Commission mulls second wave of comments on satellite radio over BDUs

On July 25 the CRTC received a wide range of comments both supporting and opposing an application by Bell Canada to distribute one or both of Canada’s satellite subscription radio (SSR) services through its Ontario and Quebec BDUs. For the commission, the interventions must have triggered a sense of déjà vu: many of the arguments echoed those advanced when the CRTC was reviewing the two applications to distribute subscription satellite radio in Canada last year (CCR, June 24/05). The commission also received an earlier application from Rogers Cable Communications Inc., and another last week from Telus Communications Inc. "I think it shows there’s an interest in incremental audio services over the digital set-top box, and the fact that the other major BDUs in the country are applying for the same rights and privileges shows there’s a consistent demand," says David Purdy, Rogers Cable’s VP and GM of television. Interveners are divided on the issue, with groups like the Canadian Independent Record Production Association (CIRPA) and CBC/Radio-Canada urging the commission to deny the application to protect Canadian content, prevent any unfair advantage SSR would have over existing pay audio services, and maintain the objectives of the Broadcasting Act. Those in favour of BDUs distributing SSR argued that it would increase consumer choice and would help drive penetration of digital cable television. This group included Rogers, Sirius Canada Inc., the Telco Television Association of Canada (Telco TV), and to some extent the Canadian Association of Broadcasters (CAB). "The broader distribution of these services by BDUs will not only support the fulfillment of the commission’s policy objectives associated with licensing satellite radio in the first place, but also enhance the feature set associated with digital cable service by expanding the diversity and choice in audio programming available to our customers," wrote Rogers in support of the Bell application. "Both XM and Sirius have unique content that’s not available anywhere else," says Purdy. "This is a way of making the digital offering more unique more compelling…in the sense that it would drive more people to ." In its reply comments, Rogers also cited the two existing pay audio services – CBC’s Galaxie and Max Trax from Corus Entertainment Inc. – as examples of the lack of competition in that market. It said the framework for pay audio services encourages innovation and choice for consumers, something that the existing two services do not accomplish. Those opposed, however, reminded the commission that there is more to consider than consumer choice. "By opening up carriage of the satellite subscription radio services to Canadian BDUs, the commission would unleash an avalanche of foreign-produced content into the Canadian mass marketplace," wrote CIRPA. "We are unable to see what benefits would be gained by exposing an even greater number of Canadians to a service that is 90% produced in America, by Americans, for Americans." The 90% figure comes from the stipulation that the satellite radio providers must offer at least one Canadian-produced channel for every nine American-produced channels. Supporting the Rogers and Bell applications, Sirius wrote that it is growing its stable of Canadian-produced channels to 11. "Those 11 Canadian channels, at 85% Canadian content, will air 224 hours a day of Canadian content . Max Trax and Galaxie, meanwhile have a 20 channel Canadian content offering on Rogers which will air 168 hours a day," reads Sirius’ application. Taking into account the 90 or so American channels Sirius offers changes the perspective somewhat, but neither Rogers nor Bell would say whether the SSR offering over cable would be free or a subscription service. Cori Ferguson, president and CEO of CIRPA tells Canadian Communications Reports that she’d like the commission to clarify this before it makes its decision. Since Max Trax and Galaxie come free with a digital cable subscription, whether or not the SSR services cost extra significantly affects how they impact the existing pay audio services. However, Ann Mainville-Neeson, executive director of Telco TV, which represents telcos-turned-BDUs MTS Allstream Inc., Saskatchewan Telecommunications and Telus Communications Inc., says her organization supports the applications, but also says they are unnecessary. It submitted that SSR services are already approved for DTH providers under the Broadcasting Distribution Regulations (see Newsmakers, p.8). While the parallel provision for BDUs doesn’t mention SSR, it includes "a pay audio service" as one of the Canadian programming services that are currently licensed. "What is it if it’s not an audio service for which you pay a subscription fee?" asks Mainville-Neeson. For its part, the CBC submitted that approving the applications "would radically change the nature of the satellite subscription radio services, effectively converting them into pay audio service by virtue of their carriage by a BDU." It added that approval would modify the nature of SSR services and give them, in effect, a dual status. Additionally, pay audio licensees are currently not permitted advertising or spoken-word programming, whereas SSR may carry spoken-word programs and six minutes of national advertising per hour. The CAB added that licenses were granted to the satellite radio services allowing them to distribute more non-Canadian channels than Canadian channels because of special circumstances, namely the use of non-Canadian satellites providing service to all of North America. In the case of the BDUs, the CAB submits that these special circumstances do not apply, explaining its qualified support for the applications. Mainville-Neeson says this is extraneous: "The manner of distribution is irrelevant in the same way that radio stations, whose main distribution is over the air, are also carried by BDUs. This is just one extra service that BDUs can carry that might entice some people to join the Canadian regulated system as opposed to getting their broadcasting services from unregulated sources like the black or grey market." CIRPA wrote that the rationale of licensing SSR services to prevent Canadians from turning to an illegal alternative is "fear mongering," noting that that the CRTC has already supplied a legal method to receive this programming. And unlike Telco TV, CIRPA feels the method of distribution is absolutely relevant. "In the case of delivery through Canadian BDUs, they are subject to Canadian content requirements that are much stricter than the requirements that the satellite radio companies were subject to," says Ferguson. Rogers disagrees. Responding to the interrogatories to its application, it stated: "the Canadian content obligations that apply to satellite radio services should not be a significant factor in the commission’s consideration of our application. The commission has authorized for distribution in Canada numerous television services that have little or no Canadian content." Purdy, though, says any satellite radio offering it distributes will include a preponderance of Canadian content, including over-the-air FM radio stations. He adds: "I want to keep as many Canadians on the Canadian broadcasting system as possible and the only way I can do that is by offering a robust, compelling offering that is as good or better than what the US grey and black market guys are providing."

Commission mulls second wave of comments on satellite radio over BDUs

News | 08/01/2006 4:00 am EDT

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