Daryl Gray
August 30th, 2005, 01:33 AM
The battle to bring a domestic satellite radio service to Canada is heating up on the political front this month. Leave it to Canadian regulators and government ministries and officials to turn a decision that is actually favorable to Canadians by the CRTC to license a trio of Canadianized satellite and terrestrial broadcasters into yet another telecommunications nightmare.
Back in mid June, after nearly 2 years of hearings, public opinions and deliberations, the CRTC made a decision to approve the licensing of 2 digital satellite radio companies and one planning a terrestrial service. The companies involved were Canadian Satellite Radio Inc., a partnership of John Bitrove Jr. and the U.S. XM Satellite Radio, Sirius Radio Canada Inc., a partnership between the Canadian Broadcasting Corp.(CBC) and the U.S. Sirius Satellite Radio. The third company was a CHUM venture partnered with Astral Media Inc. Both of the U.S. satellite radio companies have been in operation for several years and have a fully operational satellite and broadcast network in place. CHUM and Astral Media are well known in Canada for have substantial media holdings including 33 radio stations, 12 local television stations and 21 specialty channels available on cable and satellite.
The 2 satellite radio delivery applications were approved by the CRTC on the condition that they each carry a minimum of 8 Canadian English and French channels on their respective services. Of these 8 channels, at least 25% had to be in the French language. To many, this was seen as a solid decision as Canadians were already accessing the U.S. satellite radio services via the gray market. The 25% Canadian content however was well below those required from other media companies, including traditional radio, cablevision and satellite broadcasts.
Both Canadian Satellite Radio Inc. and Sirius Radio Canada Inc. proposed to use their existing U.S. satellites to deliver their programming to Canadian subscribers. The CHUM application however would use terrestrial broadcast towers and would be limited to major urban centers. CHUM reserved the right to switch to a satellite delivery system in the future.
As with any significant telecommunications decision, this was met with a great deal of opposition. Surprisingly enough however, one of the loudest voices was from CHUM/Astral who after receiving their authorization for a license, took the view that the other 2 applicants should be blocked and that they should be granted a exclusive monopoly over all of Canada, because they felt that they could not compete with firms that already had a fully operational infrastructure. CHUM/Astral filed an official opposition with the CRTC, but they did not stop there. They also began lobbying heavily to their government friends in Ottawa, playing up the limited Canadian content card.
Earlier this week, in response to heavy lobbying, Canadian Heritage Minister Liza Frulla announced plans to ask the CRTC to reconsider the licensing of the 2 Canadian satellite delivery firms. If successful, this would pave the way for a CHUM quasi-monopoly while snarling Canadian Satellite Radio and Sirius Radio Canada up in red tape, possibly for as long as another couple of years. The thinking of CHUM/Astral is no doubt that a good year to 2 year head start would give them the edge they need to apparently compete.
Now, while the 8 CRTC mandated Canadian channels does not seem like a lot, in comparison to high 35-50% ratio applied to many other Canadian broadcast mediums, in the grand scheme of things, it carries much further as those 8 Canadian channels will not just be available to the Canadian public, but also to the entire United States market as well, with over 250 million potential listeners. Indeed, what better way to promote Canadian artists and the Canadian culture than to expose it to all of North America.
Indeed, this goes further than that as the CHUM/Astral application calls for service to major urban centers only, such as Toronto, Ottawa, Vancouver etc. To all those that did not happen to reside within 20 miles or so of one of these major centers, well they are just out of luck and will have to settle for one of CHUM's AM or FM channels until they get around to building and launching one of their own satellites in 2 or 3 years. The reality of the situation is the U.S. satellite radio services are as popular as they are primarily because of portability. People like the idea of being able to listen to their favorite digital radio channels no matter where they are in North America. That being said, if Canadians had a choice of paying $12.95 for a service that would work across the country, or paying $12.95 for a service that fades out 20 minutes out of town, its quite easy to see which one would come out on top. Clearly, the culprit here is that the CHUM/Astral application is flawed from the get-go. It may indeed meet with success as a free, sponsor-driven digital radio service, however as a subscription-based service, its prospects are dim in comparison. That is to say unless that are the only game in town.
Surprisingly enough, CHUM/Astral would almost have you believe that this decision caught them with their proverbial pants down. This decision was nearly 2 years in this making. Certainly during that time, had they taken this venture seriously, in anticipation of being successfully licensed, they could have been busy building a satellite and planning its future launch for use in their planned venture. If they had, they also would have been fully ready to go as the average construction time for such as satellite would be 18-24 months.
