ARCHIVED -  Transcript / Transcription - 3 November / novembre 2004 - Gatineau, Quebec

VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

HELD AT: TENUE À:

Conference Centre Centre de conférences

Outaouais Room Salle Outaouais

Portage IV Portage IV

140 Promenade du Portage 140, promenade du Portage

Gatineau, Quebec Gatineau (Québec)

November 3, 2004 Le 3 novembre 2004

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

BEFORE / DEVANT:

Charles Dalfen Chairperson of the CRTC /

Le président du CRTC

Andrée Wylie Vice-chairperson /

Vice-présidente

Ronald Williams Commissioner / Conseillier

Joan Pennefather Commissioner / Conseillère

Stuart Langford Commissioner / Conseillier

ALSO PRESENT / AUSSI PRÉSENTS:

Pierre Lebel Secretary / Secrétaire

James Wilson Legal Counsel /

Conseiller juridique

Lynn Renaud Commission Staff /

Peter Foster Gestionnaires

HELD AT: TENUE À:

Conference Centre Centre de conférences

Outaouais Room Salle Outaouais

Portage IV Portage IV

140 Promenade du Portage 140, promenade du Portage

Gatineau, Quebec Gatineau (Québec)

November 3, 2004 Le 3 novembre 2004

PAGE

PHASE I

PRESENTATION BY / PRÉSENTATION PAR:

CHUM Limited and Astral Media Radio Inc. 608 / 3638

PHASE II

INTERVENTION BY / INTERVENTION PAR:

Corus Entertainment 842 / 4886

Tom Tompkins 866 / 5002

Jayne Courtney

Friends of Canadian Broadcasting 878 / 5071

Franz Schuller 896 / 5165

Gatineau, Quebec / Gatineau (Québec)

--- Upon resuming on Wednesday, November 3, 2004 at

0930 / L'audience reprend le mercredi 3 novembre

2004 à 09 h 30

3374 THE CHAIRPERSON: Order, please.

3375 À l'ordre, s'il vous plaît.

3376 Good morning, everyone.

3377 Mr. Secretary.

3378 THE SECRETARY: Thank you, Mr. Chairman.

3379 For the record, I would like to indicate that the CBC letter referred to at the end of the day, yesterday, was, in fact, sent and received by the Commission on September 15th and attached to that letter were the executed and signed Licensing and Services Agreement.

3380 Those documents are now available on the public file for public examination.

3381 THE CHAIRPERSON: Thank you.

3382 We apologize for that. I think the error occurred on our side. We will have some questions of follow-up, as we indicated, but in order to be fair to intervenors, I think we will accept comment on those additional documents should any intervenor have such comments by a week today and if the applicant has any comments in reply to those comments by Friday. We will give everybody a chance to have a review of those and comment on them, and only on those issues, please. So thank you for that.

3383 We will proceed with the questioning.

3384 I will take you through a number of questions on the documents, and they are primarily on the Licence and Services Agreement, dated the 6th of July. One or two of my colleagues may have some follow-up questions.

3385 If I turn to section 2.1 of the agreement--sorry, let me back up, first of all. The documents that you filed, you filed a Licence and Services Agreement between Sirius Satellite Radio and what is now Sirius Canada, then the numbered company; second, a licence agreement between the CBC and Sirius Canada, a licence agreement between the CBC and Sirius Satellite Radio of the U.S. and then a first amending agreement among the shareholders, and I mean the shareholders' agreement.

3386 My question is that we don't seem to have parallel agreements involving Standard. What are your intentions in that regard?

3387 MR. SHEA: Mr. Chairman, the addition of the fifth channel came as we prepared closer for this hearing and we will file an agreement that will absolutely mirror the CBC/Sirius agreement. So we will file that agreement.

3388 THE CHAIRPERSON: In respect of the fifth Canadian channel?

3389 MR. SHEA: In respect of the fifth, sixth, seventh and eighth.

3390 THE CHAIRPERSON: Fifth, sixth, seventh and eighth, including the right that you indicated Standard had to provide those channels--

3391 MR. SHEA: That's correct.

3392 THE CHAIRPERSON: --and including the undertaking to provide the sixth French channel?

3393 MR. SHEA: That's correct.

3394 THE CHAIRPERSON: So those will be covered in the documents which you will file after the proceeding.

3395 MR. SHEA: That's correct.

3396 THE CHAIRPERSON: Do you have a timeline for that?

3397 MR. BUCHANAN: I'm listening to this, absorbing whether or not we would include the sixth seventh and eighth at this time, but I would have to look at that. We were thinking of the ones that would be covered at launch because it's a licence agreement to permit you to carry them in the scheduled way. They agreed to carry them throughout the term and if they aren't up yet, they can't. So I would have to look at that.

3398 It certainly will cover the fifth channel, which is the promised channel for the date of launch, and our expectation would be that it would be an identical agreement that would cover any subsequent Canadian channel that was carried.

3399 THE CHAIRPERSON: Right. And the undertaking of Standard, as I heard it, where would that come in?

3400 MR. BUCHANAN: Sorry, the undertaking, we would undertake to file, yes--

3401 THE CHAIRPERSON: On the sixth channel. Was that an undertaking or was it just contingent on exercising the right to do the sixth channel, it would be French?

3402 MR. BUCHANAN: That's right.

3403 THE CHAIRPERSON: Okay.

3404 MR. BUCHANAN: The latter three channels--

3405 THE CHAIRPERSON: It isn't currently an undertaking to do it, it's an undertaking that if you do it, it will be French.

3406 MR. BUCHANAN: That's right.

3407 THE CHAIRPERSON: Is that correct?

3408 MR. BUCHANAN: That's right.

3409 THE CHAIRPERSON: Okay. So that, then, will be covered, as you say, in the fifth, sixth and--the sixth, seventh and eighth channels--

3410 MR. BUCHANAN: That's right.

3411 THE CHAIRPERSON: --am I correct, Mr. Buchanan?

3412 MR. BUCHANAN: That's right.

3413 THE CHAIRPERSON: Okay.

3414 MR. BUCHANAN: I mean, they can't carry them until there's a licence agreement, so there would have to be something in place as they do it. The question--

3415 THE CHAIRPERSON: Right.

3416 MR. BUCHANAN: We hadn't really thought about a licence agreement for future channels at this point. We were just licensing the ones that were going to be carried at launch. So we will file a new agreement with respect to the fifth channel, for sure, and we will have a look at whether we could adapt it to cover subsequent Standard channels or not. But it will at least cover the fifth channel in the same manner as the CBC's four are covered by the agreement you have.

3417 THE CHAIRPERSON: I guess one would want to see an undertaking whereby Sirius U.S. agreed to carry up to eight channels. Am I correct in that?

3418 MR. BUCHANAN: Well, I don't think the--I thought that all we had agreed to, at that point, was the negotiation as to the additional bandwidth at 300,000 subscribers.

3419 THE CHAIRPERSON: I see. I will get to the bandwidth question. So the bandwidth, in effect, is to allow you to provide how many channels?

3420 MR. BUCHANAN: The thinking was three.

3421 THE CHAIRPERSON: Was...?

3422 MR. BUCHANAN: The thinking was three.

3423 THE CHAIRPERSON: Three, in addition to the...?

3424 MR. BUCHANAN: Five.

3425 THE CHAIRPERSON: To the five.

3426 MR. BUCHANAN: So eight, in total, when we get to 300,000 subscribers.

3427 THE CHAIRPERSON: Right. And before that?

3428 MR. BUCHANAN: Five, for sure.

3429 THE CHAIRPERSON: That's the five, for sure.

3430 MR. BUCHANAN: Yes. And it's the five you will see in the conditions of licence. The trigger there is you can't carry the Americans till you launch the five Canadian. That's your hammer.

3431 THE CHAIRPERSON: Okay. Well, maybe we can move, then, to that particular provision in the Licence and Services Agreement, which was 5.02, right?

3432 MR. BUCHANAN: Yes, that's the one.

3433 THE CHAIRPERSON: So it's a bandwidth agreement, essentially, isn't it?

3434 MR. BUCHANAN: That's right.

3435 THE CHAIRPERSON: It's 144 kilobits per second.

3436 MR. BUCHANAN: That's right.

3437 THE CHAIRPERSON: And that, you are assuming, will provide for how many channels?

3438 MR. BUCHANAN: Five.

3439 THE CHAIRPERSON: For five. Then there's an obligation to negotiate in good faith to provide additional bandwidth, rather than a firm obligation--

3440 MR. BUCHANAN: That's right.

3441 THE CHAIRPERSON: --on the remaining channels. An additional bandwidth is not limited, so the eight comes in as your estimate, but is not agreed upon one way or the other, beyond the five.

3442 MR. BUCHANAN: That's right.

3443 THE CHAIRPERSON: Okay.

3444 So from your point of view, Mr. Gregor, as a party to this agreement, how do you see that? Do you see that exactly as it's written: an obligation to negotiate in good faith, no more?

3445 MR. GREGOR: We see that as an obligation to negotiate in good faith.

3446 THE CHAIRPERSON: Right. And in terms of the sixth, seventh and eighth channels, as far as you are concerned, that's off in the future?

3447 MR. GREGOR: Yes. I believe the time frame is structured such that this will be, when we get to 300,000 subs, in Canada.

3448 THE CHAIRPERSON: Okay. Now, still looking at 5.02, assuming that compression technology permitted you to expand the use of 144 kilobits per second and that you were able to derive more channels, is it your understanding that Sirius Canada has access to that 144 kilobits for additional channels that might be included in that bandwidth?

3449 MR. GREGOR: It would be our understanding that, as compression technology develops and as the subscriber base in Canada enlarges and is more interested in satellite radio, that we would clearly negotiate in good faith to expand to that eight-channel total.

3450 THE CHAIRPERSON: But that's not my question.

3451 MR. GREGOR: I'm sorry.

3452 THE CHAIRPERSON: My question is that within the 144 kilobits, which, as I understand it, is an undertaking to make 144 kilobits available--

3453 MR. GREGOR: Today.

3454 THE CHAIRPERSON: --immediately.

3455 MR. GREGOR: Yes.

3456 THE CHAIRPERSON: And I'm saying that if compression technology permitted that 144 kilobits to expand the number of channels that could be used prior to 300,000 subscribers, let's say, being attained, is it your understanding that 144 kilobits is Sirius Canada's to use to expand the number of channels?

3457 MR. GREGOR: It is our understanding that's the allocation to Sirius Canada today, the 144 kilobits, correct.

3458 THE CHAIRPERSON: That isn't my question either.

3459 MR. GREGOR: Oh, I'm sorry.

3460 MR. BUCHANAN: Mr. Chairman, yesterday, I think it was in response to a question from Commissioner Pennefather, we agreed to go away and think about what we could do by way of additional commitments, if anything, in respect of what would happen if compression allowed more channels to be created on the Sirius bandwidth. We said we would come in reply and we haven't had a chance to do that yet.

3461 THE CHAIRPERSON: Right. I didn't take it as having been pinpointed to that 144 kilobits--

3462 COMMISSIONER PENNEFATHER: No.

3463 THE CHAIRPERSON: Commissioner Pennefather confirmed--because I think it was a more general question about compression technology over the entire satellite and I'm asking--because we didn't have access to this agreement, as you know, and now I'm zeroing in on the 144 kilobits that Sirius and Sirius Canada have agreed to make available to Sirius Canada. I'm asking whether compression technology, if that could be increased, would that 144 kilobits be free to Sirius Canada to use for additional channels?

3464 MR. GREGOR: I will try again in answering your question. If the 144 kilobits can be used more efficiently as a consequence of technology, those benefits would accrue to Sirius Canada.

3465 THE CHAIRPERSON: Okay. You are getting there.

--- Laughter / Rires

3466 MR. GREGOR: I am sincerely trying to answer your question.

3467 THE CHAIRPERSON: I'm trying to get the nature of--

3468 MR. SHEA: Of the commitment.

3469 THE CHAIRPERSON: --the licence here.

3470 MR. SHEA: Right.

3471 THE CHAIRPERSON: --that you are conferring and does it include the right to use that 144 kilobits to expand the number of channels, if compression technology permits such an expansion.

3472 MR. SHEA: Mr. Chairman, if I may, we hadn't really thought through this question, to be honest, that if there are great strides made in compression technology overall, and contractually we have been allocated a particular set of bandwidth, are we beneficiary? If suddenly, now, we are using eight channels, let's say, in that particular bandwidth and we can go to 10, is that our right, as Sirius Canada, to take up that obligation or that opportunity?

3473 I think it's an interesting twist on Ms Pennefather's overall question yesterday. I think you have to allow us to get back to you on that because, from a technical perspective, I think we would want the engineering folks at Sirius just to think through how that would happen. But it is a very interesting way for us to perhaps take advantage of the bandwidth allocated to us.

3474 THE CHAIRPERSON: I'm not trying to rush your answer. I'm just trying to get--

3475 MR. SHEA: I understand.

3476 THE CHAIRPERSON: --at how you see this licence that's been conferred upon you.

3477 Mr. Buchanan.

3478 MR. BUCHANAN: I think we have now understood your question in the back row. I have just been conferring with Mr. Gregor. From Sirius U.S.'s point of view how Canada uses the 144 is Canada's business, if they want to allocate it differently. If there is more compression or they want to make changes, that is something that is acceptable.

3479 I think that answers your question.

3480 THE CHAIRPERSON: Including additional channels, Mr. Buchanan?

3481 MR. BUCHANAN: Sure. If you can squeeze more on. Recognizing voice takes less than music and so on, you might at some point have a little bit more room and the answer is yes.

3482 It wasn't a channel allocation. It was a bandwidth allocation.

3483 THE CHAIRPERSON: Correct. That's what prompted the question.

3484 MR. BUCHANAN: Okay. Sorry it took us so long to understand.

3485 THE CHAIRPERSON: So we have your answer as basically yes. That isn't a commitment, Mr. Shea. I understand that.

3486 MR. SHEA: I understand.

3487 THE CHAIRPERSON: I'm just trying to understand the nature of the right that's been conferred upon you.

3488 Okay. Thank you.

3489 On 5.01 and 6.01, which Mr. Buchanan was good enough to direct us to, I guess these refer to programming telecommunication services in 5.01 and the compensation for that, as I understand it, is part of the overall fee of the 2 per cent royalty above the $100 million.

3490 Then 6.01 is services where Sirius U.S. uses commercially reasonable efforts to provide licensees with a variety of services.

3491 Then 6.02 provides a separate payment for I guess pay-as-you-go use of those services in 6.01. Is that a correct understanding?

3492 MR. SHEA: That's correct.

3493 THE CHAIRPERSON: Then I guess in light of the demonstration that you showed us yesterday, it would appear that a number of these have moved from the commercially reasonable efforts to in effect undertakings or you couldn't really do what Mr. Lewis pointed out what you were going to do. Can you point us to the sections in those two clauses, 5.01 and 6.01, that have become in effect obligations and for which in the case of 6.01 you will be required to pay?

3494 MR. BUCHANAN: I think in 5.01(e), on reflection (e) disappears. In 6.01, (f) disappears. The others, I think we could leave them, but what we will need is another agreement involving the Cape Breton facility so that you can see clearly in words contractually the complete control that Sirius Canada has.

3495 In other words, for example, if you look at 6.01(d), assistance with integration, that can still be supplied by Sirius U.S. because there will still need to be some assistance, but it doesn't mean that they are doing it.

3496 I think the only one that really gets deleted is (f) of 6.01, but we clearly need a new document.

3497 THE CHAIRPERSON: Right. So that in 5.01, these were a lot of the basic telecom functions that are going to be performed. The commercially reasonable efforts caveat, why is that there?

3498 MR. BUCHANAN: I think I will let Mr. Gregor speak to it if he wishes, but the intention of course is that this happen. These are services that are being delivered without which the service doesn't arrive at the subscriber's set in Canada. It's a telecom services contract so it is no different than Telesat or someone else.

3499 THE CHAIRPERSON: Right.

3500 Mr. Gregor, do you see anything in 5.01 that makes you believe that these will not definitively be provided?

3501 MR. GREGOR: No, I do not. I think these are purely telecom type risks and communication type risks.

3502 THE CHAIRPERSON: Right. "Commercially reasonable efforts" was the phrase that gave me pause in both of these. I would have thought technical glitches perhaps or force majeure, but force majeure is covered elsewhere.

3503 So you intend to provide all these services in 5.01 and undertake to do that.

3504 MR. GREGOR: We do.

3505 THE CHAIRPERSON: Right. Thank you.

3506 Now, in 6.02, do you have an estimate now that you are clear on on the system, the activation process that you are going to be using? Do you have a sense of a number that comes out of 6.02 that you have been able to project in your -- and have you projected it in your financials?

3507 Mr. Lewis, if you are the right person to answer this.

3508 MR. LEWIS: Perhaps I could get some clarification from Grant as to specifically what the cost elements refer to to be able to better answer the question.

3509 THE CHAIRPERSON: Perhaps you can get back to us. It is really just a matter of -- at this stage you are probably more certain of what you are absolutely going to need and what they are going to provide. There is a number that comes out of that of cost to Sirius Canada. I don't know whether you have projected it or not in your financials. It would be useful to know.

3510 MR. SHEA: They are projected in our budget. I think John referred to yesterday we have an allocation on an annualized basis of contribution to various aspects of customer service.

3511 The company that we began discussions with now about four or five weeks ago is called Stream. They are an international company. They happen to be located in Cape Breton, which we thought was very worthwhile.

3512 We haven't, Mr. Chairman, specifically sat down with them and gone through the specifics of running the customer service part of the equation for us, but we clearly do have, from a budgeting standpoint, a cost that we have assumed to take care of that obligation.

3513 MR. LEWIS: Absolutely. If it is referring to the call centre costs, absolutely that is budgeted in just slightly under $20 per subscriber with a slightly greater amount at the beginning in order to establish it. In fact, through the pre-operating period we have a three month period prior to launch for training, et cetera, to make sure that everybody is up to scratch on it.

3514 There is also --

3515 THE CHAIRPERSON: Let me ask the question in a different way. It isn't an effort to bean count here.

3516 You presented the activation process as a change from what you had originally intended. I guess I am wondering -- that change usually has a dollar price tag attached to it, so I am trying to get the magnitude of that additional cost to the company in virtue of that if that is indeed the case.

3517 MR. LEWIS: It is not the case, no. We had originally budgeted for this and had envisioned the activation process that you see in front of you. It was a question really of ensuring that all the elements tied together more on the contractual side as opposed to what we had budgeted.

3518 THE CHAIRPERSON: So in July, the beginning of July when this was concluded, you hadn't been as far along in the design of that system --

3519 MR. LEWIS: That's correct.

3520 THE CHAIRPERSON: -- but that in budgetary terms there isn't a material change. I don't want to put words in your mouth.

3521 MR. LEWIS: No. That's correct. There isn't. It's a question of where it was to be located and who we were going to be dealing with, but certainly the funds were set aside.

3522 THE CHAIRPERSON: Okay. These lists of services in 6.01, including assistance with integration of the conditional access system, the use of the Sirius broadcast facilities, those were already included in your projections --

3523 MR. LEWIS: Yes. That's correct.

3524 THE CHAIRPERSON: -- for the marketing expenses.

3525 Okay. Turning now to clause 9.02 of this agreement, this is your effort to address the grey market, I assume, the clause referred to as spillover.

3526 MR. BUCHANAN: No, 9.01 is our attempt to deal with the grey market. 9.02 is what happens when someone drives their car, who is a legitimate American subscriber, drives into Canada, drives around and drives out again, because it's a mobile technology, if I'm reading --

3527 THE CHAIRPERSON: I had interpreted Sirius' obligation at the end of 9.02 to not market, advertise or authorize the marketing or advertising of the availability of those services in Canada or intentionally solicit or accept any revenue and so forth as addressing in effect --

3528 MR. BUCHANAN: You are quite right. That sentence is a follow on from -- the whole paragraph, section 9, is meant to deal with the issue.

3529 THE CHAIRPERSON: Right.

3530 MR. BUCHANAN: 01 and 02.

3531 THE CHAIRPERSON: The incidental spillover, as you are calling it, which is essentially somebody who picks up a set in the other country, you are not going to deem to be a breach of 9.01 in regard to the grey market.

3532 MR. SHEA: We are not going to have daily rates when they come over the border between Canada and the U.S.

3533 THE CHAIRPERSON: Right. Unlike your competitor of course, you are offering nominal dollar equivalents in your price pretty well, aren't you?

3534 I guess a Canadian subscriber would be quite tempted to prefer your service, wouldn't they? I understand the service is $12.95 U.S. in the U.S. and you are charging $12.95 Canadian, unlike your competitor who is charging --

3535 MR. SHEA: There is a differential. That's correct.

3536 THE CHAIRPERSON: Almost the currency equivalent in Canada to what the U.S. price is.

3537 MR. SHEA: That's right.

3538 THE CHAIRPERSON: Thank you.

3539 You are envisaging this as a 12-year term, this agreement, unless force majeure or whether the conditions in 14.01.

3540 Mr. Gregor, have you addressed, and you may not have but if you have I would appreciate you sharing with me, the termination clause in 14.03(c). It is a termination event if either party ceases or threatens to cease to carry on the business or a substantial portion of the business. A normal termination consideration.

3541 What would you envisage as being involved there?

3542 MR. GREGOR: I'm sorry; I didn't hear the last part of your question.

3543 THE CHAIRPERSON: I'm sorry; I wasn't close enough to the mike.

3544 What would you envisage as a threat to not carry on a substantial portion of business? On the face of the application, quite a few of your channels will not be carried in Canada, local channels and so forth. I don't know whether the parties have addressed this or this just came off Mr. Buchanan's firm's computer as a termination --

3545 MR. GREGOR: I believe it is the latter.

3546 MR. BUCHANAN: You are both right.

3547 THE CHAIRPERSON: But you as Sirius U.S. are fully comfortable with the arrangement whereby the local channels and weather channels and so on are not carried by Sirius Canada?

3548 MR. GREGOR: We are very comfortable with that. We are very comfortable with -- yes.

3549 THE CHAIRPERSON: Those are my questions on your agreements. Thank you.

3550 Commissioner Langford.

3551 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.

3552 I have a couple of last minute control of programming questions that somehow got lost in the paper chase yesterday. Before I do, if I could just follow up on a couple of questions from the Chairman this morning.

3553 I am still just slightly confused about the impact of 5.02 in the July licensing services agreement upon, if I can call it, future consideration. I will tell you what has got me somewhat confused.

3554 5.02 refers to, if I can put it in the colloquial, what CBC and Standard are getting today through Sirius in terms of bandwidth, so we are giving you 144 kilobits per second. But when you discuss with us what is going to happen in the future, you discuss it in terms of channels. I am just having trouble trying to translate that and whether we should have one standard, one measuring standard, for everything.

3555 Should I just assume that you are going to get 144 kilobits per second divided by five and multiplied by three once you pass the 300,000 subscriber mark or is that too simplistic?

3556 MR. SHEA: We should point out, Commissioner Langford, that this was filed in July and the 144 represents a commitment for four channels. So in effect, and I think Grant Buchanan mentioned this, we are going to have to actually update that and that will happen when we file the agreement with Standard.

3557 Just so that we are clear on that --

3558 COMMISSIONER LANGFORD: Okay, sorry. You are right, you did mention that.

3559 MR. SHEA: That's okay -- in terms of commitments today.

3560 But I think this is a first this morning where we have actually thought about bandwidth and channels as sort of separate and distinct. I think, as was mentioned yesterday, if it is talk it takes smaller bandwidth, if it is music, it takes more.

3561 At this point in time, other than a commitment that the sixth channel would be "en français", we don't really have a content plan as we sit before you today on is that channel going to be music, is it going to be talk, and what channels 7 and 8 are.

3562 But I think if you will allow us, we have a number of items that we are to report back to you on in Phase III, allow us to think about notionally now is the commitment from a COL perspective, and that commitment is a two way commitment between ourselves obviously and SIRIUS U.S. Is it bandwidth or channels or is it both, because we have not really thought of it along those lines.

3563 COMMISSIONER LANGFORD: Let me throw another little thing into the mix while you are thinking.

3564 I understand clearly, and you have said it a number of times, that voice takes a lot less bandwidth than music. I don't want to seem to be splitting hairs, but does all music take the same bandwidth? In other words, do Puff Daddy & The Family and Amadeus Mozart share a similar capacity need when it comes to putting out a channel of their music?

3565 MR. SHEA: I am going to answer your question in a different way, because I was quite impressed actually when I visited the master control at SIRIUS U.S.

3566 COMMISSIONER LANGFORD: Better to be "impressed" than "compressed" I guess.

3567 MR. SHEA: Exactly.

--- Laughter / Rires

3568 MR. SHEA: So 120 channels are broadcasting simultaneously and they go in -- just before those channels leave to go to the satellite there is a device that is constantly monitoring bandwidth of all those 120 channels, where it is like a "hypoglomitator". It is just managing compression across all 120 channels.

3569 Because the real answer to your question is, yes, some music will take up a bit more bandwidth and they can't really organize playlists against bandwidth, so it is constantly being checked.

3570 COMMISSIONER LANGFORD: I see. So there is a flexibility built into this.

3571 MR. SHEA: That is correct.

3572 COMMISSIONER LANGFORD: If one channel is demanding a little more and another is a little less --

3573 MR. SHEA: It gooses it up.

3574 COMMISSIONER LANGFORD: That is not the expression I would have used, but it works for me.

3575 What got me thinking about this was in one of your other agreements, licence agreement July 6th between the Canadian Broadcasting Corporation and SIRIUS Satellite Radio Inc., in paragraph 201(4) it says that if CBC can't deliver the music channel it has in mind right now because of some rights problem or whatever, it will deliver another one. So of course I began to think, well, gee, will it fit or is there a possibility that if you move from popular with a bit of talk or light opera to full-blown opera and classical, who knows. Can Sheila Rogers sit in the same chair as Jurgen Goth? Can I put it that way?

3576 MR. SHEA: The spectrum allocation currently contractually provided for to SIRIUS Canada did plan for the fact that these four channels would be a combination of music and talk, so we know full well that that allocation will certainly be more than adequate to provide access for those four channels, and the fifth channel we know is all music. So as Standard negotiates that will SIRIUS U.S., the allocation of bandwidth will be guaranteed to be able to absorb a full music channel.

3577 COMMISSIONER LANGFORD: Okay. That is fair enough for now. Just the quickies, then, that I overlooked yesterday in the kind of a bit of a muddle we had.

3578 We did mention Howard Stern. I wasn't clear in my own mind and I haven't checked the transcript, did you tell me and tell us that Howard Stern would in fact be on a premium channel only?

3579 MR. SHEA: We did not. There was a reference made, I think my the Commission, that it would be on a separate tier, but we did not mention that. That is not our position.

3580 COMMISSIONER LANGFORD: Could you clarify it then for me where Mr. Stern's program will be?

3581 MR. SHEA: At this juncture we have absolutely no idea whether the channel will be part of the basic service in the U.S., part of a tier in the U.S., but incidental to that is how the Board of Directors of SIRIUS Canada will determine when, if, where we would carry it.

3582 COMMISSIONER LANGFORD: Okay. At that point you will be bound by all of the COLs that you have put out with us, plus --

3583 Do you intend to join the Standards Council as well?

3584 MR. SHEA: Yes.

3585 COMMISSIONER LANGFORD: So I guess whereas I am a great fan of Voltaire's and any Charter of Right you can wave at me, I assume you will deal with the problems as they arise?

3586 MR. SHEA: And we will respect the rules and regulations in Canada.

3587 COMMISSIONER LANGFORD: Right. Just following on that, then, in your COL No. 13 you talk about keeping music lists for obvious reasons, and that is clear.

3588 But what about the question of logger tapes for the very sort of problem or possible problem we were just discussing?

3589 MR. SHEA: As it pertains obviously to the Canadian channels that we will be providing, we will obviously keep logger tapes for those channels, and playlists.

3590 With respect to American channels that may be deemed or determined by us to be potentially controversial, we are going to look at how we can keep the provision of logger tapes and also get some better understanding -- because the question just came up the other day -- as to what SIRIUS U.S. does vis-à-vis keeping any kind of logger tapes for those particular channels.

3591 COMMISSIONER LANGFORD: To follow up on the question that the Chairman asked to the CSR, The Canadian XM people -- I apologize if it has been asked to you as well, but better to ask it twice than not at all -- would you consider as a distributor of so many foreign signals that you would have a duty to somehow control or at least be responsible for the content of those signals, to go beyond what perhaps a normal distributor would be and to move towards something like the onus or the burden that we have put on broadcast distributors, cable companies and whatnot, with regard to the Al-Jazeera signal?

3592 MR. SHEA: You will notice we took out the words "that it originates" in our proposed conditions of license.

3593 COMMISSIONER LANGFORD: Could you point me to that one again?

3594 MR. SHEA: I don't have it in front of me, but it is the crib of section 8 of the BDU Regs, the abusive language comment.

3595 That was of course the problem that the Commission faced. Section 8 of the Regs normally only applies to the channels originated by the BDU, i.e the community channel, and so on. We have taken out those words so we have made ourselves responsible in the manner that I believe you are suggesting.

3596 COMMISSIONER LANGFORD: The answer is yes, then, in other words?

3597 MR. SHEA: Yes.

3598 COMMISSIONER LANGFORD: Thank you very much. Those are my questions, Mr. Chairman.

3599 THE CHAIRPERSON: Thank you.

3600 Vice-Chair Wylie.

3601 COMMISSIONER WYLIE: Under 601 of the agreement that you were looking at with the Chairman, paragraph (ee), is that the paragraph that relates to the role that Madam Sasseville will be performing:

"Use of SIRIUS broadcast facility for the production of licensee channels, including performances by talent..." (As read)

3602 Is that --

3603 MR. SHEA: The answer would be yes.

3604 COMMISSIONER WYLIE: So those would be commercially reasonable efforts. Had you seen that before, Madam Sasseville?

3605 MR. SHEA: Andreanne, I don't know if you want to weigh in here.

3606 COMMISSIONER WYLIE: Is that the only area on your agreements that this is -- this role?

3607 MR. SHEA: That covers use of facilities?

3608 COMMISSIONER WYLIE: Yes, because it is a large part of your Canadian Talent Development or the advantage given by the service if it were licensed to Canadian artists, so that is the area where SIRIUS takes seriously its role in facilitating the Canadian Talent Development.

3609 MR. SHEA: That is correct.

3610 COMMISSIONER WYLIE: Yes. And "commercially reasonable efforts" is comfortable for you?

3611 MS SASSEVILLE: Yes.

3612 COMMISSIONER WYLIE: After your comment, Mr. Slaight, that you sometimes make comments at cocktail parties just to impress, you don't really mean them --

3613 MR. SLAIGHT: Actually, I have only done that once.

3614 COMMISSIONER WYLIE: -- and you are the one who proposed an additional French-language channel, it would be quite easy to integrate that into your conditions of license, that assuming that there is a new channel as addressed in section 3 of the proposed conditions of license, it would be quite easy to change that, and you will?

3615 MR. SHEA: Yes.

3616 COMMISSIONER WYLIE: You could integrate, then, how that channel will be programmed with regard to music, should there be music on it, with regard to French-language vocal and Canadian content, et cetera?

3617 Mr. Buchanan?

3618 MR. BUCHANAN: Yes, that will be done for tomorrow. We are still going to send you revisions.

3619 COMMISSIONER WYLIE: We understand, obviously, that these additional channels may or may not come to pass, but that if they will the first one will be French. Of course, since we talk faster than anybody else, it won't take as many kilobytes,

--- Laughter / Rires

3620 COMMISSIONER WYLIE: That is comfortable to you, Mr. Gregor, that the sixth channel would be an additional French channel for your compatriots in the United States, assuming that you --

3621 MR. GREGOR: Yes.

3622 COMMISSIONER WYLIE: Yes. Thank you.

3623 Thank you, Mr. Chairman.

3624 THE CHAIRPERSON: Just to eliminate one element of confusion from the record, when I was talking with Mr. Buchanan earlier I think the answers were that the obligation was to provide for five channels and we were playing with 144 megahertz of bandwidth. Then, Mr. Shea, you clarified that that really only pertained to four of them and that there was a need for an additional, what, 36 megahertz of bandwidth for a fifth channel -- sorry, kilobytes per second of bandwidth?

3625 MR. SHEA: That is correct.

3626 THE CHAIRPERSON: Is that your understanding, Mr. Gregor?

3627 MR. GREGOR: Yes. It is additional bandwidth to cover the fifth channel.

3628 THE CHAIRPERSON: Thank you. I think that eliminates the confusion. I think those are our questions.

3629 Is there anything that you would like to add at this stage? You will have another chance in reply.

3630 MR. SHEA: Thank you. Thank you and the Commissioners and the staff very much.

3631 THE CHAIRPERSON: Thank you.

3632 Mr. Secretary.

3633 THE SECRETARY: Thank you, Mr. Chairman.

3634 Item 4 on the agenda is an application by CHUM Limited and Astral Media Radio Incorporated for a broadcasting licence to carry on a

national multi-channel subscription radio services, to be delivered by terrestrial transmitters, for direct reception by subscribers.

--- Pause

3635 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.

3636 THE SECRETARY: Mr. Chairman, Mr. Jay Switzer will lead off and he will introduce the panel.

3637 You have 20 minutes to make your presentation.

PRESENTATION

3638 MR. SWITZER: Thank you. Good morning, Mr. Chair, Madam Vice-Chair, Members of the Commission. For the record, my name is Jay Switzer and I am President and CEO of CHUM Limited.

3639 Before we begin our presentation this morning, perhaps we could introduce our panel. I believe you may have some seating assignments in front of you to assist you.

3640 Starting in the first row, on the far right, your left, is Kerry French, our Director of Research for CHUM Radio; to Kerry's left, Duff Roman, Vice-President, Industry Affairs, Radio at CHUM; left of Duff is Paul Ski, Executive Vice-President, Radio, for CHUM; to Paul's left, Peter Miller, Vice-President Planning and Regulatory Affairs at CHUM; on Peter's left, Jacques Parisien, President of Astral Media Radio; and on the end, your right, is Denis Rozon, Vice-President, Business Development, Astral Media Radio.

3641 In the second row, starting again at the far right, your left, is Rob Farina, Program Director of CHUM-FM and one of the leading radio programmers in North America; to Rob's left is Shelley Sheppard, Vice-President, Finance, for CHUM Radio; seated between Shelley and me is former CHUM Chief Operating Officer and long-time CHUM Board Member, Fred Sherratt; to my immediate left, Ian Greenberg, President and CEO of Astral Media Inc.; and to Ian's left, Claude Laflamme, Vice-President, Legal and Regulatory Affairs for Astral Media Radio.

3642 On the side table, in front of you, starting on your left, Nigel Oakley, Vice-President, Marketing for UK's RadioScape, the world leader in software-defined solutions for digital radio; to Nigel's left, your right, Sav Tropiano, President and CEO of Zoopad Inc., a Canadian company specializing in DAB infrastructure; to Sav's left is Gord Henke, President of DEM Allen and Associates, the broadcast engineers who prepared the preliminary coverage maps that were filed as part of our application; to Gord's left, Roma Khanna, Vice-President, CHUM Interactive and a recognized expert in identifying trends among Canadian youth; and, finally, to Roma's left, David Kines, Vice-President and General Manager of CHUM's popular music television services.

3643 I would also like to note the presence in the audience of Jim Waters, Chair of the CHUM Board; Ron Waters, Vice-Chair; and André Bureau, the Chair of the Astral Media Board.

3644 Now we would like to begin our presentation.

3645 At this hearing we are again faced with the perpetual conundrum of Canadian broadcasting policy: How can Canada control its own cultural destiny when faced with an influx of entertainment options from the United States?

3646 Over the past 75 years, every time we have been faced with new broadcast technology that could impact our culture, we have been able to find a unique made-in-Canada solution that is independent of our neighbours to the south, but still allows Canadians to access the world's best programming.

3647 At the same time, government and the Commission have fostered the development of a broadcasting system that serves to enrich the cultural, economic and social fabric of this country, and one that ensures pride of place for Canadian programming and promotes the development of Canadian creative talent.

3648 We have been successful in creating a system that stands beside the American media machine and not in the shadow of it. Ironically, the very foundations of the Canadian broadcasting system were actually built in an era where cross-border spill was the reality.

3649 MR. SKI: First with radio and later television, the Commission's predecessors could have merely authorized the direct importation of U.S. stations and networks into Canada. However, policy-makers determined that Canadian broadcasters should be Canadian-owned and controlled and that Canadian broadcasters should air a significant amount of Canadian content.

3650 In 1970 the Commission spurred the development of the Canadian music industry by requiring Canadian radio stations to air a minimum level of Canadian music. This requirement has ensured that the Canadian public can access music from homegrown talent and that artists from this country have the opportunity to be heard.

3651 In 1984 the Commission could have allowed cable to import all existing U.S. cable channels, but instead chose to encourage the development of Canadian alternatives. It licensed MuchMusic and TSN and decided to only allow distributors to offer foreign specialty channels that would complement licensed Canadian services.

3652 Since then, more than 100 Canadian specialty channels have launched and the specialty sector now generates over $1.8 billion in revenue annually, spends in excess of $690 million on Canadian programming each year, and employs thousands of Canadians.

3653 More recently, in the mid-1990s, the Commission licensed a number of direct-to-home satellite undertakings to compete with cable. Canada could have implemented a licensing regime that allowed Canadian services to use foreign facilities or authorized foreign distributors to distribute programming via satellite. It chose not to.

3654 Instead, the Commission implemented a policy framework that requires the use of Canadian satellites and facilities and ensures that the majority of services carried by DTH undertakings are Canadian, thus meeting the requirements of the Broadcasting Act. As a result, DTH has emerged as a strong alternative to cable.

3655 All of these decisions point to two crucial policy objectives in the Act that are of fundamental importance in this proceeding:

3656 one, that the Canadian broadcasting system should be effectively owned and controlled by Canadians; and

3657 two, that licensees must make maximum use and in no case less than predominant use of Canadian creative and other resources in the creation and presentation of programming.

3658 In this proceeding it has been argued that a subscription radio service with significant Canadian content that relies primarily on Canadian resources is not possible. We disagree.

3659 We are here today to demonstrate that you can introduce a subscription radio into Canada without sacrificing the principles of the Act.

3660 Mr. Chairman, over the last 50 years CHUM has demonstrated that it is not just one of Canada's leading broadcast companies, but one of its leading innovators:

3661 In 1957 we introduced top 40 radio to Canada, while in the late 1960s we were at the forefront of the decision to introduce progressive rock programming on the FM band.

