SUBSCRIPTION RADIO NOW (LEGALLY) AVAILABLE IN CANADA

UNCLAS OTTAWA 003602

SIPDIS

SENSITIVE

PASS USTR FOR CLUNE, BALASSA, BURCKY AND SCHNARE

STATE FOR EB/CIP, EB/DCT AND WHA/CAN

DOC FOR ITA/MAC -- OFFICE OF NAFTA

FCC FOR INTERNATIONAL BUREAU

PARIS FOR USMISSION UNESCO

E.O. 12958: N/A
TAGS: ECPS ETRD CA
SUBJECT: SUBSCRIPTION RADIO NOW (LEGALLY) AVAILABLE IN CANADA

REF: OTTAWA 2745 AND PREVIOUS


1. SENSITIVE, BUT UNCLASSIFIED. NOT FOR DISTRIBUTION
OUTSIDE USG CHANNELS.


2. (U) Reftels reported the GOC regulatory decision in mid-
2005 to allow the launch of three subscription radio
services in Canada. Two of the licensees are extensions of
U.S.-based "XM" and "Sirius" satellite radio services (with
Canadian channels added). Both of these U.S.-affiliated
services began operating in recent weeks, and they are
competing to attract subscribers in Canada through
advertising campaigns, special programming, and discounts on
receiver hardware. Some Canadians had already been
receiving XM and Sirius programs through receivers purchased
in the United States.


2. (U) Canadian broadcaster CHUM Ltd., the third licensee,
planned to provide a subscription radio service which would
be broadcast from terrestrial stations. CHUM appealed
unsuccessfully against the original licensing decision in
June, arguing that it could not compete with the two
satellite services unless their terms of license were
tightened (so as to require more Canadian content -- the
main point on which the licensing decision was criticized in
Canada). CHUM says it remains undecided about whether it
will actually enter the subscription radio market.
(Comment: Given the head start which XM and Sirius -- which
operates here in a partnership called Canadian Satellite
Radio -- now have in signing up subscribers, it seems
unlikely that CHUM will enter the market anytime soon. End
comment).



3. (SBU) The Canadian Association of Broadcasters, which
represents Canada's conventional over-the-air TV and radio
broadcasters, has been cautious on this issue because it has
members with interests on both sides and because it
cultivates a close relationship to the broadcast regulator.
However, it has taken the position that subscription radio
"should not undermine the ability of conventional radio to
meet its Canadian content requirements" -- a qualified
message of support for CHUM.


4. (SBU) The GOC is due to conduct a regular five-year
review of its broadcasting policy during 2006. That process
will provide a fresh platform for Canadian "cultural
interests" (i.e. the various media industries which benefit
from regulatory protection) to argue that the satellite
services are diluting the presence of Canadian content in
Canadian media, and thus harming other firms' ability to
meet their license requirements.

WILKINS