History of Cable Television

It was the middle of the 20th century when a fledgling new Canadian industry, cable television, had its small early beginnings.

About five years after the end of the Second World War, Canadian entrepreneurs looked ahead to their future. Their vision encompassed radio – already fully operational; television – the emerging ‘next big thing’; and eventually, telephony – the telecommunications business already connecting Canadians by telephone. The vision and, eventually, the operations of these first cable pioneer would by the end of the century encompass all these businesses, and far, far more as the evolution of their industry matched the emergence of the information society.

From the very early beginnings stringing cable between homes and carrying one to two channels of early television, the cable industry has, in just over 50 years, moved into and past the 500-channel universe. Cable operators now own some of the signals they carry; they have become television broadcasters, radio broadcasters, telephone and cell-phone service providers, and have moved into broader entertainment arenas through owning Internet services, sports teams and major performance venues.

The First Systems

Before the start of CBC Television, before any television at all in Canada, before the first Broadcasting Act, and long before the Canadian Radio-Television Commission was constituted, Canadian entrepreneurs began experimenting with capturing distant television signals. They sent these distant signals down a cable to home TV sets to improve, and sometimes enable, reception.

It was the middle of the 20th century, 1950, when the first Canadian cable pioneers began experimenting with reception and distribution. While there was at that point no Canadian television, U.S. stations were on-air in Detroit, Cleveland and Buffalo, and with experimental new antennas, signals could be received on the very few television sets sold in Canada.

In London, Ontario, amateur radio enthusiast Ed Jarmain was involved in a dry-cleaning business. Around 1950, he set up a large rhombic – diamond-shaped – antenna in his and his neighbour’s backyards to receive a television signal from Cleveland and experimented with distributing it to his neighbours.

Harry Anderson was in car radio sales and repair, also in London, Ontario. Around 1951, he set up his own cable television system in another part of London.

In Montreal, the UK radio company Rediffusion was developing a radio relay service for television similar to the systems it had developed in the UK. In 1950, Rediffusion began experimental distribution of both radio and television signals in Montreal using shielded coaxial cable. Rediffusion also tried rental of ‘terminal units’, a strategy that had been highly successful in the UK, but which ultimately failed in Canada because homeowners preferred to purchase their own television sets.

In Guelph, Ontario, Fred Metcalf owned CJOY radio, and Jake Milligan was his station engineer. In 1952, Metcalf began putting together Neighbourhood Television Ltd. in Guelph.

In Thorold, Alberta, Ed Polanski added radio repair and then television reception to the services offered at his father’s hardware store. Polanski experimented with sporadic signals received from hundreds of miles south in the U.S, and in 1954, the reception of CFRN-TV Edmonton.

In B.C., Syd Welsh started up a new company connected to his father’s heating, plumbing and electrical business, called Fred Welsh Home Appliances. Recognizing the need for signal distribution in order to sell television sets, he installed a master antenna system on a luxury apartment building and changed the company name to Fred Welsh Antenna Systems Ltd. By 1958, Welsh launched Pacific Cablevision Ltd. to own the cable systems he had been building under contract for others.

Also in Vancouver, CJOR radio station owner George Chandler launched Tru Vu Television to provide cable service, and successfully negotiated a pole attachment agreement with B.C. Telephone. By 1962, Pacific Cablevision purchased Tru Vu and became Vancouver Cablevision Ltd.

CBLT, the Toronto CBC station and CBFT, the Montreal CBC station,  began operations in September, 1952, adding impetus to fledgling cable operations.

And it was in Montreal that early cable TV converters were developed by Rediffusion to replace the relay system it had built, creating in effect a community antenna television (CATV) system.

Early Days/Early Beginnings

In these early days of cable television, the stage was set for lengthy and fractious relationships between the fledgling cable business and long-established telecommunications carrier Bell Canada. In London, the new cable operators needed to use either Bell Canada telephone poles or the local hydro utility poles for stringing cable. Bell Canada finally agreed to the controlled use of their poles but for rates the cable companies considered exorbitant. The pole attachment issue was one that would dog the cable industry and end up in court through  the next three decades.

While cable entrepreneurs were just beginning their new businesses, the stage was long since set for Canadian broadcasting policy and governmental support for a Canadian broadcasting system. The essential Canadian components of the system, which cable operators would eventually observe, were first articulated before cable and television ever began. It was in 1932 that Prime Minister Richard Bedford Bennett laid  out three key principles concerning broadcasting that would remain cornerstones of Canadian broadcasting policy: Canadian control of broadcasting, public ownership, and the airwaves as a natural resource to be reserved for public use. These principles became the longstanding touch-stones for Canadian broadcasting industries from radio and television to cable.
The First Pay TV

Throughout the 1950s, the sale of television sets increased exponentially, the number of television signals increased gradually, while the subscriptions to cable systems increased more slowly. In 1958, the National Community Antenna Television Association of Canada (NCATAC)  was launched.

Around the same time, the movie company subsidiary Famous Players Canadian Corp. decided to experiment with the first pay TV system in Canada, planned for London, Ontario. International Telemeter, a Los Angeles-based company originally owned 50 per cent by Paramount Pictures, had in the mid-1950s begun offering in the U.S. movies on television using a coin-box and a converter. Paramount owned a controlling interest in Famous Players Canadian, and when plans for pay TV experiments in Montreal fell through, London, Ontario was selected as a trial area for a closed-circuit pay TV system.

