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Section II – Analysis of Program Activities by Strategic Outcome

2.1 Strategic Outcome 1: Broadcasting and telecommunications industries that contribute to Canada’s cultural, economic and social prosperity.

 

Program Activity by Strategic Outcome

2.1.1 Program Activity: Canadian Broadcasting[30]
Summary Table

2008-09 Financial Resources ($ millions)			2008-09 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
24.6	32.3	31.1	248	239	9

Expected Results	Indicators And Targets	Performance Status	Performance Summary
Realize the social and cultural policy objectives of the Broadcasting Act by ensuring the predominance of Canadian content and by providing Canadians with access to the broadcasting industry—as participants and audiences.	None identified in CRTC 2008–2009 Report on Plans and Priorities	Expected Results Met The CRTC issued 355 policy and regulatory decisions, including decisions re-iterating the predominance of Canadian programming services. In addition, a policy process was initiated to establish a regulatory framework for the group-based licensing of conventional television.	Despite the current economic context, the broadcasting sector remains predominantly Canadian. Many measures were achieved or initiated during 2008–2009 to further the policy objectives of the Broadcasting Act or to support the industry in difficult economic times.
Study new media and how they contribute to the objectives of the Broadcasting Act.		Expected Results Met The CRTC completed a public proceeding to address the opportunities and issues raised by broadcasting in new media, and to determine an appropriate policy response, in preparation for the Commission’s decision to be released in June 2009.	The proceeding examined the broadcasting in new media environment and explored whether the Commission’s regulatory position of exemption orders for new media broadcasting undertakings and mobile television broadcasting undertakings continues to be appropriate.

Benefits for Canadians

Canadian broadcasting makes a significant contribution to the Canadian economy and to Canadians’ cultural identity. The CRTC ensures that Canadians have access to a diversity of quality Canadian programming.

In 2008, total broadcasting revenues in Canada were $14 billion, an increase of 7% over that of the previous year. Of that total, 11% was derived from radio broadcasters, 39% from television and 50% from broadcasting distribution undertakings (BDU) broadcasting activities.

The broadcasting industry employs more than 32,700 Canadians, provides a wide range of services that connect Canadian citizens and businesses, and contributes to their cultural, economic and social prosperity.

In 2008, broadcasters contributed more than $2.5 billion towards the development, creation and exhibition of Canadian content and talent.

The news and entertainment programming broadcast by hundreds of Canadian television services—and information and music distributed by hundreds of Canadian radio services—plays an essential role in nurturing and reflecting the cultural identity of Canada.

Through its regulatory and monitoring activities, the CRTC ensures that all Canadians have access to an extensive range of Canadian and foreign programming services. The CRTC also ensures a predominance of Canadian services.

Demonstration – some facts and statistics
As of December 31, 2008, there were approximately 707 television services authorized to broadcast in Canada, a 3% increase from 2007. Of these, 24% were conventional television services, and 29% were Canadian speciality, pay-per-view and video-on-demand services. The remaining 47% were community-related services and non-Canadian satellite services authorized for distribution.

Conventional television stations must devote at least 60% of the broadcast year and not less than 50% of the evening broadcast period (6 p.m. to midnight) to Canadian programs, and must broadcast at least eight hours per week of priority programming such as drama, documentaries, music and variety programs during prime time. English-language television ownership groups are also expected to ensure that at least 75% of the priority programming they broadcast is produced by independent production companies. For its part, TVA is expected to allocate minimum annual expenditures of $20 million for independently produced French-language programming.

Approximately 90% of Canadian households subscribe to a broadcasting distribution undertaking service such as satellite or cable.

Discretionary television channels are required to broadcast minimum amounts of Canadian programs and spend a minimum percentage of their revenues on the production of Canadian programs, depending on the nature or genre of the programming service.

Performance Analysis

Considering the economic context and the CRTC financial situation, the CRTC provided valuable results to Canadians, for both planned and unplanned activities, through its Canadian broadcasting program activity and managed to fully deliver on its mandate under the Broadcasting Act.

Planned Activities Results

Regulatory Review
Over the past fiscal year, among other cultural and economic measures, the CRTC has introduced many changes to its policy and regulatory approaches. For example, in April 2008, the Commission held a public hearing to review the regulatory framework for broadcasting distribution undertakings and discretionary services.

Licences Awards, Amendments and Renewals
In 2008–2009, the CRTC reviewed 502 applications for new services and licence amendments and renewals. It held 14 public hearings over 54 days and issued 97 notices announcing applications and calling for comments on various policy-related matters.

These processes generated a total of 19,529 comments and interventions. Compared to 2007–2008, these numbers represent a 9% increase in the regulatory activities performed by the CRTC.