Even if CHUM/Astral had contracted a satellite construction and their application had not been successful, they could quite easily have resold that to another firm and recovered their investment. Instead, we are to believe that they are deserving of a monopoly because they chose to play it safe and not make any plans or make any pre-investments until assured that their application would be approved. In fact, CHUM/Astral had not even begun to lay the ground work for their terrestrial broadcast towers either. To many, the old saying "You snooze, you lose" would seem to apply here. Simply put, in the high stakes telecommunications industry, those that choose to play it safe always come out last and usually end up folding and rendering subscribers investments useless. Think where industry leaders like Echostar and Directv would be today if they had waited until the lights were all green before they headed into town.
CHUM/Astral take the view that their business model would not work if the 2 satellite delivery licenses are allowed to stand. This is absolutely correct as their business model is flawed and can be considered marginal at best, when compared to the other satellite delivered models. 10 years ago, their model may have been successful in their target markets, however today's consumers are wise where they invest their money and are not likely to invest in any great number in one that has such limitations as being only available in certain key cities. The CHUM/Astral arguement is due in part to the fact that the 2 companies could be ready to go by the end of the year to all of Canada, while the CHUM/Astral venture would need to begin constructing broadcast towers for their venture and they would be well into 2006 before they could even begin such as service, which would be limited to only major cities. As such, the two satellite delivered companies will be well established nationwide with dealer and distribution networks and a healthy and growing subscriber base at least 9 months or more before the CHUM/Astral venture could even begin, likely in one initial market city and later expanding.
Indeed it seems that CHUM/Astral has been caught with their pants down, however it is at their own hand. Canadians however should not be made to pay for their mistakes and be denied access to a good digital radio service simply because they are not prepared to compete or wanted to play it safe. It goes without saying that in the limited Canadian market, those first out of the gate will be the ultimate winners. CHUM/Astral appears to have slept in and would have us all to wait many months and even years until they are prepared to grace us with their service, and then only if he happen to reside in a heavily populated area that they deem as profitable to service.
This is not unlike the Canadian digital satellite fiasco, in which Expressvu Inc. was licensed and took over 2 years to bring the service online after they first promised the Canadian public that it would be operational. Many Canadians did not wait then, choosing instead to subscribe to U.S. digital satellite services and they are not likely to wait now, should CHUM/Astral and the Canadian government be successful in delaying their licensing. Indeed it will be deja vu, all over again as CHUM/Astral will likely attempt to begin legal actions against those subscribing to the U.S. firms as well as those helping others to tune in to it. Ironically, this would even target people in outlying areas that they have no intention of even servicing until 2008 at the earliest, assuming that they immediately began the construction of their own satellite to expand Canada-wide, which is doubtful, considering their record on this issue.
The Canadian Heritage Ministry also seems to be blinded by the light and unable to do the math. If they had, they would see that 8 Canadian channels with a 25 million Canadians and 250 million American audience is far better than 50 Canadian channels exposed to only a Canadian audience. The kicker is the fact that one of the mandates of the Heritage Ministry is supposedly to promote & protect Canadian culture. While promoting Canadian culture to Canadians is all fine and dandy, it makes a lot more sense to also promote it to non-Canadians, so they may see first hand what a rich and diverse culture we have.
Indeed the Heritage Ministry and the federal cabinet wield a veto power that would allow them to set aside the CRTC decision, however the long term effects of this would be long lasting as the CRTC is mandated to be an independent governing body and their authority will be greatly reduced if the government takes to over-riding decisions that it does not agree with, especially when such a decision would serve no useful purpose other than to further strengthen the satellite radio gray market in Canada and also to further delay Canadian access to a service which has been available in the United States for several years.
In order to better promote their case, the Heritage Ministry is attempting to also invoke the language card, promoting the fact that the satellite radio application would be limited to 2-3 French channels. Indeed, at the moment, there are no French channels available on either of the 2 U.S. satellite radio services. And if the Heritage Ministry is successful, there will continue to be no French channels on these services as they will be snarled up in red tape licensing issues.
Ironically, this is a case of one government agency backhanding another as Sirius Radio Canada is owned in majority by the CBC, which is a federal government owned broadcasting corporation. A successful Sirius Radio Canada initiative could mean for less required funding by the CBC to continue operations, which is at the moment heavily dependant on taxpayer revenue.
The delays are also being felt in the automotive industry where several large automotive manufacturers have agreements to include satellite ready electronics in their 2006 model vehicles. The licensing delay has already caused some vehicle manufacturers to postpone their introduction until 2007.
We shall ultimately see in the months to come how things shake out, the Liberal cabinet has until September 14th to approve, deny or send the application back to the CRTC for reconsideration. If it should not be approved, it will certainly delay things quite substantially, likely into late 2006 or possibly 2007. This unnecessary delay would surely anger a great number of Canadians that are already anticipating a domestic satellite radio service. And this is sure to cause a great spike in satellite radio gray market sales in the months and years to come until the Canadian product is given the ok to proceed.