Working with Ed Jarmain, Famous Players went ahead with expansion plans in London, for a larger community antenna cable system. The location of the pay TV trial, however, was changed to Etobicoke, on the western edge of Toronto, to ensure that the results of the trial took into account more extensive television competition. This first pay TV trial was an entirely closed-circuit system which meant that it provided only pay TV, not cable television.

In 1960, the trial began and proved very popular, showing first-run movies. In that very first year, programming choice was expanded to special events, including pay broadcast of football from the Toronto Canadian National Exhibition, and then a Toronto Maple Leafs hockey game from Boston. The following year, the Telemeter system in Etobicoke began live entertainment broadcasts of nightclub comedy and subsequently, a Broadway musical.

While these experiments proved highly successful, decades would pass before the Canadian cable industry would be permitted to offer pay TV and special events on a commercial basis.

Early Regulation – the BBG

The cable industry, like all other broadcasting enterprises, began operations under the aegis of the Canadian Radio Broadcasting Commission (CRBC) established in 1932 to regulate broadcasting and to operate a national broadcasting service. The Canadian Broadcasting Act was passed in 1936, establishing the Canadian Broadcasting Corporation (CBC) as both national broadcaster and broadcast regulator, overseeing the early days of both radio and television. In the early days of cable, as television itself was just beginning, federal regulations allowed only one television station per city until a national broadcasting network was in place.

In 1956, the federal Department of Transport (DOT) established a policy on licensing community antenna television systems. While the policy was referred to the governing CBC, Transport continued to issue cable licenses, which were primarily of a technical nature and which specified the signals to be handled.  A year after the launch of the cable association, the establishment of the Board of Broadcast Governors (BBG) in 1958 relieved CBC of its regulatory duties – the responsibilities of the BBG were codified in a new Broadcasting Act to oversee public and private radio and television. The DOT however retained its licensing function for cable TV licenses. As CBC extended its national reach as a broadcaster and private stations and networks emerged, the expanding broadcast universe provided more and more services both foreign and Canadian for cable operators to distribute.

1960s – the Rise of the Major Players

At its peak, the Famous Players/Telemeter experimental pay TV network had 5,600 subscribers out of a potential 14,000 households, a very respectable level. But it was a stand-alone closed-circuit network with no corollary CATV system to distribute costs and share revenues. Six TV signals were by that point available off-air, and there was as yet no colour TV  broadcasting.  Famous Players shut down the trial in 1965 and concentrated its efforts on CATV system expansion.

Famous Players began launching, co-venturing and purchasing cable systems across the country. In Brampton, a new subdivision was constructed with all electrical connections, including cable, buried underground. At the same time, construction in Toronto began rising, literally, into the high-rise era, which blocked television signals. And the move was on to begin contemplating broadcast of colour TV, a signal which required more technical robustness than black-and-white – all supportive of increasing CATV penetration. Famous Players incorporated a new company, Metro Cable TV Ltd. to manage Toronto and area licences including the original Etobicoke area already wired for the pay-TV trial.

Toronto was essentially ‘carved up’ by the late 1960s into exclusive CATV areas licensed by well-known cable entrepreneurs including Ted Rogers, Maclean Hunter, Geoff Conway and of course, Metro Cable. In the rest of Canada, similar enterprises were growing, expanding, merging and connecting viewers. 

The Formation of the CRTC

Two years after the start of colour television broadcasting in Canada, the federal government established the Canadian Radio-Television Commission (CRTC) in 1968 as Canada’s  national broadcast regulator to replace the BBG. At the same time, a new Broadcasting Act created the regulatory framework for the agency, and a new federal Department of Communications was instituted to handle, among other things, technical licensing of broadcasting operations. 
The Broadcasting Act, as described in CRTC historical documents “confirms CBC’s mandate as a national broadcaster, strengthens restrictions on foreign ownership,  requires the predominant use of Canadian creators and talent, (and) reaffirms a vision of the broadcasting system as a means of strengthening Canada’s cultural, social and economic structures.”

For the first time, the broadcasting system, defined under the Broadcasting Act, included cable television, which at that time comprised 377 systems across Canada licensed by the Department of Transport. One of the first functions of the Commission was to take over regulation of every cable licence, referring to cable systems at that time as ‘distribution undertakings.’

It was also in 1968 that the cable industry organization decided to change its name to the Canadian Cable Television Association (CCTA), to move away from the focus on ‘community antenna.’ Two years later, in 1970, the organization would move its headquarters from Montreal to Ottawa.

1970s – Industry Expansion

The 1970s saw the expansion of an industry that would rapidly make Canada the most wired nation in the world.

In its early task of reviewing all cable licences issued under the DOT, the Commission  developed early priority carriage regulations. These regulations defined local, distant and optional – primarily American – broadcast stations cable operators could carry and the priority of that carriage.

In 1971, the CRTC published a policy on cable television called ‘Canadian Broadcasting: A Single System,’  in which the Commission adopted the system of ‘simultaneous substitution.’ When Canadian and American stations broadcast the same program at the same time, cable operators were required to substitute the Canadian program, together with all of its Canadian advertising, on the American channel. This rule ensured that cable operators helped protect Canadian broadcasters’ advertising revenues.

The Commission also began to permit cable operators the use of microwave transmission to bring in more distant television signals and to move signals around within a licensed area.  Both applications improved signal quality and quantity.

