Satellite Television – The History of Canadian Broadcasting

Canadian Satellite Television

The development and innovation of satellites and satellite technology soon followed on the heels of the development and increase of the number and variety of television channels, both in Canada and internationally.

In the 1960s and the 1970s, television networks used terrestrial microwave networks to expand signal reach and audiences. The 1980s and the 1990s saw a general migration of television signals from ground-based terrestrial networks to orbiting satellites as satellite technology expanded and the number of television channels increased exponentially.

Beginnings – Canada First

In 1969, the Government of Canada passed the Telesat Canada Act, establishing Canada’s own domestic national satellite operator. Three years later, Telesat Canada launched its first satellite, Anik A1, on a Delta rocket, the first commercial, domestic communications satellite in geostationary orbit in the world.

Eventually there were three Anik A satellites operating in C-band, the 6/4 GHz. frequency range allocated primarily for television broadcasting by the International Telecommunications Union (ITU). These first commercial satellites required large earth receiving stations, most 3-4 meters (9-12 feet) wide, and larger.

Because of the high cost, television networks were the primary broadcast users of these satellite systems. Canada’s national network, CBC, began satellite television service to Canada’s north in 1973 and was the first Canadian broadcaster to switch to satellite distribution across the country. It was a unique technological accomplishment when the system began operations on April 1, 1973, using a satellite master control system designed and developed by CBC engineering. (Twenty-six years later, in 1999, the CBC received a technical Emmy for this accomplishment.)

Satellite distribution allowed instantaneous reception of programming all across the country, and would eventually allow broadcasters to manage complex discrete feeds to separate locations in different time zones at far less cost than any ground-based systems.

Cable and Direct-to-Home by Satellite

As cable operators began to expand their systems, they also began to look for more signals to offer their customers. Microwave systems were limited in distance capability, and in the number of signals carried.

In 1975, the U.S. began its first pay TV service, Home Box Office (HBO), years before pay TV was approved in Canada. HBO moved to satellite distribution a year later, and quickly became a tempting alternative for Canadians with satellite dishes.

In Canada, satellite television distribution to cable operators began in 1979 when CBC started satellite distribution of Canada’s Parliamentary channel to 15 cable operators, for distribution on local cable systems.

Telesat Canada expanded in 1980 with a new series of satellites. Anik B was the world’s first dual-band domestic communications satellite operating in both C-band and the new higher-powered Ku-band, (14/12 GHz.) known as Direct-to-Home or DTH. The DTH satellites used considerably smaller receiving dishes.

A year later, the Canadian Radio-television and Telecommunications Commission (CRTC) licensed Canadian Satellite Communications Inc. (Cancom) to deliver television and radio services to remote and underserved communities throughout Canada by satellite. The following year, in 1982, the Commission approved six pay TV services to be delivered across the country by satellite including First Choice, the movie network, with two national channels, three regional general interest networks called SuperChannel, along with a national Canadian culture channel and a regional multi-lingual pay service in B.C.

Pay-TV and the Grey Market

While Cancom began operations in 1982 using large dishes in C-band, pay TV services began in 1983 using smaller-sized dishes in the Direct-to-Home band. Telesat Canada responded to the skyrocketing demand for more satellite capacity with two new series of satellites, Anik C in the DTH band and Anik D in the conventional C-band.

In 1983, then-Minister of Communications Francis Fox announced that individual Canadians no longer needed a licence to operate a TVRO – Television Receive Only satellite dish – for personal use. This announcement coupled with the emergence of American satellite television signals launched the ‘grey’ and ‘black’ satellite television market in Canada. By the end of 1983, CBC, educational networks, pay TV programming and Canadian independent stations were distributed by satellite. Many satellite signals remained unencrypted, especially network signals receivable by large dishes which began appearing in backyards across the country. Some were looking at Canadian satellites with Canadian programs, but many more were looking at American satellite signals from U.S. networks.

The grey market was illegal reception of non-Canadian signals which were freely available with the right equipment. When Canadians began purchasing U.S. services using U.S. post office box addresses, this constituted illegal reception of scrambled non-Canadian signals– the black market. Eventually black market operators began modifying actual decoding equipment used illegally in Canada, to ensure continued reception.

A Universe of Programming

In 1984, the CRTC licensed four new Canadian specialty channels including City TV’s MuchMusic and The Sports Network, together with 17 new American specialty television services such as CNN and Arts & Entertainment (A&E). These channels were satellite-only television networks, with no terrestrial affiliates on the ground.

