to the BDU Regulations, relating to reversal of onus, as soon as possible.
160.	On the basis of the record of this proceeding, the Commission is not satisfied that the same problem exists concerning allegations of undue preference against programming undertakings, and is therefore not prepared to impose a reverse onus provision on them at this time.
161.	The Commission also intends to insert undue preference provisions into the Television Broadcasting Regulations, 1987.
162.	The Commission recognizes its responsibility in resolving disputes that arise between BDUs and programming undertakings, where those disputes are relevant to the regulation and supervision of the Canadian broadcasting system.
163.	Three distinct methods by which such disputes can be resolved in a timely manner, with the assistance of the Commission, are set out below. The Commission notes the uniqueness of each method, and that the choice of method to be pursued lies with the parties involved. The Commission also notes that parties may, under current regulatory provisions, negotiate directly or use third-party arbitrators to resolve disputes, without Commission involvement.
164.	The first method, which currently exists and which will continue to be made available to the parties involved, consists of Commission staff-assisted mediation. This process may be requested by any one of the parties to a dispute and involves Commission staff assisting the disputants in arriving at a consensual resolution of their dispute. Participation in the process by both parties is mandatory, unless both parties have an agreed upon statement of facts and both request one of the two other methods set out below. In Commission staff-assisted mediation, the proposed resolution is not binding. Further, time limitations may be placed upon the mediation process by the mediator.
165.	The second method, which may be used when the parties involved fail to resolve the dispute through negotiation, and only when the issue is monetary, consists of final offer arbitration. In this case, the Commission will act as arbitrator. Each side to the dispute will put forward its position as a "final offer"; the Commission, as arbitrator, may not impose a solution other than that put forward by one of the parties. As such, the result should lead each party to suggest a moderate position for fear that an extreme position would lead to that of the other side being selected by the arbitrator. This method may be sought by either party, and will result in a binding determination.
166.	The third method consists of one party applying to the Commission for an expedited Commission hearing. This method may be used where the nature of the dispute is not exclusively monetary. The Commission will award the relief requested, in whole or in part, if finding in the applicant's favour.
167.	Should the Commission so determine, any information filed relating to the resolution of a dispute through Commission staff-assisted mediation, final offer arbitration or an expedited Commission hearing, along with the proceeding and decision of the Commission, may be kept confidential.
168.	No later than 1 April 2009, the Commission will issue an information bulletin setting out in detail the procedural steps to be followed and the time limitations that will apply to each of the three methods described above.
	Signal sourcing and transport
169.	In the Call for comments, the Commission sought public comment on the need for changes to its current policies relating to satellite relay distribution undertakings (SRDUs) and terrestrial relay distribution undertakings (TRDUs). These undertakings generally function as wholesalers by transporting broadcasting services and making those services available to BDUs, which then offer them to subscribers. Currently, the relay distribution sector in Canada is dominated by one undertaking, Shaw Broadcast Services (previously Cancom).
170.	The record of this proceeding raised five issues with respect to the sourcing and transport of broadcast signals:
	the current Commission requirement to receive services from a licensed SRDU;
	the possibility of exempting SRDUs;
	the need to incorporate the transport of Canadian pay and specialty services into the SRDU licences;
	the relevance of existing restrictions on TRDUs; and
	the responsibility for the cost and transport of pay and specialty services.
	Current Commission requirement to receive services from a licensed satellite relay distribution undertaking
171.	Licensed BDUs are generally prohibited from distributing certain services¹⁷ to their subscribers unless those services are received from a licensed SRDU. Those services include the signals that provide the programming of the four U.S. commercial networks (CBS, NBC, ABC, FOX) and of the non-commercial PBS network (collectively, the U.S. 4+1 signals), U.S. super stations and distant Canadian signals.
172.	The Commission has granted exceptions to this requirement for a number of BDUs that wished to use their own facilities to receive and transport these signals. Furthermore, all parties that commented on this rule, advocated its removal. Accordingly, the Commission will remove this requirement from the BDU Regulations by amending the Lists of eligible satellite services (the Lists) as soon as is practicable.
	Possibility of exempting satellite relay distribution undertakings
173.	Currently, SRDUs are licensed undertakings and their regulatory requirements are set out in conditions of licence. These requirements include the following:
	distributing a preponderance of Canadian services;
	carrying minimum levels of French-language programming services (Shaw Broadcast Services only);
	providing service to any BDU, under agreed-to terms;
	no undue preference;
	submitting to Commission dispute resolution; and
	contributing 5% of gross annual revenues to Canadian production.
174.	SRDUs argued that the regulation of SRDUs does not contribute materially to the objectives of the Act and that they should be exempted from licensing. They proposed instead that they be subject to an exemption order similar to the existing TRDU exemption order.
175.	As noted above, the SRDU sector is dominated by one undertaking, Shaw Broadcast Services. Until more effective competition has emerged, the Commission considers that exemption of SRDUs would not benefit the Canadian broadcasting system. Further, the Commission notes that SRDUs currently contribute approximately $900,000 annually to production funds. This amount, in the Commission's view, is material to the attainment of the objectives of the Act.
176.	Accordingly, the Commission will continue to license SRDUs. However, at the next renewals of the SRDU licences, the Commission is prepared to review evidence that addresses its concerns and consider whether exemption would constitute an appropriate course of action at that time.
	Need to incorporate the transport of Canadian pay and specialty services into the satellite relay distribution undertaking licences
177.	Currently, SRDU licences encompass the reception and delivery of OTA stations and non-Canadian programming services to terrestrial BDUs, but not the transport of Canadian pay and specialty services. Over time, the need for an efficient means of transporting these signals to distributors across Canada (i.e., their uplink to satellite and downlink to terrestrial BDUs) has resulted in them using the SRDU facilities in a way that is practically indistinguishable from OTA and non-Canadian services.
178.	While parties did not comment on this issue during the Proceeding, the Commission is of the view that the satellite transport of Canadian pay and specialty services by SRDUs should be incorporated into SRDU licences. Accordingly, as part of the next renewals of SRDU licences, the Commission will review evidence and consider whether incorporating the satellite transport of pay and specialty services into SRDU licences or an SRDU exemption order would constitute an appropriate course of action at that time.
	Relevance of existing restrictions on terrestrial relay distribution undertakings
179.	Currently, the exemption order for TRDUs¹⁸ places four conditions on these undertakings:
	they cannot employ satellite technology;
	they cannot alter or delete programming;
	they must be local or regional; and
	they must be affiliated with the BDU to which they transport programming services (i.e., they must deliver signals pursuant to an agreement with the BDU).
180.	BDUs, which generally operate TRDUs, submitted that all limitations on their ability to source and transport signals should be removed. The CCSA and MTS requested that BDUs be authorized to transport services to other BDUs, without limitations.
181.	The Commission proposes to eliminate the requirements that TRDUs be local or regional and that they be affiliated with the BDUs to which they provide service. In the Commission's view, removal of these restrictions would encourage greater competition in the signal transport sector. The Commission will also subject TRDUs to the Commission's requirements with respect to dispute resolution. Finally, for clarification purposes, the Commission notes that BDUs, or other parties, may transport programming services to other BDUs under the TRDU exemption order. The Commission will publish a revised exemption order for public comment by no later than 1 April 2009.
	Responsibility for the cost and transport of pay and specialty services
182.	The Commission has generally taken the view that it is reasonable to expect pay and specialty services with guarantees of access to be responsible for (and generally pay for) the transport of their services to distributors. Although this is not a formal requirement, it has become a Commission policy and an industry practice.
183.	The costs associated with transporting pay and specialty services have become a greater concern due to the increased costs of transporting HD versions of these services.
184.	Most BDUs proposed that services with access rights should continue to pay all of the costs of transport, while the transport costs for services with no access rights should remain subject to negotiation between distributors and the programming services. The CCSA proposed that pay and specialty services be required to provide both SD and HD versions of their services to all BDUs on the same basis.
185.	The Commission notes that, as part of this review, it has decided to retain access rights for Category A programming services. The Commission considers that it is reasonable to require Category A services to bear the responsibility with respect to the costs of transporting either SD or HD signals to a BDU's head end or uplink centre, and will amend the relevant regulations accordingly.
186.	At the Proceeding, it was noted that the DTH undertaking Bell TV sometimes charges a fee to pay and specialty services in regard to the alleged cross-subsidization of Star Choice by the SRDU of the Shaw Broadcasting Service. The Commission considers that, since this fee is established through the individual affiliation agreements reached between Bell TV and these pay and specialty services, this matter would be best addressed through its dispute resolution process.
	Licence classes and exemptions for broadcasting distribution undertakings
	Issues
187.	Currently, terrestrial BDU licences are divided into three classes, based primarily upon the number of subscribers that the BDU serves within a local service area. The classes are generally as follows:
	Class 1 - more than 6,000 subscribers;
	Class 2 - between 2,000 and 6,000 subscribers; and
	Class 3 - fewer than 2,000 subscribers.
188.	Where a new terrestrial BDU chooses to operate within the service area of an incumbent and competes with that incumbent, the Commission grants the same class of licence to the new entrant as it has to the incumbent, regardless of the number of subscribers the new entrant actually serves. This policy is to ensure that competition between terrestrial BDUs is fair and that competitors have the same regulatory obligations.
189.	The Commission has also issued two BDU exemption orders,¹⁹ one for BDUs that serve fewer than 2,000 subscribers and one for BDUs that serve between 2,000 and 6,000 subscribers. The exemption order for BDUs serving fewer than 2,000 subscribers has minimal conditions. The exemption order for BDUs serving between 2,000 and 6,000 subscribers includes more extensive conditions that are similar to the regulatory requirements for Class 2 BDUs. It is estimated that approximately 420,000 subscribers are served by exempt BDUs.
190.	In the Call for comments, the Commission sought public comment on whether it should simplify the current three licence classes for terrestrial BDUs and whether changes should be made to the existing exemption orders.
191.	In general, BDUs proposed reducing the number of classes of licence but provided few specific suggestions. Terrestrial BDUs made the point that they should not be placed at a competitive disadvantage vis-à-vis DTH undertakings by virtue of the regulatory requirements of a particular licence class. The CCSA, representing small cable companies, initially proposed that all BDUs with fewer than 20,000 subscribers be exempted. It subsequently revised this position to argue that all systems not affiliated with one of the four largest multiple system operators (Rogers, Shaw, Cogeco and Videotron) should be exempted.
192.	BDUs also made a variety of proposals to expand and simplify the existing exemption orders.
	Commission's determinations
193.	The Commission considers that the existing licensing regime can be streamlined, and that a greater number of smaller BDUs can be exempted from regulation, without detracting in a material manner from the implementation of Canadian broadcasting policy. Further, this will substantially streamline the Commission's regulatory activities with respect to BDUs.
194.	Accordingly, the Commission determines to exempt, under a single exemption order, all terrestrial BDUs serving fewer than 20,000 subscribers, including cable, DSL and multipoint distribution system (MDS) undertakings, and to introduce a single class of licence for those BDUs that are not eligible for exemption.
195.	The Commission's policy for exemption eligibility will be based on the following principles:
	terrestrial BDUs that serve fewer than 20,000 subscribers in a market will be eligible for exemption;
	terrestrial BDUs that serve 20,000 or more subscribers or that compete in a market with another BDU that serves 20,000 or more subscribers will continue to have to be licensed;
	exempt BDUs will not be subject to licensing should a licensed BDU from an adjacent area extend its service area and thereby enter into the small market of the exempt BDU in order to compete with that exempt BDU; and
	BDUs that operate in both small and large markets under a single regional licence will be permitted to determine whether there would be greater benefits to continuing to operate in all markets as a single undertaking under a single licence, or to conduct their operations in smaller markets in such a way that those operations would constitute a discrete operation that would be eligible for exemption.
196.	With respect to the last of these principles, BDUs operating under regional licences may apply to remove certain service areas from their licences so that they may operate in those areas as exempt undertakings. To be eligible for such a "carve-out," two conditions must apply: a) all or part of the service area removed from the regional licence must already be served by a competing exempt BDU; and b) the regionally licensed BDU must be operating as a discrete operation in that service area. The term "discrete operation" will be defined in the proceeding referenced below.
197.	By 1 April 2009, the Commission will issue for comment a proposed revised exemption order that will contain what it considers to be the minimum necessary terms and conditions for BDUs with fewer than 20,000 subscribers, based on the policy described above. As part of its consideration of the terms and conditions for exempt BDUs, the Commission will also request comment on the specific criteria to be used in determining what constitutes a "discrete operation."
198.	Exempt BDUs may request documentation from the Commission indicating that they are operating an authorized BDU under the Commission's exemption order. Prior to issuing such documentation, the Commission will require BDUs to provide assurances that they are in fact operating in compliance with the terms of the exemption order.
199.	In order for the Commission to receive basic information that it considers necessary,²⁰ exempt BDUs will be required to file certain minimal information annually with the Commission. The required information will be set out in the proposed new exemption order to be released for comment.
200.	Finally, the Commission is of the view that exempt BDUs should be required to submit to dispute resolution and be eligible to refer disputes to the Commission for resolution.
201.	The adoption of a single class of terrestrial BDU licence will be reflected in the amended BDU Regulations. As indicated above, the Commission will issue for comment a revised exemption order by 1 April 2009.
	Other issues relating to broadcasting distribution undertakings
202.	In the Call for comments, the Commission requested comments in regard to a number of secondary issues. In many cases, the Commission proposed to eliminate or streamline regulations where they were no longer relevant; in some cases, issues were raised during the public process; and, in other cases, the Commission is making changes in order to be consistent with the new policy directions set out in this public notice. The Commission's determinations in regard to these secondary issues are set out below.
	Elimination of the basic band requirement
203.	BDUs are currently required to distribute priority signals beginning with the basic band - i.e., analog channels 2 through 13. The Commission considers that this requirement is no longer necessary in the multi-channel digital environment. Further, BDUs will continue to be required to carry priority signals as part of their basic service and will have every motivation to design that service so that subscribers can readily find the services they wish to view.
204.	None of the parties who argued for the retention of the basic band requirement provided any substantial evidence linking the channel placement of a particular service on the basic band to increases or decreases in viewing to that service.