3662 We pioneered satellite-to-home programming with ASN.

3663 In 1984 we were first off the blocks in specialty television with the launch of MuchMusic.

3664 In 2003, CHUM was the first to launch over-the-air HDTV in Canada.

3665 And we created the Hot AC classic hits format, which we market as "BOB" that is now sweeping across North America.

3666 Throughout our history we have demonstrated that when CHUM is given the opportunity to do something new and creative, we make it work.

3667 With this application CHUM is looking to embark on another first, the development of a subscription radio service in Canada that is Canadian.

3668 CHUM is extremely pleased to be working on this initiative with Astral Media, a company with a rich history in Canadian broadcasting and a company we work with in other areas with excellent results.

3669 We view this new medium as an opportunity to use the vast experience of our two companies in developing programming that appeals to Canadians in both English and French Canada.

3670 M. GREENBERG : Astral est très heureuse de s'associer aux projets développés par CHUM. Nous adhérons entièrement à l'esprit qui anime ce projet, qui propose une solution pratique, efficace et entièrement canadienne au défi que pose l'implantation au Canada de services de radio à canaux multiples par abonnement. Une solution réaliste, abordable, adaptée à la réalité du marché canadien et en mesure d'offrir aux auditeurs canadiens de langues française et anglaise et aux communautés culturelles, des services de radio par abonnement qui leur ressemblent et qui véhiculent leur culture.

3671 Nous croyons qu'Astral média apporte à ce partenariat son expertise unique en matière de lancement, d'opération et de mise en marché de services par abonnement. Astral Media est l'entreprise canadienne de radiodiffusion disposant de la plus longue expérience en matière de services par abonnement au pays. Elle a pris des risques quand elle a agi comme pionnière dans notre système. Elle a présidé à l'implantation de la télévision payante au Canada dès le début des années 80 et à celle de la télévision à la carte au milieu des années 90. Et ce, en offrant chaque fois et d'entrée de jeu des services de qualité en français et en anglais.

3672 M. PARISIEN : Astral Media apporte aussi dans son bagage une connaissance approfondie du marché du Québec dans lequel elle opère avec succès de nombreux services de radio, de télévision spécialisée, de télévision payante de langue française.

3673 Astral Radio est aussi très solidement implantée au Nouveau-Brunswick et en Nouvelle-Écosse.

3674 Astral aborde la radio par abonnement comme elle a abordé la télévision payante spécialisée et à la carte, c'est-à-dire avec le même souci d'offrir un service de qualité aux deux communautés de langue officielle de ce pays. À cet égard, je voudrais indiquer que, suite à notre engagement au côté de CHUM, les deux partenaires ont décidé conjointement et avec enthousiasme d'augmenter de cinq à dix le nombre de services de langue française composant l'offre de départ de cinq ans de service, et nous nous fixons comme objectif d'exploiter quinze services de langue française d'ici la fin de notre première période de licence.

3675 Nous devrions également être en mesure d'accélérer le déploiement de notre service à l'étendue du Canada, commençant avec certains marchés québécois de langue française, dont ceux des villes de Québec, de Sherbrooke, de Trois-Rivières et de Gatineau.

3676 Ensemble, CHUM et Astral exploitent plus de 60 stations de radio de langues anglaise et française, implantées dans toutes les régions du pays : dans les provinces de l'Atlantique, le Québec, l'Ontario, les Prairies et la Colombie-Britannique. Elles cumulent également sept services spécialisés de musique vidéo en opération, donc deux sont possédés conjointement par CHUM et Astral.

3677 CHUM et nous avons l'habitude de travailler ensemble, et nous savons faire de nos entreprises conjointes des réussites. Nous sommes donc convaincus qu'ensemble CHUM et Astral possèdent les ressources humaines et financières, l'expertise, la vision, la détermination et toute l'expérience nécessaire pour faire de leurs services de radio par abonnement un grand succès dont l'industrie canadienne de la radiodiffusion et le public canadien pourront être fiers.

3678 MS FRENCH: Our research shows that 11 percent of Canadians are very interested in the innovative programming mix that CSRC will offer. We expect that the early adopters of CSRC, as with most new technologies, will be young Canadians between the ages of 12 and 34. Tuning to conventional radio by this age group has shown significant decline over the past five years, providing a key opportunity for a Canadian service that offers the new cutting edge formats that young Canadians want to listen to.

3679 MR. FARINA: CSRC will offer Canada's youth what they have been looking for. Leveraging the expertise and success of our music television services, CSRC will develop a variety of branded channels that offer subscribers popular music and engaging hosts. Canadian youth will have unprecedented options with channels specializing in dance, hip-hop, alternative rock and more.

3680 However, CSRC's service will not just appeal to the youth market. CSRC will offer channels that span all demographics, from channel specializing in adult contemporary music to folk, modern country, classic jazz, talk based channels, CSRC will provide unmatched choice. The CSRC line-up will reflect Canada's linguistic duality and cultural diversity. As Jacques noted earlier, at least 10 of CSRC's first 50 channels will be devoted to French language programming. Moreover, 10 percent of the service's channels will be directed at Canada's Aboriginal and ethnic communities.

3681 We will compliment the programming on Canadian radio by providing niche formats that cannot be supported by an advertising driven service. CSRC's Canadian produced channels will maintain a level of Canadian content that is consistent with the requirements in the radio regulations applicable to commercial radio stations. As a result, Canadian artists will receive valuable exposure across a wide range of genres. This will not only help these artists gain popularity, but will mean that more of the payment CSRC makes to copyright collectives, such as SOCAN and the NRCC, will stay north of the border.

3682 In total, CSRC will spend over $77 million on programming and copyright payments over the first term of licence. This is in addition to the millions CSRC will spend on Canadian talent development.

3683 MR. ROMAN: CSRC will be delivered to Canadians using an efficient and cost effective terrestrial based digital audio network. Industry Canada has confirmed that sufficient spectrum will be made available to do this. In addition, no amendments to Canada's existing satellite use policies are required for CSRC to launch. Based on the DAB Eureka 147 platform, our service will take advantage of global experience to offer Canadians crystal clear programming from coast to coast.

3684 The technology CSRC will rely on is established and proven. For this project, CHUM has partnered with RadioScape Limited, the world leader in software defined solutions for digital radio. RadioScape software powers Texas Instruments' digital signal processor, the heart of a digital radio. Just last month, they crossed the one million threshold in units shipped worldwide.

3685 The success of DAB worldwide, and particularly in the UK, has spawned the production of a tremendous range of consumer receivers and other equipment that are readily adaptable for CSRC. This will allow CHUM to apply existing receiver and broadcast infrastructure technology to CSRC. As a result, CHUM will be able to launch CSRC within the timelines and at the price points we need. Moreover, by employing the same technology as DAB, our receiver will also be capable of receiving over the air DAB stations, thus helping digital radio in Canada grow and ensuring the distribution of conventional Canadian radio stations.

3686 MS SHEPPARD: Our service will be offered to Canadians for a monthly fee of $9.95 and our receiver marketed for less than $100. In the service's early years we will subsidize the costs of the receiver to ensure that this price point can be met. In order to ensure that the service is rolled out to at least 60 percent of the Canadian population we will invest heavily in broadcast infrastructure over the licence term with over $91 million in budgeted capital expenditures.

3687 Based on the results of our research, and assuming a fair and equitable licensing environment, our business plan anticipates that the service's penetration will peak at one million subscribers in the seventh year of operation. Overall, our business plan clearly demonstrates that a truly Canadian subscription radio alternative is realistic and achievable.

3688 MR. SKI: Mr. Chair, Madam Vice-Chair, Commissioners, CHUM, Astral and our technology partners stand ready to provide a compelling, truly Canadian subscription radio service to Canadians, a service that will fully adhere to the objectives of the Broadcasting Act.

3689 We are not alone in believing this can and must be done. We interviewed a number of artists, music industry executives and prominent Canadians to get an idea of what a truly Canadian broadcasting system means to them. Here is what they said.

--- Video presentation / présentation vidéo

3690 MR. SKI: These are just a few members of our music community who have been profoundly affected and impacted by the current Canadian content system. Mr. Chair, Madam Vice-Chair, Commissioners, our entire service meets the objectives of the Broadcasting Act. It will make maximum use of Canadian creative and other resources. It will meet the Commission's Canadian content requirements and make a significant contribution to the development of Canadian talent. It will reflect Canada's cultural diversity and linguistic duality. Moreover, our service will be attractive, cutting edge and, most importantly, truly Canadian. For all of these reasons we respectfully submit that our application should be approved. This concludes our opening remarks. We look forward to your questions.

3691 THE CHAIRPERSON: Thank you. Commissioner Pennefather.

3692 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman. Good morning, ladies and gentlemen. I guess it is not a surprise what I am going to be questioning you about and that is the Canadian content, the English content of your proposed service. And watching the video, it is a great pleasure to see the artists. I noticed different technological descriptions of what you are proposing, but I will leave the technical questions to my colleagues. We will call it subscription radio to be clear.

3693 I am trying to get just a sense of the complete picture of your proposal. You have given us this morning what is called Phase I channel line-up and I'll get back to the specifics of Phase I. But, in fact, it is this very point, this is Phase I, there is a Phase II, and when we look at the supplementary brief at pages 12 and 13 and later on in both the June 4th and June 11th deficiencies there is the discussion of the 100 channel service and that is the service I want to talk to you about.

3694 It is pretty clear that you are starting with initially 50. I think you say in the supplementary brief that, when practical, you will expand to the 100 channel service. And it is more specific on page 12 of the supplementary brief where you table year four you will do the change to 100. So, just to ask you to confirm in fact that you will be expanding to 100 channel service in year four if licensed?

3695 MR. SKI: Yes, no later than year four.

3696 COMMISSIONER PENNEFATHER: Now, in reference to this in your reply to interventions at page 5, you indicate again that the initial offering is 50 channels produced in Canada, providing appropriate levels of Canadian content and that you have committed that once the service begins to offer 100 channels the vast majority of channels will continue to be Canadian. So let us discuss what Avast majority@ means. What is the plan in terms of the 100 channels? What is the proportion of Canadian to non-Canadian?

3697 MR. SKI: I guess, Commissioner Pennefather, given the scope of this particular proceeding, if we are the only one licensed, all of those channels would be Canadian... would be produced in Canada. If we are not the only one licensed, that sort of changes the scope of our particular application certainly in order to be competitive. But, if we are the only ones licensed, they all would be produced in Canada. Peter, would you like to add to that?

3698 COMMISSIONER PENNEFATHER: Let us continue on that point. It sounds like you are describing a service which you will create in reaction to what is in the market, as opposed to what you feel would really work as such. So you are saying that if there is no other subscription radio licensed you would have 100 channels that are Canadian originated?

3699 MR. SKI: That is correct.

3700 COMMISSIONER PENNEFATHER: In your June 4th response to deficiencies, you describe though your initial offering this way: there is music, there is talk, and there is a proportion of best of the world programming. So, even in the initial offering I was making the assumption that there were non-Canadian channels, because best of the world programming would not be Canadian channels. So let us look then at the 50 channels. Now we will have to take it back into the first phase a little bit.

3701 The first 50 channels, I had understood from your deficiency response, would be composed of, yes, fully staffed, new Canadian, rebroadcasts of existing licence services not widely available, and best of world programming. I was going to ask you to give me the proportions of that breakdown for the 50, and if that would continue into the 100 channel universe. So, perhaps you could clarify for me the nature of the first phase and then the second phase.

3702 MR. MILLER: Sorry for any confusion with the various filings we have made. Again, just to repeat, the first 50 will all be Canadian produced to the extent that we reference the best of world programming, that would of course be within channels so we conform to the 35 percent to whatever the right level is in each channel and there would still of course be the best of the world's programming outside of that level, but they were all Canadian produced channels.

3703 In terms of moving to the 100 channel universe, our dilemma, to be frank, is of course what we do is not independent of what you do. We need to have a competitive service, we note, as there has already been a lot of discussion as to linkage requirements and whether a one to one linkage requirement might, for example, be deemed by the Commission to be appropriate. If the Commission did, for example, deem that to be appropriate, we might avail ourselves of having some foreign channels in our second 50. But if we were the only one licensed and the Commission deemed it appropriate that all channels be Canadian produced, we are prepared and able to do that, because of course by producing the channels in Canada we don't lose the ability to bring in foreign music and foreign content within each of those channels.

3704 COMMISSION PENNEFATHER: So, let us get back then to what though today you would be committing to in terms of the 100 channel service. I am left with the vast majority of that 100 channel service would be Canadian. Could you give me a sense then... I understand your point about you may want to change that, but I think we have to see what we have today and what we would licence when we look at your service and what you are proposing. So, what are you committing to today in terms of the 100 channel service in terms of Canadian content?

3705 MR. MILLER: I think the best way to describe it is we are prepared to make all 100 channels Canadian produced, that is the number one... and the opening and most important position. However, if the Commission licenses with a different environment that includes linkage requirements, we would expect that there would be some equity in the licensing and we might want to take advantage of that, but the offer... if you want us to stick to the bottom line, the offer is 100 Canadian produced channels.

3706 COMMISSIONER PENNEFATHER: Okay, you just opened the door too to the general discussion we have been having. I have seen that you have been here over the last couple of days along with many of your colleagues. And, as a general discussion, I guess what you are saying is that you would expect equity amongst the various services should other services beside yours be licensed in terms of Canadian content.

3707 Can you discuss with us, from a policy perspective again, what you think how the Commission should approach this whole matter, not only of these... just as we were doing this morning, how you start, but how on an ongoing basis we should approach the changes that will occur in channel line-ups? Should we talk, as proposed by Sirius Canada, about a minimum of Canadian content in terms of numbers of channels? And I think we will stick with numbers of channels for this discussion for the moment, despite the band width discussion earlier.

3708 Should we look at a minimum number of Canadian channels as fixed, to increase over time and look at a formula in that way? And, you mentioned the linkage requirements. So, perhaps you could just tell us what your views are on that.

3709 MR. MILLER: At the outset, and again we laid it out in our opening statement and we mentioned it in our interventions and we will have other opportunities to discuss this, we of course think the first test one has to apply is are the applicants licensable under the Broadcasting Act? Do they meet the thresholds? And we have talked about the two threshold tests we believe are most important.

3710 If the Commission does believe that what the applicants offer meet those thresholds and therefore are licensable, then you go to the next aspect which would be what are the rules. And we think ultimately the precedent that you have established is a linkage and therefore we think ultimately that the minimum that you can expect in order to achieve preponderance of Canadian would be a one to one linkage.

3711 COMMISSIONER PENNEFATHER: And you would apply that to your own service going forward?

3712 MR. MILLER: We would accept that as well.

3713 COMMISSIONER PENNEFATHER: Would it be technical feasible? How would it work in your terms?

3714 MR. MILLER: With our service, of course, it is entirely achievable because it is an entirely Canadian service where we make all the decisions as to what channels we carry, so it poses no technical difficulty to us.

3715 COMMISSIONER PENNEFATHER: So, if you start off with 100, technically, and I don't want to go too deep into the technical question... you choose the number 100, is that the limit of what is possible or can we assume technology will take us farther?

3716 MR. MILLER: Again, we look forward to talking about technology a little bit more. As you know, in developing this project, we worked very cooperatively with Industry Canada and they have been very helpful in providing sufficient band width for us to provide a 50, growing to 100, channel service. It is possible, with advanced compression, you can squeeze out more channels.

3717 So, whatever the channel number is, if technology allowed us to produce more than 100 channels, then of course we would adhere to the same rules. Which is why we think at the end of the day one has to talk about percentages or linkage requirements rather than talk in absolute numbers, because at the end of the day the overall universe may change. So, we believe the best thing for you to do is to talk in terms of percentages or linkage requirements.

3718 COMMISSIONER PENNEFATHER: You are talking about percentages of Canadian channels to non-Canadian channels?

3719 MR. MILLER: Yes, one to one or more than 50 percent Canadian.

3720 COMMISSIONER PENNEFATHER: Well, as you have said and as I have said before, obviously we have a number of precedents, we also have the Act and various sections of the Act which everyone has brought forward and that, of course, is the balancing act we have to achieve. And looking at the reality of the technology, what would work to the benefit of the Canadian broadcast system and focusing on Canadian artists as you have done in your proposal and others have done, what would work, and try to find the best way to approach this.

3721 There is also the fact that if you, I think in your various responses to interventions and deficiencies, you have been clear about your concerns about the Broadcast Act, about the greatest use, etc. You are starting out by telling us that you will be Canadian produced... the 100 channels will be Canadian originated. So, would it be in addition to a possible one to one formula, would it not be appropriate in your case to assure us that the predominance of Canadian to non-Canadian would be 51 percent?

3722 MR. MILLER: We would certainly accept a requirement that the predominance of our channels be Canadian.

3723 COMMISSIONER PENNEFATHER: And you seem to oppose, in your reply, a ramp-up formula. Why were you so adamant to oppose a ramp-up in terms of, again, the realities of this context in which we are dealing? Why would that not be an approach the Commission could look at, looking at the increase of revenues, increase of subscribers, as a basis for such a formula?

3724 MR. MILLER: Our issue relates to the ability of the Commission to ultimately enforce a ramp-up. It relates to issues of control and it relates to the fact that at the end of the day our view is your mandate is to make sure that when you issue a licence that licensee meets the objectives of the act, not at some future date, but at the time of licensing. So, we don't believe a ramp-up solves or answers the fundamental question that you need to answer, which is at the time of licensing does a service meet the objectives of the Act and is the offer the greatest... to use the term in the Act, the greatest practicable use of Canadian creative and other resources.

3725 COMMISSIONER PENNEFATHER: I am sure my colleague, Commissioner Langford, will take you further on some of those questions. But again, there are open to us many different ways of approaching and, as you have said, to the greatest practical use comes in the technology question as well and how we can look at different approaches to achieving the goal that you have laid out. But we will also look at the specifics of your proposal and how, in effect, what would work best in terms of... if one takes an approach as some have done, of a new class of licence in which COLs are attached, what would be appropriate in terms of what you have set out to do here.

3726 If then, we look at the specifics a little more on the channel line-up, both in terms of Phase I and Phase II, so as I understand it while we have in your supplementary brief in deficiencies three components, namely fully staffed new Canadian, rebroads of existing channels and best world programming, you are saying to me that all will be Canadian produced?

3727 MR. MILLER: Yes.

3728 COMMISSIONER PENNEFATHER: Can you give us a sense though, as a programming concept, what the balance would be amongst these three elements.

3729 MR. SKI: Commissioner Pennefather, I could maybe turn that over to Rob Farina, our programming expert.

3730 MR. FARINA: Yes, as Peter said, they are all Canadian produced. In terms of the rebroads, what that speaks to is an example of when we create MuchRadio as an extension of the MuchMusic brand. When we are doing a live artist show on MuchMusic and on MuchRadio, we are offering, you know, promotions to fly, winners then to be part of that, it makes sense for us to also be able to rebroadcast the simulcast of the show. So even though MuchRadio is a completely separate medium to MuchMusic and a companion to it, there will be some of the show such as live music performances that can be simulcast or rebroadcast. We are looking at a very minimal amount that--

3731 COMMISSIONER PENNEFATHER: How minimal? What do you mean by minimal?

3732 MR. FARINA: Well, because of the cost of staging events of MuchMusic, usually the events like Live@Much occur once a month or once every two months, so that would be an example of the amount of rebroadcast component.

3733 COMMISSIONER PENNEFATHER: What I am getting at is diversity. If these are rebroads, to make the point kind of bluntly, the music you are talking about is already available, perhaps not as extensively as one would like, not in the best quality, but we are talking about rebroadcasting that already exists. So, it is important for me to get an understanding of how much in your offering is new.

3734 MR. MILLER: We have discussed that, because we recognize that is an important issue for you. We would be prepared to commit that less than 10 percent of our channels would be, either in whole or largely in part, rebroad. And so, for example, what we might do is possibly rebroadcast AVR in part for our Aboriginal channel. We have had discussions with them and that would be a way to help them expand their coverage area and launch. But ultimately, we would be satisfied and comfortable with a limit and we propose 10 percent.

3735 COMMISSIONER PENNEFATHER: Thank you. You understand where I am going... from the artist point of view I think the more airplay the better, but from the other side of the equation is the thesis which many have discussed at length and with great interest, we have looked at the need to find new talent and allow it to have new space on our airwaves. This was particularly my question with the youth channels of which there are three or four I think that you are proposing in your line-up in Appendix A.

3736 The third language channels, again, I think there are four in Phase I?

3737 MR. MILLER: That is correct, an Aboriginal channel and four ethnic channels.

3738 COMMISSIONER PENNEFATHER: As you go to 100 channels what would be the component of ethnic language programming?

3739 MR. MILLER: Again, I think we indicated in our opening statement that we would keep to that 10 percent proportion, so that would go at 10.

3740 COMMISSIONER PENNEFATHER: And you have given us, in a response to deficiencies, the level of music, Canadian content music on these ethnic channels, June 4th deficiency. How much of this ethnic programming is Canadian produced?

3741 MR. MILLER: That's what we are trying to summarize, by the way, on the one page that we gave you and we would be happy to give you the equivalent for Phase 2 if that would be helpful, is the music limits and again, in conforming to existing regulation as we understand it for those third language formats, the expectation of 7 per cent on the music side and so, therefore, we would hear that.

3742 COMMISSIONER PENNEFATHER: But these ethnic Chinese, German, South Asian and Italian, what my question was... I have got the 7 per cent music, but my question was: are those Canadian produced channels or are they foreign channels?

3743 MR. MILLER: Again, sorry, to be clear. All Canadian producers, those are Canadian produced channels, yes.

3744 COMMISSIONER PENNEFATHER: Okay. The re-broads or the existing services, back to that again, just in terms of, apart from the music and youth, what other kinds of services would you include that are existing? What kind?

3745 MR. FARINA: Well, it's clear when we came down that path that primarily the service was geared towards music fans and music fans were looking for more choice. None of the english or francophone services are re-broadcasts.

3746 At the time of our filing, we had not yet performed an audit of existing staffing to contribute to the CRTC staff. Since that audit has been performed and our broadcaster partner has come on board, we found confidently we will be able to deliver the channel lineup without re-broadcasts, except in the cases we mentioned earlier.

3747 That is not to say that we will not air the special programming simultaneous with television or radio, but re-broadcast a special show, as explained, so that would answer the case of the broadcast.

3748 Outside of the music programming in the initial offering, we're also offering some comedy programming.

3749 As I've said, when we did an audit of our staffing, and also looked at -- we also did some research on the needs that would not be met by conventional radio and it was put on the music genres at that came out. So, in our initial offering, it's predominantly on music services.

3750 COMMISSIONER PENNEFATHER: And as you go forward, I was a little confused by the June 4 deficiency response that when you added the balance 50 channels that predominance would continue to be music, it seemed to be more interest in talk, but maybe I misread that. Could you clarify that for me?

3751 MR. FARINA: Right. In Phase 2, we'll introduce another 20 music channels, but also there is another about 30 talk channels which vary in terms of being very focused, such as a wildness channel, a lifestyle channel, addendum to our book tv channels, so allowing a book radio channel to discuss news in the literary work and audio books and so on.

3752 COMMISSIONER PENNEFATHER: So, by the time we hit 100 channel service in year four, what's the proportion in music to non-music?

3753 MR. FARINA: We're probably looking at... well, we are looking at about 75 per cent music.

3754 COMMISSIONER PENNEFATHER: Seventy-five (75) per cent music, the balance spoken word programming.

3755 If we look at your Appendix A, which is the list of channels, and can I assume that that appendix has been repeated here exactly?

3756 MR. MILLER: It's being amended. Again, as we alluded to with the addition of Astral, we were able to improve our offering of French language channels.

3757 COMMISSIONER PENNEFATHER: Good.

3758 MR. MILLER: So, we thought providing that summary, which has the most up-to-date lineup, was most efficient.

3759 COMMISSIONER PENNEFATHER: Other than that, are there any other changes, Mr. Miller?

3760 MR. MILLER: I believe Mr. Farina may have adjusted some of the channels, but I'll let him speak to that.

3761 COMMISSIONER PENNEFATHER: Okay. So, the yellow is the French additions, and I'm going to leave the discussion of that detail to madame Wylie and will look at the English channels.

3762 When we look at some of the proposals... now, let me just see that what I had originally meets with... let's take Rap Nation, for example? Is Rap Nation still on this? My eyes aren't moving as quickly.

3763 MR. FARINA: Yes, it is. It's still on Phase 1.

3764 COMMISSIONER PENNEFATHER: And what's the Canadian content?

3765 MR. FARINA: Thirty-five (35) per cent.

3766 COMMISSIONER PENNEFATHER: So, you've changed that. It was 20 per cent?

3767 MR. FARINA: Absolutely.

3768 COMMISSIONER PENNEFATHER: That was one of our questions. Nails, originally number 9, was 20 per cent. What is it now?

3769 MR. FARINA: Thirty-five (35) per cent.

3770 COMMISSIONER PENNEFATHER: Thirty-five (35). Classic Rock Channel?

3771 MR. FARINA: Thirty-five (35) per cent.

3772 COMMISSIONER PENNEFATHER: Thirty-five (35) per cent. So, and is it your commitment, do you want to comment on a condition of licence regarding these Canadian content percentages?

3773 MR. MILLER: Yes. What we felt is that the best thing we could do on reflection was to assure you and commit to each of the first 50 channels conforming to the radio regulations.

3774 So, 35 per cent for the regular channels and the lower thresholds that are well-known of Commission, for other exceptions, classical music, et cetera, et cetera.

3775 We still do believe that for a niche service as you get more and more niche, it's harder and harder to find Canadian music in some of those niches.

3776 So, what our proposal to you would be, would be that as we introduce the second phase and before we introduce the second phase, to the extent that we would propose or ask for any exceptions to the existing radio regulations, we would apply for those at that time.

3777 So, the first phase, full 50, would conform to the radio regulations to the extent that we believed exceptions were necessary; in the second phase we would apply for those exceptions.

3778 COMMISSIONER PENNEFATHER: Let me ask you though, about this, and perhaps I'll look at the dance channel, the chill channel, like that, I understand the regulations and the minimum and that's where the 35 per cent, but considering this enterprise, considering what you are proposing and your position of strength in Canada, of a contribution to Canadian music and Canadian broadcasting, the numbers of artists who need exposure, more exposure on radio, why so low? Why not more?

3779 For example, in some of those areas, there may be, in fact, fewer Canadian artists at this time because they can't get the exposure, the support, but certainly in Category 2, I don't think that there is a lack of audio talent.

3780 So, is there any reason why you wouldn't consider higher percentages of Canadian content?

3781 MR. SKI: Well, I think, first of all, Commissioner Pennefather, we don't necessarily think it's low; 35 per cent is actually, given some of the discussions previously, is a pretty high amount.

3782 I think also it has to be remembered that most of these particular channels aren't duplicates of original... of current conventional radio channels, and for the most part, these are probably niches of niches. I think Peter touched on that.

3783 So, when you delve deeper or go into a format that, as I say, is not main stream, is a niche of a niche, then you just don't have the same amount of Canadian content, as you might have with a main stream format.

3784 COMMISSIONER PENNEFATHER: I understand. Here we have a concept which is not omnibus, which is... we are not talking about numbers of channels now, we are talking about, all right, you have your 100 channels and, in fact, you are having niche targeted channels within your overall service and within some of those, they're focused channels. Let me call them that for the moment on, let's say, soft channel AAA rock, the famous triple "A", are you telling me that you can't find more Canadian artists than those very well-known categories to move beyond that percentage?

3785 I mean, some of these, yes, perhaps, but others, I'm not sure.

3786 MR. SKI: Well, certainly 35 per cent is a minimum and if we can find more to play, we'll obviously play it.

3787 COMMISSIONER PENNEFATHER: I thought that was the point of this proposal, to play more Canadian.

3788 MR. SKI: Yes, and I think we are. I mean, all of our channels conform to the regulations.

3789 Certainly these particular channels and if we're licensed, having 50 channels that are able to receive by most of Canadians that play artistic currently aren't on the air, that's really what's going to happen here.

3790 COMMISSIONER PENNEFATHER: I see you have 100 per cent independent music. Is that dependent meaning independent label, independent producers?

3791 MR. SKI: That's correct.

3792 COMMISSIONER PENNEFATHER: Okay. And the comedy channels, 35 per cent?

3793 MR. FARINA: That's correct.

3794 COMMISSIONER PENNEFATHER: In your experience, that's a minimum or a maximum? I am not speaking of regulation, I am speaking of talent available.

3795 MR. SKI: That's a minimum.

3796 COMMISSIONER PENNEFATHER: Okay. Canadian talent development since I've started down that road, let's look specifically at your contributions to Canadian talent over and above the programming initiatives and I believe your overall C.T.D. amount is $8,313,695.00.

3797 MR. SKI: That's correct.

3798 COMMISSIONER PENNEFATHER: Which represents approximately 2 per cent of gross revenues. Now, let's look first at the details.

3799 You have provided some detail of what you will do with this $8 million in the June 4th response to deficiencies on page 4... on page 8, I'm sorry. That's where I am taking this information.

3800 Factor Musique Action, Radio Star Maker fund, Fonds Radio Star, other eligible third party initiatives. But I don't have any breakdown of numbers.

3801 What is your plan vis-à-vis a proportional breakdown amongst these three components?

3802 MR. SKI: Commissioner, it's a third, a third, a third. If you would like further information on the eligible third party initiatives, I will have Duff Roman provide that for you.

3803 MR. ROMAN: Sure. If you don't mind, Commissioner, I'll sort of do some of the breakdown and I will share the responsibilities on the C.T.D. schedule with our francophone partners on their side as well, if that's okay, because here is essentially the way the breakdown works.

3804 COMMISSIONER PENNEFATHER: Thank you. We're sharing the questioning too, so if you can.

3805 MR. ROMAN: All right. Then, I'll deal with the anglophone share.

3806 COMMISSIONER WYLIE: That's right. And I want to hear it in french.

3807 MR. ROMAN: That's tough. Okay. So, the funds are approximately $8.3 million dollars, based on 2 per cent of projected revenues over seven years; 75 per cent of the $8.3 million would go for anglophone initiatives, that would be $6,225,000 approximately.

3808 Now, each of the anglophones and the francophones are divided into thirds. On the anglophone side, we will contribute again approximately $2,075,000 to Factor, to help Canadian artists create new recordings in under-represented genres that are at the core of C.S.R.C. service.

3809 Another third or $2,075,000 will go to Radio Star Maker, the private independent fund to help make a discernable difference to the careers of Canadian artists with good track records, to take them to the next level, in fact, star making.

3810 And then, the final third, another $2,075,000 again based on projected revenues will be directed to eligible third party initiatives.

3811 Now, they will be funds that would go to the usual organizations, associations, events such as Canadian Music Week, all recognized third party recipients by the Commission.

3812 But we would reserve a funding for the development of a portion of the funds to extending artist repertoires through the production of alternate versions of tracks from their CD, such as acoustic, live sets, collaborations amongst musicians. We pay all union fees and performance fees, rental studio costs and make the materials available to the participating artists for their own use, such as selling of the stage or downloading if they choose to do it legally or of their web sites.

3813 So, we would like to have that creative production flair in addition to a much more general disbursement to eligible third party recipients.

3814 COMMISSIONER WYLIE: The detail on the third party recipients, could you table that with us in writing?

3815 MR. ROMAN: Yes, I would be pleased to do that.

3816 COMMISSIONER WYLIE: On the talent development, on the talent competition I should say, have you had any discussions with a specific organization and if so, could you include that in what you'll table with us?

3817 MR. ROMAN: Yes, I will be pleased to do that.

3818 COMMISSIONER PENNEFATHER: On the discussion, Factor Musique Action where you want to focus on new recordings in under-represented music genres, have you discussed this with the organizations and have they so agreed?

3819 MR. ROMAN: Yes. I am a director of factor and I have discussed this with them.

3820 COMMISSIONER PENNEFATHER: And have they agreed to direct resources in this regard?

3821 MR. ROMAN: Yes, they have.

3822 COMMISSIONER PENNEFATHER: Do you have a written agreement?

3823 MR. MILLER: I don't have the letter with me. I will bring that letter with me.

3824 COMMISSIONER PENNEFATHER: Can you tell us how, overall, these moneys will be broken down between the English-language initiatives and the French-language initiatives? In other words, the total $8 million, third, third, third, how will it be split between French and English initiatives?

3825 MR. MILLER: Well, sort of the global split is 75 per cent/25 per cent. So our initiatives are at $6 million and change.

3826 Perhaps Denis Rozon can talk about how the $2,075,000, or their 25 per cent of $8.3 million is going to be allocated, if that's okay.

3827 COMMISSIONER PENNEFATHER: Well, we will leave that till--

3828 MR. MILLER: Sure.

3829 COMMISSIONER PENNEFATHER: --a little later, with Madam Wylie, if that's all right.

3830 MR. MILLER: That would be fine.

3831 COMMISSIONER PENNEFATHER: Generally speaking, on the Canadian talent development, we have had this discussion throughout this hearing. Perhaps I could ask you to comment from a general point of view, and then specifically related to your proposal, about whether this is the appropriate amount of Canadian talent development in this circumstance.

3832 What is your comment on that fact that, considering the challenges of this particular technology--let us assume that we are working our way through different options under the Broadcast Act to bring what are the benefits of subscription radio to Canada and Canadian artists. In the case, for example, of a comparable, some say very comparable, some say not comparable decision on pay audio, pay audio services are required to contribute 4 per cent of revenues to eligible third parties associated with CTD. You are at 2 per cent. What is your comment on whether the contributions in subscription radio shouldn't be comparable to those in pay audio?

3833 MR. MILLER: Thanks very much for that.

3834 There has, obviously, been some discussion as to whether these services are more like pay audio or more like radio. In some ways, they have elements of both. It's multi-channel, like pay audio, but much like radio, in terms of its usage, its portability and, in our view, the hosting and personality of the channels.

3835 In our case, given that we are adhering to the radio regulations, we are prepared to adhere, essentially, to your expectations of radio, we note that the average CTD level for radio was on the order of 0.2 per cent. By offering 2 per cent, we believe we vastly exceed what is the more directly comparable regulatory environment, in our instance.

3836 In the case of satellite undertakings, should the Commission choose to license them, given that they will not, obviously, adhere to the radio regulations, in terms of their overall number of Canadian channels, we note that you have explored the possibility of a significantly higher CTD level. We note that Friends of Canadian Broadcasting have mentioned that.

3837 Without prejudice to our view that you shouldn't license those satellite undertakings, we certainly believe that, if you chose to, a much more significant CTD should be expected, and not in the order of 5 per cent, but in the order of 35 per cent. Because the analogy there, in our view, is more to specialty services and in other services you have expected very significant Canadian content expenditures from.

3838 COMMISSIONER PENNEFATHER: You brought up the matter of regulatory equity previously on another matter. Why not in this discussion, as well, in other words, 35 per cent from you for Canadian talent development?

3839 MR. MILLER: Well, equity is an overall measure, as you well know. The reason, I think both the Commission and those of us that appear before you have come to use the word "equity" rather than "equal" is "equal" means "everything the same", "equity" means "overall".

3840 It goes without saying that a service such as ours, that will, at minimum, meet a one-to-one linkage requirement and is prepared to be entirely Canadian produced, has a vast greater contribution to Canadian artists, in terms of exposure, than a service who, essentially, has a 4 per cent, or possibly as high as 5 per cent, Canadian-produced-channel percentage.

3841 So equity has to be an overall measure. And if--if--and, again, for us, it's a big "if", we don't believe you should go this route, but if you do accept the entry of satellite applicants that have a de minimus Canadian exposure and airplay contribution, one would assume that, at minimum, you would expect a very significant financial contribution far in excess of the 4 per cent level for pay audio.

3842 COMMISSIONER PENNEFATHER: I understand that point of view. There's also the fact of the financial reality of each and each specific applicant and something against which we must also assess this idea.

3843 If we look at your particular application and perhaps take your point and say, "Well, perhaps there's equity in one circumstance, but not in another and we should look at this case by case" and the specifics of Canadian talent development related to what you want to do and related to your bottom line what is feasible, understanding the technology and the rollout you are looking at, would you consider a ramp-up as an approach that's possible, in terms of Canadian talent development, looking at a base, let's say, of revenues or subscribers?

3844 MR. MILLER: It's possible. I would invite my colleagues to join, but essentially our view is, given we are providing a subscription radio service, it is a subscription service, given the level of commitments that we will have to make to capital infrastructure to build this service across the country, given what we are going to be able to do, in terms of supporting the Canadian music industry through exposure, we think the 2 per cent level is a very healthy level. It is, as I said, an order of magnitude higher, on average, than what you require from radio.

3845 We believe that is an appropriate contribution from our service.

3846 COMMISSIONER PENNEFATHER: Again, just to be sure, your comment on a scenario of 4 per cent, or even 5 per cent, equivalent to either pay audio or to other applicants, in your sense that would not be acceptable, feasible, can you comment on that possibility?

3847 MR. MILLER: I think we are suggesting, given the nature of our service, a 4 per cent level. In other words, your pay audio analogy is not appropriate because we are now committing to 100 Canadian channels, not even a linkage.

3848 We would be happy to consider and get back to you in phase three on different scenarios, but, given the scenario we have outlined for you, we believe the 2 per cent level, for us, is highly appropriate.

3849 In respect of the other applicants and their 96 per cent foreign level of channels, we think a 4 per cent CTD level is entirely insufficient.

3850 COMMISSIONER PENNEFATHER: Thank you. I understand the latter point on the previous point. Specific just to your service, perhaps you could get back, and not as a comparative basis, but, rather, what is appropriate, in your view, for your service.

3851 A final area of questioning is cultural diversity. Here, again, your supplementary brief and response to deficiencies, your channel line-up, lay out your approach, I can assume.

3852 We have, in fact, in your case, ethnic and aboriginal programming. Could you tell us a little more about employment equity and on-air presence for this particular service and how you intend to approach that component?

3853 MR. MILLER: Perhaps I can start, in an overall corporate sense, and Mr. Farina can comment on those channels, if appropriate.

3854 Obviously, the two companies are well-known to the Commission. CHUM was actually the first radio broadcaster to file cultural diversity best practices. Those are on file with the Commission. Our assumption would that those best practices, in terms of our reflection of diversity, would be adopted for this service.

3855 And in terms of our diversity employment, I think our history and commitment to that is well-known to the Commission. Certainly, the advantage of launching a new service like this, with the level of diversity we are committing to at 10 per cent, will provide those opportunities for employment, as well.

3856 COMMISSIONER PENNEFATHER: Well, you have it, however, just--I understand the corporate history, and I appreciate your comments there. Obviously, yes, you have a good track record in that respect.