Telesat continued to increase its satellite fleet with satellite launches each year between 1982 and 1985. Telesat also began building satellite teleports, large-scale ground installations in major urban areas to co-ordinate, receive and distribute television signals to and from its satellites. The first began operation in 1984 in Toronto, followed by similar installations in Montreal, Edmonton, Calgary, Vancouver, Ottawa, Iqaluit and Halifax.

In 1987, the CRTC again expanded television viewing choice with the approval of 10 new cable channels in French and in English (PN1987-260), several in stereo and most dependent on satellite delivery.

The Network Switch-Overs

CTV Engineering explored the switch to satellite beginning with early presentations on satellite technology to the CTV Board in 1978, but the cost remained prohibitive for another 10 years. In the mid-1980s, CTV initiated a voice co-ordination system on satellite that connected network stations in real-time with voice communication. Subsequently the push began for stereo signals which needed satellite distribution.

When CTV performed as host-broadcaster for the 1988 Olympics out of Calgary, Telesat transmitted over 3,000 hours of Olympic programming. Immediately after the Olympics, CTV began the rapid construction of facilities to handle its new satellite distribution system. In September, 1988, CTV took to the skies, with a national satellite network from Toronto that could handle full stereo.

It was in September, 1992 that Global Television put its signal on satellite using a full transponder for its network feed. Five years later, in 1997, Global switched its feed to Cancom for distribution.

While City TV’s MuchMusic specialty service was on satellite from start-up in 1984, it was in 1995 that the City signal itself was distributed by satellite, also through Cancom.

The 1990s and Satellite Acceleration

A major change in the satellite sector began in 1992 when the federal government sold its stake in Telesat Canada, privatizing the company. Since its inception, Telesat had been jointly owned by the federal government and a consortium of Canadian telecommunications carriers, Telecom Canada. In 1992, Alouette Telecommunications Ltd., a company itself majority-owned by Bell Canada, purchased the federal government shares. Bell completed the acquisition six years later in 1998, when it acquired all outstanding shares of Telesat.

In the 1990s, the satellite television sector in Canada began its aggressive move into the home television arena as direct competition to cable. In 1995, ExpressVu and PowerDirecTv were licensed by the CRTC. By the time service began in 1997, the composition of the two major players had changed substantially. ExpressVu was purchased by the Bell Canada conglomerate and became Bell ExpressVu, majority owner of Telesat. In 1996, PowerDirecTv, owned and controlled by Quebec-based Power Broadcasting Inc., told the Commission it did not intend to exercise its licence. The Commission then licensed StarChoice Communications, a B.C.-based company which subsequently merged with the direct-to-home operator Homestar, which was owned by Shaw Communications, a major cable operator. StarChoice subsequently merged with Cancom.

The StarChoice/Cancom organization continued its large-scale transmission of signals to television networks and cable company headends, and added DTH capability for residential customers. Telesat launched Nimiq 1, the first first “true” Direct Broadcast Satellite (DBS) using higher frequencies, in 1999 to handle Bell ExpressVu’s new residential customers. Nimiq 2 was launched in 2002 and included both DBS capability and transmission capacity in the even-higher Ka-band (28/18 GHz.) for experimentation in two-way Internet and broadcasting services.

In 2004, Telesat launched a new series satellite, Anik F2, a three-band satellite that operates in C-band, Ku-band and Ka-band, with sufficient Ka capacity for full commercial two-way Internet service.

Digital Video Compression – DVC

Two other technological developments that emerged from Telesat were critical to Canadian broadcasting. One was the commissioning and operation of the world’s first High Definition Television broadcast mobile, used in 1989 for the first licensed HDTV live event ever to be distributed by satellite. Telesat picked up a closed-circuit boxing match in Las Vegas from Japan’s NHK broadcast network and using its own HD mobile, brought the signal into the Queen Elizabeth building in Toronto.

The second was experimentation with digital video compression (DVC) which Telesat began in 1992. By 1998 Telesat, together with CBC, was able to compress two video signals into one satellite channel for the Nagano Olympic games, a two-fold increase in capacity with no additional transport costs. Two years later, four television channels were compressed into one satellite transponder and DVC began moving towards a de facto television transmission standard, a critical step in advance of widespread HDTV developments.

By 2000, the forces of globalization resulting from world trade talks moved Telesat, now privatized and wholly-owned by Bell Canada, into a basically unregulated global arena of competition for the first time in its history.

Continued Expansion

Using DVC technology, as many as 10 television channels could by 2006 be distributed on a single satellite channel. Video compression was widespread, and was essential to the distribution of HDTV signals which carried much more data than conventional TV signals. At the same time, Telesat continued its launch schedule of new series of satellites including two Anik E and three Anik F satellites.

