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Letter

Ottawa, 21 November 2005

Mr. John Bitove
Chief Executive Officer
Canadian Satellite Radio
Suite 2300
Canada Trust Tower
BCE Place
161 Bay Street
Toronto , Ontario
M5J 2S1  

Dear Mr. Bitove,  

This is in reference to Decision CRTC 2004-246, which approved your application for a satellite subscription radio licence, and included the following requirements:

•  CSR must provide written confirmation, within 150 days of the decision that it accepts the terms and conditions set out in the decision and in the licensing framework set out in Public Notice 2005-61, including any necessary revisions to its agreements with its American partner.   Failure to provide such confirmation within the required timeframe shall render the decision null and void .

•  The Commission directs CSR to file, within 150 days of the release of this decision, internal guidelines for dealing with complaints from listeners for the Commission's approval. Once these guidelines have been approved, the Commission expects the applicant to apply these guidelines to the consideration of any complaint that is received.

•  Given that CSR proposed to devote only 4% of gross revenues to CTD, the Commission requires the applicant to file for approval by the Commission, before it commences operations, a plan setting out all initiatives for CTD that it will undertake in order to fulfil the 5% requirement.  

•  The decision also notes that if XM exercises an option to acquire 33% of the shares of Canadian Satellite Radio Holdings Inc. (CSRH), the parent company of CSR, the licensee would establish an independent programming committee to comply with the Direction to the CRTC (Ineligibility of Non-Canadians) under which neither CSRH nor its directors would be permitted to influence the programming decisions of CSR. The structure of the independent programming committee would be subject to prior approval by the Commission.

Following are the Commission's determinations with respect to the fulfilment of these requirements:

Acceptance of the terms and conditions of Decision 2005-246

The Commission confirms that CSR has fulfilled this requirement, and expects CSR to file, once enacted, the following documents within 30 days of the date of execution:  

• executed copies of the XM System Licence Agreement, Programming Agreement, Trade-mark Licence Agreements, and Technical Services Agreement;

• an executed copy of the By-law establishing the Independent Programming Committee, including its composition;  

• an executed copy of the Shareholders Agreement, the Share Issuance Agreement and the Director Nomination Agreement;

• The appropriate Articles of Amendment of Canadian Satellite Radio Holdings Inc.;

• The final share capital structures and Boards of Directors of:  Canadian Satellite Radio Inc., Canadian Satellite Radio Holdings Inc. and Canadian Satellite Radio Investments Inc., if different from application 2003-1081-3.

•  Any other documents that would modify the original incorporating documents filed with application 2003-1081-3 (i.e. Certificate of name change).  

Internal guidelines for dealing with complaints  

Receipt is acknowledged of CSR's proposed internal guidelines for dealing with complaints.   The Commission is in the process of reviewing this proposal, as well as the proposed guidelines submitted by Sirius Canada, and conferring with the two satellite radio services to ensure that their respective guidelines will be appropriate and consistent.  

Balance of CTD commitments  

The Commission accepts CSR's proposed plan for CTD contributions, as set out in your letter dated 14 November 2005 , and notes your commitment   to review   CTD contributions to specific initiatives to ensure that the amounts are appropriate, given the nature and scale of the respective initiatives.

Request for flexibility to carry forward CTD contributions

The Commission is of the view that the condition of licence regarding CTD contributions cannot be interpreted in the manner suggested.   The flexibility requested by CSR would require an application for an amendment to the condition of licence, which the Commission would consider in a public process.

Request for confidentiality

In your letter dated 1 November 2005, CSR requested that the agreements you have filed be treated as confidential until the service has launched, on the basis that these agreements contain information that is sensitive from a business and competitive perspective.  

This is to advise that confidentiality of these documents is granted given the short period of time in question, but that this decision will be reviewed if the launch date of your service is significantly delayed.   After the launch date, the documents will be placed on the public file.

Conclusion

In conclusion, the Commission is satisfied that the requirements noted above have been fulfilled.   In accordance with Decision 2005-246, the licence for your satellite subscription radio undertaking will be issued when the Department of Industry notifies the Commission that its technical requirements have been met and that a broadcasting certificate will be issued, and you have informed the Commission in writing that you are prepared to commence operations.  

Yours sincerely,  

Diane Rhéaume
Secretary General

Date Modified: 2005-11-21