CRTC Decision Due Thurs. on XM, Sirius in Canada

The process has evoked the Canadian cultural self- defense reflex, because the would-be entrants are Canadian Satellite Radio, a consortium involving former Toronto Raptors owner John Bitove Jr. and XM Satellite Radio Holdings; Sirius Radio Canada, a partnership between Canadian Bcstg. Corp., Standard Radio and Sirius; and CHUM Ltd. with Montreal’s Astral Media.

Since Canada now licenses no such service, the XM, Sirius and CHUM applications raise sticky issues, demanding CRTC make decisions many say will affect Canada’s musical and broadcast landscapes for a long time to come. One question will be the position - as yet undefined -- CRTC takes on requiring Canadian content and French language requirements. Canada’s Bcstg. Act mandates “maximum use, and in no case less than predominant use,” of Canadian resources and programming in Canadian broadcasting. The Act also requires programming of equivalent quality in English and French.

Much like U.S. satellite radio, the Canadian services would offer 50-100 commercial-free channels for a fee of $10-$15 a month. The CHUM/Astral proposal at first would forgo satellites, delivering pay radio to consumers from terrestrial broadcast towers, officials said. CHUM officials said their terrestrial service would be the same as satellite on the user’s end, over handheld or vehicular units. But the service wouldn’t be as widespread as satellite. CHUM officials said by the end of the first license term, the service would be available to about 60% of Canada’s population.

Any way you slice it, XM and Sirius, with Canadian partners, won’t provide “predominantly” Canadian content. The proposed Canadian Satellite Radio (CSR) service would offer 101 XM channels, 5 to be produced in Canada by CSR. The Sirius group would offer 78 channels, 4 to be produced in Canada by the Canadian Bcstg. Corp. (CBC).

CHUM, however, has applied for 50 channels or more, all to be produced in Canada by CHUM. CHUM has been stressing its homegrown content as a “sharp contrast” to its competitors’ -- a stance already drawing fire. According to a Sirius analysis in reply comments to the CRTC, CHUM’s actual level of proposed Canadian content would be about 25%.

Conventional radio broadcasters in Canada must play Canadian selections at least 35% of each broadcast week, including prime time. But there’s no hard Canadian content number for broadcasting writ large. And the Bcstg. Act includes a qualifier saying if the nature of a service renders the Canadian programming requirement “impracticable,” the undertaking “shall make the greatest practicable use” of Canadian resources.

“It’s within the CRTC’s authority to decide what is appropriate in terms of the level of Canadian content,” said an XM spokesman: “And that’s a big part of what we expect to learn on Thursday.” A spokesman for Sirius said: “Nobody knows where the CRTC is leaning in terms of what conditions it will set. They're free to set any conditions they want for granting the license, and no one really knows what forces are coming to bear on the decision.” It would, however, be unusual for the CRTC to grant one satellite radio application and not the other, he said.

The CRTC has been hearing from all sides. Canadian consumers hot for satellite radio -- and satellite radio companies themselves -- want XM and Sirius. But nationalist groups and some in the Canadian music industry want “made in Canada” service that protects their share of the airwaves from an American radio blitz. Other Canadian artists want satellite radio -- because CRTC could order that Canadian talent development underwriters get a percentage of the proceeds, a sum potentially worth millions, because satellite radio could give them a higher profile, or for both reasons. Ford Motor Co. of Canada and Daimler Chrysler Canada have said satellite radio would benefit the Canadian automotive industry.

And the integrity of the Broadcasting Act itself rides on the CRTC decision, said a spokesman for Friends of Canadian Bcstg. (FCB), which describes itself as a citizen-supported public interest group. “Two of the applicants have made it very clear that the service that is economically feasible for them will not be predominantly Canadian. It really is a question of, ‘Will the Broadcasting Act be observed in this decision, or won’t it?'” the FCB spokesman said: “If the CRTC grants a license to either of the 2 satellite applicants at the proposed levels, it would create pressure in the system from other applicants who would say, ‘If they can do it, then we shouldn’t have to carry these onerous obligations because it’s not a fair competition.'”

The group Our Public Airwaves wants the CRTC to force XM and Sirius to deliver more Canadian content than they now propose, said Exec. Dir. Arthur Lewis. “To license these applications as they now stand is to write off 60-70 years of work protecting Canadian content on the airwaves,” said Lewis: “The balance is wrong. A few Canadian channels grafted onto a U.S. offering isn’t an adequate mix.” Said Cori Ferguson, exec. dir.-Canadian Independent Record Production Assn. (CIRPA): “If you have 100 channels and 10 play Canadian music, that’s zero percent Canadian content on the other 90 channels.” The issue isn’t one of anti-Americanism, Lewis said: “It’s wanting our own voices to be heard. We are inundated by American media like no other country in the world. We need protectionist measures simply to ensure that Canadian voices are heard.”

The CRTC has noted other issues it plans to address in today’s decision. For example, the U.S. success of XM and Sirius has illustrated the demand for subscription radio, but how many subscription radio services can the Canadian market support? How will licensees be held accountable for programming on non-Canadian channels? Will Howard Stern go Canadian, for instance? Will local and regional programming like traffic and weather be mixed in, and how? What class of license should satellite radio be issued -- programming or distribution? What’s the right percentage of proceeds to direct to Canadian talent development? And, Canadian content aside, what should the percentage of French-language Canadian content be? “There are a lot of important policy questions here,” Ferguson said. That’s why CIRPA advocates a thorough policy evaluation before licensing foreign broadcasters in Canada, she said.

XM’s and Sirius’s Canadian partnerships are a good thing because they up chances for licensure, some industry voices said, but others painted a less rosy picture. Our Public Airwaves warned of “the dangerous precedent” that might be set by the Canadian Bcstg. Corp. (CBC) getting mixed up with the Sirius venture. “The CBC is our BBC, our PBS, our NPR, our primary public broadcaster -- and it probably got into a deal with Sirius because it is seriously underfunded,” Lewis said. “What we have here is a situation where there are 3 applicants and only one of them will carry the public signal, which undermines the rule of universal accessibility to public broadcasting. Regardless of how the license decision comes down, all licensed satellite services should have to carry the programming of the public broadcaster.”

The situation recalled the 1980s for DBS industry analysts, who described the tension when attempts by U.S. pay-TV to get into Canada triggered similar responses. “It was all under the idea that it was a cultural issue, but the bottom line is that it’s a money issue,” one analyst said. In the next decade, the 2 satellite applicants said, the Canadian economy would gain $2 billion in overall economic activity from Canadian approval of satellite radio. In a Feb. survey by Decima Research commissioned by Canadian Satellite Radio and Sirius Radio Canada, a projected 4 million Canadians said they would subscribe to a Canadian satellite radio service within the next year if they could. Two million Canadians said they plan to subscribe to a U.S.-based satellite radio service within the next year if the Canadian govt. doesn’t license satellite radio in Canada.

Industry officials agreed the CRTC will be hard- pressed to make a decision that won’t trigger an appeal either way. If the CRTC grants a license on the basis of 10-15% Canadian content, those intent on upholding the Bcstg. Act likely will appeal. If the satellite providers are denied licenses or given licenses on conditions they deem too restrictive, chances are they'll appeal. “Not a lot may be settled with this decision. It might be kind of an opening bid,” said Lewis.