Results Partially Met
As explained in Section I, some of the CRTC’s expected results were partially met. This can be explained by three major reasons:

1. During the last half of the year, a significant reduction in advertising revenues put conventional broadcasters in difficult situations. As a result, the CRTC revised its traditional approach for the renewal of conventional television licences. The Commission announced a two-step public process that would narrow the scope of the April 2009 licence renewal hearings to consider short-term regulatory relief for conventional broadcasters. It also announced that it would hold a policy proceeding in the fall of 2009 to examine the modalities and conditions for licensing based on ownership groups, investigate alternative support mechanisms for local programming and establish the appropriate minimum levels of spending on Canadian programming by English-language television broadcasters.

2. When planning its activities for 2008–2009, the CRTC anticipated an increase in its budget based on fees collected from licensees. Because of the economic decline, however, the Commission decided not to pursue this approach. Thus, the Commission had to cut back on some activities. For example, it cancelled its plan for accelerated public hearing processes and associated service standards.

3. Four main unplanned activities took precedence over some planned activities and stretched the CRTC’s resources.

Important Results Linked to Unplanned Activities

TQS ownership
In the spring of 2008, TQS inc. was in technical bankruptcy. In June 2008, the CRTC held a public hearing and issued a decision approving the transfer of effective control of the television network and renewal of its broadcasting licences.

This process took place in an extremely short timeframe under intense public pressure: the application was received only weeks before the hearing was to take place, the TV service was on the brink of ceasing operations, and the new owners threatened not to proceed with the acquisition if the CRTC did not eliminate its requirement that the service broadcast new programming.

Ultimately, the CRTC was able to strike an acceptable balance. In light of TQS’s financial situation, the new owners were granted relief through a reduction in local news requirements to two hours per week in Montreal and Quebec City, on the condition that these obligations would be reviewed in the spring of 2011.

Order in Council proceedings
i)  Order-in-Council on the availability of broadcasting services in official-language minority communities
In Order in Council P.C. 2008-1293, the Governor-in-Council directed the CRTC to call for comments from the public, and report on three issues by March 31, 2009. The Commission was to:

• examine the availability and quality of English- and French-language broadcasting services in Canada’s anglophone and francophone minority communities
• identify any deficiencies and challenges in the provision of official-language broadcasting services in those communities, and
• propose measures to encourage and facilitate access to the widest possible range of official-language broadcasting services in official-language minority communities and ensure that the diversity of these communities is reflected in the Canadian broadcasting system as a whole.

In spite of an extremely heavy regulatory agenda, the CRTC was able to schedule a public hearing from January 13-16, 2009, examine and consider the written comments submitted prior to, and the oral presentations made at, the hearing, and submit its report on March 30, 2009.

ii) Order in Council on the licensing of new radio services in Ottawa/Gatineau
On August 26, 2008, in Broadcasting Decision CRTC 2008-222, the CRTC approved the applications by Astral Media Radio Inc. and by Frank Torres, on behalf of a corporation to be incorporated, for broadcasting licences to operate new English-language commercial FM radio stations to serve Ottawa and Gatineau.

On November 20, 2008, by Orders-in-Council P.C. 2008-1769 and P.C. 2008-1770, the Governor-in-Council referred the decision back to the CRTC for reconsideration and hearing.

The Orders-in-Council expressed the opinion that it is material to the reconsideration and hearing that the Commission fully consider and explain its approach to evaluating the needs of official-language minority communities and how it applies in this case.

The Commission held a public hearing beginning on March 31, 2009 to consider the applications. The completion of this process will follow in early 2009–2010.

Single point of contact for small undertakings

The establishment of a single point of contact for small broadcasting undertakings was launched in November 2008 to facilitate the licencee-application process. As of March 31, 2009, the Broadcasting Liaison team dealt with 375 requests for information.

Lessons Learned

In achieving its results during the 2008–2009 fiscal year, the CRTC learned a number of lessons, such as:

• The importance of reviewing existing regulatory frameworks to ensure they are still relevant and required.
• Broadcasting is increasingly viewed as comprising of programming available on a multiplicity of platforms. An adequate revenue base for the continued production of quality Canadian programming requires a systemic regulatory approach that takes into account the contributions of all platforms.
• Official-language minority communities must have appropriate access to television services.
• Public and community radio stations play important roles in official-language minority communities.
• Community reflection in the programming of the services available in the Canadian broadcasting system can be improved.
• There is a need for steady and reliable funding for the implementation and management of community radio stations.
• In the medium and long terms, new media are important components to ensuring access to a maximum number of services and to enable a better reflection of official-language minority communities within Canada’s broadcasting system
• While the CRTC continues to rely on measures that are targeted and minimally intrusive in regulating and monitoring the Canadian broadcasting system, the CRTC has to have the capacity to intervene swiftly and effectively to meet cultural, social and economic prosperity priorities as set in its mandate.
• Streamlining initiatives will continue to be a priority.

