Source : Montreal Gazette

3 broadcast groups are in the race to win licences

Canadian radio listeners soon could be tuning into a world of crystal-clear, commercial-free sound tailored to their tastes if the Canadian Radio-television and Telecommunications Commission gives the thumbs-up.

On Monday, the commission will begin hearings on the future of subscriber-based digital radio, with three broadcast groups vying to win licences for pay-as- you-go radio. The applicants hope at least one service will be on air a year from now.

Unlike conventional AM or FM radio, digital radio uses satellite technology to beam CD-quality audio to subscribers outfitted with special receivers. Like satellite or digital television, the radio services can compress their signals to provide everything from baroque to bluegrass to bhangra, minus between-song patter and annoying ads.

Subscriber-based radio has taken off since its launch in the U.S. about three years ago, gaining about 2.5 million subscribers. Forecasters predict that there will be about 25 million by the end of the decade. The auto sector is propelling that growth, with the installation of digital audio receivers an option in many new cars.

On Thursday, GM Canada announced an agreement to install digital audio receivers in 50 of its Canadian-made models beginning in 2006. It means 230,000 digital-radio ready cars will hit the road that first year.

Two companies, XM Digital Radio and Sirius Satellite are battling for market share. Last month, Sirius, the smaller of the two with about 650,000 subscribers, scored a coup when it signed Howard Stern to a five-year, $500-million deal that will liberate the radio shock jock from the U.S. Federal Communications Commission's regulatory grip.

Now Sirius and XM are making a move on this country, where it is estimated that as many as 100,000 Canadians subscribe to so-called "grey market" digital radio signals. Sirius has teamed with the Canadian Broadcasting Corp. and Standard Radio, proposing to beam its signal into Canada, with the addition of four Canadian channels. Sirius will hold 20 per cent of the venture, with the Canadians splitting the remaining 80 per cent.

XM has paired with Canadian Satellite Radio (CSR), headed by Toronto entrepreneur John Bitove Jr., to propose to offer another mostly American service with four Canadian channels. Bitove owns 100 per cent of CSR, though XM has an option to buy a one-third stake. Corus Entertainment also has an option to buy a minority stake.

CHUM Canadian Subscription Radio (CSRS), a partnership with Astral Media, is the all-Canadian offering. Without an American partner, CHUM and Astral have no access to a U.S. satellite. Canada's satellites are booked solid, which has forced the partners to come up with an alternative solution. Their service is based on digital audio broadcasting (DAB), a technology widely used in Europe to provide CD-quality radio. They can't tap into a pre-existing U.S. programming pipeline, but say their knowledge of and experience in Canadian radio positions them to offer a service tailored to Canadian ears. They hope that appeal to cultural nationalism will be their ace in the hole. The partners promise to respect the 35-per-cent Canadian content rules now in place for conventional broadcasters.

"One must ask how the other applicants fit into a strategy that we've been following in Canada for 30 years to create and control our own cultural identity," said Jacques Parisien, president of Astral Radio.

A spokesperson for CSR said his group plans to ask the CRTC to waive the Can-con rules because subscriber radio is a new class of licence requiring special handling.

"We'll argue that the old rules don't apply," said Stewart Lyons, CSR's executive vice-president.

He added that partnering with XM will give Canadian artists wider access to the U.S. market.

"We'll be able to offer cross-promotional opportunities. We're committed to profiling emerging Canadian talent."

Lyons thinks there is room for all three services. Parisien hopes the commission picks only one.

These issues of Canadian content and ownership promise to be much on the minds of the commissioners, who have served notice that they will want to hear what the various services think is the appropriate level of Can-con, how much they plan to invest in Canadian talent and what control Canadians will have over the service.

Whatever the outcome of the CRTC's deliberation, digital subscriber-based radio is here to stay. The only question is whether the commission wants to get in front of the wave, or get knocked over by it.

A brief look at the applicants

Canadian Satellite Radio Inc. in parntership with XM Satellite Radio Inc.: Uses U.S.-based satellites and transmitter towers to broadcast 101 digital audio channels, including four produced in Canada. Subscription cost: $12.99. Hardware costs between $90 and $130. XM is the largest satellite radio provider in the U.S. with more than 2 million subscribers.

CHUM Ltd. and Astral Media Inc.: CHUM Subscription Radio Canada uses existing digital audio band (DAB) radio frequency and transmitter towers to broadcast 50 channels, all of which would be produced in Canada. Subscription costs $9.95 a month. Hardware costs $99. CHUM owns 30 radio stations from Halifax to Victoria. Astral owns 24 in Quebec and the Maritimes.

CBC and Standard Radio Inc., in partnership with Sirius Satellite Radio Radio Inc.: Uses satelittes and transmitter towers to broadcast 78 channels, including four produced in Canada by the CBC. Subscription cost $12.95 a month. Hardware costs between $90 and $130. Sirius, with 650,000 subscribers, recently signed shock jock Howard Stern to a five-year, $500-million contract.

© Montreal Gazette