Shaw 2015 Annual Report Download - page 20

Shaw Communications Inc.
Management’s Discussion and Analysis
August 31, 2015
Pursuant to the Broadcasting Act, the CRTC is mandated to supervise and regulate all aspects of the broadcasting system in a
flexible manner. The Broadcasting Act requires BDUs to give priority to the carriage of Canadian services and to provide
efficient delivery of programming services. The Broadcasting Act also sets out requirements for television broadcasters with
respect to Canadian content. Shaw’s businesses are dependent upon licenses (or operate pursuant to an exemption order)
granted and issued by the CRTC and Industry Canada.
Under the Telecommunications Act, the CRTC is responsible for ensuring that Canadians in all regions of Canada have access to
reliable and affordable telecommunication services of high-quality. The CRTC has the authority to forbear from regulating
certain services or classes of services provided by a carrier if the CRTC finds that there is sufficient competition for that service
to protect the interests of users. All of Shaw’s telecommunication retail services have been forborne from regulation and are not
subject to price regulation. However, regulations do impact certain terms and conditions under which these services are
provided.
The technical operating aspects of the Company’s businesses are also regulated by technical requirements and performance
standards established by Industry Canada, primarily under the Telecommunications Act and the Radiocommunication Act.
Pursuant to the Copyright Act, the Copyright Board of Canada oversees the collective administration of copyright royalties in
Canada, including the review and approval of copyright tariff royalties payable to copyright collectives by BDUs, television
broadcasters and online content services.
The sections below include a more detailed discussion of various regulatory matters and recent developments specific to Shaw’s
businesses.
Licensing and ownership
For each of its cable, direct to home satellite (“DTH”) and SRDU undertakings, the Company holds a separate broadcasting
license or is exempt from licensing. In November 2010, the majority of cable undertakings owned and operated by the
Company were renewed by the CRTC for a five-year period ending August 31, 2015. On February 16, 2015, the CRTC issued
an administrative renewal of the licenses for Shaw’s undertakings serving British Columbia, Alberta, Saskatchewan, Manitoba
and Ontario for a period of one year, to August 31, 2016. The licenses of the Company’s DTH and SRDU undertakings were
renewed in 2013 by the CRTC for a seven year period ending August 31, 2019. Shaw has never failed to obtain a license
renewal for its cable, DTH or SRDU undertakings.
The Company also holds a separate license for each of its conventional over the air (“OTA”) television stations and each
specialty service. These CRTC broadcasting licenses must be renewed from time to time and cannot be transferred without
regulatory approval. The majority of the Company’s licenses for its OTA television stations and specialty services are current to
August 31, 2016 and are expected to be administratively renewed to August 31, 2017. Under these licenses, the Company is
subject to an expenditure-based regulatory regime, whereby the Company must expend a certain percentage of its prior year
revenues from its conventional OTA and specialty services on Canadian content, and also on specific categories of Canadian
programs defined as “programs of national interest”. These obligations are imposed on an individual license basis, but with
certain restrictions, may be shared among various conventional OTA and specialty licenses.
The potential for new or increased fees through regulation
In July 2012, the CRTC determined to phase out completely, as of September 2014, the Local Programming Improvement
Fund to support local television stations operating in non-metropolitan markets with contributions from licensed BDUs.
CRTC Regulations require licensed cable BDUs to obtain the consent of an OTA broadcaster to deliver its signal in a distant
market. The Regulations provide that DTH undertakings may distribute a local over-the-air television signal without consent
within the province of origin, but must obtain permission to deliver the over-the-air television signal beyond the province of
origin unless the DTH distribution undertaking is required to carry the signal on its basic service. Broadcasters may assert a
right to limit distribution of distant signals or to seek remuneration for the distribution of their signals in distant markets on the
basis of these Regulations.
The Copyright Board is considering a proposed tariff for the retransmission of programming in distant television stations for the
years 2014 through 2018. The tariff proposed by the retransmission rights collectives would, if approved, represent a
significant increase in the per subscriber rates payable for the retransmission of programming in distant signals. The Company
has objected to the tariff on behalf of its cable and DTH satellite divisions and is participating in the current hearing.
18 Shaw Communications Inc. 2015 Annual Report