Source : Canadian Press

American-allied service providers held to Canadian-content standards

OTTAWA - The CRTC opened the door to pay-radio services Thursday, approving three licence applications with tough Canadian-content rules.

The federal agency approved licences for two satellite-based systems and one ground-based proposal, paving the way for the debut of subscription radio. Pay radio is a growing phenomenon in the United States, beaming CD-quality radio to commuters and people in remote locations far from regular radio service.

The Canadian Radio-television and Telecommunications Commission raised the bar for Canadian content above the level offered by the applicants, but the main satellite players said they believe they can live with the commission's demands.

Kevin Shea, CEO of Sirius Canada Inc., a consortium of the CBC, Standard Radio and U.S.-based Sirius Satellite Radio, said he expected the higher Canadian content standards.

"At first glance, it doesn't look to be unrealistic," he said. "The question remains will we be able to have a competitive, viable service."

Satellite radio offers superior-quality sound, without commercials, from anywhere in the country.

The service would be delivered by a string of satellites rather than on an FM or AM band.

A special receiver will be required to listen to satellite radio.

Cars in the United States have had the receivers as a dealer option for years.

Dealers have been selling receivers in Canada for months but users needed to subscribe to a U.S. service.

Monthly subscription fees would be $10 to $13 depending on the service chosen.

John Bitove, head of Canadian Satellite Radio, which is partnered with the U.S.-based XM Radio, was pleased by the CRTC's decision.

"We are excited to have been given this opportunity," he said. "We applaud the CRTC. This was very difficult to balance all the various interests."

Bitove said there's work to be done to deal with the tougher Canadian content rules, but he thinks it's doable.

"We have some work to do with XM to try to renegotiate the deal we had when we proposed our licence to the CRTC last fall," he said.

The third proposal approved is a land-based pay-radio system of broadcast towers offered by Toronto-based CHUM and Astral Media of Montreal.

GM Canada, a partner of Canadian Satellite Radio, also welcomed the news. The auto giant hopes to sell factory-installed satellite receivers in over 50 models in the 2006 year.

"We've been really anxious to have a decision," said David Paterson, GM vice-president for corporate affairs.

He said GM hopes CSR can adjust to the commission's requirements and get its system off the ground by fall, as originally planned.

The CRTC said the two satellite services must offer at least eight original Canadian channels broadcasting at least 85 per cent Canadian content. They can offer nine foreign channels for each Canadian channel.

At least a quarter of the Canadian channels must be in French.

At least 25 per cent of the music on the Canadian channels must be new music and 25 per cent must be from emerging Canadian artists.

The companies must also contribute five per cent of gross revenues to initiatives for developing Canadian talent.

The CHUM-Astral ground-based service was approved to offer 50 Canadian-produced channels, with 20 per cent in French. These services must follow standard CRTC rules for Canadian content -- 35 per cent for popular music and, for French stations, 65 per cent of musical selections in French.

This service will also have to contribute two per cent of gross revenues to Canadian talent.

"These decisions foster the objectives of the Broadcasting Act and balance the interests of Canadian consumers, the radio industry and the music industry," said Charles Dalfen, commission chairman.

"These licences will harness new technologies for Canadians and give Canadian talent exposure to listeners across Canada and, indeed, North America -- both through new Canadian channels and air play on U.S. channels.

"New and emerging artists should benefit especially."

The Canadian Association of Broadcasters questioned the fairness of the decision.

"Subscription radio will compete for audiences, and consequently will have an impact on conventional radio in Canada," said Glenn O'Farrell, association president.

He said the newcomers should not be allowed to undermine existing broadcasters.

Ian Morrison, spokesman for the Friends of Canadian Broadcasting, said the CRTC erred in approving all three proposals.

His group supported the CHUM bid and fears it will die because of competition from the other American-allied bids.

"They've scuttled the Canadian candidate," Morrison said. "I don't see how it could work with full competition ... . They missed a great chance here, because CHUM and Astral were proposing a Canadian alternative that would morph to a satellite in four years' time and would have preserved a Canadian base."

He said he will meet Friday with other arts organizations to consider appealing the decision to cabinet or the Federal Court.

Bitove said he hopes the process isn't stalled by an appeal.

"Hopefully, no one will appeal it because, at the end of the day, this is a $2-billion benefit to Canada's economy. We've got a pent-up demand."

© Canadian Press