3857 But specific to this service, would you be able to table a specific plan that would tell us how this particular service would approach your employment strategies, would incorporate your employment equity strategies?

3858 MR. MILLER: We would be pleased to do that.

3859 COMMISSIONER PENNEFATHER: In response to deficiencies on June 4th, you indicate an involvement with APTN and AVR.

3860 MR. MILLER: Yes.

3861 COMMISSIONER PENNEFATHER: Have you had discussions with APTN and AVR in relation to this programming?

3862 MR. MILLER: Yes, more recently with AVR. And yes, there's great interest, particularly given the fact that, on the aboriginal side, we will have a dedicated channel. There's great interest, both in terms of increasing the exposure to aboriginal artists and those broadcasters, but also a sense that there's a need out there, as well. So we have had some very fruitful discussions there.

3863 COMMISSIONER PENNEFATHER: So you have actually discussed and have concrete plans on the table?

3864 MR. MILLER: We don't have a concrete plan, but we have discussed. And it has gone beyond the theoretical, it has got to the specific as to what we might do.

3865 COMMISSIONER PENNEFATHER: Thank you very much.

3866 Thank you. Those are my questions, Mr. Chairman.

3867 Thank you very much.

3868 THE CHAIRPERSON: Thank you.

3869 We will break now for 15 minutes. Nous reprendrons dans 15 minutes.

--- Upon recessing at 1126 / Suspension à 1126

--- Upon resuming at 1146 / reprise à 1146

3870 THE CHAIRPERSON: Order, please. À l'ordre, s'il vous plaît. Commissioner Wylie.

3871 COMMISSIONER WYLIE: Thank you, Mr. Chairman. Good morning, ladies and gentlemen.

Before we start, I guess we have to establish the ground rules.

3872 Number 1, this will be a bilingual conversation, no doubt. Even Mr. Greenberg wants to speak French, so feel free to address me in either language or answer me in either language.

3873 Secondly, I will not use CSRC but rather, CHUM Astral. Somehow or other, even in CSRC an "H" creeps in occasionally, so I won't say that.

3874 Third, I don't know if we're supposed to use a third language or a different verb tense for the five additional channels that have been put on the table, but this may result in choppy questioning since the landscape does change dramatically by doubling the number of services I'm supposed to have looked at.

3875 And fourthly, even with two pairs of glasses I can't somehow read all the yellow channels that are there, so you will have to help me with that.

3876 In fact, even with two pairs of glasses, I can't find the French channels that I was supposed to look at when I prepared for this morning's questioning. So, it's important right of the bat that you establish where they are.

3877 For example, where do I find "Bouton d'or" in here? Yes.

3878 M. ROZON: Alors, bonjour, madame la vice-présidente. Vous comprendrez que les cinq canaux qui vous avaient été soumis initialement avec la venue d'Astral ont été modifiés.

3879 C'est, effectivement, dans la grille qui vous a été remise, les sections en jaune qui sont tous les canaux francophones, ceux que vous...

3880 COMMISSAIRE WYLIE: Oui. Vous, vous êtes jeune, vous pouvez lire ça. Alors, vous allez me dire lesquels sont...

3881 M. ROZON: Alors, sur la première ligne...

3882 COMMISSIONER WYLIE: ... mon collègue ici qui est beaucoup plus jeune que moi m'a aidée à identifier francophone et ce n'est pas comique.

3883 M. ROZON: Oui. C'est qu'il était facile celui-là. Sur la première ligne, c'est les trois derniers.

3884 COMMISSAIRE WYLIE: Attendez une minute; je n'ai pas fini. Vous allez aussi me dire à quoi ils ressemblent, s'ils ne sont pas les mêmes que les cinq.

3885 Je comprends très bien qu'il y en a cinq additionnels, mais les cinq qui sont... qui étaient dans la demande au début, je ne les trouve pas non plus.

3886 Je trouve Canal Classique, et caetera. Alors, allez-y et dites-moi comment je peux comparer à ce que j'avais hier soir.

3887 MR. PARISIEN: Okay. So, for the benefit of all the Commissioners, I will first identify the francophone channels and then, Denis Rozon will address the second part of your question.

3888 So, on the first line, Hit Oriented, the last three, Palmarès, Music Plus Radio, Émergence are three francophone channels. They are high-lighted in yellow.

3889 COMMISSIONER WYLIE: The second last line?

3890 MR. PARISIEN: No. The first line on top of the sheet.

3891 COMMISSAIRE WYLIE: Ah! oui, oui, je vois, okay. Alors, Acoustique Frissons immortels?

3892 MR. PARISIEN: No; the last three.

3893 COMMISSAIRE WYLIE: Non. The last three, ah! bon, Pop, okay.

3894 MR. PARISIEN: Palmarès, Music Plus Radio and Émergence. Okay?

3895 COMMISSAIRE WYLIE: Okay.

3896 MR. PARISIEN: Now, the second line, again the last three.

3897 COMMISSAIRE WYLIE: Ça, c'est Doux Frissons, Music Plus, oui, okay.

3898 MR. PARISIEN: The second line, the last three high-lighted in yellow are the francophone channels also that are AC and Oldies. So, it's Acoustique... I'm sorry, Doux Frissons, les Immortels and Pop Sixty.

3899 If you go to the Rock line, the last one, high-lighted in yellow, it's called "Québec Rock", that's a francophone channel.

3900 COMMISSAIRE WYLIE: On revient à la première ligne, Hit Oriented Palmarès.

3901 MR. PARISIEN: Yes.

3902 COMMISSAIRE WYLIE: Okay. Allez-y.

3903 MR. PARISIEN: Okay. You've got the Québec Rock?

3904 COMMISSAIRE WYLIE: Oui.

3905 MR. PARISIEN: Okay. On the line "classical"?

3906 COMMISSAIRE WYLIE: Oui. I've got that.

3907 MR. PARISIEN: There is one Classical in french. On the second to last, the Comedy one, the second one, francophone, is a francophone one, and on the last line "Miscellaneous", it's a children's oriented product, it's called "La zone des petits".

3908 COMMISSAIRE WYLIE: La Zone.

3909 MR. PARISIEN: Before last. So, you have there the first ten francophone channels and I'll let Mr. Rozon address the second part of your question.

3910 COMMISSIONER WYLIE: I try to adjust that too because just from... in your application, it explains what's in it. This does not. It just calls them something.

3911 MR. PARISIEN: You're right.

3912 M. ROZON: Alors, vous comprendrez que quand Astral s'est joint à la demande CHUM, on a vite réalisé que les cinq canaux qui étaient proposés étaient insuffisants pour offrir une offre diversifiée de qualité à notre public francophone.

3913 Alors, on a vite re-travaillé sur une programmation qui pouvait créer ces trois éléments-là : offrir une programmation de qualité, une diversité et une bonne quantité.

3914 On s'est également assurés qu'on était pour couvrir l'ensemble des groupes d'âges et des marchés auxquels on s'adressait. Donc, on a dû rajouter des canaux et CHUM a été très ouvert là-dessus et a reconnu justement l'importance de devoir augmenter l'offre francophone disponible sur le service.

3915 Donc, on a trois groupes ou trois blocs principaux de programmation et j'aimerais aussi, avant d'aller dans le détail, revenir sur le fait que ce que nous offrons est largement différent de la musique en continu.

3916 Ce que nous offrons ressemble davantage à la radio, il y aura de l'animation, il y aura des primeurs, des entrevues avec des artistes, il y aura des thématiques que nous allons développer et ça tient compte également des services que l'on offre de ça. Nous allons amener de l'identification sonore, du branding et on veut vraiment bâtir des relations avec les auditeurs.

3917 Donc, c'est largement différent des services de musique en continu de par la nature et de part les montants que nous allons investir en programmation.

3918 De là, je me permettrais de ramener et c'est valide pour l'ensemble du service, la différence au niveau du C.T.D. qu'on disait tantôt, de la contribution. C'est qu'il faut comprendre que l'on va investir sur l'ensemble des services; 45 000 000,00 $ en programmation.

3919 Ce qui est beaucoup plus, beaucoup d'argent, et il faut vraiment considérer quand on amène ce que le service va amener au service de radiodiffusion canadien, cette somme-là qui est importante.

3920 Ceci étant dit, nous avons eu un premier bloc qui s'adresse davantage à notre clientèle plus jeune, soit ceux qu'on appelle les "early adopters". Donc, nous avons un canal qu'on a appelé « Québec Rock » qui se retrouve sur la quatrième ligne, la ligne rock.

3921 Ce canal va proposer une programmation musicale des meilleurs succès pop rock franco des 30 dernières années. Ce sera un canal qui sera à 100 pour cent francophone et qui va, bien sûr, respecter la limite de 35 pour cent de contenu canadien.

3922 On offre également un canal où est-ce qu'on est très content de pouvoir offrir ce canal-là qui est le canal Émergence qui sera 100 pour cent à contenu canadien, pour vraiment donner toute la place à la nouvelle musique d'ici.

3923 Nous verrons les meilleures nouveautés dans le pop rock, le hip rock, le RNB, le rock alternatif, autant francophone qu'anglophone, des artistes canadiens qui auront paru au cours des 12 derniers mois, des primeurs, des entrevues avec nos artistes.

3924 Nous aurons également le service Palmarès qui va permettre de diffuser les chansons les plus populaires de l'heure dans différents créneaux et genres musicaux qui n'est pas actuellement bien desservi par la radio traditionnelle.

3925 Nous voulons aussi offrir le canal Music Plus Radio. Music Plus, je pense que c'est vraiment... les gens dans le Québec reconnaissent, c'est une référence indéniable en matie de culture musicale populaire.

3926 Cette version radio diffusera 24 heures sur 24 les oeuvres des artistes et artisans des nouveaux courants musicaux, des succès à venir, la mode de demain, la musique des jeunes de 12 à 24 ans à son plus branché.

3927 Nous avons également inclus un canal humoristique qui était celui à caractère jaune sur fond jaune, un que nous avons appelé « francophone ».

3928 Alors, ce service qui sera également à 100 pour cent francophone se veut un service dans l'humour et dans l'humeur et nous verrons et nous mettrons, bien entendu, dans le service humoristique, il y aura une portion un peu plus verbale, mais restera quand même à prépondérance musicale,

3929 Et ce sera vraiment de faire découvrir les humoristes francophones, non pas seulement les québécois, mais les francophones à travers le pays et même un peu à l'extérieur du pays qui, des fois, n'ont pas toutes les plate-formes nécessaires ou préférables pour pouvoir se faire découvrir.

3930 COMMISSAIRE WYLIE: Est-ce que vous voulez insérer toujours ce canal-là comme intéressant les 12 à 24?

3931 M. ROZON: Ça va aller... c'est sûr que ça attire cette clientèle-là, mais ça ne sera pas exclusivement ces gens-là.

3932 COMMISSAIRE WYLIE: Quand est-ce que vous avez arrêté de signaler les 12 à 24?

3933 M. ROZON: Les 12 à 24, je les...

3934 COMMISSAIRE WYLIE: Québec Rock, Émergence, Palmarès?

3935 M. ROZON: ... ai signalées pour Music Plus dans 12 à 24.

3936 COMMISSAIRE WYLIE: Et Music Plus. Les quatre... ces quatre-là?

3937 M. ROZON: Ah! Vous voulez dire... bien, on dit, okay, je l'ai inclus dans le premier bloc qui s'adresse à notre clientèle davantage jeune.

3938 COMMISSAIRE WYLIE: Oui, ça va. Continuez.

3939 M. ROZON: Okay. Ça va? L'autre bloc, on dit qu'il s'adresse un peu plus à un auditoire plus traditionnel, plus calme qui va offrir de la musique de type adulte contemporain que nous avons appelé « D'ouf qu'ils sont » et, également, un poste classique, mais avec de l'animation en langue française.

3940 Un troisième bloc qui s'adresse davantage à un auditoire plus âgé, notamment les baby-boomers, tout en se référant aux plus grandes légendes de la chanson. Donc, Pop Sixty qui est un type de travail va s'adresser à la nostalgie des baby-boomers en offrant de revivre la période de jeunesse à aujourd'hui, des Ed Sullivan Show, des Beatles aux Classels, du yé-yé au rock'n roll.

3941 L'autre canal qui est Les Immortels, on voudrait faire revivre les voies légendaires, les plus grandes chansons des décennies 50, 60 et 70 : Brel, Leclerc, Charlebois, Daniel Lavoie, Gordon Lightfoot, des gens qui vont nous faire revivre des succès de ces années.

3942 Et, finalement, nous n'avons pas oublié les tout-petits. Nous avons également pensé à eux, un groupe de deux à huit ans, en leur offrant un canal qui leur sera dédié, comportera une composante verbale; c'est-à-dire des histoires, des contes pour enfants, des contines, en plus de leur livrer leur musique préférée et de leur faire découvrir de nombreux artistes francophones et, bien entendu, il y aura une prédominance musicale dans ce format également.

3943 COMMISSAIRE WYLIE: Merci. Aussi, avant de procéder, le 15 septembre, vous nous avez déposé... il faut patiner vite avec votre demande parce que c'est un peu à la dernière minute, alors vous allez m'aider. Vous nous avez déposé un Memorandum of Understanding between Astral and CHUM.

3944 Considering that you have now added five more french channels, it would be of interest to us to know whether that's an indication that the option that Astral was going to take under that Memorandum of Understanding is or is not assuredly going to be taken if your project should be licensed.

3945 The way I understand it is Astral will have the option to increase its ownership interest beyond the 19.9 per cent to 50.

3946 Where are you with that because, you know, CHUM is going to program 10 francophone channels, it's very different from Astral providing them, for a variety of reasons, some positive, some perhaps less.

3947 Is that going to occur? I suppose an application would be some type... unless you commit yourself today as to what your ownership structure will be, or the discussion may be different.

3948 MR PARISIEN: As of today, we stand at 19.9 per cent, but we have signified to CHUM our intention to go to 50 per cent if we get favourable decision on our application.

3949 COMMISSIONER WYLIE: Because you see, your proposal is that ten channels... Will it make any difference to Astral's participation? I guess so. I mean, they're going to have half of the board if it occurs; they won't if they don't.

3950 Are they going to manage the francophone part, regardless or what does that mean "an intention"? Is 10 francophone channels an intention or your application as it stands?

3951 MR. PARISIEN: No. It's a commitment.

3952 COMMISSIONER WYLIE: Okay.

3953 MR. PARISIEN: Okay, to go to 10 channels.

3954 COMMISSIONER WYLIE: So, we will want to know what the relationship between the parties as to who is programming this, the extent to which it will get into all this, retransmission of existing channels, the position already of Astral in the collect market. Will it happen or won't it?

3955 MR. PARISIEN: Go to 50?

3956 COMMISSIONER WYLIE: Yes?

3957 MR. PARISIEN: Yes, it will.

3958 COMMISSIONER WYLIE: It will, okay.

3959 MR. PARISIEN: Yes, definitely.

3960 COMMISSIONER WYLIE: Well, we will leave it to the lawyers to decide whether, if you should be licensed, whether we need another proposal.

3961 MR. PARISIEN: And, if I may, madame Wylie, just to finish of. When we joined CHUM, their application was already filed.

3962 We brought to the table different points of view that changed the application, as you have just mentioned, but we are still at 19.9 per cent. We are a partner in this application.

3963 COMMISSIONER WYLIE: Oh! yes, I understand but surely you understand as well our desire...

3964 MR. PARISIEN: Absolutely.

3965 COMMISSIONER WYLIE: ... of knowing, especially with a doubling of the number of channels, where Astral is going to be in this if it should be licensed.

3966 MR. GREENBERG: Madame Wylie, if I can. Excusez-moi. If I can just add to that. The promises that are being made from Astral's perspective will be in place whether or we're at 19.9 or whether we're at 50. So, the francophone channels that we talk about is a commitment regardless of our equity percentage.

3967 COMMISSIONER: My question was not questioning whether the 10 francophone channels, but who would be programming them and where they would come from.

3968 MR. GREENBERG: We would still have that obligation.

3969 COMMISSIONER WYLIE: They won't have an impact. With regards to going 50 per cent or not, it becomes then a regulatory/legal concern that someone else can...

3970 MR. GREENBERG: That's right.

3971 COMMISSIONER WYLIE: So, we know that those 10 channels will be with the participation of Astral one way or the other. Okay. Thank you.

3972 Vous parlez, vous nous parlez de... bon, premièrement, si je regarde à l'étude que vous avez et vous l'avez re-mentionnée ce matin, qui a été faite par Audience Research International, there is 76 per cent of the respondents who said that the type of music was the most important factor. It's even way more than the 49 per cent who said that having no ads, it would be an important factor.

3973 So, I want you to address just how different from what is available in French Canada on Astral in large part because they are a large supplier of radio.

3974 Vous avez, si je peux voir 1, 2, 3, 4 services qui sembleraient être différents de ce qu'on a, ce qu'on reçoit ou ce qu'on peut syntoniser en ce moment.

3975 Expliquez-moi comment... Canal Classique, il y en a un aussi à la radio. La Zone des petites c'est évidemment nouveau, mais les autres, comment sont-ils différents de ce qui est accessibles et donc, qui introduirait de la diversité dans le système radiophonique au Canada français et ailleurs, mais surtout au Canada français où il y a déjà plusieurs de ces formules-là qui sont syntonisables?

3976 M. PARISIEN: Alors, d'entrée de jeu, madame Wylie, ce que je peux dire, c'est que Astral a pris connaissance de la recherche quand on est rentré au dossier et, par la suite, on a fait notre propre recherche qui est tout simplement venue confirmer ce que CHUM avait dans sa première recherche.

3977 Alors, quand on parle de la radio commerciale au Québec, on parle d'une radio dont la structure d'affaires est basée sur les revenus publicitaires. Le groupe cible de revenus publicitaires, c'est généralement 25-54. Okay.

3978 Or, quand on veut adresser le groupe 25-54, il faut programmer pour une masse critique, il faut programmer large. Il faut programmer dans le sens étendu de l'objectif et c'est ce que les radios conventionnelles au Québec font, que ce soit en format classique, dans le format easy listening, dans le format rock, et caetera.

3979 Ce n'est jamais de la radio de pointe ou de la radio de niche. C'est de la radio qui diffuse de façon large.

3980 D'ailleurs, ce que soulève l'industrie de la musique, c'est qu'eux autres se plaignent que les play lists sont trop petites alors que, par contre, l'auditoire que nous visons est satisfait, eux, du format musical qu'on diffuse et on a juste à constater les succès que ces radios-là ont.

3981 Quand on parle de radio par abonnement, on est dans un autre univers en ce qui concerne les formats musicaux. On est dans un univers de niche beaucoup plus pointu.

3982 Alors, même si on parle de classique, ça ne sera certainement pas la même programmation qu'on retrouve au radio classique conventionnel. Ça va être une radio encore plus nichée, puis je vais laisser monsieur Rozon terminer puis peut-être faire la comparaison avec la plupart des canaux que nous avons prévus.

3983 M. ROZON: J'aimerais également porter à votre attention que les deux facteurs principaux que les gens seraient intéressés au service, selon nos recherches, c'est le fait qu'il n'y aura pas de commercial, pas de publicité et qu'il y aura un son, c'est ce qu'on appelle "cristal clear", la qualité CD.

3984 Ce sont les deux facteurs principaux dans nos recherches qui démontrent que les gens sont disposés... en tout cas, dans la recherche que nous on a fait par après, elle dit qu'ils sont disposés à s'abonner à un service par abonnement.

3985 COMMISSAIRE WYLIE: Oui, mais vous n'abandonnez pas le fait qu'il y a 76 pour cent de ceux qui ont répondu qui disaient, eux, que c'est la musique qui les intéresse.

3986 M. ROZON: Tout à fait.

3987 M. PARISIEN: Tout à fait.

3988 COMMISSAIRE WYLIE: Maintenant, il vous reste à vous de me dire...

3989 M. ROZON: Il faut combiner les trois facteurs.

3990 COMMISSAIRE WYLIE: Oui.

3991 M. ROZON: Ce qui arrive, c'est qu'à partir du moment que les gens veulent s'abonner au service, on ne peut pas offrir que le nouveau. Il faut quand même offrir dans une offre complète, il faut quand même être en mesure d'offrir ce qui peut intéresser les adultes contemporains ou les baby-boomers.

3992 COMMISSAIRE WYLIE: Laissez-mois vous arrêter un moment et vous soulignez que dans la demande de CHUM, dans le mémoire supplémentaire, Supplementary Brief, c'est en anglais, vous parlez à plusieurs endroits ou à plus d'un endroit.

3993 En tout cas, j'en vois à la page 2, à la page 4, que, à votre avis, pour que ça fonctionne le service que vous proposez, il faudra qu'il soit complémentaire.

3994 Par exemple, au bas de la page 2, je cite :

"For subscription radio to succeed in Canada, it must at a minimum be complementary to an ideally work with conventional radio instead of against it."

3995 Et à la page 4, vous parlez aussi de complémentarité... que ce soit complémentaire. Alors, je voudrais que vous incluez ça dans vos discussions, dans votre discussion du service que : est-ce que c'est vrai au Canada français aussi depuis que Astral s'est joint à la proposition de CHUM, qu'on essaie de faire quelque chose qui est autre que la radio qui est accessible au Canada français?

3996 M. ROZON: Absolument. Et c'est pour que nous avons augmenté le nombre de canaux. Et quand on regarde... prenons pour exemple, le canal Québec Rock qui sera vraiment un canal 100 pour cent francophone au niveau musical sur tous les meilleurs succès pop rock franco des 30 dernières années.

3997 À ma connaissance, je ne pense pas que ça existe dans la radio conventionnelle actuellement et pourquoi peut-on faire ça? C'est parce que justement c'est une base de radio par abonnement, ça intéresse des gens et il y a des gens qui vont être prêts à souscrire parce qu'on a ce service-là.

3998 Nous avons également le canal Émergence qui va être un canal 100 pour cent de contenu canadien qui va venir vraiment chercher le genre musical dans le hip hop, le pop, le rock, le rythm & blues, c'est vraiment de permettre les artistes québécois d'ici qui n'ont pas vraiment de air play ou pas suffisamment, en tout cas dans la radio conventionnelle, leur permettre d'avoir la plate-forme qu'ils vont pouvoir se faire connaître et avoir beaucoup plus de temps d'antenne là-dessus.

3999 M. PARISIEN: Est-ce que je peux ajouter un commentaire, madame Wylie? Juste une illustration de ce que ça veut dire en terme pratique.

4000 Si on prend un artiste qui produit et lance un nouvel album dans le marché francophone, le plus récent c'est Éric Lapointe, sur son album il y a 12 plages. La radio conventionnelle va probablement jouer une plage ou deux plages seulement et c'est probablement son producteur qui va nous demander lesquelles jouer.

4001 Or, les neuf autres plages très souvent ne seront pas sur la radio conventionnelle.

4002 Quand on va être dans un mode de radio par abonnement, on va pouvoir nicher beaucoup plus la musique, nicher beaucoup plus l'offre. On va pouvoir jouer beaucoup plus de plages des artistes existants et, évidemment, on a créé des créneaux également qui s'adressent aux artistes émergents.

4003 Eux, non seulement ils ne jouent pas à la radio conventionnelle, ils n'ont pas d'autre débouché. Ils vont pouvoir se retrouver dans la radio par abonnement.

4004 COMMISSAIRE WYLIE: Mais quand on parlait de sondage aussi, vous mentionnez dans votre Lettre de lacunes du 4 juin, à la page 2, que... je cite encore une fois, mais c'est en anglais :

"In fact, Trump projects that on the order of 30 to 35 per cent of CHUM Astral's listeners..."

-- although you use CSRC:

"... will be from the 12 to 24 demographic."

4005 Alors, ça, c'est 30 à 35 pour cent, donc vous avez, si je vous comprends bien, quatre canaux qui seront clairement... qui seront clairement intéressants ou ciblés vers cette tranche.

4006 Monsieur Rozon ou monsieur Parisien, avez-vous pensé à des barèmes quelconque qui pourraient être introduits pour nous assurer que justement la musique qui n'est pas accessible le sera sur ces canaux-là, des barèmes ou des critères qui intéresseraient?

4007 Solange Drouin, par exemple, de l'ADISQ, et qui serait... qui rassurerait que, de fait, nous aurions au moins quatre canaux qui offriraient de la musique qui n'est pas offerte dans les stations de radio, parce que, ici, en anglais "we'll have to teach old dogs new tricks", parce que vous êtes des gens des radiodiffuseurs. Moi, je parle de Astral, donc vos habitudes sont comme monsieur Parisien disait, très différentes.

4008 Est-ce qu'il y a des critères qui seraient, qui prouveraient que justement ces canaux-là offriraient de la diversité?

4009 M. ROZON: Je peux vous dire d'emblée, en offrant déjà quatre canaux aussi spécialisés avec des engagements de...

4010 COMMISSAIRE WYLIE: Non, non. Je vous crois que vous voulez qu'ils soient spécialisés. Là, je vous demande, est-ce que vous avez pensé à des critères qui rassureraient ceux qui peut-être ne vous croient pas qu'ils vont demeurer spécialisés.

4011 Il y a des façons de le faire. On en a déjà parlé avec le premier service de satellite où il y avait des barèmes, un certain nombre de musiques qui sont... qui n'ont pas plus que 18 mois et ici il s'agirait de trucs qui ne sont pas à la radio normalement.

4012 Parce que, évidemment, quand vous avez des radiodiffuseurs qui ont déjà des stations de radio, on se demande : est-ce qu'on va avoir la même chose ou est-ce qu'on va avoir de la diversité?

4013 Vous pouvez attendre à la réplique si vous ne y avez pas pensé.

4014 M. ROZON: Non, mais je voudrais quand même, sans rentrer dans le détail du spécifique ou du mécanisme qu'il y a là, c'est sûr qu'on est ouvert à toute proposition en ce sens-là.

4015 Mais il faut regarder, quand on prend un canal comme Émergence qui va être 100 pour cent canadien avec le contenu francophone qui va s'y retrouver, les pies musicales disponibles vont faire en sorte qu'on va les faire jouer quand on va devoir.

4016 Je veux dire, on a pris des engagements là-dedans et qui fait que compte tenu de la disponibilité des pièces musicales et du nombre d'artistes, c'est assuré qu'on va devoir les faire jouer ces pièces-là, qu'on va devoir faire connaître.

4017 C'est le but de ces canaux-là. C'est le but pour lequel on en a introduit plusieurs. Quand on arrive avec Québec Rock qui dit qu'il va être un canal 100 pour cent francophone avec 35 pour cent de contenu canadien. Vous pourrez me dire, la francophonie ce n'est pas juste le Québec, c'est sûr.

4018 On veut également faire connaître la francophonie hors Québec parce que c'est un service national que nous allons avoir, qui s'adresse à l'ensemble des francophones du pays, mais on marque 35 pour cent de contenu canadien, encore là c'est un minimum. Je veux dire, le contenu francophone va sûrement aller au-delà de 35 pour cent de contenu canadien.

4019 Mais ces critères-là font en sorte que c'est pratiquement garanti qu'il va y avoir du airplay, du temps d'antenne pour les artistes qui ne sont pas, présentement, diffusés sur des ondes traditionnelles.

4020 CONSEILLÈRE WYLIE: Et le Palmares?

4021 M. PARISIEN: Dans différents formats comme émergence, comme francophones, et caetera, on pourra vous proposer en réplique, effectivement, la formule qu'on propose. Mais comme monsieur Rozon vient de dire, cette proposition-là va faire en sorte que vous allez comprendre que tout ce qui va se faire presque va être obligé d'être diffusé étant donné les quotas qu'on suggère.

4022 CONSEILLÈRE WYLIE: Oui, c'est plus facile avec 100 pour cent contenu canadien, mais ça peut quand même être émergence. Moi, j'émerge tous les matins, puis je n'ai pas 24 ans.

4023 Vous pouvez assurément trouver des barèmes qui rassureraient que, de fait, ce serait de la musique différente plutôt que simplement une licence pour refaire ce qui existe au départ.

4024 M. PARISIEN: Je réitère que notre intention, ce n'est pas de faire de la radio conventionnelle, c'est au contraire d'ouvrir ses canaux-là au maximum, maximum de contenu canadien disponible et que nous allons vous suggérer en réplique la façon qu'on va le faire.

4025 CONSEILLÈRE WYLIE: Maintenant, qu'est-ce qui est arrivé à Franco (inaudible)...(01:54)?

4026 M. ROZON: De façon à s'assurer de respecter la législation sur le contenu francophone et avoir un service attrayant, il a été intégré à l'intérieur des services existants.

4027 CONSEILLÈRE WYLIE: Madame Pennefather a soulevé, je crois, dans votre mémoire supplémentaire à la page 15 où il y a une phrase assez large que CHUM Astral, je cite encore sauf le nom de la compagnie:

"...will also offer a number of French-language channels featuring French-language music, as well as talk programming." (As read)

4028 Il y a des endroits même où on parle de retransmission, par exemple aux pages 5 et 6 de votre lettre du 4 juin au bas, on parle de:

"A small number of the formats described will be served through the use of rebroadcasts of existing services in their entirety." (As read)

4029 Et plus loin:

"Conventional over-the-air radio, television or web-based audio services might be the source." (As read)

4030 Pour ce qui intéresse le contenu francophone, est-ce qu'il y aura, de fait, des retransmissions de services existants surtout de radio conventionnelle?

4031 M. ROZON: Aucun service conventionnel ne devrait être retransmis. Peut-être à l'occasion quelques pièces de programmation comme telles, mais je pense entre autres, et ce n'est même pas la radio, je pense entre autres, comme a dit mon confrère, mon collègue Rob tantôt, peut-être un spectacle qui a lieu à Musique Plus vaudrait la peine d'être sur la radio Musique Plus en même temps, et peut-être retransmis à quelques occasions au courant, mais à proprement parler, aucun canal existant ne sera rediffusé sur le service.

4032 CONSEILLÈRE WYLIE: Monsieur Miller, lui, a parlé "10 per cent in whole or in part". Is it 10 per cent of the service? Is it 10 per cent of each channel? What is the limitation? I think you said 10 per cent in whole or in part. Be more precise because 10 per cent of 50 channels, you could have five channels that are retransmitted. Could you be more specific?

4033 MR. MILLER: We can reflect further on this. I think what I said was "10 per cent in whole or in large part". So it would be a little bit immature--

4034 COMMISSIONER WYLIE: What do I apply the 10 per cent to? In the example I'm giving you, 50 channels, 10 per cent is five channels--

4035 MR. MILLER: That's right.

4036 COMMISSIONER WYLIE: --that could be retransmitted.

4037 MR. MILLER: That's right. We are prepared to future commit, and that's what Denis was alluding to, that, in respect of the French-language channels, none of them will be rebroadcast, and we will reflect a little bit more as to whether we can give you some more precision on that.

4038 COMMISSIONER WYLIE: To how to be more precise so that the constraint is obvious, because 10 per cent in whole or in part doesn't do it for me.

4039 Now, you told Madam Pennefather 75 per cent music and possibly 25 per cent création réal. Is that correct, in the English services?

4040 MR. MILLER: I think that was the overall mix of the 100 channels.

4041 CONSEILLÈRE WYLIE: Ça va être la même chose en français. Alors, les dix canaux seront composés surtout de musique et au moins 75 pour cent de musique.

4042 Expliquez-moi ce que seront les créations orales dans ces canaux musicaux.

4043 M. ROZON: Comme je vous disais tantôt, vu qu'on va être davantage un service de radio, ça va être de l'animation, il peut y avoir des entrevues avec des artistes, il peut y avoir des entretiens avec les auditeurs par téléphone, mais encore là c'est en fonction avec l'animateur. Ou encore l'auditeur qui va appeler pour parler à son artiste, et caetera.

4044 On prévoit, de façon globale, que le contenu verbal devrait être entre 5 et 10 pour cent.

4045 CONSEILLÈRE WYLIE: Maintenant, comment allez-vous programmer ça? Ça va être en bloc répété ou ça va être sur 24 heures? Quelle allure ça aura?

4046 Ce sera 24 heures sur 24 heures. On a entendu par exemple, hier et avant-hier, des propositions qui ne sont pas surprenantes que ce serait en blocs.

4047 Vous, les canaux francophones, comment allez-vous vous y prendre?

4048 M. PARISIEN: Premièrement, les canaux vont être programmés à Montréal et vont diffuser du contenu original 18 heures par jour et il y aura une boucle de répétition de 6 heures.

4049 Excusez-moi, 16 heures original et une boucle seulement de 8 heures qui est la boucle de nuit.

4050 CONSEILLÈRE WYLIE: Celle-là sera formulée...

4051 M. PARISIEN: The best of de la journée.

4052 CONSEILLÈRE WYLIE: ... parmi les...

4053 M. PARISIEN: Voilà. Tout à fait. Donc, c'est 16 heures original tous les jours. Pour les dix canaux.

4054 CONSEILLÈRE WYLIE: Ça c'est de quelle heure à quelle heure qu'il y aura...

4055 M. ROZON: On a convenu que compte tenu que le groupe cible est différent, ça va varier en fonction du groupe cible, en ce sens qu'un service aux jeunes, on va s'assurer que l'original soit dans le bloc de 16 heures où est-ce qu'il est plus susceptible d'y avoir de jeunes qui l'écoutent. On ne le mettra pas pendant les heures d'école s'ils sont à l'école, on va les mettre pendant la soirée, et caetera, où est-ce qu'ils ont le plus de chances d'écouter la radio.

4056 Ça peut être différent pour un autre groupe, pour les adultes contemporains ou les stations qui vont d'adresser aux baby boomers.

4057 Donc, on va vraiment déterminer le 16 heures en fonction où est-ce qu'il y a le plus d'auditoire ou d'abonnés possible dans selon les groupes d'âge.

4058 CONSEILLÈRE WYLIE: Vous aviez au départ un canal qui s'appelait Radio NRJ qui était très intelligent comme acronyme, ça, ça va être intégré, ce genre de musique là dans les nouveaux canaux, par exemple dans quoi, dans Émergence? Québec Rock?

4059 M. ROZON: Les formats sont maintenant complètement différents, ça va être intégré dans Québec Rock, dans Émergence si le format initial prévoit un peu de musique émergente, mais maintenant on va le concentrer dans le canal Émergence; et le rock francophone va se retrouver dans Québec Rock.

4060 CONSEILLÈRE WYLIE: Vous avez aussi quelque part, dans le mémoire supplémentaire, un endroit où vous dites que vous n'offrirez pas de bulletin, par exemple, d'information au niveau de weather reports, sports reports, et cetera. Il n'y aura rien de ce genre de création orale des radios conventionnelles.

4061 M. ROZON: Tout à fait. Quand on disait qu'on voulait être complémentaire à la radio conventionnelle, je pense que beaucoup de gens écoutent la radio conventionnelle dans les heures de pointe, et caetera, pour avoir ce type d'information là.

4062 On est également un service national et on va s'adresser également aux gens à l'extérieur de la province.

4063 CONSEILLÈRE WYLIE: Oui. J'ai trouvé la page, à la page 4, tout au haut de la page où on dit:

"...in addition, will not provide subscribers with original local weather or traffic information." (As read)

4064 I don't suppose you intend to give them non-original weather information.

--- Laughter / Rires

4065 MR. MILLER: Most of it is.

4066 COMMISSIONER WYLIE: Mr. Miller, your adjectives don't always work here! I was trying to figure out what "original"--so there won't be this type of programming.

4067 Vous avez soulevé la question de l'infrastructure. Évidemment, dans votre demande, on trouvait surtout des références à une infrastructure qui serait à Toronto.

4068 J'imagine que maintenant, on se servira d'infrastructures... Bien que, si je me souviens bien, vous alliez peut-être utiliser l'infrastructure de compagnies autres que CHUM.

4069 Maintenant, il y aura une infrastructure à Montréal qui sera celle d'Astral en général ou...

4070 Si je me réfère à votre lettre du 26 mars, vous parlez de,

"...radio headquarters of CHUM, there are substantial production facilities, which will be made available to the new project." (As read)

But you assumed that a number of channels will be assembled at other venues across Canada.

4071 Explain to me how that will be done and the extent to which Astral will program the francophone channels qui est, j'imagine, ce qui m'importe à moi le plus, mais qu'est-ce que sont les projets au niveau des infrastructures avec les deux participants dans la proposition?

4072 M. PARISIEN: Si vous permettez, je vais commencer puis je vais laisser Peter terminer après.

4073 Si on regarde le MOU, on constate que le rôle d'Astral, ce n'est pas seulement que, évidemment, un rôle financier ou d'un actionnaire passif, c'est un actionnaire actif qui va être responsable du marché du Québec et du marché des Maritimes.

4074 Qu'est-ce que ça veut dire? Ça veut dire qu'Astral va être appelée à puiser dans son expertise en promotion, en recherche, en marketing, en service à la clientèle, et caetera.

4075 Donc oui, il va y avoir un hub à Montréal avec des employés dédiés au projet, des employés spécifiques qui vont travailler au projet mais qui vont aussi pouvoir puiser sur les connaissances et les ressources d'Astral Media Radio.

4076 Nous allons programmer à partir de Montréal et de nos experts en place qui seront dédiés au projet toute la programmation des dix canaux dont nous avons parlé, et ces canaux seront acheminés pour l'uplink au bureau ou à l'établissement que nous aurons à Toronto à ce moment-là.

4077 Est-ce que ça répond pour la question?

4078 CONSEILLÈRE WYLIE: Est-ce que ça fait des changements à vos projections financières?

4079 M. PARISIEN: Non, c'est prévu dans nos prévisions financières tel quel, tel que je viens de le décrire. Parce que CHUM avait prévu un hub de production ailleurs, alors c'est celui qu'Astral va en faire.

4080 CONSEILLÈRE WYLIE: Alors, ça ne changera pas les états financiers, les projections financières.

4081 M. PARISIEN: Non, ça ne les changera pas. Je vais laisser Peter vous expliquer le volet Toronto.

4082 CONSEILLÈRE WYLIE: Oui. I'm more interested, of course, in the volet francophone, but go ahead.

4083 MR. MILLER: All I wanted to add, Madam Vice-Chair was, as Jacques has pointed out, we anticipated having production outside of Toronto, which would be fed into Toronto. That's what you read from in that deficiency response. So Astral, then, becomes the key hub, in terms of feeding French-language content into Toronto from their facilities in Montreal.

4084 CONSEILLÈRE WYLIE: Aussi, dans le mémoire supplémentaire à la page 6, le tout dernier paragraphe se lit comme ceci:

"With respect to the Commission's question relating to local programming, the architecture of the system modelled assumes a national service with common programming channels throughout." (As read)

4085 Est-ce que je peux conclure que les dix canaux francophones seront accessibles à tous les abonnés?

4086 MR. MILLER: Yes.

4087 CONSEILLÈRE WYLIE: Il est intéressant qu'à la page 7, vous parlez d'une certaine capacité de programmer pour certains marchés différemment. À la page 7.