Satellite technology had now become a critical, integral and irreplaceable component of television broadcasting which had expanded the capability of broadcasters while reducing the transmissions costs per channel. The satellite infrastructure had become a key component of the 500-channel universe.

21st Century Changes

In the first decade of the 21st century, the transformation of the satellite industry followed a path similar to that of both the cable and broadcasting industries. Inception was followed by experimentation, expansion, acquisition and then a reduction in the overall industry.

By 2011, the field of satellite television in Canada had been reduced to two major types of operations, both national in scope. Direct-to-Home (DTH) Satellite Distribution Undertakings provided satellite television to Canadian viewers at home. Satellite Relay Distribution Undertakings (SRDUs) provided the coast-to-coast wholesale distribution of satellite signals, the satellite-to-broadcaster and satellite-to-cable distribution function.

Further, only two players remained in the field operating both types of satellite operations. Bell ExpressVu was one national licensee of both types of services, direct-to-home and national SRDU distribution. Star Choice was the second licensee for DTH, and its parent company Shaw Satellite Services was the licensee for the national SRDU distribution. Star Choice became Shaw Direct in 2011, when the CRTC approved a change in licence which removed the structural separation previously imposed when Shaw acquired Star Choice (CRTC BD 2011-602).

Selling Canada’s Satellite Infrastructure

Canada’s satellite infrastructure, both national and international, was privatized by the federal government and then sold, to Bell Canada. Telesat Canada, a Crown Corporation launched in 1969, was sold by the federal government to Bell by 1998. Teleglobe Canada, the country’s international satellite operator and signatory to the international organization IntelSat, was privatized and, by 2000, also owned by Bell Canada.

These moves by Bell Canada were strategic and financially lucrative, but were not long-term ownership moves. With Canada’s agreement to ‘liberalize’ telecommunications under international trade agreements, in late 2000, BCE paid about $7.4 billion to acquire the 77 per cent stake of Teleglobe it did not already own. Two years later, Bell decided to cut-off long-term funding to Teleglobe and the company sought court protection from its creditors. Four years later, in 2006, Teleglobe was sold to VSNL International (Videsh Sanchar Nigam Limited), for about $239 million. VSNL, touted as India’s largest player in international long distance services, also owned and operated the Tata Global Network (TGN) with international telecom systems on trans-Atlantic, trans-Pacific and intra-European routes.

Telesat Canada, meanwhile, was also sold by Bell Canada. In late 2006, the announcement was made that Telesat would be sold to a new company formed by Canada’s Public Sector Pension Investment Board (PSP Investments) and U.S.-based Loral Space & Communications Inc. (Loral). The sale was finalized in October of 2007 for a price tag of $3.25 billion.

The Rise of the Two-Player Field

While Canadian Satellite Communications (Cancom) merged with Star Choice DTH in 1999, conditions of licence required the DTH division of Shaw to maintain structural separation between owner Shaw Communications and Star Choice. That structural separation was maintained until 2011, when Shaw applied to the CRTC to delete those conditions of licence. (CRTC Broadcast Decision 2011-602).

“The Commission notes that the conditions of licence in question were imposed at a time when DTH BDUs were new players in the distribution market and Shaw was the only owner of terrestrial BDU, DTH and SRDU holdings,” the CRTC decision stated. “The Commission notes that the distribution market has since become significantly more competitive…Further, the Commission notes that these conditions of licence only apply to Shaw and not to its competitors.”

The Commission approved the application to delete the conditions of licence relating to structural separation for what was now called Shaw Direct. The decision meant that Shaw could now take advantage of ‘bundling opportunities’ for its various offerings such as “DTH services with telephone, Internet and wireless services, a benefit enjoyed by some of its competitors,” the Commission’s decision stated. The stage was set for a more level playing field with Bell.

While Bell had decided to sell Telesat, Canada’s former domestic satellite carrier, which it had been able to purchase in its entirety from the federal government, it naturally retained a ‘special relationship’ with the new company. Telesat became a division of U.S.-based Loral Space & Communications, a satellite communications company, operating in two primary areas: satellite services and satellite manufacturing. Loral S&C got 64 per cent of Telesat Canada. Before the Telesat/Loral acquisition was finalized, Telesat signed a construction contract with Loral’s manufacturing division Space Systems/Loral for Nimiq, 5, slated for launch in 2009. Bell ExpressVu was assigned exclusive use of both direct broadcast satellites Nimiq 5 and Nimiq 4, launched in 2008.

