Force ISPs to block Internet radio stations, Sirius Satellite tells CRTC

Facing what it calls an “immediate” threat from unregulated Internet radio, Sirius Satellite says CRTC should use its regulatory powers to force ISPs to block audio content that does not comply with Canadian content requirements in order for satellite radio to be competitive. “The reason I bring it up is to give the commission some insight into the threat we perceive to our business from unregulated Internet radio that is currently not expected to contribute to the broadcast system and just how unlevel the playing field is for us,” Sherry Kerr, Sirius’ VP and general counsel told the CRTC new media hearing this morning. (CCR, Dec. 15-08) Kerr said Sirius and XM, Canada’s only two satellite radio providers, contribute more cash to Canadian content development than “all of Canada’s terrestrial radio licensees put together,” despite the fact that satellite radio has not turned a profit since its introduction in 2005. However, she declined to reveal how much money Sirius contributes to Cancon development, saying as a private company they are not at liberty to disclose those figures. “Not only that, but we play materially more Canadian content on our Canadian channels than our terrestrial radio counterparts and, unique to radio, we have spoken word obligations as well as obligations relating to new and emerging artists,” she said, adding that satellite radio serves as a platform for Canadian artists all over North America. Sirius currently offers 130 radio channels, 65 % of which focus primarily on music. Of these 130 channels, 12 are Canadian. In her testimony, Kerr also reiterated that an increasing proliferation of blue-tooth technology, 3G wireless devices, and auxiliary jacks on vehicles pose a significant threat to satellite radio in Canada and is likely to result in diminished financial returns. Kerr said 58% of vehicle models for 2009 have blue-tooth technology and auxiliary jacks. Some 60% of Canadian households now have access to high-quality Internet radio via cable or DSL broadband. Kerr this growing number of broadband subscribers are downloading audio onto mobile devices which can be plugged into auxiliary jacks on vehicles. She warns this is creating unfair competition because potential customers aren’t likely to subscribe to satellite radio when they can get other stations essentially for free through their ISP or Wireless Service Provider. “For example, for $8 per month, a Bell Mobility subscriber can have access to 60 Internet radio stations that have been aggregated and provided by Bell Mobility,” she said. ISPs and WSPs should therefore be treated as any other traditional broadcaster and be required to contribute 5% of their revenue from their “BDU like” activities, she added. The money should be directed to a fund managed by a third party. But CRTC chair Konrad von Finckenstein, himself a satellite radio subscriber, told Kerr that he thought the threat was something coming in the future and not now. Kerr disagreed: “We see it as an immediate threat.” However, commissioner Michel Arpin questioned whether the impact on satellite radio would be minimal considering that 3G phones are still not widely used. Kerr pointed out that it’s not necessary for people to have 3G phones to listen to Internet radio. “It’s more the connection to your car speakers so that you can listen to it,” she said, adding that the penetration levels are higher than for satellite radio. There are currently 1.2 million subscribers to satellite radio in Canada compared to 20 million wireless subscribers. Commissioner Leonard Katz asked how this is affecting satellite radio in terms of lost revenues. Kerr said it’s hard to find that kind of data and that a survey would have to be conducted to establish the exact figures. “It would mean going to a wireless customer and asking them if they would have subscribed to satellite radio. It’s very hard to figure, the substitution effect, because you have to ask people what they would have done,” she said in an interview with Tech Media Reports. The hearing concludes its second week today and will continue on Monday March 9, when the Ontario Ministry of Culture, Ontario Media Development Corporation, Association of Canadian Advertisers, Pelmorex Media Inc. and Stornoway Communications are scheduled to appear.

Force ISPs to block Internet radio stations, Sirius Satellite tells CRTC

News | 02/27/2009 6:12 pm EST

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