The year 1972 saw two events that would prove highly significant to the cable industry for decades. Telesat Canada, Canada’s national satellite carrier, formed in 1969 by an Act of Parliament, launched Anik A1, the world’s first domestic communications satellite operated in geostationary orbit by a commercial company. With CBC as its first customer, Telesat began satellite television transmission for Canadian broadcasters and launched Anik A2 the next year. Telesat’s operations were the precursor to satellite television distribution coast-to-coast and the transmission foundation of Canadian national specialty television services.

Also in 1972 CityTV, the downtown Toronto urban television station, launched its UHF television signal on Channel 79. Quickly adopted by viewers for such innovative programming as its Friday night ‘baby blue movies’, CityTV was recognized in broadcasting circles as the first commercial UHF television station. CityTV was assigned to the higher UHF band because all standard VHF slots were already taken. This meant that City’s distribution was very strongly dependent on cable carriage and hence, on cable operators. While not strictly a cable TV channel, City’s position as cable-dependent was an indication of the shape of channels to come. A subsequent move to Channel 57 did not significantly reduce this dependency.

The UHF frequency bands had already been scrutinized by the federal government. In 1968, a federal policy required first priority in UHF bands be given to educational broadcasters, and in 1970, cabinet directed the CRTC to require all cable systems to reserve one channel for educational broadcasting. That same year, 1970, TVOntario, the Ontario educational television station, had started broadcasting in the UHF band.

In addition, it was in 1972 that the Commission invited proposals for the future development of pay TV.

The 1970s also saw the development of the cable set-top converter. The ‘set-top box’  released cable operators and viewers from the constraints of the 12 channels receivable on a home television set. It allowed cable operators to offer substantially more channels by taking signals in a range of frequencies and converting them to VHF frequencies tunable by a conventional TV receiver. The television remote control, offered along with the set-top box, marked another sea change in television, allowing viewers to change channels without getting off the couch.

The Battles for Poles and Pay TV

Throughout the 1970s, Canadian cable operators explored again and again the potential for pay television, trying to persuade the CRTC to approve it. In the U.S, meanwhile, Time-Warner launched HBO (Home Box Office), the first American pay TV service using microwave distribution at the start, and then in 1975, satellite distribution. While Canada had its first satellite television several years prior and already had experience in pay TV in the long-running Etobicoke trial, the industry remained unable to secure approval for pay TV in Canada.

The next year, in 1976, the CRTC was re-named the Canadian Radio-Television and Telecommunications Commission, bringing under its purview regulation of telecommunications common carriers. That year also saw the Commission again seriously examining pay TV, promising that its licensing was ‘imminent.’ In fact, however, that promise was still years in the making and the Commission would require the extension of television services to remote and underserved areas of Canada before allowing pay TV.

In this decade, an issue that had surfaced in the very first days of cable television re-emerged as a major battle. During the early years of cable experimentation and expansion, the issue of pole attachments had proven to be a difficult and costly one for the industry. Per-pole attachment and cable stringing fees, in particular by Bell Canada, were seen by the cable operators as exorbitant. In addition, the cable operators were required to sign 10-year agreements for systems they weren’t allowed to own, but only rent. This made financing very difficult, and CCTA found itself backing cable pioneer Omer Girard, founder of Transvision Magog in Magog, Quebec, in a lengthy, fierce battle with Bell.

In the mid-1970s, the CRTC produced its new Cable Regulations which codified its 1971 policies including its policy on community channels programmed by the local cable operator. In 1977, it ruled on pole attachments and attachment fees which, since the Commission now regulated telecommunications common carriers, it could direct. Pole attachment fees were set at levels the cable industry found reasonable and the pole attachment battles finally began subsiding.

The Commission also held pay TV hearings in 1977, and the following year declined to allow the introduction of pay TV.

The 1980s – Experimentation and More

The 1980s saw rapid and massive expansion of the cable industry and its offerings. Cable was finally cleared to offer pay TV, specialty channels began appearing on the dial, but another promising and unique development in the background was to dissolve into oblivion.

In 1980, the Therrien Committee submitted its report entitled ‘The 1980s: A Decade of Diversity: Broadcasting, Satellites and Pay-TV’ recommending that the CRTC call for applications for a Canadian television satellite service. Direct-to-home satellite television tests had already been conducted successfully by Telesat Canada, but by this point, the American HBO pay service had been distributed on satellite for five years.

In 1981, Canadian Satellite Communications Inc. (Cancom) was licensed to deliver “a basic package of attractive television and radio services to the more remote and underserved communities throughout Canada,” the Commission’s prerequisite for approving pay TV. But Cancom was licensed in the 6/4 Gigahertz satellite frequency, the same bands used by conventional broadcasters. The Commission denied an application for a higher-band 14/12 Gig satellite television service which would have been among the first in the world in that band, and which would have precluded much of the subsequent illegal satellite television reception and development of the grey/black market in signal theft.

The same year the Commission once again called for pay TV proposals, and in the following year, 1982, it finally approved six competitive services; the movie network, First Choice, which was to program two national networks, one in French and one in English; three regional general interest networks,in Atlantic Canada, and in Alberta and Ontario, both of which were called SuperChannel;  C-Channel, ostensibly a Canadian culture channel, and a regional multi-lingual pay service in B.C.

