Terrestrial subscription radio service provider Chum Ltd. filed a petition with the Canadian government challenging the licenses awarded to Sirius Canada and Canadian Satellite Radio, the Canadian partners of Sirius Satellite Radio and XM Satellite Radio respectively, from the Canadian Radio-television and Telecommunications Commission (CRTC) June 16 (SN, June 20).

Chum’s arguments center around the differences between its license to offer subscription radio via a terrestrial network, which was approved at the same time its satellite- based competition was. Chum claims the differences puts it at a competitive disadvantage, particularly when it comes to music programming.

For Sirius Canada and Canadian Satellite Radio, the two providers can offer an unlimited amount of channels, provided 10 percent of them, with a minimum of eight channels, are Canadian-based and carry at least 85 percent of Canadian content. There are no other additional restrictions on the foreign content. The Canadian satellite radio companies also are required to contribute 5 percent of gross revenues to the development of Canadian artists.

“We are licensed for 50 channels, all of which have to be Canadian and all of which have to conform to Canadian content requirements that typically are, for commercial stations, 35 percent of commercial popular music has to be Canadian (that percentage decreases for other genres of music such as classical). All of our channels have to meet those Canadian content requirements and our contributions to Canadian talent development is 2 percent” of gross revenues,” Peter Miller, vice president of planning and regulatory affairs, Chum Ltd., told Satellite News.

The difference is the basis for the appeal by Chum.

“We have the Canadian Broadcasting Act – which covers all broadcasting services, not just over-the-air television services – which has a few fundamental principles, one of which is that there shall be maximum use and no less than predominant use of Canadian creative resources,” Miller said. “What that has been interpreted as all television and radio channels should have appropriate Canadian content levels. And if you import foreign channels directly, you have to have a one-to-one linkage of foreign to domestic channels. In every other broadcasting precedent in Canada, a maximum of 50 percent of the channels distributed by a broadcasting enterprise can be foreign services. What has happened here, the CRTC has decided not to apply that historic precedent and instead require only 10 percent of the channels being Canadian. That in our view is completely contrary to the Broadcasting Act and outside the commission’s jurisdiction.”

A representative from Canadian Satellite Radio was not immediately available for comment, but the company issued a statement July 12 regarding Chum’s appeal.

“All of [Chum’s arguments in its filing] were previously raised before the [CRTC],” Canadian Satellite Radio Chairman and CEO John Bitove said. “The CRTC deliberated the subscription radio decision for two years and received approximately 1,000 submissions from the public. The CRTC issues a unanimous (5-0) decision supporting our application and carefully balancing the needs of consumers, artists and the regulator and Canadian broadcasting system.”

A call to Sirius Canada was not returned and a spokesman from Sirius Satellite Radio declined to comment on the issue.

The Appeals Process

So Chum and a group of nine other Canadian broadcasters, following the path of two not-for-profit organizations, filed an appeal with the Canadian government. The process works like this: An individual or group has 45 days from the day a decision is handed down from the CRTC. Challenges in this instance are forwarded to the Department of Canadian Heritage, which can issue one of three rulings. The agency can uphold the CRTC’s decision; it can cancel the licenses and instruct the CRTC to restart the licensing process again; or it instructs the CRTC to review its decision further. The agency has 45 days from the initial appeal deadline to issue its ruling.

Chum is seeking a level playing field in terms of content that is carried on its service compared to the content on the satellite radio services.

“Our suggestion is that these other licenses should conform to existing precedents,” Miller said “Our alternative is if you are not going to [require satellite radio to meet existing precedents], then you are going to have to change the precedents for the entire industry.”

–Gregory Twachtman