Source : Canadian Communications Reports

The CEO of the joint venture by CBC/Radio-Canada, Standard Radio and Sirius Satellite Radio to bring subscription satellite radio here says that its rivals are unfairly blasting Industry’s Canada proposal to allow the use of foreign satellites. "I think specifically it was positioned as this big surprise that Industry Canada comes out with a clarification in the midst of the CRTC hearing. I mean it has been on the radar for the better part of a year and a half. It was no surprise," Kevin Shea tells Canadian Communications Reports. "The timing, I think, in fairness was only a byproduct of the timing of a lot of things these days with this government – it tends to be a little slow."

He adds, "I think where we’re at right now is that there’s a bit of a chicken and an egg in what has to happen first vis-à-vis satellite radio. Is it the satellite policy that needs to change before a licence is granted, or is it a licence needs to be granted and then Industry Canada and Canadian Heritage sort of look back and say, ‘We’re fine with the policy in this regard’? I think the steps more appropriately are that Industry Canada and Heritage have to say, ‘It’s okay because the commission can’t license when there’s clearly a policy that says they can’t.’"

Industry Canada issued a clarification notice last year in the middle of the CRTC’s public hearing into the licensing of subscription radio that stated that under an exception, foreign satellites could be used to broadcast subscription radio services in Canada. The exception is needed by Sirius and XM Satellite Radio, which have both applied for licences to operate subscription satellite radio services with Canadian partners, to proceed with their plans. A third applicant, CHUM Ltd., in conjunction with Astral Media, wants a licence to operate a terrestrial-based subscription radio service.

Industry Canada’s notice drew fire from CHUM Ltd. and others, including Friends of Canadian Broadcasting and the Society of Composers, Authors and Music Publishers of Canada (SOCAN), which are worried about the lower levels of Canadian content being offered up by Sirius and XM (CCR, Jan. 14/05). CHUM wants the CRTC to licence only itself, but Shea says the regulator should give the greenlight to all three proposals.

According to Shea, the Canadian market is large enough to sustain all three subscription radio services, with each likely to reach sustainability by year seven of their initial licence terms.

Shea reiterates that research presented to the CRTC by all three applicants predicted that there would be approximately 7 million subscription radio customers by year seven. "We said we’d be at a million subs, XM said they’d be at 1.4 million and CHUM indicated it would be at 1.2 million, and at that point all of us would be breaking even," he says.

Shea points out that what tends to get lost in the whole Cancon discussion is Sirius’ commitment to the Canadian music industry. "We’ve proposed $22 million in very tangible financial benefits for the music industry. Numerous musicians appeared at the hearings in support of essentially licensing all the applicants," he notes. "With due respect…I think some of the statements by Friends and CHUM and so on are not necessarily true."

He remains optimistic that the CRTC will licence all three applicants, particularly since a Canadian satellite will not be available "for a good 10 years" and by then he says the grey and black market will be firmly entrenched. "I was down at the Consumer Electronics Show in Las Vegas. We were shocked by the number of electronics dealers who are anxious to get this product into Canada, and the numbers that we heard they’d been selling in places like Fort McMurray (AB) and Whitehorse (Yukon), where people are starved for radio content," he states.

Shea says he knows of one particular dealer who sold 700 units in the third week of December to customers in Whitehorse. "That’s big. It reminds me of exactly what happened in Canada when satellite TV was first available technically. Back in the 1980s, people in Northern Canada were spending $9,000 to $11,000 for a huge earth station just to get television," he notes. "(The subscription radio device) is something that slips into your suitcase. It’s not as though you have to bring a big box over the border. It’s pretty small."

Shea says that the CHUM-Astral proposal, if it were the only one licensed, would do little to quell the grey and black market because it wouldn’t be available in all areas of the country. "I find it hard talking about CHUM because I have trouble with the application," he states. "And I say that because if your business plan is to offer a mobile service to Canadians, then it has to be completely accessible, no matter where you go, and it isn’t. If, hypothetically, the CRTC chose not to license XM and Sirius in Canada, the grey market would balloon out of control primarily because they are true mobile services accessible anywhere in Canada or the United States. From a marketing perspective, (the CHUM proposal) is like saying I’ll provide you with a cell phone service, but it only works on this side of Yonge Street."

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