The general interest licencees, both national and regional, were required to program 30 per cent Canadian content in their initial years of licence rising to 50 per cent during the last 15 months of their licence periods. The Commission also decided to specify percentages of gross revenues and of total programming budgets that were to be spent on Canadian content, in the interests of defining cable industry contributions to “new and innovative Canadian programming….and Canadian dramatic programming.”  C-Channel had lower Cancon requirements  and the multilingual channel had none. The pay services began operations the following February and before the year was over, the Commission would hold a review of licensing, to examine the immediate problems of the pay operators in Canada.

Non-Programming Services

While Canadian cable operators were continuing their efforts to secure approval for pay television, in several countries around the world a new communications system was being developed and implemented. It was called teletext or videotex and Britain and France both had these alpha-numeric information systems running over telephone lines. Canada’s Department of Communications in Ottawa had also developed a videotex system called Telidon, and it was acknowledged to be the best in the world because of the finer resolution of its graphics and because of its use of full-scale colour. Operational a full 15 years before the WorldWide Web, Telidon was intended to run over cable systems because of the wider bandwidth requirements.

Also emerging from the nation’s capital, Ottawa, was the first cable-based micro-computer-operated home computer game network, called NABU. The NABU Network was entirely a cable operation, launched at Ottawa Cablevision and sending 6.5 megabytes of videogame data to the homes of subscribers. In development for three years, the NABU Network launched in October, 1983 and was one of the first large-scale applications of home computer networks.

Ottawa Cablevision was already running two other non-programming services, Telemaster and CableGuard, cable-based security services for businesses and homes respectively. These operations were licensed under the CRTC experimental non-programming services policy of March, 1979 with final hearings set for 1981.

The history of Canada’s non-programming services followed the pattern set by pay TV, but instead of eventual success, non-programming services were driven into the ground. The CRTC would not allow advertising, and would not allow any subsidization of these services from basic cable – in other words, no cable operator could make any money with these services, let alone cover their costs.
Applications to provide non-programming services were submitted by the major cable operators in Canada including National Cablevision, Telecable and Videotron in Quebec, Canadian Cablesystems and Maclean Hunter in Ontario, Premier Cablesystems in B.C., and Cablesystems Alberta, to name only a few. The services proposed included real estate advertising, opinion polling, teleshopping, a computer programs library, video games, distance education, monitoring and surveillance services.

The 1981 hearings were delayed, extending for another two years, until 1983, the ‘experimental’ status of these services. In 1983, the Commission scheduled and then cancelled hearings for another two years, until 1985, leaving the Telidon, Nabu and security services in legal limbo. The ‘experimental’ designation became literally the kiss of death for the vast majority of these services; with no possibility of recouping any investment the experimental services were either terminated or transmuted into other kinds of services.

Only in Quebec did cable operator Videotron continued with its experiments, finally in 1989 launching its pioneering Videoway two-way interactive service and UBI (universal, bi-directional, interactive) consortium.  Using Videotron-manufactured Videoway terminals, and partnering with IBM, Hearst Corporation, Canada Post, Hydro Quebec, Loto Quebec and National Bank, viewers in Chicoutimi and in Jonquiere could bank on line, manage their energy consumption, do some limited shopping and view and print coupons. But these two-way systems were analog. Looming on the horizon was digital transmission of nearly everything cable operators offered, and for Videotron, an eventual buy-out by Quebec media giant Quebecor.

Expansion of the Cable Universe

With pay TV finally approved in 1982, Communications Minister Francis Fox the following year made a major change in Canadian policy with the legitimization of individual ownership of TVROs – television receive only systems, or satellite dishes. Until this point, only licensed operators such as Telesat Canada and Teleglobe, Canada’s international satellite operator, were legally allowed to own and operate satellite dishes. While part of the impetus was a push to support the fledgling operations of Cancom, this move strengthened the gray/black market for satellite television as home owners could install the then-giant dishes and receive American satellite television signals. Cancom signals were scrambled; most of the U.S. signals were not.

In 1983, as television stations and signals expanded, the Canadian Broadcast Program Development Fund was launched by the federal government as part of the Telefilm Canada funding organization (originally launched in 1967 as the Canadian Film Development Corporation). Over the years, the funding formulas had begun to require participation from everyone in Canadian broadcasting, and cable operators were no exception. In addition to Canadian content requirements on specialty channels, operators began to allocate percentages of revenue to Canadian production.

The cable industry began pushing harder for approval to provide more television channels and in 1984, five specialty channels were approved for cable distribution in Canada along with U.S. signals. The five Canadian services were MuchMusic, Action Canada Sports Network (later TSN or The Sports Network), Chinavision, Cathay and Telelatino ethnic services. But the 17 American channels approved from which cable operators could select created the real buzz. They included CNN – Cable News Network, A&E – Arts & Entertainment, CMT – Country Music Television, FNN – Financial News Network, TLC – The Learning Channel and the Weather Channel, among others, and, ironically, four U.S. text information services.

All the Canadian channels licensed had a range of Canadian content requirements for programming, some of which increased throughout the licensing period. MuchMusic for example was required to provide Canadian content of 10 per cent in the first year rising to 30 per cent by the fifth year of its licence. TSN promised to use 72 per cent of its programming budget over five years for Canadian programming along with major content commitments during prime time. To ensure Canadian channel distribution, the Commission required Canadian channels to be linked with American channels –  American channels could not be offered on a stand-alone basis – and these linkage and restriction requirements became a key component in the Commission’s efforts to ensure that the Canadian broadcasting system remained predominantly Canadian.

