Satellite radio under threat from unregulated Internet radio, warns Sirius

Unregulated Internet radio services delivered on mobile devices pose a financial threat to the satellite radio industry in Canada and may eventually result in the industry failing to comply with its Canadian content obligations and other CRTC-mandated requirements, Sirius Satellite Radio warns in a letter to the CRTC.Unlike its terrestrial radio counterparts, Sirius argues in its brief to the upcoming new media hearing that satellite radio is still in its nascent stages of development and is therefore vulnerable to unregulated online competitors. It claims the situation is made worse by the fact that broadband Internet is now available to nearly 93% of Canadian households and that 60% of Canadians subscribe to it. In comparison, satellite radio penetration was less than 5% for last year.Even more worrisome, says Sirius, is the increasing availibity of Internet radio in vehicles.“As the Commmission is aware, the largest potential market for satellite radio is in vehicles but unlike for terrestrial radio, satellite radio still has a long way to go before it reaches material penetration rates in this market."Sirius admits that Ipods and MP3 players also threaten to chip at its market share in vehicles, “but the providers of this content are not broadcasting” as opposed to Internet radio, which the CRTC has determined is broadcasting. Sirius says Internet radio is primarily delivered in vehicles via cellphones and other devices. With subscription rates hitting more than 20 million, Sirius argues the satellite radio industry has every reason to be worried.Throughout the brief, Sirius constantly compares satellite radio to terrestrial radio, pointing out that the latter faces less of a financial threat from the Internet. It urged the CRTC to consider regulating Internet services broadcast on mobile devices, arguing that every dollar lost will have potential adverse effects on the Canadian broadcasting system.“Satellite radio makes significant contributions both to Canadian content broadcast over its distribution system and in direct financial contributions to CCD. Every dollar lost by satellite radio to unregulated new media audio broadcasters is $0.05 lost to (Canadian Content Development) and every time a Canadian chooses to listen to Internet radio is potentially one less person listening to Canadian artists,” states Sirius.While profitability is a major concern, Sirius argues that satellite services also face “significant” obstacles in competing with terrestrial radio, which it says are well established financially because of easy access to Canadians. Regulation of Internet radio on mobile devices will create a level playing field for competition with its terrestrial conterpart, Sirius contends.It recommends that the CRTC should review the New Media Exemption Order, which only applied to the regulation of mobile television, leaving out audio services broadcast over the Internet on mobile devices. Sirius also supports a mandatory regime on ISPs to foster the development of Canadian content.

Satellite radio under threat from unregulated Internet radio, warns Sirius

Broadcast | December 15, 2008

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