CRTC Communications Monitoring Report

2012

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2.0 The CRTC, policies, and regulation

2.1 The CRTC

The CRTC is an independent public authority in charge of regulating and supervising Canadian broadcasting and telecommunications. It serves the public interest and its powers and jurisdiction are set out in the Acts. The CRTC reports to Parliament through the Minister of Canadian Heritage. The Governor in Council may issue directions of general application to the Commission on matters related to the telecommunications, broadcasting, or regulatory policy objectives set out in the Acts.

The components of broadcasting policy set out in section 3 of the Broadcasting Act are directly or indirectly tied to the cultural, social, political, and economic fabric of Canada, while those of the telecommunications policy set out in section 7 of the Telecommunications Act are tied to the country’s social and economic fabric.

Access to Canadian content, particularly its creation and availability to Canadians, is the underlying principle of the broadcasting objectives. Canadian content must not only exist, it should also be available to all Canadians both as participants in the industry and as members of the audience. To achieve the objectives of the Broadcasting Act, the Commission is guided by the regulatory policy objectives set out in subsection 5(2) of that Act, which requires the Commission to regulate and supervise the broadcasting system in a flexible manner that, among other things, takes into account regional concerns, is adaptable to technological developments, and facilitates the provision of broadcasting and Canadian programs to Canadians.

Pursuant to the Telecommunications Act, the Commission strives to ensure the provision of reliable and affordable telecommunications services of high quality accessible to both urban and rural area customers, to foster facilities-based competition, to provide incumbents with incentives to increase efficiencies and be more innovative, and to adopt regulatory approaches, that foster increased reliance on market forces and ensure that regulation, when required, is efficient and effective.

Since December 2006, the Commission has applied the Policy Direction in the exercise of its powers and performance of its duties under the Telecommunications Act. The Policy Direction mandates the CRTC to rely on market forces to the maximum extent feasible and, when regulating to do so in a manner that is efficient, proportionate to the purpose of regulation, and interferes with market forces to the minimum extent necessary. The Policy Direction specifies criteria that must be met by any new regulatory measure. The Policy Direction further directs the CRTC to adopt operational practices that promote more efficient, informed, and timely regulation, where required.

In addition to implementing the policy objectives in its governing legislation, the Commission also seeks to ensure that its regulatory frameworks for the Canadian broadcasting and telecommunications industries are keeping pace with emerging technologies. In all of its activities, the Commission is guided by four basic principles: transparency, fairness, predictability, and timeliness. Consequently, it endeavours to make and publish its decisions promptly and with a clear rationale. To further the transparency of its processes, the CRTC prepares each year (a) a summary of its activities related to the Canadian broadcasting and telecommunications industries, and (b) its three-year work plan in consultation with industry stakeholders. These documents are available to the public on the CRTC’s website: http://www.crtc.gc.ca/eng/publications.htm

2.2 Regulatory oversight of broadcasting and telecommunications

Overview

The Commission uses a variety of means to exercise its regulatory powers. Under section 6 of the Broadcasting Act, the Commission has the power to establish policy guidelines and statements. These policy guidelines and statements are periodically reviewed to ensure that they are current. When reviewing the guidelines and statements, the Commission consults with the industry and the public by holding public proceedings, which can include calls for comments. The Commission also has the power, pursuant to the Broadcasting Act, to make regulations3 respecting the Canadian broadcasting industry. Under subsection 9(1) of that Act, the Commission has the authority to establish classes of licence and to impose conditions of licence. To achieve the Canadian broadcasting policy objectives set out in the Broadcasting Act, the Commission imposes conditions of licence when it issues a licence and amends these conditions as necessary when renewing the licence.