Over the next one to four years of operations,as the new specialty channels were securing a foothold, the pay television industry underwent two bankruptcies, C-Channel and the Atlantic network StarChannel, together with restructuring and mergers, reducing to three the number of pay TV operators.

More Specialty Services

In 1986 the Commission issued new cable regulations and denied approval for pay-per-view television services. The following year, nine new specialty services including VisionTV, YTV, TV5, MusiquePlus and Le reseau des sports (RDS) among others were licensed as part of basic cable packages. CBC’s 24-hour-a-day news channel also received a licence though Newsworld, as it was named, did not become operational until 1989. (It’s French counterpart for Quebec was not licensed until 1994. RDI, Réseau de l’information, went on-air in 1995.) The Commission also began to issue policy statements on equitable access for Canadian channels to Canadian cable systems and to set out rules governing the distribution of programming services as part of the basic service or as discretionary services

With such an increase in programming choices, cable operators were dividing their systems into various tiers of programming, and were beginning the process of figuring out pricing for the various tiers. After four years in operation, MuchMusic was allowed to migrate from its status as a stand-alone channel over to the ‘basic’ or ‘extended basic’ tier, thereby substantially increasing its subscriber base. The following year, in 1989, TSN did the same, changing forever the basic cable programming line-up from primarily off-air conventional television signals to a combination of broadcast and cable channels. 
Acceleration in the 1990s

In 1990, Rogers Cablesystems began deploying hybrid fibre-optic/coaxial cable distribution networks, a technical sea-change in cable operations that laid the groundwork for revolutionary innovations across communications industries by beginning cable’s move into digital distribution. This new technology, adopted across the continent, was the foundation for a massive expansion in available television channels, interactive services and eventually cable’s move into the telephone industry. 

Cable operators to this point had one channel they could program themselves, the local community cable channel, but the CRTC prohibited advertising and restricted its use. In 1991, the Commission issued new guidelines which allowed limited advertising in areas where there was no local commercial television or radio, broadened capability for sharing programming between channels and established minimum funding guidelines.

In 1994, cable operators were  given approval for 50 new specialty channels, and the 500-channel universe began to take shape. The new channels included such diverse offerings as Bravo and Showcase, cultural arts channels, Discovery Channel, focused on  science, the Life Network with family-oriented programming, the New Country Network, and WTN – Women’s Television Network, to name only a few. Throughout the 1990s, the Commission continued to authorize new services including, in 1996, a pay-per-view channel. (The Commission had authorized pay-per-view on a ‘temporary and experimental’ basis in 1990, for three Western cities served by SuperChannel.)

By this point however, the black market satellite television business was in full swing, with literally thousands of satellite dishes across Canada receiving illegal American signals. Satellite television viewers usually were not subscribers to cable television and hence, did not watch much if any Canadian television. In 1995, ExpressVu, (subsequently Bell ExpressVu) and Power DirecTV were licensed to operate new, national, direct-to-home (DTH) satellite distribution undertakings, though it would be 1998 before they became operational. A year later, in 1996, Power DirecTV was replaced by StarChoice DTH, subsequently majority-owned by Western Canada communications firm Allarcom, and the Commission also licensed another 24 new pay and specialty channels. The new channels included the Comedy Network, CTV’s Headline News service, Teletoon, Canadian Learning Television, a number of new MuchMusic spin-off music channels, CHUM Television’s Pulse24 news channel, among others. The Commission included Canadian content directives and Canadian program expenditure requirements over the seven-year terms of licence.

In 1996,  the Canadian Broadcast Program Development Fund under Telefilm Canada, the cable industry’s Cable Production Fund which launched in 1993, and an annual federal government contribution were combined to create the Canadian Television and Cable Production Fund, a government-industry partnership, now called the Canadian Television Fund (CTF). This organization was financed by contributions from the Government of Canada, the Canadian cable and direct-to-home satellite industries and Telefilm Canada, and was designed to fund Canadian productions.

In 1997, the Commission issued new cable regulations that required BDUs to contribute a minimum of 5 per cent of gross annual revenues derived from broadcasting activities to the creation and presentation of Canadian programming with 80 per cent directed to the Canadian Television and Cable Production Fund, and the remaining 20 per cent to other independently administered funds. By this point in the history of Canadian cable, operators were expected to set aside a portion of their revenues each year for contributions to Canadian program production.

In 1995, the federal government constituted a Task Force on the Introduction of Digital Television which reported in 1997. The cable industry introduced The Wave, the first cable modem for personal computer access to the fledgling Internet – another major digital distribution initiative for the cable industry.

The Launch of Digital Cable

In 1997, two years after the start of the Digital Television task force, Shaw Cable, a Western Canada powerhouse cable operator, launched the first digital cable service in Canada, in both Calgary and Toronto. And a year after that, in 1998, the two new direct-to-home (DTH) satellite television operators launched their all-digital television services offering literally hundreds of channels. By this point, Cancom had merged with StarChoice, so the company provided internal industry satellite television feeds as well as DTH consumer television. Telesat Canada, now owned by Bell Canada, launched its Nimiq satellite in 1999, the first dedicated DTH satellite in the country.

Although licensed to carry a wide range of signals from across Canada, the satellite operators were faced none-the-less with a large installed base of grey and black market satellite dishes. It wasn’t until 2002 that the Supreme Court ruled this reception illegal in Canada. These grey/black market dishes, originally approved by the federal government in the 1980s, continued to remove viewers from the Canadian broadcasting system, impinging on subscribers to both cable and subsequently satellite services.