205.	Accordingly, the amended BDU Regulations will eliminate the basic band requirement.
	Basic service buy-through provisions
206.	As set out in section 5 of the BDU Regulations, licensees must provide subscribers with the basic service before providing any other programming services, with the exception of PPV, VOD and exempt services. That is, a subscriber may currently subscribe to a PPV or VOD service without receiving the basic service. In light of the growing importance of VOD, it was argued that these exceptions should be removed so that all subscribers receive the basic service before subscribing to VOD or PPV services.
207.	The Commission will retain the current exceptions for exempt services. With respect to VOD and PPV, the Commission considers that it would be more appropriate to rule on this issue following its consideration of the comments to be filed regarding its proposed VOD policy framework.
	Elimination of section 17(5) of the Broadcasting Distribution Regulations
208.	Section 17(5) of the BDU Regulations requires a BDU to distribute, on its basic service, services that the Commission determines are in the national public interest. However, the Commission notes that this section of the BDU Regulations has never been used, and that it has preferred to rely upon section 9(1)(h) of the Act to ensure that services that warrant mandatory distribution on basic are so distributed. Accordingly, the Commission will eliminate section 17(5) of the BDU Regulations and include in the amended BDU Regulations a section that will make it imperative for BDUs to comply with orders to distribute 9(1)(h) services.
	Customer service standards
209.	Noting the dissolution of the Cable Television Standards Council (CTSC), the Commission sought comment on whether regulatory intervention was necessary to address such matters as the following: the availability of billing in alternative formats, privacy concerns, clarity of billing, and other customer service standards.
210.	The Commission considers that, consistent with a more market-driven approach, the establishment of an industry body to oversee and apply customer service standards is not necessary.
	Distribution of audio services
211.	In the Call for comments, the Commission proposed to delete sections 22, 23(1)(b), 23(2) and 34(b) of the BDU Regulations, all of which pertain to the distribution of various audio services. Few parties commented on this proposal; of those who did comment, none raised objections. Accordingly, the Commission will eliminate the above-noted sections of the BDU Regulations.
212.	The Commission notes, as indicated above, that BDUs will remain subject to a requirement to ensure that the majority of audio channels received by the subscriber are devoted to the distribution of Canadian programming services.
	Elimination of sections 18(8) to 18(10) of the Broadcasting Distribution Regulations
213.	In the Call for comments, the Commission proposed the elimination of sections 18(8) to 18(10) of the BDU Regulations, which relate to the distribution of specialty services approved in 1996. Given that they are all now distributed, these sections are no longer necessary or relevant.
	Elimination of Part 5 of the Broadcasting Distribution Regulations
214.	Part 5 of the BDU Regulations relates to fees for and provision of basic service. In light of the fact that the competitive environment has resulted in the de-regulation of basic service rates for over 95% of terrestrial BDUs, the Commission proposed the elimination of Part 5 of the BDU Regulations. The Commission notes that BDUs were in favour of this proposal and that no opposing comments were received. Accordingly, the Commission determines that it will not include provisions for the rate regulation and provision of basic service in the amended BDU Regulations.
	Direct-to-home community channels
215.	During the proceeding, DTH undertakings proposed that they be permitted to offer community channels under similar terms and conditions as terrestrial BDUs.
216.	The Commission recognizes the advantages of harmonizing, as much as possible, the rules for DTH undertakings and terrestrial BDUs. Nevertheless, it considers that the question of DTH undertakings operating a "community" channel should be considered in the broader context of the Commission's community media policy. The Commission will therefore consider this proposal as part of its review of community media policies.
	Distribution of community media undertakings
217.	The Commission considers that issues relating to the distribution, on a digital basis, of community-based low-power television stations and digital undertakings would be more appropriately considered as part of its review of community media policies.
	Withholding of signals during a dispute
218.	BDUs are generally required, by regulation, to distribute pay and specialty services that operate in the market that they serve. However, currently there is no similar regulatory requirement for the programming services to provide their signals to distributors. In the event of a dispute, the Commission has indicated that, as a matter of policy, programmers should not withhold their signals from distributors during the dispute. The Commission has now decided to strengthen this policy and will amend the Pay Television Regulations, 1990 and the Specialty Services Regulations, 1990 to provide that programming undertakings not withhold their signals from BDUs in the event of a dispute.
	Commercial relationships - Affiliation agreements
219.	Affiliation agreements are contracts between distributors and programming services that establish the terms and conditions for the distribution of these services. These agreements include rates and any other issues that the parties consider relevant to their commercial relationship. The Commission has generally not involved itself in establishing rules or policies on affiliation agreements, allowing parties to negotiate these agreements between themselves.
220.	A number of programming services suggested that the Commission should involve itself in matters related to the negotiation of affiliation agreements, including requiring parties to enter into written affiliation agreements (including a "default agreement" that would set out terms, carriage, packaging, channel placement, notice requirements and audit rights) and/or specifying particular terms in these agreements, including most favoured nations (MFN) clauses.
221.	In the Commission's view, such an approach would be administratively burdensome and unnecessarily intrusive in the commercial relationship between distributors and programmers. Further, the Commission considers that the imposition of specific terms and conditions in all affiliation agreements would result in the Commission intervening in a large number of existing agreements which have been negotiated between the parties. Accordingly, the Commission does not intend to impose any rules with respect to specific terms in affiliation agreements. However, the Commission notes that parties may avail themselves of the Commission's dispute resolution processes to resolve matters related to affiliation agreements.
	Commercial relationships - Audit rights
222.	In Broadcasting Public Notice 2005-34, the Commission set out guidelines related to the auditing of BDU subscriber information by pay and specialty services. Those guidelines established principles with respect to the selection of auditors, the scope of the audit, the timeframe for commencing audits and confidentiality. The Commission stated that those guidelines would be used in its dispute resolution processes and were intended to aid in the development of appropriate audit provisions for inclusion in future affiliation agreements. The Commission did not find it appropriate, however, to introduce specific audit provisions into the BDU Regulations at that time.
223.	A number of programmers submitted that audit rights are a fundamental part of the commercial relationship between programmers and BDUs and suggested that incorporating an audit requirement into the amended BDU Regulations would remove the need for parties to negotiate audit terms as part of affiliation agreements. Distributors, on the other hand, argued that it is not necessary to incorporate the existing guidelines into the amended BDU Regulations, since audit requirements are already a common part of negotiated affiliation agreements.
224.	The Commission considers that the right of a programming service to perform an audit on BDU subscriber information is essential to ensure that programmers receive the correct compensation from BDUs. Despite the Commission's determinations set out in Broadcasting Public Notice 2005-34 in this regard, programming services have continued to raise a number of concerns with respect to audits. In an effort to reduce ongoing problems with respect to obtaining audit access to BDU information, the Commission intends to amend the BDU Regulations to require BDUs to permit audit access by programming services.
	Commercial relationships - Notice of channel realignment
225.	Under the BDU Regulations, Class 1 and Class 2 terrestrial BDUs are required to provide notice to Canadian programming services if the BDU intends to change the channel on which the service is being distributed, 60 days prior to the change. This requirement does not currently apply to DTH undertakings.
226.	In Broadcasting Public Notice 2005-35, the Commission determined that BDUs should provide more detailed notice to programming services of proposed changes in terms of their distribution, packaging or retailing. In that public notice, the Commission stated that BDUs should provide this information to programming services 60 days in advance of the change period.
227.	In the Proceeding, parties did not provide extensive comments on this matter. However, programmers indicated that BDUs have not been consistently observing the notification requirements set out in Broadcasting Public Notice 2005-35, and submitted that BDUs often move services with little or no notice. Several programmers recommended that these more detailed requirements be incorporated into the BDU Regulations.
228.	The Commission determines that it is appropriate to continue to require terrestrial BDUs to provide programmers with notice of modifications to channel line-ups, including the removal of channels, in accordance with the rule currently set out in the BDU Regulations. The Commission also intends to amend the BDU Regulations to apply this rule to DTH licensees. However, the Commission does not intend to add the more extensive notice requirements set out in Broadcasting Public Notice 2005-35 to the BDU Regulations at this time, although they will continue to apply.
	Inside wire
229.	In response to the questions raised in the Call for comments in regard to the use of "inside wire" owned by a licensee, most parties generally supported the Commission's existing policy. Accordingly, the Commission will not make substantive changes to its policy with respect to inside wire. However, in the proposed amendments to the BDU Regulations, the Commission will propose wording to clarify that the regulations and related definitions apply to externally wired multi-unit buildings.
	Elimination of section 25 of the Broadcasting Distribution Regulations
230.	Section 25 of the BDU Regulations prohibits the distribution of certain services on restricted channels. ²¹The Canadian Film and Television Production Association (CFTPA) opposed eliminating this regulation, but did not provide any reasons in support of its position.
231.	In the Commission's view, this provision is no longer necessary and, to the extent that impaired channels may exist in a digital environment, the market will ensure that viewers are not disadvantaged. Accordingly, the Commission will exclude the existing section 25 from the amended BDU Regulations.
	Standard authorizations
232.	In the Call for comments, the Commission proposed to reduce the necessity for duplicative applications by more than one BDU on the same issue through the use of standard authorizations. These would be used where the Commission approves a request from a BDU to do something not contemplated by the current BDU Regulations. Such a request could result in the issuance of a standard authorization, which would be incorporated by reference into the licences of all BDUs by way of a standard condition of licence.
233.	This proposal received general support from those parties that addressed it.
234.	Accordingly, the Commission will proceed with this proposal and will set out specific wording that will be incorporated into the conditions of licence of BDUs, as well as into the new exemption order for BDUs as appropriate. The Commission will implement this change as soon as is practicable.
	Regulatory framework for pay and specialty programming undertakings
235.	In the Call for comments, the Commission sought comment on several policy issues related to discretionary programming services. These issues related to the following:
	authorization of non-Canadian services;
	genre exclusivity - Canadian services;
	a policy framework for VOD programming services;
	the appropriate programming obligations for discretionary services;
	advertising limits for specialty services; and
	the processing of applications for Category B services.
236.	The issue that received the most attention during the Proceeding was the long-standing policy of genre exclusivity for discretionary services. However, questions were also raised relating to the appropriate programming obligations for discretionary services in light of any changes to the BDU regulatory framework, as well as the most appropriate policy framework for VOD programming services.
237.	The Commission has issued today Broadcasting Public Notice 2008-101, which sets out for public comment detailed questions as well as the Commission's preliminary positions with respect to a comprehensive policy framework for VOD programming service.
238.	With respect to the programming obligations for pay and specialty services, the Commission considers it more appropriate to discuss these in detail at their licence renewals. This will give the licensees an opportunity to assess the impact of the new policies and regulations contained in this public notice and formulate their commitments accordingly.
	Authorization of non-Canadian services
	Issues
239.	In the Call for comments, the Commission sought comment on whether changes needed to be made to its current policy of not authorizing, for distribution in Canada, non-Canadian services that are directly competitive with any English- or French-language Canadian pay or specialty services, including Category 2 services that may not have launched.
240.	The majority of broadcasters and cultural organizations opposed any relaxation of the Commission's current approach. They took the view that an important reason for the diversity of Canadian services now available to viewers is that these services have had an opportunity to grow without facing direct competition from non-Canadian, largely U.S., services in the same genre. It was also noted that the Commission's current policy encourages Canadian services to make agreements with their U.S. counterparts in order to access popular non-Canadian programming. In this way, Canadian viewers are not deprived of non-Canadian programs, and are also assured of Canadian programming that reflects their needs and interests.
241.	Most BDUs recognized that a fully open-entry approach for non-Canadian services would not be consistent with the objectives of the Act. Bell and Telus indicated that the current test for competitiveness was generally effective. Rogers proposed that the test focus on the impact that a non-Canadian service would have on the viability of a Canadian service, and Cogeco suggested that the focus should be on whether the non-Canadian service would have a detrimental impact on the Canadian program rights market. On the other hand, both Shaw and MTS supported a fully open-entry approach.
242.	In regard to the Commission's consideration of unlaunched Category 2 services, various parties expressed the concern that this policy permits unlaunched Canadian services to "squat" on a genre and thus prevent Canadian subscribers from accessing new non-Canadian services in that genre.
	Commission's determinations
243.	The Commission considers that its current approach to authorizing non-Canadian, English- or French-language services remains effective and as such proposes no substantial change to that approach. Accordingly, the Commission will retain a competitiveness test, based primarily on overlap between non-Canadian and Canadian pay and specialty services. By doing so, the Commission will take into account both the extent and the significance of any overlap between a proposed non-Canadian service and any existing Canadian service. In the Commission's view, this approach reflects the objectives of the Act in that it gives priority to the distribution of Canadian services while recognizing the choice, diversity and alternative perspectives that can be added to the system by the availability of non-Canadian programming and programming services.
244.	The Commission also considers that the current approach recognizes the importance to Canadian services of a separate Canadian rights market and assists those services by encouraging direct partnerships with non-Canadian services or by the licensing of specific programs.
245.	With respect to non-Canadian news services, however, the Commission considers that a more open-entry approach would be consistent with the importance it places on a diversity of editorial points of view. Over the years, the Commission has authorized a wide variety of non-Canadian news services in English and French. Canadian news services have generally not opposed the entry of these non-Canadian services, and there is no evidence that their presence in the system has had a negative impact on the Canadian services.
246.	Accordingly, absent clear evidence, as determined by the Commission, that a non-Canadian news service will violate Canadian regulations, such as those regarding abusive comment, the Commission will be predisposed to authorize non-Canadian news services for distribution in Canada. This change will be effective as of the date of this public notice.
247.	With respect to its current approach to unlaunched Canadian Category 2 (now Category B) services, the Commission considers that, generally, it should no longer take into consideration unlaunched services when assessing the competitiveness of English- or French-language non-Canadian services, unless such a service presents evidence that launch is imminent.