Pursuant to section 47 of the Telecommunications Act, the Commission must exercise its powers and perform its duties under that Act with a view to implementing the telecommunications policy objectives set out in section 7 and ensuring that Canadian carriers provide telecommunications services at rates that do not discriminate unjustly or accord any undue preference4, as well as, in accordance with any order made by the Governor in Council or any standards prescribed by the Minister of Industry5. In addition to regulating the rates, terms and conditions under which telecommunications services are provided, the Commission has the power to forbear from regulating telecommunications services or classes of service where it finds, among other things, that there is sufficient competition to protect the interests of users6.

The Commission fulfils its broadcasting and telecommunications regulatory and supervisory responsibilities by means of a number of interrelated activities, which include:

  1. establishing, monitoring, assessing and reviewing, where appropriate, regulatory frameworks to meet its policy objectives;
  2. implementing procedures for the efficient and effective resolution of competitive disputes; and
  3. making determinations on industry mergers, acquisitions and changes of ownership in the industry.

The Commission also monitors the programming and financial obligations of broadcasting undertakings to ensure compliance with regulations and conditions of licence.

Regulatory framework within a competitive environment

In exercising its statutory powers under the Acts and predecessor legislation, the Commission has, where feasible, gradually and in an orderly manner opened up monopoly-based markets to competition to allow consumers multiple means of receiving programming services that include not only traditional cable companies but also satellite, wireless and telephone companies. In Public Notice 1997-25, the Commission established the conditions of Class 1 undertaking fees.7 In the process of opening the BDU market to competition, the Commission has implemented self-regulatory mechanisms in the broadcasting industry where appropriate.

Similarly, since the early nineties, the Commission has moved toward greater deregulation of the telecommunications market. In Telecom Decision 94-19, the Commission established a three-step process by which it could determine whether a telecommunications market is or is likely to become competitive for the purpose of considering forbearance applications.8

Since 1994, the Commission has forborne, in large part, from regulating a number of telecommunications services including mobile services, retail Internet services, long distance and international services, various data and private line services, terminal equipment and inside wiring, satellite services and services provided by non-dominant carriers. In 2006, the frameworks for the forbearance from regulating retail local exchange services were established. The Forbearance Order amended the Commission’s framework established in Telecom Decision 2006-15 for forbearing from regulating retail local exchange services. In the HSDS Decision, the Commission established a framework for forbearing from regulating high-speed DNA services and MWS. In this decision, the Commission also forbore from regulating Bell Canada’s high-speed DNA services in a number of wire centres and from regulating the company’s MWS in the Toronto, Montréal and Ottawa census metropolitan areas.

Regulatory framework relating to vertical integration

In Broadcasting Regulatory Policy 2011-601 (the Vertical Integration Policy), the Commission established its regulatory framework for vertical integration. Vertical integration refers to the ownership or control by one entity of both programming services, such as conventional television stations, or pay and  specialty services, as well as distribution services, such as cable systems or direct-to-home (DTH) satellite services. Vertical integration also includes ownership or control by one entity of both programming undertakings and production companies. The Commission’s objective was to ensure that consumers continue to benefit from a wide choice of programming in a broadcasting system where programming and distribution have become increasingly integrated.

The Commission currently permits conventional television stations and pay and specialty services to acquire exclusive rights to programs since these services are offered to all cable systems and DTH satellite distributors. This ensures that most Canadians have access to these services. In the policy, the Commission decided that programming designed primarily for television cannot be offered on an exclusive basis to a mobile or retail Internet access service. This approach ensures that customers will not have to subscribe to several distributors in order to view the most popular programming.

The Commission recognized that, in today’s communications environment, Canadians expect to be in control of what they watch and that their expectations are likely to be heightened with the ongoing transition to digital technology.

The Vertical Integration Policy set out a number of decisions designed to ensure fair treatment for independent broadcasting distribution and programming services that must compete against strong vertically integrated competitors, protection of commercial information, and timely resolution of disputes between parties in the Canadian broadcasting system. The Commission set out a code of conduct for commercial arrangements and interactions. This code set out general objectives to govern commercial arrangements between broadcasting distribution undertakings, programming services and new media undertakings.