That same year, in 1999, in a somewhat ironic decision (considering Canada’s origination of Telidon videotex), the Commission released its policy on new media in which it declined to regulate new services on the Internet. The decision stated that “the majority of services now available on the Internet consist predominantly of alphanumeric text, and, therefore, do not fall within the scope of the Broadcasting Act and are thus outside the Commission’s jurisdiction.” Even for digital audio services and audio/visual ‘signals’ as the Commission called them, regulation was considered unnecessary and therefore these services were exempt from Commission oversight.

By the turn of the new century, the Canadian cable industry had undergone industry changes that made it virtually unrecognizable from the early cable pioneers who strung cable across backyards. Although there were still over 2,000 cable systems in Canada, through mergers, amalgamations and acquisitions, several major companies had emerged as the largest suppliers of cable services in Canada. Among the largest  were Rogers, Videotron, Shaw and Cogeco, and all were becoming diversified media conglomerates. In January 2002, Videotron withdrew its membership in the CCTA to, it was reported, “….save nearly a million dollars a year in fees…”, and in late 2005 another of the giants, Shaw Communications, also withdrew, citing as its reason that “…as the telecommunications and broadcasting industries evolve…..the member companies of the CCTA have divergent interests and differing strategic objectives, making it difficult to build industry-wide consensus on various issues.” After withdrawing, Videotron continued to align itself with the CCTA , when and where there were issues and proposed solutions with which they could agree. Other cable pioneers disappeared entirely from the cable universe, including such early companies as Maclean-Hunter, Premier Cablesystems, Canadian Cablesystems and Selkirk Communications Ltd.

The regulatory definition of ‘Broadcast Distribution Undertakings’ now included not only the entire cable industry but also direct-to-home satellite television operators, wireless MDS (Multi-point Distribution) over-the-air systems and LMCS (Local Multi-point Communications System) operators, all which provided substantial competition for the cable industry.

The Commission was adopting regulations for digital television and digital distribution; the debate over content and carriage had been mostly resolved with cable operators now owning some specialty cable channels; the era of digital and high-definition television was on the horizon; cable operators were moving strongly into Internet distribution together with the cellular telephone businesses and the landscape of and players in Canadian broadcasting continued to evolve at a breathtakingly rapid rate.

Upheaval and convergence

By the end of the first decade of the 21st century, the universe encompassing both cable and broadcasting continued through a period of upheaval and convergence. Through acquisition, major players had grown even larger, and the playing field became scrambled as cable companies bought broadcasters, broadcasters bought cable companies, and telephone companies bought cable, broadcast and Internet companies.

At the end of summer, 2011, the CRTC weighed in on the subject with a comprehensive review. The Commission released a major report with the somewhat unwieldy title “Navigating Convergence II: Charting Canadian Communications Change and Regulatory Implications; Convergence Policy, Policy Development and Research.” It began with the observation:

“Telecommunications and broadcasting are rapidly converging into a single world of communications that offers innovative services to consumers, delivers these services in new ways and disrupts current business models. Consumers expect to access the services or content they want at anytime, anywhere, using whichever device they choose.”

The Commission pinpointed technological advancements as the underpinning of these social and economic changes at the heart of convergence including “the digitization of communications, information and audio-visual content; growth in broadband speeds, capacity and penetration; and the development of new network infrastructure such as fibre-based networks and mobile broadband. Convergence is transforming the communications landscape and blurring the boundaries between previously distinct spheres.”

Passing almost unnoticed, at the same time, was the Canadian deadline for the conversion of Canadian broadcasting to digital, on August 31, 2011. Years behind the official conversion south of the border, the Canadian conversion, mostly completed by the deadline, was heralded only by a few public service announcements and the addition of large numbers of HD channels to an already-crowded cable universe.

The End of CCTA

In February, 2006, the writing was on the wall for the transformation of the cable industry and its subsequent even stronger emergence as a competitor in an expanded Canadian communications environment. That month saw the end of the cable industry’s 50-year-old national association, CCTA – the Canadian Cable Telecommunications Association. In its notice that the organization would cease operations, CCTA stated that “(a)s a consequence of convergence, the cable industry has evolved beyond broadcasting and now includes telephone, internet and wireless services. Given the different market conditions, evolving consumer demands for a variety of new services and competitive pressures, the CCTA has determined that it is not possible to consistently reflect a single industry position on many key issues.”

In other words, a number of major CCTA members by that point wore a number of significantly different hats. The conflicting positions and demands of the players who had entered the cable industry combined with new member organizations that were not primarily cable operators, creating irreconcilable differences that could not be resolved with the Association. On Feb. 10, 2006, when CCTA announced that it would cease operations, the organization represented 75 member companies.

When CCTA was dissolved, another cable organization, formed originally in 1993, began moving somewhat to the forefront in representing smaller, independent cable operators. The Canadian Cable Systems Alliance (CCSA) was originally created as a purchasing group for smaller cable operators, and functioned much like a single Multi-System cable Operator (MSO).

CCSA was founded to buy television programming, hardware and services for its members, according to the organization’s published mandate, and “administer supply contracts with a sophisticated and cost-effective billing system.” As cable operators increasingly moved into Internet service provision, their role began to approach that of a telecommunications provider, with all the hardware and some of the regulatory requirements involved. In addition, CCSA continued a role of industry representation and lobbying, representing its 100 small independent cable operators.

