Source : Toronto Star

Within days Canada's airwave regulator will rule on a new form of broadcasting; Odds are it will fly though many questions are unresolved.

The future of Canadian radio is up in the air.

By the end of next week, possibly sooner, the Canadian Radio-television and Telecommunications Commission is expected to issue its much-anticipated decision on whether to grant licences for pay-as-you-listen satellite and digital radio in Canada.

The players are: Canadian Satellite Radio Inc. (CSR), partnered with Washington D.C.-based XM Satellite Radio Holdings Inc. and Toronto business tycoon John Bitove Jr.; Sirius Radio Canada, teamed with the Canadian Broadcasting Corp., Standard Radio Inc. and New York-based Sirius Satellite Radio Inc.; and Chum Ltd., conjoined with Montreal-based Astral Media Inc.

Each has invested millions and promised the moon for a Canadian licence to unleash hundreds of music and talk channels that know fewer geographical boundaries.

CSR and Sirius Canada are looking to offer Canada-tweaked versions of the pay-radio services their American partners have been beaming across the United States for close to four years. Chum is looking to launch a different kind of subscription-based service that uses digital audio broadcasting, or DAB, to beam digital signals from ground transmitters.

Indications are that all three vying for a licence may get their wish. Bent on ensuring Canadians have access to the latest technologies and mandated to ensure competition in all broadcast markets, few expect the commission to say no.

Even so, it is not clear when private subscription radio will be available in Canada. That's because in its decision the CRTC may impose conditions on the licences that would have to be met, including rules on Canadian content though its relevance to the new broadcast model is unclear.

"This is the first time you've ever tried to wedge a Canadian regulatory system into a North American-wide broadcasting service," says Peter Cavanagh, a partner with Ottawa-based Connectus Consulting Inc., which focuses on public policy issues. "The CRTC can approve the licences, slap restrictions and conditions that protect commercial operators and yet allow these guys to enter the market and do what they do."

It was September 2003 when CSR filed its application with the CRTC to broadcast satellite radio in Canada. Sirius shortly followed suit. Neither offered clear indications about how much Canadian content they would offer.

Chum put an end to that by slipping its own application under the CRTC's door six months later. Offering a subscription radio service based on DAB that didn't rely on satellites, Chum played the Canadian content card, promising significantly more Jann Arden, Stompin' Tom Connors and other Canadian programming - in both official languages - than its rivals.

DAB allows the broadcast of clearer sound and options beyond conventional FM radio, but it hasn't taken off in North America because of differing frequencies in Canada and the U.S., and because receivers to pick up the signals haven't been widely available.

The debate came to a head last November, when each of the three sent teams to Ottawa for public CRTC hearings.

There, the satellite providers raised the stakes, promising five new Canadian-only channels apiece and giving assurances Canadian content would be played across all their other channels - 150-plus for XM, 120-plus for Sirius.

They also each promised to contribute millions to organizations supporting Canadian talent development. And they promised to continue adding Canadian content as technology, financing and demand permits.

Chum, the only non-satellite player, argued it wasn't enough, that the other two would swamp Canadians in foreign content, would be held hostage to American-owned companies, their equipment and the whims of their stockholders, and would unfairly compete with existing Canadian broadcasters.

It promised to best existing 35 per cent Canadian content rules, and offer dozens of channels in both French and English.

Both satellite players hammered home two points. They argued satellite radio is a private network that people pay for and shouldn't be subject to the rules that govern the public airwaves. And they said an illegal gray market would flourish if the CRTC didn't approve the licences and make it legal, since satellite signals know no boundaries. Currently anyone with a U.S. address and a radio equipped to receive either XM or Sirius signals can listen to satellite radio from Vancouver to St. John's.

As the gatekeeper of Canadian content, the sentry protecting Canadian culture from other dominant forces for well over half a century, the CRTC will arguably be making one of the more difficult and controversial decision in its history.