Social and consumer issues  

i) Closed captioning quality standards

In Broadcasting Public Notice 2007-54, the Commission set out a new policy with respect to closed captioning that applies to all television licensees.

English- and French-language broadcasters are required to caption 100% of their programs over the broadcast day, with the exception of advertising and promos. This requirement maybe subject to exceptions that take into account instances, but not patterns, of equipment/technical malfunctions and human errors that are beyond a broadcaster's control, or circumstances beyond a broadcaster's control where captioning may not be available.

The Commission was not prepared to impose specific obligations with respect to the captioning of third language programming at that time. However, the Commission encouraged broadcasters, particularly those that broadcast in third languages that use the Western alphabet, to work on solutions for making third-language programming more accessible, and to caption third-language programming whenever possible.

The Commission reiterated in Broadcasting and Telecom Regulatory Policy 2009-430 (the Accessibility Policy) its directive for the broadcasting industry to establish English- and French-language working groups to find solutions to closed captioning problems that had been highlighted by the users of closed captioning.

In late summer 2011 the Commission published English- and French-language closed captioning quality standards for comment and in the winter of 2011/2012, approved quality standards for French-language closed captioning (Broadcasting Regulatory Policies 2011-741 and 2011-741-1). In June 2012 the Commission approved quality standards for English-language closed captioning (Broadcasting Regulatory Policy 2012-362). The quality standards will come into effect 1 September 2012.

ii) Described video working group

In the fall of 2011, the Commission received the Final Report (the Report) from the Described Video Working Group (DVWG), which was created pursuant to the 2009 Accessibility Policy with the mandate to develop recommendations, common practices and other solutions for improving the accessibility and promotion of described programming. The DVWG consists of representatives from the Broadcasting Industry and disability community.   The Report described activities and timelines related to:

The Commission approved the Report and directed the DVWG to report back by the end of May 2012 on its progress on all activities.

iii) National Wireless Consumer Code

In the winter of 2011/2012, the Commission initiated a process to determine if the conditions in the Canadian wireless market have changed sufficiently to warrant Commission intervention with respect to retail wireless services.  It is expected that a Commission decision on this matter will be issued in the summer of 2012.  In its last annual report, the Commissioner for Complaints for Telecommunications Services (CCTS) reported that complaints about wireless services now represent 62% of all complaints received in 2010-2011, up from just 31% in 2007-2008. For the past two years, there were more complaints about wireless services than all other complaints combined.

Dispute resolution

For the purpose of this report, Formal dispute resolution files consist of applications submitted by a party under Part I of the CRTC Rules of Practice and Procedure and staff-assisted mediations, in which a formal request has been made by an outside party and this has led to an in-person staff led mediation.  Informal disputes consist of all other staff interventions triggered by a request – written or oral - from an outside party. In previous years, the above-described staff-assisted mediations were included in informal disputes.

For the twelve-month fiscal period ending 31 March 2012, the Commission’s Broadcasting ADR group commenced with one outstanding formal dispute resolution file from the previous fiscal period and opened four new files under Part I of the CRTC Rules of Practice and Procedure. All were undue preference/disadvantage files dealing with significant matters raised by the changing dynamics of services and platforms as the broadcasting industry continues to transition to a digital environment. There remained two dispute files outstanding at the end of the period, of which one was received in February 2012 and one was received in March 2012.  In addition, there were four further undue preference/disadvantage files pertaining to similar matters which were processed by the Distribution Regulatory Policy group, one of which remains active and, to date, unresolved.

During this same period, the ADR group assisted parties in 3 Formal mediations and 9 informal staff interventions. All 12 of these cases were concluded and disposed of in 2011/12 and none are currently on-going. As expected, the majority of matters dealt with informally concerned subject matters related to changing platforms, packaging arrangements, and rates issues in an environment of changing commercial and regulatory realities, particularly as these applied to a more vertically integrated broadcasting sector.  Disputes concerning these situations are expected to continue in the coming year.

