CRTC Calls for Comments on Conditions of Licence for TV, Specialty and On-Demand

The CRTC has called for comments on standard conditions of licence, expectations and encouragements for television stations, discretionary services (i.e., pay television and specialty services), and on-demand services (i.e., pay-per-view and video-on-demand services). These broad licensing categories, which consolidate virtually all types of television programming services, will be implemented at licence renewal.

The deadline for comments is 20 June 2024.

In March 2024, the Commission issued Broadcasting Regulatory Policies, setting out policy determinations from its review of the television system that was initiated by the Let’s Talk TV proceeding. The Commission stated its intention to streamline the licensing approach for television programming services by consolidating virtually all such services into the following three broad licensing categories:

• television stations (including over-the-air conventional and community television stations, and provincial educational television services);
• discretionary services (all pay television and specialty services, including those services, other than conventional television stations, granted mandatory distribution on the basic service
• on-demand services (i.e., pay-per-view  and video-on-demand services).
• Tthe appendices to the present notice, the Commission proposes standard conditions of licence, expectations and encouragements for each of the above-noted licensing categories.
• As stated in Broadcasting Regulatory Policy  OTA community television stations and provincial educational services will be licensed as television stations, with individual conditions of licence that differentiate these services from other television stations. Similarly, national news and mainstream sports services will be licensed as discretionary services, but will remain subject to the requirements set out in the appendix to Broadcasting Regulatory Policy 2015-436 (national news) and in Appendix 1 to Broadcasting Regulatory Policy 2009-562-2 (mainstream sports). As is currently the case, the Commission will have the option of imposing individual conditions of licence on particular services. The new licence categories will be introduced through the licence renewal process and will come into effect for each service at the beginning of its next licence term.

1. The proposed requirements implement certain of the policy determinations set out in Broadcasting Regulatory Policies , including those relating to:
   • the elimination of the genre exclusivity policy;^Footnote3
   • the unbundling of multiplexes^Footnote4 and restrictions on future multiplexes;
   • the implementation of the Wholesale Code;^Footnote5 and
   • improvements to the accessibility^Footnote6 of programming.
   • The Commission has also taken this opportunity to consolidate provisions that were similar but not identical in nature, to update the wording of current standard requirements, and to remove obsolete provisions.

Television stations are currently subject to the Television Broadcasting Regulations, 1987, and will remain subject to those regulations.

Specialty services (with the exception of national news services and mainstream sports services) are currently subject to theSpecialty Services Regulations, 1990 (the Specialty Services Regulations), whereas pay television services are subject to thePay Television Regulations, 1990 (the Pay Television Regulations). Licensees of PPV and VOD services are required, by condition of licence, to adhere to the Pay Television Regulations, with certain exceptions.

In fall 2016, the Commission intends to issue a notice of consultation to call for comments on a proposal to merge the Specialty Services Regulations and the Pay Television Regulations into one set of regulations to be known as the Discretionary Services Regulations, which the Commission expects will come into force on 1 September 2024. Discretionary services will be subject to the Discretionary Services Regulations upon their creation, whereas licensees of on-demand services will be required, by condition of licence, to adhere to those regulations, with any exceptions to be noted.

The Discretionary Services Regulations will include the majority of provisions already set out in the Pay Television Regulations and the Specialty Services Regulations, streamlined and modified as necessary to create a cohesive set of regulations. In creating this cohesion, the Discretionary Services Regulations intends to extend provisions allowing advertising to all discretionary services. The new regulations will also include existing provisions relating to undue preference and reverse onus, as well as provisions currently found in the Specialty Services Regulations relating to the technical requirements set out in theATSC Recommended Practice A/85: Techniques for Establishing and Maintaining Audio Loudness for Digital Television, published by the Advanced Television Systems Committee Inc. As a result, requirements relating to the above will be imposed on licensees of on-demand services through regulation rather than by condition of licence. For this reason, such requirements have been omitted from the proposed standard requirements for on-demand services set out in Appendix 3.

The Commission also intends to implement in the Discretionary Services Regulations its determinations relating to the exhibition of Canadian programming for discretionary services set out in Broadcasting Regulatory Policy 2015-86.

In light of the policy determinations set out in Broadcasting Regulatory Policy 2015-86, the separate designations of Category A and B pay and specialty services are no longer meaningful. With the exception of 9(1)(h) services, both types of service are offered to Canadians at their discretion, by subscription, as add-ons to their basic service. With the exception of provisions relating to the exhibition of Canadian programming, the broadcast of commercial messages and multiplexing, the standard requirements for those services are essentially identical. As a result, the requirements proposed in Appendix 2 eliminate the distinctions in the interest of streamlining. They also align these services with the policy determinations set out in Broadcasting Regulatory Policies 2015-86, 2015-96 and 2015-104, and with changes to be reflected in the Discretionary Services Regulations.

Given the similarities between PPV and VOD services, the regulatory approaches and requirements for these services have been generally consistent. However, the Commission maintained separate licensing frameworks for these services in light of their technological differences and their parallel but competitive evolution. While certain requirements for PPV services are harmonized, such as those relating to the broadcast of Canadian content, with those for VOD services, provisions relating to contributions to Canadian programming and to support for feature films have been historically different.

The requirements proposed in Appendix 3 would allow further harmonization between the two types of services and would align these services with the policy determinations set out in Broadcasting Regulatory Policies 2015-86, 2015-96 and 2015-104. The Commission also proposes to delete the current conditions of licence for PPV and VOD services relating to the following:

• requirements relating to the calculation and payment of the contribution to Canadian programming;
• the requirement to remit to the rights holders of all Canadian feature films 100% of revenues earned from the exhibition of these films;
• the broadcast of commercial messages; and
• the requirement to implement a public alerting system.