© 2005 digitalinsurrection.com
Back in mid June, after nearly 2 years of hearings, public opinions and deliberations, the CRTC made a decision to approve the licensing of 2 digital satellite radio companies and one planning a terrestrial service. The companies involved were Canadian Satellite Radio Inc., a partnership of John Bitrove Jr. and the U.S. XM Satellite Radio, Sirius Radio Canada Inc., a partnership between the Canadian Broadcasting Corp.(CBC) and the U.S. Sirius Satellite Radio. The third company was a CHUM venture partnered with Astral Media Inc. Both of the U.S. satellite radio companies have been in operation for several years and have a fully operational satellite and broadcast network in place. CHUM and Astral Media are well known in Canada for have substantial media holdings including 33 radio stations, 12 local television stations and 21 specialty channels available on cable and satellite.
The 2 satellite radio delivery applications were approved by the CRTC on the condition that they each carry a minimum of 8 Canadian English and French channels on their respective services. Of these 8 channels, at least 25% had to be in the French language. To many, this was seen as a solid decision as Canadians were already accessing the U.S. satellite radio services via the gray market. The 25% Canadian content however was well below those required from other media companies, including traditional radio, cablevision and satellite broadcasts.
Both Canadian Satellite Radio Inc. and Sirius Radio Canada Inc. proposed to use their existing U.S. satellites to deliver their programming to Canadian subscribers. The CHUM application however would use terrestrial broadcast towers and would be limited to major urban centers. CHUM reserved the right to switch to a satellite delivery system in the future.
As with any significant telecommunications decision, this was met with a great deal of opposition. Surprisingly enough however, one of the loudest voices was from CHUM/Astral who after receiving their authorization for a license, took the view that the other 2 applicants should be blocked and that they should be granted a exclusive monopoly over all of Canada, because they felt that they could not compete with firms that already had a fully operational infrastructure. CHUM/Astral filed an official opposition with the CRTC, but they did not stop there. They also began lobbying heavily to their government friends in Ottawa, playing up the limited Canadian content card.
Earlier this week, in response to heavy lobbying, Canadian Heritage Minister Liza Frulla announced plans to ask the CRTC to reconsider the licensing of the 2 Canadian satellite delivery firms. If successful, this would pave the way for a CHUM quasi-monopoly while snarling Canadian Satellite Radio and Sirius Radio Canada up in red tape, possibly for as long as another couple of years. The thinking of CHUM/Astral is no doubt that a good year to 2 year head start would give them the edge they need to apparently compete.
Now, while the 8 CRTC mandated Canadian channels does not seem like a lot, in comparison to high 35-50% ratio applied to many other Canadian broadcast mediums, in the grand scheme of things, it carries much further as those 8 Canadian channels will not just be available to the Canadian public, but also to the entire United States market as well, with over 250 million potential listeners. Indeed, what better way to promote Canadian artists and the Canadian culture than to expose it to all of North America.
Indeed, this goes further than that as the CHUM/Astral application calls for service to major urban centers only, such as Toronto, Ottawa, Vancouver etc. To all those that did not happen to reside within 20 miles or so of one of these major centers, well they are just out of luck and will have to settle for one of CHUM's AM or FM channels until they get around to building and launching one of their own satellites in 2 or 3 years. The reality of the situation is the U.S. satellite radio services are as popular as they are primarily because of portability. People like the idea of being able to listen to their favorite digital radio channels no matter where they are in North America. That being said, if Canadians had a choice of paying $12.95 for a service that would work across the country, or paying $12.95 for a service that fades out 20 minutes out of town, its quite easy to see which one would come out on top. Clearly, the culprit here is that the CHUM/Astral application is flawed from the get-go. It may indeed meet with success as a free, sponsor-driven digital radio service, however as a subscription-based service, its prospects are dim in comparison. That is to say unless that are the only game in town.
Surprisingly enough, CHUM/Astral would almost have you believe that this decision caught them with their proverbial pants down. This decision was nearly 2 years in this making. Certainly during that time, had they taken this venture seriously, in anticipation of being successfully licensed, they could have been busy building a satellite and planning its future launch for use in their planned venture. If they had, they also would have been fully ready to go as the average construction time for such as satellite would be 18-24 months.
Even if CHUM/Astral had contracted a satellite construction and their application had not been successful, they could quite easily have resold that to another firm and recovered their investment. Instead, we are to believe that they are deserving of a monopoly because they chose to play it safe and not make any plans or make any pre-investments until assured that their application would be approved. In fact, CHUM/Astral had not even begun to lay the ground work for their terrestrial broadcast towers either. To many, the old saying "You snooze, you lose" would seem to apply here. Simply put, in the high stakes telecommunications industry, those that choose to play it safe always come out last and usually end up folding and rendering subscribers investments useless. Think where industry leaders like Echostar and Directv would be today if they had waited until the lights were all green before they headed into town.