"It would be consistent with the operating principles to use such flexibility to provide...." (As read)

We are talking about the former paragraph, which says:

"It's possible for terrestrial transmitters to broadcast separate programming in certain markets". (As read)

4088 Then, in the next paragraph, you continue:

"...to provide a different mix of programming in different regions. For example, additional francophone services could be added in a French-language French-language market". (As read)

4089 Are you proposing to use this ability to have a national service that could be different in different markets, which would be contrary to the answer you gave to my other question? There is a bit of a contradiction here. What are your intentions?

4090 MR. MILLER: That reference in our supplementary brief was looking at possibilities in the future. It is no longer part of our plan.

4091 Again, to reiterate, all the channels we have talked about today are channels that will be distributed nationally.

4092 COMMISSIONER WYLIE: There is an ability of the transmitters to transmit local programming, is there?

4093 MR. MILLER: Our point, and the reference here, was--

4094 COMMISSIONER WYLIE: That was a leading question. Let me rephrase it.

--- Laughter / Rires

4095 COMMISSIONER WYLIE: Is there any ability of the local transmitters to transmit local programming--of the terrestrial transmitters?

4096 MR. MILLER: Technologically, because it's a terrestrial network, one could choose to use the terrestrial transmitters in different locations to distribute different programming. We were alluding to this technological capability as something we might want to explore in the future.

4097 Given our relationship with Astral, given the commitments we are making today, we no longer have any plans to do so and would perfectly accept any limitation that either prevents us from doing that or requires us to provide a fully national service, where all the channels are provided nationally.

4098 COMMISSIONER WYLIE: Would you be prepared to accept a limitation as to the ability to transmit local programming?

4099 MR. MILLER: Absolutely.

4100 COMMISSIONER WYLIE: So every area that you serve would get all the services that are offered?

4101 MR. MILLER: Precisely.

4102 COMMISSIONER WYLIE: Now, with regard to the new services, you mention the Canadian content similar to radio and, in some cases, like Émergence, way beyond. Are you also accepting--I don't think that's anywhere--the 65 per cent vocal music to be in French? Yes?

4103 M. PARISIEN: Oui. L'offre francophone que nous allons proposer va respecter la règle du 65 pour cent de musique vocale de langue française.

4104 CONSEILLÈRE WYLIE: Et aussi l'exigence que ce soit pendant la semaine au moins 55 pour cent, que la portion vocale soit étalée de façon raisonnable à travers les heures de grande écoute.

4105 M. ROZON: Nous, on va le répartir équitablement. Les heures de grande écoute deviennent difficiles à déterminer exactement en chiffres, en heures, mais c'est sûr que nous, on s'engage à le répartir équitablement sur l'ensemble des 16 heures de programmation.

4106 CONSEILLÈRE WYLIE: Le canal pour enfants, il va avoir la même allure que le canal anglophone? Parce que vous aviez donné une description du canal pour enfants anglophone, mais vous n'en proposiez pas en français. Ça va avoir la même allure?

4107 Expliquez-moi ce qu'il va y avoir sur ce canal-là.

4108 M. ROZON: Ce que nous proposons pour la version francophone pour la zone des petits, c'est vraiment, nous, on regarde un contenu, est-ce qu'on va s'adresse aux jeunes avec des histoires pour enfants, des contes pour enfants et de la musique pour enfants.

4109 Pour ce qui concerne le contenu anglophone, je voudrais me référer à monsieur Rob, s'il vous plaît.

4110 CONSEILLÈRE WYLIE: Ça, ce n'est pas pour le lancement, c'est pour plus tard?

4111 M. ROZON: Non. Nous autres, il fait partie de nos dix.

4112 CONSEILLÈRE WYLIE: Oui. Le canal anglophone pour enfants, est-ce que c'était pour maintenant ou pour plus tard?

4113 MR. FARINA: The first 50, as well, yes.

4114 MR. ROZON: Oui.

4115 CONSEILLÈRE WYLIE: C'est pour tout de suite aussi?

4116 MR. FARINA: Yes. The only differentiation between the French and the English is the English service is predominantly a music service, with substantially less spoken word than the French service.

4117 CONSEILLÈRE WYLIE: Vous parliez d'un deuxième canal pour enfants plus tard.

4118 Ce qui m'amène à vous demander, vous nous avez dit ce matin, si je me souviens bien, que vous visez à avoir 15 canaux francophones aux termes de la licence. Mais 100 canaux en tout à la quatrième année. Il y aura donc un déclin de la proportion francophone.

4119 M. PARISIEN: Ça dépend comment on le regarde.

4120 CONSEILLÈRE WYLIE: Vous êtes libre de le regarder par vos lunettes à vous.

4121 M. PARISIEN: C'est un déclin en pourcentage, mais une augmentation en nombre absolu.

4122 Donc, le consommateur francophone va avoir plus de choix à la fin du terme de la licence qu'il en aura au démarrage.

4123 CONSEILLÈRE WYLIE: Au lieu de 20 pour cent, ce sera 15 pour cent des canaux.

4124 Donc, vous vous engagez à dix canaux au démarrage.

4125 M. PARISIEN: Et nous nous engagerions à augmenter à 15.

4126 LE PRÉSIDENT: Et à 15 canaux après 7 ans, bien que vous auriez 100 canaux à la quatrième année.

4127 M. PARISIEN: Ce n'est pas après sept ans. Dès la quatrième année, nous nous engageons à augmenter à 15.

4128 CONSEILLÈRE WYLIE: À 15, oh dès la quatrième année. O.K. Je pense que je vous avais entendu dire à la fin de...

4129 Alors, à la quatrième année, déjà il y aura quand même 15 pour cent des canaux qui seront francophones.

4130 M. ROZON: Excusez-moi, Madame la vice-présidente. Ça va être dès que le service va passer à 100 canaux. Donc, si le service passe avant, on va monter à 15 avant.

4131 CONSEILLÈRE WYLIE: Ce n'est pas clair si vous reviendrez pour 100 canaux ou est-ce que vous vous engagez au niveau des canaux francophones qui seraient ajoutés d'avoir les mêmes exigences au contenu canadien de musique vocale francophone?

4132 M. ROZON: Tout à fait.

4133 CONSEILLÈRE WYLIE: Et vous seriez prêt à accepter ça comme des conditions de licence que ce serait la même chose.

4134 Maintenant, tout ça est un peu décousu, mais c'est un peu votre faute, alors je m'excuse.

4135 Monsieur le Président, vous pouvez prendre...

--- Off microphone / Sans microphone

4136 CONSEILLÈRE WYLIE: Alors, on va continuer et si nécessaire, pendant le lunch, je m'amuserai à voir si j'ai posé toutes les questions qui s'imposent avec vos nouveaux canaux.

4137 Évidemment, je ne peux pas être mécontente du fait que vous avez ajouté cinq canaux francophones. Seulement mécontente que vous ne l'ayez pas fait plus tôt.

4138 Le développement des talents canadiens, si j'ai bien compris votre discussion avec madame Pennefather, c'était dans la lettre, je crois, de juin où vous avez fait une ventilation de ce qui était très général.

4139 J'ai bien compris qu'il s'agirait de sommes qui seraient un tiers, un tiers, un tiers dans ces trois créneaux-là et que dans chacun, il y aurait 75 pour cent des sommes allouées au segment anglophone et 25 pour cent francophone. Donc, il y aurait un tiers du 8,3 millions, par exemple, qui irait à Radio Starmaker, Fonds RadioStar et 25 pour cent de ça irait au Fonds RadioStar. C'est bien?

4140 Mme LAFLAMME: C'est exact. Si on prend l'enveloppe totale du développement des talents canadiens, donc on dit 25 pour cent seront pour des initiatives francophones et 75 pour cent pour anglophones.

4141 Donc, du 25 pour cent, un tiers ira à Musicaction, un tiers ira à Fonds RadioStar et un tiers ira à d'autres initiatives, d'autres organismes qui...

4142 CONSEILLÈRE WYLIE: Et de ce tiers-là, 25 pour cent ira au segment francophone.

4143 Mme LAFLAMME: En fait, oui.

4144 CONSEILLÈRE WYLIE: Oui?

4145 Mme LAFLAMME: Ce qui va au segment francophone, c'est 25 pour cent de la totalité.

4146 CONSEILLÈRE WYLIE: Oui, mais j'essaie de ventiler les trois, un tiers ira à Musicaction Factor.

4147 Mme LAFLAMME: Un tiers du 25 pour cent à Musicaction.

4148 CONSEILLÈRE WYLIE: O.K. D'accord. On se comprend.

4149 Mme LAFLAMME: Un tiers du 25 pour cent à Fonds RadioStar.

4150 CONSEILLÈRE WYLIE: Oui. Pouvez-vous nous donner des exemples plus concrets du côté francophone de la troisième partie, du troisième tiers?

4151 Mme LAFLAMME: Bien sûr. Elles seront donc, données à des organismes dont la mission est de promouvoir et de développer des artistes, des talents francophones. Donc, par exemple, la SOPREF, Société pour la promotion de la relève musicale et de l'espace francophone.

4152 Nous avons identifié également l'École nationale de la chanson; Coup de coeur francophone; Festival international de la chanson de Granby; l'ANIM qui est l'Alliance nationale de l'industrie musicale et le FCPV qui est le Festival en chanson de Petite-Vallée.

4153 Donc, c'est six organismes qui recevraient une part égale du dernier tiers.

4154 CONSEILLÈRE WYLIE: Puisque nous parlons des trois services qui nous sont présentés ou des trois propositions qui nous sont faites de la relève, de radio complémentaire, et caetera, et caetera, est-ce que dans cette ventilation de la troisième partie, vous pouvez m'indiquer jusqu'à quel point ces argents-là aideront, justement, la relève?

4155 Mme LAFLAMME: Premièrement, la SOPREF est un organisme, justement, dont la mission est de développer la musique émergente, amplifiée, émergente, alternative et indépendante; donc ça vise carrément des nouveaux produits.

4156 L'École nationale de la chanson dont le titre révèle bien ce que c'est, c'est la formation des auteurs compositeurs interprètes francophones, donc, qui vont développer des nouveaux produits.

4157 Ensuite, le Coup de coeur francophone qui est un organisme qui développe, qui organise des événements, des galas et des concerts partout au Canada afin de promouvoir la culture francophone.

4158 Ensuite, je regarde. Pour les nouveaux talents, il y a le Festival de la chanson à Granby et le Festival en chanson de Petite-Vallée sont vraiment des nouveaux talents, des nouveaux auteurs, compositeurs, interprètes qui sont présentés lors de ces festivals.

4159 CONSEILLÈRE WYLIE: Est-ce que vous vous attendiez à ce que vous soyez contraints à cette division-là d'un tiers, un tiers, un tiers et 25 pour cent du côté francophone?

4160 M. PARISIEN: Honnêtement, on ne s'attendait à rien, c'est ce qu'on vous suggère parce qu'on pense que cette allocation...

4161 CONSEILLÈRE WYLIE: Mais vous accepteriez...

4162 M. PARISIEN: Tout à fait. Absolument.

4163 CONSEILLÈRE WYLIE: ... que vous y soyez contraints.

4164 M. PARISIEN: Oui. Cette allocation-là reflète ce qu'on veut faire en programmation également.

4165 CONSEILLÈRE WYLIE: Maintenant, une des questions que j'allais vous poser, c'était comment optimiser davantage la participation d'Astral quand nous parlions de cinq canaux seulement pour alimenter plus de canaux.

4166 Une de mes questions aurait été, par exemple, vous avez suggéré, si je me souviens bien, du côté anglophone, d'utiliser Much Music, et caetera, et là si je comprends bien, vous allez utiliser aussi Musique Plus, MusiMax du côté francophone pour alimenter les canaux musicaux.

4167 M. PARISIEN: Tout à fait, oui.

4168 CONSEILLÈRE WYLIE: Est-ce que vous pouvez nous donner plus de précisions sur comment tout ça va être assemblé, où ça va se faire, et caetera?

4169 M. ROZON: Encore une fois, nous allons produire à même les centres de production qui seront aménagés aux locaux existants de nos trois réseaux FM.

4170 Je pense que la beauté là-dedans, c'est qu'en se joignant à Astral, bien que nous allons mettre les ressources, nous allons dédier des gens à ce projet-là et ces gens vont pouvoir bénéficier de l'expertise de nos gens déjà en place et de la technologie que nous avons en place pour, justement, parvenir à offrir dix canaux spécialisés avec les moyens du bord.

4171 Je pense que toute cette expertise-là, cette contribution additionnelle là, Musique Plus, n os services de recherche, nos services de programmation musicale, nos services de programmation en général vont être bénéfiques et toute l'expertise qu'Astral Media Radio a dans le marché québécois francophone, enfin on a un bon succès, c'est parce qu'il y a une expertise qui est connue, on connaît nos auditeurs et on veut aller plus loin.

4172 Toute cette machine-là va servir, elle va être intégrée et nous permet d'aller de cinq à dix canaux dès le départ.

4173 CONSEILLÈRE WYLIE: Monsieur Greenberg ou monsieur Parisien, est-ce qu'il y aurait lieu que le Conseil s'inquiète que vous avez déjà une présence très importante dans la radio au Canada français, s'inquiète du fait que vous l'augmentez avec cette proposition-là?

4174 M. PARISIEN: Madame Wylie, moi je me réjouis toujours quand le Conseil se préoccupe des questions de compétition.

4175 Je vous suggère que dans ce cas ici, non, il n'y a pas de préoccupation parce que le service de radio par abonnement n'a pas de revenus publicitaires, donc il n'y a pas danger au niveau des revenus publicitaires.

4176 Si vous regardez, par contre, les parts de marché en écoute de radio, nos projections de pénétration au Québec sont marginales et ne viennent pas influencer la portée et le nombre d'auditeurs total ou le nombre d'heures total que nous aurons, même au terme de sept années de licence.

4177 Oui, on a une masse critique qu'on va atteindre, mais ce n'est pas assez significatif pour que ça devienne une préoccupation.

4178 CONSEILLÈRE WYLIE: Vous avez utilisé, je crois, basé sur la recherche qui a été faite, 11 pour cent de pénétration, on voit ça dans vos underlying assumptions pour la préparation des projections financières et aussi c'est répété à plus d'un endroit dans votre mémoire complémentaire.

4179 Est-ce que ce 11 pour cent là, ce serait aussi le pourcentage que vous avez prévu pour les abonnés au Canada francophone?

4180 Par exemple, j'essaie de voir, dans vos projections, quel nombre d'abonnés avez-vous prédit, projeté, est-ce que c'est basé sur le 11 pour cent de pénétration ou ça c'était pour le service total? Avez-vous fait une division quelconque?

4181 M. ROZON: Dans le plan d'affaires initial déposé au Conseil, le taux de pénétration pour les services francophones était moindre que 11 pour cent, compte tenu également de l'offre qui était en place.

4182 CONSEILLÈRE WYLIE: C'était à quel pourcentage?

4183 M. ROZON: Je crois, on pourra me reprendre si je me trompe, je pense qu'on parlait de 3 1/2 pour cent.

4184 CONSEILLÈRE WYLIE: Trois et demi pour cent au lieu de 11.

4185 Est-ce que vous pensez que ce sera mieux ou plus élevé avec cinq canaux de plus que vous avez maintenant dans votre proposition.

4186 M. ROZON: Nous, quand Astral s'est jointe à CHUM, pour nous ce qui est important, c'est que l'auditoire francophone soit bien desservi.

4187 Alors, on veut que ça soit un succès, ce service-là, on ne veut pas que ça soit un succès marginal.

4188 Donc, on a vite tablé avec nos partenaires qu'il fallait augmenter l'offre. Augmenter l'offre, c'est sûr que ça va avoir un impact positif sur le taux de pénétration. Ce qu'on a voulu tabler avec eux également, c'est qu'on veut accélérer l'implantation de ce service-là dans les marchés au Québec par rapport au plan initial.

4189 Donc, ce que nous croyons et que nous proposons, c'est que oui, le taux de pénétration va être supérieur parce qu'on offre dix canaux maintenant, également il va être supérieur parce que nous allons accélérer le déploiement dans les marchés de la province de Québec, mais il va y avoir des coûts additionnels.

4190 Donc, ça n'a pas d'impact significatif sur le plan d'affaires, sur le budget déposé, en ce sens que les revenus additionnels vont venir couvrir les coûts additionnels, mais à long terme, ça va être bénéfique pour le système canadien et pour l'ensemble de la population.

4191 Ça va nous assurer, en tout cas, d'un succès au niveau du francophone.

4192 CONSEILLÈRE WYLIE: Maintenant, en parlant de projections financières, pour le développement des talents canadiens, vous nous avez dit dans votre mémoire supplémentaire, et je ne me souviens plus si vous l'avez repris dans votre présentation orale ce matin, mais vous parlez de 2 percent of gross revenues mais si je regarde vos underlying assumptions, vous parlez, au numéro 6 de 2 per cent of the net revenue, which one is it?

4193 MS SHEPPARD: The figures included in the financials represent 2 per cent of the net revenue.

4194 COMMISSIONER WYLIE: Of the net?

4195 MS SHEPPARD: Yes.

4196 COMMISSIONER WYLIE: I tried quickly to look at your projections and I somehow didn't get--what figure were you using of your revenues to do 2 per cent?

4197 MR. MILLER: Madam Vice-Chair, just to confirm that, because there's no advertising revenue, in this instance, the net and the gross number are the same. If it's easier to look at it as 2 per cent of gross revenue, it is, essentially, 2 per cent of all our--

4198 CONSEILLÈRE WYLIE: Non, ce n'est pas tout à fait le cas because you have subscriber subsidies, as well. Do we take those away?

4199 See, if you look at your projections, you have less subscriber subsidy. So which figure do we apply the 2 per cent to? That would be the net or...?

4200 MS SHEPPARD: Yes. The reason why I'm saying net revenue, it is revenue after the subsidies.

4201 COMMISSIONER WYLIE: After the subsidies, 2 per cent?

4202 MS SHEPPARD: Yes.

4203 COMMISSIONER WYLIE: Okay. So that would be in your A-minus.

4204 Those are my questions for the moment.

4205 I apologize, again. It's a choppy, but it's your fault.

--- Laughter / Rires

4206 THE CHAIRPERSON: Not to worry.

4207 Commissioner Pennefather has a follow-up.

4208 COMMISSIONER PENNEFATHER: Thank you.

4209 I have a follow-up pursuant to our discussions with Vice-Chair Wylie on the English program side. I omitted to, in fact, go a little further on the question of what kind of spoken word programming. In response, you said 75:25.

4210 As similar as she asked of the French channels, the 25 per cent spoken word would be what kind of spoken word programming?

4211 MR. FARINA: We are looking at a variety of programming the second phase that's not currently available on conventional radio. Specifically targeted, such as a channel specifically targeted at women's issues, a channel targeted at lifestyle, wellness, exactly. They are very niche-targeted at specific topics, almost taking the view of a bookstore approach and looking at the different sections of the bookstore and, hopefully, trying to find where most people are milling about.

4212 COMMISSIONER PENNEFATHER: Okay, that's very helpful. In other words, where the spoken word is going to turn up is more on what we call a talk channel, as opposed to the music channels.

4213 What would be helpful, if you could, considering the discussions we have had over the last two days, as well, where we have been comparing the omnibus grouping of programming through a daily schedule to the niche-targeted programming, which I assume this was, if you had typical schedules, daily schedules, for, for example, the classic rock channel or the aboriginal channel, it would give us a better picture of whether we have here a conventional radio carrying oldies music or an oldies channel?

4214 MR. FARINA: Sure.

4215 COMMISSIONER PENNEFATHER: Is that okay?

4216 MR. MILLER: We will be happy to do that.

4217 Can I also just make sure also we are talking about the same things in these percentages we are talking about. Again, I will be corrected if I have this wrong, but I think when we said the 75:25, what we are talking about in the 100-channel universe, roughly 25 per cent of the channels would be talk channels, 75 per cent music channels.

4218 Then, I think you also want to get a sense within the music channels what's the level of spoken word. I thing Rob can also speak to that.

4219 COMMISSIONER PENNEFATHER: Thank you.

4220 MR. FARINA: That's right.

4221 In terms of the music channels, the level of spoken word, what we looked at was the niche formats that do not have a francophone counterpart will have a less than 5 per cent spoken word. With the music channels that do have a francophone counterpart, they will have a 5 per cent to 10 per cent commitment.

4222 COMMISSIONER PENNEFATHER: Thank you very much.

4223 THE CHAIRPERSON: Thank you.

4224 Commissioner Langford, with a follow-up.

4225 COMMISSIONER LANGFORD: Thank you.

4226 I have a follow-up to where Vice-Chair Wylie began this morning, with the memorandum of understanding between CHUM and Astral or Astral and CHUM, dated the 15th of September 2004.

4227 I hope you will be patient with me, if I'm misunderstanding something, but I think you must understand that there have been more new relationships formed in this process than, I think, ever in history--I sometimes feel we are trying to regulate a singles bar here, rather than a broadcasting industry--

--- Laughter / Rires

4228 COMMISSIONER LANGFORD: --so I may have misunderstood something, but I think you said, in reply to Madam Wylie earlier, that the 10 channels of French were absolutely secure, no matter what happened, whether Astral went from 19.9 per cent up to 50 per cent, they were in. Is that correct?

4229 MR. MILLER: That is correct.

4230 COMMISSIONER LANGFORD: Okay. Now, there is a clause in this memorandum of understanding, then, that leaves me just somewhat confused, and that is the very last paragraph, in which is says:

"If the application is approved by the CRTC but the conditions attached to the licence are not acceptable to a party, such party may opt out of the service and relinquish all of its rights therein in favour of the other party." (As read)

4231 Now, if that happens for some reason, some condition we put on, and I can't imagine any condition we would create that you wouldn't applaud, but assuming we did--

4232 MR. PARISIEN: Nor can we.

4233 COMMISSIONER LANGFORD: Yes--but assuming the worst--somebody must have thought this could happen or it wouldn't be in here, in the first example, and we can go both ways on it--Astral decides to opt out, what does the "opt out" mean, first of all? Does it opt out of the 50 per cent or does it opt out entirely?

4234 MR. GREENBERG: I think the answer, in that particular clause, would be opt out entirely.

4235 Now, frankly, it all depends on the decision that this Commission brings down as to whether this is a viable proposition to go forward.

4236 COMMISSIONER LANGFORD: Right.

4237 MR. GREENBERG: You have heard from us before that under conditions, it may not be viable.

4238 COMMISSIONER LANGFORD: Right.

4239 MR. GREENBERG: So that clause is to address that possibility.

4240 COMMISSIONER LANGFORD: All right. So using the first instance, Astral decides to opt out entirely, then what happens to the 10 French channels?

4241 MR. MILLER: I think, again, this is a short form agreement. The companies have, as we have spoken about, a lot of experience working together and we anticipate having a common view of the licensing environment. So our anticipation is not only in terms of the conditions you apply to us but the conditions you apply generally to others, we will be able to make a mutual assessment as to going forward.

4242 This clause was, in a sense, to cover all the possible bases: what if, in theory, one party wants to proceed and the other doesn't? In that case, what we are suggesting is, contractually, the other party could choose to proceed.

4243 In practice, we are not envisaging that to be a likely scenario. But in theory, if you want to go on the letter of what this says, what it says is not only could Astral walk away and have CHUM proceed, but CHUM could walk away and Astral stay and proceed.

4244 COMMISSIONER LANGFORD: Oh, I realize that, but we are doing the first--

4245 MR. MILLER: But all it is, in a sense, is an abundance of caution and legal clause as to what if, what if, what if.

4246 COMMISSIONER LANGFORD: But with the greatest respect, Mr. Miller, that sounds like a lot of flannel, to me. What I would like is an answer to the question.

4247 What happens if Astral walks away to the 10 French channels?

4248 MR. MILLER: If Astral walks away and CHUM decides to proceed, we will launch with those 10 channels from another supplier, if they choose not to supply them to us.

4249 COMMISSIONER LANGFORD: Excellent answer.

4250 MR. SHERRATT: Mr. Langford, I hesitate to jump in here, but I can't let Madam Wylie's comment yesterday go by.

4251 COMMISSIONER LANGFORD: I always get you jumping in, don't I?

--- Laughter / Rires

4252 COMMISSIONER WYLIE: If it wasn't smart, don't repeat it.

--- Laughter / Rires

4253 MR. SHERRATT: No, I thought it was quite intuitive because, you see, Astral and ourselves have sat on the porch for more than three years and we are married in other businesses and we just don't anticipate anything like that happening. It has never happened in our relationship yet and we don't see it happening.

4254 COMMISSIONER LANGFORD: Well, things change. Madam Wylie said yesterday that slow and easy sounded sort of like the hallmark of the fifties. By the time it got to the sixties, what I remember to dating, slow and easy had become an oxymoron. So I would like to just cross all the T's if I could.

4255 Is it conceivable that, if CHUM walked away, for some reason, that Astral would carry on alone?

4256 MR. GREENBERG: Commissioner Langford, I think Mr. Sherratt has explained this articulately. The fact is we are not strange bedfellows. We have been in partnership in two services. We know each other very well. I think our two companies share a common vision, a common culture and a common view of what a distinct Canadian broad system is.

4257 I think at the end of the day, we will be in tandem. I think you can count on that. Legal agreements are done for legal reasons, but, at the end of the day, I don't think you will find partner staying and one leaving. We will either both go together or both decide not to go forward.

4258 COMMISSIONER LANGFORD: So you wouldn't anticipate going alone under any circumstances, is what you are saying?

4259 MR. GREENBERG: I don't think so.

4260 COMMISSIONER LANGFORD: Thank you very much.

4261 Those are my questions, Mr. Chairman.

4262 THE CHAIRPERSON: Thank you.

4263 We will break now and resume at 2 p.m.

4264 Nous reprendrons à 14 h 00.

--- Upon recessing at 1300 / Suspension à 1300

--- Upon resuming at 1400 / Reprise à 1400

4265 THE CHAIRPERSON: Order, please.

4266 À l'ordre, s'il vous plaît.

4267 Madame Wylie.

4268 CONSEILLÈRE WYLIE : Merci, monsieur le Président. Est-ce que je pourrais vous demander -- non -- je vais vous demander de nous déposer des grilles horaires pour au moins les services qui sont dédiés aux jeunes, parce que nous n'avons pas de grille horaire pour vos services; nous en avons pour les autres propositions qui nous ont été déposées, à ce que je sache. On aurait, à ce moment-là, une meilleure idée de l'allure des canaux.

4269 Est-ce que c'est compliqué? Moi, je vous en demande pour les services francophones, surtout Palmarès, MusiquePlus, Émergences. Vous pouvez discuter avec l'avocat quand vous pouvez nous les déposer. Parce que ça donne toujours une image un peu plus précise.

4270 M. PARISIEN : Madame, oui, avec plaisir, nous les déposerons. Nous conviendrons avec l'avocat d'un délai raisonnable.

4271 CONSEILLÈRE WYLIE : Oui.

4272 M. PARISIEN : Mais je ne veux pas mettre mon confrère, Peter, trop dans l'embarras. Alors ce sera pour les services francophones que vous nous demandez.

4273 CONSEILLÈRE WYLIE : Oui. Madame Pennefather me dit qu'elle a déjà demandé certaines grilles aussi à M. Miller

4274 M. PARISIEN : Alors nous les déposerons.

4275 CONSEILLÈRE WYLIE : Alors au moins pour ces trois-là dédiés aux jeunes, puisqu'on parle beaucoup de complémentarité. Et si vous pensez que vous allez vous aider en en déposant pour tous les services, allez-y.

4276 M. PARISIEN : Et nous le ferons.

4277 CONSEILLÈRE WYLIE : C'est un petit peu curieux, quand nous regardons ce document-là. Vous avez attaché à votre présentation orale ce matin que ces services-là qui sont censés être les services de la relève sont dans le créneau « Hits Orientes ». Ce n'est pas très rassurant, au niveau de la diversité de la musique différente de ce qu'on entend à la radio conventionnelle. Est-ce que c'est simplement parce que vous n'aviez plus de couleurs?

4278 M. PARISIEN : Non, ce n'est pas le cas, madame Wylie. Puis ce n'est pas pour faire de la sémantique non plus. Vous y avez fait référence ce matin, les artistes en émergence cherchent tous à faire un hit, c'est tout simplement pour ça qu'ils se sont retrouvés dans cette catégorie-là. Mais on parle effectivement ici de la relève.

4279 CONSEILLÈRE WYLIE : Ça ne serait pas basé sur la façon que d'habitude on entend le mot « hit », qui est déjà un succès. Par exemple, vous donniez le CD de Lapointe comme exemple.

4280 M. PARISIEN : Mais ici on ne parle pas de cette catégorie-là.

4281 CONSEILLÈRE WYLIE : Non.

4282 M. PARISIEN : On parle des émergents, le nouveaux.

4283 CONSEILLÈRE WYLIE : Mais vous seriez d'accord avec moi que si on mettait les deux chansons qui sont les plus... Ça, c'est les hits.

4284 M. PARISIEN : Oui, vous avez raison.

4285 CONSEILLÈRE WYLIE : D'accord.

4286 Comme bonne mère de famille, j'aime toujours répéter la même chose deux fois pour bien être entendue. Vous allez aussi nous revenir avec au moins un acte pour essayer de nous donner des barèmes qui nous rassureraient que ce seront vraiment des services pour la relève. De trouver des façons de faire un calcul qui satisferait ceux qui s'inquiètent du fait que la musique est toute la même à la radio conventionnelle.

4287 M. ROZON : Oui. Nous vous reviendrons en réplique avec quelques pistes.

4288 CONSEILLÈRE WYLIE : Il y avait un exemple avec la première proposition que nous avons entendue où on mettait des barèmes. Ce ne sont pas nécessairement les barèmes qui seraient applicables ici, mais, quand même, on peut le faire pour identifier plus précisément la musique.

4289 Vous avez parlé dans votre proposition orale ce matin d'accélération des marchés. Si je me souviens bien, vous allez, au départ, au lancement, avoir Québec -- non, non -- Montréal, Ottawa et Gatineau, je crois, et ensuite Québec et Sherbrooke. De quoi parlons-nous quand nous parlons d'accélération dans les territoires? C'est un peu curieux puisque Gatineau allait être lancé tout de suite avec Montréal. Pourquoi est-il inclus dans l'accélération des territoires.

4290 M. PARISIEN : Comme je vous le disais un peu plus tôt ce matin, nous croyons que, dès le départ, il nous faut une masse critique de marché francophone qui soit suffisante pour nous assurer une base d'abonnés potentiels qui soit proportionnelle aux investissements que nous allons faire dans les dix services de langue française de grande qualité et très diversifiés par leurs formats musicaux et leur auditoire cible.

4291 Le plan déposé, effectivement, prévoyait que la grande région de Montréal et la région de la capitale nationale, Gatineau-Ottawa, seraient desservies dès le départ. Nous ajouterons assurément la région de Québec, Trois-Rivières et Sherbrooke dès le départ.

4292 CONSEILLÈRE WYLIE : Et un départ plus tôt que ce qui avait décrit comme « first base, second base ».

4293 M. PARISIEN : Tout à fait.

4294 CONSEILLÈRE WYLIE : Alors au lancement, vous couvririez...

4295 Alors il ne s'agit pas là de l'étendue ou de la couverture; il s'agit simplement e nouveaux territoires.

4296 M. PARISIEN : Il s'agit d'accélérer le déploiement.

4297 CONSEILLÈRE WYLIE : Les territoires en question.

4298 M. PARISIEN : Et d'aller chercher 65 pour cent de population francophone dès le début.

4299 L'ambiguïté concernant Gatineau illustre les synergies entre CHUM et Astral, puisqu'au début du dépôt de la demande il était question d'Ottawa et, pour nous, Ottawa, ça comprend Gatineau. Alors c'est pour ça qu'on a ajusté la terminologie « Ottawa-Gatineau » dès le début.

4300 CONSEILLÈRE WYLIE : Et ce sera selon les cartes de couverture que vous nous avez déposées. L'accélération du territoire, ce sont les villes en question plutôt que...

4301 M. ROZON : Oui. Nous avons également ajouté la ville de Trois-Rivières, qui n'était pas dans le plan.

4302 CONSEILLÈRE WYLIE : Qui n'était pas dans une ou l'autre au départ.

4303 M. ROZON : Donc c'est à la fois une accélération, en ce sens qu'on veut couvrir et servir le marché du Québec dès le départ, et un léger ajout, mais qui est important quand même, dans la région de Trois-Rivières.

4304 CONSEILLÈRE WYLIE : Est-ce que ce projet d'accélération change vos projections financières au niveau des revenus ou des abonnés francophones que vous avez inclus dans ces projections au niveau des revenus?

4305 M. ROZON : Comme je vous ai dit ce matin, je crois qu'effectivement le taux de pénétration qu'on anticipe avec cette nouvelle offre bonifiée de cinq canaux et d'arriver également, dès le départ, avec l'ensemble de ces marchés-là, va avoir un impact définitivement à la hausse sur les revenus, mais également à la hausse sur les dépenses d'exploitation et sur les investissements en capital que l'on doit faire.

4306 Donc quand on le regarde sur l'ensemble des sept ans, ça n'a pas d'impact significatif sur notre plan d'affaires.

4307 CONSEILLÈRE WYLIE : Est-ce que ça a un impact significatif sur le nombre d'abonnés francophones? Est-ce que vous avez un chiffre quelconque que vous avez projeté comme nombre d'abonnés, qui sont des territoires francophones?

4308 M. ROZON : Dans le plan actuel, on parlait d'environ 200 000 abonnés francophones.

4309 MS FRENCH: Commissioner Wylie.

4310 CONSEILLÈRE WYLIE : Oui. Allez-y.

4311 MS FRENCH: Sorry, if I could just add to that answer. In our initial business plan, we didn't at that time, at time of filing, have a francophone partner. Our projections at that point were 3.5 per cent in francophone Canada, as opposed to the 7 per cent penetration we were expecting in anglophone Canada. We knew that if we--

4312 COMMISSIONER WYLIE: Excuse me, my understanding was you used 11 per cent.

4313 MS FRENCH: Yes, it's 11 per cent potential--

4314 COMMISSIONER WYLIE: Oh, of the total.

4315 MS FRENCH: Yes.

4316 COMMISSIONER WYLIE: Thank you.

4317 MS FRENCH: Eleven per cent is the potential that our research indicated that we could get.

4318 We also knew that if we did manage to make an agreement with a francophone partner that our penetration would double to the same level as anglophone at that 7 per cent penetration. It basically doubled from the 200,000 that we initially did our business plan on to 400,000.

4319 COMMISSIONER WYLIE: Yes. What you are saying is your revenues will increase and so will your expenses. So, obviously, you need to refile your numbers, don't you?

4320 MR. MILLER: Madam Vice-Chair, the difficulty with looking at all these things in isolation is, while we control a number of factors, such as rollout and capital, the biggest factor on the business plan is the factor that we don't control, which is the licensing environment. So what we had to do--

4321 COMMISSIONER WYLIE: That was true when you did your first projections to the best of your ability. Now your proposal has changed, so all I'm saying is, to the same best of your ability, with the same unknowns, there would be different numbers.

4322 MR. MILLER: I think what we are suggesting is that now that we have more information about the environment, if we were to redo financials, we would have to do them on the basis of a number of different scenarios: us licensed alone, in which case we might actually improve upon our business plan; us licensed with the competitors, as they have made their commitments, in which case there would be significant difficulties, if I can put it that way, with the business plan; and then variations in between.

4323 COMMISSIONER WYLIE: Sounds very good. You could file these.

4324 MR. MILLER: Well, we could, and we are certainly prepared to do that.

4325 COMMISSIONER WYLIE: That would probably be helpful--

4326 MR. MILLER: Okay.

4327 COMMISSIONER WYLIE: --but I will leave it to the chairman, who will cover that area. But you are getting good at asking questions. My answer is, yes.

--- Laughter / Rires

4328 COMMISSIONER WYLIE: So I will leave it to the chairman to discuss this with you because it could have an impact about our view of viability, et cetera, et cetera, depending on licensing scenarios.

4329 We have discussed with, at least yesterday's applicant, the difference when you talk about capacity, about the number of channels that will be added or broadcasting capacity, in your case, since we are talking about terrestrial transmitters.

4330 With regard to the French component, you say you will add five channels over time. That's beyond the 10, and that will be now 15 per cent of the francophone offer. Is there also a possibility of further compression in these transmitters that will allow you to offer more? If so, how is the French to the English ratio going to work?

4331 MR. MILLER: Yes, there is--

4332 COMMISSIONER WYLIE: You know what I'm referring to, the difference between, well, in their case, was kilobits, but in your case the capacity of your transmitters.

4333 MR. MILLER: Yes. As you know, our business plan is premised on using six times 1.5 megahertz of spectrum. There's six 1.5 megahertz bands, which, basically, with the algorithms that we are comfortable with right now, we can get to 16 channels, roughly, and that brings us to the 100-channel universe.

4334 It is possible we could squeeze in more. As you have heard, part of that average number depends on whether you are dealing with music channels or talk channels, because talk channels take up more bandwidth.

4335 To your first point, yes, it's possible. To your second point, our proposal for you is, when we go from 50 to 100 channels, 15 per cent, a minimum of 15 per cent would be French-language channels and we would be prepared to commit to that proportion if we go higher.

4336 COMMISSIONER WYLIE: The ratio with technological advances or a better use of the megahertz would remain the same.

4337 Thank you very much.

4338 Thank you, Mr. Chairman.

4339 THE CHAIRPERSON: Thank you.

4340 Commissioner Williams.

4341 COMMISSIONER WILLIAMS: Thank you.

4342 Good afternoon, Mr. Switzer, Mr. Greenberg and panel members.

4343 I guess, for ease of operation here, I will direct my questions through Mr. Miller, and you can redirect, as you see fit.

4344 Mr. Miller, your panel's opening remarks were very thorough and have answered many of my questions; however, for the benefit of the record, I will go through a similar set of questions as were asked the other two applicants.

4345 If it seems repetitive in some cases, not only do I ask you to please indulge me, but I encourage you to take the opportunity to enhance and further clarify your position.

4346 The areas I will cover include spectrum, receivers, transmitters and other technology-related questions. I will start with one other area and my question is in the area of local programming. Madam Wylie and Pennefather covered many of these areas, so I have just a couple of quick questions in the area of local programming.