Transformative Convergence

The cable industry, which originated in the distribution of television programming, gradually transformed, along with other kinds of communications companies, into organizations focused not only on content distribution but on ownership and production of content itself. The fierce debates of the previous 20 to 30 years about “content vs. carriage” and the then-necessity of separating the two functions became increasingly distant and irrelevant.

By the third quarter of 2011, Canadian broadcast and cable communications were in effect controlled by what was called ‘The Big Four’ – Quebecor Media Inc. (QMI), Rogers Media, Shaw Communications Inc., and Bell – BCE Inc.

The Big Four had transformed themselves entirely from their initial business origins into large communications entities. Quebecor, originally a printing company, now owned substantial cable and television holdings. Rogers, originally a major Eastern cable operator, now owned the urban upstart TV network CityTV as well as multi-lingual television stations. Shaw, originally a Western Canada cable operator, now owned the CanWest Global television network; and Bell Canada, originally Canada’s telephone company, now owned the CTV television network. All these acquisitions were only a part of the holdings of The Big Four that radically changed the landscape.

The ‘Big Four’

In 2001, media giant Quebecor received CRTC approval for its purchase in 2000 of Videotron (Decision 2001-283), the third largest cable company in the country and the largest in Quebec, and then for its purchase of the TVA Television network (Decision 2001-384).

All of Quebecor’s media properties were held through Quebecor Media Inc. which had two shareholders, Quebecor, which held a 54.72% interest, and Capital Communications CDPQ (Capcom), with the remaining 45.28%. Capcom was a wholly-owned subsidiary of the Caisse de dépôt et placement du Québec (the Caisse), an agency created by the Government of Quebec in 1965 to manage the funds of the Quebec Pension Plan. Ten years after these acquisitions, the former printing conglomerate owned, in addition, Sun Media Corporation, publisher of eight metro daily and over 180 weekly tabloids and newspapers as well the failed Craig Broadcasting flagship Toronto One, which became the new Toronto station Sun TV; a major stake in CPAC – the Cable Public Affairs Channel; video production, distribution and specialty television operations along with cable telephony and Internet portal services including CANOE.

Rogers, the long-time major cable operator, gained control of the City-TV network and all five of its stations in 2007 (CRTC Broadcast Decision 2007-360). Rogers’ three major divisions included its original Cable division expanded to its Media and Wireless divisions. Its Cable division included over 2 million subscribers in Ontario, New Brunswick, Newfoundland and Labrador, a large subscriber base to its high-speed cable-based broadband Internet service, along with both business and residential cable telephone service. The Rogers Media division had 55 radio stations, the five CityTV stations, five multi-cultural television stations, three specialty channels and a major interest in CPAC. With the purchase of Maclean-Hunter and its cable systems, Rogers also gained control over the Maclean-Hunter publishing division including 55 business and consumer magazines. The Rogers empire also began purchases in the entertainment field including the Toronto Blue Jays baseball team, a clear advantage for the Rogers specialty sports channels including Sportsnet, and Skydome, the covered sports stadium in downtown Toronto renamed Rogers Centre. The Wireless division included Rogers Wireless, Fido and chatr cell phone service brands.

Shaw Communications, originally an Edmonton-based cable operator, became a major television network player with its purchase in 2010 of debt-ridden Canwest Global and its network television stations (CRTC Broadcast Decision 2010-782). The Global purchase also included Canwest’s equity interests in CW Investments Co., the Canwest subsidiary which owned a portfolio of specialty television channels acquired from Alliance Atlantis Communications Inc. in 2007. Previously, in 2009, Shaw purchased Mountain Cablevision in Hamilton, expanding its cable operation to Ontario. It owned 18 specialty television channels including such heavy-weights as HGTV, History Television, the Life Network, Showcase and Food Network Canada. Shaw also owned Corus Entertainment, a major player in its own right with a host of specialty television stations including Country Music Television, W Network and YTV Canada, radio stations and production companies including children’s television producer Nelvana.

Bell, originally Canada’s major telephone company, also underwent a major metamorphosis, becoming Bell Canada Enterprises, a multi-media communications company. After taking on the cable industry in content distribution with the launch of Bell ExpressVu direct-to-home satellite services, Bell moved massively into control of content in April, 2011. Bell completed its purchase of the national CTV television network (Broadcasting Decision 2011-163) and launched its new Bell Media division to include CTV and other “content assets.” CTV included 28 conventional television stations across the country, 29 specialty channels including TSN, Discovery Channel, CP24, MuchMusic, Bravo and Animal Planet. Bell owns 33 radio stations including CHUM Limited, which it purchased in 2007.

While Bell continued to operate its DTH ExpressVu satellite television service, its Mobility Wireless cell phone business, high speed Bell Internet as well as residential and business telephone services, Bell also demonstrated in the 3rd quarter of 2011 a completely new television distribution system it called ‘Fibe TV.’ Shown at the Toronto International Film Festival, Fibe TV was a direct challenge to the cable industry’s distribution of television content. Touted as “a next-generation television service platform,” it utilized existing in-home wiring with Bell’s fibre optic network and a brand-new residential home network converter device that integrated television with Internet service – IPTV. Available initially in a few major cities, the service was direct competition to all other delivery systems, including traditional cable.

