In an important policy decision issued today, “The way forward – Creating compelling and diverse Canadian programming”, the CRTC announced ”significant changes to bring the CRTC’s regulations and Canadian television forward into the Age of Abundance”, where content is everywhere online and on TV.  Commission Chair Jean-Pierre Blais warned the audience for his speech today to the Canadian Club of Ottawa that the sheer length of the policy decision - 323 paragraphs - “illustrates how complex it is to delayer regulatory rules built over the past 50 years.”

Genre Exclusivity

The delayering includes eliminating the genre exclusivity that many Canadian services have relied on for years.  This was no surprise, as the CRTC had previously announced its intention to review the policy and asked for comment not only whether to eliminate it, but also the “earliest feasible timeframe” to do so.

By way of background, the Commission has in the past licensed must-carry “Category A” services – such as HGTV Canada, Bravo!, Sportsnet 360, and YTV – on a one-per-genre basis.  Genre exclusivity is intended to prevent ”head-to-head” competition for Category A services with each other, or with any other linear service in Canada.  Category A services have been insulated at least in part from competition with other Canadian services (may-carry Category B services, and Category C news and sports services).  The rules to authorize non-Canadian services for distribution in Canada have also prohibited “direct competition” with Canadian services as a condition of authorization.  The “must carry” and the genre protection privileges for Category A services were designed in large part to ensure that the services achieved enough revenues to meet their Cancon and related programming obligations, and thereby maximize their contribution to the creation of Canadian programming.

In a 2013 Discussion Paper commissioned by the CRTC, Broadcast consultant Peter Miller concluded that

Genre exclusivity cannot be considered ‘smart regulation’.  It has elements that make it internally contradicting, ambiguous, difficult to understand, costly to enforce, and it may possibly be just plain wrong-headed for today’s Canadian broadcast system.  [...] The CRTC is not required to ‘rely on market forces to the extent possible’ in its regulation and supervision of the Canadian broadcasting system. But in this instance there is much to be said for doing just that.

In today’s decision, the CRTC stated that in the “Age of Abundance”:

the genre exclusivity policy is no longer needed to ensure programming diversity between services and [the CRTC] is therefore eliminating this policy. [...] By eliminating this policy, the Commission is removing regulatory barriers so as to allow entry by new programming services, programming flexibility and greater domestic competition.

Genre exclusivity will be retained only in the conditions of licence (COLs) for the so-called 9(1)(h) services that benefit from a CRTC mandatory distribution order.  Such services include CBC News, The Weather Network, and the Aboriginal Peoples Television Network (APTN).  Limited genre protections also remain for mainstream sports services.

For all other Category A services, it remains to be seen how market forces of supply and demand will impact what has been a regulated and “exclusive” space.

The Commission has significantly “delayered” or revised regulatory requirements in a number of other areas, summarized below.

A.  Leveling the playing field for VOD (video-on-demand) services

A new category of ”hybrid” VOD services will be exempt from licensing.  These hybrid services would be available both over the closed facilities of a broadcasting distribution undertaking (BDU), and also delivered and accessed over the Internet.  Such VOD services would be able to offer exclusive content – just as exempt online-only services can do – as long as that content is available over the Internet to all Canadians without BDU subscriber authentication.

The CRTC has issued a call for comments on revisions to the VOD exemption order and standard conditions of licence for VOD services.  Comments are due April 27.

B.  Promotion and “discoverability” of Canadian programming

Promotional and marketing expenses for Canadian-made content

Independent broadcasters may use up to 10% of the amount they invest in programs for marketing and promotion, including payments to other broadcasters for paid promos.

Local Availabilities to Promote Canadian Programs

Local availabilities, or “local avails”, are the two minutes per hour of reserved advertising time in non-Canadian specialty channels.  Broadcast distributors in Canada contract with the non-Canadian channels to insert promotional materials in these avails.

Under the current regulatory regime, 75% of this time is made available to Canadian broadcasters to promote their services, to promote the community channel, and for unpaid Canadian PSAs.  25% has been available to broadcast distributors for information on and promotions for distributors’ services.

Going forward, at least 75% of local avails must be used to promote first-run, original Canadian programs.  The remaining 25% can be used to promote Canadian channels and broadcast distribution services.

C.  Funding models for Canadian-made programs

As exceptions to the CRTC’s standard Canadian program certification process – and subject to certain streamlined criteria – the CRTC is launching the following pilot projects:

Pilot project 1:  CRTC will recognize adaptations of best-selling novels by Canadian authors as Canadian live-action drama and comedy productions.

Pilot project 2:  CRTC will recognize Canadian live-action drama and comedy productions with a budget of at least $2 million per hour as Canadian productions.

D.  Cancon quotas

In its policy shift from “quantity to quality”, the CRTC is eliminating the daytime quotas for Cancon for local TV stations; the quota for prime time remains at 50%.  For specialty channels, 35% of all programs broadcast overall must be made by Canadians.  This sweeps away varied levels from 15% to 85%, depending on the service, and does away with a specific quota for prime time.

E.  Viewer Information:  Set-top boxes

Industry stakeholders are to form a working group to develop an audience measurement system based on STB data.  The group is to report back to the CRTC by June 10 on its progress on technical standards, privacy protections, a governance structure, and cost-sharing.

Privacy protection issues have long been raised in this area as a key concern.  The collection and sharing of viewer data has also received recent media coverage in the context of user commands to Smart TVs.  STB data collection, use and disclosure proposals can be expected to be watched closely by the Office of the Privacy Commissioner of Canada.

F.  National news services

Existing and new Canadian news services will have to meet additional regulatory criteria.  Going forward, they must broadcast an annual average of 16 hours per day, 7 days per week, of original programming.  95% of their programming must be drawn from specific news-oriented categories. They must also operate a live broadcast facility, and have news bureaus in at least 3 other regions.

Next Steps

The Commission has called for comments on the proposed exemption order for hybrid VOD services, and will be amending regulations and conditions of licence in further proceedings, to implement today’s policy decisions.

The Commission will also be issuing decisions on pick-and-pay (a la carte) programming and related issues in the coming days.