CHUM/Astral take the view that their business model would not work if the 2 satellite delivery licenses are allowed to stand. This is absolutely correct as their business model is flawed and can be considered marginal at best, when compared to the other satellite delivered models. 10 years ago, their model may have been successful in their target markets, however today's consumers are wise where they invest their money and are not likely to invest in any great number in one that has such limitations as being only available in certain key cities. The CHUM/Astral arguement is due in part to the fact that the 2 companies could be ready to go by the end of the year to all of Canada, while the CHUM/Astral venture would need to begin constructing broadcast towers for their venture and they would be well into 2006 before they could even begin such as service, which would be limited to only major cities. As such, the two satellite delivered companies will be well established nationwide with dealer and distribution networks and a healthy and growing subscriber base at least 9 months or more before the CHUM/Astral venture could even begin, likely in one initial market city and later expanding.
Indeed it seems that CHUM/Astral has been caught with their pants down, however it is at their own hand. Canadians however should not be made to pay for their mistakes and be denied access to a good digital radio service simply because they are not prepared to compete or wanted to play it safe. It goes without saying that in the limited Canadian market, those first out of the gate will be the ultimate winners. CHUM/Astral appears to have slept in and would have us all to wait many months and even years until they are prepared to grace us with their service, and then only if he happen to reside in a heavily populated area that they deem as profitable to service.
This is not unlike the Canadian digital satellite fiasco, in which Expressvu Inc. was licensed and took over 2 years to bring the service online after they first promised the Canadian public that it would be operational. Many Canadians did not wait then, choosing instead to subscribe to U.S. digital satellite services and they are not likely to wait now, should CHUM/Astral and the Canadian government be successful in delaying their licensing. Indeed it will be deja vu, all over again as CHUM/Astral will likely attempt to begin legal actions against those subscribing to the U.S. firms as well as those helping others to tune in to it. Ironically, this would even target people in outlying areas that they have no intention of even servicing until 2008 at the earliest, assuming that they immediately began the construction of their own satellite to expand Canada-wide, which is doubtful, considering their record on this issue.
The Canadian Heritage Ministry also seems to be blinded by the light and unable to do the math. If they had, they would see that 8 Canadian channels with a 25 million Canadians and 250 million American audience is far better than 50 Canadian channels exposed to only a Canadian audience. The kicker is the fact that one of the mandates of the Heritage Ministry is supposedly to promote & protect Canadian culture. While promoting Canadian culture to Canadians is all fine and dandy, it makes a lot more sense to also promote it to non-Canadians, so they may see first hand what a rich and diverse culture we have.
Indeed the Heritage Ministry and the federal cabinet wield a veto power that would allow them to set aside the CRTC decision, however the long term effects of this would be long lasting as the CRTC is mandated to be an independent governing body and their authority will be greatly reduced if the government takes to over-riding decisions that it does not agree with, especially when such a decision would serve no useful purpose other than to further strengthen the satellite radio gray market in Canada and also to further delay Canadian access to a service which has been available in the United States for several years.
In order to better promote their case, the Heritage Ministry is attempting to also invoke the language card, promoting the fact that the satellite radio application would be limited to 2-3 French channels. Indeed, at the moment, there are no French channels available on either of the 2 U.S. satellite radio services. And if the Heritage Ministry is successful, there will continue to be no French channels on these services as they will be snarled up in red tape licensing issues.
Ironically, this is a case of one government agency backhanding another as Sirius Radio Canada is owned in majority by the CBC, which is a federal government owned broadcasting corporation. A successful Sirius Radio Canada initiative could mean for less required funding by the CBC to continue operations, which is at the moment heavily dependant on taxpayer revenue.
The delays are also being felt in the automotive industry where several large automotive manufacturers have agreements to include satellite ready electronics in their 2006 model vehicles. The licensing delay has already caused some vehicle manufacturers to postpone their introduction until 2007.
We shall ultimately see in the months to come how things shake out, the Liberal cabinet has until September 14th to approve, deny or send the application back to the CRTC for reconsideration. If it should not be approved, it will certainly delay things quite substantially, likely into late 2006 or possibly 2007. This unnecessary delay would surely anger a great number of Canadians that are already anticipating a domestic satellite radio service. And this is sure to cause a great spike in satellite radio gray market sales in the months and years to come until the Canadian product is given the ok to proceed.
© 2005 digitalinsurrection.com