Statistical information - Regulatory oversight of broadcasting and telecommunications

Table 2.2.1 Broadcasting complaints by sector, by issue
  2007-08 2008-09 2009-10 2010-11 2011-12
Complaints
received
Referrals
to
CBSC
Complaints
received
Referrals
to
CBSC
Complaints
received
Referrals
to
CBSC
Complaints
received
Referrals
to
CBSC
Complaints
received
Referrals
to
CBSC
Radio
Abusive comment1 11 - 26 10 11 - 35 5 38 3
Adult content 8 3 19 11 8 3 13 5 14 6
Alcohol advertising - - 6 - - - - - 1 -
Gender portrayal - - 1 1 - - - - 5 4
Offensive comment2 89 30 397 308 89 30 220 100 258 95
Offensive language3 24 8 40 23 24 8 296 266 22 9
Conventional television
Abusive comment 5 1 39 5 5 1 26 - 30 2
Adult content 84 34 111 47 84 34 52 8 56 11
Alcohol advertising 4 - 17 1 4 - 4 - 8 -
Gender portrayal - - 5 2 - - 2 - 9 -
Offensive comment 107 6 455 61 107 6 135 22 217 43
Offensive language 34 14 51 20 34 14 41 19 29 3
Television violence 40 9 85 24 40 9 84 14 76 14
Specialty channels
Abusive comment 2 - 10 - 2 - - - 1 -
Adult content 32 14 82 39 32 14 31 10 23 12
Alcohol advertising 1 - 1 - 1 - - - - -
Gender portrayal - - - - - - - - 1 -
Offensive comment 12 2 212 202 12 2 19 5 161 87
Offensive language 7 2 32 23 7 2 13 6 7 5
Television violence 14 5 20 14 14 5 21 5 18 10
Pay television and pay-per-view services
Abusive comment - - - - - - - - - -
Adult content 4 - 402 1 4 - 32 - 3 -
Alcohol advertising - - - - - - - - - -
Gender portrayal - - - - - - - - - -
Offensive comment - - 2 - - - - - - -
Offensive language - - - - - - - - - -
Television violence - - - - - - - - - -
Subscription radio (Satellite)
Abusive comment - - - - - - - - - -
  1. Where a complaint alleges that hatred or contempt was incited on-air against one of the groups identified in the television, radio, or specialty regulations.
  2. Where a complaint alleges offensive humour or other comments that do not fall under the "abusive comment" provision.
  3. Where a complaint alleges offensive language in song lyrics or in spoken word.

Source: CRTC Correspondence Tracking System. (The Rapids tracking system counts multiple contacts from the same client on the same complaint as separate units. The actual number of complaints received should therefore be slightly lower.)

Table 2.2.2 Number of contacts by public
  2007-08 2008-09 2009-10 2010-11 2011-12
Broadcasting related enquiries 14,594 7,131 5,747 6,261 5,829
Broadcasting complaints 5,581 11,851 12,740 10,813 12,419

Source: CRTC Correspondence Tracking System (The Rapids tracking system counts multiple contacts from the same client on the same complaint as separate units, therefore the actual number of complaints received should be slightly lower.)

Table 2.2.3 Complaints handled by the CBSC
  2007-08 2008-09 2009-10 2010-11
Files handled by the CBSC 1,498 1,781 2,035 8,870
Referred by the CRTC 979 1,045 761 496

Source: CBSC annual reports

Table 2.2.4 Complaints handled by the ASC
  2006 2007 2008 2009 2010 2011
Complaints received by the ASC 1,040 1,445 1,119 1,228 1,200 1,809
Complaints about television ads 527 857 528 546 526 686
Percent of total complaints received 51% 59% 47% 4 % 44% 38%
Complaints about radio ads 73 52 56 64 67 85
Percent of total complaints received 7% 4% 5% 5% 5% 5%