4347 There has been some controversy in the U.S. recently over decisions by XM and Sirius to provide local weather and traffic information over some 15 to 20 of the largest markets in the country by offering this information on channels available across the U.S.

4348 Is this an issue that the Commission needs to be concerned about in Canada, should your proposed service be licensed?

4349 MR. MILLER: If I can answer that in two parts, it is an issue that we believe the Commission should be concerned about; however, we don't believe our application, as proposed, raises any issues there. Because as was clarified this morning, we have no plans and would commit to no local weather and traffic.

4350 COMMISSIONER WILLIAMS: Okay. So that preempts my next question.

4351 The question after that is: could you please comment on the possibility of the Commission proposing a condition of licence prohibiting CHUM from carrying local advertising?

4352 MR. MILLER: We would accept such a commitment.

4353 COMMISSIONER WILLIAMS: Okay. Thank you.

4354 Now, let's talk a bit about the nuts and bolts or technology side of your business.

4355 Over the past couple of days, CSR and Sirius Canada have demonstrated a wide range of consumer receiver products providing many different options for usage for their customers. What specific products have been developed for your customers?

4356 MR. MILLER: We are delighted to have Nigel Oakley from RadioScape here to go through that will you. What I want to suggest just before I hand it off is that we felt, as we developed this business plan, the key target was the use of the portable hand-held unit.

4357 That's a unit that Canadians could carry with them, take it into their car, into their bedroom, into a building. What we sought to develop was a service that relied primarily on that notion of a portable hand-held unit, which we hear a lot about today, in terms of units such as iPod and others. We notice that the competitors in the hearing are just starting to talk about those kinds of units.

4358 Let me turn now to Nigel Oakley, who can discuss what we plan to do and how we can do it.

4359 MR. OAKLEY: Thank you, Peter.

4360 Just a very brief introduction to myself. RadioScape is a company that builds the internals of digital radios. You can see before me a number of items here, which are, in fact, the insides of digital radios. In effect, this is a computing platform on which runs software, which provides a variety of applications.

4361 A little bit of background to the receiver side of the market. In the U.K., we have just closed, probably at the end of this year, 1.4 million receivers being sold. That's 4 per cent market share, which, to put in the context with the U.S., would be about 6 million receivers sold. In fact, this number is growing. It's about 100 per cent per annum. And this is in all formats of radios. This is in hand-held radios, this is in what we call a sector of kitchen radio and this is in automotive units.

4362 The way this success has come about is by having a range of units that would enable those receivers to be built. For instance, you can see here a hand-held unit, which, in fact, we have cut away. Inside this, you will see the silver box here. All that happens is that we design these units. They are, then, manufactured into a whole range of portable devices. In fact, as you see here, there is a portable device which encompasses that module, and that is a fully portable and fully working digital radio.

4363 We, then, have similar modules for larger devices, and, in fact, we also have modules for cars. This will enable a blind-fit car radio or an after-market car radio to be a digital audio receiver. You might notice it's a little smaller than a car and that, in fact, it's a very small device, indeed. Simply by working with the car manufacturers, it enables devices to be built that support digital audio broadcasting.

4364 For the service that's being proposed in Canada, we will be using these standard platform, with a number of relatively small application add-ons which deliver such features as conditional access, which will be required for subscription audio.

4365 So we are very confident about the ability to be able to deliver receivers based on the momentum which exists in the world, based on international standards, which is Eureka 147 receivers.

4366 COMMISSIONER WILLIAMS: Will these receivers have to be modified in any way, shape or form to meet CHUM's unique technical requirements?

4367 MR. OAKLEY: There's two answers to that question.

4368 The first part of it is the hardware. If you imagine the physical computing device, that is a standard device and that is sold in the millions around the world. RadioScape's expertise is about adapting that platform and adding different applications.

4369 We will be adding a number of software-only components to enable the subscription. But just to put that in context, subscription services over the top of Eureka 147, I'm aware of rolling out in the U.K., in The Netherlands, in Singapore and in China. So the software that we will be developing is being used all over the world, it's not just a specific development for CHUM in Canada.

4370 COMMISSIONER WILLIAMS: Okay. I guess you are telling us that the receiver and transmitter technology are established and proven throughout the world, with the exception of, perhaps, the United States. And the quality, supply, cost to wholesale, retail, can I get some comments on those areas, as well as distribution, availability, timing, automotive, what kind of deals you would make with the OEM, the after-markets, pricing, just the whole gamut?

--- Laughter / Rires

4371 COMMISSIONER WILLIAMS: There's a receiver in every question that's kind of running through my mind at this time.

4372 MR. OAKLEY: That's quite a long question.

--- Laughter / Rires

4373 COMMISSIONER WILLIAMS: If you miss a part, I will bring you back to it.

4374 MR. OAKLEY: I could actually answer it, yes.

--- Laughter / Rires

4375 MR. OAKLEY: What I'm trying to say is that the technology that we are providing is already deployed in a very large scale in other regions of the world and a lot of dynamics to which you talked about in that question, yes, have already been proven and have already been deployed.

4376 If you take the U.K., which probably at the moment has the biggest deployment of digital audio broadcasting via NTL, with hundreds of transmitters out there and millions of receivers in use, all the dynamics have been proven, from manufacture of the receivers in the Far East, the channels by which they are brought to market, the software customization that's required to add the new applications. This is a mainstream market.

4377 If I may, I will just show you. This is the Times in the U.K. and this a typical advert you will see in the U.K. at the moment. This is one of the insides of ours. So right through from marketing to retail, all those pieces have already been proven.

4378 In fact, I will give you one more statistic, which is very interesting. In the U.K., sales from digital radios have now overtaken those of analogy radios. In fact, coming up to this Christmas, the retailers are extremely excited, with some over 150 models of radios being on sale in the shops within the U.K. So you can see with that sort of momentum--

4379 COMMISSIONER WILLIAMS: That's 150 different models?

4380 MR. OAKLEY: Yes. You can see with that sort of momentum that most of the dynamics have been worked on extensively.

4381 MR. MILLER: If I can add, Commissioner, to that question, because it is obviously a crucial question and one that we have spent a lot of time working on. Let me deal with the receiver part first, and then deal with your other components.

4382 As Nigel has indicated, one of the reasons we are so pleased to be working with RadioScape is those applications that we need, and, really, it comes down to two. It comes down to the conditional access technology, the notion of each receiver having a unique identifier so the receiver knows to accept the service, and the only other change is compression because we are going to run, roughly, 16 channels to that 1.5 megahertz pod.

4383 We need to use a more advanced compression than traditionally has been used in DAB. It's called mpeg 4. It's well established. It's the basis of things like Windows Media 9. And again, RadioScape, as Nigel has indicated, has actually made those application for other subscription uses around the world. So all they have to do for us is take, at a minimum, those two application and put them in their software unit.

4384 COMMISSIONER WILLIAMS: Are you not going to encrypt the product?

4385 MR. MILLER: Sorry, the codec, the conditional access, is when I'm talking about encryption.

4386 COMMISSIONER WILLIAMS: Okay. It will be the encryption of it.

4387 MR. MILLER: Exactly.

4388 If I can jump for a second to the transmission side, and we can spend more time on it, but to give you a simple answer as to why we are satisfied that's completely doable and proven, the party in Canada that we are working with to build those transmitters with other partners is a company that has been mentioned already, Unique Broadcasting Systems. They are the ones that built the terrestrial repeaters for XM. You have heard about them. They are in place to build the transmitters we need for our network. That's, again, proven technology, completely doable.

4389 You asked about retail. Again, I think what Nigel pointed to is the retail channels are well established. We have relationships already with companies such as RadioShack, who are not exclusive in Canada, who have indicated their great willingness to be part of the retail chain that will deliver these services.

4390 And finally, in terms of timelines and price points, to try and canvass the horizon, RadioScape has advised us that, once we are able to make the decision with them to move forward, they will be able to help us get the receivers delivered in the numbers sufficient to launch our service in an 8-to-12-month time frame.

4391 And in terms of building out a transmission network, which, of course requires us to go out and build and transmitters, and you may recall that the first phase requires 15 transmission sites, that's a 12-month time frame.

4392 So that's a very broad overview. We can go into each of those components in detail and give you more information as we go through your questions.

4393 COMMISSIONER WILLIAMS: That's good. We have it broken up into detailed sections that I will work my way through, once I get these few general questions out of the way.

4394 Mr. Miller, this is probably, again, a question for Mr. Oakley, or whoever, on your panel, but the technical features of these receivers that you are planning to bring into the marketplace should you be licensed, how would they compare to the Sirius-XM products? Are there any unique or different features or deficiencies or differences.

4395 MR. MILLER: They are very comparable. I will ask Duff, and then Nigel, to fill in on that.

4396 MR. ROMAN: Yes. No, we have been working with terrestrial receivers for a number of years. You might, of course, understand that there is a DAB implementation in Canada in four markets now and that we have found that, essentially, with reliable transmission coverage and the necessary transmitter contours being in place, that the receivers are very reliable, they deliver whatever quality or bit rate of sound you require.

4397 You will understand that in most cases people don't use the term CD-like quality, but you can get that kind of quality. In most cases it's clear, uninterrupted, reliable, 24/7 is what's sought, and those can be done at these decreasing bit rates.

4398 So the receivers have arrived, are well formed, well developed and they, in fact, are being tested in Canada and used, to some degree, in the markets that I have just mentioned.

4399 I would like to move over to Nigel Oakley, now.

4400 MR. OAKLEY: Thanks, Duff.

4401 The features of the receiver, certainly the ones that you have seen from me here, provide not only the subscription service, but will also receive the existing terrestrial DAB broadcast services and also they receive FM and AM broadcasts, as well. So in terms of the receivers, themselves, they have a wide range of capability in receiving many different broadcast types.

4402 Also, because they are designed to work off the terrestrial network and optimised to work off the terrestrial network, they are in effect more of a simple device because they are not having to work with three different infrastructures simultaneously. And that does give you, technically, advantages in terms of battery life and also a resilience in being able to reproduce the signal under harsh conditions such as in buildings or in sort of deeper penetration within buildings. So, the standard that we are talking about, the Eureka 147, was designed specifically for this application that you are looking at in Canada.

4403 COMMISSIONER WILLIAMS: Okay, thank you.

4404 MR. ROMAN: Mr. Williams, if I could further differentiate on those features?

4405 COMMISSIONER WILLIAMS: Sure, please do.

4406 MR. ROMAN: I think one of the most startling differentiations is that we will allow over the air free DAB reception on our receiver so that it does not make obsolete but, in fact, allows us to leverage off the existing DAB platforms that now exist in Canada.

4407 COMMISSIONER WILLIAMS: Do you foresee any problems meeting the technical requirements as set out by Industry Canada in their letter of 21 September, 2004?

4408 MR. MILLER: The short answer is no, the longer I am going to ask Gord Henke to assist with.

4409 MR. HENKE: Thank you. No, we had discussions with Industry Canada both prior to and subsequent to this letter and nothing in this letter is strange or different. It is exactly what would be expected of us to, you know, make the application to Industry Canada and adhere to all their rules under BPR5 and BPR1, etc.

4410 COMMISSIONER WILLIAMS: So, will you be able to fully meet your coverage and service objectives as per your business plan?

4411 MR. HENKE: Yes.

4412 COMMISSIONER WILLIAMS: Do you know the cost implications of these technical requirements? Have they increased your costs in any meaningful manner?

4413 MR. HENKE: No, these technical requirements were assumed prior to this letter and are completely built into the budgets as they stand.

4414 COMMISSIONER WILLIAMS: Moving to the area of equipment provisioning, your proposed subscription service based on a standalone technology, much of the equipment -- I guess I am getting mixed messages here -- either exists or can exist with some modification of existing product. I need some clarification on that before I go further.

4415 MR. MILLER: I think the simple division is all the transmission end is existing, the modulation, all of the systems required and we gave you a little diagram. If at some point it is helpful to go through the chain, Sav is in a position to do that. And again, in terms of the receivers, the hardware exists, the only thing we need to do to provide this service is for RadioScape to put two applications in that chip, that is the heart of those radios that isn't necessary for free DAB. So, we add those two applications and we are off to the races.

4416 COMMISSIONER WILLIAMS: How long will it take to add those two applications?

4417 MR. MILLER: I think I suggested earlier, from a point of a decision to delivering receivers in sufficient quantity, is eight to 12 months.

4418 COMMISSIONER WILLIAMS: Eight to 12 months. What is the cost of this newly developed equipment or approved equipment or personalized equipment?

4419 MR. MILLER: Again, we have talked a lot about costs with the applicants and them coming down. Our advantage is that we are relying on the DAB worldwide platform. So, as Nigel pointed to, the fact that 150 receiver designs are available in the UK, we can simply select whichever is our preferred manufacturer to take that module that is modified and build the receivers we need in sufficient numbers and at sufficient costs. And the price point we decided we needed from a consumer point of view was $99 and therefore we can build the receiver for $120 to $125 initially, subsidize it to allow us to sell it for $99 and again, with volumes over time, that subsidy in our business plan comes down.

4420 COMMISSIONER WILLIAMS: So the volumes, over time, would be strictly your volume then because there may not be other users that have the same requirement?

4421 MR. MILLER: Well, yes and no. Again, we have a unique application of the receiver, but the receiver is likely to be a standard thing. And Nigel can describe it better than me, but literally the way these kinds of units are manufactured in China and Taiwan is that the unit is manufactured and just at the last minute the software is loaded into that module.

4422 COMMISSIONER WILLIAMS: What is the proportion of cost between the unit and the software I guess is what I...?

4423 MR. MILLER: Nigel can speak to that better than I can.

4424 MR. OAKLEY: I think the best way of answering this is that from economies of scale, the components that go into the module are what drive down the actual price. You can ship one copy of software or a million copies of software, the economies of scale don't apply in that, they actually apply to hardware. And the hardware that is being used for this service is the same hardware that is being used in the UK service, in Singapore and so on and so on. So, the service benefits directly from the hardware sales of the module.

4425 It is customary practice for when the modules get deployed for them to have certain different tweaks or certain different features. So the ability to load the software for a specific region is standard practice for the delivery of these modules. So, as Peter said, that is loaded onto the module at the last moment and that then becomes something which is tailored for the Canadian market. This is known as software defined radio. Software defined radio has this benefit, which is the ability to be able to leverage the economies of scale at the hardware and then to customize using software to deliver into various different geographies.

4426 In terms of the software itself, roughly 80 percent of the software is standard. It is just the last 20 percent that needs to be modified. And the way it is built is in fact modular, so that you can change these features and these capabilities. So, you get the true economies of scale from what will be, you know, many many many millions of these devices which are built out in the far east and then shipped around the rest of the world.

4427 COMMISSIONER WILLIAMS: So, you say 80/20, would that be the cost allocation as well or does the software carry a higher multiple?

4428 MR. OAKLEY: In fact, the module is bought as a single device with software loaded onto it. In terms of the overall cost, the software actually is a relatively small component. The software is licensed on a royalty basis, whereas the hardware is obviously bought on a capital cost basis. So, it is of the order of 10 percent... is the software load roughly in the module.

4429 COMMISSIONER WILLIAMS: Thank you for that. Could you please outline the assumptions that were made when estimating your site development costs, I guess the cost most likely would include a larger building, stronger, higher equipment towers.

4430 MR. MILLER: Sorry, by site development, you mean the transmitter site development costs?

4431 COMMISSIONER WILLIAMS: Transmitter sites, yes, terrestrial transmitter sites.

4432 MR. MILLER: Again, I can ask Sav to fill in in more technical detail, but essentially what we did is we took the known costs of DAB transmitters at 1.5 megahertz, that is the bandwidth for DV, and we multiplied by three to have the 50 channel service and then we doubled that, I multiplied by six to get to the 60 channel service. So that is how we established the site cost, which worked out to roughly $1.4 million per site based on that approach.

4433 COMMISSIONER WILLIAMS: And these are all new sites?

4434 MR. MILLER: The sites themselves, again, it is fairly customary I think, as the Commission knows now, I mean with cell networks and broadcasters launching, there are a limited number of sites that you can access and you tend to do lease arrangements with existing players. So again, that is what we have assumed, it is fairly well established. The equipment that we need to locate there is not so massive that that cannot be achieved.

4435 THE CHAIRPERSON: Excuse me, Commissioner Williams, before you move on. Your answer of $1.4 million per site, Mr. Miller... I am looking at your... and I know there was a confusion between transmitters and sites and 101 transmitters on 69 sites is I think where we came down?

4436 MR. MILLER: Sorry, again, let me backtrack. That $1.4 million number is for the 100 channel service, so that is when we have 100 channels, that is what it equates to. And so, if you were to do the rough math, if you will, to compare something we end up with 69 sites, so your 69 times 1.4 gets us to the total capital budget.

4437 THE CHAIRPERSON: So, if you look at your deficiency answer of March 26th, page 5, you were clearly there dividing... there is a total capital build of $88,492 million?

4438 MR. MILLER: Correct.

4439 THE CHAIRPERSON: And I guess you divided that by 101 to get the 876 on that--

4440 MR. MILLER: Sorry, can I--

4441 THE CHAIRPERSON: This is item 6 on page 6 of that deficiency letter.

4442 MR. MILLER: I have page 6 of April 29 and I notice the reference to 1.--

4443 THE CHAIRPERSON: No, this is March 26th.

4444 MR. MILLER: Oh, I am sorry.

4445 THE CHAIRPERSON: I mean, you subsequently explained in a footnote in a later deficiency how the 101 sites... that you would use the word site, and you really meant 69 sites which you then called locations. So we are working with the same numbers I think. But I guess the 876,158 represents a division of that 88,492 by 101, is that right?

4446 MR. MILLER: Sorry, that would be correct on that math, yes.

4447 THE CHAIRPERSON: Right, and if you then went to 69 sites you would get your 1.4 is that correct, if you divided the 88,492 into 69 you'd get 1.4 that you just quoted?

4448 MR. MILLER: Close, but not precisely. I believe the discrepancy may be in terms of the last sites that got converted over to 100 channels. I believe, and I have to check this and confirm with you, that there was the assumption that not all 69 sites converted to the 100 channel capability. But let me check that, because you are right, that is a discrepancy that at first blush is not apparent.

4449 THE CHAIRPERSON: Yes, I guess there is, you know, just so that we are using the same numbers, it is not a major point, but it would be useful to have that clarified. The other thing is, you referred today to $91 million in budgeted capital expenditures and I guess that includes the 88,492 plus...?

4450 MR. MILLER: That is right, plus other capital expenditures that we can go through if you wish.

4451 THE CHAIRPERSON: Commission Williams.

4452 COMMISSIONER WILLIAMS: Thank you. In your opening remarks today you say your service would be marketed to Canadians for a monthly fee and a receiver marketed for less than $100 and we have since heard that there is many many different types of quality levels of receivers, I guess for you to choose one that you feel that is appropriate for your business.

4453 Your business plan envisioned a $50 receiver subsidy in the launch phase falling to $25 subsidy when your volumes start to rise. But you noted at that time it was not possible to provide specifics of your subsidy plan at that time and, in fact, you went on to say indeed there may be more than one plan. Have you finalized your subsidy plan yet and, if so, could you please describe it?

4454 MR. MILLER: We haven't finalized it beyond those basic assumptions which were at launch, we are assuming a $50 subsidy to bring it down to the $99 price point and that gets reduced next to $25, and I think the third year to something even significantly less. Shelley can go through the numbers if you like, but that is still, if you will, the plan as it stands.

4455 MS SHEPPARD: In year three, the subsidy becomes eight.

4456 COMMISSIONER WILLIAMS: Year three the subsidy becomes eight. And this receiver, this piece of equipment, what features would be included for that price? Is it CD quality, does it have a tech screen, addressability, downloading...?

4457 MR. MILLER: I will let Nigel comment but basically, as Duff pointed out, people tend to use the term CD quality somewhat loosely. At the compression ratios we are talking about, it is not CD quality, it is crystal clear, it is much better than AM and FM, it is not technically CD quality, none of the services are offering CD quality sound. But, to the user, it is extremely good quality, that is number one.

4458 In terms of the screen, yes, a digital screen that gives music information, gives all the stuff that, as a user, you want to access that service. In terms of other features, we haven't finalized what the feature set is. We have actually had some discussions with the music industry, as I think you know, they have some concerns as to what features are included in the radio, given their concerns about piracy and content protection. So we haven't finalized that, but we are looking at things, for example, like rewind radio that RadioScape have brought out into the UK.

4459 So, the final feature set hasn't been decided on, but at that price point and given the timeframes we know we can do it. There is two others that I am being reminded of that are crucial, AM/FM obviously is part of the feature set, DAB is part of the feature set, and what we are currently anticipating as part of the base model is what would be an FM modulator to transmit into an in-car receiver so that if you carry the unit into your car it plays on your stereo. So, those are the kinds of features that we are currently anticipating.

4460 COMMISSIONER WILLIAMS: Thank you. So, these receivers that are being programmed, I guess, and built solely for your subscribers, even with a successful rollout, the number of receivers may in fact be small in relation to other consumer products. Beyond the proposed subsidy, how will you obtain the necessary economies of scale to bring the receivers down to an acceptable price point?

4461 MR. MILLER: I think, and this is certainly something that we have learned as we have gone through this process. First of all, the whole manufacturing of these receivers for these kinds of applications is now occurring largely in China. So, the production costs are remarkably low. The unit run is necessary to get a production of a software defined radio with the applications you need are remarkably low.

4462 I think in past times we always assumed it had to be a major manufacturer, a Sony, a Panasonic, a Toshiba, and that the productions runs had to be in the million plus. That is no longer the case. What we are discovering is, based on our experience with the UK and other markets, is production runs of much more modest numbers are viable and therefore, based on the levels that we need and the price points we need to achieve, we are complete satisfied that it is achievable.

4463 COMMISSIONER WILLIAMS: Just to cover some ground we have already covered, again just to refresh in my mind more than anything I guess. So, assuming you were licensed within 12 months, you could have your transmitters, you could have receivers, you could actually have a product to offer to your customers?

4464 MR. MILLER: That is correct.

4465 COMMISSIONER WILLIAMS: What plans do you have for installing your receivers in automobiles?

4466 MR. MILLER: Obviously, there has been a lot of discussion about the plans of the automobile manufacturers in Canada and what not. What we have spoken about is in the initial few years... it could be three years, it could be a little longer, where there is a will there is a way, it could be shorter, but in those initial few years we would be relying on the portable handheld and the connection to the in-car receiver or aftermarket.

4467 I think what Nigel has tried to explain is that given the modular design of receivers for the automobile market and given that basically all we are talking about is another module, a different module that gets plugged in, we think it is achievable well within the kinds of timeframes that were spoken about in the last couple of days, it doesn't have to take seven to 10 years. Ultimately, of course, those manufacturers have to make the right business decision for them. Right now, it is pretty clear they have exclusive or non-exclusive arrangements with other suppliers. So right now, of course, they have no particular interest in contemplating the addition of us as another option, but certainly the technology allows it and certainly, on timeframes, far quicker than what were suggested.

4468 I mean we know, for example, that Sirius and XM have suddenly become installed in cars within timeframes of three years, four years, a lot shorter timeframes than were being discussed yesterday. So, we can again talk a bit more about the technology side, but ultimately it is business decision. Those manufacturers have to decide whether or not they are going to provide those ultimately as an option for their cars in the Canadian marketplace. But despite that, we are able to serve that market either through the portable handheld or through aftermarket... other receivers.

4469 COMMISSIONER WILLIAMS: Did you wish to add to that, Mr. Oakley?

4470 MR. OAKLEY: Yes, I can amplify that at little, some detail. RadioScape, alongside our partner who are Texas Instruments... Texas Instruments one of the biggest suppliers of chips that is into car/automobiles, are working actively with the radio manufacturers that get fitted into cars. Car manufacturers don't make radios, there are other companies that make the radios. We are working extensively with these very very major companies to integrate modules such as this into their platforms. Their platforms are largely modular and they will accept devices going in which conform to the interface specifications of those devices.

4471 We are working with those companies at the moment in the FM retransmission, as Peter talked about, in the aftermarket, which is very substantial components of the automobile marketplace still and in the line-fit, which is when it comes integrated into your dashboard. This is a very very major market for us. In fact in the UK, interestingly, if you were to go and buy a Vauxhall car, which is a General Motors owned brand, then it comes fitted with a DAB radio. So, in other areas of the world this is moving on a pace.

4472 COMMISSIONER WILLIAM: So, earlier in this proceeding Mr. Grimaldi of General Motors left us with a suggestion that some equipment may in fact void your car's warranty or part of your car's warranty. You don't see that as a possibility?

4473 MR. OAKLEY: Obviously, it is very difficult for me to comment on General Motors' warranty structure. However, that said, if you were to be using an FM retransmission of some sort inside the car--

4474 COMMISSIONER WILLIAMS: No problem?

4475 MR. OAKLEY: --that has no electrical connection to the vehicles, so I would find that very difficult--

4476 COMMISSIONER WILLIAMS: Yes, I think he was referring to if you actually became part of the automobile's LAN system.

4477 MR. OAKLEY: Right, so as I said, it would be difficult for me to say what the situation is with the aftermarket radio. However, it is a massive market, many millions of these units are sold by the leading consumer brands in the world and I have not noticed that problem occurring. But, I say again, it would be difficult for me to comment. On the line-fit, obviously that is coming with the module integrated into the car and the warranties would apply. So, I don't think the situation is quite as simple as it may have been portrayed.

4478 COMMISSIONER WILLIAMS: Okay, thank you. The consumer take-up of DAB service has been slower than many had hoped, this may be due in part to the slow introduction and high cost of suitable receivers, particularly for cars. Given that your service will be based on a standalone technology and be supported by subscription fees there is a concern that this rollout could also take a number of years. How do you plan to overcome the pitfalls that the DAB rollout has experienced and do you think your receiver subsidy will be enough to ensure successful rollout of your subscription service?

4479 MR. ROMAN: Yes, Commissioner Williams. I have been intimately involved with the rollout of DAB, as I am sure you can appreciate, and I am speaking as a staff member of CHUM, not as the president of DRI, I am in fact the past president. So, these are the views of myself and our two companies with regard to DAB and its progress or lack of progress.

4480 Strange as it might seem, DAB was only officially launched in Montreal on November... two days apart actually, in Montreal and Toronto in two days in November only five years ago. There was some research and development that took place up to that launch, but in terms of turning on the official services, that only happened five years ago. There are, in fact, 75 licenses currently issued in Canada, there are DAB stations operating in Toronto, Montreal, Vancouver and Windsor. There are two CBC stations operating in Ottawa and field trials have been completed in Halifax.

4481 Now the issue with regard to the pace of DAB rollout or implementation is probably because three important conditions weren't achieved in the introduction of DAB. The first important condition would be unique program content. Our current policy calls for replacement strategy. So, what you have at the moment are simulcasts of existing AM and FM programming. The second major issue is the critical mass of coverage and, as I just mentioned, we are only operating in four markets on a fairly extensive basis, in Montreal, Toronto, Vancouver and Windsor, and on a very selective basis here in Ottawa. This in fact impacted on the decision of General Motors who did bring DABs to the factory floor for use in Canada in 2002. They were going to install them across 26 models. But at this point, they could not go forward without ensuring that there was better coverage in more Canadian cities. It probably would have cost them more to take or turn off the DAB part of the receiver in those cities where DAB had not been rolled out. So, point number two is we didn't achieve critical mass in our coverage.

4482 And really, the third point is the availability of receivers at a critical price point and the full cooperation of the retailers. You have to really have all three of those conditions in place.

4483 COMMISSIONER WILLIAMS: So does your plan for... does Traditional Radio have all three of those parameters in place?

4484 MR. ROMAN: Absolutely, and we think that it will provide a very positive impact on those broadcasters who would choose to implement over the air DAB. We will be providing basic platforms in the 26 markets right off the bat. If we go further and deeper, there will be areas of cooperation with the local broadcasters who would like to convert their AM and FM signals to DAB signals.

4485 There are also policy implications, and as I say, I am not the spokesman for DRRI or the Canadian Association of Broadcasters, but the issue is should it be simulcast programming or should it be unique programming and that I think might be taken up in a different forum.

4486 MR. SKI: If I could comment on that too, Commissioner Williams. I think Duff touched on the fact that DAB was originally introduced as replacement technology. That makes it, I think, very difficult because what we are talking about now is a situation where we can reintroduce DAB, so to speak, or have DAB introduced and in addition to that these receivers will carry AM and FM signals plus DAB. And that is going to help also with conventional radio's growth over the next several years, because what I guess I am concerned about and they are concerned about in terms of conventional radio is the fact that it could continue to be one of the few mediums that is not digital, and that is a bit of a scary thought.

4487 So, it is one of the reasons that we I guess came up with this particular application and this particular approach as opposed to a satellite approach. Part of it is I guess self-preservation, because we believe that the next step for analogue radio, for AM/FM stations, is the digital platform, we will need that just to compete.

4488 COMMISSIONER WILLIAMS: Okay, so approval of your application wouldn't present any negative effect on CHUM's commitment to DAB then?

4489 MR. MILLER: It would enhance it.

4490 COMMISSIONER WILLIAMS: Does CHUM have any new plans or further plans to promote its DAB services?

4491 MR. MILLER: We have spent a lot of time on this file in the last 12 months. I think, as Duff and Paul have said, a big advantage of our service is it becomes a platform for DAB and, as Duff has talked about, as we roll the service out we look forward to working with broadcasters that want to launch more DAB stations and move it forward. We believe that this application is a key possible starting point for that, so this is where our effort has been in the last little while.

4492 COMMISSIONER WILLIAMS: That is your focus. Assuming that neither CSR nor the Sirius Canada proposal was licensed, would the launch of your proposed subscription service and a more aggressive rollout of DAB forestall the development of a grey/black market for U.S. satellite services and would the absence, because we recognize they still have the satellite... I mean, would the absence of terrestrial repeaters of the satellite services in the urban areas impair the signal reception to such a level that it would limit their market acceptability?

4493 MR. MILLER: The short answer is yes on both counts. I think it is an important questions though and we would like to spend a little bit more time--

4494 COMMISSIONER WILLIAMS: Yes, please.

4495 MR. MILLER: --by talking about it. First of all, if I could take the first part of your question, what would our commitment to rollout be if we are the only one licensed. I think Ian and Jay wanted to speak to that matter.

4496 MR. SWITZER: Yes, Commissioner Williams, if we were privileged and fortunate enough to earn this licence together with Astral and the other two, we would certainly go broad and deep quicker than we would have thought. We had anticipated, as you are aware, in the application some competition. If that is not the case, there is a better business opportunity and a better reason for us to put this capital at risk and serve Canadians and meet this need with a Canadian solution.

4497 MR. GREENBERG: I think what you have here, Commissioner, is a combination of speed and coverage if that was the licensing decision. That, in fact, we would cover more of the country, faster.

4498 COMMISSIONER WILLIAMS: Thank you.

4499 MR. MILLER: In respect of the second part of your question, which I have momentarily forgotten...

4500 COMMISSIONER WILLIAMS: Well, if the other two aren't licensed, they wouldn't have terrestrial repeaters in the marketplace, so--

4501 MR. MILLER: That's right, the grey market.

4502 If we can touch on the grey market a little bit because it has been alluded to in varying forms, some estimates suggesting that there are currently 2.1 million grey market subscribers in Canada, because if you take that 7 per cent number that was considered, that's what it roughs out to, but I think the generally accepted number right now is 20,000 to 30,000.

4503 We think, in the scenario that you present, we have a number of advantages. First of all, the marketing promotion muscle of these two companies to launch this service, to get it out to Canadians, and now the commitment, if we are the only ones licensed, to get it out sooner and faster really does present a viable Canadian alternative that will be successful.

4504 Secondly, the comment on the terrestrial repeaters is worth delving into, because while it is true that without those repeaters the other two services do have broad reach, that's if you are driving, if you are living in downtown Ottawa or Toronto or any other urban centre without those terrestrial repeaters, that is not a viable service, certainly not on a portable hand-held device in a building such as this.

4505 So to your point, absolutely, we think that lack of the terrestrial repeaters will significantly limit the grey market.

4506 Thirdly, let's be honest, if those services are not licensed, they won't be promoted in Canada, they won't be installed in General Motors or Ford cars and so, therefore, while, yes, there will be some Canadians that might drive across the border with them, and that we accept that will happen, particularly for Canadians in areas that our service doesn't reach right away, we believe, in total, the grey market will not be something that either prevents our service from being viable or something that becomes so large as to be a major public policy problem.

4507 COMMISSIONER WILLIAMS: Back to these software-defined radios, for a moment. It just occurred to me that, since they are modular in design, I would imagine that upgrades, as technology improves, would be rather simple if you used a similar chasse for new modules, if I will. Would that be the case?

4508 MR. MILLER: That's certainly true.

4509 COMMISSIONER WILLIAMS: Okay. So given that, what future upgrades or trends or innovations could be installed into these receivers, as you understand them today?

4510 MR. MILLER: Well, let me start, and Nigel might have just a comment.

4511 I think one of the things you are going to hear from the music industry, when they appear, is a two-fold message: one, support for the importance of Cancom levels and support for the Canadian music industry and their concerns about the use of their product in incorrect ways.

4512 What we see as a future, and working in partnership with the music industry, where we can provide, through a device such as this, a real convenience to the user, be it that ability to get legal downloads, ultimately, in the future, be it that ability to combine, if you will, an iPod like MP3 player with a receiver that consumers can use, these are the kinds of things that we see in the future. But our commitment to the music industry is to make sure we do it in a respectful way and we do it in a legal way.

4513 COMMISSIONER WILLIAMS: Mr. Oakley, what is the future of these receivers?

4514 MR. OAKLEY: As you correctly identified that being software devices, you can add lots of different capabilities to them, what we are seeing in other areas of the world are evolutions, new capabilities coming in.

4515 The advert I showed you earlier, this radio already has the rewind and pause features, which give you a limited amount of storage, which means that if the phone rings, then you can pause the radio, go back to it and the radio is then time-shifted.

4516 Other capabilities which are being talked about are enhanced screens, which give you more information, up to colour screens, which are almost giving sort of web services and, ultimately, the ability to be able to download to these devices in a highly secure manner, using very, very sophisticated digital rights management techniques so that you can use this as a part of a fully integrated licensed monitizable download system.

4517 All these features are capable and, in fact, I would say in a variety of regions around the world are in various stages of either research or deployment within those regions.

4518 COMMISSIONER WILLIAMS: If I can continue with Mr. Oakley, and come back to you, as well, what are your views on the development of an all-band/all-service receiver? Yours is fairly close now.

4519 MR. OAKLEY: Yes.

4520 COMMISSIONER WILLIAMS: It just needs to add a couple of satellite services to it and it's there.

4521 MR. OAKLEY: Yes, if only it was that simple.

4522 There are certain things you can do within this single module and, as I described earlier, FM, AM, DAB are all capable within this single device. The way that the multi-band receivers tend to come about is that, using the modular concept, you can plug in different capabilities. So with a satellite radio which may have an XM or a Sirius capability built into it, then what happens is you plug in an additional radio.

4523 Given the size of this, it's exceedingly small, and, in fact, this one is FM, AM, DAB and, in fact, will decode three digital signals simultaneously, so in a car you could be listening to one radio station in the front, a different radio station in the back and receiving telemetry data, all through the single module.

4524 The way I see the device that you are talking about, which is the multi-band or the multi-channel device, coming about is that you would have one of these, you may have an XM or a Sirius capability within that box. There is the real estate, given the footprint of this, to be able to achieve that.

4525 COMMISSIONER WILLIAMS: Are there any initiatives that our government or the Commission could undertake that would assist in the provisioning of such product? Or is it purely a market-driven activity, in your opinion?

4526 MR. OAKLEY: I think I might hand over to Peter on that one.

--- Laughter / Rires

4527 MR. MILLER: I think where we would agree with some of the comments that were made is that, essentially--and this is what Nigel was alluding to--you are dealing with completely different platforms. To do a radio that, for example, combines ourselves with the other two licensees, would essentially have to be a device that has three completely different guts to it.

4528 So in a modular environment, certainly you can anticipate an environment where, in a sense, the front end is common and you get whichever back end, whichever service you want.

4529 As to actually having a device that could receive all three, I think the comments you heard about that being unrealistic are probably true at this stage.

4530 COMMISSIONER WILLIAMS: I thought taking movies or photographs with a telephone was unusual, too.

4531 MR. MILLER: And that's why one has to say, at this point in time. There was some reference made to the FCC interoperability issue, which, again, at the moment it's standing there in the U.S., but it hasn't been enforced, so at some time it appears in the future those two licensees in the U.S. will be required to meet that standard.

4532 I think, again, the notion, ultimately, however, that, for example, a Canadian manufacturer provides that choice to their consumers is something that we can envisage, so not that necessarily you would buy a car that had all three in them, but you bought a car and you were able decide which of the services you subscribe to. Ultimately, our choice of platform is not driven by our choice of car, but our own preferences. I think that gives you a bit of a colour on it.

4533 In terms of what Canada can do, it is tough, in terms of standards development. I think encouraging it is always useful. Ultimately, quite frankly, the Competition Bureau could have something to say about automobile manufacturers providing access to one licensed Canadian service and not the others. You might have something to say about that, but it's probably not something that can be address right out of the gate.

4534 COMMISSIONER WILLIAMS: Okay. Thank you.

4535 I'm going to move into the area of licensing issues. Should approval be granted, CHUM will own about one-half of all of the digital radio services in Canada. The proportion of digital spectrum is somewhat less, but it is still quite significant.

4536 Why is it in the public interest to license such an undertaking, given the current ownership policy set out in Public Notice 98-41, that permits a person to own or control no more than two AM or two FM stations in a given language in a single market? Why is it in the public interest for you to occupy such a piece of the spectrum?

4537 MR. MILLER: I think that's a very, very fair question. First of all, the Commission is in this hearing addressing, as you know, a mixture of policy and licensing issues. You have to address the policy issues. You have three applicants before you. The decision you will make is on those applicants in front of you and probably an indication of the framework you deem to be acceptable.

4538 I think our point is, if we are the only ones licensed out of this process, we are not suggesting, ultimately, we be the only monopoly Canadian service provider. What we would respectfully suggest is that, if we are so blessed with the privilege of a licence, we would move forward and take on the very difficult challenge, but a challenge we believe that can be met, of launching a subscription radio service in Canada.

4539 Ultimately, there are other platforms and other technologies. The Commission is aware that there is 100 megahertz of spectrum in two bands, right now in one bandMMDS services and another a telephone-oriented band. Those platforms are anticipated to emerge to provide multi-media devices on which audio services may be a component.

