AYN Advice

Satellite Radio - Still In Orbit?

SATELLITE RADIO - Still in orbit?
By : Yves Lévesque

Technology is evolving at an incredible pace. It challenges us to keep up with it and it’s also problematic for our Canadian legislators and our ability to market new technology. One thing is for sure, our political and social structures are not coping with the fast pace.

What issues will this create?

There are many issues at stake: political, cultural and economical just to pick the top 3. Political ? A need for legislation. Contrary to our southern cousins, Canadian politicians want to maintain control over broadcasting and the influence that new technology has over our country prior to making it to market. It may be a good thing, but technology is moving faster than bureaucracy, how can we keep up? Cultural ? protecting our cultural heritage. One of our natural resources is rich musical talents. We can be proud of the international successes of our music performers. Does enforcing broadcasting quotas protect and foster the growth of our music and culture? Economics ? Satellite Radio is similar to the Internet, if the CRTC and government cannot apply a tax or licence to it, should they even consider allowing it within our borders?

Challenging Time For The CRTC

In Canada, over the past 5 years, we have seen:

- the explosion of Internet services into our lives,
- satellite TV stealing a big piece from the cable distributors,
- Voice over Internet Providers (VoIP) nibbling at Ma Bell’s traditional telecom monopolies,
- telecommunication providers starting to offer TV services,
- and now the emergence of satellite radio, proposing on-demand commercial-free music selection to its subscribers.

All of these will definitely affect Canadian regulations.

In a recent judgment, the superior court of Quebec ruled in favour of the defendants in a class action suit over the right to receive US satellite TV signals on their dish, therefore bypassing Canadian providers. A similar situation could arise with satellite radio.

Nothing is stopping the consumer from purchasing the equipment from the states or via Internet and subscribing to the service via credit card or by getting a US P.O. box. It’s hard to stop progress and free enterprise!

The points of contention for allowing free market of satellite radio in Canada are mainly limitations and regulations due to the Canadian Radio-television and Telecommunications Commission and the Broadcasting Act. All Canadian radio broadcasters are bound by this Act, which in a nutshell requires that roughly 35% of the music aired be of Canadian content. Failing to do so exposes them to severe fines and even license revocation.

Unless some channels are specialized to match the requested Canadian content, which is very unlikely, the program content of these somewhat 120 Satellite radio channels is to be broadcast all over North America, independently of Canadian programming needs. How can the Canadian content Act be enforced? That is the question.

Who Is Behind Satellite Radio?

Similar to satellite TV programming, satellite radio is proposing a multitude of channels that subscribers can access. Specialized channels with CD-like sound quality; jazz, country, pop, classical, all-day news, sports, you name it, without commercial interruptions supported by rich information content. It opens a market for content providers: ‘subscriptions’, and hardware manufacturers who will equip cars, mobile users and homes with ‘new receivers’. Already a few million Americans have adopted this type of radio service and the number of subscribers is growing rapidly.

In the United States, two providers are sharing the market at this point; XM Satellite Radio and Sirius Satellite Radio. Both provide to their subscriber bases, high quality music, with a selection of over 120 channels filled with all kinds of music with no commercial interruption. Packages start at approx. $7/month for basic services including a few channels (5 to 10 channels), up to $13/month for full access. For $25/month you can get a package specially designed for businesses. Annual and even lifetime subscriptions are available. If you want to listen to music only and not be bothered by all the advertising, satellite radio is an interesting option.

To access satellite radio you also must have the hardware to receive the signal. One of the great advantages of this technology is its coverage and accessibility. Anywhere you go in North America, you can listen to the same station. Pick your favourite music, and drive from coast to coast without changing the station! Car stereo receivers start at about $120, add another $100 for the satellite tuner, antenna and installation and you’re all set. Equipment is also available for mobile users, such as an MP3 or walkman, or home receivers for your stereo entertainment system.

A Canadian Satellite Radio Partnership Needed

So far the CRTC has been presented with three applications for satellite radio. As I write this, none of the applications have been reviewed or accepted. The largest US incumbent of this new technology is Sirius Satellite Radio. They have filed their application in partnership with Radio-Canada -CBC. Since then (in October 2004), Sirius announced that Howard Stern was to become the key driver behind their network programming. It may be a great positioning for Sirius in the US, but could you picture the Great Howard officially on the air of the CBC? Considering that Mr. Stern was booted out of Canadian programming in early 2003, the potential of having no control over this satellite broadcasting is enough to keep CRTC officials awake at night and have them reject this new technology. Nevertheless the applications are on the CRTC table and must be dealt with. A whole new meaning for the coming Star Wars!

C.E.BIZ - December 2004