Source: Ad complaints reports

Table 2.2.5 Telecommunications complaints handled by the CCTS
  2007-08 2008-09 2009-10 2010-11
Number of contacts 6,132 17,407 43,609 70,361
Complaints received by the CCTS 2,226 3,214 3,747 8,007
Percent related to wireless 31% 38% 52% 62%
Complaints concluded 1,662 3,003 3,522 7,732

Source: CCTS annual reports

Statistical Information - Dispute resolution

Table 2.2.6 Number of dispute files received
  Disputes/mediation Final Offer Arbitration/Expedite
2010/2011 2011/2012 2010/2011 2011/2012
Broadcasting 20 201 2 2
Telecommunications 25 30 2 2
Total 45 50 4 4

1. The Distribution Regulatory Policy group handled 4 of these files

Source: CRTC internal tracking

Table 2.2.7 Number of formal broadcasting dispute files received (2011/2012)
  Part I Applications Formal Mediations Informal Staff Interventions
Building access 0 0 0
Distribution/programming 81 3 9
Total 8 3 9

1. The Distribution Regulatory Policy group handled 4 of these files

Source: CRTC internal tracking

Table 2.2.8 Number of Telecommunications dispute resolutions (2011/2012)
  Formal mediations Informal disputes Total
Service / access availability 0 14 14
Service issues 0 11 11
Service cancellation 0 4 4
Accessibility 1 0 1
Total 1 29 30

Source: CRTC internal tracking

2.3 Contribution and spending regimes

The Commission uses a number of approaches to achieve the cultural, social and economic objectives set out in the Acts. One such method has been the establishment of contribution and spending regimes.

In 2011, broadcasting and telecommunications providers contributed $3.2 billion towards the achievement of these objectives. Approximately 95% of these funds were for cultural and programming initiatives under the Broadcasting Act and the remaining 5% were for the achievement of the social and economic objectives under the Telecommunications Act.

Contribution and spending regimes at a glance ($ millions)
  2010 2011 % Growth
CCD reported by commercial radio and audio services 46 54 17.2%
Television CPE 2,431 2,535 4.3%
BDU contributions to the creation and production of Canadian programming 368 382 3.9%
LPIF 101 107 5.8%
Subsidization of residential telephone in high-cost serving areas 165 154 -6.7%

Source: CRTC Data Collection

Statistical information: Contribution and spending regimes - Broadcasting

The following contribution and spending regimes are based on the 1 September 2010 to 31 August 2011 broadcast year. Refer to the broadcasting section of this report for additional statistical information. These charts do not reflect additional funding, incentives or contributions made by private institutions or government bodies towards the development and production of Canadian audio and visual content that are outside of the CRTC’s administrative scope and mandate.

Figure 2.3.1 2011 Contributions to CCD reported by commercial radio & audio services, $54 million

This pie chart shows the percentage of CCD contributions reported by commercial radio and audio services in 2011. Total 2011 contributions were $54 million. In the context of radio license renewals: 14%; New radio stations in their first license term: 52%; Related to tangible benefits: 33%.

Source: CRTC data collection

Figure 2.3.2 2011 Television CPE, $2.6 billion

This pie chart shows total CPE as a percentage of total CPE reported by the television sector in 2011. Total CPE reported is $2.6 billion: $1,013 million or 39% is related to specialty analog services; $149 million or 6% is related to digital 1 and 2 specialty services; $100 million or 4% is related to Pay, PPV and VOD services; $563 million or 21% is related to private conventional television; $710 million or 27% is related to CBC conventional television; and $76 million or 3% is related to other public and not-for-profit services.