4540 The cell phone is a platform that, as you were commenting earlier, Commissioner Williams, has emerged as something that provides pictures, as well as phone calls. Again, these other platforms will emerge. So at that end of the day, we do agree that we have no right to ask for a monopoly service in Canada, but we do believe that we, among the applicants that you have before you, do deserve to be licensed. And given the very niche-oriented nature of this service, certainly in the early years of the business plan, that doesn't create any issues of dominance in the Canadian marketplace.

4541 COMMISSIONER WILLIAMS: If CHUM was to receive this licence, should it provide access to third-party programming services to ensure a diversity of voices? How would you respond to that request?

4542 MR. MILLER: We have thought about this. First of all, you will know that we applied for a programming undertaking, rather than a distribution undertaking licence and we note the discussion that you had that with a distribution undertaking licence you have obligation towards third parties that you don't have with a programming licence.

4543 What we felt we would do, in respect of third parties, is certainly suggest that, to the extent--and we are going to get back to you on this--to the extent that we have any rebroad services, that they wouldn't be any of our affiliated entities. So that to the extent that we rebroadcast a service in its entirety, it won't be one of ours. It might be Aboriginal Voice Radio, to pick an example, but it wouldn't be out of ours. That was one thought we had.

4544 Otherwise, at the end of the day, given that we are applying for a programming service and that we see this as a programming service, we see us and any partners we jointly agree to bring on are the programmers for this service, so we think the notion of adding a third-party access requirement for a programming undertaking is something that we can't quite fit into the equation.

4545 COMMISSIONER WILLIAMS: CHUM has requested a general approval, under which it can install transmitters anywhere in the country, as long as they are within the expanded L-band, without any further Commission approval or notification.

4546 Given that it will not be possible to license another service, why is it in the public interest to grant such a general approval that will tie up so many frequencies in so many cities?

4547 MR. MILLER: We are asking to launch a national service, which we have planned for 60 per cent coverage. We hope and expect to do more and I think we will want to reflect on exactly what more we could commit to you on, should we be the only one licensed.

4548 What we believe is, ultimately, if a subscription radio service is to succeed in Canada, given our limited market size, there needs to be a cooperative approach. When we said in our applications that we would cooperate and be complementary to radio broadcasters, one of the things we had in mind was, if you will, franchising our service to other radio broadcasters in markets that we are not directly serving.

4549 For example, Mark Maheu is here from Newcap. You will be speaking to him about an entirely separate matter, but we have had some discussion about, perhaps, Newcap being a franchisee to provide service in Newfoundland, for the sake of argument, and other markets we don't expect to reach in the first term.

4550 We believe that's a better way to use that frequency than to try and carve it up among different service providers.

4551 COMMISSIONER WILLIAMS: Should a new regulatory authority be obtained if there's a subsequent application for a fundamental change in the nature of your undertaking, for example, the proposed nation-wide 100-channel subscription service becomes 10 advertiser-supported channels confined to a handful of major markets?

4552 MR. MILLER: The short answer is, yes.

4553 COMMISSIONER WILLIAMS: But we want more than that.

4554 MR. MILLER: First of all, we are happy to go through the exercise of clarifying our commitments and to make sure, for example, that on issues of advertising, if we have not been clear, that our commitment to no advertising is there.

4555 Ultimately, and we had this discussion a little earlier with the vice-chair, part of the discussion has to be in the different licensing scenarios. If we are the only ones licensed, we will be able to give you firm commitments as to our rollout, as to our specific plans and as to our coverage, and we actually believe that we will be able to improve on what we put in our application.

4556 If we are not the only ones licensed, particularly given what we have seen of the other applications, not only may we not be viable, which means we may not launch, but also the coverage that we might be able to achieve could be different from what we anticipate in this business plan.

4557 We will get back to you with specifics on those kinds of things, but that will be the kind of parameters we will need to address.

4558 COMMISSIONER WILLIAMS: And you will give consideration to the fact that a technical brief is required for each transmitter site, in any event?

4559 MR. MILLER: Yes, and Gord may want to address this.

4560 Again, ultimately, your comment about we are asking for a nation-wide licence--and we can go anywhere, that is true--ultimately, from a broadcasting licence perspective, but, obviously, in terms of any transmitter sites that we get, approvals are necessary and the coordination that is typical in such circumstances would have to occur.

4561 Gord can outline that for you, if that's helpful.

4562 COMMISSIONER WILLIAMS: I just have a couple of brief questions for the Astral part of your partnership, as well.

4563 Denis Rozon, vice-president of development at Astral Media said the majority of the investment will be in infrastructure, building networks in each major urban centre. Could you describe the investments that have been made in Montreal, compared with those that would be made in the network's other major urban centres?

4564 MR. PARISIEN: Well, the primary investment that will be made in Montreal will be in a production centre, where the programming would be assembled, and also some technology support to have that programming sent to the major hub, which would be in Toronto. There would also be an outsourcing of different services, but that would not take the form of investments.

4565 So the major part of the investment would be in creating that programming centre.

4566 COMMISSIONER WILLIAMS: Astral has several broadcasting centres in Quebec and Montreal specifically. Have you considered the possibility of Astral playing a greater role in the production packaging of broadcasting of French-language services in markets outside of Quebec? Is this a means of doing it, this partnership?

4567 MR. PARISIEN: We think that the services that CSRC will be providing across Canada, including the francophone service, will be sufficient and that the Montreal operation will also be sufficient to supply the francophone content needed to give a good service and quality service. So we don't anticipate another production centre anywhere else.

4568 COMMISSIONER WILLIAMS: Thank you.

4569 When are you planning to launch your service in Sherbrooke and Quebec City markets? Could Astral's presence be an impact on the plan schedule for these two marketplaces?

4570 MR. PARISIEN: As we mentioned previously this morning, we will be launching these markets in the first four years of our plan.

4571 COMMISSIONER WILLIAMS: First four years.

4572 MR. PARISIEN: Yes.

4573 COMMISSIONER WILLIAMS: Okay. Thank you very much, ladies and gentlemen.

4574 That concludes my questions, Mr. Chair.

4575 THE CHAIRPERSON: Thank you.

4576 Just a few follow-ups to those. Mr. Roman, your description of the three factors that you thought were retarding DAB, your third one was dealer pushback or non-enthusiasm. You probably didn't use those words, but that's what I took from it.

4577 MR. ROMAN: I'm sorry, sir, I missed the last part.

4578 THE CHAIRPERSON: Dealer lack of enthusiasm or lack of commitment to rollout, this is your third factor of the three that you used to explain why you thought DAB rollout was being retarded in Canada.

4579 MR. ROMAN: Essentially, no consumer demand, that's a difficulty with a limited service and lack of coordination throughout the industry. It was difficult to generate that kind of retailer enthusiasm.

4580 But I must say that RadioShack did make the commitment and there were radios available through RadioShack.

4581 THE CHAIRPERSON: At what price points, approximately?

4582 MR. ROMAN: Well, essentially, they came in at--there was one model that had a memory at $299 and another at $199. But toward the end, sir, they were down to $99.

4583 THE CHAIRPERSON: And still no great takeout?

4584 MR. ROMAN: Again, that was the other leg of the proposition. As I said, essentially, the radios were offering simulcasts of AM and FM.

4585 THE CHAIRPERSON: I took that point.

4586 So at the $99 price, for the other reasons that you suggested, there wasn't dealer enthusiasm. I guess you are assuming that here, at that price point, given the service that you are offering, that will drive the demand and you will get the dealer commitments?

4587 MR. ROMAN: Absolutely. And we have placed some research with the Commission that underscores that. We think there will be real interest and enthusiasm.

4588 COMMISSIONER WILLIAMS: Right. I have seen the research. I may be missing something here, but I didn't see any dealer endorsements or evidence of a willingness to cooperate with the service. Is there something that I haven't seen in here? Judging from yesterday, there may be.

4589 MR. MILLER: The car automobile manufacturers, I think, given what you heard yesterday, they want to match in Canada the partnerships they have in the U.S. Quite frankly, it is what it is.

4590 In terms of retail interest, again, we have had exploratory discussion with retailers. RadioShack is a good example of someone who we have dealt with in the past and is keen to help us on this venture.

4591 I should, if I could--

4592 THE CHAIRPERSON: When you say RadioShack is keen to help you in this venture, you haven't put that in evidence, nor do you have anything from them, have you?

4593 MR. MILLER: No, that is true. No, I can just tell you, in response to your question.

4594 If I can just add on the $99 receiver that they were selling, again, that technology is three or four years old, so one of the difficulties, in addition to the factors that Duff mentioned, is that particular receiver had an abysmal battery life and, quite frankly, despite good transmission coverage, that receiver wasn't able to pick up.

4595 Nigel can speak a little bit to how that has changed, but I don't want to leave you with the impression that the receiver that RadioShack was selling for $99 is anything like the receivers that we are going to be selling.

4596 MR. SKI: Mr. Chair, if I could just comment on that, too, I think that what might be good to clarify is the fact that drivers of consumers moving to new technology, normally, it's the result of the content, not the technology, itself.

4597 The reason for the move from AM to FM was not driven by the fact--with the exception of possibly some classical music listeners, was not driven by the technology, itself. It was driven by that fact that they could find alternate content, content that was very different from what you could find on the AM band.

4598 So we are saying that's the same situation here, that what will drive DAB at this point is not duplication of AM-FM, as was the case before, but what will drive the interest in these receivers is totally new content, in fact, as we have said, 50 channels that we are developing here in Canada moving to a hundred. So that's what will be the driver and I suppose it's the difference between DAB, as we are proposing it, or the receivers, as we are proposing, and what happened previously.

4599 THE CHAIRPERSON: No, I take that point, but you have in here, in your revenue and expense projections, some $6.2 million of subsidy for receivers over the first three years. I take it that you have keyed off the RadioScope evidence as to sizing that, but I guess you haven't got evidence of dealers who are prepared to corroborate that from the point of view of: here is the service, this is the price point, what do you think, in sizing the magnitude of your subsidy, for example.

4600 If they were ambitious enough to start out at $299 for a DAB receiver, why wouldn't they be prepared to start off at $125 or $150, if the service has all the content that you think would drive it? That testing, I guess, you haven't done, is what I'm saying.

4601 MR. ROMAN: Well, I would say, Mr. Chair, that independent of the testing, at the time of the filing of our application originally, we did not really have the huge marketing, promotional and cross-platform resources of CHUM-Astral. We think that those combined huge marketing efforts across all platforms are really going to provide a huge thrust in terms of visibility, awareness, the kind of marketing that I think only we are capable of in the circumstances.

4602 THE CHAIRPERSON: Who is missing? Astral wasn't there, but wasn't CHUM there, with all its market and clout?

4603 MR. MILLER: We were.

4604 If I can go back to your question, because it is an important question--

4605 THE CHAIRPERSON: Just to clarify that, this was filed by CHUM, wasn't it?

4606 MR. ROMAN: I am just saying it has gotten a lot better with Astral. It has brought another component: a huge ability for us to use our synergies.

4607 MR. MILLER: First of all, the $99 price point was based on our research. If you look at the research and what the penetration levels are, we saw a very significant sweet spot if we could get the receiver to $99. We knew we could manufacture it for $120 to $125 and, based on established--and this is fairly well established what the distributor's cut is, what the retailer's cut is--we knew that to build the model to sell it at retail at $99, we needed to start with a $50 subsidy.

4608 So you are technically correct, that we haven't had the detailed discussions with retailers, but it was based on an established knowledge of how we must achieve that price point with an appropriate subsidy.

4609 MS KHANNA: Mr. Chair, if I may jump in for a second, certainly our experience in the cell phone market, the retailers are motivated to sell, especially to a youth market.

4610 That $99 price point seems to be a magic number, getting it in under the $100, to draw the youth into a product that does a lot more than what the DAB receivers did the first time around.

4611 The second thing we should add, even in a short couple of years the cross-promotion ability of our two companies, CHUM and Astral, but also our cross-platform abilities, have developed quite a bit. We are talking about all sorts of different technologies: the Internet, wireless, the ability to leverage these for a portable device and to a youth portable lifestyle, that has changed a lot.

4612 We can use e-commerce, we can use our cell phone content outlets--our cell phone content distribution outlets. We are reaching into the lives of our consumers in a very different way than we were a very few years ago and that $99 price point is a really magic number, I think, especially for the youth.

4613 THE CHAIRPERSON: Thank you.

4614 Turning to the question that Commissioner Williams explored with you on the nature of your undertaking--and you applied for a program undertaking licence--but on that point, if the Commission were determine that you were, in effect, better licensed as a distribution undertaking, would that be acceptable?

4615 MR. MILLER: Yes.

4616 THE CHAIRPERSON: If that were to follow, then, what access provision would you be prepared to offer to third parties, given that you were gobbling up a huge swath of the remaining L-band spectrum?

4617 MR. MILLER: Can we reflect on that and get back to you?

4618 THE CHAIRPERSON: Yes, by all means.

4619 MR. MILLER: Thank you.

4620 THE CHAIRPERSON: Commissioner Langford.

4621 COMMISSIONER LANGFORD: Just one question, kind of just in the area of marketing. It may turn out to sort of have two or three subsets, but I'm just trying to better my understanding and with Mr. Oakley here it's a good time to do it.

4622 From what I'm hearing in this afternoon's discussion, it sounds like you have a fairly realistic, maybe not overjoyed approach to what's happening in the car industry and that you will have to rebreak into it.

4623 Mr. Roman was talking about how they were almost there, they were on the factory floor, but there just wasn't enough subscriber base. So now you are there, you would have to break back into it.

4624 We heard various manufacturers, who appeared with other applicants through the week, indicating that they are not closing the minds to any good business proposition, but right now they are not in the DAB business, it's not on their plan and so that it would take a certain amount of time to ramp up.

4625 In response to that sort of discussion that went on, Mr. Miller, if I take it right, indicated that one of our prime marketing tools will be this kind of hand-held appeal to the youth, they will finally have something different, it won't be just a replay of the radio that are existing, and so I want to explore that because I have no idea, first of all, what you might charge for one of these hand-held things, and then adding onto that the subscription fee, it's difficult for me to know whether the youth of today will be able to con their parents into buying this for them.

4626 Could you give me some idea of what your hand-held device would go for? Or perhaps Mr. Oakley knows. He's making these things. I just don't know where to throw that, but...

4627 MR. MILLER: Sorry, and I apologize if we weren't clear--

4628 COMMISSIONER LANGFORD: No, no, I don't think anyone asked you, so I am just trying to get to the price.

4629 MR. MILLER: We would sell the handheld device, the handheld unit that would be our receiver, for $99 at retail, that is the price point that our research demonstrates is the sweet spot, if you will, in terms of penetration and, as Roma points to, is for youth kind of the magic price point.

4630 COMMISSIONER LANGFORD: Okay, sorry, I thought that was for one of the other... the other plug-in element, I didn't realize that was the handheld.

4631 MR. MILLER: Again, to be clear, we are primarily relying on in our initial launch a portable handheld unit, that is the unit that we will rely on.

4632 COMMISSIONER LANGFORD: I was reading in the Globe & Mail this morning, there is a Toronto hotel that is giving anyone who will stay there for the night a free iPod as part of their come-on, why I can only guess. I won't do an ad for the hotel, but it is on Wellington Street, you can look it up for yourself, it was in the first section of the Globe. God knows what else comes with that iPod, but we will leave that to everyone else's speculation.

4633 It is hard to compete with free and I guess what I am trying to figure out in my mind is where do you place yourself even if someone doesn't stay in that hotel, even if someone buys the iPod, how do you see yourself competing product wise against a product like that where kids can store a thousand or more of their favourite songs, they can access them anyway they want? Why would they go to you, pay $100, and pay another, you know, whatever it is going to be, $100 a year or more?

4634 MR. MILLER: I am going to ask Roma and others to comment on this too. But again, first of all, we base the numbers on the research that we have done. Eleven percent as the maximum market potential still leaves a lot of room for other devices and other ways that people want to listen to music. What it does come down to is of course a choice, a choice between those that want to do all the work, to find all the music they want, that know what they want, that will seek it and will get it versus those that actually know the genres they want and want to sign-up for a service that provides them that kind of diversity. So, Rob and Roma I think would have much more intelligent things to say.

4635 MR. FARINA: Thanks, Peter. And further to that, I think CHUM and Astral have both, you know, very high consumer confidence in creating strong content, we have a history of that. Much of this content is not available anywhere. Sure they could go out and search the internet for it, but for somebody that could provide this content in a specific music genre, as well as be able to provide information on the music and the artists, be able to be reflective of the country that they live in so they, you know,... The youth today see themselves as part of a global community and they want representation within that global community and a service like this really provides that for them and that sense of inclusion, rather than them being in a void in the absence of this service.

4636 MS KHANNA: And just to add onto that, I think it is important to understand from a youth perspective, this isn't an either or, these can be complimentary to each other. And, yes, the dollars do add up, but when you look at the price of some of the coolest running shoes out there and some of the coolest handheld devices and music players, I think our youth have an incredible ability to pay for things that really really really appeal to them and that add value into their lifestyle. So, it is not that our device is meant to be an iPod but maybe, and we hope one day, could be very complimentary to an iPod with the legal download and purchasing of music.

4637 So, I think that there are different times in a day that any person and any youth that uses digital music and consumes digital music wants different things. Some days you want to find what you want. You are going to get online, you are going to go to Puretracks, you are going to go to iTunes and you are going to pull that song you heard, that album you heard and burn yourself a CD or put it down onto your iPod or your other MP3 player.

4638 But there is times when you don't, you want a tastemaker, there are thousands, hundreds of thousands, if not millions of choices for them out there. Who is telling them what they should listen to given what their tastes are? Where is the editorial? And that is where companies like CHUM and Astral come in and say hey, when you know what you want the world is a great place these days for youth, go out and get it. When you don't or when you know some of the things you want, how about we fill in for you what else might appeal to you and help you find your choices in this really busy world.

4639 MS FRENCH: Commissioner Langford, if I could just add to that. When we did our research, we did our research based on 18 to 64 year olds. What we found was the overall appeal of people very likely to subscribe to our service was 11 percent. Admittedly, a large percentage of that will be youth for many reasons, some of them explained by Roma. They are early technology adapters, they are likely to come to this service quickly and first. But we are not just appealing to them, we have 100 channels of various genres of music appealing to various age groups. So, we are not relying totally on them, but they are a very important part of our potential audience, but we do have a lot of interest from older demographics.

4640 MR. ROMAN: I wonder if I could add, Commissioner Langford, just to sort of pull it together. I think what everyone here has been talking about is something called radio, that is why they are going to listen to it. It is not satellite audio, it is satellite radio, there is a value added aspect to every one of the channels we are going to be offering in our subscription radio service that is different from iPod. And when Roma and Kerry talked about, there are times when they will want something specific, they will go to their iPods and they will get it. But then other times when they may want us to do the work for them, they may want to just relax and let that happen. Guess what, that is radio, that is exactly what it is.

4641 COMMISSIONER LANGFORD: One last question. Sorry to skip around, but when you are trying to just pick-up questions that come out of other people's questions it is hard to get an even flow. When you talk about kind of getting, breaking back into the car market, and Mr. Oakley demonstrated how tiny this modem is and it is much smaller than a breadbox, let the record show that, but what puzzles me about it is the fact that I am not quite sure who would want one in their car if they can't take it out of the city, if they can't take it away from one of your transmitters. And it seems to me, by your own application, you are saying that well we are going to reach 60 percent of the Canadian population and the other 40 percent just won't be able to take part.

4642 So, what happens? I mean, how do you deal with the disappointment factor? How do sell General Motors or Ford on the fact that once you leave Winnipeg you are on your own, you know, bring your CDs until you get to Saskatoon or something. It seems to me that you have pointed out a lot of the obvious concerns about the other applicants' Canadian content and what not, and you have made rather a meal of that, which is quite your job to do and to help us assess that and you have done that and you will do more if it I assume in your intervention stage. But it seemed to me, coming back on the other side, that though they are offering less at least they are offering it to everyone and I would be interested to know how you would balance those two positive aspects against each other.

4643 MR. MILLER: Let me start, Commissioner Langford. First of all, the reach that we have... let us look at a market like Toronto. The network design means that if you live in Toronto, you are going to be able to drive to Hamilton, you are going to be able to drive to Oakville, you are going to be able to drive up to Barrie and largely get the service, so the coverage is not just in the city. So, for most commuters, for most people in their daily lives, if their choice is to use this device in the car it is there.

4644 Now, our business plan doesn't make huge assumptions on in-car use, in fact we assume it starts around 10 percent and goes up to around 25 percent, but it is still a useful thing in the car. It goes without saying that when you are driving along the highway your FM or AM reception may not be very good either. So, the mere fact that it cannot be available everywhere wasn't a reason why automobile manufacturers didn't install AM and FM receivers, so we don't think that in and of itself would necessarily preclude them. But ultimately, we acknowledge that is a business decision that they are going to have to make based on their own assessment of it.

4645 COMMISSION LANGFORD: What about the bigger concept though, I mean the sense of once again disenfranchising part of the country in the sense that you have just stated it, they can't get AM or FM either and now they are not going to be able to get this, so it is another thing they can't get. You know, you have heard this, so we are no worse than the other guy. I mean, here is a chance... the other people are saying to us, the other applicants are saying look, licence them all because they are complimentary.

4646 Your application is giving something interesting, a lot more Canadian content, it is in the urban centres, they are giving less Canadian content but they are giving something to everybody right up to places that even the CBC tells us they can't reach. You are saying no, don't do it, just licence us. I mean, how do you respond to the notion that each one of you, in a way, is filling a niche, a hole and maybe you really are complimentary and it will make it a little tougher. You will have Wendy's and McDonalds and Burger King instead of just Wendy's but, you know, everybody will get something and how do you respond to that kind of notion?

4647 MR. MILLER: Well, I guess the simple answer is, in our proposition, if you licence all everyone will not get something, because our service is likely not to be viable because of the unfair competitive environment that would be established. And we think that ultimately geographic reach is not the ultimate test, the ultimate test is the service to Canadians and a service that doesn't provide adequate French language services to French Canadians is not 100 percent service. I mean, it may geographically be 100 percent, but it is not in reality 100 percent.

4648 COMMISSIONER LANGFORD: But, Mr. Miller, the people living outside of the cities are Canadians or visitors, they are certainly welcome to live there as far as I know.

4649 MR. MILLER: I guess what we are--

4650 COMMISSIONER LANGFORD: Don't we want to serve them as well?

4651 MR. MILLER: We want to serve as many Canadians as we can and we believe with this platform we can do better if we are licensed, if we have the privilege of receiving the only licence in this hearing, better than 60 percent. We can talk a little bit later about what that can be. Moreover, we ultimately believe just as the broadcasting system has found ways to serve Canadians in rural and remote areas, there will be ways that these kinds of services can get there. But, for us, the big decision is do you want a truly Canadian service at all? And, if you do, we think the choice is fairly clear.

4652 MR. SHERRATT: Mr. Langford?

4653 COMMISSIONER LANGFORD: Oh, I knew I could get you out of that stupor of yours. I thought if I stayed on this long enough I could get Fred out of retirement.

4654 MR. SHERRATT: Yes, sir, and you are absolutely right. Mr. Langford, this has been the constant conundrum for Canadian broadcasting for the last 75 years. You know, we started 75 years ago in this country, not me personally, but we did with radio.

4655 COMISSIONER LANGFORD: Bob Buchan was there I am told.

4656 MR. SHERRATT: But Bob is quite a bit older than I. With radio stations in Toronto and Montreal that were affiliates of little fledgling U.S. networks and the people of this country, through their government and directly, said wait a minute there is something here that is going to be important to Canada and important to our culture. And they stopped that a couple of years in and we got into saying it must be Canadian. That has happened through the development of television, when television first came it came across the border from the United States and we said no, we are not going to bring American television to Canada, we are going to build a system in this country that has become the envy of the world because we have made a system that is predominantly Canadian but allows Canadians access to everything that happens south of the border and to do that, we have had some trade-offs through the years.

4657 Think what would have happened if direct TV had come through here with that proposal that was put before the Commission a number of years ago, we wouldn't have our own DBS system. But we waited, you said no, we are not going to do that, we are going to do what we have traditionally done, we are going to build something that is as reflective of Canada and reflective of Canadians. And to do so, we have always had to wait a little bit. We did it in television. I remember the early days of television in developing CTV and CTV stations across the country. The big push was to get rebroads in, get rebroads in so every Canadian can get it and that came about. This isn't going to take as long, but it is going to take a little time.

4658 I understand what you are saying, you have to make a decision do we dump an entire United States based system so that every Canadian can get it or do we fight and work and dig and try and develop a system that will bring Canadians the kind of services that we are talking about but we keep that precious Canadian presence? That is your decision, it is a tough one I know.

4659 COMMISSIONER LANGFORD: Well, you are speaking to the converted, Mr. Sherratt, and nobody does it better than you do I must say. But you kind of wait and, you know, pie in the sky when you die, I mean that waiting business can get tiresome for the people waiting. You know, it reminds me of John Kenneth Galbraith's description of trickled down economics, you remember that from the Reagan years? If you feed a horse enough oats, sooner or later the sparrows will get some.

4660 Well, how long do we keep feeding the urban areas who have quite a lot of these services already? And it is the same argument with broadband, you know, access to broadband and the internet and it is the same argument still in some places to basic telephone service. Anyway, we are not here to debate, but it does strike me as a problem both... if you remember where we started, in your technological rollout plan, because the General Motors folks and the Chrysler folks said they are resistant to a plan that doesn't travel well, so to get back to that narrow point it strikes me. And then on the bigger point, it strikes me that it is unfortunate that you don't see the three applications as complimentary because it might be a chance to cut down the waiting period for some people who feel they have waited a long time.

4661 MR. SHERRATT: Well, not to stay with the horse analogy, but I always remember the Sam Slick expression, better the horse in the barn you know than the one on the range that looks good. Well, we know our Canadian horses.

4662 COMMISSIONER LANGFORD: A lot of folks don't, that is what I am saying, and they won't know your horse. We are going to beat this metaphor right to death, aren't we? I mean, they will never hear it.

4663 MR. SHERRATT: But, with all respect to the automobile manufacturers who you have introduced now, our job as broadcasters and yours as regulators is not to sell automobiles, it is to bring Canadian broadcasting services to Canadians and that is what we are talking about and it is a difficult situation. Every time new technologies come along in our industry we have been going to hell in a hand basket. Well, we haven't gotten there yet and we built quite a system in this country and I have always said we built it because of regulation, not in spite of it.

4664 COMMISSIONER LANGFORD: Mr. Sherratt, you know better than I do because you have been in this business since Bob Buchan was a choirboy. But people listen to the radio an awful lot when they are in their vehicles, I mean you know that better than I do. So, it does seem to me not just a matter of selling cars here, it is also a matter of recognizing that people are in those cars and they are in their trucks and are looking for something to listen to while they are there and the fear of course is that if they don't get it from a Canadian source they will get it from some other source and we don't have to go into all of that now and you will have an intervention stage and maybe that will be a better time, but it seems to me that, you know, the hurry up and wait argument is understandable from your perspective, but it may not be an answer to these people who have been waiting a long time.

4665 MR. SHERRATT: No, that is a decision, sir, that you and your colleagues are going to have to make. The point I am trying to make is it is balance that we have always had to address and you have to address now and I wish you well in your deliberations in that regard.

4666 COMMISSIONER LANGFORD: You are always saying that to us.

4667 MR. SKI: Commissioner Langford, just one other point. I think the vast majority of driving that we are talking about is driving in those urban areas. Yes, people do drive outside of those areas. We don't have percentages, but if we had them I think we would find that most people are driving within urban areas, driving to and from work, to and from the cottage, whatever.

4668 But I think if I could make one other point too that I think really is important and we haven't touched on it too much, maybe we will, is what the effect might be of 100 or 200 unregulated new channels on conventional radio. I think you will recall that yesterday one of the other applicants... I don't want to try to paraphrase what he said, but he would rather be in the business than not. And I think that is something that has to be of great concern to us. Again, we are analogue radio. Digital has a certain panache, a certain something to it that attracts younger people.

4669 When we say younger I am thinking under 40 quite honestly and every year I keep raising the bar on that. But for all intents and purposes right now it might be 40 and I think that is something that shouldn't be forgotten. Somehow we have to take into account the effect of, again, 100, 200 unregulated channels on conventional radio today.

4670 THE CHAIRPERSON: Mr. Ski, do you have any back-up figures for that impact? I mean, you are here and CHUM and Astral are here because they see digital as the future, other broadcasters see satellite digital as the future, everybody is probably in on this hearing who is here from the industry because they see that they want to be part of the next wave. We have asked the question of impact and we have asked the question of both the American participants who were here and others and we haven't been able to get good figures on that other than that the impact is thought to be low, in the United States very low. Do you have any better information than that?

4671 MR. SKI: We don't, we could probably try to come up with some figures. But I think the U.S. experience and the Canadian experience are different because they are on a level playing field. What is being offered in the U.S. is comparable channels. By comparable, I mean they may be niche or added channels, but they are similar, neither is regulated from the standpoint of the musical content.

4672 Here we are looking at something that is quite different. We are looking at services that are unregulated versus services that are regulated. And I think the only comparison maybe that we might be able to make is we happen to operate radio stations in Windsor. And the Commission I think recognized that in order to serve our Windsor markets with 30, 40 U.S. channels that were unregulated, there needed to be some special provisions for us in order to operate in those particular markets and we have been able to be relatively successful there.

4673 But it has been difficult, because as we move from one format to another in the Windsor market, very easily one of the larger U.S. broadcasters can quickly change and they are much larger than we are. So it has been difficult, but the Commission has recognized that.

4674 THE CHAIRPERSON: Is regulated a euphemism for Canadian content?

4675 MR. SKI: Yes.

4676 THE CHAIRPERSON: And you feel that a multi-channel content service that Mr. Roman thinks is going to drive your plan will have less of an impact than an American niche service will have on Canadian AM and FM broadcasters?

4677 MR. SKI: Yes definitely, because there is not necessarily an advantage.

4678 THE CHAIRPERSON: Advantage is less Canadian content?

4679 MR. SKI: The advantage is a different playing field. The advantage is the fact that... Again, if you are playing certain songs and most people tune to radio to hear their favourite songs, so with these niche channels it is possible for them to play more favourite songs than we might be able to.

4680 THE CHAIRPERSON: Okay, I think we will break now and resume in 15 minutes. Nous reprendrons en 15 minutes.

--- Upon recessing at 1553 / Suspension à 1553

--- Upon resuming at 1608 / Reprise à 1608

4681 THE CHAIRPERSON: Order, please. À l'ordre, s'il vous plait.

4682 Gentlemen, I am going to ask you some questions related now to your business plan and your revenue and expense projections if I may. It is an ambitious plan, in year three you expect to have achieved over $16 million of pre-tax profit and I guess over 400,000 subscribers, would that be correct?

4683 MS SHEPPARD: Yes, that is correct.

4684 THE CHAIRPERSON: Okay, and I think I understand the receiver part of the $6 million of subsidy and how you derived that. Just some arithmetic here to get the magnitude of the capital that you are going to invest. Mr. Miller, you and I talked earlier about the $88,492,000 million and in that same deficiency letter you had another approximately over $4 million of capital related to production, assembly and distribution facilities, is that right?

4685 MR. MILLER: That is correct, and Shelley can break that down further if that is helpful.

4686 THE CHAIRPERSON: Well, that is broken down, that latter part. I think I understand that the 88 represents the total for the transmitters and the sites, is that right?

4687 MR. MILLER: That is correct.

4688 THE CHAIRPERSON: And so that adds up to, I don't know, $92.5 million or somewhat more than that of capital.

4689 MS. SHEPPARD: If it helps, I will give you the exact numbers. What we have in our budgeted capital is $88,492,000 all related to the transmitter build out. We also have another $2,760,000 which relates to the studio portion of the capital for a total of $91 million.

4690 THE CHAIRPERSON: Okay, so if you look at that deficiency that we were discussing before, which is dated March 26th, 2004... I am looking at page 3 at the bottom. Capital costs there add up there I think $4,125,000. Now you are saying that that should be roughly cut in half?

4691 MS SHEPPARD: In the deficiency response filed it is a combination of some transmitter and studio information.

4692 THE CHAIRPERSON: Oh, well if you go three pages on you provide the total for the transmitters. I don't want to spend a whole lot of time on this, sometimes though these niggling things get in the way of clear records, so I am just trying to reconcile those numbers.

4693 MS SHEPPARD: Sorry, I am not sure what page you are referring to.

4694 THE CHAIRPERSON: Page 6 of that same deficiency letter, item 6 at the bottom of the page there, it is the $88,492,000 that you mentioned just before. So that part seems fine, it is the--

4695 MS SHEPPARD: Yes.

4696 THE CHAIRPERSON: --it is the earlier part that seems to be about double what you just outlined to get to your $91 million. So you may want to just update us on the numbers.

4697 MS SHEPPARD: Are you adding all four of those numbers together on page 3?

4698 THE CHAIRPERSON: I was doing that.

4699 MS SHEPPARD: Okay, because I think it is sort of a cumulative build out.

4700 THE CHAIRPERSON: Oh, it is cumulative.

4701 MS SHEPPARD: Because it is talking about 50 channels and then going to 100 and I think we were giving the numbers in that manner.

4702 THE CHAIRPERSON: I see.

4703 MS SHEPPARD: So that is why it is probably higher.

4704 THE CHAIRPERSON: So the second two figures are double the first and we should really ignore the first and look just at--

4705 MS SHEPPARD: Yes, you should really ignore the first two.

4706 THE CHAIRPERSON: I got it. It wasn't clear, I think you will agree from the...

4707 Okay, and in terms of the financing of that... Well, first of all, the pace at which that capital is going to be spent, do I turn to your essential... your rollout plan of the transmitter sites to get the answer to that? And I am looking at April 29th deficiency responses, page 5 and 6. Is that the order in which you expect to do it?

4708 MR. MILLER: That is correct.

4709 THE CHAIRPERSON: So it isn't divided by time, but if you could give me an indication of roughly the timeframes of that chart on page 5 and 6 of that deficiency.

4710 MR. MILLER: Perhaps Shelley can actually, if you like, go through year by year what the capital expenditures are, just for the record, so you have an indication of how we get to the total.

4711 THE CHAIRPERSON: Okay, why don't we do that.

4712 MS SHEPPARD: Okay, would that help?

4713 MR. MILLER: That might be of some assistance.

4714 MS SHEPPARD: Okay, if we can explain the transmitter capital in a little more detail. In the pre-launch phase we are building 15 sites and we will expend $11,422,000 in capital. In year three, we are expanding another 32 sites and we will expend $23,266,000 in capital. In year four--

4715 THE CHAIRPERSON: Pre-launch you said and then...? When is launch?

4716 MS SHEPPARD: In order to launch in year one we are going to launch, in that we would have to open up 16 sites, one being the CN Tower and 15 would be site builds.

4717 THE CHAIRPERSON: And that would be done in year one or in the pre-launch period?

4718 MS SHEPPARD: In the pre-launch period so that we are ready to go--

4719 THE CHAIRPERSON: Okay.

4720 MS SHEPPARD: --right out of the chute. Should I continue on? Is this helpful?

4721 THE CHAIRPERSON: Yes.

4722 MS SHEPPARD: In year four, capital expendi--

4723 THE CHAIRPERSON: What about year one? You went from pre-launch to year three.

4724 MS SHEPPARD: Well, pre-launch is to launch the 50 channel service.

4725 THE CHAIRPERSON: Oh, I see, you are not going to build anymore until you... I got it, okay.

4726 MS SHEPPARD: Right. Okay?

4727 THE CHAIRPERSON: Yes.

4728 MS SHEPPARD: Then in year three we are building 32 more sites because we are moving to the 100 channels in year four and we are expending $23 million in capital in year four. We are expanding again another 21 sites, adding another $15 million in capital. In year five another eight sites, $5.8 million in capital. Year six another 24 sites, $17.4 million in capital. Year seven another 21 sites, another $15 million in capital. Bringing it up to the $88 million.

4729 THE CHAIRPERSON: Thank you. And the financing of that capital expenditure, how is that going to be done?

4730 MS SHEPPARD: We will obtain bank financing with the Royal Bank and we are also going to be financing through cash flow as it is generated.

4731 THE CHAIRPERSON: Does the interest line on the revenue and expense projections relate to that cap. ex.?

4732 MS SHEPPARD: Yes.

4733 THE CHAIRPERSON: Is that all it represents?

4734 MS SHEPPARD: Yes, it does.

4735 THE CHAIRPERSON: So, the $5.9 million is all you think you are going to need to spend in interest to finance the $88 million outside of operations?

4736 MS SHEPPARD: Yes, we are financing the working capital through the short-term until we get enough subscribers and generate some cash flow.

4737 THE CHAIRPERSON: Right. So, if you don't achieve the growth that you are projecting out here... year three, for example, $40,871,000 in revenue would imply something like what, 425,000 subscribers, something like that?

4738 MS SHEPPARD: Correct. If we were not to achieve that subscriber level, obviously that would have a negative position on the working capital and we would probably have to increase those operating loans.

4739 THE CHAIRPERSON: Presumably all of these figures would have to be adjusted downwards, certainly the non-operating expenses. You haven't done those sensitivity analyses? I mean, I have your assumptions and I have read them. Okay, so that is your... The reason I am sort of leaving the questions hang in a way is that you are seeking to get to 425,000 subscribers using radios that have not been built or tested and transmitters that are going to be... You haven't got all the parameters of Industry Canada's requirements yet either and I guess there is a quality about the projections that isn't based on fully operational and tested facilities. If that is wrong, perhaps Mr. Henke or... I am sorry, I forgot your name, Nigel, if you could assist me with that.

4740 MR. OAKLEY: Sir, I could probably deal with the radios haven't been built or tested.

4741 THE CHAIRPERSON: Right.

4742 MR. OAKLEY: I said before, the large proportion of the receiver technology already exists. You look at it now, in fact, these radios working here picking DAB transmissions off CBC. Whenever we rollout these radios for different regions or different areas there are always customisations that we do, but this is almost a machine, this is something we are extremely used to doing. So although technically you are correct in saying that they have not been built or tested yet, a large proportion of it already has. The work has been done, this is more an implementation phase and I don't have any doubt at all that we can deliver those radios built and tested to deliver those services.

4743 So I would not see that necessarily as a restricting criteria. I understand your point, but that is our business if I might say, you know, that is something we know very well and this is what we do and our business is based on that, primarily on the transmitter side.

4744 THE CHAIRPERSON: Just before you leave that, I take that point and my point wasn't that you don't know your business, it was that these, as you said, were not yet built or tested. In your letter you provide jurisdictions in which you have provided radios, notably the UK I think and probably in largest number, if I am not mistaken.