248.	The Commission has also decided to simplify and consolidate the Lists to result in a single list for services authorized for either analog or digital distribution by all BDUs.
249.	Finally, the Commission will immediately harmonize the information requirements that sponsors must satisfy when making requests for the addition of non-Canadian third-language, and French- and English-language services to that list.
	Genre exclusivity - Canadian services
	Issues
250.	Currently, analog and Category 1 services (Category A) are licensed on a one-per-genre basis. The Commission generally requires that these pay and specialty services be complementary and not compete directly with one another. However, in 2006, the Commission determined that an exception to the one-per-genre policy was appropriate in the English-language pay sector. The exception was granted in light of the health of the existing pay licensees and the increase in support for Canadian programming that would result from licensing a competitor.
251.	In the Call for comments, the Commission noted that its objectives with respect to its genre policy are to ensure a diversity of programming genres and to enable Category 1 and analog services to meet their programming obligations. It also acknowledged that the increased number of discretionary services has resulted in a certain amount of overlap - particularly in the genres of news and sports. In light of the above, the Commission sought comment on what ongoing public purpose is served by maintaining genre exclusivity for pay and specialty services and on whether direct competition between services in the same genre should be permitted.
252.	The majority of BDUs supported the elimination of genre exclusivity, arguing that it is no longer required as the industry has matured, and that the removal of that policy would allow competition among Canadian services. BDUs also argued that the number of genres recognized by the Commission has been expanded and fragmented, to the point where it is sometimes difficult to ascertain where one programming genre begins and another ends. Moreover, BDUs submitted that maintaining genre definitions - even broad ones - would be artificial and counterproductive and that there is no evidence to suggest that genre definitions are "essential" to the achievement of the objectives of the Act.
253.	Some existing Category 2 services also favoured the elimination of genre exclusivity, arguing that it would allow for choice among programming services within a given genre and would permit services to tailor their overall programming schedules to meet viewers' demands.
254.	The majority of broadcasters and cultural organizations favoured maintaining genre exclusivity, arguing that it has been crucial to the Canadian broadcasting system in the past by helping discretionary services to meet their obligations and provide a broad diversity of programming formats. Some argued that the elimination of this policy would result in broadcasters "morphing" their existing services into the most profitable genres and effectively abandoning less profitable ones. It was also submitted that eliminating genre exclusivity would lead to increased competition among Canadian services for U.S. programming, driving up the costs of acquiring such programming and reducing the resources available for Canadian programming.
255.	The CAB and several broadcasters, however, were of the opinion that the Commission needs to adopt a practical approach to genre exclusivity. Such an approach would, in their view, take into account the nature of each genre licensed to date and the ability of a particular genre to support the licensing of multiple Canadian services without unduly impacting the existing services' ability to meet their regulatory obligations.
256.	During the Proceeding, the CAB proposed a simplification of the rules that would result in services no longer being limited to certain program categories. In the CAB model, however, existing limitations on certain categories would be maintained.
257.	CTVgm and Canwest proposed a variation of the CAB model. In the CTVgm/Canwest model, there would be no prohibition on certain program categories and no limits on any categories. The only regulatory tool to ensure that services maintained the genre for which they were licensed would be the narrative description in the nature of service condition of licence.
258.	Currently, each discretionary service has a condition of licence relating to its nature of service. This condition of licence generally includes three elements: a narrative description of the nature of service, a list of program categories from which the service may draw programming, and, in many cases, additional conditions limiting the broadcast of certain program categories or otherwise tailoring the nature of service. The narrative description describes the type of programming that will be scheduled, the audience to be addressed and the specific focus that distinguishes the service from other services.
259.	In addition to the narrative description, the Commission has imposed limits on the program categories from which the service may draw programming.²² For some services, certain categories may be prohibited; for others, certain categories may be limited in terms of the amount of the schedule that they can occupy. For example, Men TV, which is "dedicated to men's lifestyle," is prohibited from scheduling programming in the news, sports and music program categories (see Decision 2000-464); Discovery Channel may not do drama programming (see Decision 2001-733); and MTV (formerly Talk TV), which is "devoted to talk programming," may not do music programming (see Broadcasting Decision 2004-26).
260.	Examples of cases where thresholds have been placed on certain program categories include Canal D, which must broadcast 50% documentaries (see Broadcasting Decision 2005-441); MuchMusic, which must broadcast 50% music videos (see Broadcasting Decision 2006-380); TVTropolis (formerly Prime TV), which can only program drama that is at least 10 years old (see Broadcasting Decision 2004-18); and The Score, which cannot broadcast more than 15% live sports programming (see Broadcasting Decision 2004-10).
261.	The above-noted limitations are designed to ensure that discretionary services stick to the genres for which they were licensed and do not morph into a genre that is directly competitive with other Canadian Category A services.
262.	With respect to introducing greater competition among Canadian services, the Commission heard a number of proposals.
263.	Rogers proposed that the Commission drop genre exclusivity among Canadian services, but retain it with respect to non-Canadian services. It recommended that the Commission establish five broad genres (news, sports, general interest, music and drama), each with common exhibition and spending requirements.
264.	Corus also recommended the identification of a limited number of broadly defined genres, with broad definitions permitting the grouping of services according to similar themes and/or target audience. Each service within a given genre would be free to adjust programming content and strategies so as to best serve the needs of its audience. Provided the service remained within the broad confines of its defined genre, there would be no need to apply to the Commission for prior approval of such adjustments.
265.	Pelmorex Communications Inc. proposed that the criteria that would be used to evaluate the degree of genre exclusivity that would be warranted could be established based on broad policy considerations. Those criteria might include the following:
	Would a proposed new service be a substitute for or simply be competitive with the existing licensee operating in the genre? (i.e., Would consumption of one eliminate the need for the other or would a consumer consider buying both?)
	If a new genre is being proposed, would the market support such a service? (This would require the consideration of market size, taking into account, for example, whether it relates to an English-language market or a French-language market.)
	Could the market support multiple services within a genre without unduly affecting the ability of the existing licensee to meet its regulatory obligations?
	Would a decision to license more than one service in a given genre add to, or detract from, the diversity of Canadian voices?
	Are there unintended consequences from relaxing genre exclusivity? For example, does exclusivity enjoyed in the English-language market act to support services in the French-language market?
	Commission's determinations
	Competition
266.	The Commission has carefully examined the various proposals for changes to its genre exclusivity policy. It recognizes that, in certain popular genres such as news and sports, there is already considerable competition between Canadian services despite differences in the nature of service set out in their respective conditions of licence. Further, as the system evolves, it may be possible to introduce greater competition into other genres.
267.	Nevertheless, the Commission is concerned that a wholesale move away from genre exclusivity could have significant negative consequences on the diversity of Canadian services offered to viewers. In the Commission's view, this diversity has two major benefits for Canadians:
	it provides viewers with a wide range of Canadian programming choices; and
	it ensures the maximum contribution to the creation of Canadian programming.
268.	As noted by a number of parties, an open-market approach could encourage the competitors in a given genre to acquire the most popular and profitable programs. This could reduce the diversity of programming offered to viewers and, to the extent that this programming is non-Canadian, would reduce the resources available to support new Canadian programming.
269.	Accordingly, the Commission will introduce competition in those genres where it is convinced that a competitive environment will not significantly reduce either the diversity of services available to viewers or their contribution to the creation of Canadian programming.
270.	In order to determine the ability of a programming genre to sustain competition, the Commission will consider the following criteria:
	economic health of the services in a genre - includes profitability and revenue over a period of time, which will serve in determining the financial capacity of the service(s) within that genre to withstand competition and continue meeting programming commitments;
	popularity - includes audience and subscriber information and degree of brand recognition, which will serve in identifying genres that are most popular with viewers and that would arguably attract more viewers, rather than fragment existing viewing;
	programming availability - relates to the availability of programming within a genre - to the extent that there are large libraries of programming in that genre (Canadian and non-Canadian); it is possible that more services could be supported by that programming, without undue program duplication or competition for program rights;
	diversity that exists within a genre - includes the extent to which the genre is already open to a degree of competition and the risk that, without some genre exclusivity, services might "rush to the middle," seeking programming with the highest margins, rather than maintaining a specific nature of service and/or serving a specific audience; and
	other consequences that might result from relaxing genre exclusivity - for example, whether exclusivity enjoyed in one language cross-subsidizes programming in the other.
271.	Based on these criteria, the Commission has examined the current environment and determines that it would be appropriate to immediately introduce competition between Canadian services operating in the genres of mainstream sports and mainstream national news. The services operating in these genres - The Sports Network (TSN), Sportsnet, Le Réseau des sports (RDS), CBC Newsworld, Newsnet, Le Réseau de l'information (RDI) and Le Canal Nouvelles (LCN) - are strong, healthy, highly popular, and highly competitive.
272.	At this time, the Commission is of the view that only these genres are ripe for competition and that the objective of diversity would not be served by immediately opening other genres to broad competition. However, the Commission is prepared to consider competitive applications in other genres should an applicant demonstrate that the genre met the criteria elaborated above. Upon approval of any such competitive application, the genre would then be considered open for competition.
273.	Once a genre has been opened for competition, the following rules will apply to all services within the genre:
	a common and standard nature of service definition;
	common Canadian programming exhibition and spending obligations, as well as original programming obligations, where appropriate; these would be set at levels consistent with conditions that currently apply to the incumbent service(s);
	no access rights (except where the service benefits from a mandatory distribution order under section 9(1)(h) of the Act)²³, although undue preference provisions (including the new reverse onus provision) would continue to apply (i.e., BDUs that dropped unaffiliated services in favour of affiliated services could be found to be conferring an undue preference);
	no regulated wholesale fee (except where a rate is specified in a 9(1)(h) order²⁴); and
	continued genre exclusivity from non-Canadian and Category B services.
274.	With respect to mainstream Canadian sports and mainstream Canadian national news services, the Commission has set out proposed nature of service and contribution requirements in Broadcasting Public Notice 2008-103, also issued today. Applications for competitive news and sports services, as well as applications from the existing licensees (listed above) to amend their licences will be accepted once the Commission has approved final conditions of licence for such services.
275.	With respect to services proposing competition in other genres, the onus will be on new applicants to demonstrate that the criteria set out in paragraph 270 to this public notice have been met. New applicants will have to demonstrate that they are prepared to meet contribution levels that are comparable to those of the incumbent(s), including appropriate contributions to first-run original programming. The incumbent service(s) will have an opportunity to respond through the Commission's regular processes. If the Commission is satisfied that the criteria above have been met and, in particular, that diversity within a genre would not be threatened by approving the application, the competitive service would be approved and the genre would be open for competition, subject to the rules listed above. Incumbent services would be free to apply for the new standard conditions of licence.
276.	As noted above, competitive services will no longer benefit from access rights. Until such time as the Commission can amend the BDU Regulations, BDUs may apply for an exception to the relevant sections of the BDU Regulations by condition of licence. However, the Commission is of the view that, with respect to news services, Canadians should not have less news diversity than they currently have. Therefore, if a BDU chooses not to distribute a licensed mainstream Canadian national news service, the Commission may be prepared to consider issuing a distribution order under section 9(1)(h) of the Act requiring the distribution of that news service. The Commission notes that the existing distribution orders with respect to the mandatory distribution of CBC Newsworld and RDI in minority-language markets will continue to apply.
	Programming flexibility
277.	The Commission has also decided to simplify and streamline the rules that govern both nature of service definitions and program categories from which services may draw programming. The Commission's intent in this respect is to ensure that the nature of service set out in the licensee's conditions of licence reflects, as specifically as possible, the unique characteristics of the service.
278.	The Commission is of the view that, in most instances, the narrative descriptions of Category A services are sufficiently specific to ensure that these services remain true to the genre for which they were licensed. Therefore, the Commission determines that it will permit all Category A services to draw programming from all program categories, thereby providing these services with greater flexibility in this regard. However, to ensure that this change does not permit services to morph into other established programming genres, and thus become directly competitive with other Category A services, the Commission will establish a standard limitation of 10% of the broadcast month for the following categories:
	2(b) Long-form documentary; 6(a) Professional sports; 7 Drama and comedy; 7(d) Theatrical feature films aired on television; 7(e) Animated television programs or films; and 8(b) and (c) combined - Music video clips and Music video programs.
	Where a licensee is currently permitted to broadcast more than these standard limitations, it may continue to do so.
279.	The Commission is also prepared to eliminate other limiting conditions of licence where the narrative description is sufficient to ensure that the service will not be directly competitive with any other Category A service and will remain true to its genre. The Commission notes that it will be necessary to implement this new approach via amendments to existing conditions of licence.
280.	The Commission does not intend to apply this general approach to Category B services; however, in assessing applications for new services or applications for amendments to nature of service conditions of licence, the Commission will generally apply the same limitations.
	Advertising limits for specialty services
	Issues
281.	Currently, specialty licensees are generally limited by condition of licence to no more than 12 minutes of advertising per hour. In the Call for comments, the Commission requested comments on the possibility of increasing this limit for Category 1 and Category 2 specialty licensees, with the intention of eliminating the limit altogether, as announced for OTA stations in Broadcasting Public Notice 2007-53.
