Ms Diane Rhéaume
Secretary-General
CRTC

Dear Ms. Rhéaume:

Re: Broadcasting Notice of Public Hearing CRTC 2004-6: Applications
2003-1081-3, 2003-1885-9 and 2004-0133-1

1. Friends of Canadian Broadcasting wants to appear at the November 1st,
2004 public hearing to provide the Commission with a listeners' point of
view. For reasons laid out below, FRIENDS opposes the licensing of
2003-1081-3 (CSR-XM) and 2003-1885-9 (CBC-Standard-Sirius) in their present
form and supports 2004-0133-1 (CHUM).

2. The Broadcasting Act states that "each element of the Canadian
broadcasting system shall contribute in an appropriate manner to the
creation and presentation of Canadian programming", and "each broadcasting
undertaking shall make maximum use, and in no case less than predominant
use, of Canadian creative and other resources in the creation and
presentation of programming, unless the nature of the service provided by
the undertaking, such as specialized content or format or the use of
languages other than French and English, renders that use impracticable, in
which case the undertaking shall make the greatest practicable use of those
resources". (Section 3 (1) (e & f)). These broadcasting policies should
govern the Commission's evaluation of the three applications.

3. United States-based satellite radio services should not be licensed by
the Commission because they will harm our domestic broadcasting and music
industries. FRIENDS believes that the threat of the grey market is being
over-stated by the satellite-based applicants. Even were that not so,
importing almost 200 US channels in combination with 6 Canadian services
(some of them duplicating existing Canadian services) would do much more
damage, for example, in the music industry by reducing the proportion of
exposure that Canadian artists will receive in the Canadian market.

4. If, nonetheless, the Commission decides in principle to licence the
satellite-based applications out of a concern for grey market threats,
FRIENDS believes conditions should be attached to such licences to attenuate
for the damage they will inflict on the Canadian market.

5. Article 6 (2) of the Broadcast Distribution Regulations provides that "a
licensee shall ensure, in respect of each of analog and digital technology,
that a majority of the video and audio channels received by the subscriber
are devoted to the distribution of Canadian programming services". It would
appear that neither 2003-1081-3 nor 2003-1885-9 come remotely close to
meeting this standard.

6. The Commission's longstanding nurturing of the Canadian music industry
constitutes a major success. In essence, through exhibition requirements the
Commission has made a 35% Canadian content standard a floor in Canadian
radio. Applications 2003-1081-3 and 2003-1885-9 cannot even begin to meet
this standard. While there may be some modest benefit to the Canadian music
industry through exhibition opportunities for Canadian musicians in the US
market, no reasonable observer would be justified in concluding that this
could begin to compensate for the lack of play in the Canadian market.

7. Only an imposed expenditure requirement on the US-based satellite
services can attenuate to some degree for the damage they would inflict on
Canadian artists through massive importation of foreign music. FRIENDS
doubts that the business plans of the satellite-based applications could
bear an expenditure requirement sufficient to compensate for the damage they
inflict on the Canadian market. However this is something the Commission
might wish to quantify and to provide the applicants with an opportunity to
address this deficiency during the hearing process.

8. Recent Commission decisions for specialty television broadcasters have
required 35% to 53% of previous year gross revenues for Canadian program
expenditures, in addition to these broadcasters' exhibition requirements.
Something in this range should be required of the two satellite-based US
applicants, both to attenuate the damage they would cause through low use of
Canadian creative resources and to avoid creating a precedent whereby other
licensees might seek to buy out of exhibition requirements.

9. Grounds for reducing this level of expenditure might include any
substantial incremental costs to bring a US service with a North American
footprint into Canada. We doubt that the applicants could document such
incremental costs.

10. These expenditure requirements should be directed to Canadian talent
development, advancing the careers of Canadian artists, such as FACTOR,
MusicAction, among others, including French-language music, which appears to
constitute a minute element of the proposed satellite services.

11. In summary, FRIENDS sees in both the satellite based applications a
threat to the integrity of Canadian broadcasting policy. Abandoning a
strategy which has served our country well by licensing services that do not
meet established carriage and expenditure requirements is unjustified. It
could also create a precedent-setting expectation that existing licensees
could reduce their exhibition requirements. As well, to eliminate the
incentive for other licensees to imitate these US-based applications,
imposing a substantial expenditure requirement is absolutely essential.

12. In our view, application 2004-0133-1 conforms with Canadian broadcasting
policy and is worthy of sympathetic consideration by the Commission.

13. A copy of this intervention has been sent to the three applicants, as
noted above.

Yours sincerely,

Ian Morrison
Spokesperson
Friends of Canadian Broadcasting