COPYRIGHT REGULATIONS

Amendment to Definition of Small Retransmission Systems Regulations

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REGULATIONS
Copyright Act

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P.C. 1994-2009 6 December, 1994

His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, Science and Technology and the Minister of Communications, pursuant to subsection 70.64(2)* of the Copyright Act, is pleased hereby to amend the Definition of Small Retransmission Systems Regulations, made by Order in Council P.C. 1989-826 of May 9, 1989**, in accordance with the schedule hereto, effective January 1, 1995.

*S.C. 1988, c. 65, s. 65
**SOR/89-255, 1989 Canada Gazette Part II, p. 2588

1. Sections 2 and 3 of the Definition of Small Retransmission Systems Regulations are replaced by the following:

2. In these Regulations,

"licence" means a licence issued under paragraph 9(1)(b) of the Broadcasting Act authorizing the licensee to carry on a broadcasting receiving undertaking that distributes programming services to premises by means of signals that are retransmitted by cable or Hertzian waves;

"licensed area" means the area within which a licensee is authorized, under its licence, to provide services;

"premises" means

(a) a dwelling, including a single-unit residence or a single unit within a multiple-unit residence, or

(b) a room in a commercial or institutional building.

3. (1) Subject to subsections (2) to (4) and section 4, for the purpose of subsection 70.64(1) of the Copyright Act, "small retransmission system" means a cable retransmission system, or a terrestrial retransmission system utilizing Hertzian waves, that retransmits a signal, with or without a fee, to not more than 2,000 premises in the same licensed area.

(2) For the purpose of subsection (1), where a cable retransmission system is included in the same unit as one or more other cable retransmission systems, the number of premises to which the cable retransmission system retransmits a signal is deemed to be equal to the total number of premises to which all cable retransmission systems included in that unit retransmit a signal.

(3) For the purpose of subsection (2), a cable retransmission system is included in the same unit as one or more other cable retransmission systems where

(a) they are owned or directly or indirectly controlled by the same person or group of persons; and

(b) their licensed areas are each less than 5 km distant, at some point, from at least one other among them, and those licensed areas would constitute a series of contiguous licensed areas, in a linear or non-linear configuration, were it not for that distance.

(4) Subsection (2) does not apply to a cable retransmission system that was included in a unit on December 31, 1993.

4. The definition set out in subsection 3(1) does not include a cable retransmission system that is a master antenna system located within the licensed area of another cable retransmission system that retransmits a signal, with or without a fee, to more than 2,000 premises in that licensed area.

Description

Current regulations, pursuant to subsection 70.64(2) of the Copyright Act, provide a definition of the term "small retransmission systems" which has been criticized for its lack of clarity, particularly in respect of the word "community".

Under the provisions of the Copyright Act, the Copyright Board is responsible for approving the tariffs for the retransmission of "distant" Canadian and U.S. radio and television signals by cable systems and other retransmitters. The Copyright Act requires that the Board, when approving these tariffs, set a preferential rate for "small retransmission systems".

Currently, the regulations define a "small retransmission system" as one serving 1,000 or fewer premises in the same community. Since these Regulations came into force, there have been two decisions by the Copyright Board on retransmission royalties. As a result of the Copyright Board's comments in the 1993 retransmission decision that it is the responsibility of Cabinet, not the Board, to refine the regulations' definitions, the Government has revisited the text and has decided on a new approach for defining small retransmission systems.

This amendment defines a "small retransmission system" as one that serves not more than 2,000 premises in the same licensed service area as set out by the Canadian Radio-television and Telecommunications Commission (CRTC). The Regulations continue to ensure that Master Antenna (MATV) systems will be treated as separate from the cable retransmission system in a licensed area.

The amendment also clarifies that where two or more licensed areas that are controlled, directly or indirectly, by the same person or group of persons are less than 5 kilometres apart at any point, the number of premises for the purposes of the amendment includes the premises in all the licensed areas. This contiguous clause does not apply to any licensed area which existed prior to December 31, 1993.