282.	As a result of Broadcasting Public Notice 2007-53, the Television Broadcasting Regulations, 1987 were amended to increase the 12-minute-per-hour limit on advertising to 14 minutes per hour in peak viewing periods (7:00 p.m. to 11:00 p.m.), effective 1 September 2007; to increase the limit to 15 minutes per hour for all viewing periods, effective 1 September 2008; and to eliminate the limits altogether as of 1 September 2009. These modifications to the advertising limits are subject to a review, during the licence renewal hearings, of the impact of the increased advertising time limits so as to ensure that the increased flexibility results in a net benefit to the Canadian broadcasting system. No party has provided data that can be assessed by the Commission regarding the impact of this partial deregulation.
283.	Parties, including broadcasters, generally supported the elimination of restrictions on advertising for specialty licensees and the harmonization of regulations for OTA and specialty services. Some parties supported maintaining the current conditions on the basis that it would be premature to eliminate them pending a better understanding of the consequences of eliminating the restrictions for OTA services. The Association of Canadian Advertisers (ACA) maintained that removing the limits on advertising would result in unacceptable ad clutter. Alliance Atlantis submitted that specialty broadcasters that do not sell out their inventory would be negatively affected by the expanded available inventory and depressed advertising rates. Finally, TQS inc. (TQS) argued that raising advertising limits for specialty services would depress advertising rates compared to those in place for the English-language market.
	Commission's determinations
284.	The Commission has carefully considered whether existing limits should be retained for specialty services, and is concerned that the potential negative consequences of permitting specialty services to increase the amount of advertising outweigh any advantages. The Commission notes that both small OTA broadcasters and OTA broadcasters in Quebec are vulnerable to shifts in advertising dollars. A significant shift in ad buying from the OTA sector to specialty services would not be recovered by independent OTA stations, especially those that do not have significant specialty holdings.
285.	Further, additional advertising inventory on the specialty services owned by the large ownership groups may have an undue impact on the ability of independent specialty services to sell their own advertising inventory, in addition to depressing advertising rates overall.
286.	Therefore, the Commission considers that it is appropriate to maintain the current restrictions on advertising limits for both Category A and Category B services.
	Processing of Category B applications
287.	In the Call for comments, the Commission noted that the resources required to process Category B applications are significantly disproportionate to the number of services that become operational. Accordingly, the Commission sought comment on measures to better focus resources on services that will in fact become operational.
288.	Parties to the Proceeding noted that the current process demands significant resources from both the Commission and the industry. Rogers suggested that the Commission exempt all Category B services from licensing requirements. QMI and Telefilm Canada proposed periodic hearings to alleviate the burden for the Commission and the industry. Other parties proposed that the Commission require applicants to submit a sound business plan or a distribution agreement with their applications.
289.	Although there were a number of suggestions for improving the processes associated with the consideration of Category B services, the Commission notes that the volume of applications has decreased over time and has become more manageable, and considers that its processes appear to be working efficiently. Accordingly, the Commission determines that, at this time, it will make no changes to its processes associated with the consideration of Category B services.
	Policies relating to over-the-air television undertakings
290.	In Broadcasting Notice of Public Hearing 2007-10-4, the Commission sought comment on two issues of particular significance to OTA undertakings, namely, distant signals and fee for carriage. These issues are discussed below. Also in this section, the Commission sets out its plan for the support of local programming in smaller markets.
	Distant Signals
	Issues
291.	In the BDU Regulations, a distant signal, or "distant television station," is defined as "a licensed television station that is not a local television station, regional television station or extra-regional television station." This definition applies to terrestrial BDUs. However, the term "distant signal" is not specifically defined in relation to DTH undertakings. It is, however, generally used in connection with the retransmission of signals that originate in one time zone to subscribers in another time zone. The availability of such signals allows subscribers to "time shift," thus providing multiple opportunities to view a given program.
292.	DTH licensees are authorized to distribute, on a national basis, the signal of any licensed television undertaking. When DTH undertakings were first licensed, broadcasting undertakings were given an opportunity to object to distribution by DTH undertakings. No broadcasting undertakings chose to do so at that time.
293.	Nevertheless, DTH licensees are obliged under the BDU Regulations to perform simultaneous and non-simultaneous program deletions of out-of-market signals in order to protect the program rights acquired by local stations. However, the requirements to delete certain programs have been suspended provided that the DTH licensees undertake certain "alternative measures" agreed to by the affected broadcasters.
294.	Currently, the DTH licensees and the CAB, on behalf of private OTA broadcasters, have agreed to the following measures:
	payment to broadcasters of $0.25 per month for each subscriber who receives a second set of U.S. 4+1 signals;²⁵
	the distribution, at the distributor's expense, of thirteen small market independently-owned television stations;
	a contribution of 0.4% of the DTH licensee's gross revenues, as a portion of the 5% required to be contributed to Canadian programming, to the small market local programming fund available to independently-owned stations (the DTH Fund); and
	the equitable distribution of OTA stations belonging to the larger private ownership groups.
295.	Currently, digital terrestrial BDUs are also authorized to carry distant Canadian signals and a second set of U.S. 4+1 signals, as digital discretionary services, subject to a requirement to perform non-simultaneous program deletion. These deletion requirements have been suspended as a result of an agreement to pay affected broadcasters compensation for the impact of distant signals on local and regional television stations. This agreement includes:
	payment to broadcasters of $0.25 per month for each subscriber who receives a second set of U.S. 4+1 signals, and
	payment to broadcasters of $0.50 per month (in some cases $0.75 per month) for each subscriber who receives distant Canadian signals.
	These payments are made to the CAB, which redistributes these funds to its members using a formula agreed to by those members.
296.	During the Proceeding, broadcasters stated that the current distant signals policy as it applies to both DTH undertakings and terrestrial BDUs was seriously flawed because broadcasters were not adequately compensated for the use of their signals as distant signals or for the harm caused by the importation of distant signals. Broadcasters therefore requested the ability to consent to and be paid for any retransmission of their OTA signals outside the priority carriage market.
297.	In a study²⁶ filed with their submission, CTVgm and Canwest estimated that, in 2006/2007, the impact of the existing distant signal policy on their revenues could be as high as a loss of $93.1 million. Of this amount, the impact of Canadian distant signals was estimated to be $47.2 million, the balance representing the impact of the U.S. television signals and alleged non-compliance with requirements for simultaneous substitution.
298.	The CAB supported the proposal by CTVgm and Canwest that broadcasters should provide consent and be paid for the retransmission of their signals, and further argued the existing DTH Fund be strengthened by:
	enshrining the DTH contribution requirements to the DTH Fund in the amended BDU Regulations;
	requiring cable distributors to make similar contributions in the markets where independently-owned broadcasters access the DTH Fund; and
	extending eligibility to Corus' OTA stations and the TQS station in Trois-Rivières due to the similarities between these stations and other already eligible stations.
299.	BDUs, on the other hand, supported the Commission's current approach to distant signals and strongly disputed broadcasters' estimates of the harm caused. They submitted that any impact on OTA stations is minimal. In a study submitted by Bell,²⁷ it was estimated that the impact on broadcasters of distant signals carried by BDUs in the English-language television market could range from -$20.2 million to +$10.1 million.
300.	Terrestrial BDUs submitted that any harm to OTA services would be caused primarily by DTH undertakings. They specifically stated that DTH undertakings do not pay compensation for the distribution of Canadian distant signals and that any change to the Commission's policy should be fair and equitable to all BDUs.
301.	DTH undertakings argued that distant signals constitute a key element of their business model and are necessary for maintaining competitiveness. They argued that any policy that required consent for retransmission would work to the advantage of the broadcasters, who would be able to threaten to remove both OTA and specialty services.
	Commission's determinations
	Canadian distant signals
302.	The Commission considers that the existing regulatory policy with respect to Canadian distant signals should be streamlined and, consistent with its responsibilities set out in the Act, rely on market forces whenever possible.
303.	The Commission recognizes the value that Canadian subscribers place on the ability to time shift through the use of distant signals. It also recognizes that broadcasters should have the right to be compensated for the use of their signals when they are retransmitted by a BDU outside the priority carriage market.
304.	In the Commission's view, providing broadcasters with the right to negotiate the terms under which their signals will be retransmitted is consistent with the Commission's objective to rely on market forces whenever possible.
305.	Market-based negotiations will allow broadcasters to recover the "full value" of their signals and the programming rights they have acquired. Based upon the evidence filed in this proceeding, there is no consensus with respect to the financial impact on broadcasters of the existing distant signal policy. A free negotiation between the parties, taking into account any damage to the broadcasters as well as the value of the signals to the BDU, should result in a fair price.
306.	The Commission notes that the primary parties to these negotiations will be large broadcasting groups and large BDUs, each of which has significant bargaining power. This should increase the likelihood that those groups will reach a mutually satisfactory agreement. However, should the parties be unable to do so, the Commission is prepared to offer its dispute resolution services on a final offer basis.
307.	Accordingly, the Commission's policy with respect to Canadian distant signals will be to require all licensed BDUs to obtain the consent of OTA licensees prior to distributing their local stations in a distant market.²⁸OTA licensees will be permitted to negotiate payment from BDUs for the retransmission of their local stations as distant signals. However, DTH undertakings will not be required to obtain consent or pay fees for the distribution of mandatory basic OTA services (i.e., those services that the DTH undertaking has chosen to distribute on basic as a result of the new basic distribution regime set out earlier in this public notice) from a given province to subscribers within that province. In the case of the Atlantic provinces, no consent will be required for the distribution of mandatory basic OTA services originating in any of the four Atlantic provinces to subscribers within any of those four provinces.
308.	The Commission determines that the DTH Fund, which is designed to compensate independently-owned small market broadcasters for damage resulting from the impact of DTH distant signals, will be retained. The Commission expects that the benefits to those broadcasters with access to this fund will be considered in the negotiations for any retransmission of their signals.
309.	The Commission also determines that the Corus stations licensed to serve Kingston and Peterborough meet the requirements for access to the DTH Fund since these stations are not affiliated with one of the large networks of multi-station groups. Accordingly, the Corus stations in Kingston and Peterborough qualify for assistance from this fund. This is not the case for the Corus station serving Oshawa, since this market has a population greater than 300,000. With respect to stations owned by TQS in smaller markets, the Commission considers that, since TQS has a network licence and a station serving the metropolitan area of Montréal, its stations do not meet the requirements for access to the fund.
310.	As described in detail above, the Commission will eliminate the requirement for DTH undertakings to distribute 13 small-market independently-owned stations. DTH undertakings will now be required to carry, as part of their basic service, at least one independently-owned station from each province, subject to the Commission's further determination with respect to the Atlantic region. Further, the Commission will also eliminate the requirement for DTH undertakings to provide equitable distribution of television stations owned by the large private ownership groups.
311.	Finally, the requirement for BDUs to obtain consent for distant signals will apply to licensed BDUs. BDUs that operate under an exemption order will not require consent from the broadcaster.
312.	The Commission notes that the current rules are set out in a combination of conditions of licence, regulation and agreements. The Commission is of the view that the above changes to the distant signal policy will be implemented ultimately through amendments to the BDU Regulations. The Commission further notes that some conditions of licence and agreements may expire before the new rules can be implemented. Therefore, if parties to existing agreements wish to propose mutually acceptable alternative solutions, the Commission will be prepared to consider applications for amendments to the relevant conditions of licence.
	U.S. 4+1 signals
313.	As noted above, both DTH undertakings and terrestrial BDUs have been authorized to distribute a second set of U.S. 4+1 signals, subject to program deletion requirements that have generally been suspended as a result of payment of compensation to broadcasters and/or other measures.
314.	The CAB submitted that the impact of the distribution of these signals is three times greater than the compensation now paid for that distribution. The CAB estimated the impact overall at $11 million for the year 2005/2006.
315.	CTVgm and Canwest, in their final written submission, requested that the Commission simply prohibit the distribution of the second set of U.S. 4+1 signals. They submitted that BDUs could drop distant Canadian signals in favour of U.S. signals with little risk since much of the most popular prime-time programming would still be available to viewers through the U.S. signals.
316.	The Commission considers that prohibiting the distribution of the U.S. signals would not be in the interest of Canadian subscribers. Nevertheless, the Commission recognizes that these signals may have a significant negative impact on the revenues of Canadian OTA broadcasters.
317.	In light of the above, the Commission will authorize BDUs to make a second set of U.S. 4+1 signals available to the subscriber, only when that subscriber also receives at least one signal, originating from the same time zone as the U.S. signals, of each large multi-station Canadian broadcasting group. For example, if a Vancouver BDU wishes to provide a subscriber with the U.S. 4+1 signals from Boston, the subscriber must also receive at least one eastern time zone signal of each large Canadian multi-station group.
318.	In this context, noting that the U.S. 4+1 signals are English-language signals, a large multi-station group will be defined as an entity licensed to operate in several provinces with a potential reach of more than 70% of the English-language audience.
319.	The Commission notes that any disputes regarding the distribution of a second set of U.S. 4+1 signals will be subject to the Commission's policies regarding dispute resolution.
	Simultaneous substitution
320.	During the Proceeding, some parties alleged that cable BDUs were not complying with the Commission's policy with respect to simultaneous substitution. In this regard, the Commission has not received evidence to suggest a systemic problem.
321.	However, some complaints have been filed in recent years regarding the non-substitution of HD signals. In this regard, the Commission reminds parties that its policies and regulations with respect to simultaneous substitution remain in effect and that requirements for such substitution will continue into the digital environment, and will apply to HD signals in accordance with the framework elaborated in Broadcasting Public Notice 2003-61.
	Fee for carriage
	Issues
322.	In Broadcasting Notice of Public Hearing 2007-10-3, the Commission announced that it was expanding the scope of the BDU and discretionary service review to include consideration of a fee-for-carriage (FFC) for OTA television stations. The Commission noted the importance of these stations in the creation of Canadian programming as well as the impact that any such fee could have on BDUs, BDU subscribers and discretionary services. The Commission also asked parties advocating an FFC for supporting details, assumptions and rationale.
323.	The issue of an FFC for OTA stations was addressed by the Commission during its review of OTA television policy in 2006.²⁹ In the policy decision resulting from that proceeding,³⁰ the Commission denied an FFC for the following reasons:
	it was not convinced that the evidence supported a permanent decline in the profitability of OTA sector;
