Satellite radio applications raise concerns about Canadian content, music protection

Fears over digital piracy and the Americanization of subscription radio in Canada have emerged as the two greatest concerns by interveners in the CRTC’s ongoing licensing procedure. The two proposed satellite subscription services - one by a partnership of Sirius Satellite Radio Inc., Standard Radio Inc. and the Canadian Broadcasting Corp. for Canadian Satellite Service (CSS), and the other by XM Satellite Radio and Canadian entrepreneur John Bitove for Canadian Satellite Radio (CSR) - are singled out for their lack of Canadian content. On the other hand, CHUM Subscription Radio Canada (CSRC), a proposed terrestrial-based subscription radio service by CHUM Ltd., and new partner Astral Media, is questioned for its ability to ensure protection of the digital music it will deliver (CCR, July 30/04). The Coalition of Canadian Audio-visual Unions (CCAU) is so concerned about the limited levels of Canadian content on CSS and CSR that it is urging the CRTC not to grant any licence until it establishes a clear policy framework that fully meets the requirements and objectives of the Broadcasting Act. The CCAU is urging the commission to decide whether subscription radio is a broadcasting distribution service or a programming service. If they are distributors, then the coalition says that the ratio of Canadian to foreign services on the subscription radio services should conform at least to that required under regulations for broadcasting distribution services. If they are programming services, then CCAU says that they must conform to Canadian content and Canadian Talent Development contribution requirements for other broadcasters. The CCAU adds that if the commission opts to move ahead with licensing without a clear policy framework, then it should reject those applications that do not meet the Broadcasting Act objective of making maximum use of Canadian creative and other resources in the creation and presentation of programming. "It is immediately obvious that both the Canadian Satellite Radio Inc. and the CBC applications fall appallingly short of this standard," notes the coalition. The pro-CBC lobby groups Our Public Airwaves and Friends of Canadian Broadcasting and CHUM Ltd. are also amongst those criticizing CSS and CSR over the amount of Canadian content proposed for their services. "The inclusion of two satellite radio services that are essentially American in content…is a matter of great concern," states Our Public Airwaves’ Sept. 15 submission. "The addition of a handful of Canadian channels to each of these offerings appears to be largely cosmetic in nature and does not in any way alter the fact that the content of these services will be overwhelmingly American…There is considerable irony in the fact that the organization (CBC) created to be the principal instrument of public policy in achieving Canadian dominance of our airwaves is now asking to be licensed as one of the principal instruments in the Americanization of subscription radio." Friends tells the CRTC not to license the U.S-based satellite radio services because they will harm the domestic broadcasting and music industries. In the event they are licensed, Friends argues that the commission must impose Canadian content expenditure requirements on them that is comparable with that paid by Canadian specialty TV services - in the range of 35% to 53% of the previous year’s gross revenues. The Canadian Media Guild also urges the CRTC to demand that the number of Canadian channels offered by the subscription satellite radio services be raised. It notes that Canada faces the introduction of 179 new satellite radio channels from these two services, yet only eight will be produced initially in Canada. "Only six years ago, the CRTC encouraged the consolidation and monopolization of radio ownership because it was concerned that a crowded marketplace threatened the viability of the system. Now it appears willing to license more channels - hundreds more - accepting the argument that it will have little impact on the broadcasting system," notes the Canadian Media Guild in its submission. Canada’s largest commercial radio broadcaster, Corus Entertainment, cautions the CRTC that subscription radio services must be on a level playing field with terrestrial radio and pay audio with regard to Canadian content. As in pay audio, Corus suggests that the commission adopt a graduated linkage approach to ensure adequate Canadian representation on the subscription radio airwaves. As capacity becomes available, it wants the subscription radio services to eventually reach the 1:1 ratio required of pay audio services. Pay audio services must package or link a maximum of one non-Canadian produced pay audio channel with each Canadian-produced audio channel. "In the case of CSR, the Canadian channels will be four to 101 available channels on the network, or roughly 1:25, while the CBC’s Canadian channels will be four of 78 channels, roughly 1:20," Corus points out. Corus and a joint submission by Jim Pattison Broadcast Group, Larche Communications Inc., the OK Radio Group Ltd. and Rogers Broadcasting Ltd. also call on the CRTC to prohibit subscription radio from carrying local advertising and channels with regularly scheduled local programming. The local element is what distinguishes AM and FM radio from subscription radio, they argue. A number of groups, including the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA), the Canadian Independent Record Production Association (CIRPA) and the Canadian Recording Industry Association (CRIA) express concerns about the protection of content on subscription digital radio services. A study conducted by Washington D.C.-based consultant Thomas Lenard on behalf of CRIA questions the protection measures of the CHUM’s proposed subscription radio service. "Unprotected terrestrial digital radio (e.g. the CHUM service) may be a threat to the satellite services, assuming they are able to protect themselves through their ability to grant licenses to devices that receive their transmissions. Unprotected CHUM Digital Radio could threaten these new services, because it would allow consumers to construct personalized playlists within their favourite genres and thus compete with the genre-specific programming that currently distinguishes satellite services from terrestrial broadcast radio," reads the report, The Economic Impact of Digital Radio on the Market for Recorded Music. Lenard notes that the CHUM service is based on the international standard for terrestrial radio that Canada (and also Europe) has adopted, Eureka 147, which is different from the In Band on Channel (IBOC) standard adopted in the United States. He argues that since subscription radio will provide customized music on demand (MOD) to receivers that are capable of storing data with pause, forward and rewind functions, it could threaten legitimate music download services, such as Puretracks.com. "Unlike analog radio, digital radio will provide a very attractive means for consumers to acquire MOD, which will put it in direct competition with other channels of music distribution - including both the legitimate online distribution services and illegitimate P2P services. The CRTC’s steps at this time will be critical in determining whether digital radio will more closely resemble the former than the latter," states the report. The report calls on the CRTC to make it a condition of licence that subscription radio services must protect the music content they deliver. Digital radio can function as a new entrant in distribution MOD, potentially increasing competition, speeding innovation and offering new choices to consumers, but that will only be possible if the content is protected, the report argues.

Satellite radio applications raise concerns about Canadian content, music protection

Broadcast | September 29, 2004

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