The amendment will come into force on January 1, 1995, which is the date that the new retransmission tariffs also come into effect.

Alternatives

The status quo is an alternative to an amendment. However, the amendment should clarify the situation with respect to the various interpretations being used in the implementation of the regulations. In particular, the definition of community varies considerably and includes licensed area as defined by the CRTC and different municipal, town and county boundaries. As such, the status quo would retain confusion in the implementation of the regulation as presently defined. There were extensive consultations with rights holders and cable companies on alternatives to the amendment. The amendment is a compromise reached during those consultations.

Benefits and Costs

The amendment clarifies which small retransmission systems benefit from a preferential rate.

The organizations or persons most directly affected by the amendment are cable systems and copyright owners. Cable systems are responsible for paying tariffs for their retransmission of programming under section 28.01 of the Copyright Act. Under subsection 70.64(l) of this Act, the Copyright Board is to set a preferential rate for small retransmission systems. The amendment determines which systems are entitled to the preferential rate, causing some systems to be entitled to the preferential rate who are currently paying the full rate while others currently paying the preferential rate will have to pay the full rate. As copyright owners receive the tariffs, any change in the payments affects those owners. Subscribers to small retransmission systems may be indirectly affected as cable systems set their subscriber rates based on the cost of doing business which includes copyright tariffs.

The total cost of the regime to the industries affected, and the relief granted to small systems by virtue of the amendment, cannot be determined at this time because of the nature of the licensing regime, which envisages a tariff-setting process before the Copyright Board. Since some cable systems will be paying less while others will be paying more, the overall effect of the amendment is unknown. The amendment may reduce the cost impact of the retransmission tariffs. There should be no additional cost to the government because of this amendment.

Consultation

As a result of publication in the Canada Gazette Part I on July 30, 1994, comments were received from three cable associations or companies: Canadian Cable Television Association (CCTA), Canadian Satellite Communications (CANCOM), and Regional Cablesystem Inc. (REGIONAL). Comments were also received from three collecting organizations: Copyright Collective of Canada (CCC), the Society of Composers, Authors and Music Publishers of Canada (SOCAN), and Border Broadcasters Inc. (BBI). All of these associations or organizations were involved in the consultations held prior to publication in Part I.

The cable associations were generally supportive of the change from "1,000 premises in the same community" to "2,000 premises in the same licensed area". They objected to the concept of the contiguous clause. Specifically, CANCOM and REGIONAL requested that the 10 km requirement be changed to 2 km and that the wording of the contiguous clause be clarified. CCTA requested the addition of a new subclause which would prevent the application of the contiguous clause when a retransmission system is purchased, thereby changing ownership. Also, REGIONAL requested changing the grandfathering clause from December 31, 1993, to December 31, 1994.

The collecting organizations, were supportive of the change from "community" to "licensed area". BBI objected to the change from 1,000 to 2,000 premises. The collecting organizations also requested changes to the wording of the contiguous clause. CCC and SOCAN requested that MATV systems not be entitled to the preferential rate if the surrounding retransmission system is not a small retransmission system.

The government has changed the 10 km requirement to 5 km as a compromise and has clarified the wording of the contiguous clause in response to these comments. The government is satisfied that the contiguous clause meets the objective of giving small retransmission systems a preferential rate, and chose December 31, 1993, as appropriate because of the ongoing consultations with stakeholders throughout 1994. The government is also satisfied that 2,000 premises is the appropriate compromise and that MATV systems are being treated properly, so therefore has made no changes in the regulatory text in these areas.

The government has also noted an inconsistency in the definition of "licence" as there is no reference to Hertzian waves. This inconsistency has been changed.

Early notice was not provided in the 1994 Federal Regulatory Plan.

Compliance and Enforcement

It is for the Copyright Board to determine the liabilities that flow from the regulations.