2.1.2 Program Activity: Canadian Telecommunications[31]
Summary Table

2008-09 Financial Resources ($ millions)			2008-09 Human Resources (FTEs)
Planned Spending	Total Authorities	Actual Spending	Planned	Actual	Difference
21.3	27.9	27.4	212	227	15

Expected Results	Indicators and Targets	Performance Status	Performance Summary
Ensure that Canadians have access to affordable, reliable telephone and other high-quality telecommunications services through an increased reliance on market forces, and that regulation, where required, is effective and efficient.	None identified in CRTC 2008–2009 Report on Plans and Priorities	Expected results met Canadians can count on a telecommunications industry that is increasingly less burdened by regulatory measures, relies more than ever on market forces and continues to provide affordable, reliable and high-quality telecommunications services.	The following key accomplishments contributed toward the CRTC’s Canadian Telecommunications program activity expected results: The National DNCL was launched and is operating, and the Commission has introduced associated enforcement activities. Through 40 local forbearance decisions issued in 2008–2009, the CRTC refrained from regulating residential and business local services in a total of 191 exchanges. The CRTC reviewed eight economic regulatory measures—which exceeded the planned number of reviews in 2008–2009—and five non-economic and social measures, which meets the planned number of reviews in 2008–2009. The CCTS met conditions of approval in August 2008. The CRTC streamlined procedures for dealing with tariff applications. The CRTC met service standards applications for Part VII (CRTC Telecommunications Rules of Procedure)

Benefits for Canadians

Total telecommunications revenues in Canada increased from $34.8 billion in 2007 to $36.8 billion in 2008, a 5.6% increase. The telecommunications industry employs 110,228[32] Canadians and is a vital element of the Canadian economy. It provides a wide range of services that connect Canadian citizens and businesses.

 Through its regulatory and monitoring activities, the CRTC ensures that all Canadians enjoy reliable, affordable and high-quality telecommunications services, wherever they live. The CRTC must ensure that the marketplace is competitive and that it regulates only where market forces do not protect consumers.

Examples of direct benefits to Canadians include:

• Through the National DNCL, the CRTC helps protect Canadians’ privacy.
• Through the establishment of the CCTS, Canadians now have recourse for complaints about telecommunications services in non-regulated areas.
• Through increased competition, consumers are offered greater choice and pricing flexibility then ever before for telecommunications services.

Canada compares favourably with other countries. Canada has the highest proportion of households with broadband connections among G7 countries. Prices for wireline and wireless service are in the middle average of those in other countries.[33]

Performance Analysis

In 2008–2009, the CRTC delivered on its expected results and priorities for the Canadian telecommunications program activity and met its expectations as stated in the 2008–2009 RPP.

The performance of this program activity is mainly shown in Section I. The following four activities are examples of key accomplishments for this program activity:

Streamlined telecommunications procedures
Through its efforts to streamline telecommunications procedures, including approval mechanisms for retail and competitive local exchange carrier tariffs, the CRTC has contributed to a more efficient telecommunications trade environment in Canada. Streamlining procedures has helped ease the regulatory burden on telecommunications service providers. Because of recent changes by the CRTC, service providers operate under fewer regulations than ever before, and the CRTC’s decisions are issued in a timelier manner, which is better for industry.

Among other measures, the CRTC has:

• streamlined the tariff-approval process
• eliminated the retail quality-of-service rate-adjustment plan and streamlined reporting requirements
• reviewed the price-floor test
• eliminated and modified certain monitoring and reporting requirements
• helped to protect consumers through a strengthened framework for competition, and
• reviewed its disconnection and deposit policies.

Internet traffic management
In April 2008, the Canadian Association of Internet Providers (CAIP) asked the CRTC to direct Bell Canada to stop “traffic shaping”[34] its wholesale Asymmetric Digital Subscriber Line services and the wholesale service known as Gateway Access Service (GAS). Traffic shaping refers to slowing the transfer rates of all peer-to-peer file-sharing applications during peak periods. Bell Canada began shaping the Internet traffic of its own retail customers in October 2007 and that of its Internet service provider GAS customers in March 2008.

On November 20, 2008, the Commission denied CAIP’s request, but launched a proceeding to review the existing and emerging Internet traffic-management practices that were beyond the scope of the initial proceeding. CAIP has since appealed the CRTC’s decision.

New regulatory frameworks for small local telephone companies
The CRTC established a regulatory framework for the implementation of wireless number portability in the territories of the small local telephone companies at the end of 2008. It also launched a process to determine a framework for refraining from regulating local exchange service in those same territories.

Wireless 911 services
Over the past year the Commission made important progress in protecting Canadians by making changes to 911 emergency services for wireless customers. At times, emergency responders have difficulty locating people calling 911 from wireless devices, so the CRTC asked wireless service providers to find a technical solution.

As a result, the industry developed requirements for a solution that will use specialized technology, such as global positioning systems, to improve public safety. The CRTC has directed providers to upgrade their 911 emergency services by February 1, 2010.

Lessons Learned

In achieving its results during the 2008–2009 fiscal year, the CRTC learned a number of lessons, such as:

• The importance of reviewing existing regulatory frameworks to ensure they are still relevant and required.
• The CRTC gained experience in delivering a new consumer-protection program: the National DNCL.
• The importance of streamlining initiatives to ensure that regulation, where required, is efficient and effective, and
• The need to take advantage of emerging technologies to better serve the telecommunications industry and the Canadian public.

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