	consumer acceptance of any fee had not been addressed sufficiently in order to assess the ultimate impact on the system; and
	the Commission had particular concerns with respect to the impact that a fee may have on subscribers' take-up of specialty services.
	In the absence of reliable and persuasive data, the Commission was not convinced that the introduction of an FFC would result in a net benefit to the broadcasting system, both in terms of increased Canadian programming expenditures and the availability of Canadian programming services.
324.	At the 8 April 2008 public hearing, most OTA broadcasters, with the exception of Rogers and Corus, argued in support of an FFC. The CBC maintained that it should also be entitled to an FFC since both Parliament and the Commission have understood that the only way it can fulfil its mandate is through additional revenue-generating mechanisms, such as advertising.
325.	Broadcasters maintained that the traditional economic model for broadcasting, which relies on advertising revenues, has drastically changed. These revenues are diminishing, and if OTA broadcasters are to continue to meet their obligations, new sources of revenue must be found.
326.	CTVgm and Canwest, in a joint presentation, proposed an FFC of $0.50 per signal per subscriber, per month. In a market with access to six or more Canadian OTA signals, this proposal would amount to an additional cost of $3.00 or more per subscriber per month. With respect to an FFC for French-language broadcasters, a variety of proposals were made. For instance, TQS, in its written submission, advocated two fees: $1.50 per month in the Quebec market and $0.75 per month in markets outside of Quebec with a strong francophone presence. TQS also proposed that a portion of the FFC be invested in Canadian programs, including local programs.
327.	CTVgm and Canwest proposed that any FFC only be made available if broadcasters meet monthly local programming requirements. However, they did not commit that the FFC, or any portion of it, would result in incremental spending on Canadian programming.
328.	BDUs, on the other hand, were strongly opposed to an FFC. They contended that the OTA broadcasters continue to be profitable and that they have restructured their businesses in order to respond to audience fragmentation. BDUs also noted that the Commission is removing the time limits on advertising for OTA stations and that the Commission has not had the opportunity to assess the impact that this change may have on OTA advertising revenues.
329.	BDUs made it clear that any FFC would be passed on to subscribers and argued that the negative consequences of an FFC would outweigh any benefits. Such negative consequences could include subscribers dropping Canadian specialty services, which would result in a lower contribution to the system on the part of these services.
330.	BDUs pointed out the significant advantages that OTA broadcasters receive, including access to spectrum, priority carriage by BDUs and simultaneous substitution. They noted that OTA broadcasters had not proposed giving up these advantages in exchange for an FFC.
	Commission's determinations
331.	The Commission has reviewed the record with respect to FFC and concludes the following.
332.	While OTA broadcasters have shown a recent decline in profitability, they, as other enterprises, might first look to their own business plans before making a request for increased revenue from the Commission. In the Proceeding, no business plans suggesting new sources of revenue were provided to the Commission. Neither the rationale for strategic initiatives by OTA broadcasters, such as recent major acquisitions, nor the basis for financing those initiatives or the impact of those initiatives on profitability were explained to the Commission at the public hearing.
333.	Further, there was no commitment given by OTA broadcasters that any fee the Commission might grant would be utilized in improving Canadian programming or, if it would be so utilized, how the monies might be spent.
334.	Thus, while the Commission remains concerned that each constituent element of the Canadian broadcasting system remains robust, it must base its decisions upon coherent, transparent and complete evidence. Although OTA broadcasters clearly feel strongly that they need the Commission's assistance in increasing their revenues, the Commission does not have conclusive evidence in order to make a favourable determination on this matter. Accordingly, the Commission rejects the request by OTA broadcasters for a general FFC.
	Support for local programming in smaller markets
	Commission's concerns regarding local programming
335.	As set out in section 3(1)(i)(ii) of the Act, the programming provided by the Canadian broadcasting system should be drawn from local, regional, national and international sources. In addition, sections 3(1)(d)(ii) and (iii) of the Act refer to objectives that are relevant to local programming, while section 3(1)(e) states that each element of the system shall contribute in an appropriate manner to the creation and presentation of Canadian programming.
336.	At the oral public hearing, the Commission heard evidence regarding the value placed by Canadians on their local television news programming. Two public opinion surveys were filed as part of the Proceeding. In a poll conducted by Nanos Research, 78% of respondents indicated that having local news was of high, or very high, value to them. In the second survey, conducted by Pollara, 76% of respondents considered local news to be very important.
337.	These findings regarding the importance of local programming and, in particular, of local news, are consistent with the Commission's determination set out in Broadcasting Public Notice 2008-4. As noted by the Commission in that public notice:
	It is from the local media that most Canadians receive the information that is critical to their understanding of local, regional, national and international issues. Local media help to shape Canadian's views and to equip them to be active participants in the democratic life of the country.
338.	Canadians are increasingly turning to new media platforms as a source of information about their communities, their country and the world. However, as noted by the Commission in Broadcasting Public Notice 2008-4, these platforms largely offer content that was originally produced by, or using the resources of licensed radio or television stations, or newspapers. As a consequence, encouraging high quality, professionally-produced local programming on television will also benefit those who access this content through new media platforms.
339.	At the public hearing, as well as at other recent hearings relating to the acquisition of OTA services, the Commission heard evidence suggesting that both the quality and quantity of local programming available to Canadians have declined significantly over the past decade.
340.	Various parties expressed the concern that local news reporting has suffered as a result of a decrease in journalistic staff and the dependence of local stations on information and resources located in larger centres.
341.	The Canadian Media Guild (CMG) proposed that the Commission create a new source of funds for conventional broadcasters that could guarantee the continuation of local news and current affairs programming. Friends of Canadian Broadcasting expressed the view that OTA stations must "remain in an ongoing financial position to make a strong contribution to local programming, as well as expensive Category 7 programming, in particular drama."
342.	The Commission's own data demonstrate that private broadcaster spending on local programming has been flat since 1998. Between 1998 and 2007, the spending on local programming by English- and French-language commercial broadcasters increased by 22.8%. However, as the growth in the consumer price index (CPI) during this period was 22.1%, there was no real increase in local spending. This contrasts with spending on non-Canadian programming, which, after adjusting for CPI growth, increased by 61%, as well as spending on other Canadian programming, which increased by 8.3% over the same period. The data indicate an inability or unwillingness on the part of OTA broadcasters to invest in their local stations.
343.	The Commission has also examined broadcasters' spending on local programming by market size. In the six metropolitan markets with a population of over one million, spending on local programming, after adjusting for the CPI, has increased by 11.8% since 1998. However, in markets with a population of less than one million, local program spending has declined by 15.6% since 1998.
344.	From 1998 to 2007, the profit before interest and taxes (PBIT) margins for the private OTA sector declined from 11.1% to 5.2%. Over the same period, in metropolitan markets, the decline was from 15.9% to 9.2%, whereas in markets with a population of less than one million, the PBIT margins declined from 3.2% to -4.0%.
345.	It is clear that the business case for local OTA television has changed significantly through the expansion of Canadian and non-Canadian viewing choices offered by DTH undertakings, digital terrestrial BDUs and other digital media. This fragmentation of viewing and advertising revenues is a major reason for the increased consolidation of the industry over the past decade as the owners of OTA services have acquired more profitable specialty services and have explored ways to monetize viewing through the Internet and other new media platforms. However, one of the consequences of consolidation appears to have been that the larger ownership groups have achieved operating synergies through concentrating production resources in major centres, at the expense of smaller local markets.
346.	The Commission recognizes that this strategy may make sense from a business point of view, since stations in smaller markets are on average not profitable. However, the centralizing of resources also means that local viewers are offered less programming and fewer news stories that originate from within their communities.
347.	The situation is even more problematic in the French-language market, given its small size. The Commission's economic analysis on spending by private broadcasters on local programming in markets outside metropolitan areas reveals a clear disparity between English- and French-language stations. English-language stations in this group spend 38% more on local programming than French-language stations, on a per station, per capita basis. The greater difficulties facing broadcasters serving French-language markets became quite apparent during TQS's licence renewals, where the licensee's difficult financial situation and viewer dissatisfaction with the local news offered were clearly demonstrated.
348.	In the Commission's view, it is in the public interest for the Canadian broadcasting system to include healthy local stations that will enrich the diversity of information and editorial points of view. In particular, it is in the public interest that viewers in French-language markets are not disadvantaged by the smaller size of those markets. It also seems that local stations in all smaller markets are not capable of investing in local programming. Indeed, if present trends continue, it is highly likely that local television stations will either close or reduce even further the quality of local programming offered to viewers.
	Appropriate level of contribution by broadcasting distribution undertakings to Canadian programming
349.	The BDU Regulations generally require Class 1 and Class 2 BDUs, as well as DTH undertakings, to contribute 5% of their gross broadcasting revenues to Canadian programming.
350.	For Class 1 terrestrial BDUs, 2% of the 5% contribution may be directed to the support of the BDU's community channel. The balance must go to support Canadian programming through the CTF (at least 80%) or certified independent production funds (up to 20%).
351.	DTH undertakings do not operate community channels. As a result, their contributions are directed to the CTF (80%) and other certified independent production funds (20%). DTH undertakings must also contribute 0.4% of gross revenues to a fund assisting independently-owned local broadcasters. This amount may be deducted from the contribution to be made to certified independent production funds.
352.	The contribution level of 5% was first established, by condition of licence, for DTH undertakings in 1995. This contribution level was then applied to terrestrial BDUs and DTH undertakings in the BDU Regulations. Since that time, no changes have been made to the overall required contribution level.
353.	In 2007, the operating margin for licensed terrestrial BDUs (Classes 1, 2 and 3) was 40.2%; for DTH undertakings, the operating margin was 17.1%, resulting in an overall operating margin of 35.5%. In a letter sent to appearing interveners prior to the public hearing, the Commission set out an assumed distribution model and posed a number of questions relating to the model. One of the questions sought specific comment on "the appropriate size of the contribution by BDUs to the creation of new Canadian programming."
354.	At the public hearing, several interveners commented on this question and proposed that the contribution to Canadian programming by BDUs be increased from the current 5% of gross broadcasting revenues. Further, a number of these interveners proposed that increased contributions from BDUs be directed to improve the quality and/or quantity of local programming.
355.	The Commission determines that it would be appropriate to increase the required contribution to Canadian programming, by licensed BDUs, from 5% to 6% of gross revenues derived from broadcasting activities.³¹ Further, licensed terrestrial and DTH undertakings will be required to direct the additional 1% - estimated to be approximately $60 million in the first year - to a new fund designed to improve the quality of local programming in non-metropolitan markets. The details of the operation of the new fund, to be known as the Local Programming Improvement Fund (LPIF), are set out below. The Commission will introduce amendments to the BDU Regulations in order to implement the LPIF as quickly as possible.
356.	In establishing this new fund to support local programming, the Commission is conscious of the impact that it will have on licensed BDUs. While the precise impact will vary from undertaking to undertaking, the Commission estimates that the aggregate impact on BDUs will be to lower their overall operating margins - currently at approximately 35% - by no more than 1%.
357.	In light of the performance levels of the BDU sector and the benefits accruing to BDUs as a result of other changes being made to the regulatory framework, the Commission is of the view that there is no justification for BDUs to pass along any increased costs relating to the LPIF - estimated to be on average approximately $0.50 per month - to their subscribers.
358.	The Commission understands that BDUs serving the largest Canadian markets will be contributing to the LPIF but that the benefits in terms of improved local programming will be directly seen by viewers in smaller markets. In this regard, the Commission notes that one of the benefits from improved local programming is the ability of all stations to access stories produced in smaller markets and, as a result, to better reflect, in large markets, the lives of Canadians who live outside the major centres. In addition, greater investments in newsgathering resources in smaller markets provide broadcasters with a larger talent pool from which to draw. Therefore, the result of improved local programs in smaller markets should have the indirect benefit of better programming and increased revenues for the larger markets as well.
	Local Programming Improvement Fund
359.	The overall objectives of the LPIF are the following:
	to ensure that viewers in smaller Canadian markets continue to receive a diversity of local programming - particularly local news programming;
	to improve the quality and diversity of local programming broadcast in these markets; and
	to ensure that viewers in French-language markets are not disadvantaged by the smaller size of those markets.
360.	The fund will be made available to stations serving markets in which the population with a knowledge³² of the official language of the station (i.e., English or French) is less than one million. Accordingly, the metropolitan markets of Vancouver, Calgary, Edmonton, Toronto, anglophone Ottawa-Gatineau, and Montréal do not qualify, and stations serving those markets will therefore not qualify for funding from the LPIF.
361.	The LPIF will be funded through a contribution by licensed Class 1 terrestrial BDUs and DTH undertakings. The contribution will be 1% of the undertakings' gross revenues derived from broadcasting activities.
362.	In order to qualify for LPIF funding, stations must be providing a local programming service that, as of the date of this public notice, includes original local news. In the case of regionally produced programming such as that produced in Halifax for the Maritime provinces and in Sudbury for various northern Ontario communities, the producing stations may draw from the LPIF in order to improve service to all the communities within their region.
363.	In regard to the allocation of funds between the English- and French-language markets, the Commission recognizes the structural differences between these markets. French-language market broadcasters have lower advertising revenues and operate in a smaller market. Furthermore, current per capita spending on local programming in smaller sized French-language markets would require an additional 38% to reach the spending by English-language broadcasters in similar sized markets.
364.	The Commission is concerned, however, that even with additional financial support from the LPIF, the disparities between the two markets will be perpetuated. The Commission notes that section 3(1)(c) of the Act stipulates that "English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements." In order to ensure that viewers residing in French-language markets receive the same quality and diversity of local programming, particularly local news programming, the Commission determines that it would be appropriate to allocate one third of LPIF funding to broadcasters operating in smaller French-language markets and two thirds to those operating in English-language markets. The Commission estimates that this will result in an additional $20 million distributed among the private and public French-language broadcasters operating in French-language markets and will increase their spending on local programming by 46%. The balance of the LPIF, from which the English-language broadcasters would benefit, will amount to approximately $40 million and will result in a 33% increase in spending on local programming.