* Approximation

Source: CRTC data collection

Figure 2.3.3 Contributions to the creation and production of Canadian programming by BDUs

These two pie charts show the percentage of total contributions to Canadian programming and local expression made by the BDU sector in 2010 and 2011, respectively.  Total contributions for 2010 were: 40% to CMF; 11% to other independent funds; 22% to LPIF; and 27% to local expression. Total contributions for 2011 were: 42% to CMF; 12% to other independent funds; 22% to LPIF; and 24% to local expression.

Source: CRTC data collection

Table 2.3.1 LPIF – Contributions and number of recipients

Year
Contributions
($ millions)
Number of recipients LPIF funding as a percentage of total recipients’ revenues (excluding the CBC/SRC)
Licensees Stations
2009-2010 100.7 16 79 10.8%
2010-2011 106.7 16 80 10.8%

Source: CRTC data collection

Figure 2.3.4 LPIF distribution by region and ownership group

These duo pie charts show LPIF distribution by region and by owner group for 2010 and 2011. For 2010:  Distribution in British Columbia and the Territories: 11.4%; Altantic Canada: 18.9%; Quebec: 21.2%; Ontario: 24.7%; Prairies: 23.8%.  Distribution by CTV: 23.6%; TVA: 6.5%; CBC 34.1%; Shaw: 8.7%; Rogers: 1.1%; Other: 26.0%.  For 2011:  Distribution in British Columbia and the Territories: 11.4%; Altantic Canada: 19.8%; Quebec: 21.4%; Ontario: 24.5%; Prairies: 22.8%.  Distribution by CTV: 22.3%; TVA: 6.1%; CBC 38.3%; Shaw: 7.6%; Rogers: 1.0%; Other: 24.7%.

These duo pie charts show LPIF distribution by region and by owner group for 2010 and 2011. For 2010:  Distribution in British Columbia and the Territories: 11.4%; Altantic Canada: 18.9%; Quebec: 21.2%; Ontario: 24.7%; Prairies: 23.8%.  Distribution by CTV: 23.6%; TVA: 6.5%; CBC 34.1%; Shaw: 8.7%; Rogers: 1.1%; Other: 26.0%.  For 2011:  Distribution in British Columbia and the Territories: 11.4%; Altantic Canada: 19.8%; Quebec: 21.4%; Ontario: 24.5%; Prairies: 22.8%.  Distribution by CTV: 22.3%; TVA: 6.1%; CBC 38.3%; Shaw: 7.6%; Rogers: 1.0%; Other: 24.7%.

Source: CRTC data collection

Statistical Information: Contribution and spending regimes – Telecommunications

Figure 2.3.5 Subsidy paid to LECs and the revenue-percent charge

This bar line chart shows the subsidy received by LECs in millions of dollars from 2007 to 2011:  219, 209, 182,165 and 154.  Contribution rates for the same period are also provided: 0.94%, 0.87%, 0.81%, 0.73% and 0.66%.

Sources: CRTC data collection and decisions

 



Notes:


[3] Radio Regulations, 1986; Television Broadcasting Regulations, 1987; Broadcasting Information Regulations, 1993; Broadcasting Licence Fee Regulations, 1997; CRTC Rules of Procedure; Broadcasting Distribution Regulations; Pay Television Regulations, 1990; Specialty Services Regulations, 1990. and in accordance with any order made by the Governor in Council or any standards prescribed by the Minister of Industry

[4] Subsections 27(1) and 27(2) of the Telecommunications Act

[5] Sections 8, 15 and 47 of the Telecommunications Act

[6] Section 34 of the Telecommunications Act

[7] BDUs are classified based on the number of subscribers as follows: Class 1 refers to BDUs with more than 6,000 subscribers, Class 2 includes BDUs that have between 2,000 and 6,000 subscribers and Class 3 encompasses BDUs with fewer than 2,000 subscribers.

[8] The three steps consisted of (a) identifying the relevant market; (b) determining whether the applicant has market power with respect to the relevant market; and (c) determining whether, and to what extent, forbearance should be granted.

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