4745 MR. OAKLEY: The UK is the largest number and a number of other countries around the world as well.

4746 THE CHAIRPERSON: Well, could you share with us the experience you had with those receivers in terms of their quality, in terms of complaints you might have had and in terms of kinks that you had to iron out as you pre-tested and tested and launched them?

4747 MR. OAKLEY: Certainly. If I just for a moment just pause and tell you how the business works. We develop the software and a large proportion of that software is standard and has been refined and developed over many years. Probably the best example I could use is if you were to imagine this software in the box that I am looking at here is the equivalent of a personal computer. All that work has been done and developed and refined. The things that we are adding to it are a number of applications which are already also being worked on throughout other regions around the world and all we do is tailor those to deliver them into the market.

4748 Our returns rate is extraordinarily low. Certainly, if you look at the digital radio development board's figures for the UK. First, satisfaction for the products that are going out there, it is greater than 99 percent. An extremely well received technology into the marketplace.

4749 So the products are very very high quality, they deliver the feature and the capabilities that we are contracted to with our customers to deliver. And, in fact, really since we introduced these products into the market that is the point that we have seen the dramatic expansion of digital radio in the UK, but then in other countries as well such as Denmark, such as Italy starting to rollout, Spain rolling out, Germany with 100 percent DAB coverage. To be perfectly honest with you, massive expansion in Asia as well with countries such as China looking at rolling out subscription based terrestrial services.

4750 So this is something I want to try and get over as a feeling, is that in, you know, in the world this is a technology which is growing dramatically and expanding into a large proportion of the countries, possibly with the exception of the U.S.

4751 MR. ROMAN: Mr. Chairman, perhaps Gord Henke could provide some more comfort in the area of testing and availability?

4752 THE CHAIRPERSON: If Mr. Henke is going to address the radios.

4753 MR. ROMAN: I am sorry, transmitters, I am sorry, Mr. Chairman.

4754 MR. HENKE: I will address the transmitter portion.

4755 THE CHAIRPERSON: We will get to the transmitters in a--

4756 MR. HENKE: Yes, I realize that.

4757 THE CHAIRPERSON: Have the radios that you have provided in these jurisdictions had the conditional access feature?

4758 MR. OAKLEY: No, the conditional access feature is a feature that we have specked out and considerable... well on the way of actually deploying. Conditional access in Eureka 147, which is the DAB standard, has been there really since its inception in the mid 1990s. What we are seeing on a worldwide basis now is recognition of the appeal for subscription radio and Eureka 147's ability to deliver it.

4759 So, in parallel with the work they are doing here in Canada we are also working with services in the UK, in the Netherlands and Singapore, just off the top of my head. And as I flew this way, we had it going in the other way to China where they are working on this extensively as well. So it is a core part of our product platform that will be developed for worldwide adoption.

4760 THE CHAIRPERSON: The same bandwidth that is being used here in Canada and the design?

4761 MR. OAKLEY: Yes, absolutely. So the number of services that are looking at being developed based on advanced coding techniques that are now available is pretty much exactly the same that all the other countries are looking at.

4762 THE CHAIRPERSON: So you are pretty confident?

4763 MR. OAKLEY: I would say I was very confident.

4764 THE CHAIRPERSON: Okay, Mr. Henke, I don't want to cover more ground with you on that. The build-up of the budget and the reliability, how different are the transmitters that are going to be built here from what exists now?

4765 MR. HENKE: Well, the existing transmitters that are being deployed around the world and have been deployed here in Canada in the four systems, Toronto, Montreal, Vancouver, etc. technology wise there really isn't a lot of difference between what is deployed the rest of the way around the world and what is here. Canada, you are right, doesn't have a 70 or 69 site network running, but what we have proven over the last five years in our own limited DAB deployment that single frequency networks, both short range and long range from Toronto through Barrie, etc. do work. This is not a technology issue in terms of developing new hardware. It is a deployment issue with respect to getting the transmitter sites out there built for the network to run.

4766 THE CHAIRPERSON: Now, and Industry Canada, on site by site authorization, could they not impose upon you protection requirements or...?

4767 MR. HENKE: Oh, absolutely. Those protection requirements are already built inside DPR5 which was referenced in the September 21 letter and is part of what our normal technical brief and application to Industry Canada would entail. So, that is not an impediment that has been put forward or unexpected.

4768 THE CHAIRPERSON: But is it a cost-driver at all? Does it affect your cost?

4769 MR HENKE: No, it is not.

4770 THE CHAIRPERSON: It doesn't?

4771 MR. HENKE: No, it is not.

4772 THE CHAIRPERSON: So you are confident that these budgetary figures that we have been reviewing--

4773 MR. HENKE: Yes, absolutely, because all this... A technical brief--

4774 THE CHAIRPERSON: --are doable?

4775 MR. HENKE: --for and a technical application to Industry Canada for all 69 sites was envisioned in the original budget basically under BPR5. So, there is no difference based on what Industry Canada have said, it is not a cost driver.

4776 THE CHAIRPERSON: And the network deployment feature of this you don't feel adds a dimension that is unexplored and that casts any doubt on the viability of it?

4777 MR. HENKE: No, because the original design of the Canadian DAB was based on single frequency networks, a deployment very much like what is being proposed here. The only difference is that the original DAB rules were set-up on a decision of five channels and we have now gone to 14 or 16 channels based on a compression technology, advancements of those issues. But the basic RF channel architecture remains essentially the same.

4778 THE CHAIRPERSON: Okay, let me move to the absence of OEM agreements for the moment and in the literature certainly on satellite digital audio and, as we have heard in this hearing, arrangements with automobile manufacturers are a key driver. You indicate that you hope to have such relationships in 2007 or beyond. But, for the moment, you are relying very... almost exclusively at the outset on the portable and that is going to decline somewhat as time goes on and you are hopeful of these arrangements.

4779 But yet, as we said earlier and we discussed earlier, you don't have retailer confirmation but you are relying to start pretty exclusively on retail. And again, what level of confidence can we have that that is doable given the testimony of not only other applicants at the hearing, but of the financial analyses one reads of the services and how important the OEM is to subscription radio.

4780 MR. SKI: I might start, Mr. Chair, and Peter can maybe add to this. But, first of all, I think we have to keep in mind that the other applicants have automobile manufacturers as partners, so that is a little different than our particular proposal, obviously. And I think what we are finding now is that, certainly in the U.S., the satellite providers are now moving to the type of device that we plan to start with. So, it is just a different approach. They started with the automobile, possibly because of the partnerships, we are starting with a portable device because we believe that this will be a little bit more like radio and one of radio's strengths has been portability.

4781 Again, just to touch back also on the fact that we see this as a platform, as an opportunity to introduce digital radio services to Canada also, something that we truly believe in. So we don't think that it is necessarily a disadvantage to us. Also because of the fact that consumers will be able to use these devices in their automobile--

4782 THE CHAIRPERSON: I don't mean to interrupt you, Mr. Ski, but how can you say it is not a disadvantage to you when you yourself are saying in your responses that you anticipate having this option and that you think that in-car use will be a growing advantage to you. How can it not be a disadvantage if, when you get it, it is an advantage?

4783 MR. SKI: I'm not sure that I said that, but if I did I will correct myself.

4784 I think what we were saying is that these devices will be able to be used in automobiles now. In the absence of an agreement with an automobile manufacturer, these devices will still be able to be used, similar to the way an iPod is used. I use an iPod, for instance, in my vehicle and it transmits the signal to an available FM frequency and it is extremely useable.

4785 The other thing too is, I think the figures we have show that in the U.S. there is a higher proportion of tuning in cars to radio than there is Canada. There is also a higher --

4786 THE CHAIRPERSON: I wasn't aware of that. What are the comparable figures?

4787 MR. SKI: The numbers that we have I believe are, in the U.S. it is 33 per cent of the tuning, in Canada it is about 25 per cent.

4788 THE CHAIRPERSON: I knew the Canadian figure. I hadn't heard that the U.S. in-car tuning was 33 per cent

4789 MR. SKI: The other point too is that there is a higher per capita -- per household number of automobiles, which is about 2 to 1.5.

4790 MR. OAKLEY: I would just add. What may help, from my observations certainly outside of Canada, Mr. Roman said earlier that there were in effect three legs of the stool that any content business, the incidence of broadcast whatever, relies on that being unique, compelling content, the availability of cost-effective receivers and critical mass of coverage.

4791 If we look at the UK, just as an example, what happened when those three legs of the stool were built was the point we saw dramatic take off of digital radio services, and you can almost plot it to the month when that started to happen.

4792 The demand was there, the retailers followed, very fast indeed. In fact, in the UK now there are over 3.5 thousand retailers stocking digital radio products, the independents as well as the multiples.

4793 So once the consumer demand is there, assuming the service has been crafted right, and certainly we believe the service has been crafted correctly here, then that demand follows.

4794 What we are also seeing, to address the in-car component, are devices which are being built which are similar to this in nature, which you just plug into a cradle in the car and it is your car device; you put it in your pocket and it is your portable device; you put it in your home and it is your home device.

4795 There is a product out now in the UK called Revo that performs exactly that function. We are talking to a number of manufacturers in the UK who are looking to launch services using that exact proposition because it is such a powerful proposition to address the wide range of market sectors that are being -- or the wide range of formats that people are wanting to receive digital radio services in.

4796 THE CHAIRPERSON: Thank you.

4797 Turning to the grey market, in your deficiencies you address the grey market. I guess the gist of your point is the one I quoted one of the applicants when they were appearing.

4798 I am trying to understand how you see your service as a weapon against the grey market. It is almost the flip side of the discussion Mr. Ski and I had before the break. If those unregulated services, as you call them, are such an advantage and you are regulated, then how will you tackle -- how will licensing your service, and particular your service alone, fight the grey market?

4799 MR. SKI: Mr. Chair, the grey market is there because of the fact that consumers are looking for an alternate product. They are looking for these niche formats. We are going to be providing those. We will be providing initially, as we said, 50 channels that aren't currently available on the radio, moving to 100 channels.

4800 The reason there is a need there is because these channels aren't available in any form. Whether you solve that problem with our particular plan or a satellite plan, you are still solving that problem, because you are still providing those additional types of channels.

4801 THE CHAIRPERSON: The difference is that the satellite channels would be the grey market and one of the aims of -- their position to us, of course, is that if you license us and their agreements back it up then Canadians will buy all package of service.

4802 I take Mr. Sherratt's points about the balance we always have to draw in Canada between the adequacy of that, but focusing strictly on the grey market issue, I don't see how you would be anywhere near as effective as dealing with the grey market from those services than they would be themselves with their agreements with their Canadian partners.

4803 MR. MILLER: I think that last statement is correct, in the sense that they would repatriate more of the grey market if you will, but our question is: At what cost?

4804 In terms of what we could do -- again, I think we have gone through this a little bit, but I will try to be more clear.

4805 First of all, if the other two applicants are not licensed they don't have the benefit of the CRTC sanction, which means in-car installation in Canada, it means distribution in Canada, it means promotion and expenditures and awareness more than usual in Canada.

4806 Secondly, they don't have the benefit of a terrestrial repeater network --

4807 THE CHAIRPERSON: I have your points on that.

4808 MR. MILLER: -- and all of that. So what we are suggesting is, what history has shown -- this is why Mr. Sherratt reached back into broadcasting history -- is that when you do provide a viable Canadian alternative it can and does succeed.

4809 THE CHAIRPERSON: Yes. I think I have your point on that.

4810 The final area is the competitiveness area and how many licensees and on what terms and conditions. I am going to refer to your deficiency answer on that point, as soon as I can locate it.

4811 It is pages 4 and 5 of deficiency response of June 4, 2004.

4812 You were asked a two-part question.

4813 One:

"If the Commission were to license your proposed service as well as one or more other subscription radio services, would this affect your business plan? If so, please provide revised financial projections for your proposed service under the following scenarios:

(1) one other service is licensed; and

(2) two..." (As read)

4814 You didn't do that. You didn't provide the financial projections, for reasons I understand in the text of your answer, that you said:

"We have to make a series of assumptions, what are going to be the terms and conditions of those licensees in order for us to do that." (As read)

4815 So it wasn't by way of criticism of the lack of financial documents, but I guess where it all comes out here, you use terms like the assumptions you make are whether all services will have what you refer to as "equitable obligations", "size of the market", "exclusive partnerships or preferential arrangements".

4816 So I guess what I am concluding from this, unless you correct me -- and then you go on to say that given a number of unknown factors it is difficult to do the projections, but you still say, on page 5, that you would lose anywhere from 15 to 50 per cent of your subscriber base; it is questionable whether you would be able to recoup this investment; and, at best, you would not be able to expand your coverage beyond major markets and, at worst, not be able to launch.

4817 I guess at this hearing we are dealing with two applicants whom you have probably heard the questioning of. Are you saying that if those two services are licensed along with yourselves that you wouldn't launch?

4818 Is that a fair statement?

4819 MR. GREENBERG: Mr. Chairman, I think we have said it in many different ways and I guess the short answer is yes.

4820 The fact is, CHUM and Astral are well-known to the Commission. We are public companies, we have responsibility to shareholders. If we didn't think this was a viable opportunity I don't think we would be here committing, together, $100 millions towards a business.

4821 So we are committed to the business but, frankly, just the playing field would be so unlevel where there is no cost for infrastructure, there is no cost for satellites for the Canadian operators; that 96 per cent of all the channels are American and, frankly, for CBC, in my mind, to be involved, to go from 97 to 100 channels is pretty insignificant to put, in my mind, the Canadian system -- the percentage, 87 per cent coverage to 100 per cent, for 3 per cent extra to have to go to this extreme to in fact perhaps destroy the Canadian broadcast system, particularly in radio. That is a start.

4822 So we are here as serious companies. We think our plan is viable. We are backing it up with $100 million investment but, frankly, it is not because we want to be threatening or sort of play blackball here but, the fact is, the economics just wouldn't work if two services, with the preponderance of U.S. services, 96 out of 100 channels, and with their cost structure, it just would not be viable to have a Canadian alternative. I wish there was, but unfortunately there isn't.

4823 THE CHAIRPERSON: You are setting the stage for another easy decision for us, in other words. We have had a few.

--- Laughter / Rires

4824 MR. GREENBERG: Truly, Mr. Chairman, I am very sorry but unfortunately those are the facts of life.

4825 Astral, I might say, in 1983 was faced with a similar decision about pay TV. We had applied, we had lost, and then we came into the picture a little later on. This is 1983 where $1 was $1. In the first 18 months we lost $63 million to make sure that we would fight for a Canadian pay TV system.

4826 I might tell you, in those days if that didn't work it wasn't only a loss of investment, it would have been the loss of the entire company.

4827 We took that risk, we worked it out, and today I think both the system and Astral is very proud of the achievements that we have been able to achieve over the last 20 years in pay TV and, frankly, I look upon this as a similar opportunity for us and a similar dilemma in subscription radio.

4828 THE CHAIRPERSON: I hear your position. I guess I would comment on there are two levels, if you like, of criticism, let's call it, that you could make.

4829 One is the level of the Broadcasting Act in assessing the other applications and I understand that.

4830 The other level that you mentioned, maybe inadvertently, was that it would destroy the system.

4831 I don't think we have the evidence that I have heard at this hearing that that would be the case. I have repeatedly asked questions about impact on local broadcastings and have not been given any numbers that would support that kind of conclusion.

4832 MR. GREENBERG: I guess the reason I alluded to that was, if you have such a preponderance of foreign signals in this situation, is that possibly not setting a precedent for future decisions is my point. It has never been done before under any circumstance. This would be a precedent.

4833 THE CHAIRPERSON: But the single point I am making is that obviously that would be highly pertinent information and we have asked about impact on local broadcasters. I think we have had no quantification, at least on whatever years the system has been operating in the States.

4834 The evidence today was: Well, in the States there is more in-car tuning by some percentage, but I haven't heard numbers, either from the United States or Canada, as to impact, concrete impact, discernable impact on broadcasters.

4835 Maybe your argument would be it is too early to tell, but we go by -- the applications appear in the order they appear and we try to deal with them and here we are now.

4836 MR. GREENBERG: I will let my younger colleague Mr. Sherratt head in here.

13:28 MR. SHERRATT: Mr. Chairman, it's true, we don't have any real evidence because it hasn't happened in this country. In the U.S. -- satellite radio to automobile is what it has really been -- is a relatively new animal and there has been no real hard evidence as to its impact on conventional radio.

4837 I think some of the radio operators are starting to see the impact now when they have lost the football rights, they have lost the baseball rights, they have lost the hockey rights, they have lost, thank God, Howard Stern.

--- Laughter / Rires

4838 MR. SHERRATT: But what we have heard is anecdotal evidence that it hasn't. The anecdotal evidence has come from these huge radio operating companies who are public who would under no circumstances say publicly that their business is being hurt. They are just not going to say that publicly. So only time is really going to show that to us, I think.

4839 I think we just know what will happen if we start to loose share in this country and if we had the onslaught of what Mr. Greenberg has just been talking about.

4840 We believe it will impact radio, yes we do. We have no hard evidence, sir.

4841 MR. SKI: Mr. Chair, if I could mention one other point, there appears to be -- given what Fred had mentioned about certain movement from conventional radio to satellite, there is also a tremendous move now by conventional broadcasters in the U.S. to move to a digital platform. They have sped that up. I mean, it has been hanging there for a few years, but over the last several months they have tended to speed that up, and for that exact reason, so that they can compete a little bit more with the satellite providers.

4842 THE CHAIRPERSON: Thank you very much.

4843 Counsel.

4844 MR. WILSON: Thank you, Mr. Chairman. I just have a few questions.

4845 One, I just wanted to ask a question of clarification with respect to the proposed French channels and then I just had a number of other questions just to take you through some points that we had addressed to some of the other applicants.

4846 I believe I understood from your discussion earlier with Vice-Chair Wylie that out of the French channels that you were offering there were two -- and I think one of which was Québec Rock -- that we are going to have 100 per cent French music selections I guess and the rest were 65 per cent.

4847 Is that correct?

4848 MR. ROZON: Québec Rock is 100 per cent Francophone, French content.

4849 Also, the humoristic channel, which is called FrancoFun" is also 100 per cent Francophone, French content.

4850 MR. WILSON: Okay.

4851 MR. ROZON: We have two channels which are actually at 50 per cent French content, which is Palmares and -- which is the other one -- Emergence.

4852 Globally, with the global French proposal we are going to respect the 65 per cent content.

4853 MR. WILSON: So then MusiquePlus Radio, what would be the percentage of French?

4854 MR. ROZON: All the others are at 65 per cent.

4855 MR. WILSON: At 65 per cent, okay.

4856 Would you have any comment on those percentages being imposed by condition of licence?

4857 MR. ROZON: We are ready to accept it. We are proposing it.

4858 MR. WILSON: As you may have heard in the discussion with the other applicants, there was some question about in the context of sort of a national subscription service what is the appropriate definition of local programming. I'm wondering whether you had any thoughts on what the appropriate definition of "local programming" is.

4859 When we are talking about COLs saying how you won't do any local programming, what does that, to you, mean in this context?

4860 MR. MILLER: It is a non-trivial issue. We will reflect on it for reply.

4861 We heard the comment about "no original" in a sense meaning that you are not developing new, original local programming for the service. You may use some existing programming that is produced on other local channels. So that may be the way to go.

4862 We will try to reflect on that and see if we can come up with any other suggestions for you.

4863 MR. WILSON: This is another thing we discussed with the other applicants.

4864 Have you given any thought to whether this service would become a member of the CBSC or not?

4865 MR. MILLER: We would expect yes.

4866 MR. WILSON: I don't believe it came up in the discussion, but are any of your channels -- either in the 50-channel universe or in the potential 100-channel universe -- will any of those have any open line programs?

4867 MR. FARINA: None in the 50-channel universe. We are looking at talk programming in the 100-channel universe, and there will be some open line programming, yes.

4868 MR. WILSON: In that context, what sort of guidelines or mechanisms would you be looking at in terms of the Commission's policy on open line programming?

4869 MR. FARINA: The standard 7-second delay will be in place.

4870 MR. WILSON: Finally, you may again have heard discussions that we had with the other applicants with respect to parental control or advisories with respect to potentially explicit programming, or so forth.

4871 Do you have any sort of policies or plans in that regard?

4872 MR. MILLER: Yes. Again, first of all, given that we are going to program all of the channels, obviously it is easy for us to simply choose not to continue or change the nature of a channel, either in response to our listeners or in response to you or in response to CBSC, that we need to do. So that part is obviously much simpler with us.

4873 But certainly parental control would allow, from the individual subscriber perspective, to turn off any channels either from a parent to a child or in any other way.

4874 I think we can give you further technical details if you like, but certainly that is a capability that we will have.

4875 MR. WILSON: I guess just my final question which Vice-Chair Wylie had adverted to earlier, in terms of sort of all of the items that you have said you would get back to us on, what sort of a timeframe would you be able to get back to us on with respect to those?

4876 MR. MILLER: The daily schedules that we have been speaking about, they will take some time to generate, so we would respectfully request at least a couple of weeks to do that, if that is possible.

4877 We have some other undertakings that perhaps I can confirm with you sooner on the day. We may be able to come back just immediately on reply.

4878 MR. WILSON: I have no further questions, Mr. Chairman.

4879 THE CHAIRPERSON: Thank you. Thank you very much.

4880 We will now move to the next phase, Mr. Secretary.

4881 THE SECRETARY: We will hear the appearing intervenors. Some of them did swap places because of prior arrangements. Some cannot be here today some and some cannot be here tomorrow, so we will not follow exactly the --

4882 THE CHAIRPERSON: You are always very accommodating, Mr. Secretary.

4883 THE SECRETARY: Thank you, Mr. Chairman.

4884 THE SECRETARY: The first appearing intervention will be presented by Corus Entertainment, Mr. John Hayce, Mr. Gary Maavara and Mrs. Lisa Lyons.

--- Pause

4885 THE SECRETARY: You have 10 minutes to make your presentation.

INTERVENTION

4886 MR. MAAVARA: Thank you.

4887 Mr. Chairman, Madam Vice-Chair, Members of the Commission, CRTC staff and legal counsel, thank you for the opportunity to appear before you today.

4888 My name is Gary Maavara and I am General Counsel at Corus Entertainment Inc. I am delighted to have with me today Lisa Lyons, who is the General Manager of Max Trax, a national multi-channel pay audio programming undertaking; and Mr. John Hayce who is President of the Radio Division of Corus Entertainment.

4889 Corus Entertainment recognizes that the broadcasting world is evolving. As Mr. Cassaday stated during the appearance of the CSR application, we must be prepared to plan for and to embrace change.

4890 We also have no doubt that each of the applicants has the ability to provide Canadians with a superb service.

4891 Satellite subscription radio means new services for Canadians. It has implications beyond the broadcasting system. It will also impact how this country's broadcasting system fits into the continental regime. It means a profound impact on jobs, both inside and outside of the broadcasting industry.

4892 These services also pose both a great opportunity and a threat to the broadcasting system.

4893 As we have heard from the applicants over the last two days, the satellite subscription radio service presents a number of curious attributes that we submit require careful scrutiny by the Commission.

4894 These attributes would establish a number of paradoxical results.

4895 The digital world was to be a system where frequency scarcity would no longer be an issue. However, it turns out that no frequencies are available for a Canadian satellite. On the two U.S. service offerings, only a few channels would be available for Canadian content programming. So frequency scarcity is still very much an issue, even in this digital environment.

4896 The promise of the digital world was to be one where any content player could access the listener. The internet fulfils this promise and Canadian broadcasters have embraced this new medium to access consumers around the word with compelling websites in every genre.

4897 But satellite subscription radio does not offer the same degree of access for both suppliers of content and for consumers. In these applications, the proposed licensee would be both the distribution undertaking and the exclusive content supplier.

4898 So access remains an important issue, even in this digital environment.

4899 In a world which held the promise of interoperable systems such as the World Wide Web, Mr. Grimaldi made it very clear that in fact the satellite receive devices were also mutually exclusive. Ask yourself how many consumers would risk losing the warranty on their relatively expensive vehicle just to receive the other radio service.

4900 So consumers will still be faced with the same sort of device selection issues that they faced in the analog world, and lest we forget the question: Will that be VHS or BETA?

4901 Frequency scarcity, a service where content and carriage are exclusively with one party who utilizes exclusive technology systems where consumers must decide on the reception device, those attributes sound very much like a natural monopoly to us.

4902 The notion that these services were a type of iPod is also somewhat misleading, as that device allows the user to build the music library from a variety of sources. Satellite radio is not interactive, it is a push technology like traditional radio, except that the transmitter is farther away. The user can record, but only what is offered by the satellite licensee.

4903 These natural monopoly attributes also invite scrutiny of issues such as siphoning of programming, consumer rate regulation and the ability of the Commission to regulate networks that operate outside of Canada.

4904 This is a fact situation which the Commission has faced since the first days of the Broadcasting Act. We submit that it is a fact situation that invites regulation in the public interest.

4905 MR LYONS: I am happy to report that Max Trax programs 22 channels of music-only programming that contains an average of 35 per cent Canadian content across the channels. We submit that providing Canadian content and music should not be seen as a hardship for the applicants or a hardship for Americans to swallow. They listen to it every day; they just don't know it is Canadian.

4906 Shania, Celine, Alanis, Avril. We don't even have to say the last name. They are superstars in the U.S., first and foremost because they are superb artists. They just happen to be Canadian.

4907 Max Trax could program and provide many niche channels to any of the applicants tomorrow that Canadians and Americans alike would not only enjoy but embrace. They need not be labelled "Canadian channels".

4908 The picture painted over the past few days is that we need to surrender Canadian content because of technology. We believe that we can have a North American-friendly solution that includes Cancon because the music is awesome and loved by the American public.

4909 Frankly, the proposals give too much credit to the technology and not enough to the artists and the talent we have nurtured over the years through our commitment to Cancon. Only by continuing to support Cancon can we create the superstars of tomorrow.

4910 We suggest that the Commission look carefully at how consumers will use these services. The ability to take music anywhere is not lost on Canadian consumers. The serious research indicates that 40 per cent would be interested in a service in their car and in their home, while a further 19 per cent would be interested in it solely for their home. So almost two-thirds of the respondents, 59 per cent, said they would be interested in satellite radio for the home. This makes it a direct competitor to Max Trax.

4911 The potential for a grey market certainly makes a compelling case for the Commission to open the door. However, we submit that consumers will look to the Commission for regulation of everything from rates to standards of content, regardless of the subscription status of the service. You can count on getting letters about Howard Stern and Opie and Anthony.

4912 Canadian consumers will also look to the Commission to ensure that their world is depicted in the service, so consumer demand cuts both ways.

4913 We encourage these services to adopt a programming code of ethics and submit to the same standards that govern other Canadian broadcasters.

4914 The matter of program content also raises the matter of siphoning. Each of the U.S.-based applicants has announced exclusive content available only on their services.

4915 What if today's Howard Stern rights become the NHL hockey rights, or the exclusive right to play the new Alanis Morissette release? The Commission should also be wary of the potential for siphoning of this kind.

4916 MR. HAYCE: This proceeding also comes at a good time in the context of the Commission's review of radio policy that will take place next fall. By that time we will have the benefit of knowing of the impact of these new services and how the regulatory regime must evolve for all participants in the Canadian system.

4917 As we have said, we are supportive of the introduction of new products and services to Canadians. We agree with the applicants that they will provide terrific services that Canadians will embrace. However, we disagree with the assertion that the impact on free radio will be minimal. We already know that the average Canadian spends more than 21 hours a week with commercial radio. The new services will take away some of this listening attention, especially as the listening environment will be in exactly the same places, in the car, in the kitchen and at work.

4918 The existing radio system survives solely on one revenue source and that is advertising, national, regional and local advertising. A loss in listening time will impact this revenue source even if the services do not sell any ads. If advertisers observe that time spent with commercial radio is in decline on a national basis, it will have a very negative impact on the perception of the viability of radio as a medium as an effective way to reach the consumer.

4919 In many ways, the proposed regulatory regime places broadcasters at a disadvantage to these new services. Let me use one illustration in the short time we have. I should also say that we are prepared with other examples should the Commission have questions.

4920 A good example of how FM stations would be at a disadvantage is in music formats. Current regulations make it difficult for an FM station to operate with a pre-1980 oldies format. It is not possible to mount a full-time oldies station on any FM. SIRIUS alone will offer three oldies channels, a dedicated '50s channel, a dedicated '60s channel and a dedicated '70s channel. These channels will not have any of the hit/non-hit restrictions that commercial FM radio has. The consumer will love these oldies channels, but their listening time to these channels will come at the expense of the rest of the Canadian radio system.

4921 A single AM or FM station can never compete against 100 channels and all the targeted niche channels that these subscription services provide. A station in Vancouver that attempts a format all underground indie rock would have such a narrow appeal that it would not be commercially viable. The ratings would be too low to generate revenue that would allow the station to cover the cost of operating, let alone make a profit.

4922 In some ways, commercial radio may be open to experiencing death by 100 channel cuts.

4923 We understand and live with the limitations of this business reality and we accept that we need to make a contribution to the system to use the frequencies, however the satellite services are using scarce spectrum as well, but will have the benefit of more capacity and a second revenue stream from advertising on which to base their business model.

4924 MR. MAAVARA: We submit that it is important that the Commission recognize that satellite subscription radio is not the same as pay television or pay audio services. As we have seen over the past two days, the technology has the ability to reside anywhere. Audio devices have attributes that television does not. Although the system is a private communication in some ways, the ubiquity of its use by consumers and the low cost of the receivers and the service mean that it will be used in public in much the same way as radio has always been used.

4925 We have a number of proposals to protect the existing system, but we submit that the entire radio regulatory framework must be examined next fall to ensure that the free system can compete and survive. In the interim, we suggest the following:

4926 The applicants have agreed that they need and will do more Canadian content. We suggest that a good formula going forward would be for one Canadian channel to be added for every new foreign channel that is added beyond the first service offer of 100 channels, until an overall ratio of one Canadian channel to 10 foreign channels is reached.

4927 In this regard, we also note that Canadian can program excellent music channels that would not deprive U.S. listeners of great service.

4928 Once satellite subscription radio reaches a certain level of market penetration or listening levels, the Commission should mandate access to third parties to the distribution system. This will prevent the creation of a de facto closed system monopoly where one player governs the entire system.

4929 The services should not be permitted to provide local Canadian surveillance spoken word service, news, weather, traffic and sports, et cetera, of any kind on any channel.

4930 The services should not be permitted to sell advertising for the first license term to allow the Commission to gauge the impact prior to allowing for this right. We note that two of the applicants did not propose ad sales.

4931 The services should not be permitted to seek carriage with other BDUs. Once these satellite subscription services are operational in Canada, the Commission should allow Max Trax to have access to all BDU systems without linkage requirements so that it can compete, especially as it will provide Canadians with far higher levels of Canadian content.

4932 The Commission must establish anti-siphoning rules to prevent market dominance over content and the local terrestrial transmitter systems should not be permitted to provide content other than that which is on the two satellite beams. It should not be permitted to provide local content without a formal licensing procedure, including a call for competitive applications.

4933 The service should be limited to audio and text programming related only to the music selections. That may seem a bit off, but remember this is a bitstream and they can just as easily be video as audio.

4934 We noted the Commission's questions regarding the relationship with the U.S. service providers. The agreements between the applicants and these service providers are essentially network affiliation agreements. As such, the networks should also be required to return to the jurisdiction of the Commission. It is easy to contemplate a circumstance where some commercial dispute or other decision causes a situation where the licensee affiliate can no longer operate. If the Commission does not have the regulatory relationship with the network provider, we could end up with a de facto unregulated service to Canada.

4935 Mr. Chairman and Members of the Commission, these applications obviously raise a plethora of regulatory concerns. It will be tempting to look the other way to allow these services to operate with minimal commitments, however we are confident that Canadians will quickly realize that these are not only a great new service, but also that they raise the same questions that have arisen through the decades, and you can be certain they will look to the Commission and the industry when matters such as program siphoning and standards intrude on the system that they have come to expect.

4936 Thank you. We look forward to your questions.

4937 THE CHAIRPERSON: Thank you.

4938 Commissioner Williams.

4939 COMMISSIONER WILLIAMS: Good afternoon, Mr. Maavara. We have heard earlier today that we hadn't heard a whole bunch from the broadcasters and I guess we are hearing the opinion of Canada's largest broadcaster serving many parts of Canada today.

4940 I guess what I have just heard you say is, no local content, no advertisements, 35 per cent Cancon, a 1-to-10 linkage ratio, audio only.

4941 If all three applicants had to provide their service in a formula much like you have described, would that level the playing field enough that there would be no impact on commercial broadcasters?

4942 MR. MAAVARA: I think to answer that question you have to start with an analysis of the system which I think is, to a high degree, unprecedented.

4943 We have a circumstance here where we have really one applicant for each type of service, but in a sense they make up three entities. There is a network service provider of content, and then we have a carrier, and then we have the Canadian licensee which would have the relationship with the consumers. The applicants are seeking to blend that all together.

4944 I think inherently that creates a circumstance, with even these suggestions that we have made, that it is inherently -- call it non-level playing field in the sense that this one player has the ability to acquire content and, in many ways acquire the consumer with a terrific service. We have no qualms about saying that these will be terrific services. When you can offer 100 channels of great stuff, we think that Canadians are going to flock to it.

4945 But if you have a licensee that has the ability to do all those things in one bundle, then they have the advantage over -- the largest broadcasters in this country, of which we are one, are limited in the number of, call it channels that we can provide to a particular consumer and we are further constrained by the various regulations that apply to that.

4946 So we are suggesting that when the Commission looks at the system next fall, it really look at the entire regime, including satellite and the AM and FM regulations and says: Okay, we now have this new player here. How do we deal with that?

4947 If you will permit me, I think part of the problem that we have in terms of the perception of this is that everybody has gotten very excited with the technology and we have kind of looked at this system as if we are building a new bedroom over the garage onto the house. It doesn't look like that big a deal. We are just making a nice addition to the system.

4948 But our position is that in fact what we are talking about here is potentially a bulldozer coming in and knocking the whole house down and us being part of that original house having to say, "Hold it. We have to figure out how we are going to survive that", because these services are indeed going to be very popular.

4949 COMMISSIONER WILLIAMS: This is probably a horror scenario, but assuming all three subscription radio applicants are licensed and in such a manner that CHUM is of course willing to continue on with their subscription radio plans, what will commercial radio have to do to maintain its market share and level of listeners?

4950 MR. MAAVARA: I will turn that one over to Mr. Hayce.

4951 JOHN HAYCE: Well, as Gary said and as Paul Ski alluded to earlier today, I think from Corus' point of view -- and I can't speak for the other commercial broadcasters, but from our point of view, we have never really intervened in a negative way against anybody's application for anything in five-year history and we would really hate to start now.

4952 The question is not so much do we fear competition, we don't, but we do seek equality. The fact is, in our opinion, this is not about technology, this is about content. This is about 100 channels for one service of content most of which is not available in this country today, and a lot of the content is content that Canadian radio stations, either music or spoken word, cannot replicate.

4953 So we are all for competition, bring it on, but give us a level playing field. That is our point of view.

4954 COMMISSIONER WILLIAMS: Thank you, Mr. Hayce.

4955 I have no further questions, Mr. Chair.

4956 THE CHAIRPERSON: Commissioner Langford.

4957 COMMISSIONER LANGFORD: I guess my question is very, very fundamental. I feel a little bit like Rip Van Winkle here because there is something I am just not understanding.

4958 Is John Cassaday still working with Corus?

--- Laughter / Rires

4959 MR. HAYCE: I sure hope so because he pays my cheques.

4960 COMMISSIONER LANGFORD: Do you know where he was on Monday afternoon?

--- Laughter / Rires

4961 MR. MAAVARA: I don't think there is any inconsistency with our position. We believe that these services will be introduced in Canada. As we said in this submission and as John said the other day, we believe that the people who are offering the services are well capable of doing that.

4962 But what we are saying is, there are also elements, for example the natural monopoly elements, that require the Commission to look carefully at it. I think the temptation is to say: We have this new technology here, it is going to come in here anyway, bring it on, and there is not much we can do about it.

4963 In fact, there is a lot that the CRTC can do about it. If I could illustrate that with the network question, it is not difficult, as we said, to imagine a circumstance where the Canadian licensee might not be either willing or able to fulfil its obligations.

4964 Imagine a circumstance -- and I will use SIRIUS, not to pick on them but just as an example.

4965 Howard Stern says something about the Prime Minister that raises a big kerfuffle and the CBC decides it doesn't want to be associated any more with the service and throws in the towel. Let's say you had 100,000 Canadian households that had the service as licensed, but the only operator of that service is residing somewhere below the border and the licensee, in a sense, has disappeared. Who does the Commission regulate?

4966 In the public consumer sense you are certainly not going to turn off those services because you are not sure who you can regulate.

4967 So what we are saying is, regulate the whole system. Start with the network operator, as it were; move to the BDU, which effectively is what they are; and then there is the Canadian licensee. We see that there is no great hurdle in licensing all three elements and ensuring that all three elements are attorning to your jurisdiction to regulate. Otherwise, we see potential huge gaps.

4968 COMMISSIONER LANGFORD: Corus has made our job no easier at all here because you have painted a horror show. In fact on Monday as well we had a situation where an operator couldn't continue an another operator came in and is going to hopefully, in their way, take over after we decided one way or the other. We have had situations in Canada where operators can't continue and someone else says, "Well, I think I can" and they take over.

4969 With great respect, I am not as alarmed by that kind of a scenario, things happen. Standard is there as well so there would be some connection and we do have a duty to find some kind of Canadian control. And you are right, we might have to have some sort of transition.

4970 But I don't think that is the issue here.

4971 What has me perplexed personally is that I have a Canadian operator, Corus, that has come to us in a very strange way. Mr. Cassaday came on Monday and said nothing but supportive things about one of these satellite applicants.

4972 Another piece of Corus comes today and says, "Yes, it is a great idea, but don't do it unless all of these i's are dotted and t's are crossed, but Mr. Cassaday didn't mentioned all of those. What you have given us today is kind of fears. It is really hard to balance this.

4973 Mr. Sherratt said we had to do some balancing. I find this very difficult to balance quite frankly. I don't understand how one part of Corus can come here, quite frankly, and say the sky is falling, when another part comes and says: Go ahead, license it. I really have a fundamental problem.

4974 If you were to say between Monday and today we have done some sort of study and here is a pile of statistics and it is apocalypse now, I could see it, but I actually have a great deal of difficulty with what is going on here from your company, and I find I'm getting nothing but narrative and worst-case scenarios and, quite frankly, I have difficulty with it.