(In terms of financial parameters, the year after it was sold by Bell, Telesat reported consolidated revenues for 2008 of $711 million. At the end of that year, Telesat reported a contracted backlog for future services of $5.2 billion.)

By 2010, Telesat had announced the construction of Anik G1, “a powerful, multipurpose, state-of-the-art satellite for launch in the second half of 2012” to be built by Space Systems/Loral, stated a Telesat announcement. Anik G1 was designed to carry 16 transponders operating in the extended Ku-band for DTH operator Shaw Direct. (Anik G1 was also designed to include 24 C-band and 12 Ku-band transponders operating over South America, and was designed as the first commercial satellite operating X-band frequencies, used by civil and military agencies world-wide, with geographic coverage of the Americas and part of the Pacific Ocean. The X-band payload on G1 was reserved for the exclusive use of Canada and its NATO allies.)

Next Decade – The Wild Card

While the Canadian market had shaken out into two major DTH providers who were also the two SRDU providers for Canada, in July of 2009 the CRTC received an application for a third company to join the much-reduced satellite industry, in competition to the two main players.

The new company that proposed to join the fray was called FreeHD Canada Inc., launched by long-time satellite industry veteran David Lewis whose experience included, according to company announcements, the start-up of Bell TV, Star Choice, AlphaStar Canada and AlphaStar in the U.S.

In a ruling on the application, Broadcasting Decision 2010-61, the CRTC approved in part this new company’s plan “to operate a national direct-to-home (DTH) satellite distribution undertaking and a national satellite relay distribution undertaking (SRDU).” It was, in many ways, an audacious move.

“For its proposed DTH satellite distribution undertaking, FreeHD requested a condition of licence that would permit it to offer the majority of its programming services to subscribers in two large basic packages, one directed to Anglophone customers and the other to francophone customers,” the CRTC decision quoted. “As part of its application, FreeHD also proposed to offer a free local program package to consumers who acquire the necessary reception equipment. Consumers who purchased this equipment would receive local television stations at no further cost, and would not be obliged to purchase any other services from FreeHD. In order to recover a part of the costs of providing the free local program package, FreeHD requested that it be exempt from the requirement to contribute to the Local Programming Improvement Fund (LPIF) for the first five years of its licence term. It also requested that, to make up for the cost of providing the satellite capacity for free, conventional broadcasters provide their programming free for distribution into their local markets.”

The Commission approved, in part, the application to start up a DTH and an SRDU service subject to the same or similar conditions that applied to the existing operators. The Commission even approved interim use of a foreign satellite facility until Canadian satellite capability allowed migration to Canadian satellites. However, the Commission considered it premature to grant approval “for the applicant’s specific requests pertaining to the provision of a free local program package,” and also for provision of the majority of its programming services in two all-inclusive packages.

But most crucially, the Commission agreed to grant the necessary licences only when “the applicant has informed the Commission in writing that it is prepared to commence operations.” By the third quarter of 2011, that hadn’t happened.

One step too far

But FreeHD went a step further. In an application to the Commission under the Telecom regulations, FreeHD requested that the Commission order Telesat Canada to allocate all of the Nimiq 5 satellite capacity to FreeHD (Telecom Decision CRTC 2011-61). Telesat responded by asking the Commission to summarily dismiss FreeHD’s request, noting “(s)ummary dismissal will reduce the perception of regulatory risk caused by the application, which calls for what is tantamount to the expropriation of a fully contracted satellite. This risk perception would undermine the ability of the Canadian satellite industry to compete in global satellite markets and to finance its ongoing operations on reasonable terms.”

In its rather tart decision, the Commission observed that it did in fact have authority over its own processes, including the ability to accept or reject any application including one for summary dismissal; that Nimiq 5 was fully contracted for, and that at the time of negotiations, “FreeHD was neither a Canadian broadcasting undertaking nor a DTH satellite distribution undertaking.” The final result: without a valid licence for either a broadcasting undertaking or a DTH satellite distribution undertaking licence, FreeHD would not be allowed to take over Nimiq 5. FreeHD’s case was dismissed.

Convergence Report

The CRTC’s Navigating Convergence Report, released in August, 2011, quoted industry consultants stating that satellite TV subscriptions might plateau in the near future. The industry had, however, secured 25 per cent of the market, a considerable chunk. “In addition,” the report stated, “satellite providers play an important role in bringing voice, Internet and broadcasting distribution services – as well as competition – to remote and less densely-populated areas.”

But even as the number of players in virtually all communications sectors continued to shrink, the technology and media options available to citizens continued to expand, and the uses of all continued to evolve.