Part II - PROPOSED NEW INDUSTRY STRUCTURE FOR BROADCASTING AND…

Part II - PROPOSED NEW INDUSTRY STRUCTURE FOR BROADCASTING AND
TELECOMMUNICATIONS

Section A - NAICS Structure and Narrative


 NORTH AMERICAN INDUSTRY CLASSIFICATION SYSTEM

                                           (NAICS)


                                AGREEMENT Number 2


This Document represents the proposed agreement on the structure of the North America
                                                                                    n
Industry Classification System (NAICS) for the following industries:

                      Broadcasting and Telecommunications


The detailed NAICS structure along with a brief description of the structure is attache         d
(Attachments 1 and 2). Each country agrees to release a copy of the proposed NAICS structure
to interested data users . Comments received will beshared among the countries and discussions
held before a final decision on the structure is made. Each country may add additional detailed
industries, below the 4-digit level of NAIC as necessary to meet national needs, so long as this
                                            S,
additional detail aggregates to a 4-digit NAICS l vel in order to ensure full comparability among
                                                 e
the three countries. This NAICS structure was presented and provisionally accepted at th        e
NAICS Committee meeting held on May 18 and 19 in Ottawa, Canada.



ACCEPTED:                              Signature                           Date

       Canada                    /s/ Jacob Ryten
                                                                                        5/19/
                                                                                        95

       Mexico                    /s/    Enrique Ordaz                             5/19/95

       United States             /s/    Jack E. Triplett                          5/19/95
                                                            ATTACHMENT 1


                       NAICS STRUCTURE

XX     BROADCASTING AND TELECOMMUNICATIONS

XXX     Radio and Television Broadcasting
XXXX      Radio Broadcasting
XXXX      Television Broadcasting

XXX     Cable Networks and Program Distribution
XXXX       Cable Networks
XXXX       Cable and Program Distribution

XXX     Telecommunications
XXXX       Wired Telecommunications Carriers
XXXX       Wireless Telecommunications Carriers, Except Satellite
XXXX       Telecommunications Resellers
XXXX       Satellite Telecommunications
XXXX       Other Telecommunications
                                                                        ATTACHMENT 2

                 North American Industry Classification System

Draft Classification for:           Broadcasting and Telecommunications

   Representatives of the statistical agencies of Canada, Mexico and the United States have
agreed to a draft industry classification for the Broadcasting and Telecommunications
subsector. The draft establishes three industry groups and nine industries. It has not yet been
determined in which industry sector in NAICS the Broadcasting and Telecommunications
industry subsector will be included.

Achievements of Objectives

    The classification meets the objectives for the North American Industry Classification
System. It is comprised of industries which group establishments with similar production
processes, that is, it applies the production-oriented economic concept. The hierarchical
structure also follows the production concept.
    The classification achieves comparability for the three participating countries. Based on
existing data, all three countries expect to be able to publish data regularly at the NAICS
industry level of the NAICS structure with the exception of satellite telecommunications,
which will be published only in the United States. All countries agree on the detailed
definitions of the classes.
    The classification improves comparability with other countries. With the exception of
radio dispatch services and radio and television relay systems, all industries are compatible
with the
2-digit level of the current International Standard Industrial Classification of All Economic
Activities (ISIC, Revision 3) of the United Nations. Radio dispatch services and radio and
television relay systems activities are not significant.
    Other objectives of the NAICS project have also been met. In an effort to identify high
technology and new and emerging industries, new industries for cable networks, and satellite
telecommunications have been identified. A relatively new economic development has been
identified by creating an industry for telecommunications resellers.
    In addition to the above objectives of the NAICS project, the classification meets the
objectives of an industry classification. The classifications are homogeneous and account for
most of the activities which define them. In addition, they are economically significant.
Finally, disruptions at the NAICS industry level to time series have been kept to a minimum.
The major changes in country detail are well-defined and can be taken into account in linking
time series.

