Vol. 137, No. 46 — November 15, 2003

Regulations Amending the Local Signal and Distant Signal Regulations

Statutory Authority

Copyright Act

Sponsoring Department

Department of Industry

REGULATORY IMPACT
ANALYSIS STATEMENT

The proposed amendments to the Local Signal and Distant Signal Regulations SOR/89-254 (the Regulations) will amend the definition of "local signal," to make it applicable to all retransmitters eligible for the compulsory license set out in section 31 of the Copyright Act, and eliminate the special rule for wireless terrestrial retransmitters. The definition of a local signal is relevant for the Copyright Board tariff setting exercise.

Description

Definition of "local" signals

Section 31 of the Copyright Act (the Act), establishes a compulsory licence for retransmitters, e.g. cable companies and Direct-to-Home (DTH) satellite companies, which allows them to retransmit over-the-air broadcast signals without the consent of affected rights holders, provided certain conditions are respected. Among the applicable conditions is the requirement, as set out in paragraph 31(2)(d) of the Act, that retransmitters pay copyright royalties to the rights holders in respect of the retransmission of distant signals. No royalties are payable in respect of local signals. These royalties are set out in a tariff certified by the Copyright Board pursuant to paragraph 73(1)(a) of the Act. Under subsection 31(3) of the Act, the Governor in Council may make regulations defining "local signal" and "distant signal" for the purposes of subsection 31(2).

The current Regulations define "local" signals only with respect to the service area of a "cable retransmission system" and wireless "terrestrial retransmission system." Consequently, all signals carried by other retransmitters eligible for the section 31 compulsory licence, namely DTH satellite retransmitters, are distant signals even when they are retransmitted back into their local markets. Concerns with this aspect of the Regulations were not raised at the time of their introduction in 1989 since Canada's current licensed DTH satellite service providers did not commence operations until the latter part of the 1990s.

For cable and wireless retransmission systems, the determination as to whether a signal is local or distant is based on precise engineering calculations using criteria set out in the Regulations. A signal retransmitted within a broadcaster's "area of transmission" (i.e. the area where the broadcaster's over-the-air signal remains intelligible according to certain criteria) will be deemed local. Where the signal is retransmitted outside of that area, then it will be deemed distant.

Therefore, to make the definition of "local signal" applicable to all retransmitters eligible for the compulsory retransmission licence under section 31 of the Act, the Regulations are being amended by replacing the term "cable retransmission system" with the neutral term "retransmitter." The criteria used to calculate the "area of transmission" will remain and are not the subject of the present amendments.

Wireless Terrestrial Retransmission

Notwithstanding the foregoing scheme, wireless terrestrial retransmitters currently operate under a special rule. Under paragraph 3(a)(iii) of the Regulations, a signal retransmitted by such a system is always considered local, provided that the retransmitter's transmitter is located within the broadcaster's area of transmission; this is so even for signals retransmitted to subscribers beyond the area of transmission. At the time the Regulations were initially published, wireless terrestrial retransmitters mostly serviced rural areas and had small numbers of subscribers. Since that time, however, large wireless retransmission systems, such as Multipoint Distribution Systems (MDS), have emerged to compete with cable and DTH satellite systems in large urban markets. In some circumstances, a signal provided by both a wireless and a cable system to subscribers in the same location (e.g. an apartment building) would be differently characterized given the different rules. Furthermore, in cases where a wireless system relies upon several transmitters in the same service area, there is some ambiguity as to which transmitter is the relevant transmitter for the purposes of the Regulations.

Therefore, to eliminate the ambiguity relating to the location of the transmitter, and to provide equal treatment to all retransmitters, paragraph 3(a)(iii) of the Regulations is being deleted.

Alternatives

The alternative to amending the definition of "local signal" is the status quo. However, in order to extend the application of the Regulations to all retransmitters eligible for the compulsory retransmission licence under section 31 of the Act, the definition must be changed.

The alternative to deleting the special rule for wireless terrestrial retransmission systems is the status quo. However, this is not an attractive alternative as the rule in the Regulations must be changed to provide clarity as to location of the transmitter and to treat all retransmitters on the same footing.

Benefits and Costs

Definition of "local" signals

The amended Regulations will provide fairness in the application of the definition of "local signal" by extending it to all retransmitters eligible for the compulsory retransmission licence under section 31 of the Act, notably DTH satellite providers.

Wireless Terrestrial Retransmission

The deletion of this rule is meant to address potential ambiguity relating to the location of a transmitter and to treat all retransmitters on the same footing.

Consultation

Two proposed amendments to the Regulations were put forth to stakeholders, and consultations were held by the departments of Canadian Heritage and Industry (the Departments) in 2002 and 2003. The first consultation addressed the proposal to amend the definition in the Regulations of a "local" signal. The consultation focussed on the rights collective societies and retransmitters that would be most affected by the proposals (i.e. cable and DTH satellite retransmitters). The second consultation dealt with the proposal to eliminate the special rule for wireless retransmission systems. This consultation included all those who had been contacted during the first consultation as well as wireless retransmitters (whose names were taken from lists of possible stakeholders as obtained from the Canadian Radio-television and Telecommunications Commission (CRTC) and from the Spectrum, Information Technologies and Telecommunications Sector of Industry Canada).

In respect to the first consultation, satellite retransmitters welcomed the change while cable retransmitters were neutral. The retransmission collectives supported the amendments, subject to certain other amendments (see "Other Comments" below).