Raise the bar too high for the satellite radio operators and they will appeal the CRTC's decision. Stoop too low, allow more foreign content on the air, and Canadian industry groups, even other broadcasters, will cry foul, and appeal.

Add to that a mandate to allow new technologies to thrive, to increase competition and aggressive lobbying from automakers who have significant stakes in both satellite radio operators, "and you have no way for the commission to make anyone happy," says Ian Morrison, spokesman for Friends of Canadian Broadcasting, an independent watchdog of the Canadian broadcasting industry.

Any disenchanted party can appeal to the Federal Broadcasting Act by filing a petition to the Clerk of the Privy Council in Ottawa.

In that case the minority Liberal government could overturn the decision, or more likely avoid stepping into the debate by sending it back to the CRTC for a second go.

An appeal could also be made through the court system, which eventually could wind up with the Supreme Court.

It is clear that if satellite radio were to begin broadcasting in Canada, it would have enormous implications for the rest of the Canadian radio and music industry.

That's because the decision, if it does manage to strike a balance between what the satellite providers want and what the rest of the industry wants, would for the first time legally allow American radio programming in Canadian airspace - something previously only available to those within radio range of the border.

At the same time, it would introduce Canadian content to millions of American satellite-radio listeners - something the satellite operators have argued will benefit the Canadian music and broadcasting industry.

"The existing rules (for television and radio) have benefited the industry and benefited the artists and have been right for the platform that's existed up until now, but what we're proposing is something that takes it to the next level," says Stephen Tapp, CSR's president and chief operating officer. "It is unfettered access for Canadian content south of the border, which no one has ever been able to offer before."

"It's a North American service, not just a Canadian service, and these five channels are going to be exposed to 300 million people in the great U. S. of A.," argues Kevin Shea, Sirius Canada's president and chief executive officer. "The opportunity for Canadian programmers, for the music industry, is what they've dreamt about for 70 years - uninhibited access to the U.S. market, which is what this does, in English and in French."

One angle the satellite firms are playing is that their broadcasts aren't over public spectrum. They feel it shouldn't be subject to the same rules as public broadcasters, and also that content concessions they've already made are ample.

They point to the CRTC's decision to allow pay-per-view channels to show 10 per cent Canadian content - because they operate as private networks and because they receive their funding from subscribers, not advertisers.

Further, like pay TV, there is only so much Canadian content available to air on 150-plus stations, they say. In as much as they are willing to support Canadian artists, there is only so much talent to draw on to fill the airwaves.

On a broader level, they point to television's evolution: first only three or four network channels, later cable channels and more recently an explosion of subscriber-based offerings.

"That is what's going to happen to radio," says Sirius Canada's Shea. "For 40 or 50 years there's only been AM and FM. Well, get ready, because here comes specialty radio."

And if the conditions are anything less than Industry Canada's and Heritage Canada's current 35 per cent foreign content requirement, that could lead other broadcasters - radio, television, the Internet and soon wireless, as newer devices begin broadcasting video and radio clips - questioning why they should stick to content rules that the satellite providers don't have to abide by.

Both CSR and Sirius Canada say they plan to have their Canadian services up and running before Sept. 1, if they get licensed and can meet attached conditions.

Chum may need a year or longer to build an infrastructure for its system and get units in the hands of consumers.

© Toronto Star

Related Documents

November 3, 2004 - Presentation to CRTC re Pay Radio [PN CRTC 2004–6]
FRIENDS says the CRTC should not licence two United States-based satellite radio service applicants, or if it does, should impose substantial conditions of licence to address the harm they will inflict on the Canadian market.

September 15, 2004 - Submission to CRTC re satellite-based radio service applications [PN CRTC 2004-6]
FRIENDS opposes two satellite-based radio applications which in our view pose a threat to the integrity of Canadian broadcasting policy by coming nowhere near established Canadian content exhibition requirements.