CCA Bulletin 27/06

Ottawa, June 13, 2006

Canadian music threatened once again by last year's CRTC Satellite Radio decision!

Those of us who objected strongly to the Canadian Radio-television and Telecommunications Commission (CRTC) decision last year to license satellite radio will find they were right to describe the new service (and the conditions of license attached to it) as bringing a Trojan Horse within the walls of Canadian Content regulation.

We saw the very first signs of the pernicious effects of that decision at the recent CRTC hearing on its Commercial Radio Policy Review when private radio broadcasters tip-toed around the issue. This time, they were merely chipping at existing Canadian Content regulation through the introduction of the notion they should get bonus points if they diversified their musical programming (something that would in effect diminish the overall amount of Canadian music effectively played). Their real concern at the moment is to ensure that in the name of the proverbial level playing field, they will not be submitted to any regulation when they tailor their signal for Internet and Digital Audio Broadcasting (DAB). This is something some of them already do on the Internet, where you may well find Canadian Content sanitized versions of your favourite off-air licensed radio station.

The second manifestation the insidious nature of the satellite radio decision is now to be found in an application by Rogers Cable to be allowed to distribute the signals of both "Canadian" satellite radio services to their digital customers. Interestingly enough, this application, which could have important consequences for the Canadian music sector, is buried with a lot of other innocuous applications in a CRTC omnibus Public Notice (Broadcasting Public Notice CRTC 2006-58).

Although the application is silent on this front, there are reasons to expect that Rogers ' desire to retransmit satellite radio on digital cable has essentially one purpose: to replace the current licensed truly Canadian pay audio services Galaxie and Max Trax with one or both satellite services, in the name of consumer choice! Were this request to be granted by the CRTC, the implications would likely be considerable for the Canadian music sector, particularly since Bell ExpressVu has joi ned the fray and is contesting the CRTC staff opinion that to distribute satellite radio, Broadcasting Distribution Undertakings (BDUs, as they are familiarly known) need a modification to their condition of licence. Once again, the level playing field argument is put forward, ExpressVu saying "if you give it to cable, you give it to us!" The carriage of pay audio services is itself purely optional and left to the discretion of BDUs. Satellite radio may therefore well lead to the disappearance of the only to Canadian services offering a platform (and revenue) to Canadian musicians in over 20 contemporary formats.

The issue here is simple: if allowed to redistribute satellite radio to their digital customers, cable and direct-to-home satellite services will have access to a cheap alternative to replace Max Trax (Corus) and Galaxie (CBC). By condition of licence, those fully Canadian services currently provide 35% of their broadcast time to Canadian artists over the 67 channels programmed here vs the meager 10% requirement for satellite radio, which ghettoizes Canadian artists in 8 Canadian made channels. This would also mean that the number of French-language channels available to subscribers would drop from the current 11 to a mere 4. So much for defending consumer choice! And in monetary terms, this would translate into a loss of more than $ 3 M a year in royalties paid to Canadian artists, not to mention the important contribution made to Canadian talent development (CTD) by both existing pay audio services. The table at the end of this bulletin summarizes the real issues in this case.

The CCA has therefore tabled an intervention against the Rogers' application. This intervention is supported by a number of other organizations (Our Public Airwaves, ADISQ, Union des Artistes amongst others). Because of the position taken by ExpressVu in this file, the CRTC may decide to postpone dealing with this issue right now. This is the fall back position taken by the CCA in its intervention: failing outright rejection, we have urged the Commission to hold a public hearing in which a complete review of the Canadian Content Regulations as they apply to various kinds of broadcasting undertakings would be undertaken with reference to the cultural requirements of the Broadcasting Act.

* Does not include payments for mechanical reproduction rights made to CMRRA/SODRAC.