In respect to the second consultation, cable retransmitters (as represented by the Canadian Cable Television Association [CCTA]) fully supported the proposed amendments, while the Copyright Collective of Canada (CCC) accepted the amendments as proposed but provided some additional comments (see "Other Comments" below). One small wireless retransmitter, Peachland Communications Society, a non-profit entity that retransmits radio and television signals to Peachland, British Columbia, asked for an exemption from the amendments for community-based, non-profit retransmission organizations, such as theirs. The Departments note that the majority of organizations that serve limited numbers of persons, may, depending on their specific circumstances, have the benefit of a preferential royalty rate for small retransmission systems (as such systems are defined in the Definition of Small Retransmission Systems Regulations, SOR/89-255).

Other Comments

During the first consultation, the retransmission collectives asked that DTH satellite retransmitters be required to provide them with information regarding the number of local and distant signals received per customer. The Departments are of the view that such information is primarily relevant to the tariff-setting exercise before the Copyright Board, and is not a matter for inclusion in these Regulations.

The retransmission collectives also argued that the engineering criteria used to determine the boundary of a local signal, beyond which the signal is considered distant, needs to be revisited. They stated that the definition is difficult to apply because the precise location of contour lines is discretionary. The Departments' view is that the current definition allows for the calculation of the contour lines within a negligible margin of error. There is acceptable and well-recognized computer software available in the market that allows measurement of the local signal contour with great accuracy.

The collectives also proposed that the rules for wireless retransmission systems be amended as they allegedly deprive rights holders of royalty revenue for certain distant signals, and create ambiguity about the location of the transmitter. The Departments noted these concerns in proposing the second amendment to the Regulations.

During the second consultation, comments pertaining to issues other than those proposed for amendment were advanced by the CCC. In its submission, the CCC suggested that the Regulations be further amended to specifically address digital broadcast signals.

Although the Departments are aware of the growth of digital signal technology, the Departments are of the view that this issue should be dealt with separately from these amendments. The Departments believe that any amendment that will address digital broadcast signals will require further study and consultation. In addition, digital signal services are still in their infancy in Canada and no substantial roll-out of such services is expected for a few years. As the currently proposed amendments have been under consideration for over two years, and as they are required so that all retransmitters are subject to the same rule in time for certification of the new tariff by the Copyright Board, the Departments do not advise dealing with digital broadcast signals in this amendment package.

Compliance and Enforcement

The Regulations are strictly definitional and form a key element of the royalty tariffs certified by the Copyright Board pursuant to paragraph 73(1)(a) of the Act. It will be for the courts to enforce whatever rights or liabilities may flow therefrom.

Contact

Susan Bincoletto, Director, Intellectual Property Policy Directorate, Industry Canada, (613) 952-2527 (Telephone); or Danielle Bouvet, Director, Copyright Policy Branch, Canadian Heritage, (613) 990-6235 (Telephone).

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to paragraph 31(3)(a) (see footnote a)  and subsection 62(1) (see footnote b) of the Copyright Act, proposes to make the annexed Regulations Amending the Local Signal and Distant Signal Regulations.

Interested persons may make representations with respect to the proposed Regulations within 15 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Susan Bincoletto, Director, Intellectual Property Policy, Department of Industry, 235 Queen Street, Ottawa, Ontario K1A 0H5.

Persons making representations should identify any of those representations the disclosure of which should be refused under the Access to Information Act, in particular under sections 19 and 20 of that Act, and should indicate the reasons why and the period during which the representations should not be disclosed. They should also identify any representations for which there is consent to disclosure for the purposes of that Act.

Ottawa, November 6, 2003

EILEEN BOYD
Assistant Clerk of the Privy Council

REGULATIONS AMENDING THE LOCAL SIGNAL AND DISTANT SIGNAL REGULATIONS

AMENDMENTS

1. The long title of the Local Signal and Distant Signal Regulations (see footnote 1)  is repealed.

2. The heading before section 1 and sections 1 to 3 of the Regulations are replaced by the following:

DEFINITION OF LOCAL SIGNAL AND DISTANT SIGNAL REGULATIONS

INTERPRETATION

1. In these Regulations, "area of transmission" means

(a) in respect of a terrestrial television station, the area within the predicted Grade B contour of the station, as determined in accordance with the method set out in the schedule, and the area within a radius of 32 km from that contour;

(b) in respect of a terrestrial F.M. radio station, the area within the predicted 0.5 mV/m field strength contour of the station, as determined in accordance with the method set out in the schedule; and

(c) in respect of a terrestrial A.M. radio station, the area within a radius of 32 km from the principal studio of the station.

LOCAL SIGNAL AND DISTANT SIGNAL

2. (1) For the purposes of subsection 31(2) of the Copyright Act, "local signal" means one of the following:

(a) in respect of the entire service area of a retransmitter, the signal of a terrestrial radio or television station the area of transmission of which covers all of that area; and

(b) in respect of a portion of the service area of a retransmitter, the signal of a terrestrial radio or television station the area of transmission of which covers all of that portion.

(2) For the purposes of subsection 31(2) of the Copyright Act, "distant signal" means a signal that is not a local signal.

3. The schedule to the Regulations is amended by replacing the reference "(Section 2)" after the heading "SCHEDULE" with the reference "(Section 1)".

COMING INTO FORCE

4. These Regulations come into force on January 1, 2004.

[46-1-o]

Footnote a 

S.C. 2002, c. 26, s. 2(3)

Footnote b 

S.C. 1997, c. 24, s. 37(2)

Footnote 1 

SOR/89-254

NOTICE:
The format of the electronic version of this issue of the Canada Gazette was modified in order to be compatible with extensible hypertext markup language (XHTML 1.0 Strict).