Limitations of the Classification

   There are some limitations to the draft Broadcasting and Telecommunications hierarchy.
First, the proposed structure attempts to describe the subsector as it currently exists. It is
therefore rooted in today's technology and regulatory environment and it reflects the current
profile of service providers. However, many are anticipating fundamental changes in this
sector. For instance, the distinction between the Wired Telecommunication Carriers industry
and the Cable and Program Distribution industry may not be viable in the future if both
industries are engaged in the carriage of voice (basic telephone service), data, and video
(including television programs). Similarly, the systems which are now used to distribute
television programs may well be used in the future to distribute other types of products such
as games and software or be used for other purposes such as interactive home shopping or
banking. In such an environment, the provision of menus, interactive controls, and billing
services could become an integral part of the bundle of services provided by carriers.
    Secondly, it may be argued that for some purposes a number of industries which are
important users of telecommunications, as outlined in the proposal, should be included in this
subsector. These include telephone answering services and other message services that may
include the use of paging and voice mail, phone booth operations, and on-line information
services. These industries have not been included in this subsector as they are users of
telecommunications services, not providers of the telecommunications services as defined in
the proposal. They will be classified elsewhere in NAICS.
    These few examples illustrate the difficulty of building a classification for an evolving
sector that will stand the test of time.

Constraints on the NAICS Classification

   A number of industries which can appropriately be defined in terms of production
distinctions could not be published in all countries because of considerations of size and
confidentiality. Separate 5-digit industries which will pertain only to the United States have
been included as U.S. detailed industries.

A General Outline

   The Broadcasting and Telecommunications subsector has been defined to include
establishments providing point-to-point communications and the services related to that
activity. The industry groups (Radio and Television Broadcasting, Cable Networks and
Program Distribution, and Telecommunications) are based on differences in the methods of
communication and in the nature of services provided.
   The Radio and Television Broadcasting industry group operates broadcasting studios and
facilities for over the air or satellite delivery of radio and television programs of
entertainment, news, talk, and the like. These establishments are often engaged in the
production and purchase of programs and generate revenues from the sale of air time to
advertisers, and from donations, subsidies, and/or the sale of programs. The distinction
between radio and television broadcasting involves the use of equipment dealing in audio
versus audio/video signal.
   The Cable Networks and Program Distribution industry group includes two types of
establishments. Cable networks operate studios and facilities for the broadcasting of
programs which are typically narrowcast in nature (limited format such as news, sports,
education, and youth-oriented programming). The services of these establishments are
typically sold on a subscription or fee basis and the delivery of the programs to customers is
handled by other establishments that operate cable systems, direct-to-home satellite systems,
or other similar systems. These distribution systems establishments are classified to the Cable
and Program Distribution industry.
   The Telecommunications industry group is primarily engaged in operating, maintaining,
and/or providing access to facilities for the transmission of voice, data, text, sound, and full
motion picture video between network termination points. A transmission facility may be
based on a single technology or a combination of technologies.
    Wired Telecommunications Carriers operate and maintain switching and transmission
facilities (usually land lines and microwave) to provide one-to-one communications via
landlines (including microwave) or a combination of landline and satellite communications.
    Wireless Telecommunications Carriers, Except Satellite operate and maintain switching
and transmission facilities to provide one-to-one communications via airwaves. The United
States classification further distinguishes wireless carriers on the basis of technology by
separating paging services and other wireless services such as cellular and personal
communications services.
    Telecommunications Resellers provide services similar to those of telecommunications
carriers but do not operate and maintain a network. They principally purchase the services of
carriers for resale to customers.
    The Satellite Telecommunications industry principally provides point-to-point
communications services to other establishments in the telecommunications and broadcasting
industries by forwarding communications signals via a system of satellites. The Other
Telecommunications industry includes establishments that specialize in the provision of other
types of services such as satellite tracking, radar station operations, and overseas
telecommunications (except for satellite telecommunications).