In regard to contributions to Canadian programming, licensees of PPV and VOD services are required, by condition of licence, to contribute 5% of their services’ gross annual revenues to independent production funds. However, the condition of licence for each type of service differs as to how the contributions are calculated and paid, and may not be consistent with those of other programming services.

The Commission proposes to continue authorizing licensees of on-demand services to calculate and pay their contributions as they currently do, but to delete the provisions setting out how contributions must be calculated and paid. The Commission would replace those provisions with the following definition of “gross annual revenues”:

“Gross annual revenues” refers to total revenues that are earned directly or indirectly for the distribution of any on-demand programming, including but not limited to gross revenues from subscriptions, commercial messages and grants.

The Commission invites comments on this proposal, as well as proposals for alternate definitions, with detailed rationale, including financial evidence. The Commission notes that it will continue to be able to use the annual returns to evaluate compliance with the requirement to contribute 5% of gross annual revenues to an independent production fund.

Requirement to remit to the rights holders of all Canadian feature films 100% of revenues earned from the exhibition of these films

PPV and VOD services are required, by condition of licence, to remit 100% of the gross annual revenues earned from the exhibition of Canadian feature films to the rights holders, distributors and providers of such films. However, the allocation of those revenues is different whether the service is a PPV or a VOD service.

Given that licensees of PPV and VOD services are authorized to negotiate revenue sharing agreements with the rights holders, distributors and providers of Canadian feature films, and given that other conditions of licence support the distribution of Canadian feature films on an on-demand basis, the Commission considers that this condition of licence may no longer be necessary. Its deletion would also result in licensees of such services no longer being permitted to exclude the amount remitted to Canadian feature film rights holders as revenue for the purpose of calculating the required contribution to Canadian programming discussed above.

The Commission invites comments on whether this condition of licence should be maintained. Interveners should provide a detailed rationale, including financial evidence. Interveners should also submit proposals regarding a harmonized condition of licence for on-demand services.

PPV and VOD services are currently prohibited, by condition of licence, from broadcasting commercial messages, unless the following conditions are met:

the commercial message is already included in a program broadcast on a linear service;

• the commercial message is inserted in a program obtained from a Canadian rights holder;
• the commercial message is subject to an agreement with the programming service that owns the rights to the program, and
• the commercial message complies with the Broadcast Code for Advertising to Children, as amended from time to time and approved by the Commission, and to the technical requirements set out in the ATSC Recommended Practice A/85: Techniques for Establishing and Maintaining Audio Loudness for Digital Television, published by the Advanced Television Systems Committee Inc., as amended from time to time.
• The commercial messages PPV and VOD services broadcast may directly or indirectly advertise alcoholic beverages, but only under the conditions set out in Broadcasting Regulatory Policies 2013-561 and 2015-355, respectively.
• The Commission invites comments on whether on-demand services should continue to be prohibited by condition of licence from broadcasting commercial messages unless certain conditions are met, or whether they should no longer be subject to such a prohibition. Should the prohibition be lifted, on-demand services would be fully authorized to sell and broadcast commercial messages on a going forward basis. Licensees would nevertheless continue to be required to adhere to theBroadcast Code for Advertising to Children by condition of licence.
• In Broadcasting Regulatory Policy 2015-86, the Commission stated that Canadians will continue to migrate from scheduled television to a more on-demand television environment, and introduced measures to facilitate and lead the transition to that on-demand environment. Allowing individual licensees to adjust their business models could put them in a better position to meet the outcomes set out in Broadcasting Regulatory Policy 2015-86.
• In the alternative, the Commission seeks to ensure that any prohibitions relating to the broadcast of commercial messages that are retained are as targeted as possible and consistent with the above-noted outcomes. It therefore invites comments on the specific restrictions that should be retained, with detailed rationale, including financial evidence.
• As part of streamlining for discretionary services, the Commission will be proposing in the Discretionary Services Regulations to permit all discretionary services, including those currently licensed as pay television services, to broadcast advertising. The removal of restrictions on ads for on-demand services would also be consistent with this proposed approach.

Requirement to implement a public alerting systemLicensees of VOD services are currently subject to a condition of licence relating to the broadcast of emergency alert messages. Licensees of PPV services are not subject to such a condition of licence.

As set out in the Broadcasting Distribution Regulations, broadcasting distribution undertakings (BDUs) are required to insert emergency alerts in all programming services they distribute to subscribers located in an area targeted by the alert. Given that requirements relating to emergency alerting were announced in 2024 and came into force 1 March 2024 for broadcasters, parties have had sufficient opportunity to establish their systems. Since on-demand services can only be accessed by subscription through a BDU, maintaining this condition of licence for VOD services would appear to be duplicative. Accordingly, the Commission proposes the deletion of this condition of licence.

In Broadcasting Notice of Consultation 2015-421, the Commission launched a proceeding to review the policy framework for local and community television programming. Since that policy framework review will provide more information as to the requirements relating to local and community programming that should be set out as standard requirements for television stations, discretionary services and on-demand services, there may be changes to the current standard requirements. Accordingly, requirements relating to local and community programming have been omitted from the present notice, but will be included in the finalized standard requirements.

The Commission calls for comments on the standard conditions of licence, expectations and encouragements for television stations, discretionary services, and on-demand services, set out in the appendices to this notice. The Commission will accept comments that it receives on or before 20 June 2024. The Commission will not formally acknowledge written comments. It will, however, fully consider all comments, and they will form part of the public record of the proceeding, provided that the procedures for filing set out below have been followed.

The Commission is open to considering ways to further streamline the standard requirements, and welcomes comments to that effect. However, it requests that any such comments be limited to matters falling within the scope of this process.