Canadian broadcasters warn new policy would create grey market for satellite radio

A "grey market" for digital satellite radio could open up next year in Canada, no matter what the federal government decides to do about the issue of harmonized radio frequencies, an industry expert says. Industry Canada is considering bringing certain radio frequencies in line with those in the United States. The band that has Canada’s broadcasting industry worried is 2320-2345 MHz, frequencies that will be used in the U.S. for digital audio radio service by satellite (DARS). Some broadcasters want the department to hold off on decisions until there is a comprehensive review of satellite radio in Canada. In comments filed with Industry Canada, BCE Media says Canadian companies need time "to develop business agreements with U.S. service providers that will allow the implementation of satellite-based DARS in Canada consistent with the cultural objectives of the Broadcasting Act." But David Garforth, executive director of the Canadian consortium, Digital Radio Roll-out Inc, warns that a grey market could develop even the frequencies aren’t harmonized. He says as long as people are willing to pay about US$10 a month, they can arrange to receive a foreign satellite radio service, such as one planned by New York-based Sirius Satellite Radio. "The service wouldn’t be licensed in Canada, but the hardware would be legal to sell," he told CCR. In addition to its 50 commercial-free music channels, starting early next year Sirius will broadcast up to 50 channels of news, sports and entertainment, including a comedy channel. The company is targeting its sales pitch toward the car radio market. Several auto makers plan to offer digital satellite radio receivers as an option. Would Canadians be willing to pay for something that’s always been free? "That’s the hundred thousand dollar question," Garforth says. "No one is sure what the maximum that people will pay for entertainment. People keep paying more and more for cable TV as it adds services, but if satellite radio is going to take off, it’s going to have to offer something better than what regular radio offers. Canadians have been talking with the European space agency about setting up our own services. But it’s a question of economies of scale. Digital satellite radio is a different kind of offering, and no one is sure whether it can fly in Canada." The need for a Canadian policy Some grey market activity may be inevitable, but broadcasters say the situation will be worse if the Canadian government adopts the same DARS frequencies as the U.S. The Canadian Broadcasting Corp was particularly vocal in its opposition to any harmonization plan, saying it would clear the way for a new grey market in Canada. It warns that "these proposed initiatives will create significant opportunities for the U.S. digital radio audio broadcast industry’s possible future operations in Canada, with no reciprocal benefit to the Canadian DAB industry in either the U.S. or Canada." The Canadian Association of Broadcasters contends it’s too late for Industry Canada to initiate another review on this issue: "there is no time to engage in further public debate on the future of this particular band. A decision should be taken as soon as the Department finishes reviewing the (current) public comments..." Canada and the U.S. have never seen eye to eye on digital radio. On the terrestrial side, the U.S. is adopting an enhanced in-band technology, while Canada is using the L-band spectrum (1452-1492 MHz). In the U.S., DARS spectrum has already been licensed, and the first satellites are set to launch later this year. Their services should begin spilling over into southern Canada by early next year. Radiocomm carriers responding to Industry Canada’s call for comments support harmonization of spectrum frequencies with the U.S. While primarily interested in the three bands being considered for wireless communications services, they say applications designed for 2320-2345 MHz should mirror what’s already been decided in the U.S.

Canadian broadcasters warn new policy would create grey market for satellite radio

Broadcast | August 31, 2000

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