The Convergence Report

The CRTC ‘Navigating Convergence’ report defined the disintegration of traditional communications sectors and the merging and melding of old technologies with new. The Commission recognized the change in technologies that dramatically altered its oversight of the regulatory framework.

“These changes challenge the present regulatory framework for broadcasting and telecommunications. A sector-specific regulatory approach in an increasingly converged business environment, for example, may reduce regulatory effectiveness and render approaches for achieving policy objectives ineffective,” the report observed.

“Since the early 1990s, part of the Commission’s regulatory approach has been to encourage a competitive marketplace through deregulation and increased reliance on market forces. The Commission has decided not to regulate a large number of retail telecommunications services. Where there is insufficient competition to discipline the market, the Commission continues to impose price regulation for some services…

“It has been possible to deregulate services because Canada has two nationwide facilities-based wired networks provided by cable and telephone companies. As a result of convergence, these previously discrete networks now compete with each other. They are also complemented by wireless networks and satellite services. Where these competitors serve customers outside their wireline footprints—with wireless technologies, for example—competition is increased.”

Radical Changes in Technology

The Commission’s report detailed the outlines of these two ‘nationwide facilities-based wired networks” – the cable system and the telephone networks – competing head-to-head, not only in their traditional areas of competition but in substantial new technological arenas with core competition focused on Internet technologies and deliveries.

“In the telecommunications sector, there has been an evolution from public circuit-switched telephone networks to fibre-based transport and Internet Protocol (IP) networks,” stated the report. “On the broadcasting side, what were once purely broadcasting distribution networks have evolved to incorporate IP architectures that are capable of delivering a wide array of services, including video, voice and Internet.”

The former telecom sector was building fibre optic systems to the home (called FTTH), for individual homeowners, and fibre optic systems to multi-unit buildings (called FTTB). Technical upgrades to individual telephone lines (ADSL or asymmetric digital subscriber lines) had evolved two to three generations, providing massive bandwidth capacity and speed.

The former cable sector was moving to DOCSIS technology (Data-over-cable-service-interface-specifications), as well as fibre optic networks, towards the same end as the former telecom carriers – massive bandwidth and higher speed.

And the game-changer for both these national infrastructure systems was mobile devices – smartphones and smaller computer tablet devices. Voice services and e-mail, the Commission notes, were only two of thousands of applications available on hand-held devices. Text messaging, video recording and exchange, Web browsing and the key components of all, television, audio and radio programs and services were the driver behind increased bandwidth and speed.

The Commission quoted statistics from Cisco Systems that clearly illustrated the bandwidth driver: “a basic cellphone generated 3.3 MB per month of mobile data traffic; a smartphone generated 79 MB per month; a tablet generated 405 MB per month—five times more traffic that the average smartphone, and laptops on mobile networks generated 1.7 GB per month—22 times more traffic than the average smartphone.”

The majority of Canadians still, however, received television programming via cable – 55 per cent or about 8.4 million households, the report noted. While cable and satellite subscribers were projected to plateau in terms of numbers over the next five years, IPTV – Internet Protocol TV – was expected to increase.

Vertical Integration – a Reality in Canadian Broadcasting

The vertical integration of Canada’s major communications players across all sectors has, as noted, virtually eliminated the ‘content vs. carriage’ debate which characterized so much of the early years of all industries, as well as the division between these industries. Vertical integration, seemingly impossible to stop, prompted the CRTC to put together a policy on vertical integration, examining and detailing processes to ensure competition for content, and to reduce the ability of major players to hoard content for their own multitudinous distribution platforms.

The CRTC’s ‘Broadcasting Regulatory Policy 2011-601: Regulatory framework relating to vertical integration’ was released Sept. 21, 2011. In it, the Commission defined its decisions to:

  • “Prohibit companies from offering television programs on an exclusive basis to their mobile or Internet subscribers. Any program broadcast on television, including hockey games and other live events, must be made available to competitors under fair and reasonable terms.
  • Allow companies to offer exclusive programming to their Internet or mobile customers provided that it is produced specifically for an Internet portal or a mobile device.
  • Adopt a code of conduct to prevent anti-competitive behaviour and ensure all distributors, broadcasters and online programming services negotiate in good faith. Implement measures to ensure that independent distributors and broadcasters are treated fairly by large integrated companies.”

In addition, the Commission urged that major players provide viewers with more flexibility and choice – “pick and play” – in terms of the programming and packaging they wish to purchase. The added caveat noted that if such flexibility is not forthcoming, the Commission would hold hearings within six months on that subject.

The Convergence and Demise of Communications Sectors

While Canada’s national cable television association shut down in 2006, the demise of the Canadian Association of Broadcasters occurred only a short four years later. In June, 2010, the 84-year-old organization, started initially by and for radio broadcasters, announced that it was closing its doors. The conflicting needs of its members, who ran the gamut from conventional and specialty broadcasters to cable and telecom operators with broadcast licences, resulted in divergent and irreconcilable positions. Later, the CAB “underwent major restructuring” according to the organization’s announcement, staying alive but deciding to focus primarily on copyright and its Canadian Broadcast Standards Council. Two months later, the national Radio Marketing Bureau closed its doors permanently.

The key that unlocked an entirely new world of communications over the past 20 years was digitization. While creating entirely new industries, sectors, companies and ways of communicating, it also unraveled most of the organizations, structures and entire industries that embraced it.

Written by Daphne Lavers – September, 2011