365.	The use of LPIF funding must be incremental to the station's current expenditures on local programming. For each qualifying station, the Commission will calculate the current base level of local programming expenditures by averaging the expenditures submitted in the station's annual returns for the broadcast years 2005/2006, 2006/2007 and 2007/2008. The resulting base level of expenditure on local programming will be adjusted annually in accordance with the CPI. The base level expenditures may also be subject to adjustments following the licence renewals of OTA stations.
366.	LPIF funds may be used to produce additional original local programming or to invest in improvements to the quality of existing local programming. Although all categories of local programming will qualify for LPIF funding, the Commission considers that priority should be given to local news and public affairs programs. Stations receiving LPIF funding must report annually to the Commission with an accounting of how the base level expenditures were allocated and a detailed accounting of how the incremental LPIF funds were spent.
	Public and community local broadcasters
367.	As set out in section 3(1)(m)(ii) of the Act, the programming provided by the CBC should "reflect Canada and its regions to national and regional audiences, while serving the special needs of those regions."
368.	In light of the objectives of the Act and the objectives that have been set for the LPIF, the Commission determines that public, as well as private, licensees should be entitled to receive LPIF funding, as long as they broadcast original local news programming. In making this determination, the Commission recognizes its responsibility to regulate and supervise the Canadian broadcasting system as a whole, which comprises public, private and community elements.
369.	The Commission also notes that many subscribers to BDUs are also viewers to local CBC stations. These viewers should share in the benefits that the LPIF will bring to local news and other local programming on CBC stations as well as to the commercial stations.
370.	The CBC has, over the past two decades, been unable to maintain - much less make significant improvements to - local television programming. Following its last licence renewal in 2000, ³³the CBC significantly reduced the quantity of local programming in markets across the country. The government, through its contributions to the CTF, has made earmarked funding available for the CBC to acquire independently produced priority programs such as drama. No such earmarked funding has been made available to support CBC-produced local programming. Further, in recommending a division between the private and public parts of the CTF,³⁴ the Commission recognized that in entertainment programming there are differing objectives. Private broadcasters are appropriately focussed on maximizing audiences while public broadcasters, through their mandates, must also consider public interest objectives. In news, however, no such difference in objectives exists. Therefore, additional resources allocated to both private and public local stations will serve the same objective - improved local service and a better, more accurate reflection of all Canadians.
371.	Accordingly, given the above-noted objectives of the LPIF, the Commission considers that the public interest would be best served through BDU contributions serving to improve the quality of local programming offered by both private and public OTA broadcasters.
372.	As with the private OTA broadcasters, the use of LPIF funding by the CBC-owned and operated stations must be incremental to each qualifying station's current expenditures on local programming. In this regard, in order for the Commission to calculate each station's current base level of local programming expenditures, the CBC must provide an accounting of the local programming expenditures for each qualifying station for each of the broadcast years 2005/2006, 2006/2007 and 2007/2008. The accounting of the expenditures and their certification by management of the CBC must be in accordance with the format set out in the Annual Return of Programming Undertaking Licensee form. The Commission expects that the CBC and the CBC's independent auditors will file this information in its upcoming licence renewal and will, in its applications for renewal, make commitments with regard to local programming in light of its access to the LPIF. Based on this information, the Commission will calculate the base level of expenditures, which will be adjusted annually in accordance with the CPI.
373.	CBC-owned and operated stations receiving LPIF funding shall report annually to the Commission with an accounting of how the base level expenditures were allocated and a detailed accounting of how the incremental LPIF funds were spent.
374.	With respect to community television broadcasters, the Commission has decided to consider whether they should have access to the LPIF in the context of its review of the community media policy framework.
	Administration of the LPIF
375.	The Commission determines that the LPIF should be administered by an independent third party. Currently, the CAB administers the DTH Fund. As a result, the CAB is familiar with the issues and demands involved in managing this type of fund, and is well-positioned to develop a detailed plan for the administration of the LPIF, including a proposal as to who should administer this fund (i.e., the Fund Administrator).
376.	In order to ensure that the fund is operated in a manner consistent with the Commission's objectives; that fund allocations are fair and transparent; and that annual reports that are filed and made public provide all the necessary data to evaluate the success of the LPIF, the Commission will establish an LPIF oversight panel made up of three Commissioners. The role of this panel will be to review the following:
	the CAB's plans for administration of the LPIF;
	the disbursement of LPIF funding by the Fund Administrator;
	the continuing fulfilment by licensee recipients of their obligation to provide additional original and/or improved local programming; and
	the annual reports filed by the Fund Administrator and licensee recipients.
	The panel may also make recommendations to the Commission with respect to any matters that may arise as a result of these reviews.
377.	Accordingly, the Commission asks the CAB to provide, for Commission approval, a detailed plan for the administration of the LPIF. This plan, which must be filed no later than 19 January 2009, should include the following elements:
	Fund Administrator - the party that will administer the LPIF, and how this party meets the following desirable criteria:
	experience in fund management;
	knowledge of each of Canada's official language communities;
	familiarity with the BDU and OTA sectors; and
	ability to manage the LPIF with minimal cost.
	Annual reporting - the necessary information to be included in reports from the Fund Administrator, and from recipient licensees, to ensure that the use of LPIF funding is incremental to base level expenditures, that this funding has been allocated appropriately, and that it has been spent to further the objectives of the fund.
	Indicators of success - the necessary information to permit the Commission and the public to evaluate the success of the LPIF. Such indicators should be quantifiable and should include, but not be limited to, the following:
	evidence of audience success and viewer satisfaction;
	increases in local advertising revenues;
	increases in original local news stories;
	the number of local news stories that are picked up nationally;
	expansion of news bureaus;
	increases in the quantity of local programming broadcast;
	increases in per capita spending on local news in French-language markets;
	evidence of financial and other resource commitments made to local news over and above the required base expenditures and LPIF funding; and
	other recommended indicators as well as the weighting that should be applied to each indicator.
	New local licensees - guidelines on how new licensees or existing licensees with no history of providing local news programming could gain access to the LPIF.
	Surpluses - in the event that the full amount of the LPIF is not allocated in any given year, a plan for the carry-over and/or re-allocation of any resulting surpluses.
	Other issues - any other questions or concerns the CAB may have that require Commission guidance.
378.	Should the CAB fail to provide this plan by 19 January 2009, the Commission will initiate a process to solicit tenders from other interested parties.
379.	Annual reports from the Fund Administrator and from LPIF recipients must be filed with the Commission no later than 30 November of each year. The reports will account for fund activity during the previous broadcast year, and will be made public on the Commission's website.
	Evaluation of the LPIF
380.	In addition to requiring the submission of annual reports, the Commission will conduct, through a public process, a comprehensive review of the LPIF following its third year of operation. This public process will seek additional evidence in order to determine whether the fund is fulfilling its objectives. The quantifiable criteria to be used in this assessment could include the following:
	the number of original local news stories broadcast during the three years prior to the implementation of the LPIF and the number of original stories broadcast in each year of the fund's operation;
	evidence of increased audiences to local news and other local programming, including comparisons with audience data from before the implementation of the LPIF;
	evidence of increased resources allocated to local newsgathering;
	evidence of the increased diversity of local programming offered; and
	other quantifiable evidence of audience satisfaction, such as public opinion polling.
381.	Following this comprehensive evaluation, which will also take into account the status and impact of the transition by broadcasters from analog to digital transmission, the Commission will determine whether the LPIF should be maintained as originally defined, modified or discontinued.
	Implementation of the LPIF
382.	As noted above, the Commission will implement the LPIF as soon as possible through an amendment to the BDU Regulations. It is the Commission's intention that funding from the LPIF be available for the 2009/2010 broadcast year, subject to the further public process required to amend the BDU Regulations and barring any unforeseen intervening economic events.
383.	The Commission expects that eligible recipients will factor the availability of LPIF funds into the commitments they make as part of their upcoming licence renewals.
384.	The LPIF will function as a distinct fund. As noted above, the Commission has also determined that it will retain the DTH Fund. Each of the two funds will have its related but separate focus.
	Conclusion
385.	As noted elsewhere in this public notice, the majority of the changes to the Commission's frameworks for BDUs and programming undertakings will be implemented via amendments to the relevant regulations, most specifically the BDU Regulations, and will take effect on 31 August 2011.
386.	The Commission will issue proposed amendments to the BDU Regulations for public comment according to its normal procedures, in order to implement them on 31 August 2011. However, the Commission notes that a number of other processes are also contemplated in this public notice. For ease of reference, the Commission has summarized these follow-up and related proceedings in Appendix 4 to this public notice.
	Secretary General
	Related documents
	Proposed conditions of licence for competitive Canadian specialty services operating in the genres of mainstream sports and mainstream national news - Notice of consultation - Broadcasting Public Notice CRTC 2008-103, 30 October 2008
	Call for comments on a proposed framework for the sale of commercial advertising in the local availabilities of non-Canadian satellite services - Notice of consultation - Broadcasting Public Notice CRTC 2008-102, 30 October 2008
	Call for comments on a proposed regulatory framework for video-on-demand undertakings - Notice of consultation - Broadcasting Public Notice CRTC 2008-101, 30 October 2008
	Review of English- and French-language broadcasting services in English and French linguistic minority communities in Canada - Notice of consultation and hearing - Broadcasting Notice of Public Hearing 2008-12, 16 October 2008.
	Canadian broadcasting in new media - Notice of consultation and hearing - Broadcasting Notice of Public Hearing CRTC 2008-11, 15 October 2008
	Diversity of voices - Regulatory policy - Broadcasting Public Notice CRTC 2008-4, 15 January 2008
	New digital specialty described video programming undertaking; Licence amendments; Issuance of various mandatory distribution orders, Broadcasting Decision CRTC 2007-246, 24 July 2007
	Amendments to Exemption Order respecting cable broadcasting distribution undertakings that serve between 2,000 and 6,000 subscribers, with respect to the Commission's community channel policy, Broadcasting Public Notice CRTC 2007-125, 14 November 2007
	Review of the regulatory frameworks for broadcasting distribution undertakings and discretionary programming services, Broadcasting Notice of Public Hearing CRTC 2007-10, 5 July 2007, as amended by Broadcasting Notices of Public Hearing CRTC 2007-10-1 through 2007-10-7
	Determinations regarding certain aspects of the regulatory framework for over-the-air television, Broadcasting Public Notice CRTC 2007-53, 17 May 2007
	Linkage requirements for direct-to-home (DTH) satellite distribution undertakings, Broadcasting Public Notice CRTC 2007-52, 16 May 2007
	Distribution and linkage requirements for Class 1 and Class 2 licensees, Broadcasting Public Notice CRTC 2007-51, 16 May 2007
	Exemption order respecting certain third-language television undertakings, Broadcasting Public Notice CRTC 2007-33, 30 March 2007
	MuchMusic - Licence renewal, Broadcasting Decision CRTC 2006-380, 18 August 2006
	Regulatory framework for the licensing and distribution of high definition pay and specialty services, Broadcasting Public Notice CRTC 2006-74, 15 June 2006
	Review of certain aspects of the regulatory framework for over-the-air television, Broadcasting Notice of Public Hearing CRTC 2006-5, 12 June 2006
	Digital migration framework, Broadcasting Public Notice CRTC 2006-23, 27 February 2006
	Canal D - Licence renewal, Broadcasting Decision CRTC 2005-441, 31 August 2005
	Good commercial practices, Broadcasting Public Notice CRTC 2005-35, 18 April 2005
	Auditing of distributor subscriber information by programming services, Broadcasting Public Notice CRTC 2005-34, 18 April 2005
	Improving the diversity of third-language television services - A revised approach to assessing requests to add non-Canadian third-language television services to the lists of eligible satellite services for distribution on a digital basis, Broadcasting Public Notice CRTC 2004-96, 16 December 2004
	Talk TV - Licence renewal, Broadcasting Decision CRTC 2004-26, 21 January 2004
	Prime TV - Licence renewal, Broadcasting Decision CRTC 2004-18, 21 January 2004
	The Score - Licence renewal, Broadcasting Decision CRTC 2004-10, 21 January 2004
	The regulatory framework for the distribution of digital television signals, Broadcasting Public Notice CRTC 2003-61, 11 November 2003
	Licence renewal for CPAC; and issuance of a distribution order, Broadcasting Decision CRTC 2002-377, 19 November 2002
	Amendments to the Exemption order for small cable undertakings, Broadcasting Public Notice CRTC 2002-74, 19 November 2002
	Licence renewal for The Discovery Channel, Decision CRTC 2001-733, 29 November 2001
	Ownership of analog discretionary services by cable undertakings - amendment to the Commission's policy, Public Notice CRTC 2001-66-1, 24 August 2002
	A policy to increase the availability to cable subscribers of specialty services in the minority official language, Public Notice CRTC 2001-26, 12 February 2001
	Men TV - a new specialty channel, Decision CRTC 2000-464, 14 December 2000.
	Introductory statement - Licensing of new digital pay and specialty services, Public Notice CRTC 2000-171, 14 December 2000, as amended by Introductory statement - Licensing of new digital pay and specialty services - Corrected Appendix 2, Public Notice CRTC 2000-171-1, 6 March 2001
	Decision CRTC 2000-380, 11 September 2000
	Final revisions to certain exemption orders, Public Notice CRTC 2000-10, 24 January 2000, as corrected by Corrections to Public Notice CRTC 2000-10: Final revisions to certain exemption orders, Public Notice CRTC 2000-10-1, 27 March 2001
	Licensing framework policy for new digital pay and specialty services, Public Notice CRTC 2000-6, 13 January 2000
	Licences for CBC French-language television and radio renewed for a seven-year term, Decision CRTC 2000-2, 6 January 2000
	Licences for CBC English-language television and radio renewed for a seven-year term, Decision CRTC 2000-1, 6 January 2000
	Definitions for new types of priority programs; revisions to the definitions of television content categories; definitions of Canadian dramatic programs that will qualify for time credits towards priority programming requirements, Public Notice CRTC 1999-205, 23 December 1999
	Order respecting the distribution of the Aboriginal Peoples Television Network, Public Notice CRTC 1999-70, 21 April 1999
	Order respecting the distribution of the French-language television service of TVA Group Inc., Public Notice CRTC 1999-27, 12 February 1999, as amended by Order respecting the distribution of the French-language television service of TVA Group Inc., Public Notice CRTC 1999-27-1, 19 May 1999
	Guidelines respecting financial contributions by the licensees of broadcasting distribution undertakings to the creation and presentation of Canadian programming, Circular No. 426, 22 December 1997
	Religious broadcasting policy, Public Notice CRTC 1993-78, 3 June 1993
	This document is available in alternative format upon request, and may also be examined in PDF format or in HTML at the following Internet site: http://www.crtc.gc.ca