4975 I am not trying to be critical or nasty, but I really do have trouble with what you are doing here today.

4976 MR. MAAVARA: We are not suggesting that we are painting fear scenarios. I think we are in each of these areas citing -- first of all, in terms of the regulatory structure the applications before you don't quite fit with the existing structure and we are suggesting a new structure.

4977 Secondly, we are stating that these applicants by definition will impact on the structure that we have and we are recommending that the Commission examine all aspects of the radio structure in the context of with these new applications.

4978 Thirdly, in terms of the specific scenarios, we are just providing examples of how circumstances could arise. For example, in the last applicant's appearance the question of siphoning came up -- that term wasn't necessarily used, but we have had the headlines over the last few weeks and people have looked at the Howard Stern situation for example as a Standards issue, which it is to a certain extent, but the other side of it is that that company has spent a huge amount of money to siphon his content away from the free system.

4979 SIRIUS mentioned the other day -- Mr. Shea I think it was -- mentioned that they have NHL and NFL rights. We are just suggesting that you can be sure that you will hear from Toronto consumers in particular if the hockey rights disappear from free over-the-air broadcasting.

4980 That would clearly also be a matter of commercial concern to us on the free radio side, but we are submitting that is also a regulatory concern.

4981 COMMISSIONER LANGFORD: I appreciate what you are saying and it is clear and it is helpful information and it is helpful advice or directions you are giving. I am a little puzzles by the disconnect within Corus and a little puzzled by the fact that sitting in the same group with Mr. Cassaday were Mr. Hildebrand and someone else, Mr. Rawlinson I believe, other independent radio operators and we just didn't hear any of this.

4982 Anyway, I have heard you today and I don't want to beat it to death with a stick, but I am surprised by what I am hearing today. That's all I can say.

4983 MR. MAAVARA: I think John wants to say a few things, but the other side of it is, I think we have a positive message and that is that Canadian content in the area of music and radio has been embraced by not only this country but also across the border.

4984 Our view, for example, on the formula that we have suggested in terms to increase the channel number, we think that is doable and all of the applicants said that they could increase.

4985 Now we are saying, "Okay, if you are going to add more channels, make one out of two channels a Canadian channel". It doesn't necessarily have to be labelled Canadian per se. It can be for regulatory purposes, but as Ms Lyons said, when people are listening to Shanai Twain in Nashville, they are not thinking Timmins. It is just great content.

4986 We feel that the Canadian system as the ability to create terrific content and, as such, the threshold should be set just a tad higher.

4987 John?

4988 MR. HAYCE: I think most of what we wanted to talk about today was just to reinforce what we stated in the letter that we submitted to the Commission in advance of these hearings.

4989 Again, Corus makes this clear point: We are not asking CRTC to apply restrictions on subscription radio that would not be consistent with restrictions on commercial broadcasters.

4990 That is kind of where we fall of the rails based on what we have seen by the applicants in the area of fair competitive advantage.

4991 Commercial radio companies don't have 100 channels to support a business model. Commercial radio is held to a 35 per cent standard for Canadian content; commercial radio is held to certain standards of broadcasting with regard to spoken word programs, and in the U.S.A., as you know, anything goes on these satellite-delivered shows. It could be profanity, racism, homophobia, misogyny, it is all available on satellite.

4992 I'm sad to say that there is an attraction for that and a willingness for some to subscribe to it. So, like it or not, there will be an attraction in this country to those uncensored shows.

4993 Corus has a history here of being consistent with regulations and supportive as to spoken word. We took Howard Stern off the air in Toronto; we took Tom Leykis off the air in Vancouver.

4994 We understand the restrictions and the limitations and we are willing to live within that system, but we are asking for a level playing field here.

4995 COMMISSIONER LANGFORD: I take your points and I notice that the letter you refer to was signed by Mr. John Cassaday and you are here today asking for consistency, but perhaps he is the one -- I mean, since St. Paul on the road to Damascus there hasn't been a conversion like this I would think --

--- Laughter / Rires

4996 COMMISSIONER LANGFORD: -- but I take your point and I thank you very much.

4997 THE CHAIRPERSON: Thank you. Thank you very much.

4998 Mr. Secretary.

4999 THE SECRETARY: Thank you, Mr. Chairman.

5000 Now we will hear as a panel Intervention No. 29, Mr. Tom Tompkins; and Intervention No. 31, Jayne Courtney, who will be replaced by Laurie Januska.

--- Pause

5001 THE SECRETARY: You have a total of 10 minutes to make your presentation.

INTERVENTION

5002 MS JANUSKA: Good afternoon, Chair and Members of the Commission. My name is Laurie Januska and I am Creative Director for Music, Business Development for Play Indies. I am pleased to appear before you today on behalf of my colleague Jayne Courtney and Play Indies.

5003 Play Indies is an online digital service for independent up-and-coming artists. Together with our partners we provide developmental promotional and distribution opportunities. We concentrate on artists who are young in their career, operating behind the scenes to propel the artist to the next step up and to help them in becoming their own independent business.

5004 Play Indies is committed to promoting our creative and artistic communities in all of North America.

5005 What does this have to do with the SIRIUS application?

5006 SIRIUS and Play Indies have similar interests at heart. Elements of our mandate are the same, both in business and in the artistry. With a successful business side comes more opportunity for artistic and creative expansion. Play Indies believes the proposed SIRIUS satellite radio service will expand the choices available to Canadians across the country and provide the much need portal into all of North America, into cities and remote areas alike.

5007 SIRIUS program initiatives for Canadian Talent Development supports the Play Indies business model and objectives in providing yet more of these opportunities.

5008 From the artists' point of view, outside of the actual creative process nothing is more important than building an audience. Being heard and being seen can take a lot out of you no matter how much drive and passion you may have.

5009 Take the standard accepted pressures of an Indie artist trying to be played on conventional stations and couple that with trying to hit the road to be seen across the huge land mass that is North America, both sides of the border, and the challenges are obvious.

5010 We believe the SIRIUS-proposed program initiatives are going to be of huge benefit to artists like The Invaders, Crash Continental, Eden Ants, Strube, Jimmy Boskill, Chantal Richards, Scott Jackson, Waiting for Lucy, Great Wide Open, Damn the Diva and Vic Levac. The bands will still have to hit the road, but once they get to Flin Flon or Whitehorse or Kalamazoo, there is a slightly better chance that someone will already know who they are.

5011 Building an audience sounds so simple and obvious, but it is really one of the absolute hardest things to do. Even the most wonderful music won't sell if nobody hears it. The SIRIUS program initiatives will put great independent Canadian music into ears all over Canada and, more important, all of North America, ultimately helping to build this crucial element. Once artists have this, a marketing strategy can be designed and implemented and the artist builds a good, strong shot at success.

5012 SIRIUS recognizes the obstacles that artists are facing today and their initiatives provide a new, significant delivery platform that not only supports the development of Canadian talent, but also programming that broadens the reach of this talent throughout all of North America.

5013 In addition to expanding the choices available to Canadians across the country, SIRIUS is also providing the very important window into other North American markets and there is no question as to this window's significance.

5014 UK artist Peter Gabriel, while reflecting upon the technological advances in the entertainment industry and the opportunities they provide was quoted as saying:

"The future should be that you can get anything, any time, from wherever you are, anywhere, and whoever you are, whatever country, whatever language you speak." (As read)

5015 With this in mind, we ask that you allow SIRIUS the opportunity to showcase Canadians to North America.

5016 Thank you.

5017 MR. TOMPKINS: Mr. Chairman and Members of the Commission, we wish to thank you for allowing us to appear today to give you our support for the application for SIRIUS Canada.

5018 My name is Tom Tompkins. I have been involved in the Canadian music industry for many years, particularly in the country format. I have programmed country radio for well over 20 years. I was on the Board of Directors of the Canadian Country Music Association for 15 years and I served as the Association's President for seven of those years. I managed a Juno award winning Canadian country act for two years and have consulted many others throughout the years.

5019 With me today are two gentlemen who represent two generations of Canadian music. To my immediate right is Bruce Good of the group The Good Brothers, who this past September were inducted into the Canadian Country Music Hall of Fame. With Bruce is one of his sons, Travis, who is a member of the group The Sadies who have just returned from a small tour in Europe, and they both look forward to speaking to you in just a couple of minutes.

5020 The dream of most all musicians is to simply have the opportunity of making a career out of their chosen field. What is a career? Many would say it is simply a matter of making a living at what you do. It may sound like a very achievable objective to most, but for a musician it truly is a dream because it is rarely achieved.

5021 One of the major roadblocks for Canadians is that they rarely have the opportunity for success outside of our own borders. Without that opportunity, obviously a potential career opportunity can be very limited. I have know many Canadian acts that have achieved number one hits and won numerous awards over the years, but because of their limited opportunities they have had to secure jobs outside the music industry just to survive.

5022 Many leave the music industry for the exact same reasons. That is the reality for most, until you get some kind of exposure internationally, which obviously opens many new doors. This is the opportunity that will exist if the SIRIUS Canada application is approved.

5023 Their proposed Canadian Wave channel will contribute to that window of opportunity that will exist for Canadians to achieve exposure not just in Canada, but throughout North America. Many have never had that before.

5024 This will also open the window of exposure for many artists, not just country, who don't even receive air-play in Canada today. Included are up incoming artists who Canadian private radio stations simply can't find a room to add to their limited play list.

5025 Then, there are many Canadian artists who because of their style simply do not fit into any existing radio format.

5026 For example, the Good Brothers are considered blue grass, of which there is little or no room for on today's commercial private country radio station play list.

5027 On the other hand, the Sadies have been labelled by some as alternative country, a style of music that gets next to no air-play at all on commercial radio in Canada today.

5028 I have had assurances that SIRIUS Canada will embrace these styles of music as part of their Canadian Wave channel as well as making sure that it has the chance to be heard on other already existing SIRIUS music channels.

5029 I now invite Bruce to speak to you from the Canadian musicians perspective.

5030 MR GOOD: I'm out of my element here, I want you to know. I have been making music in this country for almost 35 years now and I have had a reasonable amount of success.

5031 I have received several JUNO Awards. As Tom mentioned, I was just honoured with an induction into the Canadian Country Music Hall of Fame and I have toured extensively across Canada and very little throughout the U.S. during my career.

5032 Probably the down side of my career has been radio, particularly main stream radio where our style, our gender of music doesn't seem to fit and now, my two sons who have, much to my chagrin, decided to follow their father's footsteps face the same challenge.

5033 I think this is a terrific opportunity; two years ago when we made our last CD, we were fortunate enough to get distribution throughout the U.S., but I found out in that two years that we have been flogging a dead horse down there because it's impossible to get your record played in the U.S.

5034 I think we have been played once or twice down there because I was in the studio doing an interview at the time and it's tough for a D.J., it's difficult for a D.J. not to play your music when you're staring him in the face. However, I don't it he spun it again after we left the studio.

5035 But this is a great opportunity, more so for my sons and for new acts that are coming up. I think that Travis and myself, we represent probably most of all entertainers in Canada. I think there is only a handful, you could count them on the fingers of both hands, who really do get air-play in the U.S.

5036 A lot of them have been forced to move to Nashville. Acts like Paul Brent, Carolyn Don-Johnson, Shania and Terry Clark, they all live in Nashville now and they have been forced to live in Nashville because they want to have their music played south of the border.

5037 I think this is a tremendous opportunity for us to have our music played throughout all of North America and I'm hoping that opportunity will come to our sons, to my sons. Thanks.

5038 MR. TRAVIS GOOD: So, I'm his son, I'm Travis and I have been playing music now for 18 years and, you know, enjoyed basically no commercial radio at all, but still made a fine living. And every time I make a record my wife will say, is this going to be the record that's going to get played on commercial radio?

5039 And I can answer that before I even go to the studio or before I even write a song, it's going to be "no" because if I do, I'm selling out for it and I won't sell out. This provides us with a good opportunity, a good window for exposure that we really need without selling out.

5040 Secondly, this isn't as a musician, but as a fan. I also live in rural Ontario, I live in Hastings, I'm only an hour and a half out of the biggest city in Canada and my radio reception sucks, it's awful, and I would love to have the chance to be able to get a nice clean signal. That's all. Thanks.

5041 MR. TOMPKINS: Technology has proved to be both a blessing and a curse for the music industry. The curse, of course, we know all to well is down loading.

5042 The technology of satellite radio though is truly a blessing. For most Canadian musicians to have the opportunity to be heard throughout North America wherever you may be is truly remarkable.

5043 To have SIRIUS Canada propose a channel such as Canadian Wave, which will be 100 per cent Canadian, we think, is just as remarkable. For that, they have our total support.

5044 On behalf of Bruce, Travis and I, we thank you for giving us this opportunity and also we want to thank your staff for adjusting the agenda so that we can get in this afternoon.

5045 THE CHAIRPERSON: Thank you very much. Commissioner Wylie.

5046 COMMISSIONER WYLIE: Mr. Tompkins, I have a blank. Who was this star of "On the Road Again"?

5047 MR. TOMPKINS: Wayne Rostad.

5048 COMMISSIONER WYLIE: No, no; the movie.

5049 MR. TOMPKINS: Willy Nelson.

5050 COMMISSIONER WYLIE: Willy Nelson, because I want to remind you the last time you and I had a discussion was in Montreal at a FM radio application, I believe.

5051 MR. TOMPKINS: That is correct.

5052 COMMISSIONER WYLIE: And you convinced me or tried to, that you would teach Willy Nelson to speak, to sing in French.

5053 MR. TOMPKINS: Yes, we did, we did as a matter of fact.

5054 COMMISSIONER WYLIE: Do you remember?

5055 MR. TOMPKINS: I do remember that.

5056 COMMISSIONER WYLIE: I see you're still an eternal optimist?

5057 MR. TOMPKINS: Yes. I'm glad you remember that.

5058 COMMISSIONER WYLIE: Thank you, Mr. Chairman.

5059 THE CHAIRPERSON: Commissioner Langford.

5060 COMMISSIONER LANGFORD: I have no question. Thank you. Or just a quick question. As the SIRIUS applicants support the C.S.R, the other satellite service and C.S.R. support SIRIUS, should I assume then that you support both applications?

5061 MR. GOOD: I definitely do. I'm here to support satellite radio who it just happened that I was asked to be here, I was asked by SIRIUS to come in, but...

5062 COMMISSIONER LANGFORD: So that both gave you the same opportunity to get heard down there?

5063 MR. GOOD: I believe so, yes. In fact, talking to Mr. Makowycs today, I think they've already somehow... Travis is being played somewhere in the U.S.

5064 MR. TOMPKINS: On XM.

5065 MR. GOOD: On XM, yes.

5066 COMMISSIONER LANGFORD: Excellent.

5067 MR. GOOD: So, yes, I think it's... whoever.

5068 COMMISSIONER LANGFORD: And we'll do what we can about that radio signal in Hastings. Thank you very much.

5069 THE CHAIRPERSON: Thank you very much. Thank you.

5070 THE SECRETARY: Mr. Chairman, the next appearing intervention will be presented by Friends of Canadian Broadcasting, Mr. Ian Morrison.

INTERVENTION

5071 MR. MORRISON: Shall I be in, Mr. Chair? And, of course, I'll observe the 10 minute limit.

5072 Mr. Chair and Commissioners, thanks for granting Friends of Canadian Broadcasting an opportunity to appear today. As you know, Friends is a watchdog for Canadian content and we're supported by 60,000 households. We wish to speak to the Commission from a listener's point of view.

5073 Friends opposes the licensing of the satellite applicants in their present form and we support the licensing of the CHUM Astral application. Why?

5074 The Broadcasting Act states that:

"Each element of the Canadian Broadcasting System shall contribute in an appropriate manner to the creation and presentation of Canadian programming and each broadcasting undertaking shall make maximum use and in no case less than predominant use of Canadian creative and other resources in the creation and presentation of programming. Unless the nature of the service provided by the undertaking such as specialized content or format or the use of languages other than French and English renders that use impracticable, in which case the undertaking shall make the greatest practicable use of those resources."

5075 As you know, that's a direct quote. These broadcasting policies, of course, should govern the Commission's evaluation of the three applications.

5076 The United States based satellite radio services should not be licensed by the Commission because we believe they will harm our domestic broadcasting and music industries.

5077 Friends believes that the threat of the grey market is being overstated by the satellite based applicants. Even if that were not the case, importing almost 200 U.S. channels in combination with a handful of Canadian services, some of them duplicating existing Canadian services would do much more damage, for example, in the music industry by reducing the proportion of exposure that Canadian artists will receive in the Canadian market.

5078 If, nonetheless, the Commission decides in principle to license the satellite based applications out of a concern for grey market threats, Friends believes that conditions should be attached to such licences to attenuate, to some degree, for the damage they will inflict in the Canadian market.

5079 Article 6.2 of the Broadcast Distribution Regulations provides that:

"A licensee shall ensure, in respect of each analog and digital technology, that a majority of the video and audio channels received by the subscriber are devoted to the distribution of Canadian programming services."

5080 It would appear that neither the XM nor the SIRIUS applications come remotely close to meeting the standard.

5081 The Commission's long-standing nurturing of Canadian music industry constitutes a major success for the whole country. In essence, through exhibition requirements, the Commission has made a 35 per cent Canadian content standard a floor in Canadian music radio.

5082 The SIRIUS and XM applications cannot even begin to meet this standard, as you know, while there may be some modest benefit to Canadian music industry through exhibition opportunities for Canadian musicians in the U.S. market, no reasonable observer would be justified in concluding that this could begin to compensate for the lack of play in the Canadian market.

5083 A substantial expenditure requirement imposed on the U.S. based satellite services as a condition of licence would attenuate to some degree for the damage that they would inflict on Canadian artists through massive importation of foreign music.

5084 Friends doubts that the business plans of the satellite based applications have been designed to bear the expenditure requirement that would be sufficient to compensate for the damage they inflict in the Canadian market.

5085 Recent Commission decisions for specialty television broadcasters have required a 35 per cent to 53 per cent of the previous year gross revenues for Canadian program expenditures in addition to these broadcasters exhibition requirements.

5086 Something in this range should be required of the two United States based applicants, both to attenuate for the damage that they would cause through low use of Canadian creative resources and to avoid creating a precedent whereby other licensees might seek to buy out of exhibition requirements.

5087 This latter point is very important. As Canadian music format radio broadcasters, I should be expected to ask whether they should continue to be required to bear content obligations, not required of a principal competitor for the ears of their audience.

5088 Grounds for reducing this level of expenditure requirement might include any substantial incremental cost to bring a U.S. service with a North American footprint into Canada. We doubt that the applicants could document such incremental costs.

5089 Also, should the Commission require the U.S. satellite applicants to increase their Cancon obligations as a condition of licence, documented costs to achieve this might also be deducted from the required expenditure requirement.

5090 These expenditure requirements should be directed to Canadian talent development, advancing the careers of Canadian artists such as Factor, Music Action among others, including French language music, which appears to constitute a minute element of the proposed satellite services.

5091 We also note that neither of the U.S. satellite based applicants appear to have yet received the required satellite policy changes from the Government of Canada. I'm referring to the letter that your Secretary General sent to the Deputy Ministers of Heritage and Industry on October 17th, 2003.

5092 The absence of this policy change in an of itself would be sufficient grounds, in our view, for the Commission to deny them a licence during this hearing process.

5093 If they were to come back at a later date, if and when the proposed satellite policy changes were in place, this might afford them and the time to reconsider their plans in order to align their proposals with Canadian Broadcasting policies and priorities.

5094 In summary, Friends sees in both the satellite-based applications a threat to the integrity of Canadian broadcasting policy. Abandoning a strategy which has served our country well by licensing services that do not meet established carriage and expenditure requirements is unjustified. It could also create a precedent-setting expectation that existing licensees could reduce their exhibition requirements.

5095 As well, to eliminate the incentive for other licensees to imitate these U.S.-based applications, imposing a substantial expenditure requirement, in our view, is absolutely essentially.

5096 And finally, in our view, the CHUM and Astral application conforms with Canadian broadcasting policy and is worthy of sympathetic consideration by the Commission.

5097 Mr. Chair, thank you.

5098 THE CHAIRPERSON: Thank you, Mr. Morrison.

5099 Vice-Chair Wylie.

5100 COMMISSIONER WYLIE: Good afternoon, Mr. Morrison.

5101 You indicate in your first paragraph of the presentation this afternoon that you will speak to the Commission from a listener's point of view. However, can you make a connection between that and the remedy that you suggest for attenuating what you describe as the "infliction of damage on the Canadian market".

5102 Because the listener, I suppose, wants to get as much as the Americans get and the requirements that you would make on the U.S.-based applicants would be to put money into the artists component or the creative component, but how, when you speak from the listener's point of view? Isn't the listener asking us for access to what's available? So how do you make the connection?

5103 MR. MORRISON: As you know, you have raised more than one subject there, and so just to touch on them, in turn--

5104 COMMISSIONER WYLIE: At least we know you weren't sitting with one of the applicants.

--- Laughter / Rires

5105 MR. MORRISON: I should have added that Sirius did not invite me to come here today.

--- Laughter / Rires

5106 MR. MORRISON: No, but seriously, I want to make it clear that we do not favour the licensing of either of the satellite broadcasters. I think I'm repeating myself, but should you decide for you own, perhaps, good reasons not to listen to that advice, then we brought up the question of the substantial expenditure requirements.

5107 But coming back to your point about the listener, I suppose there are some 32 million of those people in Canada and we are not purporting to speak for all of them. Often, in general, when that comes up, I will be accused occasionally by the president of Corus Entertainment or someone, "Who do you represent?", I will say, "Well, sometimes I'm speaking for a steering committee of 12 individuals" and other times I could say that I am mandated to speak for some 60,000 families who financially support our organization and make its work possible.

5108 Through public opinion polls, we often find that on major issues that we speak, that the vast majority of Canadians agree with us. So I'm not purporting to speak for every listener, but I'm trying to bring to the table and put before you a point of view that certain listeners, who care very deeply about Canadian content in the audio-visual system, bring to bear. But I imagine you understand that.

5109 COMMISSIONER WYLIE: Yes. Well, I wasn't alleging that you are not speaking for the listener, simply that we need all the help we can get because the Broadcasting Act tells us to speak for the listener, so to speak, by providing diversity and be flexible where technology comes into play and provide Canadians with the most possible number of services. Then, we are also told that we have to protect Canadian creative resources and artists, et cetera.

5110 They are very often difficult things to keep in equilibrium or to juggle is what I was--how do you see this? Do you see this as a sufficient counterpoint to the expression you used today, and a number of times, three at least, in the one-page-and-a-half that you filed, of inflicting damage on the system.

5111 I was just curious about to what extent it would attenuate it to try and exact money from what are basically American satellite radio providers. I am not suggesting that you don't have the right to speak to the listener, more the problem that we have to speak for the listener and the creative community.

5112 MR. MORRISON: Yes, and even to promote the economic interests of Corus Entertainment sometimes. It's all within your Broadcasting Act.

5113 COMMISSIONER WYLIE: Don't add more, I will have a headache.

--- Laughter / Rires

5114 MR. MORRISON: No, I just wanted to say, to start off, I don't think anyone could accuse Canadians of being deprived of access to a great diversity of American content in our audio-visual system. We are probably as open to American content as any country in the world. I cannot prove that, but I would be happy to argue it with anyone who disagreed.

5115 So it's not a question of a lack of access to American content, it is rather a defence of a certain floor of Canadian content.

5116 We were here some years ago, and you, indeed, were here as well, when your Commission beefed up its radio policy and introduced the real 35 per cent. I can remember the times when Canadian content was played between two and four in the morning by certain radio stations.

5117 So you have achieved something that has been valuable to the country, and it, in addition to the latent talent of Canadian artists, has done something really substantial for this country. We see in these applications, were they to be received favourably in their current form, a threat to everything that you, on behalf of Canada, have achieved.

5118 So it is not our suggestion that you license them and require a huge substantial contribution to Canadian content through an expenditure requirement; it our suggestion that you not license them. We are just trying to make a suggestion, in the event that you don't agree with us on that principle.

5119 COMMISSIONER WYLIE: Thank you, Mr. Morrison. Thank you for your participation.

5120 Thank you, Mr. Chairman.

5121 THE CHAIRPERSON: Thank you.

5122 Commissioner Pennefather.

5123 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

5124 Mr. Morrison, on page 3, middle paragraph, middle line, you use the term "modest" to describe the benefit to the Canadian music industry, through exhibition, opportunities for musicians in the United States.

5125 We just had two musicians here tell us about the tremendous value of that exposure. On what basis do you use the term "modest"? Did you do a study? Do you know exactly why you would describe it as "modest", as opposed to what I hear the musicians saying?

5126 MR. MORRISON: I wish in no way to detract from the integrity or passion of the previous intervenors. My mandate, however, is to analyze what is before you and, subject to your invitation, to come and comment on it in the judgement that we bring to it.

5127 We do not see in the current proposals from either of the satellite-based applicants anything that is going to create substantial opportunities for Canadians to receive more attention and more audience share in the United States.

5128 "Modest" is perhaps a generous phrase. It's a token type of thing. It's an argument that is used to try to create, not by the musicians but by the applicants, a smoke-screen over what is, really, a huge effort to import a lot of additional American programming without the kind of rules, as a kind of back channel around the rules, that your Commission has established to ensure a floor of Canadian content.

5129 The word "modest" is intended to recognize that there is some benefit there, but it is certainly not something that should compete with the exercise of your responsibility in defending Canadian content and the Canadian audio-visual system.

5130 COMMISSIONER PENNEFATHER: Well, it was just said, and as we have said over the last few days, this is a balancing act amongst the listeners, the artists, the broadcasting system and the points that you have raised are important ones, but again--

5131 MR. MORRISON: I would add just one thing.

5132 COMMISSIONER PENNEFATHER: --I was curious to know if you had actually done any specific exercise or any study of any kind to know the value of the benefit because this, of course, has been part and parcel of the proposal.

5133 Thank you.

5134 MR. MORRISON: Are you aware of any studies by anyone else?

5135 COMMISSIONER PENNEFATHER: I was just asking you the question, in terms of your use of that word.

5136 THE CHAIRPERSON: Commissioner Langford.

5137 COMMISSIONER LANGFORD: Yes, I would like to start where--and very quickly. You have been very kind to give us your time and I don't want to keep you, but I want to start precisely where--

5138 MR. MORRISON: I wouldn't have missed listening to you for the world, today, Commissioner Langford. It kept me wide awake for the last hour or two.

5139 COMMISSIONER LANGFORD: Excellent.

5140 I want to start where Vice-Chair Wylie started and your position of speaking for the listeners. I'm not trying to trip you up, but there seemed to be an inconsistency, in the sense that it's hard for me to understand which listeners, precisely, because you want us to deprive the listeners. I understand why and I'm not attacking the validity of your points, but you do want us to deprive the listeners, all the listeners of Canada, 90-some per cent of them, of satellite services.

5141 You want, then, for us to provide urban listeners, 60 per cent of Canadian listeners, with the CHUM service. But I wonder where you stand on the other 40 per cent of Canadian listeners, one of whom just told us that, in Hastings County, just outside of Toronto, he gets almost nothing by way of our wonderful radio service. So where do you stand on the other 40 per cent?

5142 MR. MORRISON: We do not think that, inherently, there is any reason that an application could not come before you at some time, when perhaps it would be in accord with Canadian satellite policy, that might not provide something that had a substantial share of Canadian content in it. We would welcome any efforts by your Commission to extract from the applicants commitments, or to put conditions of licence before, them that would considerably enhance the Canadian content there.

5143 It is not a question of depriving a listener in Hastings of an opportunity to receiver content versus nothing. It is a matter for the Commission to await applications that use the technology in a fashion that is in accord with your statutory mandate. And if, in order to ensure that you do not derogate that mandate and threaten the integrity of the Canadian radio system, you were not to license these applicants, that would inconvenience a listener in Hastings or in Baffin Island or wherever else, it is an unfortunate by-product of something that is, in our view, your duty to pursue.

5144 COMMISSIONER LANGFORD: I would suggest it's also our duty--I thank you for that, by the way. And I'm not trying to be argumentative, I'm just trying to push your thinking on this. Because you have been at this a long time and I want to get as much out of you as I can.

5145 We heard the term "siphoning off" today and I guess we are in the business of siphoning off ourselves.

5146 In taking that position, we are also in the position of trying to get as much for Canadian listeners in every way, and we are also in the position of trying to get as much out of a very rare and very valuable spectrum as we can. It's limited.

5147 Do you think, perhaps, on reflection, we ought to send the whole lot back to the drawing board and say, "Well, why tie up that", you know, half, almost half, the valuable L-band spectrum for urban listeners who are fairly well served now, when there's nothing for 40 per cent of Canada and, as you suggested, say, as well, to the satellite providers, "You go back and do a better job"? Should we turn this more into a policy search, then, and call the whole thing off? On reflection, do you think that might be a wise way to do it? Is the CHUM application so good that we should accept it?

5148 MR. MORRISON: Your proposal is two-thirds good. The CHUM/Astral application, in our judgment, it would make a positive contribution to the broadcasting system and we support it. We have not always supported proposals from those companies.

5149 COMMISSIONER LANGFORD: Despite the fact that it leaves out 40 per cent of listeners?

5150 MR. MORRISON: Yes. And it leaves out more than 40, I think, in the initial years of the licence. It would, at year seven--

5151 COMMISSIONER LANGFORD: Well, I'm giving them their highest peak.

5152 MR. MORRISON: We should seek to devise in this country a means to use satellite technology, or other technologies, to reach people who are beyond the reach of that technology.

5153 I will just answer it that way.

5154 COMMISSIONER LANGFORD: Thanks very much.

5155 Those are my questions.

5156 THE CHAIRPERSON: Thank you.

5157 Thank you very much, Mr. Morrison.

5158 It's 6 p.m. now and--

5159 THE SECRETARY: Mr. Chairman--

5160 THE CHAIRPERSON: Mr. Secretary.

5161 THE SECRETARY: Mr. Chairman, can I impose on you to hear one last appearing intervener today, who will not be able to be here tomorrow.

5162 THE CHAIRPERSON: I'll be accommodating as usual, Mr. Secretary; I can be no less. Go ahead.

--- Laughter / Rires

5163 THE SECRETARY: Thank you, Mr. Chairman.

5164 We will now hear Mr. Franz Schuller.

--- Pause

INTERVENTION

5165 M. SCHULLER: Hello. Thanks for letting me speak. I have jury duty in the morning and I could not come back.

5166 THE CHAIRPERSON: You are getting the full civic experience, here, this week.

--- Laughter / Rires

5167 MR. SCHULLER: Yes. And I'm only 35.

5168 My name is Franz Schuller. Would you prefer I speak in French or English? Either way. Ça ne dérange pas.

5169 Mon nom est Franz Schuller. Je travaille à Montréal avec mon groupe. On a un groupe de musique indépendante. Depuis 15 ans, je joue de la musique avec ce groupe-là. On fait toutes nos choses nous-mêmes, et j'ai une compagnie de disque, un « record label » qui s'appelle Indica, qui existe depuis huit ans. Ça a été formé par les membres de mon groupe de musique par rapport surtout au fait qu'il manquait d'infrastructure pour les jeunes artistes indépendants au Canada et surtout au Québec. Donc on a créé notre propre structure de gérance pour notre groupe. On a créé notre propre structure de « label » pour aider d'autres artistes avec qui on travaillait.

5170 J'ai eu la chance depuis huit ans de pouvoir aider à développer plusieurs jeunes talents québécois et canadiens, francophones et anglophones. Je suis ici surtout pour soutenir la demande de CSR, mais, en fait, toutes les demandes de la radio par satellite parce qu'en huit ans ou 15 ans, j'ai travaillé très, très, très fort, avec beaucoup de gens, pour essayer de faire connaître des jeunes artistes qui avaient beaucoup de talent, mais on a eu beaucoup, beaucoup d'embûches et de barrières, surtout au niveau de la radio et de la radiodiffusion. Il a fallu réinventer la roue littéralement, depuis le début de notre carrière, pour arriver au point où j'en suis aujourd'hui d'avoir une compagnie qui est solide et des artistes qui ont réussi, comme un groupe qui s'appelle Les Trois Accords, qui a maintenant un disque d'or.

5171 On a commencé la compagnie avec 2 000 $, puis aucune possibilité de diffusion radiophonique. On est aujourd'hui une compagnie qui a réussi à établir un certain succès, mais ça a été incroyablement difficile. Même à ce jour, il y a tellement peu d'opportunités pour les jeunes artistes qu'il est essentiel qu'on utilise ce que je dirais une opportunité ou un avancement de la technologie qui va être mondial très vite. On l'a vu avec l'Internet, on l'a vu avec la télé satellite.

5172 Au début, tout le monde riait un peu, maintenant tous les gens qui prennent la télé satellite, en général, ne retournent pas en arrière. Donc c'est quelque chose qui va faire partie de notre monde, et je préfère que le Canada soit impliqué dès le début en tant que leader, qu'on implique tout de suite nos gens, nos infrastructures, et surtout nos artistes, dès le départ, dans ce processus-là, pour leur donner une chance, une chance qui est tellement difficile en ce moment.

5173 Je répondrai à vos questions si vous en avez.

5174 LE PRÉSIDENT : Merci beaucoup.

5175 Madame Wylie.

5176 CONSEILLÈRE WYLIE : Monsieur Schuller, est-ce que vous étiez un des membres du groupe Les Trois Accords qui étiez dans un des vidéo que nous avons vus?

5177 M. SCHULLER : C'est possible. Je travaille avec Les Trois Accords. C'est possible que vous m'ayez vu témoigner pour une entrevue de télévision que j'ai faite, peut-être.

5178 CONSEILLÈRE WYLIE : Oui. C'était pour quel service?

5179 M. SCHULLER : C'était pour les gens d'Astral, je crois, ou CHUM. Je ne sais pas sous quel nom c'est ici; chez nous, on m'a présenté ça comme étant sous Astral.

5180 Moi, je suis ici techniquement pour parler pour CSR mais, comme je vous l'ai dit dès le départ, j'appuie les demandes des trois requérants parce que je pense que c'est surtout très, très, très important qu'on comprenne à quel point les artistes ont besoin de ce service-là et à quel point il y a beaucoup de styles musicaux avec lesquels je travaille qui ne sont pas représentés et qui n'ont pas de possibilité d'être entendus de manière générale, et surtout en dehors des gros centres. Je pense qu'il est vraiment essentiel que le Canada, selon moi, prenne un rôle de leader et ouvre le marché à ces artistes-là.

5181 CONSEILLÈRE WYLIE : Ce groupe-là chante en français surtout?

5182 M. SCHULLER : Mon groupe ou le groupe dont on parlait tantôt?

5183 CONSEILLÈRE WYLIE : Le groupe qu'on a vu au vidéo, qui s'appelle Les Trois Accords?

5184 M. SCHULLER : Le groupe dont on parlait tantôt, Les Trois Accords, c'est un groupe francophone.

5185 CONSEILLÈRE WYLIE : Ils étaient, si je me souviens bien, en chaloupe; non?

5186 M. SCHULLER : Oui. C'était leur vidéo, oui. C'était un vidéoclip pour une de leurs chansons qu'ils ont tourné.

5187 CONSEILLÈRE WYLIE : Est-ce que vous avez été ici aujourd'hui, hier, avant-hier, pour entendre les...

5188 M. SCHULLER : Je suis arrivé aujourd'hui seulement.

5189 CONSEILLÈRE WYLIE : Est-ce que vous êtes familier avec le nombre de canaux francophones ouverts à la musique plus alternative que chaque requérant propose?

5190 M. SCHULLER : Je suis au courant qu'il y en a plusieurs. Je ne pourrais pas dire les chiffres exacts, mais si vous voulez me le dire.

5191 CONSEILLÈRE WYLIE : Pour vous, ce qui importe, c'est l'accès et la possibilité d'étendre vos capacités d'atteindre les auditeurs, surtout avec de la musique qui est moins jouée, je suppose, à la radio traditionnelle.

5192 M. SCHULLER : Oui, puis parce qu'aussi je travaille avec des artistes différents. Je travaille avec des chanteurs.

5193 CONSEILLÈRE WYLIE : Oui, je comprends.

5194 M. SCHULLER : Je travaille avec des chanteurs pop rock du Yukon, anglophones, qui ont de la misère à percer la radio FM parce qu'ils veulent juste jouer du Top 40. Je travaille avec de la nouvelle chanson française, qui a de la misère à percer parce qu'il n'y a personne sauf une ou deux émissions à Radio Can qui veulent le passer. Je travaille avec des groupes punk rock que personne ne veut passer mais qui a plein de jeunes qui les écoute, puis il n'a pas de chance. Le lien entre le public et les artistes est tellement difficile en ce moment.

5195 CONSEILLÈRE WYLIE : Alors votre intervention n'est déposée que dans la demande de CSR, mais, pour vous, les trois, en autant qu'ils présentent une opportunité d'exposition de la musique alternative, vous êtes pour ça.

5196 M. SCHULLER : Bien, je crois que les trois demandeurs sont compétents et capables de faire leur travail, et c'est sûr et certain que, s'ils le font, ça va bénéficier énormément, mais énormément. Je ne peux pas dire tellement à quel point ce serait bien pour les artistes, mais aussi pour le public.

5197 Moi, j'ai un « label » de disque qui est très, très, très proche des fans. Les gens portent les gilets de notre compagnie de disque parce qu'ils trouvent que le produit qu'on leur donne est bien. Mais créer ce lien-là avec le public, c'est tellement difficile, qu'avoir accès à une ouverture que le satellite créerait géographiquement, en étant plus large que juste les villes, mais aussi, au niveau d'avoir plusieurs chaînes plutôt que juste une ou due, ce serait énorme. Même juste à Montréal, ce n'est pas terrible, la radio, à Montréal, en ce moment.

5198 CONSEILLÈRE WYLIE : Bien, je vous invite à regarder le vidéo.

--- Rires / Laughter

5199 CONSEILLÈRE WYLIE : Merci, monsieur Schuller.

5200 LE PRÉSIDENT : Merci beaucoup.

5201 M. SCHULLER : Ça fait plaisir.

5202 LE PRÉSIDENT : Maintenant, monsieur le secrétaire, est-ce que nous avons fini pour la journée?

5203 LE SECRÉTAIRE: Vous pouvez y aller, monsieur le Président. Merci beaucoup.

5204 LE PRÉSIDENT : On reprendra demain matin, à 9h30.

--- L'audience est ajournée à 1810, pour reprendre le

jeudi, 3 novembre 2004, à 0930 / Whereupon the

hearing adjourned at. 1810, to resume on Thursday,

November 3, 2004 at 0930

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