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CRTC takes action to ensure a wide choice of television programming on all platforms

OTTAWA-GATINEAU, September 21, 2011 — Today, the Canadian Radio-television and Telecommunications Commission (CRTC) announced a new framework for large integrated companies that will allow them to innovate and respond to new opportunities in a fast-changing environment. The CRTC is also establishing measures to eliminate the potential for these companies to harm their competitors or restrict consumer choice.

“Given the size of the Canadian market, there are benefits to integrating television programming and distribution services under the same corporate umbrella,” said Konrad von Finckenstein, Q.C., Chairman of the CRTC. “At the same time, we felt that some safeguards were needed to prevent anti-competitive behaviour. In particular, Canadians shouldn’t be forced to buy a mobile device from a specific company or subscribe to its Internet service simply to access their favourite television programs.”

Following its examination of consolidation in the broadcasting industry, the CRTC has decided to:

  • Prohibit companies from offering television programs on an exclusive basis to their mobile or Internet subscribers. Any program broadcast on television, including hockey games and other live events, must be made available to competitors under fair and reasonable terms.
  • Allow companies to offer exclusive programming to their Internet or mobile customers provided that it is produced specifically for an Internet portal or a mobile device. This includes supplementary programming such as behind-the-scenes video clips of a television program, as well as original content.
  • Adopt a code of conduct to prevent anti-competitive behaviour and ensure all distributors, broadcasters and online programming services negotiate in good faith. To protect Canadians from losing a television service during negotiations, broadcasters must continue to provide the service in question and distributors must continue to offer it to their subscribers.
  • Implement measures to ensure that independent distributors and broadcasters are treated fairly by large integrated companies. At least 25 per cent of specialty services1 distributed by a large integrated company must be owned by an independent broadcaster. In addition, broadcasters launching a new pay or specialty service must make it available upon request to all distributors as an individual service, even if a commercial agreement has not been finalized.

Finally, the CRTC strongly encourages television distribution companies to give Canadians more flexibility in choosing the individual services they want as part of their packages. The CRTC has called on Bell Canada, Quebecor Media, Rogers Communications and Shaw Communications to submit a report by April 1, 2012, detailing the steps they have undertaken to respond to consumer demands.

“Canadians enjoy watching programs online as it gives them the freedom to effectively pick and pay for what they want. They find it difficult to accept that their cable and satellite television providers do not offer similar choice and flexibility. If the industry fails to demonstrate that it has made significant strides in introducing consumer-friendly options, we will hold hearings on this issue in six months and take regulatory action,” Mr. von Finckenstein added.

Broadcasting Regulatory Policy CRTC 2011-601

The CRTC

The CRTC is an independent public authority that regulates and supervises broadcasting and telecommunications in Canada.

 

Note:

[1] Category B services

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Additional information on the CRTC’s code of conduct

The Canadian Radio-television and Telecommunications Commission (CRTC) has adopted a code of conduct to guide negotiations between broadcasters, broadcasting distributors and new media services. Parties should make every attempt to negotiate fair and reasonable terms for programming rights.

When it is in the public interest, the CRTC will help resolve disputes in a timely manner through mediation, final-offer arbitration or an expedited hearing. The CRTC will refer to its code of conduct to determine if a party has used its market power to engage in anti-competitive behaviour. During this time, broadcasters and broadcasting distributors may not act in a way that would deprive consumers of the programming or channels they already receive.

The code of conduct sets out the following matters that should be considered by parties as part of the negotiating process:

  1. A programming service, broadcasting distributor or new media service shall not require a party that it is contracting to accept terms or conditions for the distribution of programming on a traditional or ancillary platform that are commercially unreasonable, such as:
    1. requiring an unreasonable rate (e.g., not based on fair market value);
    2. requiring minimum penetration or revenue levels that force distribution of a service on the basic tier or in a package that is inconsistent with the package’s theme or price point;
    3. refusing to make programming services available on a stand-alone basis (i.e. requiring the acquisition of a program or service in order to obtain another program or service);
    4. requiring an excessive activation fee or minimum subscription guarantee;
    5. imposing, on an independent party, a most favoured nation clause or any other condition that imposes obligations on that independent party by virtue of a vertically integrated entity or an affiliate thereof entering into an agreement with any vertically integrated entity or any affiliate thereof, including its own.
  2. Where applicable, negotiating a wholesale rate for a programming service based on fair market value should take into consideration the following factors:
    1. historical rates;
    2. penetration levels and volume discounts;
    3. the packaging of the service;
    4. rates paid by unaffiliated broadcasting distributors for a programming service;
    5. rates paid for programming services of similar value to consumers;
    6. the number of subscribers that subscribe to a package in part or in whole due to the inclusion of the programming service in that package;
    7. the retail rate charged for the service on a stand -alone basis; and
    8. the retail rate for any packages in which the service is included.
  3. Where a broadcasting distributor includes related programming services in themed packages, it shall include all relevant non-related programming services in those packages.
  4. An independent Category A programming service shall, unless the parties agree otherwise, be included in the best available package consistent with its genre and programming.
  5. Where a broadcasting distributor provides its related programming services with access to multiple distribution platforms, it shall offer reasonable terms of access that are based on fair market value to non-related programming services.
  6. A programming service shall be given comparable marketing support by the broadcasting distributor as is given to similar or related services.