Appendix 1 to Broadcasting Public Notice CRTC 2008-100
All discretionary services by year of licensing and major ownership groups / owners
Pay services (excluding Category 2 services)
Service	Licensing year	Major ownership group
TMN (The Movie Network)	1983	Astral
MovieCentral (SuperChannel)	1983	Corus
Super Écran	1984	Astral
Family Channel, The	1987	Astral
Mpix (MoviePix)	1994	Astral
Encore Avenue (MovieMax)	1994	Corus
Super Channel (Allarco)	2004	Allarco
(Analog) Specialty services
Service	Licensing year	Major ownership group
Telelatino	1984	Corus
MuchMusic	1984	CTVgm
TSN (The Sports Network)	1984	CTVgm
Fairchild Television (Chinavision)	1984	Fairchild
MusiquePlus	1987	Astral
VRAK.TV	1987	Astral
CBC Newsworld	1987	CBC
YTV	1987	Corus
Réseau des Sports (RDS)	1987	CTVgm
Vision TV	1987	SVOX (not-for profit)
TV5	1987	Consortium de television Québec Canada
Weather Network, The / Météomedia	1987	Pelmorex
Talentvision (Cathay)	1992	Fairchild
Showcase	1994	Canwest
Slice (Life Network, The)	1994	Canwest
Canal D	1994	Astral
Réseau de l'information (RDI)	1994	CBC
CMT (Country Music Television)	1994	Corus
W Network	1994	Corus
Discovery Channel, The	1994	CTVgm
Bravo!	1994	CTVgm
History Television (H&E Network)	1996	Canwest
HGTV Canada	1996	Canwest
MusiMax	1996	Astral
Canal Vie	1996	Astral
Teletoon/Télétoon	1996	Astral
TVtropolis (Prime TV)	1996	Canwest
Treehouse TV	1996	Corus
Business News Network (BNN) (ROBTv)	1996	CTVgm
CTV Newsnet	1996	CTVgm
MTV Canada (Talk TV)	1996	CTVgm
Comedy Network, The	1996	CTVgm
CablePulse 24 (CP24)	1996	CTVgm
Canadian Learning Television (CLT)	1996	Corus
MuchMoreMusic	1996	CTVgm
Outdoor Life Network (OLN)	1996	CTVgm
SPACE (Space: The Imagination Station)	1996	CTVgm
Star! TV	1996	CTVgm
Odyssey Television Network (OTN)	1996	Peter Maniatakos
Le Canal Nouvelles (LCN)	1996	Quebecor
Sportsnet	1996	Rogers
Score, The	1996	Score Media
Asian Television Network (ATN)	1996	ATN
ZTélé (Canal Z)	1999	Astral
Historia (Canal Histoire)	1999	Canwest / Astral
Séries + (Canal Fiction)	1999	Canwest / Astral
Canal Evasion	1999	Serdy Direct
Food Network Canada	2000	Canwest
ARTV (Télé des Arts) ou artv	2000	CBC
Category 1 specialty services
Service	Licensing year	Major ownership group
Discovery Health	2000	Canwest
bold (Country Canada)	2000	CBC
Documentary (Canadian Documentary Channel)	2000	CBC
Travel + escape (CTV Travel)	2000	CTVgm
Book Television: The Channel	2000	CTVgm
Fashion Television Channel	2000	CTVgm
MTV2 (Razer)	2000	CTVgm
Réseau Info Sports	2000	CTVgm
Men TV	2000	Quebecor
Argent (LCN Affaires)	2000	Quebecor
Mystère	2000	Quebecor
Mystery	2000	Quebecor
Biography Channel, The	2000	Rogers
G4techtv	2000	Rogers / Shaw
Independent Film Channel, The	2000	Canwest
ichannel	2000	Stornoway
ONE: Canada's Mind, Body and Spirit Channel	2000	SVOX (not-for-profit)
OUTtv	2000	William Craig
Category 2 pay and specialty services (launched services only)
Service	Licensing year	Major ownership group
Cinépop	2000	Astral
ATN B4U Movies	2000	ATN
ATN Caribbean - CBN	2000	ATN
BBC Kids	2000	Canwest
Fine Living	2000	Canwest
AOV Adult Movie Channel	2000	Drive Publishing Inc.
AOV Maleflixxx	2000	1225520 Ontario Inc.
AOV XXX Action Clips	2000	1225520 Ontario Inc.
Movieola	2000	Movieola: Short Film Channel Inc.
ATN Alpha ETC Punjabi	2000	ATN
ATN ARY	2000	ATN
ATN Tamil Channel	2000	ATN
ATN Zee Gujarati	2000	ATN
Showcase Action	2000	Canwest
BBC Canada	2000	Canwest
Fox Sports World Canada	2000	Canwest
MovieTime (Lonestar)	2000	Canwest
National Geographic Channel	2000	Canwest
Showcase Diva	2000	Canwest
X-treme Sports	2000	Canwest
Leonardo World Canada	2000	Corus
Sky TG 24 Canada	2000	Corus
Video Italia Canada	2000	Corus
Discovery Kids	2000	Corus
Scream	2000	Corus
CourtTV Canada	2000	CTVgm
ESPN Classic Canada	2000	CTVgm
Leafs TV	2000	CTVgm
MuchLoud	2000	CTVgm
MuchMoreRetro	2000	CTVgm
MuchVibe	2000	CTVgm
NHL Network, The	2000	CTVgm
PunchMuch	2000	CTVgm
Raptors NBA TV	2000	CTVgm
TV Land	2000	CTVgm
Animal Planet	2000	CTVgm
Discovery Civilization Channel	2000	CTVgm
RTVi+	2000	Ethnic Channels Group
Festival Portuguese Television	2000	Frank Alvarez
DejaView	2000	Canwest
All TV	2000	Jan Sung Lee
ERT sat Canada	2000	Peter Maniatakos
SSTV	2000	Ravinder Singh Pannu
BPM:TV	2000	Stornoway
Pet Network	2000	Stornoway
Hustler Channel, The	2000	Stuart Duncan
Red Light District TV	2000	Stuart Duncan
CGTV Canada	2000	Stuart Media
Tamil Vision	2000	Tamil Vision
HPItv	2000	Woodbine Entertainment Group
Drive-In Classics	2001	CTVgm
SexTV: The Channel	2001	CTVgm
Bite Television	2001	Glassbox Television
Persian Vision	2001	M.S. Amiri Davanni
Salt and Light Catholic Media Foundation	2001	Not-for-profit Foundation
Tamil One	2002	Subanasir Vaithilingam
Avis de recherche	2002	Vincent Géracitano
Armed Forces Network, The	2002	Dieter Kohler
Auto Channel, The	2002	Dieter Kohler
Cult Movie Channel, The	2002	Dieter Kohler
Silver Screen Classics	2003	1490525 Ontario Inc.
Wild TV	2003	Dieter Kohler
1+1 International	2003	Ethnic Channels Group
ABU Dhabi TV	2003	Ethnic Channels Group
Mabuhay Channel, The	2003	Ethnic Channels Group
RTVi	2003	Ethnic Channels Group
SBTN	2003	Ethnic Channels Group
HTB Canada	2003	HTB Canada
IDNR-TV - Natural Resources Television	2003	IDNR-TV Inc.
KBS World	2003	Seabridge Media
ATN Aastha	2004	ATN
ATN Bangla	2004	ATN
ATN Zee Cinema	2004	ATN
ATN-NDTV	2004	ATN
ATN B4U Music	2004	ATN
ProSiebenSat.1 Welt	2004	Ethnic Channels Group
Israeli Network	2004	Ethnic Channels Group
ITN - Iran TV Network	2004	Ethnic Channels Group
Oasis HD	2004	High Fidelity HDTV
Treasure HD	2004	High Fidelity HDTV
World Fishing Network (WFN TV)	2004	Insight Sports
TFN - The Fight Network	2004	Mayhem Media Corp
Nuevo Mundo TV	2004	NMTV Inc.
HARDtv	2004	William Craig
Discovery HD Theatre	2005	CTVgm
Equator HD	2005	High Fidelity HDTV
Rush HD	2005	High Fidelity HDTV
GOL TV (The Soccer Net)	2005	Insight Sports
Les idées de ma maison	2005	Quebecor
Prise 2	2005	Quebecor
Christian Channel, The	2005	SVOX (not-for-profit)
ATN - Asian Sports Network	2006	ATN
TLN en Espanol	2006	Corus
Cosmopolitan Television	2007	Corus
TELETOON Rétro	2008	Corus/Astral
Pay-per-view (PPV) services (including direct-to-home (DTH) PPV)
Service	Licensing year	Major ownership group
Shaw Pay-per-view (PPV)	1991	Shaw
Viewer's Choice Canada (PPV)	1991	Astral
Viewer's Choice Canada (DTH PPV)	1995	Astral
Canal Indigo (PPV and DTH PPV)	1995	Quebecor
Rogers Sportsnet (DTH PPV)	1995	Rogers
Shaw Pay-per-view (DTH PPV)	1995	Shaw
Rogers Sportsnet (PPV)	1996	Rogers
Bell TV (DTH PPV)	1999	BCE
Breakaway (PPV and DTH PPV)	2000	Breakaway
Bell TV (PPV)	2000	BCE
SaskTel (PPV)	2005	Saskatchewan Telecommunications
Bell TV (PPV)	2007	BCE
Video-on-demand services (approved; some have not yet launched)
Service		Licensing year
Cogeco		2000
Rogers on Demand		2000