Some Changes to the National Classifications

   This section highlights some of the significant changes to the existing national industry
classification systems.
   The only change to USIC 4832 Radio Broadcasting Stations is to add detail to separate the
radio networks from the radio stations. It was felt that the programming function of the
network was a significant production difference. There is a significant change for Mexico in
that the draft proposes the elimination of the designation of private versus public.
   The change in the Television Broadcasting industry for the U.S. is restricted to a title
change to clarify the proper classification for television networks. The issue of private versus
public television is a change for Mexico.
   Cable Networks is similar to Radio Broadcasting, in that the programming function is
being used to identify these establishments as a separate industry. This would be a new
classification for all three countries.
   Cable and Program Distribution establishments are separated from the cable networks
based on the absence of the programming function. This would be a new industry for all
three countries.
   The Wired Telecommunications Carriers industry group has been changed to include the
activities of USIC 4822 Telegraph and Other Message Communications. Detail was also
added for carriers and resellers. USIC 4822 has been a declining industry and has assumed
more and more of the characteristics of the wired telecommunications industry. This change
also improved comparability with both Mexico and Canada.
   Recent changes in the telephone industry have paved the way for new businesses. The
most prevalent are the telecommunications resellers. A reseller purchases communications
services from the telecommunications carrier and resells the services to their customers. The
reseller does not operate the communications network but instead may operate only the
switching system to connect customers to the carriers' network. Telecommunication Carriers
and Telecommunications Resellers are new industries for all three countries. It is a new
economic development and, as such, is being identified as a new and emerging industry.
    Changes in the Wireless Telecommunications Carriers, Except Satellite industry involve
moving radio dispatch from USIC 4899 and adding detail to reflect different technologies and
updating the terminology. The production function of radio dispatch is similar to that of
wireless telecommunication. This change also increased comparability with Canada and
Mexico. Paging was found to have a distinct production function. Canada could not support
this activity as a NAICS industry so it was added as a 5-digit U.S. industry. Wireless
Telecommunications Carriers, Except Satellite will be a new industry for all three countries.
    Satellite Telecommunications is a new industry in all three countries. It is a new
technology which is now being identified as a new and emerging industry.
    Other Telecommunications is a new industry for all three countries.

Section B - Annex: United States National Industry Detail

As explained in the Structure presentation of this notice, the three country agreement on
NAICS envisions that each country may develop national detailed industries below the
NAICS industry level, so long as the national detail can be aggregated to the NAICS
classification, thus assuming full North American comparability.
   The ECPC is proposing U.S. 5-digit industry detail for this NAICS industry subsector. In
the following tables, proposed 5-digit detail is indicated in italics. For cases where no 5-digit
detail is shown, the ECPC is proposing that the NAICS 4-digit industries will also represent
the most detailed U.S. industries.
                                                                                  TABLE 1

     The definitions of status codes are as follows: E-existing industry; N-new industry; R-revised industry; and * means "part of". The abbreviation NEC is used for Not Elsewhere Classified.


1997 NAICS & U.S. DESCRIPTION                                                STATUS              1987 USIC        1987 USIC DESCRIPTION
                                                                             CODE                CODE

XX              Broadcasting and Telecommunications

XXX                Radio and Television Broadcasting

XXXX                 Radio Broadcasting

XXXXX                   Radio Networks                                       N                   4832*            Radio Broadcasting Stations

XXXXX                   Radio Stations                                       N                   4832*            Radio Broadcasting Stations

XXXX               Television Broadcasting                                   E                   4833             Television Broadcasting Stations

XXX             Cable Networks and Program Distribution

XXXX               Cable Networks                                            N                   4841*            Cable and Other Pay Television Services

XXXX               Cable and Program Distribution                            N                   4841*            Cable and Other Pay Television Services

XXX             Telecommunications

XXXX               Wired Telecommunications Carriers                         N                   4813*            Telephone Communications, Except Radiotelephone (Carriers)

                                                                                                 4822             Telegraph and Other Message Communications

XXXX               Wireless Telecommunications Carriers, Except              N
                   Satellite