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Broadcasting Public Notice CRTC 2008-100

Regulatory policy

Regulatory frameworks for broadcasting distribution undertakings and discretionary programming services

Table of contents

Paragraph

Introduction

Background

The Canadian broadcasting system

Need for a new regulatory framework

Calibrating the role of broadcasting distribution undertakings and the programming sector

Key elements of the Call for comments

Regulatory framework for broadcasting distribution undertakings

Basic service - Terrestrial broadcasting distribution undertakings

Issues

Commission's determinations

Basic service - Direct-to-home undertakings

Issues

Commission's determinations

Access rules for Canadian programming services

Issues

Commission's determinations

Access rules for high definition pay and specialty services

Access rules for minority-language services

Issues

Commission's determinations

Access rules for unrelated Category B, exempt and pay audio services

Issues

Commission's determinations

Preponderance of Canadian programming services

Issues

Commission's determinations

Packaging requirements

Issues

Commission's analysis

Single-point-of-view religious services

Commission's determinations

Third-language services distributed by broadcasting distribution undertakings

Issues

Commission's determinations

New forms of advertising available to broadcasting distribution undertakings

Advertising in local availabilities of non-Canadian services

Issues

Commission's determinations

Issues relating to dispute resolution

Issues

Commission's determinations

Signal sourcing and transport

Current Commission requirement to receive services from a licensed satellite relay distribution undertaking

Possibility of exempting satellite relay distribution undertakings

Relevance of existing restrictions on terrestrial relay distribution undertakings

Responsibility for the cost and transport of pay and specialty services

Licence classes and exemptions for broadcasting distribution undertakings

Issues

Commission's determinations

Other issues relating to broadcasting distribution undertakings

Elimination of the basic band requirement

Basic service buy-through provisions

Elimination of section 17(5) of the Broadcasting Distribution Regulations

Customer service standards

Distribution of audio services

Elimination of sections 18(8) to 18(10) of the Broadcasting Distribution Regulations

Elimination of Part 5 of the Broadcasting Distribution Regulations

Direct-to-home community channels

Distribution of community media undertakings

Withholding of signals during a dispute

Commercial relationships - Affiliation agreements

Commercial relationships - Audit rights

Commercial relationships - Notice of channel realignment

Inside wire

Elimination of section 25 of the Broadcasting Distribution Regulations

Standard authorizations

Regulatory framework for pay and specialty programming undertakings

Authorization of non-Canadian services

Issues

Commission's determinations

Genre exclusivity - Canadian services

All discretionary services by year of licensing
and major ownership groups / owners