XXXXX                 Paging                                                 N                   4812*            Radiotelephone Communications (Paging Carriers)

XXXXX                Cellular and Other Wireless Telecommunications          N                   4812*            Radiotelephone Communications (Cellular Carriers)

                                                                                                 4899*            Communication Services, NEC ( Radio Dispatch)

XXXX               Telecommunications Resellers                              N                   4812*            Radiotelephone Communications (Paging and Cellular
                                                                                                                  Resellers)

                                                                                                 4813*            Telephone Communications, Except Radiotelephone (Resellers)

XXXX               Satellite Telecommunications                              N                   4899*            Communication Services, NEC (Satellite)

XXXX               Other Telecommunications                                  N                   4899*            Communication Services, NEC
                                                                      TABLE 2
The abbreviation "pt" means "part of". @ means time series break has been created that is greater than 3% of the 1992 revenues for the 1987 SIC industry. The
abbreviation NEC is used for Not Elsewhere Classified.



    1987 USIC                      1987 USIC DESCRIPTION                                               1997 U.S. DESCRIPTION
    CODE


    4812@                          Radiotelephone Communications                                       Wireless Telecommunications (pt)
                                                                                                       Telecommunications Resellers (pt)

    4813@                          Telephone Communications, Except                                    Wired Telecommunications Carriers
                                   Radiotelephone                                                      (pt.)

                                                                                                       Telecommunications Resellers (pt.)

    4822@                          Telegraph and Other Message                                         Wired Telecommunications Carriers
                                   Communications                                                      (pt.)

    4832                           Radio Broadcasting Stations                                         Radio Networks
                                                                                                       Radio Stations

    4833                           Television Broadcasting Stations                                    Television Broadcasting

    4841                           Cable and Other Pay Television                                      Cable Networks
                                   Services                                                            Cable and Program Distribution


    4899                           Communications Service, NEC                                         Wireless Telecommunications
                                                                                                       Carriers (pt)
                                                                                                       Satellite Telecommunications
                                                                                                       Other Telecommunications
Description of Changes to the U.S. System

The Broadcasting and Telecommunications subsector has been completely restructured for
1997 to reflect the changing technology of the subsector. New industries are the following:

  Radio Networks from part of 1987 Industry Code 4832, Radio Broadcasting Stations.

  Radio Stations from part of 1987 Industry Code 4832, Radio Broadcasting Stations.

  Cable Networks from part of 1987 Industry Code 4841, Cable and Other Pay Television
  Services.

  Cable and Program Distribution from part of 1987 Industry Code 4841, Cable and Other
  Pay Television Services.

  Wired Telecommunications Carriers from part of 1987 Industry Code 4813, Telephone
  Communications, except Radiotelephone and Industry Code 4822, Telegraph and Other
  Message Communications.

  Paging from part of 1987 Industry Code 4812, Radiotelephone Communications.

  Cellular and Other Wireless Telecommunications from parts of 1987 Industry Codes 4812,
  Radiotelephone Communications and Industry Code 4899, Communications Services, Not
  Elsewhere Classified.

  Telecommunications Resellers from part of 1987 Industry Code 4813, Radiotelephone
  Communications and part of Industry Code 4812, Telephone Communications, Except
  Radiotelephone.

  Satellite Telecommunications from part of 1987 Industry Code 4899, Communication
  Services, Not Elsewhere Classified.

  Other Telecommunications from part of 1987 Industry Code 4899, Communication
  Services, Not Elsewhere Classified.

The number of industries in this industry subsector increased from 7 in 1987 to 11 in 1997.
For time series linkage, 4 of the 7 1987 industries are comparable within three percent of the
1997 industries. For the other 3 industries, changes involve splitting a part of 1987 SIC 4-digit
industries to obtain more industry detail, in response to new economic and technological
developments in this subsector; the new more detailed industries can readily be reaggregated
for analytical purposes where time series comparability is important.